HEALTH FITNESS CORPORATION OUTSIDE DIRECTOR COMPENSATION

1.

Initial Compensation — Stock Grant. Upon first election to the HFC Board of Directors, a Director will receive a grant of that number of shares of stock which is equal to the lesser of (i) the sum of $60,000 divided by the per share fair market value of the Company’s common stock as of such date of election, or (ii) 10,000 shares; provided that one-third of such shares shall be vested on the first anniversary of such date of election, two-thirds of such shares shall be vested on the second anniversary of the date of such election, and all of such shares shall be vested on the third anniversary of the date of such election; further provided that any non-vested shares shall be forfeited upon such director’s resignation, termination, failure to stand for re-election.

2.

Annual Compensation — Stock Options. Upon first election to the HFC Board of Directors a director will receive a six-year fully vested option to purchase 7,500 shares of HFC common stock. Thereafter, on the date of each annual shareholders’ meeting, each director serving up to the date of such meeting who was elected or re-elected at the previous annual meeting will receive a six-year fully vested option to purchase 7,500 shares of HFC common stock, and each director serving up to the date of such meeting who was first elected after the previous annual meeting shall receive a six-year fully vested option to purchase the number of shares of HFC common stock equal to 7,500, multiplied by a fraction, the numerator of which shall be the number of days between such director’s initial election to the Board and the date of such annual shareholders’ meeting, and the denominator of which shall be 365; provided, that any such director shall receive his or her full annual grant of options to purchase 7,500 shares of common stock on the date of each annual shareholders’ meeting thereafter. Each option will have an exercise price equal to the fair market value of HFC’s common stock on the date of grant. A record of options earned by each director will be maintained at the HFC corporate office by the CFO. A report of options earned will be distributed to each director on a quarterly basis by the CFO.