Nautilus 2009 Annual Report Download - page 183

ATTACHMENT A-1
THIS NOTE (THE “NOTE”) HAS BEEN ACQUIRED FOR INVESTMENT PURPOSES ONLY AND HAS NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR UNDER ANY
APPLICABLE STATE SECURITIES LAWS. THIS NOTE MAY NOT BE SOLD OR OTHERWISE TRANSFERRED OR
PLEDGED, EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR
SUCH APPLICABLE STATE SECURITIES LAWS OR PURSUANT TO EXEMPTIONS THEREFROM.
THIS NOTE IS SUBJECT TO THE TERMS AND CONDITIONS OF THE SECURITY AGREEMENT BY AND BETWEEN
MED-FIT SYSTEMS, INC. AND NAUTILUS, INC., DATED AS OF FEBRUARY 19, 2010, AS AMENDED FROM TIME TO
TIME, AND IS ENTITLED TO THE BENEFITS THEREOF.
MED-FIT SYSTEMS, INC.
SECURED PROMISSORY NOTE
FOR VALUE RECEIVED , the undersigned, Med-Fit Systems, Inc., a California corporation (together with successor thereto by way of
merger, consolidation, sale or otherwise, the “Debtor ”), hereby promises to pay to the order of Nautilus, Inc., a Washington corporation, or its
successors or assigns (the “Holder ”), the principal sum of Two Million Two Hundred Thirty Four Thousand Eight Hundred and Twenty Five
U.S. Dollars ($2,234,825.00) (the “Principal ”) in lawful money of the United States of America, together with interest on the unpaid principal
balance from time to time outstanding hereunder, on the terms and conditions as follows:
Section 1. Purchase Agreement .
This Note is being issued pursuant to the Asset Purchase Agreement dated as of February 18, 2010 (the “ Purchase Agreement ”)
by
and between the Debtor and the Holder. Capitalized terms used and not otherwise defined herein have the meanings ascribed thereto in the
Purchase Agreement.
Section 2. Interest .
No interest shall be due if payments are timely made pursuant to Section 3 hereof and the Debtor fulfills all of its obligations under
this Note, the Security Agreement (as defined below), and the Purchase Agreement. PROVIDED, that if Debtor makes more than three
(3) payments that are more than ten (10) days after the due date set forth in Section 3 below, then, subject to Section 13 hereof, interest on the
unpaid balance of the principal amount of this Note shall accrue at the rate of six percent (6%) per annum (computed on the basis of a 360-day
year and the actual number of days elapsed) (the
“Interest Rate ”) from the date on which the first of such three late payments was due until the
date of payment. IT IS PROVIDED FURTHER, that, in the event that Nautilus subordinates the security interest securing this
ATTACHMENT A-1
Vancouver, Washington
$2,234,825.00
February 19, 2010