Document:

Asset Purchase Agreement dated as of February 18, 2010

 Exhibit 10.27 
 ASSET PURCHASE AGREEMENT 
 BETWEEN 

MED-FIT SYSTEMS, INC. 
 (Buyer) 
 AND 
 NAUTILUS, INC. 
 (Seller) 
 February 18, 2010. 

 TABLE OF CONTENTS 
  

					
	 	 	 	  	Page
		
	 ARTICLE 1 - DEFINITIONS
	  	  1
		
	 ARTICLE 2 - BASIC TRANSACTION
	  	4
			
	 2.1    
	 	    Purchase and Sale of Assets	  	4
			
	 2.2    
	 	    Assumption of Assumed Liabilities	  	4
			
	 2.3    
	 	    Purchase Price	  	4
			
	 2.4    
	 	    The Closing	  	4
			
	 2.5    
	 	    Deliveries at the Closing	  	  4
			
	 2.6    
	 	    Allocation	  	5
			
	 2.7    
	 	    Accounts Payable Reconciliation	  	5
			
	 2.8    
	 	    Finished Goods Inventory	  	5
		
	 ARTICLE 3 - NAUTILUS’ REPRESENTATIONS AND WARRANTIES
	  	  5
			
	 3.1    
	 	    Organization of Nautilus	  	6
			
	 3.2    
	 	    Authorization of Transaction	  	6
			
	 3.3    
	 	    Non-Contravention	  	6
			
	 3.4    
	 	    Brokers’ Fees	  	6
			
	 3.5    
	 	    Title to Assets	  	6
			
	 3.6    
	 	    Financial Information	  	  6
			
	 3.7    
	 	    Inventory	  	7
			
	 3.8    
	 	    Contracts	  	7
			
	 3.9    
	 	    Terms of Sale	  	7
			
	 3.10  
	 	    Customers and Suppliers	  	7
			
	 3.11  
	 	    Litigation	  	7
			
	 3.12  
	 	    Tangible Personal Property	  	7
			
	 3.13  
	 	    Employment Matters	  	  7
			
	 3.14  
	 	    Environmental, Health and Safety Matters	  	  8
		
	 ARTICLE 4 – BUYER’S REPRESENTATIONS AND WARRANTIES
	  	8
			
	 4.1    
	 	    Organization of Buyer	  	8
			
	 4.2    
	 	    Authorization of Transaction	  	8
			
	 4.3    
	 	    Non-contravention	  	8
			
	 4.4    
	 	    Brokers’ Fees	  	9

  

 i 

 TABLE OF CONTENTS 
 (Continued)
  

					
	 	 	 	  	Page
		
	 ARTICLE 5 - PRE-CLOSING COVENANTS
	  	9
			
	 5.1    
	 	    General	  	9
			
	 5.2    
	 	    Notices and Consents	  	9
			
	 5.3    
	 	    Full Access	  	9
			
	 5.4    
	 	    Notice of Developments	  	9
			
	 5.5    
	 	    Employees and Employee Benefits	  	10
		
	 ARTICLE 6 - POST-CLOSING COVENANTS
	  	11
			
	 6.1    
	 	    General	  	11
			
	 6.2    
	 	    Litigation Support	  	11
			
	 6.3    
	 	    Transition	  	11
			
	 6.4    
	 	    Warranty	  	11
			
	 6.5    
	 	    Buyer Financial Statements	  	11
		
	 ARTICLE 7 - CONDITIONS TO OBLIGATION TO CLOSE
	  	12
			
	 7.1    
	 	    Conditions to Buyer’s Obligation	  	12
			
	 7.2    
	 	    Conditions to Nautilus’ Obligation	  	13
		
	 ARTICLE 8 - REMEDIES FOR BREACHES OF THIS AGREEMENT
	  	13
			
	 8.1    
	 	    Survival of Representations and Warranties	  	13
			
	 8.2    
	 	    Indemnification Provisions for Buyer’s Benefit	  	14
			
	 8.3    
	 	    Indemnification Provisions for Nautilus’ Benefit	  	14
			
	 8.4    
	 	    Matters Involving Third Parties	  	15
			
	 8.5    
	 	    Determination of Adverse Consequences	  	15
			
	 8.6    
	 	    Liquidated Damages	  	16
			
	 8.7    
	 	    Exclusive Remedy	  	16
		
	 ARTICLE 9 - TERMINATION
	  	16
			
	 9.1    
	 	    Termination of Agreement	  	16
			
	 9.2    
	 	    Effect of Termination	  	17
		
	 ARTICLE 10 - MISCELLANEOUS
	  	17
			
	 10.1  
	 	    Press Releases and Public Announcements	  	17
			
	 10.2  
	 	    No Third-Party Beneficiaries	  	17
			
	 10.3  
	 	    Entire Agreement	  	17

  

 ii 

 TABLE OF CONTENTS 
 (Continued)
  

					
	 	 	 	  	Page
			
	 10.4  
	 	    Succession and Assignment	  	17
			
	 10.5  
	 	    Counterparts	  	18
			
	 10.6  
	 	    Headings	  	18
			
	 10.7  
	 	    Notices	  	18
			
	 10.8  
	 	    Governing Law	  	19
			
	 10.9  
	 	    Amendments and Waivers	  	19
			
	 10.10
	 	    Severability	  	19
			
	 10.11
	 	    Expenses	  	19
			
	 10.12
	 	    Construction	  	19
			
	 10.13
	 	    Incorporation of Exhibits and Schedules	  	19
			
	 10.14
	 	    Bulk Transfer Laws	  	19
			
	 10.15
	 	    Governing Language	  	19
			
	 10.16
	 	    Tax Disclosure Authorization	  	19

  
  
 Exhibit A – Disclosure Schedule

 Exhibit B – Form(s) of Assignment(s) 
 Exhibit C – Form of Assumption 
 Exhibit D – Allocation Schedule 
 Exhibit E – Financial Information 
 Exhibit F
– Lease Agreement 
 Exhibit G – License Agreement 
 Schedule 2.3 – Purchase Price Calculation and Payment Terms 
 Schedule 2.8 – Finished
Goods Inventory and Purchase Price 
  

 iii 

 ASSET PURCHASE AGREEMENT 
 This Asset Purchase Agreement (this “Agreement”) is entered into as of February 18, 2010, by and between Med-Fit
Systems, Inc., a California corporation (“Buyer”), and Nautilus, Inc., a Washington corporation (“Nautilus”). Buyer and Nautilus are referred to collectively herein as the “Parties.” 
 This Agreement contemplates a transaction in which Buyer will purchase certain assets (and assume certain liabilities) of Nautilus relating
to the Commercial Fitness Equipment business. 
 Now, therefore, in consideration of the premises and the mutual promises herein
made, and in consideration of the representations, warranties, and covenants herein contained, the Parties agree as follows. 
 ARTICLE 1 - DEFINITIONS 
 “Acquired Assets” means all right, title, and interest in and to the
following assets of Nautilus: (a) the Commercial Fitness Equipment inventory, excluding finished goods inventory, consisting of Commercial Fitness Equipment raw materials, work-in-progress and spare parts, to be set forth in the Physical
Inventory Report, (b) the Tangible Personal Property, and (c) the intellectual property rights described in the Commercial License Agreement. 
 “Adverse Consequences” means all actions, suits, proceedings, hearings, investigations, charges, complaints, claims, demands, injunctions, judgments, orders, decrees, rulings, damages,
dues, penalties, fines, costs, reasonable amounts paid in settlement, liabilities, obligations, taxes, liens, losses, expenses, and fees, including court costs and reasonable attorneys’ fees and expenses. 
 “Affiliate” means, with respect to a specified Person, a Person that directly, or indirectly through one or more
intermediaries, controls, or is controlled by, or is under common control with, the Person specified. 
 “Assumed
Contracts” means all contracts set forth on Section 3.8 of the Disclosure Schedules, which includes all customer purchase orders for delivery of Commercial Fitness Equipment which are open on the Closing Date. 
 “Assumed Liabilities” means the following liabilities and obligations of Nautilus (whether known or unknown, whether
asserted or unasserted, whether absolute or contingent, whether accrued or unaccrued, whether liquidated or unliquidated, and whether due or to become due): (a) warranty liability for the Commercial Fitness Equipment products as provided in
Section 6.4 below; (b) the liabilities and obligations set forth on Schedule 2.2 hereto, which includes all purchase orders for Commercial Fitness Equipment parts, components or supplies that are open on the Closing Date; (c) the
liabilities and obligations under the Assumed Contracts; and (d) all liabilities and obligations arising out of or related to ownership or use of the Acquired Assets after the Closing. 
  

 1 

 “Business” means the Commercial Fitness Equipment business operated by
Nautilus. 
 “Buyer” has the meaning set forth in the preface above. 
 “Closing” means the closing of the Buyer’s purchase of the Acquired Assets from Nautilus as described in
Section 2.5. 
 “Closing Date” has the meaning set forth in Section 2.5 below. 
 “Code” means the Internal Revenue Code of 1986, as amended. 
 “Commercial Fitness Equipment” means Nautilus-branded commercial grade strength training equipment manufactured in the
Nautilus manufacturing facility located in Independence, Virginia and Nautilus-branded commercial grade cardio fitness equipment purchased from contract manufacturers. 
 “Confidential Information” means any information concerning the business and affairs of Nautilus that is not already generally available to the public. 
 “Disclosure Schedule” has the meaning set forth in Article 3 below. 
 “Financial Information” has the meaning set forth in Section 3.6 below. 
 “GAAP” means United States generally accepted accounting principles as in effect from time to time, consistently applied.

 “Indemnified Party” has the meaning set forth in Section 8.4 below. 
 “Indemnifying Party” has the meaning set forth in Section 8.4 below. 
 “Knowledge” means, with respect to Nautilus, actual knowledge of the following individuals: Tim Peters, Kenneth Fish and
Wayne Bolio. 
 “Lease Agreement” means the Lease Agreement providing for the lease by Nautilus to Buyer of
certain real property located in Independence, Virginia in the form attached hereto as Exhibit F. 
 “License
Agreement” means the License Agreement providing for the license by Nautilus to Buyer of certain intellectual property used in the Business. The License Agreement shall be substantially in the form attached hereto as Exhibit G.

 “Lien” means any mortgage, pledge, lien, encumbrance, charge, or other security interest other than
(a) liens for Taxes not yet due and payable, (b) purchase money liens and liens securing rental payments under capital lease arrangements, and (c) other liens arising in the Ordinary Course of Business and not incurred in connection
with the borrowing of money. 
 “Ordinary Course of Business” means the ordinary course of business of Nautilus
in operating the Business, consistent with past custom and practice (including with respect to quantity and frequency of activities). 
  

 2 

 “Party” has the meaning set forth in the preface above. 
 “Person” means an individual, a partnership, a corporation, a limited liability company, an association, a joint stock
company, a trust, a joint venture, an unincorporated organization, any other business entity or a governmental entity (or any department, agency, or political subdivision thereof). 
 “Physical Inventory Report” has the meaning set forth in Schedule 2.3 attached hereto. 
 “Purchase Price” has the meaning set forth in Section 2.3 below. 
 “Securities Exchange Act” means the Securities Exchange Act of 1934, as amended. 
 “Tangible Personal Property” means all machinery, equipment, tools, furniture, office equipment, computer hardware,
supplies, materials, vehicles and other items of tangible personal property (other than the Commercial Fitness Equipment inventory) of every kind that is owned or leased by Nautilus and located at the Virginia Facility, together with: (i) any
tooling used in the production of Commercial Fitness Equipment that is owned by Nautilus and located on the premises of Nautilus suppliers, and (ii) any express or implied warranties by the manufacturers or sellers or lessors of any such items
and all maintenance records and other documents relating thereto. A Schedule of the Tangible Personal Property is attached hereto as listed on Schedule 3.12. 
 “Tax” or “Taxes” means any federal, state, local, or non-U.S. income, gross receipts, license, payroll, employment, excise, severance, stamp, occupation, premium,
windfall profits, environmental (including taxes under Code section 59A), customs duties, capital stock, franchise, profits, withholding, social security (or similar), unemployment, disability, real property, personal property, sales, use, transfer,
registration, value added, alternative or add-on minimum, estimated, or other tax of any kind whatsoever, whether computed on a separate or consolidated, unitary or combined basis or in any other manner, including any interest, penalty, or addition
thereto, whether disputed or not. 
 “Tax Benefit” has the meaning set forth in Section 8.5 below.

 “Technical Assets” means Nautilus’ data, technical information, know-how and trade secrets existing (in
any medium) at the Virginia Facility as of the Closing, excluding the Manhattan Project, as understood by the Parties, which will be the subject of a patent application by Nautilus. 
 “Third-Party Claim” has the meaning set forth in Section 8.4 below. 
 “Virginia Facility” means the Nautilus manufacturing and warehouse facility located in Independence, Virginia that is the
subject of the Lease Agreement. The Virginia Facility consists of a campus of four (4) buildings and appurtenant improvements located on a 56 acre parcel of land. 
  

 3 

 “Warranty Service Agreement” means the Warranty Service Agreement to be
negotiated in good faith and executed by Buyer and Nautilus after Closing. Under the Warranty Service Agreement, Buyer shall provide warranty service for the TreadClimber® (TC 916) product, Nautilus EV916 product, and Clubtrack Treadmill Model
425, Model 510, and Model 620 products in North America by using parts provided by Nautilus at no charge to Buyer. If parts are needed that Nautilus is unable to provide, Buyer shall procure the parts and Nautilus shall reimburse Buyer for its
actual cost of procuring such parts plus an additional service fee of 25% of such cost of procurement. 
 ARTICLE 2 - BASIC
TRANSACTION 
 2.1 Purchase and Sale of Assets. On and subject to the terms and conditions of this Agreement, Buyer
agrees to purchase from Nautilus, and Nautilus agrees to sell, transfer, convey, and deliver to Buyer, all of the Acquired Assets at the Closing for the consideration specified below in this Article 2. 
 2.2 Assumption of Assumed Liabilities. On and subject to the terms and conditions of this Agreement, Buyer agrees to assume and
become responsible for all of the Assumed Liabilities at the Closing. Buyer will not assume or have any responsibility, however, with respect to any other obligation or liability of Nautilus not specifically identified as one of the Assumed
Liabilities. Product liability for products distributed prior to Closing is expressly not included as Assumed Liabilities. 
 2.3 Purchase Price. As payment for the Acquired Assets, Buyer agrees to pay to Nautilus a cash purchase price (the “Purchase Price”) determined in accordance with and payable as set forth in Schedule 2.3 attached
hereto. In the event Buyer obtains a senior working capital line of credit providing financing for Buyer’s conduct of the Business, Nautilus agrees to subordinate the security interest granted under the security agreement attached to Schedule
2.3 to the lien of such senior lender according to usual and customary terms; provided, that from the date of any such subordination the promissory note shall bear interest at the rate of 6% per annum. 
 2.4 The Closing. The closing of the transactions contemplated by this Agreement (the “Closing”) shall take place on
February 19, 2010 following the satisfaction or waiver of all conditions to the obligations of the Parties to consummate the transactions contemplated hereby (other than conditions with respect to actions the respective Parties will take at the
Closing itself) or such other date as the Parties may mutually determine (the “Closing Date”). The Parties will not meet for the Closing. Instead, they will exchange signature pages to the various documents to be executed at the
Closing by fax or email. Within five (5) business days after the Closing, the Parties will assemble and exchange complete copies of the documents signed at the Closing, together with original signature pages. 
 2.5 Deliveries at the Closing. At the Closing, (a) Nautilus will deliver to Buyer the various certificates, instruments, and
documents referred to in Section 7.1 below; (b) Buyer will deliver to Nautilus the various certificates, instruments, and documents referred to in Section 7.2 below; (c) Nautilus will execute, acknowledge (if appropriate), and
deliver to Buyer (i)

  

 4 

 
assignments in the forms attached hereto as Exhibit B and (ii) such other instruments of sale, transfer, conveyance, and assignment as Buyer and its counsel may reasonably request;
(d) Buyer will execute, acknowledge (if appropriate), and deliver to Nautilus (i) an assumption in the form attached hereto as Exhibit C and (ii) such other instruments of assumption as Nautilus and its counsel may reasonably
request; (e) Buyer will deliver to Nautilus the consideration specified in Section 2.3 above, including the Promissory Note and the Security Agreement described in Schedule 2.3; and (f) Nautilus and Buyer shall enter into the Lease
Agreement and the License Agreement. 
 2.6 Allocation. The Parties agree to allocate the Purchase Price (and all other
capitalizable costs) among the Acquired Assets for all purposes (including financial accounting and tax purposes) in accordance with the allocation schedule attached hereto as Exhibit D. 
 2.7 Accounts Payable Reconciliation. As soon as reasonably practicable after completion of the Physical Inventory Report, as defined
in Schedule 2.3, but in any even no later than fifteen (15) days after the Closing Date, Nautilus and Buyer shall reconcile in good faith any accounts payable related to the Business under the following guidelines: 
 (i) Any accounts payable related to inventory included in the Physical Inventory Report shall be the responsibility of
Nautilus, shall be a retained liability of Nautilus, and Nautilus shall indemnify and hold Buyer harmless from and against any and all such accounts payable. 
 (ii) Any accounts payable related to inventory not included in the Physical Inventory Report and to be delivered after
completion of the Physical Inventory Report shall be assumed by Buyer as an Assumed Liability, and Buyer shall indemnify and hold Nautilus harmless from and against any and all such accounts payable. 
 2.8 Finished Goods Inventory. The Commercial Fitness Equipment finished goods inventory is not included in the Acquired Assets and
ownership of such inventory shall be retained by Nautilus. Buyer agrees to warehouse, free of charge, the Commercial Fitness Equipment finished goods inventory on behalf Nautilus. Buyer further agrees to use commercially reasonable efforts to market
and sell such inventory to Buyer’s customers. Nautilus agrees to sell such inventory at the pricing set forth in Schedule 2.8, to Buyer for resale to Buyer’s customers. Buyer shall pay Nautilus within 60 days from date of each individual
shipment to Buyer’s customers. Any Technology Goods listed on Schedule 2.8 that are not sold by Buyer as of September 29, 2010 shall be retained by Nautilus and removed from Buyer’s warehouse at the expense of Nautilus no later than
October 15, 2010. Any Finished Goods Inventory, other than Technology Goods, listed on Schedule 2.8 that are not sold by Buyer as of September 29, 2010 shall be sold to Buyer as of that date at the pricing set forth in Schedule 2.8, with
payment being due on or before December 29, 2010. 
 ARTICLE 3 - NAUTILUS’ REPRESENTATIONS AND WARRANTIES

 Nautilus represents and warrants to Buyer that the statements contained in this Article 3 are correct and complete as of
the date of this Agreement and will be correct and complete as of the Closing Date (as though made then and as though the Closing Date were substituted for the

  

 5 

 
date of this Agreement throughout this Article 3), except as set forth in the disclosure schedule accompanying this Agreement as Exhibit A (the “Disclosure Schedule”). The
Disclosure Schedule will be arranged in sections corresponding to the lettered and numbered sections contained in this Agreement. 
 3.1 Organization of Nautilus. Nautilus is a corporation duly organized, validly existing, and in good standing under the laws of the State of Washington. 
 3.2 Authorization of Transaction. Nautilus has full power and authority (including full corporate or other entity power and authority) to execute and deliver this Agreement and to perform its
obligations hereunder. This Agreement constitutes the valid and legally binding obligation of Nautilus, enforceable in accordance with its terms and conditions. 
 3.3 Non-Contravention. Neither the execution and delivery of this Agreement, nor the consummation of the transactions contemplated hereby (including the assignments and assumptions referred to in
Article 2 above) by Nautilus, will (a) violate any constitution, statute, regulation, rule, injunction, judgment, order, decree, ruling, charge, or other restriction of any government, governmental agency, or court to which Nautilus is subject
or any provision of the charter or bylaws of Nautilus or (b) conflict with, result in a breach of, constitute a default under, result in the acceleration of, create in any party the right to accelerate, terminate, modify, or cancel, or require
any notice under any agreement, contract, lease, license, instrument, or other arrangement to which Nautilus is a party or by which it is bound or to which any of its assets is subject (or result in the imposition of any Lien upon any of
Nautilus’s assets not included as part of the Acquired Assets), except where the violation, conflict, breach, default, acceleration, termination, modification, cancellation, failure to give notice, or Lien would not have a material adverse
effect on Nautilus. Nautilus need not give notice to, make any filing with, or obtain any authorization, consent, or approval of any government or governmental agency in order for the Parties to consummate the transactions contemplated by this
Agreement (including the assignments and assumptions referred to in Article 2 above), except where the failure to give notice, to file, or to obtain any authorization, consent, or approval would not have a material adverse effect on Nautilus. For
purposes of this Section 3.3, an adverse effect shall be considered “material” if it results in a loss or liability in excess of Two Hundred Thousand U.S. Dollars ($200,000). The foregoing definition of materiality shall apply only to
this Section 3.3 and not to any other representation or warranty of Nautilus made in this Agreement. 
 3.4
Brokers’ Fees. Nautilus has no liability or obligation to pay any fees or commissions to any broker, finder, or agent with respect to the transactions contemplated by this Agreement for which Buyer could become liable or obligated.

 3.5 Title to Assets. Nautilus has good and marketable title to, or a valid leasehold interest in, the Acquired Assets,
free and clear of all Liens or restriction on transfer. 
 3.6 Financial Information. Attached hereto as Exhibit E
is selected historical financial information related to the Business (collectively the “Financial Information”). The Financial Information was derived from Nautilus financial statements prepared in accordance with GAAP throughout
the periods covered thereby. 
  

 6 

 3.7 Inventory. Subject to the reserve for inventory writedown set forth in the
Financial Information, the Commercial Fitness Equipment inventory included in the Acquired Assets is merchantable and fit for the purpose for which it was procured or manufactured. 
 3.8 Contracts. With respect to each of the contracts and agreements set forth on Section 3.8 of the Disclosure Schedules (the
“Assumed Contracts”), to the Knowledge of Nautilus: (i) the agreement is legal, valid, binding, enforceable, and in full force and effect in all material respects; (ii) no party is in material breach or default, and no event has
occurred that with notice or lapse of time would constitute a material breach or default, or permit termination, modification, or acceleration, under the agreement; and (iii) no party has repudiated any material provision of the agreement.

 3.9 Terms of Sale. Substantially all of the Commercial Fitness Equipment products manufactured, sold, leased, or
delivered by Nautilus are subject to standard terms and conditions of sale or lease, copies of which have been made available to Buyer. 
 3.10 Customers and Suppliers. 
 (a) Section 3.10 of the
Disclosure Schedule lists the ten (10) largest customers of the Commercial Fitness Equipment business for calendar year 2008 and sets forth opposite the name of each such customer the percentage of consolidated net sales attributable to such
customer. Section 3.10 of the Disclosure Schedule also lists any additional current customers that Nautilus anticipates shall be among the ten (10) largest customers for the current fiscal year. 
 (b) Since November 30, 2009, no material supplier of Nautilus has indicated in writing that it will stop, or materially
decrease the rate of, supplying materials, products or services to Nautilus, and no customer listed on Section 3.10 of the Disclosure Schedule has indicated in writing that it will stop, or materially decrease the rate of, buying materials,
products or services from Nautilus. 
 3.11 Litigation. There is no litigation pending, or to the Knowledge of Nautilus,
threatened, that could reasonably be expected to have a material adverse effect on the Business or the Acquired Assets after Closing. 
 3.12 Tangible Personal Property. To Nautilus’s Knowledge, the Schedule of Tangible Personal Property attached hereto as Schedule 3.12 contains a complete and accurate listing of the Tangible Personal Property being acquired by
Buyer, it being agreed, however, that all items of Tangible Personal Property located at the Virginia Facility may not be listed on Schedule 3.12. Accordingly, the parties agree that Buyer is acquiring all the items of Tangible Personal Property
located at the Virginia Facility, regardless of whether such items are specifically listed on Schedule 3.12. 
 3.13
Employment Matters. Except as may be set forth on the Disclosure Schedules: 
 (a) The Virginia Facility is
not subject to any collective bargaining agreement, nor has it experienced any strikes, grievances, claims of unfair labor practices, or other collective bargaining disputes; 
  

 7 

 (b) Nautilus has complied with all immigration laws, rules and regulations
relating to the employment of foreign nationals; and 
 (c) There is no pending, or to the Knowledge of Nautilus,
threatened employment-related litigation by any person who was in the past or is currently employed at the Virginia Facility. 
 3.14 Environmental, Health and Safety Matters. Except as may be disclosed on the Disclosure Schedules: 
 (a) In operating the Virginia Facility, to Nautilus’s Knowledge, Nautilus has complied with all applicable federal, state and local environmental, health and safety requirements and permits issued thereunder; 
 (b) Nautilus has not received any written or oral notice, report or other information regarding any actual or alleged
violation of any federal, state or local environmental, health and safety requirements, or any liabilities or potential liabilities, including any investigatory, remedial or corrective obligations, relating to the Virginia Facility arising under
federal, state or local environmental, health and safety requirements; and 
 (c) None of the following exists at
the Virginia Facility: (1) underground storage tanks, (2) asbestos-containing materials in any form or condition, (3) materials or equipment containing polychlorinated biphenyls, or (4) landfills, surface impoundments, or
disposal areas. 
 ARTICLE 4 – BUYER’S REPRESENTATIONS AND WARRANTIES 
 Buyer represents and warrants to Nautilus that the statements contained in this Article 4 are correct and complete as of the date of this
Agreement and will be correct and complete as of the Closing Date (as though made then and as though the Closing Date were substituted for the date of this Agreement throughout this Article 4). 
 4.1 Organization of Buyer. Buyer is a corporation duly organized, validly existing, and in good standing under the laws of the
jurisdiction of its organization. 
 4.2 Authorization of Transaction. Buyer has full power and authority (including full
corporate or other entity power and authority) to execute and deliver this Agreement and to perform its obligations hereunder. This Agreement constitutes the valid and legally binding obligation of Buyer, enforceable in accordance with its terms and
conditions. The execution, delivery and performance of this Agreement and all other agreements contemplated hereby have been duly authorized by Buyer. 
 4.3 Non-contravention. Neither the execution and delivery of this Agreement, nor the consummation of the transactions contemplated hereby (including the assignments and

  

 8 

 
assumptions referred to in Article 2 above) by Buyer, will (a) violate any constitution, statute, regulation, rule, injunction, judgment, order, decree, ruling, charge, or other restriction
of any government, governmental agency, or court to which Buyer is subject or any provision of its charter, bylaws, or other governing documents or (b) conflict with, result in a breach of, constitute a default under, result in the acceleration
of, create in any party the right to accelerate, terminate, modify, or cancel, or require any notice under any agreement, contract, lease, license, instrument, or other arrangement to which Buyer is a party or by which it is bound or to which any of
its assets are subject. Buyer need not give any notice to, make any filing with, or obtain any authorization, consent, or approval of any government or governmental agency in order for the Parties to consummate the transactions contemplated by this
Agreement (including the assignments and assumptions referred to in Article 2 above). 
 4.4 Brokers’ Fees. Buyer
has no liability or obligation to pay any fees or commissions to any broker, finder, or agent with respect to the transactions contemplated by this Agreement. 
 ARTICLE 5 - PRE-CLOSING COVENANTS 
 The Parties agree as follows with
respect to the period between the execution of this Agreement and the Closing: 
 5.1 General. Each of the Parties will
use its reasonable best efforts to take all actions and to do all things necessary, proper, or advisable in order to consummate and make effective the transactions contemplated by this Agreement (including satisfaction, but not waiver, of the
Closing conditions set forth in Article 7 below). 
 5.2 Notices and Consents. Nautilus will give any notices to third
parties, and Nautilus will use its commercially reasonable efforts to obtain any third-party consents referred to in Section 3.3 above and the items set forth in Schedule 7.1(c) hereto. Each of the Parties will give any notices to, make any
filings with, and use its commercially reasonable efforts to obtain any authorizations, consents, and approvals of governments and governmental agencies in connection with the matters referred to in Sections 3.3 and 4.3 above. 
 5.3 Full Access. Nautilus will permit representatives of Buyer (including legal counsel and accountants) to have full access at all
reasonable times, and in a manner so as not to interfere with the normal business operations of Nautilus, to all premises, properties, personnel, books, records (including Tax records), contracts, and documents of or pertaining to the Business.
Buyer will treat and hold as such any Confidential Information it receives from Nautilus and its subsidiaries (and their representatives) in the course of the reviews contemplated by this Section 5.3, will not use any of the Confidential
Information except in connection with this Agreement, and, if this Agreement is terminated for any reason whatsoever, will return to Nautilus all tangible embodiments (and all copies) of the Confidential Information that are in its possession.

 5.4 Notice of Developments. Each Party will give prompt written notice to the other Party of any material adverse
development causing a breach of any of its own representations and warranties in Articles 3 and 4 above. No disclosure by any Party pursuant to this Section 5.4, however, shall be deemed to amend or supplement the Disclosure Schedule or to
prevent or cure any misrepresentation, breach of warranty, or breach of covenant. 
  

 9 

 5.5 Employees and Employee Benefits. For the purpose of this Agreement, the term
“Active Employees” shall mean all employees employed by Nautilus at its Independence, Virginia facility on the Closing Date, including employees on temporary leave of absence, including family medical leave, military leave,
temporary disability or sick leave, but excluding employees on long-term disability leave. 
 (i) Buyer shall
offer employment prior to Closing to not less than ninety (90) Active Employees, such offers to be effective on the Closing Date and to include compensation and benefits comparable to that received by such Active Employees as of the date of
this Agreement. Prior to Closing, Buyer will provide Nautilus with a list identifying those Active Employees to whom Buyer has made an offer of employment and whether such offer has been accepted (employees who have accepted such offers are referred
to as the “Hired Active Employees”). Effective immediately before the Closing, Nautilus will terminate the employment of all Hired Active Employees. 
 (ii) Buyer shall inform Nautilus promptly of the identities of those Active Employees to whom it will not make employment
offers, and, if applicable, Buyer shall assist Nautilus in complying with the WARN Act as to those Active Employees. 
 (iii) Nautilus shall be responsible for (A) the payment of all wages and other remuneration due to Active Employees with respect to their services as employees of Nautilus through the close of business on the day preceding the Closing
Date; (B) the payment of any termination or severance payments and the provision of health plan continuation coverage in accordance with applicable contractual and legal requirements; provided, that Buyer shall reimburse Nautilus in full
for any such termination, severance or health plan costs paid to an Active Employee who is not a Hired Active Employee, but who is employed by Buyer within four months after the Closing Date, and (C) any and all payments to Active Employees, if
any, required under the WARN Act. 
 (iv) Nautilus shall be liable for any claims made or incurred by Active
Employees and their beneficiaries through the day preceding the Closing Date under the Nautilus benefit plans. For purposes of the immediately preceding sentence, a charge will be deemed incurred, in the case of hospital, medical or dental benefits,
when the services that are the subject of the charge are performed and, in the case of other benefits (such as disability or life insurance), when an event has occurred or when a condition has been diagnosed that entitles the employee to the
benefit. 
 (v) All Hired Active Employees who are participants in Nautilus’ retirement plans shall retain
their accrued benefits under Nautilus’ retirement plans as of the Closing Date, and Nautilus (or Nautilus’ retirement plans) shall retain sole liability for the payment of such benefits as and when such Hired Active Employees become
eligible therefor under such plans. Nautilus shall defend, indemnify and hold Buyer harmless from any cost or liability arising out of or relating to such retirement plans. 
 (vi) Nautilus will not make any transfer of employee benefit plan assets to Buyer. 
  

 10 

 ARTICLE 6 - POST-CLOSING COVENANTS 
 The Parties agree as follows with respect to the period following the Closing: 
 6.1 General. In case at any time after the Closing any further actions are necessary to carry out the purposes of this Agreement,
each of the Parties will take such further actions (including the execution and delivery of such further instruments and documents) as the other Party may reasonably request, all at the sole cost and expense of the requesting Party (unless the
requesting Party is entitled to indemnification therefor under Article 8 below). 
 6.2 Litigation Support. In the event
and for so long as any Party actively is contesting or defending against any action, suit, proceeding, hearing, investigation, charge, complaint, claim, or demand in connection with (i) any transaction contemplated under this Agreement or
(ii) any fact, situation, circumstance, status, condition, activity, practice, plan, occurrence, event, incident, action, failure to act, or transaction on or prior to the Closing Date involving the Business, the other Party will cooperate with
the contesting or defending Party and its counsel in the contest or defense, make available its personnel, and provide such testimony and access to its books and records as shall be necessary in connection with the contest or defense, all at the
sole cost and expense of the contesting or defending Party (unless the contesting or defending Party is entitled to indemnification therefor under Article 8 below). 
 6.3 Transition. Nautilus will not take any action that is designed or intended to have the effect of discouraging any licensor, customer, supplier, or other business associate of the Business from
maintaining the same business relationships with Buyer after the Closing as it maintained with Nautilus prior to the Closing. During the ninety (90) day period immediately following the Closing, Nautilus agrees to place purchase orders for
inventory with its suppliers as requested by Buyer; provided, that Buyer shall be obligated to pay to Nautilus the full amount of any such purchase orders three (3) business days prior to the purchase order payment date. Title to any
such products shall be transferred from Nautilus to Buyer upon arrival in Independence, Virginia. 
 6.4 Warranty. As
part of the Assumed Liabilities, Buyer shall be responsible for all warranty liability for Commercial Fitness Equipment products located in North America other than the TreadClimber® (TC916) product, Nautilus EV916 product, and Clubtrack
Treadmill Model 425, Model 510, and Model 620 products. Buyer will provide warranty service at Nautilus’ expense for the TreadClimber® (TC 916) product, Nautilus EV916 product, and Clubtrack Treadmill Model 425, Model 510, and Model 620
products in North America in accordance with the terms of the Warranty Service Agreement. 
 6.5 Buyer
Financial Statements. So long as there remains any unpaid balance under the promissory note delivered to Nautilus by Buyer in accordance with this Agreement, Buyer agrees to deliver to Nautilus the following financial statements of Buyer:
(a) Buyer’s unaudited monthly balance sheet, income statement and statement of cash flows, prepared in accordance with GAAP by Buyer’s management, such monthly statements to be delivered to Nautilus no later than the 20th day of the following month; and (b) Buyer’s audited
semiannual financial statements, prepared in accordance with GAAP for delivery to the Virginia Small Business Financing

  

 11 

 
Authority (“VSBFA”), such statements to be delivered not later than the date such statements are due to be delivered to the VSBFA: provided, that if Buyer is not required to
deliver such statements to the VSBFA, then Buyer shall deliver its annual audited financial statements to Nautilus not later than 60 days after the end of calendar year 2010. 
 ARTICLE 7 - CONDITIONS TO OBLIGATION TO CLOSE 
 7.1
Conditions to Buyer’s Obligation. The obligation of Buyer to consummate the transactions to be performed by it in connection with the Closing is subject to satisfaction of the following conditions: 
 (a) the representations and warranties set forth in Article 3 above shall be true and correct in all material respects at and
as of the Closing Date, except to the extent that such representations and warranties are qualified by the term “material,” in which case such representations and warranties (as so written, including the term “material”) shall be
true and correct in all respects at and as of the Closing Date; 
 (b) Nautilus shall have performed and complied
with all of its covenants hereunder in all material respects through the Closing, except to the extent that such covenants are qualified by the term “material,” in which case Nautilus shall have performed and complied with all of such
covenants (as so written, including the term “material”) in all respects through the Closing; 
 (c)
Nautilus shall have procured the third-party consents, if any, specified in Schedule 7.1(c); 
 (d) no action,
suit, or proceeding shall be pending before (or that could come before) any court or quasi-judicial or administrative agency of any federal, state, local, or non-U.S. jurisdiction or before (or that could come before) any arbitrator wherein an
unfavorable injunction, judgment, order, decree, ruling, or charge would (i) prevent consummation of any of the transactions contemplated by this Agreement, (ii) cause any of the transactions contemplated by this Agreement to be rescinded
following consummation, or (iii) adversely affect the right of Buyer to own the Acquired Assets or operate the former business of Nautilus (and no such injunction, judgment, order, decree, ruling, or charge shall be in effect); 
 (e) Nautilus shall have delivered to Buyer a certificate to the effect that each of the conditions specified above in
Section 7.1(a)-(d) is satisfied in all respects; 
 (f) Nautilus and Buyer shall have received all
material authorizations, consents, and approvals of governments and governmental agencies referred to in Sections 3.3 and 4.3 above; and 
 (g) Nautilus shall have executed and delivered the Lease Agreement and the License Agreement. 
 Buyer may waive any condition specified in this Section 7.1 by executing a writing so stating at or prior to the Closing, or by consummating the Closing. 
  

 12 

 7.2 Conditions to Nautilus’ Obligation. The obligation of Nautilus to consummate
the transactions to be performed by it in connection with the Closing is subject to satisfaction of the following conditions: 
 (a) the representations and warranties set forth in Article 4 above shall be true and correct in all material respects at and as of the Closing Date, except to the extent that such representations and
warranties are qualified by the term “material,” in which case such representations and warranties (as so written, including the term “material”) shall be true and correct in all respects at and as of the Closing Date;

 (b) Buyer shall have performed and complied with all of its covenants hereunder in all material respects
through the Closing, except to the extent that such covenants are qualified by the term “material,” in which case Buyer shall have performed and complied with all of such covenants (as so written, including the term “material”)
in all respects through the Closing; 
 (c) no action, suit, or proceeding shall be pending before any court or
quasi-judicial or administrative agency of any federal, state, local, or non-U.S. jurisdiction or before any arbitrator wherein an unfavorable injunction, judgment, order, decree, ruling, or charge would (i) prevent consummation of any of the
transactions contemplated by this Agreement or (ii) cause any of the transactions contemplated by this Agreement to be rescinded following consummation (and no such injunction, judgment, order, decree, ruling, or charge shall be in effect);

 (d) Buyer shall have delivered to Nautilus a certificate to the effect that each of the conditions specified
above in Section 7.2(a)-(c) is satisfied in all respects; 
 (e) Nautilus and Buyer shall have received
all material authorizations, consents, and approvals of governments and governmental agencies referred to in Sections 3.3 and 4.3 above. Nautilus may waive any condition specified in this Section 7.2 by executing a writing so stating at or
prior to the Closing, or by consummating the Closing; 
 (f) Buyer shall have executed and delivered the Lease
Agreement, the License Agreement and an assignment and assumption agreement for the Assumed Contracts; and 
 (g)
Buyer shall have paid to Nautilus that portion of the Purchase Price payable at Closing, and shall have executed and delivered the promissory note and security agreement described in Schedule 2.3. 
 ARTICLE 8 - REMEDIES FOR BREACHES OF THIS AGREEMENT 
 8.1 Survival of Representations and Warranties. All of the representations and warranties of Nautilus contained in Article 3 above shall survive the Closing and continue in full force and effect
for a period of one (1) year thereafter; provided, that (a) the representations and warranties set forth in Sections 3.2 and 3.5 shall continue for a period of three (3) years after

  

 13 

 
Closing, and (b) the representations and warranties set forth in Sections 3.13 and 3.14 shall survive for a period of two (2) years after Closing. All of the Buyer’s
representations and warranties contained in Article 4 shall continue for a period of three (3) years after Closing. All of the other representations and warranties of the Parties contained in this Agreement shall survive the Closing and
continue in full force and effect forever thereafter (subject to any applicable statutes of limitations). 
 8.2
Indemnification Provisions for Buyer’s Benefit. 
 (a) In the event Nautilus breaches any of its
representations, warranties, and covenants contained in this Agreement, and, provided that Buyer makes a written claim for indemnification against Nautilus pursuant to Section 10.7 below within the survival period (if there is an applicable
survival period pursuant to Section 8.1 above), then Nautilus agrees to defend, indemnify, and hold Buyer harmless from and against the entirety of any Adverse Consequences Buyer may suffer resulting from, arising out of, relating to, in the
nature of, or caused by the breach; provided, however, that (i) Nautilus shall not have any obligation to indemnify Buyer from and against any Adverse Consequences resulting from, arising out of, relating to, in the nature of, or caused by the
breach of any representation or warranty of Nautilus contained in Article 3 above until Buyer has suffered Adverse Consequences by reason of all such breaches in excess of a Seventy-Five Thousand U.S. Dollars ($75,000) aggregate deductible (after
which point Nautilus will be obligated only to indemnify Buyer from and against further such Adverse Consequences); and (ii) there will be a Two Million U.S. Dollars ($2,000,000) aggregate ceiling on the obligation of Nautilus to indemnify
Buyer from and against Adverse Consequences resulting from, arising out of, relating to, in the nature of, or caused by breaches of the representations and warranties of Nautilus contained in Article 3 above. 
 (b) Nautilus further agrees to defend, indemnify, and hold Buyer harmless from and against the entirety of any Adverse
Consequences Buyer may suffer resulting from, arising out of, relating to, in the nature of, or caused by any liability of Nautilus that is not an Assumed Liability (including any liability of Nautilus that becomes a liability of Buyer under any
bulk transfer law of any jurisdiction, under any common law doctrine of de facto merger or successor liability, or otherwise by operation of law). The $75,000 liability threshold and the $2,000,000 liability ceiling in Section 8.2(a) above
shall not apply to Nautilus’ obligations under this Section 8.2(b). 
 8.3 Indemnification Provisions for
Nautilus’ Benefit. 
 (a) In the event Buyer breaches any of its representations, warranties, and
covenants contained in this Agreement, and, provided that Nautilus makes a written claim for indemnification against Buyer pursuant to Section 10.7 below within the survival period (if there is an applicable survival period pursuant to
Section 8.1 above), then Buyer agrees to defend, indemnify, and hold Nautilus harmless, jointly and severally, from and against the entirety of any Adverse Consequences suffered resulting from, arising out of, relating to, in the nature of, or
caused by the breach. 
  

 14 

 (b) Buyer further agrees to defend, indemnify, and hold Nautilus harmless,
jointly and severally, from and against the entirety of any Adverse Consequences suffered resulting from, arising out of, relating to, in the nature of, or caused by any Assumed Liability. 
 8.4 Matters Involving Third Parties. 
 (a) If any third party notifies any Party (the “Indemnified Party”) with respect to any matter (a “Third-Party Claim”) that may give rise to a claim for indemnification
against the other Party (the “Indemnifying Party”) under this Article 8, then the Indemnified Party shall promptly notify the Indemnifying Party thereof in writing; provided, however, that no delay on the part of the Indemnified
Party in notifying the Indemnifying Party shall relieve the Indemnifying Party from any obligation hereunder unless (and then solely to the extent) the Indemnifying Party is thereby actually and materially prejudiced. 
 (b) The Indemnifying Party will have the right to assume the defense of the Third-Party Claim with counsel of its choice
reasonably satisfactory to the Indemnified Party at any time within fifteen (15) days after the Indemnified Party has given notice of the Third-Party Claim; provided, however, that the Indemnifying Party must conduct the defense of the
Third-Party Claim actively and diligently thereafter in order to preserve its rights in this regard; and provided further that the Indemnified Party may retain separate co-counsel at its sole cost and expense and participate in the defense of the
Third-Party Claim. 
 (c) So long as the Indemnifying Party has assumed and is conducting the defense of the
Third-Party Claim in accordance with Section 8.4(b) above, (i) the Indemnifying Party will not consent to the entry of any judgment on or enter into any settlement with respect to the Third-Party Claim without the prior written consent of
the Indemnified Party (not to be unreasonably withheld) unless the judgment or proposed settlement involves only the payment of money damages by the Indemnifying Party and does not impose an injunction or other equitable relief upon the Indemnified
Party and (ii) the Indemnified Party will not consent to the entry of any judgment on or enter into any settlement with respect to the Third-Party Claim without the prior written consent of the Indemnifying Party (not to be unreasonably
withheld). 
 (d) In the event the Indemnifying Party does not assume and conduct the defense of the Third-Party
Claim in accordance with Section 8.4(b) above, however, (i) the Indemnified Party may defend against, and consent to the entry of any judgment on or enter into any settlement with respect to, the Third-Party Claim in any manner it
reasonably may deem appropriate (and the Indemnified Party need not consult with, or obtain any consent from, the Indemnifying Party in connection therewith) and (ii) the Indemnifying Party will remain responsible for any Adverse Consequences
the Indemnified Party may suffer resulting from, arising out of, relating to, in the nature of, or caused by the Third-Party Claim to the fullest extent provided in this Article 8. 
 8.5 Determination of Adverse Consequences. The amount of any Adverse Consequences shall be determined net of any insurance proceeds
for purposes of this Article 8.

  

 15 

 
Indemnification payments under this Article 8 shall be paid by the Indemnifying Party without reduction for any Tax Benefits available to the Indemnified Party. However, to the extent that the
Indemnified Party recognizes Tax Benefits as a result of any Adverse Consequences, the Indemnified Party shall pay the amount of such Tax Benefits (but not in excess of the indemnification payment or payments actually received from the Indemnifying
Party with respect to such Adverse Consequences) to the Indemnifying Party as such Tax Benefits are actually recognized by the Indemnified Party. For this purpose, the Indemnified Party shall be deemed to recognize a tax benefit (“Tax
Benefit”) with respect to a taxable year if, and to the extent that, the Indemnified Party’s cumulative liability for Taxes through the end of such taxable year, calculated by excluding any Tax items attributable to the Adverse
Consequences from all taxable years, exceeds the Indemnified Party’s actual cumulative liability for Taxes through the end of such taxable year, calculated by taking into account any Tax items attributable to the Adverse Consequences and the
receipt of indemnification payment under this Article 8 for all taxable years (to the extent permitted by relevant Tax law and treating such Tax items as the last items taken into account for any taxable year). All indemnification payments under
this Article 8 shall be deemed adjustments to the Purchase Price. 
 8.6 Liquidated Damages. Subject to the provisions of
Section 8.7, if the Closing fails to occur because Nautilus exercises its right to terminate this Agreement under Section 9.1(c), or because of Buyer’s other breach of or default under this Agreement, Buyer shall pay to Nautilus the
amount of Three Hundred Thousand Dollars ($300,000) in liquidated damages.  
 8.7 Exclusive Remedy. Buyer and
Nautilus acknowledge and agree that the foregoing indemnification and liquidated damages provisions in this Article 8 shall be the exclusive remedy of Buyer and Nautilus with respect to the transactions contemplated by this Agreement; provided,
however, that notwithstanding the foregoing, (a) in the event that the Closing fails to occur by reason of a breach of this Agreement by Nautilus, Buyer shall have the right to sue for specific performance of this Agreement, and (b) in the
event that Closing fails to occur by reason of a breach of this Agreement by Buyer, Nautilus shall have the right, in lieu of receiving liquidated damages per Section 8.6 above, to sue for specific performance of this Agreement. Buyer hereby
waives any statutory, equitable, or common law rights or remedies relating to any environmental, health or safety matters; provided, however, that in the event of a breach by Nautilus of its representations and warranties with respect to such
matters in Article 3 above, Buyer shall be entitled to the remedies available to Buyer by reason of any such breach. 
 ARTICLE 9 - TERMINATION 
 9.1 Termination of Agreement. The Parties may terminate this Agreement as
provided below: 
 (a) Buyer and Nautilus may terminate this Agreement by mutual written consent at any time
prior to the Closing; 
 (b) Buyer may terminate this Agreement by giving written notice to Nautilus at any time
prior to the Closing (i) in the event Nautilus has breached any material representation, warranty, or covenant contained in this Agreement in any material respect, Buyer has notified Nautilus of the breach, and the breach has continued without
cure for a

  

 16 

 
period of thirty (30) days after the notice of breach, or (ii) if the Closing shall not have occurred on or before February 26, 2010, by reason of the failure of any condition
precedent under Section 7.1 hereof (unless the failure results primarily from Buyer itself breaching any representation, warranty, or covenant contained in this Agreement); and 
 (c) Nautilus may terminate this Agreement by giving written notice to Buyer at any time prior to the Closing (i) in the
event Buyer has breached any material representation, warranty, or covenant contained in this Agreement in any material respect, Nautilus has notified Buyer of the breach, and the breach has continued without cure for a period of thirty
(30) days after the notice of breach or (ii) if the Closing shall not have occurred on or before February 26, 2010, by reason of the failure of any condition precedent under Section 7.2 hereof (unless the failure results
primarily from Nautilus itself breaching any representation, warranty, or covenant contained in this Agreement). 
 9.2
Effect of Termination. If any Party terminates this Agreement pursuant to Section 9.1 above, all rights and obligations of the Parties hereunder shall terminate without any liability of any Party to the other Party (except for any liability
of any Party then in breach); provided, however, that the confidentiality provisions contained in Section 5.5 above shall survive termination. 
 ARTICLE 10 - MISCELLANEOUS 
 10.1 Press Releases and Public
Announcements. No Party shall issue any press release or public announcement relating to the subject matter of this Agreement prior to the Closing without the prior written approval of the other Party; provided, however, that any Party may make
any public disclosure it believes in good faith is required by applicable law or any listing or trading agreement concerning its publicly traded securities (in which case the disclosing Party will use its reasonable best efforts to advise the other
Party prior to making the disclosure), and provided further, that Buyer acknowledges that Nautilus will need to publicly disclose this Agreement and the subject matter hereof to comply with rules and regulations of the Securities and Exchange
Commission, and Buyer consents to such disclosure. 
 10.2 No Third-Party Beneficiaries. This Agreement shall not confer
any rights or remedies upon any Person other than the Parties and their respective successors and permitted assigns. 
 10.3
Entire Agreement. This Agreement (including the documents referred to herein) constitutes the entire agreement between the Parties and supersedes any prior understandings, agreements, or representations by or between the Parties, written or
oral, to the extent they relate in any way to the subject matter hereof. 
 10.4 Succession and Assignment. This
Agreement shall be binding upon and inure to the benefit of the Parties named herein and their respective successors and permitted assigns. No Party may assign either this Agreement or any of its rights, interests, or obligations hereunder without
the prior written approval of the other Party; provided, however, that Buyer may (a) assign any or all of its rights and interests hereunder to one or more of its Affiliates and (b) designate one or more of its Affiliates to perform its
obligations hereunder (in any or all of which cases Buyer nonetheless shall remain responsible for the performance of all of its obligations hereunder). 
  

 17 

 10.5 Counterparts. This Agreement may be executed in one or more counterparts
(including by means of facsimile), each of which shall be deemed an original but all of which together will constitute one and the same instrument. 
 10.6 Headings. The section headings contained in this Agreement are inserted for convenience only and shall not affect in any way the meaning or interpretation of this Agreement. 
 10.7 Notices. All notices, requests, demands, claims, and other communications hereunder shall be in writing. Any notice, request,
demand, claim, or other communication hereunder shall be deemed duly given (a) when delivered personally to the recipient, (b) one (1) business day after being sent to the recipient by reputable overnight courier service (charges
prepaid), (c) one (1) business day after being sent to the recipient by facsimile transmission or electronic mail, or (d) four (4) business days after being mailed to the recipient by certified or registered mail, return receipt
requested and postage prepaid, and addressed to the intended recipient as set forth below: 
  

			
	If to Nautilus:	  	Nautilus, Inc.
		  	16400 SE Nautilus Drive
		  	Vancouver, Washington 98683
		  	Attn: Wayne M. Bolio
		  	Facsimile: (360) 859 2511
		  	E-mail: wbolio@nautilus.com
		
	with a copy to:	  	Garvey Schubert Barer
		  	1191 Second Avenue, 18th Floor
		  	Seattle, Washington 98101-2939
		  	Attn: Bruce A. Robertson
		  	Facsimile: (206) 464-0125
		  	E-mail: brobertson@gsblaw.com
		
	If to Buyer:	  	Med-Fit Systems, Inc.
		  	Attn: Dean Sbragia
		  	543 E. Alvarado St.
		  	Fallbrook, CA 92028
		  	E-mail: medfit@aol.com
		
	with a copy to:	  	w/r Law Group, APC
		  	Attn: William Reavey
		  	5330 Carroll Canyon Rd. Suite 210
		  	San Diego, CA 92121
		  	Facsimile: (858) 625-0571
		  	E-mail: wreavey@thewrlaw.com

 Any Party may change the
address to which notices, requests, demands, claims, and other communications hereunder are to be delivered by giving the other Party notice in the manner herein set forth. 
  

 18 

 10.8 Governing Law. This Agreement shall be governed by and construed in accordance
with the domestic laws of the State of Washington without giving effect to any choice or conflict of law provision or rule (whether of the State of Washington or any other jurisdiction) that would cause the application of the laws of any
jurisdiction other than the State of Washington. 
 10.9 Amendments and Waivers. No amendment of any provision of this
Agreement shall be valid unless the same shall be in writing and signed by Buyer and Nautilus. No waiver by any Party of any provision of the Agreement or any default, misrepresentation, or breach of warranty or covenant hereunder, whether
intentional or not, shall be valid unless the same shall be in writing and signed by the Party making such waiver nor shall such waiver be deemed to extend to any prior or subsequent default, misrepresentation, or breach of warranty or covenant
hereunder or affect in any way any rights arising by virtue of any prior or subsequent such occurrence. 
 10.10
Severability. Any term or provision of this Agreement that is invalid or unenforceable in any situation in any jurisdiction shall not affect the validity or enforceability of the remaining terms and provisions hereof or the validity or
enforceability of the offending term or provision in any other situation or in any other jurisdiction. 
 10.11 Expenses.
Each of Buyer and Nautilus will bear its own costs and expenses (including legal fees and expenses) incurred in connection with this Agreement and the transactions contemplated hereby. 
 10.12 Construction. The Parties have participated jointly in the negotiation and drafting of this Agreement. In the event an
ambiguity or question of intent or interpretation arises, this Agreement shall be construed as if drafted jointly by the Parties and no presumption or burden of proof shall arise favoring or disfavoring any Party by virtue of the authorship of any
of the provisions of this Agreement. Any reference to any federal, state, local, or non-U.S. statute or law shall be deemed also to refer to all rules and regulations promulgated thereunder, unless the context requires otherwise. The word
“including” shall mean including without limitation. 
 10.13 Incorporation of Exhibits and Schedules. The
Exhibits and Schedules identified in this Agreement are incorporated herein by reference and made a part hereof. 
 10.14
Bulk Transfer Laws. Buyer acknowledges that Nautilus will not comply with the provisions of any bulk transfer laws of any jurisdiction in connection with the transactions contemplated by this Agreement. 
 10.15 Governing Language. This Agreement has been negotiated and executed by the Parties in English. In the event any translation of
this Agreement is prepared for convenience or any other purpose, the provisions of the English version shall prevail. 
 10.16 Tax Disclosure Authorization. Notwithstanding anything herein to the contrary, the Parties (and each Affiliate and Person acting on behalf of any Party) agree that each Party (and each employee, representative, and other agent
of such Party) may disclose to any and all Persons, without limitation of any kind, the transaction’s tax treatment and tax structure (as such terms are

  

 19 

 
used in regulations promulgated under Code section 6011) contemplated by this agreement and all materials of any kind (including opinions or other tax analyses) provided to such Party or such
Person relating to such tax treatment and tax structure, except to the extent necessary to comply with any applicable federal or state securities laws; provided, however, that such disclosure may not be made until the earlier of date of
(i) public announcement of discussions relating to the transaction, (ii) public announcement of the transaction, or (iii) execution of an agreement (with or without conditions) to enter into the transaction. This authorization is not
intended to permit disclosure of any other information including (without limitation) (i) any portion of any materials to the extent not related to the transaction’s tax treatment or tax structure, (ii) the identities of participants
or potential participants, (iii) the existence or status of any negotiations, (iv) any pricing or financial information (except to the extent such pricing or financial information is related to the transaction’s tax treatment or tax
structure), or (v) any other term or detail not relevant to the transaction’s tax treatment or the tax structure. 
 (Signatures on following page) 
  

 20 

 IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as of the date first
above written. 
  

					
		 	BUYER:
		
		 	MED-FIT SYSTEMS, INC.
		
	By:	 	 /s/ Dean Sbragia

		 	Signature	 	
		 	Print Name:	 	 Dean Sbragia

		 	Title:	 	  

		
		 	NAUTILUS:
		
		 	NAUTILUS, INC.
		
	By:	 	 /s/ Kenneth L. Fish

		 	Signature	 	
		 	Print Name:	 	 Kenneth L. Fish

		 	Title:	 	 CFO

  

 21 

 SCHEDULE 2.3 
 PURCHASE PRICE CALCULATION AND PAYMENT TERMS 
 1. Certain Definitions. The following are defined terms used in this Schedule 2.3: 
 (a)
Agreement. “Agreement” means that certain Asset Purchase Agreement to which this Schedule 2.3 is attached. 
 (b) Inventory. “Inventory” means the physical inventory of the Commercial Fitness Equipment to be taken by Nautilus before the Closing in order to create the Physical Inventory Report. The Inventory consists of three
(3) categories of goods: Finished Goods, Raw Materials and Spare Parts. 
 (c) Inventory Purchase Price.
“Inventory Purchase Price” means the portion of the Purchase Price to be paid for the Inventory, exclusive of Finished Goods and items of Raw Materials listed on Table 2.3A as having a Valuation % of zero percent (0%), or a designation of
“N/A,” in Column 5 of Part B. 
 (d) Physical Inventory Report. “Physical Inventory Report”
means the report prepared by Nautilus to record the quantities of the items included as part of the Commercial Fitness Equipment being sold to Buyer. The Physical Inventory Report will be subject to adjustment as of the Closing to reflect the sales
made by Nautilus between the date of the Inventory and the close of business on 18 February 2010. 
 (e) Standard
Cost. “Standard Cost” means Nautilus’s standard cost for the items listed in Table 2.3A (determined in accordance with GAAP, before any allowances). Buyer and Nautilus have agreed on the Standard Cost of the items of Inventory
listed on Table 2.3A. 
 2. Methodology: As noted in Section 2.3 of the Agreement, the Purchase Price will be
calculated with respect to the information contained in this Schedule 2.3 concerning the agreed value of (a) the Tangible Personal Property and (b) the Inventory. The portion of the Purchase Price payable for the Tangible Personal Property
is set forth in Section 2(a) below and shall be paid as provided in Section 4 below. The Inventory Purchase Price has not yet been finally determined. It will be determined pursuant to Section 2(b) below. The Inventory Purchase Price
has been further allocated among the following two (2) categories: Raw Materials and Spare Parts. The Inventory Purchase Price shall be paid as provided in Section 4(b) below. Finished Goods listed in Part A of the attached Table 2.3A will
be sold by Buyer after the Closing in accordance with Section 2.8 of the Agreement. The Finished Goods will not be taken into account in calculating the Inventory Purchase Price. The Raw Materials are listed in Parts B and C of Table 2.3A. The
Spare Parts are listed in Part D of Table 2.3A. 
 (a) Tangible Personal Property: The portion of the Purchase
Price allocated to the Tangible Personal Property shall be Seven Hundred Fifty Thousand Dollars ($750,000). 

 (b) Inventory: Prior to the Closing, Nautilus conducted the Inventory and
prepared the Physical Inventory Report to reflect the results of the Inventory. The Physical Inventory Report will be used to determine the Inventory Purchase Price, as more fully provided below. As noted above, the Physical Inventory Report will be
adjusted as of the close of business on February 18, 2010 to reflect sales of items of Inventory after the date on which the Inventory was performed. Table 2.3A also illustrates that the Inventory Purchase Price will be calculated by
multiplying the estimated Standard Cost in column 4 by the applicable Valuation % in column 5. Column 6 on line E of Table 2.3A shows the currently estimated aggregate amount of the Inventory Purchase Price, i.e. $3,284,825. The following provisions
of this Section 2(b) describe how the Inventory Purchase Price will be determined. 
 (i) Raw Materials (Parts B and
C): Table 2.3A contains two raw materials-materials-related categories – “Raw Materials and WIP” and “Raw Materials at Supplier.” The term “Raw Materials” shall mean and include both such categories. This
Section 2(b)(i) shall apply to all Raw Materials. The portion of the Inventory Purchase Price to be paid for the various items of Raw Materials listed in column 1 of Parts B and C shall be determined by multiplying the Standard Cost in Column 4
by the corresponding Valuation % in Column 5. To illustrate, the portion of the Inventory Purchase Price to be paid for the Raw Materials listed in column 1 on line B.3 will be $330,289 (i.e. $660,578 x 50%). It is understood that Nautilus is
retaining ownership of the Clubtrack Raw Materials listed on Line B.2. 
 (ii) Spare Parts (Part D): The Spare
Parts listed on Line D.1 of Table 2.3A will be sold at an Inventory Purchase Price equal to the Standard Cost in Column 4 multiplied by the Valuation % in Column 5. Nautilus will retain ownership of Spare Parts relating to TreadClimber, EV916 and
Clubtrack products and will not be sold or transferred to Buyer at the Closing. 
 (iii) Finished Goods (Part A):
The sale of Finished Goods will be conducted as provided in Section 2.8 of the Agreement. 
 3. Determination of
Purchase Price: 
 (a) Purchase Price. The parties agree that before the Closing occurs, the amount of the
Inventory Purchase Price will be determined, agreed and stated as a fixed amount using (1) the information contained in the Physical Inventory Report and (2) the methodology set forth in this Schedule 2.3 and Table 2.3A. The sum of the
portions of the Purchase Price allocated to the Tangible Personal Property and the Inventory Purchase Price, respectively, shall be the Purchase Price. The Purchase Price is subject to adjustment pursuant to Section 3(b) below. 
 (b) Adjusted Purchase Price. The aggregate Purchase Price (the “Adjusted Purchase Price”) actually payable by Buyer
shall be the sum of the amounts determined pursuant to Sections 2(a) and 2(b) above, minus a warranty liability offset in the amount of One Million Two Hundred Thousand Dollars ($1,200,000) granted Buyer for assuming certain warranty liabilities for
Fitness Products previously sold by Nautilus The $1,200,000 credit shall be

 
allocated among the Tangible Personal Property, the Raw Materials, and the Spare Parts in the same proportions as the Purchase Price is allocated to these items on Exhibit D to the Agreement.

 4. Payment of Adjusted Purchase Price. The Adjusted Purchase Price shall be paid as follows: 
 (a) Cash Payment. Buyer shall pay Three Hundred Thousand U.S. Dollars ($300,000) in cash to Nautilus at the Closing. On or
before June 10, 2010, Buyer shall pay Nautilus an additional Three Hundred Thousand Dollars ($300,000) in cash. These payments shall be allocated to the portion of the Adjusted Purchase Price allocated to the Tangible Personal Property. The
balance of the Adjusted Purchase Price allocated to the Tangible Personal Property shall be added to the principal balance of the Note (as defined below). 
 (b) Secured Promissory Note. The balance of the Adjusted Purchase Price shall be paid as provided below in this Section 4(b). 
 (i) Finished Goods. Buyer shall pay for the Finished Goods included in the Inventory as provided in Section 2.8 of the
Agreement. 
 (ii) Raw Materials and Spare Parts. Buyer shall pay the unpaid portion of the Adjusted Purchase
Price allocated to the Tangible Personal Property and the portion of the Adjusted Inventory Purchase Price allocable to Raw Materials and Spare Parts pursuant to the provisions of a certain Secured Promissory Note (the “Note”). The
principal amount of the Note shall be equal to the sum of such amounts. The Note shall be substantially in the form attached hereto as Attachment A-2. The Note will be secured by a security interest created pursuant to a certain Security Agreement,
which shall be substantially in the form attached hereto as Attachment A-3. The Note shall not bear interest, except as provided therein. The principal balance of the Note shall be payable in eighteen (18) equal monthly installments of
principal, beginning on June 10, 2010. 

 ATTACHMENT A-1 
 THIS NOTE (THE “NOTE”) HAS BEEN ACQUIRED FOR INVESTMENT PURPOSES ONLY AND HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE “SECURITIES ACT”), OR UNDER ANY APPLICABLE STATE SECURITIES LAWS. THIS NOTE MAY NOT BE SOLD OR OTHERWISE TRANSFERRED OR PLEDGED, EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR SUCH
APPLICABLE STATE SECURITIES LAWS OR PURSUANT TO EXEMPTIONS THEREFROM. 
 THIS NOTE IS SUBJECT TO THE TERMS AND CONDITIONS
OF THE SECURITY AGREEMENT BY AND BETWEEN MED-FIT SYSTEMS, INC. AND NAUTILUS, INC., DATED AS OF FEBRUARY 19, 2010, AS AMENDED FROM TIME TO TIME, AND IS ENTITLED TO THE BENEFITS THEREOF. 
 MED-FIT SYSTEMS, INC. 
 SECURED PROMISSORY
NOTE 
  

			
		  	Vancouver, Washington
	$2,234,825.00	  	February 19, 2010

 FOR
VALUE RECEIVED, the undersigned, Med-Fit Systems, Inc., a California corporation (together with successor thereto by way of merger, consolidation, sale or otherwise, the “Debtor”), hereby promises to pay to the order of
Nautilus, Inc., a Washington corporation, or its successors or assigns (the “Holder”), the principal sum of Two Million Two Hundred Thirty Four Thousand Eight Hundred and Twenty Five U.S. Dollars ($2,234,825.00) (the
“Principal”) in lawful money of the United States of America, together with interest on the unpaid principal balance from time to time outstanding hereunder, on the terms and conditions as follows: 
 Section 1. Purchase Agreement. 
 This Note is being issued pursuant to the Asset Purchase Agreement dated as of February 18, 2010 (the “Purchase Agreement”) by and between the Debtor and the Holder. Capitalized
terms used and not otherwise defined herein have the meanings ascribed thereto in the Purchase Agreement. 
 Section 2.
Interest. 
 No interest shall be due if payments are timely made pursuant to Section 3 hereof and the Debtor
fulfills all of its obligations under this Note, the Security Agreement (as defined below), and the Purchase Agreement. PROVIDED, that if Debtor makes more than three (3) payments that are more than ten (10) days after the due date set
forth in Section 3 below, then, subject to Section 13 hereof, interest on the unpaid balance of the principal amount of this Note shall accrue at the rate of six percent (6%) per annum (computed on the basis of a 360-day
year and the actual number of days elapsed) (the “Interest Rate”) from the date on which the first of such three late payments was due until the date of payment. IT IS PROVIDED FURTHER, that, in the event that Nautilus subordinates
the security interest securing this

  

 ATTACHMENT A-1 

 
Note in accordance with Section 2.3 of the Purchase Agreement, interest on the unpaid balance of the principal amount of this Note shall accrue at the Interest Rate from the date of
such subordination. IT IS PROVIDED FURTHER, that, subject to Section 13 hereof, interest on the unpaid balance of the principal amount of the Note shall accrue at the rate of eighteen percent (18%) per annum (computed on the basis
of a 360-day year and the actual number of days elapsed) (the “Penalty Rate”) from the date such payment was due until repayment if any payment is made more than thirty (30) days beyond the due date set forth in
Section 3 hereof. Holder shall give Debtor ten (10) days notice and the opportunity to cure before implementing the Penalty Rate. 
 Section 3. Payment. 
 Payment of Principal and, if
applicable under Section 2 hereof, any interest owing under the Interest Rate or Penalty Rate, shall be made in eighteen (18) equal monthly installments, due the 10th day of each month, in the amount of One Hundred Twenty Four Thousand One Hundred Fifty Six and 94/100 U.S. Dollars
($124,156.94) per payment, plus any applicable interest. The first installment shall be due on June 10, 2010. This Note may be prepaid, in whole or in part, at any time prior to the Maturity Date at the election of the Debtor. Any partial
payments of indebtedness represented by this Note shall be applied first to interest accrued to the date of prepayment, then to the payment of any other amounts (except Principal) at the time unpaid hereunder, and finally to the payment of
Principal. Payments and prepayments of Principal and applicable interest on this Note shall be payable by wire transfer of immediately available funds to the account of the Holder or by certified or official bank check payable to the Holder mailed
to the Holder at the address of the Holder as set forth on the records of the Debtor or such other address as shall be designated in writing by the Holder to the Debtor. 
 Section 4. Security Agreement. 
 This Note is subject to the terms and
conditions of that certain Security Agreement dated as of the date hereof, by and between the Holder and the Debtor (the “Security Agreement”), and each holder of this Note, by his, her or its acceptance hereof, is entitled to the
rights and benefits of, and agrees to be bound by, the Security Agreement. 
 Section 5. Defenses. 
 The obligations of the Debtor under this Note shall not be subject to reduction, limitation, impairment, termination, defense, set-off,
counterclaim or recoupment for any reason. 
 Section 6. Events of Default. 
 The occurrence of any of the following events shall be deemed to constitute an “Event of Default” hereunder: 
 (i) any material breach of the Security Agreement by the Debtor which is not cured within ten (10) business days after
notice of default from Holder; provided however, that Debtor’s breach of the covenant contained in Section 5(c) of the Security Agreement regarding the unauthorized removal of Collateral shall be deemed to be an incurable default;

 (ii) any payment under Section 3 becoming more than sixty (60) days overdue; 
 (iii) any sale, exchange, conveyance or other disposition of the capital stock of the Debtor in which more than fifty percent
(50%) of the voting power of the Debtor shifts to

  

 ATTACHMENT A-1 

 
persons or entities who are not stockholders (or affiliates thereof) immediately prior to the first of such transactions (a “Change of Control”), or any merger, consolidation,
reorganization or similar transaction that results in a Change of Control of the Debtor, or a sale of all or substantially of the assets of the Debtor; 
 (iv) any representation or warranty made by the Debtor in the Purchase Agreement or any document related to the underlying transaction shall prove to have been incorrect in any material respect when made;

 (v) the failure of the Debtor to perform any covenant or agreement in any material respect set forth in the
Purchase Agreement or any document related to the underlying transaction; 
 (vi) the entry of a judgment, order
or decree against the Debtor with respect to, any encumbrance against, the making of any levy, seizure or attachment of, or the occurrence of any action that results in the forfeiture of, a material portion of the Collateral (as defined in the
Security Agreement); and 
 (vii) any Liquidation Event. 
 As used herein, “Liquidation Event” means the occurrence or institution by or against the Debtor of (A) any
bankruptcy, reorganization, receivership or insolvency proceeding, (B) any appointment of a receiver or custodian for all or a substantial portion of the Debtor’s property, (C) any assignment for the benefit of, or composition or
arrangement with, the creditors of the Debtor (whether or not pursuant to bankruptcy or other insolvency laws), (D) any dissolution, liquidation, or other marshalling of the assets and liabilities of the Debtor, (E) the merger or
consolidation of the Debtor with or into another entity or (F) the sale of all or substantially all of the Debtor’s assets in a single or series of related transactions. 
 Section 7. The Holder’s Rights on Default. 
 Upon the occurrence and during the continuation of any Event of Default, the Holder may: (i) declare the entire unpaid principal of this Note and any accrued interest thereon due and payable
immediately and (ii) take any and all other actions available to a secured creditor under the Washington Uniform Commercial Code (or any other applicable state Uniform Commercial Code) and all other rights available at law or in equity,
including, without limitation, those set forth in the Security Agreement, to collect and otherwise enforce this Note. If there shall occur any Liquidation Event, the entire unpaid principal and accrued but unpaid interest on this Note shall
automatically become due and payable, without any requirement by the Holder to give notice, present this Note, make demand, protest or give other notice of any kind of character, all of which are hereby expressly waived, anything herein to the
contrary notwithstanding. 
 Section 8. Exchange or Replacement of Notes. 
 (a) The Holder may, at its option, in person or by duly authorized attorney, surrender this Note for exchange, at the principal business
office of the Debtor, and receive in exchange therefor, a new Note in the same principal amount as the unpaid principal amount of this Note and subject to interest under the same terms as this Note, each such new Note to be dated as of the date of
this Note and to be in such principal amount as remains unpaid and payable to such person or persons, or order, as the Holder may designate in writing. 
  

 ATTACHMENT A-1 

 (b) Upon receipt by the Debtor of evidence satisfactory to it of the loss, theft,
destruction, or mutilation of this Note, and (in case of loss, theft or destruction) of an indemnity reasonably satisfactory to it, and upon surrender and cancellation of this Note, if mutilated, the Debtor will deliver a new Note of like tenor in
lieu of this Note. Any Note delivered in accordance with the provisions of this Section 7 shall be dated as of the date of this Note. 
 Section 9. Attorneys’ and Collection Fees. 
 Should the
indebtedness evidenced by this Note or any part hereof be collected at law or in equity or in bankruptcy, receivership or other court proceedings, or this Note be placed in the hands of attorneys for collection, the Debtor agrees to pay, in addition
to Principal and any interest due and payable hereon, all costs of collection, including reasonable attorneys’ fees and expenses, incurred by the Holder in collecting or enforcing this Note, together with interest on such amounts following an
Event of Default unless prohibited by law. 
 Section 10. Waivers. 
 The Debtor hereby waives presentment, demand for payment, notice of dishonor, notice of protest and all other notices or demands in
connection with the delivery, acceptance, performance or default of this Note. No delay by the Holder in exercising any power or right hereunder shall operate as a waiver of any power or right, nor shall any single or partial exercise of any power
or right preclude other or further exercise thereof, or the exercise of any other power or right hereunder or otherwise; and no waiver whatsoever or modification of the terms hereof shall be valid unless set forth in writing by the Holder and then
only to the extent set forth therein. 
 Section 11. Amendments and Waivers. 
 No provision of this Note may be amended or waived except under the amendment and waiver conditions specified in the Purchase Agreement.

 Section 12. Governing Law. 
 This Note (including any claim or controversy arising out of or relating to this Note) shall be governed by and construed in accordance with the laws of the State of Washington, without regard to conflict
of law principles that would result in the application of any law other than the laws of the State of Washington. 
 Section 13. Usury. 
 All agreements between the Debtor and the Holder are hereby expressly limited so that
in no contingency or event whatsoever, whether by reason of acceleration of the maturity of this Note or otherwise, shall the amount paid or agreed to be paid to the Holder for the use or forbearance of the indebtedness represented by this Note
exceed the maximum amount permissible under applicable law. In this regard, it is expressly agreed that it is the intent of the Debtor and the Holder, in the execution, delivery and acceptance of this Note, to contract in strict compliance with the
laws of the State of Washington. If, under any circumstances whatsoever, performance or fulfillment of any provision of this Note, the Security Agreement or the Purchase Agreement at the time such provision is to be performed or fulfilled shall
involve exceeding the limit of validity prescribed by applicable law, then the obligation to be so performed or fulfilled shall be reduced automatically to the limits of such validity. 
  

 ATTACHMENT A-1 

 Section 14. Notices. 
 The terms and provisions of Section 10.7 of the Purchase Agreement are expressly incorporated into this Note. 
 (Signature on following page) 
  

 ATTACHMENT A-1 

 IN WITNESS WHEREOF, the Debtor has duly executed and delivered this Note as a
document under seal as of the date first written above. 
  

					
		 	MED-FIT SYSTEMS, INC.
		
		 	FOR EXHIBIT PURPOSES ONLY,
		 	NO SIGNATURE REQUIRED
	By:	 	  

		 	Name:	 	  

		 	Title:	 	  

  

 ATTACHMENT A-1 

 Execution Original 
 ATTACHMENT A-2 
 THIS SECURITY AGREEMENT, dated as of February 19, 2010 (this “Agreement”), is by and between MED-FIT SYSTEMS, INC., a California corporation (the “Debtor”), and
NAUTILUS, INC., a Washington corporation (the “Secured Party”). 
 W I T N E S S E T H: 
 WHEREAS, on or about the date hereof, the Debtor and the Secured Party have entered into an Asset Purchase Agreement (the “Purchase
Agreement”), pursuant to which the Debtor has agreed to execute a note and a security agreement; 
 WHEREAS, on or
about the date hereof, the Debtor has issued to the Secured Party a Secured Promissory Note in the amount of $2,234,825 (as the same may be amended or restated from time to time, the “Note”); and 
 WHEREAS, the Secured Party’s receipt of the Note was subject to the condition, among others, that the Debtor shall execute and deliver
this Agreement and grant the security interest hereinafter described. 
 NOW THEREFORE, in consideration of the willingness of
the Secured Party, subject to the terms and conditions set forth herein, to accept the Note, and for other good and valuable consideration, receipt and sufficiency of which are hereby acknowledged, it is hereby agreed, with the intent to be legally
bound, as follows: 
 1. Defined Terms. Except as otherwise provided herein, all capitalized terms shall have the
meanings ascribed to them in the Note. 
 2. Security Interest. As security for the Secured Obligations described in
Section 3 hereof, Debtor hereby grants, assigns, and pledges to the Secured Party a security interest in and lien on all of Debtor’s right, title and interest, whether now owned or existing or hereafter acquired or arising, in and to the
following, together with any and all additions thereto and replacements therefor and proceeds and products thereof (hereinafter referred to collectively as the “Collateral”): 
 (a) all raw materials, work in progress, and aftermarket parts inventory located at the factory and warehouse located at 709 Powerhouse
Road, Independence, VA 24348 (the “Warehouse”) that was acquired by Debtor pursuant to the Purchase Agreement; it being agreed that inventory acquired by Debtor after the Closing (as defined in the Purchase Agreement) shall not be
included in the Collateral; 
 (b) all equipment located at the Warehouse; 
 (c) all books and records pertaining to any of the Collateral; and 
  

 ATTACHMENT A-2 

 (d) all accessions to, substitutions for and replacements, Proceeds, Supporting Obligations
and products of any of the foregoing and, to the extent not otherwise included, all payments under insurance, or any indemnity, warranty or guaranty payable by reason of loss or damage or otherwise in respect of any of the foregoing. 
 Unless otherwise defined herein, terms defined in Articles 8 and 9 of the Uniform Commercial Code as enacted and in effect from time to time
in the State of Washington (the “UCC”) are used in this Agreement as such terms are defined in such Article 8 or 9 (including without limitation, Documents, Instruments, Proceeds and Supporting Obligations). 
 3. Secured Obligations. The security interest hereby granted shall secure the due and punctual payment and performance of the
following liabilities and obligations of the Debtor (herein called the “Secured Obligations”): 
 (a) Principal
of and interest on the Note (including, without limitation, any interest accruing after the commencement of any proceeding under the federal bankruptcy laws, as now or hereafter constituted, or any other applicable domestic or foreign federal or
state bankruptcy, insolvency or similar law, whether or not any such interest is allowed or allowable as an enforceable claim in any such proceeding); and 
 (b) Any and all other obligations and indebtedness of the Debtor to the Secured Party under the Note or this Security Agreement or under any other note, instrument or agreement executed and delivered by
the Debtor in connection therewith, all as amended from time to time, whether such obligations and indebtedness be direct or indirect, absolute or contingent, due or to become due or now existing or hereafter arising. 
 4. Perfection Certificate. The Debtor has delivered to the Secured Party a Perfection Certificate in the form appended hereto as
Schedule I. The Debtor represents that the completed Perfection Certificate delivered to the Secured Party is true, complete and correct in all material respects and the facts contained in such certificate are accurate in all material
respects. The Debtor shall promptly supplement the Perfection Certificate to reflect any information hereafter obtained by the Debtor that would require a correction or addition to the Perfection Certificate. 
 5. Special Warranties and Covenants of the Debtor. The Debtor hereby warrants and covenants to the Secured Party that: 
 (a) Schedule I attached hereto accurately sets forth the following information: (i) the exact legal name of the Debtor;
(ii) the type of organization of the Debtor; (iii) the jurisdiction of organization of the Debtor; and (iv) as of the date hereof, the chief executive office of the Debtor. The Debtor will not change (x) its type of organization,
jurisdiction of organization or other legal structure, without first obtaining any necessary consents or approvals under the Note or any agreement among the Debtor and any of its shareholders and providing the Secured Party with at least thirty
(30) days’ prior written notice of such change or (y) its chief executive office from the location set forth in the respective Schedule I, or make any change in the Debtor’s name or mailing address, without first providing
the Secured Party with at least thirty (30) days’ prior written notice of such change. 
  

 2 

 (b) Debtor is the owner of its Collateral free from any lien, security interest or
encumbrance, except as described herein and in the Purchase Agreement, and the Debtor will defend its Collateral against all claims and demands of all persons at any time claiming the same or any interest therein. 
 (c) Except as otherwise consented to in writing by the Secured Party, the Debtor shall not remove Collateral from the Warehouse unless such
removal is for the purposes of delivering finished inventory to third party customers or fulfilling Debtor’s orders in the ordinary course of business, nor will the Debtor create, incur or permit to exist any mortgage, lien, charge, encumbrance
or security interest whatsoever with respect to any Collateral; provided, that Debtor may grant a security interest in the Collateral to a senior working capital line of credit lender that provides financing to Debtor for the conduct of the
Business (as defined in the Purchase Agreement). In the event that Debtor grants such a security interest, Secured Party agrees to subordinate its lien on the Collateral to the lien securing the lender that extends the senior working capital line of
credit on customary and commercially reasonable terms and conditions. 
 (d) The Debtor keeps and maintains all property
material to the conduct of its business in good working order and condition, ordinary wear and tear excepted, and maintains insurance, with financially sound and reputable insurance companies, as may be required by law and such other insurance in
such amounts and against such risks as are customarily maintained by companies engaged in the same or similar businesses operating in the same or similar locations. Furthermore, (i) all general liability and other liability policies with
respect to the Debtor shall name the Secured Party as an additional insured thereunder as its interests may appear, and all casualty insurance policies of the Debtor shall contain a loss payable clause or endorsement, satisfactory in form and
substance to the Secured Party that names the Secured Party as the loss payee thereunder, (ii) all policies of insurance shall provide for at least thirty (30) days prior written notice to the Secured Party of any modifications or
cancellation of such policy and (iii) following the occurrence and during the continuance of an Event of Default, the Secured Party may at its option discharge any taxes, liens, security interests or other encumbrances to which any Collateral
is at any time subject, and the Debtor agrees to reimburse the Secured Party on demand for any payments or expenses incurred by the Secured Party or the other Secured Party pursuant to the foregoing authorization and any unreimbursed amounts shall
constitute Secured Obligations for all purposes hereof. 
 (e) No consent of any third party is required for any transfer by the
Debtor to the Secured Party, or from the Secured Party to any third party, of any Collateral following an Event of Default. 
 (f) The Debtor will promptly execute and deliver to the Secured Party such financing statements, certificates and other documents or instruments as may be reasonably necessary to enable the Secured Party to perfect or from time to time
renew the security interest granted hereby, including, without limitation, such financing statements, certificates and other documents as may be reasonably necessary to perfect a security interest in any additional Collateral hereafter acquired by
the Debtor or in any replacements or proceeds thereof. The

  

 3 

 
Debtor authorizes and appoints the Secured Party, in case of need, to execute such financing statements, certificates and other documents pertaining to the Secured Party’s security interest
in the Collateral in its stead if the Debtor fails to so execute such documents after the Secured Party’s request, with full power of substitution, as the Debtor’s attorney in fact. 
 (g) The Debtor agrees that the Secured Party may, at any time and from time to time, file in any jurisdiction financing statements and
amendments thereto that contain any information required by Article 9 of the UCC (including Part 5 thereof) for the sufficiency or filing office acceptance of any financing statement or amendment, including whether the Debtor is an organization, the
type of organization and any organization identification number issued to the Debtor. The Debtor agrees to furnish any such information to the Secured Party promptly upon request. 
 (h) The Debtor agrees that it will join with the Secured Party in executing and, at its own expense, will file and refile, or permit the
Secured Party to file and refile such financing statements, continuation statements and other documents in such offices as the Secured Party may reasonably deem necessary or appropriate in order to perfect and preserve the rights and interests
granted to the Secured Party hereunder. 
 (i) The records concerning all Collateral of the Debtor are and will be kept (and all
billing and collection activities conducted by each the Debtor will at all times take place) at the address shown in Schedule I as the chief executive office of the Debtor or as otherwise set forth in the Perfection Certificate, and shall be
available for inspection by the Secured Party at any time during normal business hours with ten (10) days notice. 
 (j) If
any Collateral of the Debtor is at any time in the possession of a bailee, the Debtor shall promptly notify the Secured Party and, if requested by the Secured Party, the Debtor shall obtain an acknowledgment, in form and substance reasonably
satisfactory to Secured Party, of any bailee having possession of any of the Collateral that such bailee holds such Collateral for the Secured Party and that such bailee shall act upon the instructions of the Secured Party, without further consent
of the Debtor. 
 (k) The Debtor will furnish to the Secured Party such accurate statements and amended schedules further
identifying and describing the Collateral and such other materials evidencing or reports pertaining to the Collateral, including, without limitation to the generality of the foregoing, accurate records of all Collateral not sold, as the Secured
Party may from time to time reasonably request, all in reasonable detail. 
 (l) The Debtor shall afford the Secured Party
access to the Collateral for the purpose of inspecting the Collateral and verifying the accuracy of the Debtor’s records at any time during normal business hours with ten (10) days notice. 
  

 4 

 (m) The Debtor shall at any time and from time to time execute and deliver, or cause to be
executed and delivered, such other agreements, instruments, certificates and documents and take, or cause to be taken, such other actions as the Secured Party may request to insure the continued protection, perfection and priority of the Secured
Party’s security interest in any of the Collateral. 
 6. Events of Default. The occurrence of any Event of Default
under and as defined in the Note shall be deemed to constitute an “Event of Default” hereunder. 
 7. Rights
and Remedies of Secured Party. Upon the occurrence and during the continuance of any Event of Default, the Secured Party shall have the following rights and remedies: 
 (a) All rights and remedies provided by law, including, without limitation, those provided by the UCC; 
 (b) All rights and remedies provided in this Agreement; and 
 (c) All rights and
remedies provided in the Note or any other agreement, document or instrument pertaining to the Secured Obligations. 
 8.
Right of Secured Party to Dispose of Collateral, etc. Upon the occurrence and during the continuance of any Event of Default, but subject to the provisions of the UCC or other applicable law, the Secured Party shall have the right to take
possession of the Collateral and, in addition thereto, the right to enter upon any premises on which the Collateral or any part thereof may be situated and remove the same therefrom in a commercially reasonable manner. The Secured Party may require
the Debtor to make the Collateral (to the extent the same is moveable) available to the Secured Party at a place to be designated by the Secured Party that is reasonably convenient to both parties or transfer any information related to the
Collateral to the Secured Party by electronic medium. Unless the Collateral is perishable, subject to a rapid decline in value or is of a type customarily sold on a recognized market, the Secured Party will give the Debtor at least ten
(10) days’ prior written notice in accordance with Section 14 hereof of the time and place of any public sale thereof or of the time after which any private sale or any other intended disposition thereof is to be made. Any such notice
shall be deemed to meet any requirement hereunder or under any applicable law (including the UCC) that reasonable notification be given of the time and place of such sale or other disposition. The Secured Party may comply with any applicable state
or federal law requirements in connection with a disposition of the Collateral and compliance will not be considered adversely to affect the commercial reasonableness of any sale of the Collateral. 
 9. Proceeds of Collateral. After deducting all reasonable costs and expenses of collection, storage, custody, sale or other
disposition and delivery (including legal costs and reasonable attorneys’ fees) and all reasonable other charges against the Collateral, the residue of the proceeds of any such sale or disposition shall be applied to the payment of the Secured
Obligations by the Secured Party in accordance with the terms of the Note and any surplus shall be returned to the Debtor or to any person or party lawfully entitled thereto (including, if

  

 5 

 
applicable, any subordinated creditors of the Debtor). In the event the proceeds of any sale, lease or other disposition of the Collateral hereunder are insufficient to pay all of the Secured
Obligations in full, the Debtor will be liable for the deficiency, together with interest thereon at the maximum rate provided in the Note, and the reasonable cost and expenses of collection of such deficiency, including (to the extent permitted by
law), without limitation, reasonable attorneys’ fees, expenses and disbursements. 
 10. Waivers, etc. The Debtor
hereby waives presentment, demand, notice, protest and, except as is otherwise provided herein or in the Note, all other demands and notices in connection with this Agreement or the enforcement of the Secured Party’s rights hereunder or in
connection with any Secured Obligations or any Collateral; consents to and waives notice of the granting of renewals, extensions of time for payment or other indulgences to the Debtor or to any account debtor in respect of any account receivable or
to any other third party, or substitution, release or surrender of any Collateral, the addition or release of persons primarily or secondarily liable on any Secured Obligation or on any account receivable or other Collateral, the acceptance of
partial payments on any Secured Obligation or on any account receivable or other Collateral and/or the settlement or compromise thereof. No delay or omission on the part of the Secured Party or the Secured Party in exercising any right hereunder
shall operate as a waiver of such right or of any other right hereunder. Any waiver of any such right on any one occasion shall not be construed as a bar to or waiver of any such right on any future occasion. The Debtor’s waivers under this
section have been made voluntarily, intelligently and knowingly and after the Debtor has been apprised and counseled by its attorneys as to the nature thereof and its possible alternative rights. 
 11. Termination; Assignment, etc. When all obligations of the Debtor owing to the Secured Party under the Note have been paid or
performed in full, this Agreement and the security interest in the Collateral created hereby shall automatically terminate without any further action by the Debtor or Secured Party. In such event, the Secured Party agrees to execute appropriate
releases of liens on the Collateral upon the request of the Debtor and at the Debtor’s expense, and to authorize the Debtor to file terminations of the liens and security interests granted hereby. No waiver by the Secured Party or by any other
holder of Secured Obligations of any default shall be effective unless in writing, nor operate as a waiver of any other default or of the same default on a future occasion. In the event of a sale or assignment of part or all of the Secured
Obligations by the Secured Party, the Secured Party may assign or transfer its respective rights and interest under this Agreement in whole or in part to the purchaser or purchasers of such Secured Obligations, whereupon such purchaser or purchasers
shall become vested with all of the powers, rights and obligations of the Secured Party hereunder. 
 12. Reinstatement.
Notwithstanding the provisions of Section 11 hereof, this Agreement shall continue to be effective or be reinstated, as the case may be, if at any time any amount received by the Secured Party in respect of the Secured Obligations is rescinded
or must otherwise be restored or returned by any Secured Party upon the insolvency, bankruptcy, dissolution, liquidation or reorganization of the Debtor or upon the appointment of any intervener or conservator of, or trustee or similar official for
the Debtor or any substantial part of any of its properties, or otherwise, all as though such payments had not been made. 
  

 6 

 13. Governmental Approval. Prior to or, where permitted, upon the exercise by the
Secured Party of any power, right, privilege or remedy pursuant to this Agreement that requires any consent, approval, registration, qualification or authorization of any governmental authority or instrumentality, the Debtor will execute and
deliver, or will cause the execution and delivery of, all applications, certificates, instruments and other documents and papers that the Debtor may be required to obtain for such governmental consent, approval, registration, qualification or
authorization. 
 14. Notices. The terms and provisions of Section 10.7 of the Purchase Agreement are expressly
incorporated into this Agreement. 
 15. Miscellaneous. This Agreement shall inure to the benefit of and be binding upon
the Secured Party and the Debtor and their respective successors and assigns. In case any provision in this Agreement shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any
way be affected or impaired thereby. This Agreement may be executed in any number of counterparts and by the different parties hereto on separate counterparts, each of which shall be an original, but all of which together shall constitute one
instrument. 
 16. Governing Law; Jurisdiction; Waiver of Jury Trial. This Agreement (including any claim or controversy
arising out of or relating to this Agreement) shall be governed by and construed in accordance with the laws of the State of Washington, without regard to conflict of law principles that would result in the application of any law other than the laws
of the State of Washington. Each party, to the extent that it may lawfully do so, hereby consents to service of process, and to be sued, in any state or federal court located in the State of Washington, as well as to the jurisdiction of all courts
to which an appeal may be taken from such courts, for the purpose of any suit, action or other proceeding arising out of any of its obligations hereunder or with respect to the transactions contemplated hereby, and expressly waives any and all
objections it may have as to venue in any such courts. Each party further agrees that a summons and complaint commencing an action or proceeding in any of such courts shall be properly served and shall confer personal jurisdiction if served
personally or by certified mail to it in accordance with Section 14 hereof or as otherwise provided under the laws of Washington. Nothing in this Agreement shall affect any right any party may otherwise have to bring an action or proceeding
relating to this Agreement against any other party or its properties in the courts of any jurisdiction. EACH PARTY IRREVOCABLY WAIVES ALL RIGHT TO A TRIAL BY JURY IN ANY SUIT, ACTION OR OTHER PROCEEDING INSTITUTED BY OR AGAINST SUCH PARTY IN RESPECT
OF ITS OBLIGATIONS HEREUNDER OR THE TRANSACTIONS CONTEMPLATED HEREBY. 
 [The remainder of this page is intentionally left
blank.] 
  

 7 

 IN WITNESS WHEREOF, the parties have executed this Security Agreement as a sealed instrument
as of the date first above written. 
  

					
		 	DEBTOR:
		
		 	MED-FIT SYSTEMS, INC.
		
		 	FOR EXHIBIT PURPOSES ONLY,
		 	NO SIGNATURE REQUIRED
	By:	 	  

		 	Name:	 	  

		 	Title:	 	  

		
		 	SECURED PARTY:
		
		 	NAUTILUS, INC.
		
		 	FOR EXHIBIT PURPOSES ONLY,
		 	NO SIGNATURE REQUIRED
	By:	 	  

		 	Name:	 	  

		 	Title:	 	  

  

 8 

 SCHEDULE I 
 PERFECTION CERTIFICATE 
 The undersigned, Dean
Sbragia, the Chief Financial Officer of Med-Fit Systems, Inc., a California corporation (the “Company”), hereby certifies to Nautilus, Inc., as Secured Party (the “Secured Party”), as follows:

 1. Name. 
 (a) The exact legal name of the Company as that name appears in its organizational documents is as follows: 
 MED-FIT SYSTEMS, INC. 
 (b) The following is a list of all other names
(including trade names or similar appellations) used by the Company, or any other business or organization to which the Company became the successor by merger, consolidation, acquisition, change in form, nature or jurisdiction of organization or
otherwise, now or at any time during the past five years, and in the case of any such business or organization, any chief executive office or other principal place of address used thereby during such period to the extent known to the Company:

 (c) The following is the Company’s federal employer identification number: 
 (d) The following is the Company’s state-issued identification number, if any: 
 C1734037 
 2.
Current Locations. 
 (a) The following is the jurisdiction of organization of the Company: 
 State of California 
 (b) The chief executive offices of the Company are located at the following address: 
 543 E. Alvarado Street,
Fallbrook, California 92028 
 (c) The following are all other places of business of the Company: 
  

	 	(i)	In the United States of America: 

 543 E. Alvarado Street, Fallbrook, California 92028 
  

 2 

	 	(ii)	Outside the United States of America: 

 None 
 3. Unusual Transactions. All of the property and assets of the Company pledged to the Secured Party as
Collateral has been originated by the Company (or their respective predecessor entities) in the ordinary course of business or consist of goods which have been acquired by the Company (or their respective predecessor entities) in the ordinary course
from a person in the business of selling goods of that kind. 
 4. UCC Filings. The Secured Party is hereby authorized to
file a financing statement on Form UCC-1 in form and containing a description of the Collateral acceptable to the Secured Party in the UCC filing office in each jurisdiction identified in §2 hereof. 
 IN WITNESS WHEREOF, I have hereunto signed this Certificate as of this          day of February,
2010. 
  

					
		 	MED-FIT SYSTEMS, INC.
		
		 	FOR EXHIBIT PURPOSES ONLY,
		 	NO SIGNATURE REQUIRED
	By:	 	  

		 	Name:	 	  

		 	Title:	 	  

  

 3Commercial License Agreement dated as of February 18, 2010

 Exhibit 10.28 
 COMMERCIAL LICENSE AGREEMENT 
 THIS LICENSE
AGREEMENT (hereinafter “License” or “Agreement”) is by and between Med-Fit Systems, Inc. a California corporation (“Buyer”) and Nautilus, Inc., a Washington corporation (“Nautilus”) (collectively the
“Parties”). This License is an exhibit to an Asset Purchase Agreement (the “APA”) entered into on the same date between the Parties. 
 This Agreement shall be effective as of February 18, 2010 (“the Effective Date”). 
 The Parties agree as follows: 
  

	1.	Definitions and List of Schedules 

  

	 	1.1.	Unless expressly defined otherwise herein, any term defined in the Asset Purchase Agreement shall have the same meaning in this Agreement. 

  

	 	1.2.	“Accessories” shall mean products for use with Fitness Products. By way of example, but not of limitation, Accessories shall include benches for weight
training, stands for supporting weights, mats, flooring, data storage for tracking workouts, interfaces, media players, televisions, entertainment and training software, and similar. 

  

	 	1.3.	“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. 

  

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

  

	 	1.5.	 “Cardio Products” shall mean products intended to improve cardiovascular fitness, primarily through aerobic conditioning. By way of
example, but not of limitation, Cardio Products shall include treadmills, stationary cycles (upright and recumbent), elliptical machines, steppers, and all products that attach to, or physically interface with, treadmills, stationary cycles,
elliptical machines, and steppers. Cardio Products typically use motors/generators in their operation and electrical controls for controlling its operation. A multipurpose machine or combined strength/cardio product shall be deemed

  

 1 

	 	 
a Cardio Product. Any fitness product, other than accessories, that cannot clearly be categorized as a Strength Product shall be deemed a Cardio Product. Cardio Products shall not include
TREADCLIMBER® Products. 

  

	 	1.6.	“Cardio Products Licenses” shall mean the licenses listed in § 2 that license use of Nautilus Marks, Commercial Marks, Nautilus Patents,
Commercial Patents or Other Commercial IP on Cardio Products. 

  

	 	1.7.	“Commercial Branded” shall mean goods bearing or displaying a Commercial Mark. 

  

	 	1.8.	“Commercial Channel” shall mean bona fide sales of Fitness Products and Accessories to institutional, commercial, and professional entities that are
not Affiliates of Buyer and that provide access to the products to multiple users (i.e., the products are available for use by club members, employees, contractors, etc.). Commercial Channel entities include fitness centers, gyms, health clubs,
studios, hotels, resorts, schools, military, commercial fitness, medical and senior/long term care dealers and facilities, and corporate employee centers that provide the fitness equipment for use by numerous persons. The Commercial Channel includes
Specialty Fitness Retailers, as defined below. The Commercial Channel does not include and explicitly excludes all other sales or distributions of Fitness Products, including but not limited to sales and other distributions to: (a) end users
(non-commercial users, typically home use) and resellers, such as retailers and online and direct resellers; and/or (b) 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). The Commercial Channel is further defined as Fitness Products sold at or above the applicable Minimum Invoice Price (for purposes of differentiating Commercial Fitness Products
from products sold in the Retail Channel and the Direct Channel). 

  

	 	1.9.	“Commercial Marks” shall mean the trademarks listed in Schedule B (comprising trademarks for Fitness Products and Accessories sold in the Commercial
Channel). The Commercial Marks and related goodwill will be assigned to Buyer at the time specified in § 2.22 provided the conditions to assignment set out in said section are met. 

  

 2 

	 	1.10.	“Commercial Patents” shall mean patents and applications listed in Schedule D that exclusively read on Fitness Products currently offered in the
Commercial Channel. Commercial Patents shall include patents and applications relating to a design and development project known to the Parties as Manhattan (“Manhattan Patents”) and all patents that relate back to a Manhattan Patent for
priority. The Commercial Patents will be assigned to Buyer at the time specified in § 2.22, provided the conditions to assignment set out in said section are met. 

  

	 	1.10.1.	Nautilus shall file a patent application directed to the inventions of the Manhattan project within 90 days of the Effective Date and revise the Schedule D when the
application receives a serial number. A place holder shall appear on Schedule D as “Manhattan Patents.” 

  

	 	1.11.	“Competitor” shall mean an entity that sells, offers to sell, or distributes Fitness Products in the Retail Channel or Direct Channel. A contract
manufacturer that manufactures on specification and sells only to a reseller is not a Competitor. On information, as of the Effective Date, the following entities are Competitors: the entities doing business as ICON Health & Fitness, Inc.,
Amer Sports (includes Precor whether or not affiliated with Amer), Johnson Fitness Co. (includes Matrix, Vision, and Horizon whether or not affiliated with Johnson), Brunswick Corporate (including Life Fitness whether or not affiliated with
Brunswick), Cybex International, Inc., and Technogym SpA and all entities own or controlled by those entities. Nautilus may designate additional entities as Competitors at the time Buyer desires to assign this Agreement, provided such additional
entities sell, offer to sell, or distribute Fitness Products in the Retail Channel or the Direct Channel. 

  

	 	1.12.	 “Confidential Information” shall mean (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; and (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

  

 3 

	 	 
confidential or proprietary. 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 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. 

  

	 	1.13.	“Direct Channel” shall mean bona fide sales of Fitness Products and Accessories directly to customers (end users) who are not in the Commercial Channel
or Retail Channel, such as to individuals who will use or gift the products, and who will not make the products available to additional users in a commercial, business, government, or group setting. 

  

	 	1.14.	“Discontinued Products” shall mean end of life products that were distributed or sold by Buyer as Fitness Products bearing a Nautilus Mark or
Commercial Mark for at least 12 months and are in inventory or WIP and are (a) discontinued with no comparable product offering planned for at least 12 months or (b) substantially modified such that an average consumer would visually see a
difference between a Discontinued Product and its modified version. 

  

	 	1.15.	“Fitness Products” shall mean Strength Products and Cardio Products and does not include products having a primary intended function of enabling users
to play sports (e.g., tennis racquets, bats, gloves, and similar) or to be used in transportation (e.g., bicycles, skateboards, and etc.). 

  

	 	1.16.	“Gross Sales” “Gross Sales” shall mean the total invoice price of all Nautilus Branded and Commercial Branded Fitness Products and
Accessories, and all related charges of any type whether separately invoiced (including, but not limited to, shipping charges, taxes, and delivery charges) and whether the referenced products are sold, leased or otherwise distributed.

  

 4 

	 	1.17.	“Licensed IP” shall mean the intellectual property rights licensed to Buyer pursuant to this Agreement, consisting of the Licensed Marks, the Licensed
Patents, and the Other Commercial IP. The scope of the Licensed IP may change over time, as provided elsewhere in this Agreement. 

  

	 	1.18.	“Licensed Marks” shall mean Nautilus Marks and the Commercial Marks collectively. 

  

	 	1.19.	“Licensed Patents” shall mean the Nautilus Patents and Commercial Patents collectively. 

  

	 	1.20.	“Marketing Collateral” shall mean all tangible materials and items, except for Fitness Products, bearing a Nautilus Mark or Commercial Mark and
distributed by Buyer primarily to induce sales or promote brand awareness. Marketing Collateral includes but is not limited to brochures, flyers, manuals, guides, clothing, novelty items, online content, etc. that bear a Licensed Mark and are
distributed to promote the brand or products. 

  

	 	1.21.	“Minimum Invoice Price” shall mean the lowest price invoiced by Buyer to a customer within the Commercial Channel for Cardio Products. Thus, for
example, the Minimum Invoice Price of a treadmill sold with a television and media player is the invoiced price of the sale minus the average invoice price for the television and media player sold separately. The Minimum Invoice Price for Cardio
Products is shown in the following table. The Minimum Invoice Price does not apply to Strength Products due to the nature of category. The Minimum Invoice Price shall change in proportion to the CPI-U as described in § 3.2. In the event this
clause is challenged by a Government agency as anti-competitive or a violation of anti-trust laws or regulations, then this clause and all references to Minimum Invoice Price shall be deemed severed from this Agreement as of the Effective Date.

  

 5 

				
	 Cardio Product
	  	Minimum Invoice Price
Calendar
Year 2010
		
	 Treadmill
	  	US$	2700
		
	 Elliptical Machine
	  	US$	2100
		
	 Upright Cycle
	  	US$	2100
		
	 Recumbent Cycle
	  	US$	1700
		
	 Other Cardio Products
	  	US$	2000

  

	 	1.22.	“Nautilus Branded” shall mean goods bearing or displaying a Nautilus Mark. 

  

	 	1.23.	“Nautilus Marks” that shall mean the NAUTILUS trademarks listed in Schedule A (comprising NAUTILUS, all compound marks that include NAUTILUS, the cam
logo, NAUTILUS ONE, NAUTILUS NITRO and common law marks that include NAUTILUS). As set forth below, Nautilus Marks shall be licensed to Buyer and Nautilus shall retain ownerships and all other rights pertaining thereto. 

  

	 	1.24.	“Nautilus Patents” shall mean patents and applications owned by Nautilus and relating to Fitness Products and Accessories in the Commercial Channel and
listed in Schedule C. Nautilus Patents does not include patents relating to TreadClimber® Products. 

  

	 	1.25.	“Net Sales” means Gross Sales less: (a) returns of Fitness Products and Accessories actually received by Buyer; (b) refunds actually paid by
Buyer to customers and cancellation of orders from Buyer by customers for Fitness Products and Accessories; (c) local, State and federal sales, VAT, and use and excise taxes required to be charged by Buyer for sales of Fitness Products 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. 

  

	 	1.26.	“Other Commercial IP” shall mean Nautilus copyrights, trade secrets, and know-how in existence prior to the Effective Date and used by Nautilus in
connection with distribution, marketing, sales, and support of Nautilus goods in the Commercial Channel and including Technical Assets. 

  

 6 

	 	1.27.	“Retail Channel” shall mean bona fide sales of Fitness Products and Accessories to a third party reseller for resale to end users. Such resellers
include resellers with a physical store and online resellers and resellers employing any means of direct marketing. The Retail Channel includes specialty fitness retailers. 

  

	 	1.28.	“Specialty Fitness 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 Fitness Retailers does not include Dick’s Sporting Goods, Cabelas, Sports Authority, or other retailers having greater than 10%
sales of non-fitness equipment. 

  

	 	1.29.	“Strength Products” shall mean products intended to condition muscles, primarily through anaerobic conditioning. By way of example, but not of
limitation, Strength Products shall include weight stations such as Nautilus One®, Nautilus Nitro®, Nitro Plus, and Studio, and free-weight stations, Freedom TrainerTM, Gravitron®, and XPLOAD stations and machines. Strength Products
do not use motors or electrical controls for their operation, but motors/electric controls may be used, for example, in selecting weights or reporting user results. 

  

	 	1.30.	“Strength Products and Accessories Licenses” shall mean the licenses specified below that license use of Nautilus Marks, Commercial Marks, Nautilus
Patents, Commercial Patents or Other Commercial IP on Strength Products and Accessories. 

  

	 	1.31.	“Successor-in-Interest” or “Successor” shall mean any third party that acquires substantially all the stock or assets of Buyer
pertaining to Buyer’s Fitness Products business. 

  

	 	1.32.	“Technical Assets” shall have the meaning as defined in the APA. 

  

	 	1.33.	“TreadClimber Products” shall mean single-user fitness machines having dual treadles or dual treadmills supported by a frame. 

 

	 	1.34.	Attached Schedules: 

 Schedule
A: Nautilus Marks 
 Schedule B: Commercial Marks 
 Schedule C: Nautilus Patents 
  

 7 

 Schedule D: Commercial Patents 
 Schedule E: Trademark Usage Guide 
 Schedule F: Quality Control Provisions 
 Schedule G: Electronic Payment
Instructions 
  

	2.	License Grants 

  

	 	2.1.	All licenses granted herein are subject to all the terms of this Agreement, including § 2.19. 

 Cardio Products Licenses 
  

	 	2.2.	Nautilus hereby grants to Buyer a non-exclusive license to use the Nautilus Marks in the Commercial Channel on Cardio Products sold at a price meeting or
exceeding the Minimum Invoice Price. 

  

	 	2.3.	Nautilus hereby grants to Buyer a non-exclusive license to use the Commercial Marks in the Commercial Channel on Cardio Products sold at a price meeting or
exceeding the Minimum Invoice Price. 

  

	 	2.4.	Nautilus hereby grants Buyer a non-exclusive license to the Nautilus Patents to make, have made, use, sell, offer to sell, and import Nautilus Branded and
Commercial Branded Cardio Products in the Commercial Channel. 

  

	 	2.5.	Nautilus hereby grants Buyer a non-exclusive license to the Commercial Patents to make, have made, use, sell, offer to sell, and import Nautilus Branded and
Commercial Branded Cardio Products in the Commercial Channel. 

  

	 	2.6.	Nautilus hereby grants to Buyer a non-exclusive license to use the Nautilus Marks and the Commercial Marks in the Commercial Channel on Marketing Collateral
associated with the commerce of Cardio Products. 

  

	 	2.7.	Nautilus hereby grants Buyer a non-exclusive license to the Other Commercial IP to use, sell, offer to sell, import, reproduce, and make derivate works relating
to Nautilus Branded and Commercial Branded Cardio Products in the Commercial Channel. 

  

	 	2.8.	For the avoidance of doubt, the licenses to the Nautilus Patents and the Commercial Patents (prior to assignment) extend to Nautilus Branded and Commercial Branded
goods only. 

  

 8 

	 	2.9.	The Cardio Products Licenses shall be worldwide, non-sublicensable (except to Affiliates of Buyer), and royalty bearing. The Cardio Products Licenses may be assigned to
a Successor-in-Interest in accordance with the terms below. 

 Strength Products and Accessories Licenses:

  

	 	2.10.	Nautilus hereby grants to Buyer a non-exclusive license to use the Nautilus Marks in the Commercial Channel on Strength Products and Accessories.

  

	 	2.11.	Nautilus hereby grants to Buyer a non-exclusive license to use the Commercial Marks in the Commercial Channel on Strength Products and Accessories.

  

	 	2.12.	Nautilus hereby grants Buyer a non-exclusive license to the Nautilus Patents to make, have made, use, sell, offer to sell, and import Nautilus Branded and
Commercial Branded Strength Products and Accessories in the Commercial Channel. 

  

	 	2.13.	Nautilus hereby grants Buyer a non-exclusive license to the Commercial Patents to make, have made, use, sell, offer to sell, and import Nautilus Branded and
Commercial Branded Strength Products in the Commercial Channel. 

  

	 	2.14.	Nautilus hereby grants to Buyer a non-exclusive license to use the Nautilus Marks and the Commercial Marks in the Commercial Channel on Marketing Collateral
associated with the commerce of Strength Products and Accessories. 

  

	 	2.15.	Nautilus hereby grants Buyer a non-exclusive license to the Other Commercial IP to use, sell, offer to sell, import, reproduce, and make derivate works relating
to Nautilus Branded and Commercial Branded Strength Products and Accessories in the Commercial Channel. 

  

	 	2.16.	For the avoidance of doubt, the licenses to the Nautilus Patents and the Commercial Patents (prior to assignment) extend to Nautilus Branded and/or Commercial Branded
goods only. 

  

	 	2.17.	The Strength Products and Accessories Licenses shall be worldwide, non-sublicensable (except to Affiliates of Buyer), and royalty bearing. The Strength Products and
Accessories Licenses may be assigned to a Successor-in-Interest in accordance with the terms below. 

  

 9 

	 	2.18.	The licenses granted herein notwithstanding, Buyer shall not use the Licensed Marks on or in connection with Cardio Products sold at a price less than the Minimum
Invoice Price, and Buyer shall not incorporate the Nautilus Patents in Cardio Products sold at a price lower than the Minimum Invoice Price or on products other than Nautilus Branded goods or Commercial Branded goods. Buyer may use the Licensed
Marks on Strength Products and Accessories sold in the Commercial Channel regardless of invoice price. 

 Covenant, Other Licenses, and Assignment 
  

	 	2.19.	Nautilus Covenants: 

  

	 	2.19.1.	Except as stated below, while this License is in effect Nautilus hereby covenants that it shall not grant a license to any third party under the Nautilus Marks or the
Commercial Marks for use in the Commercial Channel, except that Nautilus may license third parties under the Nautilus Marks for Cardio Products in the Commerial Channel after Buyer’s license to the Nautilus Marks on Cardio Products terminates.

  

	 	2.19.2.	While this License is in effect, Nautilus hereby covenants that it shall not use the Nautilus Marks, Commercial Marks, Nautilus Patents, or Commercial Patents to sell
or offer to sell Strength Products in the Commercial Channel in competition with Buyer’s products, except that Nautilus shall have no restrictions within the Specialty Fitness Retailers portion of the Commercial Channel.

  

	 	2.19.3.	Nautilus hereby covenants that it shall not use the Nautilus Marks, Commercial Marks, Nautilus Patents, or Commercial Patents to sell or offer to sell Cardio Products
in the Commercial Channel in competition with Buyer’s products during the term of Buyer’s license to use the Nautilus Marks, except that Nautilus may use the Nautilus Marks and other trademarks in the Commercial Channel on Treadclimber
Products and Nautilus may license third parties to sell or distribute in the Commercial Channel Treadclimber Products. 

  

	 	2.19.4.	Nautilus covenants that it shall not use the Commercial Marks for any purpose so long as this Agreement is in effect and Nautilus shall not use the Commercial Marks
after assignment of the Commercial Marks. 

  

 10 

	 	2.19.5.	An exception to the above Nautilus Covenants is that Nautilus may, in its sole discretion, license any third party any Nautilus owned intellectual property right,
including the Nautilus Patents, in connection with the resolution of a bona fide dispute including litigation, settlement, arbitration, or mediation. 

  

	 	2.20.	Extended Patent License to Nautilus Patents: When Buyer transitions the Cardio Products from Nautilus Branded Products to another trademark, Buyer may elect to use the
Nautilus Patents under the Extended Patent License granted below and Buyer agrees to the royalty terms of § 3.6.1 if Buyer avails itself of the Extended Patent License. 

  

	 	2.20.1.	Effective January 1, 2016 and upon election by Buyer, Nautilus hereby grants Buyer a non-exclusive license to the Nautilus Patents to make, have made, use,
sell, offer to sell, and import Cardio Products for sale in the Commercial Channel. 

  

	 	2.21.	Discontinued Products: Nautilus hereby grants to Buyer a license to use the Nautilus Marks and Commercial Marks in the Commercial Channel on Discontinued Products. This
license shall be world-wide, non-exclusive, non-sublicensable (except to Affiliates of Buyer), and non-assignable, except to a Successor-in-Interest. 

  

	 	2.22.	Assignments: Upon written notice by Buyer and total royalty payments by Buyer to Nautilus of US$2.0 Million or January 1, 2012, whichever occurs later, NAUTILUS
shall: 

 (i) Assign to Buyer the Commercial Patents listed in Schedule D; and 
 (ii) Assign to Buyer the Commercial Marks listed in Schedule B and associated goodwill. 
  

	 	2.22.1.	After assignment of the Commercial Patents and Commercial Trademarks to Buyer, Buyer shall have full title to the Commercial Patents and Commercial Trademarks and the
licenses pertaining to Commercial Patents and Commercial Trademarks shall expire. 

  

	 	2.22.2.	The assignment to Buyer shall include a license grant of sufficient scope by Buyer to Nautilus of all the patent rights, to enable Nautilus to fully exploit the
assigned patent rights for all Nautilus activities in the Retail Channel and Direct Channel. The license grant by Buyer to Nautilus of the Manhattan Patents shall be exclusive to Nautilus in the Retail and Direct Channels. 

 

 11 

	 	2.23.	Covenant Not To Sue: While this License is in effect Nautilus hereby covenants not to sue Buyer for infringement of any Nautilus owned or licensed intellectual property
rights not licensed herein for Buyer’s manufacture, distribution, sale, offer to sell, use in commerce, importation, display, reproduction, or derivative works of Fitness Products, Accessories, and Marketing Collateral in the Commercial Channel
only. 

  

	 	2.23.1.	“Fitness Products,” and by extension this Covenant, do not include the TreadClimber Products or intellectual property rights thereto. 

  

	 	2.23.2.	This Covenant is personal to Buyer and is not transferable or assignable without the express written permission of Nautilus. This Covenant shall be null and void and
shall have no effect in the event that Buyer is or becomes a competitor of Nautilus in the Retail or Direct Channels. 

  

	 	2.24.	For the avoidance of doubt, the Parties agree that all inventions, works, trade secrets, and know-how created by Buyer after the Effective Date shall be the property of
Buyer and Nautilus shall have rights therein only as expressly stated in this Agreement; further, Buyer shall own its rights in derivative works and inventions it creates after the Effective Date even if the underlying work or invention is Licensed
IP. 

  

	 	2.25.	Nautilus hereby assigns to Buyer, in connection with this sale of the commercial business, all of Nautilus’ rights and interest in the License Agreement dated 1
Oct. 2002 between Quinton, Inc. and Nautilus, Inc. and Buyer agrees to assume all rights and obligations of the License Agreement and Buyer shall indemnify Nautilus for all actions of Buyer in connection therewith. 

  

	3.	Royalty 

  

	 	3.1.	For the Licenses granted herein, Buyer shall pay to Nautilus a running royalty according to the following schedule. Royalty calculations are made on a calendar year
basis. Royalty payments shall be quarterly. Each quarterly payment shall be the higher of the Minimum Royalty specified for the period or the running royalty calculated as a percent of Net Sales for the quarter. Buyer shall submit a report with each
royalty payment as specified below. 

  

 12 

	 	3.2.	The Minimum Royalty and Minimum Invoice Price shall change annually based on the annual U.S. CPI-U index. The Minimum Royalty and Minimum Invoice Price shall change in
direct proportion to the percent change in the CPI index between the current year and the previous year, provided however that the amount of any change in the Minimum Royalty and the Minimum Invoice Price shall not exceed 4.0% per annum. The
following example illustrates the computation of percent change: 

  

			
	 CPI for current year
	  	136.0
	 Less CPI for previous year
	  	129.9
	 Equals index point change
	  	6.1
	 Divided by previous year CPI
	  	129.9
	 Equals
	  	0.047
	 Result multiplied by 100
	  	0.047 x 100
	 Equals percent change
	  	4.7

 Thus, for example, if
the previous year Minimum Royalty was $300K per year and the CPI-U is as shown above, then the Minimum Royalty for the current year shall increase by 4.0% (because the actual change in the CPI is greater than the maximum percent change of 4%) or
$12,000 to $312K per year (payable as $78,000 per quarter). For the avoidance of doubt, the Minimum Royalty is paid only when the actual percent royalty on Net Sales for a quarter is less than the Minimum Royalty for the same quarter. 
 The Minimum Royalty stated throughout this Agreement is for calendar year 2010. All Minimum Royalty amounts shall be adjusted under this
section even those that begin later such as those specific in the Renewal and Transition Terms, below. 
  

	 	3.3.	The Initial Term: CYs 2010—2013 (all products) 

  

	 	3.3.1.	Royalty shall be calculated on Net Sales of Nautilus Branded and Commercial Branded Strength Products, Accessories, and Cardio Products 

  

	 	3.3.2.	On Net Sales up to $20M, no royalty calculated, except Minimum Royalty still applicable. 

  

	 	3.3.3.	On Net Sales over $20M, Buyer shall pay Nautilus a royalty equal to 2% of those Net Sales or the Minimum Royalty, whichever is greater. 

  

 13 

	 	3.3.4.	The Minimum Royalty during Initial Term shall be $75K/qtr., adjusted per § 3.2. 

  

	 	3.3.5.	The Initial Term shall cover the calendar years 2010 to 2013, inclusive. 

  

	 	3.4.	The Strength Renewal Term (for Nautilus Branded Strength Products and Accessories only) 

  

	 	3.4.1.	Royalty shall be calculated on Net Sales of Nautilus Branded (and Commercial Branded if not assigned) Strength Products and Accessories. 

  

	 	3.4.2.	Buyer shall pay Nautilus a royalty equal to 2% of Net Sales or the Minimum Royalty, whichever is greater in CY 2014 and CY 2015 and Buyer shall pay Nautilus a royalty
equal to 5% of Net Sales or the Minimum Royalty, whichever is greater beginning CY 2016 and thereafter. 

  

	 	3.4.3.	The Minimum Royalty for the Strength Renewal Term shall be $125K/qtr., adjusted per § 3.2. 

  

	 	3.4.4.	The Strength Renewal Term shall begin 1/1/2014 and terminate upon termination of this Agreement. 

  

	 	3.5.	The Cardio Transition Term (for Cardio Products only) 

  

	 	3.5.1.	The Cardio Transition Term shall begin 1/1/2014 and terminate on 12/31/2015. 

  

	 	3.5.2.	Royalty shall be calculated on Net Sales of Nautilus Branded (and Commercial Branded if not assigned) Cardio Products. 

  

	 	3.5.3.	Buyer shall pay Nautilus a royalty equal to 2% of all Net Sales or the Minimum Royalty, whichever is greater. 

  

	 	3.5.4.	Minimum Royalty for the Cardio Renewal Term shall be $75K/qtr., adjusted per § 3.2. 

  

	 	3.6.	The Extended Patent Term (for Cardio Products Only) 

  

	 	3.6.1.	In the event Buyer avails itself of the Extended Patent Term of § 2.20, then Buyer shall pay Nautilus a royalty equal to 2% of all Net Sales of those Cardio
Products incorporating an invention of a Licensed Patent. 

  

	 	3.6.2.	There is no Minimum Royalty obligation for the Extended Patent Term license. 

  

 14 

 The following table provides examples of the royalty payments under different terms and sales events (this
table is for clarification only, the above terms govern the royalty calculation): 
  

							
	 Year
	  	 Term
	  	 Annual Net Sales
	  	 Royalty Due

				
	2010	  	Initial	  	 Strength & Access. 18M
  
 Cardio $15M
	  	 $75K/qtr
  
 (min. royalty)

				
	2011	  	Initial	  	 Strength & Access. $25M
  
 Cardio $20M
	  	 $500K/yr
  
 Payable qtr, when earned

  

	 	3.7.	Pass Through Royalty: Buyer shall reimburse Nautilus for all royalty payments made by Nautilus to any third party based on goods sold by Buyer not to exceed 7% of the
invoice price of a product. That is, where Buyer sells a good that incurs an obligation for Nautilus to pay a royalty to a non-affiliated party, then Buyer shall reimburse Nautilus for that royalty payment upon invoice and proof of payment by
Nautilus. The amount of the pass through royalties referenced in this §3.7 is included in Nautilus’s standard cost of Fitness Products disclosed to Buyer pursuant to the APA. 

  

	 	3.8.	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 written permission from Nautilus or a final court order that is not subject to appeal. 

  

	 	3.9.	Reports and Records: Buyer shall keep and preserve accurate records of all of its operations within the scope of this Agreement. With each payment by Buyer to Nautilus,
and for the Calendar Quarter for which a payment is being paid, Buyer shall provide to Nautilus a report containing sufficient information to allow Nautilus to calculate and confirm the amount of Royalty paid, including at least the Gross Sales, Net
Sales, 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 during normal business hours. 

  

 15 

	 	3.10.	Costs of Inspection and Copying: The cost of any inspection and copying of records 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 paid by Buyer. 

  

	 	3.11.	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. 

  

	 	3.12.	Currency: All amounts set forth in this Agreement are in U.S. dollars. 

  

	 	3.13.	 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 calendar year quarter end on March 31st, June 30th, September 30th, and December 31st. The quarterly royalty payments shall accompany the required reports of Section 3.9.

  

	4.	Term and Termination 

  

	 	4.1.	Term of Licenses: 

  

	 	4.1.1.	Initial Term: the Initial Term of the Licenses shall be for the four calendar years from the effective date of the License, inclusive. That is, the Initial Term
shall cover the calendar years 2010, 2011, 2012, and 2013. 

  

	 	4.1.2.	Strength Products & Accessories: At the end of the Initial Term, and beginning on January 1, 2014, the Licenses for the Strength Products and
Accessories shall automatically renew and remain in effect indefinitely unless terminated. 

  

	 	4.1.3.	Cardio Products: At the end of the Initial Term and beginning on January 1, 2014, the Licenses for the Cardio Products shall automatically renew for an
additional term of two (2) years. Buyer shall have such additional term of two (2) years to transition from selling goods under the Nautilus Marks to selling goods under a mark other than a Nautilus Mark and not confusingly similar to a
Nautilus Mark. Buyer may transition to a Commercial Mark. Accordingly, the Licenses for the Cardio Products shall terminate on Dec. 31, 2015, and Buyer may elect to accept the Extended Patent Term of §§ 2.20 and 3.6.

  

 16 

	 	4.2.	Termination For Cause: 

  

	 	4.2.1.	Nautilus may terminate the licenses granted herein upon the following events: 

  

	 	(a)	Buyer’s registration or attempt to register a trademark or domain name confusingly similar to a Nautilus owned registered or common law trademark, after written
notice to Buyer and Buyer’s failure to cure (e.g., abandon the registration) within 10 business days after receipt of notice; 

  

	 	(b)	Buyer’s failure to pay royalties after written notice to Buyer and Buyer’s failure to cure within 30 business days after receipt of notice;

  

	 	(c)	Upon a third incidence within any rolling five year period of Buyer’s late payment of royalties owing to Nautilus more than 30 days after a due date, without
notice by Nautilus; 

  

	 	(d)	Upon any lawsuit or counterclaim or administrative action by Buyer against Nautilus alleging patent infringement or challenging or contesting in any way the validity or
enforceability of any of the Licensed Patents, the patent licenses granted herein shall automatically and immediately terminate; 

  

	 	(e)	Upon any lawsuit or counterclaim or administrative action by Buyer against Nautilus alleging trademark infringement or challenging or contesting in any way the validity
or enforceability of any of the Licensed Marks, the trademark licenses granted herein shall automatically and immediately terminate; 

  

	 	(f)	Upon material breach of any term of this Agreement by Buyer after written notice to Buyer and Buyer’s failure to cure within 30 days after receipt of notice;

  

	 	(g)	Upon any improper assignment or sublicense by Buyer of the rights granted herein after written notice to Buyer and Buyer’s failure to cure within 30 business days
after receipt of notice; 

  

	 	(h)	In the event Buyer ceases to operate or ceases to conduct business in the Fitness Products for a period of six consecutive months; 

  

 17 

	 	(i)	In the event Nautilus provides proper written notice to Buyer of material breach five times within a rolling five year period, even if Buyer cures the breach within the
cure period; or 

  

	 	(j)	In the event that Buyer fails to make a timely payment as required by Section 3 of the Med-Fit Systems, Inc. Secured Promissory Note, and if such payment is not
thereafter made within an additional thirty calendar days, Nautilus may give Buyer notice of breach and Buyer’s failure to make such payment within seven business days of its receipt of the notice shall automatically terminate this License
Agreement and Buyer must immediately cease all use of the Licensed IP. 

  

	 	4.2.2.	Buyer may terminate the licenses granted herein upon the following events: 

  

	 	(a)	Upon material breach of any term of this Agreement by Nautilus, after written notice to Nautilus and Nautilus’ failure to cure within 30 days after receipt of
notice; 

  

	 	(b)	Upon any improper assignment or sublicense by Nautilus of the rights granted herein after written notice to Nautilus and Nautilus’ failure to cure within 30
business days after receipt of notice; 

  

	 	(c)	In the event Nautilus ceases to operate for six consecutive months; or 

  

	 	(d)	In the event Buyer provides proper written notice to Nautilus of material breach five times within a rolling five year period, even if Nautilus cures the breach within
the cure period. 

  

	 	4.3.	 Bankruptcy / Insolvency: The Licenses granted herein shall terminate immediately without notice to Buyer if (a) an Order for
Relief is entered under Title 11 of the United States Code against Buyer by any Bankruptcy Court possessing jurisdiction over Buyer or Buyer’s assets; (b) Buyer is insolvent, either on a balance sheet test or the inability to pay its debts
as they become due; (c) Buyer shall file or have filed against it a petition for the appointment of a receiver or trustee for all or substantially all of its assets and such appointment shall not be vacated or set aside within thirty
(30) days from the date of such appointment; or, (d) Buyer shall make an assignment for the benefit of

  

 18 

	 	 
creditors. The Licenses granted herein shall not be assignable by any bankruptcy trustee or bankruptcy estate, trustee, receiver, assignee for the benefit of creditors, secured party
or other person or entity taking possession of Buyer’s assets under any of the events set forth in this paragraph. Buyer, or its successor in any such proceeding, shall not oppose any efforts by Nautilus to reclaim the
licenses or to oppose the lifting of any stay imposed by the Court or Statute to reclaim the License and rights thereunder and, Buyer shall not take any actions inconsistent with the termination provided for herein.

  

	 	4.4.	Abandonment: if Buyer abandons use of the Nautilus Marks and ceases all use of the Nautilus Marks for a consecutive period of three years, Nautilus may terminate the
licenses as to the Nautilus Marks. 

  

	5.	Quality Control and Use of Licensed Marks: 

  

	 	5.1.	The Licensed Marks are an important asset to Nautilus and all uses of the Licensed Marks by Buyer shall inure to the sole benefit of Nautilus. Buyer shall at all times
use the Nautilus Marks properly and only for the sale of Fitness Products and Accessories that meet the Quality Control standards herein. Buyer shall establish procedures to insure that all goods sold bearing a Nautilus Mark or Commercial Mark
adhere to Nautilus’ minimum quality standards. Generally, goods that conform to the quality of goods manufactured and sold by as of the effective date shall conform to the quality standards. 

  

	 	5.2.	Buyer shall only sell goods that comply with EN or ASTM standards for studio/commercial or institutional goods, respectively. 

  

	 	5.3.	Buyer shall comply with Consumer Product Safety Commission rules and regulations. Buyer shall have a customer complaint monitoring and reporting process.

  

	 	5.4.	Buyer shall use and display the Nautilus Marks and Commercial Marks in conformance with the Trademark Usage Guidelines, Schedule E, which dictate appearance and
association of the trademarks as applied to the goods. Buyer shall not create new stylized versions of the Nautilus Marks and shall not create new composite marks that include a Nautilus Mark. Buyer shall comply with revisions to the Trademark Usage
Guidelines with sufficient notice; that is, Nautilus may update the marks and Buyer shall only use updated versions after reasonable time for conversion and sale of any inventory having earlier versions of the same. 

  

 19 

	 	5.5.	Buyer shall submit to a Nautilus representative samples of all new marketing materials (collateral), uses of the licensed marks, and marketing campaigns that include
the Nautilus Marks to Nautilus for approval. Where Buyer deviates from previously approved usage of a Licensed Mark or proposes new uses of a Licensed Mark, Buyer shall obtain from Nautilus pre-approval of any and all new proposed usages of the
Licensed Marks, whether in advertising, promotional materials, or otherwise. Nautilus shall have a review period of fourteen (14) 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 fourteen (14) day review period, the submitted materials shall
be deemed approved. Any Written Notice by Nautilus 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 fourteen (14) day review period. Any disagreement by the Parties as to whether materials should be approved shall be subject to the dispute resolution procedures of §8 of this
License. 

  

	 	5.6.	Buyer confirms and acknowledges that, as between the parties, Nautilus owns all rights in and to the Nautilus Marks, and prior to assignment, to the Commercial 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.

  

	 	5.7.	Any and all uses of the Licensed Marks by Buyer shall be only as permitted by this License, and then only for goods and services that meet Nautilus Quality Standards as
set forth in Schedule F to this License. Nautilus may make reasonable modifications to Nautilus Quality Standards from time to time provided that such modifications benefit customers and/or users. Buyer shall comply with Nautilus Quality Standards
and with all 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. 

  

 20 

	 	5.8.	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. 

  

	 	5.9.	Trade Names: Buyer shall not adopt or use a trade name, company identity, doing-business-as name, or any name or identity of its business entity that includes or is
confusingly similar to a Nautilus Mark. 

  

	6.	Indemnification: 

  

	 	6.1.	Buyer shall fully indemnify Nautilus for all allegations, administrative investigations, proceedings, and actions, and lawsuits that seek to enjoin Nautilus, obtain
damages from Nautilus, or that require Nautilus to comply with any official request or order, when based on an action, or a failure to act, by Buyer. Buyer shall give notice to Nautilus upon its reasonable knowledge or apprehension of such action,
proceeding, or lawsuit at Buyer’s earliest opportunity. 

  

	7.	Marking: 

  

	 	7.1.	Buyer shall mark patent numbers on goods incorporating inventions claimed in a licensed patent. Nautilus may provide Buyer with notice of Nautilus owned patents that
read on Buyer’s products and Buyer shall include such patent marking in a timely manner, not to exceed three months. Buyer shall not be required to mark products manufactured as of the effective date of this Agreement. 

 

	 	7.2.	Buyer shall use appropriate trademark designations (e.g., ®, TM) in connection with all Licensed Marks and as directed by Nautilus. 

  

	8.	Dispute Resolution: 

  

	 	8.1.	All disputes, except disputes pertaining to payments of royalties shall be resolved according to the following procedure: 

  

	 	8.1.1.	When a dispute arises, the aggrieved party shall provide written notice of the grievance(s) (alleged breach, etc.) to the other party and specify the grounds therefore.
The notified party shall acknowledge receipt within 5 business days and within 30 business days notify the aggrieved party whether it intends to cure the grievance or if it disputes the grievance. 

  

 21 

	 	8.1.2.	If the dispute remains after response, then within 15 days a senior manager from each party shall meet in person and endeavor to resolve the grievance(s).

  

	 	8.1.3.	If the managers are unable to resolve the grievance, then either party may require non-binding arbitration to be conducted in accordance with the rules of the AAA and
must be completed within 45 days of the management meeting. 

  

	 	8.1.4.	If neither party requires arbitration, or after arbitration, either party may seek redress in the courts. Venue and jurisdiction shall be either state or federal court
in Washington. The non-breaching party shall recover its attorney’s fees from the breaching party. If neither party is a breaching party, each party shall bear its own fees and costs. 

  

	 	8.2.	All disputes involving royalties, payments, or monies due shall be resolved according to the following procedure: 

  

	 	8.2.1.	The aggrieved party shall provide written notice to the other party and the other party shall cure the breach or provide notice it disputes the grievance within twenty
(20) business days. The parties may agree on a payment schedule and so long as payments are made in accordance with the agreed upon schedule, no breach shall be deemed to have occurred. 

  

	 	8.2.2.	If the parties cannot agree on a schedule for repayment or otherwise dispute the amounts due or time payment is due, then either party may seek redress in the courts.
Venue and jurisdiction shall be either state or federal court in Washington. The non-breaching party shall recover its attorney’s fees from the breaching party. If neither party is a breaching party, each party shall bear its own fees and
costs. 

  

 22 

	9.	Domain Names: 

  

	 	9.1.	Nautilus shall cooperate with Buyer to direct internet traffic seeking information of commercial products to a website designated by Buyer. 

  

	 	9.2.	Buyer shall not register or attempt to register any domain name that is in whole or in part the same as or confusingly similar to a Licensed Mark.

  

	10.	Registration, Filings and Enforcement. 

  

	 	10.1.	Registrations and Filings. Nautilus, in its sole discretion, has the option to, but is not required to: (i) file additional applications to register marks in the
United States and/or in any other country or trademark registration jurisdiction; (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. Buyer shall cooperate with Nautilus, at Buyer’s
expense, and as requested by Nautilus, by providing information concerning the use of marks and specimens of use so as to assist Nautilus to maintain registrations. 

  

	 	10.2.	Enforcement. Nautilus has the sole right and option, at Nautilus’ sole discretion, to take any or no action against 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. 

  

	 	10.3.	Possible Enforcement by Buyer: 

  

	 	10.3.1.	If Buyer discovers that any of the Licensed Patents and/or Licensed Marks 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 after reimbursement of Buyer’s expenses incurred in assisting Nautilus in this action. 

  

 23 

	 	10.3.2.	Nautilus shall have ninety (90) 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 (90) day time period. 

  

	 	10.3.3.	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 provide reasonable assistance to Buyer at Nautilus’ expense so 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 after reimbursement of Nautilus’ expenses incurred in assisting Buyer in this action. 

  

	 	10.3.4.	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 in Nautilus’ sole determination confusingly similar to a Licensed Mark. 

  

 24 

	11.	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 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
		
	To Buyer:	  	Med-Fit Systems, Inc.
		  	Attn: Dean Sbragia
		  	543 E. Alvarado St.
		  	Fallbrook, CA 92028
		  	email: medfit@aol.com
		
	 With a copy to:
	  	
		
		  	w|r Law Group
		  	Attn: William Reavey
		  	5330 Carroll Canyon Rd., Suite 210
		  	San Diego, CA 92121
		  	email: wreavey@thewrlaw.com

  

	12.	Confidentiality and Unauthorized Disclosure.  

  

	 	12.1.	Nondisclosure. 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. Subject to the foregoing prohibitions, Buyer may exploit engineering and design information concerning Fitness Products and Accessories in the Commercial Channel as Buyer deems
appropriate. 

  

	 	12.2.	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. 

  

 25 

	 	12.3.	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”) strictly on a need-to-know basis. The Receiving Party and its affiliates and their respective employees, agents, representatives and subcontractors who receive or have access to
Confidential Information agree to take all reasonable precautions to protect the confidentiality of Confidential Information. 

  

	 	12.4.	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 § 12, 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. 

  

	13.	 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

  

 26 

	 	 
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-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 in any manner for any purpose not expressly
recited by this License. 

  

	15.	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 its 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.

  

	16.	Successors and Assigns. 

  

	 	16.1.	This Agreement may be assigned in its entirety to an assignee that is not a Competitor so long as (i) the assignee agrees to all the terms of this Agreement in
writing to Nautilus, (ii) the assignor is not in material breach at the time of assignment, and (iii) the parties are not in dispute resolution or litigation at the time of assignment. 

  

	 	16.2.	The Agreement may be assigned to an assignee that is a Competitor so long as (i) the assignee agrees to all the terms of this Agreement and the below amendments,
in writing to Nautilus, (ii) the assignor is not in breach at the time of assignment, and (iii) the parties are not in dispute resolution or litigation at the time of assignment. Upon assignment to a Competitor, the Agreement shall be
modified as follows: 

  

	 	16.2.1.	The licenses to the Nautilus Marks shall terminate; 

  

	 	16.2.2.	The licenses to the Commercial Marks shall terminate if those Marks are not yet assigned to Buyer; 

  

 27 

	 	16.2.3.	The royalty rate for the licenses to the Nautilus Patents shall increase to 5% of Net Sales of Fitness Products incorporating the invention of a Nautilus Patent.

  

	 	16.3.	Upon assignment of this Agreement to any party, in addition to the modifications specified above, the licenses to Other Intellectual Property of §§ 2.7 and
2.15 and the covenant-not-to-sue under “any Nautilus owned or licensed intellectual property rights” of § 2.23 shall terminate. 

  

	 	16.4.	This Agreement shall terminate in the event that Buyer or any assignee uses any Licensed IP to sell or offer to sell products in the Retail or Direct Channels without
the express written consent of Nautilus. 

  

	17.	General Provisions. 

  

	 	17.1.	Nautilus warrants it owns or is licensed to grant the rights, licenses, covenants, and future assignments granted in this Agreement. 

  

	 	17.2.	Entire Agreement. The Asset Purchase Agreement, License, and the attached Schedules contain the entire agreement of the parties relating to licensing of
intellectual 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. 

  

	 	17.3.	Modifications and Amendments: 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. 

  

	 	17.4.	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. 

  

	 	17.5.	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. 

  

 28 

	 	17.6.	Severability. Any provision of this Agreement that is 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. 

  

	 	17.7.	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. 

  

	 	17.8.	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 or the Asset Purchase Agreement. 

  

	 	17.9.	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. 

  

	 	17.10.	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. 

  

 29 

	 	17.11.	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: § 1; § 3 for Royalties on Net Sales prior to termination and the completion of unfinished goods §§5, 6, 7, 8; §10; §§11 12, 13, 14, 15, and
§16. 

  

	 	17.12.	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. 

  

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

  

	 	17.14.	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. 

  

	 	17.15.	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. 

 / / / 
 / / / 
 / / / 
  

 30 

	 	17.16.	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. 
  

			
	 Med-Fit Systems, Inc.
 (Buyer)
	  	 Nautilus, Inc.
 (Nautilus)

		
	 /s/ Dean Sbragia
	  	 /s/ Kenneth L. Fish

	Signature	  	Signature
		
	 Dean Sbragia
	  	 Kenneth L. Fish

	Printed Name	  	Printed Name
		
	 President
	  	 CFO

	Title	  	Title
		
	 February 19, 2009
	  	 February 19, 2009

	Date	  	Date

  

 31

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00169-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00169-of-00352.parquet"}]]