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


  





 






















(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.




 




10





























 




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




 




11





























 




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.




 




12





























 




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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