WHEREAS, HealtheTech wishes to appoint Distributor as an authorized exclusive distributor of certain HealtheTech products in the Territories, and Distributor wishes to accept this appointment, subject to the terms and conditions of this Agreement.

        ACCORDINGLY, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows:

1.    DEFINITIONS.

        1.1  "Affiliate" means, with respect to a party, any person or entity that controls, is controlled by, or is under common control with such party, where "control" means ownership of fifty percent (50%) or more of the outstanding voting securities (but only as long as such person or entity meets these requirements).

        1.2  "End User" means a person, company, or other legal entity that purchases a Product for its own internal purposes and not for distribution to, or use on behalf of, others.

        1.3  "End User Agreement" means the written agreement between HealtheTech and an End User pursuant to which such End User receives a limited, non-exclusive, non-transferable right to use any software associated with the Products in accordance with such agreement.

        1.4  "HealtheTech Marks" means the trademarks, service marks and trade names of HealtheTech listed in Exhibit D (as such list may be updated from time to time by HealtheTech upon notice to Distributor).

        1.5  "Intellectual Property Rights" means all present and future worldwide copyrights, trademarks, trade secrets, patents, patent applications, moral rights, contract rights, and other

        1.6  "Markets" means those markets set forth in Exhibit C

        1.7  "BodyGem Measurement Services" means the providing of metabolic measurements using the BodyGem metabolic measurement device manufactured by HealtheTech.

        1.8  "Products" means only those devices of HealtheTech that are specifically listed in the attached Exhibit A. HealtheTech may change the specifications, components, design, performance

and appearance of any Product at any time. HealtheTech will give Distributor written notice of any such change, whereupon Exhibit A will be amended to reflect the change.

        1.9  "Sales Targets" means the annual and quarterly sales targets established by the parties in accordance with this Agreement. The Sales Targets for the Term are set forth in the attached Exhibit B. Distributor hereby acknowledges the sales targets are reasonable and constitute a material obligation herein.

        1.10 "Single Use Breathing Insert" means the "disposable" facemask or mouthpiece that an individual breathes into during a BodyGem metabolic measurement. This Insert is designed for one-time use and must be discarded at the end of a successful measurement.

        1.11 "Service Affiliate" means a joint venture, cooperative or other entity fifty one percent (51%) or more owned by Distributor and established to provide BodyGem Measurement Services to customers in the Territories in each Market using Products.

        1.12 "Sponsor" means to financially support or officially endorse through contribution of funds, Products or other resources.

        1.13 "Territories" means the geographical areas described in the attaches Exhibit C

        1.14 "User Documentation" means the user documentation and instruction manuals furnished to Distributor by HealtheTech for distribution along with the Products.

2.    RELATIONSHIP OF THE PARTIES.

        2.1  Appointment. HealtheTech hereby appoints Distributor, and Distributor hereby accepts HealtheTech's appointment, as HealtheTech's exclusive Distributor of Products in the Markets in the Territories during the Term and subject to and in accordance with the provisions of this Agreement, including the restrictions and conditions of exclusivity provided in Exhibit B.

        2.2  License Fee. As consideration for exclusivity within the Territories and within the Markets through December 31, 2003. Distributor will pay to HealtheTech a non-refundable up front fee of [*] which will be paid in accordance with the following license fee payment schedule:

        2.3  Exclusivity. Exclusivity will be maintained beyond 2003 on a year by year basis through the term of the agreement by meeting or exceeding minimum sales targets as defined in Exhibit B. During the exclusivity period, HealtheTech will not:

        (a)  appoint another distributor of Products in markets whose territory includes any portion of the Markets in the Territories; or

        (b)  make direct sales of Products to dealers or retailers in the Markets located in the Territories.

        2.4    Proprietary Information.    Subject to all the terms and conditions of this Agreement, HealthTech may provide to Distributor, during the Term of this Agreement. Proprietary Information in connection with Distributor's distribution of the Product in accordance with this Agreement. "Proprietary Information" means the following information of HealtheTech, to the extent previously, currently or subsequently disclosed to Distributor under this Agreement or otherwise: know-how and information relating to the Products, training for the Products, Product

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technology, the composition, structure, organization, and use of the Products, the software incorporated in the Products (including, code, algorithms, schematics, data, processes), ideas and inventions (whether patentable or not) related to the Products, information about HealtheTech's business, (including, names and expertise of employees and consultants and other technical, business, financial, customer and product development plans, forecasts, strategies and information).

        2.5    Independent Contractor.    Distributor is an independent contractor and not an agent, employee, franchise or partner of HealtheTech, and is acting in the ordinary course of business. Distributor does not have any authority to, and will not create or assume any obligation, express or implied, on behalf of HealtheTech. Distributor shall be responsible for all taxes and payments concerning Distributor, its employees and its sales representatives. This Agreement does not create or evidence any joint venture or partnership of the parties.

3.    LICENSES.

        3.1    Proprietary Information Sublicense.    HealtheTech grants to Distributor the right to sublicense any Proprietary Information to Distributor's Service Affiliates necessary to enable Distributor's Service Affiliates to perform Measurement Services using Products. Distributor agrees to obligate any such Service Affiliates to the obligations defined in Exhibit F attached hereto.

        3.2    Subdistributor Agreements.    Before distributing the Products to any subdistributor, Distributor must enter into a binding, written agreement with such subdistributor, that contains terms no less restrictive than, and providing substantially similar protection under the law of the applicable countries in the Territories to, those set forth in this Agreement. Distributor will provide HealtheTech with a copy of the form of the Subdistributor Agreement prior to first use in connection with the Products. Distributor will provided complete and accurate copies of all such agreements to HealtheTech prior to execution and within thirty (30) days after the execution thereof. Distributor will enforce each such agreement with at least the same degree of diligence that Distributor uses to enforce similar agreements for its own products or other software products that it distributes, but in no event less than reasonable efforts. Distributor will immediately notify HealtheTech if Distributor becomes aware of any breach of any such agreement relating to the Products. Upon the termination of any such agreement, Distributor will use all reasonable efforts to obtain from the subdistributor all Products in such subdistributor's possession or control.

4.    SALES TARGETS.

        4.1 Distributor shall either (a) purchase a minimum total volume of Products per calendar year during the duration of this agreement equal to the Sales Targets each calendar year provided in Exhibit B, or (b) pay HealtheTech the amounts equivalent to the calendar year Sales Targets as set forth in the Sales Targets definitions of Exhibit B. Sales Targets for years beyond 2002 and 2003 will be mutually agreed upon by the parties in writing in accordance with Exhibit B.

5.    MARKETING OF PRODUCTS.

        5.1  Obligations of Distributor.

        (a)  Distributor will use its best efforts aggressively to develop sales of the Products as well as to co-market HealtheTech products and services in the Territories. In furtherance thereof, Distributor will fulfill the obligations defined in Exhibit F and shall cause any Service Affiliate or sublicense to conform to the obligations defined in Exhibit F.

        (b)  Provide to HealtheTech the right of first negotiation to evaluate and negotiate rights to re-sell products manufactured by Distributor that have not yet been offered to other distributors. This right of first negotiation shall consist of Distributor notifying HealtheTech of

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the availability of a new product and its associated proposed pricing, and providing HealtheTech sixty (60) days to evaluate and exclusively negotiate with Distributor terms for reselling the product in the United States. In the event that the parties are unable to come to a mutual agreement on the terms for reselling the product within that 60 day period, Distributor shall have the right to negotiate with other parties concerning the products offered to HealtheTech.

        (c)  Distributor hereby grants to HealtheTech a non-exclusive right to distribute any Chinese language version of any nutrition and exercise logging software program that it has or will develop during the Term of this Agreement at pricing to be mutually agreed to by the parties.

        5.2    Obligations of HealtheTech.    HealtheTech will:

        (a)  provide Distributors reasonable advance notice in the event that it discontinues production of any of the Products;

        (b)  refer to Distributor all inquiries for purchase of Products received from within the Territories;

        (c)  keep Distributor informed of any Product complaints or adverse reactions that are, in HealtheTech's reasonable judgment, significant, and of all matters that are, in HealtheTech's reasonable judgment, important concerning the quality and performance of Products; and

        (d)  provide technical specifications and other information required to support Distributor's securing of registrations, permits, licenses, approvals and other governmental actions required to import, handle, market, sell, demonstrate, use or distribute Products in the Territories.

        (e)  Qualify all Products shipped to the Distributor in the European Market for "CE" certification marking, and appropriately mark all such Products shipped to Distributor in the European Market with the CE mark.

        (f)    Qualify all Products shipped to the Distributor in the Taiwan Market for either "UL" or "CE" certification marking, and appropriately mark all such Products shipped to Distributor in the Taiwanese Market with either the UL or CE mark


 

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