Nautilus 2009 Annual Report Download - page 184

Note in accordance with
Section 2.3 of the Purchase Agreement, interest on the unpaid balance of the principal amount of this Note shall accrue
at the Interest Rate from the date of such subordination. IT IS PROVIDED FURTHER, that, subject to Section 13 hereof, interest on the unpaid
balance of the principal amount of the Note shall accrue at the rate of eighteen percent (18%) per annum (computed on the basis of a 360-day
year and the actual number of days elapsed) (the
“ Penalty Rate ”) from the date such payment was due until repayment if any payment is made
more than thirty (30) days beyond the due date set forth in Section 3 hereof. Holder shall give Debtor ten (10) days notice and the opportunity to
cure before implementing the Penalty Rate.
Section 3. Payment .
Payment of Principal and, if applicable under Section 2 hereof, any interest owing under the Interest Rate or Penalty Rate, shall be
made in eighteen (18) equal monthly installments, due the 10 day of each month, in the amount of One Hundred Twenty Four Thousand One
Hundred Fifty Six and 94/100 U.S. Dollars ($124,156.94) per payment, plus any applicable interest. The first installment shall be due on
June 10, 2010. This Note may be prepaid, in whole or in part, at any time prior to the Maturity Date at the election of the Debtor. Any partial
payments of indebtedness represented by this Note shall be applied first to interest accrued to the date of prepayment, then to the payment of any
other amounts (except Principal) at the time unpaid hereunder, and finally to the payment of Principal. Payments and prepayments of Principal
and applicable interest on this Note shall be payable by wire transfer of immediately available funds to the account of the Holder or by certified
or official bank check payable to the Holder mailed to the Holder at the address of the Holder as set forth on the records of the Debtor or such
other address as shall be designated in writing by the Holder to the Debtor.
Section 4. Security Agreement .
This Note is subject to the terms and conditions of that certain Security Agreement dated as of the date hereof, by and between the
Holder and the Debtor (the “ Security Agreement ”), and each holder of this Note, by his, her or its acceptance hereof, is entitled to the rights
and benefits of, and agrees to be bound by, the Security Agreement.
Section 5. Defenses .
The obligations of the Debtor under this Note shall not be subject to reduction, limitation, impairment, termination, defense, set-off,
counterclaim or recoupment for any reason.
Section 6. Events of Default .
The occurrence of any of the following events shall be deemed to constitute an “ Event of Default ” hereunder:
(i) any material breach of the Security Agreement by the Debtor which is not cured within ten (10) business days after notice of
default from Holder; provided however, that Debtor’s breach of the covenant contained in Section 5(c) of the Security Agreement
regarding the unauthorized removal of Collateral shall be deemed to be an incurable default;
(ii) any payment under Section 3 becoming more than sixty (60) days overdue;
(iii) any sale, exchange, conveyance or other disposition of the capital stock of the Debtor in which more than fifty percent
(50%) of the voting power of the Debtor shifts to
ATTACHMENT A-1
th