Nautilus 2006 Annual Report Download - page 129

Exhibit 10.37
PURCHASE OPTION AGREEMENT
THIS PURCHASE OPTION AGREEMENT (" Agreement
") is entered effective the 31st day of January 2007, by and between Nautilus,
Inc., a Washington corporation, (" Purchaser "), and Land America Health & Fitness Co., LTD. (“Land America”), a People’s Republic of
China corporation (" Seller ").
R E C I T A L S:
WHEREAS, among its activities, Seller engages in the manufacture of certain of Purchaser’s proprietary line of health and fitness
equipment and selected other fitness equipment (the "Business"); and
WHEREAS, Seller desires to provide Purchaser an exclusive, time-
limited option to buy the Business and substantially all of the assets of
the Business, and Purchaser desires to obtain an exclusive, time-
limited option to purchase the Business and substantially all of the assets of the
Business; and
WHEREAS, Nautilus has entered into a Purchase Option Agreement, of even date herewith, providing for an option to purchase
substantially all of the assets of Treuriver Investments Limited (the “Treuriver Option”, and such Agreement the “Treuriver Option
Agreement”); and
WHEREAS, Seller and Purchaser have finalized the terms of the attached Asset Purchase Agreement and associated Escrow Agreement
to be used at Closing for the purchase transaction contemplated herein.
NOW, THEREFORE, in consideration of the mutual agreements and covenants contained herein, and for other good and valuable
consideration, the receipt and sufficiency of which hereby are acknowledged, Purchaser and Seller hereby agree as follows:
1. OPTION GRANT . Seller hereby grants to Purchaser the exclusive option (the "Option") to acquire those of Seller’s assets (the
"Assets") used or useful, now or at the time of exercise of the Option, in the design, manufacture, production or delivery of Purchaser’s
products and other fitness equipment, including, without limitation, all tangible and intangible assets, machines, devices, instruments and
components and related intellectual properties, including, but not limited to know-how, facility layouts, tooling, drawings, engineering
drawings, process instructions, quality assurance tests, inventory, materials, Seller lists, vendor lists and related items sufficient to enable
Purchaser to continue the design, manufacture, production and delivery of Purchaser’s products in the manner theretofore produced by
Seller. The Assets shall not include any cash, marketable securities, accounts receivable, or assets not used in the design, manufacture,
production or delivery of Purchaser
’
s products or other fitness equipment.
2. OPTION FEE . In consideration of the grant of the Option, Purchaser shall pay to Seller an option fee of Four Million U.S. Dollars
($4,000,000) (the "Option Fee"). In the event