Document:

Schwinn Asset Purchase Agreement dated as of December 5, 2009

 Exhibit 10.23 
 SCHWINN ASSET PURCHASE AGREEMENT 
 BETWEEN

 FIT DRAGON INTERNATIONAL, LTD. 
 (Buyer) 
 AND 
 NAUTILUS, INC. 
 (Seller) 
 December 5, 2009. 

 TABLE OF CONTENTS 
  

					
	 	  	 	  	Page
		
	ARTICLE 1 - DEFINITIONS	  	1
		
	ARTICLE 2 - BASIC TRANSACTION	  	3
			
	2.1  	  	Purchase and Sale of Assets	  	3
			
	2.2  	  	Assumption of Liabilities	  	3
			
	2.3  	  	Purchase Price	  	3
			
	2.4  	  	Adjustment Procedure	  	4
			
	2.5  	  	The Closing	  	5
			
	2.6  	  	Deliveries at the Closing	  	5
			
	2.7  	  	Allocation	  	5
		
	ARTICLE 3 - NAUTILUS’ REPRESENTATIONS AND WARRANTIES	  	5
			
	3.1  	  	Organization of Nautilus	  	5
			
	3.2  	  	Authorization of Transaction	  	5
			
	3.3  	  	Non-contravention	  	5
			
	3.4  	  	Brokers’ Fees	  	6
			
	3.5  	  	Title to Assets	  	6
			
	3.6  	  	Financial Information	  	6
			
	3.7  	  	Inventory	  	6
			
	3.8  	  	Contracts	  	6
			
	3.9  	  	Terms of Sale	  	6
			
	3.10	  	Product Liability	  	7
			
	3.11	  	Customers and Suppliers	  	7
		
	ARTICLE 4 - BUYER’S REPRESENTATIONS AND WARRANTIES	  	7
			
	4.1  	  	Organization of Buyer	  	7
			
	4.2  	  	Authorization of Transaction	  	7
			
	4.3  	  	Non-contravention	  	7
			
	4.4  	  	Brokers’ Fees	  	8
		
	ARTICLE 5 - PRE-CLOSING COVENANTS	  	8
			
	5.1  	  	General	  	8
			
	5.2  	  	Notices and Consents	  	8
			
	5.3  	  	Full Access	  	8

  

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 TABLE OF CONTENTS 
 (Continued) 
  

					
	 	  	 	  	Page
			
	5.4  	  	Notice of Developments	  	9
		
	ARTICLE 6 - POST-CLOSING COVENANTS	  	9
			
	6.1  	  	General	  	9
			
	6.2  	  	Litigation Support	  	9
			
	6.3  	  	Transition	  	9
			
	6.4  	  	Warranty	  	9
		
	ARTICLE 7 - CONDITIONS TO OBLIGATION TO CLOSE	  	9
			
	7.1  	  	Conditions to Buyer’s Obligation	  	9
			
	7.2  	  	Conditions to Nautilus’ Obligation	  	10
		
	ARTICLE 8 - REMEDIES FOR BREACHES OF THIS AGREEMENT	  	11
			
	8.1  	  	Survival of Representations and Warranties	  	11
			
	8.2  	  	Indemnification Provisions for Buyer’s Benefit	  	11
			
	8.3  	  	Indemnification Provisions for Nautilus’ Benefit	  	12
			
	8.4  	  	Matters Involving Third Parties	  	13
			
	8.5  	  	Determination of Adverse Consequences	  	14
			
	8.6  	  	Exclusive Remedy	  	14
		
	ARTICLE 9 - TERMINATION	  	14
			
	9.1  	  	Termination of Agreement	  	14
			
	9.2  	  	Effect of Termination	  	15
		
	ARTICLE 10 - MISCELLANEOUS	  	15
			
	10.1  	  	Press Releases and Public Announcements	  	15
			
	10.2  	  	No Third-Party Beneficiaries	  	15
			
	10.3  	  	Entire Agreement	  	15
			
	10.4  	  	Succession and Assignment	  	15
			
	10.5  	  	Counterparts	  	15
			
	10.6  	  	Headings	  	16
			
	10.7  	  	Notices	  	16
			
	10.8  	  	Governing Law	  	17
			
	10.9  	  	Amendments and Waivers	  	17
			
	10.10	  	Severability	  	17

  

 ii 

 TABLE OF CONTENTS 
 (Continued) 
  

					
		  		  	Page
			
	10.11	  	Expenses	  	17
			
	10.12	  	Construction	  	17
			
	10.13	  	Incorporation of Exhibits and Schedules	  	17
			
	10.14	  	Bulk Transfer Laws	  	17
			
	10.15	  	Governing Language	  	17
			
	10.16	  	Tax Disclosure Authorization	  	17

  
 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 – License Agreement 
  

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 SCHWINN ASSET PURCHASE AGREEMENT 
 This Schwinn Asset Purchase Agreement (this “Agreement”) is entered into as of December 5, 2009 by and between Fit Dragon
International, Ltd., a British Virgin Islands 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 in return for cash. 
 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 
 “Accountants” has the meaning set forth in Section 2.4(a)
below. 
 “Acquired Assets” means all right, title, and interest in and to the following assets of Nautilus:
(a) the Schwinn Commercial Indoor Cycle inventory, consisting of Schwinn Commercial Indoor Cycle finished goods and parts, as set forth on Section 3.7 of the Disclosure Schedules; (b) all owned production and tooling equipment used
exclusively in the manufacture of Schwinn Commercial Indoor Cycle products; and (c) all customer purchase orders for Schwinn Commercial Indoor Cycle products that are open as of the Closing Date. 
 “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” has the meaning set forth in Rule 12b-2 of the regulations
promulgated under the Securities Exchange Act. 
 “Assumed Contracts” means all contracts set forth on
Section 3.8 of the Disclosure Schedules, including without limitation all customer purchase orders for Schwinn Commercial Indoor Cycle products that are open as of 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) all warranty liability for Schwinn Commercial Indoor Cycle products; (b) the
liabilities and obligations set forth on Schedule 2.2 hereto; (c) the liabilities and obligations under the Assumed Contracts; and (d) all liabilities and obligations arising or related to ownership or use of the Acquired Assets.

  

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 “Buyer” has the meaning set forth in the preface above. 
 “Closing Financial Statements” has the meaning set forth in Section 2.4(a) below. 
 “Commercial Indoor Cycle” means commercial grade indoor cycling bikes sold through the commercial sales channel.

 “Closing” has the meaning set forth in Section 2.5 below. 
 “Closing Date” has the meaning set forth in Section 2.5 below. 
 “Code” means the Internal Revenue Code of 1986, as amended. 
 “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.

 “Estimated Purchase Price” has the meaning set forth in Section 2.3 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.

 “Hart-Scott-Rodino Act” means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended.

 “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: Kenneth Fish, Wayne Bolio and
Tim Peters. 
 “License Agreement” means the License Agreement providing for the license by Nautilus to Buyer
of certain intellectual property in the form attached hereto as Exhibit F. 
 “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 consistent with past custom and practice (including with respect to quantity and frequency). 
  

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 “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). 
 “Purchase Price” has the meaning set forth in Section 2.3 below. 
 “Securities Exchange Act” means the Securities Exchange Act of 1934, as amended. 
 “Schwinn” means Nautilus with respect to its Schwinn brand Commercial Indoor Cycle operations, including the manufacturing,
marketing, and sales of Commercial Indoor Cycle products under the Schwinn trademark. 
 “Nautilus” has the
meaning set forth in the preface above. 
 “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. 
 “Third-Party Claim” has the meaning set forth in Section 8.4 below. 
 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. Buyer acknowledges and agrees that the Acquired
Assets do not include raw materials, work in progress or any assets related to the manufacture, marketing and sale of any products other than Commercial Indoor Cycles sold under the Schwinn brand. 
 2.2 Assumption of 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 included within the definition of Assumed Liabilities.

 2.3 Purchase Price. Buyer agrees to pay to Nautilus an amount (the “Purchase

  

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Price”) equal to the sum of (a) the value as of the Closing Date of the Schwinn Commercial Indoor Cycle inventory, and (b) the value as of the Closing Date of all open purchase
orders for Schwinn Commercial Indoor Cycle products. At Closing, Buyer will pay to Nautilus an amount (the “Estimated Purchase Price”) equal to the sum of (a) Three Million U.S. Dollars ($3,000,000), which represents the
estimated value of the Schwinn Commercial Indoor Cycle inventory as of the Closing Date, and (b) the estimated value as of the Closing Date of all open purchase orders for Schwinn Commercial Indoor Cycle products, as determined in good faith by
Nautilus three (3) business days prior to the Closing Date; provided, that for the purpose of determining both the Estimated Purchase Price and the final Purchase Price, the minimum value of such open purchase orders shall be One Million
Five Hundred Thousand U.S. Dollars (U.S.$1,500,000) and the maximum value of such open purchase orders shall be Two Million Five Hundred Thousand U.S. Dollars ($2,500,000). The Purchase Price shall be finally determined as provided in
Section 2.4 below. The Estimated Purchase Price shall be paid to Nautilus at Closing in cash payable by wire transfer or delivery of other immediately available funds. 
 2.4 Adjustment Procedure. 
 (a) Nautilus will prepare financial statements (“Closing Financial Statements”) of Schwinn setting forth the value as of the Closing Date of the Schwinn Commercial Indoor Cycle inventory
and the Schwinn Commercial Indoor Cycle open purchase orders, in each case determined in accordance with GAAP and consistent with Nautilus’ past practice with regard to the preparation of its financial statements. Nautilus will deliver the
Closing Financial Statements to Buyer within sixty (60) days after the Closing Date. If within thirty days following delivery of the Closing Financial Statements Buyer has not given Nautilus notice of its objection to the Closing Financial
Statements (such notice must contain a statement of the basis of Buyer’s objection), then the inventory and open purchase order amounts reflected in the Closing Financial Statements will be used in computing the Purchase Price. If Buyer gives
such notice of objection, then the issues in dispute will be submitted to                     , certified public accountants (the
“Accountants”), for resolution. If issues in dispute are submitted to the Accountants for resolution, (i) each party will furnish to the Accountants such workpapers and other documents and information relating to the disputed
issues as the Accountants may request and are available to that party or its Subsidiaries (or its independent public accountants), and will be afforded the opportunity to present to the Accountants any material relating to the determination and to
discuss the determination with the Accountants; (ii) the determination by the Accountants, as set forth in a notice delivered to both parties by the Accountants, will be binding and conclusive on the parties; and (iii) Buyer and Nautilus
will each bear 50% of the fees of the Accountants for such determination. 
 (b) On the tenth business day
following the final determination of the Purchase Price (based on the valuations determined in accordance with Section 2.4(a) above), if the Purchase Price is greater than the Estimated Purchase Price, Buyer will pay the difference to Nautilus,
and if the Purchase Price is less than the Estimated Purchase Price, Nautilus will pay the difference to Buyer. No interest shall accrue on any such payments. Payments must be made in cash by wire transfer or other immediately available funds.

  

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 2.5 The Closing. The closing of the transactions contemplated by this Agreement (the
“Closing”) shall take place at the offices of Garvey Schubert Barer, 1191 Second Avenue, Eighteenth Floor, Seattle, Washington, 98101, commencing at 9:00 a.m. local time on the second business day 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”). 
 2.6 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) 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; and (f) Nautilus and Buyer shall enter into the License Agreement.

 2.7 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. 
 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 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

  

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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 Schwinn 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 Schwinn 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 Schwinn’s 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 Schwinn. 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 Schwinn. 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 Three Hundred Thousand U.S. Dollars ($300,000). 
 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 Schwinn (collectively the “Financial Information”). The
Financial Information was derived from Nautilus financial statements prepared in accordance with GAAP throughout the periods covered thereby. 
 3.7 Inventory. The Schwinn inventory included in the Acquired Assets consists of Commercial Indoor Cycle parts and finished goods, all of which is merchantable and fit for the purpose for which it
was procured or manufactured, as set forth on Section 3.7 of the Disclosure Schedules, none of which is slow-moving, obsolete, damaged, or defective, subject only to the reserve for inventory writedown set forth in the Financial Information.

 3.8 Contracts. With respect to 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 Indoor Cycle products manufactured, sold, leased, or delivered
by Schwinn are subject to standard terms and conditions of sale or lease, copies of which have been made available to Buyer. 
  

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 3.10 Product Liability. Schwinn has no material liability (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) arising out of any injury to individuals or property as a result of the ownership,
possession, or use of any Commercial Indoor Cycle product manufactured, sold, leased, or delivered by Schwinn. 
 3.11
Customers and Suppliers. 
 (a) Section 3.11 of the Disclosure Schedule lists the ten (10) largest
customers of Schwinn for each of the two (2) most recent fiscal years and sets forth opposite the name of each such customer the percentage of consolidated net sales attributable to such customer. Section 3.11 of the Disclosure Schedule
also lists any additional current customers that Schwinn anticipates shall be among the ten (10) largest customers for the current fiscal year. 
 (b) Since the date of the Most Recent Balance Sheet, no material supplier of Schwinn has indicated in writing that it shall stop, or materially decrease the rate of, supplying materials, products or
services to Schwinn, and no customer listed on Section 3.11 of the Disclosure Schedule has indicated in writing that it shall stop, or materially decrease the rate of, buying materials, products or services from Schwinn. 
 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 (or other entity) duly organized, validly existing, and in good standing under the laws of the jurisdiction of its incorporation (or other formation). 
 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 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

  

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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. Without limiting the
generality of the foregoing, each of the Parties will file any Notification and Report Forms and related material that it may be required to file with the Federal Trade Commission and the Antitrust Division of the United States Department of Justice
under the Hart-Scott-Rodino Act, will use its reasonable best efforts to obtain a waiver of the applicable waiting period, and will make any further filings pursuant thereto that may be necessary, proper, or advisable in connection therewith.

 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
Schwinn. 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. 
  

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 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. 
 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 Schwinn, 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 Schwinn from
maintaining the same business relationships with Buyer after the Closing as it maintained with Schwinn prior to the Closing. During the ninety (90) day period immediately following the Closing, Nautilus agrees to place purchase orders with its
suppliers of Schwinn Commercial Indoor Cycle products 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 entry into the U.S. 
 6.4
Warranty. As part of the Assumed Liabilities, and subject to Section 8.2(c), Buyer shall be responsible for all warranty liability for Schwinn Commercial Indoor Cycle products. 
 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; 
  

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 (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 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 Schwinn (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; 
 (g) Nautilus shall have delivered to Buyer a certificate of the secretary or an assistant secretary of Nautilus, dated the Closing Date, in form and substance reasonably satisfactory to Buyer, as to any
resolutions of the board of directors (or a duly authorized committee thereof) of Nautilus relating to this Agreement and the transactions contemplated hereby; and 
 (h) Nautilus shall have executed and delivered 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. 
 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; 
  

 10 

 (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; and 
 (f) Buyer shall have executed and delivered the License Agreement. 
 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 the warranties set forth in Sections 3.2 and 3.5 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

  

 11 

 
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 indemnify Buyer 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 One Hundred Fifty Thousand U.S. Dollars ($150,000) 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 indemnify Buyer 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). 
 (c) In the event Buyer incurs warranty expense in excess of Five Hundred Thousand U.S. Dollars ($500,000) on account of warranty claims received by Buyer within one year following Closing for Schwinn
Commercial Indoor Cycle products sold by Nautilus prior to Closing, Nautilus shall pay to Buyer an amount equal to fifty percent (50%) of such excess. The obligation of Nautilus to provide such payment shall be subject to receipt by Nautilus of
documentation identifying the customer, the product defect and the product serial number for all warranty claims received by Buyer during the one year period following Closing, together with a detailed accounting of the warranty expense for such
claims. For purposes of this Section 8.2, warranty expense shall consist of the direct labor and materials costs of warranty repair and replacement, without mark-up or allocation of indirect costs. 
 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
indemnify Nautilus 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. 
  

 12 

 (b) Buyer further agrees to indemnify Nautilus 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. 
  

 13 

 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. 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 Exclusive Remedy.
Buyer and Nautilus acknowledge and agree that the foregoing indemnification provisions in this Article 8 shall be the exclusive remedy of Buyer and Nautilus with respect to Schwinn and the transactions contemplated by this Agreement. Without
limiting the generality of the foregoing, Buyer and Nautilus hereby waive any statutory, equitable, or common law rights or remedies relating to any environmental, health, or safety matters. 
 ARTICLE 9 - TERMINATION 
 9.1 Termination of
Agreement. Certain of 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 period of thirty (30) days after the notice of breach, or (ii) if the Closing shall not have occurred on or before December 30, 2009, 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

  

 14 

 
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 December 30, 2009, 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). 
 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. 
  

 15 

 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 C. 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:
	  	Fit Dragon International, Ltd.	  	
		  	Attn:
                                        
	  	
		  	1st Floor CNAC Group Building	  	
		  	No. 10 Queens Road Central	  	
		  	Facsimile: 011 86 592-621-8275	  	
		  	E-mail:
                                    	  	
			
	 with a copy to:
	  	C. Reed Brown	  	
		  	1232 West Lexington Street	  	
		  	Washington, Utah 84780	  	
		  	Facsimile: (435) 216-1176	  	
		  	E-mail: reed.crb@gmail.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. 
  

 16 

 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

  

 17 

 
(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 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 of following page)

  

 18 

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

					
		 	BUYER:
		
		 	FIT DRAGON INTERNATIONAL, LTD.
		
	By:	 	 /s/ Michael Bruno

					
		 	Signature	 	

					
		 	Print Name:	 	 Michael Bruno

					
		 	Title:	 	 CEO

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

					
		 	Signature	 	

					
		 	Print Name:	 	 Kenneth L. Fish

					
		 	Title:	 	 CFO

  

 19License Agreement dated as of December 29, 2009

 Exhibit 10.24 
 LICENSE AGREEMENT 
 THIS
LICENSE AGREEMENT (hereinafter “License” or “License Agreement”) is effective as of the date of signing by the last of the parties to sign below and is by and between Xiamen World Gear Sports Goods Co., Ltd. a corporation
under the laws of the People’s Republic of China (“Buyer”), having a place of business at 27-29 North 2nd Road, Xinglin, Jimei District, Xiamen City, Fujian Province, People’s Republic of China and Nautilus, Inc., a
Washington Corporation (“Nautilus”), having a place of business at 16400 SE Nautilus Drive, Vancouver, WA. 98683. Buyer and Nautilus are referred to collectively herein as the “Parties”. This License is an exhibit to an Asset
Purchase Agreement entered into on the same date between Buyer and Nautilus. The parties agree as follows: 
  

	 	1.	Definitions and Schedules 

 A. Unless expressly otherwise defined herein, the Terms used in this License that are defined in the Asset Purchase Agreement shall have the same meaning as defined in the Asset Purchase Agreement. 
 B. “And/or” shall mean “and”, “or” and both “and” and “or”. 
 C. “Accessories” shall mean pedals, seats, seat posts and handlebars that replace standard components of Licensed Indoor Cycles and
offer alternate functionality such as additional compatibility, comfort, cost, etc. 
 D. “Affiliate” shall have the
meaning set forth in rule 12b-2 of the regulations promulgated under the Securities Exchange Act in force as of the effective date of this License. 
 E. “Asset Purchase Agreement” shall mean an agreement entered into between the Parties to which this License Agreement is an exhibit. 
 F. “Commercial Channel” shall mean bona fide sales to commercial, corporate, and government entities that are not Affiliates of
Buyer and that provide access to the Indoor Cycles to multiple users including fitness centers, gyms, health clubs, studios, hotels, resorts, schools, military, and corporate employee centers. The Commercial Channel does not include and excludes all
other sales or distributions of Indoor Cycles, including but not limited to sales and other distributions: (a) to end users (non-commercial users, typically home use) and resellers, such as retailers and online resellers; and/or (b) to any
entity where there is reason to know that such entity is selling or distributing to end users and/or resellers (except as used equipment following normal use in the entity’s facility). 
  

 pg. 1 

 G. “Permitted Retail Channel” shall mean bona fide sales to Independent Bike
Dealers and Specialty Retailers that are not Affiliates of Buyer. Specialty Retailers shall mean retailers selling fitness equipment and fitness accessories and the sales of fitness equipment and accessories constitutes at least 90% of the retailers
total sales. By way of example only, and not of limitation, Specialty Retailers does not include Dick’s Sporting Goods, Cabelas, Sports Authority, or other retailers having greater than 10% sales of non-fitness equipment. 
 H. “Channel” shall mean the Commercial Channel and the Permitted Retail Channel. 
 I. “Gross Sales” shall mean the total invoice price of Indoor Cycles and Accessories, and all related charges of any type whether
separately invoiced (including, but not limited to, installation charges, shipping charges, taxes, and delivery charges) and whether the Indoor Cycles and/or Accessories are sold, leased or otherwise distributed. 
 J. “Copyrighted Works” shall mean tangible works of authorship previously used by Nautilus, and/or previously created for use by
Nautilus, in connection with marketing and sales of Indoor Cycles in the Commercial Channel, such as, but not limited to, marketing collateral, photos, brochures, artwork, decals, packaging, manuals, guides, instructions, console software, and for
which Nautilus owns or has exclusive rights to relevant copyrights, regardless of whether the copyright for any such Copyrighted Works are registered with any copyright office. 
 K. “Indoor Cycle” shall mean a stationary exercise machine that simulates bicycling and is part of the larger class of Stationary
Cycles which consists of Indoor Cycles, Upright Cycles, and Recumbent Cycles. While there is overlap of these product categories, particularly between Indoor Cycles and Upright Cycles, Indoor Cycles are distinguished from Upright Cycles by exposed
frames and flywheels, adjustable handlebar positioning, lacking motors, and lacking consoles that control the flywheel resistance. As a business model, Indoor Cycles are generally positioned for use in group settings at fitness centers and health
clubs. 
  

 pg. 2 

 L. “Indoor Cycle Know How” shall mean technical information that may not be
confidential, but that is required to efficiently convey manufacture of Indoor Cycles. Indoor Cycle Know How includes tooling for Indoor Cycles and components thereof obtained by Buyer from Nautilus. 
 M. “Indoor Cycle Confidential Information” shall mean Confidential Information relating to manufacturing and marketing of Indoor
Cycles for the Commercial Channel. 
 N. “Licensed Accessories” shall mean Accessories solely for the Channel, but not
otherwise, and that bear and/or are marketed in connection with any one or more of the Licensed Marks. 
 O. “Licensed
Domain Names” shall mean the domain names listed in Schedule C to this License. 
 P. “Licensed Indoor Cycles”
shall mean Indoor Cycles solely for the Channel, but not otherwise, and that bear and/or are marketed in connection with any one or more of the Licensed Marks. 
 Q. “Licensed Indoor Cycles and Accessories” shall mean Licensed Indoor Cycles and/or Licensed Accessories. 
 R. “Licensed Patents” shall mean patents and patent applications listed on Schedule A to this License together with all subsequently filed and/or pending patent applications that claim priority
to any one of the patents or patent applications listed on Schedule A. 
 S. “Licensed Rights” shall mean the rights
and restrictions set forth in the license agreements identified in Schedule D to this License. 
 T. “Licensed Marks”
shall mean the registered and common law trademarks and service marks listed in Schedule B to this License. 
 U. “Nautilus
Quality Standards” shall mean the quality control standards set forth in Schedule E to this License, and includes modifications to the Schedule E quality control standards in accordance with the terms of this License. 
 V. “Nautilus Trademark Usage Guidelines” shall mean the guidelines for use of Nautilus Trademarks as set forth in Schedule F to
this License, and include modifications to the Schedule F guidelines in accordance with the terms of this License. The identification of a trademark or name in Schedule F does not mean that any license to such name or mark is granted by this
License, unless the mark or name is included in the Licensed Marks. 
  

 pg. 3 

 W. “Net Sales” means “Gross Sales” less allowances for: (a) returns
of Indoor Cycles and Accessories actually received; (b) refunds by Buyer to customers and cancellation of orders from Buyer by customers for Licensed Indoor Cycles and Accessories; (c) local, State and federal sales, VAT, and use and
excise taxes required to be charged by Buyer for sales of Licensed Indoor Cycles and Accessories, if separately stated on an invoice; and (d) freight charges and delivery fees, if separately stated on an invoice, and provided that any such
separately stated freight charges and delivery fees do not exceed one hundred and ten (110) percent of the actual costs incurred by Buyer for freight and delivery. 
 X. “Sales” means sales, leases and any other types of distribution of goods and services. 
 Y. “Trade Secret” means information, including a formula, pattern, compilation, program, device, method, technique, or process that: 
 (a) Derives independent economic value, actual or potential, from not being generally known to, and not being readily ascertainable by
proper means by, other persons who can obtain economic value from its disclosure or use; and 
 (b) Is the subject of efforts
that are reasonable under the circumstances to maintain its secrecy. 
 Z. This License incorporates the attached schedules,
listed below: 
 Schedule A: Licensed Patents 
 Schedule B: Licensed Trademarks 
 Schedule C: Licensed Domain Names 
 Schedule D: Licensed Rights (Prior Licenses Affecting Rights Granted Herein) 
 Schedule E: Quality Control Provisions 
 Schedule F: Nautilus Trademark Usage Guidelines 
 Schedule G: Electronic Payment
Instructions 
 Schedule H: Sublicense Agreement (for Triple Link pedals in the USA) 
  

	 	2.	License Grant 

  

	 	A.	Patent License. 

  

 pg. 4 

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

	 	B.	Trademark License. 

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

  

 pg. 5 

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

	 	C.	Copyright License. 

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

	 	D.	Domain Name License. 

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

	 	E.	Trade Secrets, Know How and Confidential Information. 

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

	 	F.	Licensed Rights. 

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

  

 pg. 6 

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

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

 Contemporaneous with this Agreement, the Parties shall execute a Sublicense Agreement by which Nautilus shall grant Buyer rights to
distribute Triple Link pedals in the USA. The Sublicense Agreement is attached as Schedule H. 
 During a transition period of up
to six (6) months from the date of this Agreement, Buyer may acquire Triple Link pedals from Nautilus at a cost of US$28/pair. For all Triple Link pedals imported into the USA, Buyer shall pay Nautilus the royalty specified in the Sublicense
Agreement. 
  

	 	3.	Payments for License 

 A.
Royalty. 
 For the Trademark License rights granted by this License Agreement to Buyer, Buyer shall pay Nautilus a Royalty which
is equal to: 
 (i) For the calendar year 2009, no Royalty; 
 (ii) For the calendar year 2010, the Royalty rate shall be five (5) percent of Net Sales of Licensed Indoor Cycles and Accessories;

 (iii) For the calendar year 2011, the Royalty rate shall be five (5) percent of Net Sales of Licensed Indoor Cycles and
Accessories; and 
 (iv) For the calendar year 2012 and each year thereafter the Royalty rate shall be three (3) percent of
Net Sales of Licensed Indoor Cycles and Accessories. 
 Because of the difficulty of allocating royalties and the different types
of intellectual property being licensed by this License, the Parties agree that a Royalty based on Net Sales of products that bear and/or are marketed in connection with any one or more of the Licensed Marks is an appropriate and convenient manner
of establishing the Royalty. 
  

 pg. 7 

 B. Payment Schedule. The Royalty will accrue upon the earlier of the
invoice date, or the shipping date for the goods by Buyer. The amounts set forth in this section are payable quarterly from Buyer to Nautilus within thirty (30) days after each March 31st, June 30th, September 30th, and December 31st, beginning January 1. 2010. The quarterly royalty payments shall accompany the required reports of
Section 3.F. 
 C. Minimum Payment to Nautilus. 
 (i) Buyer shall pay Nautilus an Annual Minimum Royalty beginning in Calendar Year 2010. The royalty payments shall be
paid quarterly and each quarterly payment shall be at least one-quarter ( 1/4) of the Annual Minimum Royalty until the royalty payments for the calendar year at least equal the Annual Minimum Royalty. 
 For the Calendar Year 2009 - Minimum Annual Payment = $0; 
 For the Calendar Year 2010 - Minimum Annual Payment = $800,000; 
 For the Calendar Year 2011 - Minimum Annual Payment = $1,000,000; 
 For the Calendar Year 2012 and each Calendar Year thereafter – Minimum Annual Payment = $600,000. 
 (ii) Example: 
 The Annual Minimum Royalty for 2010 is $800,000, or $200,000 per quarter until the total royalty paid to Nautilus for the calendar year is equal to or exceeds $800,000. Thus, if the net sales for Q1 yield
royalties less than $200,000, Buyer shall pay $200,000. If the net sales in Q2 yield royalties in excess of $200,000, Buyer shall pay the actual royalty and the royalty paid in excess of one-quarter of the Annual Minimum may not be carried over or
credited to Q3 unless the Annual Minimum has been reached. Only, when the actual paid royalties for a Calendar Year exceed the Annual Minimum Royalty, may a royalty payment for a quarter be less than one-quarter ( 1/4) of the Annual Minimum Royalty. 
 D. Methods of Payments to Nautilus. All payments under this Agreement to Nautilus shall be made in U.S. Dollars and made by electronic
payment as set out in Schedule G to this License. Buyer shall not be permitted to pay money in escrow or to any entity other than Nautilus, unless pursuant to a final court order that is not subject to appeal. 
 E. Reports and Records. Buyer shall keep and preserve accurate records of all of its operations within the scope of this License Agreement.
With each payment by Buyer to

  

 pg. 8 

 
Nautilus, and for the Calendar Quarter for which a payment is being paid, Buyer shall provide to Nautilus a report stating the Gross Sales, Net Sales, Net Sales in the Commercial Channel, Net
Sales in the Permitted Retail Channel, and returns by product number (preferably SKU identifiers), Royalty calculations, Royalty due, and a Quality Control Report as specified in Schedule F during the applicable Calendar Quarter. Nautilus and its
agents (e.g., accountants) shall have the right to inspect and copy such records at reasonable times. 
 F. Costs of Inspection
and Copying. The cost of any inspection and copying of records under Section 3.E. shall be borne by Nautilus unless a discrepancy is discovered in Nautilus’ favor in an amount that is greater than five (5) percent of the Royalty due
versus the Royalty paid, in which case such costs shall be borne by Buyer. 
 G. Record Retention. Buyer and Nautilus are not
required to retain any records relating to this License Agreement for longer than five (5) years from the date of their creation. 
 H. Pricing. All pricing for products sold by Buyer shall be determined by and be under the sole control of Buyer. 
 I.
Currency. All amounts set forth in this License are in U.S. dollars. 
  

	 	4.	Rights in Licensed Marks and Use of Marks. 

 A. Ownership of Licensed Marks by Nautilus. Buyer confirms that, as between the parties, Nautilus owns all rights in and to the Licensed Marks. Buyer agrees to not use any of the Licensed Marks, or any
marks confusingly similar to the Licensed Marks, for any purpose, whether in advertising, promotional materials or otherwise, except as expressly permitted by this License. Buyer shall not use, register or attempt to register any one or more of the
following marks and names, or any confusingly similar marks and names for any purpose: Nautilus, Nautilus logo, and/or any other Mark owned by Nautilus except for use of the Licensed Marks as expressly permitted by this Agreement. 
 B. Use of Licensed Marks by Buyer. Any and all uses of the Licensed Marks by Buyer for goods and services, shall be only as permitted by this
Agreement, and then only for goods and services that meet Nautilus Quality Standards as set forth in Schedule E to this License Agreement. Nautilus may make reasonable modifications to Nautilus Quality Standards from time to time provided that such
modifications benefit customers and/or users and are made applicable to comparable Nautilus Indoor Cycle Products sold by Nautilus outside of the Commercial Channel. Buyer

  

 pg. 9 

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

C. No Challenges to Licensed Marks. Buyer shall not in any way challenge or interfere with Nautilus’ rights in the Licensed Marks or
assist anyone else in doing so. Buyer shall not register or attempt to register any of the Licensed Marks or any confusingly similar marks in any country. 
 D. Disputed Marks. If: (i) Nautilus determines that one or more of the Licensed Marks poses a significant risk of infringing the rights of a third party in a country; or (ii) Nautilus receives a
letter from a third party asserting rights in one or more of the Licensed Marks in a country (any mark falling into 4.D. (i) and/or 4.D. (ii) shall hereinafter be called a Disputed Licensed Mark), then Nautilus shall have the option to

  

 pg. 10 

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

	 	5.	Registration, Filings and Enforcement. 

 A. Registrations and Filings. Nautilus, in its sole discretion, has the option to, but is not required to: (i) file additional applications to register any one or more of the Licensed Marks in the
United States and/or in any other country; (ii) maintain any registration for any one or more of the Licensed Marks in any country; (iii) file to register copyrights in the United States in the name of Nautilus as owner for any one or more
Copyrighted Works; and/or (iv) file any U.S. Patent Application, and/or maintain a patent or pending application for any one or more inventions. Notwithstanding the requirements of this Section 5.A., to the extent permitted by the law of
the country where the registration has been granted and while this License is in effect, Nautilus agrees to maintain the existing registrations in Schedule B to this License that include or consist of the word SCHWINN; provided, however, to the
extent Buyer has the information, Buyer must cooperate with Nautilus, at Buyer’s expense, and as requested by Nautilus, by providing information concerning the use of such marks and specimens of use; so as to assist Nautilus to maintain such
registrations. While this License is in effect, Nautilus, at the written request of Buyer and at Buyer’s expense for all such actions of Nautilus, agrees to file applications in the name of Nautilus to register the Licensed Marks in countries
where they have not been registered, to prosecute such applications, and to obtain and maintain registrations based on any such applications for Licensed Marks in other countries. Nautilus is not required to continue the prosecution of any such
application beyond a final rejection thereof by the respective Trademark Office. 
 B. Enforcement. Except as provided in
Section 5.C., Nautilus has the sole right and option, at Nautilus’ sole discretion, to take any or no action against: (i) violators or alleged violators of any of the subject matter licensed by this License and/or relating thereto.
Buyer has no right to and shall not threaten to initiate or take any action relating to the Licensed Marks, Licensed Patents, and/or to any other subject matter or rights relating to this License. 
  

 pg. 11 

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

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

  

 pg. 12 

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

  

					
	To Nautilus:	  	 Nautilus, Inc.
	  	
			
		  	 Attention: Legal Department
	  	
			
		  	 16400 SE Nautilus Drive
	  	
			
		  	 Vancouver, WA 98683
	  	
			
		  	 Fax: 011-306-859-????
	  	
			
		  	 E-Mail:
	  	
			
	To Buyer:	  	 Xiamen World Gear Sports Goods Co., Ltd.
	  	
			
		  	 Attention: Michael Bruno
	  	
			
		  	 27-29 North 2nd Road
	  	
			
		  	 Xinglin, Jimei District, Xiamen City,
	  	
			
		  	 Fujian Province
	  	
			
		  	 People’s Republic of China
	  	
			
		  	  
	  	
			
		  	 Telephone: 011-86-592-6248-245
	  	
			
		  	 Fax: 011-86-592-621-8270
	  	
			
		  	 E-Mail:
	  	
			
	With a Copy to:	  	  
	  	
			
		  	 Attention: C. Reed Brown
	  	
			
		  	 1232 W Lexington Street
	  	
			
		  	 Washington, Utah, 84780
	  	
			
		  	  
	  	
			
		  	 Fax: 435-216-1176
	  	
			
		  	 E-Mail: reed.crb@gmail.com
	  	

  

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

  

 pg. 13 

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

  

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

  

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

  

	 	10.	Confidentiality and Unauthorized Disclosure. 

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

  

 pg. 14 

 
from the Disclosing Party that becomes owned by the Receiving Party; (v) information rightfully obtained from third parties and not subject to any obligation of confidentiality to the
Disclosing Party; (vi) information independently developed by the Receiving Party without use of, reference to, or reliance on the Disclosing Party's Confidential Information; and (vii) any information following the expiration of five
(5) years from the date of the first disclosure thereof to the Receiving Party. 
 B. Nondisclosure. Except as set forth in
Section 10.D., the Receiving Party agrees that it will not disclose Confidential Information to any third party, directly or indirectly, under any circumstances or by any means, without the Disclosing Party’s prior written consent. Buyer
specifically agrees that Buyer shall not disclose any Trade Secret, Indoor Cycle Confidential Information, and/or Indoor Cycle Know How to any third party without the express written consent of Nautilus, which Nautilus may withhold, except that
Buyer may exploit engineering and design information concerning Indoor Cycles in the Commercial Channel as Buyer deems appropriate. 
 C. Nonuse. The Receiving Party further agrees that it will not use Confidential Information except as may be necessary to perform its obligations and/or exercise its rights under this License. 
 D. Protection. Notwithstanding anything contained in this License to the contrary, the Receiving Party may disclose Confidential Information
to its employees, representatives and other agents (“Representatives”). The Receiving Party and its affiliates and their respective employees, agents, representatives and subcontractors agree to take all reasonable precautions to protect
the confidentiality of Confidential Information. Any unpermitted disclosure by any Representative of the Receiving Party shall be deemed to have been made by the Receiving Party. 
 E. Injunctive Relief. The Receiving Party acknowledges that a breach of any obligation under this section 10 will result in irreparable
injury to the business of the Disclosing Party and that its remedy at law for such a breach will be inadequate. Accordingly, the Receiving Party agrees that, in addition to other remedies available at law and in equity, the Disclosing Party will be
entitled to seek both preliminary and permanent injunctions to prevent and/or halt a breach or threatened breach of any obligation under this section 10. 
 F. Disclosures for Tax Purposes. Notwithstanding anything to the contrary contained in this License, the parties and their respective affiliates and Representatives may disclose to any

  

 pg. 15 

 
person the tax structure and any of the tax aspects of the transaction(s) contemplated by the Agreement solely to the extent necessary to describe or support any United States federal income tax
benefits that may result therefrom or any materials relating thereto in order to comply with United States federal or state securities laws. For the purposes of this provision, “tax structure” is limited to facts relevant to the U.S.
federal income tax treatment of the transaction(s) and does not include information relating to the identity of the parties, their affiliates, agents, or advisors. 
 G. Compelled Disclosure. If the Receiving Party becomes legally compelled (by deposition, interrogatory, request for documents, subpoena, civil investigative demand or similar process, or applicable law
or regulation) to disclose any Confidential Information, the Receiving Party shall (unless prohibited by such demand or process) give the Disclosing Party prompt written notice of the requirement before releasing the information so that the
Disclosing Party may seek a protective order or other appropriate remedy and/or waive compliance with the terms of the Agreement. The Receiving Party shall cooperate with the Disclosing Party to obtain a protective order. If a protective order or
other remedy is not obtained, or the Disclosing Party waives compliance with the terms of this section 10, the Receiving Party shall provide only that limited portion of the Confidential Information that is legally required and shall exercise best
efforts to obtain assurance that confidential treatment will be accorded the information. Upon request of the Disclosing Party, the Receiving Party shall provide an opinion of counsel to the Disclosing Party to the effect that the Receiving Party is
legally compelled to disclose the information. 
  

	 	11.	Termination and Default. 

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

  

 pg. 16 

 
of any Dispute resolution procedure under Section 15 below concerning the issue of whether a material term or condition has or has not been performed by Buyer. Except as otherwise expressly
provided by this License, in the event of a default of this License by Nautilus that is not cured within any applicable cure period, Buyer shall have the right to terminate this License by Written Notice of termination to Nautilus provided at any
time up to the longer of six (6) months following expiration of any applicable cure period; or one (1) month following the completion of any Dispute resolution procedure under Section 15 below concerning the issue of whether a
material term or condition has or has not been performed by Nautilus. Whether a material term or condition has or has not been performed is subject to the Dispute resolution procedures of Sections 15.B. – 15.C. of this License. 
 B. Termination for Failure to Meet Minimum Annual Net Sales Requirement. 
 (i). Nautilus shall have the right to terminate this License upon Written Notice to Buyer, with no cure period being available to Buyer, in
the event during any three (3) consecutive Calendar Years the Minimum Annual Net Sales set forth in Section 11.B.(ii) below are not met. This three (3) year time period shall be reset and start over in the event the Net Sales for a
given Calendar Year exceeds the Minimum Annual Net Sales requirement. 
  

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

 For the Calendar Year 2010 - Minimum Annual Net Sales = $16,000,000; 
 For the Calendar Year 2011 - Minimum Annual Net Sales = $20,000,000; 
 For the Calendar Year 2012 and each Calendar
Year thereafter, Minimum Annual Net Sales shall be $20,000,000. 
 Thus, for example, if Buyer’s actual Net Sales for the
Calendar Year 2010 is $15,000,000; for the Calendar Year 2011 is $19,000,000; and for the Calendar Year 2012 is $19,000,000; then Nautilus shall have the right to terminate this Agreement by Written Notice to Buyer following the end of the Calendar
Year 2012 because the Annual Minimum Net Sales requirement has not been met for three consecutive Calendar Years. Termination for this reason does not excuse Buyer from paying the required Minimum Annual Payments under this License for any Calendar
Year prior to termination. If, on the other hand, the Net Sales for the Calendar Year 2010 is $15,000,000; the Net Sales for the Calendar Year 2011 is $19,000,000; and the Net Sales for the Calendar Year 2012 is $21,000,000; then the Minimum Annual
Net Sales has been met for the Calendar Year 2012 and there has not been three consecutive three (3) years

  

 pg. 17 

 
during which the Minimum Annual Net Sales has not been met. In this case, the three consecutive Calendar Year time period for determining a failure to meet Minimum Annual Net Sales will not
restart until such time, if any, that a Calendar Year again occurs in which the Net Sales falls below the applicable Minimum Annual Net Sales requirement for that Calendar Year. The Minimum Annual Net Sales requirement shall not apply to any
Calendar Year during which one or more Force Majeure events of Section 16.(c) significantly disrupts the ability of Buyer to make sales of Licensed Indoor Cycles and Accessories. The Calendar Year of any such Force Majeure disruption event
shall not be considered in determining whether the Minimum Annual Sales requirement has been met for three (3) consecutive Calendar Years, but shall not result in restarting the three (3) Calendar Year calculation. Thus, for example,
assume during the Calendar Year 2011, the Net Sales are $19,000,000; during the Calendar Year 2012 there is a Force Majeure event that significantly disrupts sales of Licensed Indoor Cycles and the Net Sales for Calendar Year 2012 are $6,000,000;
the Net Sales for the Calendar year 2013 are $18,000,000 and the net sales for the Calendar Year 2014 are $18,000,000. Based on these assumptions, there is no Minimum Annual Net Sales requirement for the Calendar Year 2012 because of the Force
Majeure event. Therefore, the License is not subject to termination for failure to meet the Minimum Annual Net Sales requirements for the three (3) Calendar Years of 2011, 2012 and 2013. However, the License is subject to termination for
failure to meet the Minimum Annual Net Sales requirements at the end of the Calendar Year 2014 because of the failure for the three (3) Calendar Years 2011, 2013 and 2014, which are deemed consecutive Calendar Years because the Force Majeure
event Calendar Year 2012 is not counted and does not restart the three consecutive Calendar Year count. 
 C. Termination for
Failure to Make the Minimum Royalty Payments. Nautilus shall have the right to terminate this License upon Written Notice to Buyer in the event any Minimum Royalty payment for a quarter required by Section 3.B. is not made when due and is not
paid within thirty (30) days of the Written Notice. 
 D. Events Upon Termination or Expiration. In the event of any
termination or expiration of this Agreement for any reason: 
 (i) Any and all use of Licensed Marks by Buyer, as well as of any
marks, names or domain names confusingly similar thereto, shall immediately cease except that Buyer may complete all unfinished goods (work-in-progress) and sell all inventory for up to six (6) months after termination. Buyer may not acquire
any additional parts or

  

 pg. 18 

 
materials to complete unfinished goods after termination of this Agreement. Any and all use by Buyer of any Licensed Patents and any other rights licensed by Nautilus under this License to Buyer
shall immediately cease upon sale of outstanding inventory. 
 (ii) All payments from Buyer to Nautilus that have accrued as of
the date of termination or expiration shall immediately become due and payable. 
 E. Additional Relief. The Parties shall be
entitled to such other relief as may be determined by a court of law as selected under Section 15.A. below. 
  

	 	12.	Term. 

 A. Except as
provided in Section 12.B. below, this License, including, but not limited to the rights licensed under Sections 2.A., 2.B.,2.C., 2.D., 2.E. and 2.F in the Commercial Channel, unless terminated in accordance with the terms of this License, shall
continue in force. 
 B. Term for the Permitted Retail Channel 
 (i) Initial Term: Unless terminated in accordance with its terms, the Initial Term of this License for the Permitted Retail Channel shall be
for only four (4) years from the effective date of the License. If no extension to the Initial Term is negotiated by the Parties, Buyer shall automatically have a two (2) year Wind Up Term to wind up its activity in the Permitted Retail
Channel and at the end of the Wind Up Term, Buyer shall cease all sales in the Permitted Retail Channel involving the Licensed Trademarks. 
 (ii) Notice for Renegotiation: No earlier than six months prior to the expiration of the Initial Term and no later than sixty (60) days prior to the expiration of this Initial Term for the Permitted
Retail Channel, Buyer may provide Written Notice to Nautilus of Buyer’s desire to renegotiate a license to rights for the Permitted Retail Channel for a period of time beyond the Initial Term. 
 (iii) Renewal Term: If Nautilus does not respond by written notice to Buyer’s request for renegotiation within sixty (60) days,
then this License for rights for the Permitted Retail Channel will continue for a Renewal Term of four (4) years commencing at the end of the Initial Term. 
 (iv) Second Notice for Renegotiation: No earlier than six months prior to the expiration of the Renewal Term and no later than sixty (60) days prior to the expiration of this Renewal Term, Buyer may
provide Written Notice to Nautilus of Buyer’s desire to renegotiate a license to rights for the Permitted Retail Channel for a period of time beyond the Renewal Term. 
  

 pg. 19 

 (v) If Nautilus does not respond by written notice to Buyer’s request to renegotiate a
license for rights for the Permitted Retail Channel, then Buyer’s rights in the Permitted Retail Channel shall continue and have the same term as Buyer’s rights in the Commercial Channel. 
 (v) If Nautilus does provide a response to the Buyer’s renegotiation request within the sixty (60) day response time, the Parties
agree to negotiate in good faith in an attempt to reach a new license agreement, which may be on different terms than this License Agreement, relating to rights in the Permitted Retail Channel. If within three (3) months of the response to
Buyer’s renegotiation request, the Parties are unable to agree to terms for a new license agreement for rights in the Permitted Retail Channel, then the Parties agree that they have failed to renegotiate a License for the Permitted Retail
Channel and Buyer shall enter the above defined two (2) year Wind Up Term. 
 (vi) Any expiration of rights licensed to
Buyer in the Permitted Retail Channel will not affect the Minimum Annual Payments under Section 3.C. above. 
  

	 	13.	Disclaimer. 

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

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

  

 pg. 20 

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

  

	 	15.	Controlling Law, Venue and Dispute Resolution. 

 A. Court and Law. This Agreement shall be interpreted in accordance with and governed by the substantive and procedural laws of the State of Washington, without regard to choice-of-law principles. The
parties hereby irrevocably consent to the exclusive jurisdiction of the courts of the State of Washington, Clark County, or of a U.S. District Court for the Western District of Washington, USA in connection with any dispute relating to this License
Agreement and/or to any alleged breach of this License Agreement. Each party hereby irrevocably waives any objection that the party may now or hereafter have regarding this choice of forum. 
 B. Resolution Procedures. The parties agree to follow procedures set forth in sub-sections 15.C. – 15.E. for the resolution of any
dispute, whether this License specifically recites the applicability of these dispute resolution procedures to the Dispute. 
 C.
Negotiated Resolution. Buyer and Nautilus wish to avoid disputes. In the event of any dispute, the parties shall first attempt to resolve the matter by an in-person meeting between executive level managers of Buyer and Nautilus to review a
presentation by each of them concerning the dispute. The meeting will be held in Seattle, Washington unless otherwise agreed. Unless otherwise agreed by Buyer and Nautilus, only if the executive level managers are unable to resolve the dispute
within the shorter of thirty (30) days of the first such meeting or forty-five (45) days from the first Written Notice by either Party requesting such meeting, shall any party be free to proceed under Section 15.D. 
 D. Mediation. Any Dispute that has not been resolved under Section 15.C. shall be the subject of non- binding mediation before a single
impartial mediator selected by mutual agreement of Buyer and Nautilus. This mediator shall be an attorney with at least 15 years experience in intellectual property licensing issues. Buyer and Nautilus agree to make a good faith effort to select a
mediator within thirty (30) days from the date that the mediation is first requested by Written Notice by either Buyer or Nautilus. Unless otherwise agreed to by the parties, the mediation will be held in Seattle, Washington and shall be
completed within sixty days of any such Written Notice of a request for mediation. A party shall not be entitled to request mediation until after the end of the negotiation and resolution procedure of Section 15.C. Each party shall bear its own
costs, including attorney fees of any mediation and shall

  

 pg. 21 

 
share equally the costs of the mediator. Unless otherwise agreed by the parties, only if mediation does not resolve the alleged claim or controversy, shall any party be free to proceed under
sub-section 15.E. 
 E. Litigation. Any dispute that is not resolved pursuant to the procedures of Section 15.C. and 15.D.
shall be subject to litigation by either party, subject to Section 15.A. The Parties agree that neither party shall be liable to the other party for any attorney fees in connection with any dispute, whether at trial, upon appeal, or otherwise.

  

	 	16.	General. 

 A. Nonwaiver.
No failure on the part of Buyer or Nautilus to exercise, and no delay in exercising, any right hereunder shall operate as a waiver thereof; nor shall any single or partial exercise by Buyer or Nautilus of any right hereunder preclude any further
exercise thereof of such right or of any other right. 
 B. Severability. No portion of Sections 2 and 3 of this License may be
severed from this License or otherwise altered, except by mutual written agreement of the Parties. If any portions of Sections 2 and 3 of this License are found to be unenforceable as written, then either Party shall have the right to terminate this
License upon thirty (30) days Written Notice to the other Party. Any provision of this License Agreement other than Sections 2 and 3 that are prohibited or rendered unenforceable by any law shall be ineffective only to the extent of the
prohibition or unenforceability without invalidating the remaining provisions of this Agreement. 
 C. Force Majeure. Neither
party shall be liable for delays due to any cause beyond the control and without the fault or negligence of the Party incurring the delay, including, to the extent it satisfies the above description, any fire, unusual weather conditions, riot, act
of God, act of the public enemy, death or incapacity of an individual who is to perform work, or other similar event. However, both Parties agree to seek to mitigate the potential impact of any such delay. The Party incurring the delay shall within
thirty (30) business days from the beginning of the delay, notify the other Party in writing of the causes of the delay and its probable extent. The notification of delay shall not be the basis for a request for additional compensation. In the
event of any such delay, any required completion date may be extended by a reasonable period not exceeding the time actually lost by reason of the delay. 
 D. No Other Representations. Buyer and Nautilus hereby acknowledge that they have not been induced to enter into this License by any representation or warranty not set forth in this License. 

 

 pg. 22 

 E. Headings. The headings and subheadings of this License are intended for convenience of
reference only and shall not be used to interpret this License or affect the construction of this License. 
 F. Construction.
Words importing the singular include the plural, words importing any gender include every gender and words importing persons include entities, corporate and otherwise; and (in each case) vice versa. Whenever the terms “including” or
“include” are used in this License in connection with a single item or a list of items within a particular classification (whether or not the term is followed by the phrase “but not limited to” or words of similar effect) that
reference shall be interpreted to be illustrative only, and shall not be interpreted as a limitation on, or an exclusive enumeration of the items within that classification. 
 G. Survival. The terms, provisions and representations contained in this License Agreement shall survive any termination or expiration of
this License Agreement to the extent that such survival is necessary to give effect to their full meaning and intent. Without limiting the foregoing, the parties expressly agree that the following Sections (including all sub-parts, unless a specific
sub-part is specified) of this License shall survive termination and expiration of this License: Section 1; Section 3 for Royalties on Net Sales prior to termination and the completion of unfinished goods under Section 11.C.;
Section 4 except for 4.B.; Sections 5, 6, 7, 8; Section 10; Sections 11.C. and 11.D.; Section 13; Section 14 in connection with the completion of unfinished goods under Section 11.C.; Section 15 and Section 16.

 H. No Third Party Beneficiaries. This License is intended solely for the benefit of the parties hereto. Except as expressly
set forth in the License, nothing in the License shall be construed to create any liability to or any benefit for any person not a party to this License. 
 I. Successors and Assigns. This License Agreement is personal to Buyer and shall not be assigned by Buyer, except to an Affiliate of Buyer, with the written consent of Nautilus, which consent shall not be
unreasonably withheld. No rights granted to Buyer under this License Agreement are assignable, transferable, or sub-licensable in any way. Nautilus shall have the right to assign this License and its rights hereunder to a successor in interest to
any portion of the Nautilus business that includes the Indoor Cycling business of Nautilus. 
 J. Effective Date. This License
Agreement shall be effective on the date of the last signature by the Parties as indicated on the signature page hereto (“Effective Date”). 
 K. Counterparts. This License Agreement may be executed in any number of counterparts, which together will constitute one instrument. 
  

 pg. 23 

 L. Independent Contractors. Buyer and Nautilus are independent contractors and are not the
agent(s) of one another for any purpose. Neither Buyer nor Nautilus shall have any authority to bind or obligate one another. 
 M. Ethical Conduct. Buyer and Nautilus shall use the highest ethical standards in their business activities and shall each not do anything to bring the other into an unfavorable light. 
 N. Determining Time Periods. Time periods for Written Notice under this Agreement, such as a time period for taking action upon Written
Notice, shall not count the day the Written Notice is effective and shall end at midnight Vancouver, Washington time of the last day of the time period. 
 In agreement hereto the parties have signed below. 
  

			
	 Xiamen World Gear Sports Goods Co., Ltd.
  
 (Buyer)
	    	 Nautilus, Inc.
  
 (Nautilus)

		
	 /s/ Michael Bruno
	    	 /s/ Kenneth L. Fish

	Signature	    	Signature
		
	 Michael Bruno
	    	 Kenneth L. Fish

	Printed Name	    	Printed Name
		
	 CEO
	    	 CFO

	Title	    	Title
		
	 December 5, 2009
	    	 December 5, 2009

	Date	    	Date
		    	

  

 pg. 24

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