EXHIBIT 10.23

 

HEALTHETECH, INC.

 

SUPPLY & SERVICES AGREEMENT

 

This Supply and Services Agreement (“Agreement”) is made on March 25, 2002 (the
“Effective Date”) by and between: HealtheTech, Inc., which has its primary place
of business located at 523 Park Point Drive, Third Floor, Golden, CO. 80401 USA
(hereinafter “HET”) and Bally Total Fitness Corporation, located at 8700 West
Bryn Mawr Avenue, Chicago, IL 60631 (hereinafter “BTF”).

 

1.                                       Recitals

 

(a)  HET has developed and commercialized numerous personal health monitoring
“Products” including the BodyGem TM Metabolic Measurement Device, and possesses
all trade secret, trademark, patent, and other intellectual property rights
associated with the Products as hereinafter defined.

 

(b)  BTF is a commercial fitness service provider offering weight management and
fitness programs to consumer clients at Company-owned and franchised locations
in the United States and Canada.

 

(c)  HET desires to supply Products to BTF.

 

(d)  BTF wishes to purchase and deploy HET Products in its Bally Total Fitness
Centers in accordance with this Agreement.

 

2.                                       Definitions

 

For purposes of this Agreement, including any Attachments and Appendices, the
following terms shall have the following meanings:

 

(a)  “BodyGem Metabolic Measurement Device” means the BodyGem handheld indirect
calorimeter used for the purpose of measuring a person’s resting metabolic rate
(RMR) along with its accompanying accessories (one hard mask, one mouth piece,
one nose-clip, one medium disposable mask, one AC adapter, one BodyGem User
Manual, one training video, and one BodyGem carrying case).

 

(b)  “Commercial Fitness Market” means chain fitness centers in the United
States and Canada.

 

(c)  “Effective Date” means the date the Supply and Services are to commence
under this Agreement.

 

(d)  “Products” means the BodyGem Metabolic Measurement Device and its
associated single use breathing units, nose clips, and collateral material.

 

(e)  “Purchase” means the collective execution of (i) placement of a purchase
order by BTF, (ii) the acceptance of such purchase order by HET followed by
shipment of the full purchase order quantity by HET or its agent. A “Purchase”
shall not be deemed completed until full shipment is made.

 

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(f)    “Single Use Breathing Unit” means the “Disposable” facemask or mouthpiece
that an individual breathes into during a BodyGem metabolic measurement.

 

(g)  “Specific Target Customers” means customers and clients of BTF owned or
franchised Centers in the United States and Canada.

 

(h)  “Term” means the time from the Effective Date to the date upon which this
Agreement expires.

 

3.                                       Grant of Rights to BTF

 

(a)  Subject to the terms of this Agreement, HET hereby will sell Products at a
reduced rate specified in Section 6 herein to BTF for use on Specific Target
Customers; however, this grant specifically excludes any right to resell BodyGem
Metabolic Measurement Devices.

 

(b)  HET agrees to supply the BodyGems and Single Use Breathing Units to BTF for
the Term of this Agreement under the pricing specified herein.

 

4.                                       Obligations of BTF

 

BTF shall, for the Term of this Agreement:

 

(a)  Provide for appropriate training to applicable BTF and BTF franchisee
employees (where appropriate) sufficient to enable proper use and promotion of
metabolic measurement services using the BodyGem, and use reasonable marketing
and promotional efforts to promote the Products to Specific Target Customers.

 

(b)  Allow HET access to visit any BTF facility at HET’s sole expense and during
normal business hours, to conduct a review of the use of HET Products with the
BTF facility and if applicable, make suggestions for improvement based upon
HET’s experience with the Products. BTF agrees to consider such suggestions and
make changes it believes, in BTF’s sole discretion, are reasonable.

 

(c)  Not knowingly incur any liability on behalf of HET, nor in any way pledge
or purport to pledge HET’s credit; nor describe or hold itself in relation to
the Products out as an employee of HET; nor describe itself other than as a
service provider of metabolic measurements using the Products in relation to HET
metabolic measurement technologies; nor make any claims with respect to the
Products (medical or otherwise) inconsistent with written product manuals or HET
provided BodyGem training.

 

(d)  Agree to comply with the Promotional and Branding Guidelines attached as
Exhibit A, except where modified by this Agreement. In case of a conflict
between this Agreement and Exhibit A, the terms within this Agreement shall be
controlling. For a period of ninety (90) days after the Effective Date of this
Agreement, BTF agrees not to distribute or publish advertising (whether written,
broadcast, telecast, posted on web sites or otherwise) created by or for BTF
referring to the Products or using HET branding (per the guidelines in Appendix
A) without submitting the same to HET for review and securing specific HET
approval in writing, with such approval to not be unreasonably withheld or
delayed (the “Ad Approval Period”).

 

(e)  Acknowledge that the BodyGem Metabolic Measurement Device being supplied to
BTF by HET is not a medical device, is not approved or cleared by the U.S. Food
and Drug Administration (FDA) as a medical

 

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device, and is not being offered by HET as a medical device. BTF agrees not to
make any medical claims about the HET Products.

 

(f)  Acknowledge that the Single Use Breathing Units are disposable components
and are not intended for re-use. BTF agrees it shall instruct and cause all the
BTF Fitness Centers not to re-use the Single Use Breathing Units of the BodyGem
Metabolic Measurement Device, or otherwise misuse the BodyGem Metabolic
Measurement Device in a way that is not consistent with HET provided
instructions for use located in the BodyGem Operator’s Manual as provided to
Bally or consistent with training by HET.

 

5.                                       Obligations of HET

 

(a)  HET shall supply Products as outlined in this Agreement.

 

(b)  Promotional Materials. HET shall supply BTF with the HET approved artwork
and mechanicals required to support BTF’s production of its own brochures and
other promotional materials that shall be subject to review and approval by HET.
During the Ad Approval Period, BTF agrees to submit promotional materials
referencing any Products to HET no less than five (5) days in advance of any
release or publication of such materials. During the Ad Approval Period, HET
will review all BTF promotional materials submitted promptly and will provide
written approval or requests for change within five (5) days after receipt of
materials from BTF.

 

(c)  Training Support. If requested by BTF, HET will provide BodyGem training to
BTF Fitness Center personnel on the following basis:

 

(i)                                     All on-going training shall be charged
at a rate of two hundred dollars ($200.00) per hour, per HET trainer, plus
reasonable travel and related expenses with such expenses to not exceed $1,000
unless pre-authorized by BTF. All on-going training shall be charged in 4-hour
block increments. All HET trainers shall provide training using their own
equipment, including the BodyGem Metabolic Measurement Device, but BTF shall
provide all Disposables for such training.

 

(ii)                                  All fees and expenses shall be
substantively documented in a form reasonably acceptable to BTF, and provided to
BTF with the invoice to be reimbursed by BTF within thirty (30) days of date of
invoice.

 

(iii)                               HET shall use all reasonable efforts to
accommodate the time and place for BTF requested on-going training, but any
on-going training shall be scheduled by mutual agreement of the parties.

 

(iv)                              In order to provide reasonable notice to HET
of known or anticipated BTF or BTF Fitness Center training requirements, BTF
agrees to give non-binding good faith training demand forecasts at the beginning
of each calendar quarter for the following calendar quarter during the Term of
this Agreement. All forecasts shall be in writing and shall specify the number
of attendees and the desired location and duration.

 

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(d)  Customer Support. BTF shall have access to HET’s normal customer support
during regular HET customer support hours (currently 8:30 a.m. to 5:30 p.m. MST)
throughout the BodyGem Metabolic Measurement Device warrantee period of one
year. After the initial warrantee period expires, extended warrantees or
additional customer service can be purchased at HET standard rates and
availability at the time of purchase. HET warrants that customer support will
remain available for the BodyGem Metabolic Measurement Device for the product
life of the BodyGem Metabolic Measurement Device.

 

6.                                       Prices, Payment, and Shipping

 

(a)  The agreed upon pricing to BTF Products supplied to BTF by HET under this
Agreement is specified below (all amounts are in U.S. dollars):

 

 

 

Product Description:

 

BTF Price:

BodyGem TM  Metabolic Measurement Device

 

$499.99 each(1)

 

 

 

BodyGem Training Video

 

$7 each

 

 

 

HET Nose clip

 

$1 each

 

 

 

Nose clip with foam pads

 

$2 each

 

 

 

Disposables (single use mouthpiece or facemask):

 

 

‹ 10,000 disposables(2)

 

$200 per box of 20

10,020 to 25,000 disposables(2)

 

$160 per box of 20

25,020 to 50,000 disposables(2)

 

$140 per box of 20

50,020 to 100,000 disposables(2)

 

$120 per box of 20

100,020 and above(2)

 

$100 per box of 20

 

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(1)                                  Such pricing subject to Section 7(b) below.

 

(2)                                  The Disposable volume discounts defined
above apply to non-cumulative, single purchase order quantities that specify a
single shipping or delivery date for the entire quantity specified in the
purchase order.

 

(b)  Special Initial BodyGem Pricing. HET shall honor a one-time order special
initial pricing for BodyGem Metabolic Measurement Devices of $499.99 each for
any quantity of BodyGem Metabolic Measurement Devices Purchased by BTF in its
initial order provided that initial order is placed with HET on or before March
26, 2002.  After the initial order of BodyGem Metabolic Measurement Devices,
such pricing shall increase to $995 per unit. Any order qualifying for this
special initial pricing shall be non-cancelable by BTF, except for
non-performance or breach by HET.

 

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(c)  Disposable Pricing. After the Term of this Agreement expires, HET shall
sell Disposable mouthpieces and facemasks to BTF at a price to be negotiated but
not to exceed the lesser of $10 or a 35% discount from the suggested list price.

 

(d)  Software. It is acknowledged by BTF that HET has provided user web based
access to HET’s BalanceLog TM  software to allow those users to log personalized
nutritional and exercise information on a trial basis. This free trial use shall
terminate as of March 29, 2002 and shall be subject to a one time, up front, per
user license fee for continued use. The license fee shall be a one-time fee of
$10.00 per user for a license for continued web access and use for the period
beginning April 1, 2002 and ending July 31, 2002. The total license fee shall be
initially computed by the total number of actual BTF users at the commencement
of the license period (292 users) multiplied by the $10.00 user fee. (292 users
x $10.00/user = $2,920.00) and shall increase by $10/user for each additional
current Bally’s customer user who activates and actually uses their BalanceLog
account during the period covered by this license fee. These additional fees
shall be invoiced by HET each month. These fees are not subject to fee reduction
or reimbursement if any users discontinue use at any time during the license
period.

 

(e)  Same Terms. For all orders and deliveries under this Agreement, BTF shall
use BTF’s purchase order form, attached hereto as Exhibit B (the “Purchase
Order”). In the event of a conflict between this Agreement and the Purchase
Order, the terms herein shall govern the subject matter contained within this
Agreement.

 

(f)  Delivery. Delivery shall be F.O.B. point of origin at HET’s shipping dock,
warehouse or point of entry, and all orders will ship within twenty-four (24)
hours of order by BTF. BTF shall insure all products ordered from HET pursuant
to this Agreement for full replacement value, including shipping charges, and
shall submit evidence of such insurance to HET upon request. Shipping dates are
estimates which are not guaranteed and are based upon prompt receipt of all
necessary information. HET shall in no event be liable for delays caused by
fire, act of God, strikes, labor difficulties, acts of governmental or military
authorities delay in transportation or in procuring materials or causes of any
kind beyond the HET’s control.  All shipping charges shall be paid by BTF.
Standard shipping shall be via ground unless otherwise specified by BTF in the
purchase order.  Any expenses associated with HET compliance with any BTF
request for any non-standard method of packaging or shipping or any other F.O.B.
point will be BTF’s sole responsibility.

 

(g)  Warranty. In addition to the terms in the Agreement, HET warrants that all
Products will be free from defects in materials and workmanship. THIS WARRANTY
SHALL EXPIRE TWELVE (12) MONTHS FROM THE DATE OF SHIPMENT FOR BODYGEM METABOLIC
MEASUREMENT DEVICES AND NINETY (90) DAYS FOR SINGLE USE BREATHING UNITS. HET
shall, pursuant to the Return Procedure outline in Section 6(g), repair or
replace any such Product or part which is defective within the terms of the
foregoing warranty, provided such products and parts have at all times been
operated or used under the normal operating conditions for which they were
designed.

 

(h)  Return Procedure. HET shall either repair or replace, at its sole
discretion, any defective Product sold to BTF, on an overnight basis, as
follows: To obtain a replacement unit under this

 

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Section, BTF will return the Product to HET via overnight shipment, at HET’s
cost. BTF will also send HET an electronic mail message or call HET’s customer
service to provide the tracking number of this overnight shipment. Upon HET’s
receipt of this tracking number, HET will ship, via overnight delivery and at
HET’s cost, a replacement Product to BTF.

 

(i)  Terms of Payment. Payment for all products ordered (and shipping services
provided) shall be paid by BTF net thirty (30) days from date of invoice.
Payments will be delinquent if not paid within thirty (30) days after the date
of invoice. Delinquent payments will be subject to a late payment fee equal to
5% of the amount thereof and will bear interest at the rate of 1.5% per month,
but will not exceed the maximum rate allowed by law. If HET’s accounts
receivable from BTF becomes more than ninety (90) days past due (i.e., more than
one hundred twenty (120) days from date of invoice, such delinquency in payment
shall constitute breach of this Agreement and HET shall have the right to
terminate this Agreement. All prices and payments are in U.S. Dollars.

 

7.                                       Term

 

(a)  This Agreement shall commence on the Effective Date hereof and shall extend
to March 31, 2003 (the “Term”). Following the Term, any potential extension of
this Agreement shall be subject to re-negotiation of pricing, except for Section
6(c), and shall be subject to mutual written agreement to extend.

 

(b)  Either party may terminate this Agreement in the event of a breach by the
other party of any term of this Agreement, upon thirty (30) days written notice
if the breaching party fails to cure such breach within thirty (30) days of such
notice of termination.

 

(c)  Notwithstanding the foregoing, this Agreement shall terminate upon notice
from HET, effective immediately, in the event of the bankruptcy or insolvency of
BTF, or in the event BTF enters into a composition with its creditors, or if BTF
undergoes a change in control.

 

8.                                       Representations and Warranties

 

(a)  HET represents and warrants to BTF that HET is qualified to do business
under the laws of each jurisdiction in which it is required by law to be so
qualified. HET represents and warrants to BTF that HET has the requisite power
and authority to enter into and perform its covenants, duties and obligations
under this Agreement.  HET further represents and warrants to BTF that: (i) HET
complies, and at all times during the Term will comply, with all applicable
laws, rules, regulations, and other legal obligations in effect during the Term;
(ii) no consent of any other person or entity is necessary for HET to enter into
and fully perform its covenants, duties and obligations under this Agreement;
(iii) no material composed or created by HET hereunder will infringe upon,
violate the privacy of or create or constitute a libel or slander against, or
violate any common law statutory right or any other right of any other person,
firm, corporation, or other entity, including but not limited to slander,
defamation, right of publicity, copyright, trademark, trade secret, and unfair
competition rights.

 

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(b)  BTF represents and warrants to HET that BTF is qualified to do business
under the laws of each jurisdiction in which it is required by law to be so
qualified. BTF represents and warrants to HET that BTF has the requisite power
and authority to enter into and perform its covenants, duties and obligations
under this Agreement. BTF further represents and warrants to HET that: (i) BTF
complies, and at all times during the Term will comply, with all applicable
laws, rules, regulations, and other legal obligations in effect during the Term;
(ii) no consent of any other person or entity is necessary for BTF to enter into
and fully perform its covenants, duties and obligations under this Agreement;
(iii) no promotional material related to the Products or BalanceLog TM  software
composed or created by BTF hereunder will infringe upon, violate the privacy of
or create or constitute a libel or slander against, or violate any common law
statutory right or any other right of any other person, firm, corporation, or
other entity, including but not limited to slander, defamation, right of
publicity, copyright, trademark, patent, trade secret, and unfair competition
rights.

 

9.                                       Intellectual Property and Promotional
Materials

 

(a)  Except as expressly provided herein, no right, title, permission, license
or interest of any kind in or to the use of any trademark, tradename, service
mark, name, logo, or insignia owned, licensed, or used by BTF (“BTF Marks”) is,
or is intended to be, given or transferred to, or acquired by, HET. HET agrees
that it will not utilize any BTF Mark in any manner without first obtaining
BTF’s prior written consent thereto, which consent BTF has no obligation to
give.  HET agrees, prior to public dissemination of such materials, to obtain
BTF’s prior written consent, which may be withheld for any or no reason
whatsoever, to all advertising, press releases, radio spots and other
promotional material related to BTF or this Agreement, which are created by or
on behalf of HET. HET shall not use the BTF Marks in any disparaging or
defamatory manner.

 

(b)  Except as expressly provided herein, no right, title, interest, permission,
license or interest of any kind in or to the use of any trademark, tradename,
service mark, name, logo, or insignia owned, licensed, or used by HET (“HET
Marks”) is, or intended to be, given or transferred to, or acquired by, BTF.
Except during the first ninety (90) days of this Agreement, as described in
section 4d, BTF does not need to receive written approval from HET to use HET
Marks.  BTF shall follow the HET Promotional and Branding Guidelines provided as
Exhibit A and shall not use the HET Marks in any disparaging or      defamatory
manner. BTF agrees that it will not utilize any HET Mark in any other matter,
other than as outlined herein, without first obtaining HET’s prior written
consent thereto, which HET will not unreasonably withhold.

 

10.                                 Indemnification

 

(a)  HET shall defend, indemnify and hold BTF, its officers, directors,
shareholders, employees, agents, legal representatives, affiliates,
subsidiaries, successors and assigns (collectively the “BTF Group”), harmless
of, from and against any and all claims, demands, actions, causes of action,
suits, debts, losses, liabilities, damages, liabilities, costs, charges, fines,
judgments and expenses, including reasonable attorneys’ fees and court costs, at
law or in equity, both known and unknown, foreseeable and unforeseeable,
liquidated and unliquidated,

 

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insured and uninsured (collectively, “Claims”), sustained, suffered or incurred
by the BTF Group or any of them, at any time, arising from or relating to:

 

(i)                                     the default or breach by HET of any
term, provision, representation, warranty, covenant, duty, obligation or
agreement made by HET in this Agreement;

 

(ii)                                  any negligent act or omission of HET or
any of its officers, directors, employees or agents in the operation of HET’s
business;

 

(iii)                               the violation or alleged violation of any
common law or any federal, state, local or foreign statute, law, ordinance,
rule, regulation, license, permit, authorization or registration, policy or
order (collectively, “Governmental Laws” and individually, a “Governmental Law”)
by HET including, without limitation, any action in which it is alleged that any
of the Products were designed, developed, manufactured, assembled, packaged or
labeled in violation of any Governmental Law;

 

(iv)                              any product recall of the Products, whether
such product recall is initiated by (1) a governmental agency having the power
and authority to require such product recall, or (2) HET, provided HET consults
with BTF prior to any such product recall;

 

(v)                                 the alleged or actual infringement of the
trademark, service mark, trade name, or copyright of any other person or entity
with respect to the HET Marks, any product labeling or other materials
associated therewith supplied by HET and utilized in connection with the
marketing or packaging of the Products; and

 

(vi)                              any alleged or actual personal injuries
(including death) resulting from the use of the Products in full compliance with
all written instructions for use that accompany the actual Product used..

 

(b)  BTF shall defend, indemnify and hold HET, its officers, directors,
shareholders, employees, agents, legal representatives, affiliates,
subsidiaries, successors and assigns (collectively the “HET Group”), harmless
of, from and against any and all claims, demands, actions, causes of action,
suits, debts, losses, liabilities, damages, liabilities, costs, charges, fines,
judgments and expenses, including reasonable attorneys’ fees and court costs, at
law or in equity, both known and unknown, foreseeable and unforeseeable,
liquidated and unliquidated, insured and uninsured (collectively, “Claims”),
sustained, suffered or incurred by the HET Group or any of them, at any time,
arising from or relating to:

 

(i)                                     the default or breach by BTF of any
term, provision, representation, warranty, covenant, duty, obligation or
agreement made by BTF in this Agreement;

 

(ii)                                  any negligent act or omission of BTF or
any of its officers, directors, employees or agents in the operation of BTF’s
business;

 

(iii)                               the violation or alleged violation of any
common law or any

 

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federal, state, local or foreign statute, law, ordinance, rule, regulation,
license, permit, authorization or registration, policy or order (collectively,
“Governmental Laws” and individually, a “Governmental Law”) by BTF including,
without limitation, any action in which it is alleged that BTF’s use of the
Products were not in conformance with the written instructions for use that
accompany the Products or was in violation of any Governmental Law unless BTF
was instructed in such use by HET or such use was for which the Products were
intended; and

 

(iv)                              the alleged or actual infringement of the
trademark, service mark, trade name, or copyright of any other person or entity
with respect to the BTF Marks, any product labeling or other promotional
materials associated therewith supplied by or created under the control of BTF
and utilized in connection with the marketing or packaging of the Products,
except for any changes made by HET or pursuant to HET’s request or any material
used by BTF provided by HET.

 

(c)  Claims. HET and BTF each agree to give to the other prompt written notice
of any matter upon which it intends to base a claim for indemnification (an
“Indemnity Claim”) under Section 10. The indemnified party shall have the right
to participate jointly with the indemnifying party in the indemnifying party’s
defense, settlement or other disposition of any Indemnity Claim. With respect to
any Indemnity Claim relating solely to the payment of money damages and which
could not result in the indemnified party becoming subject to injunctive or
other equitable relief or otherwise adversely affect the business or reputation
of the indemnified party in any manner, and as to which the indemnifying party
shall have acknowledged in writing the obligation to indemnify the indemnified
party pursuant to Section 10, the indemnifying party shall have the sole right
to defend, settle or otherwise dispose of such Indemnity Claim, on such terms as
the indemnifying party, in its sole discretion, shall deem reasonable and
appropriate; provided that the indemnifying party shall provide reasonable
evidence of its ability to pay any Claims, and with respect to any such
settlement, shall obtain the written release of the indemnified party from the
Indemnity Claim. The indemnifying party shall obtain the written consent of the
indemnified party prior to ceasing to defend, settling or otherwise disposing of
any Indemnity Claim if, as a result thereof, the indemnified party would become
subject to injunctive or other equitable relief or the business or reputation of
the indemnified party would be adversely affected in any manner.

 

11. Insurance.  During the Term, HET agrees to maintain, at its sole cost and
expense, General Liability insurance, including Products, Errors and Omissions,
and Completed Operations Liability insurance as will fully protect BTF, its
officers, directors, agents and employees from claims, including, but not
limited to, claims for consequential damages, and advertiser’s liability
resulting from the Products which are the subject of this Agreement. Such
policies shall be written on an occurrence form and with insurers carrying a
minimum Best’s Rating of A. They shall evidence deductibles in amounts
satisfactory to BTF and shall provide Combined Single Limits of at least
$1,000,000. HET agrees to provide umbrella coverage in minimum limits of
$5,000,000. HET will add BTF and any other party designated by BTF as an
additional insured on such policies and provide BTF with a certificate of
insurance along with the applicable additional insured endorsement evidencing
such coverage, within ten (10) days after HET executes this Agreement. (A
Vendor’s endorsement is not an acceptable substitute for the additional insured
endorsement.) Such policies must provide that coverage shall not be terminated,
materially changed, or renewal refused without at least thirty (30) days prior
written notice to BTF. HET will also provide Worker’s Compensation coverage in

 

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statutory limits.

 

12. Adverse Publicity.  If HET or HET’s products are the subject of materially
adverse publicity, which in the sole discretion of BTF is or may be detrimental
to the intended purpose of the Agreement or to BTF or its business, then BTF may
elect to terminate this Agreement by giving HET at least two (2) business days
prior written notice thereof. If BTF or BTF’s products or services are the
subject of materially adverse publicity, which in the sole discretion of HET is
or may be detrimental to the intended purpose of the Agreement or to HET or its
business, then HET may elect to terminate this Agreement by giving BTF at least
two (2) business days prior written notice thereof.

 

13. Confidentiality

 

(a)  Both BTF and HET shall regard as confidential and proprietary all of the
information communicated, in connection with this Agreement, by the other party
in writing and marked “Confidential” (which information shall at all times be
the property of the disclosing party) (“Confidential Information”). Neither
shall, without the prior written consent from the other party, at any time (i)
use any Confidential Information of the other party for any purpose other than
in connection with the performance of its obligations under this Agreement or
(ii) disclose any portion of the Confidential Information of the other party to
third parties, except their respective attorneys and advisors. BTF and HET, as
applicable, shall promptly at the termination of this Agreement, upon the
request of the disclosing party, either return to the disclosing party all
Confidential Information of the disclosing party which is in written or tangible
form (including, without limitation, all copies, summaries and notes of the
contents thereof) or promptly destroy all such Confidential Information and have
one of their executive officers certify, in writing, to such destruction to the
disclosing party. BTF and HET shall disseminate the Confidential Information to
their respective employees, and agents only on a “need to know” basis. BTF and
HET shall cause each of their respective employees who has access to the
Confidential Information to comply with the terms and provisions of this Section
in the same manner as BTF and HET are bound hereby.

 

(b)  Notwithstanding the foregoing, BTF’s and HET’s obligations pursuant to the
above paragraph shall not apply to (i) information that, at the time of
disclosure, is, or after disclosure becomes part of, the public domain other
than as the consequence of BTF’s or HET’s respective breach of this Section;
(ii) information that was known or otherwise available to a party prior to its
disclosure by the other party or was independently developed by either party;
(iii) information disclosed by a third party, if such third party’s disclosure
does not violate any obligation of the third party to the non-receiving party;
(iv) information that BTF and HET authorize in advance, in writing, for release;
or (v) information required to be disclosed by the receiving party by reason of
any law, governmental request or regulation or any legal proceeding or similar
process. In the event that disclosure becomes necessary under subsection (v)
above, the party required to make such disclosure shall give written notice
thereof to the other party, before such disclosure is actually made.

 

14. Taxes.  HET acknowledges and agrees that it is HET’s obligation to provide
for payment of all federal and state income and employment taxes and
unemployment or disability insurance applicable to HET, HET’s business, any of
HET’s employees and any of HET’s products, and HET will indemnify BTF and hold
BTF harmless to the extent of any obligation imposed by law on BTF to pay any
such amounts in connection with any payments under this Agreement.

 

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15. Entire Agreement; Amendment.  This Agreement, together with the Exhibits
attached hereto, embodies the entire agreement and understanding between the
parties hereto and supersedes any and all prior and contemporaneous agreements
and understandings between the parties hereto relating to the subject matter
hereof, whether verbal or written. No modifications or amendments of this
Agreement will be effective unless made in writing and signed by BTF and HET.

 

16. Assignment.  This Agreement shall inure to the benefit of and be binding
upon the parties hereto, their successors and agents, but either party may not
pledge, encumber or assign any of its rights or obligations hereunder in any
manner whatsoever without the prior written consent of the other party in each
instance.

 

17. Notices and Address for Payment.  Any and all notices, demands, requests,
consents, designations and other communications required or desired to be given
pursuant to this Agreement and all payments under this Agreement will be given
in writing and will be deemed duly given upon personal delivery, or on the third
day after mailing if sent by certified mail, postage prepaid, return receipt
requested, or on the day after deposit with a nationally recognized overnight
delivery service which maintains records of the time, place and receipt of
delivery, or upon receipt of a confirmed facsimile transmission, and in each
case to the person and address set forth below, or to such other person or
address which BTF or HET may respectively designate in like manner from time to
time.

 

If to BTF:

 

If to HET:

 

 

 

Bally Total Fitness

 

HealtheTech, Inc.

Corporation

 

523 Park Point Drive

8700 West Bryn Mawr

 

Golden, CO 80401

Avenue

 

Attention: Director,

Chicago, IL 60631

 

Sales Operations

Attn: Vice President of

 

 

Retail Operations

 

 

 

18. Severability.  The provisions of this Agreement are severable. If any
provision contained in this Agreement is held to be invalid or unenforceable in
any respect, such provision shall be carried out and enforced only to the extent
to which it shall be valid and enforceable, and any such invalidity or
unenforceability shall not affect any other provision of this Agreement, all of
which shall be fully carried out and enforced as if such invalid or
unenforceable provision had not been set forth herein.

 

19. Governing Law.  This Agreement will be governed, construed and interpreted
in accordance with the laws and decisions of the State of Colorado, without
regard to conflict of law principles that would require the law of another state
or jurisdiction to be applied.

 

20. Joint Drafting and Neutral Construction.  This Agreement is a negotiated
document and shall be deemed to have been drafted jointly by BTF and HET, and no
rule of construction or interpretation shall apply against any particular party
hereto based on a claim that the Agreement was drafted

 

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by one of the parties. This Agreement shall be construed and interpreted in a
neutral manner.

 

21. No Waiver; Course of Performance.  No waiver by BTF or HET of the breach of
any term, condition, warranty, representation, covenant or agreement contained
herein shall be considered as a waiver of the same provision in the future or
any other provision and no delay or omission by BTF or HET in exercising any
right or remedy hereunder shall impair any such right or remedy or be construed
as a waiver of any default notwithstanding any other act taken or not taken by
BTF or HET after such delay or omission. No usage of trade, course of
performance or course of dealing between or among the parties hereto will be
deemed effective to modify, amend or discharge any part of this Agreement or any
rights or obligations of any party hereunder.

 

22. Counterparts.  This Agreement may be executed in two or more counterparts,
any one of which need not contain the signatures of more than one party, but all
such counterparts taken together will constitute one and the same instrument.
One or more parties may sign this Agreement by use of facsimile transmission,
provided that, an original is sent by overnight courier.

 

23. Relationship of the Parties.  BTF and HET shall be, at all times,
independent contractors, solely responsible for the manner by and the form in
which each performs under this Agreement. Nothing contained herein shall be
deemed to: (i) create a partnership or joint venture between BTF and HET; (ii)
make either party’s employees the employees of the other; or (iii) make either
party the agent of the other for any purpose whatsoever. Neither party shall
have the authority to bind or obligate, or represent itself as having on the
authority to bind or obligate, the other party in any manner whatsoever.

 

24. Headings.  The numbers, headings, titles or designations of the various
Sections are not a part of this Agreement, but are for convenience and reference
only, and do not and will not be used to define, limit or construe the contents
of the Sections.

 

25. Cumulative Remedies.  BTF’s remedies under this Agreement are cumulative,
are not exclusive, and are in addition to any other rights and remedies BTF may
have at law, in equity or otherwise.

 

26. Binding Agreement.  This Agreement will be binding upon and inure to the
benefit of BTF and HET, and their respective legal representatives, successors
and permitted assigns, if any.

 

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
as of the day and year first above written by their respective authorized
officials.

 

 

Bally Total Fitness Corporation (BTF)

HealtheTech, Inc. (HET)

 

 

 

 

 

 

 

By:

/s/ PAUL TOBACK

 

By:

/s/ NOEL L. JOHNSON

 

 

 

 

 

Name:

Paul Toback

Name:

Noel L. Johnson,

 

 

 

Ph.D.

Title: 

COO

Title:

President and COO

 

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