policies and procedures 4.20.10_final

Policies and Procedures

Take Shape For Life, Inc. Revised March 2010

Take Shape For Life - Policies and Procedures | 2

Table of Contents: Policies and 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 Laws 2.2 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 and Marketing

4.0 Regulation regarding Returns and Exchanges 4.1 Restricted Use and Limited License of Take Shape For Life /Medifast Intellectual Property 4.2 Trademarks, Service Marks, Copyright Materials 4.3 Medifast Claims and Product Representations 4.4 Advertising and Presentations 4.5 Events and Meetings 4.6 Sales 4.7 Client Acquisition Forms 4.8 Direct Response 4.9 Product Ordering 4.10 Payments and Shipping 4.11 Internet Activity 4.12 Unsolicited Faxes Prohibited 4.13 Official Company Literature and Materials 4.14 The National “Don Not Call” Registry

Section V: Payments

5.0 Compensation and Compliance Fees Section VI: General Provisions

6.0 Notices 6.1 Force Majeure 6.2 Violations 6.3 Amendments 6.4 Arbitration 6.5 Governing Law 6.6 Venue 6.7 Non-Waiver Provision 6.8 Severability 6.9 Entire Agreement

©2010 Take Shape For Life, Inc. All rights reserved. Revised 3/2010



Appendix A: Administrative Policies Activation Policy Exchange Policy Return Policy Recoveries Recoveries from MWCC Client Transfer Policy Bulk Client Transfer Policy

Appendix B: Disclaimers and Medifast/Take Shape For Life Intellectual Property Disclaimers

Disclaimers Take Shape For Life/Medifast Intellectual Property

Appendix C: Forms

Trademark and Advertising Request Form Client – Initiated Changes Request Form Health Coach - Initiated Changes Request Form Business Type Change Form Recovery Request Form Media Request Form Press Release Request Form Contact Information Update Form

Appendix D: Take Shape For Life Official Compensation Plan

Take Shape For Life Official Compensation Plan


Section I: General Policies

1.0 OVERVIEW

A. Policies and Procedures are the foundation that set and support the high standards that Take Shape For Life, Inc. (“Company”) expects of itself, its Health Coaches, employees, and products. As an approved Independent Health Coach of Take Shape For Life, Inc., you must understand and comply with all Company Policies and Procedures and any that may, from time to time, be announced by the Company. Take Shape For Life, Inc. reserves the right to amend at any time these Policies and Procedures, Compensation Plan, product offerings and prices, or any other part of the program by publishing revisions as appropriate.

B. Take Shape For Life, Inc. obeys all federal, state, and local regulations governing Direct Selling and requires every

Independent Health Coach in the program to do the same. It is therefore very important that you read and understand the following information. If you have questions regarding any Policy or Procedure, do not hesitate to seek an answer from your Line of Sponsorship or through Health Coach Services.

C. Review this information frequently. It explains and governs the relationship between you, the Independent Health

Coach, and Take Shape For Life, Inc.

D. The Health Coach Application and Agreement, these Policies and Procedures, and the Compensation Plan (collectively the “Agreement”) explain and govern the relationship between each Health Coach (“Health Coach”) and Take Shape For Life, Inc., a Delaware corporation (“Company”). Each Health Coach is required to read, understand, and comply with all terms and conditions of the Agreement. The agreement shall constitute the entire understanding of the parties with respect to the subject matters covered in it.

E. Each of the Health Coach Application and Agreement, Policies and Procedures and Compensation Plan are subject

to revision by the Company from time to time at its own discretion. The current form of each shall govern all aspects of the relationships between the Company and its Health Coaches. The most up-to-date documents are available online in the Document Library of Office in Motion.

F. To remain a Health Coach and to receive any commissions or bonuses, all Terms and Conditions of the Health

Coach Agreement must be adhered to, including the Policies and Procedures that are a part of that Agreement. Failure to adhere to all Policies and Procedures is cause for disciplinary actions including fines, suspension, and/or cancellation of a Health Coach Agreement.

G. All Health Coaches should be aware that any breach of these policies, the agreement, etc will result in disciplinary

action up to and including termination

1.1 BECOMING A HEALTH COACH

A. A Health Coach is one who has: 1. Purchased the Health Coach Kit 2. Completed the Online Enrollment Process:

i. Read and agreed (by electronic signature) to abide by the terms and conditions in the Health Coach Agreement

ii. Completed and submitted an IRS Form W-9 iii. Successfully completed the Basic Enrollment Questionnaire

No commissions or bonuses will be paid until the Health Coach business has been activated by taking the above-referenced steps. An applicant who fails to activate within 180 days of purchase will not be considered a Health Coach and must re-enroll with Take Shape For Life, Inc.

B. An applicant or Health Coach is prohibited from submitting any inaccurate or falsified information. Applicants

must enroll electronically via Office in Motion. The applicant(s), including all partners or shareholders, must each agree to the Health Coach Agreement.



C. A Health Coach must supply the Company with a valid email and compliant (see section 4.11.D) address for communication purposes.

D. 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 computer files. 1.2 ELIGIBILITY REQUIREMENTS

A. Legal Age – Any individual who is of legal age (as defined by the state in which the applicant resides) and residing in a country where the Company is currently doing business 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 Form W-9 with this information.

C. ID Number – Take Shape For Life 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” – Except as otherwise provided in these Policies and Procedures, 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. No individual may have, operate or receive compensation from more than one Take Shape For Life business. 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 and dependent children living at or doing business at the same address, unless approved by the company.

F. Married Couples – Married couples who wish to become Health Coaches are required to sign the same Health

Coach Application as co-applicants. Their Health Coach Business will be similar to a partnership under one Sponsor, (i.e., each spouse will be responsible for the actions of the other spouse). If the spouse of a Health Coach wishes to become a Health Coach, he/she will be added as a co-applicant to the spouse’s existing Health Coach Business upon written notification to Field Administration.

G. Business Entities – All individual or married Health Coaches must first enroll as an individual as a sole proprietor

or as non-formal (e.g. husband and wife) partners under their name and social security number. If the Health Coach wishes to change the type of business he or she may do so following the process outlined in section 1.6 j.

1. If an applicant is an existing corporation, limited liability corporation, partnership, or trust, they can

register under their existing registered business name and corresponding tax ID number. 2. All shareholder(s), members, partner(s), or trustees of the entity applicant must agree to be bound jointly

and severally to the terms and conditions of the Agreement. A list of the names of each shareholder, member, partner, or trustee of the entity applicant must accompany the Health Coach Application and be submitted to Field Administration in writing. If requested, all legal documentation should be submitted to Field Administration, 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. The Application may be rejected without such documentation.

i. Health Coach Businesses as Trusts: A Health Coach Business may be transferred to, and become part of the corpus of, either an inter vivos or testamentary trust provided there has been compliance with certain requirements and conditions. One of the advantages of building a Health Coach business is that the owner may pass it on to his or her heirs as part of his or her estate. In order to accomplish that objective, he or she may wish to transfer his or her Health Coach business to an inter vivos trust during his or her lifetime or arrange for it to be transferred to a testamentary trust after his or her death. The latter may be particularly desirable where his or her surviving heirs may be minors who are disqualified from operating the Health Coach business



until they reach the age of at least 18. The trustee may be either an individual or a corporation, and the trustee may also be another Health Coach at the time the trust is created or takes effect. In order to assure that the transfer of a Health Coach business to a trust does not result in unfavorable consequences, the Company requires compliance with the following:

a. The creator of the trust must have been a duly qualified and authorized Health Coach at the time (or, in the case of a deceased Health Coach, immediately prior to the time) that the Health Coach business is transferred to the trust.

b. Frequently the beneficiary of the trust will be the spouse, child, grandchild, parent, or sibling of the Health Coach whose Health Coach business is being transferred to the trust corpus. However, the beneficiary of a trust may be any individual who is eligible to become an authorized Health Coach, provided however the beneficiary cannot be a business entity, existing corporation, charitable organization, nonprofit organization, foundation, or any similar entity.

c. The trust instrument must not permit the beneficiaries to assign any beneficial interest in the trust.

d. The trustee (all co-trustees, if more than one) must sign a Health Coach Agreement and receive authorization to become a Health Coach, and must adhere to the 6 month renewal policy. An original signed (or certified) copy of the trust instrument must be provided, and the trustee(s) must promptly file with the Company any amendments or any documents which may vary the terms of the trust.

e. If the trustee is a corporate fiduciary, e.g., a bank trust department or a trust company, the trust officer must execute on its behalf an irrevocable guarantee that the trustee will perform all the obligations and responsibilities of a Health Coach as outlined in the Policies and Procedures, and other official Company literature and communications.

f. The term of the trust shall not be perpetual and shall not continue beyond the date necessary to protect the interests of those trust beneficiaries who are unable to act for themselves legally, e.g., minor children or incompetent persons, or who, because of age or inexperience, require assistance in the conduct of business affairs.

g. The sole purpose of the trust must be the operation of the Health Coach business. No other business may be conducted by the trust.

H. Legal Name – The owner of the Health Coach Business (whether individual, partnership, corporation, limited liability corporation or trust) must match the individual’s or entity’s Social Security Number or Federal Tax Identification Number, if Health Coach Business is a registered business.

I. Actions of Household Members or Affiliated Individuals – If any member of a Health Coach’s immediate

household engages in any activity which, if performed by the Health Coach, would violate any provision of the Agreement, such activity will be deemed a violation by the Health Coach and Take Shape For Life will take action pursuant to these Policies and Procedures against the Health Coach. Similarly, if any individual associated in any way with a corporation, limited liability company, partnership, trust or other entity (collectively “affiliated individual”) violates the Agreement, such action(s) will be deemed a violation by the entity, and Take Shape For Life may take disciplinary action against the entity.

J. Health Coach represents and warrants that he or she has never been convicted of a felony. Any misrepresentation

related to this subject is a violation of the Policies and Procedures and will result in immediate termination. If a prospective Health Coach has been convicted of a felony, he/she may submit a written explanation detailing the grounds for the conviction and a request for a waiver of this Section 1.2.a. The Company reserves the right to accept or reject such request in its sole discretion. If during the term of the Health Coach Agreement, 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 Take Shape For Life / Medifast, Inc. to adversely affect the company, Take Shape For Life reserves the right to immediately terminate the Health Coach’s business.

3. No Health Coach may be in jail or otherwise confined to any correctional institution either at the time of enrollment or any time during the term of the Health Coach Agreement.



1.3 HEALTH COACH STATUS

A. Health Coaches are independent contractors and are not to be considered or represent themselves as Take Shape For Life, Inc. 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. 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, or to bind the other in any way whatsoever, aside from the binding terms of the original Health Coach Agreement and the current Policies and Procedures. 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 which are not 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. Independent Health Coaches will not incur any debt, expense or obligation on behalf of or for the Company.

C. As an independent contractor, each Health Coach is responsible for his or her own business decisions. Each Health

Coach is encouraged to set his or her own hours and conduct business practice that comply with Take Shape For Life Marketing guidelines, Direct Selling Association standards, and complies with all Company Policies and Procedures and all applicable local, state, and federal laws. A Health Coach’s success depends on his/her skills, personal efforts, business structure, and/or market conditions. Take Shape for Life does not guarantee any level of income or success.

D. Personal / Business Information Update: All Health Coach Businesses are responsible for communicating any

updates or changes to their personal information (e.g., name, email address, address, and telephone numbers, etc.) or business information (e.g., addition/deletion of partner, change of business status, etc.) to the Company.

E. A regular or Certified Health Coach is not a substitute for a physician or a qualified medical practitioner for

monitoring patients using Medifast low-calorie products, and should not be portrayed as such. 1.4 PROFESSIONAL CONDUCT

A. It is important that the Health Coach understands the sensitive nature of the relationship between themselves and their clients and other Health Coaches. The Health Coach agrees to be bound by the highest standards of confidentiality and agrees not to disclose with any and all personal information, health, financial, or other, that comes to their attention. Health Coaches may not divulge any client information for any non-Take Shape For Life purposes. Information regarding a client’s or Health Coach’s experience cannot be revealed without their expressed permission.

B. In the conduct of their business, the Health Coach shall safeguard and promote the reputation of the Company, its

products, and its promotional materials. Further, the Health Coach shall refrain from all conduct that might be harmful to the reputation of the Company, fellow Health Coaches, the industry, or the marketing of the Company products and programs. The Health Coach shall avoid and refrain from all discourteous, deceptive, misleading, unethical, unlawful and immoral practices or representations.

C. The Health Coach shall not use vulgarity, profanity or any offensive language within the context of working with

clients, prospects, other Health Coaches, or employees of the Company. Additionally, the Health Coach shall not use vulgarity, profanity or any offensive language or imagery for, or in any part of, his/her web identity or nickname, email address, graphics, web pages or other online identity that is selected for operation of the online aspects of business. Furthermore, if the Health Coach is asked by the Company to change his/her web identity or nickname due to the use of inappropriate language or materials, he/she will do so immediately or face disciplinary action up to and including termination..



D. Coaches shall not disparage Take Shape For Life, the parent company Medifast, other Health Coaches, Take Shape For Life’s products, programs, policies or procedures, the Compensation Plan, or Take Shape For Life’s owners, officers, directors, or employees. The Company welcomes constructive criticism and comments. However, negative comments made to the field about other Health Coaches, Take Shape For Life products or programs, the Compensation Plan or the Company may negatively affect the enthusiasm and performance of the network as a whole. To avoid this potentially negative impact, constructive criticism should be submitted in writing directly to Take Shape For Life for attention and vetting.

E. In addition to coaching roles, Health Coaches routinely provide important information to clients on our products

and programs. For example, they offer support and encouragement to clients, and often serve as the first contact in various other issues, including shipment and quality questions. Take Shape For Life reserves the right to request and enlist the aid of the Health Coach in dealing with and resolving field and or client issues.

F. All Health Coaches shall treat all records, information or files received from their clients with strict

confidentiality. Such records, information or files may include, but are not limited to, the medical information or order history of clients.

G. Failure of a Health Coach to comply with these Policies regarding professional conduct -including his/her

selection and use of online materials - will result in disciplinary actions, which could include in suspension or termination of his/her business by the Company. (See Section 3.5: disciplinary sanctions).

1.5 HEALTH COACH VIOLATIONS

A. Health Coaches who violate the Policies and Procedures endanger not only their own business, but also the businesses of all other Take Shape For Life Health Coaches and the Company. Therefore, it is the responsibility of each Health Coach to promptly report violations of these Policies by any Health Coach directly to the Company in order to protect everyone's best interests.

B. The Company will monitor 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 in the field monitoring client acquisition, business opportunity meetings, and training sessions.

C. Violations to 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. Death – Upon the death of a Health Coach, the rights and responsibilities of the Health Coach Business remain 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.



B. 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.

C. 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.1 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. 2Under 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. 3Take 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. 4In 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.

1. 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.

2. During the Pendency of Divorce: While waiting for divorce finalization, the parties must adopt one of the following methods of operation:

i. If one of the parties is willing to relinquish his or her right and interest in the Health Coach business, thereby leaving his or her spouse to manage the business, he or she may do so by executing an assignment of such interest to the spouse by notifying the Company in writing.

ii. 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.

D. 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 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.

3. In the case of reconciliation, the second Health Coach business must be collapsed.

E. 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.

F. 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 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.

G. Addition of Co-Health Coaches, Partners, and Shareholders –The Company must be notified of all additions

to or deletions of owners of a Health Coach Business and all requests must be sent 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 and Agreement. The Company reserves the right in it sole and absolute discretion to approve or disapprove any proposed admission of co-Health Coaches, partners, or shareholders. The addition of co-Health Coaches, partners, or shareholders must create a bona fide business relationship and must not involve the addition of inactive persons or of entities or other persons who simply “pass through” income to others.

H. Deletion of Co-Health Coach, Partners, and Shareholders – The Company must be notified of all additions to

or deletions of owners of a Health Coach Business. All requests must be sent in writing to the Company with appropriate signatures from all parties agreeing to the change. If a Co-Health Coach, Partner or Shareholder is deleted from the Health Coach Business, the remaining Health Coach Business shall be responsible for all acts or omissions in contravention of the Agreements, 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.

I. 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 it sole and absolute discretion to approve or disapprove any proposed merger of co-Health Coaches, partners, or shareholders

J. 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(s)) by forwarding written notification and a properly completed Health Coach Business Type Change form, with an accompanying IRS Form W-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. (See Appendix A)

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 or 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, 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.

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 1.7.1.a (below).

5. 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 1.4 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 – A Health Coach must renew his/her Health Coach Business every six (6) months from the date of activation to renew his/her Health Coach Agreement. Health Coaches will be automatically notified, at the last email address on file, of the opportunity to apply for renewal prior to the renewal date. The Health Coach must renew within fifteen (15) days after the renewal date. The renewal fee is currently $30 as of February 2010. Health Coach Agreements are valid for six (6) months, until the next renewal. The renewal is subject to acceptance by the Company–the Company reserves the right at its discretion to reject renewal.

B. Failure to Renew – Failure of a Health Coach to renew constitutes the Health Coach’s voluntary cancellation of

his/her Health Coach Business. Therefore, no notice of intent to cancel need be given by either the Health Coach or the Company. If the Health Coach does not pay the renewal fee within fifteen (15) business days after the renewal date, the Health Coach Business will be terminated and all Clients and personally sponsored Health Coaches will roll up to the sponsor.

C. Reactivation- if for any reason a Health Coach fails to renew his / her business, but wishes to continue with Take

Shape for Life, he or she may purchase a new Health Coach Enrollment pack under the same sponsor immediately. However, if a Health Coach who failed to renew or resigned his / her business wishes to enroll under a new sponsor, he/she must be inactive for a period of 6 months. (See Section 1.8.d Six-month inactivity)

D. Six-Month Inactivity: A Health Coach who wishes to terminate (by resignation or failure to renew) his or her

Health Coach business under his or her present Sponsor and who thereafter becomes inactive for a period of six or more consecutive months may, following the lapse of said inactive period, register as a new Health Coach under a new Sponsor. The date on which the Company receives the letter of resignation begins the inactivity period. A person who has not renewed and has not submitted a letter of resignation will be considered to have submitted his or her intent on the date his or her Health Coach Business expired and must remain inactive six months from that date. To enroll as a Health Coach under this Rule, the applicant must purchase a new Health Coach Enrollment Pack.

1. During the period of inactivity, the Health Coach shall be completely inactive, which means:

i. No promotion of Take Shape For Life programs or Medifast products

ii. No presentation of the Take Shape For Life business opportunity iii. No renewal of his/her Health Coach business iv. No attendance at any field- or company-sponsored meeting or event v. No earning or receipt of any compensation payment. (Any compensation earned before the

period of inactivity is excluded.)

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 from the company. All Health Coaches are required to submit IRS Form W-9 as part of the enrollment process. A Health Coach Account will not be activated until a completed W-9 Form is submitted. The Company will provide a record of any and all moneys paid by the Company to each Health Coach and will issue and file such reports to governmental agencies or others as may be required by law. Every year, Take Shape For Life will provide an IRS Form 1099 MISC (Non-employee Compensation) earnings statement to each U.S. resident Health Coach who falls into one of the following categories:

Had earnings of over $600 in the previous calendar year; or Made purchases during the previous calendar year in excess of $5,000.

B. Tax Exempt Status – If a Take Shape For Life business is tax exempt, the Federal tax identification number must

be provided to Take Shape For Life along with the tax exemption certificate.



C. Sales Tax – The Company will charge appropriate local sales tax, based on the current suggested retail price, on

all orders subject to sales tax and submit it to the necessary government bodies. Health Coaches will comply with the Company’s Policies as may from time to time be published with respect to such matters as sales and use taxes.

2.1 FEDERAL, STATE and LOCAL LAWS

A. Compliance with Federal, State, Local, and County Laws – Each Health Coach is responsible for compliance with all federal, state, local, and county regulations and laws.

B. Local Ordinances – Many cities and counties have laws regulating home-based businesses. In most cases these

ordinances are not applicable to Health Coaches because of the nature of their business. However, Health Coaches must obey those laws that do apply to them. If a city or county official tells a Health Coach that an ordinance applies to him or her, the Health Coach shall be polite and cooperative, and immediately send a copy of the ordinance to Take Shape For Life’s legal department. In most cases, there are exceptions to the ordinance that may apply to Health Coaches.

C. Endorsements – Federal and state regulatory agencies do not approve or endorse any home-based business or

Compensation Plans or programs. Therefore, 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. However, this coverage is only for those products that are faulty or otherwise subject to recall, and does not cover anything that you as an independent contractor may do or say when presenting the program, the products or the business opportunity. If a client does not follow directions for usage of a product, consumes expired product, or does not take precautionary measures as stated on the label, this insurance does not provide coverage. If the client uses the product for purposes other than that for which it was designed, the insurance does not provide coverage. Any careless or negligent use of the product is also not covered under the Company's insurance.

B. Business Pursuits Coverage - Any type of business is subject to a lawsuit. Hence, it is wise for a Health Coach to

secure additional liability insurance protection to cover any business exposure for which he or she may be liable in the independent marketing of any product.

C. Travel Liability: Assumption of Risk – A Health Coach understands and accepts any and all travel-related risks

in regards to their business. Health Coaches are encouraged to secure travel insurance as related to their business.

Section III: Sponsoring 3.0 SPONSORING POLICY

A. Health Coaches have the opportunity to grow their enterprises beyond simply acquiring and supporting Clients by building an Organization of Health Coaches. To do so, Health Coaches can sponsor other qualified individuals as Health Coaches and, if desired, help them do the same.

B. Sponsorship opportunities are available to all Health Coaches that have entered into a Health Coach Agreement

with Take Shape For Life. However, Take Shape For Life reserves the right to decline a sponsorship arrangement at the Company’s sole discretion if circumstances warrant such actions.



3.1 BECOMING A SPONSOR

A. Health Coaches may sponsor other individuals or legal entities as Health Coaches provided they are residents of the United States, its Territories and Commonwealths. No international sponsoring is permitted at this time.

B. Take Shape For Life compensates a Sponsor through its compensation plan (“Compensation Plan”) for the

Sponsor’s sales of products, and coaching services and the Sponsor’s efforts in providing services and assistance to his/her personally sponsored Health Coaches and other Health Coaches in his/her Organization.

C. Every Health Coach must have a sponsor. Take Shape For Life strongly encourages a potential Health Coach to

register under the initial person who introduced him or her to the business. However, each new prospect has the right to choose his or her own Sponsor.

D. If an applicant enrolls multiple times under different Sponsors, the Company will recognize the Sponsor on the

first account activated by the Health Coach

E. Sponsoring Health Professionals – The Health Professional division of the Take Shape For Life network is a subset of our Health Coaches that includes physicians, chiropractors, nurses, etc that are medically licensed by a state agency. Health Professionals are subject to the same rules, regulations, policies, and compensation structure as all Health Coaches; however, Health Professionals receive compensation in the form of Compliance Fees as opposed to Client Support Commissions. Compliance Fees are paid to a Health Professional for their services of helping patients comply with the medical protocols of the Medifast weight-loss and weight-maintenance programs. The sponsoring rules for a Health Professional are as follows:

1. Any Health Professional may approach and sponsor any other Health Professional. 2. A Health Coach may only approach and sponsor a Health Professional if:

i. The Health Coach is personally or professionally acquainted with the Health Professional, and must become Certified within 30 days OR

ii. The Health Coach is Certified.

F. A person must be recognized as a legal adult in his or her state of residence to be a Health Coach. Health Coaches shall not recruit, enroll, or attempt to sponsor minors as Health Coaches.

G. In the event that a Health Coach applies through Take Shape For Life ’s corporate website or directly with the

Company, and if Take Shape For Life accepts the Health Coach Agreement, Take Shape For Life will either appoint that Health Coach to a Sponsor, or distribute that Health Coach as a Business Lead to a qualified sponsor at its sole discretion.

H. Income Claims – Take Shape For Life makes no claims or guarantees regarding income. No false or misleading

income projections may be made to prospective Health Coaches. In their enthusiasm, Health Coaches may be occasionally tempted to make income claims or earnings representations to demonstrate the inherent power of this business model. This practice is counter-productive since new Health Coaches may be quickly disappointed if their results are not as extensive or as rapid as the results others have achieved. The only examples of income projections to be used are those provided by Take Shape For Life. The Company firmly believes that the income potential is sufficient to be highly attractive in reality without resorting to artificial and unrealistic projections. Moreover, the Federal Trade Commission and several states have laws or regulations that regulate or prohibit certain types of income claims and testimonials made by persons engaged in relationship marketing. While Health Coaches may believe it beneficial to provide copies of checks, or to disclose the earnings of themselves or others, such approaches have legal consequences that can negatively impact Take Shape For Life as well as the Health Coach making the claim, unless appropriate disclosures required by law are also made contemporaneously with the income claim or earnings representation. Because Take Shape For Life Health Coaches do not have the data necessary to comply with the legal requirements for making income claims, a Health Coach, when presenting or discussing the Take Shape For Life opportunity or Marketing and Compensation Plan to a prospective Health Coach, may not make income projections, income claims, or disclose his or her Take Shape For Life income (including the showing of checks, electronic statements, copies of checks, bank statements, or tax records).



I. Income Hypotheticals – Hypothetical income examples that are used to explain the operation of the Compensation Plan, and which are based solely on mathematical projections, may be made to prospective Health Coaches, so long as the Health Coach who uses such hypothetical examples makes clear to the prospective Health Coach(s) that such earnings are hypothetical and the Income Disclosure Statement (IDS) is provided to the prospect.

J. The Company’s success and the success of its Independent Health Coaches are based upon the consultation

provided to clients and the sale of products for consumption. The purpose of recruiting of other Health Coaches is to provide additional persons marketing the Company’s products to clients. No compensation is paid solely or primarily upon the recruitment of Health Coaches.

K. 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 which 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. The Company maintains the right to monitor the activities and results of its independent contractor Health Coaches, in order to enforce this provision.

L. Income Disclosure Statement – 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 TSFL Income Disclosure Statement (“IDS”). The TSFL IDS is designed to convey truthful, timely, and comprehensive information regarding the income that TSFL Health Coaches earn. In order to accomplish this objective, a copy of the IDS must be presented to all prospective Health Coaches.

a. A copy of the IDS must be presented to a prospective Health Coach (someone who is not a party to a

current TSFL Health Coach Agreement) anytime the 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 non-average 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, 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.

b. 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.

c. In any company-sponsored meeting that is open to the public in which the Compensation Plan is discussed or any type of income claims is made, 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).

d. 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 Compensation Plan or the making of an income claim.

e. Copies of the IDS may be printed or downloaded without charge from the corporate website or Document Library in Office in Motion

3.2 ROLE OF A SPONSOR AND OTHER RESPONSIBILITIES

A. Health Coaches who sponsor other Health Coaches must use their best efforts to provide, on an ongoing basis, bona fide supervision and training of sponsored Heath Coaches and, to some extent, the Health Coaches within their Health Coach organization. These obligations include acquiring and supporting clients who purchase the Company’s product and training and/or supervising those individuals sponsored as Health Coaches. Health



Coaches must maintain ongoing contact, communication, and management supervision with their organization. Examples of such supervision 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, voice mail, 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. 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, sell the Company’s products for 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, including suspension or termination.

C. As Relationship Marketing involves trust and mutual respect, a Sponsor, particularly one in a leadership capacity,

is not permitted to use his or her influence within the organization for personal or financial gain at the expense of other Health Coaches. Health Coaches must not manipulate enrollments of new Health Coaches and purchases of products.

D. Health Coaches will not be permitted to have collateral dealings or commission splits with other Health Coaches

without the express written consent of Take Shape For Life.

E. Inventory Loading or Front-end Loading is Prohibited – Independent Health Coaches are not required to carry an inventory of promotional materials or products. Sponsoring Health Coaches are not to encourage other Health Coaches to make excessive and unnecessary product purchases, as this violates the Company's policy prohibiting inventory loading.

F. Health Coaches must provide access to the most current version of the Compensation Plan, and IDS to the

individuals whom they are sponsoring before the applicant enrolls as a Health Coach. These documents can be obtained from the Document Library in Office in Motion.

G. 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.

H. All Health Coach Applications and Agreements, and product orders must be sent to Take Shape For Life within 72 hours from the time they are signed by an applicant or placed by a client, respectively.

I. International – Because of critical legal and tax considerations, Take Shape For Life confines the sale of Take

Shape For Life products, and the presentation of the Take Shape For Life opportunity to prospective clients and Health Coaches located in the United States and U.S. territories. Accordingly, Health Coaches are authorized to sell Take Shape For Life products and enroll clients or Health Coaches only in the United States and U.S. territories and other countries as announced in official Take Shape For Life literature. Take Shape For Life products or sales aids cannot be shipped into or sold in any other country directly by a Health Coach. Health Coaches may sell, give, transfer, or distribute Take Shape For Life products or sales aids only in their home countries. In addition, no Health Coach may, in any unauthorized country: (a) conduct sales, enrollment or training meetings; (b) enroll or attempt to enroll potential Health Coaches or clients; or (c) conduct any other activity for the purpose of selling Take Shape For Life products, establishing an Organization, or promoting the Take Shape For Life products or opportunity.



3.3 CHANGES IN SPONSORSHIP

A. If a Health Coach leaves the Company for any reason (non-renewal, resignation, termination, etc.) all personally sponsored Health Coaches will move to the next Heath Coach in succession in the Line of Sponsorship.

B. Requests to Change Sponsors or Lines of Sponsorship – Take Shape For Life is a business built upon the

creation of relationships with both clients and other Health Coaches. Once a Health Coach is sponsored, the Company will protect the relationship to the fullest extent possible. Therefore, changing Lines of Sponsorship will not be allowed, except in circumstances of extraordinary merit:

1. When, in its sole discretion, Take Shape For Life grants a transfer of sponsorship, it is deemed a one-time only action on behalf of the Health Coach changing Sponsors.

2. As completing transfer requests requires additional administrative effort and expense, Take Shape For Life may assign a fee of $50 for all transfers excluding those taking place after the first 30 days of involvement in Take Shape For Life.

1. Transfers within thirty (30 days) of activation – Take Shape For Life may allow for a transfer for a newly sponsored Health Coach within his/her 30 days for one of two possible situations. Transfers may be granted to newly registered Health Coaches was 1) assigned to a Sponsor in error, or 2) if the current Sponsors is not fulfilling his/her responsibilities under the Sponsorship Agreement, the Health Coach Agreement, or the Policies.

2. The second reason above will only be granted when it is determined upon full review by the

Company Policy Committee that the Sponsor has been negligent in his or her duties as a sponsor as outlined in Sections 3.2.a and 3.2.b in these Policies. Upon thorough investigation, if it is determined that a Sponsor is not fulfilling his or her role in relation to the newly sponsored Health Coach, then the Company - at its sole discretion - may grant the transfer request. If such a request is granted, then all affected parties will be notified in writing of the transfer and the new Sponsor will receive compensation not previously paid to the original Sponsor from the date that the transferee became a Health Coach.

3. Thirty-day transfers should be rare, but possible, if warranted. When the requests appear, the

Company will endeavor to uphold the integrity of the original Line of Sponsorship by contacting the original sponsor and the first qualified Executive Director in the Line of Sponsorship encouraging those involved support the newly sponsored Health Coach so that the transfer does not have to take place. Further, the thirty-day transfer request should only be implemented in cases of neglect or violation of Policy. In no way should the thirty-day transfer request be interrupted by a newly sponsored Health Coach as an opportunity to “shop around” within his or her first 30 days for a different sponsor, especially if his or her original sponsor is reasonably fulfilling the role of sponsor.

4. Transfers before activation – transfer requests before a Health Coach business is activated

will follow the Transfers within 30 days policy, above.

5. Transfer requests after thirty (30) days – Health Coaches requesting sponsorship change must do so by submitting a written request to the Company with all appropriate signatures attached. The Company will review such requests on an individual; basis.

C. Individual transfers without group (Ranks below Executive Director) – Health Coaches who are not yet Executive

Directors wishing to transfer from a sponsor to another may be approved it. 1. A clear, documented, and compelling reason for the transfer is provided to Take Shape For Life and is

signed by all owners of the Health Coach Account wishing to be transferred. 2. Everyone, including the Sponsor of the requesting party and all active Health Coaches in the Line of

Sponsorship up to and including the first qualified Executive Director, agrees in writing (or by omission) to the transfer.

i. (i) Agreement by omission – if a Health Coach in the line of sponsorship does not reply or comment on the requested sponsor change by the date specified in the written request, his or her position on the matter will be considered as agreement by omission



3. There is agreement in writing from the accepting Sponsor and his/her qualified upline Executive Director that they will accept the transferee and assume the appropriate responsibilities.

4. There is a final approval granted by Take Shape For Life.

D. Group transfers (Ranks below Executive Director) – Health Coaches who are not yet Executive Directors wishing to transfer themselves and all or part of their Organization from one Line of Sponsorship to another may be granted if:

1. A clear, documented, and compelling reason for the transfer is provided to Take Shape For Life and is signed by all owners of the Health Coach Account wishing to be transferred.

2. Everyone, including the Sponsor of the requesting party and all active Health Coaches in the Line of Sponsorship up to and including the first qualified Executive Director, Regional Director, National Director, and Global Director agree in writing (or by omission) to the transfer.

i. Agreement by omission – if a Health Coach in the line of sponsorship does not reply or comment on the requested sponsor change by the date specified in the written request, his or her position on the matter will be considered as agreement by omission.

ii. All Health Coaches in the requesting Health Coach’s organization agreeing to the transfer must agree in writing to the change, regardless of rank.

3. There is agreement in writing from the accepting Sponsor and his/her qualified upline Executive Director that they will accept the transferee and his/her organization and assume the appropriate responsibilities.

4. There is a final approval granted by Take Shape For Life.

E. Individual transfers without group (Executive Directors and above). - Health Coaches who are Executive Directors or above wishing to transfer from a Sponsor to another may be approved to do so if:

1. A clear, documented, and compelling reason for the transfer is provided to Take Shape For Life and is signed by all owners of the Health Coach business wishing to be transferred.

2. Everyone, including the Sponsor of the requesting party and all qualified Executive Directors and higher in the line of Sponsorship through five generations of qualified Executive Directors, up to and including the first qualified Presidential Director, agrees in writing (or by omission) to the transfer.

3. If a transfer request is denied by an immediate sponsor below the rank of Executive Director, sponsor change will be denied for a period of 6 months to allow the sponsor to reach the rank of executive director. The sponsor must maintain the rank of Executive Director for 3 consecutive months and stay at that rank for 6 out of 12 months. If this condition is not met the sponsor change request will be revisited.

4. There is agreement in writing from the accepting sponsor and his/her first qualified Executive Director and his/her first qualified Global Director in the Line of Sponsorship that they will accept the transferee and assume the appropriate responsibilities.

5. There is a final approval granted by Take Shape for Life.

F. Group transfers (Executive Director and above) – Although extremely rare, Health Coaches who are Executive Directors or above wishing to transfer themselves and their entire Organization (all Health Coaches and Clients) from one Line of Sponsorship to another may be granted if:

1. A clear, documented, and compelling reason for the transfer is provided to Take Shape For Life and is signed by all owners of the Health Coach business wishing to be transferred.

i. All Health Coaches in the requesting Health Coach’s organization wishing to also transfer must agree in writing to the change, regardless of rank.

2. Everyone, including the Sponsor of the requesting party and all qualified Executive Directors and higher in the line of Sponsorship through five generations of qualified Executive Directors, up to and including the first qualified Presidential Director, agrees in writing (or by omission) to the transfer.

3. If a transfer request is denied by an immediate sponsor below the rank of Executive Director, sponsor change will be denied for a period of 6 months to allow the sponsor to reach the rank of executive director. The sponsor must maintain the rank of Executive Director for 3 consecutive months and stay at that rank for 6 out of 12 months. If this condition is not met the sponsor change request will be revisited.

4. There is agreement in writing from the accepting sponsor and his/her first qualified Executive Director and his/her first qualified Presidential Director in the Line of Sponsorship that they will accept the transferee and his/her organization and assume the appropriate responsibilities.

5. There is a final approval granted by Take Shape for Life.



G. Denial of individual transfer – In the event an individual transfer is denied, the Health Coach requesting the transfer may either:

Stay with his/her original Line of Sponsorship, or Resign and become completely inactive (see Section 1.8.d Six Month Inactivity) and then reapply after six (6) months.

1. By resigning, all sponsorship rights and all rights to commissions, fees, bonuses, clients and Health Coaches and websites will be forfeited.

2. To join Take Shape For Life with a new Sponsor, the Health Coach must contact Take Shape For Life and supply his/her old ID number used in his/her previous entity record. Purchase of a new Health Coach Enrollment Pack and activation of the new business is required.

H. Denial of group transfer – In the event a group transfer is denied, the Health Coach and his or her Organization

requesting the transfer may either:

Stay with their original Line of Sponsorship, or

If all Health Coaches want to realign in the same fashion they were originally sponsored, they will need to resign and become completely inactive in the program (by not performing any Health Coach activities or attending any Health Coach events) and then reapply after two (2) years.

1. By resigning, all sponsorship rights and all rights to commissions, fees, bonuses, registered

clients, Health Coaches and websites will be forfeited. 2. If these former Health Coaches do not wish to wait two (2) years to reapply, they may be

sponsored again after waiting six (6) months to rejoin Take Shape For Life (as described in “Denial of individual transfer” above). However, former Health Coaches will not be allowed to realign in the same fashion or reverse fashion (i.e. instead of the old alignment where A sponsors B, then in the new alignment B sponsors A) unless they wait a full two (2) years.

3. To join Take Shape For Life with a new Sponsor and a new Line of Sponsorship, the Health

Coach and his former organization must contact Take Shape For Life and supply their old ID numbers used in their previous entity record. Completion of a new Health Coach Agreements and payment of the then in effect start-up fees are required.

I. Exceptions to Denial of individual and group 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.

J. Realignment Requests – From time to time, Health Coaches may request realignment of their organization.

These requests, although rare, may be granted by the Company in cases of extraordinary merit. Given the amount of administrative effort to execute these changes, a $50 administrative fee will be assessed.

1. Realignment requests will only be considered within the first sixty (60) days of account

activation, unless otherwise approved by the Company. 2. The request must be submitted in writing from the first qualified Global Director in the line of

Sponsorship, and a clear and compelling reason provided for the realignment. 3. Signatures of all of the parties involved in the realignment must accompany the request. 4. Signatures of all active Health Coaches up the line of Sponsorship including five generations

of qualified Executive Directors and the first qualified Presidential Director must accompany the request.

5. Final approval is granted by the Company.



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). However, to minimize potential conflicts of interest between a Health Coach’s Take Shape For Life business and any other ventures in which the Health Coach may be involved, all Health Coaches agree that they shall adhere to the following policies in this Section 3.4.

1. Competing Business Solicitation – During the term of the Health Coach Agreement, Health Coaches may not recruit other Health Coaches, except for their personally sponsored Health Coaches, for any other direct sales, multilevel, relationship marketing, or network marketing businesses. Following the cancellation of the Agreement, and for a period of six months thereafter, a former Health Coach may not recruit any other Health Coach (except for their personally sponsored Health Coaches) for another direct sales, relationship marketing, or network marketing business. The term “recruit” means actual or attempted solicitation, enrollment, encouragement, or effort to induce in any other way, either directly or through a third party, another Health Coach to enroll or participate in another direct sales, relationship marketing, or network marketing opportunity. This conduct constitutes recruiting even if the Health Coach’s actions are in response to an inquiry made by another Health Coach. For purposes of this policy and 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 product or services to

individuals who are not personally sponsored by a Health Coach, unless otherwise approved by the Company. In the event a Health Coach develops a marketing tool or collateral piece that is otherwise unavailable, the Health Coach shall submit the said piece to the Company for approval. Health Coaches must not sell, or attempt to sell, any competing non-Take Shape For Life or Medifast products to other Health Coaches or Clients. 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 is in the same generic category as Take Shape For Life and/or Medifast products, and is therefore a competing product, regardless of differences in cost, quality, ingredients or nutrient content). Further, and unless sanctioned by Take Shape For Life, Health Coaches cannot use the information contained on their genealogy reports to sell, or attempt to sell, other products and services to any clients or Health Coaches not personally recruited by them. (See Section 5.0.k). This restriction also applies to other Health Coaches who are not involved in the organization of the Health Coach.

3. Display of Take Shape For Life Products and Opportunity – Health Coaches may not display Take

Shape For Life 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 Take Shape For Life products or services and non-Take Shape For Life products or services. Nor may Health Coaches 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, products or services 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.

4. Cross-Line Sponsoring – Actual or attempted cross-line sponsoring is strictly prohibited. “Cross-line

sponsoring” is defined as the solicitation, attempted enrollment or enrollment of an individual or entity who already has a current Health Coach Agreement on file with Take Shape For Life, or who has had such an agreement 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. Health Coaches shall not demean, discredit or defame other Health Coaches in an attempt to entice another Health Coach to become part of the first Health Coach’s Organization. This policy shall not prohibit the transfer or sale of a Take Shape For Life business that is in accordance with these Policies and Procedures.

5. Solicitation of other Health Coaches’ Active Clients – Solicitation of another Health Coach’ client is

strictly prohibited. Solicitation of either a client or Health Coach undermines the integrity of the field



organization. However, clients may request and be granted a change of Health Coach assignment. These requests must be submitted to Take Shape For Life directly from the client.

i. Requests for a change of Health Coach assignment must be made by the Client. Clients may be granted a Health Coach change if a reasonable request is provided. Change of assignment will be effective from the date the request is granted; however, if any volume appears on the Client’s account, it will not be moved with the Client to ensure that the original Health Coach receives proper credit. 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 ensuring orders will be credited to the new Coach upon transfer.

ii. The Company will not accept Client transfers initiated by Health Coaches unless as described elsewhere in these policies.

6. Coach Initiated Client Transfers – Take Shape For Life may allow Health Coaches to transfer front-

line clients to other 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 Document Library of Office in Motion or in Appendix A.

i. Change of assignment will be effective from the date the request is granted, however, if any volume or orders placed by the Client prior to transfer will remain to the original Health Coach for that monthly bonus period.

ii. Any client transfer request that comes from a Health Coach who is not the immediate sponsor will be in violation of this policy and may be subjected to disciplinary sanctions up to and including termination.

7. Solicitations for Charitable Giving – There are many worthwhile causes in which Health Coaches have

involvement. Additionally, while the Company is consistently involved in many charitable endeavors and encourages its Health Coaches to contribute in various ways to organizations in which they believe, mass solicitation for these causes, unless sanctioned by the Company, is prohibited. Health Coaches may solicit for donations to charities and/or philanthropic organizations amongst their personally sponsored Health Coaches only. Health Coaches are prohibited from using their genealogy for solicitation purposes.

3.5 DISCIPLINARY SANCTIONS

A. 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 or admonition; Requiring 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; Withhold 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 for one or more pay periods with loss of earnings; Reassignment of clients or Coaches to another Health Coach in the line of sponsorship Termination of the Health Coach’s business; Any other measure expressly allowed within any provision of the Agreement or which Take Shape For

Life deems practicable to implement and appropriate to equitably resolve injuries caused by the Health Coach’s policy violation or contractual breach; or

In situations deemed appropriate by Take Shape For Life, the Company may institute legal proceedings for monetary and/or equitable relief.



B. Upon imposition of such a disciplinary sanction(s), the Company shall immediately notify the Health Coach, upline sponsor, qualified Executive Director and qualified Global Director by electronic and certified mail at the latest address listed with the Company for the Health Coach and no commissions or compliance fees can be earned or will be paid. In the event of a termination or suspension, the Health Coach agrees to immediately cease representing himself or herself as a Health Coach.

C. 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. 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 , upline sponsor, qualified Executive Director and 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. Effect of Cancellation – So long as a Health Coach remains active and complies with the terms of the Health Coach Agreement and these Policies and Procedures, Take Shape For Life shall pay compensation based on performance in accordance with the Compensation Plan. 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 non-renewal of his or her Health Coach Agreement or voluntary or involuntary cancellation of his or her Health Coach Agreement (all of these methods are collectively referred to as “cancellation”), the former Health Coach shall have no right, title, claim or interest to the Organization which he or she operated, or any commission or bonus from the orders under their Health Coach business generated by that organization. A Health Coach whose business is canceled will lose all rights as a Health Coach under their Health Coach Agreement. This includes the right to promote Take Shape For Life 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 his or her former Organization.

1. The former Health Coach shall not portray themselves as a Take Shape For Life Health Coach and shall not have the right to promote Take Shape For Life products or services. A Health Coach whose Health Coach Agreement is canceled shall receive commissions and bonuses only for the last full pay period he or she was active prior to cancellation (less any amounts withheld during an investigation preceding an involuntary cancellation).

B. Involuntary Cancellation (Termination) – A Health Coach’s violation of any of the terms of the Agreement,

including any amendments that may be made by Take Shape For Life in its sole discretion, may result in any of the sanctions listed in Section 3.5, including the involuntary termination of his or her Health Coach Agreement. Termination shall be effective on the date on which written notice is mailed, return receipt requested, to the Health Coach’s last known address, or when the Health Coach receives actual notice of termination, whichever occurs first.

1. Take Shape For Life expressly reserves the right to terminate all Health Coach Agreements within thirty (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 distribution of its products and services via direct selling/ direct service.

C. Voluntary Cancellation (Resignation) – A participant in this relationship marketing model has a right to resign

at any time, regardless of reason. Resignation must be submitted in writing to the Company at its principal



business address (11444 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..

D. Non-Renewal – A Health Coach may also voluntarily cancel his or her Health Coach Agreement by failing to

renew his/her business according to the 6 month renewal policy. (Section 1.8)

Section IV: Sales and Marketing 4.0 REGULATIONS REGARDING RETURNS AND EXCHANGES

A. Take Shape For Life must be notified within thirty (30) days of the purchase date if there are any problems or issues with an order or shipment. Take Shape For Life does not accept responsibility for any issues that are reported after the said 30-day period.

B. Returns must be received by Take Shape For Life within 30 days of the date of purchase. Any returns received

after 30 days from the purchase date will not be refunded any amount. Non-consumable items, such as program materials, Take Shape For Life apparel, and Take Shape Tools, may not be returned. Shipping charges will not be refunded. Earning will be deducted as per adjustments in Section 5.0.f.

C. It is the responsibility of each Health Coach to know, understand, and make his./her clients and Health Coaches

aware of Take Shape for Life’s return and exchange policy. The current policy can be located electronically in the Document Library of Office in Motion or in Appendix A.

D. Buyer's Right to Cancel – Federal law grants a buyer (the client) the right to cancel certain sales without penalty

prior to midnight of the third business day after the transaction. This rule covers retail consumer sales of $25.00 or more that occur away from the seller's main office or in the consumer’s home. Take Shape For Life’s sales order form contains all legally required notices. In addition, Health Coaches must orally inform clients of their three-day right to cancel at the time of purchase.

E. Enrollment Pak Returns – Health Coaches who voluntarily terminate their Independent Health Coach business

have the right to return all marketing and promotional materials that were purchased within one (1) year of termination and which are returned in marketable condition upon reasonable commercial terms. "Reasonable commercial terms" shall mean twelve (12) months from the date of purchase at not less than 90% of the net cost of the item to the Health Coach, less appropriate administration fees and legal claims, if any. Items shall not be considered "currently marketable" if returned for repurchase after the items commercially reasonable, usable or shelf-life period has passed; nor shall items be considered "currently marketable" if Take Shape For Life clearly discloses to Health Coaches prior to purchase that the items are seasonal, discontinued, or special promotion items and are not subject to the repurchase obligation. Any item which has been personalized is not eligible for return.

1. A written request must be submitted accompanied by proof of payment and invoice or packing slip.

2. Take Shape For Life will provide Health Coaches a Return Authorization Number for the returned items. Upon receipt and inspection of the return, Take Shape For Life will process the appropriate refund. Take Shape For Life will cover the cost of return shipping through shipping labels to pick up the goods.

3. All commissions, overrides and bonuses paid to a Health Coach whose business has been terminated and those bonuses paid to his or her Sponsor as a result of any item returned upon termination must be repaid to Take Shape For Life. Take Shape For Life may deduct such amounts from any commissions, fees or other amounts owed to such Health Coaches.

F. Montana Residents – A Montana resident may cancel his or 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 RESTRICTED USE AND LIMITED LICENSE OF TAKE SHAPE FOR LIFE / MEDIFAST INTELLECTUAL PROPERTY

A. The Company has certain trademarks, service marks, trade names, slogans, symbols, and color schemes that are proprietary (referred to as “Intellectual Property”). Except for marketing materials, sample products, and advertising provided or sold to the Health Coach by the Company, the Health Coach shall not use or display such trademarks, service marks, trade names, slogans, symbols, and color schemes without the Company’s prior permission.

4.2 TRADEMARKS, SERVICE MARKS, COPYRIGHT MATERIALS

A. Health Coaches may not use, reproduce, or disseminate the Take Shape For Life or Medifast trade names or logos, or any Take Shape For Life or Medifast trademark, service mark, or copyright material except in the use and dissemination of marketing materials made available by Take Shape For Life and Medifast and except on stationery and business cards produced and authorized by Take Shape For Life's and Medifast’s approved vendor(s).

B. 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. A violator's Health Coach Agreement will be subjected to disciplinary sanctions, up to and including termination.

4.3 MEDICAL CLAIMS AND PRODUCT REPRESENTATIONS

A. Health Coaches must call attention to any directions for use or precautionary measures related to any Take Shape For Life product. No statements that claim to treat, diagnose, prevent, cure, or mitigate disease associated with Medifast products shall be made. Not only is this strictly against the Company Policies, but it is also against the laws governed by both the United States Food and Drug Administration and the Federal Trade Commission.

B. 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. Health Coaches may testify as to a general sense of wellbeing as a result of participating in Take Shape For Life featuring Medifast programs. A statement must accompany any testimonials that there are no guarantees that everyone will experience the same results. All advertisements, presentations, or promotional materials with any weight loss or program testimonials must include the most recent disclaimers. See Appendix B for full list.

4.4 ADVERTISING AND PRESENTATIONS

A. Health Coaches shall not advertise or present the Company’s product or business opportunity in any way other than 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. When advertising or presenting the Health Coach opportunity Health Coaches shall not make any representations

as to potential income to be received by a prospective Health Coach. A copy of the Income Disclosure Statement (IDS) must be presented to any prospective Health Coach in according policy. (See Section 3.1.j Income Disclosure Statement for details.)

C. 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.



D. Media Guidelines 1. Television and radio broadcasts (including guest appearances or advertising) are prohibited unless

approved by the Company. 2. 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 Appendix C for guidelines and form for submittal.

3. 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 includes all media representatives including newspaper, magazine, radio, and television. Any media inquiries must be directed to the Company. Participating in any media interview without approval, even a positive one, is grounds for termination of a Health Coach Agreement.

4. Any request or inquiry from a government agency must be referred to the Company for response. This

list includes Better Business Bureaus a 5. If the media solicits coverage of any event, the Company must be notified immediately to review the

media opportunity prior to it being published or aired.

6. Press Releases (Company-Issued) – Health Coaches are permitted to distribute unaltered company-issued press releases if requested from a client or prospective Health Coach.

7. Press Releases (Coach Initiated) – As press releases are an outward facing communication with the

media, all press releases must be approved before distribution. Health Coach-created press releases should only be submitted to local media outlets. Use of a press release distribution service, such as PRNewswire, BusinessWire, etc. is prohibited. The process and form for submitting a press release for approval can be found in Appendix C.

E. Health Coaches may not produce, reproduce use or distribute any information relative to the contents,

characteristics, or properties of the Company’s products, which has not 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.

F. Coupon Guidelines – From time to time, the Company may provide its Health Coaches with promotional codes

and discounts for the purpose of acquiring new clients. Coupons are to be used only at the time of the order. Otherwise, the coupon will be invalid. Take Shape For Life cannot issue refunds for any coupons, and coupons cannot be applied to an order that has been invoiced and prepared for shipment. Once payment is made, there will be no adjustments for coupons. Coupons or special promotional offers are not to appear in any print, media advertising, power points or other presentations.

G. Health Coaches may not produce, sell or distribute literature, Internet web sites 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.

H. Any and all support materials, e.g. promotional and premium items, are to be sold and/or distributed only by the

Company or Company-approved vendors.

I. Professional Image – Take Shape For Life and its Health Coaches are a professional organization. As such, the conduct and image of each Health Coach reflects upon the Company, its brands and products, and upon the image and reputation of other Health Coaches. Therefore, all Health Coaches are required to use good judgment and appropriate taste in promoting their 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. Approval will not be given for swap meets, garage sales, flea markets, or farmer’s markets, as these events are not conducive



to the professional image Take Shape For Life wishes to portray, and various local laws often prohibit the sale of dietary foods and ingestible products at such events.

Specifically, the following methods of advertising are PROHIBITED:

Street signs/posters at intersections Indiscriminate placement of flyers or brochures (as under windshield wipers on cars in parking lots) Randomly handing out flyers on the street Solicitation of products, services, or coupon codes on eBay, other auction sites such as Amazon.com,

or Craig’s List.

J. 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.

K. A Health Coach may be listed in telephone directories white or yellow page as follows: Joe Doe, Take Shape For

Life Health Coach L. A Health Coach may list any toll free number under the name of his/her Health Coach business, as a Health

Coach, but must not represent that he/she is employed by or is an agent of the Company.

M. 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.

N. Health Coaches are permitted to make personal donations of product or funds to an organization or program

provided they do not represent the donation as being from the Company.

O. 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 utilizing the Company’s trademarks, trade names, service marks, logos or color schemes.

P. 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 product for sampling purposes.

4.5 EVENTS AND MEETING

A. Health Coaches are encouraged to get together with other Health Coaches in their Line of Sponsorship for training, motivational or business development purposes. These gatherings are deemed “meetings” and/or “Trainings”. Since Meetings and Trainings are held between Health Coaches in the same organization, the Company does not need to be notified of their occurrence and latitude is given to Health Coaches in how to train in these smaller environments using customized presentations.

B. Health Coaches may also wish to hold client acquisition or business opportunity seminars that are advertised, promoted, or open to the public and consist of more than 20 attendees. These gatherings are deemed “Events”.

1. The Income Disclosure policy (Section 3.1.j) must be adhered to for business opportunity meetings only. 2. For any event, only Company-developed or Company-approved materials and presentations may be

used. Any material or presentation that contains Medifast or Take Shape For Life intellectual property must be submitted for review and approval. The submittal form can be found in Appendix C.

i. The Company does not require approval for modest modifications to previously approved presentations that do not alter the substance of the presentation or incorporate new concepts, including but not limited to changes associated with adding new testimonials; updating statistical data; adding any unedited copy or unaltered graphics from the Habits of Health, Companion Guide or TSFL Business Blueprint.

3. Failure to provide any presentation materials containing Company intellectual property for approval is grounds for disciplinary actions, including the restriction of Office in Motion access.



4.6 SALES

A. Qualification Required – In order to promote Take Shape For Life products or acquire and support clients, all Health Coaches must successfully activate his/her account by completing the Basic Enrollment Exam, agreeing to the terms and conditions of the Health Coach Agreement and a completing an IRS Form W-9.

B. Product Sales Required – The Take Shape For Life Compensation Plan is based upon the sale of Take Shape For

Life products to end consumers. Health Coaches must fulfill personal and organizational (as applicable) requirements (as well as meet other responsibilities set forth in the Agreement) to be eligible for bonuses, commissions, and advancement to higher levels of achievement.

C. 70% Rule – Health Coaches are strongly encouraged not to purchase any more products than they can personally

consume within 30 days of purchase. If applicable, the Health Coach agrees to abide by the 70% Rule. The 70% Rule requires that at least 70% of all purchases in a month by the Health Coach must be sold to an end-client. Since, in this model, clients order directly from the Company, this provision has limited applicability.

D. Five Client Rule – To qualify for monthly bonuses, Health Coaches must develop or service at least five (5)

clients with 1000 in Group Volume in a month (based on ARP). See Appendix D, Compensation Plan, for full details.

E. Re-selling Product and Holding Inventory – Health Coaches are prohibited from purchasing product with the

intent to re-sell the product to clients. All purchases must be made by the end-user from the company to ensure proper compensation.

F. Repackaging – Take Shape For Life and/or Medifast products must be sold 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 on products for sale.

G. Methods of Payment – Take Shape For Life accepts major credit cards and debit cards as payment options.

4.7 CLIENT ACQUISITION FORUMS

A. Retail Establishments – Over the counter retail sales, exchanges, or product refunds are prohibited. The promotion of Take Shape For Life products and services within such retail facilities must be conducted by a Health Coach and must be preceded by a discussion where the Coach introduces the prospect to the Medifast products and Take Shape For Life programs and opportunity just as they would if they had met outside of the retail facility.

1. Take Shape For Life programs and Medifast products can only be displayed and promoted in retail

establishments where it is not predominantly marketed under the Medifast or Take Shape For Life brands. Some examples would include but are not limited to salons, doctors' offices, pharmacies, health clubs, wellness centers, natural/homeopathic stores.

2. Company product literature, banners, or signage may only be displayed on a shelf, counter, or wall and must be displayed by itself; product may only be displayed where it can be seen, but not accessed by inquirers. Product may not be sold from a shelf or taken from a display for purchase by a client. Therefore, products may only be purchased from the company and any Medifast/Take Shape For Life products can only be displayed for promotional purposes.

B. Commercial Sales – Commercial Sales are prohibited.

C. Trade Shows, Expositions and Other Sales Forums – Only Certified Health Coaches who are qualified Executive Director or above may display and/or promote Take Shape For Life products at trade shows and professional expositions. A Certified or non-Certified or Health Coach not yet qualifying at the rank of Executive Director may participate in a tradeshow only under the guidance and tutelage of a Certified Executive Director at the event.



1. 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 Certified Health Coach.

2. Medifast products and Take Shape For Life programs and opportunity are the only products, programs and/or opportunity that may be offered in the tradeshow booth.

3. Only Company-produced marketing materials may be displayed or distributed unless otherwise approved. 4. 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. The Tradeshow Participation form may be located in Appendix C.

D. Take Shape For Life offers special discounted pricing for Certified Health Coaches who are exhibiting at a

tradeshow or professional exposition. The purpose of the discount is to allow Certified Health Coaches to provide samples and information to the audience. Products and materials purchased for use at a tradeshow must be used at such events for sampling and informational purchases only. Certified Health Coaches may not purchase samples or information for more than 25% of the expected attendance.

E. Client Orders at Trade Shows, Expositions and Other Sales Forums – Tradeshows are a great opportunity for

Health Coaches to market their businesses and acquire new clients and Health Coaches. In the event that a prospective client is ready to place an order at the exposition, there are a few options available. The first is to place the order through the Company Call Center. The second option is to take paper orders at the event and fax them to the Company. Paper orders can be processed in as few as 24 hours. The third option is to place orders online. This method may require Internet access at the tradeshow, or orders can be placed at the end of the show via the Internet.

F. Website and Internet Guidelines – See Policy 4.11 for complete details.

4.8 DIRECT RESPONSE

A. Direct Response – Direct Response refers to any advertising that uses a call to action, such as directing a consumer to a toll-free number or a website to make an immediate purchase of product. As Take Shape For Life is a person-to-personal relationship model, the Company does not allow its Health Coaches to engage in direct response sales fulfillment of its products through print, radio, television, online auctions, direct mail, mail order forms, brochures, catalogs, annual directories, or any other type of unsolicited direct response promotion or advertising without the Company’s prior consent. Approved advertising may direct potential clients or prospective Health Coaches to promote their valued-added coaching services as part of the Take Shape For Life program. Breach of the condition may be cause for immediate termination.

4.9 PRODUCT ORDERING

A. Direct Clients – In the Take Shape for Life model, all Clients and Health Coaches purchase products directly from the company. Clients simply log-on to Take Shape For Life’s online Shopping Cart or call Take Shape For Life’s Toll Free Order Number to place their orders, which they can charge to their credit card. Take Shape For Life ships the ordered products directly to the client.

B. Purchasing Take Shape For Life Products – Each Health Coach purchases his or her products directly from

Take Shape For Life under his/her Health Coach account (ID number). C. Order Policies – Take Shape For Life accepts orders via online Shopping Cart, toll-free order number, fax, or

mail. No C.O.D. orders will be accepted. Take Shape For Life maintains no minimum order requirements. Orders for products and sales aids may be combined.

1. On fax or mail orders with invalid or incorrect payment, Take Shape For Life will attempt to contact the Health Coach by phone, email and/or mail to try to obtain another payment. If these attempts are unsuccessful after five working days, the order will be returned unprocessed.



D. Shipping and Back Order Policy – Take Shape For Life will expeditiously ship full or in part any order currently in stock. Take Shape For Life will normally ship products within 48 hours from the date on which it receives an order. If, however, an ordered item is out-of-stock, it will be placed on back order and sent when Take Shape For Life receives additional inventory. Health Coaches will be charged and given volume on back ordered items unless notified on the invoice that the product has been discontinued. Take Shape For Life will notify Health Coaches and clients if items are back-ordered and are not expected to ship within 30 days from the date of the order. An estimated shipping date will also be provided. Back ordered items may be canceled upon a client’s or Health Coach’s request. Clients and Health Coaches may request a refund, credit on account, or replacement merchandise for canceled back orders. If a refund is requested, the Health Coach’s personal sales volume will be decreased by the amount of the refund in the month in which the refund is issued.

E. Confirmation of Orders – A Health Coach and/or recipient of an order must confirm that the product received

matches the product listed on the shipping invoice, and is free of damage. Failure to notify Take Shape For Life of any shipping discrepancy or damage within fifteen days (15) of purchase will cancel a Health Coach’s right to request a correction.

4.10 PAYMENTS AND SHIPPING

A. Insufficient Funds – It is the responsibility of each Health Coach and client to ensure that there are sufficient funds or credit available in his or her account to cover an order. Take Shape For Life will not contact Health Coaches in regard to orders canceled due to insufficient funds or credit.

B. Restrictions on Third Party Use of Credit Cards and Checking Account Access – Health Coaches shall not

permit other Health Coaches or clients to use his or her credit card, or permit debits to their checking accounts, to enroll or to make purchases from the Company.

4.11 INTERNET ACTIVITIES

A. Take Shape for Life is primarily a person-to-person relationship business. The Company provides all Health Coaches with a co-branded website intended to promote your activities as a Health Coach, including client education, acquisition, and support, Health Coach sponsoring and ecommerce for product purchase. It is required that any Health Coach who uses the internet offers the same level of personal support to all clients.

B. Health Coaches are not permitted to develop independent/personal websites containing any intellectual property of

Medifast and/or Take Shape For Life or copyrighted material unless approved by the Company as a licensed Take Shape For Life Independent Website Health Coach. Operating an unlicensed, independent/personal website is a direct violation of the Health Coach Agreement and will result in disciplinary action and/or termination.

C. Health Coaches may operate a website that does not contain or is deceptively similar in nature any intellectual

property of Medifast and/or Take Shape For Life or copyrighted material. The website can contain a link to the Health Coach’s co-branded e-commerce website for specific Take Shape For Life product and program information and order placement, but it may not contain any further information regarding Take Shape For Life or Medifast; nor can it contain any details regarding the two respective company’s products or programs. This website may give a Health Coach’s personal testimonial, but cannot contain any aforementioned material. Please note: personal testimonials are only permitted for individuals age 18 or older. Websites containing testimonials must include the most recent disclaimers. See Appendix B for full list.

D. Domain Names and Email Addresses – Health Coaches may not use or attempt to register any of Take Shape

For Life’s or Medifast’s trade names, trademarks, service names, service marks, product names, the Company’s name, or any derivative thereof, for any Internet domain name. Nor may Health Coaches incorporate or attempt to incorporate any of Take Shape For Life’s or Medifast’s trade names, trademarks, service names, service marks, product names, the Company’s name, or any derivative thereof, into any electronic mail address.

E. Search Manipulation and Keyword Spamming – Search manipulation is any practice that results in searches on

the Internet returning irrelevant listings or that otherwise inhibits a user's ability to accurately locate specific items.



This violation most often consists of the use of brand names or other inappropriate "keywords" for the purpose of gaining attention or diverting users to a website. Search manipulation is strictly prohibited and will result in disciplinary action up to and including termination.

F. Sponsored Link Advertising – Only Certified Health Coaches who have reached the rank of Executive Director

and above are permitted to advertise their authorized independent or co-branded Web sites as sponsored links on various search engines. As with all advertising, online or otherwise, the content of the sponsored link advertising must be submitted to Take Shape For Life for approval. Examples of unacceptable sponsored link advertising phrases include:

1. “Medifast Official Site” 2. “Medifast Professional” 3. “Free Shipping” (without the BeSlim Club participation requirement and $225 order minimum clearly

stated)

G. Online Advertising – Any online advertising, unless supplied by the Company, must be submitted to Take Shape For Life for approval prior to placement. All advertisements, online or otherwise, must adhere to the marketing and advertising guidelines outlined by Take Shape For Life. Both ad content and placement location must be included in the submission. Upon approval by Take Shape For Life, the Health Coach may place the advertisement. See Appendix C for guidelines.

H. Unsolicited email – “Spamming” or the practice of sending unsolicited or unwanted commercial email to

prospects is strictly prohibited and will result in disciplinary action or termination. Health Coaches may not use or transmit mass emails, unsolicited email, or “Spam” relative to the operation of their Take Shape For Life businesses. If a Health Coach wishes to send an email or a group of emails, he or she must adhere to the following guidelines.

1. All email lists must be permission based - recipients must have explicitly asked to receive

communications from the sender or have a relationship with the sender. The following types of email conduct are NOT appropriate:

i. Emailing to any purchased list of email addresses from any source, regardless of what the claims of that source may be.

ii. Emailing any non-specific email addresses unless the recipient is a personal contact and permission is clear. Examples of these addresses are [email protected], [email protected], [email protected], and [email protected].

iii. Emailing to any distribution lists or mailing lists, (i.e., email addresses that mail to more than one email address). Explanation: distribution lists send emails to more than one individual and permission has not been given directly by all individuals to receive such emails, past and future. Sending to one of these lists increases the likelihood of Spam reports.

2. Use of Healthy Habits Newsletter- Health Coaches may only send the virtual newsletter “Healthy

Habits” to front line clients or personally known individuals (prospects).

I. Online Auction Sales – Health Coaches are strictly prohibited from selling, auctioning, or attempting to sell the Medifast/Take Shape For Life products, programs, business tools, coupons/promotional codes or the unique support services offered by a Health Coach on any and all online auction sites (i.e., eBay, Amazon.com, craigslist, etc.). Additionally, Health Coaches are prohibited from using these online auction sites to solicit or generate leads. Violation of this policy will be cause for disciplinary sanctions up to and including termination.

J. Social Media Sites - Health Coaches may participate in social media and social networking sites (Facebook, MySpace, Twitter, etc) to promote their Take Shape For Life businesses by sharing their personal success story, linking to their co-branded website, posting company-approved materials and videos, or offering their support to others in their network. The use of Take Shape For Life logos or Medifast Intellectual Property is strictly prohibited on any social networking site. Any fraudulent, misleading, or inappropriate postings and/or materials on social media sites held by a Health Coach in conjunction with their Take Shape For Life businesses, or postings in poor taste are a direct violation of company policy and are grounds for disciplinary action, up to and including termination. Nothing in this section is meant to discourage the use of social media and the sharing of company approved material. The purpose of this section is to restrict the unauthorized use of company logos and



Intellectual Property in environments where the public could be easily misled as to the authenticity of certain content.

K. Medifast Direct/ My Medifast – 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 who attempt to solicit Medifast Direct customers put the entire Take Shape For Life field and Qualified Leads Program at risk. Therefore, Health Coaches may not attempt to provide counsel nor advice, contact, solicit or recruit any customers, leads or potential Health Coaches from any and all Medifast Direct websites, including the My Medifast online community, message boards, forums, chat rooms or other community spaces. Health Coaches engaging in these activities will be subject to disciplinary action and/or immediate termination.

L. Support in Motion – Other than personally-sponsored Clients, Health Coaches may not attempt to provide

counsel nor advice, 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.

4.12 UNSOLICITED FAXES PROHIBITED

A. The practice of sending unsolicited or unwanted facsimile transmissions to prospects is not allowed. Engaging in such activities is strictly 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 which is transmitted to any person, except that these terms do not include a fax sent: (a) to any person with that person's prior express invitation or permission; or (b) 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: (a) an inquiry, application, purchase or transaction by the person regarding products offered by such Health Coach; or (b) a personal or familial relationship, which relationship has not been previously terminated by either party.

4.13 OFFICIAL COMPANY LITERATURE AND MATERIALS

A. 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 B and C, respectively.

B. 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 only make representations about the Company products that are found in current Company literature, videos, audiotapes, and Published Company literature.



4.14 THE NATIONAL “DO NOT CALL” REGISTRY

A. The purpose of the National “Do Not Call” Registry is to give the consumer a choice about whether they want to receive most telemarketing calls. Under these regulations, it is illegal for most telemarketing companies or sellers to call a number on the registry. However, 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.

B. A seller may call a consumer with whom it has an established business relationship for up to 18 months after the

consumer’s last purchase, delivery, or payment – even if the consumer’s number is on the national “do not call” registry. In addition, a seller may call a consumer for up to three months after the consumer makes an inquiry or submits an application to the seller. If a consumer has given a seller written permission, the seller may call the consumer even if the consumer’s number is on the registry.

C. However, if a consumer asks a seller not to call, the seller may not call, even if there is an established business

relationship. A seller may not call a consumer – regardless of whether the consumer’s number is on the registry – if the consumer has asked to be put on the seller’s “do not call” list. For more information about the National “Do Not Call” Registry, please visit www.donotcall.gov or call 888-382-1222.

Section V: Payments 5.0 COMPENSATION AND COMPLIANCE FEES

A. Compensation Income – Compensation income is paid to Health Coaches for performance according to the Take Shape for Life Compensation Plan.

B. Weekly Checks, Monthly Bonuses and, Payment Schedule – All earned commissions on personally sponsored,

front-line clients and Health Coaches are paid weekly ,if a Health Coach is set up for direct deposit. Otherwise, all other earnings and bonuses are paid on a monthly basis. Take Shape For Life generally mails or deposits monthly bonuses on or about the 15th day 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 the Take Shape For Life Direct Deposit

program. Enrollment forms can be found online in the Document Library of Office in Motion.

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 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 earning on that check.

E. Adjustments to Checks – Health Coaches receive bonuses and commissions based on the actual orders of

products to end consumers. When a product is returned to Take Shape For Life and the consumer is entitled to a refund, the paid bonuses and commissions attributable to the returned product(s) will be deducted, in the month in which the refund is given, and continuing every pay period thereafter until the bonuses and commissions are recovered from the Health Coaches who received bonuses and commissions on the sale of the returned product(s). Refunds are not processed on the last day of a bonus month.

F. Un-cashed Checks/Returned Checks/ Replacement Check Requests: – Commission or compliance fee checks

that remain un-cashed for more than 90 days will not be honored. Health Coaches who are in possession of un-cashed checks that are more than 90 days old will be issued a replacement check only upon receipt by the Company of a written request from the Health Coach to whom the original check was issued together with a processing fee and the original un-cashed check. 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 asses a processing fee.



G. Business Month – A Business Month refers to the time period opening on the first day after the close of a

calendar month and extending up until midnight (EST) on the last day of that calendar month. All orders fully paid for and processed during this time period contribute to the total volume upon which commissions, bonuses and qualifications are based.

H. Business Day – A business day is any Monday through Friday except for days when holidays are celebrated.

Corporate offices at Take Shape For Life are not open on the following days: Saturday and Sunday, New Year's Day, Good Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving (Thursday and Friday), Christmas Eve and Christmas Day.

I. Minimum Monthly Payout – Because of the high cost of check processing, compensation checks and direct

deposits under $25 will be held and accrued and then paid when accumulated commissions or compliance fees exceed $25. This amount is subject change.

J. Genealogy Reports – Each Health Coach qualifying for commissions or compliance fees will receive an online

monthly report showing the calculation of the Health Coach’s commissions and bonuses. Genealogy Reports will be made available only on official Take Shape For Life websites and will not be available via hard copy from the company. All information provided by Take Shape For Life 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. Nevertheless, due to various factors including the inherent possibility of human and technical error, the accuracy, completeness, and timeliness of orders, denial of credit card and electronic check payments, returned products, credit card and charge-backs, the information is not guaranteed by Take Shape For Life or any persons creating or transmitting the information.

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 use, or non-infringement.

2. To the extent permissible under applicable law, Take Shape For Life 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, Take Shape For Life 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 Take Shape For Life’s online Genealogy Reporting services and the information

acquired thereby is at a Health Coach’s own risk. All such information is provided "as is".

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 Take Shape For Life. 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 the above confidential information to the Health Coach. A Health Coach shall not, on his or her own behalf, or on behalf of any other person, partnership, association, corporation or any other entity:

i. Directly or indirectly disclose any information contained in any Genealogy Report to any third

party;



ii. Directly or indirectly disclose his or her password or other user access code to his or her Genealogy Report;

iii. Use the information contained in any such report to compete with Take Shape For Life or to promote any products services, or income opportunities for any purpose other than reviewing and promoting his or 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 Take Shape For Life; or

v. Use or disclose to any person, partnership, association, corporation, or other entity any information contained in any Genealogy Report.

vi. 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

A. All notices to be given pursuant to the Agreements 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 email. 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 email.

6.1 FORCE MAJEURE

A. Take Shape For Life 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 VIOLATIONS

A. It is the obligation of every Health Coach to abide by and maintain the integrity of the Policies. If a Health Coach observes another Health Coach committing a violation, he or she should inform Take Shape For Life immediately and directly of the violation.

6.3 AMENDMENTS

A. Health Coach understands and agrees that Take Shape For Life may amend the Policies, the Health Coach Agreement, the Guidelines, prices for Product, Take Shape For Life literature, and/or the Compensation Plan, without prior notice, at any time, effective upon publication or transmittal of such amendment (“Amendment”) in the Take Shape For Life publications, literature, email, website or voicemail, as applicable.

B. In the event of any conflict between the terms of this Sponsorship Agreement, the Policies, the Health Coach

Agreement or any other document and such Amendment, the Amendment shall control. Failure of a Health Coach



to terminate his or her Health Coach Agreement within five (5) business days of publication of the Amendment shall be deemed acceptance of the Amendment.

6.4 ARBITRATION

A. 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 counterclaim against Take Shape For Life, he or 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 arbitrator, an attorney at law, who shall have expertise in business law transactions with a strong preference being 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.

B. 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.

6.5 GOVERNING LAW

A. 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 laws of the state in which a Health Coach resides expressly require the application of its laws.

6.6 VENUE

A. Jurisdiction and venue of any matter not related to arbitration shall be brought in the federal and state courts located in 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 that state’s laws shall govern all issues related to jurisdiction and venue.

6.7 NON-WAIVER PROVISION

A. 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 breach of any provision of the Agreements shall not constitute a waiver of any prior, concurrent, or subsequent breach by the Health Coach. An authorized officer of the Company must issue the waiver in writing.

6.8 SEVERABILITY

A. If under any applicable and binding law or rule of any applicable jurisdiction, any provision of the Health Coach Agreement, including these Policies, or any specification, standard or operating procedure which Take Shape For



Life has prescribed is held to be invalid or unenforceable, Take Shape For Life shall have the right to modify the invalid or unenforceable provision, specification, standard or operating procedure 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.

6.9 ENTIRE AGREEMENT

A. These Policies and Procedures and the Compensation Plan are incorporated into the Health Coach Agreement. Collectively, these documents are referred to as the “Agreement.” The Agreement constitutes the entire 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.



Appendix A: Administrative Policies Activation Policy In order for an individual to become a Health Coach with Take Shape For Life, he or she must follow the activation process. 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. Most Pending Health Coaches activate their accounts within a few days of enrollment; however, some do not activate for several months, and some fail to activate at all. With the implementation of the Field Support team, the number of those who do not activate in a timely manner should diminish; however, a policy is still needed to address those who never activate.

Policy and Process Any Pending Health Coach who does not activate his/her account within 6 months will be returned to Client status. Before the change back to Client, Field Support will attempt to contact the Pending Health Coach several times to encourage him/her to activate. The activation campaign includes:

- 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 180)

At the six month mark, Field Administration will attempt one final contact, and if no response, the account will be returned

to Client status.

Exchange Policy

If you are not satisfied with a Medifast Meal, you may exchange up to 10 boxes of product within 30 days from the date of purchase for a comparable product.* To qualify for an exchange, no more than one packet may be removed from a box. Super Omega-3 and Essential1: Digestive Health dietary supplements will not be accepted for exchange. Exchanged products cannot be returned for exchange or refund. Policy is subject to change. All Exchanges require a Return Authorization Number, which can be obtained from a member of our Customer Service Team. Please call the number located at the bottom of your Packing Slip. *Comparable product is defined as products of the same type and price; i.e., Ready-to-Drink Shakes may only be exchanged for other Ready-to-Drink Shakes, Medifast Bars may only be exchanged for other Medifast Bars, Momentum by Medifast Meals may only be exchanged for other Momentum by Medifast Meals, Flavor InfusersTM may only be exchanged for other Flavor InfusersTM of the same price, etc.



Return Policy 30-Day Money Back Guarantee Receive a refund of the purchase price on any unopened, unused boxes returned and postmarked within 30 days of purchase. Refund applies to returned consumable products and blenders only; shipping charges, if applicable, are non-refundable. "Free" products received as part of a promotional offer do not qualify for a credit if returned. Partial boxes, individual packets, and opened, unsealed Super Omega-3 bottles do not qualify for a credit if returned. We will not re-ship returns sent after the 30-day purchase period. We are not responsible for lost or stolen packages. Only the account used for the original purchase may be credited. Please allow up to four weeks for your return to be processed and your account refunded. 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. Customer is responsible to pay shipping cost to return product. Exchanged products cannot be returned for exchange or refund. Policy is subject to change. All returns require a Return Authorization Number, which can be obtained from a member of our Customer Service Team. Please call the number located at the bottom of your Packing Slip. This document supersedes any other client relation policies that exist throughout our materials. For full details on our policies, please visit our Web site.

Recoveries 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 Contact center. However, from time to time, Clients may inadvertently order through the Medifast Direct website in error. The Home Office is committed to finding better ways to ensure that orders placed on an incorrect website are credited to the appropriate Health Coach. Until those technical solutions can be put into place, we need a mechanism to be notified of those ordering errors, investigate, and recover the volume for credit.

Recovery Policy Therefore, based on the recommendation and input of our field partners on the Chairman’s Business Development Council (CBDC), we have revised the Recovery policy, and are introducing a new Recovery Request form to standardize the initiation process. The agreed-upon policy is as follows:

Must have a completed Recovery Request Form in order to initiate the recovery process An order is only recoverable from 60 days from the date of request Up to three recovery requests per Client If a lead, the initial order is not recoverable (no change from current policy) A Health Coach must be activated to receive credit for a recovered order

Recovery Request Process In order to begin the recovery investigation process, a Health Coach will need to complete the Recovery form in full. This form is an editable PDF, located in the Document Library of Office in Motion, so the process for submittal is simple:

Download the Recovery Request form from the Library in OIM Complete the PDF form Save the completed form to your desktop



Attach the completed form to an email, and send it to [email protected]

This streamlined process will make it easier for the Home Office team to locate orders in need of recovery and ensure that they have been credited properly. Keep in mind, the goal is to have all orders coming through the appropriate TSFL websites or the Client Contact Center. Therefore, upon completion of a Recovery, it is important to reach out to the Client and educate them on the proper ordering procedure to prevent future mishaps. Any Client who fails to order from TSFL after three completed recovery requests will no longer be considered interested in TSFL or eligible for recovery.

Recoveries from MWCC From time to time, a Client who is in an “emergency” situation (i.e. out of Medifast Meals), may opt go to their local Medifast Weight Control Center to purchase an order for product until they can receive their order via delivery. In those instances, since the company wants to ensure that the Client remains compliant on the Program but balance the proper credit to the Health Coach, that emergency order is eligible for recovery. MWCC Recovery Policy Therefore, if a TSFL client obtains product from a MWCC center, it will be up to the Health Coach to notify TSFL immediately to initiate the recovery process. The guidelines are below:

Client must already be an existing TSFL Client (have a TSFL ID # and at least one previous order) Client must have received product from MWCC within previous 30 days

A Health Coach must be activated to receive credit for a recovered order MWCC Recovery Request Process In order to begin the recovery investigation process, a Health Coach will need to email [email protected] provide the following information:

Client Name Client ID # Name of Medifast Weight Control Center where food was purchased Approximate date of visit

Once the email is received, the Home Office will contact MWCC to validate the order and obtain the proper amount of purchase. If valid, the volume for that order will be recovered and credited to the Health Coach. Keep in mind, any TSFL Client obtaining food from a clinic should be a very rare occurrence. Therefore, upon completion of a MWCC Recovery, it is important to reach out to the Client and educate them on the proper ordering procedure to ensure that they have enough Medifast Meals to maintain compliance on the program.


mailto:[email protected]



Client Transfer Policy Client-requested transfers 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. Therefore, the company has instituted a policy to facilitate these rare transfers. If a Client wishes to transfer to a new Health Coach, he or she must complete the Client Transfer Request form and return it to [email protected] for processing. Client transfers will take between 3 -5 days for processing, and once approved, will be made effective the date the request is received. Please note: 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. 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.

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. 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. 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





Bulk Client Transfer Policy Take Shape For Life understands that from time to time, Business Leaders may wish to transfer large numbers of front-line entities (Clients, Leads, or Inactives) to downline 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: - 10-25 front-line entities (Clients, Leads, Inactives) - $25

- 26 – 50 front-line entities (Clients, Leads, Inactives) - $50 - 51 – 75 front-line entities (Clients, Leads, Inactives) - $75 - 76 - 100 front-line entities (Clients, Leads, Inactives) - $100 - 101 – 250 front-line entities (Clients, Leads, Inactives) - $250 - 251 + 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.



Appendix B: Disclaimers & Take Shape For Life/Medifast Intellectual Property Weight-loss disclaimers: When accompanied in close proximity in the advertisement by a statement showing typical results of “up to 2 to 5 lbs per week”:

Results will vary. When used either:

a) alone without stating “up to 2 to 5 lbs per week” elsewhere on the advertisement, or b) along with the statement “up to 2 to 5 lbs per week” when the weight loss is dramatic, i.e., greater than “up to 2 to 5 lbs per week,” e.g., an individual loses 50 lbs in 2 months):

o Results not typical. You should not expect to experience these results. Typical weight loss on the Medifast 5 & 1 Plan is up to 2 to 5 lbs per week.

If the ad testimonials are TSFL Health Professionals: The doctor represented in this advertisement is an independent Health Coach for Take Shape For Life®, a Medifast support program. Not all Take Shape For Life® Health Coaches are doctors. OR Some of the doctors represented in this advertisement are independent Health Coaches for Take Shape For Life®, a Medifast support program. Not all Take Shape For Life® Health Coaches are doctors. If the ad testimonials are TSFL Health Coaches: The success story represented in this advertisement is a Health Coach for Take Shape For Life®, a Medifast support program. OR Some of the doctors represented in this advertisement are independent Health Coaches for Take Shape For Life®, a Medifast support program.



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 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



Appendix C: Forms Trademark and Advertising Request Form Client – Initiated Changes Request Form Health Coach - Initiated Changes Request Form Business Type Change Form Recovery Request Form Media Request Form Press Release Request Form Contact Information Update Form


Trademark & Advertising Request Form

This request form must be used by Take Shape For Life (TSFL) Health Coaches to obtain authorization for independent third party advertisements and/or TSFL trademark usage. An approved request does not constitute any license or right to Take Shape For Life trademarked and copyrighted material, nor its intellectual property. All advertisements must adhere to the marketing advertising guidelines of Take Shape For Life1. Additionally, Take Shape For Life reserves the right to refuse permission to use its trademarks for any reason, at its sole discretion. Approved requests are subject to change or modifications. Please make certain that all proofs and or mock ups are included. Incomplete trademark requests will be returned. A completed form must be submitted to the Take Shape For Life Compliance Department no later than 10 business days before proposed trademark usage. All requests for advertising or promotional materials will be carefully scrutinized in order to comply with FTC and FDA regulations. You will receive a response regarding your submission from the Compliance Department within 3 business days. Rush requests are not a guarantee of expedited processing. No rush requests will be considered for press releases or any media opportunities. This includes Web advertisements, television advertisements, and radio advertisements. Completed forms can be submitted to:

Take Shape For Life Attention: Compliance 11444 Cronhill Drive

Owings Mills, Maryland 21117 Completed forms may be submitted via fax to: 1-443-471-3326 Attention: Compliance Department Completed forms and attachments related to your request may be submitted via e-mail to: [email protected]

1 For details on the guidelines for promoting your Health Coach business, please review the Take Shape For Life Policies & Procedures, sections 4.1-4.5, and 4.11. The Policies and Procedures document is available in the Office in Motion Library (keyword: Policies).


REQUESTER INFORMATION (Fields with a “*” are required)

Name*: _________________________________ Health Coach ID*: _____________________ Address*: ____________________________________________________________________ Telephone*: (day) ________________ (evening) _________________ (fax) ________________ Email*: _______________________________________________________________________

MANUFACTURER INFORMATION (Complete if project is to be produced by a third party)

Company Name: _______________________________________________________________ Primary Contact Name: __________________________________________________________ Address: ______________________________________________________________________ Telephone (day) ________________ (evening) _________________ (fax) _________________ Email: ________________________________________________________________________ Trademark(s) Requested: ________________________________________________________ Intended Date of Use*: _______________________ Detailed description of advertisement and/or use of trademark(s)*:

(Attach proofs or mockups to this document or email your drafts to [email protected]) Time Frame for Use: ____________________ through ____________________ (The maximum term of use is for a trademark is six (6) months. The term is renewable once a new application is received and approved.)

Trademark Request

(check all that apply)

Use of Brand Terms (Medifast, Take Shape For Life, Medifast 5 & 1 Plan, TSFL, etc.)

Use of TSFL Logo

Use of copyrighted material (including excerpts)

Advertising Request

(check all that apply)

Radio advertisement

TV advertisement

Web advertisement

Take Shape For Life – Advertising & Trademark Request Form v0310 p. 2 of 3


Terms of Permission

By signing below I acknowledge agreement and acceptance of Take Shape For Life’s advertising and trademark terms of permission. I also agree to abide by policy 1.3b and policy 4.1 of the Take Shape For Life Policies & Procedures: Take Shape For Life “trademarks” as used in this request form include: all intellectual property, service marks, trade names, slogans, symbols, tag lines, product names, and color schemes whether registered or unregistered. Take Shape For Life and Medifast, Inc., intellectual property includes, but is not limited to, the following terms and associated logos:

- Take Shape For Life - Take Shape - TSFL - Medifast - BeSlim - Medifast 5 & 1 Plan

The above is not exhaustive of all intellectual property owned by Take Shape For Life and Medifast, Inc. A full list can be found in Appendix B of the Take Shape For Life Policies and Procedures. Upon approval, this trademark may only be used as expressly outlined in the request form, and does not constitute any license or right to the requester. Approved requests are non-exclusive and non-transferable. Approvals are for use of a specified advertisement or promotional material based upon the proposal outlined in this document and no other purpose. Any other use will be construed as breach of agreement, and the approval of advertisement and trademark privileges will be rescinded. Failure to comply with these regulations may result in disciplinary action. ________________________________ _______________________ Printed Name Signature ________________________________ Date

For Official Use

Approved Approved with Changes Denied Signature: ______________________________________ Date:___________________

Take Shape For Life – Advertising & Trademark Request Form v0310 p. 3 of 3

Client – Initiated Changes Request Form

(All fields required for transfer)

*Date of Request: _____________________

*Client’s Name : _____________________________ *Client’s ID #: _______________________

*Current Health Coach Name: _________________________ *ID #: _______________________

*New Health Coach Name: _____________________________ *ID #: _______________________

*Reason for transfer (please provide as much detail as possible):

By completing this form, I understand that Take Shape For Life will notify all parties of the change. The Client reserves the right to select a Health Coach of their choosing. The reason for the transfer will be withheld from the current Health Coach to protect confidentiality. Requests are kept on file for record-keeping and audit purposes.

Please understand that all requests may take 1 – 3 business days for approval and processing.

I Agree (Name) ___________________________________ Date: _____________

Take Shape For Life – Client - Inititated Changes Request Form – 3/2010 Page 1 of 1

Health Coach – Initiated Changes Request Form

Please note: Requests may only be initiated by the current Health Coach or Client (if you are a Client, please see the “Client-Initiated Client Transfer Form”). (All fields required for transfer)

*Date of Request: _____________________

*Current Health Coach Name: _________________________ *ID #: _______________________

*Client’s Name: _____________________________ *Client’s ID #: _______________________

*New Health Coach Name: ____________________________ *ID #: _______________________

*Reason for transfer (please provide as much detail as possible):

By completing this form, I understand that Take Shape For Life will notify all parties of the change. The Client reserves the right to select a Health Coach of their choosing. Reason for the transfer will be withheld from the current Health Coach to protect confidentiality. Requests are kept on file for record-keeping and audit purposes.

Please understand that all requests may take 1–3 business days for processing, and once approved, will be made effective the date the request is received. Please note: any and all volume that appeared on the Client’s account will not move with the Client, but remain with the previous Health Coach. Any NEW orders placed after the transfer request has been received will be credited to the new Health Coach. I Agree (Name) __________________________________ Date: ____________________ *This form is exclusively for Client Sponsor Changes. All Health Coaches wishing to change Business Coaches must submit documentation as outlined in Section 3.3 of the governing Policies and Procedures for Health Coaches.

Take Shape For Life – Health Coach – Initiated Changes Request Form – 3/2010 Page 1 of 1

Business Type Change Form * Requesting Health Coach Name: ____________________ *ID # _________________ * Business Name _________________________________________________________ * Business Type Change From: Individual Trading As Sole Proprietor L.L.C L.L.P. Corporation Other: ____________________________ * Reason for the Business Type Change: ______________________________________ ________________________________________________________________________ * Business Type Change To: Trading As Sole Proprietor L.L.C L.L.P. Corporation Other: ____________________________ * New Business Name (if applicable): ________________________________________ * Mailing Address: ________________________________________________________ * Home Phone: ________________ * Alternate Phone: _________________ * E-Mail Address: ________________________________________________________ * New W-9 Submitted: Yes No (Business type ownership will not be changed with out a completed W-9) I agree to abide by the terms and conditions of the Health Coach agreement. I acknowledge that Take Shape For Life will update my account to reflect the above changes. Please understand that changes may take from 1-3 business days for processing. I Agree Name: __________________________ Date: ___________

Take Shape For Life – Business Type Change Form – 3/2010 Page 1 of 1

Recovery Request Form

*Requesting Health Coach Name: _____________________________ *ID#: __________________

-------------------------------------------- Recovery Request 1 ----------------------------------------

*Client’s Name (include nickname, if applicable) ________________________________________

*Address ________________________________________________________________________

Phone Number or Email _______________________ Medifast ID # (if known) _______________

*Approximate Date of Order ____________________ Order # (if known) ____________________

*How did you meet this Client? ______________________________________________________

*How frequently are you in contact with this Client?

1-2 times per week 1-2 times per month less than once a month less than once every 2 months

*Date of first contact ________________ *Date of most recent contact ________________

*How do you support this Client? (Check all that apply) Phone Meetings

Email Face to Face

Is this Client on Medifast VIP (Autoship)? Yes No

-------------------------------------------- Recovery Request 2 ----------------------------------------

*Client’s Name (include nickname, if applicable) ________________________________________

*Address ________________________________________________________________________

Phone Number or Email _______________________ Medifast ID # (if known) _______________

*Approximate Date of Order ____________________ Order # (if known) ____________________

*How did you meet this Client? ______________________________________________________

*How frequently are you in contact with this Client?

1-2 times per week 1-2 times per month less than once a month less than once every 2 months

*Date of first contact ________________ *Date of most recent contact ________________

*How do you support this Client? (Check all that apply) Phone Meetings

Email Face to Face

Is this Client on Medifast VIP (Autoship)? Yes No

Fields Marked with an asterisk (*) are required.

By completing this form, I acknowledge that it is my responsibility to support and coach the Clients listed on this recovery request. I also understand that as part of my coaching efforts, the Clients listed on this form are expected to order via the Take Shape For Life Client Contact Center or via my co-branded website for future purchases. Take Shape For Life reserves the right to contact these Clients at any time to confirm support activities and validate this request. I understand the company may conduct regular audits of recovered orders to confirm compliance with the Take Shape For Life policy for recovered orders and for accounting purposes.

* I Agree *Date: _____________

Take Shape For Life – Contact Information Update Form – 3/2010 Page 1 of 1

Media Request Form

This request form must be used by Take Shape For Life (TSFL) Health Coaches to obtain authorization for initiating contact with the Media for advertising and/or interviews. An approved request does not constitute any license or right to initiate contact with the Media on behalf of Take Shape For Life or a Health Coach’s TSFL Business. Television, radio, magazines and newspapers are powerful ways to reach the masses, gain their trust, and grow your business. Conversely, if mismanaged, the power of the media could result in the opposite of the intended effect. Therefore, all pitches to the local and/or national media MUST adhere to the marketing advertising guidelines of Take Shape For Life1, and be approved by the Medifast, Inc. (TSFL) PR Team before validation and placement. The PR Team can also assist with media training, crafting a pitch message, identifying accurate local media contact information and building locally targeted media lists. Per policy, all Health Coaches are expressly prohibited from responding to contact from any media regarding Take Shape For Life or its products. Any media inquiries or requests for interviews MUST be directed to the Company. Additionally, Take Shape For Life reserves the right to refuse permission to Health Coaches to contact any Media for any reason, at its sole discretion. Please make sure that all text or recording of the pitch message is included. Incomplete media requests will be returned. A completed form with the pitch message must be submitted to Public Relations no later than 10 business days prior to the intended media placement date. Rush requests will not be considered. Completed forms can be submitted to:

Take Shape For Life Attention: Public Relations

11444 Cronhill Drive Owings Mills, Maryland 21117

Completed forms may be submitted via fax to: 1-443-471-3326 Attention: Public Relations Completed forms and attachments related to your request may be submitted via e-mail to: [email protected]

1 For details on the guidelines for media opportunities, please review the Take Shape For Life Policies & Procedures, sections 4.4a, and 4.4d (i, ii, iii, iv, v). The Policies and Procedures document is available in the Office in Motion Library (keyword: Policies).



Name*: _________________________________ Health Coach ID*: _____________________ Address*: _____________________________________________________________________ Telephone*: (day) _______________________ (evening or fax) __________________________ Email*: _______________________________________________________________________ Date of Media Placement*: ____________________________ Purpose of Media Opportunity*: ___________________________________________________ _____________________________________________________________________________________ _____________________________________________________________________________ _____________________________________________________________________________ _____________________________________________________________________________ Have you consulted with your Business Coach and/or Global Director? (Yes or No): __________ Requested Time Frame for Use*: ____________________ through _______________________ (The maximum term of use is 3 months. This term is non-renewable.)

MEDIA OUTLET

Type of Media (TV, Radio, Print, Other – Select One)*:__________________________________ (Only one pitch message, and one type of media will be considered per request.) Company Name*:_______________________________________________________________ Primary Contact Name*:__________________________________________________________ Secondary Contact Name*:_______________________________________________________ Address*: _____________________________________________________________________ Telephone*: (day) ______________________ (evening or fax)*___________________________ Primary Contact’s Email*: ________________________________________________________ Secondary Contact’s E-mail*: _____________________________________________________



Terms of Permission By signing below I acknowledge agreement and acceptance of Take Shape For Life’s terms of permission for Media validation and placement. I also agree to abide by policy 4.4d of the Take Shape For Life Policies & Procedures. Upon approval, the submitted pitch message may only be used as expressly outlined in the request form, and does not constitute any license or right to the requester. Approved requests are non-exclusive and non-transferable across different types of media. (If reference to a website is included, the audience will be directed to the co-branded website). Approvals are for use of a specified pitch message based upon the request outlined in this document and no other type of media and/or purpose. Any other use will be construed as breach of agreement, and approval will be rescinded. If an approved request results in inquiries from the Media, they will be directed to the Company. Failure to comply with these regulations may result in disciplinary action and could be grounds for termination. ________________________________ _______________________ Printed Name Signature ______________________ Date

For Official Use

Approved Approved with Changes Denied Date:___________________

Press Release Request Form

This request form must be used by all Take Shape For Life (TSFL) Health Coaches to obtain authorization for any Health Coach- or TSFL-related press releases. An approved request does not constitute any license or right to issue Take Shape For Life press releases. Since press releases are an outward facing communication, they must adhere to the marketing advertising guidelines of Take Shape For Life1, and be approved by the Medifast, Inc. (TSFL) PR Team before distribution. Per policy, use of a national press release distribution service such as PRNewswire, BusinessWire, or any online PR services is strictly prohibited. Additionally, Take Shape For Life reserves the right to refuse permission to issue a press release for any reason, at its sole discretion. Approved requests are subject to change or modifications and should only be submitted to local media outlets. Please make sure that all text of the press release is included. Incomplete press release requests will be returned. A completed form with the press release must be submitted to Public Relations no later than 5 business days prior to any distribution. Rush requests will not be considered. Completed forms can be submitted to:

Take Shape For Life Attention: Public Relations

11444 Cronhill Drive Owings Mills, Maryland 21117

Completed forms may be submitted via fax to: 1-443-471-3326 Attention: Public Relations

Completed forms and attachments related to your request may be submitted via e-mail to: [email protected]

1 For details on the guidelines for press releases, please review the Take Shape For Life Policies & Procedures, sections 4.4a, and 4.4d (ii, iii, vi, vii). The Policies and Procedures document is available in the Office in Motion Library (keyword: Policies).




Name*: _________________________________ _ Health Coach ID*: _____________________ Address*: _____________________________________________________________________ Telephone*: (day) _______________________ (evening or fax) __________________________ Email*: _______________________________________________________________________ Date of Press Release*: ______________ Purpose of Press Release(s)*: __________________ _____________________________________________________________________________________ Requested Time Frame for Use*: ____________________ through ______________________ (The maximum term of use is one year. This term is non-renewable.) Media outlets for distribution (please list):

Additional Media Outlets:

Terms of Permission

By signing below I acknowledge agreement and acceptance of Take Shape For Life’s press release terms of permission. I also agree to abide by policy 4.4d of the Take Shape For Life Policies & Procedures. Upon approval, the submitted press release may only be used as expressly outlined in the request form, and does not constitute any license or right to the requester. Approved requests are non-exclusive and non-transferable. Approvals are for use of a specified press release based upon the request outlined in this document and no other purpose. Any other use will be construed as breach of agreement, and approval will be rescinded. Failure to comply with these regulations may result in disciplinary action. ________________________________ _______________________ Printed Name Signature ______________________ Date

For Official Use

Approved Approved with Changes Denied Date:_________________

Contact Information Update Form * Effective Date: ____________________ * Requesting Health Coach Name: ____________________ *ID # _________________ * Business Name _________________________________________________________ * Type of Change:

Name Change: (attach Marriage License or Legal Name Change Document) From: __________________________ To: __________________________

Address Change: From: __________________________ To: __________________________ __________________________ __________________________ Home Phone Number: From: __________________________ To: __________________________

Work Phone Number: From: __________________________ To: __________________________ Cellular Phone Number: From: __________________________ To: __________________________ E-Mail Address: From: __________________________ To: __________________________

I acknowledge that Take Shape For Life will update my account to reflect the above changes. Please understand that changes may take from 1-3 business days for processing. I Agree Name: __________________________ Date: ___________




Appendix D: Take Shape For Life Official Compensation Plan


© Take Shape For Life 05.2009 Incomes shown in any examples are for illustration purposes only and are not intended to imply, promise, or guarantee any income. 1


The official compensation plan for Take Shape For Life went into effect January 1, 2003. This plan is a collaborative effort between the Field and the Company. Many top leaders in the organization provided input and feedback as the plan was crafted. We believe that the end result is a comp plan that fits our model and the objectives of the business we all want to build. Objectives of the Compensation Plan

Conform to the philosophy and business model of Take Shape For Life.

Be balanced, fair, and equitable.

Reward people who do the work.

Provide rapid yet stable growth.

Create greater and quicker Health Coach profitability.

Promote client acquisition, higher client order activity, client retention and ordering consistency.

Provide incentives for mentoring, field leadership, and organization building.

Create positive promotion (push/pull) resulting in Health Coaches pushing themselves towards higher goals while simultaneously rewarding sponsors (Business Coaches) for helping them.

Provide recognition for accomplishment.

Be logical and relatively simple to understand.

Keep the Company revenues and Health Coaches incomes viable for long-term success.

What Kind of Business Are We?

We are a Heath Coach Services Company.

We are a company fundamentally driven by service to our clients. We lead with our programs and products and not the opportunity.

We are a Health Coach Network; our Health Coaches provide the “value add” to the client by delivering the support and behavioral training they need.

We are a professional organization; accountable to a higher standard.

We are all about building relationships both with our Coaches and Clients.

We, along with our team of Health Coaches, are client service focused.

We are creating a new paradigm in business. We represent a new model.

We represent a stable, long-term business for our Health Coaches.

Where Compensation Comes From Fundamentally, all corporate revenues flow from orders generated to clients and compensation is derived from efficient and skillful execution of the operation of the business. To be a viable entity, a company must effectively allot revenues to cover a variety of fixed and variable costs as well as derive a profit. These expenses include: the cost of manufacturing, the cost of goods, other


overhead expenses, advertising, and compensation to employees and individuals in the field. What remains after these costs are profits and return to investors. In this company, as in any organization, there is a finite amount of money available to pay compensation to the field as a percentage of orders. The question before any compensation plan then becomes, “what is the best mechanism to pay compensation to the field?” In other words, what behaviors should the company incent to reward individuals for their efforts? Put another way, what should people to do in order to earn income? We have determined that the best compensation plan for Take Shape For Life is a balanced one that rewards the following four behaviors:

1. Client acquisition and support 2. Health Coach recruiting/sponsoring/mentoring 3. Mid-level leadership 4. Top-level leadership

With a finite amount to pay, we have determined the percentages we will pay for each activity. Considering all of the payout available (i.e 100% of the payout), in this plan we pay 40% as client support commissions, up to an additional 30% as a bonus for either first level orders and/or for sponsoring and developing a Health Coach team, and up to another 30% for mid-level and top leadership compensation. Additionally, we pay separate client acquisition bonuses and volume consistency bonuses. Overview of The Plan Individuals participating in the Take Shape For Life business have 2 primary earning opportunities available to them for growing their business. These are:

I. To develop a stand-alone independent Health Coach business acquiring clients and providing them with the support, programs, and products they need from Take Shape For Life.

II. And, if they chose, they can also create a Business Organization or Health Coach Team

by developing a Health Coach Network of other independent Health Coaches like themselves.

Special Characteristics of this Compensation Plan To better understand the details of the Take Shape For Life Compensation Plan, you should be familiar with the following special characteristics and definitions (a more detailed list of definitions is available at the end of this document):

Clients and Health Coaches pay the same price for products.

Personally sponsored Health Coaches are considered the personal clients of their sponsors and commissions are paid to the sponsor on orders placed by these Coaches.

Personally acquired Clients and personally sponsored Health Coaches (people frontline to you) are considered to be on your first level (Level 1) for compensation purposes.

Commissions on Level 1 orders are paid as a percentage of the adjusted retail dollar (ARP) amount of a product.

o ARP (ARP) is currently 95% of the retail price of a product. (ARP subject to change.)


All Growth Bonuses and Leadership Bonuses are paid as a percentage of CV or Commissionable Volume. CV is a point system in dollars that is assigned to each product. (Currently CV is 48% of the ARP and is subject to change).

Compensation (Client Support Commissions and all bonuses) is paid on consumable (meal replacements, anti-oxidants, etc.) products only. Tools, apparel, program materials, and shipping are not eligible for compensation.

Weekly Client Support Commissions (paid on level 1) are paid the week following a weekly commission period.

o A commission week is Monday – 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 have paid in full.

Bonuses are paid on the 15th of the month following the previous Monthly Bonus period.

o The Monthly Bonus Period for the compensation plan is based on orders placed and payment received in a calendar month. The monthly period begins at 12:00 AM on the first day of the month, and concludes at 11:59 PM on the last day of the month. Volume is credited for orders that have paid in full.

This is a “real time” plan, meaning that, although someone is granted a title based on their highest achievement level, they are paid month-to-month based on their current business structure and production.

Getting Started:

You can get started in TSFL by registering to become a Health Coach by purchasing one of the enrollment Pack options (Health Coach Career Kit or Health Professional Kit). Previously, Take Shape For Life had three pack options (Basic, Career Builders, and Health Professional). Purchasers of the Health Coach Career Kit are called Fast-Track Health Coaches, and purchases of the Health Professional kit are referred to as Health Professional Health Coaches. (Please note – only individuals who are medically credentialed and currently licensed in their state can purchase the Health Professional Kit.) Once one of the enrollment packs are purchased, an individual must complete the Activation progress to become a Health Coach. In order to recommend the products or programs, enroll clients, sponsor Health Coaches, or receive compensation, a Health Coach’s account must be activated. Upon purchase of an enrollment pack, and email detailing the online enrollment process will be sent. Once activated, and with the support of your sponsor (Business Coach), you can immediately begin to recommend TSFL products to others. You will have 30 days to complete the Basic Competency Exam (we provide you with the information you need to successfully pass). Completion of the exam is required to be paid compensation on any orders placed by your Clients or Health Coaches.

As a Health Coach or Fast-Track Health Coach, you can begin earning Client Support Commissions on the orders of your personally acquired clients and personally sponsored Health Coaches.

Acquiring Clients and Generating Orders:

The foundation and starting point of our business model is a Health Coach acquiring, supporting, and servicing a client. Health Coaches are paid based on orders placed. Clients can order online on a Health Coach’s personalized co-branded website (provided by the company), calling a toll free number, or by sending a completed order form via mail or fax.


You have 3 clients who each order 200 in ARP Rank: Health Coach Commission: 3 x 200 = 600 frontline volume x 15% = $90

Total Monthly Income = $90.00

Annualized Income = $1080.00/Year Rank: “Fast-Track” Health Coach Commission: 3 x 200 = 600 frontline volume x 20% = $120

Total Monthly Income = $120.00 Annualized Income = $1440.00/Year

Note: The following examples set forth in this compensation plan are hypothetical examples that are intended to explain the components and operation of the Take Shape For Life Compensation Plan. These hypothetical examples are not representative of the income, if any, that a Take Shape For Life Health Coach can or will earn through his or her participation in the Take Shape For Life Compensation Plan. These figures should not be considered as guarantees or projections of your actual earnings or profits. Any representation or guarantee of earnings, whether made by Take Shape For Life or a Health Coach, would be misleading. Success with Take Shape For Life results only from successful sales efforts, which require hard work, diligence, and leadership. Your success will depend upon how effectively you exercise these qualities.

As a Fast-Track Health Coach:

You permanently earn Commissions of 20% of the volume (ARP) ordered by Clients and 20% of the volume (ARP) ordered by your personally sponsored Health Coaches. You will earn at this higher percentage as long as you remain with Take Shape For Life.

As a Health Professional Health Coach:

You permanently earn Compliance Fees of 20% of the volume (ARP) ordered by Clients and 20% of the volume (ARP) ordered by your personally sponsored Health Coaches. You will earn at this higher percentage as long as you remain with Take Shape For Life.

Example 1.

New Fast-Track Health Coaches and Health Professional Health Coaches can also earn additional bonuses. These are the 30-day Client Acquisition Bonus and the Assist Bonus.

C

C

C

YOU


(Note that the qualifications to earn these bonuses are the same for Fast-Track Health Coaches and Health Professional Health Coaches).

30-day Client Acquisition Bonus (CAB): You can earn a one-time 30-day CAB of $100 by developing 5 frontline clients or personally sponsored Health Coaches that, combined, generate a total of $1000 in front line volume (ARP) or more from orders within your first 30 days of joining TSFL. This bonus is a one-time bonus designed to give an extra incentive to new Health Coaches to establish their business rapidly. When a Health Coach acquires/sponsors 5 Clients/Health Coaches who order a total of $1000 in frontline volume (ARP) within the first 30 days of their joining TSFL, they will earn a $100 Client Acquisition Bonus. This is in addition to their normal compensation.

Assist Bonus: You can also assist new Health Coaches you sponsor (and those in your organization) in helping them earn a 30-day Client Acquisition Bonus. Whenever you help a new Health Coach earn their CAB of $100, you will be paid a matching bonus of $100.

A Health Coach can earn the $100 Assist Bonus over and over again as he or she helps new Health Coaches get started and earn their CABs. The Assist Bonus will automatically default to the first upline “Assist Bonus Qualified” Health Coach in the line of sponsorship (in most cases, this will be the sponsor unless the sponsor is not an “Assist Bonus Qualified” Health Coach). In certain instances, another “Assist Bonus Qualified” Health Coach (not the sponsor) may be principally responsible for assisting the new Health Coach in earning his or her CAB. In those cases, at the time of qualification for the CAB, the new Health Coach who has qualified for a CAB must inform TSFL that the Assist should be someone other than the first “Assist Bonus qualified” Health Coach in the line of sponsorship. There is a special “Change of Assist” form in PDF in the Document Library of Office in Motion. This notification must be signed by the new Fast-Track Health Coach and sent to TSFL via fax (443.471.3319.)

Growing Your Business As you expand your business, there are greater opportunities available for you to increase your income. These include, Rolling Consistency Bonuses, Monthly Growth Bonuses, and Monthly Leadership Bonuses. Becoming a Senior Coach One of the first goals of all Health Coaches should be to reach the rank of Senior Coach. This is a very achievable early goal and it is literally the launching pad for all other forms of income. To advance to the rank of Senior Coach, you must have group volume totaling $1000(ARP) or more in one month from a combination of at least five (5) personally ordering Clients and/or Health Coach teams. Since most new clients order more than $200 in their first month on a Medifast program, reaching the rank Senior Coach can be relatively simple and easy to achieve with as few as five clients.


All qualified Senior Coaches earn:

Commissions of 20% of the volume (ARP) ordered by Clients and 20% of the volume (ARP) ordered by your personally sponsored Health Coaches.

Plus, reaching Senior Coach automatically entitles you to begin earning Monthly Growth Bonuses as well as potentially earning quarterly Rolling Consistency Bonuses. In this discussion, we will first explain how quarterly Rolling Consistency Bonuses work and then we’ll turn our attention to Monthly Grow Bonuses. Rolling Consistency Bonuses Take Shape For Life has set aside special bonuses and recognition for Health Coaches who display client order volume consistency month after month. These Rolling Consistency Bonuses can mean up to an additional $1000 every three (3) months. What they’re worth:

A Health Coach who generates $2000 or more per month in frontline volume (ARP) for 3 consecutive months will be paid a $250 quarterly bonus.

A Health Coach who generates an average of $4000 or more per month in frontline volume (ARP) for 3 consecutive months will be paid a $500 quarterly bonus

A Health Coach who generates an average $6000 or more per month in frontline volume (ARP)for 3 consecutive months will be paid a $1000 quarterly bonus

How they work: These are rolling bonuses meaning that you can begin the quarterly cycle in any month. To earn any one of these consistency bonuses your cycle begins whenever you reach a minimum of $2000 in frontline volume (ARP) in any month. You must then maintain that level of frontline volume (ARP) for the next two (2) consecutive months. As long as you hit a minimum of $2000 in frontline volume (ARP) in each of the rolling three months, the average monthly volume will determine your bonus. Example 2.

Health Coach Monthly Growth Bonuses Monthly Growth Bonuses are additional incremental bonuses available to Senior Coaches and higher. They enable Health Coaches to earn more money on their frontline volume and on the

If you have frontline volume (ARP) of $3000 in May, $4000 in June, and $5000 in July, your total sales would be $12,000. $12,000 divided by 3 months equals $4000/month average.


ordering activity of other Health Coaches and their clients - not personally sponsored by them - within their organization. To qualify for any Growth Bonus you must have a rank of Senior Coach or higher in the commissionable month with a minimum of $1000 frontline volume (ARP) through a minimum of 5 ordering Clients and/or Coach teams). Additionally, you must have passed the Basic Product Knowledge Exam.

Unlike Commissions, which are paid as a percentage of the actual retail dollar amount of a product, all Growth Bonuses and Leadership Bonuses are paid as a percentage of CV or Commissionable Volume. CV is a point system in dollars that is assigned to each product. (Currently CV is 48% of the ARP and is subject to change).

There are five Monthly Growth Bonuses that pay out a total of 30% of CV of frontline volume (ARP) and group volume within your organization. They begin with the Senior Coach Bonus at 10% followed by four other bonuses (Manager, Associate Director, Director, and Executive Director) that each pays an additional 5% of CV. (See table below)


Table 1. The table below outlines the Monthly Growth Bonuses that can be earned as a Health Coach‘s business grows:

Title Bonus

Senior Coach Earn a 10% Senior Coach Bonus on the CV generated by Coaches and Clients starting on your Level 1 (Total bonus potential = 10%)

10 % Bonus

10 % Maximum

Manager Earn a Manager’s Bonus of 5% on the CV generated by Coaches and Clients starting on your Level 1. (Total bonus potential = 15%)

5 % Bonus

15 % Maximum

Associate Director Earn an Associate Director’s Bonus of 5% on the CV generated by Coaches and Clients starting on your Level 1 (Total bonus potential = 20 %)

5 % Bonus

20 % Maximum

Director Earn a Director’s Bonus of 5% on the CV generated by Coaches and Clients starting on your Level 1 (Total bonus potential = 25 %)

5 % Bonus

25 % Maximum

Executive Director Earn an Executive Director’s Bonus of 5% on the CV generated by Coaches and Clients starting on your Level 1 (Total bonus potential = 30 %)

5 % Bonus

30 % Maximum

As your business grows and you move up in rank from Coach to Executive Director, you can earn up to 30% of the CV on your frontline volume (ARP) from orders by your Clients/Health Coaches and on group volume generated by Health Coaches within your organization. Qualifications to Move Up in Rank (By Frontline Volume or Structure) – You can move up in rank to Executive Director by either by increasing frontline volume (ARP) or by increasing the number of separate Senior Coach teams that you develop. Put another way, you can control your advancement to Executive Director by your frontline volume or by your business structure. Keep in mind that you must always have group volume totaling $1000 or more from a combination of at least five (5) personally ordering Clients and/or Health Coach teams. Table 2. The table below outlines the qualifications to move up in rank to earn Monthly Growth Bonuses:

Senior Coach

$1000 or more in total group volume from 5 or more ordering clients or personally sponsored Health Coach teams

Manager $3000 or more in total frontline volume(ARP) from 5 or more ordering Clients/Health Coaches OR have 2 separate Sr. Coach teams

Associate Director

$4000 or more in total frontline volume (ARP) from 5 or more ordering Clients/Health Coaches OR have 3 separate Sr. Coach teams

Director $5000 or more in total frontline volume (ARP) from 5 or more ordering Clients/Health Coaches OR have 4 separate Sr. Coach teams

Executive Director

$6000 or more in total frontline volume (ARP) from 5 or more ordering Clients/Health Coaches OR have 5 separate Sr. Coach teams

How Monthly Growth Bonuses are Paid - Bonuses for each rank are paid on all CV generated by you or your team starting with your frontline Clients and Health Coaches (Level 1). You are paid that bonus in depth (Level 2 and below) until you reach another Health Coach with the same rank. When this occurs, you will be paid the bonus on the CV of the personal orders for that Health Coach but not on the CV of orders generated to any Clients or other Health Coaches on his/her team. In other words, if you are a Manager and someone on your team becomes a Manager, you will be paid a Manager’s Bonus down to that Manager and on his/her personal orders but you will not be paid the Manager bonus on your Manager’s Level 1 and beyond. (In this compensation plan, personally acquired clients and personally sponsored Health Coaches are considered to be on a Health Coach’s Level 1.)


Monthly Growth Bonus Summary Chart Another way of looking at the Monthly Growth Bonus is to visualize you moving up in rank as someone climbing a series of steps starting as a Health Coach and moving toward Executive Director. (Remember, you can move up in rank either by your frontline volume efforts or your team building efforts.) Table 3: Health Coach Monthly Growth Bonus Summary Chart

Executive Director

Director

Associate Director

Manager

Sr. Coach

Health Coach

Earn 15% of

ARP on all Frontline Volume

Earn 20% of

ARP on all Frontline volume

Earn a

Maximum of 10 % of CV

on orders in your Health Coach

Network starting on Level 1

Earn 20% of


Earn a

Maximum of

15 % of CV on orders in your

Health Coach Network starting on

Level 1

Earn 20% of


Earn a

Maximum of



Level 1

Earn 20% of


Earn a

Maximum of



Level 1

Earn 20% of


Earn a

Maximum of



Level 1

With each step you reach, there is an additional bonus. The cumulative sum of all of the bonuses at each step is the maximum you are eligible to earn at that rank. On frontline Clients/Health Coaches (Level 1), you always earn the maximum bonus percentage on the CV of their orders. Example 3.

You have 4 Clients who each order $200 (ARP)/95CV You Have 1 Health Advisor who orders $200 (ARP)/95CV Rank: Senior Advisor Commission: 5 x $200 = $1000 frontline volume x 20% = $200 Monthly Growth Bonus: 475 CV x 10% = $47.50

Total Monthly Income = $247.50 Annualized Income = $2970/Year

Client Health Coach Senior Coach


Assumptions: You have 10 Frontline Clients/Health Coaches who each order $200 (ARP)/96 CV this month Rank: Senior Coach Commission: 20% of ARP

10 x $200 = $2000 frontline volume x 20% = $400 Growth Bonus: 10% of CV

960 CV X 10% = $96

Consistency Bonus: 3 months at $2000 or more = $250

1/3rd of $250 = $83.33

Total Monthly Income = $579.33

Annualized Income = $6951.96

Assumptions: You have 15 Frontline Clients/Health Coaches who each order $200 (ARP)/96 CV this month Rank: Manager Commission: 20% of ARP


1440 CV X 15% = $216


1/3rd of $250 = $83.33

Total Monthly Income = $899.33 Annualized Income = $10,791.96

Assumptions: You have 20 Frontline Clients/Health Coaches who each order $200 (ARP)/96 CV this month Rank: Associate Director Commission: 20% of ARP


1920 CV X 20% = $384


1/3rd of $500 = $166.66


Assumptions: You have 25 Frontline Clients/Health Coaches who each order $200/96 CV this month Rank: Director Commission: 20% of ARP

25 x $200 = $5000 total sales x 20% = $1000 Growth Bonus: 25% of CV

2400 CV X 25% = $600


1/3rd of $500 = $166.66


Earning Monthly Growth Bonuses on Frontline volume A Health Coach who develops and services a large number of clients has the opportunity to do very well financially with Take Shape For Life because his or her Monthly Growth Bonuses will increase along with frontline volume performance. Additionally, with a consistent and large business, a Health Coach also qualifies for Rolling Consistency Bonuses. The Examples below will illustrate the earning power available to someone who builds strong frontline volume. Keep in mind that the income illustrated in these examples only reflects income derived from frontline volume. If someone is also building a team and has orders below Level 1, additional incomes would be earned. Example 4. Example 5.

Example 6. Example 7.


Assumptions: You have 30 Frontline Clients/Health Coaches who each order $200/96 CV this month Rank: Executive Director Commission: 20% of ARP

30 x $200 = $6000 frontline volume x 20% = $1200

Growth Bonus: 30% of CV

2880 CV X 30% = $864


1/3rd of $1000 = $333.33



50 x $200 = $10,000 frontline volume x 20% = $2000

Growth Bonus: 30% of CV

4800 CV X 30% = $1440


1/3rd of $1000 = $333.33


In addition to developing and servicing clients, if you are also building a Health Network of other Health Coaches, your income from Monthly Growth Bonuses will be larger than those shown in these examples. (See the next section)


100 x $200 = $20,000 total orders x 20% = $4000 Growth Bonus: 30% of CV

9600 CV X 30% = $2880


1/3rd of $1000 = $333.33


Example 8. Example 9.

Example 10.

Earning Monthly Growth Bonuses on Orders within Your Entire Organization If you are building a team, you can also earn Monthly Growth Bonuses on orders placed by Health Coaches and Clients in your organization below your frontline (i.e. Level 2 and below). On these orders you will earn from zero up to the maximum percent allowed at your current rank. The percentage you earn on your depth (Level 2 and beyond) will be dependent upon the rank of other Health Coaches in each of your separate teams.


As Senior Coach, you earn 10% of the CV on the volumes generated by frontline (Level 1) Clients and Health Coaches and anywhere from zero to 10% on CV generated on Clients and Health Coaches in your second level (Level 2) and below depending upon the rank of the Health Coaches within each organization.

Example 11. To best illustrate how Monthly Growth Bonuses are paid on Level 2 and beyond, let’s look at how an Executive Director is paid on the orders occurring underneath each rank of Health Coach.

You earn 20% Commission on the ARP ordered by these frontline Clients and Health Coaches. You also earn 10% Monthly Growth Bonus on the CV generated by the orders placed by these frontline people.

Level 1

A B C D E

Level 2 and Below

G

Because B, E, F, H, and I have a rank of Health Coach, they do not qualify for a Monthly Growth Bonus. Therefore, you receive 10% on all of the CV generated on level 2 and beyond until you encounter someone with a rank of Senior Coach or higher.

In this example, you earn 10% of the CV generated in the light yellow area of this diagram

F

H

I

Because G has a rank of Senior Coach (same as you), he qualifies for the Senior Coach Monthly Growth Bonus of 10% on his level 1. Therefore, you don’t receive any bonus on the CV generated in this organization beyond his personal volume until you move to the rank of Manager or higher. When that occurs, you then earn the Manager’s Bonus of 5% on these orders.

You as Senior Coach



As an Executive Director, you earn 30% of the CV on the volumes generated by frontline (Level 1) Clients and Health Coaches and anywhere from 10% to 30% on CV generated on Clients and Health Coaches in your second Level and below depending upon the rank of the Health Coaches within each organization.

Example 12.

A B C D E F G

30% of CV

15% of CV

10% of CV

5% of CV

6% of CV

20% of CV

Level 2 & Below

Health Coach

Senior Coach

Manager Associate Director

Director Executive Director

Because B has a rank of Health Coach, he does not qualify for a Monthly Growth Bonus. You earn all 5 Growth Bonuses (Senior Coach, Manager, Associate Director, Director, and Executive Director Bonus.) Therefore, you receive 30% on all of the CV generated on level 2 and beyond, until you encounter someone with a rank of Senior Coach or higher.

Because C has a rank of Senior Coach, he qualifies for a Monthly Growth Bonus of 10%. You earn the other 4 Growth Bonuses. Therefore, you receive 20% on all of the CV generated on your level 2 (his level 1) and beyond, until you encounter someone with a rank of Manager or higher.

Because D has a rank of Manager, he qualifies for 2 Growth Bonuses (Sr. Advisor and Manager) totaling 15%. You earn the other 3 Growth Bonuses. Therefore, you receive 15% on all of the CV generated on your level 2 (his level 1) and beyond, until you encounter someone with a rank of Associate Director or higher.

Because E has a rank of Associate Director, he qualifies 3 Growth Bonuses (Sr. Advisor, Manager, and Associate Director) totaling 20%. You earn the other 2 Growth Bonuses. Therefore, you receive 10% on all of the CV generated on your level 2 (his level 1) and beyond, until you encounter someone with a rank of Director or higher.

Because F has a rank of Director, he qualifies for 4 Monthly Growth Bonuses (Sr. Advisor, Manager, Associate Director and Director) totaling 25%. Therefore, you receive the 5% Executive Director Growth Bonus on all of the CV generated on your level 2 (his level 1) and beyond, until you encounter someone with a rank of Executive Director or higher.

Because G has a rank of Executive Director, he qualifies for a Monthly Growth Bonus of 30% (the same as you). When this occurs he “breaks away” from you and you receive a 6% Leadership Bonus on all of the CV generated in his Executive Director organization. (See Leadership Bonuses)

You earn 20% of the ARP ordered by frontline Clients and Health Coaches.

You also earn 30% of the CV generated on the orders placed by frontline Clients and health Coaches.

You as an Executive Director


Example 13. Growth Bonus Payout in One Leg of an Executive Director Team

Level 1

Level 2

Level 3

Level 4

Level 5

Level 6

Level 7

Level 8

Level 9

Level 10

As an Executive Director, you are at the maximum payout of 30% of CV for the Monthly Growth Bonus.

You earn 20% of the ARP ordered by frontline Clients and Health Coaches.

You also earn 30% of the CV generated by the orders placed by Level 1 people.

A

B

C

D

Because A is not yet a Senior Coach, you receive all 5 Growth Bonuses for a maximum of 30% of CV on this level.

Because B is not yet a Senior Coach, you receive all 5 Growth Bonuses for a maximum of 30% of CV on this level.

Because C is not yet a Senior Coach, you receive all 5 Growth Bonuses for a maximum of 30% of CV on this level.

30 %

30 %

30 %

20 %

20 %

Because D is a Senior Coach and receives a 10% Growth Bonus, you receive the other 4 Growth Bonuses for a maximum of 20% of CV on Levels 5, 6 and 7. G

F E

H

I 20 %

10%

10%

Because I is an Associate Director, he receives the Senior Coach, Manager, and Associate Director Monthly Growth Bonuses totally 20%. You receive the Director and Executive Director Monthly Growth Bonuses totaling 10 % of CV on levels 8, 9, and 10.

10%


Monthly Leadership Bonuses Leaders drive all successful organizations. Within Take Shape For Life, leaders play a vital role in shaping the culture of the field, in communication, in training and support, in defining and living the mission of TSFL, and in setting examples worthy of emulating. Monthly Leadership Bonuses are business development bonuses paid to Executive Directors and higher for their role in developing other leaders within their organization. Leadership Bonuses are paid whenever Executive Directors help others in their organization reach the rank of Executive Director. There are two types of Leadership Bonuses that TSFL pays: Executive Director Generation Bonuses and Monthly Elite Leadership Bonuses. Becoming an Executive Director In the previous section we discussed how, in order to reach the maximum percentage available in the Monthly Growth Bonus, a person would need to reach the rank of Executive Director. You will recall that the qualification for reaching that goal is generating $6000 or more in total frontline volume from 5 or more Clients/Health Coaches OR by having 5 separate Sr. Coach teams and group volume totaling $1000 or more from a combination of at least five (5) personally ordering Clients and/or Health Coach teams. In a dynamic organization, many people will be striving to reach Executive Director. This plan is designed to provide incentives for an individual to work diligently to reach that goal and for his or her sponsor and Field Support Team (upline) to also benefit when this occurs. Advancing (or “Promoting” ) to Executive Director If you are an Executive Director, when someone on your team reaches the Executive Director rank, they will be qualifying for all five Monthly Growth Bonuses like you. In other words, since you are both at the same rank, you will no longer be able to earn Monthly Growth Bonuses on personal orders in CV on this Health Coach or on any orders of his or her Health Coach team. Instead, you now will be compensated for that business via the Monthly Leadership Bonuses. The terminology used to describe what happens when someone becomes an Executive Director is that they’ve “advanced to Executive Director” or they “promoted to Executive Director”. Getting paid on “Generations” of Executive Directors Unlike the Monthly Growth Bonuses where someone is paid on orders to levels of individuals, with Executive Director Bonuses you are paid on orders (in CV) generated in an entire Executive Director “team” or “organization”. An Executive Director organization is defined as all of the Health Coaches and their clients within a line of sponsorship of an Executive Director, down to the next qualified Executive Director in the line. This is also termed a “Generation”. Qualifications to Move Up in Rank - The number of separate Executive Director teams that you develop determines your leadership rank at the Executive Director level. (An Executive Director does not have to be personally sponsored to count towards your qualification to move up in rank.) Additionally, the more Executive Director Teams (legs) that you develop in width determines how many generations of Executive Directors (or higher) that you will be paid on in depth. (See below.)


Table 4. The table below outlines the qualifications to move up in rank to earn Monthly Leadership Bonuses: Regional Director Executive Director with one (1) Executive Director Team (does not have to be personally sponsored)

National Director Executive Director with three (3) separate Executive Director Teams (do not have to be personally sponsored)

Global Director Executive Director with five (5) separate Executive Director Teams (do not have to be personally sponsored)

Presidential Director Executive Director with ten (10) separate Executive Director Teams (do not have to be personally sponsored)

Paying Monthly Executive Director Generation Bonuses Table 5 below shows a schematic of how much and how deep Executive Director Bonuses are paid. What follows afterward is a written explanation detailing how this works. Table 5. Executive Director Generation Bonuses (paid on CV)

Title Regional Director National Director Global Director

Exec. Dir. with 1 Exec. Dir. Team Exec. Dir. with 3 Exec. Dir. Teams Exec. Dir. with 5 Exec. Dir. Teams

1 6 % 6 % 6 %

2 5 % 5 % 5 %

3 5 % 5 %

4 4 %

Generations of Exec. Dir. Teams

5 4 % Regional Director - If you are a qualified Executive Director, when someone on your team also reaches Executive Director, you change rank to Regional Director. You are now eligible to earn through 2 generations of Executive Directors in depth. You will be paid 6 % on the CV of the entire 1st generation Executive Director organization and 5% of the CV on the 2nd. (See Example 13 below.) National Director – As a qualified Executive Director, when you have 3 separate Executive Director teams, you change rank to National Director. You are now eligible to earn through 3 generations of Executive Directors in depth. You will be paid 6 % on the CV of the entire 1st generation Executive Director organization, 5% of the CV on the 2nd, and 5% on the 3rd. Plus as a National Director, you will also qualify for an Elite Leadership Bonus called the National Executive Director leadership Bonus (See Elite Leadership Bonuses below). Global Director - As a qualified Executive Director, when you have 5 separate Executive Director teams, you change rank to Global Director. You are now eligible to earn through 5 generations of Executive Directors in depth. You will be paid 6 % on the CV of the entire 1st generation Executive Director organization, 5% of the CV on the 2nd, 5% on the 3rd, 4% on the 4th and 4% on the 5th. Plus as a Global Director, you will also qualify for a second Elite Leadership Bonus called the Global Executive Director leadership Bonus (See below).


Example 14. Schematic Illustrating 2 Generations of Executive Directors

This example does not illustrate any clients and doesn’t show all Health Coaches within an Executive Director organization either. The view shown is to simply give the reader a conceptual idea of how Generation bonuses are paid.

You as a Regional Executive Director

Since your 1st downline Executive Director (in this example, a Regional Executive Director) is not personally sponsored, you would not be paid an Executive Director Generation Bonus on this portion of your organization. Instead, you would be paid a Monthly Growth Bonuses on this part of this team (leg).

This area represents your first generation Executive Director organization. You are paid an Executive Director Generation Bonus of 6% of the CV on the entire business generated here.

This area represents your second-generation Executive Director organization. You are paid an Executive Director Generation Bonus of 5% of the CV on the entire business generated here.


Manager Associate Director Director

Executive Director Regional Exec. Dir. National Exec. Dir.

Executive Director Breakaway

Executive Director Breakaway


Paying Monthly Elite Leadership Overrides Elite Leadership Overrides are paid to National Executive Directors and higher for their leadership role in directing and overseeing large Take Shape For Life field organizations of Health Coaches. Overrides are paid on orders in CV on large portions of a leader’s business - in some instances his/her entire business - and could mean as much as an additional 3% through more than 5 generations of Executive Director Health Coach teams within a leader’s business. There are 3 overlapping Elite Leadership Overrides:

National Executive Director Leadership Bonus Global Executive Director Leadership Bonus Presidential Executive Director Leadership Bonus

National Executive Director Leadership Bonus A National Executive Director is an Executive Director with at least one Executive Director in each of three (3) separate teams. As a National Executive Director (or higher), you earn a 1% of CV override on your entire business down to the second National Executive Director in a leg. (His/her personal CV is included in your override volume for compensation.) Example 15 below illustrates how the National Executive Director bonus (and the other 2 Elite Overrides) is calculated. Global Executive Director Leadership Bonus A Global Executive Director is an Executive Director with at least one Executive Director in each of five (5) separate teams. As a Global Executive Director (or higher), you earn a 1% of CV override on your entire business down to the second Global Executive Director in a leg. (His/her personal CV is included in your override volume for compensation.) Presidential Executive Director Leadership Bonus A Presidential Executive Director is an Executive Director with at least one Executive Director in each of ten (10) separate teams. As a Presidential Executive Director (or higher), you earn a 1% of CV override on your entire business through down to the second Presidential Executive Director in a leg. (His/her personal CV is included in your override volume for compensation.) Elite Leadership Overrides are overlapping and can pay deeper into your organization These Bonuses are overlapping meaning that that they are additive. For example, if you are a Presidential Executive Director, you would also earn a Global Executive Director Bonus and a National Executive Director Bonus. It is also important that you understand that these overrides are paid in addition to your Executive Director Generation Bonuses. For example, this means that if you are a Presidential Executive Director, an additonal 3% of CV could be added to your compensation on your first five generations of Executive Directors and higher. (i.e. 1% for each of the 3 Elite Bonuses are added to your Executive Generation Bonuses.) Elite Leadership Overrides can also pay deep into your organization beyond 5 generations because you earn overrides on your entire business down to the second Executive Director holding the same elite leader title. (See Table 6: Monthly Leadership Bonus Summary)


Example 15. Schematic Illustrating The National Executive Director Bonus

Manager Associate Director Director


Executive Director Regional Exec. Dir. National Exec. Dir.

Global Exec. Director Presidential Exec. Dir.

This example does not illustrate any clients and only shows Executive Director business organizations within the organization of a National Executive Director.

You as a National Executive Director

This Health Coach is a Global Executive Director and is the first National Director or higher in this organization

This Health Coach is a National Executive Director and is the 2nd National Executive Director or higher in this organization. You are paid a 1% of CV override through this entire business to this National Executive Director. His personal CV is included in your override volume for compensation.

You earn a 1% of CV override on all of the volume generated by the business represented in this highlighted oval area.

All overrides are earned in addition to your Executive Director Generation Bonuses


Table 6: Monthly Leadership Bonus Summary

Title Regional Director

National Director Global Director Presidential Director

1 6 % 6 +1= 7 % 6 +1 +1 = 8 % 6 +1 +1+1 = 9 %

2 5 % 5 +1= 6 % 5 +1 +1 = 7 % 5 +1 +1+1 = 8 %

3 5 +1= 6 % 5 +1 +1 = 7 % 5 +1 +1+1 = 8 %

4 4 +1 +1 = 6 % 4 +1 +1+1 = 7 %

5

4 +1 +1 = 6 % 4 +1 +1+1 = 7 %

Generations of Exec. Dir. Teams

1 %

1 +1 = 2 %

2 %

1 +1 +1 = 3 %

3 %

Notes: This is a “real time” plan, meaning that, although someone is granted a title based on their highest achievement level, they are paid month-to-month based on their current business production.

This plan uses roll-up and compression. Roll-up means that if a Health Coach fails to hit the minimum order volume and recruiting requirements (i.e is Bonus Qualified), his/her volume will “roll-up” and be added to the volume of the next Coach in the line who has met those requirements and is Bonus Qualified. Compression means that if you are Bonus Qualified to earn bonuses on group volumes in your network (based on your rank), each Bonus Qualified Coach at the specific rank to the depth you are to be paid determines a level or generation as you move down a line. For example, if you are qualified to earn Executive Director bonuses on two generations of Executive Director organizations, your first generation Executive Director will be the first Coach in the line that is currently Bonus Qualified at that rank and your second generation Executive Director will be the next one who is Bonus Qualified at that rank. Unqualified Coaches in between are rendered “invisible” regarding compensation for that pay period and their volume compresses to first qualified Executive Director up the line.

The examples set forth in this compensation plan are hypothetical examples that are intended to explain the components and operation of the Take Shape For Life Compensation Plan. These hypothetical examples are not representative of the income, if any, that a Take Shape For Life Health Coach can or will earn through his or her participation in the Take Shape For Life Compensation Plan. These figures should not be considered as guarantees or projections of your actual earnings or profits. Any representation or guarantee of earnings, whether made by Take Shape For Life or a Health Coach, would be misleading. Success with Take Shape For Life results only from successful sales effort, which require hard work, diligence, and leadership. Your success will depend upon how effectively you exercise these qualities.

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