Security Agreement dated as of March 8, 2010



 Exhibit 10.31 
 SECURITY AGREEMENT 
 This SECURITY AGREEMENT, dated as
of March 8, 2010, is by and between NAUTILUS, INC., a Washington corporation (the “Debtor”), and BANK OF THE WEST (“the Secured Party”). 
 WHEREAS, the Debtor has entered into a credit agreement dated as of the date hereof (as amended and in effect from time to time, the “Credit Agreement”), with the Secured Party, pursuant to
which the Secured Party, subject to the terms and conditions contained therein, is to make loans or otherwise to extend credit to the Debtor; and 
 WHEREAS, it is a condition precedent to the Secured Party’s making any loans or otherwise extending credit to the Debtor under the Credit Agreement that the Debtor execute and deliver to the Secured
Party a security agreement in substantially the form hereof; and 
 WHEREAS, the Debtor wishes to grant a security interest in
favor of the Secured Party as herein provided; 
 NOW, THEREFORE, in consideration of the promises contained herein and for
other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows: 
 1. Definitions. All capitalized terms used herein without definitions shall have the respective meanings provided therefor in the Credit Agreement. The term “State,” as used
herein, means the State of Washington. All terms defined in the Uniform Commercial Code of the State and used herein shall have the same definitions herein as specified therein. However, if a term is defined in Article 9 of the Uniform
Commercial Code of the State differently than in another Article of the Uniform Commercial Code of the State, the term has the meaning specified in Article 9. 
 2. Grant of Security Interest. The Debtor hereby grants to the Secured Party, to secure the payment and performance in full of all of the Obligations, a security interest to the Secured
Party in the following properties, assets and rights of the Debtor, wherever located, whether now owned or hereafter acquired or arising, and all proceeds and products thereof (all of the same being hereinafter called the “Collateral”):
all personal and fixture property of every kind and nature including without limitation all goods (including inventory, equipment and any accessions thereto), instruments (including promissory notes), documents, accounts (including
health-care-insurance receivables), chattel paper (whether tangible or electronic), deposit accounts, letter-of-credit rights (whether or not the letter of credit is evidenced by a writing), commercial tort claims, securities and all other
investment property, supporting obligations, any other contract rights or rights to the payment of money, insurance claims and proceeds, and all general intangibles (including all payment intangibles). The Secured Party acknowledges that the
attachment of its security interest in any additional commercial tort claim as original collateral is subject to the Debtor’s compliance with Section 4.6. Notwithstanding anything in this Section to the contrary, the following shall not
constitute “Collateral” hereunder: (a) equipment acquired after the Closing Date pursuant to Capital Leases in compliance with the Credit Agreement to the extent that the agreements with respect thereto prohibit the inclusion of

  

 1 








 
such equipment as Collateral; and (b) any intent-to-use trademark application to the extent and for so long as creation by the Debtor of a security interest therein would result in the
abandonment, invalidation, or unenforceability thereof. Notwithstanding anything in this Section to the contrary, the Collateral constituting stock in foreign Subsidiaries shall be limited as set forth in the Pledge Agreement. 
 3. Authorization to File Financing Statements. The Debtor hereby irrevocably (until termination of this Agreement) authorizes
the Secured Party at any time and from time to time to file in any filing office in any Uniform Commercial Code jurisdiction any initial financing statements and amendments thereto that (a) indicate the Collateral (i) as all assets of the
Debtor or words of similar effect, regardless of whether any particular asset comprised in the Collateral falls within the scope of Article 9 of the Uniform Commercial Code of the State or such jurisdiction, or (ii) as being of an equal or
lesser scope or with greater detail, and (b) provide any other information required by part 5 of Article 9 of the Uniform Commercial Code of the State, or such other jurisdiction, for the sufficiency or filing office acceptance of any
financing statement or amendment, including (i) whether the Debtor is an organization, the type of organization and any organizational identification number issued to the Debtor and, (ii) in the case of a financing statement filed as a
fixture filing or indicating Collateral as as-extracted collateral or timber to be cut, a sufficient description of real property to which the Collateral relates. The Debtor agrees to furnish any such information to the Secured Party promptly upon
the Secured Party’s request. The Debtor also ratifies its authorization for the Secured Party to have filed in any Uniform Commercial Code jurisdiction any like initial financing statements or amendments thereto if filed prior to the date
hereof. 
 4. Other Actions. To further the attachment, perfection and first priority of, and the ability of the
Secured Party to enforce, the Secured Party’s security interest in the Collateral, and without limitation on the Debtor’s other obligations in this Agreement, the Debtor agrees, in each case at the Debtor’s expense, to take the
following actions with respect to the following Collateral: 
 4.1 Promissory Notes and Tangible Chattel
Paper. If the Debtor shall at any time hold or acquire any promissory notes or tangible chattel paper, in each case to the extent that the aggregate amount of such promissory notes or tangible chattel paper (along with all other
Collateral of any type described above) exceeds $250,000, the Debtor shall forthwith endorse, assign and deliver the same to the Secured Party, accompanied by such instruments of transfer or assignment duly executed in blank as the Secured Party may
from time to time specify. 
 4.2 Deposit Accounts. For each deposit account that the Debtor at
any time opens or maintains, the Debtor shall, at the Secured Party’s request and option, pursuant to an agreement in form and substance satisfactory to the Secured Party in its Permitted Discretion, either (a) cause the depositary bank to
comply at any time with instructions from the Secured Party to such depositary bank directing the disposition of funds from time to time credited to such deposit account, without further consent of the Debtor, or (b) arrange for the Secured
Party to become the customer of the depositary bank with respect to the deposit account, with the Debtor being permitted, only with the consent of the Secured Party, to exercise rights to withdraw funds from such deposit account. The

  

 2 








 
Secured Party agrees with the Debtor that the Secured Party shall not give any such instructions or withhold any withdrawal rights from the Debtor, unless an Event of Default has occurred and is
continuing, or would occur, if effect were given to any withdrawal not otherwise permitted by the Loan Documents. The provisions of this paragraph shall not apply to (i) any deposit account for which the Debtor, the depositary bank and the
Secured Party have entered into a cash collateral agreement specially negotiated among the Debtor, the depositary bank and the Secured Party for the specific purpose set forth therein, (ii) a deposit account for which the Secured Party is the
depositary bank and is in automatic control, and (iii) deposit accounts specially and exclusively used for payroll, payroll taxes and other employee wage and benefit payments to or for the benefit of the Debtor’s salaried employees, and
(iv) deposit accounts that contain no more than $50,000 in any such deposit account at any time and no more than $250,000 in the aggregate in all such deposit accounts under this clause (iv). 
 4.3 Investment Property. If the Debtor shall at any time hold or acquire any certificated securities, to the
extent that the aggregate amount of such certificated securities exceeds $250,000, the Debtor shall forthwith endorse, assign and deliver the same to the Secured Party, accompanied by such instruments of transfer or assignment duly executed in blank
as the Secured Party may from time to time specify. If any securities in the aggregate amount exceeding $250,000 now or hereafter acquired by the Debtor are uncertificated and are issued to the Debtor or its nominee directly by the issuer thereof,
the Debtor shall immediately notify the Secured Party thereof and, at the Secured Party’s request and option, pursuant to an agreement in form and substance satisfactory to the Secured Party in its Permitted Discretion, either (a) cause
the issuer to agree to comply with instructions from the Secured Party as to such securities, without further consent of the Debtor or such nominee, or (b) arrange for the Secured Party to become the registered owner of the securities. If any
securities, whether certificated or uncertificated, or other investment property now or hereafter acquired by the Debtor, to the extent that the aggregate amount of such securities or investment property exceeds $250,000, are held by the Debtor or
its nominee through a securities intermediary or commodity intermediary, the Debtor shall immediately notify the Secured Party thereof and, at the Secured Party’s request and option, pursuant to an agreement in form and substance satisfactory
to the Secured Party in its Permitted Discretion, either (i) cause such securities intermediary or (as the case may be) commodity intermediary to agree to comply with entitlement orders or other instructions from the Secured Party to such
securities intermediary as to such securities or other investment property, or (as the case may be) to apply any value distributed on account of any commodity contract as directed by the Secured Party to such commodity intermediary, in each case
without further consent of the Debtor or such nominee, or (ii) in the case of financial assets or other investment property held through a securities intermediary, arrange for the Secured Party to become the entitlement holder with respect to
such investment property, with the Debtor being permitted, only with the consent of the Secured Party, to exercise rights to withdraw or otherwise deal with such investment property. The Secured Party agrees with the Debtor that the Secured Party
shall not give any such entitlement orders or instructions or directions to any such issuer, securities intermediary or commodity intermediary, and shall not withhold its consent to the exercise of any withdrawal or

  

 3 








 
dealing rights by the Debtor, unless an Event of Default has occurred and is continuing, or, after giving effect to any such investment and withdrawal rights not otherwise permitted by the Loan
Documents, would occur. The provisions of this paragraph shall not apply to any financial assets credited to a securities account for which the Secured Party is the securities intermediary. 
 4.4 Collateral in the Possession of a Bailee. If any Collateral is at any time in the possession of a bailee,
the Debtor shall promptly notify the Secured Party thereof and, at the Secured Party’s request and option, shall promptly obtain an acknowledgement from the bailee, in form and substance satisfactory to the Secured Party in its Permitted
Discretion, that the bailee holds such Collateral for the benefit of the Secured Party, and that such bailee agrees to comply, without further consent of the Debtor, with instructions from the Secured Party as to such Collateral, provided that if no
Default or Event of Default has occurred and is continuing, the Debtor does not need to comply with the provisions of this Section so long as the Collateral is not in possession of any such bailee for a period longer than 30 days and no more
than $250,000 of Collateral is in possession of any such bailee (or $1,000,000 in possession of all bailees) at any time. The Secured Party agrees with the Debtor that the Secured Party shall not give any such instructions unless an Event of Default
has occurred and is continuing or would occur after taking into account any action by the Debtor with respect to the bailee. 
 4.5 Letter-of-Credit Rights. If the Debtor is at any time a beneficiary under a letter of credit, to the extent that the aggregate amount of any such letters of credit exceeds $250,000, the
Debtor shall promptly notify the Secured Party thereof and, at the request and option of the Secured Party, the Debtor shall, pursuant to an agreement in form and substance satisfactory to the Secured Party in its Permitted Discretion, either
(a) arrange for the issuer and any confirmer or other nominated person of such letter of credit to consent to an assignment to the Secured Party of the proceeds of the letter of credit, or (b) arrange for the Secured Party to become the
transferee beneficiary of the letter of credit. 
 4.6 Commercial Tort Claims. If the Debtor shall
at any time hold or acquire a commercial tort claim, to the extent that the aggregate amount of any such commercial tort claims exceeds $250,000, the Debtor shall immediately notify the Secured Party in a writing signed by the Debtor of the
particulars thereof and grant to the Secured Party in such writing a security interest therein and in the proceeds thereof, all upon the terms of this Agreement, with such writing to be in form and substance satisfactory to the Secured Party.

 4.7 Other Actions as to Any and All Collateral. The Debtor further agrees, at the request and
option of the Secured Party, to take any and all other commercially reasonable actions the Secured Party may determine in its Permitted Discretion to be necessary or useful for the attachment, perfection and first priority of, and the ability of the
Secured Party to enforce, the Secured Party’s security interest in any and all of the Collateral, including, without limitation, (a) executing, delivering and, where appropriate, filing financing statements and amendments relating thereto
under the Uniform Commercial Code, to the extent, if any, that the Debtor’s signature thereon is required

  

 4 








 
therefor, (b) causing the Secured Party’s name to be noted as secured party on any certificate of title for a titled good if such notation is a condition to attachment, perfection or
priority of, or ability of the Secured Party to enforce, the Secured Party’s security interest in such Collateral, (c) complying with any provision of any statute, regulation or treaty of the United States as to any Collateral if
compliance with such provision is a condition to attachment, perfection or priority of, or ability of the Secured Party to enforce, the Secured Party’s security interest in such Collateral, (d) obtaining governmental and other third party
waivers, consents and approvals in form and substance satisfactory to Secured Party in its Permitted Discretion, including, without limitation, any consent of any licensor, lessor or other person obligated on Collateral, (e) obtaining waivers
from mortgagees and landlords in form and substance satisfactory to the Secured Party in its Permitted Discretion and (f) taking all actions under any earlier versions of the Uniform Commercial Code or under any other law, as reasonably
determined by the Secured Party to be applicable in any relevant Uniform Commercial Code or other jurisdiction, including any foreign jurisdiction. 
 5. Relation to Other Security Documents. The provisions of this Agreement supplement the provisions of any real estate mortgage or deed of trust granted by the Debtor to the Secured Party
which secures the payment or performance of any of the Obligations. Nothing contained in any such real estate mortgage or deed of trust shall derogate from any of the rights or remedies of the Secured Party hereunder. In addition to the provisions
of this Agreement being so read and construed with any such mortgage or deed of trust, the provisions of this Agreement shall be read and construed with the other Security Documents referred to below in the manner so indicated. 
 5.1 IP Security Agreements. Concurrently herewith the Debtor is also executing and delivering to the Secured
Party the IP Security Agreements pursuant to which the Debtor is granting to the Secured Party security interests in certain Collateral consisting of patents and patent rights, trademarks, service marks and trademark and service mark rights,
together with the goodwill appurtenant thereto. The provisions of the IP Security Agreements are supplemental to the provisions of this Agreement, and nothing contained in the IP Security Agreements shall derogate from any of the rights or remedies
of the Secured Party hereunder. Neither the delivery of, nor anything contained in, the IP Security Agreements shall be deemed to prevent or postpone the time of attachment or perfection of any security interest in such Collateral created hereby.

 6. Representations and Warranties Concerning Debtor’s Legal Status. The Debtor has previously delivered to
the Secured Party a certificate signed by the Debtor and entitled “Perfection Certificate” (the “Perfection Certificate”). The Debtor represents and warrants to the Secured Party as follows: (a) the Debtor’s exact legal
name is that indicated on the Perfection Certificate and on the signature page hereof, (b) the Debtor is an organization of the type, and is organized in the jurisdiction set forth in the Perfection Certificate, (c) the Perfection
Certificate accurately sets forth the Debtor’s organizational identification number or accurately states that the Debtor has none, (d) the Perfection Certificate accurately sets forth the Debtor’s place of business or, if more than
one, its chief executive office, as well as the Debtor’s mailing address, if different, (e) all other information set forth on the Perfection Certificate pertaining to the Debtor is accurate and complete in all material respects, and
(f) that there has been no change in any information provided in the Perfection Certificate since the date on which it was executed by the Debtor. 
  

 5 








 7. Covenants Concerning Debtor’s Legal Status. The Debtor covenants with
the Secured Party as follows: (a) without providing at least 15 days’ prior written notice to the Secured Party, the Debtor will not change its name, its place of business or, if more than one, chief executive office, or its mailing
address or organizational identification number if it has one, (b) if the Debtor does not have an organizational identification number and later obtains one, the Debtor shall forthwith notify the Secured Party of such organizational
identification number, and (c) the Debtor will not change its type of organization, jurisdiction of organization or other legal structure except as permitted in the Credit Agreement. 
 8. Representations and Warranties Concerning Collateral, etc. The Debtor further represents and warrants to the Secured Party
as follows: (a) the Debtor is the owner of the Collateral, free from any right or claim of any person or any adverse lien, security interest or other encumbrance, except for the security interest created by this Agreement and Permitted Liens,
(b) none of the Collateral constitutes, or is the proceeds of, “farm products” as defined in Section 9-102(a)(34) of the Uniform Commercial Code of the State, (c) none of the account debtors or other persons obligated on any
of the Collateral is a governmental authority covered by the Federal Assignment of Claims Act or like federal, state or local statute or rule in respect of such Collateral, (d) the Debtor holds no commercial tort claim except as indicated on
the Perfection Certificate, and (e) the Debtor has at all times operated its business in material compliance with all applicable provisions of the federal Fair Labor Standards Act, as amended, and with all applicable provisions of federal,
state and local statutes and ordinances dealing with the control, shipment, storage or disposal of hazardous materials or substances, (f) all other information set forth on the Perfection Certificate pertaining to the Collateral is accurate and
complete in all material respects, and (g) that there has been no change in any information provided in the Perfection Certificate since the date on which it was executed by the Debtor. 
 9. Covenants Concerning Collateral, etc. The Debtor further covenants with the Secured Party as follows: (a) the
Collateral, to the extent not delivered to the Secured Party pursuant to Section 4, will be kept at those locations listed on the Perfection Certificate and the Debtor will not remove the Collateral from such locations, without providing at
least 15 days prior written notice to the Secured Party, (b) except for the security interest herein granted and the Permitted Liens, the Debtor shall be the owner of the Collateral free from any right or claim of any other person, lien,
security interest or other encumbrance, and the Debtor shall defend the same against all claims and demands of all persons at any time claiming the same or any interests therein adverse to the Secured Party (except for the Permitted Liens),
(c) the Debtor shall not pledge, mortgage or create, or suffer to exist any right of any person in or claim by any person to the Collateral, or any security interest, lien or encumbrance in the Collateral in favor of any person, other than the
Secured Party (and other than the Permitted Liens), (d) the Debtor will keep the Collateral in good order and repair (ordinary wear and tear excepted) and will not use the same in violation of any material law or any policy of insurance
thereon, (e) the Debtor will permit the Secured Party, or its designee, to inspect the Collateral, subject to reasonable advance notice, at any reasonable time during normal business hours, wherever located, (f) the Debtor will pay
promptly when due all taxes, assessments, governmental charges and levies upon the Collateral or incurred in connection with the use or operation of such Collateral or incurred in

  

 6 








 
connection with this Agreement (unless such taxes, assessments, governmental charges, and levies are being properly contested), (g) the Debtor will continue to operate, its business in
compliance with all applicable provisions of the federal Fair Labor Standards Act, as amended, and with all applicable provisions of federal, state and local statutes and ordinances dealing with the control, shipment, storage or disposal of
hazardous materials or substances, and (h) the Debtor will not sell or otherwise dispose, or offer to sell or otherwise dispose, of the Collateral or any interest therein except for (i) sales of inventory in the ordinary course of business
(ii) so long as no Event of Default has occurred and is continuing, sales or other dispositions of obsolescent items of equipment consistent with past practices and (iii) as otherwise permitted in the Credit Agreement. 
 10. Insurance. 
 10.1 Maintenance of Insurance. The Debtor will maintain with financially sound and reputable insurers insurance with respect to its properties and business against such casualties and
contingencies as shall be in accordance with general practices of businesses engaged in similar activities in similar geographic areas. Such insurance shall be in such minimum amounts that the Debtor will not be deemed a co-insurer under applicable
insurance laws, regulations and policies and otherwise shall be in such amounts, contain such terms, be in such forms and be for such periods as may be reasonably satisfactory to the Secured Party. In addition, all such insurance (other than
workers’ compensation and D&O insurance) shall be payable to the Secured Party as loss payee. Without limiting the foregoing, the Debtor will (a) keep all of its physical property insured with casualty or physical hazard insurance on
an “all risks” basis, (b) maintain all such workers’ compensation or similar insurance as may be required by law, and (c) maintain, in amounts and with deductibles equal to those generally maintained by businesses engaged in
similar activities in similar geographic areas, general public liability insurance against claims of bodily injury, death or property damage occurring, on, in or about the properties of the Debtor; business interruption insurance; and product
liability insurance. 
 10.2 Insurance Proceeds. The proceeds of any casualty insurance in respect
of any casualty loss of any of the Collateral shall, subject to the rights, if any, of other parties with an interest having priority in the property covered thereby, (a) so long as no Default or Event of Default has occurred and is continuing
and to the extent that the amount of such proceeds is less than $10,000, be disbursed to the Debtor for direct application by the Debtor solely to the repair or replacement of the Debtor’s property so damaged or destroyed, and (b) in all
other circumstances, be held by the Secured Party as cash collateral for the Obligations. The Secured Party may, at its sole option, disburse from time to time all or any part of such proceeds so held as cash collateral, upon such terms and
conditions as the Secured Party may reasonably prescribe, for direct application by the Debtor solely to the repair or replacement of the Debtor’s property so damaged or destroyed, or the Secured Party may apply all or any part of such proceeds
to the Obligations. 
  

 7 








 10.3 Continuation of Insurance. All policies of insurance shall
provide for at least 30 days prior written cancellation notice to the Secured Party. In the event of failure by the Debtor to provide and maintain insurance as herein provided, the Secured Party may, at its option, provide such insurance and
charge the amount thereof to the Debtor. The Debtor shall furnish the Secured Party with certificates of insurance and policies evidencing compliance with the foregoing insurance provision. 
 11. Collateral Protection Expenses; Preservation of Collateral. 
 11.1 Expenses Incurred by Secured Party. In the Secured Party’s discretion, if the Debtor fails to do so,
upon giving the Debtor prior written notice thereof, the Secured Party may discharge taxes and other encumbrances at any time levied or placed on any of the Collateral, maintain any of the Collateral, make repairs thereto and pay any necessary
filing fees or insurance premiums. The Debtor agrees to reimburse the Secured Party promptly on demand for all expenditures so made. The Secured Party shall have no obligation to the Debtor to make any such expenditures, nor shall the making thereof
be construed as the waiver or cure of any Default or Event of Default. 
 11.2 Secured Party’s
Obligations and Duties. Anything herein to the contrary notwithstanding, the Debtor shall remain obligated and liable under each contract or agreement comprised in the Collateral to be observed or performed by the Debtor thereunder. The Secured
Party shall not have any obligation or liability under any such contract or agreement by reason of or arising out of this Agreement or the receipt by the Secured Party of any payment relating to any of the Collateral, nor shall the Secured Party be
obligated in any manner to perform any of the obligations of the Debtor under or pursuant to any such contract or agreement, to make inquiry as to the nature or sufficiency of any payment received by the Secured Party in respect of the Collateral or
as to the sufficiency of any performance by any party under any such contract or agreement, to present or file any claim, to take any action to enforce any performance or to collect the payment of any amounts which may have been assigned to the
Secured Party or to which the Secured Party may be entitled at any time or times. The Secured Party’s sole duty with respect to the custody, safe keeping and physical preservation of the Collateral in its possession, under Section 9-207 of
the Uniform Commercial Code of the State or otherwise, shall be to deal with such Collateral in the same manner as the Secured Party deals with similar property for its own account. 
 12. Securities and Deposits. The Secured Party may at any time following and during the continuance of a Default and Event of
Default, at its option, transfer to itself or any nominee any securities constituting Collateral, receive any income thereon and hold such income as additional Collateral or apply it to the Obligations. Whether or not any Obligations are due, the
Secured Party may, following and during the continuance of a Default and Event of Default, demand, sue for, collect, or make any settlement or compromise which it deems desirable with respect to the Collateral. Regardless of the adequacy of
Collateral or any other security for the Obligations, any deposits or other sums at any time credited by or due from the Secured Party to the Debtor may at any time be applied to or set off against any of the Obligations. 
  

 8 








 13. Notification to Account Debtors and Other Persons Obligated on Collateral.
If a Default or an Event of Default shall have occurred and be continuing, the Debtor shall, at the request and option of the Secured Party, notify account debtors and other persons obligated on any of the Collateral of the security interest of
the Secured Party in any account, chattel paper, general intangible, instrument or other Collateral and that payment thereof is to be made directly to the Secured Party or to any financial institution designated by the Secured Party as the Secured
Party’s agent therefor, and the Secured Party may itself, if a Default or an Event of Default shall have occurred and be continuing, upon notice to the Debtor, so notify account debtors and other persons obligated on Collateral. After the
making of such a request or the giving of any such notification, the Debtor shall hold any proceeds of collection of accounts, chattel paper, general intangibles, instruments and other Collateral received by the Debtor as trustee for the Secured
Party without commingling the same with other funds of the Debtor and shall turn the same over to the Secured Party, together with any necessary endorsements or assignments. The Secured Party shall apply the proceeds of collection of accounts,
chattel paper, general intangibles, instruments and other Collateral received by the Secured Party to the Obligations, such proceeds to be immediately credited after final payment in cash or other immediately available funds of the items giving rise
to them. 
 14. Power of Attorney. 
 14.1 Appointment and Powers of Secured Party. The Debtor hereby irrevocably (until termination of this
Agreement) constitutes and appoints the Secured Party and any officer or agent thereof, with full power of substitution, as its true and lawful attorneys-in-fact with full irrevocable power and authority in the place and stead of the Debtor or in
the Secured Party’s own name, for the purpose of carrying out the terms of this Agreement, to take any and all appropriate action and to execute any and all documents and instruments that may be necessary or useful to accomplish the purposes of
this Agreement and, without limiting the generality of the foregoing, hereby gives said attorneys the power and right, on behalf of the Debtor, without notice to or assent by the Debtor, to do the following: 
 (a) upon the occurrence and during the continuance of an Event of Default, generally to sell, transfer, pledge, make any
agreement with respect to or otherwise dispose of or deal with any of the Collateral in such manner as is consistent with the Uniform Commercial Code of the State and as fully and completely as though the Secured Party were the absolute owner
thereof for all purposes, and to do, at the Debtor’s expense, at any time, or from time to time, all acts and things which the Secured Party deems necessary or useful to protect, preserve or realize upon the Collateral and the Secured
Party’s security interest therein, in order to effect the intent of this Agreement, all at least as fully and effectively as the Debtor might do, including, without limitation, (i) the filing and prosecuting of registration and transfer
applications with the appropriate federal, state, local or other agencies or authorities with respect to trademarks, copyrights and patentable inventions and processes, (ii) upon written notice to the Debtor, the exercise of voting rights with
respect to voting securities, which rights may be exercised, if the Secured Party so elects, with a view to causing the liquidation of assets of the issuer of any such securities, and (iii) the execution, delivery and recording, in connection
with any sale or other disposition of any Collateral, of the endorsements, assignments or other instruments of conveyance or transfer with respect to such Collateral; and 
  


 9 








 (b) to the extent that the Debtor’s authorization given in
Section 3 is not sufficient, to file such financing statements with respect hereto, with or without the Debtor’s signature, or a photocopy of this Agreement in substitution for a financing statement, as the Secured Party may deem
appropriate and to execute in the Debtor’s name such financing statements and amendments thereto and continuation statements which may require the Debtor’s signature. 
 14.2 Ratification by Debtor. To the extent permitted by law, the Debtor hereby ratifies all that said
attorneys shall lawfully do or cause to be done by virtue hereof. This power of attorney is a power coupled with an interest and is irrevocable. 
 14.3 No Duty on Secured Party. The powers conferred on the Secured Party hereunder are solely to protect its interests in the Collateral and shall not impose any duty upon it to exercise any such
powers. The Secured Party shall be accountable only for the amounts that it actually receives as a result of the exercise of such powers, and neither it nor any of its officers, directors, employees or agents shall be responsible to the Debtor for
any act or failure to act, except for the Secured Party’s own bad faith, gross negligence or willful misconduct. 
 15.
Rights and Remedies. If an Event of Default shall have occurred and be continuing, the Secured Party, without any other notice to or demand upon the Debtor have in any jurisdiction in which enforcement hereof is sought, in addition to
all other rights and remedies, the rights and remedies of a secured party under the Uniform Commercial Code of the State and any additional rights and remedies which may be provided to a secured party in any jurisdiction in which Collateral is
located, including, without limitation, the right to take possession of the Collateral, and for that purpose the Secured Party may, so far as the Debtor can give authority therefor, enter upon any premises on which the Collateral may be situated and
remove the same therefrom. The Secured Party may in its discretion require the Debtor to assemble all or any part of the Collateral at such location or locations within the jurisdiction(s) of the Debtor’s principal office(s) or at such other
locations as the Secured Party may reasonably designate. Unless the Collateral is perishable or threatens to decline speedily in value or is of a type customarily sold on a recognized market, the Secured Party shall give to the Debtor at least five
Business Days prior written notice of the time and place of any public sale of Collateral or of the time after which any private sale or any other intended disposition is to be made. The Debtor hereby acknowledges that five Business Days prior
written notice of such sale or sales shall be reasonable notice. In addition, the Debtor waives any and all rights that it may have to a judicial hearing in advance of the enforcement of any of the Secured Party’s rights and remedies hereunder,
including, without limitation, its right following an Event of Default to take immediate possession of the Collateral and to exercise its rights and remedies with respect thereto. 
 16. Standards for Exercising Rights and Remedies. To the extent that applicable law imposes duties on the Secured Party to
exercise remedies in a commercially reasonable manner, the Debtor acknowledges and agrees that it is not commercially unreasonable

  

 10 








 
for the Secured Party (a) to fail to incur expenses reasonably deemed significant by the Secured Party to prepare Collateral for disposition or otherwise to fail to complete raw material or
work in process into finished goods or other finished products for disposition, (b) to fail to obtain third party consents for access to Collateral to be disposed of, or to obtain or, if not required by other law, to fail to obtain governmental
or third party consents for the collection or disposition of Collateral to be collected or disposed of, (c) to fail to exercise collection remedies against account debtors or other persons obligated on Collateral or to fail to remove liens or
encumbrances on or any adverse claims against Collateral, (d) to exercise collection remedies against account debtors and other persons obligated on Collateral directly or through the use of collection agencies and other collection specialists,
(e) to advertise dispositions of Collateral through publications or media of general circulation, whether or not the Collateral is of a specialized nature, (f) to contact other persons, whether or not in the same business as the Debtor,
for expressions of interest in acquiring all or any portion of the Collateral, (g) to hire one or more professional auctioneers to assist in the disposition of Collateral, whether or not the collateral is of a specialized nature, (h) to
dispose of Collateral by utilizing Internet sites that provide for the auction of assets of the types included in the Collateral or that have the reasonable capability of doing so, or that match buyers and sellers of assets, (i) to dispose of
assets in wholesale rather than retail markets, (j) to disclaim disposition warranties, (k) to purchase insurance or credit enhancements to insure the Secured Party against risks of loss, collection or disposition of Collateral or to
provide to the Secured Party a guaranteed return from the collection or disposition of Collateral, or (l) to the extent deemed appropriate by the Secured Party, to obtain the services of other brokers, investment bankers, consultants and other
professionals to assist the Secured Party in the collection or disposition of any of the Collateral. The Debtor acknowledges that the purpose of this Section 16 is to provide non-exhaustive indications of what actions or omissions by the
Secured Party would fulfill the Secured Party’s duties under the Uniform Commercial Code or other law of the State or any other relevant jurisdiction in the Secured Party’s exercise of remedies against the Collateral and that other actions
or omissions by the Secured Party shall not be deemed to fail to fulfill such duties solely on account of not being indicated in this Section 16. Without limitation upon the foregoing, nothing contained in this Section 16 shall be
construed to grant any rights to the Debtor or to impose any duties on the Secured Party that would not have been granted or imposed by this Agreement or by applicable law in the absence of this Section 16. 
 17. No Waiver by Secured Party, etc. The Secured Party shall not be deemed to have waived any of its rights or remedies in
respect of the Obligations or the Collateral unless such waiver shall be in writing and signed by the Secured Party. No delay or omission on the part of the Secured Party in exercising any right or remedy shall operate as a waiver of such right or
remedy or any other right or remedy. A waiver on any one occasion shall not be construed as a bar to or waiver of any right or remedy on any future occasion. All rights and remedies of the Secured Party with respect to the Obligations or the
Collateral, whether evidenced hereby or by any other instrument or papers, shall be cumulative and may be exercised singularly, alternatively, successively or concurrently at such time or at such times as the Secured Party deems expedient.

 18. Suretyship Waivers by Debtor. The Debtor waives demand, notice, protest, notice of acceptance of this
Agreement, notice of loans made, credit extended, Collateral received or delivered or other action taken in reliance hereon and all other demands and notices

  

 11 








 
of any description except any demands and notices expressly provided for in this Agreement or the Credit Agreement. With respect to both the Obligations and the Collateral, the Debtor assents to
any extension or postponement of the time of payment or any other indulgence, to any substitution, exchange or release of or failure to perfect any security interest in any Collateral, to the addition or release of any party or person primarily or
secondarily liable, to the acceptance of partial payment thereon and the settlement, compromising or adjusting of any thereof, all in such manner and at such time or times as the Secured Party may deem advisable. The Secured Party shall have no duty
as to the collection or protection of the Collateral or any income therefrom, the preservation of rights against prior parties, or the preservation of any rights pertaining thereto beyond the safe custody thereof as set forth in Section 11.2.
The Debtor further waives any and all other suretyship defenses. 
 19. Marshalling. The Secured Party shall not
be required to marshal any present or future collateral security (including but not limited to the Collateral) for, or other assurances of payment of, the Obligations or any of them or to resort to such collateral security or other assurances of
payment in any particular order, and all of its rights and remedies hereunder and in respect of such collateral security and other assurances of payment shall be cumulative and in addition to all other rights and remedies, however existing or
arising. To the extent that it lawfully may, the Debtor hereby agrees that it will not invoke any law relating to the marshalling of collateral which might cause delay in or impede the enforcement of the Secured Party’s rights and remedies
under this Agreement or under any other instrument creating or evidencing any of the Obligations or under which any of the Obligations is outstanding or by which any of the Obligations is secured or payment thereof is otherwise assured, and, to the
extent that it lawfully may, the Debtor hereby irrevocably waives the benefits of all such laws. 
 20. Proceeds of
Dispositions; Expenses. The Debtor shall pay to the Secured Party on demand any and all out-of-pocket expenses, including reasonable attorneys’ fees and disbursements, incurred or paid by the Secured Party in protecting, preserving
or enforcing the Secured Party’s rights and remedies under or in respect of any of the Obligations or any of the Collateral. After deducting all of said expenses, the residue of any proceeds of collection or sale or other disposition of the
Collateral shall, to the extent actually received in cash, be applied to the payment of the Obligations in such order or preference as the Secured Party may determine, but in accordance with the terms of the Credit Agreement, proper allowance and
provision being made for any Obligations not then due. Upon the final payment and satisfaction in full of all of the Obligations and after making any payments required by Sections 9-608(a)(1)(C) or 9-615(a)(3) of the Uniform Commercial Code of
the State, any excess shall be returned to the Debtor. In the absence of final payment and satisfaction in full of all of the Obligations, the Debtor shall remain liable for any deficiency. 
 21. Overdue Amounts. Until paid, all amounts due and payable by the Debtor hereunder shall be a debt secured by the Collateral
and shall bear, whether before or after judgment, interest at the rate of interest for overdue principal set forth in the Credit Agreement. 
 22. Termination; Release of Collateral. Upon termination of the Credit Agreement, this Agreement shall automatically terminate and Secured Party (at Borrower’s expense) shall promptly execute
and deliver to Borrower such documents and instruments reasonably requested by Borrower as shall be necessary to evidence termination of all security

  

 12 








 
interests given by Borrower to Secured Party hereunder. Upon any dispositions of Collateral permitted by the Credit Agreement, Secured Party’s security interest in such Collateral shall
automatically terminate and Secured Party (at Borrower’s expense) shall promptly execute and deliver to Borrower such documents and instruments reasonably requested by Borrower as shall be necessary to evidence termination of all security
interests given by Borrower to Secured Party in such Collateral. 
 23. Governing Law; Consent to Jurisdiction.
THIS AGREEMENT IS INTENDED TO TAKE EFFECT AS A SEALED INSTRUMENT AND SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF WASHINGTON. The parties hereto agree that any action or claim arising out of, or any dispute in
connection with, this Agreement, any rights, remedies, obligations, or duties hereunder, or the performance or enforcement hereof or thereof, may be brought in the courts of the State or any federal court sitting therein and consents to the
exclusive jurisdiction of such court and to service of process in any such suit being made upon such party by mail at the address specified in Section 11.4 of the Credit Agreement. Each party hereto hereby waives any objection that it may now
or hereafter have to the venue of any such suit or any such court or that such suit is brought in an inconvenient court. 
 24.
Waiver of Jury Trial. THE PARTIES HERETO WAIVE THEIR RIGHT TO A JURY TRIAL WITH RESPECT TO ANY ACTION OR CLAIM ARISING OUT OF ANY DISPUTE IN CONNECTION WITH THIS AGREEMENT, ANY RIGHTS, REMEDIES, OBLIGATIONS, OR DUTIES HEREUNDER, OR THE
PERFORMANCE OR ENFORCEMENT HEREOF OR THEREOF. Except as prohibited by law, the parties hereto waive any right which they may have to claim or recover in any litigation referred to in the preceding sentence any special, exemplary, punitive or
consequential damages or any damages other than, or in addition to, actual damages. Each party hereto (a) certifies that neither party hereto nor any representative, agent or attorney of any party hereto has represented, expressly or otherwise,
that the Secured Party would not, in the event of litigation, seek to enforce the foregoing waivers or other waivers contained in this Agreement, and (b) acknowledges that, in entering into the Credit Agreement and the other Loan Documents, the
parties hereto are relying upon, among other things, the waivers and certifications contained in this Section 24. 
 25.
Miscellaneous. The headings of each section of this Agreement are for convenience only and shall not define or limit the provisions thereof. This Agreement and all rights and obligations hereunder shall be binding upon the Debtor and
its respective successors and assigns, and shall inure to the benefit of the Secured Party and its successors and assigns. If any term of this Agreement shall be held to be invalid, illegal or unenforceable, the validity of all other terms hereof
shall in no way be affected thereby, and this Agreement shall be construed and be enforceable as if such invalid, illegal or unenforceable term had not been included herein. The Debtor acknowledges receipt of a copy of this Agreement. 
  

 13 








 IN WITNESS WHEREOF, intending to be legally bound, the Debtor has caused this Agreement to
be duly executed as of the date first above written. 
  

			
	NAUTILUS, INC.
		
	By:	 	/s/ Kenneth Fish
		 	Kenneth Fish, Chief Financial Officer
	
	BANK OF THE WEST
		
	By:	 	/s/ Sean Edwards
		 	Sean Edwards, Vice President


  

 S-1