Nautilus 2009 Annual Report Download - page 88

covenants contained in this Agreement, and, provided that Buyer makes a written claim for indemnification against Nautilus pursuant to
Section 10.7 below within the survival period (if there is an applicable survival period pursuant to Section 8.1 above), then Nautilus agrees
to indemnify Buyer from and against the entirety of any Adverse Consequences Buyer may suffer resulting from, arising out of, relating to,
in the nature of, or caused by the breach; provided, however, that (i) Nautilus shall not have any obligation to indemnify Buyer from and
against any Adverse Consequences resulting from, arising out of, relating to, in the nature of, or caused by the breach of any representation
or warranty of Nautilus contained in Article 3 above until Buyer has suffered Adverse Consequences by reason of all such breaches in
excess of a One Hundred Fifty Thousand U.S. Dollars ($150,000) aggregate deductible (after which point Nautilus will be obligated only
to indemnify Buyer from and against further such Adverse Consequences); and (ii) there will be a Two Million U.S. Dollars ($2,000,000)
aggregate ceiling on the obligation of Nautilus to indemnify Buyer from and against Adverse Consequences resulting from, arising out of,
relating to, in the nature of, or caused by breaches of the representations and warranties of Nautilus contained in Article 3 above.
(b) Nautilus further agrees to indemnify Buyer from and against the entirety of any Adverse Consequences Buyer may suffer
resulting from, arising out of, relating to, in the nature of, or caused by any liability of Nautilus that is not an Assumed Liability (including
any liability of Nautilus that becomes a liability of Buyer under any bulk transfer law of any jurisdiction, under any common law doctrine
of de facto merger or successor liability, or otherwise by operation of law).
(c) In the event Buyer incurs warranty expense in excess of Five Hundred Thousand U.S. Dollars ($500,000) on account of warranty
claims received by Buyer within one year following Closing for Schwinn Commercial Indoor Cycle products sold by Nautilus prior to
Closing, Nautilus shall pay to Buyer an amount equal to fifty percent (50%) of such excess. The obligation of Nautilus to provide such
payment shall be subject to receipt by Nautilus of documentation identifying the customer, the product defect and the product serial
number for all warranty claims received by Buyer during the one year period following Closing, together with a detailed accounting of the
warranty expense for such claims. For purposes of this Section 8.2, warranty expense shall consist of the direct labor and materials costs of
warranty repair and replacement, without mark-up or allocation of indirect costs.
8.3 Indemnification Provisions for Nautilus’ Benefit .
(a) In the event Buyer breaches any of its representations, warranties, and covenants contained in this Agreement, and, provided that
Nautilus makes a written claim for indemnification against Buyer pursuant to Section 10.7 below within the survival period (if there is an
applicable survival period pursuant to Section 8.1 above), then Buyer agrees to indemnify Nautilus from and against the entirety of any
Adverse Consequences suffered resulting from, arising out of, relating to, in the nature of, or caused by the breach.
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