Health Coach Agreement

Transcription

1 Page 1 of 5 Health Coach Agreement This Agreement is entered into between Take Shape For Life, Inc., a Delaware corporation with its principal place of business located at Owings Mills, Maryland, and you, (the independent Health Coach ). This Agreement may be amended from time to time at the sole discretion of Take Shape For Life, and sets forth the rights and obligations of Take Shape For Life and the Health Coach. The Health Coach understands this Health Coach Agreement is subject to and effective as of the date of acceptance by Take Shape For Life, Inc. 1. Our Health Coach Agreement. This Health Coach Agreement, together with the Take Shape For Life Policies and Procedures, the Integrated Compensation Plan, and Income Disclosure Statement, are which are all incorporated into the Health Coach Agreement by reference (and are attached as Appendices), shall constitute the entire agreement between Take Shape For Life and the Health Coach. Take Shape For Life reserves the right, in its sole judgment, to decline any Health Coach Agreement within thirty (30) days of its submission. If Take Shape For Life declines the Health Coach Agreement, the Health Coach will be immediately terminated, the enrollment fee refunded in full, and any Compensation earned by the Health Coach during the period as a Health Coach will be paid according to Integrated Compensation Plan. 2. Health Coach Eligibility Requirements. Health Coach certifies they (i) are 18 years of age or older as of the date of submission; (ii) are a legal resident of the United States, the District of Columbia, Puerto Rico, or Guam; (iii) have provided Take Shape For Life with a valid W-9, Social Security Number and/or Federal Tax Identification Number; (iv) are not in jail or prison or otherwise confined to a correctional institution; (v) have not ever been convicted of a felony; and (v) have a valid address. Upon acceptance of the Health Coach Agreement, the Health Coach is eligible to earn commission for the sale of Medifast, Inc. and Take Shape For Life products and services ( the Products ) to Take Shape For Life Clients ( Clients ). In order for the Health Coach to receive commissions they must submit an accurate W9 Form, verified by Take Shape For Life. Commissions will be forfeited by any Health Coach All sales of the Products must be compliant with this Health Coach Agreement, the Take Shape For Life Policies and Procedures, the Income Disclosures Statement, and the Integrated Compensation Plan. 3. Independent Contractor Status. Health Coach agrees that as a Health Coach, she or he is an independent contractor, and not an employee, agent, partner, legal representative or franchisee of Take Shape For Life. Health Coach is solely responsible for all decisions made and all costs incurred with respect to her or his business and assumes all entrepreneurial and business risk. HEALTH COACH UNDERSTANDS THAT SHE OR Health Coach Agreement _HC-TSFL v2 (April 1, 2015)

2 Page 2 of 5 HE WILL NOT BE TREATED AS AN EMPLOLYEE OF TAKE SHAPE FOR LIFE FOR FEDERAL OR STATE TAX PURPOSES. Take Shape For Life will report amounts paid to Health Coach to the IRS as required by law. Health Coach is solely responsible for payment and reporting of all income taxes required to be made or filed with any tax authority with respect to her or his activities. Take Shape For Life will not withhold or make payment for Social Security, make unemployment insurance or disability insurance contributions or obtain worker s compensation insurance on Health Coach s behalf. Take Shape For Like is not responsible for withholding, and shall not withhold or deduct from Health Coach s bonuses or commissions, if any, FICA, or taxes of any kind. Health Coach further understands and agrees that her or his participation as a Health Coach is voluntary, and that Take Shape For Life has not provided Health Coach with any promises or guarantees of any levels of success or compensation. 4. Health Coach Not Associated With Another Health Coach Account. Health Coach affirms that they do not have a current Health Coach account, nor is Health Coach a partner, shareholder, or principal of any entity having a Health Coach Account. Health Coach understands that any intentional misrepresentation of any information provided on the Health Coach Application and Agreement may result in action by Take Shape For Life, up to and including cancellation of this Agreement. 5. Ethical Representations. The Health Coach agrees to use his/her best efforts to actively promote the Products and represent Take Shape For Life in a professional manner, pursuant to this Agreement. Health Coach agrees not to misrepresent the Take Shape For Life or its affiliated entities in any manner and will make no statements, claims, or warranties representing Take Shape For Life or its affiliates, which are not contained in the Company s written materials. Health Coach further agrees to perform all obligations under this Agreement in a manner consistent with all applicable laws and regulations and with the principles of good conduct and business ethics, in order to promote and enhance the name of the company, the reputation of the product, and the goodwill attached to any trade names or any trademarks in use hereafter adopted or used by Take Shape For Life or its Affiliates. 6. Intellectual Property. Health Coach will not use Take Shape For Life s copyrighted materials, trade names, trademarks, services marks, slogans, logos, symbols, or color schemes except as expressly provided to the Health Coach by Take Shape For Life for the specified use, or as permitted in writing by Take Shape For Life. 7. Fiscal Responsibility. Health Coach agrees to pay for products and services when payment is due. Take Shape For Life is authorized to withhold the appropriate sums from amounts due to Health Coach or to charge the Health Coach s authorized credit card if Health Coach fails to pay for products or services. 8. Assignment. Health Coach may not assign any rights or delegate any duties under the Agreement without the prior written consent of Take Shape For Life. Any attempt to transfer or assign the Agreement without the express written consent of Take Shape For Life renders the Agreement voidable at the option of Take Shape For Life and may result in termination of Health Coach s business. Health Coach Agreement _HC-TSFL v2 (April 1, 2015)

3 Page 3 of 5 9. Product Ordering and Sales; No Inventory Requirements. There are no minimum product purchase or inventory requirements with the Take Shape For Life Program. Health Coach and her or his Clients may purchase products through the Health Coach s cobranded Take Shape For Life website. Take Shape For Life reserves the right to limit the maximum amount of products purchased by Health Coach in a given time period. Health Coach may not purchase or encourage others to purchase quantities of product in excess of that considered to be reasonably needed for personal consumption. Health Coach may not resell Products to Clients or any third parties. Health Coach agrees not to make any representations or claims about the Products and Take Shape For Life Program beyond those shown on product labels or in official Take Shape For Life literature. Health Coach further agrees to sell products available through Take Shape For Life only in authorized territories in the United States, and to be bound by all sales tax collection agreements between Company and the various taxing jurisdictions, as well as the related rules and procedures established from time to time by Company to effectuate those agreements. Please refer to the Agreement for details regarding ordering, shipments, and returns. 10. Images/Recordings/Consents. Health Coach agrees to permit Take Shape For Life to obtain photographs, videos, and other recorded media of Health Coach or Health Coach s likeness. Health Coach acknowledges and agrees to allow any such recorded media to be used by Take Shape For Life or its Affiliates for any lawful purpose, and without compensation. Health Coach agrees that Take Shape For Life may obtain, record, use, hold, transfer, dispose of and otherwise process such personal and business information as may be necessary to enable Take Shape For Life to fulfill its obligations under this Agreement, or which Take Shape For Life determines is expedient to support its business operations and the management of the Program. 11. Personal and Business Data. Health Coach agrees to obtain, record, use, hold, transfer, dispose of and otherwise process personal information about Clients, other Take Shape For Life Health Coach or any other person (however and whomever obtained from) only in accordance with Take Shape For Life s policies relating to the handling of such information. Unless otherwise provided by Take Shape For Life, Health Coach shall (i) only use such personal information for his/her own Take Shape For Life business and for no other purpose(s); (ii) comply with Take Shape For Life s privacy and data security policies as updated from time to time; and (iii) comply with like data security obligations to those imposed on Take Shape For Life under applicable laws in respect of such information. 12. Limitation of Liability. Notwithstanding anything herein to the contrary or any failure of essential purpose, in no event shall a Health Coach, Take Shape For Life or any of its Affiliates be liable to the other party for any special, incidental, indirect, punitive or exemplary, or consequential damages of any kind or nature, however caused, arising out of or related to this agreement or the subject matter hereof (including but not limited to the Medifast products, Take Shape For Life program, Take Shape For Life marketing materials, or Take Shape For Life business supplies), whether such liability is asserted on the basis of contract, tort or other theory of liability (including but not limited to negligence or strict liability), or otherwise, even if Health Coach, Take Shape For Life or any of its related parties have been advised of the possibility of such damages. Health Coach Agreement _HC-TSFL v2 (April 1, 2015)

4 Page 4 of Indemnification. Health Coach agrees to indemnify, defend, and hold harmless Take Shape For Life (together with its Related Parties, agents, other Health Coaches, stockholders, members, employees, directors, officers, and attorneys, collectively Indemnified Parties ) from and against any and all losses or liabilities (including attorneys fees) they may suffer or incur as a result of Health Coach s breach or alleged breach of the Health Coach Agreement, including, without limitation, any terms or conditions of the policies and procedures. Without limitation of the foregoing, Health Coach shall specifically indemnify the Indemnified Parties against any losses or liabilities they may suffer or incur as a result of Health Coach being deemed an employee, agent, or holding any status other than an independent contractor, and Health Coach s tax liabilities. 14. Expiration and Renewal. Health Coach s registration expires on the anniversary date of the applicant s account activation date. To remain a Health Coach, Health Coach must annually acknowledge compliance with Take Shape For Life s Health Coach Agreement and pay the required Renewal Fee. In the event the Health Coach elects automatic renewal, Health Coach agrees to continue to abide by the terms of this Agreement. Failure to renew as a Health Coach will result in the loss of Health Coach s rights as a Health Coach, including, but not limited to, all rights of sponsorship, bonuses and compensation. 15. Termination. Health Coach or Take Shape For Life may terminate this Agreement at any time and for any reason by providing written notice to the other party. Take Shape For Life may also take actions short of termination of the Agreement if Health Coach breaches any of its provisions. In determining what actions to take in the event of breach of the Agreement, Take Shape For Life may consider without limitation the nature and severity of the breach, whether the breach can be or has been cured following notification by Take Shape For Life of the existence of the same, and whether there are multiple simultaneous, serial or repeating breaches. 16. Modification of Terms. The terms of this Agreement may be modified at the discretion of Take Shape For Life. Health Coach acknowledges that any modifications shall take effect upon written publication by Take Shape For Life or at a later date, if any, that Take Shape For Life may specify. The continuation of the Health Coach s Take Shape For Life Health Coach Account or her or his acceptance of bonuses or commissions shall constitute the Health Coach s acceptance of any and all amendments. In the event of a dispute, the most recent Take Shape For Life Health Coach Agreement or Policies and Procedures shall prevail. To the extent of any conflict or inconsistency between this Agreement and the Take Shape For Life Policies and Procedures (in their current form or as subsequently modified), the Policies and Procedures shall supersede and prevail over any term of this Agreement as to the matters addressed herein. 17. Private Statute of Limitations, Jurisdiction and Governing Law. Despite any law or equitable doctrine or authority to contrary, any Claim must be brought within one (1) year from the date the person or entity asserting the Claim first knew, or through the exercise of reasonable diligence should have known, that the Claim existed. The formation, construction, interpretation, and enforceability of the contract with Take Shape For Life as set forth in this Health Coach Agreement and any incorporated documents shall be governed by and interpreted in all respects under the laws of the State of Maryland without regard to conflict of laws provisions. If any provision Health Coach Agreement _HC-TSFL v2 (April 1, 2015)

5 Page 5 of 5 of this Agreement is held to be illegal, unenforceable or invalid in whole or in part, such provision shall be reformed only to the extent necessary to make it enforceable, and the balance of the Agreement will remain in full force and effect. 18. Dispute Resolution. Any claim or dispute between or among Take Shape For Life and Health Coach arising under or relating to the Health Coach Agreement (whether arising in contract, tort or otherwise) that cannot be resolved through negotiation or mediation shall be settled exclusively by confidential, final, binding arbitration before a single arbitrator in Owings Mills, Maryland in accordance with the Federal Arbitration Act and the Commercial Arbitration Rules of the American Arbitration Association. Each party to the arbitration shall be responsible for its own costs and expenses of arbitration, including legal and filing fees. Health Coach acknowledges that she or he has carefully reviewed this Health Coach Agreement, the Policies and Procedures, Income Disclosure Statement, and Integrated Compensation Plan, all of which are included herein by reference and collectively referred to as the Agreement and agrees to abide by all terms set forth in these documents. Appendix: Policies and Procedures Income Disclosure Statement Integrated Compensation Plan Health Coach Agreement _HC-TSFL v2 (April 1, 2015)

6 Official Policies & Procedures Take Shape For Life, Inc. Effective April 1, 2015 Take Shape For Life August 2013 All rights reserved. 1

7 Table of Contents: Official Policies & Procedures Section I: General Policies 1.0 Overview 1.1 Becoming a Health Coach 1.2 Eligibility Requirements 1.3 Health Coach Status 1.4 Professional Conduct 1.5 Health Coach Violations 1.6 Changes in Health Coach Status 1.7 Sale of Health Coach Business 1.8 Renewal Section II: Taxes and Other Legal Issues 2.0 Taxes 2.1 Federal, State and Local 2.2 Laws Insurance Section III: Sponsoring 3.0 Sponsoring Policy 3.1 Becoming a Sponsor 3.2 Role of a Sponsor and Other Responsibilities 3.3 Changes in Sponsorship 3.4 Relationships with Other Health Coaches 3.5 Disciplinary Sanctions 3.6 Cancellation (Termination) of Health Coach Status Section IV: Sales Regulations Regarding Returns and Exchanges Orders 4.2 Placing Orders Section V: Payments 5.0 Compensation and Compliance Fees Section VI: General Provisions 6.0 Notices 6.1 Force Majeure 6.2 Amendments 6.3 Arbitration 6.4 Governing Law 6.5 Venue 6.6 Non-Waiver Provision 6.7 Severability 6.8 Entire Agreement Section VII: Advertising and Promotion 7.0 Introduction Policies & Procedures 7.1 General Advertising and Promotional Guidelines 7.2 Telling Your Story 7.3 Prohibited Coach Advertising Practices 7.4 Permissible Coach Advertising Practices 7.5 Official Company Literature and Materials 7.6 Holding Events and Meetings 7.7 Advertising and Presentations 7.8 Public Relations Opportunities 7.9 General 7.10 Trade Shows, Fairs and Expos 7.11 Telephone and Fax Rules 7.12 Permissible Classified Advertising Take Shape For Life, Inc. All rights reserved. 2

8 Appendix A: Administrative Procedures Appendix B: Intellectual Property Appendix C: Forms Activation Policy Renewal Process Reinstatement Policy Recovery Policy Check Replacement Policy Client Transfer Policies Return Policy Exchange Policy Package Refusal Policy Take Shape For Life / Medifast Intellectual Property Trademark and Advertising Request Form Client Initiated Changes Request Form Media Request Form Press Release Approval Request Form Take Shape For Life, Inc. All rights reserved. 3

9 Section I: General Policies 1.0 OVERVIEW A. Defining the Policies and Procedures Policies and Procedures are the foundation that set and support the high standards that Take Shape For Life, Inc., a Delaware Corporation ( the Company ) expects of itself and its Health Coaches, employees, and products. As an approved Independent Health Coach of Take Shape For Life, Inc., you must understand and comply with the Health Coach Agreement, the Take Shape For Life Policies and Procedures, the Income Disclosure Statement and the Integrated Compensation Plan, and other guidance herein incorporated by reference and that may, from time to time, be announced or modified by the Company. B. Understanding the Policies and Procedures Our Policies are designed to comply with legal requirements and to protect our Coaches. It is very important that you read, understand, and follow them. If you have questions regarding any Policy or Procedure, do not hesitate to seek an answer from your Line of Sponsorship, through Health Coach Services, or through the Compliance Department. C. Policies and Procedures Usage Review this information frequently. It explains and governs the relationship between you the Independent Health Coach and the Company. D. The Agreement The Health Coach Application and Agreement, these Policies and Procedures, and the Integrated Compensation Plan (collectively the Agreement ) explain and govern the relationship between each Health Coach ( Health Coach ) and the Company. Each Health Coach is required to read, understand, and comply with all terms and conditions of the Agreement. E. Subject to Revision The Health Coach Application and Agreement, Policies and Procedures, and Integrated Compensation Plan are each subject to revision by the Company from time to time at its sole discretion. The current form of each such document shall govern all aspects of the relationship between the Company and its Health Coaches. F. Agreement Responsibilities of a Health Coach To remain a Health Coach and to receive any commissions or bonuses, all Terms and Conditions of the Agreement must be adhered to; failure to adhere to the Agreement is cause for disciplinary actions as described in section 3.5 below. 1.1 BECOMING A HEALTH COACH A. Health Coach Definition A Health Coach is one who has: 1. Purchased a Health Coach Kit and 2. Completed the Online Activation Process: i. Read and signed the Health Coach Agreement ii. Completed and submitted an IRS FormW-9 iii. Set up a co-branded website. Completion of the above steps is referred to as Activation, and no commissions or bonuses will be paid until the applicant completes the above steps. An applicant who fails to activate a kit within a year of purchase must re-enroll with the Company through the purchase of a new kit and completion of the above steps. B. Legal and Accurate Information An applicant or Health Coach is prohibited from submitting any inaccurate or falsified information. Submission of falsified information will result in immediate termination of a Health Coach. C. Mailing, Address, and Phone Number Requirement A Health Coach must supply the Company with a valid Mailing, Address, and Phone Number for communication purposes. Health Coach consents to be contacted by the Company regarding their Health Coach account. Message and data rates may apply. D. Company Discretion The Company reserves the right to accept or reject any application. Upon notification of acceptance by the Company, the new Health Coach will be activated in the Company s system of record. Take Shape For Life, Inc. All rights reserved. 4

10 1.2 ELIGIBILITY REQUIREMENTS A. Legal Age Any individual who is of legal age (as defined by the state in which the applicant resides, currently 18 years of age in 49 States and 19 years of age in Alabama) is eligible to become a Health Coach. B. Tax ID Number Each applicant must have a valid Social Security Number or Federal Tax ID Number and is required to submit IRS FormW-9 with this information. C. ID Number The Company will assign a Health Coach Identification Number to each Health Coach entity. The owner of the Health Coach Business (whether individual, partnership, corporation, limited liability corporation, or trust) must match the tax identification number. D. U.S. Resident An applicant must have legal residence in the United States or a US territory and have a valid U.S. Social Security or Tax ID#. E. One Business per Health Coach and per Family Unit A Health Coach may operate or have an ownership interest, legal or equitable, as a sole proprietorship, partner, shareholder, member, trustee, or beneficiary in only one Health Coach Business, unless otherwise approved in writing by the Company. Individuals of the same family unit may not enter into or have an interest in more than one Take Shape For Life business. A family unit is defined as spouses or domestic partners as defined under the State law of the State in which the Health Coach resides. Exceptions to this rule may occur in certain and unique circumstances such as two Independent Health Coaches who marry, or a current coach wishing to purchase an existing Take Shape For Life Executive Director or higher business, or in the case of certain Health Care professionals who wish to operate an independent Take Shape For Life business outside of their employment. In all cases, requests for exemption must be submitted in writing to the Compliance Department for review and approval or rejection. F. Health Professional Health Professional Health Coaches wishing to maintain two separate accounts for the purpose of having one account for Clients who are also patients of their medical practice and one account for non-patient Clients may do so, but only with the prior approval of the Company. In such cases, both accounts must share a common sponsor. G. Married Couples Married couples who wish to become Health Coaches are required to sign the same Health Coach Application as co-applicants. If the spouse of a Health Coach wishes to become a Health Coach, he/she can be added as a co-applicant to the spouse s existing Health Coach Business through completion of the online Co- Applicant update form. H. Business Entities If an existing Health Coach wishes to form a business entity for the purpose of operating his/her coaching business, he/she can register the business name and its corresponding tax ID# with Health Coach services. By submitting the information, all shareholders, members, partners, or trustees of the entity agree to be bound jointly and severally to the terms and conditions of the Agreement. The Company may request that a list of the names of each shareholder, member, partner, or trustee of the entity applicant be submitted to the Company. Field Administration may request documents including, but not limited to, articles of incorporation, charters, operating agreements, certificates of organization, licenses, shareholder agreements, partnership agreements, trust agreements, and other pertinent legal information. Payment of compensation for business entity accounts issued in the name of the business will be withheld until all requested records are received. I. Legal Name The tax reported owner of the Health Coach business (whether individual, partnership, corporation, limited liability corporation, or trust) must match the individual or business entity name on file with the Company. J. Actions of Household Members or Affiliated Individuals A Health Coach is solely responsible for his/her own business. Any actions by a family member or other third party on a Coach s behalf that violate the terms of the Agreement will be considered a violation by the Health Coach, at the sole discretion of the Company. K. Criminal Record/ Incarceration The Health Coach represents and warrants that he/she has never been convicted of a felony. Any misrepresentation related to this subject will result in immediate termination. If a current Health Coach is convicted of a felony, a crime involving moral turpitude, or any other crime or offense that is reasonably likely, in the good faith judgment of the Company, to adversely affect the company, the Take Shape For Life, Inc. All rights reserved. 5

11 Company reserves the right to immediately terminate the Health Coach s business. No Health Coach may be incarcerated either at the time he/she enrolls or at any time during the term of his/her Health Coach Agreement. 1.3 HEALTH COACH STATUS A. Independent Contractors Health Coaches are independent contractors and may not represent themselves as Company employees, agents, or franchisees. The Agreement between the Company and its Health Coaches does not create an employer/employee relationship, agency, partnership, or joint venture between the Company and the Health Coaches. The Health Coach will not be treated as an employee for federal or state tax purposes. B. Contracts and Liabilities Neither the Health Coach nor the Company shall have any right to enter into contracts or commitments in the name of or on behalf of the other. Health Coaches will not incur any debt, expense, or obligation on behalf of or for the Company. Each Health Coach shall hold harmless the Company from any claims, damages, judgments, penalties, civil court costs, refunds, attorney fees, or other liabilities arising out of the Health Coach s business practices and/or verbal and/or written statements concerning the Company s products and opportunity other than those which are expressly contained in writing in official Take Shape For Life materials, including but not limited to: the Business Blueprint, Company Policies and Procedures, Health Coach Agreement, Income Disclosure Statement (IDS), and any promotional or marketing materials supplied directly by the Company. C. Independent Business As an independent contractor, each Health Coach is responsible for his/her own business decisions. Health Coaches are encouraged to set their own hours and operate their businesses in any manner they see fit that is consistent with their obligations under the Agreement. A Health Coach s success depends on his/her skills, personal efforts, business acumen, and/or market conditions. The Company does not guarantee any level of income or success. D. Contact Information All Health Coaches are responsible for communicating any updates or changes to their personal or business information to the Company through submission of a Contact Information Update form, available online. E. Coaching Responsibilities Health Coaches are responsible for the coaching of their Clients. Coaches may share or delegate administrative and Client support duties related to their Health Coach business to employees or other Certified Coaches, as in the case of Health Care Professionals working with other Coaches. The Health Coach remains responsible under Policy 1.2 J for the actions of their employees. This rule does not prohibit co-applicants from supporting commonly held Clients, nor does it prohibit a business leader from supporting Clients within their organization. This rule is drafted to allow multiple ways for individuals to support Clients through delegating part of their responsibilities. F. Health Professional Coaches The Health Professional division is a subset of Health Coaches that includes physicians, chiropractors, nurses, and other individuals who are medically licensed by a state agency. Health Professionals are subject to the same rules, regulations, and policies as all Health Coaches. G. Coaching is Not Medical Care Health Coaching does not involve the practice of medicine. Health Professional Health Coaches provide two distinct services to their Clients. The first is medical care, which is not a part of the Take Shape For Life program. The second is Health Coaching. Health Professionals must differentiate between any medical service they provide to patients and Health Coaching that they provide to Clients. It is strongly advised that Health Professionals inform patients who are prospective Clients that they are financially compensated as a Health Coach. H. Health Coach is Not a Medical Title A Health Coach is not a substitute for a physician or a qualified medical practitioner for monitoring patients using the Medifast program and must not be portrayed as such. 1.4 PROFESSIONAL CONDUCT A. Client Confidentiality The Health Coach agrees to be bound by the highest standards of confidentiality and agrees not to disclose any Client s personal information, including health and financial information. Information regarding a Client s or Health Coach s experience with Company programs cannot be revealed without their Take Shape For Life, Inc. All rights reserved. 6

12 written permission; this includes use of personal testimonials. B. Expected Health Coach Conduct The Health Coach shall safeguard and promote the reputation of the Company, its parent and affiliate companies, its products, and its promotional materials. The Health Coach shall refrain from all conduct that might be harmful to the reputation of the Company, its parent and affiliate companies, fellow Health Coaches, the industry, or the marketing of Company products and programs. The Health Coach shall avoid and refrain from all discourteous, deceptive, misleading, unethical, unlawful, and immoral practices or representations. C. Upholding Company Image Coaches shall not disparage the Company, its parent and affiliate companies, other distribution channels of the Company, other Health Coaches, the Integrated Compensation Plan, or the products, programs, policies or procedures, owners, officers, directors, or employees of the Company or its parent and affiliate companies. D. Working with Your Organization Health Coaches routinely provide important information about our products and programs to Clients. They often serve as the first contact with a Client for various other issues, including shipment and quality questions. The Company reserves the right to request and enlist the aid of the Health Coach in dealing with and resolving Field and or Client issues. E. Health Coach Support Duties Health Coaches support, mentor, and encourage their Clients. They guide Clients through the process of using Medifast products and programs as tools to help change their behaviors and their lives. F. Accurate Accounts Health Coaches must ensure that each Client has one account featuring their personal information, including both contact and billing information. Health Coaches may not substitute their own information for that of their Clients. While a Health Coach is often the primary contact Clients have with Medifast products and programs, the Company requires accurate account information for business purposes. 1.5 HEALTH COACH VIOLATIONS A. Reporting Violations Health Coaches who violate the Policies and Procedures endanger not only their own business, but also the businesses of other Coaches and the Company. It is the responsibility of each Health Coach to promptly report violations of these Policies by any Health Coach directly to the Company. B. Company Efforts The Company monitors the activities of its Health Coaches to ensure that they comply with all Policies and Procedures. This may include, but is not limited to, having company personnel monitor Client acquisition, business opportunity meetings, events, training sessions, and Health Coach Internet and advertising activities. C. Violation Consequences Violations of the Agreement, Policies and Procedures, Marketing Guidelines, and other official Company Policies can result in disciplinary action, probation, censure, suspension, or termination of the Health Coach Business. (See Section 3.5 Disciplinary Sanctions). 1.6 CHANGES IN HEALTH COACH STATUS A. Addition or Deletion of Co-Health Coaches, Partners, and Shareholders All requests to add or delete owners of a Health Coach Business must be approved by all parties in a writing that must be submitted to the Company. A new Health Coach Agreement must also be submitted with signatures of all partners or shareholders. Addition and deletion of co-applicants is not an alternate method for changing the ownership of a Health Coach business, which can be found in Section 1.7. Co-applicants must fulfill all of the requirements necessary to become a Health Coach, and the Company reserves the right in its sole and absolute discretion to approve or disapprove any proposed admission of co- Health Coaches, partners, or shareholders. Coaches remaining with a Health Coach Business shall be responsible for all the acts or omissions of those who have left the Health Coach Business for a period of six (6) months after the date of the deletion of the Co-Health Coach, Partner, or Shareholder. B. Death Upon the death of a Health Coach, the rights and responsibilities of the Health Coach Business remain Take Shape For Life, Inc. All rights reserved. 7

13 with the spouse, if said spouse is a partner in the business. If a spouse does not exist, the rights and responsibilities are passed on to the rightful heir(s), trustee(s), guardian(s) or conservator(s). The heir(s), trustee(s), guardian(s) or conservator(s) shall be required to contact the company in writing and shall be bound by the terms and conditions of the agreement. To effect a testamentary transfer of a Take Shape For Life business upon the death of a Health Coach, the successor must provide the following to Take Shape For Life: (a) a death certificate; (b) a certified copy of the will or other instrument establishing the successor s right to the business; and (c) a completed and executed Health Coach Application and Agreement. To effect a transfer of a Take Shape For Life business because of incapacity, the successor must provide the following to Take Shape For Life: (a) a notarized copy of an appointment as trustee, guardian or conservator; (b) a certified copy of the trust document or other documentation establishing the successor s right to administer the incapacitated Health Coach s business; and (c) a completed and signed W-9 form. If there is more than one successor, they must form a business entity and acquire a federal taxpayer identification number. Take Shape For Life will issue all such checks and one IRS Form 1099 to the entity. C. Incapacity To effect a transfer of a Take Shape For Life business because of incapacity, the successor must agree to abide by all terms and conditions in the agreement provide the following to Take Shape For Life: (a) a notarized copy of an appointment as trustee, guardian or conservator; (b) a certified copy of the trust document or other documentation establishing the successor s right to administer the incapacitated Health Coach s business; and (c) a completed compensation form, signed W- 9 form a Health Coach Business transferred pursuant to this section will be paid in a single check jointly to the successors. Such individuals must provide Take Shape For Life with an address of record to which all compensation checks will be sent. If there is more than one successor, they must form a business entity and acquire a federal taxpayer identification number. Take Shape For Life will issue all such checks and one IRS Form 1099 to the entity. D. Divorce Upon divorce, the Company must be notified in writing as to which former spouse will assume ownership of the Health Coach Business as determined by the parties or by a court of competent jurisdiction. A change in the ownership of the Health Coach Business will not take place until the Company receives a copy of the divorce documentation, accompanied by letter detailing ownership assumption, signed by both parties. Should the party who does not assume ownership of the Health Coach Business desire to remain a Health Coach, he/she may do so by purchasing a Health Coach enrollment kit under the sponsor of his/her choosing. Under no circumstances will the Organization of divorcing spouses be divided. Similarly, under no circumstances will Take Shape For Life split commission and bonus checks between divorcing spouses. Take Shape For Life will recognize only one Organization and will issue only one compensation payment per Take Shape For Life business per commission cycle. Compensation shall always be issued to the same individual or entity. In the event that parties to divorce are unable to resolve a dispute over the disposition of earnings and ownership of the business, the Health Coach Agreement shall be involuntarily canceled. If there is agreement to ownership assumption prior to the Final Divorce, the company must be notified via formal written request signed by both parties. The spouse not assuming the Health Coach business may enroll as a new Health Coach immediately under the sponsor of choice. During the Pendency of Divorce: While waiting for divorce finalization, the parties must adopt one of the following methods of operation: o If one of the parties is willing to relinquish his/her right and interest in the Health Coach business, thereby leaving his/her spouse to manage the business, he/she may do so by executing an assignment of such interest to the spouse by notifying the Company in writing. o If both spouses in a divorce situation agree that, despite their domestic difficulties, they can continue to operate the Health Coach business jointly on a business-as-usual basis during the pendency of the divorce action, they may do so. In such case, all compensation will continue to be paid in the joint names of the Health Coaches involved. E. Spousal Separation If two married Health Coaches, sharing one business, undergo legal separation a legal written agreement whereby a husband and wife live apart from each other while remaining married, either by mutual consent or by judicial decree then the couple may delegate the ownership of the business through their own discretion. A change in ownership of the Health Coach Business will not take place until the Company receives a formal written request in the form of a letter detailing ownership assumption signed by both parties. The spouse not assuming the Health Coach business may enroll as a new Health Coach immediately by purchasing a Health Coach Enrollment pack under the sponsor of choice. Under no circumstances will the Organization of separated spouses be divided. Similarly, under no circumstances will Take Shape For Life split compensation between separated spouses. Take Shape For Life will recognize only one Organization and will issue only one Take Shape For Life, Inc. All rights reserved. 8

14 compensation payment per Health Coach business per commission cycle. In the event that the separated parties are unable to resolve a dispute over the disposition of commissions and ownership of the business, the Health Coach business shall be involuntarily canceled. In the case of reconciliation, the second Health Coach business must be collapsed. F. Marriage If two existing Health Coaches marry, they may maintain their separate Health Coach Businesses or may opt to merge the two businesses if one Health Coach spouse is personally sponsored by the other Health Coach spouse. G. Dissolution of Entity Health Coach Business Upon the dissolution of a corporation, limited liability company, partnership, or trust which owns the Health Coach Business, the ownership of the Health Coach Business will be transferred pursuant to the agreement among the shareholders, members, partners, or trustees or upon order of a court of competent jurisdiction upon written notification to the Company. If one or more of the partners, members, trustees, or shareholders in a Health Coach Business terminates his/her ongoing relationship with the Company by leaving the partnership or disposing of his/her share holdings, such parties, including the departing party, shall continue to be bound by the terms of Section 3.4 (Relationships with other Health Coaches). If a dispute arises over the disposition of the partnership interest from the Health Coach Business, the Company may suspend the Health Coach Business and hold all commissions and bonuses until a court of competent jurisdiction resolves the dispute. Under no circumstances will the Organization of a dissolving business entity be divided. Similarly, under no circumstances will Take Shape For Life split compensation between members of dissolving entities. Take Shape For Life will recognize only one Organization and will issue per Take Shape For Life business per commission cycle. Commission and bonus payment shall always be issued to the same individual or entity. In the event that parties to a dissolution proceeding are unable to resolve a dispute over the disposition of commissions and ownership of the business within 60 days of the dissolution, the Health Coach Agreement shall be involuntarily canceled. H. Mergers Although discouraged, mergers may be permitted only between a sponsor and his/her personally sponsored Health Coaches. Any proposed merger must be submitted in writing to the Company with appropriate signatures from all parties agreeing to the change. A new Health Coach Agreement must also be submitted with signatures of all partners or shareholders. The original Health Coach(s) must remain as a party to the new Health Coach Agreement. The Company reserves the right in its sole and absolute discretion to approve or disapprove any proposed merger of co-health Coaches, partners, or shareholders. I. Name and Business-Type Changes A Health Coach may change the operating name of the Health Coach Business or change the form of ownership of the business (e.g., from an individual proprietorship to a business entity owned by the Health Coach(es) by forwarding written notification and a properly completed Health Coach Business Type Change form, with an accompanying IRS FormW-9 and Agreement to the Company. The Company reserves the right to request the Articles of Incorporation of a corporation or Partnership Agreement of a partnership, or any amendments pertaining thereto, as well as any other corporate or partnership documentation relating to ownership or control. J. Dissolution of Entity Health Coach Business Upon the dissolution of a corporation, limited liability company, partnership, or trust that owns the Health Coach Business, the ownership of the Health Coach Business will be transferred pursuant to the agreement among the shareholders, members, partners, or trustees or upon order of a court of competent jurisdiction upon written notification to the Company. Under no circumstances will the Organization of a dissolving business entity or any compensation derived from it be divided. In the event that parties to a dissolution proceeding are unable to resolve a dispute over the disposition of commissions and ownership of the business within 60 days of the dissolution, the Health Coach Agreement shall be involuntarily canceled. K. Six-Month Inactivity A Health Coach whose Health Coach business is cancelled for non-disciplinary reasons may register as a new Health Coach under a new Sponsor six months from the date of termination and not before. The Health Coach may re-register under his/her former sponsor at any time. Coaches may not promote Company programs, earn compensation, or attend events or trainings during the six-month waiting period. A Health Coach who has been previously terminated for disciplinary actions is no longer eligible to be a Health Coach. Take Shape For Life, Inc. All rights reserved. 9

15 1.7 SALE OF HEALTH COACH BUSINESS A. A Health Coach Business or any rights direct or indirect, relating to a Health Coach Business may not be sold or otherwise transferred by the Health Coach without prior written approval from the Company, in its sole and absolute discretion. B. Only Health Coach businesses that have performed at or above the rank of Executive Director are candidates for sale. A Health Coach business that has not performed at or above the rank of Executive Director 6 out of the 12 prior months may not be sold. C. A Health Coach may not sell his/her business within the first twelve (12) months he/she is a Health Coach. D. No sale will be approved unless it includes a covenant by the seller not to solicit his/her prior organization of Health Coaches and Clients or for that matter, any Health Coach and Clients in any organization involved with Take Shape For Life. E. In the Take Shape For Life organization the only Health Coaches eligible to purchase a Health Coach business are those who have qualified at or above the rank of Executive Director 6 out of the previous 12 months. Referred to as Qualified Executive Director or higher. F. A Health Coach Business or any right thereto that is under suspension, on probation or subject to disciplinary action or any investigation by or on behalf of the Company, may not be sold or otherwise transferred while such conditions continue, unless otherwise approved by the Company. G. The right of first priority is reserved for Health Coaches in the Take Shape For Life organization. 1. The sale of the Health Coach Business must first be offered to the Health Coach in the line of sponsorship who is at or above the same qualifying rank, up to Global Director. 2. If that Health Coach declines the offer, the sale must be offered second to all other Health Coaches at or above the same qualifying rank in the line of sponsorship, up to the Company. 3. If those Health Coaches decline the offer, the sale must then be offered to any Health Coaches in the seller s organization, at or above the same qualifying rank as the seller. 4. If those Health Coaches decline the offer, the sale may then be offered to a Health Coach at or above the same rank as the seller in a separate line of sponsorship. H. In the event that no Health Coach buyer can be found in the Take Shape For Life organization, the sale of the Health Coach business may then be offered to a person outside of the organization. The sale to persons outside of the Company s field organization is subject to the Company s right of approval or disapproval, in its sole and absolute discretion. The Company must first receive the proposed Purchase and Sale Agreement, including terms of payment, a Health Coach Application, and proof of purchase of a Health Coach Enrollment Pak, for the Purchaser of the Health Coach Business, as well as such further information and documentation as the Company shall require to evaluate the purchaser, terms of sale, and such other matters which the Company shall deem relevant or necessary for the exercise of its right of approval or disapproval. I. The Terms and Conditions of the sale must be identical for all offers. The Company also reserves the right to stipulate additional Terms and Conditions prior to the approval of any proposed sale and ultimately the Company reserves the right to reject any sale. Approval will not be unreasonably withheld. J. The purchased Health Coach business will be operated as a second business and remain in its current position in the line of sponsorship, if the purchaser is already a Health Coach with Take Shape For Life. Health Coaches cannot purchase other Health Coach businesses to enable them to advance in the compensation plan. K. In any sale of a Health Coach Business, the Purchase and Sale Agreement must include a provision in which the parties agree upon the ownership of the inventory (tools, sales aids, etc.) of the Health Coach Business. Upon the sale the Company shall not repurchase inventory from a person who sold his/her interest in a Health Coach Business. Take Shape For Life, Inc. All rights reserved. 10

16 L. The seller may not reapply or purchase another Company Health Coach Business for a period of six (6) months, either as an individual, partnership or corporation, with the exception of policy 1.7.L1 (below). 1. If the sale is the result of a divorce, dissolution or separation, the seller may reapply to become a Health Coach immediately following the sale, pending Company approval (See Section 1.6 D for details). M. The purchaser of a Health Coach Business shall be responsible for all acts or omissions of the seller in contravention of the agreement for a period of six (6) months after the date of the sale or transfer. 1.8 RENEWAL A. Renewal Health Coach Businesses must be renewed every 12 months from the date of activation. Health Coaches will be notified at the last address on file of any upcoming renewal prior to the renewal date. The renewal fee is subject to change by the Company. For complete details on the renewal process, see the Appendix A. B. Failure to Renew Failure of a Health Coach to renew constitutes voluntary cancellation of the Health Coach Business. No notice of intent to cancel need be given by either the Health Coach or the Company. Clients and personally sponsored Health Coaches of cancelled accounts will roll up to the sponsor. Section II: Taxes and Other Legal Issues 2.0 TAXES A. Payment of Taxes All Health Coaches are personally responsible for all taxes due on any income earned. The Company will provide a record of all moneys paid to each Health Coach and will issue and file such reports as may be required by law. Every year, the Company will provide an IRS Form1099MISC (Non-employee Compensation) earnings statement to each U.S. resident Health Coach who has earnings of $600 or more in the previous calendar year. B. Tax Exempt Status If a Coach s Take Shape For Life business is tax exempt, the Federal tax identification number must be provided to the Company along with the tax exemption certificate. C. Sales Tax The Company will charge appropriate local sales tax on all orders subject to sales tax and submit it to the necessary government bodies. 2.1 FEDERAL, STATE, and LOCAL LAWS A. Compliance with Federal, State, County, and Local Laws Each Health Coach is responsible for compliance with all federal, state, county, and local regulations, ordinances, and laws. B. Compliance Department Notification There are many laws regulating home-based businesses. If a Health Coach becomes aware that a law, ordinance, or regulation applies to his/her Health Coach business, the Health Coach may submit a copy of the law, ordinance, or regulation to the Compliance department for review. C. Endorsements Federal and state regulatory agencies do not approve or endorse any home-based business or Compensation Plans or programs. Health Coaches may not represent that the Company Compensation Plan or business model has been approved or endorsed by any governmental agency. 2.2 INSURANCE A. Product Liability The Company carries product liability insurance for those products that are faulty or otherwise subject to recall. This coverage does not include the actions of Health Coaches in promoting the products, programs, or business opportunity. B. Business Pursuits Coverage The Company recommends but does not require that Health Coaches secure additional liability insurance to cover any business exposure for which they may be liable in the independent marketing of any product. Take Shape For Life, Inc. All rights reserved. 11

17 C. Travel Liability: Assumption of Risk A Health Coach understands and accepts any and all travel-related risks in regard to their business. Health Coaches are encouraged to secure travel insurance as related to their business. D. Other Insurance The Company does not provide health insurance, event insurance, professional liability insurance, malpractice insurance, or any other type of insurance to Health Coaches. Section III: Sponsoring 3.0 SPONSORING POLICY A. Business Opportunity Health Coaches have the opportunity to grow their businesses beyond acquiring and supporting Clients by building an Organization of Health Coaches. To do so, Health Coaches can sponsor other individuals as Health Coaches and, if desired, help them do the same. B. Business Opportunity is Available at the Company s Discretion Sponsorship opportunities are available to all Health Coaches. The Company reserves the right to decline a sponsorship arrangement at the Company s sole discretion. 3.1 BECOMING A SPONSOR A. United States Residency Required Health Coaches may sponsor individuals or legal entities who are residents of the United States and its Territories and Commonwealths. No international sponsoring is permitted at this time. B. Compensation The Company compensates a Health Coach through its compensation plan ( Integrated Compensation Plan ). Health Coaches are compensated for the training, coaching, and business leadership services they provide to Clients, personally sponsored Health Coaches, and other Health Coaches in their Organization. Compensation is determined proportionally based on sales of products to end-user consumers within the Health Coach s organization. Similarly, Health Professionals are compensated for helping Clients comply with the guidelines of the Medifast weight-loss and weight-maintenance programs and for the business leadership services and training they provide to Clients, personally sponsored Health Coaches, and other Health Coaches in their organization. Compensation is determined proportionally based on sales of products to end-user consumers within the Health Professionals organization. Sponsoring new Health Coaches leverages and expands a Health Coach s business and provides additional persons marketing the Company s products to Clients. No compensation is paid based upon the recruitment of Health Coaches. C. The Sponsor Relationship Every Health Coach must have a sponsor, and potential Coaches have the right to choose their own Sponsor. The Company strongly encourages potential Health Coaches to register under the person who introduced them to the business. Health Coaches must appropriately counsel prospects on the consequences of Sponsor selection and the relationship that it creates. Sponsors must not be selected without appropriate consideration and thought, as Sponsorship, once established, cannot be changed except in rare circumstances. D. Sponsoring Health Professionals Health Professional Health Coaches and Certified Health Coaches who have achieved the rank of Executive Director or higher may sponsor Health Professionals. All other Health Coaches may sponsor a Health Professional only if they are Certified and already personally acquainted with the Health Professional. E. Promises to Provide Clients Health Coaches share their experiences and the Take Shape For Life program with people and acquire Clients through their individual efforts. Health Coaches may not offer prospective Coaches leads or Clients or indicate that they will receive Clients in any way other than as a result of the Prospective Coaches own efforts. Health Coaches may not advertise or offer any programs that promise to Take Shape For Life, Inc. All rights reserved. 12

18 provide new Coaches with leads or Clients. Violation of this rule will result in sanction, up to and including termination of your Health Coach account. F. Sales of Leads are Prohibited Health Coaches earn compensation through Coaching Clients, mentoring Coaches, and acting as a business leader. A Health Coach is permitted to provide another Health Coach with a potential Client but cannot do so in exchange for any payment, compensation, or reward. G. Company-Appointed Sponsors Anyone interested in becoming a Health Coach but who does not have a specific Sponsor will have one appointed by the Company. These individuals will be distributed as Business Leads to qualified sponsors at the Company s discretion. H. Income Claims and Hypotheticals Take Shape For Life makes no claims or guarantees regarding income. Health Coaches may not make any false or misleading income projections to prospective Health Coaches. A Health Coach, when presenting or discussing the Take Shape For Life opportunity and Integrated Compensation Plan to a prospective Health Coach, may not make income projections or income claims nor disclose his/her Take Shape For Life income (including the showing of checks, electronic statements, copies of checks, bank statements, or tax records) without also providing a current TSFL Income Disclosure Statement (IDS). Hypothetical income examples that are used to explain the operation of the Integrated Compensation Plan, and which are based solely on mathematical projections, may be made to prospective Health Coaches, so long as the Health Coach makes clear to the prospect that these are hypothetical examples and provides the Income Disclosure Statement (IDS) to the prospect. I. Practices for Growing Your Business No Health Coach shall engage in any deceptive, unlawful, or unethical consumer or recruiting practices. Each Health Coach shall ensure that no statements, promises, or testimonies are made that are likely to mislead Clients or prospective sales representatives. Primary emphasis must be the quality and value of the Company s products, programs, and certification and not on recruiting for the sake of recruiting. J. Income Disclosure Statement The Company has developed the TSFL Income Disclosure Statement (IDS). To convey truthful, timely, and comprehensive information regarding the income that TSFL Health Coaches have earned. The IDS is not a projection of what may be earned in the future; it is a report of what has been earned in the past and must be conveyed as such. 1. A copy of the IDS must be made available to any prospective Health Coach any time the Integrated Compensation Plan is presented or discussed or any type of income claim or earnings representation is made. i. The terms income claim and/or earnings representation (collectively income claim ) include: (1) statements of average earnings, (2) statements of actual earnings, (3) statements of nonaverage or non-actual earnings (projected earnings), (4) statements of earnings ranges, (5) income testimonials, (6) lifestyle claims, and (7) hypothetical claims. ii. A lifestyle income claim typically includes statements (or pictures) involving large homes, luxury cars, exotic vacations, or other items suggesting or implying wealth. They also consist of references to the achievement of one s dreams or having everything one always wanted and are phrased in terms of opportunity or possibility or chance. Claims such as My TSFL income exceeded my salary after six months in the business, or Our TSFL business has allowed my wife to come home and be a full-time mom also fall within the purview of lifestyle claims. 2. In any meeting that is open to the public in which the Integrated Compensation Plan is discussed or any type of income claims are made, there must be a 3-foot x 5-foot or larger copy of the current IDS on display in the front of the room in reasonable proximity to the presenter(s). Alternatively, a Health Coach may provide all attendees with a copy of the current TSFL Income Disclosure Statement (IDS). 3. In any meeting in which any type of video display is used (e.g., monitor, television, projector, etc.), a slide of the IDS must be displayed continuously throughout the duration of any discussion of the Integrated Compensation Plan or the making of an income claim. Alternatively, a Health Coach may provide all attendees with a copy of the current TSFL Income Disclosure Statement (IDS). 4. Health Coaches must provide access to the most current version of the Integrated Compensation Plan and IDS to the individuals whom they are sponsoring before the applicant enrolls as a Health Coach. 5. Copies of the IDS may be printed or downloaded without charge from the corporate website or Document Library in Office in Motion. Take Shape For Life, Inc. All rights reserved. 13

19 3.2 ROLE OF A SPONSOR AND OTHER RESPONSIBILITIES A. Health Coach Business Responsibilities Sponsoring Health Coaches must use their best efforts to provide, on an ongoing basis, bona fide mentoring and training of sponsored Health Coaches and the Health Coaches within their organization. These obligations include acquiring and supporting Clients who purchase the Company s product and training and/or mentoring those individuals sponsored as Health Coaches. Health Coaches must maintain ongoing contact, communication, and mentoring with their organization. Examples of such mentoring may include, but are not limited to: 1. Providing ongoing contact, communication, encouragement, and support of personally sponsored Health Coaches and those within his/her Organization 2. Product, program, and Coaching training 3. Encouragement and support 4. Written correspondence 5. Personal and/or virtual meetings 6. Telephone contact, voic , electronic mail 7. Accompanying individuals to the Company and/or field training sessions and meetings 8. Assisting Health Coaches to set goals and create business strategies, etc. B. Upholding the Company s Name A Health Coach shall use his/her best efforts at all times to promote the Company s business, protect and promote the Company s good name and image, promote the sale of the Company s products for end-user consumption, and assist sponsored Health Coaches in their business activities. If, in the opinion of the Company, the Health Coach is not using such best effort, the Company may, in its sole discretion, discontinue paying the Health Coach bonuses, move sponsored Health Coaches or other Health Coaches in his/her Organization, or otherwise discipline the Health Coach, up to and including suspension or termination. C. Leadership Ethics As relationship marketing involves trust and mutual respect, a Health Coach, particularly one in a leadership capacity, is not permitted to use his/her influence within the organization for personal or financial gain at the expense of other Health Coaches. Health Coaches may not manipulate enrollments of new Health Coaches or manipulate the purchases of products. D. Inventory Loading or Front-End Loading is Prohibited Health Coaches are not required to carry any inventory of promotional materials or products. Sponsoring Health Coaches shall not encourage other Health Coaches to make excessive or unnecessary product purchases. E. Recordkeeping Health Coaches shall maintain records indicating they have fulfilled their Sponsor responsibilities. The Company has the right to audit these records at any mutually convenient time to verify compliance. F. Submitting Orders and Agreements Any Health Coach Applications and Agreements and product orders must be sent to the Company within 72 hours from the time they are signed by an applicant or placed by a Client, respectively. G. International The Company confines the promotion of its products and the presentation of the business opportunity to prospective Clients and Health Coaches located in the United States and U.S. territories. Health Coaches are authorized to promote Company products, conduct events or trainings, and enroll Clients or Health Coaches only in the United States and U.S. territories. Company products cannot be shipped into or sold in any other country. 3.3 CHANGES IN SPONSORSHIP A. Requests to Change Sponsors or Lines of Sponsorship Take Shape For Life is a business built upon the creation of relationships with Clients and other Health Coaches. Once a Health Coach is sponsored, the Company will protect that relationship to the fullest extent possible. Therefore, changing Lines of Sponsorship will not be allowed, except in extraordinary circumstances. Any request for change of sponsor must be submitted to the Company in the form of a signed written document. Take Shape For Life, Inc. All rights reserved. 14

20 When, in its sole discretion, the Company grants a transfer of sponsorship, it is deemed a one-time-only action on behalf of the Health Coach changing Sponsors. As completing transfer requests requires additional administrative effort and expense, the Company assigns a fee of $50 for all transfers. All requests to change Sponsors must come directly from the Coach seeking to be moved. If action is required from a Health Coach in the line of sponsorship, and he/she does not reply or comment on the requested sponsor change by the date specified in the written request, his/her position on the matter will be considered as agreement by omission. B. Transfers Before Activation or within Thirty (30) Days of Activation 1. Regardless of rank or situation, these changes are granted only if a Health Coach was assigned to a Sponsor in error or if the current Sponsor is not fulfilling his/her responsibilities under the Sponsorship Agreement, the Health Coach Agreement, or the Policies. 2. Assignment errors will be validated and corrected administratively upon written request from the Health Coach seeking to move. In order for the assignment to be considered an error, the Coach must have been assigned to the wrong sponsor through a systems error that can be verified through Company files or with verification of the error from the Health Coach s current sponsor. All other changes require review by the Company Policy Committee. 3. In no way should the 30-day transfer request be interpreted by a newly sponsored Health Coach as an opportunity to shop around within his/her first 30 days for a different sponsor, especially if his/her original sponsor is reasonably fulfilling the role of sponsor. C. Requests Made More Than Thirty (30) Days After Activation 1. Individual transfers without group (ranks below Executive Director) may be made if: i. A clear, documented, and compelling reason for the transfer is provided and is signed by all owners of the Health Coach Account wishing to be transferred ii. Signatures agreeing to the change are submitted by (1) the current Sponsor of the requesting party and (2) all active Health Coaches in the Line of Sponsorship up to and including the first qualified Executive Director iii. There is agreement in writing from the accepting Sponsor and his/her qualified up-line Executive Director that they will accept the transferee and assume the appropriate responsibilities iv. There is a final approval granted by the Company. 2. Individual transfers without group (Executive Directors and above) may be made if: i. #i-iv, above, are completed ii. Signatures agreeing to the change are submitted by all qualified Executive Directors and higher in the current line of Sponsorship through five generations of qualified Executive Directors, up to and including the first qualified Presidential Director iii. There is agreement in writing from the first qualified Global Director in the new line of Sponsorship that he/she will accept the transferee and assume the appropriate responsibilities. D. Other Transfer Requests All other transfer requests, including those involving the transfer of more than one Coach, will be reviewed on a case-by-case basis and may be granted in exceptional circumstances at the Company s sole discretion. E. Company-Initiated Transfers In certain rare and extenuating circumstances and at the sole discretion of Take Shape For Life, the Company reserves the right to transfer individual or groups if it deems it is in the best interest of the individuals and the Company at large. 3.4 RELATIONSHIPS WITH OTHER HEALTH COACHES A. Conflicts of Interest Health Coaches may participate in other business ventures or marketing opportunities, including direct sales, relationship marketing, multilevel, or network marketing ( other opportunities ) under the following conditions: 1. Competing business solicitation Active Health Coaches or anyone who has been a Health Coach within the last six months may recruit only personally sponsored Health Coaches for any other opportunities. Recruit means actual or attempted solicitation, enrollment, encouragement, or effort to induce in any other way, either directly or indirectly, another Health Coach to enroll or participate in any other opportunity, even if the Health Coach is responding to an inquiry. For purposes of this policy and Take Shape For Life, Inc. All rights reserved. 15

21 the Cross-Selling policy below, a Health Coach assigned to another Health Coach by the Company does not qualify as a personally sponsored Health Coach. 2. Cross-selling Health Coaches are prohibited from selling or promoting any other products or services to individuals who are not personally sponsored by the Health Coach. Health Coaches must not sell, or attempt to sell, any competing non-take Shape For Life or Medifast products. Any product in the same generic category as a Take Shape For Life product is deemed to be competing (e.g., any weight-loss product). Health Coaches cannot use the information contained on their genealogy reports to sell, or attempt to sell, other products and services. (See Section 5.0.J). 3. Tools In the event that a Health Coach develops a marketing tool or collateral piece that is otherwise unavailable, the Health Coach shall submit the piece to the Company for approval prior to use. Health Coaches may not sell marketing tools, collateral pieces, training materials, or any other item peripheral to Take Shape For Life. To the extent that a Coach wishes to pass along a shared cost, such as the cost of renting a room for a training event, he/she is limited to recouping the expenditure only. 4. Display of Company and opportunity Health Coaches may not display Company products with any other products or services in a fashion that might in any way confuse or mislead a prospective Client or Health Coach into believing that there is a relationship between the Company and the non-take Shape For Life products or services. Health Coaches may not offer the Take Shape For Life opportunity or products and services to prospective or existing Clients or Health Coaches in conjunction with any non-take Shape For Life program, opportunity, product, or service. Health Coaches may not offer any non-take Shape For Life opportunity, product, or service at any Take Shape For Life-related meeting, seminar, or convention. Nor may they offer Take Shape For Life products or services in tandem with any other products or services at any time. This policy will not prevent a Health Coach from participating in health and wellness fairs and other similar events where other vendors are presenting their products and services. 5. Cross-line sponsoring Actual or attempted cross-lines sponsoring is strictly prohibited. Cross-line sponsoring is defined as the solicitation or enrollment of an individual or entity who is a pending Health Coach, current a Health Coach, or a Health Coach within the preceding six calendar months, within a different line of sponsorship. The use of a spouse s or relative s name, trade names, Doing Business As (DBA), assumed names, corporations, partnerships, limited liability companies, trusts, federal ID numbers, or fictitious ID numbers to circumvent this policy is prohibited. 6. Solicitation of other Health Coaches Clients Solicitation of another Health Coach s Clients is strictly prohibited. Solicitation of existing Clients undermines the integrity of the field organization. Clients may request a change of Health Coach assignment by submitting a written request directly to The Company. i. Requests for a change of Health Coach assignment must be made by the Client. If an order appears on the Client s account prior to the request for change, that order will be credited to the original sponsor for that volume period. All subsequent orders will be credited to the new Coach upon transfer. ii. The Company will not accept Client transfers initiated by any Health Coach who is not the current Sponsor of the Client. 7. Coach initiated Client transfers Health Coaches may request transfers of their frontline Clients to Health Coaches in their organization, if a Client Sponsor Change form is completed and submitted to Take Shape For Life. This form is available electronically in the Resources section of Office in Motion. i. Any such transfer may be approved at the discretion of the Company. ii. Change of assignment will be effective from the date the request is granted. Any volume or orders placed by the Client prior to transfer will remain with the original Health Coach for that monthly bonus period. iii. Any transfer must be in the best interest of the Client. The Company reserves the right to deny transfer requests that appears to be for purposes of financial gain or that will have impact on the Compensation and rank of the Coaches involved. 9. Solicitations for Charitable Giving Health Coaches may solicit for donations to charities and/or philanthropic organizations among their personally sponsored Health Coaches, only. Health Coaches are prohibited from using their genealogy for solicitation purposes. Take Shape For Life, Inc. All rights reserved. 16

22 3.5 DISCIPLINARY SANCTIONS A. Potential Disciplinary Sanctions The Company reserves the right to impose any of the following listed disciplinary sanctions upon any Health Coach when it is determined that the Health Coach has violated any provision of the Health Coach Agreement including the provisions of these Policies and Procedures as they may be amended from time to time or has engaged in any illegal, fraudulent, deceptive, or unethical business conduct. The Company, at its discretion, may impose any one or more of the following listed corrective measures (disciplinary sanctions): Issuance of a written warning Requirement of the Health Coach to take immediate corrective action; Restriction of Office in Motion (online business management tool) access for a period of time Imposition of a fine, which may be withheld from bonus and commission checks Loss of rights to one or more bonus and commission checks Withholding of all or part of any bonuses and commissions during the investigation period (If a Health Coach s Agreement is cancelled for disciplinary reason, the Health Coach will not be entitled to recover any commissions or bonuses withheld during the investigation period.) Suspension of the Health Coach business with loss of earnings Reassignment of Clients or Coaches to another Health Coach Termination of the Health Coach s business Equitable resolution by any other measure the Company deems appropriate to resolve the injuries caused by the Health Coach s policy violation or contractual breach Institution of legal proceedings for monetary and/or equitable relief. B. Notification of Disciplinary Sanctions Upon imposition of a disciplinary sanction(s), the Company shall immediately notify the Health Coach by electronic and certified mail. The Company will also notify the Health Coach s Sponsor, first qualified Executive Director, and first qualified Global Director. Health Coaches terminated for disciplinary reasons may not reapply to be a Health Coach. C. Ability to Appeal Disciplinary Sanctions The Health Coach will have 15 days from the date of the mailing of the certified letter in which to appeal the disciplinary sanction(s) in writing. The Company must receive the Health Coach s appeal correspondence within 20 days of the Company s letter. If the appeal is not received within the 20- day period, the disciplinary sanction(s) will be automatically deemed final. D. Policy Committee Review of Appeal If a Health Coach files a timely appeal of the disciplinary sanction(s), the Company s Policy Committee will review and reconsider the disciplinary sanction(s), consider any other appropriate action, and notify the Health Coach, the Health Coach s Sponsor, first qualified Executive Director, and first qualified Global Director of its decision. The decision of the Policy Committee will be final and subject to no further review. In the event a termination or suspension is not rescinded, the termination or suspension will be effective as of the date of the Company s original notice. 3.6 CANCELLATION (TERMINATION) OF HEALTH COACH STATUS A. The Business Organization of a Cancelled or Terminated Health Coach If a Health Coach leaves the Company for any reason (non-renewal, resignation, termination, etc.), all personally sponsored Health Coaches and Clients will move to the next Heath Coach in succession in the Line of Sponsorship. B. Effect of Cancellation A Health Coach s bonuses and commissions constitute the entire consideration for the Health Coach s efforts in generating orders and all activities related to generating orders (including building an Organization). Following a Health Coach s voluntary or involuntary cancellation of his/her Health Coach Agreement, the former Health Coach shall have no right, title, claim, or interest to the Organization he/she operated nor any commission or bonus from the orders generated by that organization. A Health Coach whose business is canceled will lose all rights as a Health Coach under the Health Coach Agreement. This includes the right to promote Company products and services and the right to receive future commissions, bonuses, or other income resulting from the orders generated and other activities of the Health Coach s former Organization. In the event of cancellation, Health Coaches agree to waive all rights they may have, including but not limited to property rights, to their former Organization, and to any bonuses, commissions, or other remuneration derived from the sales and other activities from their former Organization. A Health Coach whose Health Coach Agreement is canceled shall receive commissions and bonuses only for the last full pay period he/she was active prior to cancellation (less any amounts withheld during an investigation preceding an involuntary cancellation). Take Shape For Life, Inc. All rights reserved. 17

23 C. Termination for Other Reasons The Company expressly reserves the right to terminate all Health Coach Agreements within 30 days upon written notice in the event that it elects to: (1) cease business operations, (2) dissolve as a corporate entity, or (3) terminate or modify distribution of its products and services via direct selling/ direct service. D. Voluntary Cancellation (Resignation) Health Coaches may resign at any time, regardless of reason. Resignation must be submitted in writing to the Company at its principal business address (11445 Cronhill Dr., Owings Mills, MD 21117). The written notice must include the Health Coach s signature, printed name, address, and Health Coach ID Number. Upon acceptance of resignation, the Health Coach business will be cancelled, and all Clients/Health Coaches will roll up to the next immediate sponsor. E. Non-Renewal A Health Coach may also voluntarily cancel his/her Health Coach Agreement by failing to renew his/her business. Section IV: Sales 4.0 REGULATIONS REGARDING RETURNS AND EXCHANGES A. Return and Exchange Policy It is the responsibility of each Health Coach to know, understand, and make his/her Clients and Health Coaches aware of the Company s return and exchange policy. The current policy can be located electronically in the Document Library of Office in Motion or in Appendix A. B. Damage and Discrepancies Failure to notify the Company of any shipping discrepancy or damage within 15 days of purchase will cancel a Health Coach s right to request a correction. C. Buyer s Right to Cancel Clients may cancel sales of $25 or more without penalty any time prior to midnight on the third business day after the transaction. Health Coaches must orally inform Clients of their three-day right to cancel at the time of purchase. D. Enrollment Pack Returns Health Coaches who voluntarily terminate their Independent Health Coach business have the right to return all marketing and promotional materials and enrollment packs, if they were purchased within one (1) year of termination and are in marketable condition, for 90% of the net cost to the Health Coach, less appropriate administration fees and legal claims, if any. Items shall not be considered inmarketable condition if returned after the items commercially reasonable lifespan or shelf life has passed. Items shall not be considered i n marketable condition if the Company clearly discloses prior to purchase that the items are seasonal, discontinued, or special promotion items and are not subject to their purchase obligation. Any item that has been personalized is not eligible for return. Returns can be submitted by written request and must be accompanied by proof of payment, invoice, or packing slip and a Return Authorization Number. Shipping labels related to the return of enrollment packs will be provided by the Company at no cost to the Health Coach. Upon receipt and inspection of the return, the Company will process any appropriate refund. E. Montana Residents A Montana resident may cancel his/her Health Coach business within 15 days of the date of enrollment and may return the Health Coach Enrollment Pack purchased for a full refund within such a time period. 4.1 ORDERS A. Activation Required In order to promote Take Shape For Life products or acquire and support Clients, all Health Coaches must successfully activate their account by agreeing to the terms and conditions of the Health Coach Agreement, completing an IRS FormW-9, and setting up their co-branded website. B. Eligibility for Compensation The Integrated Compensation Plan uses the Company s sales of products to enduser consumers as a metric for the calculation of compensation. Health Coaches must provide Coaching services and fulfill personal and organizational requirements to be eligible for bonuses, commissions, and advancement to higher levels of achievement. Take Shape For Life, Inc. All rights reserved. 18

24 C. Ordering Practices The TSFL ordering process is designed to make it clear that large financial investments are not necessary for success. Requiring Clients to order directly from the Company limits the financial risk to any individual Health Coach, especially new Health Coaches. Health Coaches may not purchase any more products than they can personally consume within 60 days of purchase, with the exception of samples ordered under an authorized sample program. This rule limits the amount that an individual Coach can order in a given month, thereby limiting risk. TSFL does not condone excessive ordering. It is not necessary and does not benefit the Health Coach. In cases of a husband and wife, the 60 day provision represents enough food for both spouses. Other circumstances where a Health Coach may require additional food are permissible, but only with the prior written approval of the Company. D. Five-Client Ordering Entities Rule To qualify for monthly bonuses, Health Coaches must support at least five (5) Client ordering entities with $1,200 in Group Volume in a month. See the Official TSFL Integrated Compensation Plan for full details. E. Re-Selling Product and Holding Inventory Health Coaches are prohibited from purchasing products with the intent to re-sell; this includes placing orders where Clients subsequently pay back the Health Coach. All purchases must be made by the end user from the company to ensure proper compensation. F. Repackaging or Tampering Take Shape For Life and/or Medifast products must always be presented with the official Take Shape For Life and/or Medifast packaging intact. No repackaging or tampering of any sort with product or product labels is permitted. G. Methods of Payment The Company accepts major credit cards and debit cards as payment options. H. Health Coach Credit Card Information All purchase transactions take place between Clients and the Company. Health Coaches may not use their credit cards to order for their Clients or for other Health Coaches, except as noted below. Health Coaches supporting Clients who do not have access to credit cards should suggest their Clients purchase pre-paid credit cards. In cases where a Client has a particular objection to use of credit cards for cultural or religious reasons, the Health Coach may contact Health Coach Services for further assistance. I. Client Credit Card Information Coaches may occasionally see or hear some or all of a Client s credit card information when either personally helping them place an order online or over the phone or through assisting with an Order Form signed by the Client. Coaches must not keep records of any Client credit card information they see or hear. Coaches may facilitate transactions by submitting signed order forms to the Company on behalf of Clients but must destroy any such order form upon successful placement of the order. Nothing in this rule prohibits a Health Coach from using information on an Order Form to place the order electronically for the Client. In cases where the order is placed electronically for the Client, it should be placed on the Clients account, and the form must still be submitted to the Company and then subsequently destroyed. 4.2 PLACING ORDERS A. Direct Clients All Clients and Health Coaches purchase products directly from the company. Clients log onto the Company s online Shopping Cart through their Health Coach s co-branded website or call our Toll Free Order Number to place their orders, which they can charge to their credit card. The Company ships the ordered products directly to the Client. Coaches may not make any attempt to circumvent or change the ordering process. B. Purchasing Products Health Coaches may only purchase products using their own Health Coach ID number. C. Ordering Policies The Company accepts orders via online Shopping Cart, telephone, fax, or mail. No C.O.D orders will be accepted. There are no minimum order requirements. Orders for products and sales aids may be combined. Fax or mail orders containing invalid or incorrect payment information cannot be processed. The Company will attempt to contact the Client by phone, , and/or mail to correct the issue. If the problem is not resolved within five business days, the order will not be processed. D. Ordering for Others Using a Coach s Credit Card Health Coaches may not order products for Clients or other Health Coaches using their personal credit or debit cards, regardless of whether there is any expectation of repayment. Health Coaches may not give access to their credit or debit cards for the purposes of allowing other Health Coaches or Clients to make purchases with them. Take Shape For Life, Inc. All rights reserved. 19

25 E. Cash Sales Cash sales of any type are prohibited. Coaches may not accept cash from Clients for any reason in relation to ordering or fulfilling TSFL or Medifast products. F. Insufficient Funds It is the responsibility of each Health Coach and Client to ensure that there are sufficient funds or credit available in his/her account to cover an order. The Company will not contact Health Coaches or Clients in regard to orders canceled due to insufficient funds or credit. G. Gifts Coaches who wish to give Medifast products as gifts may do so, but all gift orders must follow normal ordering policies. Gifts may not be used as a means to impact compensation or rank. H. Samples Coaches are not required to offer sample products to potential Clients but may do so if they choose. Samples must be ordered through approved means and in amounts that a Coach can reasonably expect to use for genuine promotional purposes. I. Ordering for Purposes of Achieving Rank Coaches may not place orders; misuse company programs, processes, or incentives; or encourage others to do so for the purposes of achieving and/or maintaining rank within the compensation plan or for the purpose of receiving an incentive or benefit of any kind. All orders placed that generate volume must be solely for the purpose of consumption. This rule does not apply to proper use of the Cash on Account Policy listed below. J. Cash on Account The company provides a mechanism by which Health Coaches or Clients can provide rewards, gifts, or incentives to another Health Coach or Client. This mechanism is deemed Cash on Account and is a type of internal gift-card program. Cash on Account (COA) is purchased via the Take Shape For Life shopping cart or Contact Center and designated to a Take Shape For Life account (valid ID #) of the purchaser s choosing. Purchases of COA are non-commissionable. If present on a Take Shape For Life account, COA is redeemed on the next Take Shape For Life order for that account, acting as a method of payment. Coaches are limited in the amount of COA they may purchase, and should not purchase COA in any given month in an aggregate amount exceeding 15% of their total commission earned from the previous month. COA is a gift, and can only be redeemed by the Client through placing an order. Once given, COA belongs to the Client or Coach who receives it. The following are acceptable uses of Cash on Account: Thank-you gift from a Health Coach to Client for a referral or lead Thank-you gift from a Health Coach to Client for hosting an event (weigh in, meeting, or tasting) Congratulatory gift from a Health Coach to Client for meeting a goal or milestone (20 lbs. lost, reaching goal weight, etc.) Charitable gift for a Client who cannot afford the full cost of the program Holiday/birthday gift for a Client or Health Coach Encouragement gift from a Health Coach or Client to Client to start or stay on plan Reparation from a Health Coach to a Client for an order mishap (shipment delay, inability to exchange, etc.) Reward for team incentive contests/challenges from Business Coach/Business Leader to team members Section V: Payments 5.0 COMPENSATION AND COMPLIANCE FEES A. Compensation Income Compensation income is paid to Health Coaches for the services they provide, in accordance with the Take Shape For Life Integrated Compensation Plan. B. Weekly Checks, Monthly Bonuses, and Payment Schedule Health Coaches using direct deposit will be paid weekly for commissions earned on personally sponsored, frontline Clients and Health Coaches. Otherwise, all other earnings and bonuses are paid monthly. The Company generally mails or deposits monthly bonuses on or about the 15th of each month for commissions or compliance fees earned during the previous month. When the 15th day of the month falls on a weekend or holiday, checks will generally be mailed or deposited on the next business day. C. Direct Deposit Health Coaches are strongly encouraged to sign up for direct deposit. Enrollment forms can be found online in the Document Library of Office in Motion. Take Shape For Life, Inc. All rights reserved. 20

26 D. Check Processing Fee Any Health Coach who is not enrolled in the Direct Deposit program but opts for a physical check will be subject to a $2.50 check processing fee each time a check is generated to cover the costs associated with printing and mailing. The check processing fee will be deducted from the earnings on that check. The company reserves the right to modify the fee amount at any time. E. Adjustments to Checks Health Coaches receive compensation based on Clients or Health Coaches actual orders of products. When a product is returned for a refund, the volume amount associated with that return will be deducted from the Health Coach s Frontline Volume (will appear as a negative PV amount for that Client). As returns are processed as negative volume, they can impact both Client Support Bonus percentages and rank qualifications. Returns and refunds are not processed on the last day of a month. F. Un-cashed Checks/Returned Checks/Replacement Check Requests 1. Compensation checks that remain un-cashed for more than six months become void. Health Coaches who are in possession of voided checks may be issued a replacement check upon the Company s receipt of a written request from the Health Coach, along with a processing fee and the original uncashed check. 2. If a check was lost and a replacement check requested, the company will put a stop payment on the original check, issue a replacement check, and assess a processing fee. G. Business Month The monthly bonus period for the compensation plan is based on orders placed and payments received in a calendar month. The monthly period begins at 12:00 A.M. PST on the first day of the month and concludes at 11:59 P.M. PST on the last day of the month. Volume is credited for orders that are paid in full. H. Business Day A business day is any Monday through Friday except for observed holidays. Observed holidays currently include New Year s Day, Good Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving (Thursday and Friday), Christmas Eve, Christmas Day, and a single floating holiday determined by the Company. I. Minimum Monthly Payout Because of the administrative costs and the high cost of check processing, compensation checks under $27.50 and direct deposits under $25.00 will be held, accrued, and then paid when accumulated commissions or compliance fees exceed either $27.50 or $25.00, respectively. J. Genealogy Reports Each Health Coach qualifying for commissions or compliance fees will receive an online monthly report showing the calculation of commissions and bonuses. Hard copies of Genealogy Reports will not be made available. All information provided in online Genealogy Reports, including but not limited to personal and group volume (or any part thereof), sponsoring activity, and accrued bonuses or commissions is believed to be accurate and reliable. The Company does not guarantee the accuracy of the information provided. 1. All such information is provided as is without warranties, express or implied, or representations of any kind whatsoever. In particular but without limitation, there shall be no warranties of merchantability, fitness for a particular purpose, or non-infringement. 2. To the extent permissible under applicable law, the Company and/or other persons creating or transmitting the information will in no event be liable to any Health Coach or anyone else for any direct, indirect, consequential, incidental, special, or punitive damages that arise out of the use of access to the information (including but not limited to lost profits, bonuses, or commissions, loss of opportunity, and damages that may result from inaccuracy, incompleteness, delay, or loss of the use of the information), even if Take Shape For Life or other persons creating or transmitting the information shall have been advised of the possibility of such damages. To the fullest extent permitted by law, the Company or other persons creating or transmitting the information shall have no responsibility or liability to Health Coaches or anyone else under any tort, contract, negligence, strict liability, products liability, or theory with respect to any subject matter of this agreement or terms and conditions related thereto. 3. Access to and use of online Genealogy Reporting services and the information contained therein is at a Health Coach s own risk. 4. Protecting Proprietary and Confidential Information All Genealogy Reports and the information contained therein are confidential and constitute proprietary information and trade secrets belonging to the Company. Health Coaches agree that all reports are proprietary and confidential to the Company and are transmitted to the Health Coach in strict confidence for the sole purpose of assisting Health Coaches in working with their respective Organizations in the development of their Take Shape For Life business. The Health Coach and the Company agree that if it were not for this agreement of confidentiality and nondisclosure, the Company would not provide Genealogy Report to the Health Coach. A Health Coach shall not: Take Shape For Life, Inc. All rights reserved. 21

27 i. Directly or indirectly disclose any information contained in any Genealogy Report to any third party ii. Directly or indirectly disclose his/her password or other user access code to his/her Genealogy Report iii. Use the information contained in any such report for any purpose other than reviewing and promoting his/her Take Shape For Life business iv. Recruit or solicit any Health Coach or Client of Take Shape For Life listed on any Genealogy Report, or in any manner attempt to influence or induce any such Health Coach or Client to alter their relationship with the Company v. Use the information contained in any such report to disparage or misrepresent the Company in any way. 5. Upon request by the Company, any current or former Health Coach will destroy any printed copies of any Genealogy Report in the Health Coach s possession immediately. Failure to do so may result in legal action. Section VI: General Provisions 6.0 NOTICES All notices to be given pursuant to this Agreement shall be deemed to have been properly given by depositing the notice in the mail, addressed to the subject Health Coach at the last address on file with the Company, postpaid, and registered or certified; or delivery by hand by a recognized overnight delivery service; or by facsimile transmission; or by an . All notices shall be deemed given three (3) business days from the date of postmark, if sent by mail; two (2) days after notice is deposited with a delivery service or same day, if delivered by hand or upon transmission by facsimile or FORCE MAJEURE The Company shall not be responsible for delays or failure in performance caused by circumstances beyond a party s control, such as, but not limited to, strikes, labor difficulties, product shortages, energy or fuel shortages, fire, war, acts of terrorism, government decrees, natural disasters, inclement weather, or orders of curtailment of a party s usual source of supply. 6.2 AMENDMENTS A. Company s Discretion The Health Coach understands and agrees that the Company, at its sole discretion, may amend the Policies, the Health Coach Agreement, the Guidelines, prices for Products, Take Shape For Life literature, and/or the Integrated Compensation Plan without prior notice, at any time, effective upon publication or transmittal of such amendment ( Amendment ). B. Conflicts In the event of any conflict between the terms of this Agreement, the Policies, the Health Coach Agreement, or any other document and a subsequent thereto, the Amendment shall control. Failure of a Health Coach to terminate his/her Health Coach Agreement within five (5) business days of publication of the Amendment shall be deemed acceptance of the Amendment. 6.3 ARBITRATION A. Arbitration Process Any controversy or claim arising out of or relating to the Agreement, or the breach thereof, shall be settled by arbitration administered by the American Arbitration Association under its Commercial Arbitration Rules, and judgment on the award rendered by the arbitrator may be entered in any court having jurisdiction thereof. If a Health Coach files a claim or counter claim against Take Shape For Life, he/she may only do so on an individual basis and not with any other Health Coach or as part of a class or consolidated action. Health Coaches waive all rights to trial by jury or to any court. All arbitration proceedings shall be held in the City of Owings Mills, Maryland, unless the laws of the state in which a Health Coach resides expressly require the application of its laws, in which case the arbitration shall be held in the capital of that state. The parties shall be entitled to all discovery rights allowed under the Federal Rules of Civil Procedure. No other aspects of the Federal Rules of Civil Procedure shall be applicable to arbitration. There shall be one arbitrate or an attorney at law, who shall have expertise in business law transactions, with a strong preference for an attorney knowledgeable in the direct selling industry, selected from the panel which the American Arbitration Panel provides. Each party to the arbitration shall be responsible for its own costs and expenses of arbitration, including legal and filing fees. The decision of the arbitrator shall be final and binding on the parties and may, if necessary, be reduced to a judgment in any court of competent jurisdiction. This agreement to arbitrate shall survive any termination or expiration of the Agreement. Take Shape For Life, Inc. All rights reserved. 22

28 B. Judicial Remedies Available to Take Shape For Life Nothing in these Policies and Procedures shall prevent Take Shape For Life from applying to and obtaining from any court having jurisdiction a writ of attachment, a temporary injunction, preliminary injunction, permanent injunction, or other relief available to safeguard and protect Take Shape For Life s interest prior to, during, or following the filing of any arbitration or other proceeding or pending the rendition of a decision or award in connection with any arbitration or other proceeding. 6.4 GOVERNING LAW The Federal Arbitration Act shall govern all matters relating to arbitration. The laws of the State of Maryland shall govern all other matters relating to or arising from the Agreement unless the law of the State in which a Health Coach resides expressly requires the application of its laws. 6.5 VENUE Jurisdiction and venue of any matter not related to arbitration shall be brought in either the state courts located in Baltimore County, Maryland or Federal District Court located in Baltimore City, Maryland, unless otherwise required by law. 6.6 NON-WAIVER PROVISION Failure of the Company to exercise any rights stated in the Agreements shall not constitute a waiver of the Company s rights to demand exact compliance therewith. Waiver by the Company of any particular breach of any provision of the Agreement shall not constitute a waiver of any prior, concurrent, or subsequent breach by the Health Coach. For any waiver to be deemed effective, an authorized officer of the Company must issue the waiver in writing. 6.7 SEVERABILITY If any provision of this Agreement is held to be invalid or unenforceable in any jurisdiction, the Company shall have the right to modify the invalid or unenforceable provision or any portion thereof, to the extent required to be valid and enforceable, and the Health Coach shall be bound by any such modification. The modification will be effective only in the jurisdiction in which it is required. 6.8 ENTIRE AGREEMENT This Health Coach Agreement, together with the Take Shape For Life Policies and Procedures, the Integrated Compensation Plan, and Income Disclosure Statement, are which are all incorporated into the Health Coach Agreement by reference (and are attached as Appendices), shall constitute the entire agreement between Take Shape For Life and the Health Coach. This Agreement in constitutes the entire understanding and agreement of the parties regarding their business relationship. Any promises, representations, offers, or other communications not expressly set forth in the Agreement are of no force or effect. Section VII: Advertising and Promotion Policies & Procedures 7.0 INTRODUCTION Trademarks and the Company Name What Take Shape For Life means. The R in the circle changes things. We are not talking about what Take Shape For Life means to you. We are certainly proud that Take Shape For Life has great personal meaning for so many of you; it means a lot to us, too for many reasons. But here, we are talking specifically about what consumers in the marketplace expect when they see the Take Shape For Life trademark. Our trademark represents who we are as a Company. It is our brand name, and it carries the weight of our reputation. People know what to expect when they see Take Shape For Life and when they see Medifast. We want to make sure that they know to expect the best always. Technically, a trademark or service mark includes any word, name, symbol, device, or any combination of those, used or intended to be used to identify and distinguish the goods/services of one seller or provider from those of others, and to indicate the source of the goods/services. This protection includes our name Take Shape For Life and much more. It also includes company symbols and logos and in some cases the names we give to our products. When we use these terms in this document, derivations of these marks are also included. Creative spellings and variations on a theme don t make a difference. When someone sees our brand, they know who they are dealing with, and they know what to expect, whether you call it Take Shape For Life or Take Take Shape For Life, Inc. All rights reserved. 23

29 Shape 4 Life. To protect our brand, and to protect our Coaches and Clients, we have put these Policies and Procedures in place. You are required to follow these Policies and Procedures in advertising and promoting your Business. Take a few minutes now to avoid confusion and problems later. Please keep in mind that violations may result in disciplinary action, including possible termination of your business. These Policies are dynamic and evolve to fit the needs of the company and the ever-changing legal landscape. The Company reserves the right to change, modify, or discontinue these policies at any time at its sole discretion. How can you use Company trademarks in your business? The Company has certain trademarks, service marks, trade names, slogans, symbols, and color schemes that are proprietary (referred to as Intellectual Property or just IP ). Except for marketing materials, sample products, and advertising content that is provided or sold to the Health Coach by the company, Health Coaches must not use or display company trademarks, service marks, trade names, slogans, symbols, and color schemes without the Company s express prior permission. Trademarks, Service Marks, Copyright Materials Health Coaches may use or distribute Take Shape For Life or Medifast intellectual property only as part of marketing materials made available by Take Shape For Life and Medifast or through a Take Shape For Life or a Medifast approved vendor, or through materials specifically submitted to and approved by the company. All printed, audio, and video material containing the proprietary trademarks or service marks of Take Shape For Life, Inc. and Medifast, and their respective products, promotional materials, or such items describing Take Shape For Life or Medifast are protected by U.S. patents, trademarks, and copyrights. Any creation of new or duplication of existing material, in whole or in part, is strictly prohibited by federal law and Company policy. Advertising and Promotion Understand that these rules apply to two things: advertising and promotion. Advertising and promotional activities broadly include almost everything that you say and do in developing your business. 7.1 GENERAL ADVERTISING AND PROMOTIONAL GUIDELINES A. Adherence to Policies and Procedures You are required to follow these Policies and Procedures in advertising and promoting your Business. Violations may result in disciplinary action, including possible termination of your business. These Policies are dynamic and evolve to fit the needs of the company and the ever-changing legal landscape. The Company reserves the right to change, modify, or discontinue these policies at any time at its sole discretion. B. Identifying Yourself Coaches must clearly identify themselves as Independent Health Coaches with Take Shape For Life. Representatives may not imply that they are employees of the Company or that they are the Company. 1. You must always clearly and prominently identify yourself by your own name followed by: Independent Health Coach with Take Shape For Life. Example: Susie S. Thompson, Independent Health Coach with Take Shape For Life 2. Certified Coaches may include Certified when identifying themselves. Example: Susie S. Thompson, Independent Certified Health Coach with Take Shape For Life 3. Health Professional Health Coaches may include Health Professional. Example: Susie S. Thompson, Independent Health Professional Health Coach with Take Shape For Life C. Advertising Billing All advertising billing must be addressed to the Health Coach at the Coach s billing address and must not imply or indicate that the Company is responsible in any way for such advertising or the advertising bills. D. Advertising Approval All advertising and promotional materials must be submitted to the Company for approval prior to use, including pre-approved advertising or promotional materials. E. Reproduction of Company Materials Health Coaches may not copy or reproduce images, graphics, product photographs, or photographs of any person, model, or celebrity found in Company brochures, promotional materials, or literature of any kind or from any Company website without permission. Take Shape For Life, Inc. All rights reserved. 24

30 F. Using Claims and Making Statements in Advertising Health Coaches are responsible for making truthful, accurate, and legally acceptable product claims. Coaches may use only approved advertising claims, which may change from time-to-time at the Companies sole discretion. G. How Health Coaches Assist Clients Orders Health Coaches facilitate orders either through their co-branded websites, through helping Clients complete order forms, or through assisting them with placing telephone orders. All other forms of sales or orders are prohibited. H. Health Coaching in Retail Environments Health Coaches may promote their Take Shape For Life business in retail establishments under very limited circumstances. 1. In retail establishments, which would include but are not limited to places like pharmacies, health clubs, wellness centers, beauty salons, and natural/homeopathic stores, Coaches may: i. Display promotional pamphlets, flyers, banners, or other approved materials purchased from the company or pre-approved by the company ii. Hand out business cards iii. Have conversations about the program iv. Assist Clients with ordering products from the company through a mobile device or laptop computer, provided they are not connected through the retail establishment s computer or point-of -sale systems. 2. Coaches may not: i. Sell or appear to sell Medifast products from within a retail establishment, ii. Provide Clients with ordering stations or a fixed way, such as a kiosk or computer station, to place orders from within a retail establishment, iii. Display full or empty Medifast product boxes, iv. Post signage outside of the establishment or inside on windows facing out so they are viewable from outside the establishment, v. Use a retail establishment as the Ship To address for any order. vi. Because of the unique nature of Health Professionals offices and the fact that they are not perceived as retail establishments, while all other rules of this paragraph will apply, Health Professionals may continue to assist their Clients to order through existing office computer systems. Because of the unique nature of Health Professionals offices and the fact that they are not perceived as retail establishments, while all other rules of this paragraph will apply, Health Professionals may continue to assist their Clients to order through existing office computer systems. I. Commercial Sales Commercial sales are prohibited. Any advertising or promotion of commercial style selling is also prohibited. J. Direct Response Sales Health Coaches may not engage in direct response lead-generation sales of TSFL or Medifast products. Direct Response refers to any advertising that uses a call to action, such as directing a consumer to call a toll-free number or to visit a website to make an immediate purchase of product or Health Coach services. K. Promotion of Coaching Services Any Health Coach-generated advertising must promote the valued-added coaching services that are a part of the Take Shape For Life program. L. Independent Websites Health Coaches are not permitted to develop or operate independent/personal websites promoting their Take Shape For Life business. This rule does not prohibit Health Coaches from maintaining a website for other businesses or interests they may have, so long as they are not deceptively similar to the Company s sites and do not discuss the Coach s Take Shape For Life business. Independent websites unrelated to Take Shape For Life or weight loss can contain a link to the Health Coach s co-branded e-commerce website or may include a TSFL provided landing page as a tab, but they may not contain any further information regarding the company, its products, or programs, unless provided or preapproved by the Company. Unless pre-approved by the Company in writing, Health Coach websites featuring non-tsfl or unbranded weight-loss or coaching services of any kind are not permitted. This rule insures that Coaches may not market Take Shape For Life, Inc. All rights reserved. 25

31 other competing weight-loss programs or products and that Coaches may not market the TSFL program without clearly identifying it as such. M. Separating Alternate Business Promotions No other business names may be included in any form of advertising or promotion. If, for example, a Coach also owns a flower shop, that name cannot appear in the advertisement or promotion with Take Shape For Life. Potential Clients and prospective Coaches could be misled to assume that Take Shape For Life and the flower shop are related companies. N. Personal Support Offered to All Clients Health Coaches who use the Internet must offer the same level of personal support to Internet Clients that they offer to all Clients. O. Buying or Using Lists Coaches may not buy or use any third-party-generated or mailing address lists in conjunction with their TSFL business. Coaches may not send s to non-specific or randomly generated addresses, bought lists, or to group addresses that result in a message being sent to more than one individual. This rule applies to all s, including electronic updates such as the Healthy Habits e-newsletter. P. Person-to-Person Business Model Take Shape For Life is a person-to-person business model, with individuals who know about the program sharing its benefits with people they know or meet. Coaches are encouraged to share their own experiences as outlined below under Telling Your Story. Because this is a person-to-person model, certain business initiatives are beyond the scope of what any Health Coach is equipped to provide. 1. Therefore, Coaches may not sponsor: i. Hospital or health system networks ii. Insurance companies or programs iii. State agencies 2. Pursuant to prior approval and written authorization by the Company, Coaches may approach and sponsor the following entities: i. Corporate wellness programs ii. iii. Group medical providers affiliated with hospital or health system networks Businesses, corporations, or other entities (Note: Coaches may sponsor individual Coaches who have subsequently formed Coaching entities pursuant to Policies and Procedures Section 1.2 G.) Individual physicians can be individually sponsored as Health Professional Health Coaches. 7.2 TELLING YOUR STORY A. Paid Endorser Coaches are considered paid endorsers for Take Shape For Life. When Coaches use themselves or their Clients as examples of success on the program, it is considered a testimonial. Health Coaches may give only truthful, accurate, and non-misleading testimonials as to their personal weight loss, experience, energy level, appearance, or performance gains in conjunction with any Take Shape For Life product. Testimonials have specific legal requirements when used in advertising and promotion. We lay some of them out below generally, and the Compliance team can help you sort out how they may apply to advertisements that you may want to use in your business. B. Disclosure When telling their personal stories, whether in person or in advertising or promotional materials, Coaches must disclose that they are Health Coaches. C. Weight-Loss Statements are statements or representations about weight-loss efficacy or statements disclosing the amount of weight that any person has lost. 1. This includes: i. Statements of total weight loss e.g. I lost XX lbs ii. Statements of weight loss over time e.g. I ost l XX lbs in 10 weeks. iii. Statements of rate of weight loss e.g. I lost X pounds for 5 weeks. iv. A before and after photo, with or without additional wording. 2. Weight-loss statements must also include our disclaimer: Results vary. Clients can expect to lose 2-5 lbs. per week for the first 2 weeks and 1-2 lbs. per week thereafter. 3. Statements of exceptional rates of weight loss, which exceed our documented weight-loss rate are prohibited. Even when true, testimonials about rapid weight loss can create a false expectation in someone who sees the advertisement. Your result may be unusual, and we want consumers to see what they must expect to experience for themselves. Examples of non-compliant statements are: Take Shape For Life, Inc. All rights reserved. 26

32 i. I lost 9 pounds in the first week ii. I lost 15 lbs in three weeks. 4. Statements of weight loss within our standard weight-loss range are encouraged. Examples of compliant statements are: i. I lost 50 lbs. ii. I lost 20 lbs in 10 weeks. iii. I lost a total of 100 lbs. D. Health Statements Take Shape For Life, the Habits of Health, and Medifast products are not medical treatment or care and cannot be conveyed as such. No statements that claim our products and programs treat, diagnose, prevent, cure, or mitigate disease are permitted. Losing weight caused the improvements you have experienced. Consumers will need to follow through with the program to see those results; our products won t do it on their own. 1. Weight loss has been demonstrated to have significant impact on certain health conditions that are co- morbidities of obesity. 2. Coaches are permitted to convey truthful statements about improvements in high cholesterol, blood pressure, or Type II diabetes or regarding their medical provider reducing medications that treat those conditions, but only when these improvements are appropriately attributed to weight loss. 3. Coaches may not make any statements that weight loss has attributed to any other health conditions or medicinal changes. 4. Coaches may not make any statements that Take Shape For Life, the Habits of Health, or Medifast products or programs have caused them to lessen or eliminate medications or have caused either general or specific improvements in any specific health condition. 5. Health Coaches may not discuss any other health conditions nor make any statements regarding the elimination of medications. 7.3 PROHIBITED COACH ADVERTISING PRACTICES A. Company Image As a national company, we have an image that must be protected in order to help your business grow. In order to protect our image and to make things fair and balanced for everyone, certain types of Health Coach advertising are prohibited. B. Printed Materials Health Coaches are prohibited from advertising their businesses or from using the Company name or any other Company trademark in printed advertising materials or in conjunction with other promotions. This includes: 1. National magazines, such as People or Rolling Stone 2. National/regional magazines, such as Baltimore Magazine or New York Magazine. 3. National newspapers, such as USA Today or The New York Times 4. Multi-level marketing publications, such as Making Money 5. Outdoor commercial advertising, such as transit ads, billboards, etc. 6. Catalogs or catalog listing services 7. Promotions with other companies; such as the offering of Take Shape For Life Lean and Green meals at an area restaurant 8. The offering of money, gifts, products, discounts, or any other inducements to become a Health Coach. C. Radio & Television Health Coaches are currently not permitted to advertise on national or regional radio. Coaches are permitted to use Company-provided or Company pre-approved advertising materials on local radio to promote local Health Coach events. No other local radio advertising is permitted unless pre-approved in writing by the Company. With the exception of approved PR opportunities such as Health Coach interviews on local news programs (as noted later in these Policies) and without the prior written authorization of the Company. Coaches may not advertise on television. D. Online Advertising & the Internet 1. Third-party sites/any website or web page other than your Co-branded TSFL website As a Health Coach, you may not publish, create, or maintain any website or web page, other than your Co-Branded TSFL website, in connection with advertising or promoting your business. This means that, without limitation, you may not: i. Use your personal homepage to advertise Company products or promote your business. ii. Advertise any non-tsfl business on your Co-Branded website. Take Shape For Life, Inc. All rights reserved. 27

33 2. Domain names, URLs, keywords, meta tags, and addresses that include the Company name or Company marks As a Health Coach, you may not use, purchase, or register any domain names, URLs, keywords, meta tags, or addresses that include, in whole or in part, the Company name or any of the Company s trademarks, service marks, or product names other than your Companyprovided co-branded websites. To the extent that Health Coaches violate this policy, they hereby acknowledge and agree that they will, promptly upon Company request, transfer to the Company or its designee, at the Health Coaches expense, any such materials. Without limitation, you may not: i. Create, operate, or maintain any website or web page with the words Take Shape For Life or any other Company trademark, in whole or in part, in all or part of the URL (for example, or ) ii. Purchase a keyword from a search engine or other online service that comprises or includes the words Take Shape For Life or any other Company trademark, irrespective of whether the results of searches for that term include the Company. iii. Create an address that includes Take Shape For Life or any other Company trademark (for example, [email protected]). 3. Online auctions, markets and outlets Health Coaches may not sell, auction, or attempt to sell Company products, programs, business tools, coupons/promotional codes, or the unique support services offered by a Health Coach on any online auction sites (i.e., ebay, Amazon.com, etc.). Health Coaches are prohibited from using these auction sites to solicit or generate leads. This includes listing auctions on ebay and also any form of electronic storefront or sales mechanism, such as Amazon.com or Yahoo! Shopping. 4. Unsolicited s Health Coaches may not send, transmit, or otherwise communicate any spam or other unsolicited messages to any individual or group. Use of Company provided tools, such as the isharetsfl.com website, require that the Health Coach have a connection to their recipients prior to sending correspondence of any kind. 5. Blogs and vlogs Coaches cannot create or maintain independent blogs or vlogs (video blogs) that contain the Company name or company trademarks or that describe Company products or programs without Company approval. Vlogs specifically include, but are not limited to, YouTube and Vimeo channels. Blogs and vlogs created as part of a co-branded website are excluded from this rule. 7.4 PERMISSIBLE COACH ADVERTISING PRACTICES A. Permissible Advertising While advertising in national and regional media is prohibited, Coaches may use a wide variety of local resources to attract Clients and to recruit new Health Coaches. Millions of people are struggling with obesity and are in desperate need of a Health Coach to help guide them to Optimal Health. Advertising that you are out there helping get people healthy may pay off in both sales and earnings. Please remember that Health Coaches may use only pre-approved advertising or promotional materials, and all other advertising and promotional materials must be submitted to the Company for approval prior to use. B. Your Co-Branded TSFL Website Health Coaches can advertise their business through their Co-Branded site. C. Text Hyperlinks You may link your non-tsfl web site or web page on a website (including social media sites like Facebook.) to your Co-Branded site, provided you follow all other Company Advertising Policies and Procedures. D. Telephone Directories (Yellow and White Pages) Potential Clients seeking a Health Coach can look one up in the telephone directory. Coaches who have reached Executive Director or higher may list themselves in telephone books and other directories as their name, followed by Independent Health Coach with Take Shape For Life. (ex. Susie Thompson, Independent Health Coach with Take Shape For Life). Certified Health Coaches may identify themselves as such in telephone directories. This rule also applies to local online directories or listings, including websites like and Yellow Pages. E. Community Newspapers and Local Classified Publications Publications like PennySaver, local newspapers, and community bulletins are widely read by the people in your community. The approved templates below provide examples of some types of ads that will help you promote your business and may help you attract new potential Health Coaches. Take Shape For Life, Inc. All rights reserved. 28

34 F. Social Media Sites Social media is hard to define yet a part of everyday life for many people. If you use a social media site, maintain a blog, comment on other people s blogs, leave product reviews on retailers sites or customer review websites, take part in online polls and votes, or participate in conversations on online forums and message boards, whether they are private or public, you are engaged in social media. Don t forget that social media is still advertising. You are promoting your business; all the rules still apply. Health Coaches may participate in social media and social networking sites (Facebook, MySpace, Twitter, LinkedIn, etc.) to promote their business by sharing their personal success story, linking to their co-branded websites, posting company-approved materials and videos, or offering their support to others in their network. Unauthorized use of Take Shape For Life logos or Medifast Intellectual Property, including any use as a user name or as an account name, is strictly prohibited on social networking sites. Coaches must properly identify themselves in any social media context as being Independent or Certified Health Coaches. 1. Certain Company-specific social media outlets have specific rules: i. Medifast Direct/ MyMedifast As our partner, Medifast Direct supplies the Take Shape For Life organization with interested Medifast Direct customers requesting the support of a Certified Health Coach through the Qualified Leads Program. Health Coaches may not attempt to provide counsel or advice to or contact, solicit, or recruit any customers, leads, or potential Health Coaches from any Medifast Direct websites, including, but not limited to: the MyMedifast /MyTSFL online community, message boards, forums, chat rooms, or other community spaces. ii. MyTSFL Other than personally sponsored Clients, Health Coaches may not attempt to counsel or advise Clients, contact, solicit, or recruit any Clients, leads, or potential Health Coaches from the Take Shape For Life Support in Motion online community. Health Coaches engaging in these activities will be subject to disciplinary action and/or immediate termination. G. Online Classifieds Many local newspapers and weekly publications are also available online. You may use approved materials to advertise your business through local online classified advertisements as well as on a website such as Craigslist. These classifieds are to promote your Health Coach business and to locate potential new Health Coaches, not for product sales. Postings related to sales of products are strictly prohibited. Below are examples of permissible online classifieds: Start your journey toward Optimal Health with Take Shape For Life. Contact: YOUR NAME HERE Independent Health Coach with Take Shape For Life DISCOVER: Safe, clinically proven weight loss The health improvements that come with shedding unwanted pounds A new you through Optimal Health Contact: YOUR NAME HERE Independent Health Coach with Take Shape For Life at (phone/ /web site) (555) Take Shape For Life, Inc. All rights reserved. 29

35 H. Local Savings / Entertainment Packs In many communities, local businesses purchase ads that are mailed to local residents (Valpak is one). Health Coaches may advertise their businesses this way at the local level. Coaches who choose to do so must properly identify themselves and indicate that they are Independent Health Coaches with Take Shape For Life. I. Supermarket Bulletin Boards Every local grocery store has a bulletin board where local residents fill out cards advertising goods and services babysitting, cars for sale, apartments for rent, etc. This is a great, usually free, way to advertise. If you do use one of the blank cards, please type or clearly print your message. Or you may wish to simply place your approved business card in the rack. J. Welcome to the Neighborhood When people move into a new neighborhood, they are on the lookout for new ways to buy familiar services and goods. Many communities offer gift baskets featuring special deals for new residents. Find out if you can add something to the welcome package. K. Customized Signature Turn your signature into a mini-ad. It s a free, easy way to promote your business. Keep it brief, but include what you think is important. This tag will be the closing of every you send. Example: Susie Thompson Independent Health Coach with Take Shape For Life (555) OFFICIAL COMPANY LITERATURE AND MATERIALS A. Promotion with Company Materials Independent Health Coaches may only use official Company literature, videos, CDs, or audiotapes in promoting the Company and its products unless otherwise approved. Any material created by a Health Coach using the Company s intellectual property must be approved. A list of intellectual property and submittal form may be found in Appendices A and B, respectively. 1. Health Coaches shall not reproduce or alter the Company literature, videos, audiotapes, CDs, and/or promotional materials. Health Coaches shall not use the Company s trademark or logo without prior written consent. Health Coaches shall make representations about the Company products that are found in current Company literature, videos, audiotapes, and Published Company literature, only. 2. Health Coaches may not produce, reproduce, use, or distribute any information relative to the contents, characteristics, or properties of the Company s products, except that which has been provided directly by the Company, unless approval is granted. This includes but is not limited to print, audio, video, or electronic media. The form and submittal process can be located in Appendix C. 3. Health Coaches may not produce, sell, or distribute literature, Internet websites or web pages, films, audio recordings, or video recordings that are deceptively similar in nature to those produced, published, and provided by the Company for its Health Coaches. A Health Coach may not purchase, sell, or distribute non-company materials that imply or suggest that said materials originate from the Company. 4. Any and all support materials are to be sold and/or distributed only by the Company or Company approved vendors. 5. A Health Coach may order business cards through the Take Shape For Life Corporate Website, Health Coach Services, or the Call Center. If a Health Coach s relationship with the Company has been terminated, he/she must immediately cease using and destroy all business cards using the Company s trademarks, trade names, service marks, logos, or color schemes. 6. No one, including Health Coaches, can manufacture for sale or distribution any product with Medifast or Take Shape For Life names or logos. This includes items such as t-shirts, hats, mugs, ties, etc. Coaches may not produce or use any materials that are deceptively similar to Company designs or materials, or that could lead a Client or potential Coach to believe that they came from the Company, unless the company specifically approves them in writing. 7. For approved promotional items, go to the Custom Tools tab of Office in Motion. Only official promotional items issued by the Company may contain Company logos or trademarks unless specifically authorized by the Company. Take Shape For Life, Inc. All rights reserved. 30

36 7.6 HOLDING EVENTS AND MEETINGS A. Field-Run Events Health Coaches are encouraged to get together with other Health Coaches for training, motivational, or business development purposes. These gatherings are deemed meetings and/or Trainings. Meetings and Trainings can be held between Health Coaches in the same organization or coaches in other lines of sponsorship. The Company does not need to be notified of their occurrence. B. Client or Health Coach Acquisition Events Health Coaches may also wish to hold Client acquisition or business opportunity events that are advertised, promoted, or open to the public and consist of more than 20 attendees. These gatherings are deemed Events. For Health Coach acquisition events, Coaches must abide by the following requirements: 1. The Income Disclosure policy (Section3.1.j) must be adhered to. 2. Only Company-developed or Company-approved materials and presentations may be used at any Event. Visit the Trilogy Training System (TTS) for the most updated versions. Any material or presentation that contains Medifast or Take Shape For Life intellectual property must be submitted for review. The Trademark submittal form can be obtained from the Coach Services or Compliance departments. 3. Failure to provide any presentation materials for approval is grounds for disciplinary action. 7.7 ADVERTISING AND PRESENTATIONS A. Methods of Promotion Health Coaches may not advertise or present the Company s products or business opportunity in any way other than through the use of advertising, presentation, or promotional materials made available to the Health Coach by the Company, unless otherwise approved. Health Coaches are prohibited from using the Company s trademarks, service marks, trade name, slogans, symbols, and color schemes in advertising or presentations in a manner that would suggest or imply that they are employed by or are agents of the Company. Advertisements or presentations must not suggest that the advice of a Health Coach is a substitute for the advice of a physician. B. Presenting the Health Coach Opportunity When advertising or presenting the Health Coach opportunity, Health Coaches may not make any representations as to potential income to be received by a prospective Health Coach, except as provided in the Income Disclosure Statement or Section 3.1 H, or as pre-approved in writing by Company. Coaches may not use examples that make acquiring Clients and/or Coaches or progressing through ranks in the compensation plan appear easier than they are. All examples must be based on real data and must be capable of being easily replicated by a reasonable Coach putting diligent effort into his/her business. A copy of the Income Disclosure Statement (IDS) must be presented to any prospective Health Coach while discussing the business opportunity. (See Section 3.1.H for details.) C. Reproducing Company Materials All Company materials, whether printed, on film, on the Internet, or produced by audio or video recording are copyrighted and may not be reproduced in whole or in part by Health Coaches or any other persons unless authorized by the Company. 7.8 PUBLIC RELATIONS OPPORTUNITIES A. Initiating Contacts with the Media Media opportunities including any print, television, or radio interviews or inquiries featuring Take Shape For Life, a Health Coach s business, or Client success stories are not individual sales opportunities. All media opportunities must be referred to the Company for express approval and consent prior to being published or aired. A Health Coach must not have any contact with media unless prior authorization is received from the Company. See the Business Promotion Guide for guidelines and form for submittal. B. Responses to Media Inquiries Take Shape For Life Health Coaches are expressly prohibited from responding to contact from any media regarding Take Shape For Life or its products. This policy applies to all media representatives, including newspaper, magazine, radio, and television. All media inquiries must be forwarded to the Company for response. C. Responses to Governmental Inquiries Any request or inquiry from a government agency must be referred to the Company for response. This list includes Better Business Bureaus and other pseudo-regulatory agencies. D. Press Releases (Company-Issued) Health Coaches are permitted to distribute unaltered company- issued press releases if requested from a Client or prospective Health Coach. Take Shape For Life, Inc. All rights reserved. 31

37 E. Press Releases (Coach Initiated) As press releases are outward-facing communications with the media, all press releases must be approved before distribution. Upon approval, Health Coach-created press releases may be submitted only to local media outlets. Use of a press release to an attribution service (PRNewswire, Business- Wire, etc.) is prohibited. See Appendix C for forms. 7.9 GENERAL A. Coupon Guidelines The Company may at times provide promotional codes and discounts. Such offers are to be used only at the time of the order and will be otherwise invalid. Once payment is made, there will be no adjustments for such offers. Coaches may not advertise promotional codes and discounts. Coaches may not use any advertisement that appears to be or functions as a Coupon. B. Professional Image Take Shape For Life and its Health Coaches are a professional organization. The conduct and image of each Health Coach reflects upon the Company, its brands and products, and the image and reputation of other Health Coaches. All Health Coaches are required to use good judgment and appropriate taste in promoting the individual Health Coach businesses. No advertisement that cheapens or reduces the good image of the Company, its products, brands, or business opportunity will be tolerated. Street signs/posters at intersections and indiscriminate distribution of fliers (either in person or by leaving them on cars in parking lots) are prohibited. Approved door hangers may be used where appropriate. Coaches must obey posted warnings against solicitation or the distribution of fliers or door hangers. C. Product Packaging Health Coach may not re-label, repackage, or modify the Company s products in any way in conjunction with any advertising, presentation, or fundraising endeavor. A Health Coach may, however, provide products for sampling purposes. D. Managing Advertising Expenses While certain advertisements are permitted, Take Shape For Life is a person- to-person business based on personally connecting with people. Take Shape For Life does not encourage Coaches to spend significant money on advertising efforts TRADE SHOWS, FAIRS, AND EXPOS A. Promoting Your Business at Professional Events When you are ready, we encourage you to attend Trade Shows, Fairs, and Expos to promote your business, but you must refrain from attending events that do not reflect well on the scientific and clinical heritage of the Company and its programs, or that could negatively reflect on the image of the Company. B. Qualifications Only Certified Health Coaches who are qualified Executive Director or above may promote Take Shape For Life at trade shows and professional expositions. Other Health Coaches not yet qualifying at the rank of Executive Director may participate in a tradeshow only under the guidance of a Certified Executive Director personally present at the event. C. Samples for Events Coaches must contact the Company to request any Company product samples or materials for use at trade shows or professional expositions. The provision of samples will be at the Company s sole discretion. D. Turning Event Contacts into Active Clients In the event that a prospective Client is ready to place an order at the exposition: he/she can place the order through the Company Call Center, place the order online, or submit a signed paper order at the event that can be subsequently faxed to the Company. Paper orders are usually processed in 24 hours. E. Corporate Presence at Events Members of Medifast s corporate team often sponsor One Medifast events, which emphasize the importance of speaking with one voice from a brand perspective to uniformly promote our channels Medifast Direct, Take Shape For Life, Medifast Weight Control Centers, and Medifast Medical Providers and provide customers with the appropriate and most effective support choice for their distinct weight- loss product and support needs. 1. Coaches may not participate in events where there is a Corporate Presence 2. Corporate One Medifast events include, but are not limited to: i. Weight Management Symposium ii. C.O.P.E. Symposium iii. One Medifast Events iv. American Society of Bariatric Physicians Regional Obesity Course Take Shape For Life, Inc. All rights reserved. 32

38 v. Maryland Dietetic Association Annual Meeting vi. American Society for Metabolic and Bariatric Surgery Annual Conference vii. Florida Dietetic Association Annual Symposium viii. Health & Fitness Expo ix. The Obesity Society x. Academy of Nutrition and Dietetics FNCE xi. American Society of Bariatric Physicians Annual Conference (Dates and locations for these events change annually) F. Field Presence at Events Take Shape For Life is not responsible for managing the Field event schedule and will not mediate disputes with event vendors or among members of the field. Any conflicts should be resolved by engaging your Business Mentorship Team. G. Registering for Events Coaches should inquire with the event organizer prior to registration to determine if the Company will be attending the event. In cases where the Company will be present, Coaches should contact the Company before registration. The Company is not responsible for event registration fees and event costs associated with Coaches registering for events they cannot attend. H. Insurance Take Shape For Life does not provide liability or other insurance coverage that is sometimes required to participate in such events. Such coverage, if necessary, is the sole responsibility of the Health Coach. I. Approval Take Shape For Life further reserves the right to refuse authorization for participation in any function that it does not deem to be a suitable forum for the promotion of its goods, services, or the Take Shape For Life opportunity TELEPHONE AND FAX RULES A. Health Coach Listing A Health Coach may be listed in telephone directories or have a social media user name or account name that reads: Joe Doe, Independent Health Coach with Take Shape For Life. B. Trademark Usage within Telephonic Devices The Company prohibits the use of its trademarks, service marks, trade names, slogans, or symbols or any of its product trade names or any copyrighted materials through telephonic devices, including computer networks, facsimile machines, or other automatic calling devices for the purpose of soliciting potential Health Coach or Clients. C. Proper Telephonic Representation Health Coaches may not answer the telephone and/or use any telephonic message device in a way that would represent or imply that they are employed by or are agents of the Company. D. The National Do Not Call Registry The purpose of the National Do Not Call Registry is to give consumers a choice about whether they want to receive telemarketing calls. Take Shape For Life is an opt-in program, meaning the Client requests information about the program. As soon as the Client opts in for information, the Company has three months to follow up on the lead. 1. You may call a Client up to 18 months after his/her last purchase, delivery, or payment even if the Client s number is then on the National Do Not Call Registry. You may call a potential Client for up to three months after he/she makes an initial inquiry to you. If Client gives you written permission, you may call them even if their number is on the registry. 2. If someone asks you not to call him/her, you are prohibited from making that call, even if you would otherwise be allowed to do so. If someone asks to be removed from your calling list, you must remove that person and notify the Company of the request. E. Unsolicited Faxes The practice of sending unsolicited or unwanted facsimile transmissions to prospects is prohibited. For purposes of this policy, the term unsolicited or unwanted facsimile transmissions means the transmission via telephone facsimile of any material or information advertising or promoting Take Shape For Life, its products, its Compensation Plan, or any other aspect of the company. These terms do not include a fax sent with prior express invitation or permission from the person receiving the fax or to any person with whom the Health Coach has an established business or personal relationship. The term established business or personal relationship means a prior or existing relationship formed by a voluntary two-way communication between a Health Coach and a person, on the basis of an inquiry, application, purchase, or transaction by the person regarding products offered by such Health Coach or formed by a personal or familial relationship. Take Shape For Life, Inc. All rights reserved. 33

39 F. Examples Examples of Telephone Directory Listings: 1. White Pages Listings (Phone book for businesses)- Health Coaches are permitted to list themselves as an independent Health Coach with Take Shape For Life, followed by their own name in the White Pages section, or under their own name, followed by the Company name. Examples: Independent Health Coach with Take Shape For Life Susie S. Thompson 123 Any Street (555) Thompson, Susie S. Independent Health Coach with Take Shape For Life 123 Any Street (555) Yellow Pages Listings (phone book for individuals)- For personal listings, Coaches must always be listed by name first. Examples Thompson, Susie Independent Health Coach with Take Shape For Life 123 Any Street (555) G. The Toll-Free Directory For a fee charged by the telephone company, Coaches can obtain a toll-free number for business purposes. Coaches may want to separate their listings from those of other Coaches by further identifying themselves. For example: Take Shape For Life Independent Health Coach Susie Thompson of New York, New York. No other business name may be included in a Health Coach ad PERMISSIBLE CLASSIFIED ADVERTISING A. Pre-Approved Advertisements Sample advertisements and pre-approved ads can be found in your Document Library of Office in Motion. These ads must still be approved by Compliance prior to use. These ads are preapproved for your use in creating promotional posters, flyers, and brochure inserts and placing ads in local newspapers or in PennySaver. Whether you wish to increase your personal Client acquisition efforts or sponsor new Health Coaches, the right message can make a difference. Remember that you may not stray from these pre-approved ads without specific Company approval. Getting something wrong can hurt not only you but all Health Coaches. It can also result in disciplinary action. B. Advertisement requirements Reminder: Any advertising placed by a Health Coach must include your name and clearly indicate Independent Health Coach with Take Shape For Life. The ad or flyer cannot imply that Coaches are employees of the Company or that the ad was placed by the Company, nor can your agreement or contract imply that the Company is responsible for the ad or for the payment of the billing for the ad. Any claims used must be approved, and no income claims, either direct or implied, can be presented in any materials referencing the business opportunity. Take Shape For Life, Inc. All rights reserved. 34

40 Appendix A: Administrative Procedures ACTIVATION POLICY In order for an individual to become a Health Coach with Take Shape For Life, he/she must follow the activation process once a new Health Coach Career kit is purchased. Until the account is activated, the individual is considered a Pending Health Coach. Pending Health Coaches cannot enroll Clients, sponsor other Health Coaches, set up their co-branded websites, access Office in Motion, or earn commissions or bonuses. Activation is defined as completion of the Health Coach Questionnaire, an accurate and complete W9, and agreeing to the terms and conditions of the Health Coach Agreement. Any Health Coach who does not activate their account within one year will be reverted back to Client status. The following notifications are sent via prior to the account being reverted back to Client status: A contact within the first 30 days of enrollment A second contact within the following 30 days (at or before day 60) A third contact within the following 30 days (at or before day 90) A final contact within the following 90 days (at or before day 150) RENEWAL POLICY A Health Coach will be required to renew his/her Health Coach Business on an annual basis from the date of activation. Renewal of a Health Coach Business indicates the intent of remaining active as a Health Coach for twelve (12) months and provides the following benefits: An annual subscription to Office in Motion An annual subscription for personalized co-branded websites with e-commerce capabilities An annual subscription to the Trilogy Training System Take Shape For Life Team support of Client Services o Health Coach Services o Commission and bonus processing Other Business Tools and Resources o Optimal Online o Coach Connection How to Renew A Health Coach may place an order for a Renewal via the Shopping Cart or by contacting Health Coach Services at The SKU is RENANN_EA and the current cost will be reflected on the Shopping Cart. Renewal Notification Process 30 days prior to the renewal date An will be sent to the address on file, notifying the Health Coach that it is time to renew. A countdown in the Office In Motion ticker will also appear. 15 days prior to the renewal date A second will be sent to the address on file, notifying the Health Coach that they now have 15 days to renew. The Business Coach will receive a notification that this business is scheduled for renewal so that they can encourage the Health Coach to renew. A reminder window will appear upon logging in to Office in Motion, directing the Health Coach to renew. (This message will appear every time the Coach logs into Office in Motion, up until the day of renewal or the Health Coach actually renews.) 7 days prior to the renewal date A third will be sent to the address on file, notifying the Health Coach that they now have 7 days to renew. The Business Coach will receive a notification that this business is scheduled for renewal. 1 day prior to the renewal date An outbound telephone call will be made to Health Coaches with front line volume in the last 30 days of the renewal date reminding them to renew. 1 day beyond renewal date Office in Motion will lock with no access to any functionality. A message will appear directing them to renew to gain access to OIM. (This message will remain for the next 14 days, with no access.) 15 Calendar Days Beyond the renewal date If a Health Coach fails to renew his/her business the account is cancelled, all frontline Clients and Health Coaches will automatically roll up to their business coach, if they do not renew. Take Shape For Life, Inc. All rights reserved. 35

41 REINSTATEMENT POLICY Within 30 days of cancellation Health Coaches that wish to reinstate their Health Coach business within thirty calendar days of the actual cancellation date may do so by paying an administration fee in addition to the renewal fee. Clients will not be restored without written communication via fax, letter, or ( address must match what is on file with Take Shape For Life) from their Business Coach. Please note that Health Coaches will not be automatically restored to a reinstated Business Coach. Health Coaches that wish to transfer back to their previous Business Coach will need to follow the Health Coach transfer process as outlined in Section 3.3 of the Policy and Procedures. After 30 days of cancellation Health Coaches that wish to reinstate their Health Coach business after the thirty calendar days from cancellation must purchase a new Health Coach Kit under the same Business Coach. Previous Clients will not be restored without writ- ten communication via fax, letter, or ( address must match what is on file with Take Shape For Life) from their Business Coach. Again, please note that Health Coaches will not be automatically restored to a reinstated Business Coach. Health Coaches that wish to transfer back to their previous Business Coach will need to follow the Health Coach Transfer process as outlined in Section 3.3 of the Policy and Procedures. If the Health Coach wishes to elect a new Business Coach he/she may do so but must remain inactive in the business for a period of six months prior to doing so. Under these circumstances the Health Coach s previous organization will not be restored to them. Take Shape For Life does not reimburse Health Coach s for any lost client support commission during the time the Health Coach account is cancelled. Take Shape For Life does reserve the right to decline a request for reinstatement of a Heath Coach Account. Please see the full policy for details. RECOVERY POLICY All Take Shape For Life orders should be submitted via a Health Coach s co-branded website, the company s website, or through the dedicated TSFL Client Solution Center. However, from time to time, Clients may inadvertently order through the Medifast Direct website in error. The Recovery Request process is in place as a mechanism to correct these errors. The Recovery Request Policy states: A Recovery Form must be completed. The form is located in Office in Motion> Resources Tab> Business Forms> Recovery Request Form A Medifast order is only recoverable within 60 days of when the order was placed Volume for a Recovery is only applied in the month the request is received. Up to three Medifast orders are recoverable per Client First time orders of a Medifast Direct Lead are not recoverable A Health Coach must be an active Health Coach at the time an order is placed for it to be recoverable. Purchases made at Medifast Weight Control Centers are not recoverable CHECK REPLACEMENT POLICY A replacement check request form must be completed for all lost, stolen, or damaged checks. The form is located in Office in Motion> Resources Tab> Replacement Check Request Form. Checks that are damaged or have incorrect payee information on them must be returned to the Take Shape For Life Team before a replacement check will be issued. Misplaced, lost or stolen checks require that 10 business days grace period from the date of release before they will be replaced. Checks are released on the 15th business of each month. CLIENT TRANSFER POLICIES Client Transfer Requests Client support is of utmost importance to Take Shape For Life. Occasionally, a Client may request the support of a different Health Coach than initially introduced him or her to Take Shape For Life. Clients have the right to select the Health Coach that best meets their individual support needs. If a Client wishes to transfer to a new Health Coach, he/she must complete the Client Transfer Request form and return it to [email protected] for processing or via fax at Client transfers will take between 1 to 3 business days for processing, and once approved, will be made effective the date the request is received. All volume that appeared prior to the date the change request was received on a Client s account will not move with the Client, but remain with the previous Health Coach. Any orders placed after the transfer has been received and approved will be credited to the new Health Coach. Take Shape For Life, Inc. All rights reserved. 36

42 A Client-initiated sponsor change should be rare, and warranted only in the case where the Client feels better supported by another Health Coach. In no way does this policy allow or condone Health Coach shopping or the solicitation of one Health Coach s Client by another Health Coach. Client solicitation is strictly prohibited and grounds for disciplinary action, up to and including termination. Health Coach-Initiated Client Transfers There are instances where a Business Coach may feel that a particular Client could be better supported by another Health Coach in his/her team. In that case, a Business Coach may initiate a transfer of a Client to another Health Coach by completing the Transfer Request form and submitting it to [email protected] for processing. Health Coach-initiated Client transfers follow the same processing timeframe and guidelines as a Client-requested transfer. That is: any and all volume that appeared on a Client s account will not move with the Client, but remain with the previous Coach. Any NEW orders placed after the transfer has been received and approved will be credited to the new Health Coach. Health Coach-requested Client transfers should be rare and in the Client s best interest. They may only come from a Client s personal Health Coach, and not from any other Coach in the line of sponsorship. In no way are Client transfers intended for compensation/qualification benefit or gain. Any Coach-requested transfer for such purposes is strictly prohibited and grounds for disciplinary action, up to and including termination. Change Request Process A Health Coach will need to complete the Health Coach Initiated Form in full. This form is located in Office in Motion > Resources Tab > Business Forms > Health Coach Initiated Change Request. Bulk Client Transfer Policy Take Shape For Life understands that from time to time, a Health Coach may wish to transfer large numbers of front-line entities (Clients, Leads, or Inactives) to down line Health Coaches for ongoing support and service. The amount of administrative effort required to transfer these front-line entities rises as the numbers of front-line entities rises. If a Business Leader opts to transfer more than 9 front-line entities from his/her front-line to a downline Health Coach, administrative fees will be assessed. The tiered Administrative fees have been introduced to recognize this proportional relationship between the number of front line entities and the required level of administrative effort. Administrative Fees are as follows: front-line entities (Clients, Leads, Inactives) - $ front-line entities (Clients, Leads, Inactives) - $ front-line entities (Clients, Leads, Inactives) - $ front-line entities (Clients, Leads, Inactives) - $ front-line entities (Clients, Leads, Inactives) - $ front-line entities (Clients, Leads, Inactives) - $500 The fees will be assessed based on the total number of transfers requested within a commission week (Monday Sunday). For example, if a Business Coach opts to give 5 front-line entities each to 10 downline Health Coaches, a $50 fee will be levied, since the total transfer amount equals 50. Please keep in mind that Clients always have the right to select their own Health Coach. No fee will be assessed for Client- requested transfers. RETURN POLICY Medifast will issue a refund of the purchase price on any unopened, unused boxes postmarked within 30 days of receipt. Refunds are available on consumable products and blenders, only; shipping charges are non-refundable. Free products received as part of a promotional offer and Last Chance! items do not qualify for either a refund or a credit if returned. Partial boxes, individual meals, and opened, unsealed supplements are exempt from refunds and credits. Cred- its will be issued only to the account used for the original purchase. Once we receive your return, please allow up to four weeks for processing. Refunds will be applied within 14 days after your return is processed but may not appear on your statement for one to two billing cycles. Customers are responsible for shipping costs to return product. All returns require a Return Authorization Number. To receive a Return Authorization Number, please call our Client Solutions Team at the number listed on the front of this document. EXCHANGE POLICY If you are not satisfied with a consumable product you purchased from Medifast, you may exchange it for another product of the same value. Your exchange must be postmarked within 30 days from the date you received it. To qualify for an exchange, no more than two meals may be missing from a box. You may exchange up to 10 boxes per order. Supplements, Last Chance!, and non-consumable products are ineligible for exchange. All exchanges require a Return Authorization Number. To receive a Return Authorization Number, please call our Client Solutions Team at the number listed on the front of this document. Take Shape For Life, Inc. All rights reserved. 37

43 PACKAGE REFUSAL POLICY If you refuse your shipment, $15 will be deducted from your refund. We are not responsible for lost or stolen packages en route to us. Policies are subject to change. Take Shape For Life, Inc. All rights reserved. 38

44 Appendix B: Intellectual Property/ Trademarks The following list of Medifast/Take Shape For Life Intellectual Property and trademarks (or any derivative thereof) cannot be used in any advertisement, presentation, or promotional material without the express approval of the Company. 5 & 1 Plan Active Trim Always Trim BeSlim Creating Hope, Health and Happiness Essential 1 Fast Shake Fast Soups Fit by Medifast Flavor Infuser Hi-Energy Weight Control Centers Lean & Green Life in Motion Maintain by Medifast Medifast Medifast Direct Medifast Weight Control Centers Medslim Medically Prescribed Weight Control RX Pro Drink Soy Living Take Shape Take Shape For Life The Power to Choose Health The Trilogy of Optimal Health Your Physician s Answer to Weight Control Your Physician s Answer to Weight Management Take Shape For Life, Inc. All rights reserved. 39

45 Appendix C: Forms 1. Trademark and Advertising Request Form 2. Client Initiated Changes Request Form 3. Media Request Form 4. Press Release Approval Request Form Take Shape For Life, Inc. All rights reserved. 40

46 Take Shape For Life August 2013 All rights reserved. 42

47 1 For details on the guidelines for promoting your Health Coach business, please review the Take Shape For Life Policies & Procedures, sections 7.0, 7.1, 7.3 and 7.7. The Policies & Procedures document is available in the Office in Motion Library (keyword: Policies).

48 Take Shape For Life August 2013 All rights reserved. 43

49 Take Shape For Life August 2013 All rights reserved. 44

50 Take Shape For Life August 2013 All rights reserved. 45

51 Take Shape For Life August 2013 All rights reserved. 46

52 Take Shape For Life August 2013 All rights reserved. 47

53 1 For details on the guidelines for media opportunities, please review the Take Shape For Life Policies & Procedures, sections 7.3 and 7.8. The Policies & Procedures document is available in the Office in Motion Library (keyword: Policies).

54 Take Shape For Life August 2013 All rights reserved. 48

55 Take Shape For Life August 2013 All rights reserved. 49

56 Take Shape For Life August 2013 All rights reserved. 50

57 1 For details on the guidelines for press release, please review the Take Shape For Life Policies & Procedures, sections 7.8. The Policies & Procedures document is available in the Office in Motion Library (keyword: Policies).

58 Take Shape For Life August 2013 All rights reserved. 51

59 Integrated Compensation Plan

60 1 Client 2 Health 3 Leadership Acquisition and Support Coach Sponsoring and Team Building Development Introduction At Take Shape For Life, our Health Coaches are the added value and level of support individuals often seek on their weight-loss and health-improvement journeys. Our Health Coaches have the opportunity to guide Clients to a state of Optimal Health and improve their lives using the Bio-Network of Support and Habits of Health System. Health Coaches are compensated for their efforts through the Take Shape For Life Integrated Compensation Plan outlined in this document; it allows Health Coaches the potential to enjoy the Trilogy of Optimal Health: Healthy Body, Healthy Mind, and Healthy Finances. 2 Take Shape For Life

61 Three primary earning opportunities with Take Shape For Life correlate to the three levels of competency in our business plan: 1. Client support income to reward the Health Coach Competency 2. Team building income to reward the Business Coach Competency 3. Leadership development income to reward the Business Leader Competency Related to these three earning opportunities are ten different avenues of earning income: 1. Client acquisition and support (Health Coach Competency) a. Client Support Commissions b. Certification Bonus c. Client Support Bonuses d. Health Coach Consistency Bonuses e. Client Acquisition Bonus 2. Health Coach sponsoring and team building (Business Coach Competency) a. Assist Bonuses b. Team Growth Bonuses c. Fully Integrated Business Coach Bonus 3. Leadership development (Business Leader Competency) a. Executive Director Generation Bonuses b. Elite Leadership Bonuses The Take Shape For Life Compensation Plan was designed to reward: Client acquisition & support Health Coach sponsoring & mentoring Mid-level leadership development & support Top-level leadership development Full integration at each level of competency Continuing education & Certification Integrated Compensation Plan

62 1 Client Acquisition and Support Client acquisition and support are the foundation of a successful TSFL business and, for many, are the starting point in our business model. Health Coaches are compensated based on orders placed by their personally sponsored and supported Clients. A Client can order online via a Health Coach s personalized, co-branded website (which is provided by the company) or by calling the toll free ordering line (800) Client Support Commissions Health Coaches earn 15% of the retail dollar amount of commissionable goods on an order placed by their personally sponsored Clients. Certification Bonus There is also a reward for continuing education and becoming Certified with TSFL. Certified Health Coaches generally offer a higher level of service to their Clients via the knowledge gained through Certification. Health Coaches are Clients personal guides on their weightloss journey; therefore, it is imperative that a Health Coach is equipped with the proper knowledge to coach Clients through their entire journey from successful weight loss to Optimal Health. TSFL values continuing education through Health Coach Certification so highly that our compensation plan rewards this behavior with an additional 3% bonus. Client Support Bonuses At Take Shape For Life, we reward Health Coaches for their personal efforts and experience; therefore, our Client Support Bonuses are in a tiered structure that allows for greater earnings opportunities as more orders are generated by Clients directly acquired and supported by you. Client Support Compensation Frontline Volume (FLV) Client Support Path Less than $1,200 FLV Minimum FLV $1,200 Minimum FLV $2,400 Minimum FLV $3,600 Minimum FLV $4,800 It pays to get Certified! Minimum FLV $6,000 Client Support Commissions 15% 15% 15% 15% 15% 15% Certification Bonus 3% 3% 3% 3% 3% 3% Client Support Bonuses 5% 7% 9% 11% 13% Maximum Client Support Compensation 18% 23% 25% 27% 29% 31% 4 Take Shape For Life

63 Health Coach Compensation Example $300 x 5 Ordering Entities = $1,500 Frontline Volume (FLV) Certified Health Coach: $1,500 FLV x 23% (15% CSC + 3% CB + 5% CSB) = $345 Health Coach: $1,500 FLV x 20% (15% CSC + 0% CB + 5% CSB) = $300 Health Coach Consistency Bonus TSFL wants to recognize Certified Health Coaches who display Client order volume consistency, month after month. This bonus has three tiers*: A Certifed Health Coach who generates a minimum of $2,000 in Frontline Volume for three (3) consecutive months will be paid a $250 bonus. A Certified Health Coach who generates an average of $4,000 in Frontline Volume for three (3) consecutive months will be paid a $500 bonus. A Certified Health Coach who generates an average of $6,000 in Frontline Volume for three (3) consecutive months has reached a level of mastery referred to as Fully Integrated Health Coach and will be paid a $1,000 bonus. *Note: In order to be eligible for this bonus, Frontline Volume cannot fall below $2,000 in any month. If volume does fall below the $2,000 minimum threshold, the three-month consistency clock starts back at zero, and three additional months will be needed to achieve this bonus. The three-month cycle can begin in any month, and Health Coaches are eligible for this bonus four times in a 12-month period. Client Acquisition Bonus (CAB) Take Shape For Life knows how important it is to get off to the right start with your new TSFL business. Therefore, to reward new Health Coaches who get on the fast track to success, we offer a special bonus. As a new Health Coach, you have the opportunity in your first 30 days after activating your business to earn a one-time $100 bonus. To achieve this bonus, you must acquire five (5) new* frontline Clients and/or Health Coaches whose combined orders generate a minimum total of $1,000 in Medifast Meals within your first 30 days. *New is defined as a first-time Client with Take Shape For Life who has never ordered with any other Health Coach or through any other mechanism with TSFL. Integrated Compensation Plan

64 2 Health Coach Sponsoring and Team Building In order to maximize one s earning opportunity with TSFL, a Health Coach must build and mentor Health Coach Teams. Assist Bonuses As a Business Coach, you can assist a new Health Coach whom you have personally sponsored in earning his/her Client Acquisition Bonus. Whenever you help a new personally sponsored Health Coach earn the $100 CAB, you will be paid a matching Assist Bonus of $100, too. Team Growth Bonuses The Team Growth Bonuses provide the opportunity for a Business Coach to earn on orders of other Health Coaches and their teams. This bonus is only available to Business Coaches qualifying at the Senior Coach level or higher and is earned only on business teams outside of a Coach s frontline. This chart provides the qualified rank earning percentage for each potential business team rank. For example: a qualified Director earns 6% on a Senior Coach Team down to the next qualifying Health Coach above Senior Coach. *Team Growth Bonuses paid on Level 2 and below (Client Support Bonuses paid on Level 1 (frontline) Team Rank Senior Coach Manager Qualified Rank Associate Director Director Executive Director Health Coach 4% 6% 8% 10% 12% Senior Coach 2% 4% 6% 8% Manager 2% 4% 6% Associate Director 2% 4% Director 2% Team Growth Bonus Example Executive Director Eligible for ED Generation Bonus 6 Take Shape For Life

65 Team Growth Bonus Teams In-depth (Earning the Gap) Example Fully Integrated Business Coach Consistency Bonus A Business Coach has reached a level of mastery when he/she has achieved the level of Fully Integrated Business Coach (FIBC). This is attained when a qualified Executive Director (who is Certified) achieves $6,000 in Frontline Volume, five (5) qualified Senior Coach Teams, and $15,000 in Group Volume in a monthly bonus period. A Business Coach who meets these qualifications for three (3) consecutive months will be paid a $1,000 bonus. A Business Coach can begin this three-month cycle in any month and has the opportunity to earn this bonus up to a maximum of four times in a 12-month period. Integrated Compensation Plan

66 3 Leadership Development Leaders drive all successful organizations, and within TSFL, leaders play a vital role in communicating, training, supporting, shaping, building, defining, and living the mission of TSFL. Executive Director Generation Bonuses The Executive Director Generation Bonuses are business development bonuses that reward Business Leaders qualifying as a Regional Director or higher for developing Executive Directors within their organizations. In order to maximize the benefit of the Executive Director Generation Bonuses, it is important for a Business Leader to develop separate Executive Director Teams. An Executive Director Team is defined as a qualifying Executive Director (or higher) in a unique line of sponsorship (an Executive Director does not need to be personally sponsored). The Executive Director Generation Bonuses are paid on an entire Executive Director s organization, which is defined as all of the Health Coaches and their Clients within a line of sponsorship of a qualified Executive Director (or higher), down to the next qualified Executive Director (or higher) in depth. The term for this is 8 Take Shape For Life

67 Generation, and the diagram below demonstrates Executive Director Generations visually down through six generations. The diagram below outlines the six generations of depth by which an Integrated Presidential Director is eligible to receive generational earnings. Executive Director Generation Example The more qualified Executive Director Teams a Business Leader develops in width, the higher that Business Leader will advance in rank, which determines how many generations of Executive Directors a Business Leader will be paid on in depth. Another method for qualifying for earnings on Executive Directors in depth is through integration. Integrated Coaches are eligible to earn on more Executive Directors in depth than their non-integrated rank counterparts. Integrated Compensation Plan

68 The table below displays the Executive Director Generation depth a Business Leader is eligible to earn on based on his/her qualified rank level. Qualified Rank Regional Director Integrated Regional Director National Director Integrated National Director Global Director Integrated Global Director Presidential Director Integrated Presidential Director Generations of ED Teams 1 2.5% 2.5% 2.5% 2.5% 2.5% 2.5% 2.5% 2.5% 2 2.5% 2.5% 2.5% 2.5% 2.5% 2.5% 2.5% 3 2% 2% 2% 2% 2% 4 2% 2% 2% 2% 5 1.5% 1.5% 1.5% 6 1.5% Elite Leadership Bonuses Elite Leadership Bonuses are paid to our Business Coaches qualifying at our Leadership ranks of National Director and higher to compensate for their role in directing and overseeing largescale TSFL businesses. The three separate bonuses listed below overlap, which means they are cumulative, so a qualifying Presidential Director will earn all three bonuses. These bonuses are: National Elite Leadership Bonus Global Elite Leadership Bonus Presidential Elite Leadership Bonus Each of these bonuses is paid in the same way on a Coach s organization. A Business Leader earns a 0.5% override on his/her entire business down through the first Business Leader at or above the qualifying bonus rank (National Director, Global Director, or Presidential Director) to the second Business Leader at or above that rank in each line of sponsorship. The Business Leader receives earnings on the personal order of the second Business Leader at or above the bonus rank in a line sponsorship but not on the orders of that Business Leader s team. These Elite Leadership Bonuses have the potential to pay deep into a Business Leader s organization beyond the level of Executive Director Generations a Business Leader also qualifies to receive. This is because a Business Leader earns on the entire organization down to the second qualified Business Leader holding the same elite leader rank. 10 Take Shape For Life Elite Leadership Bonus Example

69 Take Shape For Life Career Path & Rank Qualifications Ranks Qualifications Coaching Ranks Health Coach Senior Coach (SC) Manager Associate Director Director Less than $1,200 GV and 5 Ordering Entities Minimum $1,200 GV and 5 Ordering Entities Qualified SC with 2 Qualifying Points Qualified SC with 3 Qualifying Points Qualified SC with 4 Qualifying Points Executive Ranks Executive Director (ED) Integrated Executive Director (FIBC) Regional Director Integrated Regional Director Qualified SC with 5 Qualifying Points Qualified ED with minimum $6,000 FLV, 5 SC Teams, $15,000 GV, and Certified Qualified ED with 1 ED Team Qualified FIBC with 1 ED Team, and Certified Leadership Ranks National Director Integrated National Director Global Director Integrated Global Director (FIBL) Presidential Director Integrated Presidential Director Qualified ED with 3 ED Teams Qualified FIBC with 3 ED Teams, and Certified Qualified ED with 5 ED Teams Qualified ED with 5 FIBC Teams, and Certified Qualified ED with 10 ED Teams Qualified FIBL with 5 additional ED Teams, and Certified Point Definition: 1 point for each Senior Coach Team 1 point for every $1,200 increment of Frontline Volume Integrated Compensation Plan

70 Special Characteristics and Criteria of the Integrated Compensation Plan To better understand the details of the Take Shape For Life Integrated Compensation Plan, a Health Coach should be familiar with the following special characteristics and criteria. A glossary is provided at the end of this document. Crediting of Products and Orders for Compensation Clients and Health Coaches pay the same price for products. Compensation (all commissions and bonuses) is paid on the retail dollar amount of products. Compensation is paid on commissionable goods only. These include, but are not limited to, meal replacements, snacks, flavor infusers, supplements, etc. Tools, apparel, program materials, events, fees, taxes, and shipping are not eligible for compensation. A Health Coach s personal orders are credited to the sponsor of that Health Coach. Health Coaches do not receive compensation for their personal orders. This is because personally sponsored Health Coaches are considered the personal Clients of their sponsors. Personally acquired Clients and personally sponsored Health Coaches (people on a Health Coach s frontline) are considered to be on his/her first level (Level 1) for compensation purposes. Health Coaches receive compensation based on Clients or Health Coaches actual orders of products. When a product is returned for a refund, the volume amount associated with that return will be deducted from the Health Coach s Frontline Volume (will appear as a negative Personal Volume (PV) amount for that Client). As returns are processed as negative volume, they can impact both Client Support Bonus percentages and rank qualifications. Returns and refunds are not processed on the last day of a month. A Client must have positive Personal Volume (PV) to count as an ordering entity in a monthly bonus period. Clients who have negative or zero Personal Volume (PV) do not count as an ordering entity for rank qualifications. Only Certified, Fully Integrated Health Coaches, who are members of the BeSlim Club, and have a minimum monthly order of $100 ($100 PV), are eligible to receive Leads. 12 Take Shape For Life

71 Payment Schedules and Methods Weekly Client Support Commissions (paid on Level 1) are paid the week following a weekly commission period. o A commission week is Monday through Sunday, and any orders placed and paid for during that week will be paid as Client Support Commissions the following week. Volume is credited for orders that are paid in full. o Weekly Client Support Commissions are paid at the base level of 15%. Any additional percentages earned for volume or Certification are paid with Monthly Bonuses, on or about the 15th of the month following the closure of the monthly bonus period. Bonuses are paid on or about the 15th of the month following the closure of the monthly bonus period. o The monthly bonus period for the compensation plan is based on orders placed and payments received in a calendar month. The monthly period begins at 12:00 AM PST on the first day of the month and concludes at 11:59 PM PST on the last day of the month. Volume is credited for orders that are paid in full. For the purposes of compensation, a business week is defined as any Monday through Friday, with the exception of observed holidays. Observed holidays currently include New Year s Day, Good Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving (Thursday and Friday), Christmas Eve, Christmas Day, and another holiday TBD by the company. The preferred method of compensation disbursement is electronic funds transfer (EFT), which means that funds are directly deposited into a Health Coach s banking account electronically. The schedule for EFTs is once per week for commission payments and once per month for monthly bonuses (if applicable). o The minimum amount to process an EFT will be $25. Earnings under $25 will be accrued and released once the $25 threshold is reached. Funds can also be disbursed via physical check, if preferred. If check is the selected method for payment, several conditions will apply: o Checks are only issued once per month, on or about the 15th. This monthly payment includes any and all commissions and bonuses for the previous monthly period. o A check processing fee of $5.00 will be assessed and subtracted from total compensation for the previous month. o The minimum earnings amount to process a check will be $ Earnings under $30.00 will be accrued and released once the $30.00 threshold is reached. (The $5.00 check fee will be deducted prior to release.) Compensation checks that remain un-cashed for more than six months become void. Health Coaches who are in possession of voided checks may be issued a replacement check upon the Company s receipt of a written request from the Health Coach, along Integrated Compensation Plan

72 with a processing fee and the original un-cashed check. o If a check was lost and a replacement check requested, the company will put a stop payment on the original check, issue a replacement check, and assess a processing fee. Rank Advancement and Recognition This is a real-time plan. Although Health Coaches are granted a recognition title based on their highest achievement level, they are paid month to month based on their current monthly rank performance. A Health Coach must reach the Integrated rank qualifications and maintain those qualifications for three consecutive months to be recognized and honored at the new Integrated Recognition Title Rank. o The Integrated Ranks include: Integrated Executive Director, Integrated Regional Director, Integrated National Director, Integrated Global Director and Integrated Presidential Director. A Health Coach will be paid at his/her performing rank, regardless of recognition title. The company reserves the right to use Recognition Title Rank or qualification rank for committee participation and selection, communication schedules, invitations for trainings and events, and/or special recognition. o The company reserves the right to make any event, incentive trip, or training by invitation only. A Health Coach is responsible for reviewing his/her performance throughout the month to ensure his/her personal business goals are met. If any questions or disputes about qualification, ranking, or performance arise, a Health Coach has two business days from the end of the weekly commission period or monthly bonus period to notify Take Shape For Life. Failure to do so will result in the acceptance of that qualification/ rank/performance by the Health Coach. Performance or Activity Requirements A Health Coach must have completed the online Activation process in Office in Motion to receive compensation. This includes: o Completing the Activation Questionnaire o Completing and submitting a W-9 Form for tax purposes (with a valid tax ID # and electronic signature) o Agreeing to the Terms and Conditions of the Health Coach or Health Professional Agreement o Setting up a Take Shape For Life co-branded website o Completing the Basic Competency Assessment within 30 days of activation A Health Coach is required to renew his/her business annually. The cost to renew the business is currently $99.00 and is subject to change. 14 Take Shape For Life

73 Limited Rights to Leadership Compensation Time Limited Rights to Compensation for Health Coaches below the Recognition Title Rank of Regional Director on a National Director Team(s) either personally sponsored or in Depth. o If a Health Coach with a Recognition Title Rank below Executive Director sponsors a Health Coach who reaches the Recognition Title Rank of National Director (or higher) or has any Business Coach anywhere in his/her Health Coach organization who achieves the Recognition Title Rank of National Director (or higher), the Health Coach(s) in the Line of Sponsorship (LOS) above that National Director will have 12 months from the date of the National s qualification in which to achieve the Rank of Executive Director and to also become Certified. Failure to meet this standard will result in forfeiture of all rights to future compensation on the revenues generated by the line of business containing that National Director (or higher) organization and any upline Recognition Title Rank Executive Directors or higher. That line of business starting at the first Recognition Title Rank Executive Director will be moved to the next eligible Executive Director (or higher) in the Line of Sponsorship (LOS) (if need be). Regional Director 3-Month Rule: Annual requirement to Earn Compensation on National Directors (or higher) in Depth. o Any Health Coach with a Recognition Title Rank of Regional Director that has a National Director (or higher) team either personally sponsored or anywhere in his/her organization which has qualified 9 out of 12 consecutive months, must themselves be qualified at Regional Director for a minimum of at least 3 months in that same 12-month period and they must also be Certified in order to maintain future rights to Leadership Compensation. Failure to achieve this standard will result in forfeiture of all rights to future compensation on the revenues generated by the line of business containing that National Director (or higher) organization and any upline Regional Director or higher. That line of business starting at the first Regional Director will be moved to the next eligible Executive Director (or higher) in the Line of Sponsorship (LOS) (if need be). Appeal and Reinstatement: With reasonable and extenuating circumstances, Health Coaches who lose rights to future compensation may appeal to the Policy Committee to keep these rights. However, reinstatement of Leadership Compensation can only be accomplished with written approval by the Company and from all qualified Executive Directors in the Line of Sponsorship who potentially may be adversely affected by the reinstatement. Qualification Notes The first Health Coach to qualify at a required rank qualifies that team for the purposes of compensation. For example, if Bill, a Senior Coach, sponsors Sharon, also a Senior Coach, Bill qualifies that team as a Senior Coach Team. This plan uses compression. Integrated Compensation Plan

74 Compensation Statements and Yearly Tax Statements All compensation statements (weekly commissions and monthly bonuses) are available online via Office in Motion for download by the Health Coach. Health Coaches receiving compensation of at least $600 per year will receive a Misc Form from Take Shape For Life for all payments received in that calendar year. The 1099-Misc Form may be available online via Office in Motion or, if not available in electronic format or upon request, will be mailed no later than January 31st of the following calendar year. Terms to Learn (Glossary) Following are some important terms to learn regarding the Integrated Compensation Plan. Assist Bonus: A matching $100 bonus paid to the sponsor of a new Health Coach who earns his/her Client Acquisition Bonus. Associate Director: A Health Coach who qualifies as a Senior Coach with three Qualifying Points in a monthly Bonus Qualified: A Health Coach who has met the requirements to earn specific bonuses within the Integrated Compensation Plan. Business Coach: A Health Coach who enrolls, trains, and mentors Health Coaches. Business Leader: A Business Coach who builds teams of Business Coaches. Career Path: Specific and measurable accomplishments and benchmarks within the Integrated Compensation Plan that relate to set qualifications of achievement or ranks. Certification: Take Shape For Life offers an additional education opportunity to help Health Coaches become more informed and better at their craft. Certification is an optional online course offered by the Center for Obesity Prevention and Education (COPE) at Villanova University. Health Coaches who elect to purchase, complete this online course, and pass the Certification Exam are deemed Certified and eligible for additional bonuses in the Integrated Compensation Plan. Certification Bonus: A 3% bonus paid to Certified Health Coaches on their Frontline Volume. Certified Health Coach: Someone who has successfully completed and passed the online Certification Course. Client: An individual who receives the support of a Take Shape For Life Health Coach and orders Medifast products via a Health Coach s co-branded website or the toll-free order line provided by Take Shape For Life. 16 Take Shape For Life

75 Client Acquisition Bonus (CAB): A one-time $100 bonus for new Health Coaches who develop at least five new frontline Clients whose orders total at least $1,000 in Medifast Meals within their first 30 days as a Health Coach. Client Support Bonuses: Bonuses available to Health Coaches who acquire and support Clients. The percentage a Health Coach can earn increases with increased Frontline Volume (more orders) and is a sliding scale from 5% to 13%. Client Support Commissions (CSC): Payment to a Health Coach on frontline (level 1) orders. Client Support Commissions are 15% of the retail dollar amount of the commissionable goods on an order. Commissionable Goods: Any products including Medifast Meals, Snacks, Supplements, Flavor Infusers TM, etc. that can be consumed. Tools, apparel, program materials, events, fees, taxes, and shipping are not commissionable goods and thus not eligible for compensation. Compensation: The earnings paid to a Health Coach from Take Shape For Life for the services provided to Clients or team members, based on the Health Coach s individual performance and his/her team s performance in a period of time. Competency: The fundamental skills, attitudes, behaviors, and performance that a Health Coach acquires through training, application, and practice. The three levels of competency in Take Shape For Life are Health Coach, Business Coach, and Business Leader. Compression: Compression occurs when a Health Coach does not meet the required qualifications for receiving bonuses. The non-qualifying Health Coach s Group Volume available down to the next qualifying Health Coach in his/ her organization will roll up to the next qualified Health Coach in the line of sponsorship for bonus eligibility. Unqualified Health Coaches in between are rendered ineligible regarding that specific bonus compensation for that monthly bonus period, and their volume is credited to the first qualified Health Coach in the line of sponsorship. Director: A Health Coach who qualifies as a Senior Coach with four Qualifying Points in a monthly bonus period. Elite Leadership Bonuses: Monthly bonuses paid to a Health Coach who has reached the qualified rank of National Director or higher on their Group Volume for their entire team, down to the second individual at that rank or higher in depth. These bonuses include: National Elite Leadership Bonus Global Elite Leadership Bonus Presidential Elite Leadership bonus Executive Director: A Health Coach who qualifies as a Senior Coach with five Qualifying Points in a monthly bonus period. Executive Director Generation Bonus: Additional incremental bonuses available to those who have achieved the qualified rank of Regional Director or higher in the monthly bonus period. Paid on generations of Executive Director Teams in depth. Bonuses are paid as a percentage of the Executive Director in depth s Group Volume, down to the next Executive Director in depth. Executive Director Team: A team that contains at least one qualified Executive Director (or above). Frontline: Individuals personally sponsored by a Health Coach, including Clients, Health Coaches/Health Care Professionals, and Leads. Frontline is also referred to as Level 1. Frontline Volume (FLV): All of the volume from orders of commissionable goods placed by individuals in a Health Coach s frontline (Level 1), not including a Health Coach s Personal Volume. Commissions are paid weekly on Frontline Volume. Frontline Volume in a monthly bonus period also determines the percentage (if any) for the Client Support Bonuses. Full Integration: Completion of the act or process of making the parts whole is completed. If someone is Fully Integrated, the process has been accomplished for that person, at that level. Fully Integrated Business Coach: A Business Coach who demonstrates proficiency in both Client acquisition and support and Health Coach sponsoring and mentorship. He/she is Certified, maintains Frontline Volume of at least $6,000, qualifies five Senior Coach Teams, and has Group Volume of at least $15,000 each month. Fully Integrated Business Coach Consistency Bonus (FIBC Consistency Bonus): A $1,000 bonus paid to individuals who are Certified and meet the following criteria for three consecutive months: Frontline Volume of at least $6,000 5 qualified Senior Coach Teams Group Volume of at least $15,000. Integrated Compensation Plan

76 Fully Integrated Business Coaches are eligible to receive this bonus four times in a 12-month period. Fully Integrated Business Coach (FIBC) Team: A team that contains at least one qualified Fully Integrated Business Coach (FIBC). Fully Integrated Business Leader: A Business Leader who demonstrates mastery in team building. He/she is Certified and qualifies as a Global Director and has five qualified Fully Integrated Business Coach Teams in a monthly bonus period. Fully Integrated Health Coach: A Health Coach who consistently demonstrates mastery of Client coaching and support. He/she is Certified and maintains Frontline Volume each month of at least $6,000 from approximately 25 Clients and earns the $1,000 Health Coach Consistency Bonus. Generation: All of the Health Coaches and their Clients within a line of sponsorship of a qualified Executive Director, down to the next qualified Executive Director in depth. Global Director: A Health Coach who qualifies as an Executive Director and has five qualified Executive Director Teams in a monthly bonus period. Group Volume (GV): Total volume from a Health Coach s entire organization, including their Frontline Volume. Group Volume does not include a Health Coach s Personal Volume. Health Coach: Someone who provides Take Shape For Life Clients with the knowledgeable care and support they need to move toward Optimal Health. Health Coaches support, encourage, and mentor Clients using Medifast products and protocols for safe and effective weight loss, followed by transition and long-term weight management using the Habits of Health System. Health Coach (rank): Base rank; someone who has purchased a Health Coach or Health Professional Career Kit and activated his/her Take Shape For Life business. Health Coach Consistency Bonuses (HC Consistency Bonus): A special bonus for Certified Health Coaches who demonstrate Frontline Volume consistency for a consecutive three-month (rolling) period. Health Coach Consistency Bonuses are tiered ($250, $500, and $1,000) based on a Health Coach s Frontline Volume performance each month in the three-month period. A minimum of $2,000 Frontline Volume per month is required to be eligible for any Health Coach Consistency Bonus. Health Coaches are eligible to receive this bonus four times in a 12-month period. Health Professional: A Health Coach who is also a Health Care Professional. For the purposes of compensation and rank advancement, Health Professional Health Coaches must fulfill the same eligibility and qualification requirements and earn the same compensation as all other Health Coaches. Highest Rank Achieved: The highest rank ever achieved by a Health Coach in the compensation plan. Also known as Recognition Title Rank or Rank. In-depth (or Depth): The Clients and/or Health Coaches in a Health Coach s business below his/her Frontline (Level 1). Depth occurs as Health Coaches sponsor other Health Coaches and begin building teams. Integrated Executive Director: A Certified Health Coach who has $6,000 Frontline Volume, 5 qualified Senior Coach Teams, and $15,000 Group Volume in a monthly bonus period. Also known as a Fully Integrated Business Coach. Integrated Global Director: A Certified Health Coach who qualifies as an Executive Director and has five qualified Fully Integrated Business Coach Teams in a monthly bonus period. Also known as a Fully Integrated Business Leader. Integrated National Director: A Certified Health Coach who qualifies as a Fully Integrated Business Coach and has three qualified Executive Director Teams in a monthly bonus period. Integrated Presidential Director: A Certified Health Coach who qualifies as an Executive Director and has 10 qualified Executive Director Teams in a monthly bonus period, five of which must be qualified Fully Integrated Business Coach Teams. Integrated Regional Director: A Certified Health Coach who qualifies as a Fully Integrated Business Coach and has one qualified Executive Director Team in a monthly bonus period. Integration: The act or process of making parts whole or complete. Lead: An individual who requests the support of a Take Shape For Life Health Coach either via the Medifast Direct website or the Take Shape For Life corporate site. Health 18 Take Shape For Life

77 Coaches who qualify as Fully Integrated Health Coaches with $6,000 in Frontline Volume, are BeSlim Club members with a monthly minimum order of at least $100 ($100 in PV), and are Certified are eligible to receive these Leads. Line of Sponsorship: The lineage of Health Coaches from an individual to his/her sponsor, connected to the next upline sponsor and so forth. Also referred to as Business Mentorship Team. Manager: A Health Coach who qualifies as a Senior Coach with two Qualifying Points in a monthly bonus period. Monthly Bonus Period: Period for which monthly qualifications and bonuses are calculated. The monthly bonus period begins at 12:00 AM PST on the first calendar day of the month and closes at 11:59 PM PST on the last calendar day of the month. All volume generated during the month comprises the total volume for rank qualification and bonus calculation. Bonus payout occurs on or about the 15th of the month following the monthly bonus period. National Director: A Health Coach who qualifies as an Executive Director and has three qualified Executive Director Teams in a monthly bonus period. Ordering Entities: Any frontline Client or Health Coach with positive Personal Volume (PV) or any frontline Health Coach Team with positive Group Volume (GV) in a given monthly bonus period. Personal Volume (PV): The volume from an individual s personal order of commissionable goods. For Health Coaches, PV is not included in a Health Coach s Frontline Volume, but rather included in the sponsor s Frontline Volume. Presidential Director: A Health Coach who qualifies as an Executive Director and has 10 qualified Executive Director Teams in a monthly bonus period. Qualified: When a Health Coach meets all criteria for a specific rank in the current monthly bonus period. Recognition Title Rank: See Highest Rank Achieved. Regional Director: A Health Coach who qualifies as an Executive Director and has one qualified Executive Director Team in a monthly bonus period. Senior Coach: A Health Coach who has at least $1,200 in Group Volume from at least five ordering entities in a monthly bonus period. Senior Coach Team: A team that contains at least one qualified Senior Coach (or above). Sponsor: The Health Coach who enrolls a Health Coach into the business and provides him/her with mentorship and business support. Team: A segment of business genealogy consisting of a frontline Health Coach and those [Health Coaches and Clients] whom that Health Coach supports. Also referred to as a leg. Team building: The act of building an organization of Health Coaches by sponsoring individuals into a Take Shape For Life business, and helping them develop successful businesses of their own. Team Growth Bonuses: Additional incremental bonuses available to those who have achieved the qualified rank of Senior Coach or higher in the monthly bonus period and have Health Coaches with volume on their team. Paid as incremental percentages of the Health Coach in depth s Group Volume based on qualifying rank (both Health Coach and team) down to the next qualifying Senior Coach or higher. Team Growth Bonuses are not paid on Frontline Volume (covered in Client Support Bonuses) or Executive Director Teams (covered in Generation Bonuses). Weekly Commission Period: Period for which Client Support Commissions are calculated. A weekly commission period runs Monday through Sunday, with payment occurring mid-week of the following week. Qualifying Point: A unit of measurement for qualification. As a Health Coach generates more Frontline Volume in orders or sponsors and grows teams of qualified Senior Coaches, he or she becomes eligible to earn more Qualifying Points. One (1) point is awarded for: every $1,200 in Frontline Volume a Health Coach generates OR every qualified Senior Coach Team. Integrated Compensation Plan

78 2013 Take Shape For Life Integrated Compensation Plan Medifast, Inc., Owings Mills, Maryland TS-0972-DOC_ICP

79 Initial Integrated Compensation Plan Income Disclosure Statement This Income Disclosure Statement is a representation of Take Shape For Life s business opportunity. THE COMPANY POLICY IS NOT TO STATE OR ENDORSE POTENTIAL OR HYPOTHETICAL INCOME CLAIMS BUT RATHER TO PRESENT HISTORICAL DATA AND RANGES OF ACTUAL HEALTH COACH EARNINGS. With the launch of the new Integrated Compensation Plan on September 1, 2013, to provide information on realistic earnings opportunities for Health Coaches under the Integrated Compensation Plan, Take Shape For Life has provided the following chart. The chart is based on Health Coach performance for the date range provided assuming the compensation mechanism for performance during that period was the Integrated Compensation Plan. The Integrated ranks represented below are new ranks that were not included in the prior compensation plan. Had the Integrated Compensation Plan been the compensation mechanism for the January June 2013 period, the resulting rank and income performance for the integrated ranks would have been as indicated on the chart. January June 2013 Active Health Coaches who would have Received Payment by Month Active Health Coach Rank Percentage of Active Health Coaches in each rank Average Volume of Sales* to Clients Percentage of Total TSFL Sales* Generated Health Coach 57.78% % $ $25.01 $87.45 $73.77 Senior Coach 17.66% 1, % $ $28.22 $ $ Manager 7.59% 2, % $2, $37.16 $ $ Associate Director 3.79% 3, % $2, $ $ $ Director 2.16% 4, % $3, $ $1, $1, Executive Director 6.17% 7, % $14, $ $2, $2, Integrated Executive Director 0.18% 10, % $8, $2, $5, $4, Regional Director 2.46% 7, % $9, $1, $3, $3, Integrated Regional Director 0.90% 11, % $12, $3, $6, $6, National Director 0.23% 5, % $20, $1, $7, $7, Integrated National Director 0.50% 11, % $23, $3, $8, $8, Global Director 0.44% 9, % $75, $3, $18, $14, Integrated Global Director 0.02% 8, % $59, $48, $53, $53, Presidential Director 0.06% 10, % $56, $16, $28, $25, Integrated Presidential Director 0.06% 5, % $276, $29, $148, $127, * Refers to Commissionable Sales The above earning statistics are for all Active Take Shape For Life Health Coaches who would have been paid commissions and/or bonuses from January 1, 2013 to June 30, 2013 via the Integrated Compensation Plan during that time period, if that plan was the compensation mechanism in place. If the Integrated Compensation Plan had been in effect during the period, approximately 79% of Health Coaches would have been active during this period. An Active Health Coach is defined as any person who: - purchased one of Take Shape For Life s enrollment pack options; and Monthly Income (U.S. Dollars) High Low Average 1 Median 2 1 Average The average monthly income is defined as the sum total amount of all payments earned and released for that rank, divided by the number of active Health Coaches receiving payment at that rank. 2 Median The median monthly income is defined as the midpoint amount of all of the payments earned and released for Health Coaches receiving payment at that rank. Page 1 of Take Shape For Life, Inc. All rights reserved. TSFL Initial Integrated Compensation Plan Income Disclosure Statement rev. 9/13

80 - completed the online activation process to activate his/her account, including agreeing to the terms and conditions in the Health Coach Agreement, submitting a W-9 Form, and successfully completing the Basic Activation Questionnaire; and - would have had earnings with the Integrated Compensation Plan at or above $25, the minimum amount required to receive a check or EFT, in a given calendar month (Note: any earnings below $25 are accrued and disbursed once the $25 threshold is met) Please note that this excludes Clients, Inactive Clients, Leads, and Pending Health Coaches. Individuals who have purchased one of the enrollment pack options, but have not completed the activation process, are not considered Health Coaches until that process has been fulfilled. Accordingly, the status of an individual can and sometimes will change throughout the year. For example, Beverly begins the year as a Client and decides to purchase a Health Coach enrollment pack in February. However, she does not complete the activation process and become a Health Coach until March. The following March, she opts not to renew her Health Coach account and returns to Client status. Therefore, for the purposes of this Income Disclosure Statement, Beverly is only considered a Health Coach for the 12 months from March until February. The earnings of the Health Coaches in this chart are not necessarily representative of the income, if any, that a Take Shape For Life Health Coach can or will earn through participation in the Take Shape For Life Integrated Compensation Plan. THE COMPANY BELIEVES ANY ACTIVE HEALTH COACH S RESULTS WILL VARY DEPENDING ON HIS/HER PERSONAL EFFORTS AND BUSINESS STRUCTURE. TAKE SHAPE FOR LIFE DOES NOT GUARANTEE ANY LEVEL OF INCOME OR SUCCESS. Take Shape For Life s corporate ethics compel us to do not merely what is legally required, but rather to conduct the absolute best business practices. To this end, we have developed the Take Shape For Life Income Disclosure Statement (IDS). The Take Shape For Life IDS is designed to convey truthful, timely, and comprehensive information regarding the income that Take Shape For Life Health Coaches earn. In order to accomplish this objective, a copy of the IDS must be presented to all prospective Health Coaches. A copy of the IDS must be presented to a prospective Health Coach (someone who is not a party to a current Health Coach Agreement) any time the Integrated Compensation Plan is presented or discussed or any type of income claim or earnings representation is made. The terms income claim and/or earnings representation (collectively income claim ) include: (1) statements of average earnings, (2) statements of actual earnings, (3) statements of non-average or non-actual earnings (projected earnings), (4) statements of earnings ranges, (5) income testimonials, (6) lifestyle claims, and (7) hypothetical claims. A lifestyle income claim typically includes statements (or pictures) involving large homes, luxury cars, exotic vacations, or other items suggesting or implying wealth. It also consists of references to the achievement of one's dreams or having everything one always wanted and is phrased in terms of opportunity or possibility or chance. Claims such as My Take Shape For Life income exceeded my salary after six months in the business or Our Take Shape For Life business has allowed my wife to come home and be a full-time mom also fall within the purview of lifestyle claims. In any non-public meeting (e.g., a home meeting, one-on-one regardless of venue) with a prospective Health Coach or Health Coaches in which the Compensation Plan is discussed or any type of income claim is made, you must provide the prospect(s) with a copy of the IDS. In any meeting that is open to the public in which the Integrated Compensation Plan is discussed or any type of income claim is made, you must provide every prospective Health Coach with a copy of the IDS and you must display at least one 3-foot x 5-foot poster board in the front of the room in reasonably close proximity to the presenter(s). In any meeting in which any type of video display is utilized (e.g., monitor, television, projector, etc.) a slide of the IDS must be displayed continuously throughout the duration of any discussion of the Integrated Compensation Plan or the making of an income claim. Copies of the IDS may be printed or downloaded without charge from the corporate Web site at Health Coaches who develop sales aids and tools in which the Integrated Compensation Plan or income claims are present must incorporate the IDS into each such sales aid or tool prior to submission to the Company for review. Page 2 of Take Shape For Life, Inc. All rights reserved. TSFL Initial Integrated Compensation Plan Income Disclosure Statement rev. 9/13