FHTM Class Action Law Suit

UNITED STATES DISTRICT COURT

FOR THE EASTERN DISTRICT OF KENTUCKY

AT LEXINGTON

[Filed Electronically]

YVONNE DAY ) PLAINTIFFS

)

and )

)

LEONARD HASLAG )

)

and )

)

JAMES McCORMICK )

)

and )

)

JOHN W. TURNER, )

)

on behalf of themselves and others )

similarly situated ) CASE NO. ______________________

)

v. )

)

FORTUNE HI-TECH MARKETING, INC. ) DEFENDANTS

880 Corporate Drive, Suite 300 )

Lexington, Kentucky 40503 )

)

SERVE: )

Thomas A. Mills )



)

and )

)

PAUL C. ORBERSON )

President/Director )

Fortune Hi-Tech Marketing, Inc. )



)

and )

)

gtelecom

Sticky Note

Case No: 5:2010cv00305

2

JEFF ORBERSON )

Chief Business Officer )




)

and )

)

THOMAS A. MILLS )

Vice President/Chief Executive Officer )




)

and )

)

DAVID MILLS )

Chief Operating Officer )




)

and )

)

BILLY STAHL )

Senior Executive Vice President of )

Marketing and Training )




)

and )

)

SIMON DAVIES )

Chief Financial Officer )




)

and )

)

RUEL MORTON )

1 Wellington Drive )

Longview, TX 75605-2017 )

)

and )

3

)

TODD ROWLAND )

1000 Lowes Blvd. )

Mooresville, NC 28117-8520 )

)

and )

)

ASHLEY ROWLAND )

1000 Lowes Blvd. )

Mooresville, NC 28117-8520 )

)

and )

)

TODD & ASHLEY, INC. )

261 Knoxview Lane )

Mooresville, North Carolina 28117 )

)

and )

)

MIKE MISENHEIMER )

11725 Stage Coach Road )

Gravette, AR 72736-9248 )

)

and )

)

STEVE JORDAN )

3315 Heritage Drive )

Claremore, OK 74019-4989 )

)

and )

)

JOEL McNINCH )

)

SERVE: )




)

and )

)

CHRIS DOYLE )

62 Haverhill Drive )

Jackson, TN 38305-8506 )

)

and )

)

4

KEN BROWN )

)

SERVE: )




)

and )

)

JERRY BROWN )

)

SERVE: )




)

and )

)

BOB DECANT )

754 N. Decant Road )

Oregon, OH 43616-5889 )

)

and )

)

JOANNE McMAHON )

J.T. McMahon )

3540 Secor Rd., Ste 301 )

Toledo, OH 43606-1538 )

)

and )

)

TERRY WALKER )

2022 E. Lakeview )

Benton, AR 72015-2799 )

)

and )

)

SANDI WALKER )

19617 Congo Ferndale Rd. )

Little Rock, AR 72210-5691 )

)

and )

)

SHERRI WINTER )

)

SERVE: )

5




)

and )

)

TREY KNIGHT )

701 Columbia Rd. )

Titusville, FL 32780-7902 )

)

and )

)

KEVIN MULLINS )

)

SERVE: )




)

and )

)

SCOTT AGUILAR )

6845 Osterling Crt. )

San Diego, CA 92114-7828 )

)

and )

)

MOLLY AGUILAR )

755 Wala Drive )

Oceanside, CA 92058-0616 )

)

and )

)

NATHAN KIRBY )

4520 Old Village Rd. )

Raleigh, NC 27612-3930 )

)

and )

)

DWAYNE BROWN )

480 Monticello Drive )

Auburn, AL 36830-1427 )

)

and )

)

AARON DECKER )

6

443 Lawrence Street )

Bellevue, OH 44811-1631 )

)

and )

)

SUSAN FRANK )

2030 Sierra Trace Road )

Denton, NC 27239 )

)

and )

)

RAMIRO ARMENTA )

5414 Salma St. )

Plainfield, IL 60586-5585 )

)

and )

)

ANGELINA ARMENTA )

384 Thelma Ct. )

Wheeling, IL 60090-4434 )

)

and )

)

ALEXIS ADAME )

2694 Avenue H )

Ingleside, TX 78362-6302 )

)

and )

)

TERESA ADAME )

114 Huisache Street )

Crystal City, TX )

)

and )

)

DARLA DiGRANDI )

)

SERVE: )




)

and )

)

MATT MORSE )

308 Mead Street )

7

Lake City, AR 72437-9592 )

)

and )

)

MATT BARRETT )

829 Montevideo Dr., Apt. 22 )

Lansing, MI 48917-4833 )

)

and )

)

ROBERTO RIVERA )

2509 Trinity Street )

Irving, TX 76062-5258 )

** ** ** **

CLASS ACTION COMPLAINT

Plaintiffs Yvonne Day, Leonard Haslag, James McCormick, and John W. Turner, by counsel

and on behalf of themselves and others similarly situated, for their Class Action Complaint, state as

follows:

INTRODUCTION

1. This is an action by plaintiffs on behalf of themselves and those similarly situated to

recover damages caused by the defendants’ operation of an inherently fraudulent pyramid scheme.

The pyramid scheme is fraudulent because it requires the payment by participants of money to

defendant Fortune Hi-Tech Marketing, Inc. (“Fortune”), in return for which participants receive (1)

the right to sell products and (2) the right to receive in return for recruiting other participants into the

program rewards which are unrelated to sale of the product to ultimate users.

2. This action is brought on behalf of a national class of persons who serve or have

served as independent representatives for Fortune, pursuant to the Racketeer Influenced and Corrupt

Organizations Act, 18 U.S.C. § 1961-1968 (“RICO”), the Kentucky Consumer Protection Act, KRS

Chapter 367, and the laws of Kentucky.

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PARTIES

3. Plaintiff Yvonne Day is and was at all times relevant to the allegations in this

complaint a resident of Comal County, Texas and a citizen of the United States.

4. Plaintiff Leonard Haslag is and was at all times relevant to the allegations in this

complaint a resident of Osage County, Missouri and a citizen of the United States.

5. Plaintiff James McCormick is and was at all times relevant to the allegations in this

complaint a resident of Pasco County, Florida and a citizen of the United States.

6. Plaintiff John W. Turner is and was at all times relevant to the allegations in this

complaint a resident of Comal County, Texas and a citizen of the United States.

7.. Defendant Fortune Hi-Tech Marketing, Inc. is a Kentucky corporation with a

principal office at 880 Corporate Drive, Suite 300, Lexington, Kentucky 40503.

8. Defendant Paul C. Orberson, the president, founder and director of Fortune, is and

was at all times relevant to the allegations in this complaint a resident of Fayette County, Kentucky

and a citizen of the United States.

9. Defendant Thomas A. Mills, the Chief Executive Officer of Fortune, is and was at all

times relevant to the allegations in this complaint a resident of Fayette County, Kentucky and a

citizen of the United States.

10. Defendant David Mills, the Chief Operating Officer of Fortune, is and was at all



11. Defendant Jeff Orberson, the Chief Business Officer of Fortune, is and was at all



9

12. Defendant Ruel Morton is and was at all times relevant to the allegations in this

complaint a resident of Gregg County, Texas and a citizen of the United States. Morton is a

Presidential Ambassador for Fortune.

13. Defendant Todd Rowland is and was at all times relevant to the allegations in this

complaint a resident of Iredell County, North Carolina and a citizen of the United States. Mr.

Rowland is a Presidential Ambassador for Fortune.

14. Defendant Ashley Rowland is and was at all times relevant to the allegations in this

complaint a resident of Iredell County, North Carolina and a citizen of the United States. Ms.

Rowland is a Presidential Ambassador for Fortune.

15. Defendant Todd & Ashley, Inc. (“Todd & Ashley”) is a North Carolina corporation,

operated by Todd & Ashley Rowland, with its principal office located at 261 Knoxview Lane,

Mooresville, NC 28117.

16. Defendant Mike Misenheimer is and was at all times relevant to the allegations in this

complaint a resident of Benton County, Arkansas and a citizen of the United States. Misenheimer is

a Presidential Ambassador for Fortune.

17. Defendant Steve Jordan is and was at all times relevant to the allegations in this

complaint a resident of Madison County, Tennessee and a citizen of the United States. Jordan is a


18. Defendant Joel McNinch is and was at all times relevant to the allegations in this

complaint a resident of Oakland County, Michigan and a citizen of the United States. McNinch is a


10

19. Defendant Chris Doyle is and was at all times relevant to the allegations in this

complaint a resident of Dallas County, Texas and a citizen of the United States. Doyle is a


20. Defendant Ken Brown is and was at all times relevant to the allegations in this

complaint a resident of Stanislaus County, California and a citizen of the United States. Ken Brown

is a National Sales Manager for Fortune.

21. Defendant Jerry Brown is and was at all times relevant to the allegations in this

complaint a resident of Fulton County, Georgia and a citizen of the United States. Jerry Brown is a

National Sales Manager for Fortune.

22. Defendant Bob Decant is and was at all times relevant to the allegations in this

complaint a resident of Lucas County, Ohio and a citizen of the United States. Decant is a National

Sales Manager for Fortune.

23. Defendant Joanne McMahon is and was at all times relevant to the allegations in this

complaint a resident of Lucas County, Ohio and a citizen of the United States. McMahon is a


24. Defendant Terry Walker is and was at all times relevant to the allegations in this

complaint a resident of Saline County, Arkansas and a citizen of the United States. Terry Walker is

a National Sales Manager for Fortune.

25. Defendant Sandi Walker is and was at all times relevant to the allegations in this

complaint a resident of Saline County, Arkansas and a citizen of the United States. Sandi Walker is


26. Defendant Sherri Winter is a resident of Gregg County, Texas and a citizen of the

United States. Winter is a National Sales Manager for Fortune.

11

27. Defendant Trey Knight is and was at all times relevant to the allegations in this

complaint a resident of Duval County, Florida and a citizen of the United States. Knight is a


28. Defendant Kevin Mullins is and was at all times relevant to the allegations in this

complaint a resident of Leon County, Florida and a citizen of the United States. Mullins is a


29. Defendant Scott Aguilar is and was at all times relevant to the allegations in this

complaint a resident of San Diego County, California and a citizen of the United States. Scott

Aguilar is a National Sales Manager for Fortune.

30. Defendant Molly Aguilar is and was at all times relevant to the allegations in this

complaint a resident of San Diego County, California and a citizen of the United States. Molly

Aguilar is a National Sales Manager for Fortune.

31. Defendant Nathan Kirby is and was at all times relevant to the allegations in this

complaint a resident of San Diego County, California and a citizen of the United States. Kirby is a


32. Defendant Dwayne Brown is and was at all times relevant to the allegations in this

complaint a resident of Lee County, Alabama and a citizen of the United States. Brown is a National


33. Defendant Aaron Decker is and was at all times relevant to the allegations in this

complaint a resident of Kent County, Michigan and a citizen of the United States. Decker is a


12

34. Defendant Susan Frank is and was at all times relevant to the allegations in this

complaint a resident of Davidson County, North Carolina and a citizen of the United States. Frank is


35. Defendant Ramiro Armenta is and was at all times relevant to the allegations in this

complaint a resident of Will County, Illinois and a citizen of the United States. Ramiro Armenta is a


36. Defendant Angelina Armenta is and was at all times relevant to the allegations in this

complaint a resident of Will County, Illinois and a citizen of the United States. Angelina Armenta is


37. Defendant Alexis Adame is and was at all times relevant to the allegations in this

complaint a resident of Cook County, Illinois and a citizen of the United States. Alexis Adame is a


38. Defendant Teresa Adame is and was at all times relevant to the allegations in this

complaint a resident of Cook County, Illinois and a citizen of the United States. Teresa Adame is a


39. Defendant Darla DiGrandi is and was at all times relevant to the allegations in this

complaint a resident of San Diego County, California and a citizen of the United States. DiGrandi is


40. Defendant Matt Morse is and was at all times relevant to the allegations in this

complaint a resident of Craighead County, Arkansas and a citizen of the United States. Morse is a


13

41. Defendant Matt Barrett is and was at all times relevant to the allegations in this

complaint a resident of Ingham County, Michigan and a citizen of the United States. Barrett is a


42. Defendant Roberto Rivera is and was at all times relevant to the allegations in this

complaint a resident of Dallas County, Texas and a citizen of the United States. Rivera is a National


JURISDICTION AND VENUE

43. Jurisdiction is proper pursuant to 28 U.S.C. § 1331 because plaintiffs bring claims

under RICO, 18 U.S.C. § 1961-1968. Pursuant to 28 U.S.C. § 1367, this Court may exercise

jurisdiction over plaintiffs’ claims under the Kentucky Consumer Protection Act, KRS Chapter 367

and other state law claims because those claims and the RICO claims form a part of the same case or

controversy under Article III.

44. Venue is proper pursuant to 28 U.S.C. § 1391(b) because a substantial part of the

events or omissions giving rise to the plaintiffs’ claims occurred in this district. Under 18 U.S.C. §

1965(a) and (b), venue is proper for plaintiffs’ RICO claims because Fortune and other individual

defendants reside in this district, and the ends of justice require that other parties residing in any

other district be brought before the Court.

FACTS

45. On September 11, 2000, defendant Fortune was organized as a Kentucky corporation.

46. Since at least January 5, 2001, Fortune has been operating in Kentucky and other

states.

47. Fortune purports to be a lawful and legitimate company engaged in “relationship

marketing,” which Fortune’s website defines as “a method of distribution that involves an estimated

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59 million people worldwide and is defined as the sale of a consumer product or service, person-to-

person, away from a fixed retail location, marketed through independent sales representatives.”1 .

48. In reality, Fortune is the founder of an enterprise that is and always has been an illegal

pyramid scheme. This enterprise will hereinafter be referred to as the Fortune Pyramid.

The Fortune Pyramid’s Basic Structure

49. The Fortune Pyramid operates by offering prospective participants the opportunity to

become “Independent Representatives” (“IRs”) who allegedly will “have the opportunity to earn a

residual income over time by acquiring loyal customers and introducing the Fortune opportunity to

others.”2

50. Fortune labels all individuals who participate in the Fortune Pyramid as IRs.

51. Fortune compensates all of its IRs in accordance with what it terms a “multilevel

marketing compensation plan.” Id.

52. The basic terms of this compensation plan are set forth in a Policies & Procedures

document produced by Fortune.

53. From 2001 until at least July 1, 2010, Fortune utilized a Polices & Procedures

document that sets forth a compensation structure that amounts to a fraudulent and illegal pyramid

scheme, both by its very terms and by its implementation by Fortune in practice. This Policies &

Procedures document is attached as Exhibit 1.

54. Prospective participants who meet certain basic criteria and desire to join Fortune

enter the company as either a representative or a manager. Although the Policies & Procedures

provide that one may join the Fortune Pyramid as a representative for $75, Fortune’s recruiting

presentations usually do not offer prospective participants this option and instead encourage

1 “What is Relationship Marketing?”, http://www.fhtm.net/relationship.aspx 2 “Why FHTM,” http://www.fhtm.net/whyfhtm.aspx

15

participants to join as a manager, which requires the participant to pay $299. Although the Policies

& Procedures document provides that this $299 is for the purchase of an “Optional Special Services

Program,” the defendants and others high in the pyramid frequently refer to the $299 fee in other

terms. Additionally, to remain a manager, one must pay Fortune an additional $199 each year.

55. After paying at least $299 to join, a new Fortune manager then ostensibly has the

opportunity to advance to the following higher positions within the company:

A. Qualified Representative3

A. Regional Manager

B. Executive Sales Manager

C. National Sales Manager

D. Presidential Ambassadors

56. The basis for promoting managers to subsequent higher positions in the company is

not success in selling products or services, but rather the recruitment and sponsorship of new Fortune

managers by the manager and those in his or her “downline” (i.e., IRs below them on the pyramid).

Fortune’s Compensation and Bonus Structure Is a Fraudulent Pyramid Scheme

57. Under the Compensation Plan utilized by Fortune until at least July 1, 2010, IRs are

able to earn compensation from two sources: (1) bonuses for recruiting and sponsoring new

representatives; and (2) commissions from sales of products and services by themselves and by

recruits in their “downline.”

3 Fortune’s Policies & Procedures document also refers to “Qualified” Regional Managers, Executive Sales

Managers, etc. Only “Qualified” IRs are entitled to receive the bonuses and commissions to which an IR at their level of the pyramid is entitled. However, the only distinction between being a regular Manager and a “Qualified” one is that, to be Qualified, a manager must have purchased the requisite amount of Fortune Goods or Services described below by the end of any given month. Thus, for simplicity’s sake, this complaint will refer to each level as simply “Regional Manager,” “Executive Sales Manager,” etc. without using the “Qualified” label.

16

58. Fortune operates as an illegal pyramid scheme because this compensation plan affords

IRs the right to receive in return for recruiting other participants into Fortune rewards which are

unrelated to the sale of products or services to ultimate users outside of Fortune. See United States v.

Gold, 177 F.3d 472, 480 (6th Cir 1999) (quoting In re Koscot Interplanetary, Inc., 86 F.T.C. 1106,

1187 (1975)). Such a scheme is deemed inherently fraudulent under federal law. Id.

A. Recruiting presentations by the defendants and others at the top of the Fortune

Pyramid emphasize recruitment of new representatives over the sale of products and

services to customers outside of Fortune.

59. In recruiting presentations, the defendants and other individuals at the top of the

Fortune Pyramid, presenting official Fortune marketing materials, consistently emphasize

recruitment of new members over sales or products and services to customers outside of Fortune.

60. For example, defendant Joel McNinch stated during a Fortune recruitment

presentation that is available online on YouTube: “When you build a group of 12 people – you

sponsor three, and help them build nine total – 12, you promote yourself to regional sales manager.

We just had a guy in Indian River, Michigan last week do it in one day.”4

61. In the same presentation, McNinch stated, “As a regional manager, every time you go

out and personally enroll a new manager who gathers three customers, you’re going to earn a $200

bonus.” Id.

62. McNinch described the process of earning more bonuses as more representatives are

recruited to join Fortune: “As these reps start to bring in reps, not only do you earn an override

percentage of their customers, but you earn a $100 customer acquisition bonus for every rep that’s

gathered by any of your reps. . . . $100, $100, $100 unlimited for every rep that joins.” Id.

63. Summarizing the emphasis on recruitment, McNinch stated, “We’re not looking to

sign you up and sell you something; we’re looking for team members.” Id.

4 http://www.youtube.com/watch?v=F0sE2ID9bXo

17

64. Recruiting new IRs into the Fortune Pyramid is similarly emphasized in presentations

made by throughout the country by the individual defendants and other individuals at the top of the

Fortune Pyramid.

65. For example, in another presentation, defendant Misenheimer said that the key to

making money in Fortune is to “get a rep, get a rep, get a rep, get a rep . . . [successful Fortune reps]

are making money, but they don’t understand what they’re doing . . . The whole thing’s about getting

the preliminary stuff out of the way, and getting to regional [sales manager] fast.”5

B. Official Fortune training materials emphasize recruitment of new members over the

sale of products and services to actual end users outside of Fortune IR’s.

66. Fortune provides IRs with written training materials. Each plaintiff received some

form of these materials from Fortune.

67. These training materials clearly emphasize recruitment of new IRs, not the sale of

products and services to end users.

68. To illustrate, the materials received by plaintiff Haslag provide a list of “Business

Building Steps,” which is attached as Exhibit 2.

69. This list provides guidance for recruiting new managers into Fortune. It tells newly

appointed managers, “You are not trained as a sales person and you should not act like one.” It

further tells managers to tell prospective managers, “you don’t have to be a salesperson” to succeed

at Fortune.

70. Furthermore, this list provides answers to hypothetical questions that a manager may

face in attempting to recruit new managers.

5 http://www.youtube.com/watch?v=lqLcrsXO1Hw&feature=related

18

71. One such hypothetical question is, “Is this a pyramid?” Fortune encourages

representatives to respond as follows: “No. Pyramids are illegal and I certainly wouldn’t be

involved in anything illegal. Just let me show it to you.”

72. The Building Business steps encourage managers to quickly sign up new managers by

requesting an answer from a prospective participant within a short period of time.

C. Bonuses paid to Fortune IRs are based upon recruiting others to join Fortune as

managers.

73. Fortune’s compensation plan involves an elaborate set of bonuses which are

effectively the only way to earn money in Fortune and which are all tied not to real sales to outside

customers, but rather to recruitment of new IRs.

74. An IR receives a “Quick Start Bonus” of $100 for sponsoring a manager who

acquires only three personal customer points within 60 days of the manager’s enrollment. Managers

are told that these “customers” need not be actual customers not participating in Fortune, but rather

purchases of Fortune products and services made by the manager him or herself. New managers are

encouraged to make these three purchases the same day as they join the Fortune Pyramid, thus

qualifying themselves immediately and triggering the Quick Start Bonuses to those above them on

the Fortune Pyramid. Thus, a Quick Start Bonus is compensation for recruitment and is not based on

actual product sales to end users outside of Fortune.

75. Additionally, an IR may earn a “Quick Start Bonus Override” (“QSBO”)whenever a

manager within his or her downline receives a Quick Start Bonus. If the new manager recruited in

the downline falls on Level 2-7, the amount of the QSBO is $5. If the new manager is on Level 8,

the QSBO is $10. Within the last year, these QSBO amounts have been raised to $15 for Levels 2-7

and $20 for Level 8.

19

76. Once an IR becomes a Regional Sales Manager, he or she is eligible to receive

customer acquisition bonuses. These bonuses are based not on the acquisition of new customers, but

rather on the recruitment of new managers into the Regional Sales Manager’s downline. The

amount of the customer acquisition bonus is $100 for each new manager, to unlimited levels deep,

who enters the QRSM’s regional coded group and qualifies for a Quick Start Bonus. If 16 such new

managers enter the group, then the amount of the bonus is doubled to $200 per new manager.

77. At the level of Executive Sales Manager and National Sales Manager, these

“customer” acquisition bonuses become more lucrative as the Executive or National Sales Manager

receives a bonus for each new manager in his or her downline that is recruited to join Fortune and

qualifies for a Quick Start Bonus.

D. Fortune’s “Trainer Coach” Program is merely another thinly veiled means of paying

IRs for the recruitment of new IRs.

78. Fortune also encourages new participants to pay $299 (or slightly less in some states)

to become a “Trainer Coach.” As a Trainer Coach, one purportedly will be paid $40 for the initial

training of a new manager. However, managers are not obligated to undergo such training. Many

managers are simply trained on the use of their “Fortune Back Office” and sign a form, causing the

$40.00 training fee to be paid.

79. Trainer Coaches are required to pay an annual renewal fee of $100 to maintain their

status as Trainer Coach.

80. As with the advancement in the ranks of manager, IRs may advance to higher levels

of trainers. A Trainer Coach who becomes a Regional Sales Manager may become a “Certified

Regional Trainer” for an additional $200. A Certified Regional Trainer, in turn, receives $80 for

training each new Trainer Coach.

20

81. Certified Trainer Coaches can become eligible to receive bonuses tied directly to the

training of new managers by any Trainer Coach in their “training downline.” However, a Certified

Trainer Coach can become eligible for these bonuses only by sponsoring four active managers who

are also Trainer Coaches.

82. Thus, the Trainer Coach program amounts to nothing more than another means for

Fortune to push IRs to recruit new participants into the Fortune Pyramid and to receive payment

from IRs.

E. Commissions ostensibly earned on sales of products and services are, in fact, tied to

recruitment of new managers.

83. Although Fortune’s compensation structure allows IRs to earn commissions on the

sale of Fortune products and services by themselves and those recruited in the eight levels below

them, these commissions are relatively small compared to the bonuses that an IR can earn when new

representatives are recruited to join Fortune in his or her downline.

84. Even this commission structure rewards recruitment, not sales to customers outside

the Fortune Pyramid, because IRs are encouraged to purchase Fortune products and services

themselves or sell them to IRs they recruit rather than to sell them to customers outside the Fortune

Pyramid.

85. Fortune’s commission structure makes this possible by allowing IRs to earn

commissions on sales without ever actually selling anything to a customer outside the Fortune

Pyramid. In fact, prospective IRs are told while joining Fortune that they must purchase certain

products to earn their first “customer points” and therefore allow bonuses to be paid to their

sponsors.

21

86. For example, until at least April 2010, new Fortune IRs were required to purchase a

“Fortune Back Office” website that required a $20.00 setup fee and a $24.95 recurring monthly

payment. This website qualified as the IR’s first customer point/customer.

87. Fortune’s commission structure allows IRs to earn commissions on sales of products

and services by themselves, to themselves, and by those IRs they recruit to join the company for up

to eight levels below them on the pyramid.

88. To earn commissions on all eight levels, an IR is required to recruit and sponsor one

new manager. Thus, an IR’s ability to receive commissions on the sale of any products is tied to

recruitment of new individuals to join the Fortune Pyramid.

89. An IR qualifies to receive commissions on sales by any IR he or she recruits

personally (Level 1) by acquiring three “active personal customers” and one “personally sponsored

Manager,” i.e., a new Fortune IR.

90. These “active personal customers” need not be actual human beings, let alone human

beings outside of the Fortune Pyramid; rather, a product or service purchased from Fortune by the IR

him or herself qualifies as a “customer” for purposes of allowing IRs to receive commissions and

bonuses. The “customer points” assigned to each Fortune product or service determine how much of

any given Fortune product or service must be purchased to qualify as one customer.

91. A “Customer Point Sheet” provided to new IRs explains what products or services

may be purchased to qualify as a new “customer.” As an example, the purchase of $39.99 of True

Essentials products by an IR counts as one “customer” and one “customer point.”

92. To obtain the required three customer points, new IRs are encouraged to merely

purchase Fortune products and services themselves, rather than attempt to sell them to outsiders.

Potential IRs are frequently told at recruiting meetings that they are already paying for the types of

22

products and services offered by Fortune – e.g., television, Internet service, cellular phone service,

vitamins or travel – so they should simply switch from their current service provider to a product

offered by Fortune.

93. Although one of the three “customers” purportedly must be “other than his/her own

personal or household account”, Fortune neither tracks nor enforces this policy, and the policy itself

permits this customer to be another IR.

94. Thus, a new Fortune IR must recruit another manager and either purchase or sell three

Fortune products or services in order to receive commissions on the products or services purchased

or sold by the manager he or she recruits (Level 1 commissions).

95. To earn commissions on Levels 2-7, an IR must acquire five customer points, i.e.,

purchase five Fortune products or services, and sponsor two managers. There is no requirement that

these customers be actual purchasers outside of the Fortune Pyramid.

96. To earn commissions on Level 8, an IR must acquire 10 customer points, i.e.,

purchase ten Fortune products or services, and sponsor three managers. There is no requirement that

these customers be actual purchasers outside of the Fortune Pyramid.

97. An IR who meets the requirements for earning Level 8 commissions – i.e., one who

has purchases 10 Fortune products or services and personally sponsors three new managers – is

eligible to receive the first promotion available within Fortune, to the position of Qualified

Representative.

98. To advance to the next level in the company, Regional Sales Manager, a Qualified

Representative must develop a minimum of 12 managers within his or her first five levels, and need

only maintain the same 10 “customer points” required to become a Qualified Representative. Thus,

23

Qualified Representatives, to advance in Fortune, have an incentive solely to recruit and to ensure

that those immediately below them recruit new managers into Fortune.

99. During recruitment presentations, the individual defendants and others near the top of

the Fortune Pyramid encourage prospective IRs to quickly advance to the level of Regional Manager

in order to begin earning the bonuses described below.

100. A Regional Sales Manager becomes a Qualified Regional Sales Manager merely by

maintaining the 10 “customer points” that were necessary to be promoted to Qualified

Representative and Regional Sales Manager.

101. As set forth below in the description of Fortune’s bonus structure, the benefit of

advancing to each new level within the company is the eligibility for bonuses tied directly to the

recruitment of new managers within an IR’s downline.

102. The next level in Fortune is Executive Sales Manager. A Regional Sales Manager

may be promoted to Executive Sales Manager by having 15 or more active personal “customer

points,” i.e., buying 15 products or services from Fortune, developing six Regional Sales Managers

within a certain range on his or her downline; and developing a minimum downline organization of

90 managers within his or her downline. Thus, advancement to ESM occurs only through

recruitment.

103. The second-highest level in Fortune is National Sales Manager. To be promoted to

this level, an IR need not acquire any more active customers. But he or she must have six Qualified

Executive Sales Managers in a portion of her downline; 90 managers in his or her Regional Sales

Manager group, and 540 managers in his or her Executive Sales Manager group. To be a Qualified

National Sales Manager, the IR must maintain his or her 15 customer points at the end of the month.

24

104. The highest level obtainable in Fortune is Presidential Ambassador. A Presidential

Ambassador need only have 15 personal customer points but must have three Qualified National

Sales Managers within a certain portion of his or her downline; and a downline organization of 1620

managers in his or her National Sales Manager group and a monthly income exceeding $100,000.

Presidential Ambassadors are appointed by Fortune, and, as a special bonus, they receive a share of

the revenue/profits of the entire Fortune Pyramid.

105. Advancement in Fortune is therefore tied directly to recruitment of new managers.

As described below, the benefit of advancement in Fortune is the receipt of bonuses based on new

members who are sponsored in one’s downline. These bonuses increase based on the IR’s position

in the company, which is obtained by recruiting new representatives.

E. Fortune misrepresents its relationships with the vendors of its products and

services.

106. To perpetuate the fraudulent pyramid scheme described above, Fortune claims to

have special relationships with or to be a “partner” of several large major national companies whose

products and services Fortune offers.

107. These companies include, but are not limited to, AT&T, Verizon Wireless, Sprint,

Dish Networks, General Electric Security (“GE Security”), DuPont and Home Depot. Fortune has

used the trademarks of these and other companies in marketing materials and business presentations

in order to convince prospective customers that Fortune is a legal business.

108. In reality, Fortune does not have any sort of special relationship with these

companies. Fortune is not a “partner” with Dish Network. Rather it is a third-party independent

contractor authorized to sell Dish Network service. There are numerous other such third-party

vendors of Dish Network.6

6 See, e.g., http://www.vmcsatellite.com/red_design/program_overview.cfm.

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109. Counsel for Home Depot informed authorities in the state of Montana that Fortune

has no partnership or sales agreement with Home Depot.

110. GE Security also informed Montana authorities that Fortune has no direct

relationship with GE Security or GE. Instead, Fortune purchases GE Security products from Protect

America, an authorized GE Security dealer.

111. Fortune purchases all wireless products from Simplexity, a third-party online affiliate

program of the wireless carriers. Fortune has no direct relationship with any of the nation’s top

wireless carries.

F. In furtherance of the illegal pyramid scheme, Fortune makes false claims about its

legitimacy and success.

112. Defendants misrepresent that Fortune has been endorsed and/or praised by

independent third-party companies and publications. For example, defendant Joel McNinch stated

during a recruiting presentation, currently available on YouTube, “Fortune isn’t just going around

saying, ‘We’re great, we’re great.’ We’ve got third-party companies like Millionaire Blueprint, a

nationwide publication, and Success From Home magazine preaching, you guys, how well this

company’s doing.”7 In reality, upon information and belief, Fortune paid hundreds of thousands of

dollars to several publications to produce and publish articles about Fortune containing

misrepresentations about the success of the company. These “articles” are actually paid

advertisements.

113. Defendants have further made representations that alleged “partners” of Fortune such

as Dish Network have sent legal teams to verify the legality of Fortune’s operation. Defendants have

also made representations that former high-level government attorneys represented Fortune and

7 http://www.youtube.com/watch?v=F0sE2ID9bXo

26

ensured that it complied with the law and was legal in all 50 states. All of these representations are

false.

114. Defendants and other individuals high in the Fortune Pyramid have made false

representations that Fortune is licensed to transact business in every state and that its compensation

structure must be approved by each state’s financial regulators before such a license is given.

115. In an effort to add legitimacy to the Fortune Pyramid’s operations, the defendants

have made representations that well known actors, athletes, businesspersons and politicians,

including Chris Rock, Jerry Rice, Bob McDonnell, former Bank of America CEO Ken Lewis, and

Judy Hammerschmidt, were affiliated IRs with Fortune. A list of such famous individuals

purportedly affiliated with Fortune is attached as Exhibit 3.

Unconscionable Check and Electronic Funds Transfer Fees

116. Fortune charges a $6.00 “administrative fee” for any weekly payment made by check

to an IR. Fortune also charges $5.00 for any weekly electronic payment made by the company to an

IR.

117. Prospective participants are not told about these fees prior to paying to join the

Fortune Pyramid, nor are they described in any marketing materials produced by Fortune

Cease and Desist Orders in North Dakota and Montana – Settlement

118. Recognizing that the defendants operate an illegal pyramid scheme, regulators in

North Dakota and Montana have taken action against Fortune.

119. On December 10, 2009, the North Dakota Attorney General issued a cease and desist

order against Fortune, ordering it to cease from doing business in North Dakota. The North Dakota

cease and desist order is attached as Exhibit 4.

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120. In short, the North Dakota Attorney General alleged that, among other things,

Fortune operated as a pyramid scheme illegal under North Dakota law.

121. On January 14, 2010, Fortune reached a settlement with the North Dakota Attorney

General in which Fortune agreed to refund any North Dakota customer the entire amount he or she

paid and to pay the Attorney General’s investigation costs and attorney’s fees. (Exhibit 5.)

122. On March 4, 2010, the Montana Commissioner of Securities issued a cease and desist

order prohibiting Fortune from doing business in Montana and, likewise alleging that Fortune

operated as an illegal pyramid scheme. (Exhibit 6.)

123. Fortune reached a settlement agreement with Montana requiring it to pay potentially

over $800,000, including a $100,000 fine to the state treasurer and any refunds of enrollment fees

that Montana IRs may seek. (Exhibit 7.)

124. As part of the Montana settlement, Fortune was also required to, among other things,

train Montana IRs to emphasize the sale of products to customers outside of the Fortune Pyramid..

125. Fortune was also required to charge only $75 for new IRs to enroll in Montana.

126. Finally, Fortune was forced to disclose certain financial information. These Montana

disclosures are attached as Exhibit 8.

127. The disclosures reveal that a very small number of individuals at the top of the

Fortune Pyramid are making, on average, thousands of dollars per month, while the mast majority of

Fortune IRs, who are in the lower rungs of the pyramid, earn virtually nothing.

128. For example, the disclosures show that:

A. Nearly 30% of the active IRs earn nothing at all.

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B. Of those IRs that do earn something, over 54% are managers on the bottom

rung of the pyramid. These managers receive an average of only $93 per month from

Fortune..

C. National Sales Managers comprise just .38 % of the total number of paid IRs.

On average, they earn $19,865 per month in commissions.

D. Presidential Ambassadors constitute only .07% of paid IRs. They earn an

average of $103,416 per month in commissions.

Following North Dakota and Montana, Fortune promulgates new Policies & Procedures

129. Following the cease and desist orders and subsequent settlements in North Dakota

and Montana, Fortune has made various changes to its Policies & Procedures manual, including

significant changes to the compensation structure.

130. The new Policies & Procedures manual became available on Fortune’s website in

July 2010.

131. Additionally, Fortune now purports to have a team of “Legal Council” consisting of

former state attorneys general.8

132. Fortune did not hire these individuals to its legal advisory team until May 2010.

Plaintiffs are victims of Fortune’s fraudulent schemes

133. Each plaintiff was induced to pay money to Fortune by numerous misrepresentations,

including false claims that Fortune is a legitimate network marketing company and not an illegal

pyramid scheme.

134. As the direct and proximate result of such misrepresentations, each plaintiff was

damaged.

8 http://www.fhtm.net/legalcouncil.aspx

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135. Plaintiffs were also subjected to the administrative fees for payments from Fortune

described above.

136. Plaintiff Yvonne Day (“Day”) was recruited to join Fortune by a Fortune IR whom

Day knew and trusted. For nearly a year, this IR attempted to persuade Day to join Fortune.

137. Before agreeing to join Fortune, Day met with a Fortune executive sales manager.

Day also was given and watched DVDs containing video presentations by defendants Paul Orberson

and Joel McNinch. In those videos, Orberson and McNinch made numerous false representations

concerning Fortune’s legitimacy and its purported relationship with entities such as Fortune

Magazine.

138. Day agreed to join Fortune in October 2008 without completing or signing any

document that contained or referenced an arbitration clause. Day never agreed to arbitrate any

claims against Fortune.

139. The IR who recruited Day to Fortune caused Day to become a Fortune IR by

completing all necessary documents online outside of Day’s presence using personal information

obtained from Day.

140. As a direct result of the defendants’ promotion of and participation in the illegal

pyramid scheme described above, Day paid $299 to join Fortune.


pyramid scheme described above, Day also paid $299 for the right to become a Trainer Coach for

Fortune.


pyramid scheme described above, Day also paid $200 for the right to become a Certified Regional

Trainer.

30

143. Additionally, Day purchased numerous products from Fortune and suffered additional

damages.

144. Plaintiff Leonard Haslag (“Haslag”) attended a Fortune recruitment meeting on

September 10, 2009. At this meeting, defendant Mike Misenheimer spoke.

145. Misenheimer stated that recruiting new members into Fortune would allow

participants to earn huge amounts of money. Misenheimer claimed that prospective participants

could earn up to $80,000 per month if they joined Fortune.

146. At this meeting, and as a result of these and other representations by Misenheimer,

Haslag completed a photocopied application to be a Fortune IR. The application did not contain an

arbitration clause and did not contain terms and conditions on the back of the document. Haslag

never agreed anywhere else to arbitrate claims against Fortune.

147. Haslag then had second thoughts about joining Fortune and cancelled the credit card

for which he had provided Fortune with information.

148. Haslag ultimately decided to join Fortune shortly thereafter, however, and he called

the IR who had sponsored him at the meeting to provide new credit card information.

149. At this point, someone other than Haslag, outside of Haslag’s presence, entered

information into a website sufficient to cause Haslag to be registered as a Fortune IR.


pyramid scheme described above, Haslag paid $299 to join Fortune.

151. Plaintiff James McCormick (“McCormick”) attended a Fortune Saturday morning

business meeting, conducted by National Sales Manager – Ken Bailey, prior to agreeing to join

Fortune.

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152. After this meeting, McCormick completed a document bearing the Fortune logo that

required him to submit his name, social security number, and credit card information for the

purchase of his first three customer points. This document did not contain any agreement to arbitrate

and did not reference arbitration or policies and procedures, in any way.

153. McCormick has never seen any document pertaining to Fortune containing an

agreement to arbitrate.

154. Someone other than McCormick, outside of McCormick’s presence, entered

information into a website sufficient to cause McCormick to be registered as an Fortune IR.


pyramid scheme described above, McCormick paid $299 to join Fortune and was charged $100 each

month until May 2010 for various Fortune products and services.

156. McCormick was unable to sell any Fortune products to others or to recruit anyone to

join Fortune as a manager.

157. Plaintiff John Turner (“Turner”) attended several meetings held by persons promoting

the Fortune Pyramid.

158. Eventually, Turner provided his social security number and credit card number by

filling out a document that required him to submit such information. This document did not contain

an agreement to arbitrate. Turner never agreed to arbitrate his claims against any of the defendants.


pyramid scheme described above, Turner paid $299 to join Fortune.


pyramid scheme described above, Turner paid $299 for the right to become a Trainer Coach for

Fortune.

32


pyramid scheme described above, Turner also paid $200 for the right to become a Certified Regional

Trainer for Fortune.

162. Additionally, Turner purchased numerous products from Fortune and suffered

additional damages.

CLASS ACTION ALLEGATIONS

163. This action is brought by plaintiffs as a class action pursuant to Federal Rule of Civil

Procedure 23.

164. Plaintiffs seek relief on behalf of themselves and a nationwide class of all persons

who were Fortune independent representatives from January 2001 until present and who were

injured as a result of the defendants’ illegal pyramid schemes. The defendants, their employees, and

family members are excluded from the class.

165. The members of the class number in the tens of thousands, making joinder of all class

members in a single action impracticable.

166. There are common questions of law and fact common to the class, including, but not

limited to, the following:

A. Whether the defendants operate and/or operated an illegal pyramid scheme;

B. Whether Fortune’s IRs paid money to the defendants in exchange for (1) the

right to sell products or services and (2) the right to receive, in return for recruiting other into the

program, rewards unrelated to the sale of products or services to retail consumers not affiliated with

Fortune;

C. Whether the defendants failed to inform plaintiffs that plaintiffs were entering

into an illegal pyramid scheme in which the overwhelming majority of participants lose money;

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D. Whether the defendants made materially false representations that Fortune

was legal and/or had been approved by governmental entities;

E. Whether defendants engaged in acts of mail fraud and wire fraud in violation

of RICO;

F. Whether and to what extent defendants’ conduct has injured plaintiffs and the

class;

G. Whether the defendants’ conduct constitutes an illegal “pyramid distribution

plan” under KRS 367.830(4);

H. Whether the defendants’ practice of charging a $6.00 “administrative fee” for

each payment made by check to an IR and a $5.00 “transfer fee” for any payment made

electronically to an IR are “[u]nfair, false, misleading, or deceptive acts or practices in the conduct of

any trade or commerce” under KRS 367.170 that is actionable under KRS 446.070.

167. These and other questions of law and/or fact are common to the class and the

subclass, and predominate over any question affecting only individual class members.

168. The plaintiffs’ claims are typical of the claims of the class and the subclass in that

plaintiffs were IRs for Fortune and lost money as a result of the pyramid scheme.

169. The plaintiffs will fairly and adequately represent the interests of the class and the

subclass in that plaintiffs’ claims are typical of those of the class and plaintiffs’ interests are fully

aligned with those of the class. The plaintiffs have retained counsel who is experienced and skilled in

class action litigation.

170. Class action treatment is superior to the alternatives, if any, for the fair and efficient

adjudication of the controversy alleged herein, because such treatment will permit a large number of

similarly-situated persons to prosecute their common claims in a single forum simultaneously,

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efficiently and without unnecessary duplication of evidence, effort, and expense that numerous

individual actions would engender.

171. The plaintiffs know of no difficulty likely to be encountered in the management of

this action that would preclude its maintenance as a class action.

CLAIMS FOR RELIEF

COUNT I: RACKETEERING ACTIVITY

IN VIOLATION OF 18 U.S.C. § 1962(C) (VERSUS ALL DEFENDANTS)

172. Plaintiffs re-allege each of the preceding paragraphs as if fully set forth here.

173. Each defendant is a “person” for purposes of RICO, 18 U.S.C. § 1962, because each

defendant is, and was at all relevant times, an individual or entity capable of holding legal or

beneficial interest in property.

174. All of the defendants in this action collectively form an “enterprise” under RICO, 18

U.S.C. § 1962, in that they are a group of individuals and entities associated in fact, although not a

legal entity.

175. In the alternative, the enterprise consisted of Fortune, which is controlled by

defendants Paul C. Orberson, Jeff Orberson, Thomas A. Mills, David Mills, Billy Stahl, and Simon

Davies.

176. In the alternative, the Fortune Pyramid is an enterprise, in that it is an association in

fact of all defendants and others which, although not gathered under any legal entity, operates the

illegal pyramid scheme to draw new investors to Fortune.

177. The defendants engaged in a pattern of racketeering activity by participating in a

scheme and artifice to defraud in violation of the mail and wire fraud statutes, 18 U.S.C. §§ 1341 and

1343.

35

178. The defendants’ promotion of an illegal pyramid scheme is a per se scheme to

defraud under the mail and wire fraud statutes; thus, the defendants have committed racketeering

acts by promoting an illegal pyramid scheme by using and causing others to use the mail and by

transmitting and causing others to transmit, by means of wire in interstate commerce, writing, signs,

signals, pictures and sounds, all in furtherance of and for purposes of executing a scheme or artifice

to defraud, namely an illegal pyramid scheme.

179. Each defendant has promoted the Fortune Pyramid. Each use of the mail or wire by

the defendants in furtherance of the Fortune Pyramid is therefore an act of racketeering.

180. Moreover, the defendants have used false and fraudulent pretenses to deceive the

plaintiffs and the class and to thereby obtain money and property from the same. The defendants

have engaged in materially misleading statements of facts and nondisclosure of particular facts,

including:

A. Creating the false impression that the Fortune Pyramid is legal and has been

investigated and approved by several major national companies, as well as state governments, which

purportedly would have closed Fortune permanently if it was an illegal operation.

B. Creating the false impression that the majority of investors in the Fortune

Pyramid will profit from their investment by merely working hard.

C. Creating the false impression that Fortune has a unique business model that is

unusually generous to investors.

D. Creating the false impression that several magazine covers and articles used to

induce investments in the Fortune Pyramid were articles written by objective third-parties, when in

reality they were paid advertisements.

36

E. Creating the false impression that several well known athletes, actors,

politicians and successful business people were in fact Fortune IRs and endorsed the Fortune

Pyramid;

F. Failing to disclose that the purported success and wealth achieved by the

individual defendants through their participation in the Fortune Pyramid is no longer possible and

that Presidential Ambassadors represent only the top .07% of investors in the Fortune Pyramid who

earned any money at all.

G. Failing to disclose that nearly 30% of active participants in the Fortune

Pyramid earn nothing at all.

181. These and other misrepresentations at the heart of the defendants’ enterprise were

reasonably calculated to deceive a person of ordinary prudence and comprehension.

182. Plaintiffs and the class relied on these misrepresentations.

183. All of the defendants acted with intent to defraud.

184. The defendants’ numerous acts of mail fraud and wire fraud amount to a pattern of

racketeering activity because they are related and continuous. The pattern consists of more than two

acts, which occurred from 2000 until present and consistently throughout that period. The predicate

acts of mail and wire fraud are related because they have had the same or similar purpose: to

convince new investors to pay to join the Fortune Pyramid by paying money to do so, and to

convince those investors to in turn recruit new investors. They have the same result: convincing

investors to join the Fortune Pyramid by paying money and having those investors recruit new ones

to do the same. They have the same participants: Fortune’s executives, Presidential Ambassadors,

and National Sales Managers, all of whom promote the Fortune Pyramid. They have the same

victims: plaintiffs and class members who were fraudulently deceived into investing in the Fortune

37

Pyramid. Finally, they have similar methods of commission: fraudulent misrepresentations

concerning numerous aspects of Fortune’s operations made via online presentations, in-person

gatherings, and written materials. In short, the predicate acts of wire and mail fraud committed by

the defendants constitute an intricately related set of predicate acts sufficient to meet the relatedness

standard.

185. Moreover, the predicate acts are continuous. They pose a threat of continued illegal

conduct in that the defendants continue to promote and operate the Fortune Pyramid and have

expressed their intention to continue to do so. Additionally, the predicate acts have extended over a

significant period of time – the nearly 10 years that Fortune has been in existence. The defendants’

regular business of attracting new independent representatives is conducted by ongoing mail and

wire fraud that misrepresents that Fortune is a legitimate multilevel marketing enterprise and not an

illegal pyramid scheme. Without the repeated acts of wire and mail fraud, the defendants’ fraudulent

pyramid scheme would not be in existence.

186. As a direct and proximate result of the defendants’ acts of mail and wire fraud,

plaintiffs and the class were injured in their business and property. Each plaintiff was injured in his

or her business or property by reason of the defendants’ pattern of racketeering activity, in that

plaintiffs surrendered valuable consideration of at least $299, and in most cases much more, in order

to participate in the inherently fraudulent scheme promoted by the defendants.

187. Each enterprise alleged above was engaged in, or affecting, interstate commerce by

reason of, at least, each of the defendants’ numerous acts or omissions constituting use of the mail or

interstate wire communication facilities in furtherance of their scheme to defraud. Additionally,

each enterprise affected interstate commerce because the members comprising it engaged in business

in several states and made use of the mail and interstate wire communication facilities in the process

38

of doing so by causing marketing and promotional materials for Fortune, as well as images, videos,

and information to be communicated through regular mail and via the Internet.

188. Each of the defendants is employed by or associated with each enterprise above to

conduct or participate, directly or indirectly, in the conduct of the enterprise’s affairs through a

pattern of racketeering activity, i.e., conducting the affairs of, promoting, and otherwise supporting

the pyramid scheme.

189. Specifically, defendants Paul C. Orberson, Jeff Orberson, Thomas A. Mills, David

Mills, Billy Stahl, and Simon Davies have overseen the creation of marketing materials containing

misrepresentations regarding Fortune and have authorized the Presidential Ambassadors and

National Sales Managers to direct conference calls, websites, web presentations and speeches that

contain numerous misrepresentations and that deceive people into participating in the Fortune

Pyramid.

190. Pursuant to 19 U.S.C. § 1964, Plaintiffs are entitled to recover treble damages, costs,

and attorneys’ fees.

COUNT II: RACKETEERING ACTIVITY

IN VIOLATION OF 18 U.S.C. § 1962(A) (VERSUS ALL DEFENDANTS)


192. Revenue derived from the pattern of racketeering activity set forth above, which upon

information and belief constitutes a significant portion of the defendants’ total income, was

reinvested into the Fortune Pyramid for at least the following purposes: (1) to expand the operations

of the Fortune Pyramid through additional false and misleading advertising and promotional

materials aimed at recruiting new participants in the Fortune Pyramid; (2) to facilitate the execution

of the Fortune Pyramid; and (3) to convince existing participants in the Fortune Pyramid to recruit

new ones, resulting in harm to plaintiffs and the class.

39

193. Plaintiffs and the class were injured in their business or property as a result of such

reinvestment into the Fortune Pyramid because they were induced, with funds used to establish new

levels of the Fortune Pyramid, to invest in Fortune

194. Pursuant to 19 U.S.C. § 1964, plaintiffs and the class are entitled to recover treble

damages, costs, and attorneys’ fees.

COUNT III: CONSPIRACY TO COMMIT RACKETEERING ACTIVITY

IN VIOLATION OF 18 U.S.C. § 1962(D) (VERSUS ALL DEFENDANTS)


196. The defendants conspired to violate 18 U.S.C. § 1962(a) and (c) in violation of 18

U.S.C. § 1962(d).

197. Each defendant knew about and knowingly and intentionally agreed to participate in

and promote an illegal pyramid scheme. Specifically, the defendants had a meeting of the minds on

an object and course of action, namely, to create, support, and maintain the pyramid scheme for their

own financial benefit.

198. Each of the defendants has committee multiple overt acts in furtherance of the

unlawful objects of the pyramid scheme.

199. The plaintiffs and the class were injured in their business or property as a result.

200. Pursuant to 19 U.S.C. § 1964, plaintiffs and the class are entitled to recover treble

damages, costs, and attorneys’ fees.

COUNT IV: INJUNCTIVE RELIEF UNDER 18 U.S.C. § 1964(A)

AGAINST ALL DEFENDANTS


202. To prevent and restrain ongoing violations of 18 U.S.C. § 1962 by the defendants, the

Court should order the defendants to divest themselves of any interest, direct or indirect, in the

40

enterprise; impose reasonable restrictions on the future activities or investments of the enterprise,

including, but not limited to, prohibit the defendants from engaging in the same type of endeavor as

the enterprise engaged in, or order dissolution or reorganization of the enterprise.

COUNT V: KENTUCKY CONSUMER PROTECTION ACT

(PYRAMID SALES ACT)


204. The defendants established, promoted, operated, and/or participated in a pyramid

distribution plan as defined in KRS 367.830(4).

205. Specifically, Fortune was and is a “plan, program, device, scheme, or other process

by which a participant gives consideration for the opportunity to receive compensation or things of

value in return for inducing other persons to become participants in the program.” KRS 367.830(4).

206. By establishing, promoting, operating, and/or participating in a pyramid distribution

plan, defendants violated KRS 367.832 and KRS 367.160.

207. Plaintiffs were damaged and suffered an ascertainable loss of money and/or property

as a direct and proximate result of these violations, entitling plaintiffs to recover such damages under

KRS 367.220 and KRS 446.070.

COUNT VI: UNLAWFUL ACTS UNDER THE

KENTUCKY CONSUMER PROTECTION ACT


209. By charging the $6.00 check fee and $5.00 electronic funds transfer fee, the

defendants have engaged in unfair, unconscionable, false, misleading, or deceptive acts or practices

in the conduct of any trade or commerce in violation of KRS 367.170.

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210. The plaintiffs and the class were injured by such acts or practices and thereby are

entitled to be compensated for their injury and to reasonable attorney’s fees under KRS 367.220

and 446.070.

COUNT VII: UNJUST ENRICHMENT (VERSUS FORTUNE)


212. As a result of charging check fees and electronic funds transfer fees, Fortune received

payment from plaintiffs and the class.

213. Fortune was not entitled to obtain those payments.

214. Fortune actually appreciated the benefits of those payments.

215. Retention of that benefit would be inequitable.

216. Accordingly, the plaintiffs and the class are entitled to restitution.

COUNT VIII: CONVERSION (VERSUS FORTUNE)


218. As a result of charging check fees and electronic funds transfer fees, Fortune

converted property rightfully belonging to the plaintiffs and the class.

PRAYER FOR RELIEF

219. Plaintiffs and the class request the following relief:

A. Certification of the class;

B. Jury trial and judgment against the defendants;

C. Damages in the amount of the named plaintiffs’ and the class’s financial loss

as a result of defendants’ conduct and for injury to plaintiffs’ and the class’s business and property,

all as a result of defendants’ violations of 18 U.S.C. § 1962(a),(c), and (d) and that such amount be

tripled in accordance with 18 U.S.C. § 1964(c);

42

D. Temporary and permanent injunctive relief enjoining the defendants from

further unlawful, unfair, fraudulent, or deceptive acts, including, but not limited to, operating and

supporting the Fortune Pyramid.

E. Restitution and disgorgement of monies;

F. The cost and expense of suit, including reasonable attorneys’ fees, in

accordance with 18 U.S.C. § 1964(c);

G. For general, compensatory, and exemplary damages in an amount yet to be

ascertained; and

H. For such other damages, relief, and pre- and post-judgment interest that the

Court may deem just and proper.

DEMAND FOR A JURY TRIAL

Plaintiffs hereby demand a jury trial as provided by Rule 38 of the Federal Rules of Civil

Procedure.

Respectfully submitted,

/s/ R. Kenyon Meyer___ R. Kenyon Meyer DINSMORE & SHOHL LLP 1400 PNC Plaza 500 West Jefferson Street Louisville, Kentucky 40202 (502) 540-2300 (Telephone) (502) 585-2207 (Facsimile) [email protected]

801964_4

POLICIES & PROCEDURES

program guide contents

Section 1: FHTM Management

Section 2: FHTM Products and Services

Section 3: The FHTM Sales Force A.Representative B.Manager C.IndependentRepresentative

Section 4: FHTM Field Leadership A.QualifiedRepresentative B.RegionalSalesManager/QualifiedRegionalSalesManager C.ExecutiveSalesManager/QualifiedExecutiveSalesManager D.NationalSalesManager/QualifiedNationalSalesManager E.PresidentialAmbassadors F. PersonalSponsorship-MonthlyMaximum

Section 5: FHTM Field Training and Training Compensation A.TrainerCoach B.CertifiedRegionalTrainer C.LeadershipTrainingBonus D.DeadlinesforTrainingandSubmissionofInvoices

Section 6: The FHTM Optional Special Services Program

Section 7: The FHTM Compensation Plan A.CustomerGeneratedUsage B.QualifiedCustomer C.CommissionsandtheQuickStartBonus D.QuickStartBonusOverride E.TrueBeginningsBonus F. FirstandSecondLevelRSMOverrideBonus

Section 8: FHTM Management Bonus Program A. CustomerAcquisitionBonus B. AnnualCustomerRetentionBonus C. DoubleManagementCustomerAcquisitionBonuses D. QRSM“EXTRA$50”ManagementCustomerAcquisitionBonus

Section 9: Eligibility for Commissions, Overrides, and Bonuses

Section 10: Commission Reports and Payment Schedules A. MonthlyCGUCommission B. ManagementCAB C. TrainingCommission D. QuickStartBonus E. CheckandEFTcharges F. Checkinquiries

Section 11: Downline Reports

policies & procedures contents

Section 1: Introduction 1.1 PoliciesandCompensationPlanIncorporatedintoIRAgreement1.2 PurposeofPolicies1.3 ChangestotheAgreement1.4 Delays1.5 PoliciesandProvisionsSeverable1.6 Waiver

Section 2: Becoming an Independent Representative2.1 RequirementstoBecomeanIndependentRepresentative2.2 NoPurchaseRequired2.3 RegistrationbyOnlineEnrollment2.4 IRBenefits2.5 RenewalofYourFHTMBusiness

Section 3: Operating A FHTM Business3.1 AdherencetotheFHTMMarketingandCompensationPlan3.1.1 Ethics3.2 Advertising3.2.1 InGeneral3.2.2 DomainNamesande-mailAddresses3.2.3 TrademarksandCopyrights3.2.4 MediaandMediaInquiries3.3 BonusBuying3.4 BusinessEntities3.5 ChangestotheFHTMBusiness3.5.1 InGeneral3.5.2 AdditionofCo-Applicants3.5.3 ChangeofSponsor3.5.4 CancellationandRe-application3.6 UnauthorizedClaimsandActions3.6.1 Indemnification3.6.2 IncomeClaims3.6.3 Savings,RateorProductPerformanceGuarantees3.7 TradeShows,ExpositionsandOtherSalesForums3.8 ConflictsofInterest3.8.1 Non-Solicitation/Cross-Recruiting3.8.2 DualParticipationforPromotedIRs3.8.3 DownlineActivityReports3.9 Cross–Sponsoring3.10 ErrorsorQuestions3.11 GovernmentalApprovalorCompanyEndorsement3.12 HoldingApplicationsorOrders3.13 Identification3.14 IncomeTaxes

3.15 IndependentContractorStatus3.16 Insurance3.16.1 BusinessPursuitsCoverage3.17 InternationalMarketing3.18 AdherencetoLawsandOrdinances3.18.1 LocalOrdinances3.18.2 CompliancewithFederal,State,LocalLaws,Military3.19 Minors3.20 OneFHTMBusinessPerRepresentative3.21 ActionsofHouseholdMembersandAffiliatedIndividuals3.22 RequestsforRecords3.23 Sale,TransferorAssignmentofanFHTMBusiness3.24 SeparationofanFHTMBusiness3.25 Slamming3.26 Sponsoring3.27 Stacking3.27.1 Cycling3.28 Succession3.28.1 TransferUponDeathofanIR3.28.2 TransferUponIncapacitationofanIR3.29 TelemarketingTechniques3.30 UseoftheFHTMVoice-MailSystem

Section 4: Responsibilities of Independent Representatives4.1 ChangeofAddressorTelephoneorEmail4.2 ContinuingDevelopmentObligations4.2.1 OngoingTraining4.2.2 IncreasedSupportResponsibilities4.2.3 OngoingSalesResponsibilities4.2.4 CustomerQualifications4.3 Non-disparagement4.4 ProvidingDocumentationtoApplicants4.5 ReportingPolicyViolations4.6 CompletionofApplicationsandOrderForms4.7 ConfidentialityandNondisclosureofProprietaryInformation

Section 5: Sales Requirements5.1 Services/ProductSales5.2 NoTerritorialRestrictions5.3 ProductOfferings/TermsofService5.4 UnauthorizedContact

continued next page

Section 6: Bonuses and Commissions6.1 BonusandCommissionQualifications6.2 DeductionsfromBonusesandCommissions6.2.1 DownlineReports6.2.2 OtherDeductions6.3 UnclaimedCommissionsandCredits6.4 Genealogy/DownlineReports

Section 7: Service Guarantees and Marketing Materials 7.1 ProductGuarantee7.2 ReturnofMarketingMaterialsbyanIR7.3 MontanaResidents7.4 ProceduresforAllReturnsofMarketingMaterials

Section 8: Dispute Resolution and Disciplinary Proceedings8.1 DisciplinarySanctions8.2 GrievancesandComplaints8.3 DisputeResolutionBoard8.4 Arbitration8.5 GoverningLaw,JurisdictionandVenue

Section 9: Ordering9.1 PurchasingFHTMMarketingMaterials,ProductsandServices9.2 GeneralOrderingPolicies9.3 ShippingandBackOrderPolicy9.4 ConfirmationofOrder

Section 10: Payment and Shipping10.1 InsufficientFunds10.2 ReturnedChecks10.3 RestrictionsonThirdPartyUseofCredit/DebitCards

andCheckingAccountAccess10.4 SalesTax

Section 11: Cancellation and Termination11.1 EffectofCancellation11.2 InvoluntaryCancellation/TerminationofAgreement11.3 VoluntaryCancellation11.4 Non-Renewal

Section 12: Definitions

Section 13: Customer Generated Usage Commission Schedule

Founder and President: Paul Orberson:DeterminationandanoldfashionedworkethicarequalitiesthatsetPaulapartandmadehimoneofthemostfinanciallysuccessfulnetworkmarketersinthehistoryoftheindustry.Hisgenuinesincerityanddowntoearthapproachtonetworkinghaveenabledhimtoencouragewelloveramillionindividualstoworktowardimprovingtheirfinancialfuturesthrough,whatheconsiderstobethebestmethodavailabletoday,networkmarketing.PaulutilizedhisexperienceasaRepresentativeandhisentrepreneurialskillstoenvisionanddeveloptheultimatevehicleforthoseindividualsseekingtoimprovetheirfinancesandlivesthroughnetworkmarketing.ThatvehicleisFHTMHi-TechMarketing,Inc.

Chief Executive Officer: Tom Mills: Tombringswithhimyearsofadministrativeexperienceincludingresponsibilityforthousandsofindividuals;multi-milliondollarbudgetsandseveralyearsinnetworkmarketing.Amanofintegrityandvision,Tomhasassembledatop-notchstaffacrosstheboard.HiseyefordetailhasenabledFHTMtoestablishitselfasamajorplayerintheareaofnetworkmarketinginrecordtimeallwhilemaintainingafocusontheimportanceofeachindividual.

Together,PaulOrbersonandTomMillsstartedFHTMwiththebeliefthattheywouldbeabletohelpmanypeopleachievetheirfinancialgoalsandgivebacktoanindustrythathadbeensogoodtothem.ThegoalofCEO,TomMills,isandalwayshasbeentomakeFHTMthebestnetworkmar-ketingcompanyintheindustry.

Chief Operating Officer: Jeff Orberson: OneoftheaspectsJeffOrbersonlikesmostabouthisworkatFHTMisgettingtoseeRepresentativesexperiencesomeoftheachievementsandfreedomshewatchedhisfather,PaulOrberson,accomplishinthenetworkmarketingindustry.

Today,heisabletoseetheachievementsofothersfirsthand,servingFHTMastheDirectorofOperations.JeffworkswithCEOTomMillstomakemanagementandmarketingdecisionsonaday-to-daybasis.

Whileincollege,Jeffplayedbasketballandthededicationanddeterminationhelearnedthroughthesportcarriesoverintotheoffice.Jeffutilizesalevelheaded,analyticandevalua-tiveapproachtodecision-making,ensuringdecisionsmadearethebestforthecompanyandRepresentativesinthefield.

Senior Executive Vice President of Marketing and Training: Billy Stahl: Billyisaseasonedprofessionalexecutiveinthenetwork-marketingindustry.HebringswithhimhisvastexperienceasaCEO,President,andCOOofnationalnetworkingcompanies,whichheimparts,onaregularbasisintrainingtoRepresentativesnationwide.HewasinstrumentalinthedevelopmentandexpansionofthesamecorporationinwhichMr.Orbersonsetrecords.Hehasbeenanactiveconsultanttoseveralextremelysuccessfulnationalcompanies.Priortojoiningthenetworkmarket-ingindustryhewasinmanagementwithGeneralMotorsCorporation.

Chief Financial Officer: Simon Davies: SimonisamemberoftheInstituteofCharteredAccountantsinEnglandandWaleswithover12yearsofexperiencewithinthenetworkmarketingindustry.ExtensiveinternationalfinanceexposureandastrongemphasisonsystemsandcontrolstructuresmakesFHTM’sFinancedepartmenttheidealteamforDaviestolead.DaviesiscommittedtothesuccessofFHTMforboththeRepresentativesandthecompanyasawhole.FormerlyVicePresidentofFinanceintheUnitedKingdom,DaviesmovedtoKentuckytofillthepositionofCFOatthecorporateoffice.

1. fhtm management

fhtm program guide

1

2. fhtm products & services

A. Long Distance Service:ProvidedthroughPowerNetGlobal,andothers,theuniquepartofourlongdistanceprogramisthatweprovideresidentialandsmallbusinessuserswith6-secondincrementalbilling,afterthefirstminute.Thisistypicallyreservedforverylargebusinesses.Ourratesareverycompetitive.

B. Nutritional Product Line:Noamountofwealthwillmakeadifferenceifyoudon’thaveyourhealth.Forthisreason,FHTMoffersTrueEssentialsTMNutritionalProducts.TheTrueEssentialslinecontainsJointSolutionswithHATM,multivitaminsformen,women,andchildren,aswellasdailypacksformenandwomen.Visitwww.trueessentials.netformoreinformation.

C. Internet Service:ProvidedbyFHTMutilizingtheUUNETinternetbackbone.UUNETisthelargestinternetbackbonewithmorelocalaccessthananyothercompany.

D. Satellite TV Service:ProvidedbyDishNetwork,oneofthenationslargestsatelliteprovidersandwinneroftheJ.D.Powerawardforcustomerserviceandexcellence.

E. The Wireless Shop: ShoponlineandcomparepricesandavailabilityfromthetopU.S.wirelessprovidersandphonemanufacturers.Alltel,AT&T,Nextel,Sprint,T-MobileandVerizonWirelessareavailable,amongotherleadingnationalwirelesscarriers.

F. Choice Plans Health Care Card: Non-Insurancebenefitsthatwork!TheChoicePlanshealthcaresavingscardisalowcostalternativeforthosewithouthealthinsurance.

G. Voice Messaging Services: Providedasatooltokeepyouintouchandisagreatserviceforyoutouseasyourbusinessgrows,aswellasausefulproductforyourcustomers.

H. Paging Service: ProvidedbySKYTEL.Thisnationallyknowncompanyofferscustomersverycompetitiverates.

I. FHTM Rewards Mall: OurmerchantaffiliateprogramiscomprisedofthetopInternetmerchants(e-tailers)available.

J. Office Assistant: Youhavetheabilitytocommunicateandpromoteyourbusinesstotheworld,quicklyandinexpensivelythroughtheworldwideweb.

K. Identashield:IdentashieldisIDtheftinsurance.Theplanoffersexpensereimbursement,andiscoupledwithalegalplan,whichprovidesnationwideaccesstoover22,000attorneysinall50states.Membersreceiveaccesstofreeanddeeplydiscountedlegalcare.

L. Home Based Security System:Allowsyoutohavethepeaceofmindyouneedtofeelsafeinyourownhome.

M. Travel FHTM:Apersonaltravelportalallowscustomerstobookairlinetickets,hotelandresortroomsandrentalcarsthroughaTravelocityPartnerNetwork.

N. Lamas Beauty:LamasBeautyoffersstate-of-theartnatural,healthyandorganicbeautyproducts,intheareasofhaircare,skincare,bodycareandanti-aging.

For current information on FHTM products or services, check your Office Assistant or www.fhtm.net.

2

The best part of all

of these products and

services is that they

all generate customer

usage for which you

are paid. Your customers

will enjoy the services

of all of our great

suppliers because they

save money and

receive quality service.

3. fhtm sales force

AllFHTMenrolleesareknownasIndependentRepresentatives(IRs).Theyareindependentcontractorsbuildingtheirownbusinesses.TheymarketFHTMproductsandservicesandsponsorlike-mindedpeoplewhowouldliketodothesame.IRsreceivecommissionsandbonusesbaseduponcustomersthatpurchaseanduseFHTM’sproductsandservices.Theamountofsuccessthatyouwillenjoyisoftenrelatedtothetimeandeffortthatyoudedicatetoworkingyourbusiness.WorkwithyoursponsoranduplineandfollowourQuickStartBusinessPlan.

A. Representative: TheRepresentativepositionattractsthoseindividualswhoareprimarilyinterestedinmarketingproductsandservicesandreceivingmonthlyresidualincomecommissions.Thispositionrequiresa$75.00refund-ableapplicationdeposit,exceptwhereprohibitedbylaw(seecurrentForm#100.)SinceRepresentativesdonotpurchasetheOptionalSpecialServicesProgramtheymustpayforallservices(i.e.downlineprintouts,newslettersubscription,homeofficesupport,etc.)theymaydesirewhichwillbeprovidedtothemuponreceiptoftheirwrit-tenrequest.ARepresentativecannotattendManagertrainingwhichisprovidedasapartoftheOptionalSpecialServicesProgram.RepresentativesareprovidedwithafreeStarterKitandthePoliciesandProceduresatthetimeofenrollment.ARepresentativereceivesthesameCompensationPlancommissions/bonusesandissubjecttothesamepoliciesandadvancementrequirementsasaManager.

B. Manager:TheMANAGERpositionisanIRthathaspurchasedtheOptionalSpecialServicesProgramwhichincludesadditionalsalesmaterials,manuals,specialtraining,homeofficesupport,monthlydownlinereportsuponrequest(viainternetorinprintedform),etc.The annual renewal fee for the Optional Special Services Program is $199.00. A Manager may cancel the Optional Special Services Program and request a refund, in writing, within ten (10) calendar days from the date of purchase. See Section 11.4 of Policies and Procedures.

C. Independent Representative (IR): TheCompanyconsidersallRepresentativesandManagerstobe“IndependentRepresentatives.”

A. Qualified Representative (QR): AQualifiedRepresentative(QR)isanIRthathasqualifiedforallcommissionlevelsintheeight(8)levelcompensationprogram.Requirementsare:(i) TheIRmusthaveten(10)ormoreactivepersonalcustomers;and(ii) theIRmusthaveaminimumofthree(3)personallysponsoredfirstlevelManagers.QRswillremaineligibleforCGUcommissionsthroughalleight(8)levelsbymaintainingten(10)ormoreactivepersonalcustomersonamonthlybasis.

B. Regional Sales Manager (RSM) / Qualified Regional Sales Manager (QRSM): AQualifiedRepresentativecanbepromotedtoRegionalSalesManager(RSM)bymeetingallofthefollowingrequire-ments:(i)developaminimumdownlineorganizationof

twelve(12)Managerswithinhisorherfirstfive(5)levels;(ii)haveten(10)ormoreactivepersonalcustomers;and(iii)beapprovedbyFHTM.TheQRcannotcountitselfasone(1)oftherequiredtwelve(12)Managers.RSMsareresponsibleformanagingdownlineorganizations,coor-dinatinglocaleventsandcommunications,developingareasandprovidingassistancetoallIRs.

AnRSMmustmaintainten(10)ormoreactivepersonalcustomersasofthelastdayofthemonthinordertobeaQualified Regional Sales Manager (QRSM)andtherebybeeligibletoreceiveanymonthlymanagementcustomeracquisitionbonusespayableforthatmonthfromhis/herRSMcodedgroup.AnactiveQRSMiseligibletoreceiveamonthlymanagementcustomeracquisitionbonusof$100.00foreachnewManagerenteringhis/herRSMcodedgroupwhenthenewlysponsoredManagermeets

4. fhtm field leadership

3

therequirementsnecessaryforthepaymentofaQuickStartBonus(QSB)tohis/hersponsor.InadditiontothisbonustheQRSMearnsa1/4%overridecommissiononCGUofthecustomersinhis/herRSMcodedgroup.

QRSMsthatgatherandmaintainfive(5)TrueEssentialscustomerswillreceiveanadditional$25RSMCustomerAcquisitionBonus(CAB)whenthenewly-sponsoredIRgathertwo(2)newTEcustomerswithinthe60-dayQuickStarttimeperiod,providedtheyareeligibleforbasicCAB(section8A).Atleastfour(4)oftheten(10)requiredcustomersmustbecustomersotherthantheQRSM’spersonalaccounts(i.e.,outsideofthehousehold)inordertoqualifyfortheadditionalCAB.

AQRSMthatdevelopsaQRSMinhis/hercodedRSMgroupbecomesqualifiedfora“firstgenerationbreakaway”codedcustomeracquisitionbonusof$50.00anda1/4%overridecommissionontheCGUofthecustom-ersforeachnewManagerthatthenewQRSMdevelops(andforwhomaQSBispaid)inhis/hernewRSMcodedgroup.

Whenthe“FirstGenerationQRSM”developsaQRSMinhis/hercodedRSMgroupandtherebybecomeseligibleforhis/herownseparate“firstgenerationbreakaway”codedcustomeracquisitionbonus,thena“secondgen-erationbreakaway”codedcustomeracquisitionbonusof$10.00willbepaidtothe“GrandparentQRSM”foreachnewManagerthatthe“secondgenerationQRSM”develops(andforwhomaQSBispaid)inhis/hernewRSMcodedgroup.

C. Executive Sales Manager (ESM) / Qualified Executive Sales Manager (QESM): AQualifiedRegionalSalesManagercanbepromotedtoExecutiveSalesManager(ESM)bymeetingallofthefollowingrequirements:(i)havefifteen(15)ormoreactiveper-sonalcustomers;(ii)developsix(6)QRSMsonanylevelofhis/herpersonalRSMcodedgroup,however,thesesix(6)QRSMsmustbedevelopedintwo(2)ormoreseparatelegsoftheRSMcodedgroup;(iii)developaminimumdownlineorganizationofninety(90)Managersinhis/herRSMcodedgroup;and(iv)beapprovedbyFHTM.AnESMmustmaintainfifteen(15)ormoreactiveper-sonalcustomersasofthelastdayofthemonthinordertobeaQualifiedExecutiveSalesManager(QESM)andtobeeligibletoreceiveanymonthlymanagementcus-tomeracquisitionbonusespayableforthatmonthfromhis/herESMcodedgroup.AnactiveQESMiseligibletoreceiveamonthlymanagementcustomeracquisition

bonusof$60.00foreachnewManagerenteringhis/herESMcodedgroupwhenthenewlysponsoredManagermeetstherequirementsnecessaryforthepaymentofaQuickStartBonus(QSB)tohis/hersponsor.InadditiontothisbonustheQESMearnsa1/4%overridecommissiononCGUofthecustomersinhis/herESMcodedgroup.AQESMthatdevelopsaQESMinhis/hercodedESMgroupbecomesqualifiedfora“firstgenerationbreakaway”codedcustomeracquisitionbonusof$20.00anda1/4%overridecommissionontheCGUofthecustom-ersforeachnewManagerthatthenewQESMdevelops(andforwhomaQSBispaid)inhis/hernewESMcodedgroup.Whenthe“FirstGenerationQESM”developsaQESMinhis/hercodedESMgroupandtherebybecomeseligibleforhis/herownseparate“firstgenerationbreakaway”codedcustomeracquisitionbonus,thena“sec-ondgenerationbreakaway”codedcustomeracquisi-tionbonusof$10.00willbepaidtothe“GrandparentQESM”foreachnewManagerthatthe“secondgenera-tionQESM”develops(andforwhomaQSBispaid)inhis/hernewESMcodedgroup.QESMsthatgatherandmaintainfive(5)TrueEssentialscustomerswillreceiveanadditional$10ESMCustomerAcquisitionBonus(CAB)providedtheyareeligibleforthebasicCAB(section8A)whentwo(2)TEcustomersaregatheredbyanewIR.Atleastfour(4)ofthefifteen(15)requiredcustomersmustbecustomersotherthantheQESM’spersonalaccounts(i.e.,outsideofthehousehold)inordertoqualifyfortheadditionalCAB.

D. National Sales Manager (NSM):AQualifiedExecutiveSalesManagercanbepromotedtoNationalSalesManager(NSM)bymeetingallofthefollowingrequirements:(i)maintainfifteen(15)ormoreactivepersonalcustomers;(ii)developsix(6)QESMsonanylevelofhis/herpersonalESMcodedgroup,however,thesesix(6)QESMsmustbedevelopedintwo(2)ormoreseparatelegsoftheESMcodedgroup;(iii)havedevelopedaminimumdownlineorganizationofninety(90)ManagersinRSMcodedgroup;(iv)developaminimumdownlineorganizationoffivehundredandforty(540)Managersinhis/herESMcodedgroup;and(v)beapprovedbyFHTM.AnNSMmustmaintainfifteen(15)ormoreactiveper-sonalcustomersasofthelastdayofthemonthinordertobeaQualified National Sales Manager (QNSM) andtobeeligibletoreceiveanymonthlymanagementcus-tomeracquisitionbonusespayableforthatmonthfromhis/herNSMcodedgroup.AnactiveQNSMiseligibletoreceiveamonthlymanagementcustomeracquisition

4

bonusof$30.00foreachnewManagerenteringhis/herNSMcodedgroupwhenthenewlysponsoredManagermeetstherequirementsnecessaryforthepaymentofaQuickStartBonus(QSB)tohis/hersponsor.InadditiontothisbonustheQNSMearnsa1/2%overridecommissiononCGUofthecustomersinhis/herNSMcodedgroup.AQNSMthatdevelopsaQNSMinhis/hercodedNSMgroupbecomesqualifiedfora“firstgenerationbreakaway”codedcustomeracquisitionbonusof$10.00anda1/4%overridecommissionontheCGUofthecustomersforeachnewManagerthatthenewQNSMdevelops(andforwhomaQSBispaid)inhis/hernewNSMcodedgroup.Whenthe“FirstGenerationQNSM”developsaQNSMinhis/hercodedNSMgroupandtherebybecomeseligibleforhis/herownseparate“firstgenerationbreakaway”codedcustomeracquisitionbonus,thena“secondgen-erationbreakaway”codedcustomeracquisitionbonusof$5.00willbepaidtothe“GrandparentQNSM”foreachnewManagerthatthe“secondgenerationQNSM”devel-ops(andforwhomaQSBispaid)inhis/hernewNSMcodedgroup.

E. Presidential Ambassadors: PresidentialAmbassadorswillbedeterminedasaportionoftheCustomerGeneratedUsage.Youmustmeetthefollowingrequire-mentstobeeligible:(i)YoumusthavemetallrequirementsforbecomingaQualifiedNationalSalesManager;(ii)developthree(3)QNSMsonanylevelofyourpersonalNSMcodedorganization,however,thesethree(3)QNSMsmustbedevelopedintwo(2)ormoreseparatelegsoftheNSMcodedgroup;(iii)developaminimumdownlineorga-nizationofonethousandsixhundredandtwenty(1620)ManagersinyourNSMcodedgroup;(iv)maintainfifteen

(15)ormoreactivepersonalcustomersasofthelastdayofthemonthforwhichtheBonusPoolispayable;and(v)beapprovedbyFHTM.Thepositionmayalsobeappoint-edbytheExecutiveStaffofFHTM.Appointeeswillhavedemonstratedleadershipskillsdeemednecessarytorep-resentFHTMasaPresidentialAmbassador.

F. Personal Sponsorship-Monthly Maximum:FHTMbelievesthatitsMarketingandCompensationPlanisthebestthereisintheindustry.InordertoensurethateverynewManagerhasthebestpossibleopportunitytobuildasuccessfulandlong-termbusiness,FHTMbelievesthatitisimperativeforsponsoringIRstoworkcloselywithalloftheirpersonallyenrolledManagersuntilthosenewManagersaretrainedandarecapableoffullyandadequatelypresentingtheFHTMbusinessplantoothersontheirown.Assuch,IRsmaypersonallysponsoramaxi-mumofsix(6)newMangerspercalendarmonth.ThislimitonsponsorshipservestoensurethatthesponsoringIR’stimeandenergyarenotspreadthinamongtoomanynewManagers,therebypermittingthesponsoringIRtodevotethenecessarytimetoeachnewManagerthatittakestoassistthatnewManageringettinghis/herbusinessofftoaQuickStart.Thisinturnleadstothebuildingofastronger,long-termbusinessforall,bothuplineanddownline.

A. Trainer Coach (TC): TheTrainerCoach(TC)positionisaseparatebusinessandanopportunitytoearnadditionalincome.ATrainerCoachcanbeanIRbutitisnotrequired.TrainerCoachestrainManagersthathavepurchasedtheOptionalSpecialServicesProgram.TheTrainerCoachispaidaone-time$40.00feefortheinitialtrainingofanewManager.ManagersareencouragedtoattendandauditadditionaltrainingsessionsasoftenasdesiredinordertoreinforcetheFHTMPoliciesandProceduresandbusinessbuildingtechniques.TCssubmitaninvoice(Form#103)forpaymentfortheinitialtraining.SubmissionofthisinvoicetoFHTMbytheTCservesascertificationtoFortuneHi-TechMarketing,Inc.,byboththeTCandManager,thatthisservicewaspersonallyperformedinaccordancewithCompanyapprovedmethodsbytheTCsubmittingtheinvoiceforpayment.

5. fhtm field training & compensation

5

TrainerCoachesaretrainedbyCertifiedRegionalTrainersthathavebeentrainedandcertifiedbyFHTM’sCorporateTrainers.TheinitialTrainerCoachcertificationfeeis$299.00($295.00forresidentsofLouisiana,Maryland,UtahandWashington;$249.00forresidentsofMaine,SouthCarolinaandSouthDakota;and$199.00forresidentsofConnecticutandNorthCarolina).TrainerCoachesmustbere-certifiedannuallybyaCertifiedRegionalTrainer.InorderforTrainerCoachestomaintaincertifiedstatusaTCmustpayanannualrenewalfeeof$100.00forre-certificationandtraining.ATCthatisalsoaCRTpaysonlythere-certificationfeeof$100.00asaCRT.TheTCrenewalfeeiswaivedforanyTCthatisalsoaCRT.TheTChassixty(60)daystoobtainre-certificationtrainingfromaCRTafterpaymentoftherenewalfee.FHTMrecognizesthatinanefforttoprovidenewManagerswiththetrainingandvaluableinformationthattheyneedinordertosuccessfullyoperatetheirbusinesses,manyleaderswhoarealsoTCs,willconducttrainingclassesimmediate-lyfollowingaregularlyscheduledformalbusinesspresentation.Whilethisattitudeiscommendable,theCompanydoesnotrecommendit.Thereasonforthisisquitesimple.IfanyindividualinattendanceatthetrainingclassisnotalreadyaFHTMManager,thentheclasscouldbeviewedasamethodofsponsoring/recruitingtheprospect.Trainingisnecessar-ilymoredetailedthanabusinesspresentation.Asaresult,theexamples(bothvisualandverbal)thatmaybeofferedbyTrainerCoachestoexplainorclarifyvariousaspectsoftheCompensationPlantotraineesmaynotbeasthoroughlydis-claimed,ifatall,intheclassroomsettingastheywouldbeasamatterofpolicyinaformalbusinesspresentationsetting.Assuch,innoeventshallanyonethatisnotanenrolledFHTMManagerbepermittedtoattendatrainingclass.Trainingclassesarenotasponsorshiptoolandshouldneverbeusedassuch.Ifyoumustconductatrainingclassafteraformalbusi-nesspresentationatthesamelocation,thenyoushouldallowatleastthirty(30)tofortyfive(45)minutesbetweentheendofthebusinesspresentationandthestartofthetrainingclasstoensurethatonlyenrolledManagersareinatten-dance.ItisthedutyandresponsibilityoftheTrainerCoachconductingtheclasstoensurethatthisattendancepolicyisfollowedatalltimes.

B. Certified Regional Trainer (CRT): CertifiedRegionalTrainersareTrainerCoachesthathaveattainedtherankofRegionalSalesManager,havesuccessfullycompletedaCertifiedRegionalTrainerSchoolandhavebeenapprovedbyFHTM.ThefeetobecertifiedasaCertifiedRegionalTraineris$200.00.YoumustbeaTrainerCoachtoattendtheCertifiedRegionalTrainerSchool.TherequirementforcompletionofCertifiedRegionalTrainerSchoolmaybecom-pletedpriortobecomingaRegionalSalesManager.ACRTthathasattainedtherankofRegionalSalesManagercantrainTrainerCoachesandreceiveaone-timepaymentof$80.00foreachTrainerCoachthatispersonallytrained.CRTsmustattendaCertifiedRegionalTrainerSchoolannuallytomaintaincertifiedstatus.There-certificationfeeis$100.00.TheCRTwillbepaid$40.00forre-trainingaTrainerCoachthathasrenewedandisseekingre-certification.Forrecertifi-cationpurposes,aCRTpaysonly$100.00annually.Therenewalfeeof$100.00asaTrainerCoachiswaivedforCRTs.TheCRThassixty(60)daystoobtainre-certificationtrainingbyattendingCRTschoolafterpaymentoftherenewalfee.EveryattemptshouldbemadetoattendCRTschoolduringtherenewalmonth.

C. Leadership Training Bonus: FHTMpaysaLeadershipTrainingBonus(LTB)offive($5.00)dollarstoallManagers,whoarealsoactiveTrainerCoaches,thatqualifyforaLTBbymeetingthefollowingeligibilityrequirements:(i)beanactiveManagerandTrainerCoachyourself;(ii)personallysponsorandmaintainfour(4)activeManagerswhoarealsoactiveTrainerCoaches;and(iii)maintainten(10)activepersonalcustomers.IfyoumeettheserequirementsyouwillreceiveaLTBoffive($5.00)dollarseachtimeoneofyourpersonallysponsoredactiveTrainerCoachestrainsanewManagerandispaidthe$40.00trainingfeebyFHTM.RSMsorESMsthatmeettheeligibilityrequirementstoqualifytoreceiveLTBfortheirpersonallysponsoredManager/TrainerCoachesarealsoqualifiedtoreceiveRSMorESMCodedLTBoffive($5.00)dollarseachtimeaTrainerCoachintheirapplicablecodedgroup(s)trainsanewManagerandispaidthe$40.00trainingfeebyFHTM.Additionally,FHTMpaysaDoubleLeadershipTrainingBonus(DLTB)often($10.00)dollarstoallManagers,whoarealsoactiveTrainerCoaches,thatqualifyforaDLTBbymeetingthefollowingeligibilityrequirements:(i)beanactiveManagerandTrainerCoachyourself;(ii)personallysponsorandmaintainsix(6)activeManagerswhoarealsoactiveTrainerCoaches;and(iii)maintainfifteen(15)activepersonalcustomers.IfyoumeettheserequirementsyouwillreceiveaDLTBoften($10.00)dollarseachtimeoneofyourpersonallysponsoredactiveTrainerCoachestrainsanewManagerandispaidthe$40trainingfeebyFHTM.

�

TheFHTMOptionalServicesProgramisdesignedtoassistanenrolledManagerwithspecialbusinessbuildingtrain-ing,includingaManagerSalesKit,downlinereports,accesstoonlinetraininginformationandcorporatehomeofficesupport.TheManagerSalesKitincludessupportitems,marketingmaterials,presentationmaterials,ratechartsandothersalestoolstohelpthenewManagerbuildasuccessfulbusiness.ThecostoftheOptionalSpecialServicesProgramis$299.00.Managersthatvoluntarilycancelinwritingwithinten(10)calendardaysofthedateofpurhcasewillreceivearefundofthepurchasepriceuponreturnoftheManagerSalesKittoFHTMinresalableconditionwithintwenty(20)calendardaysoftheirwrittennoticeofcancellation(seeSection11.4ofPoliciesandProcedures).

If,priortocancellation,theManagerhasattendedManagerTraining,$40.00willbedeductedfromtheSpecialServicespurchaseprice.The annual cost for renewal of the Optional Special Services Program is $199.00.

TheRepresentativeServicesDepartment(859-422-7008)atthecorporateofficeisavailabletoassistManagerswithdownlinequestions,commissionstatements,bonusreports,andannouncementsmadethroughthecorporatecommuni-cationssystem.

�. fhtm optional special services program

TheFHTMCompensationPlanasdelineatedinthisguide,representsthegeneralcompensationplanofferedbytheCompany.IndependentRepresentativesofFortuneHi-TechMarketing,Inc.shouldfamiliarizethemselveswiththiscompensationplan.However,FHTMmayengageinpromotionsorofferincentivesthatwillaffectthestructureofthegeneralplanfromtimetotime.IndependentRepresentativesareencouragedtoseekupdatedinformationregardingcurrentpromotionsonwww.fhtm.net.

A. Customer Generated Usaged (CGU): ActiveFHTMIndependentRepresentativesmayearnfrom2%to25%oftheCustomerGeneratedUsage(CGU)ofallactivepersonalcustomers.Commissionspaidforourproductsandservicesmayvaryslightlyfromtheexampleusedinthecorporatebusinesspresentation,duetovaryingcommissionagreementswithourproviders.(SeetheCommissionChartinSection13oftheProgram Guide and Policies and Proceduresmanualforactualcommissionpayable).TheunilevelportionoftheCompensationPlanhasaone-timequalificationforeachleveloftheCompensationPlan.AnIRqualifiesforthefirstlevelbyacquiringthree(3)activepersonalcustomers(atleastoneofwhichmustbeotherthanhis/herownpersonalorhouseholdaccount)andone(1)personallysponsoredManager.Toqualifyforlevelstwo(2)throughseven(7)anIRmustacquirefive(5)activepersonalcustomersandpersonallysponsortwo(2)Managers.Toqualifyforleveleight(8)

RSMsorESMsthatmeettheeligibilityrequirementstoqualifytoreceiveDLTBfortheirpersonallysponsoredManager/TrainerCoachesarealsoqualifiedtoreceiveRSMorESMCodedLTBoften($10.00)dollarseachtimeaTrainerCoachintheirapplicablecodedgroup(s)trainsanewManagerandispaidthe$40.00trainingfeebyFHTM.

D. Deadlines for Training and Submission of Invoices: InordertoensurethatournewManagersandTrainerCoachesarepromptlytrained,FHTMhighlyrecommendsthatallinitialtrainingofnewManagersand/orTrainerCoachesbecon-ductedwithinthirty(30)daysoftheenrollmentofthenewManagerand/orTrainerCoach.InorderforaTrainerCoachand/orCertifiedRegionalTrainertobepaidfortraininganewManagerand/orTrainerCoach,suchtrainingshallhavebeenconductedwithinsixty(60)daysoftheenrollmentofthenewManagerand/orTrainerCoach.Additionally,theFHTMhomeofficemustreceivetraininginvoiceswithinten(10)businessdaysofthedateuponwhichthetrainingoccurred.Invoicesfortrainingthatoccurredoutofthistimeframeand/orinvoicesreceivedmorethanten(10)businessdaysafterthetrainingwasconductedshallnotbepaidexceptinthecaseofanexceptionalcircumstance,approvedbyFHTMassuchafterreview,thatmayhavecausedanunavoidabledelay.Promptandthoroughtrainingisakeyingredientforsuccess!

7. fhtm compensation plan

7

Quick Start Bonus (QSB)$100.00 Level QS

1 $100

2 $5

3 $5

4 $5

5 $5

6 $5

7 $5

8 $10

***�CGU�percentages�displayed�in�the�chart�are�for�illustrative�purposes�only.�CGU�percentages�may�vary�depen-dent�upon�the�product�used�by�the�customer.�Please�see�Section�13�of�the�Program�Guide�and�Policies�and�Procedures�manual�for�CGU�percentages�payable�for�each�product/service�offered.

PercentageCGU–Usage**

2%-25%

an IR must acquire ten (10) active personal customers and personally sponsor three (3) Managers. An IR that has acquired three (3) personal Managers and ten (10) or more active personal customers is a Qualified Representative (QR). PLEASE NOTE that with regard to commercial long distance accounts with billed CGU in excess of $1000.00 per month the IR that personally acquires the account receives 5% of the CGU rather than the normal 2%. In this situation the percentages paid on the first and eighth levels are reversed and the eighth level IR will be paid 2% of the CGU for this account and the IR personally responsible for acquiring the customer will receive 5% of the CGU for this customer.

B. Qualified Customer (QC): ): A legitimate True Essentials (Easy Ship), Lamas, HomVantage, FonVantage, Identashield, Health Care Card, The Wireless Shop, Dish Network, or Office Assistant customer submitted in good faith by an IR that becomes an active customer within sixty (60) days of submission to FHTM and/or the service provider. A customer that does not remain on service (for any reason) for a minimum of ninety (90) days or three (3) complete billing cycles from the date of initial activation by the service provider shall not be considered an “active customer” submitted in “good faith” for any pur-poses by the Company nor shall it be considered a Qualified Customer. Any bonuses or commissions paid on such customers shall be subject to withholding and recovery from any IRs paid on such customers.

C. Commissions and the Quick Start Bonus (QSB): IRs are qualified to earn a customer acquisition Quick Start Bonus (QSB) when a personally sponsored Manager acquires and submits in good faith three (3) personal Qualified Customers within sixty (60) days of the new Manager’s enrollment date and which customers become active within sixty (60) days of the new Manager’s enrollment date. No more than one of the three (3) customers required in order to generate this bonus may be PNG customers.

$$$$ $$$$ $$$$

Y O UPersonal Customers

JANE: $100 BOB: $100 MIKE: $100

$5 $5 $5 $5 $5 $5 $5 $5 $5

1/4%

1/4%

1/4%

1/4%

1/4%

1/4%

1/4%

5%

�

PLEASE NOTE: In order to

qualify for release of QSB,

QSBO and other bonus

payments, the three (3)

Select Qualified Customers

must be submitted active

within sixty (60) days of the

new Manager’s enrollment

date. If they do not become

active during this period then

no QSB or other bonuses

will be paid. It is strongly

recommended that the newly

sponsored Manager submit

more than the minimum of

three (3) customers in order

to help ensure that QSB will

be paid to the sponsoring

IR and other bonuses will

be paid to coded upline IRs.

When YOU recruit JANE

and she has (*3) personal cus-

tomers, YOU receive a Quick

Start Bonus of $100.00. When

you have (3) active personal

customers and (1) first level

Manager, you will qualify to earn

commissions (CGU) on level (1).

When you sign up (5) active

customers and recruit BOB

and he has (*3) personal active

customers you will receive

a QSB and qualify to earn

commissions on levels 2-7.

When you sign up (10) active

customers and recruit MIKE

and he has (*3) personal active

customers you will receive a

QSB and qualify to earn

commissions on level (8).

�*All�active�customers�must�be�

signed�up�and�become�active�

during�your�new�Manager’s��

first�60�days�from�the�time�

the�application�is�received�by�

Fortune�to�receive�a�QSB.

D. Quick Start Bonus Override (QSBO):WhenanewManagerissponsoredonyour2ndthrough8thlevelandthepersonalsponsorofthatnewManagerreceivesaQuickStartBonusforthenewlysponsoredManager,youwillreceiveaQuickStartBonusOverrideasfollows:IfthenewManagerfallsonanyofyourlevels2-7,youwillreceivea$5.00QSBO.IfthenewManagerfallsonyour8thlevel,youwillreceivea$10.00QSBO.InordertoreceivethisnewQSBO,allyouneedtodoisbequalifiedandeligibletoreceiveCGU,inaccordancewiththeCompensationPlan,foreachparticularlevel.

E. True Beginnings Bonus:TheTrueBeginningsBonusisa$299bonusawardedtoIndependentRepresentativeswhogatheratotaloften(10)customers(five(5)ofwhichareTrueEssentialscustomers),withatleastfour(4)oftheten(10)customersbeingcustomersotherthanhis/herpersonalaccounts.Thesecustomersmustgoactivewithinthefirst60daysafterhis/hernewManagerstartdate.

�. fhtm management bonus program

A. Customer Acquisition Bonus (CAB): CABisearnedbyIRsthathaveattainedthepositionsofQRSM,QESMorQNSM.CABisonlypaidonManagerswhoarespon-soredafteryouhavemetthequalificationforthefirst“coded”positionofRSM.Onceyouarepromotedandqualified,andanewlysponsoredManagerinyournewmanagementcodedgroupsubmitsthree(3)QCs(see7C),youbecomeeligibletoreceiveCAB.TheQRSM,QESMandQNSMpositionsareeligibletoearnbonusesasshown:InordertoreceiveCAByoumustacquireandmaintainonamonthlybasistherequisitenumberofactivecus-tomersandManagersrequiredfor“eligibility”atyourparticularposition.AlthoughManagerswillachievethetitleforanypromotedpositiontheyhaveachievedbaseduponthenumberofManagersintheirbusiness(i.e.RSM,ESM,NSM)oncetherequisitenumberofManagershasbeenattained,theywillnotbeeligibletoreceivenorwilltheybepaidanyCABfornewManagerssponsoredintotheircodedorganizationuntilALLactivecustomerrequirementshavebeenmetandtheyhavebecomeaQRSM,QESMorQNSM.ActivecustomerrequirementsmustbemaintainedmonthlyinordertoremaineligibleforreceiptofCAB.AManagerthatpromotestoRSMshallbegrantedaone-time“qualificationperiod”tomeettherequire-mentofgatheringtheten(10)activepersonalcustomersrequiredtobecomeaQRSM.ThenewRSMshallhaveuntilthelastdayofthemonthfollowingthemonthinwhichhe/shepromotedtoRSMtomeetthisrequire-ment.ItisstronglyurgedthatthecustomergatheringrequirementsnecessaryforQRSMstatusbemetassoonaspossible(i.e.within30daysofenrollment)foranyone

enteringthebusiness.OnlywhentheactivecustomerrequirementshavebeenmetshallanyCABbepaid.Again,thisactivecustomerrequirementmustbemain-tainedonamonthlybasis(seeSection9ofthismanual)inorderforyoutoremaineligibletoreceiveCABthatmaybepayablefromyourcodedorganization(s).

B. Double Management Customer Acquisition Bonuses:AQRSM,QESMorQNSM,mayreceivea“double”ManagementCABwhentheappropriatenumberofqualifyingnewManagersaresponsoredintotheirappropriateCodedGroup(s)asfollows:(i) QRSMswillreceivethisdoublebonusforeachqualifyingnewManagerenteringhis/herRegionalCodedGroupeachmonthwhenaminimumofsixteen(16)newManagersaresponsoredintohis/herRegionalCodedGroup.(ii) QESMswillreceivethisdoublebonusforeachquali-fyingnewManagerenteringhis/herExecutiveCodedGroupeachmonthwhenaminimumoftwenty-four(24)newManagersaresponsoredintohis/herExecutiveCodedGroup.(iii)QNSMswillreceivethisdoublebonusforeachqualifyingnewManagerenteringhis/herNationalCodedGroupeachmonthwhenaminimumofforty-eight(48)newManagersaresponsoredintohis/herNationalCodedGroup.A“qualifyingnewManager”forpurposesofreleaseofthisdoublebonusisanewManagerthattriggersthereleaseofaQuickStartBonustohis/herpersonalsponsor.

�

B. Leadership Coded Bonus Chart

* The examples assume that you sponsor a new Manager into each new Management Coded Group after you have been promoted. Each column represents the cumulative total possible payment that can be earned for the new Managers that are sponsored into each particular new Management Coded Group after your promotion. Bonuses are only paid if the new Managers obtain three customers (one other than themselves) within their first 60 days. **Breakaway bonuses are paid on promotions made in your RSM, ESM and NSM coded groups. 1st Generation Breakaway is $50 + 1/4-1/2%. 2nd Generation Breakaway is a $10 bonus in the RSM. ESM 1st Generation Breakaway is $20 + 1/4-1/2%. ESM 2nd Generation Breakaway is $10. ***This assumes that CAB is being paid on a new Manager that is in more than one coded position.

C. QRSM “EXTRA $50” Management Customer Acquisition Bonus: QRSMs may receive an “Extra $50” Management CAB when the appropriate number of qualifying new Managers are sponsored in their Regional Coded Group as follows.

QRSMs will receive an “Extra $50” CAB (i.e. $50.00) for each qualifying new Manager entering their Regional Coded Group each month when a minimum of six (6) new Managers are sponsored into their Regional Coded Group. This bonus will be paid to QRSMs on qualifying new Managers (1 through 15) only in the event the QRSM does not qualify for the monthly Double QRSM CAB. It is not paid in addition to Double QSB CAB.

10

Quick Start

$100.00Quick Start

Bonus

†Regional Sales Manager Coded

Group*

•$100 & up to 1/4%(**$50 + 1/4%/$10 Breakaway)

RSM C.A.B.

†Executive Sales Manager Coded

Group*

•$60 & up to 1/4%(**$20 + 1/4%/$10 Breakaway)

ESM C.A.B.

†National Sales Manager Coded

Group*

•$30 & up to 1/2%(**$10 + 1/4%/$5 Breakaway)

NSM C.A.B.

{$100+$100 & 1/4%+1/4%}*

{$100+$100+$60 & 1/4%+1/4%+1/4%}*

{$100+$100+$60+$30 & 1/4%+1/4%+1/4%+1/2%}*

1. 1/4% $100

2. 1/4% $5

3. 1/4% $5

4. 1/4% $5

5. 1/4% $5

6. 1/4% $5

7. 1/4% $5

8. 5% $10

9. 0%

$200 & 1/2%*

$100 & 1/2%

$100 & 1/2%

$100 & 1/2%

$100 & 1/2%

$100 & 1/2%

$100 & 1/2%

$100 & 5 1/4%

$100 & 1/4%

unlimited levels

$$$$

Presidential

Ambassador

$$$$

Personal Customers2%-25%

$260 & 3/4%*

$160 & 3/4%

$160 & 3/4%

$160 & 3/4%

$160 & 3/4%

$160 & 3/4%

$160 & 3/4%

$160 & 5 1/2%

$160 & 1/2%

unlimited levels

***

$290 & 1/4%*

$190 & 1 1/4%

$190 & 1 1/4%

$190 & 1 1/4%

$190 & 1 1/4%

$190 & 1 1/4%

$190 & 1 1/4%

$190 & 6%

$190 & 1%

unlimited levels

***

�. eligiblity for commissions, overrides and bonuses

AllIRsareeligibletoreceivecommissionsontheirpersonalcustomers’CGU.IRswiththree(3)activepersonalcustomersandone(1)personallysponsoredfirstlevelManagerareeligibletoreceivedownlineoverridecommissionsontheirfirstlevelManager’scustomers(seeSection7“FHTMCompensationPlan”inthismanualforcustomerandManagerrequirementsforlevels2through8).

InordertoreceivemonthlyManagementCustomerAcquisitionBonuses(CAB)forwhichyoumayqualify;youmustalsomaintainanactiveeligibilitystatus.Youcanaccomplishthisbymaintainingyouractivecustomercountatorabovetheeligibilitylevelrequiredforpaymentofthesebonuses.REMEMBERthatthenumberofactivecustomersrequiredinorderforyoutobeeligibletoreceivemonthlyCABis:QRSM=10+;QESM&QNSM=15+.

Eligibilityrequirementsmustbemetbythelastdayofthemonthimmediatelyprecedingthemonthduringwhichtheappli-cablebonusand/orcommissionpaymentsarescheduledtobeissuedbyFHTM.(Example:ToreceivepaymentforCABearnedinJune,whichisissuedonJuly20th,youmusthaveyouractivecustomercountatorabovetherequiredeligibilitylevelonJune30th).Thereisnograceperiod.Theonlyexceptiontothisruleistheone-time“qualificationperiod”grantedtonewlypromotedRSMs(seeSection8A).Youwillbepaidforthehighestlevelofpromotionforwhichyouareeligible.Forexample:AnESMwith14activecustomersonJune30thwouldbeissuedpaymentforCABonJuly20thonlyforCABearnedasaQRSMforthemonthofJune.NoCABwouldbepaidthatmonthtotheESMforanyCABthatmayhavebeenpayablefromtheESMcodedgroupsincetheeligibilityrequirementforreceivingQESMCAB(i.e.maintaining15activepersonalcustomers)wasnotmetonJune30.

Alwaysmaintainmorethantheminimumnumberofactivecustomersrequiredtoensurethatyouareeligibleforallcompensationatyourlevelofachievement.

IntheeventFHTMshouldelecttodiscontinueofferingtheproductand/orserviceofoneofitsvariousproviderswhichresultsintheterminationofresidualpaymentsfromsaidprovidertoFHTM,thenandinthatevent,upontheeffectivedateofthediscontinuationofanysuchproductand/orserviceoffering,FHTMshallnotcreditanycustomerpointstowardsCompensationPlanqualification/eligibilityrequirementsforthediscontinuedproductorservice.IRsshallberequiredtoreplacethediscontinuedproduct/customerpointtoremainqualified/eligible(asmaybeapplicable)forCompensationPlanpurposesshouldthisresultinthemfallingbelowtherequiredcustomercountfortheirlevelforpromotionand/or8levelCGUqualification.

Eligibilityforallcommissions,overrides,andbonusesendsimmediatelyifyouareterminatedbyFHTMoryouvoluntarilyterminateyourIRAgreement.

11

10. commissions reports & payment schedules

11. downline reports

A. Payment of monthly CGU commissiontoeligibleactiveIRsonbillingsofallservicesandproductswillnormallyoccuronoraboutthetwentieth(20th)dayofthesecondmonthfollowingthemonthinwhichthecustomerwasbilled.Thisisthethirdmonthafteractualusagetoallowtimeforthecustomertobebilledandforreceiptofpaymentforthebilledservices.

B. Payment of monthly Management CABtoaneligibleactiveQRSM,QESM,and/orQNSMwilloccuronoraboutthetwentieth(20th)dayofthemonthfollowingthemonthinwhichtheCABwasearned(subjecttoeligibilityrequirements).

C. Training commission checks will be issuedonthefirstFridayfollowingreceiptofthetraininginvoicebytheCompanyprovidedthatallnecessarydataforidentificationofthenewlytrainedManagerandTrainerCoachsubmittingtheinvoicehavebeenreceivedandverifiedbyFHTM.Innoeventwilltrainingchecksbeissuedpriortotheexpirationoften(10)calendardaysfromthenewlytrainedManager’sdateofenrollment.

D. Quick Start Bonus checks will be issuedonthefirstFridayfollowingtheexpirationoften(10)calendardaysfromdateofenrollmentofanewManagerthathasmetallofthecustomergatheringrequirementsforthereleaseofQSBpaymentstothesponsoringIRprovidedthatallnecessarydataforidentificationofthenewManager,customersandsponsorhavebeenreceivedandverifiedbyFHTM.

E. All payments made are subject to the check and/or EFT fees.Commissionchecksmustbegreaterthanorequaltofifteendollars($15.00)beforeacheckwillbeissued.Thereisasixdollar($6.00)checkchargeforeachcheck(a$15.00commissiongeneratesa$10.00check).EFTpaymentsmustbeequaltoorgreaterthanfifteendollars($15.00)togenerateatransfer.Thereisafivedollar($5.00)transferfeeforeachEFT(a$12.00commissionwilltransferas$10.00aftertheEFTfee).Commissionsaccumulateiftheyarelessthantheaboveamountsuntiltheappropriateamountisreached.Thisamountisaddedtothenextpayperiod.

F. All check inquiries should be made in writingandmustbereceivedbyFHTMwithinsixty(60)daysofissuancetobereissued.AnylostormissingchecksthatyourequestFHTMtoreissuewillbesubjecttoa$25.00feeandasixty(60)daywaitingperiod.

Thisserviceisincluded,uponrequest,forallManagersenrolledintheOptionalSpecialServicesProgram.Uponrequest,adownlinesummaryreportisprovidedmonthlybywayofeitherapaperprintout(mailed)orviatheinternet(email).IRsthathavepurchasedanFHTMreplicatedwebpagehave“realtime”accesstotheirdownlineinformationuponcommand.Achargeoftwentyfive($.25)centsperpageforpaperprintoutreportsexceedingtwenty(20)pageswillbedeductedfromtherequestingIR’scommissionpayment.ThereportcontainsinformationthatisproprietaryandconfidentialtoFHTMandtheIRagreestoholdsuchinformationprivate.TheIRagreestoonlyusetheinforma-tiontooperateandbuildhis/herFHTMbusiness.

ARepresentativethatrequestsadownlinereportmustpayforthisasaseparateserviceandthefeeistwentyfivedol-lars($25.00)perrequesteddownlinereportoflessthantwenty(20)pagesinlength.Reportsinexcessoftwenty(20)pageswillbeassessedanadditionalchargeoftwentyfive($.25)centsperpageexceedingtwenty(20)pages.

12

1.1 Policies and Compensation Plan Incorporated into Independent Representative Agreement ThesePoliciesandProcedures,intheirpresentformandasamendedatthesolediscretionofFortuneHi-TechMarketing,Inc.(hereafter“FHTM”orthe“Company”),areincorporatedintoandformanintegralpartoftheFHTMIndependentRepresentativeAgreement/Application(hereafter“IRAgreement”)andtheTrainerCoachAgreement/Application.ThroughoutthesePolicies,whentheterm“Agreement”isused,itcollectivelyreferstotheFHTMIRApplicationandAgreement,theFHTMTrainer/CoachAgreement,thesePoliciesandProcedures,andtheFHTMMarketingandCompensationPlan.ThesedocumentsareincorporatedbyreferenceintotheFHTMIRAgreement(allintheircurrentformandasamendedbyFHTM).ItistheresponsibilityofeachIndependentRepresentative(hereafter“IR”)toread,understand,adhereto,andensurethatheorsheisawareofandoperatingunderthemostcurrentversionofthesePoliciesandProcedures.

1.2 Purpose of Policies FHTMisadirectsalescompanythatmarketstoenduserconsumerscertainservicesthatcouldinclude,butarenotlimitedto,nutritionalproducts,longdistancephoneservice,internetaccess,cellularphoneservice,satellitetelevisionservice,voicemessagingservice,pagingproductsandservicesandotherusefulproductsthroughitsIndependentRepresentatives.ItisimportanttounderstandthatyoursuccessandthesuccessofyourfellowIndependentRepresentativesisdependentupontheintegrityofthepeoplewhomarketourproductsandservices.ToclearlydefinetherelationshipthatexistsbetweenallIRsandFHTM,andtoexplicitlysetastandardforethicalandacceptablebusinessconduct,FHTMhasestablishedthisagreement.

FHTMIRsarerequiredtocomplywithallofthetermsandconditionssetforthinthisagreement.FHTMmayamendthisagreementatitssolediscretionfromtimetotime.

Becauseyoumaybeunfamiliarwithmanyofthesestandardsofpractice,itisveryimportantthatyoureadandabidebythisagreement.Pleasereviewtheinformationinthismanualcarefully.Itexplainsandgovernstherelationshipbetweenyou,asanindependentcontractor,andtheCompany.Ifyouhavequestionsregardinganypolicyorrule,donothesitatetoseekananswerfromFHTM.

1.3 Changes to the Agreement Becausenational,provincial,territorialandlocallaws,aswellasthebusinessenvironment,periodicallychange,FHTMreservestheright,atanytime,toamendtheAgreementanditspricesinitssoleandabsolutediscretion.BysigningtheIRAgreement,anIRagreestoabidebyallamendmentsormodificationsthatFHTMelectstomake.AmendmentsshallbeeffectiveuponnoticetoIRsthattheAgreementhasbeenmodified.NotificationofamendmentsshallbepublishedinofficialFHTMmaterials.TheCompanyshallprovideormakeavailabletoIRsacompletecopyoftheamendedprovisionsbyoneormoreofthefollowingmethods:(1)postingontheCompany’sofficialwebsite;(2)electronicmail(e-mail);(3)voicemailsystembroadcast;or(4)inclusioninCompanyperiodicals.NoticegivenviaanyoneofthepreviouslylistedchannelswillbedeemedreceivedbytheIRuponposting.ThecontinuationofanIR’sFHTMbusinessoranIR’sacceptanceofbonusorcommissionpaymentsshallconstituteacceptancebyanIRofanyandallamendments.

1.4 Delays FHTMshallnotberesponsiblefordelaysorfailuresinperformanceofitsobligationswhenperformanceismadecommer-ciallyimpracticableduetocircumstancesbeyonditsreasonablecontrol.Thisincludes,withoutlimitation,strikes,labordifficulties,riot,war,fire,death,curtailment,cessationorinterruptionofFHTM’ssourceofsupply,orgovernmentdecreesororders.

1. introduction

14

2. becoming an independent representative

1.5 Policies and Provisions Severable IfanyprovisionoftheAgreement,initscurrentformorasmaybeamended,isfoundtobeinvalid,orunenforceableforanyreason,onlytheinvalidportion(s)oftheprovisionshallbeseveredandtheremainingtermsandprovisionsshallremaininfullforceandeffectandshallbeconstruedasifsuchinvalid,orunenforceableprovisionnevercomprisedapartoftheAgreement.

1.6 Waiver TheCompanynevergivesupitsrighttoinsistoncompliancewiththeAgreementandwiththeapplicablelawsgoverningtheconductofabusiness.NofailureofFHTMtoexerciseanyrightorpowerundertheAgreementortoinsistuponstrictcompliancebyanIRwithanyobligationorprovisionoftheAgreement,andnocustomorpracticeofthepartiesatvariancewiththetermsoftheAgreement,shallconstituteawaiverofFHTM’srighttodemandexactcompliancewiththeAgreement.WaiverbyFHTMcanbeaffectedonlyinwritingbyanauthorizedofficeroftheCompany.FHTM’swaiverofanyparticularbreachbyanIRshallnotaffectorimpairFHTM’srightswithrespecttoanysubsequentbreach,norshallitaffectinanywaytherightsorobligationsofanyotherIR.NorshallanydelayoromissionbyFHTMtoexerciseanyrightarisingfromabreachaffectorimpairFHTM’srightsastothatoranysubsequentbreach.

TheexistenceofanyclaimorcauseofactionofanIRagainstFHTMshallnotconstituteadefensetoFHTM’senforcementofanytermorprovisionoftheAgreement.

2.1 Requirements to Become an Independent RepresentativeTobecomeanFHTMIR,eachapplicantmust: a) Be of the age of majority in his or her state or

country of residence; b) Reside in a country in which FHTM is engaged in

doing business; c) Provide: i: a valid Social Security or Federal Tax ID

number; ii: a date of birth. d) Submit a fully refundable deposit (waived for IRs elect-

ing to purchase the Optional Special Services Package) where applicable;

e) Submit a fully and properly completed (originals only—no copies) and signed IR Application and Agreement to FHTM; and

f) Be approved and accepted by FHTM.

TheCompanyreservestherighttorejectanyapplicationsforanewIndependentRepresentativeorapplicationsforrenewal.

2.2 No Purchase RequiredNopersonisrequiredtopurchaseFHTMproducts,ser-vicesormarketingmaterials,ortopayanychargeorfeetobecomeanIR.However,eachIRmustsubmitafullyrefund-abledeposit(exceptwhereprohibitedbylaw)toFHTMwithhisorherIRApplicationandAgreement.Thedepositshallberefundeduponreceiptofwrittenrequestuponthetermi-nation(voluntaryorinvoluntary)ofanIR’sAgreement.

AStarterKitcontainingmarketingmaterialsandotherimportantinformationwillbeprovidedtoallnewIRsuponenrollment.

2.3 Registration by Online EnrollmentThepotentialnewIRmayenrollanewIndependentRepresentativeonlinebyuseofFHTM’sonlineregistra-tionprocess.ThepersonmakingtheenrollmentmustbeabletoprovideallnecessaryIRAgreementinformationfortheonlineenrollment.AStarterKitorManagerSalesKitwillbeprovidedtothenewenrolleeuponreceipt/verifica-tionofpaymentoftherefundabledeposit(ifapplicable)orOptionalSpecialServicesPackagefeebyFHTM.Pleaserefertoyoursponsor’spersonalFHTMOfficeAssistantwebsiteatwww.fhtm.wsorotherdesignatedwebaddressforonlineenrollmentassistance.

ThenewIR’sonlineenrollmentauthorizationwillbevalidforuptothirty(30)days,pendingreceiptandverificationbytheCompanyofanyapplicabledeposit/paymentthatmaybedue.Onceanyapplicabledeposit/paymenthasbeenreceivedandverifiedattheFHTMHomeOffice,thenewIRAgreementwillbeextendedtoone(1)fullyearfromthedateonwhichtheonlineenrollmentwasacceptedbyFHTM.

Ifanyapplicabledeposit/paymentrequiredisnotreceivedwithinthetemporarythirty(30)daytimeperiod,thetem-poraryauthorizationshallexpireandtheIRApplicationandAgreementshallautomaticallyterminate.Additionally,inthe

15

eventthatthedeposit/paymentisdishonoredforanyrea-son,thenewIRshallbeimmediatelyterminatedbyFHTMandanysumsthatmayhavebeenpaidtothenewIR,thenewIR’ssponsorand/oruplineshallbesubjecttorecoverybytheCompanybywayofeitherwithholdingsamefromanysumsinthepossessionoftheCompanythatarepayabletoanysuchpartyand/orwithholdingsamefromanyfuturesumsthatmaybecomepayabletoanysuchpartyand/orbyanyothermethodprovidedbylaw.

Intheeventoftheonlineenrollmentofabusinessentity,allrequirementscontainedinSection4.4below,shallalsobecompliedwithassetforththerein.

2.4 IR Benefits OnceanIRApplicationandAgreementhasbeenacceptedbyFHTM,thebenefitsoftheMarketingandCompensationPlanandtheIRAgreementareavailabletothenewIR.Thesebenefitsincludetherightto: a) Market FHTM products and services, in accordance

with the terms of the FHTM Marketing and Compensation Plan;

b) Participate in the FHTM Marketing and Compensation Plan (receive bonuses and commissions, if eligible);

c) Acquire customers for FHTM’s products and services and sponsor other individuals (IRs) into the FHTM business and thereby build a marketing organiza-tion and progress through the FHTM Marketing and Compensation Plan;

d) Receive periodic FHTM literature and other FHTM communications;

e) Participate in FHTM-sponsored support, service, training, motivational and recognition functions, upon payment of appropriate charges, if applicable (i.e. purchase of the Optional Special Services Package); and

f) Participate in promotional and incentive contests and programs sponsored by FHTM for its IRs.

2.5 Renewal of Your FHTM Business ThetermoftheIRAgreementandTrainerCoachAgreementisone(1)yearfromthedateofitsacceptancebyFHTM.ManagersmustrenewtheirOptionalSpecialServicesAgreementand/orTrainerCoachAgreementeachyearbypayinganannualrenewalfeeof$199.00fortheOptionalSpecialServicesPackageand$100.00fortheTrainerCoachposition(ifapplicable)onorbeforethelastdayoftheanni-versarymonthoftheirIRAgreementand/orTrainerCoachAgreement,asmaybeapplicable.IftherenewalfeeisnotpaidonorbeforethelastdayoftheanniversarymonthofthecurrenttermoftheIRAgreementand/orTrainerCoachAgreement,thentheapplicableAgreementwillbeterminat-ed.AManagerthatelectsnottorenewtheOptionalSpecialServicesPackagemayrenewasaRepresentativeonly,bysubmittingawrittenrequesttoFHTMrequestingthattherenewalstatusbechangedfromManagertoRepresentative.SuchrequestmustbereceivedbyFHTMpriortotheexpira-tionoftheapplicablerenewalperiodandbeaccompaniedbya$75.00depositexceptforresidentsofstateswherethedepositiswaivedbylaw.(Forexample,iftheanniversarydateofeitheranIRAgreementorTrainerCoachAgreementisJanuary15,2008,therenewalpaymentwillbedueonorbeforeJanuary31,2008)Renewalnoticeswillbemailedduringthemonthimmediatelyprecedingthemonthinwhichtherenewalpaymentisdue.

Please Note:TCsthatarealsoCRTsonlyrenewfortheCRTposition,whichincludestherenewaloftheTCposition.AseparatenoticewillbesenttoCRTswhentherenewalisdueorthisrenewalfeemaybepaidatthesametimeastheOptionalSpecialServicesrenewal.Ifyouchoosetorenewatthesametime,thiswillnotaffecttheCRTanniversarydateforre-certificationpurposes.Theanniversarydatewillnotchange.

ThereisnorenewalfeeforthoseIRswhohavenotpur-chasedtheOptionalSpecialServicesPackage.However,theymustnotifyFHTMannually,inwriting,oftheirdesiretocontinuetoparticipateasaRepresentative.Iftheydonot,theirpositionshallbeterminated.RepresentativeswillreceiveanannualrenewalnoticefromtheCompany.

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3.1 Adherence to the FHTM Marketing and Compensation Plan IRsmustadheretothetermsoftheFHTMMarketingandCompensationPlanassetforthinofficialFHTMliterature.IRsshallnotoffertheFHTMopportunitythrough,orincombinationwith,anyothersystem,program,ormethodofmarketingotherthanthatspecificallysetforthinofficialFHTMliterature.IRsshallnotrequireorencourageothercurrentorprospectivecustomersorIRstoparticipateinFHTMinanymannerthatvariesfromtheprogramassetforthinofficialFHTMliterature.IRsshallnotrequireorencourageothercurrentorprospectivecustomersorIRstoexecuteanyagreementorcontractotherthanofficialFHTMagreementsandcontractsinordertobecomeanFHTMcustomerorIR.Similarly,IRsshallnotrequireorencourageothercurrentorprospectivecustomersorIRstomakeanypurchasefrom,orpaymentto,anyindividualorotherentitytoparticipateintheFHTMMarketingandCompensationPlanotherthanthosepurchasesorpaymentsidentifiedasrecommendedinofficialFHTMliterature.

FHTMreservestherighttolimitordisallowanymarketingactivitiesthatcastnegativeaspersionsontheintegrity,truthfulness,and/orreputationofFortuneHi-TechMarketing,Inc.

3.1.1: Ethics FHTMconductsbusinessinanethicalandcrediblemannerandrequiresitsRepresentativestodealethicallywiththeircustomers,witheachotherandwiththecompany.FHTMpermitsnounethicalorillegalactivityandwillintercedewhensuchbehaviormayexist.FHTMreservestherighttouseitsbestjudgmentindecidingwhethercertainRepresentativeactivitiesareunethical.Furthermore,FHTMmayuseitsowndiscretionindeterminingtheappropriatecourseofaction.IfFHTMdeterminesthatunethicalactivitiesmayexist,thenitreservestherighttosuspendorterminatetheIndependentRepresentativepositionandwithholdallcommissionsandpaymentsofanykind.UndernocircumstanceswouldanIndependentRepresentativewhoisterminatedforunethicalorillegalactivitybeentitledtoarefundoftheiroriginalpurchasefee,noraretheyentitledtosellortransfertheirposition.Examples of unethical or illegal activity include, but are not limited to: 1.Forgingasignatureonanydocumentorapplication.2. Makingfalseormisleadingrepresentationsofanykindincluding,butnotlimitedto,misrepresentationsaboutFHTMproductsandservicesortheFHTMCompensationPlan.3. DepositingchecksmadepayabletoFHTMintopersonalaccountsinsteadofimmediatelyforwardingthemtoFHTM.4. SpreadingfalseormisleadingremarksorrumorswithmaliciousintentthatmaydisparageFHTM,FHTMemployees,oranotherFHTMIndependentRepresentative.5. AnyunauthorizeduseofFHTM’sname,trademarksorcopyrightedmaterial(i.e.reproducingFHTM’sforms,businesscards,etc.).6. Violationofanyfederal,stateorlocallawsorregulations.7. ViolationofanyFHTMPolicyorProcedure.8. Co-marketingofanyotherbusiness,product,service,seminarorprograminconjunctionwiththeFHTMopportunity.Thislimitationappliestoallpromotionalactivitiesincluding,butnotlimitedto,marketingmaterials,events,presentations,verbalsolicitations,etc.9.Purchasingaproductorsubmittingacustomerwiththeintenttodiscontinueuseoftheproductforthepurposeoftriggeringcommissionsandbonuses.

3.2 Advertising 3.2.1: In General

AllIRsshallsafeguardandpromotethegoodreputationofFHTManditsproductsandservices.ThemarketingandpromotionofFHTM,theMarketingandCompensationPlan,andFHTMproductsandservicesshallbeconsistentwiththepublicinterest,andmustavoidalldiscourteous,deceptive,misleading,unethicalorimmoralconductorpractices.

3. operating an fhtm business

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Topromoteboththeproductsandservices,andthetremendousopportunityFHTMoffers,IRsshallonlyusethemarketingmaterialsandsupportmaterialsproducedbyoratthedirectionofFHTM.FHTMhascarefullydesigneditsproducts,productlabels,MarketingandCompensationPlan,andpromotionalmaterialstoensurethateachaspectofFHTMisfair,truthful,substantiated,andcomplieswiththevastandcomplexlegalrequirementsoffederalandstatelaws.Accordingly,IRsshallnotproducetheirownliterature,advertisements,marketingmaterialsandpromotionalmaterials,orinternetsite/webpagestooffertheFHTMOpportunityand/orproductsandservices.IfanIRdesirestoadvertisetopromotehisorherbusiness,heorshemaydosoonlythroughtheCompanyapprovedadvertisementsthatmaybefoundinthe“CorporateTools”sectiononthe“SecureConsole”ofwww.fhtm.net.Exceptasprovidedinthissection,IRsshallnotuseortransmitunsolicitedfaxes,masse-maildistribution,unsolicitede-mail,or“spamming”relativetotheoperationoftheirFHTMbusinesses.Theterms“unsolicitedfaxes”and“unsolicitede-mail”meanthetransmissionviatelephonefacsimileorelectronicmail,respectively,ofanymaterialorinformationadvertisingorpromotingFHTM,itsproducts,itscompensationplanoranyotheraspectoftheCompanywhichistransmittedtoanyperson,exceptthatthesetermsdonotincludeafaxore-mail:(a)toanypersonwiththatperson’spriorexpressinvitationorpermission;or(b)toanypersonwithwhomtheIRhasanestablishedbusinessorpersonalrelationship.Theterm“establishedbusinessorpersonalrelationship”meansapriororexistingrelationshipformedbyavoluntarytwo-waycommunicationbetweenanIRandaperson,onthebasisof:(i)aninquiry,application,purchaseortransactionbythepersonregardingproductsofferedbysuchIR;or(ii)apersonalorfamilialrelationship,whichrelationshiphasnotbeenpreviouslyterminatedbyeitherparty.IfanIRdesirestoutilizeaninternetwebpagetopromotehisorherbusiness,heorshemaydosoonlythroughtheCompany’sofficialwebsiteorbyuseoftheapprovedFHTMSelf-ReplicatingWebPage,usingonlyofficialFHTMtemplates.Further,IRsthatusetheFHTMreplicatedwebpageshallnotlinkfromittoanyothersitethatisnotaffiliatedwithand/orapprovedbyFHTMnorshalltheyadvertiseanyotherproducts,servicesorbusinessesonthesitewithouttheexpresswrittenapprovalofFHTM.ThefailuretoadheretothispolicyconstitutesamaterialbreachofthesePoliciesandProcedures,whichmayresultinsanctions,includingtermination,atthesolediscretionofFHTM.3.2.2: Domain Names and E-mail Addresses IRsshallnotuseorattempttoregisteranyofFHTM’stradenames,trademarks,servicenames,servicemarks,productnames,theCompany’sname,oranyderivativethereof,foranyinternetdomainname.NorshallIRsincorporateorattempttoincor-porateanyofFHTM’stradenames,trademarks,servicenames,servicemarks,productnames,theCompany’sname,oranyderivativethereof,intoanyelectronicmailaddress.3.2.3: Trademarks and Copyrights FHTMwillnotallowtheuseofitstradenames,trademarks,designs,orsymbolsbyanyperson,includinganFHTMIR,withoutitsprior,writtenpermission.IRsmaynotproduceforsaleordistributionanyrecordedCompanyeventsandspeecheswithoutwrittenpermissionfromFHTMnormayIRsreproduceforsaleorforpersonaluseanyrecordingofCompanyproducedaudioorvideotapepresentations.Further,IRsshallnotreproduceorusethemarksofanyofFHTM’sproductorserviceprovidersexceptasexpresslyauthorizedinwritingbyFHTM.ThelimitedlicensethatFHTMhasbeengrantedbyeachofitsserviceprovidersforuseandreproductionoftheirvariouslogosandmarksdoesnotextendtoitsIRs.3.2.4: Media and Media Inquiries IRsshallnotrespondtomediainquiriesregardingFHTM,itsproductsorservices,ortheirindependentFHTMbusinesswithouttheexpresswrittenconsentandpermissionofFHTM.AllinquiriesbyanytypeofmediamustbeimmediatelyreferredtoFHTM’sRepresentativeServicesDepartment.Thispolicyisdesignedtoensurethataccurateandconsistentinformationisprovidedtothepublicaswellasaproperpublicimage.

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3.3 Bonus Buying “Bonusbuying”includes,butisnotlimitedto:(a)thesponsorship/enrollmentofindividualsorbusinessentitieswithouttheconsentand/orknowledgeofand/orexecutionofanIRApplicationandAgreementbysuchindividualsorbusinessentities;(b)thefraudulentsponsorship/enrollmentofanindividualorbusinessentityasanIRorcustomer;(c)thesponsorship/enroll-mentorattemptedsponsorship/enrollmentofnon-existentindividualsorbusinessentitiesasIRsorcustomers(“phantoms”);(d)theuseofacredit/debitcard,checkorothernegotiableinstrumentbyoronbehalfofanIRorcustomerwhentheIRorcustomerisnottheaccountholderofsuchcredit/debitcard,checkorinstrument;(e)thepurchaseofproductsand/orservicesfromdownlineIRs;(f)theplacement,distribution,orallocationofcustomeraccountstootherFHTMIRshavingtheeffectofincreasingcompensationtothatIR;(g)useofapre-paidcreditcardinthesubmissionofacustomer;(h)thesubmissionofanunauthorizedrequestforserviceofanindividual’sorbusinessentity’stelephoneorinternetserviceprovider(“slamming”)and/oranyotherserviceorproductmarketedbyFHTM;or(i)anyoccurrenceorpatternofactivitythat,inthesoleandabsolutediscretionofFHTM,constitutesBonusbuyingindetrimenttoFHTM’swelfareorintegrity.BonusbuyingconstitutesamaterialbreachofthesePoliciesandProcedures,isstrictlyandabsolutelyprohibitedandshallresultinimmediatetermination.

3.4 Business Entities Acorporation,partnershiportrust(collectivelyreferredtointhissectionasa“businessentity”)mayapplytobeanFHTMIRbysubmittingitsCertificateofIncorporation,PartnershipAgreementortrustdocumentsandInternalRevenueService“letterofnotice”assigningtheentity’sEmployerIdentificationNumber(thesedocumentsarecollectivelyreferredtoasthe“EntityDocuments”)toFHTM,alongwithanyadditionalinformationFHTMmayrequestregardingtheidentityoftheindividualswithabeneficialinterestinanysuchbusinessentities.AFHTMbusinessmaychangeitsstatusunderthesamesponsorfromanindividualtoapartnership,corporationortrustorfromonetypeofbusinessentitytoanother.Thereisa$25.00administrativefeeforeachchangerequested,whichmustbeincludedwiththewrittenrequestandthecompletednewIRApplicationandAgreementonbehalfofthebusinessentity.ThenewIRApplicationformmustbesignedbyalloftheshareholders,officers,directors,partners,trusteesandtrustbeneficiariesortheirlegalrepresentatives.MembersofthebusinessentityarejointlyandseverallyliableforanyindebtednessorotherobligationofthebusinessentitytoFHTM.

Allshareholders,directors,officers,partnersandbeneficiariesshallbeidentifiedbySocialSecuritynumber,nameandaddressandcannotholdanotherIRpositionexceptasotherwisespecificallypermittedherein.OneoftheseindividualsshallbelistedontheIRAgreementastheprimarycontactpersonfortheentity.Thisindividualshallalsosupplyhis/hersocialsecuritynum-berontheIRAgreement.UntilsuchtimeasFHTMreceivesallrequiredentitydocuments,theFHTMbusinessshallbelistedunderthenameandsocialsecuritynumberoftheindividualdesignatedastheentity’scontactperson.Ifanyoftherequiredentitydocumentsarenotprovided,inwriting,totheCompanywithinthirty(30)daysofanewenrollmentand/orchangeofsta-tus,thepositionwillbeterminated(orremaininthenameofthecontactpersonifrequestedinwriting)andanysumspaidasaresultofsaidentity’snewenrollmentshallberecoveredbywithholdingsmadepursuanttothesePolicies.3.5 Changes to the FHTM Business 3.5.1: In General

EachIRmustimmediatelynotifyFHTM,inwriting,ofallchangestotheinformationcontainedonhisorherIRApplicationandAgreement.IRsmaymodifytheirexistingIRAgreement(i.e.,changeSocialSecuritynumbertoFederalI.D.number,orchangetheformofownershipfromanindividualproprietorshiptoabusinessentityownedbytheIR)bysubmittingawrittenrequest,aproperlyexecutedIRApplicationandAgreement,andappropriatesupportingdocumentationasmayberequiredand/orrequestedbytheCompanyfromtimetotime.Changesshallbeprocessedonlyonceperyear.AllchangesmustbesubmittedbyNovember30tobecomeeffectiveonJanuary1ofthefollowingyear.FHTMreservestherighttoapproveordisapproveanyIR’schoiceofbusinessnames,formationofpartnerships,corpora-tionsandtrusts,fortax,estateplanningandliabilitypurposes.IfFHTMapprovessuchachangebytheIR,theorganization’snameandthenamesoftheprincipalsoftheorganizationmustappearontheIndependentRepresentativeAgreementalongwithaSocialSecurityNumberorFederalTaxIdentificationNumber.AnyrequestforachangeinthenameorachangeintheSocialSecurityNumberorTaxIdentificationNumberoftheIndependentRepresentativestatusissubjecttoawrittenagreement,signedbyallpartiesinvolved,submittedtoandapprovedbyFHTM.FHTMreservestherighttoverifyallauthorizationspriortomakingchanges.Intheabsenceofanyagreementornotification,FHTMwillonlyrecognizetheindividualwhoseSocialSecurityNumberwasoriginallylistedontheIndependentRepresentativeAgreement.PleasenotethatFHTMwillonlycontinuetoservicetheIndependent

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Representativewhoremainslistedinourcomputersystem.FHTMreservestherighttointercedeindisputesandifitisdeterminedthatunethicalactivityexists,thestatusmaybesuspendedand/orterminated.Thereisa$25.00administrativefeeforeachchangerequested(otherthanchangesofaddressorcontactnumbers),whichmustbeincludedwiththewrittenrequestandthecompletednewIRApplicationandAgreement,ifapplicable.3.5.2: Addition of Co-Applicants Whenaddingaco-applicant(eitheranindividualorabusinessentity)toanexistingFHTMbusiness,theCompanyrequiresbothawrittenrequestaswellasanewproperlycompletedIRApplicationandAgreementthatcomplieswiththerequire-mentsandrestrictionsofSection3.1andcontainsthesignaturesofboththeapplicantandtheco-applicant.TopreventthecircumventionofSection4.23(regardingtransfersandassignmentsofFHTMbusiness),theoriginalapplicantmustremainasapartytotheoriginalIRApplicationandAgreement.IftheoriginalIRwantstoterminatehisorherrelationshipwiththeCompany,heorshemusttransferorassignhisorherbusinessinaccordancewithSection4.23.Ifthisprocessisnotfol-lowed,thebusinessshallbeterminateduponthewithdrawaloftheoriginalIR.AllbonusandcommissioncheckswillbesenttotheaddressofrecordoftheoriginalIR.Thereisa$25.00administrativefeeforeachchangerequested,whichmustbeincludedwiththewrittenrequestandthecompletednewIRApplicationandAgreement.FHTMmay,atitsdiscretion,requirewitnessedandnotarizeddocumentsbeforeimplementinganychangestoanFHTMbusiness.Pleaseallowthirty(30)daysafterthereceiptoftherequestbyFHTMforprocessing.Thenewco-applicantshallberesponsibleforobtainingandpayingforhis/herownManagerSalesKit(orothernecessarymaterials)andshallberesponsibleforattendingandpayingforhis/herowntraining,iftheoriginalIRhasalreadyattendedtraining.Ifthereisachangetoabusinessentity,theIRmustcomplywithallrequirementsofSection3.4abovebeforethechangewillbeacceptedbyFHTM.Iftheserequirementsarenotfulfilledwithinthirty(30)daysofthechange,thepositionwillbeterminated.Please Note:themodificationstotheoriginalIRpositionpermittedwithinthescopeofthisSectiondonotincludeachangeofsponsorship.ChangesofsponsorshipshallnotbepermittedandareaddressedinSection4.5.3,below.3.5.3: Change of Sponsor ToprotecttheintegrityofallmarketingorganizationsandsafeguardthehardworkofallIRs,FHTMprohibitsanychangesinsponsorship(exceptassetforthinSection4.5.4,below).MaintainingtheintegrityofsponsorshipiscriticalforthesuccessofeveryIRandmarketingorganization.Accordingly,thetransferofanFHTMIR’sbusinessfromonesponsortoanothermay,inthesolediscretionoftheCompany,onlybepermittedinaninstanceinwhichclearandconvincingproofoffraudu-lentinducementorunethicalsponsoringhasbeenestablishedbasedupondocumentationsubmittedtotheCompany.ALL requests for change of sponsorship shall be submitted in writingtotheRepresentativeServicesDepartment,withinthirty(30)daysofthecomplainingIR’sexecutionoftheoriginalIRAgreementandshallincludethereason(s)fortherequestedchangeofsponsor.Incasesinvolvingfraudulentinducementorunethicalsponsoring,anIRmayrequestthatheorshebetransferredtoanotherorganizationwithhisorherentiremarketingorganizationintact.Allrequestsfortransferallegingfraudulentenrollmentpracticesshallbeevaluatedonacasebycasebasis.WrittendocumentationinsupportofanysuchrequestshallberequiredbytheCompany,inallcases,beforeanyreviewoftheclaimwillcommence.

3.5.4: Cancellation and Re-application AnIRmaylegitimatelychangeorganizationsbyvoluntarilycanceling,inwriting,hisorherFHTMbusinessandremaininginac-tive(i.e.,nosalesofFHTMproductsorservices,nosponsoring,noattendanceatanyFHTMfunctions,participationinanyotherformofManageractivity,oroperationofanyotherFHTMbusiness)forsix(6)fullcalendarmonthsfollowingthevoluntarycancellation.Followingthemandatorysix(6)monthperiodofinactivity,theformerIRmayreapplyunderanewsponsor.FormerIRsthatre-enrollwiththecompanyunderanewsponsorshallnotqualifyasa“newManager”forpurposesofreleasingQuickStartBonuses(QSB),oranymonthlybonusesofanytype,totheirnewsponsorortheirnewcodedupline.Additionally,re-enrollingIRsshallnotcounttowardtheirnewsponsor’sManagertotalforpromotionpurposes(i.e.ManagertoRSM;RSMtoESM...).However,anynewdownlineorganizationtheycreateafterre-enrollingshallcountforsuchpurposesfortheirnewsponsors.ActivecustomersshallnotbemovedfromthepreviousIRpositiontothenewIRposition.

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3.6 Unauthorized Claims and Actions 3.6.1: Indemnification

AnIRissolelyresponsibleforallofhisorherverbalandwrittenstatementsmaderegardingFHTMproducts,services,andtheMarketingandCompensationPlanwhicharenotexpresslycontainedinofficialFHTMmaterials.IRsagreetoindemnifyFHTMandFHTM’sdirectors,officers,employees,andagents,andholdthemharmlessfromanyandallliabilityincludingjudgements,civilpenalties,refunds,attorneyfees,courtcosts,orlostbusinessincurredbyFHTMasaresultoftheIR’sunauthorizedrepresentationsoractions.ThisprovisionshallsurvivetheterminationoftheIRAgreement.3.6.2: Income Claims TheFederalTradeCommissionandseveralstateshavelawsorregulationsthatregulateorevenprohibitcertaintypesofincomeclaimsandtestimonialsmadebypersonsengagedinnetworkmarketing.BecauseFHTMIRsdonothavetheinfor-mationnecessarytocomplywiththelegalrequirementsformakingincomeclaims,anIR,whenpresentingordiscussingtheFHTMopportunityorMarketingandCompensationPlantoaprospectiveIR,mustnotmakeincomeprojections,incomeclaims,ordisclosehisorherFHTMincome(includingtheshowingofchecks,copiesofchecks,bankstatements,ortaxrecords,etc.).3.6.3: Savings, Rate or Product Performance Guarantees FHTMstrictlyprohibitsIndependentRepresentativesfrommakinganyclaimsorguaranteesrelatedtosavings,ratesorproductperformance,whetherexpressedorimplied.Thislimitationextendstobothwrittenandverbalcommunicationsandappliestohypotheticalsavingscalculationsaswell.IndependentRepresentativesmaynotmakeanyreferencestospecificornumericalsavingsguarantees,oranysimilarclaimsrelatingtoproductperformance,whetherexpressedorimplied,withrespecttoFHTM’sproductsandservices.Forexample,itisapolicyviolationtouseverbiagesuchas“FHTMcansaveyouupto30%onyourlongdistancebills.”Anexampleofacceptableverbiageis“MostcustomersofthemajorlongdistancecarrierswillsaveontheirmonthlybillswithFHTM’sLongDistanceservice.”

3.7 Trade Shows, Expositions and Other Sales ForumsIRsmaydisplayand/orsellFHTMproductsorservicesattradeshowsandprofessionalexpositions.Thisprivilegeisrestrictedtothedisplayorsaleoftelecomortechnologyproductsonly.Beforesubmittingadeposittotheeventpromoter,IRsmustcontacttheRepresentativeServicesDepartmenttorequestaSpecialEventsParticipationform(thisformandalettercontain-inginstructionsforcompletionisalsoavailablefordownloadinginthe“CorporateTools”sectionofthe“SecureConsole”atwww.fhtm.net.)andconditionalapproval,asFHTM’spolicyistoauthorizeonlyoneFHTMbusinessperevent.FinalapprovalwillbegrantedtothefirstIRwhosubmitsacompletedSpecialEventsParticipationform,acopyofthecontractsignedbyboththeIRandtheeventofficial,andareceiptindicatingthatadepositfortheboothhasbeenpaid.Approvalisgivenonlyfortheeventspecified.AnyrequeststoparticipateinfutureeventsmustagainbesubmittedtotheRepresentativeServicesDepartment.FHTMfurtherreservestherighttorefuseauthorizationtoparticipateatanyfunctionwhichitdoesnotdeemasuitableforumforthepromotionofitsproducts,services,ortheFHTMopportunity.Approvalwillnotbegivenforswapmeets,garagesales,fleamarketsorfarmer’smarkets,astheseeventsarenotconducivetotheprofessionalimageFHTMwishestoportray.

3.8 Conflicts of Interest 3.8.1: Non-Solicitation/Cross-Recruiting

Subjecttocertainrestrictionsondualparticipation,includingthoseinsection4.8.2,FHTMIRsmayparticipateinotherdirectsellingornetworkmarketingormultilevelmarketingventures(collectively“networkmarketing”),andIRsmayengageinsellingactivitiesrelatedtonon-FHTMproductsandservicesiftheydesiretodoso.However,thisrightissubjecttocertainlimitations.IfanIRelectstoparticipateinanothernetworkmarketingopportunity,inordertoavoidconflictsofinter-estandloyalties,IRsareprohibitedfromUnauthorizedCross-Recruiting,whichincludesthefollowing:a) During the term of this agreement, any actual or attempted recruitment or enrollment of FHTM Customers or IRs for

other network marketing business ventures, either directly or through a third party. This includes, but is not limited to, presenting or assisting in the presentation of other network marketing business ventures to any FHTM Customer or IR, or implicitly or explicitly encouraging any FHTM Customer or IR to join other business ventures. Because there is an extreme likelihood that conflicts will arise if an IR operates two network marketing programs, it is the IR’s responsibility to first determine whether a prospect is an FHTM Customer or IR before recruiting or enrolling the prospect for another network business venture.

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b) For a period of six (6) months following the cancellation or termination of an IR’s Agreement, the former IR may not recruit any FHTM IR or customer for another network marketing program. c) Producing or offering any literature, tapes or promotional material of any nature for another network marketing business which is used by the IR or any third person to recruit FHTM Customers or IRs for that business venture; d) Selling, offering to sell, or promoting any competing non-FHTM products or services to FHTM Customers or IRs. Any product or services in the same generic category as an FHTM product or service is deemed to be competing. e) Offering FHTM products or services, or promoting the FHTM Marketing and Compensation Plan, in conjunction with any non-FHTM products, services, business plan, opportunity, or incentive; or f) Offering any non-FHTM products, services, business plan, opportunity, or incentive at any FHTM meeting, seminar, launch, convention, or other FHTM function, or immediately following such event (i.e. any “bait and switch” methods).

3.8.2: Dual Participation for Promoted IRs IRspromotedtothelevelofRegionalSalesManagerorhigherwithintheFHTMCompensationPlanmaynotparticipateinanyothernetworkmarketingormulti-levelmarketingventures.SuchdualparticipationwillbedeemedamaterialbreachofthesePoliciesandProceduresandwillbegroundsfortermination.

3.8.3: Downline Activity Reports DownlineActivityReportsareavailablemonthlytoManagers(i.e.thoseIRsthathavepurchasedtheOptionalSpecialServicesProgram),uponrequest,viaemailorinprintedform.TheyarealsoavailabletoManagersthathavesubscribedtoFHTM’sreplicablewebpageupondemand.AccessthroughFHTM’sreplicatedwebpagesand/or“BackOffice”toonlineDownlineActivityReportsispasswordprotected.RepresentativesthatwanttoobtainacopyoftheirDownlineActivityReportmustsendawrittenrequesttoRepresentativeServicesalongwithanyassociatedfeetoobtainacopy.AllDownlineActivityReportsandtheinformationcontainedthereinareconfidentialandconstituteproprietaryinformationandbusinesstradesecretsbelongingtoFHTM.DownlineActivityReportsareprovidedtoIRsinstrictestconfidenceandaremadeavail-abletoIRsforthesolepurposeofassistingIRsinworkingwiththeirrespectiveDownlineOrganizationsinthedevelopmentoftheirFHTMbusiness.IRsshouldusetheirDownlineActivityReportstoassist,motivate,andtraintheirdownlineIRs.TheIRandFHTMagreethat,butforthisagreementofconfidentialityandnondisclosure,FHTMwouldnotprovideDownlineActivityReportstotheIR.AnIRshallnot,onhisorherownbehalf,oronbehalfofanyotherperson,partnership,association,corporationorotherbusinessentity: a) Directly or indirectly disclose any information contained in any Downline Activity Report to any third party;

b) Directly or indirectly disclose his or her password or other user access code to his or her Downline Activity Report; c) Use the information to compete with FHTM or for any purpose other than promoting his or her FHTM business; d) Recruit or solicit any IR or customer of FHTM listed on any report, or in any manner attempt to influence or induce any IR or customer of FHTM, to alter their business relationship with FHTM; or e) Use or disclose to any person, partnership, association, corporation, or other entity any information contained in any Downline Activity Report.

UpondemandbytheCompany,anycurrentorformerIRwillreturntheoriginalandallcopiesofDownlineActivityReports

totheCompany.FHTMshallnotreleaseanycustomerand/orIRinformationtoanymemberofanIR’supline(exceptfortheinformationcontainedontheDownlineActivityReport)withouttheexpresswrittenconsentoftheIR.TelephoneinformationwillbereleasediftheIRhassoindicatedthatthisispermissibleontheIRApplicationatthetimeofenrollment.FHTMshallnotreleaseanycustomerand/orIRinformationtoanymemberofanIR’supline(exceptfortheinformationcontainedontheDownlineActivityReport).TelephoneinformationwillbereleasediftheIRhassoindicatedthatthisispermissibleontheIRApplicationatthetimeofenrollment.

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3.9 Cross-Sponsoring Actualorattemptedcrosssponsoringisstrictlyprohibited.“Crosssponsoring”isdefinedastheenrollmentofanindividualorbusinessentityalreadyhavingacurrentIRAgreementonfilewithFHTM,orhashadsuchanagreementwithintheprecedingsix(6)calendarmonths,withinadifferentlineofsponsorship,orencouraginganIRtovoluntarilycancelandre-enrollatalaterdate.Theuseofaspouseorrelative’sname,tradenames,DBAs,assumednames,corporations,partnerships,trusts,federalIDnumbers,orfictitiousIDnumberstocircumventthispolicyisprohibited.IRsshallnotdemean,discreditordefameotherFHTMIRsinanattempttoenticeanotherIRtobecomepartofthefirstIR’smarketingorganization.ThispolicyshallnotprohibitthetransferofanFHTMbusinessinaccordancewithSection4.23.

3.10 Errors or Questions IfanIRhasquestionsaboutorbelievesanyerrorshavebeenmaderegardingcommissions,bonuses,DownlineActivityReports,orcharges,theIRmustnotifyFHTMinwritingwithinthirty(30)daysofthedateofthepurportederrororincidentinquestion.FHTMwillnotberesponsibleforanyerrors,omissionsorproblemsnotreportedtoitwithinthirty(30)days.

3.11 Governmental Approval or Endorsement Neitherfederalnorstateregulatoryagenciesorofficialsapproveorendorseanydirectsellingornetworkmarketingcompa-niesorprograms.Therefore,IRsshallnotrepresentorimplythatFHTMoritsMarketingandCompensationPlanhavebeen“approved,”“endorsed”orotherwisesanctionedbyanygovernmentagency.Likewise,FHTMdoesnotendorseorrecommendanycompanyorothermethodofoperatinganetworkmarketingbusinessthatisnotcontainedinofficialFHTMliterature.Thisincludes,butisnotlimitedto,“lead”generatingservices,recruitingservices,massinternetmarketingtechniquesandothersimilaractivities.

3.12 Holding Applications or Orders IRsSHALLNOTmanipulateenrollmentsofnewapplicantsandpurchasesofproductsorservicesforanyreason.AllIRApplicationsandAgreements,andproductorserviceordersmustbedeliveredtoFHTMwithinfortyeight(48)hoursfromthetimetheyaresignedbyanIRorplacedbyacustomer,respectively.ViolationofthissectionisstrictlyprohibitedandshallbedeemedamaterialbreachofthesePoliciesandtheAgreement.

3.13 Identification AllIRsarerequiredtoprovidetheirSocialSecurityNumberoraFederalEmployerIdentificationNumber,theirdriver’slicenseorstateissuedIDNumber,andtheirdateofbirthtoFHTMontheIRApplicationandAgreement.Uponenrollment,theCompanywillprovideauniqueRepresentativeIDNumbertotheIR.AnIRmayusethisnumberorhisorherSocialSecurityNumberorFederalEmployerIdentificationNumbertoplaceordersandtrackcommissionsandbonuses.TheuseofafictitiousorinaccurateSocialSecurityNumber,FederalEmployerI.D.Number,driver’slicensenumber,stateissuedI.D.Number,ordateofbirthisprohibited.SuchprohibitedusewillbedeemedamaterialbreechofthesepoliciesandtheAgreement.

3.14 Income Taxes IndependentRepresentativesarenotconsideredemployeesforpurposesoftheSocialSecurityAct,theFederalUnemploymentTaxAct,FederalIncomeTaxlawsoranyotherlawsgoverningemployees.ItistheIndependentRepresentative’sresponsibilitytomakeself-employmentandincometaxpaymentsasrequiredbylaw.Assuch,FHTMdoesnotdeductanytaxesfromanycommissionand/orpayments.ItistheIndependentRepresentative’sresponsibilitytoprovideFHTMwiththeproperSocialSecurityNumberorTaxpayerIdentificationNumber.IftheinformationthatisprovidedisincorrectoriftheInternalRevenueServicenotifiesFHTMthattheinformationdoesnotmatchtheirrecordsthenFHTMshallwitholdbackupwithholdingsasprescribedbyIRSregulationsuntilthematterisresolved.

Everyyear,FHTMwillprovideIRSForm1099MISC(Non-employeeCompensation)earningsstatementtoeachU.S.residentwhofallsintooneofthefollowingcategories: a) Had earnings of over $600.00 in the previous calendar year; or b) Made purchases during the previous calendar year in excess of $5,000.00.EachIRisresponsibleforpayinglocal,stateandfederaltaxesonanyincomegeneratedasanIndependentRepresentative.

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3.15 Independent Contractor Status IRsareindependentcontractors,andarenotpurchasersofafranchiseorabusinessopportunity.TheAgreementbetweenFHTManditsIRsdoesnotcreateanemployer/employeerelationship,agency,partnership,orjointventurebetweentheCompanyandtheIR.IRsshallnotbetreatedasanemployeeforanypurposewhatsoever,includingbutnotlimitedtohisorherservicesorforFederalorStatetaxpurposes.AllIRsareresponsibleforpayinglocal,state,andfederaltaxesduefromallcompensationearnedasanIRoftheCompany.TheIRhasnoauthority(expressedorimplied),tobindtheCompanytoanyobligation.EachIRshallestablishhisorherowngoals,hours,andmethodsofsale,solongasheorshecomplieswiththetermsoftheIRAgreement,thesePoliciesandProcedures,andapplicablelaws.

3.15.1: Trademarks and Copyrights ThenameofFHTMandothernamesasmaybeadoptedbyFHTMareproprietarytradenames,trademarksandservicemarksofFHTM.Assuch,thesemarksareofgreatvaluetoFHTMandaresuppliedtoIRsfortheiruseonlyinanexpresslyauthorizedmanner.UseofFHTMnameonanyitemnotproducedbytheCompanyisprohibitedexceptasfollows:IR’s Name; Independent FHTM Representative; Fortune Hi-Tech MarketingTM. AllIRsmaylistthemselvesasan“IndependentRepresentative”inthewhiteoryellowpagesofthetelephonedirectoryundertheirownname.NoIRmayplacetelephonedirectorydisplayadsusingFHTM’sname(s)orlogo(s),orthelogo(s)ofanyofFHTM’sproductsorservices.IRsmaynotanswerthetelephonebysaying“FHTM”,“FortuneHi-TechMarketing,Inc.”,“FortuneHi-TechIncorporated”,orinanyothermannerthatwouldleadthecallertobelievethatheorshehasreachedcorporateofficesofFHTM.

3.16 Insurance Youmaywishtoarrangeinsurancecoverageforyourbusiness.Itisunlikelythateitheryourhomeowner’sinsurancepolicyoryourautomobileinsurancepolicycoversbusiness-relatedinjuries,orthetheftofordamagetoinventoryorbusinessequipment.Contactyourinsuranceagentwithanyquestionsyoumayhavetomakecertainthatyourpropertyisprotected.TheCompanywillnotansweranyinsurancerelatedquestions.

3.17 International Marketing Becauseofcriticallegalandtaxconsiderations,including:compliancewithforeignlawsregardingtheapproval,registrationorlicensureofproductsorservices;protectionofintellectualproperty;compliancewithcustoms,tax,andimmigrationlaws;compliancewithdirectsellinglaws;productandincomerepresentations;andliteraturecontentandlanguagerequirements,FHTMmustlimittheresaleofFHTMproductsandservices,andthepresentationoftheFHTMbusinesstoprospectivecustomersandIRslocatedwithintheUnitedStatesatthistime.Moreover,allowingafewIRstoconductbusinessinmarketsnotyetopenedbyFHTMwouldviolatetheconceptofaffordingeveryIRtheequalopportunitytoexpandinternationally.FHTMproductsormarketingmaterialscannotbeshippedintoorsoldinanyforeigncountry.IRsmaysell,give,transfer,ordistributeFHTMproductsormarketingmaterialsonlyintheUnitedStates.Inaddition,noIRmay,inanyunauthorizedcountry:(a)conductsales,enrollmentortrainingmeetings;(b)enrollorattempttoenrollpotentialcustomersorIRs;or(c)conductanyotheractivityforthepurposeofsellingFHTMproducts,establishingamarketingorganization,orpromotingtheFHTMbusiness.

3.18 Adherence to Laws and Ordinances 3.18.1: Local Ordinances

Manycitiesandcountieshavelawsregulatingcertainhome-basedbusinesses.InsomecasestheseordinancesmaybeapplicabletoIRs.IRsmustobeythoselawsthatapplytothem.3.18.2: Compliance With Federal, State, Local Laws, Military IRsshallcomplywithallfederal,state,andlocallawsandregulationsintheconductoftheirbusinesses.IRsshouldneverenterorconductmeetingsonmilitarybases,installations,orgovernment-operatedfacilitieswithoutfirstcontactinganysuchfacilitytoobtainpriorpermissionforentry.IRsmustobtainanynecessaryinformationonrequirementsand/orrestrictionsfordoingso.Ifspecialpermitsorlicensesarerequired,theIRshallapplyforsameinhis/herindividualcapacityasanIR,andshallforwardacopyofthisinformationtotheComplianceDepartment.

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3.19 Minors Apersonwhoisrecognizedasaminorinhis/herstateorcountryofresidencemaynotbeanFHTMIR.IRsshallnotenrollorrecruitminorsintotheFHTMprogram.

3.20 One FHTM Business Per RepresentativeAnIRmayoperateorhaveanownershipinterest,legalorequitable,asasoleproprietorship,partner,shareholder,trustee,orbeneficiary,inonlyone(1)FHTMbusiness.Noindividualmayhave,operateorreceivecompensationfrommorethanone(1)FHTMbusiness.

InordertomaintaintheintegrityoftheFHTMMarketingandCompensationPlan,husbandsandwivesorcommon-lawcouples(collectively“spouses”)regardlessofwhetheroneorbotharesignatoriestoanIRApplicationandAgreement,maynotownoroperateseparateFHTMbusinesses,eitherindividuallyorjointly,normaytheyparticipatedirectlyorindirectly(asashareholder,partner,trustee,trustbeneficiary,oranyotherlegalorequitableownership)intheownershipormanagementofanotherFHTMbusinessinanyform.

Incaseswheretwo(2)IRsmarryorincasesofanIRreceivinganinterestinanotherbusinessthroughinheritance,theIRwillbepermittedtochoosewhichbusinessheorshewilloperate.Theremainingbusinesswillbefrozen.

3.21 Actions of Household Members and Affiliated IndividualsIfanymemberofanIR’simmediatehouseholdengagesinanyactivitywhich,ifperformedbytheIR,wouldviolateanyprovisionoftheAgreement,suchactivitywillbedeemedaviolationbytheIRandFHTMmaytakedisciplinaryactionpursuanttothesePoliciesandProceduresagainsttheIR.Similarly,ifanyindividualassociatedinanywaywithacorporation,partnership,trustorotherbusinessentity(collectively“affiliatedindividual”)violatestheAgreement,suchaction(s)willbedeemedaviolationbythebusinessentity,andFHTMmaytakedisciplinaryactionagainstthebusinessentity.

3.22 Requests for Records AnyrequestfromanIRforearningreports,additionalcopiesofinvoices,applications,downlineactivityreports,orotherrecordswillrequireanadministrativefeeof$25.00plus$1.00perpagepercopy.TherequestmustbemadeinwritingandpaymentreceivedpriortorequestedrecordsbeingprovidedtotheIR.Thisfeecoverstheexpenseofmailingandtimerequiredtoresearchfilesandmakecopiesofrecords.

ThisfeedoesnotapplytoreplacementofalostormisplacedForm1099.OneduplicatecopyofForm1099willbeprovidedatnocost.Anyadditionalcopieswillbesubjecttotheadministrativefeesreferencedabove.

3.23 Sale, Transfer or Assignment of an FHTM Business AlthoughanFHTMbusinessisaprivatelyownedandindependentlyoperatedbusiness,thesale,transferorassignmentofanFHTMbusinessissubjecttocertainlimitationsforprotectionoftheintegrityofthedownlineorganization.IfanIRwishestosellhisorherFHTMbusiness,thefollowingcriteriashallbesatisfied:

a) Protection of the existing line of sponsorship must always be maintained so that the FHTM business continues to be operated in that line of sponsorship.

b) The buyer or transferee must be (or must become) a qualified FHTM IR. If the new owner is not already an FHTM IR then the new owner must, within thirty (30) days of the transfer of ownership, attend Manager Training, Trainer/Coach Training and, if applicable, Certified Regional Trainer’s School (as scheduled). The new owner shall be required to pay the appropri-ate fee for any such training. (It is also the responsibility of the buyer to obtain up to date materials and literature from the Company at his/her own expense.) If the buyer is an active FHTM IR, he or she must first terminate his or her existing FHTM business simultaneously with the purchase, transfer, assignment or acquisition of any interest in the new FHTM business. No changes in line of sponsorship can result from the sale or transfer of an FHTM business. If the prospective buyer, transferee or assignee is an active FHTM IR, the sale, transfer or assignment cannot result in a change of sponsorship of the buyer, transferee or assignee. If such a sale, transfer or assignment will result in a change of the buyer’s, transferee’s or assignee’s sponsor, then the provisions of Section 4.5.4 of these Policies and Procedures shall be applicable and the six (6) month inactivity period shall be imposed upon the buyer, transferee or assignee before the sale, transfer or assignment may be finally concluded.

c) Before the sale, transfer or assignment can be finalized and approved by FHTM, any debt obligations the selling IR has with FHTM must be satisfied.

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d) The selling IR must be in good standing and not in violation of any of the terms of the Agreement in order to be eligible to sell, transfer or assign an FHTM business. A business that has been terminated may not be sold, transferred or assigned.

e) The sale, transfer or assignment will be finally approved by FHTM upon receipt of all required documents, including but not limited to, associated fees, a fully completed Transfer of Business form, IR Agreement and/or Trainer Coach Agreement, as applicable. Said approval will not be unreasonably withheld.

f) Before the new owner of a Trainer Coach position will be allowed to train Managers for compensation, the new Trainer Coach must be trained by a Certified Regional Trainer that has been pre-approved by FHTM.

PriortosellinganFHTMbusiness,thesellingIRmustnotifyFHTMRepresentativeServicesDepartmentofhisorherintenttoselltheFHTMbusiness,completeallapplicableFHTMTransferofBusiness/SaleDocuments,andpayanyapplicablefeesimposedbyFHTMforthetransfer/saleofthebusiness,currently$200.00.

3.24 Separation of an FHTM Business FHTMIRssometimesoperatetheirFHTMbusinessesashusband-wifepartnerships,regularpartnerships,corporations,trustsorotherbusinessentities.Atsuchtimeasamarriagemayendindivorceorabusinessentitymaydissolve,arrangementsmustbemadetoassurethatanyseparationordivisionofthebusinessisaccomplishedsoasnottoadverselyaffecttheinterestsandincomeofotherbusinessesupordownthelineofsponsorship.IftheseparatingpartiesfailtoprovideforthebestinterestsofotherIRsandtheCompany,FHTMwillinvoluntarilyterminatetheIRAgreement.

Duringthependencyofdivorceorbusinessentitydissolution,thepartiesmustadoptoneofthefollowingmethodsofoperation: a) One of the parties may, with consent of the other(s), operate the FHTM business pursuant to an assignment, in

writing, whereby the relinquishing spouse, shareholders, partners or trustees authorize FHTM to deal directly and solely with the other spouse or non-relinquishing shareholder, partner or trustee.

b) The parties may continue to operate the FHTM business jointly on a “business-as-usual” basis, whereupon all compensation paid by FHTM will continue to be paid as designated in the original IR Agreement or in the name of the business entity, to be divided as the parties may independently agree between themselves.

c) Should each of the parties wish to continue participation in FHTM separately, they may elect to freeze their original position and begin two (2) new positions under the sponsor of the original (frozen) position. Downline IRs will not be “moved” or “re-coded” to either of the new positions. All applicable fees and costs associated with the enrollment process of a new Manager position shall be required for each new position. This includes, but is not limited to, the purchase price of the Optional Special Services Package.

UndernocircumstanceswilltheDownlineOrganizationofdivorcingspousesoradissolvingbusinessentitybedivided.Similarly,undernocircumstanceswillFHTMsplitcommissionandbonuschecksbetweendivorcingspousesormembersofdissolvingentities.FHTMwillrecognizeonlyoneDownlineOrganizationandwillissueonlyonecommissioncheckperFHTMbusinesspercommissioncycle.Commissionchecksshallalwaysbeissuedtothesameindividualorbusinessentity.Intheeventthatpartiestoadivorceordissolutionproceedingareunabletoresolveadisputeoverthedispositionofcommissionsandownershipofthebusiness,theIRAgreementshallbeinvoluntarilyterminated.IfaformerspouseoraformerbusinessentityaffiliatehascompletelyrelinquishedallrightsintheiroriginalFHTMbusiness,inwriting,theyarethereafterfreetoenrollunderanysponsoroftheirchoosing,solongastheymeetthewaitingperiodrequirementssetforthinSection4.5.4.Insuchcase,however,theformerspouseorpartnershallhavenorightstoanyIRsintheirformerorganizationortoanyformercustomer.Theymustdevelopthenewbusinessinthesamemanner,aswouldanyothernewIRandcarefullyavoidviolationsofSection3.9,herein.

3.25 Slamming Slammingisdefinedastheswitchingortransferofathirdparty’slongdistanceorinternetservicetoanothercarrierwithoutauthorization.Slammingisabsolutelyprohibited.IfanIR“slams”anythirdparty,heorsheshallbeliableto,andindemnify,FHTMforanyfinesFHTMincursasaresultofthecomplaint(includingfeesimposedbyanygovernmentalagencies),anyfeeorchargesassociatedwithreturningthethirdpartytoitsoriginallongdistancecarrier,reimbursementoftheoutstandinglongdistancechargesoftheslammedthirdparty,anyattorney’sfeesincurredbyFHTM,aswellasallofthesanctionsavailablepur-suanttoSection8.1.

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Theunauthorizedswitchingortransferofathirdparty’sexistingservicetoanFHTMserviceshallresultintermination.“Existingservice”shallinclude,butnotbelimitedto,anyservicethatmaybemarketedbyFHTMthroughitsIndependentManagers(e.g.longdistanceservice,Internet,cellular,paging).

3.26 Sponsoring AllactiveIRsingoodstandinghavetherighttosponsorandenrollothers,ingoodfaith,intoFHTM.EachprospectiveIRhastheultimaterighttochoosehisorherownSponsoringIR.IftwoIRsclaimtobetheSponsoringIRofthesamenewIR,theCompanyshallregardthefirstapplicationreceivedbytheCompanyascontrolling.

IRsmaypersonallysponsoramaximumofsix(6)newMangerspercalendarmonth.ThislimitonsponsorshipservestoensurethatthesponsoringIR’stimeandenergyarenotspreadthinamongtoomanynewManagers,therebypermittingthesponsoringIRtodevotethenecessarytimetoeachnewManagerthatisrequiredtoassistthatnewManagerinbeginninghis/hernewbusiness.Thisinturnleadstothebuildingofastronger,longtermbusinessforall,bothuplineanddownline.

SincetheIRandTrainerCoachpositionsaretwo(2)separateanddistinctbusinesses,anindividualmayinitiallyelecttoenrollinFHTMinoneorbothcapacities.Inordertopreventthepotentialformultiplesponsorshipclaimsofthesameindividual(i.e.haveadifferentsponsorineachcapacity)anindividualwhoelectstoinitiallyenrollinFHTMinonlyonesuchcapacity(i.e.IRorTC)andsubsequentlydecidestoenrollintheothercapacityaswell,mustdosoundertheoriginalsponsorandthepositionshallfallunderthesamebusinesscodedgroupofthatsponsor.AnIRorTrainerCoachmaynotholdapositioninthesponsor’sManager’sbusinessgroupandsubsequentlybesponsoredinahighercodedgroup(e.g.RSM,ESM,etc.).

3.27 StackingTheterm“stacking”includes:(a)thefailuretotransmittoFHTM,and/ortheholdingofanIRApplicationandAgreementorServiceRequestForminexcessof(fortyeight)48hoursafteritsexecution;(b)theplacementormanipulationofIndependentRepresentativeApplicationsandAgreementsand/orServiceRequestFormsforthepurposeofmaximizingcompensationpursu-anttoFHTM’sMarketingandCompensationPlan;or(c)payingfornewcustomersand/orIRsforthepurposeofmaximizingcom-pensationpursuanttoFHTM’sMarketingandCompensationPlan.StackingconstitutesamaterialbreachofthesePoliciesandProceduresandisstrictlyandabsolutelyprohibited.

3.27.1: Cycling Theterm“cycling”referstothepracticeinwhichtheoriginalSponsoringIRre-sponsorsformerIRs(thosethathavevoluntarilyterminatedtheirbusinessesorwhosebusinesseshavebeencancelled)therebymovingthemfromtheiroriginalmanagementcodedorganizationintoanewmanagementcodedorganizationundertheSponsoringIRorapatternofconductwherebyitisevidentthatformernominallyactiveIRsarebeingre-enrolledbetweendownlineorganizationsforthepurposesofgeneratingbonuspayments.AlthoughIRsthathavevoluntarilycancelledtheirbusinessesinaccordancewithSection4.5.4ofthesePoliciesarefreetore-jointhebusinessunderanewsponsor,theyarenotfreetore-jointhebusinessundertheirformersponsorinadifferentmanagementcodedorganizationoftheirsponsor’sorganization.IfaformerIRrejoinsunderhis/herformersponsor,theIR’sformerpositionintheSponsoringIR’sorganizationwillbere-activatedasofthedateofre-applicationandtheformerIRwillbereturnedtohis/herpreviouspositionintheSponsoringIR’sorganization.Attemptstocircumventthispolicythroughtheuseofafictitiousname,thenameofaspouse,childorrelative,tradenames,DBAs,assumednames,corporations,partnerships,trusts,fictitiousIDnumbersand/oranyothermethodsofavoidancetocircumventthispolicyarestrictlyandabsolutelyprohibitedandshallbeconsideredamaterialbreachoftheAgreement.

3.28 Succession UponthedeathorincapacitationofanIR,hisorherbusinessmaybepassedtohisorherheirs-at-lawordevisees.AppropriatelegaldocumentationmustbesubmittedtotheCompanytoensurethetransferisproper.Accordingly,anIRshouldconsultanattorneytoassistwiththepreparationofaWillorothertestamentaryinstrument.WheneveranFHTMbusinessistransferredbyaWillorothertestamentaryprocess,thebeneficiaryacquirestherighttocollectallbonusesandcommissionsofthedeceasedIR’smarketingorganizationprovidedthefollowingqualificationsaremet.Thesuccessor(s)must: a) Execute a new IR Agreement and complete a Transfer of Business form; b) Comply with terms and provisions of the Agreement; and c) Meet all of the qualifications for the deceased IR’s status.

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BonusandcommissionchecksofanFHTMbusinesstransferredpursuanttothissectionwillbepaidinasinglechecktothedevisee.ThedeviseemustprovideFHTMwithan“addressofrecord”towhichallbonusandcommissioncheckswillbesent.Ifthebusinessisbequeathedtojointdevisees,theymustformabusinessentityandacquireafederaltaxpayeridentificationnumber.FHTMwillissueallbonusandcommissionchecksandoneIRS(INTERNALREVENUESERVICE)Form1099tothebusinessentity.ThenewIRsmustattendtrainingattheirownexpenseforallapplicablepositionsforwhichtheyarequalifiedinordertoremaineligibletoreceivebonusesorcommissions.

3.28.1: Transfer Upon Death of an IR ToeffectatestamentarytransferofanFHTMbusiness,thesuccessormustprovidethefollowingtoFHTM:(1)anoriginaldeathcertificate;(2)anotarizedcopyofthewillorotherinstrumentestablishingthesuccessor’srighttotheFHTMbusiness;(3)appropriatedocumentationfromaCourtofcompetentjurisdictionapprovingthetransfer;and(4)acompletedandexe-cutedIRAgreementandTransferofBusinessform.ThenewIRsmustattendtrainingattheirownexpenseforallapplicablepositionsforwhichtheyarequalified.IntheeventthatnotestamentarydispositionhasbeenmadeofthebusinessitshallbeterminatedimmediatelyuponthereceiptofnoticebyFHTMoftheIR’sdeath.Further,ifapositionisnotrenewed,asmaybecomenecessary,duringanyperiodinwhichasuccessorininterestmaybeawaitingafinalCourtOrderordispositionofthedeceasedIR’sestate,thepositionshallbeterminated.Itisthesoleresponsibilityofanypersonclaimingsuccessor’srightsinabusinesstorenewthepositionandnotifyFHTMofanychangesnecessarytotransferthebusiness.3.28.2: Transfer Upon Incapacitation of an IR ToeffectatransferofanFHTMbusinessbecauseofincapacity,thesuccessormustprovidethefollowingtoFHTM:(1)anotarizedcopyofanappointmentasguardianand/ortrustee;(2)anotarizedcopyofthetrustdocumentorotherlegaldocumentationestablishingtheguardian/trustee’srighttoadministertheFHTMbusiness;and(3)acompletedIRAgreementandTransferofBusinessformexecutedbytheguardian/trustee.

3.29 Telemarketing Techniques Theuseofanyautomatedtelephonesolicitationequipmentor“boiler-room”telemarketingoperationsinconnectionwiththemarketingorpromotionofFHTM,itsproducts,servicesortheFHTMbusinessplanisstrictlyprohibited.

3.30 Use of the FHTM Voice-Mail System FHTMutilizesvoice-messagingsystemsforuseincommunicatingwithenrolledIRs.Thissystemisalsoatooltocommunicatewithyourdownline,topromotethesaleofFHTMproductsandservicesandtheFHTMbusinessplan.UndernocircumstancesshallanactiveIRusetheFHTMvoice-mailsystemtopromotethesaleofanynon-FHTMproductsorservices,anynon-FHTMprogramoropportunityortodisparageanyFHTMIRorFortuneHi-TechMarketing,Inc.

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4.1 Change of Address or Telephone Toensuretimelydeliveryofsupportmaterialsandcommissionchecks,itisimportantthatFHTM’sfilesarecurrent.Streetaddressesarerequiredforshippingsincemanycarrierswillnotorcannotdelivertoapostofficebox.IRsplanningtomoveshouldsendtheirnewaddress,telephonenumbersandemailaddressestoFHTM’scorpo-rateofficestotheattentionoftheRepresentativeServicesDepartment.Toguaranteeproperdelivery,aminimumtwo(2)weeksadvancenoticemustbeprovidedtoFHTMofallchanges.Theaddressonfileisalsousedforlegaladvice.

4.2 Continuing Development Obligations 4.2.1: Ongoing Training

AnyIRwhosponsorsanotherIRintoFHTMmustperformabonafideassistanceand/ortraining(TRAINER/COACHESONLYCANTRAINANIRTHATPURCHASESTHEOPTIONALSPECIALSERVICESPROGRAM)functiontoensurethathisorherdownlineisproperlyoperatinghisorherFHTMbusiness.IRsmusthaveongoingcon-tactandcommunicationwiththeIRsintheirDownlineOrganizations.Examplesofsuchcontactandcommunicationmayinclude,butarenotlimitedto:newsletters,writtencorrespondence,personalmeetings,telephonecontact,voicemail,electronicmail,andtheaccompanimentofdownlineIRstoFHTMmeetings,trainingsessions,andotherfunctions.UplineIRsarealsoresponsibletomotivateandassistnewIRsinobtainingknowledgeofFHTMservicesandproducts,effectivesalestechniques,theFHTMMarketingandCompensationPlan,andcompliancewithCompanyPoliciesandProcedures.CommunicationwithandthetrainingofdownlineIRsmustnot,however,violateSection4.2(regardingthedevelopmentofself-producedmarketingmaterialsandpromotionalmaterials).IRsmustmonitortheIRsintheirDownlineOrganizationstoensurethatdownlineIRsdonotmakeimproperservice,productorbusinessclaims,orengageinanyillegalorinappropriateconduct.Uponrequest,everyIRshouldbeabletoprovidedocumentedevidencetoFHTMofhisorherongoingfulfillmentoftheresponsibilitiesofasponsoringIR.4.2.2: Increased Support Responsibilities AsIRsprogressthroughthevariouslevelsofleadership,theywillbecomemoreexperiencedinsalestechniques,services,products,knowledgeandunderstandingoftheFHTMprogram.Theywillbecalledupontosharethis

knowledgewithlesser-experiencedIRswithintheirorganization.4.2.3: Ongoing Sales Responsibilities Regardlessoftheirlevelofachievement,IRshaveanongoingobligationtocontinuetopersonallypromotesalesofFHTM’sservicesorproductsthroughthegenerationofnewcustomersandthroughservicingtheirexistingcustomers.Additionally,intheeventthatFHTMelectstodiscontinueofferingtheproductand/orserviceofoneofitsvariousproviderswhichresultsintheterminationofresidualpaymentsfromsaidprovidertoFHTM,thenandinthatevent,upontheeffectivedateofthediscontinuationofanysuchproductand/orserviceoffering,FHTMshallnotcreditanycustomerpointsforCompensationPlanqualification/eligibilityrequirementsforthediscontinuedproductorservice.IRsshallberequiredtoreplacethediscontinuedproductcustomerpointtoremainqualified/eligible(asmaybeapplicable)forCompensationPlanpurposes.4.2.4: Customer Qualifications CABs,commissionsandtheadvancementtoearnedlevelsintheCompensationPlanarebasedontheacquisitionofactive,billingcustomers.EachserviceordermustcontainthenameandIDNumberoftheIndependentRepresentativethatacquiredthecustomer.RepresentativesareprohibitedfromenteringthenameorIDNumberofanotherIndependentRepresentativeorsigningserviceordersinthenameofanotherRepresentative.RepresentativesareresponsibleforthevalidityoftheordersofallcustomersthatappearontheirPersonalCustomerList.Therefore,IRsareencouragedtoroutinelyreviewtheircustomerliststoensurethatonlycustomersthattheyhaveperson-allyenrolledareappearingonthecustomerlist.IfanIRfindsthatacustomerappearsontheircustomerlistthattheyhavenotpersonallyenrolled,theymustcontactRepresentativeServicesimmediately.Establishingcustomeraccountsforthepurposesofqualificationswhenthecustomerdoesnotintendtousetheserviceorwhenthecustomerisnotawarethatsuchanaccounthasbeenestablishedisunethicalandissubjecttodisciplinaryactionuptoandincludingtermina-tion.FHTMreservestherighttoremovethesecustomersfromtheIR’scustomerlistifunethicalactivitiesoccurredandduringanyreview.CustomersthatcancelservicewithFHTMoritsprovidersandthosethatdonotuse

4. responsibilities of irs

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theservicewillnotcountas“activecustomers”forqualificationpurposes.

4.3 Nondisparagement FHTMwantstoprovideitsIRswiththebestproducts,CompensationPlanandserviceintheindustry.Accordingly,wevalueyourconstructivecriticismsandcomments.AllsuchcommentsshouldbesubmittedinwritingtotheRepresentativeServicesDepartment.Remember,tobestserveyou,wemusthearfromyou!WhileFHTMwelcomesconstructiveinput,negativecommentsandremarksmadeinthefieldbyIRsabouttheCompany,itsservices/products,orCompensationPlanservenopurposeotherthantosourtheenthusiasmofotherFHTMIRs.Forthisreason,andtosettheproperexamplefortheirdownline,IRsmustnotdis-parageFHTM,otherFHTMIRs,FHTM’sservices/products,theMarketingandCompensationPlan,orFHTM’sdirectors,officers,oremployees.ThedisparagementofFHTM,otherFHTMIRs,FHTM’sservices/products,theMarketingandCompensationPlan,orFHTM’sdirectors,officers,oremployeesconstitutesamaterialbreachofthesePoliciesandProceduresandshallresultintermination.

4.4 Providing Documentation to Applicants IRsmustprovidethemostcurrentversionofthesePoliciesandProceduresandtheCompensationPlantoindividu-alswhomtheyaresponsoringasIRsbeforetheapplicantsignsanIRAgreement.AdditionalcopiesofPolicies and Procedures canbeobtainedfromFHTM.

4.5 Reporting Policy Violations IRsobservingapolicyviolationbyanotherIRshouldsubmitawrittenreportoftheviolationdirectlytotheattentionoftheFHTMComplianceDepartment.Detailsoftheincidentssuchasdates,numberofoccurrences,personsinvolvedandanysupportingdocumentationshouldbeincludedinthereport.Inmostinstances,theComplianceDepartmentcan-notandwillnotinitiateactionintheabsenceofawrittenreportdocumentingtheallegedviolation.

4.6 Completion of Applications and Order FormsAllIRsaresolelyresponsibleforaccuratelycompletinganyIR/TCApplicationsand/orproductorderformsthattheysubmittotheCompany.Thisincludesbothpaperformsaswellasonlinesignups.TheCompanyshallnotberesponsi-bleforanydelayscausedbyincomplete,inaccurateorilleg-ibleinformationprovidedbyanIRorcustomer.IRsmustusetheutmostcarewhencompletingallapplicationsandorderstoavoidanyerrors.Ifqualificationdeadlinesforeligibilitytoreceivecommissionsand/orbonusesaremissedasaresultoferrorsofthisnature,theyshallnotbepaid.TheCompanyshallnotacceptorrecognizeforanypurposeanewIR/TCenrollmentorcustomerordersubmissionuntilALLrequiredinformationiscompletedaccuratelyandsubmittedinitsentirety.

Additionally,theCompanyshallnotbeliableforanyamountoverpaid/chargedorbankfeesincurredorassessedthatresultfromtheerror(s)ofanIR,applicantorcustomerwhenusingtheonlinesignupprocess.Inparticular,theCompanyshallnotbeliablefor,norshallitreimburseanycostsassociatedwithorincurredasaresultofmultiplesubmis-sionsofthesamenewIRApplicationororder.Youshouldonlysubmitanonlinesignuponetimeandthenonlyaftercheckingtoensurethatallinformationthathasbeeninputiscorrect.Ifanapplicationissubmittedmorethanonetime,eventhoughasaresultofunintendederror,itwillresultinfundsbeingchargedagainstthelistedbankaccountforeacherroneoussubmission.Ifthereisaproblemwiththeinitialsubmission,contactRepresentativeServicesforassistance.Donotre-submittheapplication.Becareful,itisyourresponsibility.

4.7 Confidentiality and Nondisclosure of Proprietary Information Duringthetermoftherelationship,theIndependentRepresentativemayreceiveinformationordataconstitutingatradesecretorconfidentialinformationofFHTMand/oritscarrier/supplier/serviceprovider(s)inwhichevent,theIndependentRepresentativeshalltreatsuchtradesecretorconfidentialinformationasstrictlyconfidentialandwhollyownedbyFHTMasapplicable.NoIndependentRepresentativemay,foranyreason,norinanymanner,directlyorindirectlyuse,sell,lend,lease,distribute,license,give,transfer,disclose,disseminate,reproduceorotherwisecommunicateanysuchitemofinformationordatatoanypersonorentityforanypurposeotherthanasauthorizedbyFHTMinwriting.Thedefinitionof“confidentialinformation”shallmeanproprietaryandconfidentialdataorinformationofFHTMoritscarrier/supplier/serviceprovider(s)whichisnotpubliclyknownoravailabletotheIndependentRepresentativeorthecompetitorsofFHTMoritscarrier/supplier/serviceprovider(s).“Confidentialinformation”alsoincludeswithoutlimitation,informationregardingFHTMoritscarrier/supplier/serviceprovider(s),IndependentRepresentatives,customersorpro-spectivecustomers,marketingmethods,businessandtech-nicalplans,productinformationandpricing.Thedefinitionof“confidentialinformation”includes“tradesecrets”whichshallmeanthatportionofconfidentialinformationwhichconstitutestradesecretsasdefinedbyapplicablelawandincluding,withoutlimitation,confidentialcomputerprograms,software,designs,processes,procedures,formulasandimprovements,whethercopyrightableornot.

IndependentRepresentativesmustusetheirbesteffortstopreserveallconfidentialInformationuntilitbecomesgener-allyavailabletothepublicorFHTMagreesinwritingthatsuchinformationmaybedisclosedorisotherwisenolongerdeemedtobeconfidential.IndependentRepresentativesmustnot,withoutpriorconsentandapprovalofFHTM,

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5.1 Services/Product Sales TheFHTMMarketingandCompensationPlanisbaseduponthesaleofFHTMproductsandservicestoenduserconsumers.IRsmustfulfillpersonalsalesrequirements(aswellasmeetallotherrequirementsorresponsibilitiessetforthintheAgreement)tobequalifiedand/oreligibleforbonuses,commissionsandadvancementtohigherlevelsofachievementwithintheMarketingandCompensationPlan.AllIRsshouldsatisfythefollowingsalesrequirements: a) At least 70% of an IR’s total personal sales volume should be sold to End User Consumer Active Customers; and

b) IRs should attempt to acquire at least three new customers every month.

5.2 No Territorial Restrictions TherearenoexclusiveterritoriesgrantedtoanyIRbyFHTM.IRsmayenrollcustomersorsponsorIRsinanyareainwhichFHTMisauthorizedtodobusiness.

5.3 Product Offerings/Terms of ServiceFHTManditscarriers/suppliers/productandserviceprovider(s)havethesolerighttoacceptorrejectordersforproductsandservices,toestablishandchangewithoutnotice,thepricesofsuchproductsandservicesaswellastoestablishthetermsandconditionsoftheiroffering.FHTManditscarriers/suppliers/productandserviceprovider(s)mayalsodiscontinueoffer-ingorsellinganyproductorservice,withoutliabilityorobligationtoFHTMoritsIndependentRepresentatives.IndependentRepresentativesmayonlyofferandsellservicesandproductsinaccordancewithrates,termsandconditionsestablishedbyFHTM,anyregulatoryagencyoritscarriers/suppliers/productandserviceprovider(s).Allsalesrepresentationsandactivitiesmustbeinfullcompliancewithallapplicablelawsandregulations.IndependentRepresentativesmayonlyusethosemeansofmarketingandsellingofservicesandproductsthataresolelyacceptabletoFHTManditscarriers/suppliers/productandserviceprovider(s).

5.4 Unauthorized ContactUndernocircumstances,isanIndependentRepresentativepermittedtodirectlycontactanycarrier/supplier/serviceprovider(s)withwhomFHTMcontracts,unlessitisinspecificrelationtoapersonalaccounttheymaycurrentlyhavewithsaidprovider.Intheeventthatyourcustomerisexperiencingdifficultieswithaspecificprovider,pleaseinformyourcustomertodirectlycontactFHTMortheappropriateproviderofservicetoresolvethematter.

5. sales requirements

eitherfortheirownpositionorasaconsultant,distribu-tor,IndependentRepresentative,partnerorownerofanyotherfirm,partnershiporcorporation,whetherinnetworkmarketingoranyotherkindofbusiness,directlyorindirectlysolicit,divert,takeawayorinterferewithanyofthebusiness,employees,customers,IndependentRepresentativesordistributors,tradeorpatronageofFHTM,itscarriers/suppliers/serviceprovider(s)oritsaffiliatedentities.ViolationofthiscovenantandconditionwillresultinforfeitureofallIndependentRepresentativerights,includingallcurrentandfuturecommissions,bonusesandpaymentsofanykind.

Onaperiodicbasis,FHTMwillsupplydataprocessinginformationandreportstotheIR,whichwillprovideinformationtotheRepresentativeconcerningtheIR’sorganization,productpurchasesandproductmix.IndependentRepresentativesagreethatsuchinformationisproprietaryandconfidentialtoFHTMandistransmittedtotheIRinconfidence.TheIRagreesthatheorshewillnotdisclosesuchinformation,directlyorindirectly,toanythirdpartynorusetheinformationtocompetewithFHTMinanymanner.TheIRandFHTMagreethat,butforthisagreementofconfidentialityandnondisclosure,FHTMwouldnotprovidetheaboveconfidentialinformationtotheIR.

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6.1 Bonus and Commission Qualifications AnIRmustbeactiveandincompliancewiththeAgreementtoqualifyforbonusesandcommissions.SolongasanIRcomplieswiththetermsoftheAgreement,FHTMshallpaytosuchIRanycommissionsforwhichtheIRiseligibleastheyareearnedinaccordancewiththeMarketingandCompensationPlan.AnIRthatispaidbycheckwillbechargeda$6.00administrativefeeperissuedpapercheckora$5.00feeperEFTcheck.TheminimumamountforwhichFHTMwillissueacheckis$10.00.IfanIR’sbonusesandcommissionsdonotequalorexceed$15.00($10.00plusthe$5.00fee),theCompanywillholdandaccruethecommissionsandbonusesuntiltheytotalatleast$15.00.Acheckwillbeissuedonce$15.00ormoreincommissionsand/orbonuseshaveaccrued.

AnIRthatispaidbyEFT(electronicfundstransfer)ischargeda$5.00banktransferfeeandwillreceivetheEFTwhenaccruedbonusesand/orcommissionstotal$15.00ormore.

6.2 Deductions from Bonuses or Commissions 6.2.1FHTMwilldeductfromallbonusandcommission

checksadataprocessingfeeof$.25perpageforallpagesinexcessoftwenty(20)pagesforprinteddownlinegenealogyreportssenttoIRs.6.2.2 Additionally,FHTMshalldeductand/orwithholdfromanysumsthatmaybecomedueorpayabletoanIRthefollowing: a) Any sums that may be owed to the Company by the IR for purchases made from the Company by the IR; b) Any sums that may be owed to the Company by the IR for dishonored instruments and/or credit/debit card payments (including any applicable fees assessed either against or by the Company) that were payable from the IR to the Company; c) Any sums that were overpaid and/or paid in error to the IR by the Company in the event that the Company learns, subsequent to having issued any such payment, that the IR was ineligible (for any reason) to receive such payment at the time it was issued by the Company (even if paid as a result of actions of downline IRs); d) Any sums ordered to be withheld by the Compliance Department as a result of violations of the Agreement in accordance with Section 9 hereof; and e) Any other sums that may be owed by the IR to the Company for any reason.

6.3 Unclaimed Commissions and Credits IRsthathaveelectedtoreceivepaymentofthecommissionsandbonusesbycheckmustdepositorcashcommissionandbonuscheckswithinsix(6)monthsfromtheirdateofissuance.Acheckthatremainsuncashedaftersix(6)monthswillbevoidedanda“stoppayment”orderenteredwiththeCompany’sfinancialinstitution.Afteracheckhasbeenvoided,FHTMwillattempttonotifyanIRwhohasanuncashedcheckbysendingawrittennoticetohisorherlastknownaddressidentifyingtheamountofthecheckandadvisingthattheIRcanrequestthatthecheckbereissued.Thereshallbea$20.00chargeforreissuingacheckanda$10.00administrativefeechargedforthenoticethatissenttotheIR.Inadditiontothosefees,theIRshallberespon-sibleforanychargeassessedtotheCompanybyitsfinancialinstitutionforissuanceofthe“stoppayment”orderonthecheck.AllofthesesumsshallbedeductedfromthebalanceduetotheIRatthetimethecheckisre-issued.Allfundsthatremainunclaimed/uncashedaftertwelve(12)monthsfromthedateofissuanceshallbedeemedforfeitedbytheIRandretainedbytheCompany.

6.4 Genealogy/Downline ReportsAllinformationprovidedbyFHTMinonlineorprintedgene-alogyreports,includingbutnotlimitedtopersonalanddownlinecustomervolume(oranypartthereof),downlinesponsoringactivity,andcommissionspayableisbelievedtobeaccurateandreliable.Nevertheless,duetovariousfactorsincludingtheinherentpossibilityofhumanandmechanicalerror;theaccuracy,completeness,andtimeli-nessoforders;denialofcreditcardandelectroniccheckpayments;returnedproducts;canceledservices;creditcardandelectroniccheckcharge-backs;theinformationisnotguaranteedbyFHTMoranypersonscreatingortransmittingtheinformation.

All genealogy report information is provided “as is” without warranties, express or implied, or representa-tions of any kind whatsoever. In particular but without limitation there shall be no warranties of merchantability, fitness for a particular use, or non-infringement.

To the fullest extent permissible under applicable law, FHTM and/or other persons creating or transmitting the information will in no event be liable to any IR or anyone else for any direct, indirect, consequential, incidental, special or punitive damages that arise out of the use or access to genealogy report information (including but not limited to lost profits, bonuses, or commissions, loss of opportunity, and damages that may result from

�. bonuses and commissions

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inaccuracy, imcompleteness, inconvenience, delay, or loss of the use of the information), even if FHTM or other persons creating of transmitting the information shall have been advised of the possibility of such damages. To the fullest extent permitted by law, FHTM or other persons creating or transmitting the information shall have no responsibility or liability to you or anyone else under any tort, contract, negligence, strict liability, products liability or other theory with respect to any subject matter of this agreement or terms and conditions related thereto.

AccesstoanduseofFHTM’sonlineorprintedgenealogyservicesandtheinformationreceivedtherebyisatyourownrisk.Allsuchinformationisprovidedtoyou“asis.”Ifyouaredissatisfiedwiththegenealogyinformation,yoursoleandexclusiveremedyistodiscontinueuseofandaccesstoFHTM’sonlineorgenealogyservices.

7.1 Product Guarantee FHTMdoesnotofferanyproductguaranteeorwarranty.IfanyproductguaranteeismadeitwillonlybemadebytheindividualsuppliersofanyproductsandservicesofferedthroughtheFHTMMarketingPlan.FHTMdoesnotmaintainaninventoryofproductsthatmaybeofferedandisonlyamarketingCompanyofferingtheproductsofitsvarioussuppliers.IfacustomerorIRhasaquestionregardingawarranteeorguaranty,heorshemustcontactthemanufacturer,supplier,and/orvendoroftheproductorservicemarketedbyFHTMandFHTMIRs.

7.2 Return of Marketing Materials by IRsUponcancellationofanIR’sAgreement,theIRmayreturncurrentmarketingmaterialsforarefundifheorsheisunabletosellorusethemerchandise.AnIRmayonlyreturnmarketingmaterialspurchasedbyhimorherthatareinresalablecondition.Uponreceiptofthemarketingmaterials,theIRwillbereimbursed90%ofthenetcostoftheoriginalpurchaseprice(s),lessshippingcharges.Ifthepurchasesweremadethroughacreditcard,therefundwillbecreditedbacktothesameaccount.TheCompanyshalldeductfromthereimbursementpaidtotheIRanysumsthatmaybeduetoFHTMatthetimeofcancellationastheresultofthepreviouspurchaseofanysuchitems.

7.3 Montana ResidentsAMontanaresidentmaycancelhisorherIRAgreementwithinfifteen(15)daysfromthedateofenrollment,andmayreturnhisorherstarterkitforafullrefundwithinsuchtimeperiod.

7.4 Procedures for All Returns of Marketing MaterialsThefollowingproceduresapplytoallreturnsforrefundorrepurchaseofmarketingmaterials: a) All merchandise must be returned, in resalable condition, by the IR who purchased it directly from FHTM.

b) All products to be returned must have a Return Authorization Number, which will be obtained by calling the Representative Services Department. This Return Authorization Number must be written on each carton returned. c) The return is accompanied by: 1. A completed and signed Consumer Return Form; 2. A copy of the original dated retail sales receipt; and 3. The unused portion of the product in its original container. d) Proper shipping carton(s) and packing materials are to be used in packaging the product(s) returned for replacement, and the best and most economical means of shipping is suggested. All returns must be shipped to FHTM, shipping pre-paid. FHTM does not accept shipping-collect packages. The risk of loss in shipping for returned product shall be on the IR. If returned product is not received by the Company’s Distribution Center, it is the responsibility of the IR to trace the shipment.

Norefundorreplacementofmarketingmaterialswillbemadeiftheconditionsoftheserulesarenotmet.

7. service guarantees & marketing materials

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8.1 Disciplinary Sanctions ViolationoftheAgreement,thesePoliciesandProcedures,oranyillegal,fraudulent,deceptiveorunethicalbusinessconductbyanIRmayresult,atFHTM’sdiscretion,inoneormoreofthefollowingcorrectivemeasures:

a) Issuance of a written warning or admonition; b) Requiring the IR to take immediate corrective measures; c) Imposition of a fine, which may be withheld from bonus

and commission checks; d) Loss of rights to one or more bonus and commission

checks; e) FHTM may withhold from an IR all or part of the IR’s

bonuses and commissions during the period that FHTM is investigating any conduct allegedly in violation of the Agreement. If an IR’s business is canceled for disciplinary reasons, the IR shall not be entitled to recover any commissions withheld during the investigation period;

f) Suspension of the individual’s IR Agreement for one or more pay periods;

g) Involuntary termination of the offender’s IR Agreement; h) Any other measure expressly allowed within any provi-

sion of the Agreement or which FHTM deems practicable to implement and appropriate to equitably resolve injuries caused partially or exclusively by the IR’s policy violation or contractual breach;

i) In situations deemed appropriate by FHTM, the Company may institute legal proceedings for monetary and/or equitable relief.

8.2 Grievances and Complaints WhenanIRhasagrievanceorcomplaintwithanotherIRregardinganypracticeorconductinrelationshiptotheirrespectiveFHTMbusinesses,thecomplainingIRshallfirstreporttheproblemtohisorherSponsororuplineRegionalSalesManagerwhoshallreviewthematterandtrytoresolveitwiththeotherparty’suplinesponsororRSM.Ifthemat-tercannotberesolvedandthepartieswanttheCompanytoreviewthematter,itshallbereportedinwritingtotheComplianceDepartmentattheCompany.Telephonecom-plaintswillnotbeaddressedoraccepted.FHTMconsidersthesetobeveryseriousmattersandassuchrequiresallgrievancesorcomplaints,forwhichareviewisrequested,tobemadeinwritingandsignedbytheinitiatingIRbeforeareviewofthematterwillbeundertaken.Telephonecallsoremailsarenotsufficientforthispurpose.TheCompliance

Departmentwillreviewthewrittengrievancepresentedtofirstdetermine,initssolediscretion,whetherornotanyrevieworactioniswarranted.Intheeventthatitisdeterminedthatareviewiswarrantedanattemptwillthenbemadetoresolvethematterwiththeparties.Ifitisnotresolved,itwillbereferredtotheDisputeResolutionBoardforacceptanceorrejection,finalreviewanddetermination.

8.3 Dispute Resolution Board ThepurposeoftheDisputeResolutionBoard(DRB)isto(1)reviewappealsofdisciplinarysanctions;and(2)reviewunresolvedgrievancesbetweenFHTMIRs.AftertheresponseorsettlementinstitutedbytheComplianceDepartmenthasbeendeniedorotherwiseremainsunresolved,theDisputeResolutionBoardreviewsevidence,deliberates,andrespondstocurrentoutstandingissuesonacollectivebasis.

AnIRmaysubmitawrittenrequestforatelephonicorin-personhearingwithinseven(7)businessdaysfromthedateof:(1)thewrittennoticebyFHTMofdisciplinaryaction;or(2)thewrittendecisionoftheComplianceDepartmentregard-ingdisputesbetweenIRs.AllcommunicationwithFHTMandtheIRseekingresolutionofadisputeshallbeinwriting.

ItiswithintheDRB’ssolediscretionwhetheraclaimisaccept-edforreview.IftheDRBagreestoreviewthematter,itshallscheduleahearingwithintwentyone(21)daysofthereceiptoftheIR’swrittenrequest.Ifahearingisnotrequested,noneshallbeheld.Allevidence(e.g.,documents,exhibits,etc.)thatanIRdesirestohaveconsideredbytheDRBmustbesubmittedtoFHTMwiththeoriginalrequestforahear-ing.TheIRshallbearalloftheexpensesrelatedtohisorherattendanceandtheattendanceofanywitnessesheorshedesirestobepresentatthehearing.ThedecisionoftheDisputeResolutionBoardshallbefinalandsubjecttonofurtherreview.DuringthependencyoftheclaimbeforetheDRB,theIRwaiveshisorherrighttopursuearbitrationoranyotherremedy.

FollowingissuanceofadisciplinarysanctionbytheComplianceDepartment,thedisciplinedIRmayappealthesanctiontotheDisputeResolutionBoard(“DRB”).TheIR’sappealshallbeinwritingandreceivedbytheCompanywithinfifteen(15)calendardaysfromthedateofFHTM’sterminationnoticeorsanctionnotice.IftheappealisnotreceivedbyFHTMwithinthefifteen(15)dayperiod,the

�. dispute resolution and disciplinary proceedings

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sanctionortermination,asthecasemaybe,shallbefinal.TheIRshallsubmitallsupportingdocumentationwithhisorherappealcorrespondence.IftheIRfilesatimelyappealofterminationorasanctionimposed,theDRBwillreviewandreconsiderthesanctionortermination,consideranyotherappropriateaction,andnotifytheIRinwritingofitsdeci-sion.

8.4 Arbitration AnycontroversyorclaimarisingoutoforrelatingtotheAgreement,orthebreachthereof,shallbesettledbyarbitra-tionadministeredbytheAmericanArbitrationAssociationunderitsCommercialArbitrationRules,andjudgmentontheawardrenderedbythearbitratormaybeenteredinanycourthavingjurisdictionthereof.IfanIRfilesaclaimorcounterclaimagainstFHTM,heorshemayonlydosoonanindividualbasisandnotwithanyotherIRoraspartofaclassorconsolidatedaction.IRswaiveallrightstotrialbyjuryortoanycourt.AllarbitrationproceedingsshallbeheldintheCityofLexington,FayetteCounty,Kentucky,unlessthelawsofthestateinwhichanIRresidesexpresslyrequiretheapplicationofitslaws,inwhichcasethearbitrationshallbeheldinthecapitalofthatstate.ThepartiesshallbeentitledtoalldiscoveryrightsallowedundertheFederalRulesofCivilProcedure.NootheraspectsoftheFederalRulesofCivilProcedureshallbeapplicabletoarbitration.Thereshallbeonearbitrator,anattorneyatlaw,whoshallhaveexper-tiseinbusinesslawtransactionswithastrongpreferencebeinganattorneyknowledgeableinthemulti-levelmarket-

ing/directsellingindustry,selectedfromthepanel,whichtheAmericanArbitrationPanelprovides.Eachpartytothearbitrationshallberesponsibleforitsowncostsandexpens-esofarbitration,includinglegalandfilingfees.Thedecisionofthearbitratorshallbefinalandbindingonthepartiesandmay,ifnecessary,bereducedtoajudgmentinanycourtofcompetentjurisdiction.Thisagreementtoarbitrateshallsur-viveanyterminationorexpirationoftheAgreement.

NothinginthesePoliciesandProceduresshallpreventFHTMfromapplyingtoandobtainingfromanycourthavingjurisdictionawritofattachment,atemporaryinjunction,pre-liminaryinjunction,permanentinjunctionoranyotherreliefavailabletosafeguardandprotectFHTM’sinterestpriorto,duringorfollowingthefilingofanyarbitrationorotherpro-ceedingorpendingtherenditionofadecisionorawardinconnectionwithanyarbitrationorotherproceeding.

8.5 Governing Law, Jurisdiction and VenueJurisdictionandvenueofanymatternotsubjecttoarbitra-tionshallresideinFayetteCounty,StateofKentuckyunlessthelawsofthestateinwhichanIRresidesexpresslyrequiretheapplicationofitslaws,inwhichcasethatstate’slawshallgovernallissuesrelatedtojurisdictionandvenue.TheFederalArbitrationActshallgovernallmattersrelatingtoarbitration.ThelawsoftheStateofKentuckyshallgovernallothermattersrelatingtoorarisingfromtheAgreementunlessthelawsofthestateinwhichanIRresidesexpresslyrequiretheapplicationofitslaws.

�. ordering

9.1 Purchasing FHTM Marketing Materials, Products and Services EachIRshouldpurchasehisorhermarketingmaterials,productsandservicesdirectlyfromFHTM.IfanIRpurchasestheseitemsfromanotherIRoranyothersource,FHTMshallnotberesponsibleforthecontents,condition,orvalueofanysuchmarketingmaterialsorproductsnorwillanysuchmarketingmaterialsorproductsbesubjecttoreturnand/orrefundbyFHTM.

9.2 General Ordering Policies Onmailorderswithinvalidorincorrectpayment,FHTMwillattempttocontacttheIRbyphoneand/ormailtotrytoobtainanotherpayment.Iftheseattemptsareunsuccessfulafterfive(5)businessdaystheorderwillbereturnedunprocessed.NoC.O.D.orderswillbeaccepted.FHTMmaintainsnominimumorderrequirements.Ordersforproductsandmarketingmateri-alsmaybecombined.

9.3 Shipping and Back Order Policy FHTMattemptstoshipproductswithintwo(2)businessdaysfromthedateonwhichitreceivesanorder.FHTMwillexpeditiouslyshipanypartofanordercurrentlyinstock.If,however,anordereditemisoutofstock,itwillbeplacedonbackorderandsentwhenFHTMreceivesadditionalinventory.FHTMwillnotifyManagersifitemsareback-orderedandarenotexpectedtoshipwithinthirty(30)calendardaysfromthedateoftheorder.Anestimatedshippingdatewillalsobeprovided.BackordereditemsmaybecanceleduponanIR’srequest.IRsmayrequestarefund,creditonaccount,orreplacementmerchandiseforcanceledbackorders.

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11.1 Effect of Cancellation SolongasanIRremainsactiveandcomplieswiththetermsoftheIRAgreementandthesePoliciesandProcedures,FHTMshallpaytosuchIRanycommissionsforwhichtheIRiseligibleastheyareearnedinaccordancewiththeMarketingandCompensationPlan.AnIR’sbonusesandcommissionsconstitutetheentireconsiderationfortheIR’seffortsingeneratingsalesandallactivitiesrelatedtogeneratingsales(includingbuildingadownlineorganization).FollowinganIR’snon-renewalofhisorherIRAgreement,orvoluntaryorinvoluntarycancellation/terminationofhisorherIRAgreement(allofthesemethodsarecollectivelyreferredtoas“cancellation”),theformerIRshallhavenoright,title,claimorinteresttothemarketingorgani-zationwhichheorsheoperated,oranycommissionorbonusfromthesalesgeneratedbytheorganization.

AnIRwhosebusinessiscanceledand/orterminatedshallpermanentlyloseallrightsasanIR.ThisincludestherighttosellFHTMproductsandservicesandtherighttoreceivefuturecommissions,bonuses,orotherincomeresultingfromthesalesandotheractivitiesoftheIR’sformerdownlinesalesorganization.Intheeventofcancellation,IRsagreetowaiveallrights

10.1 Insufficient Funds ItistheresponsibilityofeachIRtoensurethattherearesufficientfundsorcreditavailableinhisorheraccounttocoveranyDirectShipmentorder.FHTMwillnotcontactIRsinregardtoorderscanceledduetoinsufficientfundsorcredit.

10.2 Returned Checks AllchecksreturnedbyanIR’sbankforinsufficientfundsmay,atFHTM’soption,bere-submittedforpayment.A$25.00returnedcheckfeeshallbechargedtotheaccountoftheIR.AfterreceivingareturnedcheckfromanIR,allfutureordersshallbepaidbyCreditCard,moneyorderorcashier’scheck.AnyoutstandingbalanceowedtoFHTMbyanIRforNSFchecksandreturnedcheckfeesshallbewithheldfromsubsequentbonusandcommissionchecks.

10.3 Restrictions on Third Party Use of Credit Cards and Checking Account Access IRsshallnotpermitotherIRsorcustomerstousehisorhercredit/debitcardorpermitdebitstotheirbanking,checkingaccounts…toenrollnewIRsortomakepurchasesfromthe

Company.AnyattempttocircumventthispolicyisstrictlyprohibitedandshallbeconsideredamaterialbreachofthesePoliciesandmayresultinimmediateterminationofany/allIRsand/orcustomersinvolved.

10.4 Sales Taxes ItistheresponsibilityoftheIRtobeawareofandcom-plywithallregulationsregardingapplicablesalestaxes.RemissionofanysalestaxesowedisthesoleresponsibilityoftheIR.FHTMisnotresponsibleforanynon-remissionofapplicablesalestaxes.

Thetaxabilityofproductsandsalestaxratesdifferbystate.Additionally,anincreasingnumberoflocaltaxes(countyandcity)arebeinginitiatedthroughoutthecountry.ItistheresponsibilityofeachIRtoknowwhatproductsaretaxableandatwhatrate.Ifyouhavequestionsregardingtaxabilityandrates,contactyourstateorlocaldepartmentofrevenueforassistance.

9.4 Confirmation of Order AnIRand/orrecipientofanordermustconfirmthattheproductreceivedmatchestheproductlistedontheshippinginvoice,andisfreeofdamage.FailuretonotifyFHTMofanyshippingdiscrepancyordamagewithinthirty(30)calendardaysofshipmentwillcancelanIR’srighttorequestacorrection.

10. payment and shipping

11. inactivity and cancellation

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theymayhave,includingbutnotlimitedtopropertyrights,totheirformerdownlineorganizationandtoanybonuses,commissions,orotherremunerationderivedfromthesalesandotheractivitiesfromhisorherformerdownlineorganization.FurthertheformerIRshallnotbepermittedtosell,transferorassignthebusinesstoanother.

TheformerIRshallnotholdhimselforherselfoutasanFHTMIRandshallnothavetherighttosellFHTMproductsorser-vices.AnIRwhoseIRAgreementiscanceledshallreceivecommissionsandbonusesonlyforthelastfullpayperiodheorshewasactivepriortocancellation(lessanyamountsowedtotheCompanyatthetimeofcancellationand/orwithheldduringaninvestigationprecedinganinvoluntarycancellation).

11.2 Involuntary Cancellation/Termination of Agreement An IR’s violation of any of the terms of the Agreement, including any amendments that may be made by FHTM in its solediscretion,mayresultinanyofthesanctionslistedinSection9.1,includingtheinvoluntarycancellation/terminationofhisorherIRAgreement.Cancellation/Terminationshallbeeffectiveonthedateonwhichwrittennoticeismailed,returnreceiptrequested,totheIR’slastknownaddress,orwhentheIRreceivesactualnoticeoftermination/cancellation,whicheveroccursfirst.

FHTMexpresslyreservestherighttoterminateallIRAgreementsuponthirty(30)dayswrittennoticeintheeventthatitelectsto:(1)ceasebusinessoperations;(2)dissolveasacorporateentity;or(3)terminatedistributionofitsproductsandservicesviatheFHTMMarketingandCompensationPlanornetworkmarketing/multi-levelmarketing/directsellingmethods.

11.3 Voluntary Cancellation Aparticipantinthisnetwork-marketingplanhasarighttocancelatanytime,regardlessofreason.CancellationshallbesubmittedinwritingtotheCompanyatitsprincipalbusinessaddress.ThewrittennoticemustincludetheIR’ssignature,printedname,address,andIRI.D.Number.

IfanewManagerand/orTrainerCoachvoluntarilycancelswithinten(10)calendardaysofthedateofexecutionoftheinitialapplication,afullrefundofthecostoftheOptionalSpecialServicesPackageand/orTrainerCoachfeewillbemadeifthecancelingManagerand/orTrainerCoachhasnotattendedaManagerand/orTrainerCoachtrainingclassandreturnstheManager’sKitand/orTrainerCoachKittoFHTM’scorporateoffice(initsoriginalcondition)withintwenty(20)calendardaysofthenoticeofcancellation.

IfthecancelingManagerand/orTrainerCoachhasattendedaManagerand/orTrainerCoachTrainingclass,thefee(s)paidbyFHTMtotheTrainerCoach/CertifiedRegionalTrainerthatconductedtheapplicabletraining(currently$40.00and$80.00respectively)class(es)shallbedeductedfromanysumstoberefunded.IfaManager’sKitand/orTrainerCoachKithasbeenshippedbyFHTMtothecancelingManagerand/orTrainerCoach,thethencurrentcostoftheapplicableKitshallbedeductedfromanysumstoberefundediftheKit(s)isnotreturnedinitsoriginalconditiontoFHTM’scorporateofficewithintwenty(20)calendardaysofthenoticeofcancellation.

11.4 Non-renewal AnIRmayalsovoluntarilycancelhisorherIRAgreementbyfailingtorenewtheAgreementandpayinganyapplicablefee(s)annually.

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Active Customer: AcustomerthatpersonallypurchasesanFHTMproductorsubscribestoandpaysforanFHTMservicethatgeneratesbilledCGU(CustomerGeneratedUsage)duringthesubjectcalendarbillingmonthandisrecognizedbyFHTM’sproductorserviceproviderasanactivecustomer/accountinitssystem.Acustomerthatdoesnotremainonservice(foranyreason)foraminimumofninety(90)daysorthree(3)completebillingcyclesfromthedateofinitialactivationbytheserviceprovidershallnotbeconsideredan“activecustomer”submittedin“goodfaith”foranypurposesbytheCompany.Anybonusesorcommis-sionspaidonsuchcustomersshallbesubjecttowithholdingandrecoveryfromanyIRspaidonsuchcustomers.

Active IR: AnIRwhohasnotcancelledorbeentermi-natedandsatisfiestheminimumcustomeracquisitionrequirements,assetforthintheFHTMMarketingandCompensationPlan,toensurethatheorsheiseligibletoreceivebonusesand/orcommissions.

Active Rank: Theterm“activerank”refersthecurrentrankofanIR,asdeterminedbytheFHTMMarketingandCompensationPlan,foranycalendarmonth.Tobeconsidered“active”relativetoaparticularrank,anIRmustmeetthequalificationcriteriasetforthintheFHTMMarketingandCompensationPlanforhisorherrespectiverank.(Seethedefinitionof“Rank”below.)

Agreement: ThecontractbetweentheCompanyandeachIRincludestheIRApplicationandAgreement,theFHTMPoliciesandProcedures,theFHTMMarketingandCompensationPlan,theBusinessEntityFormandTrainerCoachApplicationandAgreement(whereappropri-ate)andanyotherdocumentsFHTMmaydeemappropriatefromtimetotimeinthefuture,allintheircurrentformandasamendedbyFHTMinitssolediscretion.Thesedocu-mentsarecollectivelyreferredtoasthe“Agreement.”

Cancellation: TheterminationofanIR’sbusiness.Cancellationmaybeeithervoluntary,involuntary,orthroughnon-renewal.

Commission Check: AllpaymentsofcommissionsorbonusestoIRsbyFHTMinanyformofferedbyFHTM,includingbutnotlimitedto,printedcheck,electronicfundstransferordirectdeposittodebitcard.

Commissionable Products/Services: AllFHTMproductsandservicesonwhichcommissionsandbonusesarepaid.StarterKits,training,FHTMreplicablewebpage,suppliesandmarketingmaterialsarenotcommissionableproducts.

Company/FHTM: Theterms“Company”and/or“FHTM”asusedthroughouttheAgreementmeansFortuneHi-TechMarketing,Inc.

Downline: See“MarketingOrganization”below.

Downline Activity Report (Genealogy Report): AmonthlyreportgeneratedbyFHTMthatprovidescriticaldatarelatingtotheidentitiesofIRs,salesinformation,andenrollmentactivityofeachIR’sMarketingOrganization.ThisreportcontainsconfidentialandtradesecretinformationwhichisproprietarytoFHTM.

Downline Leg: Eachoneoftheindividualsenrolledimmediatelyunderneathyouandtheirrespectivemarketingorganizationsrepresentsone“leg”inyourmarketingorganization.

End User Consumer/Customer: ApersonwhopurchasesFHTMproductsorservicesforthepurposeofpersonaluseratherthanforresaletosomeoneelse.

Good Faith: AnIRowesadutyofhonestyandfairdealingtobothFHTMandfellowIRsinallmattersrelatedtotheoperationofanFHTMbusiness.Thisincludes,butisnotlimitedto,thesubmissionofalldocumentationrequiredbytheCompanyinaccordancewithitsstatedPoliciesandProcedures.SubmissionofanydocumentationtotheCompanyinanefforttomaximizeand/ormanipulatethecompensationplanisstrictlyprohibitedandshallresultinappropriatedisciplinarysanctionsassetforthinthePoliciesandProcedures.

Immediate Household: Headsofhousehold,common-lawspousesanddependentfamilymembersresidinginthesamedwelling.

Level: ThelayersofdownlinecustomersandIRsinaparticularIR’sMarketingOrganization.ThistermreferstotherelationshipofanIRrelativetoaparticularuplineIR,determinedbythenumberofIRsbetweenthemwhoarerelatedbysponsorship.Forexample,ifAsponsorsB,whosponsorsC,whosponsorsD,whosponsorsE,thenEisonA’sfourthlevel.

12. definitions

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Marketing Organization: ThecustomersandIRssponsoredbelowaparticularIR.

Manager: AnIRthathaspurchasedtheOptionalSpecialServicesPackage.

Official FHTM Material: Literature,audioorvideotapes,compactdiscs,files,andothermaterialsdeveloped,printed,publishedanddistributedbyoratthedirectionofFHTMtoIRs.

Personal Production: Saleofproductsand/orservicestoanenduserconsumerforpersonaluse.

Qualified Customer: AlegitimatecustomersubmittedingoodfaithbyanIRthatbecomesanactivecustomerwithinsixty(60)daysofsubmissiontoFHTMand/ortheserviceprovider.Acustomerthatdoesnotremainonservice(foranyreason)foraminimumofninety(90)daysorthree(3)completebillingcyclesfromthedateofinitialactivationbytheserviceprovidershallnotbeconsideredan“activecustomer”submittedin“goodfaith”foranypurposesbytheCompanynorshallitbeconsideredaQualifiedCustomer.AnybonusesorcommissionspaidonsuchcustomersshallbesubjecttowithholdingandrecoveryfromanyIRspaidonsuchcustomers.

Rank:The“title”thatanIRhasachievedpursuanttotheFHTMMarketingandCompensationPlan.

Recruit: ForpurposesofFHTM’sConflictofInterestPolicy(Section4.8),theterm“recruit”meansactualorattemptedsolicitation,enrollment,encouragement,orefforttoinfluenceinanyotherway,eitherdirectlyorthroughathirdparty,anotherFHTMIRorcustomertoenrollorparticipateinanothermultilevelmarketing,networkmarketingordirectsalesopportunity.ThisconductconstitutesrecruitingeveniftheIR’sactionsareinresponsetoaninquirymadebyanotherIRorcustomer.

Resalable: Marketingmaterialsshallbedeemed“resalable”ifeachofthefollowingelementsissatisfied:1)theyareunopenedandunused;2)packagingandlabelinghavenotbeenalteredordamaged;3)theproductandpackagingareinaconditionsuchthatitisacommerciallyreasonablepracticewithinthetradetosellthemerchandiseatfullprice;4)productsarereturnedtoFHTMwithinoneyearfromthedateofpurchase;5)theproductexpirationdatehasnotelapsed;and6)theproductcontainscurrentFHTMliterature,marketingmaterialsandlabeling.Anymerchandisethatisclearlyiden-tifiedatthetimeofsaleasnon-returnable,discontinued,orasaseasonalitem,shallnotberesalable.

Sponsor:AnIRwhoenrollsacustomeroranotherIRintotheCompany,andislistedastheSponsorontheRepresentativeApplicationandAgreementand/orcustomeragreement.TheactofenrollingothersandtrainingthemtobecomeIRsiscalled“sponsoring.”

Starter Kit: AselectionofFHTMtrainingmaterialsandbusinesssupportliteraturethateachnewIRreceives.TheManagerStarterKitisprovidedtoManagersasapartoftheOptionalSpecialServicesPackage.AnalternativeStarterKitisprovidedatnocosttoRepresentativesthathavenotpurchasedtheOptionalSpecialServicesPackage.

Upline: ThistermreferstotheIRorManagersaboveaparticularIRinasponsorshiplineuptotheCompany.Converselystated,itisthelineofsponsorsthatlinksanyparticularIRtotheCompany.

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TITLES: All are Independent Representatives (IR)

Representative:Entrylevelpositionthatpaysa$75.00refundabledeposit.Manager: AnIRthatpurchasestheOptionalSpecialServicesPackage.Regional Sales Manager (RSM):Firstleadershippromotionlevel.*Qualified Regional Sales Manager (QRSM): RSMthathasmetallcustomer/sponsorshiprequirementstobeeligibletoreceiveallRSMlevelincome.*Executive Sales Manager (ESM): Secondleadershippromotionlevel.*

Qualified Executive Sales Manager (QESM): ESMthathasmetallcustomer/sponsorshiprequirementstobeeligibletoreceiveallESMlevelincome.*National Sales Manager (NSM): Thirdleadershippromotionlevel.*Qualified National Sales Manager (QNSM): NSMthathasmetallcustomer/sponsorshiprequirementstobeeligibletoreceiveallNSMlevelincome.** See Compensation Plan for promotion, qualification and monthly eligibility requirements.

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(1)CGUpayableisreducedinvaryingpercentagesbytheprovidersfrom100%ofbillableCGUtoallowforthe“baddebt”liabilitytheymayassumeandmayvaryfromprovidertoprovider.(Forexample,CGUpaidforlongdistanceusageisbasedupon95%of100%oftheactualamountofCGUbilledtothecustomer.

(2)TrueEssentialandLamasproductordersofferRepresentativestheoptiontochoosebetweenreceivingstandardcommissionandcustomerpoints,or25%CGUandnocustomerpoints(YouChooseCGUoption).Thisoptionisavailableupto72hoursfollowingtheplacementoftheorder,andaRepresentativemustmaketheselectionoftheYouChooseCGUoptionthroughtheirBackOffice.Ifnochoiceismadewithinthe72hourwindow,theoptiondefaultstothereceiptofstandardcommissionandcustomerpoints.

(3)CGUpaidforTheWirelessShopcustomersispaidpercontractbylisteddollaramount.(4)HealthCareCardcommissionisdependentuponthenumberofpersonalcustomersaRepresentativehasinagivenmonth.

IfaRephasten(10)ormorepersonalcustomers,thecommissionis20%.IfaRephasfewerthanten(10),commissionis2%.(5)ThecommissionpaidoutonbookedtravelisdependentupontheamountofcommissionreceivedbyFHTMforthesale.

ARepresentativewithtravelbookedontheirpersonallevelwillthenreceive60%ofthecommissionreceivedbyFHTM;not60%ofthetotalsale.TheamountofcommissionreceivedbyFHTMvaries.

(6)Thecommissionstructurelistedforlongdistanceisalsothestandardcommissionforthefollowingproductsandservices:Identashield,GoSolo,OfficeAssistant,ChoicePlansRX,ITPlease,SkytelandFortuneTV.

13. customer generated usage commission schedule

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Level True Essentials (2)

Lamas Beauty (2)

Dish The Wireless Shop (3)

Health Care Card (4)

Magazine.com

FHTM Travel (site)

FHTM Travel (purchases) (5)

Long Distance (6)

GE Home Security

Ingrid

Personal Customer

upto25% upto25% $0.80 $1.00 upto20% 4.00% 2.00% 60.00% 2.00% $0.90 2.00%

Manager Level 1 0.25% 0.25% $0.08 $0.05 0.25% 0.50% 0.25% 0.25% 0.25% $0.03 0.25%

Manager Level 2 0.25% 0.25% $0.08 $0.05 0.25% 0.50% 0.25% 0.25% 0.25% $0.03 0.25%

Manager Level 3 0.25% 0.25% $0.08 $0.05 0.25% 0.50% 0.25% 0.25% 0.25% $0.03 0.25%

Manager Level 4 0.25% 0.25% $0.08 $0.05 0.25% 0.50% 0.25% 0.25% 0.25% $0.03 0.25%

Manager Level 5 0.25% 0.25% $0.08 $0.05 0.25% 0.50% 0.25% 0.25% 0.25% $0.03 0.25%

Manager Level 6 0.25% 0.25% $0.08 $0.05 0.25% 0.50% 0.25% 0.25% 0.25% $0.03 0.25%

Manager Level 7 0.25% 0.25% $0.08 $0.05 0.25% 0.50% 0.25% 0.25% 0.25% $0.03 0.25%

Manager Level 8 5.00% 5.00% $1.59 $0.50 5.00% 10.00% 5.00% 5.00% 5.00% $0.03 5.00%

RSM Code 0.25% 0.25% $0.08 $0.05 0.25% 0.50% 0.25% 0.25% 0.25% $0.03 0.25%

RSM Breakaway 0.25% 0.25% $0.08 $0.05 0.25% 0.50% 0.25% 0.25% 0.25% $0.03 0.25%

ESM Code 0.25% 0.25% $0.08 $0.05 0.25% 0.50% 0.25% 0.25% 0.25% $0.03 0.25%

ESM Breakaway 0.25% 0.25% $0.08 $0.05 0.25% 0.50% 0.25% 0.25% 0.25% $0.03 0.25%

NSM Code 0.05% 0.05% $0.15 $0.10 0.50% 1.00% 0.05% 0.05% 0.05% $0.05 0.05%

NSM Breakaway 0.25% 0.25% $0.08 $0.05 0.25% 0.50% 0.25% 0.25% 0.25% $0.03 0.25%

CGU COMMISSIONS(1)

From the Sports world: 1. Art Monk - NFL, Hall of Fame, 16 seasons, Redskins, Jets, Eagles 2. Bob Lily - NFL Great, Hall of Fame, 14 seasons, Cowboys 3. Cullen Jones - Olympic gold medal swimmer 4. Darrell Green - NFL, Hall of Fame, 20 seasons, Redskins 5. Doug Herbert - Owner/Driver Snap-On Tools Top Fuel Dragster 6. Evander Holyfield - heavyweight boxing champion (joined October '09) 7. Phil Ford - former NBA and UNC basketball star 8. George Andrie - NFL Great, 10 seasons, Cowboys 9. Jerry Rice - NFL great, 20 seasons, 49ers, Raiders, Seahawks 10. Mitch Stott - 2003 IHRA Pro Modified World Champion and first Pro Mod Five Second Doorslammer 11. Rondell Jones - 5 seasons NFL, Broncos, Ravens 12. Stacy Compton - Veteran of NASCAR's NEXTEL CUP and Craftsman Truck Series 13. Steve Corker - Top Sportsman, 2008 World Champion Drag Racing IHRA 14. Terrence Metcalf - 7 seasons NFL, Bears 15. Vic Jones - 7 seasons NFL, Buccaneers, Lions

Entertainment superstars: 1. Barbara McKay - former morning talk show host 2. Barbara Palacios - Former Miss Universe and Venezuelan TV show host, Minister of Tourism of Venezuela 3. Brian Sexton - Radio voice of the Jacksonville Jaguars with CBS47 & FOX30 TV 4. Chris Rock - comedian, actor joined in September '09 5. Stefania Fernandez - Miss Universe 2009

Business World: 1. Donna Lewis - Wife of Ken Lewis, President and CEO of Bank of America 2. Jack Cotton - Owner of the chain of Scotsman Convenience, Dairy Queens, and Blimpi's 3. Jerry Fallwell, Jr - Attorney and Chancellor of Liberty University 4. Mel Graham - One of the Carolinas leading real estate developers. 5. Pat Rogers - Owner of numerous Harley Davidson and car dealership 6. Rai Glover - Former VP at Bank of America 7. Wendell Murphy - NC's 2nd wealthiest individual. The Ray Kroc of the Pork Industry.. 8. Woodson Gardner - Who's Who of Luxury Realty, Featured in Forbes

Former Politicians: 1. Bob McDonnell - Newly elected Governor of Virginia and former Virginia Attorney General 2. Jim Miles - Former Secretary of State of South Carolina 3. Judy Hammerschmidt - Former Asst. Attorney General in Reagan Administration 4. Patrick O. Gottschalk - Virginia Secretary of Commerce 5. Pat McCrory - Former Mayor of Charlotte, NC and gubernatorial candidate 6. Mike Rose - Senator of SC 7. Tom Gallagher - Chief Financial Officer for State of Florida

MONTANA DISCLOSURE STATEMENT

MONTHLY COMMISSION PAYMENTS (U.S. DOLLARS)

IndependentRepresentative

Position

% of PaidIndependent

RepresentativesPer Month

AnnualizedIncomePer Paid

Representative

AverageTotal Months

in FHTM

Low High

Manager 54.26% $15 $1,827 $93 $1,116 9.2

15.6

37.3

63.5

77.8

$3,072

$31,524

$238,272

$1,240,992

$256

$2,627

$19,856

$103,416

$10,235

$44,688

$88,634

$285,700

$15

$15

$17

$18,939

40.55%

4.74%

0.38%

0.07%

Regional SalesManager

Executive SalesManager

National SalesManager

PresidentialAmbassador

Average

The income statistics shown above are for all Fortune Hi-Tech Marketing, Inc. (FHTM) Independent Representatives who qualified to receive commissions and bonuses during the 12-month reporting period of January 23, 2009 through January 20, 2010. Average monthly payment is based only on months that Representatives received payment. A paid Independent Representative (IR) is an IR who earned at least one commission or bonus payment during the reporting period. During the reporting period 71.85% of Independent Representatives earned at least one commission or bonus payment.

FHTM was built on a foundation of honesty, respect and responsibility. We have a strong commitment to ethics and require that our Independent Representatives follow the FHTM Policies and Procedures, the FHTM Code of Ethics, as well as the DSA Code of Ethics. Whether you are just being introduced to FHTM or you are already an IR, you can rest assured that this organization believes in integrity, opportunity and a strong work ethic.

FHTM strives to conduct business in compliance with the standards established by government agencies and the direct sales industry. Whether you decide to become an FHTM Independent Representative or not, you should protect your-self from involvement with pyramid schemes. A pyramid scheme is a fraudulent, non-sustainable business model in which vested members are promised large profits without selling products or services and are compensated based primarily on the recruitment of new members. As an FHTM Independent Representative, successful sales efforts and hard work are required. In order to be eligible for bonuses, all Montana Representatives must maintain records of onward customer sales to non-participants and submit those records to FHTM on a monthly basis.

The earnings of the FHTM Independent Representatives in the above chart are not necessarily representative of the income, if any, that a FHTM Independent Representative can or will earn through his or her participation in the FHTM Compensation Plan. These figures should not be considered as guarantees or projections of your actual earnings or profits. A FHTM Independent Representative’s success depends upon and requires successful sales efforts, hard work, leadership and teamwork.

MONTANA DISCLOSURE STATEMENT

In Montana, a participant or entity affiliated with FHTM may not represent that FHTM is licensed, registered, sanctioned by, approved or endorsed as to its sales plan or operation.

The Federal Trade Commission and several states have laws or regulations that regulate or even prohibit certain types of income claims and testimonials made by persons engaged in network marketing. When presenting or discussing the FHTM opportunity or Marketing and Compensation Plan to a prospective Independent Representative, an Independent Representative must not make income projections or disclose his or her FHTM income (including the showing of checks, copies of checks, bank statements, or tax records, etc.). The Fortune Hi-Tech Marketing, Inc. Income Disclosure State-ment (IDS) is provided to convey accurate information regarding income that is earned by FHTM Independent Repre-sentatives. All prospective Representatives should be made aware of the IDS and provided access to it. The IDS must be acknowledged and presented to prospective Representatives anytime the Compensation Plan is discussed, or any type of income claim is made. Copies of the IDS may be printed without charge from the company website at www.fhtm.net.

An example of an earnings statement includes “Our top Representative makes X dollars per month.” An example of an earning range statement is “We have Regional Sales Managers making anywhere from X dollars per month to X dollars per month.”

Lifestyle Claims include statements, pictures, and other references to large homes, vehicles, vacations, or other items inferring wealth derived from the FHTM business model. References to achieving dreams, use of the term “opportu-nity” or similar words, and use of terms similar to “having it all” or “living a better life,” all are categorized as Lifestyle Claims. Also, claims such as “I made more after 6 months with FHTM than I made at my job,” or “I became debt free due to my FHTM business,” or “My spouse is now able to stay at home with our children” are considered Lifestyle Claims.

Hypothetical Claims are projections made to create a picture of what could happen if you become a FHTM Independent Representative. These assumptions are used to show what compensation may be earned with hypothetical numbers.

These projections include:

Information Specific to Montana:

Income claims include:1. Statements of Earnings, both average and non-average2. Statements of Earning Ranges3. Income Testimonials4. Lifestyle Claims5. Hypothetical Claims

1. The number of customers gathered2. The number of customers accumulated by the downline3. The number of Representatives sponsored4. The number of downline Representatives accumulated

a. All individuals joining FHTM as a participant have at least 15 days to cancel their participation in the sales plan or operation.b. If a participant terminates participation in FHTM’s sales plan, they are entitled to the repurchase, at not less than 90% of the amount paid by the participant, of any currently marketable goods or services sold to the participant within 12 months of the request that have not been resold or consumed by the participant. c. All new FHTM participants must complete a training session prior to actively participating in FHTM’s sales plan operation.d. All Montana FHTM participants must maintain records of onward customer sales and submit those records to FHTM on a monthly basis.e. The fee to participate in FHTM shall not exceed $75.f. No commission or bonuses will be paid on the recruitment of new participants into FHTM’s sales plan or operation.

FHTM Class Action Law Suit

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