Nautilus 2008 Annual Report Download - page 86

(b) The definition of “Availability Reserve” in Section 1.1 of the Loan Agreement is hereby amended in its entirety to read as
follows:
“ Availability Reserve : the sum (without duplication) of (a) the Inventory Reserve; (b) the Rent and Charges Reserve (including,
without limitation, a reserve in an amount determined appropriate by Agent in its discretion (in an amount not to exceed $50,000 if
the Lien Waiver delivered in connection with such location on or around the Closing Date remains in full force and effect) in
connection with the Bolingbrook, Illinois location of US Borrower, which reserve shall be in effect during any period beginning 180
days after the Closing Date that Borrower maintains Inventory or Equipment at that location); (c) the LC Reserve; (d) the Bank
Product Reserve; (e) all accrued Royalties, whether or not then due and payable by a Borrower, unless Agent determines in its
discretion that such Royalties are not necessary or useful to the liquidation or other disposition of any Collateral; (f) the aggregate
amount of liabilities (other than inchoate liabilities) secured by Liens upon Collateral that are senior to Agent’s Liens (but imposition
of any such reserve shall not waive an Event of Default arising therefrom); (g) the Books and Records Block; (h) the Appraisal
Reserve; (i) the Disclosed Sale Reserve; (j) commencing on the earlier of (i) the day on which US Borrower receives the Tax Refund
or (ii) May 18, 2009, a reserve in the amount of $1,000,000 on account of payroll; (k) commencing on the earlier of (i) the day on
which US Borrower receives the Tax Refund or (ii) May 18, 2009, a reserve in the amount of $1,000,000; and (l) such additional
reserves, in such amounts and with respect to such matters, as Agent in its discretion may elect to impose from time to time.”
(c) The definition of “Borrowing Base” in Section 1.1 of the Loan Agreement is hereby amended in its entirety to read as follows:
“ Borrowing Base : on any date of determination, an amount equal to the lesser of (a) the aggregate amount of Revolver
Commitments, minus the LC Reserve; or (b) the sum of (i) the Accounts Formula Amount, plus (ii) the Inventory Formula Amount,
plus (iii) the Foreign Assets Formula Amount, plus (iv) the Equipment Formula Amount, minus (vi) the Availability Reserve.”
(d) The definition of “Dominion Account” in Section 1.1 of the Loan Agreement is hereby amended and restated in its entirety to
read as follows:
“ Dominion Account : a special account established by Borrowers at Bank of America or another bank acceptable to Agent, over
which Agent has exclusive control for withdrawal purposes and into which proceeds of Accounts shall be deposited.”
(e) The definition of “EBITDA” in Section 1.1 of the Loan Agreement is hereby amended and restated in its entirety to read as
follows:
“ EBITDA : determined on a consolidated basis for Borrowers and Subsidiaries, net income, calculated before (in each case, to the
extent included in determining net income and to the extent incurred or attributable during the applicable measurement period)
(i) interest expense, (ii) provision for income taxes, (iii) depreciation and amortization expense, (iv) gains or losses arising from the
sale of capital assets, (v) gains arising from the write-up of assets, (vi) any extraordinary gains, (vii) non-
recurring charges during the
month of December 2008 as listed on Schedule E hereto, (viii) up to $8,000,000 in non-
cash expenses incurred during the first Fiscal
Quarter of 2009 in connection with
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Certain information has been redacted from this page and filed separately with the Commission. Confidential treatment has been requested
with respect to the redacted portion.