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EXHIBIT 10.10
Healthe tech
xxx.xxxxxxxxxxx.xxx
Memorandum of Understanding
This Memorandum of Understanding ("MOU") memorializes the key terms and
conditions on which HealtheTech, Inc. of Golden Colorado ("HET"), and the
Cetalon/Xxxxxx Group doing business in the State of California ("C/W Group"),
intend to formalize their strategic relationship relating to the providing of
services using certain HET products, distributing other HET products and
executing on certain investment opportunities in HET.
EFFECT OF MOU
Upon execution of this MOU, the parties agree to work together in good faith to
negotiate and prepare formal documents contemplated this MOU that shall comprise
the substance of the key terms and conditions herein and other mutually
acceptable provisions (the "Agreements"). This MOU shall constitute no other
legal obligation on either party. Neither party shall have any legal obligation
to enter into or complete the transactions contemplated herein unless and until
the definitive Agreements are executed by both parties on such terms and
conditions as HET and C/W Group shall agree.
This MOU shall expire on December 31, 2001 or upon the execution of the
definitive Agreements, whichever occurs earlier. Each party shall bear its own
costs and expenses, including any legal and financial professional service fees
incurred in connection with the transactions contemplated hereby, whether or not
such transactions are consummated.
RECITALS
HET has developed unique fitness, nutrition, and weight loss products and
services, including the HET BodyGem(TM) Metabolic Meter device that allows the
measurement of metabolism, and unique software systems for Palm OS personal
digital assistants (PDA's) and Windows desktop computers for the tracking of
nutritional, fitness, and weight loss management information;
The C/W Group has obtained an exclusive license from Sears Xxxxxxx & Co.
("Sears") to create, install and manage a Heath and Fitness Centers
(store-in-store) in more than 800 Sears retail outlets in North America (herein
referred to as Sears Health and Fitness, or "SHF"), and
HET and C/W Group wish to establish a strategic business relationship
incorporating the following key terms and conditions:
1. HET will license to C/W Group the right to purchase HET BodyGem systems
(Metabolic Meters and related disposable and peripheral equipment) at
the current market price (the BodyGem device to be capped at no greater
than the current $1495 (US dollars) per unit)
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for the express and sole purpose of SHF employees providing a
supervised service to SHF customers in the SHF stores. The services
provided shall comprise using the BodyGem system to measure individual
SHF customer metabolism using HET single-use only BodyGem disposable
inserts (facemasks and/or mouthpieces, collectively "Disposables"). C/W
Group will agree to use the BodyGem system for this purpose only, and
shall agree to purchase all their BodyGem Disposable requirements from
HET.
2. C/W Group will agree to the following minimum calendar quarterly
purchase commitments for the BodyGem devices:
- 2Q01: 100 BodyGems
- 3Q01: 100 BodyGems
- 4Q01: 250 BodyGems
- 1Q02: 250 BodyGems
- 2Q02: 250 BodyGems
- 3Q02: 300 BodyGems
- 4Q02: 300 BodyGems
3. HealtheTech will grant C/W Group's request to purchase up to 5000
BodyGem devices over the upcoming 18 months based on product
availability and disposable utilization rate.
4. HET shall agree to provide Disposables to C/W Group at agreed upon
delivery schedules and at pricing determined as follows:
a. Disposables unit price paid to HET shall be $5 (US
dollars) regardless of actual revenues received by
C/W Group. The parties will split any revenues above
$11.30 50/50. The first thousand units for each store
opening will be priced at a reduced price of $3.00
for facemask disposables only. The suggested retail
price for each test in the United States will be
$15.00.
b. The Disposables unit pricing shall be re-assessed by
the parties at 3 months from the commencement date of
the Agreement.
5. All BodyGem devices purchased by C/W Group shall not be resold without
the express written consent of HET. Initial order quantities for
existing SHF stores and new SHF store openings shall not be less than
1,000 Disposables units (mix between masks and mouthpieces determined
by C/W Group). C/W shall agree to a minimum Disposables purchase
requirements of 75 Disposables per month per BodyGem device purchased
by C/W Group. Minimum inventory requirements for disposables in each
SHF store shall be 75 units.
6. HET and C/W Group will agree on specifications for SHF store space,
layout, training, and support requirements for the facilitation of the
BodyGem metabolic measurement
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services. The parties shall agree that no BodyGem devices will be
shipped to any SHF store or otherwise made available to that SHF store
until the an authorized HET representative has verified in writing that
the agreed upon specifications have been met in the applicable SHF
store.
7. Each SHF will purchase, inventory, and appropriately mechandize
HealtheTech branded Personal Data Assistants ("PDA's") as well as all
consumer software products currently offered for sale by HET. Each SHF
location will maintain minimum displayed inventory of six PDA units as
well as any additional PDA or HET software products stock necessary to
satisfy retail demand. The parties shall agree that a 30 days supply
stock shall be recommended stock at each SHF store.
8. HET will agree to develop for C/W Group within a reasonable time a
professional software application that will allow each SHF location to
track the nutrition, fitness, and weight loss data for each of their
enrolled clients using the BodyGem metabolic measurement service.
9. C/W Group shall agree to actively promote the BodyGem metabolic
measurement service and the other HET products in appropriate SHF
advertising and promotion activities using HET approved branding,
artwork, logo, and corporate identity.
10. HET shall agree to promote C/W Group's SHF stores as locations
providing HET products and services in appropriate HET advertising, PR
and other marketing communications, including a listing in the
contemplated web-based HET BodyGem Locator Service that shall identify
the nearest geographic location providing BodyGem metabolic measurement
services by zip code, or other suitable identification means selected
by HET.
11. C/W Group (including FV) will complete the subscription documents to
invest no less than $2.5 million (US dollars) in the HET Series C
Financing, or as otherwise agreed between the parties, prior to April
6th 2001, and C/W shall take all reasonable efforts to complete the
investment by April 30, 2001. Upon completion of this investment HET
will grant C/W Group an exclusive license for supervised use of BodyGem
devices in a major retail department store setting. This license is
granted for a one-year term renewable annually based solely upon
achieving minimum monthly BodyGem disposable purchase requirements.
