Addendum dated August 20, 2010 to Supply Agreement dated May 2, 2008 between
Nautilus, Inc., Treuriver Investments LIMITED, and Land America Health and
Fitness Co. Ltd.
 
 
This Addendum to the Supply Agreement (hereinafter “Addendum”), dated August 20,
2010 and effective January 1, 2011, supplements and amends the Supply Agreement
dated May 2, 2008 (hereinafter “Supply Agreement”) as hereinafter set forth and
according to the following terms:
 
 
Article 1 Definitions:
 
The definition of “New Products” is eliminated.
 
 
Article 3 Price:
 
The Preamble in Article 3 is eliminated in its entirety and replaced with the
following: “The per unit purchase price payable by Purchaser to Suppliers for
each Product purchased hereunder is set forth in a confidential memorandum that
has been approved and agreed upon by the Parties in connection with the
negotiation of this Addendum (the “Unit Price Schedule”). The Prices set forth
in the Unit Price Schedule attached as Exhibit A to this Addendum shall be valid
and remain in effect for all shipments made during the term of the Addendum.”
 
Article 3.1 shall be eliminated in its entirety.
 
Article 3.2 shall be eliminated in its entirety.
 
Article 3.3 shall be eliminated in its entirety:
 
 
Article 5 Volume Guarantees:
 
Article 5 is eliminated in its entirety.
 
Article 7 Payment:
 
Article 7.1: The second complete sentence of Article 7.1 shall be eliminated and
replaced with the following sentence: “Beginning January 1, 2011, payment terms
are net forty five (45) days and effective July 1, 2011 payment terms are net
sixty (60) days and due on the Thursday of the week following the due date of
the invoice, and absent a dispute regarding the amount of an invoice or an
amount otherwise due under this Agreement.”
 
 
Article 7.2: Eliminate Article 7.2 in its entirety and replace it with the
following: “In the event Purchaser fails to make timely full payment for
undisputed product shipped between January 1, 2011 and June 30, 2011 within
fifty five (55) days following the due date of the invoice in Article 7.1 (and
for product shipped between July 1, 2011 and December 31, 2011 seventy (70) days
following the due date of the invoice in Article 7.1), Supplier may thereafter,
upon providing prior written notice to Purchaser, suspend further shipments of
product until all payments are brought current. All late payments as defined in
this Article will accrue interest at the rate of LIBOR plus 3% per annum until
paid.”
 

 

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Article 8 Certain Agreements Regarding Products:
 
Article 8.5: A new Article 8.5 shall be added as follows:
 
Suppliers agree to provide to Purchaser a full cost detailed Bill of Materials
(“CBOM”) as set forth in this Article. In the event that Suppliers in the future
request a price increase on any of the products on the Unit Price Schedule,
Suppliers agree to provide Purchaser a CBOM for any of those products on which a
price increase is being requested before any price increase goes into effect. In
the event that Purchaser requests a quote from Suppliers on any Products not on
the Unit Price Schedule, Suppliers agree to provide a CBOM at the time it
provides the quote to Purchaser.
 
Article 9 Quality
 
Article 9.3: Eliminate Article 9.3 in its entirety and replace it with the
following: “If the inspection reject rate (arising solely from inspections
occurring at Supplier's facility in Xiamen, China) of a single Product reaches
an unacceptable level (which shall occur if five percent (5%) or more of the
Products produced within a given purchase order are rejected by Purchaser for
non-conformance), Purchaser may recommend or institute corrective action.”
 
Article 19 Non-Competition
 
The amount of $10 million USD referred to in Article 19 for the purchase of rod
based home gyms shall be changed to $6 million USD of rod based home gyms. In
all other respects the terms of Article 19 remain.
 
Article 20 Duration of Agreement
 
Article 20: Substitute the date of “December 31, 2011” in place of “December 31,
2010.”
 
 
 
 
 
 

 

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In all other respects the Supply Agreement dated May 2, 2008 shall remain in
full force and effect through December 31, 2011.
 
 
PURCHASER:
 
NAUTILUS, INC.
 
By: /s/ William McMahon
Signature
Print Name: William McMahon
Title: SVP Consumer
 
 
Suppliers:
 
Treuriver Investments LIMITED
 
By: /s/ Michael Carmen Bruno
Signature
Print Name: Michael Carmen Bruno
Title: CEO
 
 
 
LAND AMERICA HEALTH AND
FITNESS CO., LTD.
 
By: /s/ Michael Carmen Bruno
Signature
Print Name: Michael Carmen Bruno
Title: CEO
 
 
 
 
 
 
 
 
 
 
 
 
 
Acknowledged and Agreed as to Article 19 above:
 
 
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/s/ Michael Carmen Bruno
MICHAEL BRUNO
 
/s/ Yang Lin Qing
YANG LIN QING