Nautilus 2006 Annual Report Download - page 131

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agreement to manufacture or sell, any product for delivery to any competitor of Purchaser. Notwithstanding the foregoing, Seller
will be allowed to continue to sell certain products to certain existing customers as separately agreed in writing by Purchaser.
4.2 Audited Financial Statements.
Seller agrees that commencing January 1, 2007 and at all times prior to expiration of the Option, or
if the Option is exercised, at all times to and including the Closing Date, Seller shall maintain books and records in a manner
necessary and appropriate to prepare audited financial statements prepared in accordance with U.S. GAAP. Seller further agrees to
appoint Deloitte Touche Tohmatsu (“Deloitte”) as its independent auditors for 2007. The incremental cost of Deloitte as auditors
compared to the cost of Seller’s previous statutory auditors will be reimbursed by Purchaser; provided, that if the Option terminates
without exercise, such reimbursement shall be limited to incremental costs incurred by Seller for services provided through June 30,
2007.
5. EXCLUSIVE PERIOD OF NEGOTIATION . From the date of this Agreement until the earlier to occur of the parties' mutual
execution of the Purchase Agreement or termination of the Option, other than as contemplated by this Agreement, Seller will not, directly
or indirectly, through any officer, director, employee, agent or otherwise (i) solicit, initiate or encourage submission of any proposals or
offers from any corporation, partnership, persons or group relating to any acquisition, purchase or option to purchase any of the Business
or Assets or stock of Seller, or any merger, consolidation, recapitalization or other business combination of any kind involving Seller, or
any other transaction that is incompatible with the transactions described in this Agreement, or (ii) furnish to any person (other than its
own professional advisors) any information with respect to any such transaction. From the date of this Agreement until the earlier to
occur of (i) termination of the Option, (ii) termination of the Purchase Agreement and (iii) December 31, 2007, Purchaser shall not
without the written consent of Seller (which consent shall not be unreasonably withheld) acquire or enter into negotiations to acquire the
assets of any other business engaged in the manufacture of fitness equipment in China that has assets with a value exceeding (*).
6. DUE DILIGENCE AND ACCESS TO RECORDS. Commencing on the date of this Agreement and until the earlier of the mutual
execution of the Purchase Agreement or termination of the Option, Purchaser will have reasonable opportunity and access to investigate
the Business and the Assets, including Seller's books, records, and all relevant financial and operational information regarding the Assets
and Business that Purchaser deems necessary to provide a basis for determining whether it will exercise the Option.
(*) Certain information on this page has been omitted and filed separately with the Commission. Confidential treatment has been requested
with respect to the omitted portions.