Document:

EMPLOYMENT
      AGREEMENT

    

    THIS
      AGREEMENT ("Agreement") made as of February 8, 2006, between MEDIFAST, INC.,
      a
      Delaware corporation with its principal office presently located at 11445
      Cronhill Drive, Owings Mills, Maryland 21117 ("Medifast"), and Margaret
      MacDonald, an individual presently residing in Owings Mills, Maryland (the
      "Executive").

    

    W
      I T N E
      S S E T H:  

    

    WHEREAS,
      Medifast and the Executive desire to enter into a new Agreement regarding,
      among
      other things, the employment of the Executive by Medifast, all as hereinafter
      set forth.

    

    NOW,
      THEREFORE, the parties hereto, intending to be legally bound hereby, agree
      as
      follows:

    

    1.
      Employment.
      Medifast hereby employs the Executive, and the Executive hereby accepts
      employment with Medifast, on the terms and conditions set forth in this
      Agreement. 

    

    2.
      Duties
      of Employee.
      The
      Executive will perform and discharge well and faithfully such duties as an
      executive officer of Medifast as may be assigned to him from time to time by
      the
      Board of Directors of Medifast ("Board"). The Executive will be employed as
      Vice
      President of Operations of Medifast, and be prepared to assume the
      responsibilities of the Chief Operating Officer of the Company at the discretion
      of the Board of Directors and will hold such other senior positions and or
      titles as may be given to him from time to time by the Board. The Executive
      will
      report to the Chairman of the Board of Medifast Inc. The Executive will devote
      his full time, attention and energies to the business of Medifast and will
      not,
      during the Employment Period (as defined in Section 3), be employed or involved
      in any other business activity, whether or not such activity is pursued for
      gain, profit or other pecuniary advantage; provided, however, that this section
      will not be construed as preventing the Executive from (a) passively investing
      his personal assets, (b) acting as a member of the Board of Directors or
      Trustees of Medifast or any other entity not in competition with Medifast (or
      an
      affiliate of Medifast), or (c) being involved in any community, civic or similar
      activity. Except for reasonable travel requirements consistent with his
      positions and except as otherwise provided herein, all duties of the Executive
      shall be routinely discharged at Medifast's facilities located in Owings Mills,
      Maryland. 

    

    3.
      Term
      of Employment.
      The
      Executive's employment under this Agreement will be for a period (the
      "Employment Period") commencing upon the date of this Agreement and ending
      at
      the end of the term of this Agreement on February 8,
      2012
      pursuant to the Terms and Conditions of this agreement, unless the Executive's
      employment is sooner terminated in accordance with Section 5 or one of the
      following provisions:

    

    (a)
      Termination
      for Cause.
      The
      Executive's employment under this Agreement may be terminated at any time during
      the Employment Period for Cause, by action of the Board, upon giving notice
      of
      such termination to the Executive at least 15 days prior to the date upon which
      such termination is to take effect. As used in this Agreement, "Cause" means
      any
      of the following events:

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    (i)
      the
      Executive is convicted of or enters a plea of guilty or nolo contendere
      to a
      felony, a crime of falsehood, or a crime involving fraud or moral turpitude,
      or
      the actual incarceration of the Executive. 

    

    (ii)
      the
      Executive willfully and repeatedly fails to follow the lawful instructions
      of
      the Board after the Executive's receipt of written or email notice of such
      instructions, other than a failure resulting from the Executive's incapacity
      because of physical or mental illness;

    

    (iii)
      a
      government regulatory agency finally recommends or orders in writing that
      Medifast terminate the employment of the Executive; or

    

    (iv)
      the
      Executive violates the covenant not to compete contained in Section 8 or the
      confidentiality provisions of Section 9.

    

    Notwithstanding
      the foregoing, the Executive's employment under this Agreement will not be
      deemed to have been terminated for Cause under Section 3(a)(i) or (ii) if such
      termination took place solely as a result of:

    

    (i)
      questionable judgment on the part of the Executive;

    

    (ii)
      any
      act or omission believed by the Executive, in good faith, to have been in,
      or
      not opposed to, the best interests of Medifast; or

     

    (iii)
      any
      act or omission in respect of which a determination could properly be made
      that
      the Executive met the applicable standard of conduct prescribed for
      indemnification or reimbursement or payment of expenses under the Articles
      of
      Incorporation or By-laws of Medifast or the directors' and officers' liability
      insurance of Medifast, in each case as in effect at the time of such act or
      omission.

    

    If
      the
      Executive's employment is terminated under the provisions of this subsection,
      then all rights of the Executive under Section 4 will cease as of the effective
      date of such termination.

    

    (b)
      Termination
      Without Cause.
      The
      Executive's employment under this Agreement may be terminated at any time during
      the Employment Period without Cause, by action of the Board, upon giving notice
      of such termination to the Executive at least 30 days prior to the date upon
      which such termination is to take effect. If the Executive's employment is
      terminated under the provisions of this subsection, then the Executive will
      be
      entitled to receive the compensation set forth in Section 6.

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    (c)
      Voluntary
      Termination, Retirement or Death.
      If the
      Executive voluntarily terminates employment without "Good Reason" (as defined
      in
      Section 5), retires or dies, the Executive's employment under this Agreement
      will be deemed terminated as of the date of the Executive's voluntary
      termination, retirement or death, and all rights of the Executive under Section
      4 will cease as of the date of such termination and any benefits payable to
      the
      Executive will be determined in accordance with the retirement and insurance
      programs of Medifast then in effect.

    

    (d)
      Disability.
      If the
      Executive is incapacitated by accident, sickness, or otherwise so as to render
      the Executive mentally or physically incapable of performing the essential
      duties required of the Executive under Section 2, notwithstanding reasonable
      accommodation, for a continuous period of six months, then, upon the expiration
      of such period or at any time thereafter, by action of the Board, the
      Executive's employment under this Agreement may be terminated immediately upon
      giving the Executive notice to that effect. If the Executive's employment is
      terminated under the provisions of this subsection, then all rights of the
      Executive under Section 4 will cease as of the last business day of the week
      in
      which such termination occurs, and the Executive will thereafter be entitled
      to
      the benefits to which he is entitled under any disability or other plan of
      Medifast in which he is then a participant.

    

    4.
      Employment
      Period Compensation and Related Matters.

    

    (a)
      Salary.
      For
      services performed by the Executive under this Agreement, Medifast will pay
      the
      Executive a salary, in the aggregate, during the Employment Period, at the
      annualized rate of $65,000, payable at the same times as salaries are payable
      to
      other executive employees of Medifast. Medifast may, from time to time, increase
      (but not decrease) the Executive's salary, and any and all such increases will
      be deemed to constitute amendments to this subsection to reflect the increased
      amounts, effective as of the dates established for such increases by the Board
      in the resolutions authorizing such increases.

    

    (b)
      Bonus.
      For
      services performed by the Executive under this Agreement, he shall be entitled
      to participate in such bonus or similar award plan or program as may be
      maintained from time to time by Medifast for its executive officers. In
      addition, Medifast may, from time to time, pay such other bonus or bonuses
      to
      the Executive as the Board, in its sole discretion, deems appropriate. The
      payment of any such bonuses will not reduce or otherwise affect any other
      obligation of Medifast to the Executive provided for in this
      Agreement.

    

    (c)
      Pension
      and Welfare Benefits.
      Medifast will provide the Executive, during the Employment Period, with pension
      and welfare benefits (within the meaning of Section 3 of the Employee Retirement
      Income Security Act of 1974, as amended ("ERISA")) in the aggregate not less
      favorable than those received by other employees of Medifast.

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    (d)
      Fringe
      Benefits.

    

    (i)
      In
      General. Except as otherwise provided in this subsection, Medifast will provide
      the Executive, during the Employment Period, with such fringe benefits as may
      be
      provided generally from time to time for its executive officers.

    

    (ii)
      Vacation. The Executive will be entitled to not less than three weeks of
      vacation per calendar year. The right to carry over unused vacation days will
      be
      subject to the executive personnel policies of Medifast from time to time in
      effect.

    

    (e)
      Expense
      Reimbursement.
      The
      Executive will be entitled to reimbursement of all expenses incurred by him
      in
      the discharge of his duties hereunder, or otherwise in furtherance of the
      business of Medifast, provided he renders an accounting of such expenses in
      such
      manner as may be required from time to time for employees
      generally.

     

    (f)
      Salary
      Deferral.
      The
      Executive may request that the payment of any portion of his base salary and/or
      bonus for any calendar year be deferred. Such request must be made in writing
      to
      Medifast before the beginning of such calendar year and must include the period
      of deferral requested by the Executive (the "Deferral Period"). If the Board
      approves such request, the Executive will be entitled to receive, at the end
      of
      the Deferral Period, the deferred portion of his base salary and/or bonus plus
      interest at a compounded rate of 6% per annum. Any salary and/or bonus which
      is
      deferred as described herein will be credited to an account on the books of
      Medifast established in the name of the Executive. However, this account will
      not be funded, and Medifast shall not be deemed to be a trustee for the
      Executive with respect to any deferred amount. The Executive will be a general
      unsecured creditor of Medifast for any amount due him under this section.
      Medifast will not be required to segregate any funds representing such deferred
      amounts, and nothing herein will be construed as providing for such
      segregation.

    

    (g) Stock
      Grant.
      The
      Executive has been granted and will receive 150,000*
      shares
      of Medifast, Inc. common stock to be vested over the term of this Agreement.
      The
      Executive will receive 25,000* shares of common stock per year over the next
      six
      years, providing the Executive is performing his duties in accordance with
      this
      Agreement. The Board of Directors reserves the right to adjust the vesting
      schedule as business conditions change. 

    

    *
      Amount
      subject to change.

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    5.
      Resignation
      of the Executive for Good Reason.

    

    (a)
      Events
      Giving Right to Terminate for Good Reason.
      The
      Executive may resign for Good Reason at any time during the Employment Period,
      as hereinafter set forth. As used in this Agreement, the term "Good Reason"
      means any of the following:

    

    (i)
      any
      reduction in title or a material adverse change in the Executive's
      responsibilities or authority which are inconsistent with, or the assignment
      to
      the Executive of duties inconsistent with, the Executive's status as Chief
      Executive Officer of Medifast;

    

    (ii)
      any
      reassignment of the Executive to a principal office which is more than 15 miles
      from Owings Mills, Maryland;

    

    (iii)
      any
      removal of the Executive from office except for any termination of the
      Executive's employment under the provisions of Section 3(a) or (d);

    

    (iv)
      any
      reduction in the Executive's annual base salary as in effect on the date hereof
      or as the same may be increased from time to time;

    (v)
      any
      failure by Medifast to provide the Executive with benefits at least as favorable
      as those enjoyed by the Executive under any of the pension or welfare plans
      (as
      such terms are defined in ERISA Section 3) of Medifast in which the Executive
      is
      participating on the date of this Agreement, or the taking of any action that
      would materially reduce any of such benefits, unless the change is part of
      a
      change applicable in any case to employees generally; and

    

    (vi)
      any
      material breach of this Agreement by Medifast, coupled with the failure to
      cure
      the same within 30 days after receipt of a written notice of such breach from
      the Executive.

    

    (b)
      Notice
      of Termination.
      At the
      option of the Executive, exercisable by the Executive within 90 days after
      the
      occurrence of the event constituting Good Reason, the Executive may resign
      from
      employment under this Agreement by a notice in writing ("Notice of Termination")
      delivered to Medifast and the provisions of Section 6 will thereupon
      apply.

    

    (c)
      Special
      Right of Termination.
      Notwithstanding anything herein to the contrary, but subject to the provisions
      of Section 3(a), within the one-year period immediately following the occurrence
      of a "Change in Control" (as defined in Subsection (d)), the Executive may
      terminate his employment for any or no reason by delivering a written notice,
      similar to a Notice of Termination, to Medifast; and such termination will
      be
      deemed for all purposes to constitute a resignation for Good Reason. In such
      event, he will be entitled to the payments set forth in Section 6.

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    (d)
      Change
      in Control Defined.
      For
      purposes of this Agreement, the term "Change in Control" means any of the
      following:

    

    (i)
      a
      sale of the majority of the assets of the company or a change of control of
      the
      Board of Directors as a result of a third party shareholder acquiring or holding
      over 10% of the common stock and attempting to nominate a majority of the Board
      of Directors in favor of his/her shareholder block;

    

    (ii)
      In
      the event of a Change of Control of the Company, all compensation and severance
      due as a result of this agreement will become due immediately at the time of
      the
      change of control to a third party.

    

    6.
      Rights
      in Event of Certain Termination of Employment.
      In the
      event that the Executive resigns from employment for Good Reason, by delivery
      of
      a Notice of Termination or other permitted notice to Medifast, or the
      Executive's employment is terminated by Medifast without Cause, Executive will
      be entitled to receive the payments set forth in this section.

    

    (a)
      Basic
      Payments.
      The
      Executive will be paid an amount equal to one and a half times the sum of (i)
      the highest annualized base salary paid to him during the calendar year of
      termination or the immediately preceding two calendar years. Such amount will
      be
      paid to the Executive in equal monthly installments (without interest),
      beginning 30 days following the date of termination of employment and commencing
      on the Agreement ending date disclosed in section 19(a). Notwithstanding the
      preceding provisions of this subsection to the contrary, in the event this
      section becomes applicable following a Change in Control, the Executive will,
      within 30 days after his termination of employment, be paid a lump sum equal
      to
      the present value of the amounts otherwise payable under this subsection. For
      purposes of the preceding sentence, present value will be determined by using
      the short-term applicable federal rate under Section 1274 of the Internal
      Revenue Code of 1986, as amended (the "Code"), in effect on the date of
      termination of employment. For purposes of this subsection, to the extent
      relevant, base salary and bonuses with any predecessor of Medifast or an
      affiliate thereof shall be taken into account.

    

    7.
      Expiration
      of Agreement.
      In the
      event this Agreement expires by its terms in accordance with the provisions
      of
      Section 19(a), no additional amounts or benefits will be paid
      hereunder.

    

    8.
      Covenant
      Not to Compete.

    

    (a)
      The
      Executive hereby acknowledges and recognizes the highly competitive nature
      of
      the business of Medifast and accordingly agrees that, during and for the
      applicable period set forth in Subsection (c), the Executive will
      not:

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    (i)
      be
      engaged, directly or indirectly, either for his own account or as agent,
      consultant, employee, partner, officer, director, proprietor, investor (except
      as an investor owning less than 5% of the stock of a publicly owned company)
      or
      otherwise of any person, firm, corporation, or enterprise engaged, in the
      continental United States ("Non-Competition Area"), in any business which at
      the
      relevant time during employment or at the date of termination of employment
      is
      competitive to any of the businesses of Medifast or any of its subsidiaries;
      or

    

    (ii)
      provide financial or other assistance to any person, firm, corporation, or
      enterprise engaged in any activity in which Medifast or any of its subsidiaries
      is engaged during the Employment Period, in the Non-Competition
      Area.

    

    (b)
      It is
      expressly understood and agreed that, although the Executive and Medifast
      consider the restrictions contained in Subsection (a) reasonable for the purpose
      of preserving for Medifast and its subsidiaries their goodwill and other
      proprietary rights, if a final judicial determination is made by a court having
      jurisdiction that the time or territory or any other restriction contained
      in
      Subsection (a) is an unreasonable or otherwise unenforceable restriction against
      the Executive, the provisions of Subsection (a) will not be rendered void but
      will be deemed amended to apply as to such maximum time and territory and to
      such other extent as such court may judicially determine or indicate to be
      reasonable.

    

    (c)
      The
      provisions of this section will be applicable commencing on the date of this
      Agreement and ending as follows:

    

    (i)
      at
      the termination of the payments and benefits provided under Section 6; provided,
      however, that this clause will not apply in the event Executive's termination
      of
      employment occurs following a Change in Control;

    

    (ii)
      one
      year following the termination of Executive's employment, in the case of a
      voluntary termination without Good Reason; or

    

    (iii)
      in
      all other cases, the date of Executive's termination of employment.

    

    9.
      Confidentiality.

    

    (a)
      As
      used in this section, the term "Confidential Information" means any and all
      information regarding the organization, business or finances of Medifast or
      any
      of its subsidiaries and affiliates, including, but not limited to, any and
      all
      business plans and strategies, financial information, proposals, reports,
      marketing plans and information, cost information, customer information, claims
      history and experience data, sales volume and other sales statistics, personnel
      data, pricing information, concepts and ideas, information respecting existing
      and proposed investments and acquisitions, and information regarding customers
      and suppliers, but the term Confidential Information will not include
      information which prior to the Executive's receipt thereof (i) was generally
      publicly available, or (ii) was in the Executive's possession free of any
      restrictions on its use or disclosure and from a source other than Medifast
      or
      any of its subsidiaries or affiliates.

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    (b)
      The
      Executive acknowledges and agrees that his employment by Medifast will afford
      him an opportunity to acquire Confidential Information and that the
      misappropriation or disclosure of any Confidential Information would cause
      irreparable harm to Medifast and its subsidiaries and affiliates.

    

    (c)
      During the Employment Period and for a period of two years thereafter, the
      Executive will not use for the benefit of anyone other than Medifast and its
      subsidiaries and affiliates or disclose any of the Confidential Information
      for
      any reason or purpose whatsoever except to authorized representatives of such
      business entities, as directed or authorized by Medifast, or as required by
      law.

    

    (d)
      With
      respect to those items of Confidential Information which constitute trade
      secrets under applicable law, the Executive's obligations of confidentiality
      and
      nondisclosure as set forth in this section will continue and survive after
      the
      two-year period as provided in Subsection (c) to the greatest extent permitted
      by applicable law.

    

    (e)
      The
      Executive will not remove any records, documents or any other tangible items
      (excluding the Executive's personal property) from the premises of Medifast
      or
      its subsidiaries or affiliates, in either original or duplicate form, except
      as
      needed in the ordinary course of performing services hereunder.

    

    (f)
      Upon
      termination of this Agreement, the Executive will immediately surrender to
      the
      owner thereof all documents in his possession, custody or control embodying
      the
      Confidential Information or any part thereof and will not thereafter remove
      the
      same from the premises on which it is located.

    

    10.
      Remedies.
      Executive acknowledges and agrees that the remedy at law of Medifast for a
      breach or threatened breach of any of the provisions of Section 8 or 9 would
      be
      inadequate and, in recognition of this fact, in the event of a breach or
      threatened breach by the Executive of any of the provisions of Section 8 or
      9,
      it is agreed that, in addition to the remedy at law, Medifast will be entitled
      to, without posting any bond, and the Executive agrees not to oppose any request
      of Medifast for, equitable relief in the form of specific performance, a
      temporary restraining order, a temporary or permanent injunction, or any other
      equitable remedy which may then be available. Nothing herein contained will
      be
      construed as prohibiting Medifast from pursuing any other remedies available
      to
      it for such breach or threatened breach.

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    11.
      Arbitration.
      Medifast and Executive recognize that in the event a dispute should arise
      between them concerning the interpretation or implementation of this Agreement,
      lengthy and expensive litigation will not afford a practical resolution of
      the
      issues within a reasonable period of time. Consequently, except as otherwise
      provided herein, each party agrees that all disputes, disagreements and
      questions of interpretation concerning this Agreement are to be submitted for
      resolution to the American Arbitration Association ("Association") in Baltimore,
      Maryland, in accordance with the Individual Employment Dispute Resolution rules
      of the Association. Medifast or the Executive may initiate an arbitration
      proceeding at any time by giving notice to the other in accordance with the
      rules of the Association. The Association will designate a single arbitrator
      to
      conduct the proceeding, but Medifast and the Executive may, as a matter of
      right, require the substitution of a different arbitrator chosen by the
      Association. Each such right of substitution may be exercised only once. The
      arbitrator will not be bound by the rules of evidence and procedure of the
      courts of the State of Maryland, but will be bound by the substantive law
      applicable to this Agreement. The decision of the arbitrator, absent fraud,
      duress, incompetence or gross and obvious error of fact, will be final and
      binding upon the parties and will be enforceable in courts of proper
      jurisdiction. Following written notice of a request for arbitration, Medifast
      and the Executive will be entitled to an injunction restraining all further
      proceedings in any pending or subsequently filed litigation concerning this
      Agreement, except as otherwise provided herein.

    

    12.
      Indemnification.
      Medifast will indemnify the Executive, to the fullest extent permitted under
      Delaware and federal law, with respect to any threatened, pending or completed
      legal or regulatory action, suit or proceeding brought against him by reason
      of
      the fact that he is or was a director, officer, employee or agent of Medifast,
      or is or was serving at the request of Medifast as a director, officer, employee
      or agent of another person or entity. To the fullest extent permitted by
      Delaware and federal law, Medifast will, in advance of final disposition, pay
      any and all expenses incurred by the Executive in connection with any
      threatened, pending or completed legal or regulatory action, suit or proceeding
      with respect to which he may be entitled to indemnification hereunder. Medifast
      will use its best efforts to obtain insurance coverage for the Executive under
      a
      policy covering directors and officers against litigation, arbitrations and
      other legal and regulatory proceedings; provided, however, that nothing herein
      is to be construed as requiring such action if the Board determines that such
      insurance coverage cannot be obtained at commercially reasonable
      rates.

    

    13.
      Notices.
      Any
      notice required or permitted to be given under this Agreement will, to be
      effective hereunder, be given to Medifast, in the case of notices given by
      the
      Executive, and will, to be effective hereunder, be given by Medifast, in the
      case of notices given to the Executive. Any such notice will be deemed properly
      given if in writing and if mailed by registered or certified mail, postage
      prepaid with return receipt requested, to the residence of the Executive, in
      the
      case of notices to the Executive, and to the principal office of Medifast,
      in
      the case of notices to Medifast.

    

    14.
      Waiver.
      No
      provision of this Agreement may be modified, waived, or discharged unless such
      waiver, modification, or discharge is agreed to in writing and signed by the
      Executive and an executive officer of Medifast, each such officer specifically
      designated by the Board. No waiver by any party hereto at any time of any breach
      by the other party hereto of, or compliance with, any condition or provision
      of
      this Agreement to be performed by such other party will be deemed a waiver
      of
      similar or dissimilar provisions or conditions at the same or at any prior
      or
      subsequent time.

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    15.
      Assignment.
      This
      Agreement is not assignable by any party hereto, except by Medifast to any
      successor in interest to the business of Medifast.

    

    16.
      Entire
      Agreement.
      This
      Agreement contains the entire agreement of the parties relating to the subject
      matter of this Agreement and, in accordance with the provisions of Section
      25,
      supersedes any prior agreement of the parties.

    

    17.
      Successors;
      Binding Agreement.

    

    (a)
      Medifast will require any successor (whether direct or indirect, by purchase,
      merger, consolidation, or otherwise) to all or substantially all of the business
      and/or assets of Medifast to expressly assume and agree to perform this
      Agreement in the same manner and to the same extent that Medifast would be
      required to perform it if no such succession had taken place. Failure by
      Medifast to obtain such assumption and agreement prior to the effectiveness
      of
      any such succession will constitute a material breach of this Agreement. As
      used
      in this Agreement, "Medifast" means Medifast as hereinbefore defined and any
      successor to the business and/or assets of Medifast, as aforesaid, which assumes
      and agrees to perform this Agreement by operation of law, or
      otherwise.

    

    (b)
      This
      Agreement will inure to the benefit of and be enforceable by the Executive's
      personal or legal representatives, executors, administrators, heirs,
      distributees, devisees, and legatees. If the Executive should die while any
      amount is payable to the Executive under this Agreement if the Executive had
      continued to live, all such amounts, unless otherwise provided herein, will
      be
      paid in accordance with the terms of this Agreement to the Executive's devisee,
      legatee, or other designee, or, if there is no such designee, to the Executive's
      estate.

    

    18.
      Termination.

    

    (a)
      Unless the Executive's employment is terminated pursuant to the provisions
      of
      Section 3 or Section 5, the term of this Agreement will be for a period
      commencing on the date of this Agreement and ending on June 1,
      2012.

    

    (b)
      Any
      termination of the Executive's employment under this Agreement or of this
      Agreement will not affect the benefit, noncompetition and confidential
      information provisions of Section 6, 8, 9 or 12, which will, if relevant,
      survive any such termination and remain in full force and effect in accordance
      with their respective terms.

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    (c)
      Except as provided in Section 25, nothing herein will be construed as limiting,
      restricting or eliminating any rights the Executive may have under any plan,
      contract or arrangement to which she is a party or in which she is a vested
      participant; provided, however, that any termination payments required hereunder
      will be in lieu of any severance benefits to which he may be entitled under
      a
      severance plan or arrangement of Medifast; and provided further, that if the
      benefits under any such plan or arrangement may not legally be eliminated,
      then
      the payments hereunder will be correspondingly reduced in such equitable manner
      as the Board may determine. 

    

    19.
      No
      Mitigation or Offset.
      The
      Executive will not be required to mitigate the amount of any payment provided
      for in this Agreement by seeking employment or otherwise; nor will any amounts
      or benefits payable or provided hereunder be reduced in the event he does secure
      employment, except as may otherwise be provided herein.

    

    20.
      Validity.
      The
      invalidity or unenforceability of any provisions of this Agreement will not
      affect the validity or enforceability of any other provision of this Agreement,
      which will remain in full force and effect.

    

    21.
      Applicable
      Law.
      Except
      to the extent preempted by federal law, this Agreement will be governed by
      and
      construed in accordance with the domestic internal law of the State of
      Delaware.

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    22.
      Number.
      Words
      used herein in the singular will be construed as being used in the plural,
      as
      the context requires, and vice versa.

    

    23.
      Headings.
      The
      headings of the sections, subsections and paragraphs of this Agreement are
      for
      convenience only and will not control or affect the meaning or construction
      or
      limit the scope or intent of any of the provisions of this
      Agreement.

    

    24.
      Effective
      Date; Termination of Prior Agreement.
      This
      Agreement will become effective immediately upon the execution and delivery
      of
      this Agreement by the parties hereto. Upon the execution and delivery of this
      Agreement, any prior agreement relating to the subject matter hereof, will
      be
      deemed automatically terminated and be of no further force or
      effect.

    

    25.
      Withholding
      For Taxes.
      All
      amounts and benefits paid or provided hereunder will be subject to withholding
      for taxes as required by law.

    

    26.
      Individual
      Agreement.
      This
      Agreement is an agreement solely between and among the parties hereto. It is
      intended to constitute a nonqualified unfunded arrangement for the benefit
      of a
      key management employee and will be construed and interpreted in a manner
      consistent with such intention. 

    

    IN
      WITNESS WHEREOF, the parties have executed this Agreement as of the date first
      above written.

    

    MEDIFAST,
      INC. 

    
      

        
          	
                  By

                	 
	 	
                  Chairman
                    of the Compensation Committee of the Board,

                
	 	
                  Rev.
                    Donald F. Reilly OSA

                
	 	 
	 	
                  Margaret
                    MacDonald 

                
	 	
                  ("Medifast")

                
	 	 
	 	 	
                  (SEAL)EMPLOYMENT
      AGREEMENT

    

    THIS
      AGREEMENT ("Agreement") made as of February 8, 2006, between MEDIFAST, INC.,
      a
      Delaware corporation with its principal office presently located at 11445
      Cronhill Drive, Owings Mills, Maryland 21117 ("Medifast"), and Brendan N.
      Connors, an individual presently residing in Owings Mills, Maryland (the
      "Executive").

    

    W
      I T N E
      S S E T H:

    

    WHEREAS,
      Medifast and the Executive desire to enter into a new Agreement regarding,
      among
      other things, the employment of the Executive by Medifast, all as hereinafter
      set forth.

    

    NOW,
      THEREFORE, the parties hereto, intending to be legally bound hereby, agree
      as
      follows:

    

    1.
      Employment.
      Medifast hereby employs the Executive, and the Executive hereby accepts
      employment with Medifast, on the terms and conditions set forth in this
      Agreement. 

    

    2.
      Duties
      of Employee.
      The
      Executive will perform and discharge well and faithfully such duties as an
      executive officer of Medifast as may be assigned to him from time to time by
      the
      Board of Directors of Medifast ("Board"). The Executive will be employed as
      Vice
      President of Finance of Medifast, and be prepared to assume the responsibilities
      of the Chief Financial Officer of the Company at the discretion of the Board
      of
      Directors and will hold such other senior positions and or titles as may be
      given to him from time to time by the Board. The Executive will report to the
      Chairman of the Board of Medifast Inc. The Executive will devote his full time,
      attention and energies to the business of Medifast and will not, during the
      Employment Period (as defined in Section 3), be employed or involved in any
      other business activity, whether or not such activity is pursued for gain,
      profit or other pecuniary advantage; provided, however, that this section will
      not be construed as preventing the Executive from (a) passively investing his
      personal assets, (b) acting as a member of the Board of Directors or Trustees
      of
      Medifast or any other entity not in competition with Medifast (or an affiliate
      of Medifast), or (c) being involved in any community, civic or similar activity.
      Except for reasonable travel requirements consistent with his positions and
      except as otherwise provided herein, all duties of the Executive shall be
      routinely discharged at Medifast's facilities located in Owings Mills,
      Maryland.

     

    3.
      Term
      of Employment.
      The
      Executive's employment under this Agreement will be for a period (the
      "Employment Period") commencing upon the date of this Agreement and ending
      at
      the end of the term of this Agreement on February 8,
      2012
      pursuant to the Terms and Conditions of this agreement, unless the Executive's
      employment is sooner terminated in accordance with Section 5 or one of the
      following provisions:

    

    (a)
      Termination
      for Cause.
      The
      Executive's employment under this Agreement may be terminated at any time during
      the Employment Period for Cause, by action of the Board, upon giving notice
      of
      such termination to the Executive at least 15 days prior to the date upon which
      such termination is to take effect. As used in this Agreement, "Cause" means
      any
      of the following events:

    

    (i)
      the
      Executive is convicted of or enters a plea of guilty or nolo contendere
      to a
      felony, a crime of falsehood, or a crime involving fraud or moral turpitude,
      or
      the actual incarceration of the Executive. 

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    (ii)
      the
      Executive willfully and repeatedly fails to follow the lawful instructions
      of
      the Board after the Executive's receipt of written or email notice of such
      instructions, other than a failure resulting from the Executive's incapacity
      because of physical or mental illness;

    

    (iii)
      a
      government regulatory agency finally recommends or orders in writing that
      Medifast terminate the employment of the Executive; or

    

    (iv)
      the
      Executive violates the covenant not to compete contained in Section 8 or the
      confidentiality provisions of Section 9.

    

    Notwithstanding
      the foregoing, the Executive's employment under this Agreement will not be
      deemed to have been terminated for Cause under Section 3(a)(i) or (ii) if such
      termination took place solely as a result of:

    

    (i)
      questionable judgment on the part of the Executive;

    

    (ii)
      any
      act or omission believed by the Executive, in good faith, to have been in,
      or
      not opposed to, the best interests of Medifast; or

     

    (iii)
      any
      act or omission in respect of which a determination could properly be made
      that
      the Executive met the applicable standard of conduct prescribed for
      indemnification or reimbursement or payment of expenses under the Articles
      of
      Incorporation or By-laws of Medifast or the directors' and officers' liability
      insurance of Medifast, in each case as in effect at the time of such act or
      omission.

    

    If
      the
      Executive's employment is terminated under the provisions of this subsection,
      then all rights of the Executive under Section 4 will cease as of the effective
      date of such termination.

    

    (b)
      Termination
      Without Cause.
      The
      Executive's employment under this Agreement may be terminated at any time during
      the Employment Period without Cause, by action of the Board, upon giving notice
      of such termination to the Executive at least 30 days prior to the date upon
      which such termination is to take effect. If the Executive's employment is
      terminated under the provisions of this subsection, then the Executive will
      be
      entitled to receive the compensation set forth in Section 6.

    

    (c)
      Voluntary
      Termination, Retirement or Death.
      If the
      Executive voluntarily terminates employment without "Good Reason" (as defined
      in
      Section 5), retires or dies, the Executive's employment under this Agreement
      will be deemed terminated as of the date of the Executive's voluntary
      termination, retirement or death, and all rights of the Executive under Section
      4 will cease as of the date of such termination and any benefits payable to
      the
      Executive will be determined in accordance with the retirement and insurance
      programs of Medifast then in effect.

    

    (d)
      Disability.
      If the
      Executive is incapacitated by accident, sickness, or otherwise so as to render
      the Executive mentally or physically incapable of performing the essential
      duties required of the Executive under Section 2, notwithstanding reasonable
      accommodation, for a continuous period of six months, then, upon the expiration
      of such period or at any time thereafter, by action of the Board, the
      Executive's employment under this Agreement may be terminated immediately upon
      giving the Executive notice to that effect. If the Executive's employment is
      terminated under the provisions of this subsection, then all rights of the
      Executive under Section 4 will cease as of the last business day of the week
      in
      which such termination occurs, and the Executive will thereafter be entitled
      to
      the benefits to which he is entitled under any disability or other plan of
      Medifast in which he is then a participant.

    

    
      
        
        

      

      
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    4.
      Employment
      Period Compensation and Related Matters.

    

    (a)
      Salary.
      For
      services performed by the Executive under this Agreement, Medifast will pay
      the
      Executive a salary, in the aggregate, during the Employment Period, at the
      annualized rate of $70,000, payable at the same times as salaries are payable
      to
      other executive employees of Medifast. Medifast may, from time to time, increase
      (but not decrease) the Executive's salary, and any and all such increases will
      be deemed to constitute amendments to this subsection to reflect the increased
      amounts, effective as of the dates established for such increases by the Board
      in the resolutions authorizing such increases.

    

    (b)
      Bonus.
      For
      services performed by the Executive under this Agreement, he shall be entitled
      to participate in such bonus or similar award plan or program as may be
      maintained from time to time by Medifast for its executive officers. In
      addition, Medifast may, from time to time, pay such other bonus or bonuses
      to
      the Executive as the Board, in its sole discretion, deems appropriate. The
      payment of any such bonuses will not reduce or otherwise affect any other
      obligation of Medifast to the Executive provided for in this
      Agreement.

    

    (c)
      Pension
      and Welfare Benefits.
      Medifast will provide the Executive, during the Employment Period, with pension
      and welfare benefits (within the meaning of Section 3 of the Employee Retirement
      Income Security Act of 1974, as amended ("ERISA")) in the aggregate not less
      favorable than those received by other employees of Medifast.

    

    (d)
      Fringe
      Benefits.

    

    (i)
      In
      General. Except as otherwise provided in this subsection, Medifast will provide
      the Executive, during the Employment Period, with such fringe benefits as may
      be
      provided generally from time to time for its executive officers.

    

    (ii)
      Vacation. The Executive will be entitled to not less than three weeks of
      vacation per calendar year. The right to carry over unused vacation days will
      be
      subject to the executive personnel policies of Medifast from time to time in
      effect.

    

    (e)
      Expense
      Reimbursement.
      The
      Executive will be entitled to reimbursement of all expenses incurred by him
      in
      the discharge of his duties hereunder, or otherwise in furtherance of the
      business of Medifast, provided he renders an accounting of such expenses in
      such
      manner as may be required from time to time for employees
      generally.

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

     

    (f)
      Salary
      Deferral.
      The
      Executive may request that the payment of any portion of his base salary and/or
      bonus for any calendar year be deferred. Such request must be made in writing
      to
      Medifast before the beginning of such calendar year and must include the period
      of deferral requested by the Executive (the "Deferral Period"). If the Board
      approves such request, the Executive will be entitled to receive, at the end
      of
      the Deferral Period, the deferred portion of his base salary and/or bonus plus
      interest at a compounded rate of 6% per annum. Any salary and/or bonus which
      is
      deferred as described herein will be credited to an account on the books of
      Medifast established in the name of the Executive. However, this account will
      not be funded, and Medifast shall not be deemed to be a trustee for the
      Executive with respect to any deferred amount. The Executive will be a general
      unsecured creditor of Medifast for any amount due him under this section.
      Medifast will not be required to segregate any funds representing such deferred
      amounts, and nothing herein will be construed as providing for such
      segregation.

    

    (g) Stock
      Grant.
      The
      Executive has been granted and will receive 30,000*
      shares
      of Medifast, Inc. common stock to be vested over the term of this Agreement.
      The
      Executive will receive 5,000* shares of common stock per year over the next
      six
      years, providing the Executive is performing his duties in accordance with
      this
      Agreement. The Board of Directors reserves the right to adjust the vesting
      schedule as business conditions change. 

    

    *
      Amount
      subject to change.

     

    5.
      Resignation
      of the Executive for Good Reason.

    

    (a)
      Events
      Giving Right to Terminate for Good Reason.
      The
      Executive may resign for Good Reason at any time during the Employment Period,
      as hereinafter set forth. As used in this Agreement, the term "Good Reason"
      means any of the following:

    

    (i)
      any
      reduction in title or a material adverse change in the Executive's
      responsibilities or authority which are inconsistent with, or the assignment
      to
      the Executive of duties inconsistent with, the Executive's status as Chief
      Executive Officer of Medifast;

    

    (ii)
      any
      reassignment of the Executive to a principal office which is more than 15 miles
      from Owings Mills, Maryland;

    

    (iii)
      any
      removal of the Executive from office except for any termination of the
      Executive's employment under the provisions of Section 3(a) or (d);

    

    (iv)
      any
      reduction in the Executive's annual base salary as in effect on the date hereof
      or as the same may be increased from time to time;

    (v)
      any
      failure by Medifast to provide the Executive with benefits at least as favorable
      as those enjoyed by the Executive under any of the pension or welfare plans
      (as
      such terms are defined in ERISA Section 3) of Medifast in which the Executive
      is
      participating on the date of this Agreement, or the taking of any action that
      would materially reduce any of such benefits, unless the change is part of
      a
      change applicable in any case to employees generally; and

    

    (vi)
      any
      material breach of this Agreement by Medifast, coupled with the failure to
      cure
      the same within 30 days after receipt of a written notice of such breach from
      the Executive.

    

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

     

    (b)
      Notice
      of Termination.
      At the
      option of the Executive, exercisable by the Executive within 90 days after
      the
      occurrence of the event constituting Good Reason, the Executive may resign
      from
      employment under this Agreement by a notice in writing ("Notice of Termination")
      delivered to Medifast and the provisions of Section 6 will thereupon
      apply.

    

    (c)
      Special
      Right of Termination.
      Notwithstanding anything herein to the contrary, but subject to the provisions
      of Section 3(a), within the one-year period immediately following the occurrence
      of a "Change in Control" (as defined in Subsection (d)), the Executive may
      terminate his employment for any or no reason by delivering a written notice,
      similar to a Notice of Termination, to Medifast; and such termination will
      be
      deemed for all purposes to constitute a resignation for Good Reason. In such
      event, he will be entitled to the payments set forth in Section 6.

    

    (d)
      Change
      in Control Defined.
      For
      purposes of this Agreement, the term "Change in Control" means any of the
      following:

    

    (i)
      a
      sale of the majority of the assets of the company or a change of control of
      the
      Board of Directors as a result of a third party shareholder acquiring or holding
      over 10% of the common stock and attempting to nominate a majority of the Board
      of Directors in favor of his/her shareholder block;

    

    (ii)
      In
      the event of a Change of Control of the Company, all compensation and severance
      due as a result of this agreement will become due immediately at the time of
      the
      change of control to a third party.

    

    6.
      Rights
      in Event of Certain Termination of Employment.
      In the
      event that the Executive resigns from employment for Good Reason, by delivery
      of
      a Notice of Termination or other permitted notice to Medifast, or the
      Executive's employment is terminated by Medifast without Cause, Executive will
      be entitled to receive the payments set forth in this section.

    

    (a)
      Basic
      Payments.
      The
      Executive will be paid an amount equal to one and a half times the sum of (i)
      the highest annualized base salary paid to him during the calendar year of
      termination or the immediately preceding two calendar years. Such amount will
      be
      paid to the Executive in equal monthly installments (without interest),
      beginning 30 days following the date of termination of employment and commencing
      on the Agreement ending date disclosed in section 19(a). Notwithstanding the
      preceding provisions of this subsection to the contrary, in the event this
      section becomes applicable following a Change in Control, the Executive will,
      within 30 days after his termination of employment, be paid a lump sum equal
      to
      the present value of the amounts otherwise payable under this subsection. For
      purposes of the preceding sentence, present value will be determined by using
      the short-term applicable federal rate under Section 1274 of the Internal
      Revenue Code of 1986, as amended (the "Code"), in effect on the date of
      termination of employment. For purposes of this subsection, to the extent
      relevant, base salary and bonuses with any predecessor of Medifast or an
      affiliate thereof shall be taken into account.

    

    7.
      Expiration
      of Agreement.
      In the
      event this Agreement expires by its terms in accordance with the provisions
      of
      Section 19(a), no additional amounts or benefits will be paid
      hereunder.

    

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

     

    8.
      Covenant
      Not to Compete.

    

    (a)
      The
      Executive hereby acknowledges and recognizes the highly competitive nature
      of
      the business of Medifast and accordingly agrees that, during and for the
      applicable period set forth in Subsection (c), the Executive will
      not:

    

    (i)
      be
      engaged, directly or indirectly, either for his own account or as agent,
      consultant, employee, partner, officer, director, proprietor, investor (except
      as an investor owning less than 5% of the stock of a publicly owned company)
      or
      otherwise of any person, firm, corporation, or enterprise engaged, in the
      continental United States ("Non-Competition Area"), in any business which at
      the
      relevant time during employment or at the date of termination of employment
      is
      competitive to any of the businesses of Medifast or any of its subsidiaries;
      or

    

    (ii)
      provide financial or other assistance to any person, firm, corporation, or
      enterprise engaged in any activity in which Medifast or any of its subsidiaries
      is engaged during the Employment Period, in the Non-Competition
      Area.

    

    (b)
      It is
      expressly understood and agreed that, although the Executive and Medifast
      consider the restrictions contained in Subsection (a) reasonable for the purpose
      of preserving for Medifast and its subsidiaries their goodwill and other
      proprietary rights, if a final judicial determination is made by a court having
      jurisdiction that the time or territory or any other restriction contained
      in
      Subsection (a) is an unreasonable or otherwise unenforceable restriction against
      the Executive, the provisions of Subsection (a) will not be rendered void but
      will be deemed amended to apply as to such maximum time and territory and to
      such other extent as such court may judicially determine or indicate to be
      reasonable.

    

    (c)
      The
      provisions of this section will be applicable commencing on the date of this
      Agreement and ending as follows:

    

    (i)
      at
      the termination of the payments and benefits provided under Section 6; provided,
      however, that this clause will not apply in the event Executive's termination
      of
      employment occurs following a Change in Control;

    

    (ii)
      one
      year following the termination of Executive's employment, in the case of a
      voluntary termination without Good Reason; or

    

    (iii)
      in
      all other cases, the date of Executive's termination of employment.

    

    9.
      Confidentiality.

    

    (a)
      As
      used in this section, the term "Confidential Information" means any and all
      information regarding the organization, business or finances of Medifast or
      any
      of its subsidiaries and affiliates, including, but not limited to, any and
      all
      business plans and strategies, financial information, proposals, reports,
      marketing plans and information, cost information, customer information, claims
      history and experience data, sales volume and other sales statistics, personnel
      data, pricing information, concepts and ideas, information respecting existing
      and proposed investments and acquisitions, and information regarding customers
      and suppliers, but the term Confidential Information will not include
      information which prior to the Executive's receipt thereof (i) was generally
      publicly available, or (ii) was in the Executive's possession free of any
      restrictions on its use or disclosure and from a source other than Medifast
      or
      any of its subsidiaries or affiliates.

    

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

     

    (b)
      The
      Executive acknowledges and agrees that his employment by Medifast will afford
      him an opportunity to acquire Confidential Information and that the
      misappropriation or disclosure of any Confidential Information would cause
      irreparable harm to Medifast and its subsidiaries and affiliates.

    

    (c)
      During the Employment Period and for a period of two years thereafter, the
      Executive will not use for the benefit of anyone other than Medifast and its
      subsidiaries and affiliates or disclose any of the Confidential Information
      for
      any reason or purpose whatsoever except to authorized representatives of such
      business entities, as directed or authorized by Medifast, or as required by
      law.

    

    (d)
      With
      respect to those items of Confidential Information which constitute trade
      secrets under applicable law, the Executive's obligations of confidentiality
      and
      nondisclosure as set forth in this section will continue and survive after
      the
      two-year period as provided in Subsection (c) to the greatest extent permitted
      by applicable law.

    

    (e)
      The
      Executive will not remove any records, documents or any other tangible items
      (excluding the Executive's personal property) from the premises of Medifast
      or
      its subsidiaries or affiliates, in either original or duplicate form, except
      as
      needed in the ordinary course of performing services hereunder.

    

    (f)
      Upon
      termination of this Agreement, the Executive will immediately surrender to
      the
      owner thereof all documents in his possession, custody or control embodying
      the
      Confidential Information or any part thereof and will not thereafter remove
      the
      same from the premises on which it is located.

    

    10.
      Remedies.
      Executive acknowledges and agrees that the remedy at law of Medifast for a
      breach or threatened breach of any of the provisions of Section 8 or 9 would
      be
      inadequate and, in recognition of this fact, in the event of a breach or
      threatened breach by the Executive of any of the provisions of Section 8 or
      9,
      it is agreed that, in addition to the remedy at law, Medifast will be entitled
      to, without posting any bond, and the Executive agrees not to oppose any request
      of Medifast for, equitable relief in the form of specific performance, a
      temporary restraining order, a temporary or permanent injunction, or any other
      equitable remedy which may then be available. Nothing herein contained will
      be
      construed as prohibiting Medifast from pursuing any other remedies available
      to
      it for such breach or threatened breach.

    11.
      Arbitration.
      Medifast and Executive recognize that in the event a dispute should arise
      between them concerning the interpretation or implementation of this Agreement,
      lengthy and expensive litigation will not afford a practical resolution of
      the
      issues within a reasonable period of time. Consequently, except as otherwise
      provided herein, each party agrees that all disputes, disagreements and
      questions of interpretation concerning this Agreement are to be submitted for
      resolution to the American Arbitration Association ("Association") in Baltimore,
      Maryland, in accordance with the Individual Employment Dispute Resolution rules
      of the Association. Medifast or the Executive may initiate an arbitration
      proceeding at any time by giving notice to the other in accordance with the
      rules of the Association. The Association will designate a single arbitrator
      to
      conduct the proceeding, but Medifast and the Executive may, as a matter of
      right, require the substitution of a different arbitrator chosen by the
      Association. Each such right of substitution may be exercised only once. The
      arbitrator will not be bound by the rules of evidence and procedure of the
      courts of the State of Maryland, but will be bound by the substantive law
      applicable to this Agreement. The decision of the arbitrator, absent fraud,
      duress, incompetence or gross and obvious error of fact, will be final and
      binding upon the parties and will be enforceable in courts of proper
      jurisdiction. Following written notice of a request for arbitration, Medifast
      and the Executive will be entitled to an injunction restraining all further
      proceedings in any pending or subsequently filed litigation concerning this
      Agreement, except as otherwise provided herein.

    

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

     

    12.
      Indemnification.
      Medifast will indemnify the Executive, to the fullest extent permitted under
      Delaware and federal law, with respect to any threatened, pending or completed
      legal or regulatory action, suit or proceeding brought against him by reason
      of
      the fact that he is or was a director, officer, employee or agent of Medifast,
      or is or was serving at the request of Medifast as a director, officer, employee
      or agent of another person or entity. To the fullest extent permitted by
      Delaware and federal law, Medifast will, in advance of final disposition, pay
      any and all expenses incurred by the Executive in connection with any
      threatened, pending or completed legal or regulatory action, suit or proceeding
      with respect to which he may be entitled to indemnification hereunder. Medifast
      will use its best efforts to obtain insurance coverage for the Executive under
      a
      policy covering directors and officers against litigation, arbitrations and
      other legal and regulatory proceedings; provided, however, that nothing herein
      is to be construed as requiring such action if the Board determines that such
      insurance coverage cannot be obtained at commercially reasonable
      rates.

    

    13.
      Notices.
      Any
      notice required or permitted to be given under this Agreement will, to be
      effective hereunder, be given to Medifast, in the case of notices given by
      the
      Executive, and will, to be effective hereunder, be given by Medifast, in the
      case of notices given to the Executive. Any such notice will be deemed properly
      given if in writing and if mailed by registered or certified mail, postage
      prepaid with return receipt requested, to the residence of the Executive, in
      the
      case of notices to the Executive, and to the principal office of Medifast,
      in
      the case of notices to Medifast.

    

    14.
      Waiver.
      No
      provision of this Agreement may be modified, waived, or discharged unless such
      waiver, modification, or discharge is agreed to in writing and signed by the
      Executive and an executive officer of Medifast, each such officer specifically
      designated by the Board. No waiver by any party hereto at any time of any breach
      by the other party hereto of, or compliance with, any condition or provision
      of
      this Agreement to be performed by such other party will be deemed a waiver
      of
      similar or dissimilar provisions or conditions at the same or at any prior
      or
      subsequent time.

    

    15.
      Assignment.
      This
      Agreement is not assignable by any party hereto, except by Medifast to any
      successor in interest to the business of Medifast.

    

    16.
      Entire
      Agreement.
      This
      Agreement contains the entire agreement of the parties relating to the subject
      matter of this Agreement and, in accordance with the provisions of Section
      25,
      supersedes any prior agreement of the parties.

    

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

     

    17.
      Successors;
      Binding Agreement.

    

    (a)
      Medifast will require any successor (whether direct or indirect, by purchase,
      merger, consolidation, or otherwise) to all or substantially all of the business
      and/or assets of Medifast to expressly assume and agree to perform this
      Agreement in the same manner and to the same extent that Medifast would be
      required to perform it if no such succession had taken place. Failure by
      Medifast to obtain such assumption and agreement prior to the effectiveness
      of
      any such succession will constitute a material breach of this Agreement. As
      used
      in this Agreement, "Medifast" means Medifast as hereinbefore defined and any
      successor to the business and/or assets of Medifast, as aforesaid, which assumes
      and agrees to perform this Agreement by operation of law, or
      otherwise.

    

    (b)
      This
      Agreement will inure to the benefit of and be enforceable by the Executive's
      personal or legal representatives, executors, administrators, heirs,
      distributees, devisees, and legatees. If the Executive should die while any
      amount is payable to the Executive under this Agreement if the Executive had
      continued to live, all such amounts, unless otherwise provided herein, will
      be
      paid in accordance with the terms of this Agreement to the Executive's devisee,
      legatee, or other designee, or, if there is no such designee, to the Executive's
      estate.

    

    18.
      Termination.

    

    (a)
      Unless the Executive's employment is terminated pursuant to the provisions
      of
      Section 3 or Section 5, the term of this Agreement will be for a period
      commencing on the date of this Agreement and ending on June 1,
      2012.

    

    (b)
      Any
      termination of the Executive's employment under this Agreement or of this
      Agreement will not affect the benefit, noncompetition and confidential
      information provisions of Section 6, 8, 9 or 12, which will, if relevant,
      survive any such termination and remain in full force and effect in accordance
      with their respective terms.

    

    (c)
      Except as provided in Section 25, nothing herein will be construed as limiting,
      restricting or eliminating any rights the Executive may have under any plan,
      contract or arrangement to which he is a party or in which he is a vested
      participant; provided, however, that any termination payments required hereunder
      will be in lieu of any severance benefits to which he may be entitled under
      a
      severance plan or arrangement of Medifast; and provided further, that if the
      benefits under any such plan or arrangement may not legally be eliminated,
      then
      the payments hereunder will be correspondingly reduced in such equitable manner
      as the Board may determine. 

    

    19.
      No
      Mitigation or Offset.
      The
      Executive will not be required to mitigate the amount of any payment provided
      for in this Agreement by seeking employment or otherwise; nor will any amounts
      or benefits payable or provided hereunder be reduced in the event he does secure
      employment, except as may otherwise be provided herein.

    

    20.
      Validity.
      The
      invalidity or unenforceability of any provisions of this Agreement will not
      affect the validity or enforceability of any other provision of this Agreement,
      which will remain in full force and effect.

    

    21.
      Applicable
      Law.
      Except
      to the extent preempted by federal law, this Agreement will be governed by
      and
      construed in accordance with the domestic internal law of the State of
      Delaware.

    

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

     

    22.
      Number.
      Words
      used herein in the singular will be construed as being used in the plural,
      as
      the context requires, and vice versa.

    

    23.
      Headings.
      The
      headings of the sections, subsections and paragraphs of this Agreement are
      for
      convenience only and will not control or affect the meaning or construction
      or
      limit the scope or intent of any of the provisions of this
      Agreement.

    

    24.
      Effective
      Date; Termination of Prior Agreement.
      This
      Agreement will become effective immediately upon the execution and delivery
      of
      this Agreement by the parties hereto. Upon the execution and delivery of this
      Agreement, any prior agreement relating to the subject matter hereof, will
      be
      deemed automatically terminated and be of no further force or
      effect.

    

    25.
      Withholding
      For Taxes.
      All
      amounts and benefits paid or provided hereunder will be subject to withholding
      for taxes as required by law.

    

    26.
      Individual
      Agreement.
      This
      Agreement is an agreement solely between and among the parties hereto. It is
      intended to constitute a nonqualified unfunded arrangement for the benefit
      of a
      key management employee and will be construed and interpreted in a manner
      consistent with such intention. 

    

    IN
      WITNESS WHEREOF, the parties have executed this Agreement as of the date first
      above written.

     

    MEDIFAST,
      INC. 

    

      
        	
                By

              	 
	 	
                Chairman
                  of the Compensation Committee of the Board,

              
	 	
                Rev.
                  Donald F. Reilly OSA

              
	 	 
	 	
                Brendan
                  N. Connors

              
	 	
                ("Medifast")

              
	 	 
	 	 	
                (SEAL)

              

      

    

     

    
      
        
        

      

      
        10

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