fhtm class action includes its national sales managers

8/8/2019 FHTM Class Action includes its National Sales Managers

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UNITED STATES DISTRICT COURTFOR 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. ) DEFENDANTS880 Corporate Drive, Suite 300 )Lexington, Kentucky 40503 )

)SERVE: )Thomas A. Mills )880 Corporate Drive, Suite 300 )Lexington, Kentucky 40503 )

)and )

)PAUL C. ORBERSON )President/Director )Fortune Hi-Tech Marketing, Inc. )880 Corporate Drive, Suite 300 )Lexington, Kentucky 40503 )

)and )

)



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JEFF ORBERSON )Chief Business Officer )Fortune Hi-Tech Marketing, Inc. )880 Corporate Drive, Suite 300 )Lexington, Kentucky 40503 )

)and ))

THOMAS A. MILLS )Vice President/Chief Executive Officer )Fortune Hi-Tech Marketing, Inc. )880 Corporate Drive, Suite 300 )Lexington, Kentucky 40503 )

)and )

)

DAVID MILLS )Chief Operating Officer )Fortune Hi-Tech Marketing, Inc. )880 Corporate Drive, Suite 300 )Lexington, Kentucky 40503 )

)and )

)BILLY STAHL )Senior Executive Vice President of )

Marketing and Training )Fortune Hi-Tech Marketing, Inc. )880 Corporate Drive, Suite 300 )Lexington, Kentucky 40503 )

)and )

)SIMON DAVIES )Chief Financial Officer )Fortune Hi-Tech Marketing, Inc. )880 Corporate Drive, Suite 300 )Lexington, Kentucky 40503 )

)and )

)RUEL MORTON )1 Wellington Drive )Longview, TX 75605-2017 )

)and )



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)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: )Fortune Hi-Tech Marketing, Inc. )880 Corporate Drive, Suite 300 )Lexington, Kentucky 40503 )

)and )

)CHRIS DOYLE )62 Haverhill Drive )Jackson, TN 38305-8506 )

)and )

)



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KEN BROWN ))

SERVE: )Fortune Hi-Tech Marketing, Inc. )880 Corporate Drive, Suite 300 )

Lexington, Kentucky 40503 ) )and )

)JERRY BROWN )

)SERVE: )

Fortune Hi-Tech Marketing, Inc. )880 Corporate Drive, Suite 300 )Lexington, Kentucky 40503 )

)

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: )



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)and )

)TREY KNIGHT )701 Columbia Rd. )Titusville, FL 32780-7902 )

)and )

)KEVIN MULLINS )

)SERVE: )

Fortune Hi-Tech Marketing, Inc. )

880 Corporate Drive, Suite 300 )Lexington, Kentucky 40503 ))

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 )



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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 )



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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 COMPLAINTPlaintiffs 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





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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




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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

National Sales Manager for Fortune.

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.



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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




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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

a National Sales Manager for Fortune.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




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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.aspx2 “Why FHTM,” http://www.fhtm.net/whyfhtm.aspx



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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 Representative 3

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 SalesManagers, etc. Only “Qualified” IRs are entitled to receive the bonuses and commissions to which an IR at their levelof the pyramid is entitled. However, the only distinction between being a regular Manager and a “Qualified” one isthat, 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.



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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 (6 th 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 FortunePyramid emphasize recruitment of new representatives over the sale of products andservices 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 emphasizerecruitment 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



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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 thesale 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



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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 asmanagers.

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.



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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 andqualifies for a Quick Start Bonus.

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



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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 torecruitment 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.



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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



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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,



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

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

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.



25

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 itslegitimacy 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 .



27

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 potentiallyover $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 Dakotaand 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



29

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 anarbitration 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.

155. As a direct result of the defendants’ promotion of and participation in the illegal 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 personswho 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;



33

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,



34

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 ACTIVITYIN 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 ACTIVITYIN 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 ACTIVITYIN 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 THEKENTUCKY 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.



41

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 theCourt 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 LLP1400 PNC Plaza500 West Jefferson StreetLouisville, 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 ForceA. RepresentativeB. ManagerC. Independent Representative

Section 4: FHTM Field LeadershipA. Quali ed RepresentativeB. Regional Sales Manager/Quali ed Regional Sales ManagerC. Executive Sales Manager/Quali ed Executive Sales ManagerD. National Sales Manager/Quali ed National Sales Manager

E. Presidential Ambassadors F. Personal Sponsorship-Monthly Maximum

Section 5: FHTM Field Training and Training CompensationA. Trainer CoachB. Certi ed Regional TrainerC. Leadership Training BonusD. Deadlines or Training and Submission o Invoices

Section 6: The FHTM Optional Special Services Program

Section 7: The FHTM Compensation PlanA. Customer Generated Usage

B. Quali ed CustomerC. Commissions and the Quick Start BonusD. Quick Start Bonus OverrideE. True Beginnings BonusF. First and Second Level RSM Override Bonus

Section 8: FHTM Management Bonus ProgramA. Customer Acquisition BonusB. Annual Customer Retention BonusC. Double Management Customer Acquisition BonusesD. QRSM “EXTRA $50” Management Customer Acquisition Bonus

Section 9: Eligibility or Commissions, Overrides, and Bonuses

Section 10: Commission Reports and Payment SchedulesA. Monthly CGU CommissionB. Management CABC. Training CommissionD. Quick Start BonusE. Check and EFT chargesF. Check inquiries

Section 11: Downline Reports



pol ic ies & procedures contents

Section 1: Introduction1.1 Policies and Compensation Plan Incorporated into IR Agreement1.2 Purpose o Policies1.3 Changes to the Agreement1.4 Delays1.5 Policies and Provisions Severable1.6 Waiver

Section 2: Becoming an Independent Representative2.1 Requirements to Become an Independent Representative2.2 No Purchase Required2.3 Registration by Online Enrollment2.4 IR Bene ts2.5 Renewal o Your FHTM Business

Section 3: Operating A FHTM Business3.1 Adherence to the FHTM Marketing and Compensation Plan3.1.1 Ethics3.2 Advertising3.2.1 In General3.2.2 Domain Names and e-mail Addresses3.2.3 Trademarks and Copyrights3.2.4 Media and Media Inquiries3.3 Bonus Buying3.4 Business Entities3.5 Changes to the FHTM Business3.5.1 In General3.5.2 Addition o Co-Applicants3.5.3 Change o Sponsor3.5.4 Cancellation and Re-application3.6 Unauthorized Claims and Actions3.6.1 Indemni cation3.6.2 Income Claims3.6.3 Savings, Rate or Product Per ormance Guarantees3.7 Trade Shows, Expositions and Other Sales Forums3.8 Conficts o Interest

3.8.1 Non-Solicitation/Cross-Recruiting3.8.2 Dual Participation or Promoted IRs3.8.3 Downline Activity Reports3.9 Cross–Sponsoring3.10 Errors or Questions3.11 Governmental Approval or Company Endorsement3.12 Holding Applications or Orders3.13 Identi cation3.14 Income Taxes



3.15 Independent Contractor Status

3.16 Insurance3.16.1 Business Pursuits Coverage3.17 International Marketing3.18 Adherence to Laws and Ordinances3.18.1 Local Ordinances3.18.2 Compliance with Federal, State, Local Laws, Military3.19 Minors3.20 One FHTM Business Per Representative3.21 Actions o Household Members and A liated Individuals3.22 Requests or Records3.23 Sale, Trans er or Assignment o an FHTM Business

3.24 Separation o an FHTM Business3.25 Slamming3.26 Sponsoring3.27 Stacking3.27.1 Cycling3.28 Succession3.28.1 Trans er Upon Death o an IR3.28.2 Trans er Upon Incapacitation o an IR3.29 Telemarketing Techniques3.30 Use o the FHTM Voice-Mail System

Section 4: Responsibilities o Independent Representatives

4.1 Change o Address or Telephone or Email4.2 Continuing Development Obligations4.2.1 Ongoing Training4.2.2 Increased Support Responsibilities4.2.3 Ongoing Sales Responsibilities4.2.4 Customer Quali cations4.3 Non-disparagement4.4 Providing Documentation to Applicants4.5 Reporting Policy Violations4.6 Completion o Applications and Order Forms4.7 Con dentiality and Nondisclosure o Proprietary In ormation

Section 5: Sales Requirements5.1 Services/Product Sales5.2 No Territorial Restrictions5.3 Product O erings/Terms o Service5.4 Unauthorized Contact

continued next page



Section 6: Bonuses and Commissions6.1 Bonus and Commission Quali cations6.2 Deductions rom Bonuses and Commissions6.2.1 Downline Reports6.2.2 Other Deductions6.3 Unclaimed Commissions and Credits6.4 Genealogy/Downline Reports

Section 7: Service Guarantees and Marketing Materials7.1 Product Guarantee7.2 Return o Marketing Materials by an IR7.3 Montana Residents7.4 Procedures or All Returns o Marketing Materials

Section 8: Dispute Resolution and Disciplinary Proceedings8.1 Disciplinary Sanctions8.2 Grievances and Complaints8.3 Dispute Resolution Board8.4 Arbitration8.5 Governing Law, Jurisdiction and Venue

Section 9: Ordering9.1 Purchasing FHTM Marketing Materials, Products and Services9.2 General Ordering Policies9.3 Shipping and Back Order Policy9.4 Con rmation o Order

Section 10: Payment and Shipping10.1 Insu cient Funds10.2 Returned Checks10.3 Restrictions on Third Party Use o Credit/Debit Cards

and Checking Account Access10.4 Sales Tax

Section 11: Cancellation and Termination11.1 E ect o Cancellation11.2 Involuntary Cancellation/Termination o Agreement11.3 Voluntary Cancellation

11.4 Non-RenewalSection 12: De nitions

Section 13: Customer Generated Usage Commission Schedule



Founder and President: Paul Orberson: Determination andan old ashioned work ethic are qualities that set Paul apartand made him one o the most nancially success ulnetwork marketers in the history o the industry. His genuinesincerity and down to earth approach to networking haveenabled him to encourage well over a million individualsto work toward improving their nancial utures through,what he considers to be the best method available today,

network marketing. Paul utilized his experience as aRepresentative and his entrepreneurial skills to envision anddevelop the ultimate vehicle or those individuals seeking toimprove their nances and lives through network marketing.That vehicle is FHTM Hi-Tech Marketing, Inc.

Chie Executive O fcer:Tom Mills: Tom brings with himyears o administrative experience including responsibility

or thousands o individuals; multi-million dollar budgetsand several years in network marketing. A man o integrityand vision, Tom has assembled a top-notch sta across theboard. His eye or detail has enabled FHTM to establishitsel as a major player in the area o network marketing inrecord time all while maintaining a ocus on the importanceo each individual.

Together, Paul Orberson and Tom Mills started FHTM withthe belie that they would be able to help many peopleachieve their nancial goals and give back to an industry thathad been so good to them. The goal o CEO, Tom Mills, isand always has been to make FHTM the best network mar-keting company in the industry.

Chie Operating O fcer: Jeff Orberson: One o theaspects Je Orberson likes most about his work at FHTMis getting to see Representatives experience some o theachievements and reedoms he watched his ather, PaulOrberson, accomplish in the network marketing industry.

Today, he is able to see the achievements o others rsthand, serving FHTM as the Director o Operations. Jeworks with CEO Tom Mills to make management andmarketing decisions on a day-to-day basis.

While in college, Je played basketball and the dedicatiand determination he learned through the sport carries oveinto the o ce. Je utilizes a levelheaded, analytic and evtive approach to decision-making, ensuring decisions madeare the best or the company and Representatives in the

eld.

Senior Executive Vice President o Marketing and Training:

Billy Stahl: Billy is a seasoned pro essional executive in thnetwork-marketing industry. He brings with him his vastexperience as a CEO, President, and COO o nationalnetworking companies, which he imparts, on a regularbasis in training to Representatives nationwide. He wasinstrumental in the development and expansion o thesame corporation in which Mr. Orberson set records. Hehas been an active consultant to several extremely successnational companies. Prior to joining the network market-ing industry he was in management with General MotorsCorporation.

Chie Financial O fcer:Simon Davies: Simon is a member

o the Institute o Chartered Accountants in England andWales with over 12 years o experience within the netwomarketing industry. Extensive international nance exposureand a strong emphasis on systems and control structuresmakes FHTM’s Finance department the ideal team orDavies to lead. Davies is committed to the success o F

or both the Representatives and the company as a wholFormerly Vice President o Finance in the United KingdoDavies moved to Kentucky to ll the position o CFO acorporate o ce.

1. fh tm management

fhtm program guide

1



2 . fh tm products & services

A. Long Distance Service: Provided through PowerNet Global, and others, the unique part o our long

distance program is that we provide residential andsmall business users with 6-second incremental billing,a ter the rst minute. This is typically reserved orvery large businesses. Our rates are very competitive.

B. Nutritional Product Line: No amount o wealth willmake a di erence i you don’t have your health. Forthis reason, FHTM o ers True EssentialsTM NutritionalProducts. The True Essentials linecontains Joint Solutions with HATM,multivitamins or men, women,and children, as well as daily packs

or men and women. Visitwww.trueessentials.net ormore in ormation.

C. Internet Service: Provided byFHTM utilizing the UUNETinternet backbone. UUNET isthe largest internet backbonewith more local access than anyother company.

D. Satellite TV Service:Provided by Dish Network, oneo the nations largest satelliteproviders and winner o the J.D.Power award or customer serviceand excellence.

E. The Wireless Shop: Shop onlineand compare prices and availability

rom the top U.S. wireless providersand phone manu acturers. Alltel,AT&T, Nextel, Sprint, T-Mobile and Verizon Wireless are available, amongother leading national wireless carriers.

F. Choice Plans Health Care Card: Non-Insurancebene ts that work! The Choice Plans health care savingscard is a low cost alternative or those without healthinsurance.

G. Voice Messaging Services: Provided as a tool tokeep you in touch and is a great service or you to use asyour business grows, as well as a use ul product or yourcustomers.

H. Paging Service: Provided by SKYTEL. This nationallknown company o ers customers very competitive rat

I. FHTM Rewards Mall: Our merchant a liate programis comprised o the top Internet merchants (e-tailers)available.

J. O ce Assistant: You have the ability to communicateand promote your business to the world, quickly andinexpensively through the world wide web.

K. Identashield: Identashield is IDthe t insurance. The plan o ersexpense reimbursement, and iscoupled with a legal plan, whichprovides nation wide access toover 22,000 attorneys in all 50states. Members receive access to

ree and deeply discounted legalcare.

L. Home Based Security System:Allows you to have the peace omind you need to eel sa e in yown home.

M. Travel FHTM: A personal traveportal allows customers to bookairline tickets, hotel and resortrooms and rental cars through aTravelocity Partner Network.

N. Lamas Beauty: Lamas Beautyo ers state-o -the art natural,healthy and organic beautyproducts, in the areas o haircare, skin care, body careand anti-aging.

For current in ormation on FHTM products or services,

check your O ce Assistant or www. htm.net.

2

The best part o all

o these products andservices is that they

all generate customer

usage or which you

are paid. Your customers

will enjoy the services

o all o our great

suppliers because theysave money and

receive quality service.



3. fhtm sales force

All FHTM enrollees are known as Independent Representatives (IRs). They are independent contractors building their ownbusinesses. They market FHTM products and services and sponsor like-minded people who would like to do the same.IRs receive commissions and bonuses based upon customers that purchase and use FHTM’s products and services. Theamount o success that you will enjoy is o ten related to the time and e ort that you dedicate to working your businWork with your sponsor and upline and ollow our Quick Start Business Plan.

A. Representative: The Representative position attracts those individuals who are primarily interested in marketingproducts and services and receiving monthly residual income commissions. This position requires a $75.00 re und-able application deposit, except where prohibited by law (see current Form #100.) Since Representatives do notpurchase the Optional Special Services Program they must pay or all services (i.e. downline print outs, newslettersubscription, home o ce support, etc.) they may desire which will be provided to them upon receipt o their wrten request. A Representative cannot attend Manager training which is provided as a part o the Optional SpecialServices Program. Representatives are provided with a ree Starter Kit and the Policies and Procedures at the timo enrollment. A Representative receives the same Compensation Plan commissions/bonuses and is subject to the

same policies and advancement requirements as a Manager.

B. Manager: The MANAGER position is an IR that has purchased the Optional Special Services Program whichincludes additional sales materials, manuals, special training, home o ce support, monthly downline reports uponrequest (via internet or in printed orm), etc.The annual renewal ee or the Optional Special Services Programis $199.00. A Manager may cancel the Optional Special Services Program and request a re und, in writing,within ten (10) calendar days rom the date o purchase. See Section 11.4 o Policies and Procedures.

C. Independent Representative (IR): The Company considers all Representatives and Managers to be“Independent Representatives.”

A. Quali ed Representative (QR): A Quali edRepresentative (QR) is an IR that has quali ed or allcommission levels in the eight (8) level compensationprogram. Requirements are: (i) The IR must have ten (10)or more active personal customers; and (ii) the IR musthave a minimum o three (3) personally sponsored rstlevel Managers.

QRs will remain eligible or CGU commissions throughall eight (8) levels by maintaining ten (10) or more activepersonal customers on a monthly basis.

B. Regional Sales Manager (RSM) / Quali edRegional Sales Manager (QRSM): A Quali edRepresentative can be promoted to Regional SalesManager (RSM) by meeting all o the ollowing require-ments: (i) develop a minimum downline organization o

twelve (12) Managers within his or her rst ve (5)(ii) have ten (10) or more active personal customers;(iii) be approved by FHTM. The QR cannot count itseone (1) o the required twelve (12) Managers. RSMsresponsible or managing downline organizations, coor-dinating local events and communications, developingareas and providing assistance to all IRs.

An RSM must maintain ten (10) or more active personcustomers as o the last day o the month in order tQuali ed Regional Sales Manager (QRSM) and therebybe eligible to receive any monthly management customeacquisition bonuses payable or that month rom his/heRSM coded group. An active QRSM is eligible to recea monthly management customer acquisition bonus o$100.00 or each new Manager entering his/her RSMcoded group when the newly sponsored Manager meets

4. fhtm f ie ld leadership

3



the requirements necessary or the payment o a QuickStart Bonus (QSB) to his/her sponsor. In addition to thisbonus the QRSM earns a 1/4% override commission onCGU o the customers in his/her RSM coded group.

QRSMs that gather and maintain ve (5) True Essentialscustomers will receive an additional $25 RSM Customer

Acquisition Bonus (CAB) when the newly-sponsored IRgather two (2) new TE customers within the 60-day QuickStart time period, provided they are eligible or basicCAB (section 8A). At least our (4) o the ten (10) requiredcustomers must be customers other than the QRSM’spersonal accounts (i.e., outside o the household) inorder to quali y or the additional CAB.

A QRSM that develops a QRSM in his/her coded RSMgroup becomes quali ed or a “ rst generation breakaway” coded customer acquisition bonus o $50.00 anda 1/4% override commission on the CGU o the custom-ers or each new Manager that the new QRSM develops(and or whom a QSB is paid) in his/her new RSM codedgroup.

When the “First Generation QRSM” develops a QRSM inhis/her coded RSM group and thereby becomes eligible

or his/her own separate “ rst generation break away”coded customer acquisition bonus, then a “second gen-eration break away” coded customer acquisition bonuso $10.00 will be paid to the “Grandparent QRSM” oreach new Manager that the “second generation QRSM”develops (and or whom a QSB is paid) in his/her newRSM coded group.

C. Executive Sales Manager (ESM) / Quali edExecutive Sales Manager (QESM): A Quali edRegional Sales Manager can be promoted to ExecutiveSales Manager (ESM) by meeting all o the ollowingrequirements: (i) have teen (15) or more active per-sonal customers; (ii) develop six (6) QRSMs on any levelo his/her personal RSM coded group, however, thesesix (6) QRSMs must be developed in two (2) or moreseparate legs o the RSM coded group; (iii) develop aminimum downline organization o ninety (90) Managersin his/her RSM coded group; and (iv) be approved by

FHTM.

An ESM must maintain teen (15) or more active per-sonal customers as o the last day o the month in orderto be a Quali ed Executive Sales Manager (QESM) andto be eligible to receive any monthly management cus-tomer acquisition bonuses payable or that month romhis/her ESM coded group. An active QESM is eligibleto receive a monthly management customer acquisition

bonus o $60.00 or each new Manager entering his/herESM coded group when the newly sponsored Managermeets the requirements necessary or the payment o aQuick Start Bonus (QSB) to his/her sponsor. In additionthis bonus the QESM earns a 1/4% override commissionon CGU o the customers in his/her ESM coded group.

A QESM that develops a QESM in his/her coded ESMgroup becomes quali ed or a “ rst generation breakaway” coded customer acquisition bonus o $20.00 anda 1/4% override commission on the CGU o the customers or each new Manager that the new QESM develop(and or whom a QSB is paid) in his/her new ESM cgroup.

When the “First Generation QESM” develops a QESMin his/her coded ESM group and thereby becomeseligible or his/her own separate “ rst generation breakaway” coded customer acquisition bonus, then a “sec-ond generation break away” coded customer acquisi-tion bonus o $10.00 will be paid to the “GrandparentQESM” or each new Manager that the “second genertion QESM” develops (and or whom a QSB is paid)his/her new ESM coded group.

QESMs that gather and maintain ve (5) True Essentiacustomers will receive an additional $10 ESM CustomeAcquisition Bonus (CAB) provided they are eligible othe basic CAB (section 8A) when two (2) TE customeare gathered by a new IR. At least our (4) o the(15) required customers must be customers other thanthe QESM’s personal accounts (i.e., outside o thehousehold) in order to quali y or the additional CAB

D. National Sales Manager (NSM): A Quali edExecutive Sales Manager can be promoted to NationalSales Manager (NSM) by meeting all o the ollowingrequirements: (i) maintain teen (15) or more activepersonal customers; (ii) develop six (6) QESMs on anylevel o his/her personal ESM coded group, however,these six (6) QESMs must be developed in two (2) ormore separate legs o the ESM coded group; (iii) havdeveloped a minimum downline organization o ninety(90) Managers in RSM coded group; (iv) develop aminimum downline organization o ve hundred and

orty (540) Managers in his/her ESM coded group; an(v) be approved by FHTM.An NSM must maintain teen (15) or more active per-sonal customers as o the last day o the month in orto be aQuali ed National Sales Manager (QNSM) andto be eligible to receive any monthly management cus-tomer acquisition bonuses payable or that month romhis/her NSM coded group. An active QNSM is eligibleto receive a monthly management customer acquisition

4



bonus o $30.00 or each new Manager entering his/herNSM coded group when the newly sponsored Managermeets the requirements necessary or the payment o aQuick Start Bonus (QSB) to his/her sponsor. In addition tothis bonus the QNSM earns a 1/2% override commissionon CGU o the customers in his/her NSM coded group.

A QNSM that develops a QNSM in his/her coded NSMgroup becomes quali ed or a “ rst generation breakaway” coded customer acquisition bonus o $10.00 anda 1/4% override commission on the CGU o the customers

or each new Manager that the new QNSMdevelops (and or whom a QSB is paid) in his/her newNSM coded group.

When the “First Generation QNSM” develops a QNSM inhis/her coded NSM group and thereby becomes eligible

or his/her own separate “ rst generation break away”coded customer acquisition bonus, then a “second gen-eration break away” coded customer acquisition bonus o$5.00 will be paid to the “Grandparent QNSM” or eachnew Manager that the “second generation QNSM” devel-ops (and or whom a QSB is paid) in his/her new NSMcoded group.

E. Presidential Ambassadors: Presidential Ambassadorswill be determined as a portion o the CustomerGenerated Usage. You must meet the ollowing require-ments to be eligible: (i) You must have met all requirements

or becoming a Quali ed National Sales Manager;(ii) develop three (3) QNSMs on any level o your personalNSM coded organization, however, these three (3) QNSMs

must be developed in two (2) or more separate legs o theNSM coded group; (iii) develop a minimum downline orga-nization o one thousand six hundred and twenty (1620)Managers in your NSM coded group; (iv) maintain teen

(15) or more active personal customers as o the lasto the month or which the Bonus Pool is payable; anbe approved by FHTM. The position may also be appoed by the Executive Sta o FHTM. Appointees willdemonstrated leadership skills deemed necessary to rep-resent FHTM as a Presidential Ambassador.

F. Personal Sponsorship-Monthly Maximum: FHTMbelieves that its Marketing and Compensation Plan isthe best there is in the industry. In order to ensure thaevery new Manager has the best possible opportunity tobuild a success ul and long-term business, FHTM believthat it is imperative or sponsoring IRs to work closelywith all o their personally enrolled Managers until thonew Managers are trained and are capable o ully andadequately presenting the FHTM business plan to otherson their own. As such, IRs may personally sponsor a mmum o six (6) new Mangers per calendar month. Thison sponsorship serves to ensure that the sponsoring IR’stime and energy are not spread thin among too many nManagers, thereby permitting the sponsoring IR to devotthe necessary time to each new Manager that it takes tassist that new Manager in getting his/her business oQuick Start. This in turn leads to the building o a strlong-term business or all, both upline and downline.

A. Trainer Coach (TC): The Trainer Coach (TC) position is a separate business and an opportunity to earn additional incoA Trainer Coach can be an IR but it is not required. Trainer Coaches train Managers that have purchased the OptionSpecial Services Program. The Trainer Coach is paid a one-time $40.00 ee or the initial training o a new Managerare encouraged to attend and audit additional training sessions as o ten as desired in order to rein orce the FHTM Poland Procedures and business building techniques. TCs submit an invoice (Form #103) or payment or the initial trainiSubmission o this invoice to FHTM by the TC serves as certi cation to Fortune Hi-Tech Marketing, Inc., by both theManager, that this service was personally per ormed in accordance with Company approved methods by the TC submittthe invoice or payment.

5. fhtm field training & compensation

5



Trainer Coaches are trained by Certi ed Regional Trainers that have been trained and certi ed by FHTM’s CorporateTrainers. The initial Trainer Coach certi cation ee is $299.00 ($295.00 or residents o Louisiana, Maryland, Utah anWashington; $249.00 or residents o Maine, South Carolina and South Dakota; and $199.00 or residents o Connectand North Carolina). Trainer Coaches must be re-certi ed annually by a Certi ed Regional Trainer. In order or TraineCoaches to maintain certi ed status a TC must pay an annual renewal ee o $100.00 or re-certi cation and trainingA TC that is also a CRT pays only the re-certi cation ee o $100.00 as a CRT. The TC renewal ee is waivedthat is also a CRT. The TC has sixty (60) days to obtain re-certi cation training rom a CRT a ter payment o the

FHTM recognizes that in an e ort to provide new Managers with the training and valuable in ormation that they nein order to success ully operate their businesses, many leaders who are also TCs, will conduct training classes immedly ollowing a regularly scheduled ormal business presentation. While this attitude is commendable, the Company doenot recommend it. The reason or this is quite simple. I any individual in attendance at the training class is not alFHTM Manager, then the class could be viewed as a method o sponsoring/recruiting the prospect. Training is necessily more detailed than a business presentation. As a result, the examples (both visual and verbal) that may be o ereTrainer Coaches to explain or clari y various aspects o the Compensation Plan to trainees may not be as thoroughlyclaimed, i at all, in the classroom setting as they would be as a matter o policy in a ormal business presentation

As such, in no event shall anyone that is not an enrolled FHTM Manager be permitted to attend a training class. Trclasses are not a sponsorship tool and should never be used as such. I you must conduct a training class a ter a ormness presentation at the same location, then you should allow at least thirty (30) to orty ve (45) minutes betweenend o the business presentation and the start o the training class to ensure that only enrolled Managers are in attendance. It is the duty and responsibility o the Trainer Coach conducting the class to ensure that this attendance policy

ollowed at all times.

B. Certi ed Regional Trainer (CRT): Certi ed Regional Trainers are Trainer Coaches that have attained the rank oRegional Sales Manager, have success ully completed a Certi ed Regional Trainer School and have been approvedby FHTM. The ee to be certi ed as a Certi ed Regional Trainer is $200.00. You must be a Trainer Coach to attenCerti ed Regional Trainer School. The requirement or completion o Certi ed Regional Trainer School may be com-pleted prior to becoming a Regional Sales Manager. A CRT that has attained the rank o Regional Sales Manager catrain Trainer Coaches and receive a one-time payment o $80.00 or each Trainer Coach that is personally trained. Cmust attend a Certi ed Regional Trainer School annually to maintain certi ed status. The re-certi cation ee is $100.0The CRT will be paid $40.00 or re-training a Trainer Coach that has renewed and is seeking re-certi cation. For recation purposes, a CRT pays only $100.00 annually. The renewal ee o $100.00 as a Trainer Coach is waived orCRT has sixty (60) days to obtain re-certi cation training by attending CRT school a ter payment o the renewal eeattempt should be made to attend CRT school during the renewal month.

C. Leadership Training Bonus: FHTM pays a Leadership Training Bonus (LTB) o ve ($5.00) dollars to all Managerwho are also active Trainer Coaches, that quali y or a LTB by meeting the ollowing eligibility requirements: (i) beactive Manager and Trainer Coach yoursel ; (ii) personally sponsor and maintain our (4) active Managers who areactive Trainer Coaches; and (iii) maintain ten (10) active personal customers. I you meet these requirements you willreceive a LTB o ve ($5.00) dollars each time one o your personally sponsored active Trainer Coaches trains a neManager and is paid the $40.00 training ee by FHTM.

RSMs or ESMs that meet the eligibility requirements to quali y to receive LTB or their personally sponsored ManagTrainer Coaches are also quali ed to receive RSM or ESM Coded LTB o ve ($5.00) dollars each time a Trainer C

their applicable coded group(s) trains a new Manager and is paid the $40.00 training ee by FHTM.

Additionally, FHTM pays a Double Leadership Training Bonus (DLTB) o ten ($10.00) dollars to all Managers, whoactive Trainer Coaches, that quali y or a DLTB by meeting the ollowing eligibility requirements: (i) be an active Mand Trainer Coach yoursel ; (ii) personally sponsor and maintain six (6) active Managers who are also active TraineCoaches; and (iii) maintain teen (15) active personal customers. I you meet these requirements you will receive a DLten ($10.00) dollars each time one o your personally sponsored active Trainer Coaches trains a new Manager and is paid thtraining ee by FHTM.



The FHTM Optional Services Program is designed to assistan enrolled Manager with special business building train-ing, including a Manager Sales Kit, downline reports, accessto online training in ormation and corporate home o cesupport. The Manager Sales Kit includes support items,marketing materials, presentation materials, rate charts andother sales tools to help the new Manager build a success ulbusiness. The cost o the Optional Special Services Programis $299.00. Managers that voluntarily cancel in writing withinten (10) calendar days o the date o purhcase will receivea re und o the purchase price upon return o the ManagerSales Kit to FHTM in resalable condition within twenty (20)calendar days o their written notice o cancellation (seeSection 11.4 o Policies and Procedures).

I , prior to cancellation, the Manager has attended ManageTraining, $40.00 will be deducted rom the Special Servicpurchase price. The annual cost or renewal o theOptional Special Services Program is $199.00.

The Representative Services Department (859-422-7008)at the corporate o ce is available to assist Managers withdownline questions, commission statements, bonus reports,and announcements made through the corporate communi -cations system.

. fhtm optional special services program

The FHTM Compensation Plan as delineated in this guide, represents the general compensation plan o ered by the CompIndependent Representatives o Fortune Hi-Tech Marketing, Inc. should amiliarize themselves with this compensation plan.However, FHTM may engage in promotions or o er incentives that will a ect the structure o the general plan rom tIndependent Representatives are encouraged to seek updated in ormation regarding current promotions on www. htm.net.

A. Customer Generated Usaged (CGU): Active FHTM Independent Representatives may earn rom 2% to 25% o theCustomer Generated Usage (CGU) o all active personal customers. Commissions paid or our products and services maslightly rom the example used in the corporate business presentation, due to varying commission agreements with our provi(See the Commission Chart in Section 13 o theProgram Guide and Policies and Procedures manual or actual commission payable

The unilevel portion o the Compensation Plan has a one-time quali cation or each level o the Compensation Plan.quali es or the rst level by acquiring three (3) active personal customers (at least one o which must be other thanown personal or household account) and one (1) personally sponsored Manager. To quali y or levels two (2) throughan IR must acquire ve (5) active personal customers and personally sponsor two (2) Managers. To quali y or level

RSMs or ESMs that meet the eligibility requirements to quali y to receive DLTB or their personally sponsored ManagTrainer Coaches are also quali ed to receive RSM or ESM Coded LTB o ten ($10.00) dollars each time a Trainer Ctheir applicable coded group(s) trains a new Manager and is paid the $40.00 training ee by FHTM.

D. Deadlines or Training and Submission o Invoices: In order to ensure that our new Managers and Trainer Coacheare promptly trained, FHTM highly recommends that all initial training o new Managers and/or Trainer Coaches be coducted within thirty (30) days o the enrollment o the new Manager and/or Trainer Coach. In order or a Trainer C

and/or Certi ed Regional Trainer to be paid or training a new Manager and/or Trainer Coach, such training shall haveconducted within sixty (60) days o the enrollment o the new Manager and/or Trainer Coach. Additionally, the FHTMo ce must receive training invoices within ten (10) business days o the date upon which the training occurred. Invotraining that occurred out o this time rame and/or invoices received more than ten (10) business days a ter the trainconducted shall not be paid except in the case o an exceptional circumstance, approved by FHTM as such a ter revithat may have caused an unavoidable delay. Prompt and thorough training is a key ingredient or success!

7. fhtm compensation plan

7



Quick StartBonus (QSB)$100.00 Level QS

1 $1002 $5

3 $5

4 $5

5 $5

6 $5

7 $5

8 $10

***CGU percentages displayed in the chart are or illustrative purposes only. CGU percentages may vary depen-dent upon the product used by the customer. Please see Section 13 o the Program Guide and Policies andProcedures manual or CGU percentages payable or each product/service o ered.

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 Qualifed Representative (QR). PLEASENOTE that with regard to commercial long distance accounts with billed CGU in excess o $1000.00 per month the IR thatpersonally acquires the account receives 5% o the CGU rather than the normal 2%. In this situation the percentages paidon the frst and eighth levels are reversed and the eighth level IR will be paid 2% o the CGU or this account and the IRpersonally responsible or acquiring the customer will receive 5% o the CGU or this customer.

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

C. Commissions and the Quick Start Bonus (QSB): IRs are qualifed to earn a customer acquisition Quick Start Bonus(QSB) when a personally sponsored Manager acquires and submits in good aith three (3) personal Qualifed Customerswithin sixty (60) days o the new Manager’s enrollment date and which customers become active within sixty (60) days o thenew Manager’s enrollment date. No more than one o the three (3) customers required in order to generate this bonus maybe PNG customers.

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

Y O UPersonalCustomers

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 toquali y or release o QSBQSBO and other bonuspayments, the three (3)Select Qualifed Customersmust be submitted activewithin sixty (60) days o thnew Manager’s enrollmentdate. I they do not becomeactive during this period theno QSB or other bonuseswill be paid. It is strongly

recommended that the newlsponsored Manager submitmore than the minimum o three (3) customers in orderto help ensure that QSB wilbe paid to the sponsoringIR and other bonuses willbe paid to coded upline IRs

When YOU recruit JANE and she has (*3) personal cus-tomers, YOU receive a QuickStart Bonus o $100.00. Whenyou have (3) active personalcustomers and (1) frst levelManager, you will quali y to earncommissions (CGU) on level (1).

When you sign up (5) activecustomers and recruit BOB and he has (*3) personal activecustomers you will receivea QSB and quali y to earncommissions on levels 2-7.

When you sign up (10) activecustomers and recruit MIKE and he has (*3) personal activecustomers you will receive aQSB and quali y to earncommissions on level (8).

*All active customers must besigned up and become activeduring your new Manager’sfrst 60 days rom the timethe application is received byFortune to receive a QSB.



D. Quick Start Bonus Override (QSBO): When a new Manager is sponsored on your 2nd through 8th level and thepersonal sponsor o that new Manager receives a Quick Start Bonus or the newly sponsored Manager, you will receQuick Start Bonus Override as ollows: I the new Manager alls on any o your levels 2-7, you will receive a $the new Manager alls on your 8th level, you will receive a $10.00 QSBO. In order to receive this new QSBO, allto do is be quali ed and eligible to receive CGU, in accordance with the Compensation Plan, or each particular lev

E. True Beginnings Bonus: The True Beginnings Bonus is a $299 bonus awarded to Independent Representatives who

gather a total o ten (10) customers ( ve (5) o which are True Essentials customers), with at least our (4) o thecustomers being customers other than his/her personal accounts. These customers must go active within the rst 60 daa ter his/her new Manager start date.

. fhtm management bonus program

A. Customer Acquisition Bonus (CAB): CAB is earnedby IRs that have attained the positions o QRSM, QESMor QNSM. CAB is only paid on Managers who are spon-sored a ter you have met the quali cation or the rst“coded” position o RSM. Once you are promoted andquali ed, and a newly sponsored Manager in your newmanagement coded group submits three (3) QCs (see7C), you become eligible to receive CAB. The QRSM,QESM and QNSM positions are eligible to earn bonusesas shown:

In order to receive CAB you must acquire and maintainon a monthly basis the requisite number o active cus-tomers and Managers required or “eligibility” at yourparticular position. Although Managers will achievethe title or any promoted position they have achievedbased upon the number o Managers in their business(i.e. RSM, ESM, NSM) once the requisite number oManagers has been attained, they will not be eligible toreceive nor will they be paid any CAB or new Managerssponsored into their coded organization until ALL activecustomer requirements have been met and they havebecome a QRSM, QESM or QNSM. Active customerrequirements must be maintained monthly in order toremain eligible or receipt o CAB.

A Manager that promotes to RSM shall be granted a

one-time “quali cation period” to meet the require-ment o gathering the ten (10) active personal customersrequired to become a QRSM. The new RSM shall haveuntil the last day o the month ollowing the month inwhich he/she promoted to RSM to meet this require-ment. It is strongly urged that the customer gatheringrequirements necessary or QRSM status be met as soonas possible (i.e. within 30 days o enrollment) or anyone

entering the business. Only when the active customerrequirements have been met shall any CAB be paid.Again, this active customer requirement must be main-tained on a monthly basis (see Section 9 o this manin order or you to remain eligible to receive CAB thmay be payable rom your coded organization(s).

B. Double Management Customer AcquisitionBonuses: A QRSM, QESM or QNSM, may receive“double” Management CAB when the appropriatenumber o quali ying new Managers are sponsored intheir appropriate Coded Group(s) as ollows:

(i) QRSMs will receive this double bonus or eachquali ying new Manager entering his/her RegionalCoded Group each month when a minimum o sixtee(16) new Managers are sponsored into his/her RegionaCoded Group.

(ii) QESMs will receive this double bonus or each qualying new Manager entering his/her Executive Coded

Group each month when a minimum o twenty- ournew Managers are sponsored into his/her ExecutiveCoded Group.

(iii) QNSMs will receive this double bonus or eachquali ying new Manager entering his/her National

Coded Group each month when a minimum oorty-eight (48) new Managers are sponsored intohis/her National Coded Group.

A “quali ying new Manager” or purposes o releaseo this double bonus is a new Manager that triggersthe release o a Quick Start Bonus to his/her personasponsor.



B. Leadership Coded Bonus Chart

* The examples assume that you sponsor a new Manager into each new Management Coded Group a ter you have been promoted. Each column represents thecumulative total possible payment that can be earned or the new Managers that are sponsored into each particular new Management Coded Group a ter your promotion. Bonuses are only paid i the new Managers obtain three customers (one other than themselves) within their frst 60 days. **Breakaway bonuses arepaid 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 CustomerAcquisition Bonus: QRSMs may receive an “Extra$50” Management CAB when the appropriate numberof qualifying new Managers are sponsored in theirRegional Coded Group as follows.

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

10

Quick Start

$100.00Quick StartBonus

†Regional SalesManager Coded

Group*•$100 & up to 1/4%

(**$50 + 1/4%/$10 Breakaway)RSM C.A.B.

†Executive SalesManager Coded

Group*•$60 & up to 1/4%

(**$20 + 1/4%/$10 Breakaway)ESM C.A.B.

†National SalesManager 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%

unlimitedlevels

$$$$

PresidentialAmbassador

$$$$

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%

unlimitedlevels

***

$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%

unlimitedlevels

***



. eligiblity for commissions ,overrides and bonuses

All IRs are eligible to receive commissions on their personal customers’ CGU. IRs with three (3) active personal customersand one (1) personally sponsored rst level Manager are eligible to receive downline override commissions on their rst levelManager’s customers (see Section 7 “FHTM Compensation Plan” in this manual or customer and Manager requirements orlevels 2 through 8).

In order to receive monthly Management Customer Acquisition Bonuses (CAB) or which you may quali y; you must almaintain an active eligibility status. You can accomplish this by maintaining your active customer count at or above theeligibility level required or payment o these bonuses. REMEMBER that the number o active customers required in or

or you to be eligible to receive monthly CAB is: QRSM= 10+; QESM & QNSM= 15+.

Eligibility requirements must be met by the last day o the month immediately preceding the month during which the apcable bonus and/or commission payments are scheduled to be issued by FHTM. (Example: To receive payment or CAB

earned in June, which is issued on July 20th, you must have your active customer count at or above the required eligiblevel on June 30th). There is no grace period. The only exception to this rule is the one-time “quali cation period” granto newly promoted RSMs (see Section 8 A). You will be paid or the highest level o promotion or which you are eFor example: An ESM with 14 active customers on June 30th would be issued payment or CAB on July 20th onlyearned as a QRSM or the month o June. No CAB would be paid that month to the ESM or any CAB that may hpayable rom the ESM coded group since the eligibility requirement or receiving QESM CAB (i.e. maintaining 15 activpersonal customers) was not met on June 30.

Always maintain more than the minimum number o active customers required to ensure that you are eligible or allcompensation at your level o achievement.

In the event FHTM should elect to discontinue o ering the product and/or service o one o its various providers whiresults in the termination o residual payments rom said provider to FHTM, then and in that event, upon the e ectivedate o the discontinuation o any such product and/or service o ering, FHTM shall not credit any customer points towCompensation Plan quali cation /eligibility requirements or the discontinued product or service. IRs shall be required toreplace the discontinued product/customer point to remain quali ed/eligible (as may be applicable) or CompensationPlan purposes should this result in them alling below the required customer count or their level or promotion and/orlevel CGU quali cation.

Eligibility or all commissions, overrides, and bonuses ends immediately i you are terminated by FHTM or you voluntaterminate your IR Agreement.

11



10. commissions reports & payment schedules

11. downline reports

A. Payment o monthly CGU commission to eligible active IRs on billings o all services and products will normallon or about the twentieth (20th) day o the second month ollowing the month in which the customer was billed.This is the third month a ter actual usage to allow time or the customer to be billed and or receipt o paymentbilled services.

B. Payment o monthly Management CAB to an eligible active QRSM, QESM, and/or QNSM will occur on or abotwentieth (20th) day o the month ollowing the month in which the CAB was earned (subject to eligibility requirem

C. Training commission checks will be issued on the rst Friday ollowing receipt o the training invoice by theCompany provided that all necessary data or identi cation o the newly trained Manager and Trainer Coach submittithe invoice have been received and veri ed by FHTM. In no event will training checks be issued prior to the expirao ten (10) calendar days rom the newly trained Manager’s date o enrollment.

D. Quick Start Bonus checks will be issued on the rst Friday ollowing the expiration o ten (10) calendar days

rom date o enrollment o a new Manager that has met all o the customer gathering requirements or the releaseQSB payments to the sponsoring IR provided that all necessary data or identi cation o the new Manager, customerand sponsor have been received and veri ed by FHTM.

E. All payments made are subject to the check and/or EFT ees. Commission checks must be greater than or equato teen dollars ($15.00) be ore a check will be issued. There is a six dollar ($6.00) check charge or each check(a $15.00 commission generates a $10.00 check). EFT payments must be equal to or greater than teen dollars ($15to generate a trans er. There is a ve dollar ($5.00) trans er ee or each EFT (a $12.00 commission will trans era ter the EFT ee). Commissions accumulate i they are less than the above amounts until the appropriate amount isreached. This amount is added to the next pay period.

F. All check inquiries should be made in writing and must be received by FHTM within sixty (60) days o issuancto be reissued. Any lost or missing checks that you request FHTM to reissue will be subject to a $25.00 ee and a

(60) day waiting period.

This service is included, upon request, or all Managersenrolled in the Optional Special Services Program. Uponrequest, a downline summary report is provided monthlyby way o either a paper printout (mailed) or via the internet(email). IRs that have purchased an FHTM replicated web

page have “real time” access to their downline in ormationupon command. A charge o twenty ve ($.25) cents perpage or paper printout reports exceeding twenty (20)pages will be deducted rom the requesting IR’s commissionpayment. The report contains in ormation that is proprietaryand con dential to FHTM and the IR agrees to hold suchin ormation private. The IR agrees to only use the in orma-tion to operate and build his/her FHTM business.

A Representative that requests a downline report must payor this as a separate service and the ee is twenty ve-

lars ($25.00) per requested downline report o less thantwenty (20) pages in length. Reports in excess o twentypages will be assessed an additional charge o twenty v

($.25) cents per page exceeding twenty (20) pages.

12



1.1 Policies and Compensation Plan Incorporated into Independent Representative AgreementThese Policies and Procedures, in their present orm and as amended at the sole discretion o Fortune Hi-Tech MarketinInc. (herea ter “FHTM” or the “Company”), are incorporated into and orm an integral part o the FHTM IndependentRepresentative Agreement/Application (herea ter “IR Agreement”) and the Trainer Coach Agreement/Application.Throughout these Policies, when the term “Agreement” is used, it collectively re ers to the FHTM IR Applicationand Agreement, the FHTM Trainer/Coach Agreement, these Policies and Procedures, and the FHTM Marketing andCompensation Plan. These documents are incorporated by re erence into the FHTM IR Agreement (all in their current

orm and as amended by FHTM). It is the responsibility o each Independent Representative (herea ter “IR”) to read,understand, adhere to, and ensure that he or she is aware o and operating under the most current version o thesePolicies and Procedures.

1.2 Purpose o PoliciesFHTM is a direct sales company that markets to end user consumers certain services that could include, but arenot limited to, nutritional products, long distance phone service, internet access, cellular phone service, satellitetelevision service, voice messaging service, paging products and services and other use ul products throughits Independent Representatives. It is important to understand that your success and the success o your ellowIndependent Representatives is dependent upon the integrity o the people who market our products and services.To clearly de ne the relationship that exists between all IRs and FHTM, and to explicitly set a standard or ethicaland acceptable business conduct, FHTM has established this agreement.

FHTM IRs are required to comply with all o the terms and conditions set orth in this agreement. FHTM may amendagreement at its sole discretion rom time to time.

Because you may be un amiliar with many o these standards o practice, it is very important that you read and abidethis agreement. Please review the in ormation in this manual care ully. It explains and governs the relationship betweenyou, as an independent contractor, and the Company. I you have questions regarding any policy or rule, do not hesitateto seek an answer rom FHTM.

1.3 Changes to the AgreementBecause national, provincial, territorial and local laws, as well as the business environment, periodically change, FHTMreserves the right, at any time, to amend the Agreement and its prices in its sole and absolute discretion. By signing thIR Agreement, an IR agrees to abide by all amendments or modi cations that FHTM elects to make. Amendments shallbe e ective upon notice to IRs that the Agreement has been modi ed. Noti cation o amendments shall be published io cial FHTM materials. The Company shall provide or make available to IRs a complete copy o the amended provisiby one or more o the ollowing methods: (1) posting on the Company’s o cial web site; (2) electronic mail (e-mail);voice mail system broadcast; or (4) inclusion in Company periodicals. Notice given via any one o the previouslylisted channels will be deemed received by the IR upon posting. The continuation o an IR’s FHTM business or an IR’acceptance o bonus or commission payments shall constitute acceptance by an IR o any and all amendments.

1.4 Delays

FHTM shall not be responsible or delays or ailures in per ormance o its obligations when per ormance is made comcially impracticable due to circumstances beyond its reasonable control. This includes, without limitation, strikes, labordi culties, riot, war, re, death, curtailment, cessation or interruption o FHTM’s source o supply, or government decreor orders.

1. in t roduct ion

14



2. becoming an independent representative

1.5 Policies and Provisions SeverableI any provision o the Agreement, in its current orm or as may be amended, is ound to be invalid, or unen orceabany reason, only the invalid portion(s) o the provision shall be severed and the remaining terms and provisions shall rein ull orce and e ect and shall be construed as i such invalid, or unen orceable provision never comprised a partAgreement.

1.6 WaiverThe Company never gives up its right to insist on compliance with the Agreement and with the applicable laws governinthe conduct o a business. No ailure o FHTM to exercise any right or power under the Agreement or to insist uponcompliance by an IR with any obligation or provision o the Agreement, and no custom or practice o the parties at vwith the terms o the Agreement, shall constitute a waiver o FHTM’s right to demand exact compliance with the AgreWaiver by FHTM can be a ected only in writing by an authorized o cer o the Company. FHTM’s waiver o any pbreach by an IR shall not a ect or impair FHTM’s rights with respect to any subsequent breach, nor shall it a ect inthe rights or obligations o any other IR. Nor shall any delay or omission by FHTM to exercise any right arising roma ect or impair FHTM’s rights as to that or any subsequent breach.

The existence o any claim or cause o action o an IR against FHTM shall not constitute a de ense to FHTM’s enany term or provision o the Agreement.

2.1 Requirements to Become an IndependentRepresentativeTo become an FHTM IR, each applicant must:

a) Be o the age o majority in his or her state or country o residence;

b) Reside in a country in which FHTM is engaged indoing business;

c) Provide: i: a valid Social Security or Federal Tax IDnumber; ii: a date o birth.

d) Submit a ully re undable deposit (waived or IRs elect-ing to purchase the Optional Special Services Package)where applicable;

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

) Be approved and accepted by FHTM.

The Company reserves the right to reject any applicationsor a new Independent Representative or applications or

renewal.

2.2 No Purchase RequiredNo person is required to purchase FHTM products, ser-vices or marketing materials, or to pay any charge or ee tobecome an IR. However, each IR must submit a ully re und-able deposit (except where prohibited by law) to FHTM withhis or her IR Application and Agreement. The deposit shallbe re unded upon receipt o written request upon the termi-nation (voluntary or involuntary) o an IR’s Agreement.

A Starter Kit containing marketing materials and otherimportant in ormation will be provided to all new IRsupon enrollment.

2.3 Registration by Online EnrollmentThe potential new IR may enroll a new IndependentRepresentative online by use o FHTM’s online registra-tion process. The person making the enrollment must beable to provide all necessary IR Agreement in ormationthe online enrollment. A Starter Kit or Manager Sales Kitwill be provided to the new enrollee upon receipt/veri ca-tion o payment o the re undable deposit (i applicableOptional Special Services Package ee by FHTM. Pleaseto your sponsor’s personal FHTM O ce Assistant websiteat www. htm.ws or other designated web address or onlienrollment assistance.

The new IR’s online enrollment authorization will be validor up to thirty (30) days, pending receipt and veri catio

the Company o any applicable deposit/payment that maybe due. Once any applicable deposit/payment has beenreceived and veri ed at the FHTM Home O ce, the newAgreement will be extended to one (1) ull year rom thdate on which the online enrollment was accepted by FHT

I any applicable deposit/payment required is not receivedwithin the temporary thirty (30) day time period, the tem-porary authorization shall expire and the IR Application anAgreement shall automatically terminate. Additionally, in th

15



event that the deposit/payment is dishonored or any rea-son, the new IR shall be immediately terminated by FHTMand any sums that may have been paid to the new IR, thenew IR’s sponsor and/or upline shall be subject to recoveryby the Company by way o either withholding same romany sums in the possession o the Company that are payableto any such party and/or withholding same rom any uture

sums that may become payable to any such party and/or byany other method provided by law.

In the event o the online enrollment o a business entity, allrequirements contained in Section 4.4 below, shall also becomplied with as set orth therein.

2.4 IR Bene tsOnce an IR Application and Agreement has been acceptedby FHTM, the bene ts o the Marketing and CompensationPlan and the IR Agreement are available to the new IR.These bene ts include the right to: a) Market FHTM products and services, in accordance

with the terms o theFHTM Marketing and Compensation Plan;

b) Participate in the FHTM Marketing and CompensationPlan (receive bonuses and commissions, i eligible);

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

d) Receive periodic FHTM literature and other FHTMcommunications;

e) Participate in FHTM-sponsored support, service,

training, motivational and recognition unctions, uponpayment o appropriate charges, i applicable (i.e.purchase o the Optional Special Services Package);and

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

2.5 Renewal o Your FHTM BusinessThe term o the IR Agreement and Trainer CoachAgreement is one (1) year rom the date o its acceptanFHTM. Managers must renew their Optional Special ServiAgreement and/or Trainer Coach Agreement each year bypaying an annual renewal ee o $199.00 or the OptionSpecial Services Package and $100.00 or the Trainer Coposition (i applicable) on or be ore the last day o theversary month o their IR Agreement and/or Trainer CoacAgreement, as may be applicable. I the renewal ee ispaid on or be ore the last day o the anniversary monththe current term o the IR Agreement and/or Trainer CoaAgreement, then the applicable Agreement will be terminat-ed. A Manager that elects not to renew the Optional SpeServices Package may renew as a Representative only, bysubmitting a written request to FHTM requesting that therenewal status be changed rom Manager to RepresentativSuch request must be received by FHTM prior to the expirtion o the applicable renewal period and be accompaniedby a $75.00 deposit except or residents o states wheredeposit is waived by law. (For example, i the anniversaryo either an IR Agreement or Trainer Coach AgreementJanuary 15, 2008, the renewal payment will be due on obe ore January 31, 2008) Renewal notices will be mailedduring the month immediately preceding the month inwhich the renewal payment is due.

Please Note: TCs that are also CRTs only renew or theCRT position, which includes the renewal o the TC posA separate notice will be sent to CRTs when the renewaldue or this renewal ee may be paid at the same time aOptional Special Services renewal. I you choose to renew

the same time, this will not a ect the CRT anniversaryor re-certi cation purposes. The anniversary date will notchange.

There is no renewal ee or those IRs who have not puchased the Optional Special Services Package. However,they must noti y FHTM annually, in writing, o their deto continue to participate as a Representative. I they donot, their position shall be terminated. Representatives willreceive an annual renewal notice rom the Company.

1



3.1 Adherence to the FHTM Marketing and Compensation PlanIRs must adhere to the terms o the FHTM Marketing and Compensation Plan as set orth in o cial FHTM literature.not o er the FHTM opportunity through, or in combination with, any other system, program, or method o marketing othan that speci cally set orth in o cial FHTM literature. IRs shall not require or encourage other current or prospectivcustomers or IRs to participate in FHTM in any manner that varies rom the program as set orth in o cial FHTM lIRs shall not require or encourage other current or prospective customers or IRs to execute any agreement or contract otthan o cial FHTM agreements and contracts in order to become an FHTM customer or IR. Similarly, IRs shall not reqencourage other current or prospective customers or IRs to make any purchase rom, or payment to, any individual or oentity to participate in the FHTM Marketing and Compensation Plan other than those purchases or payments identi ed asrecommended in o cial FHTM literature.

FHTM reserves the right to limit or disallow any marketing activities that cast negative aspersions on the integrity, truthand/or reputation o Fortune Hi-Tech Marketing, Inc.

3.1.1: EthicsFHTM conducts business in an ethical and credible manner and requires its Representatives to deal ethically with theircustomers, with each other and with the company. FHTM permits no unethical or illegal activity and will intercede wsuch behavior may exist. FHTM reserves the right to use its best judgment in deciding whether certain Representativeactivities are unethical. Furthermore, FHTM may use its own discretion in determining the appropriate course o actionI FHTM determines that unethical activities may exist, then it reserves the right to suspend or terminate the IndepenRepresentative position and withhold all commissions and payments o any kind. Under no circumstances would anIndependent Representative who is terminated or unethical or illegal activity be entitled to a re und o theiroriginal purchase ee, nor are they entitled to sell or trans er their position.

Examples o unethical or illegal activity include, but are not limited to:1. Forging a signature on any document or application.2. Making alse or misleading representations o any kind including, but not limited to, misrepresentations about FHTM

products and services or the FHTM Compensation Plan.3. Depositing checks made payable to FHTM into personal accounts instead o immediately orwarding them to FHTM4. Spreading alse or misleading remarks or rumors with malicious intent that may disparage FHTM, FHTM employeeor another FHTM Independent Representative.5. Any unauthorized use o FHTM’s name, trademarks or copyrighted material (i.e. reproducing FHTM’s orms, businecards, etc.).6. Violation o any ederal, state or local laws or regulations.7. Violation o any FHTM Policy or Procedure.8. Co-marketing o any other business, product, service, seminar or program in conjunction with the FHTM opportunitylimitation applies to all promotional activities including, but not limited to, marketing materials, events, presentations, vesolicitations, etc.9. Purchasing a product or submitting a customer with the intent to discontinue use o the product or the purposetriggering commissions and bonuses.

3.2 Advertising3.2.1: In GeneralAll IRs shall sa eguard and promote the good reputation o FHTM and its products and services. The marketing andpromotion o FHTM, the Marketing and Compensation Plan, and FHTM products and services shall be consistent withpublic interest, and must avoid all discourteous, deceptive, misleading, unethical or immoral conduct or practices.

3. operat ing an fhtm business

17



To promote both the products and services, and the tremendous opportunity FHTM o ers, IRs shall only use the markematerials and support materials produced by or at the direction o FHTM. FHTM has care ully designed its products,product labels, Marketing and Compensation Plan, and promotional materials to ensure that each aspect o FHTM is airtruth ul, substantiated, and complies with the vast and complex legal requirements o ederal and state laws. Accordingly,shall not produce their own literature, advertisements, marketing materials and promotional materials, or internet site/webpages to o er the FHTM Opportunity and/or products and services.

I an IR desires to advertise to promote his or her business, he or she may do so only through the Company approvedadvertisements that may be ound in the “Corporate Tools” section on the “Secure Console” o www. htm.net.

Except as provided in this section, IRs shall not use or transmit unsolicited axes, mass e-mail distribution, unsolicited eor “spamming” relative to the operation o their FHTM businesses. The terms “unsolicited axes” and “unsolicited e-mailmean the transmission via telephone acsimile or electronic mail, respectively, o any material or in ormation advertisingpromoting FHTM, its products, its compensation plan or any other aspect o the Company which is transmitted to anyperson, except that these terms do not include a ax or e-mail: (a) to any person with that person’s prior express invitaor permission; or (b) to any person with whom the IR has an established business or personal relationship. The term“established business or personal relationship” means a prior or existing relationship ormed by a voluntary two-waycommunication between an IR and a person, on the basis o : (i) an inquiry, application, purchase or transaction by theperson regarding products o ered by such IR; or (ii) a personal or amilial relationship, which relationship has not beepreviously terminated by either party.

I an IR desires to utilize an internet web page to promote his or her business, he or she may do so only through theCompany’s o cial web site or by use o the approved FHTM Sel -Replicating Web Page, using only o cial FHTMtemplates. Further, IRs that use the FHTM replicated web page shall not link rom it to any other site that is not a land/or approved by FHTM nor shall they advertise any other products, services or businesses on the site without the expwritten approval o FHTM. The ailure to adhere to this policy constitutes a material breach o these Policies and Procwhich may result in sanctions, including termination, at the sole discretion o FHTM.

3.2.2: Domain Names and E-mail AddressesIRs shall not use or attempt to register any o FHTM’s trade names, trademarks, service names, service marks, productthe Company’s name, or any derivative thereo , or any internet domain name. Nor shall IRs incorporate or attempt toporate any o FHTM’s trade names, trademarks, service names, service marks, product names, the Company’s name, or a

derivative thereo , into any electronic mail address.3.2.3: Trademarks and CopyrightsFHTM will not allow the use o its trade names, trademarks, designs, or symbols by any person, including an FHTM Iits prior, written permission. IRs may not produce or sale or distribution any recorded Company events and speeches witwritten permission rom FHTM nor may IRs reproduce or sale or or personal use any recording o Companyproduced audio or videotape presentations. Further, IRs shall not reproduce or use the marks o any o FHTM’s productor service providers except as expressly authorized in writing by FHTM. The limited license that FHTM has been granteeach o its service providers or use and reproduction o their various logos and marks does not extend to its IRs.

3.2.4: Media and Media InquiriesIRs shall not respond to media inquiries regarding FHTM, its products or services, or their independent FHTM businesswithout the express written consent and permission o FHTM. All inquiries by any type o media must be immediately

to FHTM’s Representative Services Department. This policy is designed to ensure that accurate and consistent in ormationprovided to the public as well as a proper public image.

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3.3 Bonus Buying“Bonus buying” includes, but is not limited to: (a) the sponsorship/enrollment o individuals or business entities withoutconsent and/or knowledge o and/or execution o an IR Application and Agreement by such individuals or business entiti(b) the raudulent sponsorship/enrollment o an individual or business entity as an IR or customer; (c) the sponsorship/enment or attempted sponsorship/enrollment o non-existent individuals or business entities as IRs or customers (“phantoms”)(d) the use o a credit/debit card, check or other negotiable instrument by or on behal o an IR or customer when thcustomer is not the account holder o such credit/debit card, check or instrument; (e) the purchase o products and/or s

rom downline IRs; ( ) the placement, distribution, or allocation o customer accounts to other FHTM IRs having the eincreasing compensation to that IR; (g) use o a pre-paid credit card in the submission o a customer; (h) the submissiunauthorized request or service o an individual’s or business entity’s telephone or internet service provider (“slamming”or any other service or product marketed by FHTM; or (i) any occurrence or pattern o activity that, in the sole and adiscretion o FHTM, constitutes Bonus buying in detriment to FHTM’s wel are or integrity. Bonus buying constitutes abreach o these Policies and Procedures, is strictly and absolutely prohibited and shall result in immediate termination.

3.4 Business EntitiesA corporation, partnership or trust (collectively re erred to in this section as a “business entity”) may apply to be an FHby submitting its Certi cate o Incorporation, Partnership Agreement or trust documents and Internal Revenue Service “leto notice” assigning the entity’s Employer Identi cation Number (these documents are collectively re erred to as the “EnDocuments”) to FHTM, along with any additional in ormation FHTM may request regarding the identity o the individuaa bene cial interest in any such business entities. A FHTM business may change its status under the same sponsor romindividual to a partnership, corporation or trust or rom one type o business entity to another. There is a $25.00 admin

ee or each change requested, which must be included with the written request and the completed new IR ApplicationAgreement on behal o the business entity. The new IR Application orm must be signed by all o the shareholders,o cers, directors, partners, trustees and trust bene ciaries or their legal representatives. Members o the business entity a jointly and severally liable or any indebtedness or other obligation o the business entity to FHTM.

All shareholders, directors, o cers, partners and bene ciaries shall be identi ed by Social Security number, name and adand cannot hold another IR position except as otherwise speci cally permitted herein. One o these individuals shall beon the IR Agreement as the primary contact person or the entity. This individual shall also supply his/her social securitber on the IR Agreement. Until such time as FHTM receives all required entity documents, the FHTM business shall beunder the name and social security number o the individual designated as the entity’s contact person. I any o the reentity documents are not provided, in writing, to the Company within thirty (30) days o a new enrollment and/or chang

tus, the position will be terminated (or remain in the name o the contact person i requested in writing) and any sumresult o said entity’s new enrollment shall be recovered by withholdings made pursuant to these Policies.

3.5 Changes to the FHTM Business3.5.1: In GeneralEach IR must immediately noti y FHTM, in writing, o all changes to the in ormation contained on his or her IR Aand Agreement. IRs may modi y their existing IR Agreement (i.e., change Social Security number to Federal I.D. numchange the orm o ownership rom an individual proprietorship to a business entity owned by the IR) by submittingwritten request, a properly executed IR Application and Agreement, and appropriate supporting documentation as may brequired and/or requested by the Company rom time to time. Changes shall be processed only once per year. All chmust be submitted by November 30 to become e ective on January 1 o the ollowing year.

FHTM reserves the right to approve or disapprove any IR’s choice o business names, ormation o partnerships, corp

tions and trusts, or tax, estate planning and liability purposes. I FHTM approves such a change by the IR, the orgname and the names o the principals o the organization must appear on the Independent Representative Agreementalong with a Social Security Number or Federal Tax Identi cation Number.

Any request or a change in the name or a change in the Social Security Number or Tax Identi cation Number oIndependent Representative status is subject to a written agreement, signed by all parties involved, submitted to andapproved by FHTM. FHTM reserves the right to veri y all authorizations prior to making changes. In the absence oany agreement or noti cation, FHTM will only recognize the individual whose Social Security Number was originallylisted on the Independent Representative Agreement. Please note that FHTM will only continue to service the Independ

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Representative who remains listed in our computer system. FHTM reserves the right to intercede in disputes and i itdetermined that unethical activity exists, the status may be suspended and/or terminated.

There is a $25.00 administrative ee or each change requested (other than changes o address or contact numbers),must be included with the written request and the completed new IR Application and Agreement, i applicable.

3.5.2: Addition o Co-Applicants

When adding a co-applicant (either an individual or a business entity) to an existing FHTM business, the Company reboth a written request as well as a new properly completed IR Application and Agreement that complies with the reqments and restrictions o Section 3.1 and contains the signatures o both the applicant and the co-applicant. To prevecircumvention o Section 4.23 (regarding trans ers and assignments o FHTM business), the original applicant must reas a party to the original IR Application and Agreement. I the original IR wants to terminate his or her relationshipCompany, he or she must trans er or assign his or her business in accordance with Section 4.23. I this process islowed, the business shall be terminated upon the withdrawal o the original IR. All bonus and commission checks wisent to the address o record o the original IR. There is a $25.00 administrative ee or each change requested, wbe included with the written request and the completed new IR Application and Agreement. FHTM may, at its discretrequire witnessed and notarized documents be ore implementing any changes to an FHTM business. Please allow thirtydays a ter the receipt o the request by FHTM or processing. The new co-applicant shall be responsible or obtainpaying or his/her own Manager Sales Kit (or other necessary materials) and shall be responsible or attending and p

or his/her own training, i the original IR has already attended training.

I there is a change to a business entity, the IR must comply with all requirements o Section 3.4 above be ore the chaccepted by FHTM. I these requirements are not ul lled within thirty (30) days o the change, the position will be te

Please Note: the modi cations to the original IR position permitted within the scope o this Section do not includechange o sponsorship. Changes o sponsorship shall not be permitted and are addressed in Section 4.5.3, below.

3.5.3: Change o SponsorTo protect the integrity o all marketing organizations and sa eguard the hard work o all IRs, FHTM prohibits anyin sponsorship (except as set orth in Section 4.5.4, below). Maintaining the integrity o sponsorship is critical or tho every IR and marketing organization. Accordingly, the trans er o an FHTM IR’s business rom one sponsor to amay, in the sole discretion o the Company, only be permitted in an instance in which clear and convincing proo o

lent inducement or unethical sponsoring has been established based upon documentation submitted to the Company.ALL requests or change o sponsorship shall be submitted in writing to the Representative Services Department,within thirty (30) days o the complaining IR’s execution o the original IR Agreement and shall include the reason(requested change o sponsor. In cases involving raudulent inducement or unethical sponsoring, an IR may request thaor she be trans erred to another organization with his or her entire marketing organization intact. All requests or traalleging raudulent enrollment practices shall be evaluated on a case by case basis. Written documentation in supportany such request shall be required by the Company, in all cases, be ore any review o the claim will commence.

3.5.4: Cancellation and Re-applicationAn IR may legitimately change organizations by voluntarily canceling, in writing, his or her FHTM business and remainitive (i.e., no sales o FHTM products or services, no sponsoring, no attendance at any FHTM unctions, participation inother orm o Manager activity, or operation o any other FHTM business) or six (6) ull calendar months ollowing

cancellation. Following the mandatory six (6) month period o inactivity, the ormer IR may reapply under a new spons

Former IRs that re-enroll with the company under a new sponsor shall not quali y as a “new Manager” or purposes oreleasing Quick Start Bonuses (QSB), or any monthly bonuses o any type, to their new sponsor or their new coded upAdditionally, re-enrolling IRs shall not count toward their new sponsor’s Manager total or promotion purposes (i.e. Manto RSM; RSM to ESM...). However, any new downline organization they create a ter re-enrolling shall count or such ptheir new sponsors. Active customers shall not be moved rom the previous IR position to the new IR position.

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b) For a period o six (6) months ollowing the cancellation or termination o an IR’s Agreement, the ormer IR may not recruit any FHTM IR or customer or another network marketing program.

c) Producing or o ering any literature, tapes or promotional material o any nature or another network marketingbusiness which is used by the IR or any third person to recruit FHTM Customers or IRs or that business venture;

d) Selling, o ering 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) O ering FHTM products or services, or promoting the FHTM Marketing and Compensation Plan, in conjunction withany non-FHTM products, services, business plan, opportunity, or incentive; or

) O ering any non-FHTM products, services, business plan, opportunity, or incentive at any FHTM meeting, seminar,launch, convention, or other FHTM unction, or immediately ollowing such event (i.e. any “bait and switch” methods).

3.8.2: Dual Participation or Promoted IRsIRs promoted to the level o Regional Sales Manager or higher within the FHTM Compensation Plan may not particiany other network marketing or multi-level marketing ventures. Such dual participation will be deemed a material breathese Policies and Procedures and will be grounds or termination.

3.8.3: Downline Activity ReportsDownline Activity Reports are available monthly to Managers (i.e. those IRs that have purchased the Optional SpecialServices Program), upon request, via email or in printed orm. They are also available to Managers that have subscribFHTM’s replicable web page upon demand. Access through FHTM’s replicated web pages and/or “Back O ce” to onDownline Activity Reports is password protected. Representatives that want to obtain a copy o their Downline ActivitReport must send a written request to Representative Services along with any associated ee to obtain a copy. All DoActivity Reports and the in ormation contained therein are con dential and constitute proprietary in ormation and busintrade secrets belonging to FHTM. Downline Activity Reports are provided to IRs in strictest con dence and are madeable to IRs or the sole purpose o assisting IRs in working with their respective Downline Organizations in the devo their FHTM business. IRs should use their Downline Activity Reports to assist, motivate, and train their downlineThe IR and FHTM agree that, but or this agreement o con dentiality and nondisclosure, FHTM would not provideDownline Activity Reports to the IR. An IR shall not, on his or her own behal , or on behal o any other person

association, corporation or other business entity: a) Directly or indirectly disclose any in ormation 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 in ormation to compete with FHTM or or any purpose other than promoting his or her FHTM business;d) Recruit or solicit any IR or customer o FHTM listed on any report, or in any manner attempt to infuence or induce any IR or customer o FHTM, to alter their business relationship with FHTM; or e) Use or disclose to any person, partnership, association, corporation, or other entity any in ormation contained in any Downline Activity Report.

Upon demand by the Company, any current or ormer IR will return the original and all copies o Downline Activityto the Company.

FHTM shall not release any customer and/or IR in ormation to any member o an IR’s upline (except or the in ormcontained on the Downline Activity Report) without the express written consent o the IR. Telephone in ormation willreleased i the IR has so indicated that this is permissible on the IR Application at the time o enrollment.

FHTM shall not release any customer and/or IR in ormation to any member o an IR’s upline (except or the in ormcontained on the Downline Activity Report). Telephone in ormation will be released i the IR has so indicated that thpermissible on the IR Application at the time o enrollment.

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3.9 Cross-SponsoringActual or attempted cross sponsoring is strictly prohibited. “Cross sponsoring” is de ned as the enrollment o an individubusiness entity already having a current IR Agreement on le with FHTM, or has had such an agreement within the presix (6) calendar months, within a di erent line o sponsorship, or encouraging an IR to voluntarily cancel and re-enrolldate. The use o a spouse or relative’s name, trade names, DBAs, assumed names, corporations, partnerships, trusts, edenumbers, or ctitious ID numbers to circumvent this policy is prohibited. IRs shall not demean, discredit or de ame otheIRs in an attempt to entice another IR to become part o the rst IR’s marketing organization. This policy shall notprohibit the trans er o an FHTM business in accordance with Section 4.23.

3.10 Errors or QuestionsI an IR has questions about or believes any errors have been made regarding commissions, bonuses, Downline ActivityReports, or charges, the IR must noti y FHTM in writing within thirty (30) days o the date o the purported error orquestion. FHTM will not be responsible or any errors, omissions or problems not reported to it within thirty (30) days.

3.11 Governmental Approval or EndorsementNeither ederal nor state regulatory agencies or o cials approve or endorse any direct selling or network marketing comnies or programs. There ore, IRs shall not represent or imply that FHTM or its Marketing and Compensation Plan have“approved,” “endorsed” or otherwise sanctioned by any government agency. Likewise, FHTM does not endorse orrecommend any company or other method o operating a network marketing business that is not contained in o cialFHTM literature. This includes, but is not limited to, “lead” generating services, recruiting services, mass internet marketintechniques and other similar activities.

3.12 Holding Applications or OrdersIRs SHALL NOT manipulate enrollments o new applicants and purchases o products or services or any reason. AllApplications and Agreements, and product or service orders must be delivered to FHTM within orty eight (48) hourstime they are signed by an IR or placed by a customer, respectively. Violation o this section is strictly prohibited anddeemed a material breach o these Policies and the Agreement.

3.13 Identi cationAll IRs are required to provide their Social Security Number or a Federal Employer Identi cation Number, their driver’sor state issued ID Number, and their date o birth to FHTM on the IR Application and Agreement. Upon enrollment, thCompany will provide a unique Representative ID Number to the IR. An IR may use this number or his or her Social

Number or Federal Employer Identi cation Number to place orders and track commissions and bonuses. The use o aor inaccurate Social Security Number, Federal Employer I.D. Number, driver’s license number, state issued I.D. Number, odate o birth is prohibited. Such prohibited use will be deemed a material breech o these policies and the Agreement.

3.14 Income TaxesIndependent Representatives are not considered employees or purposes o the Social Security Act, the FederalUnemployment Tax Act, Federal Income Tax laws or any other laws governing employees. It is the IndependentRepresentative’s responsibility to make sel -employment and income tax payments as required by law. As such, FHTM dodeduct any taxes rom any commission and/or payments. It is the Independent Representative’s responsibility to provide Fwith the proper Social Security Number or Taxpayer Identi cation Number. I the in ormation that is provided is incorrethe Internal Revenue Service noti es FHTM that the in ormation does not match their records then FHTM shall witholdwithholdings as prescribed by IRS regulations until the matter is resolved.

Every year, FHTM will provide IRS Form 1099 MISC (Non-employee Compensation) earnings statement to each U.S. reswho alls into one o the ollowing categories:

a) Had earnings o over $600.00 in the previous calendar year; or b) Made purchases during the previous calendar year in excess o $5,000.00.Each IR is responsible or paying local, state and ederal taxes on any income generated as an Independent Representat

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3.15 Independent Contractor StatusIRs are independent contractors, and are not purchasers o a ranchise or a business opportunity. The Agreement betweenFHTM and its IRs does not create an employer/employee relationship, agency, partnership, or joint venture between theCompany and the IR. IRs shall not be treated as an employee or any purpose whatsoever, including but not limited toher services or or Federal or State tax purposes. All IRs are responsible or paying local, state, and ederal taxes duecompensation earned as an IR o the Company. The IR has no authority (expressed or implied), to bind the Company tobligation. Each IR shall establish his or her own goals, hours, and methods o sale, so long as he or she complies witerms o the IR Agreement, these Policies and Procedures, and applicable laws.

3.15.1: Trademarks and CopyrightsThe name o FHTM and other names as may be adopted by FHTM are proprietary trade names, trademarks and servmarks o FHTM. As such, these marks are o great value to FHTM and are supplied to IRs or their use only inauthorized manner. Use o FHTM name on any item not produced by the Company is prohibited except as ollows:IR’s Name; Independent FHTM Representative; Fortune Hi-Tech Marketing TM.

All IRs may list themselves as an “Independent Representative” in the white or yellow pages o the telephone directounder their own name. No IR may place telephone directory display ads using FHTM’s name(s) or logo(s), or the logo any o FHTM’s products or services. IRs may not answer the telephone by saying “FHTM”, “Fortune Hi-Tech MaInc.”, “Fortune Hi-Tech Incorporated”, or in any other manner that would lead the caller to believe that he or she hasreached corporate o ces o FHTM.

3.16 Insurance You may wish to arrange insurance coverage or your business. It is unlikely that either your homeowner’s insurance poor your automobile insurance policy covers business-related injuries, or the the t o or damage to inventory or businessequipment. Contact your insurance agent with any questions you may have to make certain that your property is protecteThe Company will not answer any insurance related questions.

3.17 International MarketingBecause o critical legal and tax considerations, including: compliance with oreign laws regarding the approval, registratior licensure o products or services; protection o intellectual property; compliance with customs, tax, and immigration lacompliance with direct selling laws; product and income representations; and literature content and language requirements,FHTM must limit the resale o FHTM products and services, and the presentation o the FHTM business to prospective

customers and IRs located within the United States at this time. Moreover, allowing a ew IRs to conduct business in mnot yet opened by FHTM would violate the concept o a ording every IR the equal opportunity to expand internationaFHTM products or marketing materials cannot be shipped into or sold in any oreign country. IRs may sell, give, transdistribute FHTM products or marketing materials only in the United States. In addition, no IR may, in any unauthorized(a) conduct sales, enrollment or training meetings; (b) enroll or attempt to enroll potential customers or IRs; or (c) conduother activity or the purpose o selling FHTM products, establishing a marketing organization, or promoting the FHTMbusiness.

3.18 Adherence to Laws and Ordinances3.18.1: Local OrdinancesMany cities and counties have laws regulating certain home-based businesses. In some cases these ordinances may beapplicable to IRs. IRs must obey those laws that apply to them.

3.18.2: Compliance With Federal, State, Local Laws, MilitaryIRs shall comply with all ederal, state, and local laws and regulations in the conduct o their businesses. IRs shouldenter or conduct meetings on military bases, installations, or government-operated acilities without rst contacting any

acility to obtain prior permission or entry. IRs must obtain any necessary in ormation on requirements and/or restricor doing so. I special permits or licenses are required, the IR shall apply or same in his/her individual capacity a

and shall orward a copy o this in ormation to the Compliance Department.

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3.19 MinorsA person who is recognized as a minor in his/her state or country o residence may not be an FHTM IR. IRs shall nrecruit minors into the FHTM program.

3.20 One FHTM Business Per RepresentativeAn IR may operate or have an ownership interest, legal or equitable, as a sole proprietorship, partner, shareholder, trustebene ciary, in only one (1) FHTM business. No individual may have, operate or receive compensation rom more thanFHTM business.

In order to maintain the integrity o the FHTM Marketing and Compensation Plan, husbands and wives or common-lawcouples (collectively “spouses”) regardless o whether one or both are signatories to an IR Application and Agreement, mnot own or operate separate FHTM businesses, either individually or jointly, nor may they participate directly or indirectla shareholder, partner, trustee, trust bene ciary, or any other legal or equitable ownership) in the ownership or managemeo another FHTM business in any orm.

In cases where two (2) IRs marry or in cases o an IR receiving an interest in another business through inheritance, thpermitted to choose which business he or she will operate. The remaining business will be rozen.

3.21 Actions o Household Members and A liated IndividualsI any member o an IR’s immediate household engages in any activity which, i per ormed by the IR, would violateprovision o the Agreement, such activity will be deemed a violation by the IR and FHTM may take disciplinary actionpursuant to these Policies and Procedures against the IR. Similarly, i any individual associated in any way with a corppartnership, trust or other business entity (collectively “a liated individual”) violates the Agreement, such action(s) will bdeemed a violation by the business entity, and FHTM may take disciplinary action against the business entity.

3.22 Requests or RecordsAny request rom an IR or earning reports, additional copies o invoices, applications, downline activity reports, or othrecords will require an administrative ee o $25.00 plus $1.00 per page per copy. The request must be made in writinpayment received prior to requested records being provided to the IR. This ee covers the expense o mailing and timerequired to research les and make copies o records.

This ee does not apply to replacement o a lost or misplaced Form 1099. One duplicate copy o Form 1099 will be

no cost. Any additional copies will be subject to the administrative ees re erenced above.

3.23 Sale, Trans er or Assignment o an FHTM BusinessAlthough an FHTM business is a privately owned and independently operated business, the sale, trans er or assignmentFHTM business is subject to certain limitations or protection o the integrity o the downline organization. I an IR wsell his or her FHTM business, the ollowing criteria shall be satis ed:

a) Protection o the existing line o sponsorship must always be maintained so that the FHTM business continues to beoperated in that line o sponsorship.b) The buyer or trans eree must be (or must become) a quali ed FHTM IR. I the new owner is not already an FHTM IR thenthe new owner must, within thirty (30) days o the trans er o ownership, attend Manager Training, Trainer/Coach Trainingand, i applicable, Certi ed Regional Trainer’s School (as scheduled). The new owner shall be required to pay the appropri-ate ee or any such training. (It is also the responsibility o the buyer to obtain up to date materials and literature rom the

Company at his/her own expense.) I the buyer is an active FHTM IR, he or she must rst terminate his or her existing FHTMbusiness simultaneously with the purchase, trans er, assignment or acquisition o any interest in the new FHTM business. Nochanges in line o sponsorship can result rom the sale or trans er o an FHTM business. I theprospective buyer, trans eree or assignee is an active FHTM IR, the sale, trans er or assignment cannot result in a changeo sponsorship o the buyer, trans eree or assignee. I such a sale, trans er or assignment will result in a change o thebuyer’s, trans eree’s or assignee’s sponsor, then the provisions o Section 4.5.4 o these Policies and Procedures shall beapplicable and the six (6) month inactivity period shall be imposed upon the buyer, trans eree or assignee be ore the sale,trans er or assignment may be nally concluded.

c) Be ore the sale, trans er or assignment can be nalized and approved by FHTM, any debt obligations the selling IR haswith FHTM must be satis ed.

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d) The selling IR must be in good standing and not in violation o any o the terms o the Agreement in order to be eligibleto sell, trans er or assign an FHTM business. A business that has been terminated may not be sold, trans erred or assigned.

e) The sale, trans er or assignment will be nally approved by FHTM upon receipt o all required documents, including but not limited to, associated ees, a ully completed Trans er o Business orm, IR Agreement and/or Trainer Coach Agreement,as applicable. Said approval will not be unreasonably withheld.

) Be ore the new owner o a Trainer Coach position will be allowed to train Managers or compensation, the new Trainer Coach must be trained by a Certi ed Regional Trainer that has been pre-approved by FHTM.

Prior to selling an FHTM business, the selling IR must noti y FHTM Representative Services Department o his or herto sell the FHTM business, complete all applicable FHTM Trans er o Business/Sale Documents, and pay any applicableimposed by FHTM or the trans er/sale o the business, currently $200.00.

3.24 Separation o an FHTM BusinessFHTM IRs sometimes operate their FHTM businesses as husband-wi e partnerships, regular partnerships, corporations, trusother business entities. At such time as a marriage may end in divorce or a business entity may dissolve, arrangementsmade to assure that any separation or division o the business is accomplished so as not to adversely a ect the interesincome o other businesses up or down the line o sponsorship. I the separating parties ail to provide or the best iother IRs and the Company, FHTM will involuntarily terminate the IR Agreement.

During the pendency o divorce or business entity dissolution, the parties must adopt one o the ollowing methods o operation: a) One o the parties may, with consent o 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 o the business entity, to be divided as the parties may independently agree between themselves.

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

Under no circumstances will the Downline Organization o divorcing spouses or a dissolving business entity be divided.Similarly, under no circumstances will FHTM split commission and bonus checks between divorcing spouses or membersdissolving entities. FHTM will recognize only one Downline Organization and will issue only one commission check perbusiness per commission cycle. Commission checks shall always be issued to the same individual or business entity. In tevent that parties to a divorce or dissolution proceeding are unable to resolve a dispute over the disposition o commissand ownership o the business, the IR Agreement shall be involuntarily terminated. I a ormer spouse or a ormer buentity a liate has completely relinquished all rights in their original FHTM business, in writing, they are therea ter reeunder any sponsor o their choosing, so long as they meet the waiting period requirements set orth in Section 4.5.4. Icase, however, the ormer spouse or partner shall have no rights to any IRs in their ormer organization or to any orcustomer. They must develop the new business in the same manner, as would any other new IR and care ully avoid vioo Section 3.9, herein.

3.25 SlammingSlamming is de ned as the switching or trans er o a third party’s long distance or internet service to another carrier wauthorization. Slamming is absolutely prohibited. I an IR “slams” any third party, he or she shall be liable to, and indeFHTM or any nes FHTM incurs as a result o the complaint (including ees imposed by any governmental agencies)or charges associated with returning the third party to its original long distance carrier, reimbursement o the outstandingdistance charges o the slammed third party, any attorney’s ees incurred by FHTM, as well as all o the sanctions avasuant to Section 8.1.

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Bonus and commission checks o an FHTM business trans erred pursuant to this section will be paid in a single checkdevisee. The devisee must provide FHTM with an “address o record” to which all bonus and commission checks will bI the business is bequeathed to joint devisees, they must orm a business entity and acquire a ederal taxpayer identinumber. FHTM will issue all bonus and commission checks and one IRS (INTERNAL REVENUE SERVICE) Form 1099business entity. The new IRs must attend training at their own expense or all applicable positions or which they are qin order to remain eligible to receive bonuses or commissions.

3.28.1: Trans er Upon Death o an IRTo e ect a testamentary trans er o an FHTM business, the successor must provide the ollowing to FHTM: (1) andeath certi cate; (2) a notarized copy o the will or other instrument establishing the successor’s right to the FHTM b(3) appropriate documentation rom a Court o competent jurisdiction approving the trans er; and (4) a completed andcuted IR Agreement and Trans er o Business orm. The new IRs must attend training at their own expense or allpositions or which they are quali ed. In the event that no testamentary disposition has been made o the business itbe terminated immediately upon the receipt o notice by FHTM o the IR’s death. Further, i a position is not renewed,become necessary, during any period in which a successor in interest may be awaiting a nal Court Order or dispositiondeceased IR’s estate, the position shall be terminated. It is the sole responsibility o any person claiming successor’s rightsbusiness to renew the position and noti y FHTM o any changes necessary to trans er the business.

3.28.2: Trans er Upon Incapacitation o an IRTo e ect a trans er o an FHTM business because o incapacity, the successor must provide the ollowing to FHTM(1) a notarized copy o an appointment as guardian and/or trustee; (2) a notarized copy o the trust document or othlegal documentation establishing the guardian/trustee’s right to administer the FHTM business; and (3) a completed IRAgreement and Trans er o Business orm executed by the guardian/trustee.

3.29 Telemarketing TechniquesThe use o any automated telephone solicitation equipment or “boiler-room” telemarketing operations in connection with tmarketing or promotion o FHTM, its products, services or the FHTM business plan is strictly prohibited.

3.30 Use o the FHTM Voice-Mail SystemFHTM utilizes voice-messaging systems or use in communicating with enrolled IRs. This system is also a tool to commwith your downline, to promote the sale o FHTM products and services and the FHTM business plan. Under no circumshall an active IR use the FHTM voice-mail system to promote the sale o any non-FHTM products or services, any no

program or opportunity or to disparage any FHTM IR or Fortune Hi-Tech Marketing, Inc.

2



the service will not count as “active customers” orquali cation purposes.

4.3 NondisparagementFHTM wants to provide its IRs with the best products,Compensation Plan and service in the industry. Accordingly,we value your constructive criticisms and comments. All

such comments should be submitted in writing to theRepresentative Services Department. Remember, to bestserve you, we must hear rom you! While FHTM welcomesconstructive input, negative comments and remarks madein the eld by IRs about the Company, its services/products,or Compensation Plan serve no purpose other than to sourthe enthusiasm o other FHTM IRs. For this reason, and toset the proper example or their downline, IRs must not dis-parage FHTM, other FHTM IRs, FHTM’s services/products,the Marketing and Compensation Plan, or FHTM’s directors,o cers, or employees. The disparagement o FHTM, otherFHTM IRs, FHTM’s services/products, the Marketing andCompensation Plan, or FHTM’s directors, o cers, oremployees constitutes a material breach o these Policiesand Procedures and shall result in termination.

4.4 Providing Documentation to ApplicantsIRs must provide the most current version o these Policiesand Procedures and the Compensation Plan to individu-als whom they are sponsoring as IRs be ore the applicantsigns an IR Agreement. Additional copies oPolicies and Procedures can be obtained rom FHTM.

4.5 Reporting Policy ViolationsIRs observing a policy violation by another IR should submit

a written report o the violation directly to the attention othe FHTM Compliance Department. Details o the incidentssuch as dates, number o occurrences, persons involved andany supporting documentation should be included in thereport. In most instances, the Compliance Department can-not and will not initiate action in the absence o a writtenreport documenting the alleged violation.

4.6 Completion o Applications and Order FormsAll IRs are solely responsible or accurately completing anyIR/ TC Applications and/or product order orms that theysubmit to the Company. This includes both paper orms aswell as online sign ups. The Company shall not be responsi-

ble or any delays caused by incomplete, inaccurate or illeg-ible in ormation provided by an IR or customer. IRs must usethe utmost care when completing all applications and ordersto avoid any errors. I quali cation deadlines or eligibility toreceive commissions and/or bonuses are missed as a resulto errors o this nature, they shall not be paid. The Companyshall not accept or recognize or any purpose a new IR/TCenrollment or customer order submission until ALL requiredin ormation is completed accurately and submitted in itsentirety.

Additionally, the Company shall not be liable or any amoverpaid/charged or bank ees incurred or assessed thatresult rom the error(s) o an IR, applicant or customerusing the online sign up process. In particular, the Compashall not be liable or, nor shall it reimburse any costsassociated with or incurred as a result o multiple submisions o the same new IR Application or order. You sho

only submit an online sign up one time and then only achecking to ensure that all in ormation that has been inpis correct. I an application is submitted more than one teven though as a result o unintended error, it will resulin unds being charged against the listed bank accounteach erroneous submission. I there is a problem with thinitial submission, contact Representative Services orassistance. Do not re-submit the application. Be care ul,it is your responsibility.

4.7 Con dentiality and Nondisclosure o Proprietary In ormationDuring the term o the relationship, the IndependentRepresentative may receive in ormation or data constitutina trade secret or con dential in ormation o FHTM and/oits carrier/supplier/service provider(s) in which event, theIndependent Representative shall treat such trade secretor con dential in ormation as strictly con dential andwholly owned by FHTM as applicable. No IndependentRepresentative may, or any reason, nor in any manner,directly or indirectly use, sell, lend, lease, distribute, licengive, trans er, disclose, disseminate, reproduce or otherwiscommunicate any such item o in ormation or data to anperson or entity or any purpose other than as authorizedby FHTM in writing. The de nition o “con dential

in ormation” shall mean proprietary and con dential dataor in ormation o FHTM or its carrier/supplier/serviceprovider(s) which is not publicly known or available to thIndependent Representative or the competitors o FHTMor its carrier/supplier/service provider(s).“Con dential in ormation” also includes without limitation,in ormation regarding FHTM or its carrier/supplier/serviceprovider(s), Independent Representatives, customers or pro-spective customers, marketing methods, business and tech-nical plans, product in ormation and pricing. The de nitiono “con dential in ormation” includes “trade secrets” whicshall mean that portion o con dential in ormation whichconstitutes trade secrets as de ned by applicable law and

including, without limitation, con dential computer programso tware, designs, processes, procedures, ormulas andimprovements, whether copyrightable or not.

Independent Representatives must use their best e orts topreserve all con dential In ormation until it becomes geneally available to the public or FHTM agrees in writing thsuch in ormation may be disclosed or is otherwise no londeemed to be con dential. Independent Representativesmust not, without prior consent and approval o FHTM,

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5.1 Services/Product SalesThe FHTM Marketing and Compensation Plan is based upon the sale o FHTM products and services to end user consummust ul ll personal sales requirements (as well as meet all other requirements or responsibilities set orth in the Agreembe quali ed and/or eligible or bonuses, commissions and advancement to higher levels o achievement within the Markeand Compensation Plan. All IRs should satis y the ollowing sales requirements: a) At least 70% o 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 RestrictionsThere are no exclusive territories granted to any IR by FHTM. IRs may enroll customers or sponsor IRs in any area inFHTM is authorized to do business.

5.3 Product O erings/Terms o ServiceFHTM and its carriers/suppliers/product and service provider(s) have the sole right to accept or reject orders or productsservices, to establish and change without notice, the prices o such products and services as well as to establish the termand conditions o their o ering. FHTM and its carriers/suppliers/product and service provider(s) may also discontinue oing or selling any product or service, without liability or obligation to FHTM or its Independent Representatives. IndepenRepresentatives may only o er and sell services and products in accordance with rates, terms and conditions establishedFHTM, any regulatory agency or its carriers/suppliers/product and service provider(s). All sales representations and activitiemust be in ull compliance with all applicable laws and regulations. Independent Representatives may only use those meo marketing and selling o services and products that are solely acceptable to FHTM and its carriers/suppliers/product aservice provider(s).

5.4 Unauthorized ContactUnder no circumstances, is an Independent Representative permitted to directly contact any carrier/supplier/service provider(

with whom FHTM contracts, unless it is in speci c relation to a personal account they may currently have with said prthe event that your customer is experiencing di culties with a speci c provider, please in orm your customer to directlycontact FHTM or the appropriate provider o service to resolve the matter.

5. sales requirements

either or their own position or as a consultant, distribu-tor, Independent Representative, partner or owner o anyother rm, partnership or corporation, whether in networkmarketing or any other kind o business, directly or indirectlysolicit, divert, take away or inter ere with any o the business,employees, customers, Independent Representatives ordistributors, trade or patronage o FHTM, its carriers/

suppliers/service provider(s) or its a liated entities. Violationo this covenant and condition will result in or eiture o allIndependent Representative rights, including all current and

uture commissions, bonuses and payments o any kind.

On a periodic basis, FHTM will supply data processingin ormation and reports to the IR, which will providein ormation to the Representative concerning the IR’sorganization, product purchases and product mix.Independent Representatives agree that such in ormationis proprietary and con dential to FHTM and is transmittedto the IR in con dence. The IR agrees that he or she w

disclose such in ormation, directly or indirectly, to any thparty nor use the in ormation to compete with FHTM inmanner. The IR and FHTM agree that, but or this agreeo con dentiality and nondisclosure, FHTM would not provthe above con dential in ormation to the IR.

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6.1 Bonus and Commission Quali cationsAn IR must be active and in compliance with the Agreementto quali y or bonuses and commissions. So long as an IRcomplies with the terms o the Agreement, FHTM shallpay to such IR any commissions or which the IR is eligibleas they are earned in accordance with the Marketing andCompensation Plan. An IR that is paid by check will becharged a $6.00 administrative ee per issued paper checkor a $5.00 ee per EFT check. The minimum amount orwhich FHTM will issue a check is $10.00. I an IR’s bonusesand commissions do not equal or exceed $15.00 ($10.00plus the $5.00 ee), the Company will hold and accrue thecommissions and bonuses until they total at least $15.00.A check will be issued once $15.00 or more in commissions

and/or bonuses have accrued.

An IR that is paid by EFT (electronic unds trans er) is chargeda $5.00 bank trans er ee and will receive the EFT whenaccrued bonuses and/or commissions total $15.00 or more.

6.2 Deductions rom Bonuses or Commissions6.2.1 FHTM will deduct rom all bonus and commissionchecks a data processing ee o $.25 per page or allpages in excess o twenty (20) pages or printed downlinegenealogy reports sent to IRs.

6.2.2 Additionally, FHTM shall deduct and/or withhold

rom any sums that may become due or payable to an IRthe ollowing:

a) Any sums that may be owed to the Company by theIR or purchases made rom the Company by the IR;b ) Any sums that may be owed to the Company by theIR or dishonored instruments and/or credit/debit card payments (including any applicable ees assessed either against or by the Company) that were payable rom theIR to the Company;c) Any sums that were overpaid and/or paid in error tothe IR by the Company in the event that the Company learns, subsequent to having issued any such payment,that the IR was ineligible ( or any reason) to receive suchpayment at the time it was issued by the Company (eveni paid as a result o actions o downline IRs);d) Any sums ordered to be withheld by the ComplianceDepartment as a result o violations o the Agreement inaccordance with Section 9 hereo ; and e ) Any other sums that may be owed by the IR to theCompany or any reason.

6.3 Unclaimed Commissions and CreditsIRs that have elected to receive payment o the commissand bonuses by check must deposit or cash commissionand bonus checks within six (6) months rom their dateissuance. A check that remains uncashed a ter six (6) mowill be voided and a “stop payment” order entered withthe Company’s nancial institution. A ter a check has beevoided, FHTM will attempt to noti y an IR who has anuncashed check by sending a written notice to his or herlast known address identi ying the amount o the checkadvising that the IR can request that the check be reissueThere shall be a $20.00 charge or reissuing a check and$10.00 administrative ee charged or the notice that is seto the IR. In addition to those ees, the IR shall be resp-

sible or any charge assessed to the Company by its nainstitution or issuance o the “stop payment” order on tcheck. All o these sums shall be deducted rom the baldue to the IR at the time the check is re-issued. All unthat remain unclaimed/uncashed a ter twelve (12) months

rom the date o issuance shall be deemed or eited byIR and retained by the Company.

6.4 Genealogy/Downline ReportsAll in ormation provided by FHTM in online or printedalogy reports, including but not limited to personal anddownline customer volume (or any part thereo ), downlinesponsoring activity, and commissions payable is believed

to be accurate and reliable. Nevertheless, due to variousactors including the inherent possibility o human and

mechanical error; the accuracy, completeness, and timeli-ness o orders; denial o credit card and electronic checkpayments; returned products; canceled services; credit cardand electronic check charge-backs; the in ormation is notguaranteed by FHTM or any persons creating or transmittithe in ormation.

All genealogy report in ormation is provided “as is”without warranties, express or implied, or representa-tions o any kind whatsoever. In particular but withoutlimitation there shall be no warranties o merchantability,

tness or a particular use, or non-in ringement.

To the ullest extent permissible under applicable law,FHTM and/or other persons creating or transmitting thein ormation will in no event be liable to any IR or anyoneelse or any direct, indirect, consequential, incidental,special or punitive damages that arise out o the use oraccess to genealogy report in ormation (including butnot limited to lost pro ts, bonuses, or commissions, losso opportunity, and damages that may result rom

. bonuses and commissions

32



inaccuracy, imcompleteness, inconvenience, delay, orloss o the use o the in ormation), even i FHTM or otherpersons creating o transmitting the in ormation shallhave been advised o the possibility o such damages.To the ullest extent permitted by law, FHTM or otherpersons creating or transmitting the in ormation shallhave no responsibility or liability to you or anyone else

under any tort, contract, negligence, strict liability,products liability or other theory with respect to anysubject matter o this agreement or terms and conditionsrelated thereto.

Access to and use o FHTM’s online or printed genealogservices and the in ormation received thereby is at your orisk. All such in ormation is provided to you “as is.” Iare dissatis ed with the genealogy in ormation, your soleand exclusive remedy is to discontinue use o and accessFHTM’s online or genealogy services.

7.1 Product GuaranteeFHTM does not o er any product guarantee or warranty. I any product guarantee is made it will only be made by thindividual suppliers o any products and services o ered through the FHTM Marketing Plan. FHTM does not maintainan inventory o products that may be o ered and is only a marketing Company o ering the products o its variousI a customer or IR has a question regarding a warrantee or guaranty, he or she must contact the manu acturer, supplievendor o the product or service marketed by FHTM and FHTM IRs.

7.2 Return o Marketing Materials by IRsUpon cancellation o an IR’s Agreement, the IR may return current marketing materials or a re und i he or she is usell or use the merchandise. An IR may only return marketing materials purchased by him or her that are in resalable cUpon receipt o the marketing materials, the IR will be reimbursed 90% o the net cost o the original purchase price(shipping charges. I the purchases were made through a credit card, the re und will be credited back to the same accouCompany shall deduct rom the reimbursement paid to the IR any sums that may be due to FHTM at the time o can

as the result o the previous purchase o any such items.

7.3 Montana ResidentsA Montana resident may cancel his or her IR Agreement within teen (15) days rom the date o enrollment, and maor her starter kit or a ull re und within such time period.

7.4 Procedures or All Returns o Marketing MaterialsThe ollowing procedures apply to all returns or re und or repurchase o marketing materials: a) All merchandise must be returned, in resalable condition, by the IR who purchased it directly rom FHTM.

b) All products to be returned must have a Return Authorization Number, which will be obtained by calling theRepresentative 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 o the original dated retail sales receipt; and 3. The unused portion o the product in its original container.

d) Proper shipping carton(s) and packing materials are to be used in packaging the product(s) returned or replacement, and the best and most economical means o shipping is suggested. All returns must be shipped to FHTM, shipping pre-paid.FHTM does not accept shipping-collect packages. The risk o loss in shipping or returned product shall be on the IR. I returned product is not received by the Company’s Distribution Center, it is the responsibility o the IR to trace the shipment.

No re und or replacement o marketing materials will be made i the conditions o these rules are not met.

7. service guarantees & marketing materials

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8.1 Disciplinary Sanctions Violation o the Agreement, these Policies and Procedures,or any illegal, raudulent, deceptive or unethical businessconduct by an IR may result, at FHTM’s discretion, in oneor more o the ollowing corrective measures:

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

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

e) FHTM may withhold rom an IR all or part o the IR’sbonuses and commissions during the period that FHTMis investigating any conduct allegedly in violation o theAgreement. I an IR’s business is canceled or disciplinary reasons, the IR shall not be entitled to recover any commissions withheld during the investigation period;

) Suspension o the individual’s IR Agreement or oneor more pay periods;g) Involuntary termination o the o ender’s IR Agreement;

h) Any other measure expressly allowed within any provi-sion o the Agreement or which FHTM deems practicableto implement and appropriate to equitably resolve injuries

caused partially or exclusively by the IR’s policy violationor contractual breach; i) In situations deemed appropriate by FHTM, the

Company may institute legal proceedings or monetary and/or equitable relie .

8.2 Grievances and ComplaintsWhen an IR has a grievance or complaint with another IRregarding any practice or conduct in relationship to theirrespective FHTM businesses, the complaining IR shall rstreport the problem to his or her Sponsor or upline RegionalSales Manager who shall review the matter and try to resolveit with the other party’s upline sponsor or RSM. I the mat-

ter cannot be resolved and the parties want the Companyto review the matter, it shall be reported in writing to theCompliance Department at the Company. Telephone com-plaints will not be addressed or accepted. FHTM considersthese to be very serious matters and as such requires allgrievances or complaints, or which a review is requested, tobe made in writing and signed by the initiating IR be ore areview o the matter will be undertaken. Telephone calls oremails are not su cient or this purpose. The Compliance

Department will review the written grievance presentedto rst determine, in its sole discretion, whether or notany review or action is warranted. In the event that it isdetermined that a review is warranted an attempt will thebe made to resolve the matter with the parties. I it is nresolved, it will be re erred to the Dispute Resolution Bo

or acceptance or rejection, nal review and determination

8.3 Dispute Resolution BoardThe purpose o the Dispute Resolution Board (DRB) is t(1) review appeals o disciplinary sanctions; and (2) revieunresolved grievances between FHTM IRs. A ter the respoor settlement instituted by the Compliance Departmenthas been denied or otherwise remains unresolved, theDispute Resolution Board reviews evidence, deliberates, anresponds to current outstanding issues on a collective basi

An IR may submit a written request or a telephonic orperson hearing within seven (7) business days rom the do : (1) the written notice by FHTM o disciplinary actiothe written decision o the Compliance Department regarding disputes between IRs. All communication with FHTMthe IR seeking resolution o a dispute shall be in writing

It is within the DRB’s sole discretion whether a claim is aed or review. I the DRB agrees to review the matter,schedule a hearing within twenty one (21) days o the reo the IR’s written request. I a hearing is not requestednone shall be held. All evidence (e.g., documents, exhibitsetc.) that an IR desires to have considered by the DRB mbe submitted to FHTM with the original request or a he-ing. The IR shall bear all o the expenses related to hisher attendance and the attendance o any witnesses he orshe desires to be present at the hearing. The decision oDispute Resolution Board shall be nal and subject to no

urther review. During the pendency o the claim be oreDRB, the IR waives his or her right to pursue arbitration

any other remedy.

Following issuance o a disciplinary sanction by theCompliance Department, the disciplined IR may appeal thesanction to the Dispute Resolution Board (“DRB”). The IRappeal shall be in writing and received by the Companywithin teen (15) calendar days rom the date o FHTMtermination notice or sanction notice. I the appeal is notreceived by FHTM within the teen (15) day period, the

. dispute resolution and disciplinary proceedings

34



sanction or termination, as the case may be, shall be nal.The IR shall submit all supporting documentation with his orher appeal correspondence. I the IR les a timely appeal otermination or a sanction imposed, the DRB will review andreconsider the sanction or termination, consider any otherappropriate action, and noti y the IR in writing o its deci-sion.

8.4 ArbitrationAny controversy or claim arising out o or relating to theAgreement, or the breach thereo , shall be settled by arbitra-tion administered by the American Arbitration Associationunder its Commercial Arbitration Rules, and judgment onthe award rendered by the arbitrator may be entered inany court having jurisdiction thereo . I an IR les a claim orcounterclaim against FHTM, he or she may only do so on anindividual basis and not with any other IR or as part o a classor consolidated action. IRs waive all rights to trial by juryor to any court. All arbitration proceedings shall be held inthe City o Lexington, Fayette County, Kentucky, unless thelaws o the state in which an IR resides expressly require theapplication o its laws, in which case the arbitration shall beheld in the capital o that state. The parties shall be entitledto all discovery rights allowed under the Federal Rules oCivil Procedure. No other aspects o the Federal Rules oCivil Procedure shall be applicable to arbitration. There shallbe one arbitrator, an attorney at law, who shall have exper-tise in business law transactions with a strong pre erencebeing an attorney knowledgeable in the multi-level market-

ing/direct selling industry, selected rom the panel, whichthe American Arbitration Panel provides. Each party to tharbitration shall be responsible or its own costs and expes o arbitration, including legal and ling ees. The deco the arbitrator shall be nal and binding on the partiesmay, i necessary, be reduced to a judgment in any courtcompetent jurisdiction. This agreement to arbitrate shall sur-

vive any termination or expiration o the Agreement.

Nothing in these Policies and Procedures shall preventFHTM rom applying to and obtaining rom any court h jurisdiction a writ o attachment, a temporary injunction, prliminary injunction, permanent injunction or any other relieavailable to sa eguard and protect FHTM’s interest prior tduring or ollowing the ling o any arbitration or otherceeding or pending the rendition o a decision or awardconnection with any arbitration or other proceeding.

8.5 Governing Law, Jurisdiction and VenueJurisdiction and venue o any matter not subject to arbitrtion shall reside in Fayette County, State o Kentucky unthe laws o the state in which an IR resides expressly rethe application o its laws, in which case that state’s lawshall govern all issues related to jurisdiction and venue. TFederal Arbitration Act shall govern all matters relating toarbitration. The laws o the State o Kentucky shall goveall other matters relating to or arising rom the Agreemenunless the laws o the state in which an IR resides exprrequire the application o its laws.

. order ing

9.1 Purchasing FHTM Marketing Materials, Products and ServicesEach IR should purchase his or her marketing materials, products and services directly rom FHTM. I an IR purchases

rom another IR or any other source, FHTM shall not be responsible or the contents, condition, or value o any suchmaterials or products nor will any such marketing materials or products be subject to return and/or re und by FHTM.

9.2 General Ordering PoliciesOn mail orders with invalid or incorrect payment, FHTM will attempt to contact the IR by phone and/or mail to try toanother payment. I these attempts are unsuccess ul a ter ve (5) business days the order will be returned unprocessed.

C.O.D. orders will be accepted. FHTM maintains no minimum order requirements. Orders or products and marketing maals may be combined.

9.3 Shipping and Back Order PolicyFHTM attempts to ship products within two (2) business days rom the date on which it receives an order. FHTM willexpeditiously ship any part o an order currently in stock. I , however, an ordered item is out o stock, it will be placorder and sent when FHTM receives additional inventory. FHTM will noti y Managers i items are back-ordered and areexpected to ship within thirty (30) calendar days rom the date o the order. An estimated shipping date will also be pBack ordered items may be canceled upon an IR’s request. IRs may request a re und, credit on account, or replacementmerchandise or canceled back orders.

35



11.1 E ect o CancellationSo long as an IR remains active and complies with the terms o the IR Agreement and these Policies and Procedures,shall pay to such IR any commissions or which the IR is eligible as they are earned in accordance with the MarketinCompensation Plan. An IR’s bonuses and commissions constitute the entire consideration or the IR’s e orts in generatisales and all activities related to generating sales (including building a downline organization). Following an IR’s non-renehis or her IR Agreement, or voluntary or involuntary cancellation/termination o his or her IR Agreement (all o theseare collectively re erred to as “cancellation”), the ormer IR shall have no right, title, claim or interest to the marketingzation which he or she operated, or any commission or bonus rom the sales generated by the organization.

An IR whose business is canceled and/or terminated shall permanently lose all rights as an IR. This includes the right tFHTM products and services and the right to receive uture commissions, bonuses, or other income resulting rom the sand other activities o the IR’s ormer downline sales organization. In the event o cancellation, IRs agree to waive all

10.1 Insu cient FundsIt is the responsibility o each IR to ensure that there aresu cient unds or credit available in his or her account tocover any Direct Shipment order. FHTM will not contactIRs in regard to orders canceled due to insu cient undsor credit.

10.2 Returned Checks

All checks returned by an IR’s bank or insu cient undsmay, at FHTM’s option, be re-submitted or payment. A$25.00 returned check ee shall be charged to the accounto the IR. A ter receiving a returned check rom an IR, all

uture orders shall be paid by Credit Card, money order orcashier’s check. Any outstanding balance owed to FHTMby an IR or NSF checks and returned check ees shall bewithheld rom subsequent bonus and commission checks.

10.3 Restrictions on Third Party Use o CreditCards and Checking Account AccessIRs shall not permit other IRs or customers to use his or hercredit/debit card or permit debits to their banking, checking

accounts…to enroll new IRs or to make purchases rom the

Company. Any attempt to circumvent this policy is strictlyprohibited and shall be considered a material breach othese Policies and may result in immediate termination oany/all IRs and/or customers involved.

10.4 Sales TaxesIt is the responsibility o the IR to be aware o and coply with all regulations regarding applicable sales taxes.

Remission o any sales taxes owed is the sole responsibio the IR. FHTM is not responsible or any non-remissioapplicable sales taxes.

The taxability o products and sales tax rates di er byAdditionally, an increasing number o local taxes (countyand city) are being initiated throughout the country. It isresponsibility o each IR to know what products are taxaand at what rate. I you have questions regarding taxabiland rates, contact your state or local department o reven

or assistance.

9.4 Con rmation o OrderAn IR and/or recipient o an order must con rm that the product received matches the product listed on the shippinginvoice, and is ree o damage. Failure to noti y FHTM o any shipping discrepancy or damage within thirty (30) caledays o shipment will cancel an IR’s right to request a correction.

10. payment and shipping

11. inact iv i ty and cancel lat ion

3



they may have, including but not limited to property rights, to their ormer downline organization and to any bonuses,commissions, or other remuneration derived rom the sales and other activities rom his or her ormer downline organizFurther the ormer IR shall not be permitted to sell, trans er or assign the business to another.

The ormer IR shall not hold himsel or hersel out as an FHTM IR and shall not have the right to sell FHTM prodvices. An IR whose IR Agreement is canceled shall receive commissions and bonuses only or the last ull pay periodwas active prior to cancellation (less any amounts owed to the Company at the time o cancellation and/or withheld dur

investigation preceding an involuntary cancellation).

11.2 Involuntary Cancellation/Termination o AgreementAn IR’s violation o any o the terms o the Agreement, including any amendments that may be made by FHTMdiscretion, may result in any o the sanctions listed in Section 9.1, including the involuntary cancellation/ termination oIR Agreement. Cancellation/Termination shall be e ective on the date on which written notice is mailed, return receipt reqto the IR’s last known address, or when the IR receives actual notice o termination/cancellation, whichever occurs rst.

FHTM expressly reserves the right to terminate all IR Agreements upon thirty (30) days written notice in the event thatto: (1) cease business operations; (2) dissolve as a corporate entity; or (3) terminate distribution o its products and servithe FHTM Marketing and Compensation Plan or network marketing/multi-level marketing/direct selling methods.

11.3 Voluntary CancellationA participant in this network-marketing plan has a right to cancel at any time, regardless o reason. Cancellation shall bsubmitted in writing to the Company at its principal business address. The written notice must include the IR’s signatureprinted name, address, and IR I.D. Number.

I a new Manager and/or Trainer Coach voluntarily cancels within ten (10) calendar days o the date o execution oapplication, a ull re und o the cost o the Optional Special Services Package and/or Trainer Coach ee will be madecanceling Manager and/or Trainer Coach has not attended a Manager and/or Trainer Coach training class and returns theManager’s Kit and/or Trainer Coach Kit to FHTM’s corporate o ce (in its original condition) within twenty (20) calendthe notice o cancellation.

I the canceling Manager and/or Trainer Coach has attended a Manager and/or Trainer Coach Training class, the ee(s)by FHTM to the Trainer Coach/Certi ed Regional Trainer that conducted the applicable training (currently $40.00 and $80

respectively) class(es) shall be deducted rom any sums to be re unded. I a Manager’s Kit and/or Trainer Coach Kit hshipped by FHTM to the canceling Manager and/or Trainer Coach, the then current cost o the applicable Kit shall be d

rom any sums to be re unded i the Kit(s) is not returned in its original condition to FHTM’s corporate o ce withincalendar days o the notice o cancellation.

11.4 Non-renewalAn IR may also voluntarily cancel his or her IR Agreement by ailing to renew the Agreement and paying any applicaannually.

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Active Customer: A customer that personally purchasesan FHTM product or subscribes to and pays or an FHTMservice that generates billed CGU (Customer GeneratedUsage) during the subject calendar billing month and isrecognized by FHTM’s product or service provider as anactive customer/account in its system. A customer that doesnot remain on service ( or any reason) or a minimum oninety (90) days or three (3) complete billing cycles rom thedate o initial activation by the service provider shall not beconsidered an “active customer” submitted in “good aith”

or any purposes by the Company. Any bonuses or commis-sions paid on such customers shall be subject to withholdingand recovery rom any IRs paid on such customers.

Active IR: An IR who has not cancelled or been termi-nated and satis es the minimum customer acquisitionrequirements, as set orth in the FHTM Marketing andCompensation Plan, to ensure that he or she is eligible toreceive bonuses and/or commissions.

Active Rank: The term “active rank” re ers the currentrank o an IR, as determined by the FHTM Marketingand Compensation Plan, or any calendar month. To beconsidered “active” relative to a particular rank, an IRmust meet the quali cation criteria set orth in the FHTMMarketing and Compensation Plan or his or her respectiverank. (See the de nition o “Rank” below.)

Agreement: The contract between the Company andeach IR includes the IR Application and Agreement, theFHTM Policies and Procedures, the FHTM Marketingand Compensation Plan, the Business Entity Form andTrainer Coach Application and Agreement (where appropri-ate) and any other documents FHTM may deem appropriate

rom time to time in the uture, all in their current orm andas amended by FHTM in its sole discretion. These docu-ments are collectively re erred to as the “Agreement.”

Cancellation: The termination o an IR’s business.Cancellation may be either voluntary, involuntary, orthrough non-renewal.

Commission Check: All payments o commissions orbonuses to IRs by FHTM in any orm o ered by FHTM,including but not limited to, printed check, electronic

unds trans er or direct deposit to debit card.

Commissionable Products/Services: All FHTMproducts and services on which commissions and bonusesare paid. Starter Kits, training, FHTM replicable web pagesupplies and marketing materials are not commissionableproducts.

Company/FHTM: The terms “Company” and/or “FHTM”as used throughout the Agreement means Fortune Hi-TechMarketing, Inc.

Downline: See “Marketing Organization” below.

Downline Activity Report (Genealogy Report):A monthly report generated by FHTM that provides critica

data relating to the identities o IRs, sales in ormation, aenrollment activity o each IR’s Marketing Organization. Treport contains con dential and trade secret in ormationwhich is proprietary to FHTM.

Downline Leg: Each one o the individuals enrolledimmediately underneath you and their respective marketingorganizations represents one “leg” in your marketingorganization.

End User Consumer/Customer: A person who purchaseFHTM products or services or the purpose o personalrather than or resale to someone else.

Good Faith: An IR owes a duty o honesty and airdealing to both FHTM and ellow IRs in all matters relato the operation o an FHTM business. This includes, bunot limited to, the submission o all documentation requirby the Company in accordance with its stated Policiesand Procedures. Submission o any documentation to theCompany in an e ort to maximize and/or manipulate thecompensation plan is strictly prohibited and shall result inappropriate disciplinary sanctions as set orth in the Policand Procedures.

Immediate Household: Heads o household, common-law spouses and dependent amily members residing inthe same dwelling.

Level: The layers o downline customers and IRs in aparticular IR’s Marketing Organization. This term re ers tothe relationship o an IR relative to a particular upline IRdetermined by the number o IRs between them who arerelated by sponsorship. For example, i A sponsors B, whsponsors C, who sponsors D, who sponsors E, then E isA’s ourth level.

12. def ini t ions

3



Marketing Organization: The customers and IRssponsored below a particular IR.

Manager: An IR that has purchased the Optional SpecialServices Package.

O cial FHTM Material: Literature, audio or videotapes,compact discs, les, and other materials developed, printed,published and distributed by or at the direction o FHTMto IRs.

Personal Production: Sale o products and/or servicesto an end user consumer or personal use.

Quali ed Customer: A legitimate customer submitted ingood aith by an IR that becomes an active customer withinsixty (60) days o submission to FHTM and/or the serviceprovider. A customer that does not remain on service ( orany reason) or a minimum o ninety (90) days or three (3)complete billing cycles rom the date o initial activationby the service provider shall not be considered an “activecustomer” submitted in “good aith” or any purposesby the Company nor shall it be considered a Quali edCustomer. Any bonuses or commissions paid on suchcustomers shall be subject to withholding and recovery

rom any IRs paid on such customers.

Rank: The “title” that an IR has achieved pursuant tothe FHTM Marketing and Compensation Plan.

Recruit: For purposes o FHTM’s Confict o InterestPolicy (Section 4.8), the term “recruit” means actual orattempted solicitation, enrollment, encouragement, ore ort to infuence in any other way, either directly orthrough a third party, another FHTM IR or customerto enroll or participate in another multilevel marketing,network marketing or direct sales opportunity. This conductconstitutes recruiting even i the IR’s actions are in responseto an inquiry made by another IR or customer.

Resalable: Marketing materials shall be deemed“resalable” i each o the ollowing elements is satis ed1) they are unopened and unused; 2) packaging andlabeling have not been altered or damaged; 3) theproduct and packaging are in a condition such that itis a commercially reasonable practice within the trade tosell the merchandise at ull price; 4) products are returneto FHTM within one year rom the date o purchase;5) the product expiration date has not elapsed; and6) the product contains current FHTM literature, marketingmaterials and labeling. Any merchandise that is clearly ideti ed at the time o sale as non-returnable, discontinued,as a seasonal item, shall not be resalable.

Sponsor: An IR who enrolls a customer or another IRinto the Company, and is listed as the Sponsor on theRepresentative Application and Agreement and/or customeragreement. The act o enrolling others and training thembecome IRs is called “sponsoring.”

Starter Kit: A selection o FHTM training materials andbusiness support literature that each new IR receives. TheManager Starter Kit is provided to Managers as a part oOptional Special Services Package. An alternative Starter Kis provided at no cost to Representatives that have notpurchased the Optional Special Services Package.

Upline: This term re ers to the IR or Managers above aparticular IR in a sponsorship line up to the Company.Conversely stated, it is the line o sponsors that links anparticular IR to the Company.

3



TITLES: All are Independent Representatives (IR)

Representative: Entry level position that pays a $75.00re undable deposit.

Manager: An IR that purchases the Optional SpecialServices Package.

Regional Sales Manager (RSM): First leadershippromotion level.*

Quali ed Regional Sales Manager (QRSM):RSM that has met all customer/sponsorship requirementsto be eligible to receive all RSM level income.*

Executive Sales Manager (ESM): Second leadershippromotion level.*

Quali ed Executive Sales Manager (QESM):ESM that has met all customer/sponsorship requirementsto be eligible to receive all ESM level income.*

National Sales Manager (NSM): Third leadershippromotion level.*

Quali ed National Sales Manager (QNSM):NSM that has met all customer/sponsorship requirementsto be eligible to receive all NSM level income.*

* See Compensation Plan or promotion, quali cation and monthly eligibility requirements.

40



(1)CGU payable is reduced in varying percentages by the providers rom 100% o billable CGU to allow or the “bad debt” liability tmay assume and may vary rom provider to provider. (For example, CGU paid or long distance usage is based upon 95% o 100%the actual amount o CGU billed to the customer.

(2)True Essential and Lamas product orders o er Representatives the option to choose between receiving standard commission andcustomer points, or 25% CGU and no customer points (You Choose CGU option). This option is available up to 72 hours ollowingthe placement o the order, and a Representative must make the selection o the You Choose CGU option through their Back O ceI no choice is made within the 72 hour window, the option de aults to the receipt o standard commission and customer points.

(3) CGU paid or The Wireless Shop customers is paid per contract by listed dollar amount.(4)Health Care Card commission is dependent upon the number o personal customers a Representative has in a given month.

I a Rep has ten (10) or more personal customers, the commission is 20%. I a Rep has ewer than ten (10), commission is 2%.(5)The commission paid out on booked travel is dependent upon the amount o commission received by FHTM or the sale.

A Representative with travel booked on their personal level will then receive 60% o the commission received by FHTM;not 60% o the total sale. The amount o commission received by FHTM varies.

(6)The commission structure listed or long distance is also the standard commission or the ollowing products and services:Identashield, Go Solo, O ce Assistant, Choice Plans RX, IT Please, Skytel and Fortune TV.

13. customer generated usage commission schedule

41

Level TrueEssentials(2)

LamasBeauty(2)

Dish TheWirelessShop (3)

HealthCare Card(4)

Magazine.com

FHTMTravel(site)

FHTM Travel(purchases)(5)

LongDistance(6)

GE HomeSecurity

Ingrid

PersonalCustomer

up to 25% up to 25% $0.80 $1.00 up to 20% 4.00% 2.00% 60.00% 2.00% $0.90 2.

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, Eagles2. Bob Lily - NFL Great, Hall of Fame, 14 seasons, Cowboys3. Cullen Jones - Olympic gold medal swimmer4. Darrell Green - NFL, Hall of Fame, 20 seasons, Redskins

5. Doug Herbert - Owner/Driver Snap-On Tools Top Fuel Dragster6. Evander Holyfield - heavyweight boxing champion (joined October '09)7. Phil Ford - former NBA and UNC basketball star8. George Andrie - NFL Great, 10 seasons, Cowboys9. Jerry Rice - NFL great, 20 seasons, 49ers, Raiders, Seahawks10. Mitch Stott - 2003 IHRA Pro Modified World Champion and first Pro Mod FiveSecond Doorslammer11. Rondell Jones - 5 seasons NFL, Broncos, Ravens12. Stacy Compton - Veteran of NASCAR's NEXTEL CUP and Craftsman Truck Series13. Steve Corker - Top Sportsman, 2008 World Champion Drag Racing IHRA14. Terrence Metcalf - 7 seasons NFL, Bears

15. Vic Jones - 7 seasons NFL, Buccaneers, LionsEntertainment superstars:1. Barbara McKay - former morning talk show host2. Barbara Palacios - Former Miss Universe and Venezuelan TV show host, Minister of Tourism of Venezuela3. Brian Sexton - Radio voice of the Jacksonville Jaguars with CBS47 & FOX30 TV4. Chris Rock - comedian, actor joined in September '095. Stefania Fernandez - Miss Universe 2009

Business World:1. Donna Lewis - Wife of Ken Lewis, President and CEO of Bank of America2. Jack Cotton - Owner of the chain of Scotsman Convenience, Dairy Queens, andBlimpi's3. Jerry Fallwell, Jr - Attorney and Chancellor of Liberty University4. Mel Graham - One of the Carolinas leading real estate developers.5. Pat Rogers - Owner of numerous Harley Davidson and car dealership6. Rai Glover - Former VP at Bank of America7. 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 AttorneyGeneral2. Jim Miles - Former Secretary of State of South Carolina3. Judy Hammerschmidt - Former Asst. Attorney General in Reagan Administration4. Patrick O. Gottschalk - Virginia Secretary of Commerce5. Pat McCrory - Former Mayor of Charlotte, NC and gubernatorial candidate6. Mike Rose - Senator of SC7. 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 FHTMLow 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 whoqualified to receive commissions and bonuses during the 12-month reporting period of January 23, 2009 throughJanuary 20, 2010. Average monthly payment is based only on months that Representatives received payment. A paidndependent 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 bonuspayment.

FHTM was built on a foundation of honesty, respect and responsibility. We have a strong commitment to ethics andequire 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 restassured 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 directales industry. Whether you decide to become an FHTM Independent Representative or not, you should protect your-elf 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 basedprimarily on the recruitment of new members. As an FHTM Independent Representative, successful sales efforts andhard work are required. In order to be eligible for bonuses, all Montana Representatives must maintain records ofonward 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 thencome, 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,eadership and teamwork.



MONTANA DISCLOSURE STATEMENT

n Montana, a participant or entity affiliated with FHTM may not represent that FHTM is licensed, registered, sanctionedby, 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 typesof income claims and testimonials made by persons engaged in network marketing. When presenting or discussing theFHTM opportunity or Marketing and Compensation Plan to a prospective Independent Representative, an IndependentRepresentative 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-entatives. 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 anyype 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 anearning range statement is “We have Regional Sales Managers making anywhere from X dollars per month to X dollarsper month.”

Lifestyle Claims include statements, pictures, and other references to large homes, vehicles, vacations, or other itemsnferring wealth derived from the FHTM business model. References to achieving dreams, use of the term “opportu-it ” i il d d f t i il t “h i g it ll” “li i g b tt lif ” ll t g i d Lif t l

ncome claims include:1. Statements of Earnings, both average and non-average2. Statements of Earning Ranges3. Income Testimonials4. Lifestyle Claims5. Hypothetical Claims