Exhibit 10.24

LICENSE AGREEMENT

THIS LICENSE AGREEMENT (hereinafter “License” or “License Agreement”) is
effective as of the date of signing by the last of the parties to sign below and
is by and between Xiamen World Gear Sports Goods Co., Ltd. a corporation under
the laws of the People’s Republic of China (“Buyer”), having a place of business
at 27-29 North 2nd Road, Xinglin, Jimei District, Xiamen City, Fujian Province,
People’s Republic of China and Nautilus, Inc., a Washington Corporation
(“Nautilus”), having a place of business at 16400 SE Nautilus Drive, Vancouver,
WA. 98683. Buyer and Nautilus are referred to collectively herein as the
“Parties”. This License is an exhibit to an Asset Purchase Agreement entered
into on the same date between Buyer and Nautilus. The parties agree as follows:

 

  1. Definitions and Schedules

A. Unless expressly otherwise defined herein, the Terms used in this License
that are defined in the Asset Purchase Agreement shall have the same meaning as
defined in the Asset Purchase Agreement.

B. “And/or” shall mean “and”, “or” and both “and” and “or”.

C. “Accessories” shall mean pedals, seats, seat posts and handlebars that
replace standard components of Licensed Indoor Cycles and offer alternate
functionality such as additional compatibility, comfort, cost, etc.

D. “Affiliate” shall have the meaning set forth in rule 12b-2 of the regulations
promulgated under the Securities Exchange Act in force as of the effective date
of this License.

E. “Asset Purchase Agreement” shall mean an agreement entered into between the
Parties to which this License Agreement is an exhibit.

F. “Commercial Channel” shall mean bona fide sales to commercial, corporate, and
government entities that are not Affiliates of Buyer and that provide access to
the Indoor Cycles to multiple users including fitness centers, gyms, health
clubs, studios, hotels, resorts, schools, military, and corporate employee
centers. The Commercial Channel does not include and excludes all other sales or
distributions of Indoor Cycles, including but not limited to sales and other
distributions: (a) to end users (non-commercial users, typically home use) and
resellers, such as retailers and online resellers; and/or (b) to any entity
where there is reason to know that such entity is selling or distributing to end
users and/or resellers (except as used equipment following normal use in the
entity’s facility).

 

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G. “Permitted Retail Channel” shall mean bona fide sales to Independent Bike
Dealers and Specialty Retailers that are not Affiliates of Buyer. Specialty
Retailers shall mean retailers selling fitness equipment and fitness accessories
and the sales of fitness equipment and accessories constitutes at least 90% of
the retailers total sales. By way of example only, and not of limitation,
Specialty Retailers does not include Dick’s Sporting Goods, Cabelas, Sports
Authority, or other retailers having greater than 10% sales of non-fitness
equipment.

H. “Channel” shall mean the Commercial Channel and the Permitted Retail Channel.

I. “Gross Sales” shall mean the total invoice price of Indoor Cycles and
Accessories, and all related charges of any type whether separately invoiced
(including, but not limited to, installation charges, shipping charges, taxes,
and delivery charges) and whether the Indoor Cycles and/or Accessories are sold,
leased or otherwise distributed.

J. “Copyrighted Works” shall mean tangible works of authorship previously used
by Nautilus, and/or previously created for use by Nautilus, in connection with
marketing and sales of Indoor Cycles in the Commercial Channel, such as, but not
limited to, marketing collateral, photos, brochures, artwork, decals, packaging,
manuals, guides, instructions, console software, and for which Nautilus owns or
has exclusive rights to relevant copyrights, regardless of whether the copyright
for any such Copyrighted Works are registered with any copyright office.

K. “Indoor Cycle” shall mean a stationary exercise machine that simulates
bicycling and is part of the larger class of Stationary Cycles which consists of
Indoor Cycles, Upright Cycles, and Recumbent Cycles. While there is overlap of
these product categories, particularly between Indoor Cycles and Upright Cycles,
Indoor Cycles are distinguished from Upright Cycles by exposed frames and
flywheels, adjustable handlebar positioning, lacking motors, and lacking
consoles that control the flywheel resistance. As a business model, Indoor
Cycles are generally positioned for use in group settings at fitness centers and
health clubs.

 

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L. “Indoor Cycle Know How” shall mean technical information that may not be
confidential, but that is required to efficiently convey manufacture of Indoor
Cycles. Indoor Cycle Know How includes tooling for Indoor Cycles and components
thereof obtained by Buyer from Nautilus.

M. “Indoor Cycle Confidential Information” shall mean Confidential Information
relating to manufacturing and marketing of Indoor Cycles for the Commercial
Channel.

N. “Licensed Accessories” shall mean Accessories solely for the Channel, but not
otherwise, and that bear and/or are marketed in connection with any one or more
of the Licensed Marks.

O. “Licensed Domain Names” shall mean the domain names listed in Schedule C to
this License.

P. “Licensed Indoor Cycles” shall mean Indoor Cycles solely for the Channel, but
not otherwise, and that bear and/or are marketed in connection with any one or
more of the Licensed Marks.

Q. “Licensed Indoor Cycles and Accessories” shall mean Licensed Indoor Cycles
and/or Licensed Accessories.

R. “Licensed Patents” shall mean patents and patent applications listed on
Schedule A to this License together with all subsequently filed and/or pending
patent applications that claim priority to any one of the patents or patent
applications listed on Schedule A.

S. “Licensed Rights” shall mean the rights and restrictions set forth in the
license agreements identified in Schedule D to this License.

T. “Licensed Marks” shall mean the registered and common law trademarks and
service marks listed in Schedule B to this License.

U. “Nautilus Quality Standards” shall mean the quality control standards set
forth in Schedule E to this License, and includes modifications to the Schedule
E quality control standards in accordance with the terms of this License.

V. “Nautilus Trademark Usage Guidelines” shall mean the guidelines for use of
Nautilus Trademarks as set forth in Schedule F to this License, and include
modifications to the Schedule F guidelines in accordance with the terms of this
License. The identification of a trademark or name in Schedule F does not mean
that any license to such name or mark is granted by this License, unless the
mark or name is included in the Licensed Marks.

 

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W. “Net Sales” means “Gross Sales” less allowances for: (a) returns of Indoor
Cycles and Accessories actually received; (b) refunds by Buyer to customers and
cancellation of orders from Buyer by customers for Licensed Indoor Cycles and
Accessories; (c) local, State and federal sales, VAT, and use and excise taxes
required to be charged by Buyer for sales of Licensed Indoor Cycles and
Accessories, if separately stated on an invoice; and (d) freight charges and
delivery fees, if separately stated on an invoice, and provided that any such
separately stated freight charges and delivery fees do not exceed one hundred
and ten (110) percent of the actual costs incurred by Buyer for freight and
delivery.

X. “Sales” means sales, leases and any other types of distribution of goods and
services.

Y. “Trade Secret” means information, including a formula, pattern, compilation,
program, device, method, technique, or process that:

(a) Derives independent economic value, actual or potential, from not being
generally known to, and not being readily ascertainable by proper means by,
other persons who can obtain economic value from its disclosure or use; and

(b) Is the subject of efforts that are reasonable under the circumstances to
maintain its secrecy.

Z. This License incorporates the attached schedules, listed below:

Schedule A: Licensed Patents

Schedule B: Licensed Trademarks

Schedule C: Licensed Domain Names

Schedule D: Licensed Rights (Prior Licenses Affecting Rights Granted Herein)

Schedule E: Quality Control Provisions

Schedule F: Nautilus Trademark Usage Guidelines

Schedule G: Electronic Payment Instructions

Schedule H: Sublicense Agreement (for Triple Link pedals in the USA)

 

  2. License Grant

 

  A. Patent License.

 

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Subject to the terms of this License, Nautilus hereby grants Buyer a
non-exclusive, non-transferable, non-assignable, non-sublicensable, worldwide,
license to the Licensed Patents to make, use, sell, offer to sell, and/or import
Licensed Indoor Cycles and Licensed Accessories solely in the Commercial Channel
and Permitted Retail Channel. Subject to the terms of this License and while
this License is in effect, Nautilus covenants not to sue Buyer under any patent
rights owned by Nautilus and used by Buyer in making, using, selling, offering
to sell, and/or importing Licensed Indoor Cycles and Accessories solely in the
Commercial Channel and Permitted Retail Channel. While this License is in
effect, and commencing upon execution of this License, Nautilus will not grant
any license of the Licensed Patents to a third party to make Indoor Cycles for
the Commercial Channel. Buyer understands that Mad Dogg Athletics, Inc. is, and
remains, an existing licensee (See Schedule D) of Nautilus. Nautilus is not
restricted by this Patent License from otherwise exploiting the Licensed Patents
itself, such as by having any products made for Nautilus for sale by and/or on
behalf of Nautilus.

 

  B. Trademark License.

Subject to the terms of this License, Nautilus hereby grants Buyer an exclusive,
non-transferable, non-assignable, non-sublicensable, worldwide, royalty-bearing,
license to the Licensed Marks solely for use on Indoor Cycles and Accessories in
the Commercial Channel and in connection with marketing and selling Indoor
Cycles and Accessories in the Commercial Channel. Subject to the terms of this
License, Nautilus hereby also grants to Buyer a non-exclusive, non-transferable,
non-assignable, non-sublicensable, worldwide, royalty-bearing, license to the
Licensed Marks solely for use on Indoor Cycles and Accessories in the Permitted
Retail Channel. No license is granted by this License to use the Licensed Marks,
and Buyer shall not use any Licensed Mark and/or any mark confusingly similar to
any Licensed Mark, for any goods or services other than for Indoor Cycles and
Accessories in the Channel. The Trademark License of this Section 2.B. shall be
subject to Buyer’s compliance with Nautilus Quality Standards as to product
quality, product appearance, customer satisfaction and service as set forth in
Section 4.B. below and in Schedule E and Buyer’s compliance with Nautilus
Trademark Usage Guidelines as set forth in Section 4.B. below and in Schedule F.
Buyer shall prominently use at least the SCHWINN

 

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mark on all Indoor Cycles sold by Buyer that are made using any Nautilus Trade
Secrets, Copyrighted Works, Nautilus Indoor Cycle Know How, or Nautilus Indoor
Cycle Confidential Information, and/or that are covered by any Licensed Patents.
Buyer may combine the SCHWINN mark with Buyer’s trademarks, for example to
market “SCHWINN LA” Indoor Cycles provided that the SCHWINN mark is prominently
used. Buyer understands and agrees that Buyer is to focus Buyer’s efforts on
sales of Licensed Indoor Cycles and Accessories in the Commercial Channel and
that Buyer is only licensed by this License to make up to a maximum of twenty
(25) percent of Buyer’s total Net Sales of Licensed Indoor Cycles and
Accessories in the Permitted Retail Channel in any Calendar Year.

 

  C. Copyright License.

Subject to the terms of this License, Nautilus hereby grants Buyer a
non-exclusive, non-transferable, non-assignable, non-sublicensable, worldwide,
license to reproduce, distribute, perform and make derivative works of all
Copyrighted Works solely in connection with sales of Licensed Indoor Cycles and
Accessories.

 

  D. Domain Name License.

Subject to the terms of this License, Nautilus hereby grants Buyer a
non-exclusive, non-transferable, non-assignable, non-sublicensable, worldwide,
license to use the Licensed Domain Names solely in connection with sales of
Licensed Indoor Cycles and Accessories.

 

  E. Trade Secrets, Know How and Confidential Information.

Subject to the terms of this License, Nautilus hereby grants to Buyer a
non-exclusive, non-transferable, non-assignable, non-sublicensable, and
worldwide license to Nautilus Indoor Cycle Know How, Nautilus Trade Secrets and
Nautilus Indoor Cycle Confidential Information solely for use in connection with
sales and marketing of Indoor Cycles and Accessories bearing a Licensed
Trademark in the Channel.

 

  F. Licensed Rights.

Except for rights to U.S. Patent 6,877,399 that Nautilus has under the license
from Peloton Fitness identified in Schedule D (Peloton License), to which no
rights are granted by Nautilus to Buyer under this Section 2.F., to the extent
Nautilus has any rights under the Licensed Rights identified in Schedule D that
are sublicensable, and subject to the terms of this License, Nautilus hereby
grants to Buyer a non-exclusive,

 

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non-transferable, non-assignable, non-sublicensable, worldwide, license to
rights under such Licensed Rights needed by Buyer to market and sell Indoor
Cycles and Accessories in the Channel, but not otherwise. To the extent any such
Licensed Rights impose restrictions on the activities of Buyer, Buyer shall be
subject to and agrees to abide by such restrictions.

 

  G. Sublicense Under Nautilus and Peloton License Agreement Identified in
Schedule D.

Contemporaneous with this Agreement, the Parties shall execute a Sublicense
Agreement by which Nautilus shall grant Buyer rights to distribute Triple Link
pedals in the USA. The Sublicense Agreement is attached as Schedule H.

During a transition period of up to six (6) months from the date of this
Agreement, Buyer may acquire Triple Link pedals from Nautilus at a cost of
US$28/pair. For all Triple Link pedals imported into the USA, Buyer shall pay
Nautilus the royalty specified in the Sublicense Agreement.

 

  3. Payments for License

A. Royalty.

For the Trademark License rights granted by this License Agreement to Buyer,
Buyer shall pay Nautilus a Royalty which is equal to:

(i) For the calendar year 2009, no Royalty;

(ii) For the calendar year 2010, the Royalty rate shall be five (5) percent of
Net Sales of Licensed Indoor Cycles and Accessories;

(iii) For the calendar year 2011, the Royalty rate shall be five (5) percent of
Net Sales of Licensed Indoor Cycles and Accessories; and

(iv) For the calendar year 2012 and each year thereafter the Royalty rate shall
be three (3) percent of Net Sales of Licensed Indoor Cycles and Accessories.

Because of the difficulty of allocating royalties and the different types of
intellectual property being licensed by this License, the Parties agree that a
Royalty based on Net Sales of products that bear and/or are marketed in
connection with any one or more of the Licensed Marks is an appropriate and
convenient manner of establishing the Royalty.

 

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B. Payment Schedule. The Royalty will accrue upon the earlier of the invoice
date, or the shipping date for the goods by Buyer. The amounts set forth in this
section are payable quarterly from Buyer to Nautilus within thirty (30) days
after each March 31st, June 30th, September 30th, and December 31st, beginning
January 1. 2010. The quarterly royalty payments shall accompany the required
reports of Section 3.F.

C. Minimum Payment to Nautilus.

(i) Buyer shall pay Nautilus an Annual Minimum Royalty beginning in Calendar
Year 2010. The royalty payments shall be paid quarterly and each quarterly
payment shall be at least one-quarter ( 1/4) of the Annual Minimum Royalty until
the royalty payments for the calendar year at least equal the Annual Minimum
Royalty.

For the Calendar Year 2009 - Minimum Annual Payment = $0;

For the Calendar Year 2010 - Minimum Annual Payment = $800,000;

For the Calendar Year 2011 - Minimum Annual Payment = $1,000,000;

For the Calendar Year 2012 and each Calendar Year thereafter – Minimum Annual
Payment = $600,000.

(ii) Example:

The Annual Minimum Royalty for 2010 is $800,000, or $200,000 per quarter until
the total royalty paid to Nautilus for the calendar year is equal to or exceeds
$800,000. Thus, if the net sales for Q1 yield royalties less than $200,000,
Buyer shall pay $200,000. If the net sales in Q2 yield royalties in excess of
$200,000, Buyer shall pay the actual royalty and the royalty paid in excess of
one-quarter of the Annual Minimum may not be carried over or credited to Q3
unless the Annual Minimum has been reached. Only, when the actual paid royalties
for a Calendar Year exceed the Annual Minimum Royalty, may a royalty payment for
a quarter be less than one-quarter ( 1/4) of the Annual Minimum Royalty.

D. Methods of Payments to Nautilus. All payments under this Agreement to
Nautilus shall be made in U.S. Dollars and made by electronic payment as set out
in Schedule G to this License. Buyer shall not be permitted to pay money in
escrow or to any entity other than Nautilus, unless pursuant to a final court
order that is not subject to appeal.

E. Reports and Records. Buyer shall keep and preserve accurate records of all of
its operations within the scope of this License Agreement. With each payment by
Buyer to

 

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Nautilus, and for the Calendar Quarter for which a payment is being paid, Buyer
shall provide to Nautilus a report stating the Gross Sales, Net Sales, Net Sales
in the Commercial Channel, Net Sales in the Permitted Retail Channel, and
returns by product number (preferably SKU identifiers), Royalty calculations,
Royalty due, and a Quality Control Report as specified in Schedule F during the
applicable Calendar Quarter. Nautilus and its agents (e.g., accountants) shall
have the right to inspect and copy such records at reasonable times.

F. Costs of Inspection and Copying. The cost of any inspection and copying of
records under Section 3.E. shall be borne by Nautilus unless a discrepancy is
discovered in Nautilus’ favor in an amount that is greater than five (5) percent
of the Royalty due versus the Royalty paid, in which case such costs shall be
borne by Buyer.

G. Record Retention. Buyer and Nautilus are not required to retain any records
relating to this License Agreement for longer than five (5) years from the date
of their creation.

H. Pricing. All pricing for products sold by Buyer shall be determined by and be
under the sole control of Buyer.

I. Currency. All amounts set forth in this License are in U.S. dollars.

 

  4. Rights in Licensed Marks and Use of Marks.

A. Ownership of Licensed Marks by Nautilus. Buyer confirms that, as between the
parties, Nautilus owns all rights in and to the Licensed Marks. Buyer agrees to
not use any of the Licensed Marks, or any marks confusingly similar to the
Licensed Marks, for any purpose, whether in advertising, promotional materials
or otherwise, except as expressly permitted by this License. Buyer shall not
use, register or attempt to register any one or more of the following marks and
names, or any confusingly similar marks and names for any purpose: Nautilus,
Nautilus logo, and/or any other Mark owned by Nautilus except for use of the
Licensed Marks as expressly permitted by this Agreement.

B. Use of Licensed Marks by Buyer. Any and all uses of the Licensed Marks by
Buyer for goods and services, shall be only as permitted by this Agreement, and
then only for goods and services that meet Nautilus Quality Standards as set
forth in Schedule E to this License Agreement. Nautilus may make reasonable
modifications to Nautilus Quality Standards from time to time provided that such
modifications benefit customers and/or users and are made applicable to
comparable Nautilus Indoor Cycle Products sold by Nautilus outside of the
Commercial Channel. Buyer

 

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shall comply with Nautilus Quality Standards and with all such modifications to
Nautilus Quality Standards, but shall have three (3) months to implement any
such modifications to Nautilus Quality Standards unless such modifications
relate to product safety, which Buyer shall immediately implement. All uses of
the Licensed Marks shall inure to the sole benefit of Nautilus. Where Buyer
deviates from past usage of a Licensed Trademark, Nautilus shall have the right
to require pre-approval of any and all new proposed usages of the Licensed Marks
by Buyer, whether in advertising, promotional materials, or otherwise. Where
Nautilus requires prior approval, Nautilus shall have a review period of
twenty-one (21) days from the receipt by Nautilus from Buyer of advertising
and/or promotional materials submitted for approval by Buyer to either approve
or deny approval of such materials. If Written Notice of the approval or denial
of approval of such materials is not provided to Buyer before the end of the
twenty-one (21) day review period, the submitted materials shall be deemed
approved. Any Written Notice denying approval of the submitted materials shall
provide the reasons for the disapproval and the disapproved materials shall not
be used by Buyer. Buyer may correct and resubmit any disapproved materials for
approval, which submission will restart the twenty-one (21) day review period.
Any disagreement by the Parties as to whether materials should be approved shall
be subject to the dispute resolution procedures, including mediation, of
Section 15 of this License. All such uses of Licensed Marks must be in
accordance with Nautilus Trademark Usage Guidelines of Schedule F, as modified
by Nautilus from time to time. Nautilus hereby approves usage of Licensed Marks
that strictly comply with the then current version of the Nautilus Trademark
Usage Guidelines.

C. No Challenges to Licensed Marks. Buyer shall not in any way challenge or
interfere with Nautilus’ rights in the Licensed Marks or assist anyone else in
doing so. Buyer shall not register or attempt to register any of the Licensed
Marks or any confusingly similar marks in any country.

D. Disputed Marks. If: (i) Nautilus determines that one or more of the Licensed
Marks poses a significant risk of infringing the rights of a third party in a
country; or (ii) Nautilus receives a letter from a third party asserting rights
in one or more of the Licensed Marks in a country (any mark falling into 4.D.
(i) and/or 4.D. (ii) shall hereinafter be called a Disputed Licensed Mark), then
Nautilus shall have the option to

 

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substitute a different mark for each Disputed Licensed Mark, in which case each
substituted mark shall become a Licensed Mark; and thereafter, upon sixty
(60) days Written Notice to Buyer of the Disputed Licensed Mark, Buyer shall
cease all use of each Disputed Licensed Mark for which such Written Notice has
been provided.

 

  5. Registration, Filings and Enforcement.

A. Registrations and Filings. Nautilus, in its sole discretion, has the option
to, but is not required to: (i) file additional applications to register any one
or more of the Licensed Marks in the United States and/or in any other country;
(ii) maintain any registration for any one or more of the Licensed Marks in any
country; (iii) file to register copyrights in the United States in the name of
Nautilus as owner for any one or more Copyrighted Works; and/or (iv) file any
U.S. Patent Application, and/or maintain a patent or pending application for any
one or more inventions. Notwithstanding the requirements of this Section 5.A.,
to the extent permitted by the law of the country where the registration has
been granted and while this License is in effect, Nautilus agrees to maintain
the existing registrations in Schedule B to this License that include or consist
of the word SCHWINN; provided, however, to the extent Buyer has the information,
Buyer must cooperate with Nautilus, at Buyer’s expense, and as requested by
Nautilus, by providing information concerning the use of such marks and
specimens of use; so as to assist Nautilus to maintain such registrations. While
this License is in effect, Nautilus, at the written request of Buyer and at
Buyer’s expense for all such actions of Nautilus, agrees to file applications in
the name of Nautilus to register the Licensed Marks in countries where they have
not been registered, to prosecute such applications, and to obtain and maintain
registrations based on any such applications for Licensed Marks in other
countries. Nautilus is not required to continue the prosecution of any such
application beyond a final rejection thereof by the respective Trademark Office.

B. Enforcement. Except as provided in Section 5.C., Nautilus has the sole right
and option, at Nautilus’ sole discretion, to take any or no action against:
(i) violators or alleged violators of any of the subject matter licensed by this
License and/or relating thereto. Buyer has no right to and shall not threaten to
initiate or take any action relating to the Licensed Marks, Licensed Patents,
and/or to any other subject matter or rights relating to this License.

 

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C. Possible Enforcement by Buyer. If Buyer discovers that any of the Licensed
Patents and/or Licensed Trademarks are infringed, Buyer shall timely communicate
the details of the infringement to Nautilus. Nautilus shall thereupon have the
right, but not the obligation, to take whatever action it deems necessary,
including the filing of lawsuits, to protect the rights of the Parties to this
License and to terminate such infringement. Buyer shall provide reasonable
assistance to Nautilus at Buyer’s expense, if Nautilus takes any such action,
but all expenses of Nautilus shall be borne by Nautilus. If Nautilus recovers
any damages or compensation for any action it takes hereunder, Nautilus shall
retain 100% of such damages. Nautilus shall have ninety (30) days from the
receipt of such details of infringement from Buyer to decide, in its sole
discretion, whether to take any action to stop such infringement. Nautilus shall
provide Written Notice of Nautilus’ decision to Buyer before the end of such
ninety (30) day time period. If Nautilus decides not to file any action (or to
discontinue any action if initially undertaken by Nautilus), Buyer shall also
have the right, but not the obligation, to take any such action to stop the
infringement, in which case Nautilus shall provided reasonable assistance to
Buyer at Nautilus’ expense as long as Nautilus is not a party (by joinder or
otherwise) to any action, but all of Buyer’s expenses shall be borne by Buyer.
If Nautilus decides not to file any action, and/or to discontinue any action if
initially undertaken by Nautilus, and Buyer decides to take such action and/or
to continue any action that Nautilus decides to discontinue, then Buyer shall
provide Written Notice to Nautilus of Buyer’s decision and, if Nautilus is a
party (by joinder or otherwise) to such action, then Buyer shall bear all of
Nautilus’ expenses of participation in such action incurred from the time Buyer
decides to take such action and/or continue such action, including, but not
limited to, subsequently incurred attorney’s fees through and including trial
and upon appeal In such event Buyer will retain 100% of damages recovered. The
Party pursuing the action shall be entitled to control the action; provided,
however, no settlement shall be entered into without the written consent of
Nautilus, which consent shall not be unreasonably withheld. Nautilus is not
required to consent to any settlement that grants an alleged infringer a license
under any one or more of the Licensed Patents and/or any one or more of the
Licensed Trademarks; and/or that allows an infringer to continue to use a mark
that is confusingly similar to a Licensed Mark.

 

  6.

Written Notice. Any Written Notice that is required under this License shall be
in writing and shall be deemed delivered upon actual delivery to the other party
in the case of hand delivery, which includes delivery by a recognized courier
(such as

 

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FedEx), or upon deposit thereof in the United States mail by certified mail
return receipt requested (provided the address for notice is in the United
States), with postage thereon fully prepaid, addressed as follows:

 

To Nautilus:   

Nautilus, Inc.

     

Attention: Legal Department

     

16400 SE Nautilus Drive

     

Vancouver, WA 98683

     

Fax: 011-306-859-????

     

E-Mail:

   To Buyer:   

Xiamen World Gear Sports Goods Co., Ltd.

     

Attention: Michael Bruno

     

27-29 North 2nd Road

     

Xinglin, Jimei District, Xiamen City,

     

Fujian Province

     

People’s Republic of China

     

 

     

Telephone: 011-86-592-6248-245

     

Fax: 011-86-592-621-8270

     

E-Mail:

   With a Copy to:   

 

     

Attention: C. Reed Brown

     

1232 W Lexington Street

     

Washington, Utah, 84780

     

 

     

Fax: 435-216-1176

     

E-Mail: reed.crb@gmail.com

  

 

  7.

Entire Agreement. This License, and Schedules A - G hereto, which are
incorporated by reference herein, contains the entire agreement of the parties
relating to licensing of intellectual

 

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property rights from Nautilus to Buyer, and supersedes all existing agreements
and all other oral, written or other communications between the parties relating
to its subject matter. This License Agreement cannot be modified except in a
writing signed by all of the parties and that expressly recites that the writing
is an amendment to or a modification of this License Agreement.

 

  8. Compliance with Laws. Buyer shall at all times comply with all applicable
laws, statutes, rules, regulations and ordinances, including without limitation
those governing wages, hours, desegregation, employment discrimination, health
and safety, and equal opportunity laws and regulations to the extent that they
are applicable.

 

  9. Proprietary Rights Notice. While this License is in effect, Buyer shall
mark products with appropriate patent markings as required by Nautilus and shall
use appropriate trademark designations (™, ®) as required by Nautilus. Schedule
A lists current Licensed Indoor Cycles and Accessories that Nautilus in good
faith believes are covered by the Licensed Patents. Buyer shall not, unless
directed to do so by Nautilus, remove or alter any copyright or proprietary
rights notices on tangible materials received by Buyer from Nautilus

 

  10. Confidentiality and Unauthorized Disclosure.

A. Definition of “Confidential Information. As used in this License, the term
“Confidential Information” means: (i) proprietary information that one party
(the “Disclosing Party”) discloses to the other party (the “Receiving Party”);
(ii) information marked or designated by the Disclosing Party as confidential;
(iii) information, whether or not in written form and whether or not designated
as confidential, that is known by the Receiving Party to be treated by the
Disclosing Party as confidential or which, given the nature of the information
or the circumstances surrounding its disclosure, would be understood by a
reasonable person as being confidential or proprietary; and (iv) information
provided to the Disclosing Party by third parties that the Disclosing Party is
obligated to keep confidential provided that, in the event that such third party
information does not otherwise qualify as Confidential Information hereunder,
the Disclosing Party notifies the Receiving Party of such obligations.
Confidential Information shall not include: (i) information that is publicly
available at the time of disclosure by the Disclosing Party to the Receiving
Party or its Representatives; (ii) information that becomes publicly available
other than through actions of the Receiving Party or any of its Representatives
in violation of this Agreement; (iii) information already known to the Receiving
Party as documented by written records that predate the disclosure;
(iv) information

 

pg. 14

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from the Disclosing Party that becomes owned by the Receiving Party;
(v) information rightfully obtained from third parties and not subject to any
obligation of confidentiality to the Disclosing Party; (vi) information
independently developed by the Receiving Party without use of, reference to, or
reliance on the Disclosing Party's Confidential Information; and (vii) any
information following the expiration of five (5) years from the date of the
first disclosure thereof to the Receiving Party.

B. Nondisclosure. Except as set forth in Section 10.D., the Receiving Party
agrees that it will not disclose Confidential Information to any third party,
directly or indirectly, under any circumstances or by any means, without the
Disclosing Party’s prior written consent. Buyer specifically agrees that Buyer
shall not disclose any Trade Secret, Indoor Cycle Confidential Information,
and/or Indoor Cycle Know How to any third party without the express written
consent of Nautilus, which Nautilus may withhold, except that Buyer may exploit
engineering and design information concerning Indoor Cycles in the Commercial
Channel as Buyer deems appropriate.

C. Nonuse. The Receiving Party further agrees that it will not use Confidential
Information except as may be necessary to perform its obligations and/or
exercise its rights under this License.

D. Protection. Notwithstanding anything contained in this License to the
contrary, the Receiving Party may disclose Confidential Information to its
employees, representatives and other agents (“Representatives”). The Receiving
Party and its affiliates and their respective employees, agents, representatives
and subcontractors agree to take all reasonable precautions to protect the
confidentiality of Confidential Information. Any unpermitted disclosure by any
Representative of the Receiving Party shall be deemed to have been made by the
Receiving Party.

E. Injunctive Relief. The Receiving Party acknowledges that a breach of any
obligation under this section 10 will result in irreparable injury to the
business of the Disclosing Party and that its remedy at law for such a breach
will be inadequate. Accordingly, the Receiving Party agrees that, in addition to
other remedies available at law and in equity, the Disclosing Party will be
entitled to seek both preliminary and permanent injunctions to prevent and/or
halt a breach or threatened breach of any obligation under this section 10.

F. Disclosures for Tax Purposes. Notwithstanding anything to the contrary
contained in this License, the parties and their respective affiliates and
Representatives may disclose to any

 

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person the tax structure and any of the tax aspects of the transaction(s)
contemplated by the Agreement solely to the extent necessary to describe or
support any United States federal income tax benefits that may result therefrom
or any materials relating thereto in order to comply with United States federal
or state securities laws. For the purposes of this provision, “tax structure” is
limited to facts relevant to the U.S. federal income tax treatment of the
transaction(s) and does not include information relating to the identity of the
parties, their affiliates, agents, or advisors.

G. Compelled Disclosure. If the Receiving Party becomes legally compelled (by
deposition, interrogatory, request for documents, subpoena, civil investigative
demand or similar process, or applicable law or regulation) to disclose any
Confidential Information, the Receiving Party shall (unless prohibited by such
demand or process) give the Disclosing Party prompt written notice of the
requirement before releasing the information so that the Disclosing Party may
seek a protective order or other appropriate remedy and/or waive compliance with
the terms of the Agreement. The Receiving Party shall cooperate with the
Disclosing Party to obtain a protective order. If a protective order or other
remedy is not obtained, or the Disclosing Party waives compliance with the terms
of this section 10, the Receiving Party shall provide only that limited portion
of the Confidential Information that is legally required and shall exercise best
efforts to obtain assurance that confidential treatment will be accorded the
information. Upon request of the Disclosing Party, the Receiving Party shall
provide an opinion of counsel to the Disclosing Party to the effect that the
Receiving Party is legally compelled to disclose the information.

 

  11. Termination and Default.

A. Material Breach Cure Period. Unless otherwise specified in this License that
no cure time period or a different cure time period applies to the failure to
perform any material term or condition of this License, it shall be a default of
this Agreement for Buyer or Nautilus to fail to perform any material term or
condition of this License Agreement within a sixty (60) day cure time period
following Written Notice setting forth such failure or alleged failure by Buyer
to Nautilus and/or by Nautilus to Buyer. Except as otherwise expressly provided
by this License, in the event of a default of this License by Buyer that is not
cured within any applicable cure period, Nautilus shall have the right to
terminate this Agreement by Written Notice of termination to Buyer that is
provided to Buyer at any time up to the longer of six (6) months following
expiration of any applicable cure period; or one (1) month following the
completion

 

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of any Dispute resolution procedure under Section 15 below concerning the issue
of whether a material term or condition has or has not been performed by Buyer.
Except as otherwise expressly provided by this License, in the event of a
default of this License by Nautilus that is not cured within any applicable cure
period, Buyer shall have the right to terminate this License by Written Notice
of termination to Nautilus provided at any time up to the longer of six
(6) months following expiration of any applicable cure period; or one (1) month
following the completion of any Dispute resolution procedure under Section 15
below concerning the issue of whether a material term or condition has or has
not been performed by Nautilus. Whether a material term or condition has or has
not been performed is subject to the Dispute resolution procedures of Sections
15.B. – 15.C. of this License.

B. Termination for Failure to Meet Minimum Annual Net Sales Requirement.

(i). Nautilus shall have the right to terminate this License upon Written Notice
to Buyer, with no cure period being available to Buyer, in the event during any
three (3) consecutive Calendar Years the Minimum Annual Net Sales set forth in
Section 11.B.(ii) below are not met. This three (3) year time period shall be
reset and start over in the event the Net Sales for a given Calendar Year
exceeds the Minimum Annual Net Sales requirement.

 

  (ii) For the Calendar Year 2009 - Minimum Annual Net Sales = $0;

For the Calendar Year 2010 - Minimum Annual Net Sales = $16,000,000;

For the Calendar Year 2011 - Minimum Annual Net Sales = $20,000,000;

For the Calendar Year 2012 and each Calendar Year thereafter, Minimum Annual Net
Sales shall be $20,000,000.

Thus, for example, if Buyer’s actual Net Sales for the Calendar Year 2010 is
$15,000,000; for the Calendar Year 2011 is $19,000,000; and for the Calendar
Year 2012 is $19,000,000; then Nautilus shall have the right to terminate this
Agreement by Written Notice to Buyer following the end of the Calendar Year 2012
because the Annual Minimum Net Sales requirement has not been met for three
consecutive Calendar Years. Termination for this reason does not excuse Buyer
from paying the required Minimum Annual Payments under this License for any
Calendar Year prior to termination. If, on the other hand, the Net Sales for the
Calendar Year 2010 is $15,000,000; the Net Sales for the Calendar Year 2011 is
$19,000,000; and the Net Sales for the Calendar Year 2012 is $21,000,000; then
the Minimum Annual Net Sales has been met for the Calendar Year 2012 and there
has not been three consecutive three (3) years

 

pg. 17

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during which the Minimum Annual Net Sales has not been met. In this case, the
three consecutive Calendar Year time period for determining a failure to meet
Minimum Annual Net Sales will not restart until such time, if any, that a
Calendar Year again occurs in which the Net Sales falls below the applicable
Minimum Annual Net Sales requirement for that Calendar Year. The Minimum Annual
Net Sales requirement shall not apply to any Calendar Year during which one or
more Force Majeure events of Section 16.(c) significantly disrupts the ability
of Buyer to make sales of Licensed Indoor Cycles and Accessories. The Calendar
Year of any such Force Majeure disruption event shall not be considered in
determining whether the Minimum Annual Sales requirement has been met for three
(3) consecutive Calendar Years, but shall not result in restarting the three
(3) Calendar Year calculation. Thus, for example, assume during the Calendar
Year 2011, the Net Sales are $19,000,000; during the Calendar Year 2012 there is
a Force Majeure event that significantly disrupts sales of Licensed Indoor
Cycles and the Net Sales for Calendar Year 2012 are $6,000,000; the Net Sales
for the Calendar year 2013 are $18,000,000 and the net sales for the Calendar
Year 2014 are $18,000,000. Based on these assumptions, there is no Minimum
Annual Net Sales requirement for the Calendar Year 2012 because of the Force
Majeure event. Therefore, the License is not subject to termination for failure
to meet the Minimum Annual Net Sales requirements for the three (3) Calendar
Years of 2011, 2012 and 2013. However, the License is subject to termination for
failure to meet the Minimum Annual Net Sales requirements at the end of the
Calendar Year 2014 because of the failure for the three (3) Calendar Years 2011,
2013 and 2014, which are deemed consecutive Calendar Years because the Force
Majeure event Calendar Year 2012 is not counted and does not restart the three
consecutive Calendar Year count.

C. Termination for Failure to Make the Minimum Royalty Payments. Nautilus shall
have the right to terminate this License upon Written Notice to Buyer in the
event any Minimum Royalty payment for a quarter required by Section 3.B. is not
made when due and is not paid within thirty (30) days of the Written Notice.

D. Events Upon Termination or Expiration. In the event of any termination or
expiration of this Agreement for any reason:

(i) Any and all use of Licensed Marks by Buyer, as well as of any marks, names
or domain names confusingly similar thereto, shall immediately cease except that
Buyer may complete all unfinished goods (work-in-progress) and sell all
inventory for up to six (6) months after termination. Buyer may not acquire any
additional parts or

 

pg. 18

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materials to complete unfinished goods after termination of this Agreement. Any
and all use by Buyer of any Licensed Patents and any other rights licensed by
Nautilus under this License to Buyer shall immediately cease upon sale of
outstanding inventory.

(ii) All payments from Buyer to Nautilus that have accrued as of the date of
termination or expiration shall immediately become due and payable.

E. Additional Relief. The Parties shall be entitled to such other relief as may
be determined by a court of law as selected under Section 15.A. below.

 

  12. Term.

A. Except as provided in Section 12.B. below, this License, including, but not
limited to the rights licensed under Sections 2.A., 2.B.,2.C., 2.D., 2.E. and
2.F in the Commercial Channel, unless terminated in accordance with the terms of
this License, shall continue in force.

B. Term for the Permitted Retail Channel

(i) Initial Term: Unless terminated in accordance with its terms, the Initial
Term of this License for the Permitted Retail Channel shall be for only four
(4) years from the effective date of the License. If no extension to the Initial
Term is negotiated by the Parties, Buyer shall automatically have a two (2) year
Wind Up Term to wind up its activity in the Permitted Retail Channel and at the
end of the Wind Up Term, Buyer shall cease all sales in the Permitted Retail
Channel involving the Licensed Trademarks.

(ii) Notice for Renegotiation: No earlier than six months prior to the
expiration of the Initial Term and no later than sixty (60) days prior to the
expiration of this Initial Term for the Permitted Retail Channel, Buyer may
provide Written Notice to Nautilus of Buyer’s desire to renegotiate a license to
rights for the Permitted Retail Channel for a period of time beyond the Initial
Term.

(iii) Renewal Term: If Nautilus does not respond by written notice to Buyer’s
request for renegotiation within sixty (60) days, then this License for rights
for the Permitted Retail Channel will continue for a Renewal Term of four
(4) years commencing at the end of the Initial Term.

(iv) Second Notice for Renegotiation: No earlier than six months prior to the
expiration of the Renewal Term and no later than sixty (60) days prior to the
expiration of this Renewal Term, Buyer may provide Written Notice to Nautilus of
Buyer’s desire to renegotiate a license to rights for the Permitted Retail
Channel for a period of time beyond the Renewal Term.

 

pg. 19

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(v) If Nautilus does not respond by written notice to Buyer’s request to
renegotiate a license for rights for the Permitted Retail Channel, then Buyer’s
rights in the Permitted Retail Channel shall continue and have the same term as
Buyer’s rights in the Commercial Channel.

(v) If Nautilus does provide a response to the Buyer’s renegotiation request
within the sixty (60) day response time, the Parties agree to negotiate in good
faith in an attempt to reach a new license agreement, which may be on different
terms than this License Agreement, relating to rights in the Permitted Retail
Channel. If within three (3) months of the response to Buyer’s renegotiation
request, the Parties are unable to agree to terms for a new license agreement
for rights in the Permitted Retail Channel, then the Parties agree that they
have failed to renegotiate a License for the Permitted Retail Channel and Buyer
shall enter the above defined two (2) year Wind Up Term.

(vi) Any expiration of rights licensed to Buyer in the Permitted Retail Channel
will not affect the Minimum Annual Payments under Section 3.C. above.

 

  13. Disclaimer.

Disclaimer. ALL RIGHTS LICENSED BY NAUTILUS ARE LICENSED “AS IS” AND WITHOUT ANY
WARRANTY OF ANY KIND. TO THE MAXIMUM EXTENT PERMITTED BY APPLICABLE LAW,
NAUTILUS HEREBY DISCLAIMS ALL WARRANTIES, EXPRESS AND/OR IMPLIED, INCLUDING, BUT
NOT LIMITED TO, IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A
PARTICULAR PURPOSE AND/OR WARRANTIES AGAINST INFRINGEMENT. THE MAXIMUM LIABILITY
OF NAUTILUS TO BUYER RELATING TO THIS AGREEMENT SHALL BE NO GREATER THAN THE
TOTAL OF ANY ROYALTY ACTUALLY PAID BY BUYER TO NAUTILUS DURING THE TWELVE MONTH
TIME PERIOD IMMEDIATELY PRECEEDING THE DATE A CLAIM IS MADE AGAINST NAUTILUS BY
BUYER.

 

  14.

Export Restrictions. Buyer agrees to comply with all applicable international
and national laws that apply to products, including U.S. Export Administration
Regulations, as well as End-

 

pg. 20

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User, End-Use and Destination restrictions issued by the United States and other
governments. Nothing in the preceding sentence shall be construed to grant Buyer
any rights to in any manner for any purpose not expressly recited by this
License.

 

  15. Controlling Law, Venue and Dispute Resolution.

A. Court and Law. This Agreement shall be interpreted in accordance with and
governed by the substantive and procedural laws of the State of Washington,
without regard to choice-of-law principles. The parties hereby irrevocably
consent to the exclusive jurisdiction of the courts of the State of Washington,
Clark County, or of a U.S. District Court for the Western District of
Washington, USA in connection with any dispute relating to this License
Agreement and/or to any alleged breach of this License Agreement. Each party
hereby irrevocably waives any objection that the party may now or hereafter have
regarding this choice of forum.

B. Resolution Procedures. The parties agree to follow procedures set forth in
sub-sections 15.C. – 15.E. for the resolution of any dispute, whether this
License specifically recites the applicability of these dispute resolution
procedures to the Dispute.

C. Negotiated Resolution. Buyer and Nautilus wish to avoid disputes. In the
event of any dispute, the parties shall first attempt to resolve the matter by
an in-person meeting between executive level managers of Buyer and Nautilus to
review a presentation by each of them concerning the dispute. The meeting will
be held in Seattle, Washington unless otherwise agreed. Unless otherwise agreed
by Buyer and Nautilus, only if the executive level managers are unable to
resolve the dispute within the shorter of thirty (30) days of the first such
meeting or forty-five (45) days from the first Written Notice by either Party
requesting such meeting, shall any party be free to proceed under Section 15.D.

D. Mediation. Any Dispute that has not been resolved under Section 15.C. shall
be the subject of non- binding mediation before a single impartial mediator
selected by mutual agreement of Buyer and Nautilus. This mediator shall be an
attorney with at least 15 years experience in intellectual property licensing
issues. Buyer and Nautilus agree to make a good faith effort to select a
mediator within thirty (30) days from the date that the mediation is first
requested by Written Notice by either Buyer or Nautilus. Unless otherwise agreed
to by the parties, the mediation will be held in Seattle, Washington and shall
be completed within sixty days of any such Written Notice of a request for
mediation. A party shall not be entitled to request mediation until after the
end of the negotiation and resolution procedure of Section 15.C. Each party
shall bear its own costs, including attorney fees of any mediation and shall

 

pg. 21

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share equally the costs of the mediator. Unless otherwise agreed by the parties,
only if mediation does not resolve the alleged claim or controversy, shall any
party be free to proceed under sub-section 15.E.

E. Litigation. Any dispute that is not resolved pursuant to the procedures of
Section 15.C. and 15.D. shall be subject to litigation by either party, subject
to Section 15.A. The Parties agree that neither party shall be liable to the
other party for any attorney fees in connection with any dispute, whether at
trial, upon appeal, or otherwise.

 

  16. General.

A. Nonwaiver. No failure on the part of Buyer or Nautilus to exercise, and no
delay in exercising, any right hereunder shall operate as a waiver thereof; nor
shall any single or partial exercise by Buyer or Nautilus of any right hereunder
preclude any further exercise thereof of such right or of any other right.

B. Severability. No portion of Sections 2 and 3 of this License may be severed
from this License or otherwise altered, except by mutual written agreement of
the Parties. If any portions of Sections 2 and 3 of this License are found to be
unenforceable as written, then either Party shall have the right to terminate
this License upon thirty (30) days Written Notice to the other Party. Any
provision of this License Agreement other than Sections 2 and 3 that are
prohibited or rendered unenforceable by any law shall be ineffective only to the
extent of the prohibition or unenforceability without invalidating the remaining
provisions of this Agreement.

C. Force Majeure. Neither party shall be liable for delays due to any cause
beyond the control and without the fault or negligence of the Party incurring
the delay, including, to the extent it satisfies the above description, any
fire, unusual weather conditions, riot, act of God, act of the public enemy,
death or incapacity of an individual who is to perform work, or other similar
event. However, both Parties agree to seek to mitigate the potential impact of
any such delay. The Party incurring the delay shall within thirty (30) business
days from the beginning of the delay, notify the other Party in writing of the
causes of the delay and its probable extent. The notification of delay shall not
be the basis for a request for additional compensation. In the event of any such
delay, any required completion date may be extended by a reasonable period not
exceeding the time actually lost by reason of the delay.

D. No Other Representations. Buyer and Nautilus hereby acknowledge that they
have not been induced to enter into this License by any representation or
warranty not set forth in this License.

 

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E. Headings. The headings and subheadings of this License are intended for
convenience of reference only and shall not be used to interpret this License or
affect the construction of this License.

F. Construction. Words importing the singular include the plural, words
importing any gender include every gender and words importing persons include
entities, corporate and otherwise; and (in each case) vice versa. Whenever the
terms “including” or “include” are used in this License in connection with a
single item or a list of items within a particular classification (whether or
not the term is followed by the phrase “but not limited to” or words of similar
effect) that reference shall be interpreted to be illustrative only, and shall
not be interpreted as a limitation on, or an exclusive enumeration of the items
within that classification.

G. Survival. The terms, provisions and representations contained in this License
Agreement shall survive any termination or expiration of this License Agreement
to the extent that such survival is necessary to give effect to their full
meaning and intent. Without limiting the foregoing, the parties expressly agree
that the following Sections (including all sub-parts, unless a specific sub-part
is specified) of this License shall survive termination and expiration of this
License: Section 1; Section 3 for Royalties on Net Sales prior to termination
and the completion of unfinished goods under Section 11.C.; Section 4 except for
4.B.; Sections 5, 6, 7, 8; Section 10; Sections 11.C. and 11.D.; Section 13;
Section 14 in connection with the completion of unfinished goods under
Section 11.C.; Section 15 and Section 16.

H. No Third Party Beneficiaries. This License is intended solely for the benefit
of the parties hereto. Except as expressly set forth in the License, nothing in
the License shall be construed to create any liability to or any benefit for any
person not a party to this License.

I. Successors and Assigns. This License Agreement is personal to Buyer and shall
not be assigned by Buyer, except to an Affiliate of Buyer, with the written
consent of Nautilus, which consent shall not be unreasonably withheld. No rights
granted to Buyer under this License Agreement are assignable, transferable, or
sub-licensable in any way. Nautilus shall have the right to assign this License
and its rights hereunder to a successor in interest to any portion of the
Nautilus business that includes the Indoor Cycling business of Nautilus.

J. Effective Date. This License Agreement shall be effective on the date of the
last signature by the Parties as indicated on the signature page hereto
(“Effective Date”).

K. Counterparts. This License Agreement may be executed in any number of
counterparts, which together will constitute one instrument.

 

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L. Independent Contractors. Buyer and Nautilus are independent contractors and
are not the agent(s) of one another for any purpose. Neither Buyer nor Nautilus
shall have any authority to bind or obligate one another.

M. Ethical Conduct. Buyer and Nautilus shall use the highest ethical standards
in their business activities and shall each not do anything to bring the other
into an unfavorable light.

N. Determining Time Periods. Time periods for Written Notice under this
Agreement, such as a time period for taking action upon Written Notice, shall
not count the day the Written Notice is effective and shall end at midnight
Vancouver, Washington time of the last day of the time period.

In agreement hereto the parties have signed below.

 

Xiamen World Gear Sports Goods Co., Ltd.

 

(Buyer)

    

Nautilus, Inc.

 

(Nautilus)

/s/ Michael Bruno

    

/s/ Kenneth L. Fish

Signature      Signature

Michael Bruno

    

Kenneth L. Fish

Printed Name      Printed Name

CEO

    

CFO

Title      Title

December 5, 2009

    

December 5, 2009

Date      Date     

 

pg. 24