EXHIBIT 10.10

 

LICENSE AGREEMENT

between

PIAGET ASSOCIATES, L.L.C.,

A              LIMITED LIABILITY COMPANY

(LICENSOR)

and

DIRECT FOCUS, INC.

(A Washington Corporation)

(LICENSEE)

 

This Agreement is the complete and exclusive statement of Licensor’s and
Licensee’s obligations and responsibilities to each other and supersedes any
other proposal, representation, or other communication by or on behalf of
Licensor relating to the subject matter hereof. This Agreement shall become
effective when both Licensor and Licensee have executed this Agreement.

 

1. LICENSE

 

1.1 Licensed Intellectual Property. Licensor owns, and warrants to Licensee that
its ownership comprises rights sufficient to grant exclusively to Licensee the
rights so granted herein, to U.S. Patent 5,336,146 and U.S. Patent Des. 406,621
and all follow-on and supplemental utility and design patents either filed or
pending or which may be filed in the future and any common law or registered
trademarks covering the name “Tread Climber” (hereinafter referred to as
“Patent” and/or “Trademark”). Goods incorporating the Patent shall be “Licensed
Goods.” A copy of the Patent shall be attached to this Agreement and listed as
Exhibit A hereto.

 

1.2 License Grant.

 

  A. Licensor hereby grants to Licensee an exclusive worldwide right and license
to all of Licensor’s rights and interest in the Patent and Trademark, including
the right to sublicense to others, to manufacture, have manufactured, import,
use, sell, or otherwise distribute or dispose of Licensed Goods.

 

1.3 Patent Notice/Location of the Mark.

 

  A. Licensed Goods shall be marked with the patent numbers in a manner that
allows the consumer to be easily informed upon examination of Licensed Goods of
the patented nature of the Licensed Product.

 

2. WARRANTIES AND PROPRIETARY RIGHTS

 

2.1 Warranty of Title. Licensor represents and warrants to Licensee that
Licensor has all necessary rights, power and authority to enter into and perform
this Agreement and to grant the licenses granted to Licensee herein. Licensor
represents that Licensor has experience in research and development regarding
products related to the Patent and has made reasonable efforts to ascertain
regarding the Patent, the absence of infringement or misappropriation of any
third party rights in any patent, copyright, trademark, trade secret or any
other proprietary rights and that there are no claims known of any third party
which, if upheld, would impair Licensor’s right to enter into this Agreement, or
that would, in any way, restrict or limit Licensee’s ability to manufacture or
market products worldwide using the Licensed Goods. Licensor has not granted any
prior licenses which would interfere with or restrict in any way its ability to
grant the License to Licensee.

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2.2 Licensee’s Warranties and Representations. Licensee represents and warrants
that it has the requisite authority, ability and resources to enter into this
Agreement and to perform all of the contemplated obligations enumerated therein.
Entering into this Agreement will not cause Licensee to be in breach or default
of any other agreement and the product to be manufactured and sold under the
Agreement will be manufactured of good workmanship and of a reasonable quality
to enable the product to be used for its intended purpose.

 

2.3 Limitation Warranty. Except as expressly set forth in this Agreement,
Licensor makes no other representations or warranties, expressed or implied, and
Licensor makes no representations or warranties of merchantability or fitness
for a particular purpose.

 

2.4 Limitation of Damages. Except for the indemnity provided in Section 2.5 in
this Agreement, in no event shall Licensor be liable for any damages or losses,
whether direct, incidental or consequential or otherwise, arising out of any
claim or allegation or damage sustained by Licensee or a third party, that
arises from or relates to Licensee’s use of the Patents or the use of the Mark
under this Agreement.

 

2.5 Indemnity. Licensor, subject to the limitation below, shall indemnify, hold
harmless, and defend Licensee, and its officers, agents, and employees, against
any and all claims, expense, judgments, liabilities, damages or losses,
including reasonable attorney fees, court costs, and any settlements, whether
direct or consequential or otherwise, arising out of any claim or allegation
that the Licensed Goods, solely with respect to licensed rights hereunder,
infringe or misappropriates any patent, copyright, trademark, trade secret, mask
work, intention, intellectual property right, or other proprietary right of any
third party, including any claims of Trace O. Gordon associated with any claims
he may have concerning his status as co-inventor under Patent 5,336,146, and
Licensee shall cooperate with Licensor, at Licensor’s expense, in the defense or
settlement of any such claim. In the event Licensor does not defend Licensee,
Licensee shall have the right to defend itself and its officers, agents, and
employees against any such charge of infringement, misappropriation of trade
secrets or violation of any proprietary rights, and to deduct the cost of doing
so from the royalties as they come due under Article 3.1 of this Agreement.
Licensor’s liabilities under this paragraph shall be limited to royalties as
they come due after Licensor has received written notice of such claim.

 

2.6 Proprietary Rights of Licensor. Ownership of subsequent developments,
improvements, or inventions which are patented shall be jointly owned by
Licensor and Licensee when such developments, improvements, or inventions are
derived by Licensee from claims allowed in the Patents and may be used without
the requirement for the payment of any additional royalties by Licensee other
than those specified in 4.2 (A) of this Agreement. Otherwise, Licensor shall
have sole and exclusive ownership of all right, title and interest in and to the
Patent and to all modifications and enhancements thereof made by Licensor
subject only to the rights of Licensee under this License. Any foreign patents
developed by Licensor during the term of this Agreement shall be licensed to
Licensee on the terms and conditions of this Agreement without the requirement
for the payment of any additional royalties by Licensee.

 

3. ASSIGNMENT OF PATENT

 

3.1 Licensor agrees to assign patents covered by this Agreement to Licensee upon
request of Licensee as long as Licensee is not in default under this Agreement,
and so long as Licensee has paid Licensor at least a total of $100,000 in
royalties during the most recent four calendar quarters cumulative. Licensor
further agrees to assign all improvements to Licensee and to reasonably
cooperate with Licensee in prosecuting patent applications, both U.S. and
foreign, covering the patented technology and/or any improvements,
modifications, enhancements or adaptations made to the patent technology or
products covered under this Agreement by Licensee, provided that Licensee shall
pay all expenses (including legal fees and expenses) of the Licensor in
connection therewith. Licensee shall be obligated to pay all ongoing maintenance
fees for existing patents previously obtained by Licensor.

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3.2 If this Agreement is terminated for any reason other than upon expiration of
the term hereof, Licensee shall execute any instrument necessary to formally
revest Licensor of his interest in the Patent Rights as fully and entirely as
the Licensor would have held and enjoyed if an assignment of the patent had not
been made.

 

3.3 During the term of the Agreement, Licensee may apply for a patent based on
any improvements, adaptations or inventions of Licensee relating to the Licensed
Product. Licensee will be responsible to prosecute and maintain such
applications and pay all costs incurred in connection therewith. Licensor shall
receive notice of any such improvements, adaptations or inventions at such time
as patents are applied for. These patents would be royalty free; however, upon
termination of the Agreement, all such patent rights would revert to Licensor.

 

4. ROYALTY, PAYMENT, AND RECORD KEEPING

 

4.1 The Licensee shall use its best reasonable efforts to develop, market and
sell Licensed Goods. Licensee commits to make a national rollout of the
contemplated direct response commercial within twelve (12) months of execution
of this Agreement. Failure to do so will be an event of default giving Licensor
the right of termination pursuant to paragraph 5.2(B). However, in the event
Licensee has not commenced a national rollout of the direct response commercial
within twelve (12) months of execution of this Agreement, Licensee may extend
its license rights for up to an additional six (6) months by paying the minimum
quarterly royalty payment amount specified in paragraph 4.1(D) ii of $25,000 per
quarter. Said payments would not count toward the advance royalty. Additionally,
Licensee agrees to develop, market and offer for sale a club version within two
and one-half (2 1/2) years from the date of this Agreement. Failure to develop,
market and offer for sale a club version within two and one-half (2 1/2) years
from the date of this Agreement will result in termination of Licensee’s right
to exclusivity to develop, market and offer for sale a club version of the
Licensed Goods.

 

4.2 Royalties and Payments/Minimum Royalties.

 

  A. As consideration for the rights and licenses herein granted, Licensee shall
pay to Licensor a royalty on all Licensed Goods at a rate of four percent (4%)
of net collected sales by Licensee.

 

  B. Licensee may enter into sub-license agreements for part or all of the
Licensed Goods. However, in no case shall royalties be less than what would have
been payable under 4.2(A).

 

  C. Licensee shall pay such royalties and all other amounts due under this
License each quarter no later than thirty (30) days following the end of such
quarter and shall, at that time, deliver to Licensor a royalty statement for
such quarter. “Net collected sales” shall be defined as gross sales by Licensee
less credit card and cash discounts actually credited to the customer, financing
discounts, selling commissions paid, freight and bad debt. “Net collected sales”
shall refer only to sales for which the company has received payment. Net
collected sales will also include any actual net profit realized from shipping
and handling revenue after fully burdening of shipping and handling.

 

  D. Licensee agrees to make royalty payments, as follows:

 

  i. $17,500 within two (2) weeks of the signing of this Agreement and an
additional $17,500 within six months from the signing of this Agreement.

 

  ii. $25,000 minimum per quarter beginning with the quarter ending eighteen
(18) months from the date of this Agreement and thereafter until such time
actual royalties due under this Agreement exceed royalty minimums paid. However,
in the event Licensee has commenced the sale of Licensed Goods earlier than
eighteen (18) months from the date of this Agreement, minimum royalty payments
shall be due for the quarter in which first sales of Licensed Goods are made.

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4.3 Reports and Records.

 

4.3.1 Licensee shall keep complete and accurate records of its operations under
this Agreement and shall furnish Licensor with a statement not more than thirty
(30) days after the end of each calendar quarter during the term of this
Agreement, setting forth the “net sales” and the method used to determine net
sales during the quarter to which the statement pertains, and the royalty then
due. Each such statement shall be accompanied by payment to Licensor of all
amounts then due. The first such report and payment shall be due not more than
thirty (30) days after the quarter in which product sales have commenced.

 

4.3.2 Licensor shall have the right to audit the records and accounts of
Licensee relating to the sales under this Agreement, provided that such audits
shall be made at reasonable times during normal business hours by a certified
public accountant selected by Licensor solely at Licensor’s expense.

 

4.3.3 If an audit shall reveal that in any calendar quarter, Licensee has made
an error in its favor in any payment due to Licensor, Licensee shall be
obligated to pay the reconciled unpaid amount and, in addition, pay the audit
fee in respect of such audits if such error equals or is greater than five
percent (5%).

 

4.3.4 In calculating and determining the royalties payable hereunder, Licensee
shall consistently apply the conventions, rules and procedures of Generally
Accepted Accounting Principles (GAAP) as defined by the American Institute of
Certified Public Accountants (AICPA).

 

5. TERM, TERMINATION AND REVISION

 

5.1 Term. Unless sooner terminated as provided herein, this Agreement shall
remain in effect for the term of the licensed patents, or for so long as
Licensee continues to manufacture, market, promote or sell the Licensed Product,
whichever is longer.

 

5.2 Termination.

 

  A. Licensee shall have the right to terminate this Agreement upon ninety (90)
days written notice to Licensor. Expiration or termination of this Agreement or
of any license rights under this Agreement shall not relieve the parties of any
obligation accruing prior to or at the time of such expiration or termination,
and any provisions relating to enforcement of the license rights hereunder or
indemnification of one party by the other shall survive the expiration or
termination of this Agreement.

 

  B. In the event of a breach of any of the terms or provisions of this
Agreement by either party, the party not in default shall have the right to
terminate the Agreement by giving thirty (30) days written notice to such effect
to the defaulting party, such notice to set forth the nature of the breach or
default relied upon to effect termination. In the event that the breach or
default is cured by the defaulting party within the period of the notice, then
the notice shall be null and void and of no further effect.

 

  C. If Licensee becomes insolvent or files for liquidation under any provision
of the bankruptcy law, all rights of the Licensee will be automatically deemed
to have expired as of a date seven (7) days prior to that event.

 

5.3 Rights After Termination. Upon termination of this Agreement, Licensee shall
have the right to complete any Licensed products then in the process of
manufacture and to dispose of those Licensed Goods, as well as its existing
inventory of all Licensed Goods, subject to the payment of royalties to Licensor
as provided in Article 3.1. Any inventory not disposed of one hundred eighty
(180) days from the date of termination will be offered to Licensor at cost.
Licensor shall have no obligation to purchase said existing inventory.

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5.4 Reversion. Upon termination of this Agreement, all rights granted to
Licensee will terminate and revert to Licensor.

 

6. GENERAL

 

6.1 Law. This Agreement shall be governed by and construed in accordance with
the laws of the State of Washington, to which State the parties agree to
jurisdiction of its courts or to federal courts situated therein.

 

6.2 Indemnification. Licensee shall defend, indemnify and hold Licensor harmless
from and against any and all damages, liabilities, costs, losses, expenses,
claims and/or judgments, including legal costs and reasonable attorneys’ fees
which may result in connection with the Direct Response Commercial or the
manufacturing, marketing or distribution of the Product, unless resulting
directly from Licensor’s material breach of this Agreement or Licensor’s gross
negligence or willful misconduct.

 

6.3 Litigation.

 

  A. So long as this exclusive license to Direct Focus, Inc. is in effect,
Licensee shall have the authority, but not the obligation, to pursue any and all
litigation and/or potential litigation with third parties regarding said Product
and any and all modifications and improvements thereof. Licensee shall pay
Licensor royalties on proceeds of any such action, after deducting all costs of
litigation including attorney fees, in accordance with percentages outlined in
paragraph 4.2 (A).

 

  B. Licensor shall make reasonable efforts to cooperate with Licensee in
litigation and/or potential litigation with third parties being pursued by
Licensee.

 

  C. Where Licensee chooses not to pursue a particular litigation matter,
including a party who infringes Licensee’s exclusive rights hereunder, Licensor
shall have the authority, but not the obligation, to pursue the particular
litigation matter. Licensee shall not be obligated to pay any fees or expenses
for litigation that Licensor chooses to pursue. Licensor shall not be obligated
to pay Licensee any proceeds from litigation commenced under this paragraph.

 

  D. Licensee shall make reasonable efforts to cooperate with Licensor in
litigation and/or potential litigation with third parties being pursued by
Licensor.

 

6.4 Modifications. No waiver, consent, modification, amendment or change of the
terms of this Agreement shall be binding unless in writing and signed by
Licensee and Licensor.

 

6.5 Notices. Any notices required or permitted under this Agreement shall be in
writing and delivered in person or sent by registered or certified mail, return
receipt requested, with proper postage affixed to Licensee: Direct Focus, Inc.,
attention Brian R. Cook, 2200 NE 65th Avenue, Vancouver, WA 98661, telephone
(360) 418-6177; to Licensor: Gary Piaget, P.O. Box 236, Deerharbor, WA 98243,
telephone (360) 376-7088.

 

6.6 Severability. In the event that any provision of this Agreement is held by a
court of competent jurisdiction to be legally ineffective or unenforceable, the
validity of the remaining provisions shall not be affected, unless the intent of
this Agreement is frustrated.

 

6.7 Assignment of Contract.

 

  A. Neither this Agreement nor the licenses granted herein may be assigned or
otherwise transferred by Licensee or Licensor without the other’s written
consent. Such consent shall not be unreasonably withheld, except in connection
with the sale of substantially all of the assets of the business to which the
Agreement pertains or any inter-company assignment. Any assignment or transfer
without such consent shall be null and void.

 

  B. Subject to the restriction against assignment and transfer set forth in
Paragraph A of this Article, this Agreement shall inure to the benefit of and be
binding upon the parties hereto, their subsidiaries, successors, assigns, and
other legal representatives.

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6.8 Execution in Counterparts. This Agreement shall be executed in counterparts,
each of which shall have the full force and effect of an original.

 

6.9 Arbitration. Any controversy or claim arising under or in relation to this
Agreement or the breach thereof, or the relations between Licensee and Licensor
shall be settled by arbitration by one arbitrator in the City of Vancouver,
Washington administered by the American Arbitration Association under the then
applicable general arbitration rules of said association and judgment on the
award rendered by the arbitrator may be entered in any court having jurisdiction
thereof; provided however that the arbitrator shall be bound by the laws of the
State of Washington and regarding any questions relating thereto, the trademark
and patent laws of the United States of America. The prevailing party shall be
awarded its attorney’s fees and reasonable costs. The choice of law governing
any and all questions and issues any way related to this Agreement shall be the
laws of the State of Washington and the patent and trademark laws of the United
States of America.

 

6.10 Product Liability Insurance. Licensee agrees to maintain product liability
insurance on the Licensed Goods in such amount as Licensee typically maintains
on its other fitness products, but in any event, not less than $1 million per
occurrence and $2 million aggregate with coverage for attorney’s fees and costs
outside those amounts. Licensee agrees to provide appropriate certificates of
insurance evidencing such coverage. Licensee agrees to list Piaget Associates,
LLC as an additional insured on such policy. Any additional expense for naming
Piaget Associates LLC as an additional insured will be borne by Licensor.

 

6.11 Time is Of the Essence. The parties acknowledge that time is strictly of
the essence with respect to each and every term, condition and obligation of
this Agreement, and the failure to perform any of the terms, conditions or
obligations hereunder by any party shall constitute a material breach of this
Agreement.

 

6.12 Confidentiality. Each party hereto agrees to maintain the confidentiality
of the Confidential Information acquired during the negotiations leading up to
and throughout the term of this Agreement from the other party. “Confidential
Information” includes, without limitation, trade secrets, technical data,
prototypes, product summaries, financial data, sales data, business plans, and
other certain information which either party with respect to its own information
deems to be confidential, and which the party claiming confidentiality has
declared to the other party verbally or in writing to be “Confidential” or
“Proprietary.” Each party agrees to receive and hold all such Confidential
Information acquired from the other party in strict confidence and to disclose
the same within its own organization only on an “as needed” basis, and then only
to those employees who have agreed in writing to protect and preserve the
confidentiality of such disclosures. Further, each party agrees that it will not
disclose or use the Confidential Information acquired from the other party, in
whole or in part, for any purpose other than those purposes contemplated under
this Agreement, and that it will not disclose any such Confidential Information
to any third party, or use the same for its own benefit or for the benefit of
any third party. The foregoing restrictions on the disclosure and use of
Confidential Information shall not apply to the extent of information (a) known
to one party prior to receipt from the other party; (b) which becomes public
knowledge without breach of this confidentiality provision; (c) rightfully
acquired from a third party without restriction on disclosure or use; (d)
disclosed by the disclosing party to a third party without restriction on
disclosure or use; (e) independently developed by the receiving party without
resort to the disclosing party’s disclosure; or (f) as to which the receiving
party has received express consent from an authorized officer of the disclosing
party to disclose or use; provided, however, that the receiving party shall have
the burden to prove any of the aforementioned events on which that party relies
to relieve it of the restrictions hereunder, and provided further that in the
case of events (b), (c), (d), (e) and (f), the removal of restrictions shall be
effective only from and after the date of occurrence of the applicable event.

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6.13 Survival. In addition to the express survival provision of Section 5.2.A.
herein above, and without limiting any other provision herein regarding survival
of covenants and obligations, Sections 2.4, 2.5, 2.6, 3.2, the reversion of
patent rights under 3.3, 5.3, 5.4, 6.2, 6.3, 6.7.B., 6.9, 6.10, 6.12 and this
Section 6.13 shall survive the expiration or termination of this Agreement.

 

IN WITNESS WHEREOF, the parties have caused this Agreement to be executed and
delivered as of the day and year first written above.

 

LICENSOR      Piaget Assoc LLC Date: 4/11/99      By:  

/s/ Gary D. Piaget

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LICENSEE      DIRECT FOCUS, INC. Date: 4/26/99      By:  

/s/ Brian R. Cook

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       Brian R. Cook, President Notary Statement: (Licensor)      Notary
Statement: (Licensee) STATE OF Washington      STATE OF Washington      ) ss.
         

) ss.

County of San Juan      County of Clark

On 4/11/99 before me,

a Notary Public in and for said County

and State, residing therein, personally

     On 4/26/99 before me,
a Notary Public in and for said County and State,
residing therein, and personally appeared appeared Gary Piaget,      Brian R.
Cook who, being duly sworn, and he acknowledged said instrument to be its
voluntary act and deed.      who, being duly sworn, and he acknowledged said
Instrument to be its voluntary act and deed. IN WITNESS WHEREOF, I have hereunto
set my hand and affixed my official seal the day and year last above written.
     IN WITNESS WHEREOF, I have hereunto set my
hand and affixed by official seal the day and year last
above Written. Diane M. Baxtor      Deborah L. Merz Notary Public for San Juan
County, State of Washington      Notary Public for Clark County, WA My
Commission Expires 7/9/01      My Commission Expires 10/19/02

(Seal)

                                     (Seal)

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FIRST AMENDMENT TO LICENSE AGREEMENT

 

The License Agreement executed by Piaget Associates, L.L.C. on April 11, 1999
and by Direct Focus, Inc. on April 26, 1999 is hereby amended as follows:

 

A. The parties to the Agreement are changed to include Gary D. Piaget, an
individual residing in East Sound, Washington, as the Licensor along with Piaget
Associates, L.L.C.

 

B. The royalty rate (Paragraph 4.2A) is reduced from Four Percent (4%) to Three
Percent (3%).

 

C. The minimum royalty payment (Paragraphs 4.1 and 4.2D ii) is reduced from
Twenty five Thousand Dollars ($25,000) per quarter to Twenty Thousand Dollars
($20,000) per quarter.

 

D. Paragraph 2.6 is amended to add the following:

 

  2.6 Improvements. Licensor shall promptly notify Licensee of all improvements
heretofore or hereinafter made by Licensor relating to exercise machines covered
by U.S. Patent No. 5,336,146, and Licensee shall have the exclusive right and
license to use such improvements without further payment to Licensor.

 

E. The following new Paragraph 3.4 is added to the agreement:

 

  3.4 Upon request by Licensee and as long as Licensee is not in default under
this Agreement, Licensor will assign the entire right, title and interest in and
to the TREAD CLIMBER trademark and any registration granted thereon to Licensee.

 

F. In Paragraph 4.1, the reference to Paragraph 4.1D ii is changed to Paragraph
4.2D ii.

 

G. In Paragraph 5.3, the reference to Article 3.1 is changed to Article 4.2A.

 

IN WITNESS WHEREOF, the parties have caused this amendment to be executed and
delivered this 7th day of October, 1999.

 

PIAGET ASSOCIATES. L.L.C.

By

 

/s/ Gary D. Piaget

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Gary D. Piaget, President

   

/s/ Gary D. Piaget

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Gary D. Piaget

DIRECT FOCUS, INC.

By

 

/s/ Brian R. Cook

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Brian R. Cook, President

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SECOND AMENDMENT TO LICENSE AGREEMENT

 

The License Agreement executed by Piaget Associates, L.L.C. on April 11, 1999
and by Direct Focus, Inc. on April 26, 1999, is hereby amended as follows:

 

A. Paragraph 4.1 in the License Agreement is replaced with the following
paragraph:

 

“Licensee shall use its best reasonable efforts to develop, market and sell
Licensed Goods. Licensee commits to make a national roll-out of the contemplated
direct response commercial by April 30, 2000. Failure to do so will be an event
of default giving Licensor the right of termination pursuant to Paragraph
5.2(B). However, in the event Licensee has not commenced a national roll-out of
the direct response commercial by April 30, 2000, Licensee may extend its
license rights for up to an additional eighteen (18) months by paying a minimum
quarterly royalty payment in the amount of $20,000 per quarter. Said payments
would not count towards the advanced royalty. Additionally, Licensee agrees to
develop, market and offer for sale a club version within two and one-half (2 ½)
years from the date of this Agreement. Failure to develop, market and offer for
sale a club version within two and one-half (2 ½) years from the date of this
Agreement will result in termination of Licensee’s right to exclusivity to
develop, market and offer for sale a club version of the Licensed Goods.”

 

B. Licensee and Licensor agree that, as referred to within this document, the
term “quarter” will refer to calendar quarters. The first such calendar quarter
for which minimum royalty payments are due shall be the quarter ending June 30,
2000. Minimum royalties due for that quarter will be pro-rated from April 26
through June 30, 2000. The pro-rated amount of royalties for that period is
$14,505.50. It is agreed between the parties that the royalties for this quarter
will be paid within seven (7) days of the signing of this Amendment to the
Agreement. Future royalties will be due as outlined in Section 4 of the License
Agreement.

 

Dated this 26th day of April, 2000.

 

/s/ Brian R. Cook

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/s/ Gary D. Piaget

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Brian R. Cook, President

  

Gary D. Piaget

DIRECT FOCUS, INC.

  

TEAM PIAGET

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THIRD AMENDMENT TO LICENSE AGREEMENT

 

The License Agreement executed by Piaget Associates, LLC on April 11, 1999 and
by Direct Focus, Inc. on April 26, 1999, along with the First and Second
Amendments thereto, is hereby amended as follows:

 

A. Paragraph 4.1 in the License Agreement is replaced with the following
paragraph:

 

“Licensee shall use its best reasonable efforts to develop, market and sell
Licensed Goods. Licensee commits to make a national roll-out of the contemplated
direct response commercial by March 31, 2002. Failure to do so will be an event
of default giving Licensor the right of termination pursuant to Paragraph
5.2(B). However, in the event Licensee has not commenced a national roll-out of
the direct response commercial by March 31, 2002, Licensee may extend its
license rights for up to an additional three (3) months by continuing to pay the
minimum quarterly royalty in the amount of $20,000 per quarter. Said payments
would not count towards the advanced royalty. Additionally, Licensee agrees to
develop, market and offer for sale a club version within two (2) years from the
date of this Amendment. Failure to develop, market and offer for sale a club
version within two (2) years from the date of this Amendment will result in
termination of Licensee’s right to exclusivity to develop, market and offer for
sale a club version of the Licensed Goods.”

 

B. Licensee acknowledges that it is currently paying minimum quarterly royalties
in the amount of $20,000 per quarter and agrees that until such time as a
product is being marketed under this Agreement (or unless the License is
terminated), Licensee shall continue to pay minimum quarterly royalties within
seven (7) days after the end of the calendar quarter. At such time Licensee
begins marketing a product under this Agreement, the quarterly royalties will be
due in accordance with the original Agreement and the first two (2) Amendments
thereto.

 

IN WITNESS WHEREOF, the parties have caused this Amendment to be executed and
delivered this 11 day of April, 2001.

 

PIAGET ASSOCIATES, LLC

 

DIRECT FOCUS, INC.

/s/ Gary D. Piaget

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/s/ Brian R. Cook

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Gary D. Piaget, President

 

Brian R. Cook, President

/s/ Gary D. Piaget

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Gary D. Piaget

   

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FOURTH AMENDMENT TO LICENSE AGREEMENT

 

The License Agreement executed by Piaget Associates, LLC on April 11, 1999 and
by Direct Focus, Inc. on April 26, 1999, along with the First, Second and Third
Amendments thereto, is hereby amended as follows:

 

A. Paragraph 4.1 in the License Agreement is replaced with the following
paragraph:

 

“Licensee shall use its best reasonable efforts to develop, market and sell
Licensed Goods. Licensee commits to make a national roll-out of the contemplated
direct response commercial by December 31, 2002. Failure to do so will be an
event of default giving Licensor the right of termination pursuant to Paragraph
5.2(B). However, in the event Licensee has not commenced a national roll-out of
the direct response commercial by December 31, 2002, Licensee may extend its
license rights for up to an additional three (3) months by continuing to pay the
minimum quarterly royalty in the amount of $20,000 per quarter. Said payments
would not count towards the advanced royalty. Additionally, Licensee agrees to
develop, market and offer for sale a club version within two (2) years from the
date of this Amendment. Failure to develop, market and offer for sale a club
version within two (2) years from the date of this Amendment will result in
termination of Licensee’s right to exclusivity to develop, market and offer for
sale a club version of the Licensed Goods.”

 

B. Licensee acknowledges that it is currently paying minimum quarterly royalties
in the amount of $20,000 per quarter and agrees that until such time as a
product is being marketed under this Agreement (or unless the License is
terminated), Licensee shall continue to pay minimum quarterly royalties within
seven (7) days after the end of the calendar quarter. At such time Licensee
begins marketing a product under this Agreement, the quarterly royalties will be
due in accordance with the original Agreement and the first three (3) Amendments
thereto.

 

IN WITNESS WHEREOF, the parties have caused this Amendment to be executed and
delivered this 4th day of October, 2001.

 

   

PIAGET ASSOCIATES, LLC

  

DIRECT FOCUS, INC.

   

/s/ Gary D. Piaget

--------------------------------------------------------------------------------

  

/s/ Brian R. Cook

--------------------------------------------------------------------------------

   

Gary D. Piaget, President

  

Brian R. Cook, C.E.O.

   

/s/ Gary D. Piaget

--------------------------------------------------------------------------------

        

Gary D. Piaget

    

--------------------------------------------------------------------------------

FIFTH AMENDMENT TO LICENSE AGREEMENT

 

This Fifth Amendment (hereinafter, “Amendment”) is made this 31st day of
December, 2002, and amends the License Agreement dated April 26, 1999, by and
between Piaget Associates, L.L.C. (hereinafter, “Licensor”) and The Nautilus
Group, Inc., formerly known as Direct Focus, Inc. (hereinafter, “Licensee”).

 

The purpose of this Amendment is to provide the following modifications to the
Agreement, and Amendments, as set forth below.

 

  1. Paragraph 4.1 of the Agreement is replaced in its entirety as follows:

 

Licensee shall use its best reasonable efforts to develop, market and sell
Licensed Goods. Licensee commits to making a national roll-out of the
contemplated direct response infomercial by June 30, 2003. Failure to do so will
constitute an event of default giving Licensor the right of termination pursuant
to Paragraph 5.2(B). However, in the event Licensee has not commenced a national
roll-out of the direct response infomercial by June 30, 2003, Licensee may
extend its license rights for up to an additional three (3) months by continuing
to pay the minimum quarterly royalty in the amount of $27,500. These payments
will not count towards the advanced royalty.

 

Additionally, Licensee agrees to develop, market and offer for sale a club
version on or before March 31, 2005. Failure to develop, market and offer for
sale a club version by this date will result in termination of Licensee’s right
to exclusively develop, market and offer for sale a club version of the Licensed
Goods.

 

  2. Paragraph 4.1, third sentence, delete the phrase “paragraph 4.1(D) ii of
$25,000 per quarter.” and replace with the phrase “paragraph 4.1(D) ii of
$27,500 per quarter”.

 

  3. Paragraph 4.1(D)(ii), first sentence, delete the beginning phrase “$25,000
minimum per quarter” and replace with the phrase “27,500 minimum per quarter”.

 

  4. Insert new Paragraph 6.14 as follows:

 

Licensor has knowledge and capabilities, which will assist Licensee in achieving
its objectives as anticipated under this Agreement. Licensor will disclose to
Licensee such knowledge and will advise and assist Licensee, and its technical
staff, as required and at reasonable times and in reasonable ways in
consideration for which Licensee shall reimburse Licensor for reasonable travel
expenses if Licensor is required to travel outside the State of Washington.

 

  5. In the event of a conflict between the terms and conditions of this
Amendment and those contained in the Agreement, the provisions of this Amendment
shall govern.

 

  6. All other terms and conditions of the Agreement remain in full force and
effect.

--------------------------------------------------------------------------------

IN WITNESS WHEREOF, the parties have caused this Amendment to be executed and
delivered this 31 day of December, 2002.

 

PIAGET ASSOCIATES, L.L.C.

 

THE NAUTILUS GROUP, INC.

By:

 

/s/ Gary Piaget

--------------------------------------------------------------------------------

 

By:

 

/s/ Brian R. Cook

--------------------------------------------------------------------------------

Name:

 

Gary Piaget

 

Name:

 

Brian R. Cook

Title:

 

Owner

 

Title:

 

CEO

--------------------------------------------------------------------------------

SIXTH AMENDMENT TO LICENSE AGREEMENT

 

This Sixth Amendment (hereafter, “Amendment”) is made this 2nd day of May, 2003,
and amends the License Agreement by and between Piaget Associates, L.L.C.
(hereinafter “Licensor”) and The Nautilus Group, Inc., formerly known as Direct
Focus, Inc. (hereinafter, “Licensee”), such License Agreement dated April 26,
1999 (hereafter “Agreement) and amended by the First Amendment on October 7,
1999, Second Amendment of April 26, 2000, Third Amendment of April 11, 2001,
Fourth Amendment of October 4, 2001, and Fifth Amendment of December 31, 2002.

 

NOW THEREFORE, for One Dollar ($1.00) and other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties agree
as follows:

 

1. Section 1.1 of the Agreement shall be amended as follows to add U.S. Patent
Des. 421,779 entitled “Treadmill-Type Exercise Apparatus” and U.S. Patent No.
5,626,539 entitled “Treadmill Apparatus with Dual Spring-Loaded Treads” as two
of the patents licensed under the Agreement:

 

In section 1.1, line 3, after “U.S. Patent Des. 406,621” insert “U.S. Patent
Des. 421,779 and U.S. Patent No. 5,626,539”

 

2. In the event of a conflict between the terms and conditions of this
Amendment, and those contained in the Agreement, as amended by the previous five
amendments, the provisions of this Amendment shall govern.

 

3. All other terms and conditions of the Agreement shall remain in full force
and effect.

 

IN WITNESS WHEREOF, the parties have executed this Amendment to be effective as
of the date first written above.

 

PIAGET ASSOCIATES, L.L.C.

 

THE NAUTILUS GROUP, INC.

By:

 

/s/ Gary D. Piaget

--------------------------------------------------------------------------------

 

By:

 

/s/ Brian R. Cook

--------------------------------------------------------------------------------

Name:

 

Gary D. Piaget

 

Name:

 

Brian R. Cook

Title:

 

Gary Piaget, Owner

 

Title:

 

CEO

--------------------------------------------------------------------------------

SEVENTH AMENDMENT TO LICENSE AGREEMENT

 

This Seventh Amendment (hereafter, “Amendment”) is made this 2nd day of May,
2003, and amends the License Agreement by and between Piaget Associates, L.L.C.
(hereinafter “Licensor”) and The Nautilus Group, Inc., formerly known as Direct
Focus, Inc. (hereinafter, “Licensee”), such License Agreement dated April 26,
1999 (hereafter “Agreement) and amended by the First Amendment on October 7,
1999, Second Amendment of April 26, 2000, Third Amendment of April 11, 2001,
Fourth Amendment of October 4, 2001, Fifth Amendment of December 31, 2002, and
Sixth Amendment of May 2, 2003.

 

NOW THEREFORE, for One Dollar ($1.00) and other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties agree
as follows:

 

1. Section 1.1 of the Agreement shall be amended as follows to add U.S. Patent
Des. 421,779 entitled “Treadmill-Type Exercise Apparatus” as one of the patents
licensed under the Agreement:

 

In section 1.1, line 3, after “U.S. Patent 5,626,539” insert “U.S. Patent Des.
421,779”

 

2. In the event of a conflict between the terms and conditions of this
Amendment, and those contained in the Agreement, as amended by the previous five
amendments, the provisions of this Amendment shall govern.

 

3. All other terms and conditions of the Agreement shall remain in full force
and effect.

 

IN WITNESS WHEREOF, the parties have executed this Amendment to be effective as
of the date first written above.

 

PIAGET ASSOCIATES, L.L.C.

 

THE NAUTILUS GROUP, INC.

By:

 

/s/ Gary D. Piaget

--------------------------------------------------------------------------------

 

By:

 

/s/ Brian R. Cook

--------------------------------------------------------------------------------

Name:

 

Gary D. Piaget

 

Name:

 

Brian R. Cook

Title:

 

Gary Piaget

 

Title:

 

CEO

--------------------------------------------------------------------------------

EIGHTH AMENDMENT TO LICENSE AGREEMENT

 

This Eighth Amendment (hereafter, “Amendment”) is made this 22nd day of October,
2003, and amends the License Agreement by and between Piaget Associates, L.L.C.
(hereinafter “Licensor”) and The Nautilus Group, Inc., formerly known as Direct
Focus, Inc. (hereinafter, “Licensee”), such License Agreement dated April 26,
1999 (hereafter “Agreement) and amended by the First Amendment on October 7,
1999, Second Amendment of April 26, 2000, Third Amendment of April 11, 2001,
Fourth Amendment of October 4, 2001, Fifth Amendment of December 31, 2002, Sixth
Amendment of May 2, 2003, and Seventh Amendment of May 2, 2003.

 

NOW THEREFORE, for One Dollar ($1.00) and other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties agree
as follows:

 

1. As a result of the assignment by Gary Piaget to Nautilus, Inc. of his entire
right, title and interest in and to U.S. Patent No. 5,626,539 entitled
“Treadmill Apparatus With Dual Spring-Loaded Treads,” the Agreement and any and
all Amendments are revised to read as follows:

 

In section 1.1, line 3, after “U.S. Patent Des. 406,621” delete “U.S. Patent
5,626,539.”

 

2. In the event of a conflict between the terms and conditions of this
Amendment, and those contained in the Agreement, as amended by the previous five
amendments, the provisions of this Amendment shall govern.

 

3. All other terms and conditions of the Agreement shall remain in full force
and effect.

 

IN WITNESS WHEREOF, the parties have executed this Amendment to be effective as
of the date first written above.

 

PIAGET ASSOCIATES, L.L.C.

 

THE NAUTILUS GROUP, INC.

By:

 

/s/ Gary D. Piaget

--------------------------------------------------------------------------------

 

By:

 

/s/ Gregg C. Hammann

--------------------------------------------------------------------------------

Name:

 

Gary D. Piaget

 

Name:

 

Gregg C. Hammann

Title:

 

Owner

 

Title:

 

President and CEO