Nautilus 2009 Annual Report Download - page 211

Thus, for example, if the previous year Minimum Royalty was $300K per year and the CPI-U is as shown above, then the
Minimum Royalty for the current year shall increase by 4.0% (because the actual change in the CPI is greater than the
maximum percent change of 4%) or $12,000 to $312K per year (payable as $78,000 per quarter). For the avoidance of doubt,
the Minimum Royalty is paid only when the actual percent royalty on Net Sales for a quarter is less than the Minimum
Royalty for the same quarter.
The Minimum Royalty stated throughout this Agreement is for calendar year 2010. All Minimum Royalty amounts shall be
adjusted under this section even those that begin later such as those specific in the Renewal and Transition Terms, below.
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3.2. The Minimum Royalty and Minimum Invoice Price shall change annually based on the annual U.S. CPI-U index. The
Minimum Royalty and Minimum Invoice Price shall change in direct proportion to the percent change in the CPI index
between the current year and the previous year, provided however that the amount of any change in the Minimum Royalty and
the Minimum Invoice Price shall not exceed 4.0% per annum. The following example illustrates the computation of percent
change:
CPI for current year
136.0
Less CPI for previous year
129.9
Equals index point change
6.1
Divided by previous year CPI
129.9
Equals
0.047
Result multiplied by 100
0.047 x 100
Equals percent change
4.7
3.3.
The
Initial Term
: CYs 2010
—
2013 (all products)
3.3.1. Royalty shall be calculated on Net Sales of Nautilus Branded and Commercial Branded Strength Products,
Accessories, and Cardio Products
3.3.2.
On Net Sales up to $20M, no royalty calculated, except Minimum Royalty still applicable.
3.3.3. On Net Sales over $20M, Buyer shall pay Nautilus a royalty equal to 2% of those Net Sales or the Minimum
Royalty, whichever is greater.