Document:

Exhibit 10.27

 

	
  November 11,
  2003

  
	
   

  
	
  Craig
  P. Womack, CEO

  
	
  Interactive
  Health, LLC

  

 

 

Dear
Craig:

 

This
letter shall constitute our understanding and agreement between, Daito Mingsi
Inc., and, Interactive Health, LLC, (hereinafter referred to as, “IH”), a subsidiary
of Whitney & Company regarding the following:

 

1)
IH agrees to pay Daito Mingsi Inc., via T/T, on all small massager goods, sixty
(60) days, plus a 2% interest fee based on the B/L issued date.

 

2)
With regards to the massager chairs, IH will pay Daito Mingsi Inc., the
commission (i.e. any amount of the purchase order cost not paid directly to the
chair manufacturer) based on agreed products. 
This amount is determined and agreed to by Daito-Osim and Daito Mingsi.  IH will pay via T/T, 45-60 days.

 

Agreed
to and accepted this 11th day, of November 2003 by:

 

 

	
   

  	
  /s/
  Shinichi Shimizu

  	
   

  	
  /s/
  Craig P. Womack

  	
   

  
	
   

  	
  Shinichi
  Shimizu, President

  	
  Craig
  P. Womack, CEO

  
	
   

  	
  Daito
  Mingsi

  	
  Interactive
  HealthExhibit 10.28

 

Dear
Mr. Shimizu,

 

By
this letter, we seek to confirm the understandings and oral agreements between
Daito-Osim Health Care Appliances (Suzhou) Co., Ltd. (“Daito-Osim”), a Chinese
corporation, and Daito Denki Kogyo (“Daito Denki”), a Japanese Kubushiki
Kaisha, also doing business as Daito Electric Machine Industry Co.  Ltd., on the one hand, and Interactive
Health, LLC (“IH”), on the other, with respect to patents, copyrights,
inventions, concepts, designs, prototypes, software, data, know-how, trade
secrets and other proprietary information (“Intellectual Property”) developed
solely or jointly by the parties, and with respect to certain trademarks owned
by IH.

 

In
particular, in connection with the Distribution Agreement dated as of
August 24, 2000, by and between Daito-Osim and IH, as amended by the First
Amendment to Distribution Agreement dated February 2003 and the
side-letter dated June 12, 2003 (as amended, the “Distribution
Agreement”), it is understood and agreed that, for the term of the Distribution
Agreement:

 

(a)           Daito Denki and Daito-Osim
individually and jointly grant to IH a royalty-free license under all
Intellectual Property solely or jointly owned or developed by Daito Denki
and/or Daito-Osim (“Daito Intellectual Property”) embodied in the Products to
import, export, market, use, distribute and sell the Products in the
territories set forth in Section 2 of the Distribution Agreement.  Products within the scope of said license
shall be manufactured by Daito Denki and/or Daito-Osim.  Said license shall be exclusive in
conformance with the exclusive licenses set forth in Section 2 of the
Distribution Agreement, ***

 

(b)           IH grants to Daito-Denki a
royalty-free license under all Intellectual Property owned or developed by
IH(“IH Intellectual Property”) embodied in the Products, other than Perfect
Chair Products, to import, export, market, use, distribute and sell the
Products in the territory consisting of *** (“the Daito Denki Territory”) and
the Remaining International Territory. 
Said license shall be exclusive in the Daito Denki Territory and
non-exclusive in the Remaining International Territory.  *** 

 

***         Confidential
treatment requested.

 

 

(c)           The parties shall cooperate with one
another regarding the disclosure, naming of inventors, and filing of patent
applications around the world covering Intellectual Property developed solely
or jointly by the parties relating to the Products.  In particular:

 

(i)            for any inventions relating to the
Products conceived solely by IH or its employees, agents or independent
contractors (“IH Inventions”), IH shall have the first opportunity, at its sole
expense, to file and prosecute patent applications covering said inventions;

 

(ii)           for any inventions relating to the
Products conceived solely by Daito Denki and/or Daito-Osim, or their employees,
agents or independent contractors (“Daito Inventions”), Daito shall have the
first opportunity, at its sole expense, to file and prosecute patent
applications covering said inventions; and

 

(iii)          for any inventions conceived jointly
by Daito Denki and/or Daito-Osim, or their employees, agents or independent
contractors, on the one hand, and IH, or its employees, agents or independent
contractors, on the other, and for any improvements made to inventions made by
one party to an invention originated by the other, the parties shall consult
with one another regarding the filing of patent applications and could be named
as joint assignees in the future.

 

(e)           ***

 

In
the event of bankruptcy, insolvency, dissolution or shut down for any reason of
any party to this Agreement, or material breach of the Distribution Agreement
by any party to this Agreement (the “Non-Performing Party”), the remaining
parties shall retain a license under Intellectual Property belonging to the
Non-Performing Party necessary for the remaining parties to enjoy the rights
granted herein, including without limitation to make, have made, import,
export, use and sell the Products, notwithstanding any early termination of the
Distribution Agreement resulting from such bankruptcy, insolvency, dissolution,
shut down or breach, provided however that said license shall be temporary in
nature and shall last only until the Non-Performing Party emerges from
bankruptcy, resumes operation and/or performs its obligations under the
Distribution Agreement.

 

Capitalized
terms used but not otherwise defined herein shall have the respective meanings
assigned to them in the Distribution Agreement.  The term “Products” as used herein shall have the meaning set
forth in paragraph (b) of the side-letter dated June 12, 2003.  The term “Remaining International
Territories” as used herein shall have the meaning set forth in
Section 1.2 of the First Amendment to the Distribution Agreement
February 2003, and shall therefore consist of those countries and areas
listed on Exhibit B of said First Amendment.

 

2

 

The
rights, licenses and obligations set forth herein shall be binding upon and
inure to the benefit of the parties to this Agreement, as well as their
successors and assigns.

 

The
undersigned have the full power and authority to enter into this Agreement and
to bind the respective parties to the terms of this Agreement.

 

If
the foregoing is an accurate statement of our understandings and agreements,
please execute a copy of this letter at your earliest convenience.  We will treat a fully executed copy of this
letter as an amendment to the Distribution Agreement to the extent that it may
be read otherwise.

 

Thank
you again Shimizu-san, for your attention to this matter and for the continuing
excellent relationship that our two companies share.

 

	
   

  	
  Sincerely,

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/
  Craig P. Womack

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Craig
  P. Womack, CEO and COO

  
	
   

  	
  the
  foregoing accepted and agreed to on behalf of Interactive Health LLC

  
	
   

  	
   

  
	
   

  	
  ACCEPTED
  AND AGREED:

  
	
   

  	
   

  
	
   

  	
  DAITO-OSIM
  HEALTH CARE APPLIANCES (SUZHOU)

  
	
   

  	
  CO.
  LTD.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Shinichi Shimizu

  	
   

  
	
   

  	
   

  
	
   

  	
  Name:
  Director

  
	
   

  	
   

  
	
   

  	
  Title:
  November 11, 2003

  
	
   

  	
   

  
	
   

  	
  Dated:
  November 11, 2003

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  DAITO
  DENKI KOGYO, K.K.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Shinichi Shimizu

  	
   

  
	
   

  	
   

  
	
   

  	
  Name:
  Shinichi Shimizu

  
	
   

  	
   

  
	
   

  	
  Title:
  Director

  
	
   

  	
   

  
	
   

  	
  Dated:
  November 11, 2003

  

 

3

 

EXHIBIT 1

 

***

 

 

 

 

 

EXHIBIT 2

 

***Exhibit 10.29

 

FORM
OF NONQUALIFIED OPTION AGREEMENT

 

NONQUALIFIED OPTION AGREEMENT (this
“Agreement”) is entered into as of the
                 
by and between Interactive Health, Inc., a Delaware corporation (the “Company”),
and the undersigned employee (the “Employee”) of the Company or its
Subsidiaries.

 

WHEREAS, pursuant to the Interactive Health
2004 Stock Incentive Plan (the “Plan”) and in accordance with the Company’s
obligations under the Company’s Employment Agreement with the Employee dated
                 (the
“Employment Agreement”), the Committee designated under the Plan desires to
grant to the Employee options to acquire Common Shares, par value $0.001 per
share, of the Company; and

 

WHEREAS, the Employee desires to accept such
options subject to the terms and conditions of this Agreement and
the repurchase rights set forth in that certain Securityholders’ Agreement,
dated August 22, 2003, by and among the Company and certain investors (the
“Securityholders’ Agreement”), and by which, the Employee agrees to be bound.

 

NOW, THEREFORE, in consideration of the
premises and of the mutual covenants and agreements contained herein, the
Company and the Employee, intending to be legally bound, hereby agree as
follows:

 

1.             Grant
of Options.  On the terms and
conditions hereinafter set forth, the Company hereby grants to the Employee
three options to purchase Shares as follows: (i) all (or any part) of 168,953
Shares (“Option A”), (ii) all (or any part) of 84,476 Shares (“Option B”) and
all (or any part) of 84,476 Shares (“Option C” and together with Option A and
Option B, the “Options” and each an “Option”). 
These Options are granted on the 22nd day of August, 2003 (the “Grant
Date”).  Each Option is a Nonqualifed
Option.  These Options are granted pursuant
to the Plan, and each Option is governed by the terms and conditions of the
Plan.  All defined terms used herein,
unless specifically defined in this Agreement, have the meanings assigned to
them in the Plan.

 

2.             Exercise
Price.  Subject to any adjustment
under Section 8 and the terms of the Plan, the
exercise price (the “Exercise Price”) for the Shares covered by: (i) Option A
will be $10.00 per share, (ii) Option B will be $20.00 per share and (iii)
Option C will be $30.00 per share.

 

3.             Time
of Exercise of Options.

 

(a)           The
Options will become vested and exercisable (pro rata
according to the number of Shares
exercisable at different exercise prices specified above) 20% on the one year
anniversary of the Grant Date and thereafter in 16 equal quarterly installments
commencing on the date that is 15 months after the Grant Date and continuing on
each following three month anniversary until the Options become fully
exercisable on the fifth anniversary of the Grant Date.

 

(b)           Notwithstanding
any provision in this Agreement, the Plan or the Employment Agreement to the
contrary, unless otherwise approved by a written resolution of the

 

 

Committee prior to or contemporaneously with the closing of any such
transaction, one-half of each unvested installment of each Option shall
automatically vest on the date that an Organic Transaction (as such term is
defined in the Employment Agreement) shall occur (provided that the Employee
remains employed by the Company on such date) and the balance of each such
installment shall remain subject to the vesting schedule set forth in Section
3(a).

 

4.             Term
of Options and Repurchase Rights.

 

(a)           The
Options will expire 10 years from the date hereof, but will be subject to earlier termination as
provided below.

 

(b)           Upon
termination of employment:

 

(i)            all
vesting of the Options will cease and the unexercisable portion of the Options
hereby granted will terminate on the date of such termination; and

 

(ii)           the
exercisable portion of the Options hereby granted will be treated as follows:

 

(A)          Subject
in each case to the repurchase rights described in clause (c) below and the
Securityholders’ Agreement, if the Employee’s employment is terminated for any reason except for Cause, the
exercisable portion of the Options hereby granted will be exercisable for 90 days following the termination (but
in no event later than the expiration date for such Option).  To
the extent the Employee does not exercise such Option during the time period
set forth in the previous sentence, the Option shall terminate.

 

(B)           If
the Employee’s employment is terminated for Cause, the exercisable portion of
the Options hereby granted will terminate on the date of such termination.

 

(c)           Subject
to the terms of the Plan, the Company has the right to repurchase Shares acquired
upon the exercise of Options for a period of 90 days, with such period
beginning on the later of (i) the day after the six month anniversary of
 the day the Shares for which the Option is exercised are acquired or
(ii) the day the Employee terminates employment with the Company.  Notwithstanding anything to the contrary in
the Securityholders’ Agreement, the purchase price per Share payable by the
Company under Section 6(a) or (b) of the Securityholders’ Agreement
where such termination:

 

(i)            was
due to resignation or for Cause shall be the amount equal to the lesser of:
(A) the Fair Market Value at the time of such repurchase; or (B) the
Exercise Price; provided, however, that after the earlier to occur of the
seventh anniversary of the Grant Date or the consummation of an event described
in Section 3(b), the purchase price per Share shall always be the Fair
Market Value at the time of such repurchase; or

 

(ii)           was
without Cause or because of death, retirement or disability shall be the amount
equal to the greater of:  (A) the
Fair Market Value at the time of such repurchase; or (B) the Exercise
Price.

 

2

 

(d)           For
purposes of this Agreement, “Cause” shall have the meaning ascribed to such
term in the Employment Agreement, as the same may be amended or modified
from time to time.

 

5.             Manner
of Exercise of Options.  The Options
may be exercised by delivery in person or via certified mail of a
notice of exercise (in the form attached hereto as Exhibit A, “Notice of
Exercise”) and related forms to the secretary of the Company stating the number
of Shares with respect to which such Option is being exercised and such
representations and agreements as to the Employee’s investment intent in
respect of such Shares as may be required by the Company and accompanied by
payment of the aggregate Exercise Price for the Shares in cash or by check,
bank draft or money order payable to the order of the Company or, subsequent to
an Initial Public Offering, through the delivery to the Company of a written
authorization for a Cashless Exercise of the Options with irrevocable
instructions to a broker to deliver promptly to the Company an amount equal to
the aggregate Exercise Price for the Shares in accordance with Section
6.6(a)(5) of the Plan, subject to such limitations as the Committee may adopt
from time to time or by any combination of the above methods of payment.

 

6.             Non-Transferability.  The right of the Employee to exercise the
Options (as and when exercisable) may not be assigned or transferred by the
Employee other than by will or the laws of descent and distribution.  The Options may be exercised and the Shares
may be purchased during the lifetime of the Employee only by the Employee (or
the Employee’s legal representative in the event that the Employee’s employment
is terminated due to “Disability” within the meaning of Code
Section 22(e)).  Any attempted
assignment or transfer, except as hereinabove provided, including without
limitation any purported assignment, whether voluntary or by operation of law,
pledge, hypothecation or other disposition contrary to the provisions hereof,
or any levy of execution, attachment, trustee process or similar process,
whether legal or equitable, upon the Options, will in each instance be null and
void.

 

7.             Representation
Letter and Investment Legend.

 

(a)           In
the event that for any reason the issuance of the Shares to be issued upon
exercise of an exercisable Option will not be effectively registered under the
1933 Act, upon any date on which such Option is exercised, the Employee (or the
person exercising the Option pursuant to Paragraph 6) will give a written representation
to the Company in  the form
attached hereto as Exhibit B, and the Company will place the legend
described in Exhibit B upon any certificate for the Shares issued by
reason of such exercise.

 

(b)           The
Company will be under no obligation to qualify Shares or to  cause a registration statement or a
post-effective amendment to any registration statement to be prepared for the
purpose of covering the issuance of Shares.

 

8.             Adjustments
of Shares and Options.  Subject to
Sections 10 and 11 of the Plan, in the event of any change in the outstanding
Shares by reason of an acquisition, spin-off or reclassification, recapitalization
or merger, combination or exchange of Shares or other corporate exchange or other event described in Sections 10 or 11
of the Plan, the Committee may adjust appropriately the number or kind of
Shares or securities subject to the Options and exercise

 

3

 

prices related thereto and make such other
revisions to the Options as it
deems are equitably required.

 

9.             No
Special Employment Rights.  Nothing
contained in this Agreement will be construed or deemed by any person under any
circumstances to bind the Company or any of its Subsidiaries to continue the
employment of the Employee for the period within which the Options may vest or
for any other period.

 

10.           Rights
as a Stockholder.  The Employee will
have no rights as a stockholder with respect to any Shares which may be
purchased upon the exercise of the Options unless and until a certificate
or certificates representing such Shares are duly issued and delivered to the
Employee.  If at any time during the
term of the Options, the Company is advised by its counsel that the Shares are
required to be registered under the Securities Act or under applicable state
securities laws, or that delivery of the Shares must be accompanied or preceded
by a prospectus meeting the requirements of such laws, delivery of Shares by
the Company may be deferred until a registration is effective or a prospectus
is available or an appropriate exemption from registration is secured.

 

11.           Withholding
Taxes.  The Employee hereby agrees,
as a condition to any exercise of the Option, to provide to the Company an
amount sufficient to satisfy its obligation to withhold certain federal, state
and local taxes arising by reason of such exercise (the “Withholding Amount”),
if any, by (a) authorizing the Company to withhold the Withholding Amount
from the Employee’s cash compensation, or (b) remitting the Withholding
Amount to the Company in cash; provided that, to the extent that the
Withholding Amount is not provided by one or a combination of such methods, the
Company may at its election withhold from the Shares delivered upon exercise of
the Option that number of Shares having a Fair Market Value as of the date
immediately prior to the issuance of such Shares equal to the Withholding Amount.

 

12.           Execution
of Securityholders’ Agreement and of Release and Waiver of Rights.  The Employee acknowledges that, in
connection with the grant of the Options and his or her prior or future
purchase of Shares of the Company, he or she will execute and deliver the
Securityholders’  Agreement or a
joinder or counterpart signature page thereto. 
The Employee further agrees that the Options and all Shares acquired by
such Employee upon exercise of the Options will be subject to the terms and conditions of the
Securityholders’ Agreement as modified hereby.  Prior to participation
in the Plan, if the Committee requires, the Employee will execute a release and
waiver to rights, in a form satisfactory to the Committee, to payments and
benefits under certain plans of Interactive Health, Inc.

 

13.           Lock-Up
Agreements.  The Employee agrees
that notwithstanding anything to the contrary contained in this Agreement, in
the event of an Initial Public Offering or any other offering of securities of
the Company, except to the extent that: 
(a) the Employee sells his or her Shares obtained upon the exercise
of the Options to the underwriters of the Company’s securities in connection
with such offering or (b) the underwriters do not request the following
restrictions, such Employee shall not (i) offer, hedge, pledge, sell or contract to sell any
such Shares, (ii) sell any option or contract to purchase any Shares,
(iii) purchase any option or contract to sell any Shares, (iv) grant
any option, right or warrant for the sale of any Shares, or (v) lend or
otherwise dispose of or transfer any Shares during the longer of (A) any
black-out period requested by the

 

4

 

underwriters conducting any such offering of securities on behalf of
the Company and (B) during the seven days prior to and during the 180-day
period beginning on the effective date of such Initial Public Offering or other
offering of securities; provided, however, that such Employee
shall, in any event, be entitled to sell his or her Shares commencing on the
expiration of the black-out period described in the aforementioned
clause (A) or (B).

 

14.           Delivery of Certificates.  The Employee will have no interest in the Shares unless and until
certificates for the Shares are issued following exercise of the Option.

 

15.           Section 83(b) Election.

 

(a)           The Employee
understands that the Code taxes as ordinary income the difference between the
amount paid for the Shares obtained
upon the exercise of the Options and the fair market value of such
Shares on the date of exercise or, if later, as of the date any restrictions on
the Shares lapse.  The Employee
understands that the Employee may elect to be taxed at the time the Options are
exercised, rather than when and as the restrictions lapse, by filing an
election under Section 83(b) (an “83(b) Election”) of the Code with the
Internal Revenue Service within 30 days from the date of such exercise (and
satisfying certain other requirements). 
The fair market value of the Shares obtained upon the exercise of the
Options may increase before the restrictions on such shares lapse.  Therefore, if Employee wishes to avoid the
recognition of ordinary income in the amount of such increase with respect to
the Shares issued upon the exercise of the Options, the Employee must make a
valid and timely 83(b) Election with respect to the exercise of the
Options.  The Employee understands that
failure to file a valid 83(b) Election in a timely manner may result in adverse
tax consequences for the Employee, and that in some circumstances filing the
83(b) Election could produce adverse tax consequences.  The Employee further understands that, if he
or she desires to make the 83(b) Election, an additional copy of such election
form must be filed with his or her federal income tax return for the calendar
year in which the exercise of the Option falls, and the Employee must deliver a
copy of such election form to the Company when the election is filed.  The Employee acknowledges that the foregoing
is only a summary of the effect of United States federal income taxation with
respect to the exercise of the Options hereunder under the laws in effect as of
the date hereof, and does not purport to be complete.  The Employee further acknowledges that the Company has directed
the Employee to seek independent advice regarding the applicable provisions of
the Code, the income tax laws of any municipality, state or foreign country in
which the Employee may reside, and the tax consequences of the ownership and
transfer of the Shares obtained upon the exercise of the Options at the time of
the Employee’s death.  THE EMPLOYEE
ACKNOWLEDGES THAT IT IS THE EMPLOYEE’S SOLE RESPONSIBILITY AND NOT THE
COMPANY’S TO FILE TIMELY THE ELECTION UNDER SECTION 83(b), EVEN IF THE
EMPLOYEE REQUESTS THE COMPANY OR ITS REPRESENTATIVE TO MAKE THIS FILING ON THE
EMPLOYEE’S BEHALF.

 

(b)           The Employee agrees that he or she
will execute and deliver to the Company with the Notice of Exercise a copy of
the Acknowledgment and Statement of Decision Regarding Section 83(b) Election
(the “Acknowledgment”) attached hereto as Exhibit C.  The Employee further agrees that he or she
will execute and submit with the Acknowledgment a copy of the 83(b) Election
attached hereto as Exhibit D or such other valid election form as may be

 

5

 

completed by the Employee in consultation
with his or her tax advisors if the Employee has indicated in the
Acknowledgment his or her decision to make such an election.

 

16.           Governing
Law.  The Plan is incorporated
herein by reference.  This
Agreement is governed by the laws of the state of Delaware and applicable
federal law.

 

17.           Receipt of Plan. 
The Employee acknowledges receipt of a copy of the Plan and the
Securityholders’ Agreement and represents that he or she is familiar with the
terms and provisions thereof, and hereby accepts these Options subject to the
terms and provisions thereof.  The
Employee has reviewed the Plan, the Securityholders’ Agreement and this
Agreement (including without limitation the exhibits hereto) in their entirety,
has had an opportunity to obtain the advice of counsel prior to executing this
Agreement and fully understands all provisions of the Options.  The Employee hereby agrees to accept as
binding, conclusive and final all decisions or interpretations of the Committee
upon any questions arising under the Plan, this Agreement or the applicable
portions of the Securityholders’ Agreement. 
The Employee further agrees to notify the Company upon any change in the
residence address indicated below.

 

**********

 

[Signatures on
Following Page]

 

6

 

OPTION
AGREEMENT

 

Counterpart
Signature Page

 

IN WITNESS WHEREOF, the Company has caused
this Agreement to be executed, by its officer thereunto duly authorized, and
the Employee has executed this Agreement, all as of the day and year first
above written.

 

	
  INTERACTIVE
  HEALTH, INC.

  	
  EMPLOYEE

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Title

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
  Address

  
	
  (print name)

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Facsimile Number:

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  E-mail Address:

  
	
   

  	
   

  
	
   

  	
  Social Security Number

  

 

 

7

 

EXHIBIT A

 

2004 STOCK INCENTIVE PLAN

 

EXERCISE NOTICE FOR NONQUALIFED OPTION

 

Interactive
Health, Inc.

3030 Walnut Avenue

Long Beach, CA 90807

Attention:  Corporate Secretary

 

1.             Exercise of Option.  Effective as of today,
                       ,
                 ,
the undersigned (“Optionee”)
hereby elects to irrevocably exercise Optionee’s option (the “Option”) to purchase
                       shares
of the Common Stock (the “Shares”)
of Interactive Health, Inc. (the “Company”) under and pursuant to the Company’s
2004 Stock Incentive Plan (the “Plan”) and the Stock
Option Agreement dated
                       ,
                 (the
“Option Agreement”).

 

2.             Delivery of Payment.  Optionee herewith delivers to the Company the full purchase price
of the Shares, as set forth in the Option Agreement.

 

3.             Representations of Optionee.  Optionee acknowledges that Optionee has
received, read and understood the Plan and the Option Agreement and agrees to
abide by and be bound by their terms and conditions.

 

4.             Rights as Stockholder.  The
Optionee will have no rights as a stockholder with respect to any Shares which
may be purchased upon the exercise of the Options until a certificate
or certificates representing such Shares are duly issued and delivered to the
Optionee.

 

5.             Company’s Repurchase Rights.  The Shares shall be subject to repurchase by
the Company in accordance with the Plan, the Option Agreement and the Securityholders’
Agreement (as defined in the Option Agreement).

 

6.             Tax Consultation.  Optionee understands that Optionee may suffer adverse tax
consequences as a result of Optionee’s purchase or disposition of the
Shares.  Optionee represents that Optionee
has consulted with any tax consultants Optionee deems advisable in connection
with the purchase or disposition of the Shares and that Optionee is not relying
on the Company for any tax advice.

 

7.             Successors and Assigns.  The Company may assign any of its rights under this Notice of
Exercise to single or multiple assignees, and the terms and conditions of this
Notice of Exercise shall inure to the benefit of the successors and assigns of
the Company.  Subject to the
restrictions on transfer herein set forth, the terms and conditions of this
Notice of Exercise shall be binding upon Optionee and his or her heirs,
executors, administrators, successors and assigns.

 

8

 

8.             Interpretation. 
Any dispute regarding the interpretation of this Notice of Exercise
shall be submitted by Optionee or by the Company forthwith to the Committee
which shall review such dispute at its next regular meeting.  The resolution of such a dispute by the
Committee shall be final and binding on all parties.

 

10.           Governing Law; Severability.  This Notice of Exercise is governed by the
laws of the state of Delaware and applicable federal law.

 

11.           Entire Agreement. 
The Plan and Option Agreement are incorporated herein by reference.  This Notice of Exercise, the Plan, the
Securityholders’ Agreement, the Option Agreement and the Employment Agreement
(together with the exhibits hereto and thereto) constitute the entire agreement
of the parties with respect to the subject matter hereof and supersede in their
entirety all prior undertakings and agreements of the Company and Optionee with
respect to the subject matter hereof.  

 

	
  Submitted by:

  	
   

  	
  Accepted by:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  OPTIONEE:

  	
   

  	
  INTERACTIVE HEALTH,
  INC.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Signature

  	
   

  	
  By

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Print Name

  	
   

  	
  Its

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Address:

  	
   

  	
  Address:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  3030 Walnut Avenue

  	
   

  
	
   

  	
   

  	
  Long Beach, CA 90807

  	
   

  
	
   

  	
   

  	
  Attention:  Corporate Secretary

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Date Received

  	
   

  

 

9

 

EXHIBIT
B

 

TO:         INTERACTIVE HEALTH, INC.

 

Pursuant to a Notice of Exercise submitted to
Interactive Health, Inc., a Delaware corporation (the “Company”), herewith, the
undersigned irrevocably exercises the right to purchase
           of the shares
of Common Shares, par value $0.001 per share (“Shares”) of the Company
evidenced by the attached Option, and herewith makes payment of the Exercise
Price with respect to such shares in full, all in accordance with the
conditions and provisions of said Option.

 

1.             The
undersigned hereby represents and warrants to and agrees with the Company as
follows:

 

(a)           The
undersigned understands and acknowledges that an investment in the Shares
issuable upon exercise of this Option involves a high degree of risk and that there are limitations on
the liquidity of the Shares issuable upon exercise of this Option.  The undersigned is able to bear the economic risk of an investment in the Shares
issuable upon exercise of this Option. 
The undersigned has adequate means of providing for the undersigned’s
current needs and contingencies; is able to afford to hold the Shares issuable upon exercise of this Option for an
indefinite period; and has such knowledge and experience in financial and
business matters such that the undersigned is capable of evaluating the merits
and risks of the investment in the Shares issuable upon exercise of this Option;

 

(b)           The undersigned is acquiring the Shares issuable upon
exercise of this Option for
its own account for investment and not as a nominee and not with a present view to the
distribution thereof in violation of the Securities Act of 1933, as amended
(the “1933 Act”).  The undersigned
understands that the undersigned must bear the economic risk of this investment
indefinitely unless such shares are registered pursuant to the 1933 Act  and any applicable state securities laws,
or an exemption from such registration is available.  The undersigned has
no plan or intention to sell the Shares issuable upon exercise of this Option
at any predetermined time, and has made no predetermined arrangements to sell
such shares; and

 

(c)           The
undersigned will not make any sale, transfer or other disposition of the Shares
issuable upon exercise of this Option in violation of (1) the 1933 Act,
the Securities Exchange Act of 1934, as amended, any other applicable Federal
or state securities laws or the rules and regulations of the Securities and
Exchange Commission or of any state securities commissions or similar state authorities
promulgated under any of the foregoing, or (2) any applicable securities
laws of jurisdictions outside the United States and the rules and regulations
thereunder.

 

2.             The
undersigned agrees not to offer, sell, transfer or otherwise dispose  of any of the Shares obtained on exercise
of the Option, except in accordance with the provisions of the Option, and
consents that the following legend may be affixed to the stock certificates for
the Shares hereby subscribed for, if such legend is applicable:

 

10

 

“THE SALE, TRANSFER OR
ENCUMBRANCE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO
THE TERMS AND CONDITIONS OF A SECURITYHOLDERS AGREEMENT, DATED AS OF AUGUST 22, 2003 AMONG INTERACTIVE HEALTH, INC. AND CERTAIN
HOLDERS OF ITS OUTSTANDING CAPITAL SECURITIES, AS SUCH AGREEMENT MAY BE AMENDED.  COPIES OF SUCH AGREEMENT MAY BE OBTAINED AT
NO COST BY WRITTEN REQUEST MADE BY THE HOLDER OF RECORD OF THIS CERTIFICATE TO
THE SECRETARY OF INTERACTIVE HEALTH,
INC.

 

THIS SECURITY
HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, NOR UNDER
APPLICABLE STATE SECURITIES LAWS AND MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE
DISPOSED OF UNLESS IT HAS BEEN REGISTERED UNDER SUCH LAWS OR AN EXEMPTION FROM
REGISTRATION IS AVAILABLE.”

 

The undersigned agrees that, in order to
ensure compliance with the restrictions referred to above, the Company may
issue appropriate “stop transfer” instructions to its transfer agent, if any,
and that, if the Company transfers its own securities, it may make appropriate
notations to the same effect in its own records.  The Company shall not be required (i) to transfer on its
books any Shares that have been sold or otherwise transferred in violation of
any of the provisions of the Securityholders’ Agreement or (ii) to treat
as owner of such Shares or to accord the right to vote or pay dividends to any
purchaser or other transferee to whom such Shares shall have been so
transferred.

 

3.             The
undersigned requests that stock certificates for such shares be issued, and a
new option agreement representing any unexercised portion hereof be issued in
the name of the registered holder and delivered to the undersigned at the
address set  forth below:

 

[Signature on the Following Page]

 

11

 

	
  Dated:

  
	
   

  
	
   

  	
   

  
	
  Signature of
  Registered Holder

  
	
   

  
	
   

  	
   

  
	
  Name of
  Registered Holder (Print)

  

 

 

12

 

EXHIBIT C

 

ACKNOWLEDGMENT AND
STATEMENT OF DECISION 

REGARDING SECTION
83(b) ELECTION

 

The undersigned (which term includes the undersigned’s
spouse), a purchaser of Shares of common stock (the “Shares”) of Interactive
Health, Inc., a Delaware corporation (the “Company”), obtained upon exercise of
an Option granted pursuant to the Company’s 2004 Stock Incentive Plan, as
amended (the “Plan”), hereby states as follows:

 

1.             The
undersigned acknowledges receipt of a copy of the Plan relating to the offering
of such shares.  The undersigned has
carefully reviewed the Plan and the Option Agreement pursuant to which the
Option was granted and the underlying Shares were purchased.

 

2.             The
undersigned either [check and complete as applicable]:

 

(a)                                               has
consulted, and has been fully advised by, the undersigned’s own tax advisor,
                                                  ,
whose business address is
                                                  ,
regarding the federal, state and local tax consequences of the grant of an
Option for the Shares under the Plan, and particularly regarding the
advisability of making elections pursuant to Section 83(b) of the Internal
Revenue Code of 1986, as amended (the “Code”) and pursuant to the corresponding
provisions, if any, of applicable state law; or

 

(b)                                             has
knowingly chosen not to consult such a tax advisor.

 

3.             The
undersigned hereby states that the undersigned has decided [check as
applicable]:

 

(a)                                              to
make an election pursuant to Section 83(b) of the Code, and is submitting to
the Company an executed form entitled “Election Under Section 83(b) of the
Internal Revenue Code of 1986;” or

 

(b)                                             not
to make an election pursuant to Section 83(b) of the Code.

 

4.             The
undersigned acknowledges that he/she/they will be solely responsible for the
accuracy of the information set forth in, and the tax consequences of filing,
the Election under Section 83(b) of the Code, and for properly filing such
document with the Internal Revenue Service (and any other applicable taxing
authority) on a timely basis.  In
addition, the undersigned understands that the election must be filed no later
than 30 days after the exercise of the Option for the Shares.

 

13

 

5.             Neither
the Company nor any of its affiliates, employees, officers, directors,
attorneys or accountants has made any warranty or representation to the
undersigned with respect to the tax consequences of the undersigned’s purchase
of shares under the Plan or of the making or failure to make an election
pursuant to Section 83(b) of the Code or the corresponding provisions, if any,
of applicable state law.

 

	
  Date:

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  [NAME]

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Date:

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Spouse of [NAME]

  	
   

  

 

14

 

EXHIBIT D

 

ELECTION UNDER
SECTION 83(b)

OF THE INTERNAL
REVENUE CODE OF 1986

 

The undersigned taxpayer hereby elects, pursuant to Section
83(b) of the Internal Revenue Code, to include in taxpayer’s gross income for
the current taxable year, the amount of any income that may be taxable to
taxpayer in connection with taxpayer’s receipt of the property described below:

 

1.                                       The
name, address, taxpayer identification number and taxable year of the
undersigned are as follows:

 

NAME OF
TAXPAYER:

 

NAME OF
SPOUSE:  

 

ADDRESS:  

 

IDENTIFICATION
NO. OF TAXPAYER:  

 

IDENTIFICATION
NO. OF SPOUSE:  

 

2.                                       The
property with respect to which the election is made is described as follows:

 

          shares
of common stock, $.001 par value, of Interactive Health, Inc., a Delaware
corporation (the “Company”).

 

3.                                       (a)  The date on which the property was
transferred is:  

 

(b)  The
taxable year for which the election is made is:  200 

 

4.                                       The
property is subject to the following restrictions:

 

The shares may not be transferred and are subject to
forfeiture, under the terms of an agreement between the taxpayer and the
Company, upon termination of taxpayer’s employment or consulting
relationship.  These restrictions lapse
upon the satisfaction of certain conditions contained in such agreement.

 

5.                                       The
fair market value at the time of transfer, determined without regard to any
restriction other than a restriction which by its terms will never lapse, of
such property is: $    

 

6.                                       The
amount (if any) paid for such property: $    

 

15

 

The undersigned has submitted a
copy of this statement to the person for whom the services were performed in
connection with the undersigned’s receipt of the above-described property.  The transferee of such property is the
person performing the services in connection with the transfer of said property.

 

The
undersigned understands that the foregoing election may not be revoked except
with the consent of the Commissioner.

 

The undersigned declares under
penalties of perjury that the foregoing is true and correct to the best of the
undersigned’s knowledge and belief.

 

	
  Date:

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Date:

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Spouse

  	
   

  

 

This election must be filed with the Internal Revenue Service Center
with which taxpayer files his or her Federal income tax returns and must be
filed within thirty (30) days after the exercise of the Option for the Shares.  This filing should be made by registered or
certified mail, return receipt requested, and a copy must be provided to the
Company when it is filed with the Internal Revenue Service.  Taxpayer must also file a copy of the
completed election with his or her Federal and state tax returns for the tax
year to which the election applies, and should keep a copy for his or her
records.

 

16

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00065-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00065-of-00352.parquet"}], [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00065-of-00352.parquet"}]]