Nautilus 2009 Annual Report Download - page 279

Borrower, (v) deferred expenses, and (vi) any other intangible asset of Borrower that should be classified as such on the balance sheet of
Borrower in accordance with GAAP, less all liabilities on the balance sheet of Borrower.
“ Default ” means any event or occurrence that with the passage of time, or the provision of notice, or both, would constitute an
Event of Default.
“ Default Rate ” means an interest rate that is 3 percent per annum greater than the interest rate or rates in effect with respect to the
Revolving Loan in question immediately prior to the occurrence of such Event of Default.
“ Dilution Reserve Percentage ”
means, for any calendar quarter in question, the greater of (expressed as a percentage) (a) the amount
of non-cash trade credits (credit memos, reserves, rebates, and similar items) divided by the total amount of retail sales reported by Borrower in
the financial statements for such quarter (other than sales to individuals who purchased Inventory directly from Borrower), and (b) the amount
reported by Borrower in the financial statements for such quarter as a rebate, allocation, or similar reserve divided by the total Commercial
Accounts Receivable for such quarter.
“ Dividend Determination Date ” has the meaning specified in Section 9.4 of this Agreement.
“ Eligible Commercial Accounts Receivable ” means all Commercial Accounts Receivable of Borrower meeting all of the following
criteria and in which Lender has a valid, perfected first priority security interest:
(a) A Commercial Account Receivable that arose from a bona fide sale of goods by Borrower, or as a result of services
performed by Borrower under an enforceable contract, provided that such goods have been shipped to the appropriate account debtor (or the sale
otherwise has been consummated), and, in the case of services, the services have been performed for the account debtor in question substantially
in accordance with the contract or agreement governing such services;
(b) A Commercial Account Receivable as to which the title of Borrower to the Commercial Account Receivable is absolute
and is not subject to any prior assignment, claim, or Lien, other than the Lien created by the Loan Documents and inchoate tax Liens;
(c) A Commercial Account Receivable as to which the amount shown on the books of Borrower is owing to Borrower and no
partial payment has been made thereon, except as reflected on the books of Borrower;
(d) A Commercial Account Receivable to the extent that it is not subject to any reduction, counterclaim, setoff, recoupment,
or any present claim for credits, allowances, or adjustment by the account debtor because of returned, inferior, or damaged goods, unsatisfactory
services, or for any other reason, except for customary discounts allowed for prompt payment (provided, however, that at all times Borrower
shall reduce the amount of Eligible Commercial Accounts Receivable by the actual amount of credits, offsets, allowances,
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