Service Level Agreement

Exhibit 10.3


THIS AGREEMENT DATED 15 JULY 2004

PARTIES

1 Tesco TESCO IRELAND LIMITED a company registered in Ireland (no. 19542) whose registered office is at Gresham House, Marine Road, Dun Laoghaire, Co. Dublin, Ireland; and 2 eDiets eDIETS.COM, INC., a company registered in Delaware whose principal place of business is at 3801 W. Hillboro Blvd, Deerfield Beach, Florida, USA.


RECITALS A. Tesco and eDiets (or members of their respective Group) have entered into agreements, including a Business Transfer Agreement and a Technology Licence Agreement (each as hereinafter defined), to enable Tesco to enter into the business of utilising eDiets' content and technology.

B. Tesco is desirous of having eDiets provide services for providing and maintaining a website for performing the activities in accordance with the Business (as hereinafter defined).

C. eDiets is desirous of performing services for supporting such website.

OPERATIVE PROVISIONS

1 Definitions and interpretation

1.1 In this agreement and the recitals, where the context so admits, the following definitions apply:

AlertSite a third party software tool used to measure availability of websites and/or servers (or such replacement measurement tool as agreed between the parties from time to time); Available the availability of the Tesco Production Infrastructure (and " Availability" shall have a corresponding meaning and " non-Availability" shall be construed accordingly);


1 Business the business of delivering personalized weight loss and diet related fitness services in any online (including, but not limited to, Internet, 3G, WAP, SMS, fax and phone) or offline medium purposely directed to customers residing in the Territory and for the avoidance of doubt shall include the fitness service as incorporated in the eDiets Service, but shall not include any standalone online personalised fitness service or the services as currently offered at http://www.eFitness.ie; Business Transfer Agreement the agreement between eDiets Europe Limited (a subsidiary of eDiets), Tesco, eDiets and Unislim Limited of even date transferring certain assets and employees of eDiets Europe Limited to Tesco; Change Control Procedure the procedure for agreeing to major changes to the Services provided by eDiets set out in schedule 2; Control the power to direct the affairs of a company, whether by ownership of shares, management influence or otherwise; Customers users of the Tesco Diet Service; eDiets Service the personalised weight loss and diet related fitness business carried out by eDiets; Effective Date the date of Completion of the Business Transfer Agreement (as defined in that agreement); Group in respect of a party, that party and any company which is a Subsidiary Company (as defined in the Technology Licence Agreement) or a Holding Company (as defined in the Technology Licence Agreement) of that party or any company which is a Subsidiary Company of any Holding Company;


2 Implementation Services Procedure the procedure by which Improvements made to the eDiets Service are evaluated and implemented on the Tesco Production Infrastructure and Tesco Application System (as applicable) as set out in schedule 4; Improvements shall have the meaning set out in the Technology Licence Agreement; Intellectual Property Rights all copyright and rights in the nature of copyright, database rights, patents, design rights, trade marks, applications and rights to apply for any of the above, moral rights, know-how, inventions, confidential information and any other intellectual property rights, whether now known or in future subsisting in the United Kingdom, Ireland or any other part of the world; Maintenance Window 00:01 am to 03:00 am (Greenwich Mean Time) every Friday; Quarter the four three month periods in the Year, the first such period beginning on the Effective Date and each subsequent such period beginning three months thereafter; Royalties the Royalties payable by Tesco to eDiets Europe Limited under the Technology Licence Agreement; Security Policy the Tesco security policy setting out Teco.com Limited' s third party IT security requirements set out in schedule 3; Service Credits the compensation calculated in accordance with clause 15 payable by eDiets to Tesco for failure to meet the Service Levels; Service Levels the minimum standards (to be no greater than eDiets then current standard as applied to the


3 eDiets Service (unless such standard falls below the standards set out in schedule 1, in which case the higher standard in schedule 1 shall prevail)) to be achieved by eDiets in carrying out its obligations under this agreement as set out in schedule 1; Services all services provided by eDiets under this agreement (including the service relating directly to the management of the hardware (including network) and software components that comprise the Tesco Production Infrastructure and the services listed under the heading " Associated services" in schedule 1) and such other services as are agreed to be provided by eDiets to the Tesco Group under this agreement from time to time; Technology shall have the meaning set out in the Technology Licence Agreement; Technology Licence Agreement the agreement between eDiets Europe Limited, eDiets and Tesco of even date setting out arrangements for the licensing to Tesco of certain technology and content relating to the Business; Term shall have the meaning set out in clause 20.3; Tesco Application System all application code residing on the Tesco Production Infrastructure used to provide the Tesco Diet Service (including but not limited to Cold Fusion application code and custom tags, any code indirectly called as a result, SQL statements, HTML code, Javascript and Flash script) but excluding the software components of the Tesco Production Infrastructure; Tesco Data any data whether in electronic or paper form and whether provided by the Tesco Group or produced by eDiets as a result of the processing of data provided by Tesco;


4 Tesco Diet Service all services provided by Tesco in connection with the Business (including the Tesco Diet Website); Tesco Diet Team the technical, nutrition, content, marketing and customer service team of the Tesco Group that is operating the Tesco Diet Service; Tesco Diet Website(s) the website(s) made available to public Internet users via the Tesco Production Infrastructure using the Tesco Application System; Tesco Production Infrastructure the hardware (including network) and software components managed and maintained by eDiets listed under the headings " Hardware and software components" and " Network components" in schedule 1; Tesco Systems any and all computer and telecommunications infrastructure (including hardware and software) owned, licensed or leased by or on behalf of Tesco excluding the Tesco Production Infrastructure and Tesco Application System; Third Party Services as defined in clause 5.2; Year a period of 12 months from the Effective Date or an anniversary thereof.

1.2 Save as otherwise provided herein, any references in this agreement to clauses or paragraphs are references to clauses and paragraphs of this agreement unless the context otherwise admits or so requires.

1.3 Words such as hereunder, hereof and herein and other words commencing with here shall, unless the context clearly indicates to the contrary, refer to the whole of this agreement and not to any particular clause hereof.

1.4 References to the singular shall include the plural and vice versa and reference to any gender shall include other genders. 1.5 The headings to the clauses in this agreement are for reference only and shall not affect the interpretation of this agreement.

5 1.6 This agreement may be executed in any number of counterparts and by the different parties hereto on separate counterparts, each of which when executed and delivered shall constitute an original, all such counterparts together constituting as one and the same instrument.

1.7 Amendments to or modifications of this agreement may be made only by mutual agreement of all parties in writing and shall be subject to whatever approvals or appropriate authorities as may be required by law.

1.8 A waiver by either party of any breach by any other party of any other terms, provisions or conditions of this agreement or the acquiescence of such party and any act (whether by commission or omission) which but for such acquiescence would be a breach as aforesaid shall not constitute a general waiver of such term, provision or condition or of any subsequent act contrary thereto. 1.9 This agreement shall not authorize any party, the legal representative, partner or agent of the other parties or any of them nor (save as expressly provided in this agreement) shall any party, or any successor of any party, have the right or authority to assume, create or incur any liability or obligation of any kind express or implied against or in the name of or on behalf of any other party. 1.10 Except as otherwise provided, this agreement, or the benefit hereof, may not be assigned or sublicensed by either party in whole or in part without the prior and mutual written consent of the other party (such consent not to be unreasonably withheld, delayed or conditioned) save that:

1.10.1 either party may assign this agreement or the benefit of it, to any member of its Group;

1.10.2 eDiets may assign this agreement outside of its Group as part of a sale of substantially all of the assets of eDiets, or its Group, or a change of Control or merger of eDiets, or its Group, provided always that such assignment is not permitted to Wal-Mart Stores, Inc. or a member of its Group.

1.11 This agreement and all rights and obligations hereunder shall for all purposes be treated and construed as being separate and apart from any other agreement or agreements or any rights or obligations thereunder save only insofar as the express provision requires to the contrary.


6 1.12 The parties hereto enter this agreement as principals for and on their own behalf.

1.13 This agreement represents the entire of the understanding of the parties concerning the subject matter hereof and overrides and supersedes all prior promises, representations (unless fraudulent), undertakings, understandings, arrangements, agreements, side letters or heads of agreement concerning the same which are hereby revoked by mutual consent of the parties. 1.14 This agreement shall become effective only upon the same being executed by or on behalf of all parties hereto. 1.15 References to " liability" , unless the context otherwise requires includes claims, demands, proceedings, damages, losses, costs and expenses. 1.16 Any reference to any statutory enactment includes all amendments, re-enactments and secondary legislation. 1.17 If the British Pound (a3) shall be discontinued then the values stated herein shall be converted to Euros ( ?) or any such official currency of the United Kingdom using the conversion rate as posted in the London Financial Times (or similar periodical if discontinued) on the date just prior to discontinuation.

1.18 This agreement is wholly conditional upon and no rights or obligations shall arise for either party under this agreement until such time as the Business Transfer Agreement has been executed and Completion (as defined in that agreement) has taken place.

2 Performance of the Services by eDiets

2.1 eDiets shall provide the Services for the Term in accordance with the terms and conditions of this agreement from the Effective Date, in particular in accordance with the Service Levels. Tesco acknowledges that, in order to provide certain parts of the Services to Tesco, eDiets must put in place certain procedures or elements not in place within the eDiets Service prior to the Effective Date (these procedures and elements are set out in schedule 5). eDiets shall be excused from meeting the Service Levels to the extent that meeting the Service Levels requires those procedures or elements of the Service listed in Schedule 5 to be in place and provided that all such procedures or elements of the Service shall be put in place by eDiets within the time periods from the Effective Date set out in schedule 5. For the avoidance of doubt, the absence of these elements of the Service shall not excuse eDiets of its obligations under this agreement (in particular, in relation to Availability under clause 3.1).


7 2.2 eDiets will perform its obligations under this agreement with reasonable skill, care and diligence and in any event it shall use the skill, care and diligence that it applies to the eDiets Service and not any lower standard.

2.3 eDiets shall be responsible for obtaining and maintaining all licences, consents, approvals, permits and authorisations required to be obtained under any applicable law in connection with the performance of its obligations under this agreement at its own cost and expense.

3 Availability of the Tesco Diet Service

3.1 eDiets shall ensure that the Tesco Production Infrastructure is Available for 99.7% of the time in each calendar month during the Term (excluding Maintenance Windows). eDiets shall use AlertSite to measure Availability as follows: AlertSite will ping the Tesco Production Infrastructure and if a return ping is received by AlertSite indicating the Tesco Production Infrastructure is Available more than 99.7% of the time, the Available uptime goal under this clause 3.1 will have been achieved by eDiets. eDiets shall make best efforts to ensure that the Tesco Production Infrastructure is accessible by the Tesco Diet Team for an equivalent period of time to the Availability requirements under this clause 3.1.

3.2 It is expected that eDiets will need much less than the scheduled Maintenance Window. Should an emergency dictate a need for any period of non-Availability to the Tesco Production Infrastructure outside the Maintenance Window, or for a period of non-Availability exceeding 3 hours, eDiets will schedule each instance of such non-Availability at least 12 hours in advance of its commencement by agreement with a designated Tesco representative. Any period of non-Availability outside of the Maintenance Window shall be treated by eDiets as a ' critical' Issue (as defined in schedule 1). During any period of non-Availability of the Tesco Diet Website(s) eDiets shall re-direct all Customers to a holding page provided by Tesco.

3.4 To the extent that the following have occurred to the Tesco Production Infrastructure, they shall not be included in any calculation of non-Availability for the purposes of clause 3.1:

3.4.1 loss of Availability due to external issues outside of eDiets' reasonable control (for example, failure of the hosting provider or catastrophic Internet shutdown arising from country code (or similar) top level domain failure);

3.4.2 if ordered by emergency services or any governmental authority;

3.4.3 patching a change to the Tesco Production Infrastructure by or as instructed by Tesco;


8 3.4.4 a fault in an application on the Tesco Application System if such fault can be reasonably traced to the Tesco System; 3.4.5 an error caused by the administration of the Tesco Production Infrastructure, or the Tesco Application System, where that error has been caused by a member of the Tesco Diet Team;

3.4.6 a fault in Tesco' s connection to the Internet;

3.4.7 a failure as a result of excessive page view demand where eDiets has reasonably discharged its responsibilities under schedule 1; 3.4.8 as a direct result of a withdrawal by Tesco of a change proposal as set out in paragraph 5.2 of schedule 2. 4 Description of Support Services and Service Levels

4.1 eDiets shall support the Tesco Production Infrastructure (by way of server and database pinging, 24/7 tech support, server capacity review, security patching and hardware and software installation as more particularly described in the schedules) in accordance with the Service Levels.

4.2 eDiets is not responsible for support or bug fixing of the Tesco Application System.

4.3 eDiets is responsible for the installation but not the configuration or administration of the Tesco Production Infrastructure upon which the Tesco Application Systems run.

4.4 eDiets shall not maintain and monitor the Tesco Application System. Furthermore, eDiets is not responsible for tuning the Tesco Application System (e.g. databases, application servers).

4.5 eDiets and Tesco shall estimate capacity for the Tesco Application System based on page view demand in accordance with schedule 1. Tesco shall implement any additional capacity to the Tesco Production Infrastructure in accordance with schedule 1.

4.6 If the Services cannot be provided in the manner contemplated herein, eDiets will notify Tesco and the procedures set out in schedule 1 shall apply. Contact information is set out in schedule 1 and shall be updated by the relevant party any time personnel or contact information changes.

4.7 eDiets shall at all times have such resource and expertise available whether on site or on call to ensure the uninterrupted Availability of the Tesco Production Infrastructure under clause 3.1.


9 5 Tesco Rights and Obligations

5.1 eDiets shall make the Tesco Production Infrastructure accessible to Tesco via a secure manner (as agreed between the parties from time to time) for the purpose of updating the Tesco Application System (including the Tesco Diet Website(s)) with the Availability set out in clause 3.1.

5.2 Tesco shall have the right to contract with any third party to:

5.2.1 perform any service outside of the scope of, or in addition to, the Services, including systems operations and related services to augment or supplement the Services or to interface with Tesco Systems; however, any modification of any eDiets software shall be owned by eDiets and eDiets retains copyright in such modifications, and if ownership cannot be obtained, then Tesco shall obtain an irrevocable license to use such modification from eDiets (unless such modification is an Improvement under the Technology Licence Agreement, in which case the terms and conditions relating to ownership of Improvements shall apply); and/or 5.2.2 to provide IT and/or business process outsourcing or administration services to Tesco in connection with the subject matter of this agreement;

(collectively, " Third Party Services" ). 5.3 If Tesco contracts with any third party to perform Third Party Services, eDiets shall cooperate with Tesco and any such third party to the extent reasonably required by Tesco including by providing (subject to equivalent confidentiality as set out in clause 19) all reasonable assistance to Tesco and such third party. In relation to clause 5.2.2, eDiets agrees that the outsourcing service provider may exercise any of Tesco' s rights, or perform any of Tesco' s obligations, under this agreement as if the outsourcing provider were Tesco. Tesco shall pay eDiets' reasonable and documented increased costs (at cost, and as pre-agreed with Tesco) for complying with its obligations under this clause 5.3.

5.4 All payments made by Tesco under this agreement shall be payable by Tesco under its standard payment procedures (i.e., within 30 days from the end of the month in which Tesco receives the invoice). In the event that Tesco fails to make a payment for services under this agreement, and that payment is not the subject of a bona fide dispute between the parties, eDiets may charge interest on the amount unpaid, at the rate of two percent per annum above Barclays Bank plc base rate from time to time until the payment in full is made.


10 5.5 eDiets acknowledges and agrees that Tesco may source hardware, software and services relating to the Tesco Production Infrastructure from any supplier of its choice and at its sole discretion, providedthat the hardware, software and services do not conflict with eDiets' then-current hardware, software or services used for the eDiets Service.

6 Insurance

6.1 Without prejudice to the warranties and undertakings given by eDiets in this agreement, eDiets shall maintain in force (at its own expense) for the Term and for six years thereafter general liability insurance as related to eDiets responsibilities to maintain the web hosting (sometimes referred to cyber liability insurance) to cover loss of $1m.

6.2 The insurance policies referred to in clause 6.1 shall be with a reputable insurer and shall not include unreasonable excesses which are unusual for this type of insurance.

6.3 Within 14 calendar days of a request by Tesco, eDiets shall provide evidence of the insurances which it is obliged to maintain under clause 6.1. 6.4 eDiets shall be responsible for insuring any equipment which it brings onto any Tesco premises. Tesco shall have no responsibility for any loss of or damage to this equipment except for loss or damage caused by damage to Tesco premises or the negligent acts of Tesco.

7 Hosting of the eDiets Europe Limited websites on the Tesco Production Infrastructure

7.1 Subject to Security Policy, for the period beginning on the Effective Date and ending six months thereafter, Tesco grants eDiets (solely for the benefit of its Subsidiary Company eDiets Europe Limited) the following:

7.1.1 the ability to host the eDiets Europe Limited websites on the Tesco Production Infrastructure; and

7.1.2 the right to access the Tesco Production Infrastructure for the purposes of administering and maintaining the eDiets Europe Limited websites. 8 Reports; Data

8.1

eDiets, at its sole cost, in fulfilment of all monitoring requirements, shall use AlertSite to measure and report on eDiet' s performance under this agreement. eDiets shall provide


11

Tesco with a log in facility to AlertSite via a dedicated web page. Reports will be available to Tesco daily by Tesco logging into the AlertSite web page. Tesco shall retain all necessary AlertSite data (" AlertSite Data" ) to produce monthly rollups reports to measure eDiets compliance against the Availability metrics stated in clause 3.1. The historical availability of the AlertSite Data is subject to the operation procedures of AlertSite and Tesco will have the responsibility for retrieving and archiving such data should it require functionality beyond that provided by AlertSite. 8.2 All data and information (including Tesco Data) submitted to eDiets by the Tesco Group in connection with the Services and all data developed, generated and processed by eDiets on behalf of the Tesco Group in performance of its obligations under this agreement or the Technology Licence Agreement is and shall remain the exclusive property of Tesco (or its licensors, as the case may be). Tesco Data shall not be used by eDiets other than in connection with providing the Services and may not be sold, leased or otherwise provided to third parties or in any way commercially exploited by or on behalf of eDiets, its employees or agents or by any third party save with Tesco' s prior express written agreement.

9 Change Control Procedure

9.1 eDiets and Tesco will use the Change Control Procedure to agree any proposed major changes to the Services at least 10 working days before their application (including changes to the procedures referred to in clause 2.1).

9.2 eDiets will conduct tests of the security and integrity of the changes to the Tesco Production Infrastructure under clause 2.1. The nature and benchmarks for such tests shall be mutually agreed as part of the Change Control Procedure before each change.

10 Co-operation; Benchmarking; Service Improvements

10.1

Where eDiets becomes aware of system security vulnerabilities, e.g. Microsoft Critical Alerts, in relation to the Tesco Production Infrastructure, it shall advise Tesco of available updates/patches at the earliest opportunity (and in any event within 24 hours of the alert) and seek Tesco' s approval to apply the updates/patches. If Tesco is unavailable to approve the update/patch following eDiets' best endeavours to contact Tesco using the contact information provided from time to time and if, in eDiets' opinion, the Tesco Diet Service is exposed to an attack that threatens to materially adversely affect the Tesco Production Infrastructure or the Tesco Diet Service, eDiets may apply an update/patch or disconnect the Tesco Diet Service from the Internet (and any disconnection under this clause 10.1 shall be deemed a critical level support issue, " critical" having the meaning set out in schedule


12

1). Provided eDiets uses its best endeavours to contact Tesco, eDiets will have no liability to Tesco for non-Availability as a result of taking such action without the consent of Tesco and any non-Availability as a direct result of such action will not be used to calculate t ...