Nautilus 2009 Annual Report Download - page 148

(ii) Buyer shall have no rights in the Other Retail Channel for eighteen (18) months from the execution of this Agreement per section
2.C.(ii).
D. 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.
E. Payment Schedule. The Royalties of this Stairmaster Technology Agreement will accrue upon the earlier of the invoice date, or the
shipping date for the goods by Buyer. The Royalty amounts set forth in sections 4.A.; 4.B. and 4.C. are payable quarterly from Buyer to
Nautilus within thirty (30) days after each March 31 , June 30 , September 30 , and December 31 , beginning January 1. 2010. The
quarterly royalty payments shall accompany the required reports of Section 4.G.
F. 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 D to this Agreement. 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.
G. Reports and Records. Buyer shall keep and preserve accurate records of all of its operations within the scope of this Agreement. With
each payment by Buyer to Nautilus, and for the Calendar Quarter for which a payment is being paid, Buyer shall provide to Nautilus a
report stating the Gross Sales, Net Sales, Net Sales in the Commercial Channel, Net Sales in the IBD and SF Channel, Net Sales for the
Other Channel and returns by channel and product number (preferably SKU identifiers), Royalty calculations, and Royalty due. Nautilus
and its agents (e.g., accountants) shall have the right to inspect and copy such records at reasonable times.
H. Costs of Inspection and Copying. The cost of any inspection and copying of records under Section 4/G/. 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.
I. 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.
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