**EXHIBIT 10.23**

 

HEALTHETECH, INC.

 

SUPPLY & SERVICES AGREEMENT

 

ThisSupply and Services Agreement (“Agreement”) is made on March 25, 2002 (the“Effective Date”) by and between: HealtheTech, Inc., which has its primaryplace of business located at 523 Park Point Drive, Third Floor, Golden, CO.80401 USA (hereinafter “HET”) and Bally Total Fitness Corporation, located at8700 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 possessesall trade secret, trademark, patent, and other intellectual property rightsassociated with the Products as hereinafter defined.

 

(b) BTF is a commercial fitness service provider offering weight managementand fitness programs to consumer clients at Company-owned and franchisedlocations 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 TotalFitness Centers in accordance with this Agreement.

 

2.                                       Definitions

 

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

 

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

 

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

 

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

 

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

 

(e) “Purchase” means the collective execution of (i) placement of a purchaseorder by BTF, (ii) the acceptance of such purchase order by HET followed byshipment 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 ormouthpiece that an individual breathes into during a BodyGem metabolicmeasurement. 

 

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

 

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

 

3.                                       Grant ofRights to BTF

 

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

 

(b)  HET agrees to supply the BodyGems and SingleUse Breathing Units to BTF for the Term of this Agreement under the pricingspecified herein.

 

4.                                       Obligationsof BTF

 

BTFshall, for the Term of this Agreement:

 

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

 

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

 

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

 

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

 

(e) Acknowledge that the BodyGem Metabolic Measurement Device being suppliedto 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 anymedical claims about the HET Products.

 

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

 

5.                                       Obligationsof HET

 

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

 

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

 

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

 

(i)                                     Allon-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 withsuch expenses to not exceed $1,000 unless pre-authorized by BTF. All on-goingtraining shall be charged in 4-hour block increments. All HET trainers shallprovide training using their own equipment, including the BodyGem MetabolicMeasurement Device, but BTF shall provide all Disposables for such training.

 

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

 

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

 

(iv)                              In order toprovide reasonable notice to HET of known or anticipated BTF or BTF FitnessCenter training requirements, BTF agrees to give non-binding good faithtraining demand forecasts at the beginning of each calendar quarter for thefollowing calendar quarter during the Term of this Agreement. All forecastsshall be in writing and shall specify the number of attendees and the desiredlocation and duration.

 

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(d) Customer Support. BTF shall have access to HET’s normal customer supportduring regular HET customer support hours (currently 8:30 a.m. to 5:30 p.m.MST) throughout the BodyGem Metabolic Measurement Device warrantee period ofone year. After the initial warrantee period expires, extended warrantees oradditional customer service can be purchased at HET standard rates andavailability at the time of purchase. HET warrants that customer support willremain available for the BodyGem Metabolic Measurement Device for the productlife of the BodyGem Metabolic Measurement Device.

 

6.                                       Prices,Payment, and Shipping

 

(a) The agreed upon pricing to BTF Products supplied to BTF by HET underthis 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)                                  Suchpricing subject to Section 7(b) below.

 

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

 

(b)  Special Initial BodyGemPricing. HET shall honor a one-time order special initial pricing for BodyGemMetabolic Measurement Devices of $499.99 each for any quantity of BodyGemMetabolic Measurement Devices Purchased by BTF in its initial order providedthat initial order is placed with HET on or before March 26, 2002.  After the initial order of BodyGem MetabolicMeasurement Devices, such pricing shall increase to $995 per unit. Any orderqualifying 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. Afterthe Term of this Agreement expires, HET shall sell Disposable mouthpieces and facemasksto 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 isacknowledged by BTF that HET has provided user web based access to HET’sBalanceLog TM  software to allow thoseusers to log personalized nutritional and exercise information on a trialbasis. This free trial use shall terminate as of March 29, 2002 and shall besubject to a one time, up front, per user license fee for continued use. Thelicense fee shall be a one-time fee of $10.00 per user for a license forcontinued web access and use for the period beginning April 1, 2002 and endingJuly 31, 2002. The total license fee shall be initially computed by the totalnumber of actual BTF users at the commencement of the license period (292users) 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 customeruser who activates and actually uses their BalanceLog account during the periodcovered by this license fee. These additional fees shall be invoiced by HETeach month. These fees are not subject to fee reduction or reimbursement if anyusers discontinue use at any time during the license period.

 

(e)  Same Terms. For all ordersand 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 conflictbetween this Agreement and the Purchase Order, the terms herein shall governthe subject matter contained within this Agreement.

 

(f) Delivery. Delivery shall be F.O.B. point of origin at HET’s shippingdock, 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 HETpursuant to this Agreement for full replacement value, including shippingcharges, and shall submit evidence of such insurance to HET upon request.Shipping dates are estimates which are not guaranteed and are based upon promptreceipt of all necessary information. HET shall in no event be liable fordelays caused by fire, act of God, strikes, labor difficulties, acts ofgovernmental or military authorities delay in transportation or in procuringmaterials 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 thepurchase order.  Any expenses associatedwith HET compliance with any BTF request for any non-standard method ofpackaging or shipping or any other F.O.B. point will be BTF’s soleresponsibility.

 

(g) Warranty. In addition to the terms in the Agreement, HET warrants thatall Products will be free from defects in materials and workmanship. THISWARRANTY SHALL EXPIRE TWELVE (12) MONTHS FROM THE DATE OF SHIPMENT FOR BODYGEMMETABOLIC MEASUREMENT DEVICES AND NINETY (90) DAYS FOR SINGLE USE BREATHINGUNITS. 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 termsof the foregoing warranty, provided such products and parts have at all timesbeen operated or used under the normal operating conditions for which they weredesigned.

 

(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 obtaina replacement unit under this

 

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Section,BTF will return the Product to HET via overnight shipment, at HET’s cost. BTFwill also send HET an electronic mail message or call HET’s customer service toprovide the tracking number of this overnight shipment. Upon HET’s receipt ofthis 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 shippingservices provided) shall be paid by BTF net thirty (30) days from date ofinvoice. Payments will be delinquent if not paid within thirty (30) days afterthe date of invoice. Delinquent payments will be subject to a late payment feeequal 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’saccounts 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 delinquencyin payment shall constitute breach of this Agreement and HET shall have theright 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 shallextend to March 31, 2003 (the “Term”). Following the Term, any potentialextension of this Agreement shall be subject to re-negotiation of pricing,except for Section 6(c), and shall be subject to mutual written agreement toextend.

 

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

 

(c) Notwithstanding the foregoing, this Agreement shall terminate uponnotice from HET, effective immediately, in the event of the bankruptcy orinsolvency of BTF, or in the event BTF enters into a composition with itscreditors, or if BTF undergoes a change in control.

 

8.                                       Representationsand Warranties

 

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

 

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(b)  BTF represents and warrantsto HET that BTF is qualified to do business under the laws of each jurisdictionin which it is required by law to be so qualified. BTFrepresents and warrants to HET that BTF has the requisite power and authorityto enter into and perform its covenants, duties and obligations under thisAgreement. 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) noconsent of any other person or entity is necessary for BTF to enter into andfully 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 BTFhereunder will infringe upon, violate the privacy of or create or constitute alibel or slander against, or violate any common law statutory right or anyother right of any other person, firm, corporation, or other entity, includingbut not limited to slander, defamation, right of publicity, copyright,trademark, patent, trade secret, and unfair competition rights.

 

9.                                       IntellectualProperty 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 (“BTFMarks”) 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 firstobtaining BTF’s prior written consent thereto, which consent BTF has noobligation to give.  HET agrees, priorto public dissemination of such materials, to obtain BTF’s prior writtenconsent, which may be withheld for any or no reason whatsoever, to alladvertising, press releases, radio spots and other promotional material relatedto BTF or this Agreement, which are created by or on behalf of HET. HET shallnot use the BTF Marks in any disparaging or defamatory manner.

 

(b)  Except as expresslyprovided herein, no right, title, interest, permission, license or interest ofany 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 intendedto be, given or transferred to, or acquired by, BTF. Except during the firstninety (90) days of this Agreement, as described in section 4d, BTF does notneed to receive written approval from HET to use HET Marks.  BTF shall follow the HET Promotional andBranding Guidelines provided as Exhibit A and shall not use the HET Marks inany disparaging or      defamatorymanner. 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 writtenconsent thereto, which HET will not unreasonably withhold.

 

10.                                 Indemnification

 

(a)  HET shall defend, indemnify and hold BTF,its officers, directors, shareholders, employees, agents, legalrepresentatives, affiliates, subsidiaries, successors and assigns (collectivelythe “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, includingreasonable attorneys’ fees and court costs, at law or in equity, both known andunknown, foreseeable and unforeseeable, liquidated and unliquidated,

 

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

 

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

 

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

 

(iii)                               theviolation or alleged violation of any common law or any federal, state, localor foreign statute, law, ordinance, rule, regulation, license, permit,authorization or registration, policy or order (collectively, “GovernmentalLaws” and individually, a “Governmental Law”) by HET including, withoutlimitation, any action in which it is alleged that any of the Products weredesigned, developed, manufactured, assembled, packaged or labeled in violationof any Governmental Law;

 

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

 

(v)                                 the allegedor actual infringement of the trademark, service mark, trade name, or copyrightof any other person or entity with respect to the HET Marks, any productlabeling or other materials associated therewith supplied by HET and utilizedin connection with the marketing or packaging of the Products; and

 

(vi)                              any allegedor actual personal injuries (including death) resulting from the use of theProducts in full compliance with all written instructions for use thataccompany the actual Product used..

 

(b)  BTF shall defend, indemnify and hold HET,its officers, directors, shareholders, employees, agents, legalrepresentatives, affiliates, subsidiaries, successors and assigns (collectivelythe “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, foreseeableand unforeseeable, liquidated and unliquidated, insured and uninsured(collectively, “Claims”), sustained, suffered or incurred by the HET Group orany of them, at any time, arising from or relating to:

 

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

 

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

 

(iii)                               theviolation 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 theProducts were not in conformance with the written instructions for use thataccompany the Products or was in violation of any Governmental Law unless BTFwas instructed in such use by HET or such use was for which the Products wereintended; and

 

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

 

(c)  Claims. HET and BTF each agree to give tothe other prompt written notice of any matter upon which it intends to base aclaim for indemnification (an “Indemnity Claim”) under Section 10. Theindemnified party shall have the right to participate jointly with theindemnifying party in the indemnifying party’s defense, settlement or otherdisposition of any Indemnity Claim. With respect to any Indemnity Claimrelating solely to the payment of money damages and which could not result inthe indemnified party becoming subject to injunctive or other equitable reliefor otherwise adversely affect the business or reputation of the indemnifiedparty in any manner, and as to which the indemnifying party shall haveacknowledged in writing the obligation to indemnify the indemnified partypursuant to Section 10, the indemnifying party shall have the sole right todefend, settle or otherwise dispose of such Indemnity Claim, on such terms asthe indemnifying party, in its sole discretion, shall deem reasonable andappropriate; provided that the indemnifying party shall provide reasonableevidence of its ability to pay any Claims, and with respect to any suchsettlement, shall obtain the written release of the indemnified party from theIndemnity Claim. The indemnifying party shall obtain the written consent of theindemnified party prior to ceasing to defend, settling or otherwise disposingof any Indemnity Claim if, as a result thereof, the indemnified party wouldbecome subject to injunctive or other equitable relief or the business orreputation of the indemnified party would be adversely affected in any manner.

 

11.Insurance.  During the Term, HET agreesto maintain, at its sole cost and expense, General Liability insurance,including Products, Errors and Omissions, and Completed Operations Liabilityinsurance as will fully protect BTF, its officers, directors, agents andemployees from claims, including, but not limited to, claims for consequentialdamages, and advertiser’s liability resulting from the Products which are thesubject of this Agreement. Such policies shall be written on an occurrence formand with insurers carrying a minimum Best’s Rating of A. They shall evidencedeductibles in amounts satisfactory to BTF and shall provide Combined SingleLimits of at least $1,000,000. HET agrees to provide umbrella coverage inminimum limits of $5,000,000. HET will add BTF and any other party designatedby BTF as an additional insured on such policies and provide BTF with acertificate of insurance along with the applicable additional insuredendorsement evidencing such coverage, within ten (10) days after HET executesthis Agreement. (A Vendor’s endorsement is not an acceptable substitute for theadditional insured endorsement.) Such policies must provide that coverage shallnot be terminated, materially changed, or renewal refused without at leastthirty (30) days prior written notice to BTF. HET will also provide Worker’sCompensation coverage in

 

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statutorylimits.

 

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

 

13.Confidentiality

 

(a)  Both BTF and HET shall regard asconfidential and proprietary all of the information communicated, in connectionwith 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 consentfrom the other party, at any time (i) use any Confidential Information of theother party for any purpose other than in connection with the performance ofits obligations under this Agreement or (ii) disclose any portion of theConfidential Information of the other party to third parties, except theirrespective attorneys and advisors. BTF and HET, as applicable, shall promptlyat the termination of this Agreement, upon the request of the disclosing party,either return to the disclosing party all Confidential Information of thedisclosing party which is in written or tangible form (including, withoutlimitation, all copies, summaries and notes of the contents thereof) orpromptly destroy all such Confidential Information and have one of theirexecutive officers certify, in writing, to such destruction to the disclosingparty. BTF and HET shall disseminate the Confidential Information to theirrespective employees, and agents only on a “need to know” basis. BTF and HETshall cause each of their respective employees who has access to theConfidential Information to comply with the terms and provisions of thisSection in the same manner as BTF and HET are bound hereby.

 

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

 

14.Taxes.  HET acknowledges and agrees thatit is HET’s obligation to provide for payment of all federal and state incomeand employment taxes and unemployment or disability insurance applicable toHET, HET’s business, any of HET’s employees and any of HET’s products, and HETwill indemnify BTF and hold BTF harmless to the extent of any obligationimposed by law on BTF to pay any such amounts in connection with any paymentsunder this Agreement.

 

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15.Entire Agreement; Amendment.  ThisAgreement, together with the Exhibits attached hereto, embodies the entireagreement and understanding between the parties hereto and supersedes any andall prior and contemporaneous agreements and understandings between the partieshereto relating to the subject matter hereof, whether verbal or written. Nomodifications or amendments of this Agreement will be effective unless made inwriting and signed by BTF and HET.

 

16.Assignment.  This Agreement shall inureto the benefit of and be binding upon the parties hereto, their successors andagents, but either party may not pledge, encumber or assign any of its rightsor obligations hereunder in any manner whatsoever without the prior writtenconsent of the other party in each instance.

 

17.Notices and Address for Payment.  Anyand all notices, demands, requests, consents, designations and othercommunications required or desired to be given pursuant to this Agreement andall payments under this Agreement will be given in writing and will be deemedduly given upon personal delivery, or on the third day after mailing if sent bycertified mail, postage prepaid, return receipt requested, or on the day afterdeposit with a nationally recognized overnight delivery service which maintainsrecords of the time, place and receipt of delivery, or upon receipt of aconfirmed facsimile transmission, and in each case to the person and addressset forth below, or to such other person or address which BTF or HET mayrespectively 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 thisAgreement are severable. If any provision contained in this Agreement is heldto be invalid or unenforceable in any respect, such provision shall be carriedout and enforced only to the extent to which it shall be valid and enforceable,and any such invalidity or unenforceability shall not affect any otherprovision of this Agreement, all of which shall be fully carried out andenforced as if such invalid or unenforceable provision had not been set forthherein.

 

19.Governing Law.  This Agreement will begoverned, construed and interpreted in accordance with the laws and decisionsof the State of Colorado, without regard to conflict of law principles thatwould 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 beendrafted jointly by BTF and HET, and no rule of construction or interpretationshall apply against any particular party hereto based on a claim that theAgreement was drafted

 

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by one ofthe parties. This Agreement shall be construed and interpreted in a neutralmanner.

 

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

 

22.Counterparts.  This Agreement may beexecuted in two or more counterparts, any one of which need not contain thesignatures of more than one party, but all such counterparts taken togetherwill constitute one and the same instrument. One or more parties may sign thisAgreement by use of facsimile transmission, provided that, an original is sentby overnight courier.

 

23.Relationship of the Parties.  BTF andHET shall be, at all times, independent contractors, solely responsible for themanner by and the form in which each performs under this Agreement. Nothingcontained herein shall be deemed to: (i) create a partnership or joint venturebetween BTF and HET; (ii) make either party’s employees the employees of theother; 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 itselfas having on the authority to bind or obligate, the other party in any mannerwhatsoever.

 

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

 

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

 

26.Binding Agreement.  This Agreement willbe binding upon and inure to the benefit of BTF and HET, and their respectivelegal representatives, successors and permitted assigns, if any.

 

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INWITNESS WHEREOF, the parties hereto have caused this Agreement to be executedas of the day and year first above written by their respective authorizedofficials.

 

 
| 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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