Nautilus 2009 Annual Report Download - page 113

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
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