Nautilus 2013 Annual Report Download - page 49

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As of December 31, 2013 , we had no outstanding borrowings and $0.5 million
in standby letters of credit issued under the Loan Agreement. As
of December 31, 2013 , we were in compliance with the financial covenants of the Loan Agreement and approximately $15.3 million
was
available for borrowing.
Sherborne Note Payable
On September 3, 2010, we entered into a Note Purchase Agreement (the “Purchase Agreement”)
with certain entities (collectively, the
“Sherborne Purchasers”) under common control of Sherborne Investors GP, LLC and its affiliates (collectively “Sherborne”).
Sherborne was
formerly our largest shareholder and is controlled by Edward J. Bramson, our former Chairman and Chief Executive Officer, and Craig L.
McKibben, a former member of our Board of Directors.
Pursuant to the Purchase Agreement, we issued to the Sherborne Purchasers $6.1 million
in aggregate principal amount at maturity of Increasing
Rate Senior Discount Notes (the “Notes”). The Notes had an original principal amount totaling $5.0 million
and an original maturity date of
December 31, 2012. On March 12, 2012, the maturity date of the Notes was automatically extended under certain terms of the Purchase
Agreement to May 2, 2013.
On July 19, 2011, beneficial interest in the Notes was assigned by the Sherborne Purchasers pro-
rata to their respective investors in the manner
permitted by the Purchase Agreement. Such assignment was made in connection with the resignation of Messrs. Bramson and McKibben from
their respective positions with Nautilus on May 26, 2011, and the subsequent pro-rata distribution by certain Sherborne-
affiliated entities to their
respective investors of our common stock owned by such entities.
We repaid all amounts outstanding under the Notes on March 30, 2012. If all of the Notes were paid on the original maturity date, the effective
rate of interest over the term of the Purchase Agreement would have been approximately 8.7%
per annum, which was the rate at which interest
expense was accrued in periods preceding the repayment date. The actual effective rate of interest through the repayment date was approximately
6.4% per annum.
42