Nautilus 2009 Annual Report Download - page 189

Execution Original
ATTACHMENT A-2
THIS SECURITY AGREEMENT, dated as of February 19, 2010 (this “ Agreement ”), is by and between MED-FIT SYSTEMS, INC., a
California corporation (the “ Debtor ”), and NAUTILUS, INC., a Washington corporation (the “ Secured Party ”).
W I T N E S S E T H:
WHEREAS, on or about the date hereof, the Debtor and the Secured Party have entered into an Asset Purchase Agreement (the “
Purchase Agreement ”), pursuant to which the Debtor has agreed to execute a note and a security agreement;
WHEREAS, on or about the date hereof, the Debtor has issued to the Secured Party a Secured Promissory Note in the amount of
$2,234,825 (as the same may be amended or restated from time to time, the “ Note ”); and
WHEREAS, the Secured Party’s receipt of the Note was subject to the condition, among others, that the Debtor shall execute and deliver
this Agreement and grant the security interest hereinafter described.
NOW THEREFORE, in consideration of the willingness of the Secured Party, subject to the terms and conditions set forth herein, to
accept the Note, and for other good and valuable consideration, receipt and sufficiency of which are hereby acknowledged, it is hereby agreed,
with the intent to be legally bound, as follows:
1. Defined Terms . Except as otherwise provided herein, all capitalized terms shall have the meanings ascribed to them in the Note.
2. Security Interest . As security for the Secured Obligations described in Section 3 hereof, Debtor hereby grants, assigns, and pledges to
the Secured Party a security interest in and lien on all of Debtor’
s right, title and interest, whether now owned or existing or hereafter acquired or
arising, in and to the following, together with any and all additions thereto and replacements therefor and proceeds and products thereof
(hereinafter referred to collectively as the “ Collateral ”):
(a) all raw materials, work in progress, and aftermarket parts inventory located at the factory and warehouse located at 709
Powerhouse Road, Independence, VA 24348 (the “ Warehouse ”) that was acquired by Debtor pursuant to the Purchase Agreement; it being
agreed that inventory acquired by Debtor after the Closing (as defined in the Purchase Agreement) shall not be included in the Collateral;
(b) all equipment located at the Warehouse;
(c) all books and records pertaining to any of the Collateral; and
ATTACHMENT A-2