Document:

Lease Agreement dated as of February 19, 2010 between Nautilus, Inc. and Med-Fit

 Exhibit 10.29 
 LEASE 
 BETWEEN 
 NAUTILUS, INC., 
 a Washington corporation, 
 AS LANDLORD 
 and 
 MED-FIT SYSTEMS, INC., 
 a California corporation, 
 AS TENANT 
 for 
 709 POWERHOUSE ROAD, INDEPENDENCE, VIRGINIA 24348 

 SUMMARY OF BASIC LEASE INFORMATION 
 This SUMMARY OF BASIC LEASE INFORMATION (the “Lease Summary”) is hereby incorporated into and made a part of the attached Lease (this Lease
Summary and the Lease to be known collectively as the “Lease”). In the event of a conflict between the terms of this Lease Summary and the Lease, the terms of the Lease shall prevail. Any capitalized terms used in this Lease Summary and
not otherwise defined in this Lease Summary shall have the meanings ascribed to them in the Lease. 
  

					
	  1.	 	Date:	  	February 19, 2010
			
	  2.	 	Landlord:	  	Nautilus, Inc., a Washington corporation
			
	  3.	 	Address of Landlord:	  	 Nautilus, Inc.
 10400 SE
Nautilus Drive
 Vancouver, Washington 98683
 Attention: Chief Financial Officer
 Phone and telecopy: 360-859-5913

			
	  4.	 	Tenant:	  	 Med-Fit Systems, Inc.
 a
California corporation

			
	  5.	 	Address of Tenant:	  	 Med-Fit Systems, Inc.
 543 E.
Alvarado St.
 Fallbrook, CA 92028
 E-mail: medfit@aol.com
  
 Attention: Dean
Sbragia

			
	  6.	 	Premises:	  	The term “Premises” means the Property (as defined below), the Buildings (as defined below), and appurtenant improvements located on the Property. The term
“Property” means the land described in the legal description attached hereto as Exhibit A. The Property contains approximately 56 acres of land.
			
	  7.	 	Buildings:	  	The four buildings located on the Property (each, a “Building” and collectively, the “Buildings”).
			
	  8.	 	Term.	  	
			
		 	 (a)    Lease Term:
	  	The period between the Commencement Date (as defined below) and December 31, 2012, subject to earlier termination as provided in the Lease. The Lease Term may be extended pursuant
to Section 13.6(g)
			
		 	 (b)    Commencement Date:
	  	The “Closing Date” as such term is defined in that certain Asset Purchase Agreement dated February 19, 2010 between Landlord and Tenant (the
“APA”).
			
		 	 (c)    Expiration Date:
	  	December 31, 2012 (unless extended pursuant to Section 13.6(g)).
			
	  9.  	 	Base Rent:	  	$5,000 per month through August 31, 2010, and $40,000 per month thereafter, subject however, to an adjustment to $22,000 per month pursuant to Sections 13.6(f) or
13.6(g).

  

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	  10.	 	Additional Rent.	  	All Premises Operating Costs.
			
	  11.	 	Security Deposit:	  	$5,000.00 until August 31, 2010, and $40,000.00 as of September 1, 2010, (but subject to change pursuant to Section 13.6(f) or Section 13.6(g)), which amount (reduced by any amount
that Landlord uses or applies in accordance with Article 5) will be applied to the rent due for the last month in the Lease Term.
			
	  12.	 	Permitted Use:	  	General office/warehouse/manufacturing use.
			
	  13.	 	Addenda and Exhibits:	  	 The addenda and exhibits listed below are incorporated by reference in this Lease.
  
 Exhibit A     Legal Description of the Premises
  
 Exhibit B     Construction

 [SIGNATURE PAGE FOLLOWS] 
  

 (2) 

 Landlord and Tenant hereby agree to the foregoing terms of this Lease Summary. 
  

					
	  LANDLORD:	 	 NAUTILUS, INC.
 a Washington corporation

			
		 	By:	 	 /s/ Kenneth L. Fish

		 	Printed Name:	 	 Kenneth L. Fish

		 	Title:	 	 CFO

		 	Date:	 	 February 22, 2010

		
	  TENANT:	 	MED-FIT SYSTEMS, INC.,
		 	a California corporation
			
		 	By:	 	 /s/ Dean Sbragia

		 	Printed Name:	 	 Dean Sbragia

		 	Title:	 	 President

		 	Date:	 	 2/22/10

  

 (3) 

 TABLE OF CONTENTS 
  

					
	ARTICLE 1	  	LEASE OF PREMISES	  	1
			
	ARTICLE 2	  	DEFINITIONS	  	1
			
	ARTICLE 3	  	PREMISES AND DELIVERY OF POSSESSION	  	4
			
	ARTICLE 4	  	RENT	  	5
			
	ARTICLE 5	  	SECURITY DEPOSIT	  	5
			
	ARTICLE 6	  	USE	  	6
			
	ARTICLE 7	  	HAZARDOUS MATERIALS	  	6
			
	ARTICLE 8	  	SERVICES AND UTILITIES	  	7
			
	ARTICLE 9	  	CONDITION OF THE PREMISES	  	8
			
	ARTICLE 10	  	REPAIRS AND MAINTENANCE	  	8
			
	ARTICLE 10A	  	TAXES	  	10
			
	ARTICLE 11	  	ALTERATIONS AND ADDITIONS	  	10
			
	ARTICLE 12	  	CERTAIN RIGHTS RESERVED BY LANDLORD	  	11
			
	ARTICLE 13	  	OPTION TO PURCHASE	  	11
			
	ARTICLE 14	  	TRANSFERS	  	13
			
	ARTICLE 15	  	DESTRUCTION OR DAMAGE	  	14
			
	ARTICLE 16	  	EMINENT DOMAIN	  	15
			
	ARTICLE 17	  	INDEMNIFICATION, WAIVER, RELEASE AND LIMITATION OF LIABILITY	  	16
			
	ARTICLE 18	  	TENANT’S INSURANCE	  	16
			
	ARTICLE 19	  	DEFAULT	  	18
			
	ARTICLE 20	  	LANDLORD REMEDIES AND DAMAGES	  	19
			
	ARTICLE 21	  	BANKRUPTCY	  	22
			
	ARTICLE 22	  	LIEN FOR RENT	  	22
			
	ARTICLE 23	  	HOLDING OVER	  	23
			
	ARTICLE 24	  	SURRENDER OF PREMISES	  	23
			
	ARTICLE 25	  	BROKERAGE FEES	  	24
			
	ARTICLE 26	  	NOTICES	  	24
			
	ARTICLE 27	  	SIGNAGE	  	24
			
	ARTICLE 28	  	LENDER PROVISIONS	  	24
			
	ARTICLE 29	  	MISCELLANEOUS	  	25

  

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 LEASE 
 THIS LEASE (the “Lease”) is made February 19, 2010, by and between NAUTILUS, INC. a Washington corporation (“Landlord”), and, MED-FIT SYSTEMS, INC. a California corporation
(“Tenant”), with reference to the following facts and circumstances: 
  

	 	A.	As noted in the Lease Summary, Landlord and Tenant are parties to the APA, which provides that Landlord and Tenant will enter into this Lease as art of the transactions
contemplated in the APA. 

  

	 	B.	Landlord is the owner of the Premises, as defined in the Lease Summary. 

  

	 	C.	Once this Lease becomes effective, Tenant will use the Premises to operate the Commercial Fitness Business that Landlord conducted in the Premises before the Closing
(as defined in the APA). 

  

	 	D.	The parties desire to enter into this Lease, all on the terms and conditions set forth below. 

 NOW, THEREFORE, in consideration of the foregoing facts and circumstances, the mutual covenants and promises contained herein and after good and valuable
consideration, the receipt and sufficiency of which are acknowledged by each of the parties, the parties do hereby agree to the following: 
 ARTICLE 1 
 LEASE OF PREMISES 
 1.1 Demising Clause. Subject to all the terms and conditions of this Lease, Landlord hereby leases to Tenant and Tenant hereby leases
from Landlord, the Premises for the Term and in consideration of Tenant’s payment of the Rent. 
 1.2 Term. The Term
shall be as specified in the Lease Summary, unless the parties agree to extend the Term or the Lease is earlier terminated. It is agreed that Tenant shall have the right to terminate this Lease without penalty at any time during the Term upon
Tenant’s purchase of the Premises pursuant to Article 13 below. 
 ARTICLE 2 
 DEFINITIONS 
 Terms
that begin with initial capital letters are defined terms that shall have the meanings given in the APA, the Lease Summary, or this Article of the Lease. 
 2.1 Additional Rent. All amounts, costs and expenses that Tenant assumes, agrees or is otherwise obligated to pay to Landlord under this Lease other than Base Rent. The Premises Operating Costs are
part of the Additional Rent. 
 2.2 Affiliate. An entity that is controlled by, controls, or is under common control with
a party. “Control” shall mean the ownership, directly or indirectly, of at least fifty-one percent (51%) of the voting securities of, or possession of the right to vote, in the ordinary direction of its affairs, of at least fifty-one
percent (51%) of the voting interest in any entity. 
 2.3 Bankruptcy Code. Title 11 of the United States Code, as
amended from time to time. 
 2.4 Business Days. Days other than Saturdays, Sundays and Holidays. If any item must be
accomplished or delivered hereunder on a day that is not a Business Day, it shall be timely to accomplish or deliver the same on the next following Business Day. 
 2.5 Commencement Date. As set forth on the Lease Summary. 
 2.6
Environmental Laws. All Laws regulating or controlling Hazardous Materials, including, without limitation, the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as amended, 42 U.S.C. 9601, et seq.; the
Hazardous Material Transportation Act, 49 U.S.C. 1801 et seq.; and the Resource Conservation and Recovery Act, 42 U.S.C. 6901 et seq. 
  

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 2.7 Expiration Date. As set forth on the Lease Summary, unless the Lease is otherwise
sooner terminated in accordance with its provisions. 
 2.8 Force Majeure. Strikes, labor disputes, lockouts, inability
to obtain labor, materials, equipment, or reasonable substitutes therefor, acts of God, governmental restrictions, regulations, or controls, judicial orders, enemy or hostile government actions, civil commotion, war, terrorism (foreign or domestic),
fire, accident, explosion, falling objects or other casualty, or other causes beyond the reasonable control of the party obligated to perform hereunder. 
 2.9 Hazardous Materials. Any hazardous waste or hazardous substance as defined in any Laws applicable to the Premises, including, without limitation, the Environmental Laws. “Hazardous
Materials” shall also include asbestos or asbestos-containing materials, radon gas, petroleum or petroleum fractions, urea formaldehyde foam insulation, transformers containing levels of polychlorinated biphenyls greater than 50 parts per
million, medical waste, biological materials (including without limitation blood and blood products), electromagnetic fields, mold and chemicals known to cause cancer or reproductive toxicity, whether or not defined as a hazardous waste or hazardous
substance in any statute, ordinance, rule or regulation. 
 2.10 Holidays. All federally observed holidays, including New
Year’s Day, President’s Day, Martin Luther King, Jr. Day, Memorial Day, Columbus Day, Independence Day, Labor Day, Veteran’s Day, Thanksgiving Day and Christmas Day. 
 2.11 Interest Rate. The average prime loan rate published by the board of governors of the Federal Reserve System of the United
States, as the same may change from time to time, plus four percent (4%) per annum, but not in excess of the maximum rate, if any, allowed by Law for the transaction on which interest is being calculated. 
 2.12 Landlord Related Parties. Landlord, Landlord’s Affiliates, and the members, principals, beneficiaries, partners, trustees,
shareholders, directors, officers, employees, mortgagees, investment managers, property managers, brokers, contractors, attorneys, and agents of Landlord and Landlord’s Affiliates, and the successors of such parties. 
 2.13 Law or Laws. All federal, state, county and local governmental and municipal laws, statutes, ordinances, rules, regulations,
requirements, codes, decrees, orders, and decisions by courts and cases, when the decisions are considered binding precedent in the State, and decisions of federal courts applying the Law of the State; including but not limited to The Americans With
Disabilities Act of 1990 (42 U.S.C. § 12101 et seq.), and any regulations and guidelines promulgated thereunder, as all of the same may be amended and supplemented from time to time. 
 2.14 Lease Year. Each twelve (12) month period or portion thereof during the Term, commencing with the Commencement Date,
without regard to calendar years. 
 2.15 Mortgagee. The holder of any mortgage or deed of trust encumbering any portion
of the Premises. 
 2.16 Operating Costs. All costs incurred by Landlord in the ownership, management, maintenance,
repair, replacement, improvement, alteration and operation of the Premises, including, without limitation, the following: a) utilities; b) supplies, tools, equipment and materials used in the operation, repair and maintenance of the
Premises; c) insurance (including but not limited to public liability, property damage, earthquake, flood, pollution, terrorism and property insurance for the full replacement cost of the Buildings as required by Landlord or its lenders);
d) landscaping; e) parking area repair, restoration, and maintenance, including, but not limited to, resurfacing, repainting, re-striping, and cleaning; f) reasonable reserves for covering uninsured damage and liability claims relating to
the Premises, including, without limitation, deductible amounts (provided that if Landlord incurs an expense for which a reserve is held, Landlord shall apply the applicable reserves to the expense prior to including the balance of the expense in
Operating Costs); g) fees, charges and other costs, including without limitation, reasonable consulting fees, legal fees and accounting fees, of all contractors engaged by Landlord or otherwise reasonably incurred by Landlord in connection with
the management, operation, maintenance and of the Premises; h) compensation (including, without limitation, employment taxes and fringe benefits) of all persons who perform duties in connection with the operation, maintenance, repair, or
overhaul of the Premises, and equipment, improvements, and facilities located on the Property; i) operation, repair, maintenance and replacement of the Buildings, including, without limitation, the cost to replace or retrofit as required by
Laws; j) janitorial service, alarm and security service, window cleaning, trash removal; k) repair and

  

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replacement of building standard surfaces, including but not limited to wall and floor coverings, ceiling tiles, window coverings and fixtures; l) maintenance and replacement of curbs and
walkways; m) repair to and replacement of the roof; n) rental expenses for (or a reasonable depreciation allowance on) personal property used in maintenance, operation or repair of the Premises; o) licenses, certificates, permits and
inspections and the cost of contesting the validity or applicability of any governmental enactments that may affect Operating Costs; p) any costs, expenditures, or charges (whether capitalized or not) required by any governmental or
quasi-governmental authority; and q) amortization of capital expenses (including, without limitation, financing costs) (A) that are required under any Law, or (B) that are in Landlord’s opinion necessary to maintain the Premises, or
any portion thereof, in good condition and repair; provided that such cost shall be amortized (including interest on the unamortized cost) over its useful life as Landlord shall reasonably determine. Notwithstanding the foregoing, for purposes of
this Lease, Operating Costs shall not include: 
 2.16.1 Utilities or services sold to Tenant or others for which
Landlord is entitled to and actually receives reimbursement (other than through any operating cost reimbursement provision similar to the provisions set forth in this Lease); 
 2.16.2 Depreciation and amortization, except on materials, small tools and supplies purchased by Landlord to enable Landlord
to supply services Landlord might otherwise contract for with a third party, where such depreciation and amortization would otherwise have been included in the charge for such third party services, all as determined in accordance with sound real
estate management principles; 
 2.16.3 Overhead or any profit increment paid to Landlord or to subsidiaries or
affiliates of Landlord for services in or in connection with the Buildings to the extent the same exceeds the cost of such services that could be obtained from equally qualified third parties on a competitive basis or at market rates; 
 2.16.4 Except as otherwise specifically provided in this Section, interest on debt or amortization on any mortgages, other
charges, costs and expenses payable under any mortgage, if any, and costs for financing and refinancing the Premises; 
 2.16.5 Ground rents; 
 2.16.6 Rentals and other related expenses incurred in leasing equipment, the
cost of which would otherwise be excluded capital expenses hereunder, except equipment used in case of emergency; 
 2.16.7 Electrical power for which Tenant directly contracts with and pays an electrical service company; 
 2.16.8 Marketing costs, including leasing commissions, attorneys’ fees in connection with the negotiation and preparation of letters, deal memos, letters of intent, leases, subleases and/or assignments, space planning costs, and other
costs and expenses incurred in connection with lease, sublease or assignment negotiations and transactions with prospective tenants of the Premises or any of the Buildings, including attorneys’ fees and other costs and expenditures incurred in
connection with disputes with such prospective tenants; 
 2.16.9 Costs covered by insurance, to the extent of
the insurance proceeds actually received by Landlord; 
 2.16.10 Costs covered by warranties, to the extent of
the amount actually paid under the warranty; 
 2.16.11 Any service provided directly to and paid directly by the
tenant; and 
 2.16.12 Wages and benefits of any employee who does not devote substantially all of his or her
employed time to the Buildings unless such wages and benefits are prorated to reflect time spent on operating and managing the Building vis-a-vis time spent on matters unrelated to operating and managing the Buildings. 
 2.17 Permitted Transfer. The transfer of ownership interests in a publicly traded entity, a transfer in connection with a sale of
substantially all of the assets of Tenant as a going concern, a merger or consolidation of Tenant with another entity, and an assignment or subletting of all of the Premises to an Affiliate of Tenant, where (a) the transferee assumes, in full,
the obligations of Tenant under this Lease; (b) Tenant remains fully liable under this Lease; (c) the use of the Premises remains unchanged; (d) after such transaction is effected, the tangible net worth of the tenant

  

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hereunder is equal to or greater than the tangible net worth of Tenant as of the date of this Lease; (e) Landlord shall have received an executed copy of all documentation effecting such
transfer on or before its effective date; and (f) the same is not a subterfuge by Tenant to avoid its obligations under this Lease. 
 2.18 Pre-Existing Conditions. The mold visible in Buildings known as #2 and #3. 
 2.19 Premises Operating Costs. Operating Costs and Taxes. 
 2.20 Rent. Base Rent and Additional Rent.

 2.21 State. The state in which the Premises are located. 
 2.22 Taxes. Any form of real property taxes or governmental assessment on the Premises, whether special or general, ordinary or
extraordinary; rental levy or tax (other than inheritance, income or estate taxes); improvement bonds; and/or license fees imposed upon or levied against any legal or equitable interest of Landlord in the Premise, Landlord’s right to other
income therefrom, and/or Landlord’s business of leasing, by any authority having the direct or indirect power to tax and where the funds are generated with reference to the Premises and where the proceeds so generated are to be applied by the
city, county or other local taxing authority of a jurisdiction within which the Premises are located. 
 2.23 [INTENTIONALLY
DELETED] 
 2.24 Tenant Related Parties. Tenant, its Affiliates, agents, contractors, subcontractors, employees,
invitees, subtenants, transferees, and any other party claiming by, through or under Tenant. 
 2.25 Tenant’s
Property. All Tangible Personal Property (as defined in the APA) located at the Premises on the Commencement Date and all movable partitions, business and trade fixtures, machinery and equipment, communications equipment, and office equipment
located in the Premises and acquired by or for the account of Tenant after the Commencement Date, without expense to Landlord, that can be removed without damage to the Premises, and all furniture, furnishings, and other articles of movable personal
property owned by Tenant and located in the Premises. 
 2.26 Term. As set forth on the Lease Summary, as the same may be
extended from time to time. 
 2.27 Transfer. An assignment, mortgage, pledge, hypothecation, encumbrance, lien or other
transfer of this Lease or any interest hereunder, a transfer by operation of law, a sublease of the Premises or any part thereof, or the use of the Premises by any party other than Tenant and its employees. “Transfer” shall also include
(a) if Tenant is a partnership or limited liability company, the withdrawal or change, voluntary, involuntary or by operation of law, of twenty-five percent (25%) or more of the partners or members, or transfer of twenty-five
percent (25%) or more of partnership or membership interests, within a twelve (12)-month period, or the dissolution of the partnership or company without immediate reconstitution thereof, (b) if Tenant is a closely held corporation
(i.e., whose stock is not publicly held and not traded through an exchange or over the counter), the dissolution, merger, consolidation or other reorganization of Tenant, the sale or other transfer of more than an aggregate of twenty-five
percent (25%) of the voting shares of Tenant (other than to immediate family members by reason of gift or death), within a twelve (12)-month period; and (c) the sale, mortgage, hypothecation or pledge of more than an aggregate of
twenty-five percent (25%) of the value of the unencumbered assets of Tenant within a twelve (12) month period. 
 2.28
Transferee. Any person or entity to whom or which any Transfer is made. 
 ARTICLE 3 
 PREMISES AND DELIVERY OF POSSESSION 
 3.1 Delivery of Possession. Landlord shall deliver possession of Premises on the Commencement Date. If, for any reason, Landlord is delayed by an Event of Force Majeure in delivering possession of
or on the Premises to Tenant, Landlord shall not be subject to any liability for such failure, and the validity of this Lease shall not be impaired, but (except in the case of Tenant Delays) the Commencement Date shall be extended for the period of
such delay. 
 3.2 Commencement Date. [INTENTIONALLY DELETED] 
  

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 ARTICLE 4 
 RENT 
 Tenant agrees to pay to Landlord all Rent payable hereunder, without set-off
or deduction, in lawful money of the United States of America. Tenant shall pay the Rent as follows: 
 4.1
Base Rent. Tenant shall pay to Landlord the Base Rent without notice or demand, in installments due and payable in advance on the first (1st) day of each calendar month during the Term. Along with and in addition to each monthly Base Rent payment under the
Lease, Tenant shall pay to Landlord any sales or privilege tax required under applicable Law. In the event of any fractional calendar month, Tenant shall pay for each day in such partial month a rental equal to  1/30 of the Base Rent. Concurrent with the execution of this Lease,
Tenant will deliver to Landlord the first month’s Base Rent. 
 4.2 Tenant’s Payment of Premises Operating
Costs. In addition to the Base Rent and all other payments due under this Lease, Tenant shall pay Premises Operating Costs promptly upon (and in no event later than 10 business days after) receiving a statement from Landlord describing the
nature and amount of any Premises Operating Costs incurred by Landlord. Tenant shall have the right to demand that Landlord provide Tenant with copies of any business records of Landlord maintained in the ordinary course of its business in
connection with any Premises Operating Costs. (As provided in Sections 10.2 and 10A.1, the parties intend that Tenant will pay certain Premises Operating Costs directly to the persons providing goods and services for the repair and maintenance of
the Premises or the taxing authority, as the case may be.) 
 4.2.1 Landlord’s Records. Landlord
shall maintain records regarding Premises Operating Costs incurred and paid by Landlord. Tenant or its representative shall have the right to examine such records upon reasonable prior notice specifying which records Tenant desires to examine,
during normal business hours at the place or places where such records are normally kept. 
 4.3 Other Taxes Payable by
Tenant. In addition to the Base Rent and any other charges to be paid by Tenant hereunder, Tenant shall, as an element of Rent, reimburse Landlord upon demand for any and all Taxes paid by Landlord as a result of Tenant’s failure to satisfy
its obligation (as provided in Article 10A) timely to pay Taxes. 
 4.4 Place of Payment. All Rent shall be paid at the
office of Landlord set forth on the Lease Summary or at such other place as Landlord may designate. 
 4.5 Interest and Late
Charges. If Tenant fails to pay any Rent when due, after giving effect to any applicable grace periods, the unpaid amounts shall bear interest at the Interest Rate. Tenant acknowledges that the late payment of any Rent will cause Landlord to
incur costs and expenses not contemplated under this Lease, including, without limitation, administrative and collection costs and processing and accounting expenses, the exact amount of which is extremely difficult to ascertain. Therefore, in
addition to interest, if any such payment is not received by Landlord within five (5) business days from when due, Tenant shall pay Landlord a late charge equal to five percent (5%) of such payment, plus any reasonable attorneys’ fees
incurred by Landlord by reason of Tenant’s failure to pay Rent when due. Landlord and Tenant agree that this late charge represents a reasonable estimate of such costs and expenses and is fair compensation to Landlord for loss resulting from
Tenant’s nonpayment. The late charge shall be deemed Additional Rent and the right to require it shall be in addition to all of Landlord’s other rights and remedies hereunder or at law and shall not be construed as liquidated damages for
any default of Tenant or as limiting Landlord’s remedies in any manner. In addition, any check returned by the bank for any reason will be considered late and will be subject to all late charges, plus a Fifty Dollar ($50.00) fee. After
two (2) returned checks in any twelve (12) month period, Landlord will have the right to receive payment by wire transfer, cashier’s check, or money order. Nothing contained herein shall be construed as to compel Landlord to accept
any payment of Rent in arrears or late charges should Landlord elect to apply its rights and remedies available under this Lease or at law or in equity in the event of a Default. 
 ARTICLE 5 
 SECURITY DEPOSIT 

Upon Tenant’s execution of this Lease, Tenant shall deposit with Landlord $5,000.00, and no later than September 1, 2010, shall deposit an
additional $35,000.00, as the Security Deposit, as shown on the Lease Summary (subject to a reduction to $17,000.00, in the amount of the additional deposit if Section 13.6(f) or 13.6(g) apply). The Security Deposit shall serve as security for
the prompt, full, and faithful performance by Tenant of its obligations under this

  

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Lease. In the event that Tenant is in Default hereunder, Landlord may use or apply the whole or any part of the Security Deposit for the payment of Tenant’s obligations hereunder. The use or
application of the Security Deposit or any portion thereof shall not prevent Landlord from exercising any other right or remedy provided hereunder or under any Law and shall not be construed as liquidated damages. In the event the Security Deposit
is reduced by such use or application, Tenant shall deposit with Landlord, within ten (10) days after notice, an amount sufficient to restore the full amount of the Security Deposit. Landlord shall not be required to keep the Security Deposit
separate from Landlord’s general funds or pay interest on the Security Deposit. Provided Tenant has performed all of its obligations under this Lease, the amount of the Security Deposit shall be applied by Landlord to the monthly payment due
for Base Rent for the last month of the Lease Term. If the Lease Term shall be extended at any increased rate of Rent, the Security Deposit shall thereupon be proportionately increased. No trust or fiduciary relationship is created herein between
Landlord and Tenant with respect to the Security Deposit. If Landlord transfers the Premises during the Term, Landlord may pay the Security Deposit to Landlord’s successor-in-interest. Tenant waives the provisions of any Laws now in force or
that become in force after the date of execution of this Lease, that limit the costs, expenses or damages for which Landlord may use a security deposit, including any provisions of such Laws providing that Landlord may claim from a security deposit
only those sums reasonably necessary to remedy defaults in the payment of Rent, to repair damage caused by Tenant, or to clean the Premises. Landlord and Tenant agree that Landlord may, in addition, claim those sums reasonably necessary to
compensate Landlord for any other foreseeable or unforeseeable loss or damage caused by the acts or omissions of Tenant or any Tenant Related Party. 
 ARTICLE 6 
 USE 
 6.1 Permitted Use. Tenant shall use the Premises solely for the Permitted Use as shown on the Lease Summary, and for no other purpose
without Landlord’s consent. Tenant shall comply with all recorded covenants, conditions, and restrictions, and the provisions of all ground or underlying leases, now or hereafter affecting the Premises. Tenant shall not (a) cause, maintain
or permit any nuisance arising out of Tenant’s use or occupancy of the Premises; or (b) commit or suffer to be committed any waste in or upon the Premises. 
 6.2 Compliance with Law. Tenant has been provided an opportunity to inspect the Premises to a degree sufficient to determine whether or not the same, in their condition as of the date hereof,
violate any applicable Law. Tenant further acknowledges and agrees that, except as may otherwise be specifically provided in this Lease, Landlord has made no representation or warranty as to whether the Premises conform to the requirements of Law.
Tenant shall be responsible for compliance of the Premises with applicable Law and shall bear all costs necessary to maintain the Premises in compliance with Law, including, without limitation, structural work, if any. Tenant shall also be
responsible for the cost of any alterations to the Premises necessitated by any change in use of the Premises; provided, however any such change must be within the Permitted use. Tenant shall not use or occupy the Premises in violation of any Law or
the certificate of occupancy issued for the Buildings and shall, upon notice from Landlord, immediately discontinue any use of the Premises that is declared by any governmental authority having jurisdiction to be a violation of Law or the
certificate of occupancy. A judgment of any court of competent jurisdiction or the admission by Tenant in any action or proceeding against Tenant that Tenant has violated any such Laws in the use of the Premises shall be deemed to be a conclusive
determination of that fact as between Landlord and Tenant. Should any obligation be imposed by Law, then Tenant agrees, at its sole cost and expense, to comply promptly with such obligations to the extent the same relate to the Premises or
Tenant’s use of the Premises. 
 6.3 Effect on Landlord’s Insurance. Tenant shall not do or permit to be done
anything that will invalidate or increase the cost of any property coverage, or other insurance policy covering the Premises, including the Buildings, and any property located therein. Tenant shall promptly, upon demand, reimburse Landlord for any
additional premium charged for such policy by reason of Tenant’s failure to comply with the provisions of this Section. 
 ARTICLE 7 
 HAZARDOUS MATERIALS 
 7.1 Indemnity. Tenant shall indemnify, defend and hold harmless all Landlord Related Parties from and against all claims, suits,
demands, response costs, contribution costs, liabilities, losses, or damages (including, without limitation, reasonable attorneys’ fees), directly or indirectly arising out of the existence, use generation, migration, storage, transportation,
release, threatened release, or disposal of Hazardous Materials in, on, or under the Premises, or in the groundwater under the Premises and the migration or transportation of Hazardous Materials to or from the Premises, or the groundwater underlying
the Premises, to the extent that any of the foregoing is caused by any Tenant Related Parties. This indemnity extends to the costs incurred by any Landlord Related Party to investigate, remediate, monitor,

  

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treat, repair, clean-up, dispose of, or remove such Hazardous Materials in order to comply with the Environmental Laws; provided that if Tenant is not otherwise in Default, Landlord shall give
Tenant not less than thirty (30) days’ advance notice of Landlord’s intention to incur such costs. For the avoidance of doubt, Tenant shall not be responsible for any Hazardous Materials that were released or discharged on the
Premises before the Commencement Date. 
 7.2 Restriction on Hazardous Materials. Tenant shall not permit any Tenant
Related Parties to use, generate, manufacture, store, transport, release, threaten release, or dispose of Hazardous Materials, other than de minimus amounts of customary office and cleaning supplies in compliance with applicable Environmental Laws,
in, on, or about the Premises, or transport Hazardous Materials from the Premises unless Tenant shall have received Landlord’s prior consent therefor, which Landlord may revoke at any time, and shall not cause or permit the release or disposal
of Hazardous Materials from the Premises except in compliance with applicable Environmental Laws. Tenant shall promptly deliver notice to Landlord if Tenant obtains knowledge sufficient to infer that Hazardous Materials are located on the Premises
that are not in compliance with applicable Environmental Laws or if any third party, including without limitation, any governmental agency, claims a significant disposal of Hazardous Materials occurred on the Premises or is being or has been
released from the Premises. 
 7.3 Investigation of Contamination. Upon reasonable written request of Landlord, Tenant,
through its appropriately qualified and licensed professional engineers, and at Tenant’s cost, shall thoroughly investigate suspected Hazardous Materials contamination of the Premises that would arguably come within the scope of Tenant’s
indemnification and hold harmless obligations as set forth above. Tenant, using duly licensed and insured contractors approved by Landlord, shall promptly commence and diligently complete the removal, repair, clean-up, and detoxification of any
Hazardous Materials from the Premises as may be required by applicable Environmental Laws that comes within the scope of Tenant’s indemnification and hold harmless obligations as set forth above. The provisions of this Article shall survive the
expiration or earlier termination of this Lease. 
 7.4 Landlord Consent. If, during the Term, Tenant contemplates
utilizing Hazardous Materials (or subleasing or assigning this Lease to a subtenant or assignee who utilizes Hazardous Materials), other than de minimus amounts of customary office and cleaning supplies in compliance with applicable Environmental
Laws, Tenant shall obtain the prior written consent of Landlord. As a condition of granting such consent, Landlord may require, among other things, that a) such substances be of the type customarily used in offices and be used and
maintained only in such quantities as are reasonably necessary for the Permitted Use and in strict accordance with applicable Environmental Laws and manufacturer instructions therefor; b) such substances shall not be disposed of,
released or discharged on the Premises and shall be transported to and from the Premises in compliance with all applicable Environmental Laws and as Landlord shall reasonably require; c) any remaining such substances shall be completely,
properly and lawfully removed from the Premises upon expiration or earlier termination of this Lease; and d) Tenant carry environmental insurance acceptable to Landlord, meeting the requirements of Sections 18.2 and 18.3, and naming
Landlord as an additional insured. If any applicable Environmental Law or other ordinance requires that any such substances be disposed of separately from ordinary trash, Tenant shall make arrangements, at Tenant’s expense, for such disposal
directly with a qualified and licensed disposal company at a lawful disposal site and shall ensure that such disposal occurs frequently enough to prevent unnecessary storage of such substances on the Premises. At such times as Landlord may
reasonably request, Tenant shall provide Landlord with a written list identifying any Hazardous Materials then used, stored or maintained upon the Premises, the use and approximate quantity of each such material, a copy of any Material Safety Data
Sheet (“MSDS”) issued by the manufacturer thereof, written information concerning the removal, transportation, and disposal of the same, and such other information as Landlord may reasonably require or as may be required by Environmental
Laws. Landlord, at its option, and at Tenant’s expense, may cause an engineer selected by Landlord, to review (1) Tenant’s operations including, without limitation, materials used, generated, stored, disposed, and manufactured in
Tenant’s business; and (2) Tenant’s compliance with terms of this Section. Tenant shall provide the engineer with such information reasonably requested by the engineer to complete the review. The first such review may occur prior to
or shortly following the commencement of the Term. Thereafter, such review shall not occur more frequently than once each year unless cause exists for some other review schedule. 
 ARTICLE 8 
 SERVICES AND UTILITIES

 8.1 Utilities. Tenant shall obtain and pay for all water, gas, electricity, heat, telephone, sewer, sprinkler
charges and other utilities and services used at the Premises (“Utilities”), together with all taxes, penalties, surcharges, and maintenance charges pertaining thereto. 
  

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 8.2 Furnishing of Premises Services. Tenant shall obtain and pay for any and all
services provided to the Premises (collectively, “Premises Services”). The definition of Operating Costs shall not imply that Landlord is responsible for any Premises Services. 
 8.3 Interruption in Services. Unless caused by the gross negligence or willful misconduct of Landlord, Landlord shall not be in
default hereunder nor be liable for any damages directly or indirectly resulting from, nor shall the Rent be abated, for any interruption of or diminution in the quality or quantity of Utilities or Premises Services, when the same is occasioned, in
whole or in part, by a) repairs, replacements, or improvements; b) by inability to secure or limitation, curtailment, or rationing of, or restrictions on, use of electricity, gas, water, or other form of energy serving the
Premises; c) by any accident or casualty; d) by act or Default by Tenant or other parties; or e) by Force Majeure. Landlord shall not be liable under any circumstances for a loss of or injury to property or
business, however occurring, through or in connection with or incidental to failure of Utilities or failure to furnish any Premises Services. No failure, delay or diminution in Utilities or Premises Services shall ever be deemed to constitute an
eviction or disturbance of Tenant’s use and possession of the Premises or relieve Tenant from paying Rent or performing any of its obligations under this Lease. Furthermore, Landlord shall not be liable under any circumstances for loss of, or
injury to, property or for injury to, or interference with, Tenant’s business, including, without limitation, loss of profits, however occurring, through or in connection with or incidental to a failure of Utilities or any failure to furnish
any of the Premises Services. 
 8.4 Safety and Security Devices, Services, and Programs. The parties acknowledge that
safety and security devices, services, and programs provided by Landlord, if any, while intended to deter crime and ensure safety, may not in given instances prevent theft or other criminal acts or ensure safety of persons or property. The risk that
any safety or security device, service, or program may not be effective, or may malfunction, or be circumvented by a criminal, is assumed by Tenant with respect to Tenant’s property and interests; and Tenant shall obtain insurance coverage to
the extent Tenant desires protection against such criminal acts and other losses. Tenant agrees to cooperate in any reasonable safety or security program developed by Landlord or required by Law. 
 8.5 Government Energy or Utility Controls. In the event of imposition of any government controls, rules, regulations, or restrictions
on the use or consumption of energy or other utilities during the Term, both Landlord and Tenant shall be bound thereby, and the same shall not constitute a constructive eviction of Tenant. In the event of a difference in interpretation by Landlord
and Tenant of any such controls, Landlord’s interpretation shall prevail, and Landlord shall have the right to enforce compliance therewith, including, without limitation, the right of entry into the Premises to effect compliance. 

ARTICLE 9 
 CONDITION OF THE PREMISES 
 9.1 “As Is” Condition. Subject to Section 9.2 below,
Tenant acknowledges that Tenant is leasing the Premises on an “as is, where is” basis. Tenant’s taking possession of the Premises shall be deemed conclusive evidence that, as of the date of taking possession, the Premises were in good
order and satisfactory condition. No promise of Landlord to alter, remodel, repair, or improve the Premises and no representation, express or implied, respecting any matter or thing relating to the Premises or this Lease (including, without
limitation, the condition thereof) have been made to Tenant by Landlord. 
 9.2 Landlord’s Retained
Responsibilities. Notwithstanding anything in Section 9.1 above to the contrary, it is agreed that Landlord shall be solely responsible for correcting or remediating, to the reasonable satisfaction of Tenant, the following matter (the
“Pre-Existing Conditions”) affecting the physical condition of the Premises that existed as of the Closing: Any mold that exists in Buildings known as #2 and #3. Landlord shall complete the work necessary to correct or remediate such mold
no later than thirty (30) days after the Commencement Date. 
 ARTICLE 10 
 REPAIRS AND MAINTENANCE. 
 10.1 Landlord’s Obligations. This Lease is intended to be a triple net lease. Accordingly, Landlord’s shall have no repair or maintenance obligations. Landlord reserves the right to
contract for repair and maintenance required to keep the Premises in their condition on the Commencement Date on behalf of Tenant if Tenant fails to keep the Premises in such condition and the costs thereby incurred by Landlord shall be treated as
Operating Costs and be an element of Additional Rent. 
  

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 10.2 Tenant’s Obligations. Tenant, at Tenant’s sole expense, shall
maintain, repair and replace all portions of the Premises in good order, condition, and repair, including without limitation, the following: (a) all HVAC, plumbing, electrical, sewerage and mechanical systems serving the Buildings; (b) all
fixtures, interior walls, floors, carpets, draperies, window coverings, and ceilings; (c) all windows, doors, entrances, and plate glass; and (d) any fire detection or extinguisher equipment that Landlord does not maintain. Tenant shall
also maintain the lighting in the Premises (including replacement of bulbs and batteries). Tenant shall conduct quarterly tests on emergency lighting and provide Landlord a copy of each such test. Bulbs, ballasts and light fixtures shall be replaced
whenever they fail. All bulbs, batteries, ballasts and fixtures of the lighting systems must be in working order upon lease termination. Tenant’s obligations shall include all necessary repairs and replacements, ordinary a s well as
extraordinary, foreseen as well as unforeseen. All such repairs and replacements shall be of first class quality and sufficient for the proper maintenance and operation of the Premises. Tenant shall keep and maintain the Premises safe, secure and
clean, specifically including, but not by way of limitation, removal of waste and refuse matter. Tenant shall not permit anything to be done upon the Premises (and shall perform all maintenance and repairs thereto so as not) to invalidate, in whole
or in part any warranties, or prevent the procurement of any insurance policies that may, at any time, be required under the provisions of this Lease. Tenant shall not obstruct or permit the obstruction of any parking area, adjoining street or
sidewalk. Notwithstanding the foregoing, Tenant shall not be obligated to improve the condition of the Premises on the Commencement Date. 
 10.3 Additional Maintenance Obligations. Without limiting the generality of the foregoing, Tenant agrees as follows: 
 10.3.1 If the Premises have a septic sewer system, Tenant agrees to indemnify, defend (with counsel approved by Landlord) and
hold harmless Landlord against any and all loss, liability, cost, expense, claim or damage asserted or claimed against Landlord or incurred by Landlord relating to the septic sewer system of the improvements and water leaking from leach fields.
Tenant will furnish to Landlord, on an annual basis, evidence reasonably satisfactory to Landlord that the septic tanks have been properly pumped and that the leach field is functioning properly. 
 10.3.2 Tenant shall enter into a maintenance contract or contracts, in form and substance and with a firm reasonably
satisfactory to Landlord and with Landlord’s prior consent, for the maintenance and regular repair of the mechanical systems, including but not limited to the heating, ventilating and air conditioning systems, including exhaust fans. Said
maintenance contract shall provide, at a minimum, for quarterly inspections and services. Landlord, at its election, may enter into such contract and charge Tenant for the cost thereof. 
 10.3.3 Tenant shall be responsible for the maintenance and upkeep of the entire fire sprinkler system. Tenant shall conduct
quarterly flow checks on the sprinkler system. In addition, Tenant shall be responsible for fire pump inspection and testing on an annual basis. 
 10.3.4 Tenant shall keep and maintain written reports of the maintenance and repair to the mechanical systems, and the fire sprinkler system and forward copies of each inspection report to Landlord within
ten (10) days of each inspection. Tenant shall also provide information and backup for major repairs to any building systems, including any warranties on the work, that occurred at any time during the Term. 
 10.3.5 Tenant shall maintain the lighting in the Premises (including replacement of bulbs and batteries). Tenant shall
conduct quarterly tests will be conducted on emergency lighting and provide Landlord a copy of each such test. Bulbs, ballasts and light fixtures shall be replaced whenever they fail. All bulbs, batteries, ballasts and fixtures of the lighting
systems must be in working order upon lease termination. 
 10.3.6 Tenant shall maintain roll-up doors in good
condition, including but not limited to repair of major dents and replacement of missing rollers and step plates. 
 10.3.7 Tenant will lubricate all dock levelers, adjust springs and remove debris from pits at least semi-annually. Side seals will be replaced if damaged. 
 10.4 Damage by Tenant. Except for ordinary wear and tear, Tenant shall promptly reimburse Landlord for any costs that Landlord may incur in making repairs and alterations in and to the Premises,
including, without limitation, the buildings and their systems and equipment, where the need for such repairs or alterations is caused by any of the following: a) Tenant’s use or occupancy of the Premises in a fashion that
contravenes any provision of this Lease; b) the installation, removal, use, or operation of Tenant’s Property; c) the moving of Tenant’s Property into or out of any Building; d) any tortious act,
omission, misuse, or negligence of any Tenant Related Parties; or e) any breach by Tenant of its obligations under Section 10.2. 
  

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 ARTICLE 10A 
 TAXES 
 10A.1 Tenant’s
Responsibility. Tenant shall be obligated (i) to pay all Taxes no later than the date after which any interest or penalties could accrue and (ii) to provide Landlord, no later than one business day after Tenant has paid any Taxes,
reasonable evidence to confirm that such payment has been made. 
 10A.2 Landlord’s Responsibility. Landlord will
send any written notices or statements regarding Taxes to Tenant as soon as practicable after Landlord’s receipt of same so that Tenant will be able to make payments due before any date on which interest or penalties could begin to accrue.

 10A.3 Landlord’s Right to Satisfy Tenant’s Obligation. If Tenant fails timely to provide Landlord with
reasonable evidence of payment of any Taxes due in accordance with Section 10A.1 above, Landlord shall have the right to pay such Taxes (together with accrued interest and penalties) and to demand reimbursement from Tenant in accordance with
Section 4.2 above. 
 ARTICLE 11 
 ALTERATIONS AND ADDITIONS 
 11.1 Tenant’s Alterations.
Tenant shall not make any additions, alterations, or improvements to the Premises without the prior consent of Landlord, which consent shall be requested by Tenant at least thirty (30) days prior to the commencement of any work and which
consent shall not be unreasonably withheld or delayed by Landlord. Landlord’s consent may be conditioned, among other things, on Tenant’s removing any such additions, alterations, or improvements at the Expiration Date and restoring the
Premises to the same condition as on the Commencement Date. All additions, alterations, and improvements shall be a) made in a good and workmanlike manner using only good grades of materials; b) performed by properly
qualified and licensed personnel approved by Landlord; and c) diligently prosecuted to completion. Notwithstanding the foregoing, Tenant shall have the right during the Term to make additions, alterations, or improvements as Tenant may
reasonably deem desirable or necessary, following ten (10) days’ notice to Landlord, but without Landlord’s consent, provided that such work (i) is of a non-structural nature; (ii) is not visible from outside of the
Premises; (iii) does not affect any system serving the Premises; (iv) does not, in the aggregate, exceed $5,000 for alterations other than floor and wall covering in any twelve (12) month period; and (v) does not require any
license, permit or approval under applicable Law. 
 11.2 Payment and Indemnification. Tenant shall pay the costs of any
work done on the Premises by or on behalf of Tenant and shall keep the Premises free and clear of liens of any kind. Tenant shall indemnify, defend against, and keep Landlord free and harmless from all claims, demands, liability, loss, damage,
costs, reasonable attorneys’ fees, and any other expense incurred on account of claims by any person performing work or furnishing materials or supplies for Tenant or any person claiming under Tenant, including but not limited to resolution of
any jurisdictional or other labor disputes. 
 11.3 Notices and Liens. Tenant agrees not to suffer or permit any lien of
any mechanic or materialman to be placed or filed against the Premises. In case any such lien shall be filed, Tenant shall satisfy and release such lien of record within twenty (20) days (or such shorter period as may be required by any
Mortgagee) after the earlier to occur of (a) receipt of notice thereof from Landlord; or (b) Tenant’s actual knowledge or notice of such lien filing. If Tenant shall fail to have such lien satisfied and released of record as provided
herein, Landlord may, on behalf of Tenant, without being responsible for making any investigation as to the validity of such lien and without limiting or affecting any other remedies Landlord may have, pay the same and Tenant shall reimburse
Landlord on demand for such amount together with any other reasonable costs of Landlord, including, without limitation, reasonable attorneys’ fees. Notwithstanding the foregoing, Tenant shall have the right to contest any such lien claim
diligently and in good faith, and during such contest shall not be obligated to pay such lien claim, provided that Tenant is not in breach of any of its obligations under this Lease and provided, Tenant, at its sole cost and expense, bonds the lien,
or transfers the lien from the Property to a bond, thereby freeing the Property from any claim of lien. Notwithstanding any such contest or title insurance, Tenant shall pay any such claim in full within five (5) days following the entry of an
unstayed judgment or order of sale. All materialmen, contractors, artisans, mechanics, laborers and any other person now or thereafter furnishing any labor, services, materials, supplies or equipment to Tenant with respect to Premises or any portion
thereof, are hereby charged with notice that they must look exclusively to Tenant to obtain payment for the same. Notice is hereby given that

  

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Landlord shall not be liable for any labor, services, materials, supplies, skill, machinery, fixtures or equipment furnished to or to be furnished to Tenant upon credit and that no
mechanic’s lien or any other lien for any such labor, services, materials, supplies, machinery, fixtures or equipment shall attach to or effect the state or interest of Landlord in and to the Premises, or any portion thereof. Before the actual
commencement of any work for which a claim or lien may be filed, Tenant shall give Landlord notice of the intended commencement date a sufficient time before that date to enable Landlord to post notices of nonresponsibility or any other notices that
Landlord deems necessary for the protection of Landlord’s interest in the Premises, and Landlord shall have the right to enter the Premises and post such notices at any reasonable time. 
 11.4 Construction Requirements. Any work performed on the Premises (including, without limitation, the Buildings) by Tenant or
Tenant’s contractor in connection with improvements shall be subject to the General Conditions set forth in Exhibit B, including, without limitation, the insurance requirements relating to Tenant’s contractors. 
 ARTICLE 12 
 CERTAIN RIGHTS RESERVED BY LANDLORD 
 Landlord reserves the following rights, exercisable without liability to Tenant
for (a) damage or injury to property, person, or business; (b) causing an actual or constructive eviction from the Premises; or (c) disturbing Tenant’s use, possession, or beneficial and quiet enjoyment of the Premises:

 12.1 Keys. To have passkeys to the Premises and all doors within the Premises, excluding Tenant’s vaults and
safes. 
 12.2 Inspection and Entry. Landlord may enter the Premises on reasonable prior notice to Tenant (except in the
event of an emergency, in which case no notice shall be required) (a) to inspect the Premises; (b) to show the Premises to any Mortgagee or to others having an interest in the Premises or Landlord; (c) during the existence of a
Default; (d) during the last six (6) months of the Term, to show the Premises to prospective tenants or potential purchasers of the Premises; (e) to make inspections, repairs, alterations, additions, or improvements to the Premises
including, without limitation, the Buildings) to the extent that Tenant is not obligated to do so under the Lease or is obligated but has failed to do so; and (f) to take all steps as may be necessary or desirable for the safety, protection,
maintenance, or preservation of the Premises or Landlord’s interest therein, or as may be necessary in order to comply with Laws. 
 ARTICLE 13 
 OPTION TO PURCHASE 
 Tenant (and any person including, without limitation, Grayson County, to which Tenant may assign the Option, as defined below) shall have the option and right to purchase the Premises (“Option”)
during the period between the Commencement Date and August 31, 2010, (the “Option Term”). (The holder of the Option, being the Tenant or its assignee of the Option, is hereinafter referred to as “Option Holder.”) Option
Holder may exercise Option by giving Landlord written notice of exercise at any time during the Option Term but no later than 45 days prior to the end of Option Term. On the closing of the purchase of the Premises pursuant to the exercise and
performance of Option by Option Holder (the “Option Closing”), the Lease and any rights not then accrued under the Lease shall terminate. The terms and conditions on which Option Holder may purchase the Premises are as follows: 

13.1 Purchase Price. The purchase price for the Premises shall be Two Million Two Hundred Thousand Dollars ($2,200,000.00). If
Option Holder is Tenant, the amount of the Security Deposit may, at the election of Tenant, be applied to payment of purchase price, in which event Landlord will retain the Security Deposit and it will not be applied to Rent. The purchase price
shall be paid all in cash at the Option Closing. The Option Closing shall be conducted through a mutually acceptable escrow company as provided in Section 13.6 below. 
 13.2 Costs of Sale. Option Holder shall pay all costs of sale, regardless of local custom, except that Option Holder shall not be
responsible for any of the following closing costs, all of which shall be the sole responsibility of Landlord: costs to remove title exceptions that are not Permitted Exceptions under Section 13.3 below, the tax imposed on the grantor on a deed
by the Commonwealth of Virginia, Landlord’s attorneys’ fees, and real estate taxes and assessments accrued and unpaid through the date of Closing and attributable to the period before the Commencement Date. 
  

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 13.3 Title. At the Option Closing, title of Option Holder to the Premises shall be
insurable under an owner’s standard title insurance policy subject only to those assessments, restrictions, easements, covenants, and reservations of record existing on the date of this Lease that do not materially and adversely affect the use
of the Premises in the ordinary course of Tenant’s business or the value of the Premises (provided, however, that Landlord will use commercially reasonable efforts to resolve objections to the state of title raised by Option Holder’s
lender providing financing to Option Holder for the purchase of the Premises) as well as any matters arising by, through, or under Tenant (“Permitted Exceptions”). Title shall be conveyed by Landlord by a general warranty deed with English
covenants of title subject to Permitted Exceptions. In no event shall Permitted Exceptions include monetary liens or encumbrances created or permitted by Landlord. Promptly after Option Holder becomes aware of any title exception or exceptions that
are not Permitted Exceptions, Option Holder shall give notice of such exception(s) to Landlord and Landlord shall promptly use its best efforts to correct whatever encumbrance, easement, or other adverse effect on title created the title
exception(s) but only if Landlord caused or permitted such encumbrance, easement, or other adverse effect. 
 13.4 Deadline
to Close. Closing shall occur no later than 45 days after the notice of exercise is given; provided, however, that if an encumbrance has arisen that is not a Permitted Exception and if such encumbrance can not be removed through escrow
procedures at Closing, then the deadline for the Option Closing shall be automatically extended for such reasonable period of time as is needed to remove the new title exception, provided that such extension shall not exceed thirty
(30) calendar days. 
 13.5 Place of Closing. The purchase of the Premises shall be closed through an escrow agent
at an office in Virginia of the title company that will issue the owner’s title insurance policy to Option Holder. If Landlord shall have paid Taxes relating to any period on or after the Commencement Date or Tenant shall have said Taxes
relating to any period before the Commencement Date, then Taxes shall be appropriately prorated as of the Commencement Date. 
 13.6 Contingency for Remediation of Hazardous Materials. If any lender from which Option Holder intends to obtain funding for payment of the purchase price of the Premises or if Grayson County (if it becomes Option Holder) determines
that there has been one or more releases or discharges of Hazardous Materials on the Premises and requires that the presence of Hazardous Materials be remediated as a condition of funding (or, in the case of Grayson County, as a condition of the
Option Closing being consummated) and if presence of Hazardous Materials on the Premises results from one or more releases or discharges occurring before the Commencement Date, then the following provisions apply: 
 (a) Option Holder will promptly provide Landlord with copies of all documents and communications in its possession concerning
the presence of Hazardous Materials and shall obtain and transmit to Landlord any survey, test reports, and/or other documentation regarding such Hazardous Materials in the possession of lender. 
 (b) As soon as reasonably practical after Landlord receives the information from Option Holder pursuant to (a) above,
Landlord will obtain at least two estimates from reputable engineering or other companies experienced in carrying out remediation projects and determine whether Landlord can cause the remediation to be completed at a cost not to exceed $220,000.00

 (c) If Landlord determines that it can cause remediation to be completed at a cost not to exceed $220,000.00
and provided that Option Holder provides assurances reasonably acceptable to Landlord that Option Holder will and can proceed to complete the Option Closing promptly after remediation has occurred, then Landlord will use reasonable commercial
efforts to cause the remediation to be carried out and completed expeditiously. 
 (d) If Landlord cannot obtain
a contract with a reputable engineering or other company experienced in remediation to remediate to the extent required by the lender, or Grayson County if it is the Option Holder, at a cost not to exceed $220,000.00, then Option Holder may elect,
no later than 30 days after Landlord so informs the Option Holder, to (i) carry out the Option Closing at a purchase price for the Premises of $1,980,000.00; (ii) provide financial assurances reasonably satisfactory to Landlord that the
Option Holder will pay any costs of remediation in excess of $220,000.00, in which case Landlord will proceed to use reasonable commercial efforts to cause the remediation to be carried out and completed expeditiously (subject to receipt of
assurances reasonably acceptable to Landlord that Option Holder will and can proceed to complete the Option Closing promptly after remediation has occurred); or (iii) allow the Option Term to expire without exercising the Option or, if the
Option has been exercised, give notice to Landlord that Option Holder rescinds its exercise of the Option. 
  

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 (e) If remediation occurs pursuant to this Section 13.6, then the
Option Closing shall occur no later than 10 business days after the remediation is completed to the reasonable satisfaction of the lender (or Grayson County, if it is the Option Holder). 
 (f) If any period of remediation extends beyond the end of the Option Term, then the Base Rent between the end of the Option
Term and the Option Closing shall be $22,000.00 per month per month and the security deposit shall be $22,000.00 during such period. 
 (g) If Option Holder elects to exercise its right under Section 13.6(d)(iii) above, then the Base Rent from the end of the Option Term to the termination of this Lease shall be $22,000.00, the
security deposit shall be $22,000.00 after the end of the Option Term, and the Term of this Lease shall be extended to December 31, 2014. 
 (h) Notwithstanding any provisions in the APA, this Section 13.6 shall apply to and govern the subject matter of contingency for remediation of Hazardous Materials. 
 ARTICLE 14 
 TRANSFERS 
 Except as provided in this Article, Tenant shall not, without the prior consent of Landlord, make any
Transfer. 
 14.1 Notice. Tenant shall notify Landlord of any proposed Transfer (a “Transfer Notice”).
The date of the proposed Transfer must be not less than forty-five (45) days or more than one hundred eighty (180) days after the date of the Transfer Notice. The Transfer Notice shall include a) the proposed effective date of
the Transfer; b) all of the terms of the proposed Transfer and the consideration therefor, including, without limitation, a calculation of the Transfer Premium (as defined below); c) the name and address of the Transferee;
d) current financial statements of the Transferee certified by an officer, partner or owner thereof; e) any other information that will enable Landlord to determine the financial responsibility, character, and reputation of
the Transferee and the nature of such Transferee’s business; and f) the proposed use of the Premises. Landlord shall respond to any properly delivered Transfer Notice within thirty (30) days. 
 14.2 Fees. Whether or not Landlord shall grant consent, Tenant shall pay Landlord concurrently with any request for consent, a $1,000
administrative review and processing fee, as well as any reasonable legal fees incurred by Landlord, within thirty (30) days after written request by Landlord. 
 14.3 Consent. Landlord’s consent shall not be required for any Permitted Transfer. Landlord shall not unreasonably withhold or delay its consent to any other proposed Transfer. It shall be
reasonable under this Lease and under any applicable Law for Landlord to withhold consent to any proposed Transfer where one or more of the following apply, without limitation as to other reasonable grounds for withholding consent: 
 14.3.1 The Transfer would be for less than the entire Premises. 
 14.3.2 The Transferee intends to use the Premises for purposes that are not permitted under this Lease. 
 14.3.3 The Transferee is either a governmental agency or instrumentality thereof. 
 14.3.4 The Transferee is not a party of reasonable financial worth or financial stability in light of the responsibilities
involved under the Lease on the date consent is requested, as determined by Landlord. 
 14.3.5 The Transfer
would cause a violation of another lease or any agreement to which Landlord is a party. 
 14.4 Completion of Transfer.
If Landlord consents to any Transfer (and does not exercise any recapture rights Landlord may have under this Lease), Tenant may within six (6) months after Landlord’s consent, enter into the approved Transfer, upon substantially the same
terms and conditions as are set forth in the Transfer Notice. If there are any material changes in the terms and conditions from those specified in the Transfer Notice a) such that Landlord would initially have been entitled to refuse
its consent to such Transfer; or b) that would cause the proposed Transfer to be more favorable to the Transferee than the terms set forth in the Transfer Notice, Tenant shall again submit the Transfer to Landlord for its approval and
other action under this Article (including, without limitation, exercise any of recapture rights Landlord may have under this Lease). 
  

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 14.5 [INTENTIONALLY DELETED] 
 14.6 [INTENTIONALLY DELETED] 
 14.7 Effect of Transfer. If Landlord consents to a Transfer, a) no terms or conditions of this Lease shall be deemed to have been waived or modified; b) such consent shall
not be deemed consent to any further Transfer; c) no Transfer shall be valid, and no Transferee shall take possession of the Premises, until an executed counterpart of all documentation pertaining to the Transfer has been delivered to
Landlord; and d) no Transfer shall relieve Tenant from primary liability under this Lease. The acceptance of Rent by Landlord from any party shall not be deemed to be a waiver of Landlord of any provision hereof. In the event of Default
by a Transferee in the performance of any of the terms hereof, Landlord may proceed directly against Tenant without the necessity of exhausting remedies against such Transferee. Landlord may consent to subsequent assignments of the Lease or
sublettings or amendments or modifications to the Lease by Transferees without notifying Tenant, and without obtaining its consent thereto, and any such actions shall not relieve Tenant of liability under this Lease. Any Transfer for which
Landlord’s consent is required but not obtained pursuant hereto shall constitute a Default under this Lease and shall be void. 
 14.8 Tenant Remedy for Landlord Refusal to Consent. Notwithstanding any provision of this Lease or any applicable Laws to the contrary, Landlord and Tenant hereby expressly agree that if a court of competent jurisdiction determines
that Landlord unreasonably withheld consent to a proposed Transfer, then Tenant’s sole and exclusive remedy for such breach by Landlord shall be limited to termination of this Lease as of the date of such court determination. Tenant hereby
expressly waives the right to recover monetary damages of any kind whatsoever and attorney’s fees incurred on account of any such breach. 
 ARTICLE 15 
 DESTRUCTION OR DAMAGE 
 15.1 Landlord Termination Rights. If the Premises are damaged by fire, earthquake, terrorism, act of war, act of God, the elements or
other casualty, then Landlord may terminate this Lease upon notice given to Tenant within thirty (30) days after the date of such casualty, effective as of the date of the casualty if a) in Landlord’s opinion, repairs necessary
for Tenant’s occupancy cannot be completed within one hundred twenty (120) days after the date of the casualty; b) the Premises are damaged during the final twelve (12) months of the Term, unless both parties agree on an
extension of this Lease within ten (10) days following Tenant’s receipt of Landlord’s termination notice; c) the insurance proceeds available to Landlord are not sufficient to complete repair or restoration;
d) Landlord’s lender does not elect to make insurance proceeds available to Landlord for repair and restoration; or e) Tenant has vacated the Premises or is in Default under this Lease. 
 15.2 Repairs. If this Lease is not terminated as provided above, it shall continue in full force and effect, and Landlord shall
promptly and diligently, subject to reasonable delays for insurance adjustment, and subject to all other terms of this Article, restore the base, shell, and core of the Buildings and the other portions of the Premises serving the Buildings. Such
restoration shall be to substantially the same condition of such items as prior to the casualty, except for modifications a) required by Law; b) required by the holder of a mortgage on the Buildings, or the lessor of a ground
or underlying lease with respect to the Property. No such modifications shall materially impair access to the Premises. Tenant shall be responsible, at its sole cost and expense, for the repair, restoration, and replacement of any leasehold
improvements installed by Tenant (unless Landlord has elected to insure the same, in which case such repair shall be Landlord’s responsibility to the extent Landlord receives proceeds from such insurance for such repair) and Tenant’s
Property. Landlord shall not be liable for any loss of business, inconvenience, or annoyance arising from any casualty or any repair or restoration of any portion of the Premises as a result of any damage from any casualty. Following Landlord’s
repair of the Premises, Tenant shall repair and restore any improvements installed by Tenant to substantially the same condition as prior to the casualty, except for modifications required by Law. All work by Tenant shall be subject to the
conditions set forth in this Lease governing alterations and additions. 
 15.3 Tenant’s Termination Rights. If
Landlord does not elect to terminate this Lease pursuant to Landlord’s termination right as provided above, and the repairs cannot be completed within one hundred twenty (120) days after the date of the casualty (the “Repair
Period”) as determined by an architect or contractor designated by Landlord, Tenant may elect, no earlier than sixty (60) days after the date of the casualty and not later than ninety (90) days after the date of such casualty, to
terminate this Lease by notice to Landlord, effective as of the date specified in the notice, which date

  

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shall not be less than thirty (30) days nor more than sixty (60) days after such notice. In addition, in the event that the Premises are destroyed or damaged to any substantial extent during
the last twelve (12) months of the Term, then Tenant shall have the option to terminate this Lease by giving notice to Landlord within thirty (30) days after such casualty, in which event this Lease shall cease and terminate as of the date
of such notice. Tenant shall also have the right to terminate this Lease if Landlord does not complete repairs within the Repair Period by thirty (30) days’ notice to Landlord after the expiration of the Repair Period; provided however, if
Landlord completes repair within such thirty (30) day period, such termination shall be nullified and this Lease shall continue in full force and effect. 
 15.4 Apportionment of Rent. Upon any termination of this Lease pursuant to this Article, Tenant shall pay the Rent, properly apportioned up to such date of termination, and both parties hereto
shall thereafter be freed and discharged of all further obligations hereunder, except as provided for in provisions of this Lease that by their terms survive the expiration or earlier termination of this Lease. 
 15.5 Abatement. The Rent shall abate on an equitable basis to the extent Tenant’s use of the Premises is impaired, commencing
with the date of the casualty and continuing until completion of the repairs required of Landlord; provided that if the damage is due to the negligence or willful misconduct of any Tenant Related Party, Rent shall only abate to the extent the same
is covered by rent loss insurance, if any, carried by Landlord. 
 15.6 Express Agreement. This Lease shall be considered
an express agreement governing any case of damage to or destruction of the Premises by fire or other casualty; and any present or future Law that purports to govern the rights of Landlord and Tenant in such circumstances in the absence of express
agreement is hereby waived by the parties and shall have no application. 
 ARTICLE 16 
 EMINENT DOMAIN 
 16.1 Entire Premises. If the whole of the Premises is lawfully taken by condemnation or in any other manner for any public or quasi-public purpose, this Lease shall terminate as of the earlier of
the date of the date title vests or the date possession is given, and Rent shall be prorated to such date. 
 16.2 Partial
Condemnation. If less than the whole of the Premises is so taken, this Lease shall be unaffected by such taking, except that (a) Tenant shall have the right to terminate this Lease by notice to Landlord given within ninety (90) days
after the date of such taking if twenty-five percent (25%) or more of the Premises is taken and the remaining area of the Premises is not reasonably sufficient for Tenant to continue operation of its business; and (b) Landlord shall have
the right to terminate this Lease by notice to Tenant given within ninety (90) days after the date of such taking. If either Landlord or Tenant so elects to terminate this Lease, this Lease shall terminate on the thirtieth (30th) day after
either such notice. Rent shall be prorated to the date of such termination. If this Lease continues in force upon such partial taking, the Base Rent shall be equitably adjusted according to the remaining area of the Premises. Tenant’s
obligation to pay Premises Operating Costs shall not be affected by any such partial taking of the Premises. 
 16.3 Proceeds
of Award. In the event of any taking, partial or whole, all of the proceeds of any award, judgment, or settlement payable by the condemning authority shall be the exclusive property of Landlord, whether awarded as compensation for the damages to
Landlord’s or Tenant’s interest in the Premises and whether or not awarded as compensation for diminution in value of the leasehold or to the fee of the Premises, and Tenant hereby assigns to Landlord all of its right, title, and interest
in any award, judgment, or settlement from the condemning authority. Tenant, however, shall have the right, to the extent that Landlord’s award is not reduced or prejudiced, to claim from the condemning authority (but not from Landlord) such
compensation as may be recoverable by Tenant in its own right for relocation expenses and damage to Tenant’s Property. 
 16.4 Repairs. In the event of a partial taking of the Premises that does not result in a termination of this Lease, Landlord shall restore the remaining portion of the Premises as nearly as practicable to its condition prior to the
condemnation or taking. Tenant shall be responsible at its sole cost and expense for the repair, restoration, and replacement of Tenant’s Property. 
  

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 ARTICLE 17 
 INDEMNIFICATION, WAIVER, RELEASE AND LIMITATION OF LIABILITY 
 17.1 Tenant’s Indemnity. Except for any injury or damage to persons or property on the Premises that is proximately caused by or results proximately from the gross negligence or willful
misconduct of Landlord, no Landlord Related Parties shall be liable for, and Tenant will and does hereby indemnify, defend and hold harmless the Landlord Related Parties against and from all liabilities, obligations, suits, damages, penalties,
claims, costs, charges and expenses, including, without limitation, reasonable attorneys’ fees and other professional fees (if and to the extent permitted by law), that may be imposed upon, incurred by, or asserted against Landlord or any of
the Landlord Related Parties and arising, directly or indirectly, out of or in connection with Tenant’s use, occupancy or maintenance of the Premises including, without limitation, any of the following: a) any work or thing done in,
on or about the Premises or any part thereof by any Tenant Related Party; b) any injury or damage to any person or property; c) any failure on the part of Tenant to perform or comply with any of the covenants, agreements,
terms or conditions contained in this Lease; and d) any negligent or otherwise tortious act or omission of any Tenant Related Party. At Landlord’s request, Tenant shall, at Tenant’s expense and by counsel selected by Landlord,
defend Landlord in any action or proceeding arising from any such claim or liability and shall indemnify Landlord against all costs, reasonable attorneys’ fees, expert witness fees, and any other expenses incurred in such action or proceeding.

 17.2 Assumption of Risk. Tenant hereby assumes all risk of damage or injury to any person or property in, on, or about
the Premises from any cause other than the gross negligence or willful misconduct of Landlord. Tenant, to the fullest extent permitted by law and as a material part of the consideration to Landlord for this Lease, hereby waives and releases all
claims against any Landlord Related Parties with respect to all matters for which Landlord has disclaimed liability pursuant to the provisions of this Lease. Tenant agrees that, unless expressly provided herein, no Landlord Related Parties will be
liable for any loss, injury, death, or damage to persons, property, or Tenant’s business resulting from any of the following, regardless of whether the same is due to the active or passive negligence of any Landlord Related Party:
a) theft; b) Force Majeure, order of governmental body or authority, fire, explosion, or falling objects; c) any accident or occurrence in the Premises caused by the Premises becoming out of repair or by the
obstruction, breakage or defect in or failure of equipment, pipes, sprinklers, wiring, plumbing, heating, ventilation and air-conditioning or lighting fixtures of the Buildings or by broken glass or by the backing up of drains, or by gas, water,
steam, electricity or oil leaking, escaping or flowing into or out of the Premises; d) construction, repair or alteration of the Premises, unless due to solely to the gross negligence or willful misconduct of Landlord;
e) business interruption or loss of use of the Premises; f) any diminution or shutting off of light, air or view by any structure erected on any land adjacent to the Premises, even if Landlord is the adjacent land owner;
g) mold or indoor air quality; h) any acts or omissions of any occupant of or visitor to the Premises; or i) any cause beyond Landlord’s control. In no event shall Landlord be liable for indirect,
consequential, or punitive damages, including, without limitation, any damages based on lost profits. None of the foregoing shall be considered a constructive eviction of Tenant, nor shall the same entitle Tenant to an abatement of Rent. 

17.3 Waiver of Subrogation. Anything in this Lease to the contrary notwithstanding, Landlord and Tenant each hereby waives any and
all rights of recovery, claim, action or cause of action against the other for any loss or damage to any property of Landlord or Tenant, arising from any cause that (a) would be insured against under the terms of any property insurance required
to be carried hereunder; or (b) is insured against under the terms of any property insurance actually carried, regardless of whether the same is required hereunder. The foregoing waiver shall apply regardless of the cause or origin of such
claim, including but not limited to the negligence of a party, or such party’s agents, officers, employees or contractors. The foregoing waiver shall not apply if it would have the effect, but only to the extent of such effect, of invalidating
any insurance coverage of Landlord or Tenant. The foregoing waiver shall also apply to any deductible, as if the same were a part of the insurance recovery. 
 17.4 Limitation of Landlord Liability. Neither Landlord nor any Landlord Related Party shall have any personal liability with respect to any of the provisions of the Lease, or the Premises. If
Landlord is in breach or default with respect to Landlord’s obligations under the Lease, Tenant shall look solely to the equity interest of Landlord in the Premises for the satisfaction of Tenant’s remedies or judgments. No other real,
personal, or mixed property of any Landlord Related Parties, wherever situated, shall be subject to levy to satisfy such judgment. Upon any Transfer of Landlord’s interest in this Lease or in the Premises, the transferring Landlord shall have
no liability or obligation for matters arising under this Lease from and after the date of such Transfer. 
 ARTICLE 18 

 TENANT’S INSURANCE 
 18.1 Required Coverage. As provided in Section 2.16 above, Landlord shall be responsible for insuring the Buildings and appurtenant improvements for the full replacement cost thereof against
the risks covered by broad form property insurance. Tenant shall maintain the following coverages in the following amounts. 
  

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 18.1.1 Commercial General Liability Insurance (or its equivalent) covering
the insured against claims of bodily injury and death, personal injury and property damage arising out of Tenant’s operations, assumed liabilities or use of the Premises, for limits of liability not less than Two Million and No/100 Dollars
($2,000,000.00) combined single limit per occurrence and Five Million and No/100 Dollars ($5,000,000.00) combined single limit annual aggregate. 
 18.1.2 Property Insurance covering (a) Tenant’s Property, (b) any improvements and alterations made by Tenant or at Tenant’s request. Such insurance shall be written on a “Causes
of Loss – Special Form” basis (or its equivalent), for the full replacement cost (as shall be approved by Landlord) without deduction for depreciation, and shall include coverage for vandalism, malicious mischief and sprinkler leakage. The
proceeds of such insurance shall be used for the repair or replacement of the property so insured. Upon termination of this Lease following a casualty as set forth herein the proceeds under (a) shall be paid to Tenant and the proceeds under
(b) in excess of Tenant’s unamortized cost associated therewith shall be paid to Landlord. Notwithstanding the foregoing, Landlord shall have the option at any time, upon three (3) months’ notice to Tenant, to procure property
insurance covering leasehold improvements on all the premises throughout the Buildings, and thereafter the premium of such policy shall be an element of Premises Operating Costs. 
 18.1.3 Business Income and Extra Expense insurance (or its equivalent) in such amounts as will reimburse Tenant for direct or
indirect loss of earnings attributable to all perils commonly insured against by prudent tenants or attributable to prevention of access to the Premises or to the Building as a result of such perils, for a period of not less than twelve (12)
months. 
 18.1.4 Statutory worker’s compensation, together with employer’s liability coverage at
limits of: 
 $500,000 Each Accident 
 $500,000 Each Employee by Disease 
 $500,000 Policy Limit by Disease 
 18.2 Form of Policies. The minimum limits of policies of insurance required of Tenant under this Lease shall in no event limit the liability of Tenant under this Lease. All liability insurance
shall a) name Landlord, and, at Landlord’s request, any Mortgagee, each as an additional insured, as their respective interests may appear; b) specifically cover the liability assumed by Tenant under this Lease,
including, but not limited to, Tenant’s indemnity obligations under this Lease; c) be issued by an insurance company having a rating of not less than A- IX in Best’s Insurance Guide or that is otherwise acceptable to
Landlord and licensed to do business in the State; d) be primary insurance as to all claims thereunder and provide that any insurance carried by Landlord shall be excess and non-contributing with any insurance requirement of Tenant;
e) provide that said insurance shall not be canceled, expire or coverage reduced unless thirty (30) days’ prior notice shall have been given to Landlord; and f) if Tenant has a tangible net worth of less than Ten
Million and No/100 Dollars ($10,000,000.00), have a deductible not greater than Five Thousand and No/100 Dollars ($5,000.00). 
 18.3 Evidence of Insurance. Tenant shall deliver a copy of each paid-up policy (authenticated by the insurer) or other evidence of insurance reasonably satisfactory to Landlord, evidencing the
existence and amount of each insurance policy required hereunder on or before the Commencement Date and at least thirty (30) days before the expiration dates of the applicable policies. Landlord may, at any time and from time to time, inspect
or copy any insurance policies that this Lease requires Tenant to maintain. Tenant shall furnish Landlord with renewals or “binders” of each policy at least ten (10) days prior to the expiration thereof. Tenant agrees that, if Tenant
does not obtain and maintain such insurance, Landlord may (but shall not be required to) after five (5) days’ notice to Tenant during which time Tenant does not supply Landlord evidence of the required insurance, procure said insurance on
Tenant’s behalf and charge Tenant the premiums therefor, payable upon demand. Tenant shall have the right to provide the insurance required hereunder pursuant to blanket policies obtained by Tenant, provided such blanket policies afford
coverage as required by this Lease. 
 18.4 Additional Insurance Obligations. Landlord may require (a) that Tenant
obtain additional types of insurance, including but not limited to earthquake, sprinkler leakage by earthquake, environmental and terrorism insurance; to the extent such coverages are either (i) standard for similar properties in the same
geographic area as the Property and are available at commercially reasonable rates, or (ii) are otherwise reasonably required by Landlord; and (b) from time to time, but not more frequently than once during the Term, increases in the
policy limits for all insurance to be carried by Tenant as set forth herein, in order to reflect standard limits for similar properties. 
  

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 18.5 Independent Obligations. Tenant acknowledges and agrees that Tenant’s
insurance obligations under this Lease are independent of Tenant’s indemnity obligations, liabilities and duties under this Lease. 
 ARTICLE 19 
 DEFAULT 
 19.1 Tenant’s Default. A “Default” shall mean the occurrence of any one or more of the following events: 
 19.1.1 Tenant’s failure to pay any Rent when due, where such failure shall continue for a period of five (5) days
after written notice thereof from Landlord to Tenant. In the event that Landlord serves Tenant with a Notice to Pay Rent or Quit pursuant to applicable Unlawful Detainer statutes, such Notice to Pay Rent or Quit shall also constitute the notice
required by this subsection. 
 19.1.2 Tenant fails to cure a material breach of its non-monetary obligations
under this Lease within thirty (30) days after notice of default from Landlord; provided, however, that if the nature of the subject breach is such that it is curable but cannot be reasonably cured within said 30- day period, such 30-day period
shall be extended for a reasonable additional period of time so long as Tenant commences to cure the subject breach within said 30-day period of time and thereafter diligently prosecutes the cure to completion; 
 19.1.3 Tenant fails to deliver any estoppel certificates or subordination agreements within the periods set forth in this
Lease. 
 19.1.4 The levy of a writ of attachment or execution on this Lease or on any of Tenant’s property.

 19.1.5 Tenant’s general assignment for the benefit of creditors or arrangement, composition, extension,
or adjustment with its creditors. 
 19.1.6 Tenant becomes insolvent or bankrupt or admits in writing its
inability to pay its debts as they mature. 
 19.1.7 Proceedings for the appointment of a trustee, custodian or
receiver of Tenant or for all or a part of Tenant’s property are filed by or against Tenant, and, if filed against Tenant involuntarily, are not dismissed within sixty (60) days of filing. 
 19.1.8 Proceedings in bankruptcy, or other proceedings for relief under any law for the relief of debtors, are instituted by
or against Tenant, and, if instituted against Tenant involuntarily, are not dismissed within sixty (60) days of filing. 
 19.1.9 Tenant makes an anticipatory breach of this Lease. “Anticipatory breach” shall mean either (a) Tenant’s repudiation of this Lease in writing; or (b) the combination of
(i) Tenant’s desertion or vacation of the Premises or removal of all or a substantial amount of Tenant’s inventory, equipment, furniture and fixtures from the Premises; and (ii) Tenant’s failure to pay any Rent under this
Lease when due. 
 19.1.10 Tenant shall repeatedly fail to pay Rent when due or any other charges required to be
paid, or shall repeatedly default in keeping, observing or performing any other covenant, agreement, condition or provision of this Lease, whether or not Tenant shall timely cure any such payment or other default. For the purposes of this
subsection, the occurrence of similar defaults two (2) times during any twelve (12) month period shall constitute a repeated default. 
 Any notice periods provided for under this Section shall run concurrently with any statutory notice periods and any notice given hereunder may be given simultaneously with or incorporated into any such statutory notice. 
 19.2 Landlord’s Default. If Landlord fails to perform any covenant, condition, or agreement contained in this Lease within
thirty (30) days after receipt of notice from Tenant, or if such default cannot reasonably be cured within thirty (30) days, and if Landlord fails to commence to cure within such thirty (30) day period or to diligently prosecute the
same to completion, then, subject to the other limitations set forth elsewhere in this Lease, Landlord shall be liable to Tenant for any damages sustained by Tenant as a result of Landlord’s breach; provided, however, that in no event shall
(a) Landlord be liable for indirect, consequential or punitive damages, including, without limitation, any damages based

  

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on lost profits; or (b) Tenant have the right to terminate this Lease on account of a Landlord default. Tenant shall not have the right to withhold, reduce or offset any amount against any
payments of Rent or any other charges due and payable under this Lease unless Tenant has obtained a final, non-appealable judgment against Landlord for the amount due. 
 ARTICLE 20 
 LANDLORD REMEDIES AND DAMAGES 
 20.1 Remedies. In the event of a Default, then in addition to any other rights or remedies Landlord may have at law or in equity,
Landlord shall have the right, at Landlord’s option, without further notice or demand of any kind, to do any or all of the following without prejudice to any other remedy that Landlord may have (but only as permitted to a landlord by applicable
Law): 
 20.1.1 Terminate this Lease and Tenant’s right to possession of the Premises by giving notice to
Tenant. Tenant shall immediately surrender the Premises to Landlord, and if Tenant fails to do so, Landlord may re-enter the Premises and take possession thereof and expel or remove Tenant and any other party who may be occupying the Premises, or
any part thereof, whereupon Tenant shall have no further claim to the Premises or under this Lease. 
 20.1.2
Continue this Lease in full force and effect, whether or not Tenant has vacated or abandoned the Premises, and sue upon and collect any unpaid Rent or other charges, that have or thereafter become due and payable. 
 20.1.3 Continue this Lease in effect, but terminate Tenant’s right to possession of the Premises and re-enter the
Premises and take possession thereof, whereupon Tenant shall have no further claim to the Premises without the same constituting an acceptance of surrender. 
 20.1.4 In the event of any re-entry or retaking of possession by Landlord, Landlord shall have the right, but not the
obligation, (a) to expel or remove Tenant and any other party who may be occupying the Premises, or any part thereof; and (b) to remove all or any part of Tenant’s or any other occupant’s property on the Premises and to place
such property in storage at a public warehouse at the expense and risk of Tenant. 
 20.1.5 Landlord may relet
the Premises without thereby avoiding or terminating this Lease (if the same has not been previously terminated), and Tenant shall remain liable for any and all Rent and other charges and expenses hereunder. For the purpose of reletting, Landlord is
authorized to make such repairs or alterations to the Premises as may be necessary in the sole discretion of Landlord for the purpose of such reletting, and if a sufficient sum is not realized from such reletting (after payment of all costs and
expenses of such repairs, alterations and the expense of such reletting (including, without limitation, reasonable attorney and brokerage fees) and the collection of rent accruing therefrom) each month to equal the Rent, then Tenant shall pay such
deficiency each month upon demand therefor. Actions to collect such amounts may be brought from time to time, on one or more occasions, without the necessity of Landlord’s waiting until the expiration of the Term. 
 20.1.6 Without any further notice or demand, Landlord may enter upon the Premises, if necessary, without being liable for
prosecution or claim for damages therefor, and do whatever Tenant is obligated to do under the terms of the Lease Tenant agrees to reimburse Landlord on demand for any reasonable expenses that Landlord may incur in effecting compliance with
Tenant’s obligations under the Lease. Tenant further agrees that Landlord shall not be liable for any damages resulting to Tenant from such action, unless caused by the gross negligence or willful misconduct of Landlord (but subject to the
other limitations on Landlord’s liability set forth in this Lease). Notwithstanding anything herein to the contrary, Landlord will have no obligation to cure any Default of Tenant. 
 20.1.7 Landlord shall at all times have the right, without prior demand or notice except as required by Law, to seek any
declaratory, injunctive or other equitable relief, and specifically enforce this Lease, or restrain or enjoin a violation or breach of any provision hereof, without the necessity of proving the inadequacy of any legal remedy or irreparable harm.

 20.1.8 Without notice to Tenant, Landlord may change or re-key all locks to entrances to the Premises, and
Landlord shall have no obligation to give Tenant notice thereof or to provide Tenant with a key to the Premises. 
  

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 20.1.9 The rights given to Landlord in this Article are cumulative and shall
be in addition and supplemental to all other rights or remedies that Landlord may have under this Lease and under applicable Laws or in equity. 
 20.2 Damages. Should Landlord elect to terminate this Lease or Tenant’s right to possession under the provisions above, Landlord may recover the following damages from Tenant: 
 20.2.1 Past Rent. The worth at the time of the award of any unpaid Rent that had been earned at the time of
termination; plus 
 20.2.2 Rent Prior to Award. The worth at the time of the award of the unpaid Rent
that would have been earned after termination, until the time of award; plus 
 20.2.3 Rent After Award.
The worth at the time of the award of the amount by which the unpaid Rent for the balance of the term after the time of award exceeds the amount of the rental loss that Tenant proves could have been reasonably avoided, if any; plus 
 20.2.4 Proximately Caused Damages. Any other amount necessary to compensate Landlord for all detriment proximately
caused by Tenant’s failure to perform its obligations under this Lease or that in the ordinary course of things would be likely to result therefrom, including, but not limited to, any costs or expenses (including, without limitation, reasonable
attorneys’ fees), incurred by Landlord in (a) retaking possession of the Premises; (b) maintaining the Premises after Default; (c) preparing the Premises or any portion thereof for reletting to a new tenant, including, without
limitation, any repairs or alterations, whether for the same or a different use; (d) reletting the Premises, including but not limited to, advertising expenses, brokers’ commissions and fees; and (e) any special concessions made to
obtain a new tenant. 
 20.2.5 Other Damages. At Landlord’s election, such other amounts in addition
to or in lieu of the foregoing as may be permitted from time to time by Law. 
 As used in subsections 20.2.1 and 20.2.2, the phrase
“worth at the time of the award” shall be computed by adding interest on all such sums from the date when originally due at the Interest Rate. As used in subsection 20.2.3, the phrase “worth at the time of the award” shall
be computed by discounting the sum in question at the Federal Reserve rate promulgated by the Federal Reserve office for the district in which the Premises are located, plus one percent (1%). 
 20.3 Rent after Termination. Tenant specifically acknowledges and agrees that Landlord shall have the right to continue to collect
Rent after any termination (whether said termination occurs through eviction proceedings or as a result of some other early termination pursuant to this Lease) for the remainder of the Term, less any amounts collected by Landlord from the reletting
of the Premises, but in no event shall Tenant be entitled to receive any excess of any such rents collected over the Rent. 
 20.4 No Termination. A termination of this Lease by Landlord or the recovery of possession of the Premises by Landlord or any voluntary or other surrender of this Lease by Tenant or a mutual cancellation thereof, shall not work a
merger and shall at the option of Landlord, terminate all or any existing franchises or concessions, licenses, permits, subleases, subtenancies or the like between Tenant and any third party with respect to the Premises, or may, at the option of
Landlord, operate as an assignment to Landlord of Tenant’s interest in same. 
 20.5 Waiver of Demand. All demands
for Rent and all other demands, notices and entries, whether provided for under common law or otherwise, that are not expressly required by the terms hereof, are hereby waived by Tenant. 
 20.6 Waiver of Redemption. Tenant hereby waives, relinquishes and releases for itself and for all those claiming under Tenant any
right of occupancy of the Premises following termination of this Lease, and any right to redeem or reinstate this Lease by order or judgment of any court or by any legal process or writ under present or future Laws. 
 20.7 Deficiency. If it is necessary for Landlord to bring suit in order to collect any deficiency, Landlord shall have the right to
allow such deficiencies to accumulate and to bring an action on several or all of the accrued deficiencies at one time. Any such suit shall not prejudice in any way the right of Landlord to bring a similar action for any subsequent deficiency or
deficiencies. 
  

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 20.8 Counterclaim. Tenant hereby waives any right to plead any counterclaim, offset
or affirmative defense in any action or proceedings brought by Landlord against Tenant for possession of the Premises or otherwise, for the recovery of possession based upon the non-payment of Rent or any other Default. The foregoing shall not,
however, be construed as a waiver of Tenant’s right to assert any claim in a separate action brought by Tenant against Landlord. In the event Tenant must, because of applicable court rules or statutes, interpose any counterclaim or other claim
against Landlord in such proceedings, Landlord and Tenant agree that, in addition to any other lawful remedy of Landlord, upon motion of Landlord, such counterclaim or other claim asserted by Tenant shall be severed from the proceedings instituted
by Landlord (and, if necessary, transferred to a court of different jurisdiction), and the proceedings instituted by Landlord may proceed to final judgment separately and apart from and without consolidation with or reference to the status of any
such counterclaim or any other claim asserted by Tenant. 
 20.9 Mitigation of Damages. Both Landlord and Tenant shall
each use commercially reasonable efforts to mitigate any damages resulting from a default of the other party under this Lease; provided that any failure by Landlord to mitigate damages in accordance with the foregoing shall not give rise to any
liability of Landlord for breach of this Lease, but shall only serve to reduce the recovery by Landlord by the amount of damages that Tenant proves could reasonably have been avoided. Subject to the foregoing, Landlord’s obligation to mitigate
damages after a Default shall be satisfied in full if Landlord undertakes to lease the Premises to another tenant (a “Substitute Tenant”) in accordance with the following criteria: 
 20.9.1 Landlord shall have no obligation to solicit or entertain negotiations with any Substitute Tenant until Landlord
obtains full and complete possession of the Premises including, without limitation, the final and unappealable legal right to relet the Premises free of any claim of Tenant. 
 20.9.2 Landlord shall not be obligated to lease the Premises to a Substitute Tenant for a rental amount less than the greater
of (a) the current fair market rental then prevailing for similar uses in comparable buildings in the same market area as the Premises, and (b) the rental rate payable under this Lease. 
 20.9.3 Landlord shall not be obligated to enter into a lease with any Substitute Tenant whose use would: 
  

	 	1.	Violate any restriction, covenant, or requirement contained in any other agreement to which Landlord is a party; 

  

	 	2.	Be inconsistent with the Permitted Use. 

 20.9.4 Landlord shall not be obligated to enter into a lease with any Substitute Tenant that does not have, in Landlord’s reasonable opinion, sufficient financial resources or operating experience to
operate the Premises in a first-class manner. 
 20.9.5 Landlord shall not be required to expend any amount of
money to alter, remodel, or otherwise make the Premises suitable for use by a Substitute Tenant unless: 
  

	 	1.	Tenant pays any such sum to Landlord in advance of Landlord’s execution of a lease with such Substitute Tenant (which payment shall not be in lieu of any damages
or other sums to which Landlord may be entitled as a result of Tenant’s Default); or 

  

	 	2.	Landlord determines that any such expenditure is financially justified in connection with entering into any such lease. 

 20.10 Upon compliance with the above criteria regarding the releasing of the Premises after a Default, Landlord shall be deemed to have
fully satisfied Landlord’s obligation to mitigate damages under this Lease and under any Law, and Tenant waives and releases, to the fullest extent legally permissible, any right to assert in any action by Landlord to enforce the terms of this
Lease, any defense, counterclaim, or rights of setoff or recoupment respecting the mitigation of damages by Landlord, unless and to the extent Landlord maliciously or in bad faith fails to act in accordance with the requirements of this Section.
Until Landlord is able, through such efforts, to relet the Premises, Tenant must pay to Landlord, on or before the first day of each calendar month, the monthly Rent and any other charges provided in this Lease. No such reletting shall be construed
as an election on the part of Landlord to terminate this Lease unless Landlord gives Tenant a notice of such intention. Notwithstanding any such reletting without termination, Landlord may at any time thereafter elect to terminate this Lease for
such previous breach. 
  

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 ARTICLE 21 
 BANKRUPTCY 
 21.1 In the event a petition is
filed by or against Tenant under the Bankruptcy Code, Tenant, as debtor and debtor in possession, and any trustee who may be appointed agree to adequately protect Landlord as follows: 
 21.1.1 to pay monthly in advance on the first day of each month as reasonable compensation for use and occupancy of the
Premises an amount equal to all Rent due pursuant to this Lease; 
 21.1.2 to perform each and every obligation
of Tenant under this Lease until such time as this Lease is either rejected or assumed by order of a court of competent jurisdiction; 
 21.1.3 to determine within one hundred twenty (120) days after the filing of such petition whether to assume or reject this Lease; 
 21.1.4 to give Landlord at least thirty (30) days’ prior notice, unless a shorter period is agreed to in writing by
the parties, of any proceeding relating to any assumption of this Lease; 
 21.1.5 to give at least
thirty (30) days’ prior notice of any vacation or abandonment of the Premises, any such vacation or abandonment to be deemed a rejection of this Lease; and 
 21.1.6 to do all other things to benefit Landlord otherwise required under the Bankruptcy Code. 
 This Lease shall be deemed rejected in the event of the failure to comply with any of the above. 
 21.2 In order to provide Landlord with the assurance contemplated by the Bankruptcy Code, the following obligations must be fulfilled, in
addition to any other reasonable obligations that Landlord may require, before any assumption of this Lease is effective: a) all monetary Defaults under this Lease must be cured within ten (10) days after the date of assumption;
b) all other Defaults (other than those arising solely on account of the bankruptcy filing) must be cured within fifteen (15) days after the date of assumption; c) all actual monetary losses incurred by Landlord
(including, but not limited to, reasonable attorneys’ fees) must be paid to Landlord within ten (10) days after the date of assumption; and d) Landlord must receive within ten (10) days after the date of assumption a
security deposit in the amount of six (6) months’ Base Rent and an advance prepayment of three (3) months’ Base Rent. 
 21.3 In the event this Lease is assumed in accordance with the requirements of the Bankruptcy Code and this Lease, and is subsequently assigned, then, in addition to any other reasonable obligations that
Landlord may require and in order to provide Landlord with the assurances contemplated by the Bankruptcy Code, Landlord must be provided with (a) a financial statement of the proposed assignee prepared in accordance with generally accepted
accounting principles consistently applied, though on a cash basis, which reveals a net worth in an amount sufficient, in Landlord’s reasonable judgment, to assure the future performance by the proposed assignee of Tenant’s obligations
under this Lease; or (b) a written guaranty by one or more guarantors with financial ability sufficient to assure the future performance of Tenant’s obligations under this Lease, such guaranty to be in form and content satisfactory to
Landlord and to cover the performance of all of Tenant’s obligations under the Lease. 
 21.4 Neither Tenant nor any
trustee who may be appointed in the event of the filing of a petition under the Bankruptcy Code shall conduct or permit the conduct of any “fire,” “bankruptcy,” “going out of business” or auction sale in or from the
Premises. 
 ARTICLE 22 
 LIEN FOR RENT 
 In consideration of the mutual benefits arising under this Lease,
Tenant hereby grants to Landlord a lien and security interest on all property of Tenant now or hereafter placed in or upon the Premises, and such property shall be and remain subject to such lien and security interest of Landlord for payment of all
Rent. The provisions of this Article relating to such lien and security interest shall constitute a security agreement under the Uniform Commercial Code in force in the

  

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State (the “UCC”) so that Landlord shall have and may enforce a security interest on all property of Tenant now or hereafter placed in or on the Premises, including, but not limited to,
all fixtures, machinery, equipment, furnishings and other articles of personal property now or hereafter placed in or upon the Premises by Tenant. Landlord, as secured party, shall be entitled to all of the rights and remedies afforded a secured
party under the UCC in addition to and cumulative of Landlord’s liens and rights provided by law or by the other terms and provisions of this Lease, and Landlord shall have the right to file a Financing Statement reflecting such lien.

 ARTICLE 23 
 HOLDING OVER 
 If after expiration of the Term, Tenant remains in possession of the
Premises, Landlord may, at its option, serve notice upon Tenant that such hold-over constitutes either: (a) a month-to-month tenancy upon all the provisions of this Lease (except as to Term and Base Rent); or (b) a tenancy at sufferance.
If Landlord does not give said notice, Tenant’s hold-over shall create a tenancy at sufferance, subjecting Tenant to all the covenants and obligations of this Lease. In either event, the monthly installments of Base Rent shall be increased to
one hundred fifty percent (150%) of the monthly installments of Base Rent in effect at the expiration of the Term. If a month-to-month tenancy is created, either party may terminate such tenancy by giving the other party at least
thirty (30) days advance notice of the date of termination. In the case of a month-to-month tenancy or tenancy at sufferance, if Tenant shall hold over without the consent of Landlord after Landlord has given Tenant thirty (30) days prior
written notice of termination, then Tenant shall also protect, defend, indemnify and hold Landlord harmless from all claims, losses, costs and expenses resulting from retention of possession by Tenant, including, without limiting the generality of
the foregoing, any claims made by any succeeding tenant founded upon such failure to surrender and any lost rents or profits to Landlord resulting therefrom. The provisions of this Article shall not constitute a waiver by Landlord of any right of
re-entry as otherwise available to Landlord, nor shall receipt of any rent or any other act appearing to affirm the tenancy operate as a waiver of the right to terminate this Lease for a breach by Tenant hereof. 
 ARTICLE 24 
 SURRENDER OF PREMISES 
 24.1 Upon the expiration or earlier termination of this Lease, Tenant shall
peaceably surrender the Premises to Landlord broom-clean and in the same condition as on the date Tenant took possession, except for (a) reasonable wear and tear; (b) loss by fire or other casualty; and (c) loss by condemnation. All
fixtures, equipment, improvements, and appurtenances attached to or built into the Premises at the commencement of or during the Term, whether or not by or at the expense of Tenant, other than Tenant’s Property, shall be and remain a part of
the Premises, shall be the property of Landlord, and shall not be removed by Tenant, except as directed by Landlord. Tenant shall not be required to remove any leasehold improvements unless (i) such removal is necessary to ensure that the
Premises comply with applicable code at the time of surrender, including but not limited to removal of wires located in risers and plenums without raceways or conduits; (ii) they were made without the consent of Landlord; or (iii) Landlord
notified Tenant that removal would be required at the time Landlord approved Tenant’s plans therefor. Tenant’s Property shall be and shall remain the property of Tenant and may be removed by Tenant at any time during the Term; provided
that, if any of Tenant’s Property is removed, Tenant shall promptly repair any damage to the Premises resulting from such removal. Internal floor coating/concrete hardener shall be left in sealed condition, including, without limitation, any
areas that may be damaged by removal of Tenant’s fixtures. All interior walls should be left in good condition, and any holes from removal of Tenant’s fixtures must be patched. 
 24.2 If Tenant abandons or surrenders the Premises or is dispossessed by process of law or otherwise, any of Tenant’s Property left on
the Premises shall be deemed abandoned, and, at Landlord’s option, title shall pass to Landlord under this Lease as by a bill of sale. If Landlord elects to remove all or any part of such Tenant’s Property, the reasonable cost of removal,
storage and disposal of Tenant’s Property, including, without limitation, repairing any damage to the Premises or Building caused by such removal, shall be paid by Tenant. On the Expiration Date, Tenant shall surrender all keys, parking cards
and other means of entry to the Premises (including, without limitation, the Buildings) and shall inform Landlord of the combinations and access codes for any locks and safes located in the Premises. It is specifically agreed that any and all
telephonic, coaxial, ethernet, or other computer, word processing, facsimile, or electronic wiring (“Telecom Wiring”) and any other components of Tenant’s Telecommunications System shall be removed at Tenant’s cost at the
expiration of the Term, unless Landlord has specifically requested in writing that the Telecom Wiring shall remain, whereupon the Telecom Wiring shall be surrendered with the Premises as Landlord’s property. 
  

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 ARTICLE 25 
 BROKERAGE FEES 
 Tenant warrants and represents that it has not
dealt with any real estate broker or agent in connection with this Lease or its negotiation. Tenant shall indemnify, defend and hold Landlord harmless from any cost, expense, or liability, (including, without limitation, costs of suits and
reasonable attorneys’ fees) for any compensation, commission, or fees claimed by any other real estate broker or agent in connection with this Lease (including but not limited to any expansions of the Premises and renewals) or its negotiation.

 ARTICLE 26 
 NOTICES 
 Any notice, demand, request, consent, covenant, approval or other
communication to be given by one party to the other must be in writing and (except for statements and invoices to be given in the ordinary course hereunder, which may be sent by regular U.S. Mail) (a) delivered personally; (b) mailed by
certified United States mail, postage prepaid, return receipt requested (except for statements and invoices to be given in the ordinary course hereunder, which may be sent by regular U.S. Mail); (c) sent by nationally recognized overnight
courier; or (d) sent by telecopy and confirmed by one of the other methods set forth herein. The effective date of notice shall be (i) for any notice delivered in person, the date of delivery; (ii) for any notice by U.S. mail,
three (3) days after the date of certification thereof; (iii) for any notice by overnight courier, the next Business Day after deposit with the courier; and (iv) for any notice by telecopy, the date of confirmation of receipt, if
before 5:00 p.m. at the location delivered, or the next day if after 5:00 p.m. All notices shall be delivered or addressed to the parties at their respective addresses set forth on the Lease Summary. Either party may change the address at which it
desires to receive notice upon giving notice of such request to the other party in the manner provided herein. 
 ARTICLE 27

 SIGNAGE 
 [INTENTIONALLY DELETED] 
 ARTICLE 28 
 LENDER PROVISIONS 
 28.1 Subordination. After the Option Term, this Lease will be subject and subordinate to all future ground or underlying leases of the Property and to the lien of any mortgages, deed to secure
debt, or trust deed, coming into force after the Option Term against the Property or the Buildings, if any, and to all renewals, extensions, modifications, consolidations and replacements thereof (collectively, “Mortgages”), and to all
advances made or hereafter to be made upon the security of such Mortgages. Landlord covenants that during the Option Term, the Premises will not be subject to any ground or underlying leases of the Property or to any lien of any mortgage, deeds to
secure debt, or trust deeds. Tenant covenants and agrees in the event any proceedings are brought for the foreclosure of any mortgage, deed to secure debt or trust deed, or if any ground or underlying lease is terminated, to attorn, without any
deductions or set-offs whatsoever, to the purchaser upon any such foreclosure sale, or to the lessor of such ground or underlying lease, as the case may be (the “Purchaser”), if so requested to do so by the Purchaser, and to recognize the
Purchaser as the lessor under this Lease. In no event shall Tenant have a right of offset against amounts due any Purchaser on account of any defaults by Landlord under this Lease that pre-date the time the Purchaser becomes the lessor hereunder,
nor shall any Purchaser be liable for any such defaults by Landlord. Tenant shall, within ten (10) Business Days of request by Landlord, execute such further instruments or assurances as Landlord may reasonably deem necessary to evidence or
confirm the subordination or superiority of this Lease to any Mortgages. Tenant waives the provisions of any current or future statute, rule or law that may give or purport to give Tenant any right or election to terminate or otherwise adversely
affect this Lease and the obligations of Tenant hereunder in the event of any foreclosure proceeding or sale. Notwithstanding the provisions hereof, should any Mortgagee require that this Lease be prior rather than subordinate to its Mortgage, or
require that Tenant attorn to any Purchaser, then in such event, this Lease shall become prior and superior to such Mortgage, or Tenant shall so attorn, upon notice to that effect to Tenant from such Mortgagee. The aforesaid superiority of this
Lease to any Mortgage shall be self-operative upon the giving of such notice and no further documentation other than such notice shall be required to effectuate such superiority or attornment. In the event Landlord or such Mortgagee desires
confirmation of such superiority or attornment, Tenant shall, promptly upon request therefor by Landlord or such Mortgagee, and without charge therefor, execute a document acknowledging such priority or attornment obligation to the Mortgagee as
Landlord in the event of foreclosure or deed in lieu thereof or termination of a ground lease. 
  

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 28.2 Estoppel Certificates. Within ten (10) days after written request from
Landlord, Tenant shall execute and deliver to Landlord, or Landlord’s designee, a written statement certifying (a) that this Lease is unmodified and in full force and effect or is in full force and effect as modified and stating the
modifications; (b) the amount of Base Rent and the date to which Base Rent and Additional Rent have been paid in advance; (c) the amount of any security deposit with Landlord; (d) that Landlord is not in default hereunder or, if
Landlord is claimed to be in default, stating the nature of any claimed default; and (e) such other matters as may be requested. Landlord and any purchaser, assignee, or Mortgagee may rely upon any such statement. Tenant’s failure to
execute and deliver such statement within the time required shall be conclusive against Tenant (1) that this Lease is in full force and effect and has not been modified except as represented by Landlord; (2) that there are no uncured
defaults in Landlord’s performance and that Tenant has no right of offset, counterclaim, or deduction against Rent; (3) not more than one (1) month’s Rent has been paid in advance; and (4) as to the truth and accuracy of any
other matters set forth in the statement as submitted to Tenant. 
 28.3 Notice and Cure Rights. Tenant agrees to notify
any Mortgagee whose address has been furnished to Tenant, of any notice of default served by Tenant on Landlord. If Landlord fails to cure such default within the time provided for in this Lease, such Mortgagee shall have an additional
thirty (30) days to cure such default; provided that, if such default cannot reasonably be cured within that thirty (30) day period, then such Mortgagee shall have such additional time to cure the default as is reasonably necessary under
the circumstances. 
 28.4 Changes Requested by Mortgagee. Tenant shall not unreasonably withhold its consent to changes
or amendments to this Lease requested by a Mortgagee, so long as such changes do not alter the basic business terms of this Lease or otherwise materially diminish any rights or materially increase any obligations of Tenant. 
 ARTICLE 29 
 MISCELLANEOUS 
 29.1 Quiet Enjoyment. Tenant, upon paying the Rent and performing all of its
obligations under this Lease, shall peaceably and quietly enjoy the Premises, subject to the terms of this Lease and to any mortgage, deed of trust, lease, or other agreement to which this Lease may be subordinated. 
 29.2 [INTENTIONALLY DELETED] 
 29.3 Force Majeure. Any prevention, delay, or stoppage of work to be performed by Landlord or Tenant that is due to Force Majeure shall excuse performance of the work by that party for a period
equal to the duration of that prevention, delay, or stoppage. Nothing in this Section 29.3 shall excuse or delay Tenant’s obligation to pay Rent or other charges under this Lease. 
 29.4 Accord and Satisfaction; Allocation of Payment. No payment by Tenant or receipt by Landlord of a lesser amount than the Rent
provided for in this Lease shall be deemed to be other than on account of the earliest due Rent; nor shall any endorsement or statement on any check or letter accompanying any check or payment as Rent be deemed an accord and satisfaction. Landlord
may accept such check or payment without prejudice to Landlord’s right to recover the balance of the Rent or pursue any other remedy provided for in this Lease. In connection with the foregoing, Landlord shall have the absolute right in its
sole discretion to apply any payment received from Tenant to any account or other payment of Tenant then not current and due or delinquent. 
 29.5 Attorneys’ and Other Fees. Should either party institute any action or proceeding to enforce or interpret this Lease or any provision hereof, for damages by reason of any alleged breach
of this Lease or of any provision hereof, or for a declaration of rights hereunder, the prevailing party in any such action or proceeding shall be awarded from the other party all costs and expenses, including, without limitation, attorneys’
and other fees, reasonably incurred in good faith by the prevailing party in connection with such action or proceeding. The term “attorneys’ and other fees” shall mean and include reasonable attorneys’ fees, accountants fees,
expert witness fees and any and all consultants and other similar fees incurred in connection with the action or proceeding and preparations therefor. The term “action or proceeding” shall mean and include actions, proceedings, suits,
arbitrations, appeals and other similar proceedings. 
 29.6 Construction. Headings at the beginning of each Article,
Section and subsection are solely for the convenience of the parties only and in no way define, limit, or enlarge the scope or meaning of this Lease. Except as otherwise provided in this Lease, all exhibits referred to herein are attached hereto and
are incorporated herein by this reference. This Lease shall not be construed as if either Landlord or Tenant had prepared it, but rather as if both Landlord and Tenant had prepared it. 
  

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 29.7 Confidentiality. Tenant acknowledges that the content of this Lease and any
related documents are confidential information. Tenant shall keep such confidential information strictly confidential and shall not disclose such confidential information to any person or entity other than Tenant’s financial, legal, and space
planning consultants or as required by Law. In addition to any other remedies to which Landlord may be entitled if Tenant breaches the foregoing covenant, Landlord shall have the right to increase the Rent to then current market rent for the
Building. 
 29.8 Governing Law. This Lease shall be governed by, interpreted under, and construed and enforced in
accordance with the Laws of the Commonwealth of Virginia applicable to agreements made and to be performed wholly within Virginia. 
 29.9 Consent. Unless otherwise expressly set forth herein, all consents and decisions required or permitted of Landlord hereunder shall be granted, withheld and made in Landlord’s sole discretion; provided, however, that if
Landlord does not reject or withhold a written request for consent or a decision made by Tenant to Landlord within 30 days of Landlord’s receipt of such request, then Landlord shall be deemed to have approved such request. All consents and
approvals required from Landlord hereunder shall be subject to the requirement that Landlord be reimbursed within fifteen (15) days of Landlord’s written demand for attorneys’ and consultants’ fees and costs incurred in
connection therewith. Tenant shall have no claim and hereby waives the right to any claim against Landlord for money damages by reason of any refusal, withholding, or delaying by Landlord of any consent, approval, statement, or satisfaction that
Landlord has agreed shall be subject to a standard of reasonableness. In such event, Tenant’s only remedy therefor shall be an action for specific performance, injunction, or declaratory judgment to enforce any right to such consent, approval,
statement, or satisfaction. 
 29.10 Authority. [INTENTIONALLY DELETED] 
 29.11 Duplicate Originals; Counterparts. This Lease may be executed in any number of duplicate originals, all of which shall be of
equal legal force and effect. Additionally, this Lease may be executed in counterparts, but shall become effective only after each party has executed a counterpart hereof; all said counterparts, when taken together, shall constitute the entire
single agreement between the parties. 
 29.12 Further Assurances. Landlord and Tenant each agree to execute any and all
other documents and to take any further actions reasonably necessary to consummate the transactions contemplated hereby. 
 29.13 [INTENTIONALLY DELETED] 
 29.14 Recording. Tenant shall not record this Lease without the prior
consent of Landlord. 
 29.15 Severability. In the event any portion of this Lease shall be declared by any court of
competent jurisdiction to be invalid, illegal or unenforceable, such portion shall be deemed severed from this Lease, and the remaining parts hereof shall remain in full force and effect, as fully as though such invalid, illegal or unenforceable
portion had never been part of this Lease. 
 29.16 Survival. All indemnity and other unsatisfied obligations set forth
in this Lease shall survive the termination or expiration hereof. 
 29.17 WAIVER OF TRIAL BY JURY. TO THE
EXTENT PERMITTED BY APPLICABLE LAW, THE PARTIES HEREBY IRREVOCABLY WAIVE ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS LEASE, OR THE TRANSACTIONS OR MATTERS RELATED HERETO OR CONTEMPLATED HEREBY.

 29.18 Successors and Assigns. Subject to the terms and conditions of Article 14 of this Lease, this Lease shall apply
to and bind the heirs, personal representatives, and permitted successors and assigns of the parties. 
 29.19 Integration of
Other Agreements; Amendments. This Lease and the APA set forth the entire agreement and understanding of the parties with respect to the matters set forth herein and supersedes all previous written or oral understandings, agreements, contracts,
correspondence and documentation with respect thereto. Any oral representations or modifications concerning this Lease shall be of no force or effect. No provisions of this Lease may be amended or added to except by an agreement in writing signed by
the parties or their respective successors in interest. 
  

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 29.20 TIME OF THE ESSENCE. TIME IS OF THE ESSENCE OF THIS LEASE AND EACH
AND EVERY TERM AND PROVISION HEREOF. 
 29.21 Waiver. The waiver by a party of any breach of any term, covenant, or
condition of this Lease shall not be deemed a waiver of such term, covenant, or condition or of any subsequent breach of the same or any other term, covenant, or condition. No delay or omission in the exercise of any right or remedy of a party shall
impair such right or remedy or be construed as a waiver of any default of the other party. Consent to or approval of any act by a party requiring consent or approval of the other party shall not be deemed to waive or render unnecessary such consent
to or approval of any subsequent act. Any waiver must be in writing and shall not be a waiver of any other matter concerning the same or any other provision of this Lease. 
 29.22 No Surrender. No act or conduct of Landlord, including, without limitation, the acceptance of keys to the Premises, shall
constitute an acceptance of the surrender of the Premises by Tenant before the expiration of the Term. Only a written notice from Landlord to Tenant shall constitute acceptance of the surrender of the Premises and accomplish a termination of the
Lease. 
 29.23 Number and Gender. As used in this Lease, the neuter includes masculine and feminine, the singular
includes the plural and the use of the word “including” shall mean “including without limitation.” 
 29.24
Days. The term “days,” as used herein, shall mean actual days occurring, including Saturdays, Sundays and Holidays. 
 29.25 [INTENTIONALLY DELETED] 
 29.26 No Third Party Beneficiaries. Except as otherwise provided herein,
no person or entity shall be deemed to be a third party beneficiary hereof, including but not limited to any brokers, and nothing in this Lease, (either expressed or implied) is intended to confer upon any person or entity, other than Landlord and
Tenant (and their respective nominees, successors and assigns), any rights, remedies, obligations or liabilities under or by reason of this Lease. 
 29.27 No Other Inducements. It is expressly warranted by each of the undersigned parties that no promise or inducement has been offered except as herein set forth and in the APA and that this Lease
is executed without reliance upon any statement or representation of any person or party or its representatives concerning the nature and extent of damages, costs and/or legal liability therefor. 
 29.28 Independent Covenants. This Lease shall be construed as though the covenants herein between Landlord and Tenant are independent
and not dependent. Tenant hereby expressly waives the benefit of any Laws to the contrary and agrees that if Landlord fails to perform any of its obligations set forth herein, Tenant shall not be entitled to make any repairs or perform any acts
hereunder at Landlord’s expense or to any setoff of Rent. 
 29.29 No Discrimination. Tenant covenants by and for
itself, its heirs, executors, administrators and assigns, and all persons claiming under or through Tenant, and this Lease is made and accepted upon and subject to the condition that there shall be no discrimination against or segregation of any
person or group of persons, on account of race, color, creed, sex, religion, marital status, ancestry or national origin in the leasing, subleasing, transferring, use, or enjoyment of the Premises, nor shall Tenant itself, or any person claiming
under or through Tenant, establish or permit such practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy, of tenants, lessees, sublessees, subtenants or vendees in the Premises.

 29.30 OFAC Compliance. 
 29.30.1 As used herein “Blocked Party” shall mean any party or nation that (a) is listed on the Specially Designated Nationals and Blocked Persons List maintained by the Office of Foreign
Asset Control, Department of the U.S. Treasury (“OFAC”) pursuant to Executive Order No. 13224, 66 Fed. Reg. 49079 (Sept. 25, 2001) or other similar requirements contained in the rules and regulations of OFAC (the “Order”) or
in any enabling legislation or other Executive Orders in respect thereof (the Order and such other rules, regulations, legislation, or orders are collectively called the “Orders”) or on any other list of terrorists or terrorist
organizations maintained pursuant to any of the rules and regulations of OFAC or pursuant to any other applicable Orders (such lists are collectively referred to as the “Lists”); or (b) has been determined by competent authority to be
subject to the prohibitions contained in the Orders. 
  

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 29.30.2 As a material inducement for Landlord entering into this Lease,
Tenant warrants and represents that none of Tenant, any Affiliate of Tenant, any partner, member or stockholder in Tenant or any Affiliate of Tenant, or any beneficial owner of Tenant, any Affiliate of Tenant or any such partner, member or
stockholder of Tenant (collectively, a “Tenant Owner”): (a) is a Blocked Party; (b) is owned or controlled by, or is acting, directly or indirectly, for or on behalf of, any Blocked Party; or (c) has instigated, negotiated,
facilitated, executed or otherwise engaged in this Lease, directly or indirectly, on behalf of any Blocked Party. Tenant shall immediately notify Landlord if any of the foregoing warranties and representations becomes untrue during the Term.

 29.30.3 Tenant shall not: (a) transfer or permit the transfer of any interest in Tenant or any Tenant
Owner to any Blocked Party; or (b) make a Transfer to any Blocked Party or party who is engaged in illegal activities. 
 29.30.4 If at any time during the Term (a) Tenant or any Tenant Owner becomes a Blocked Party or is convicted, pleads nolo contendere, or is indicted, arraigned, or custodially detained on charges
involving money laundering or predicate crimes to money laundering; (b) any of the representations or warranties set forth in this Section become untrue; or (c) Tenant breaches any of the covenants set forth in this Section, the same shall
constitute a Default. In addition to any other remedies to which Landlord may be entitled on account of such Default, Landlord may immediately terminate this Lease and refuse to pay any Allowance or other disbursements due to Tenant under this
Lease. 
 [SIGNATURE PAGE FOLLOWS] 
  

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 IN WITNESS WHEREOF the parties have executed this Lease, under seal, as of the date
first-above written. 
  

											
		 		 		 	LANDLORD:	 	
					
		 		 		 	NAUTILUS, INC.	 	
	 Witness:
	 	a Washington corporation	 	
					
	  
	 		 	By:	 	 /s/ Kenneth L. Fish
	 	
		 		 		 	Printed Name:	 	 Kenneth L. Fish
	 	
	Date:	 	  
	 		 	Title:	 	 CFO
	 	
		 		 		 	Date:	 	 February 22, 2010
	 	
		 		 		 		 		 	(SEAL)
					
		 		 		 	TENANT:	 	
					
		 		 		 	MED-FIT SYSTEMS, INC.,	 	
	 Witness:
	 	a California corporation	 	
					
	  
	 		 	By:	 	 /s/ Dean Sbragia
	 	
		 		 		 	Printed Name:	 	 Dean Sbragia
	 	
	Date:	 	  
	 		 	Title:	 	 President
	 	
		 		 		 	Date:	 	 2/22/10
	 	
		 		 		 		 		 	(SEAL)

  

 -29- 

 EXHIBIT A - LEGAL DESCRIPTION OF PREMISES 
 The Premises are the real property described below 
 together with all improvements thereon. 
 The Premises are located in the
Town of Independence, County of Grayson, Commonwealth of Virginia, and are more particularly described as follows: 
 Tract 1,
Parcels 1-8: Tax Map No. 73A3-A-28; 73A3-A-31; 53-A-76B; 73A3-A-30; 53-A-76C; 73A3-A-25; 73A3-A-32 & 73A3-A-29 
 BEGINNING at an iron pipe at the corner of R. C. Cox on the North side of Va. Sec. Rt. #685; thence with the North boundary line of Va. Sec. Rt. #685, S 66-35 W 45.91 feet to a stake, S 36-31 W 11.68 feet to a stake, S 36-31 W 22.18 feet to
a stake, S 06-52 W 73.31 feet to an iron pipe at a corner; thence, leaving the road, S 26-3 5 W 102.20 feet to an iron pipe in the Rex Johnson corner; thence, N 73-25 W 165 feet to an iron pipe, S 26-35 W 132 feet to an iron pipe, N 73-25 W 108.89
feet to an iron pipe, N 17-45 E 255.83 feet to a stake by a post in a branch, H.C. Moore’s corner; thence, N 86-00 W 311.35 feet to a large poplar, N 64-31 W 68.93 feet to a post, N 20-32-50 W 1207.84 feet to an iron pipe in the fence corner of
the H.C. Moore and Smith property; thence with the Smith line, N 80-32-50 E 829.69 feet to a post in a hollow at a fence intersection, N 81 -39-40 E 1131.09 feet to a set stone found in the Jim T. McKnight corner; thence with the McKnight line, S
51-02 E 432.80 feet to a pipe set by a West gate post, S 15-44-15 W 857.07 feet to an iron pipe hi the Eller corner; thence with the Eller line, S 81-21-20 W 128.84 feet to a 2 inch iron pipe, S 83-53-45 W 104.88 feet to a one-half inch iron pipe;
thence S 02-09-30 W 149.44 feet to a pipe found, S 02-11 W 123.76 feet to a large oak stump 20 feet from the centerline of Va. Sec. Rt. #685; thence with the North line of Va. Sec. Rt. #685, N 85-06-15 W 80.84 feet to an iron pin set in the Miller
fence corner; thence leaving the road and with the Miller line, N 05-28-50 E 32.49 feet to a post, N 06-07-17 W 20.57 feet to an iron pin set by a post, N 27-22-17 W 17.42 feet to an iron pin set, N 60-31-21 W 27.27 feet to an iron pin set, S
87-00-56 W 20.20 feet to an iron pin set at the end of the fence, N 26-14-40 W 91.85 feet to a metal post in a fence corner, S 85-12-22 W 72.68 feet to a metal post in a fence corner, S 06-25-30 W 137.28 feet to an iron pipe found at the Miller
corner on the North side of State Rt. #685; thence with the North line of Va. Sec. Rt #685, S 81-25 W 41.37 feet to an iron pipe set, S 81-25 W 38.97 feet to an iron pipe, S 66-49 W 60.76 feet to a point at the corner of R.C. Cox; thence leaving the
road and with the Cox line, N 07-56-41 W 174.13 feet to an iron pin, N 88-07-30 W 242.74 feet to an iron pin, S 04-30-36 E 248 feet to the point of the BEGINNING, 
 CONTAINING 56.291 acres, more or less, as shown by the plat of survey of J. L. Zeh, C.L.S., dated July 21, 1986, and revised by survey of out conveyance dated July 22, 1987, and 
 BEING the same land conveyed to Plum Limited Company (name subsequently changed to DFI Properties, LLC, on January 15, 1999, and which
was subsequently merged into Grantor on March 8 2006) by deed dated December 31, 1998 from Nautilus International, Inc., which deed is recorded in the Clerk’s Office of the Circuit Court of Grayson County, Virginia, in Deed Book 339,
Page 1. 
  

 -1- 

 EXHIBIT B – CONSTRUCTION 
 This Exhibit sets forth the terms and conditions relating to construction work in the Premises. All references in this Exhibit to
capitalized terms or “this Lease” shall mean the relevant portion of the lease to which this Exhibit is attached and of which this Exhibit forms a part. 
 1. Inspection by Landlord. Landlord shall have the right to inspect work at all times; provided however, Landlord’s failure to inspect any work shall in no event constitute a waiver of any of
Landlord’s rights hereunder, nor shall Landlord’s inspection of the work constitute Landlord’s approval thereof. Should Landlord disapprove any work, Landlord shall notify Tenant in writing of such disapproval and shall specify the
items disapproved. In the event Landlord disapproves of any matter that might adversely affect the Premises, Landlord may take such action as Landlord deems necessary, at Tenant’s expense and without incurring any liability on Landlord’s
part, to correct any such matter, including, without limitation, causing the cessation of the applicable work. 
 2.
Insurance. In addition to any insurance that may be required under this Lease, Tenant shall secure, pay for and maintain or cause Tenant’s contractors to secure, pay for and maintain during the continuance of any work, the following
insurance: 
 (a) Worker’s Compensation Insurance with a limit of not less than the greater of (i) $500,000, or
(ii) the amount required from time to time by applicable Laws. 
 (b) Employer’s Liability Insurance with a limit of
not less than $1,000,000. 
 (c) Commercial General Liability Insurance (including Contractor’s Protective Liability) in an
amount not less than $1,000,000 per occurrence, whether involving bodily injury liability (or death resulting therefrom) or property damage liability or a combination thereof with a minimum aggregate limit of $2,000,000, and with umbrella coverage
with limits not less than $5,000,000 ($10,000,000 if the cost of the work is greater than $1,000,000). Such insurance shall provide for explosion and collapse, completed operations coverage and broad form blanket contractual liability coverage and
shall insure against any and all claims for bodily injury, including death resulting therefrom, and damage to the property of others and arising from its operations under the contracts whether such operations are performed by Tenant’s
contractors or by anyone directly or indirectly employed by any of them. 
 (d) Automobile Liability Insurance, including the
ownership, maintenance and operation of any automotive equipment, owned, hired, or non-owned in an amount not less than $1,000,000 for bodily injury and property damage combined in any one accident. Such insurance shall insure against any and all
claims for bodily injury, including death resulting therefrom, and damage to the property of others arising from its operations under the contracts, whether such operations are performed by Tenant’s contractors, or by anyone directly or
indirectly employed by any of them. 
 (e) “All-risk” builder’s risk insurance for the full insurable value of
the work (including all stored material and equipment), as approved by Landlord. This insurance shall include the interests of Landlord and Tenant (and their respective contractors and subcontractors of any tier to the extent of any insurable
interest therein) in the work and shall insure against physical loss or damage including, without duplication of coverage, theft, vandalism and malicious mischief. If any materials or equipment will be stored offsite or will be in transit to the job
site and are not covered under said “all-risk” builder’s risk insurance, then Tenant shall effect and maintain similar property insurance on such materials and equipment. Any loss insured under said “all-risk” builder’s
risk insurance shall be adjusted with Landlord and Tenant and made payable to Landlord, as trustee for the insureds, as their interests may appear. 
 (f) Commercial Catastrophe or “Umbrella” Excess Liability Insurance, as stated above, on an “occurrence” basis with a limit of not less than $5,000,000 (or $10,000,000, as applicable)
per occurrence and in the aggregate. 
 (g) Professional Liability Insurance with limits of not less than the amount that would
prudently be maintained for comparable work, which shall in no event be less than $1,000,000 per claim and in the aggregate. 
 (h) Pollution Liability and Environmental Impairment Insurance with limits of not less than $2,000,000 per claim and $5,000,000 in the aggregate. 
  

 -1- 

 The liability policies required in paragraphs (c) and (f) above shall be endorsed
to include all additional insureds required or permitted herein with coverage equivalent to that provided by ISO form CG 20 10 11 85 [NOTE: if necessary, ISO endorsement CG 20 10 10 01 together with CG 20 37 10 01 are acceptable equivalents]. Such
additional insured endorsements shall be separate from the certificates of insurance required herein. 
 All other policies
(except the worker’s compensation policy) shall be endorsed to include the Landlord Related Parties as additional insureds. All insurance policies shall provide that all additional insureds shall be given thirty (30) days’ prior
written notice of any reduction, cancellation or non-renewal of coverage (except that ten (10) days’ notice shall be sufficient in the case of cancellation for non-payment of premium) and shall provide that the insurance coverage afforded
to the additional insureds shall be primary to any insurance carried independently by said additional insureds. Certificates for all insurance required hereunder shall be delivered to Landlord before the commencement of construction and before any
contractor’s equipment is moved onto the Property. Tenant shall cause Tenant’s contractors to provide Landlord with an endorsement evidencing that each required policy herein contains a waiver of subrogation in favor of the additional
insureds required or permitted herein. Insurance companies shall have a rating of A VI, or higher, in the most currently available “Best Insurance Guide”. 
 3. Lien Free Completion. 
 (a) Landlord may require, at Landlord’s
sole option, that Tenant provide to Landlord such security as reasonably determined by Landlord to protect Landlord against any liability in connection with the work, including but not limited to a lien and completion bond naming Landlord as a
co-obligee. 
 (b) Tenant shall use its best efforts to obtain or cause to be obtained a “no-lien” contract from each
of Tenant’s contractors. All subcontractors under each of the contracts shall be given a notice of such no-lien contract before such subcontractor furnishes any labor or materials. If Tenant is unable to obtain or cause to be obtained a no-lien
contract from any proposed contractor, Tenant shall give written notice of such fact to Landlord, and Landlord shall have the right to disapprove such contractor. Upon completion of the work, Tenant shall furnish Landlord with full and final waivers
of liens and contractors’ affidavits and statements, in such form as may be required by Landlord, Landlord’s title insurance company and any Mortgagee, from all parties performing labor or supplying materials or services in connection with
the work showing that all of said parties have been compensated in full. 
 (c) If Tenant fails to make any payment relating to
the work, Landlord, as its option, may complete the work, make such payment and hold Tenant liable for the costs thereof. 
 4.
Plan Approval. Landlord’s approval of Tenant’s plans will not be unreasonably withheld, provided that (a) they comply with all Laws; (b) the improvements do not adversely affect (as determined by Landlord) the Premises;
(c) the plans are sufficiently detailed to allow construction of the improvements in a good and workmanlike manner; and (d) construction of the improvements conforms to the requirements set forth in this Exhibit. Notwithstanding that any
plans submitted to Landlord in connection with this Lease (including, without limitation, pursuant to this Exhibit B) are reviewed by Landlord and notwithstanding any comments, advice or assistance that Landlord may render
to Tenant, in no event shall any such review, comments, advice or assistance constitute a representation or warranty as to the completeness, design, accuracy or sufficiency of such plans, compliance of such plans with Laws or as
to any other matter, and Landlord shall have no liability whatsoever with respect thereto. 
 5. Change Orders.
Tenant shall make no changes or modifications to the plans approved by Landlord without Landlord’s prior written consent. Such approval shall not be unreasonably withheld or delayed, as long as such requested change meets (a) through
(d) in Section 4 above and the same would not delay the completion of the work. If any change order would increase the cost of construction, as a condition of such approval Landlord may require that Tenant deposit any increased cost with
Landlord, or provide Landlord with other security therefor acceptable to Landlord. 
 6. Pre-Construction Activity. At
least thirty (30) days prior to commencement of any work, Tenant shall submit the following information and items to Landlord for Landlord’s review and approval: 
 (a) The proposed plans. 
 (b) A detailed critical path construction schedule containing the major components of the work and the time required for each, including the scheduled commencement date of construction of the work, milestone dates and the estimated date of
completion of construction. 
  

 -2- 

 (c) An itemized statement of estimated construction cost, including fees for permits and
architectural and engineering fees. 
 (d) Evidence satisfactory to Landlord in all respects of Tenant’s ability to pay the
cost of the work as and when payments become due. 
 (e) The names and addresses of Tenant’s contractors (and said
contractors’ subcontractors) and materialmen to be engaged by Tenant for the work (individually, a “Tenant Contractor,” and collectively, “Tenant’s Contractors”). Landlord may designate a list of approved contractors
for performance of those portions of work involving electrical, mechanical, plumbing, heating, air conditioning or life safety systems, from which Tenant must select its contractors for such designated portions of work (“Approved
Contractors”). Landlord has the right to disapprove any of Tenant’s Contractors that are not Approved Contractors. 
 (f) Certificates of insurance as required herein. 
 No work by Tenant shall proceed until Landlord has approved all of
the foregoing items. 
 7. Performance of Work. 
 (a) All work by Tenant shall be performed under a valid permit when required, a copy of which shall be furnished to Landlord before
commencement of such work. 
 (b) All work shall comply in all respects with (i) all applicable Laws; (ii) applicable
standards of the American Insurance Association (formerly, the National Board of Fire Underwriters) and the National Electrical Code; and (iii) building material manufacturer’s specifications. 
 (c) Tenant’s contractors, approved by Landlord pursuant to Section 6(e) of this Exhibit C, shall be licensed contractors,
possessing good labor relations (including use of union labor if required by Landlord), capable of performing quality workmanship and working in harmony with Landlord’s contractors and subcontractors in the Building. All work shall be
coordinated with any other construction or other work in the Building in order not to adversely affect construction work being performed by or for Landlord or its tenants. 
 (d) Tenant shall use only new, first-class materials, except where explicitly shown in the plans approved by Landlord. All work shall be
done in a good and workmanlike manner. Tenant shall obtain contractors’ warranties of at least one (1) year duration from the completion of the work against defects in materials and workmanship. 
 (e) At Tenant’s expense, Tenant shall engage the services of an on-site project manager approved in advance by and reasonably
acceptable to Landlord, who will be charged with the task of performing daily supervision of the work. Such on-site project manager shall be accountable and responsible to Tenant and to Landlord and, where necessary, shall serve as a liaison between
Landlord and Tenant with respect to the work. 
 (f) Tenant shall pay to Landlord a percentage of the cost of any tenant work
sufficient to compensate Landlord for all overhead, general conditions, fees and other costs and expenses arising from Landlord’s supervision of or involvement with such work. 
 8. As-Built Plans and Specifications. Immediately after completion of any work on the Premises by Tenant, Tenant shall deliver to
Landlord “as-built” plans and specifications (including all working drawings) for the work. 
  

 -3-Credit Agreement dated as of March 8, 2010

 Exhibit 10.30 
  
  
  
 CREDIT AGREEMENT 

among 
 BANK
OF THE WEST, 
 as Lender, 
 and 
 NAUTILUS, INC., 
 as Borrower, 
 dated

 March 8, 2010 
  
  
  

 TABLE OF CONTENTS 
  

					
	 	 	 	  	Page
			
	RECITALS	 		  	1
			
	ARTICLE I	 	DEFINITIONS	  	1
			
	Section 1.1  	 	 Defined Terms
	  	1
			
	Section 1.2  	 	 Accounting Terms
	  	19
			
	Section 1.3  	 	 Rules of Construction
	  	19
			
	Section 1.4  	 	 Rounding
	  	19
			
	Section 1.5  	 	 Times of Day
	  	20
			
	Section 1.6  	 	 References to Agreements
	  	20
			
	Section 1.7  	 	 Incorporation of Recitals
	  	20
			
	ARTICLE II	 	CONDITIONS OF LENDING	  	20
			
	Section 2.1  	 	 Conditions Precedent
	  	20
			
	Section 2.2  	 	 Conditions to Revolving Loans and Issuance of Letters of Credit
	  	22
			
	ARTICLE III	 	THE REVOLVING CREDIT FACILITY	  	23
			
	Section 3.1  	 	 The Revolving Credit Facility Commitment
	  	23
			
	Section 3.2  	 	 The Note
	  	23
			
	Section 3.3  	 	 The Letter of Credit Subfacility
	  	23
			
	Section 3.4  	 	 Letter of Credit Fees
	  	24
			
	Section 3.5  	 	 Reimbursement Obligation of Borrower
	  	24
			
	Section 3.6  	 	 Cash Collateral for Letters of Credit and Credit Exposure Reserve
	  	24
			
	Section 3.7  	 	 Permitted Use of Funds
	  	25
			
	Section 3.8  	 	 Limitation on Amount Outstanding
	  	25
			
	Section 3.9  	 	 The Revolving Credit Facility Commitment Fee
	  	25
			
	Section 3.10	 	 Available Interest Rates on the Revolving Credit Facility
	  	26
			
	Section 3.11	 	 Revolving Loan Interest Payments
	  	26
			
	Section 3.12	 	 The Unused Commitment Fee
	  	26
			
	Section 3.13	 	 Revolving Nature of the Revolving Credit Facility
	  	26
			
	Section 3.14	 	 Maturity Date of the Revolving Credit Facility
	  	26
			
	Section 3.15	 	 No Borrowing During Pendency of an Event of Default
	  	26
			
	ARTICLE IV	 	TERMS RELATING GENERALLY TO PAYMENTS AND INTEREST RATES	  	27

  

 -i- 

 TABLE OF CONTENTS 
  

					
	 	 	 	  	Page
			
	Section 4.1  	 	 Computation of Interest and Fees
	  	27
			
	Section 4.2  	 	 Payment of Interest
	  	27
			
	Section 4.3  	 	 Default Rate of Interest
	  	27
			
	Section 4.4  	 	 Limitations on Amounts of LIBOR Rate Loans
	  	27
			
	Section 4.5  	 	 Notice of Borrowing or Conversion of Revolving Loans
	  	28
			
	Section 4.6  	 	 Advances of Loan Proceeds
	  	28
			
	Section 4.7  	 	 No LIBOR Rate Loans or Applicable Floating Rate Loans When Default Exists
	  	28
			
	Section 4.8  	 	 Conversion of Loans
	  	29
			
	Section 4.9  	 	 Lender’s Note Records
	  	29
			
	Section 4.10	 	 Voluntary Prepayments
	  	29
			
	Section 4.11	 	 Method of Payments
	  	29
			
	Section 4.12	 	 LIBOR Indemnity
	  	30
			
	Section 4.13	 	 Changed Circumstances
	  	30
			
	Section 4.14	 	 Prepayment Due to Illegality
	  	31
			
	ARTICLE V	 	COLLATERAL FOR BORROWER’S OBLIGATIONS	  	31
			
	Section 5.1  	 	 Execution by Borrower of the Security Agreement and the IP Security Agreements
	  	31
			
	Section 5.2  	 	 Execution by Borrower of the Pledge Agreement
	  	31
			
	Section 5.3  	 	 Right of Setoff
	  	31
			
	Section 5.4  	 	 Other Documents
	  	32
			
	Section 5.5  	 	 Appraisals and Collateral Examinations
	  	32
			
	ARTICLE VI	 	REPRESENTATIONS AND WARRANTIES	  	32
			
	Section 6.1  	 	 Existence and Power of Borrower
	  	32
			
	Section 6.2  	 	 Authorization by Borrower
	  	32
			
	Section 6.3  	 	 Government Approvals
	  	33
			
	Section 6.4  	 	 Binding Obligations
	  	33
			
	Section 6.5  	 	 Litigation
	  	33
			
	Section 6.6  	 	 Financial Condition of Borrower
	  	33
			
	Section 6.7  	 	 Title and Liens
	  	33
			
	Section 6.8  	 	 Intellectual Property; Licenses, Etc.
	  	33
			
	Section 6.9  	 	 Taxes
	  	33

  

 -ii- 

 TABLE OF CONTENTS 
  

					
	 	 	 	  	Page
			
	 Section 6.10
	 	 Other Agreements
	  	34
			
	 Section 6.11
	 	 Federal Reserve Regulations
	  	34
			
	 Section 6.12
	 	 Compliance With Laws
	  	34
			
	 Section 6.13
	 	 Labor Relations
	  	34
			
	 Section 6.14
	 	 Material Adverse Effect
	  	34
			
	 Section 6.15
	 	 Full Disclosure
	  	34
			
	 Section 6.16
	 	 Solvency
	  	35
			
	 Section 6.17
	 	 Continuing Representations and Warranties
	  	35
			
	ARTICLE VII	 	AFFIRMATIVE COVENANTS	  	35
			
	 Section 7.1  
	 	 Additional Acts
	  	35
			
	 Section 7.2  
	 	 Use of Loan Proceeds
	  	35
			
	 Section 7.3  
	 	 Preservation of Existence
	  	35
			
	 Section 7.4  
	 	 Visitation Rights
	  	35
			
	 Section 7.5  
	 	 Keeping of Books and Records
	  	36
			
	 Section 7.6  
	 	 Maintenance of Property
	  	36
			
	 Section 7.7  
	 	 Other Obligations
	  	36
			
	 Section 7.8  
	 	 Insurance
	  	36
			
	 Section 7.9  
	 	 Compliance with Laws
	  	36
			
	 Section 7.10
	 	 Financial Information/Reporting
	  	36
			
	 Section 7.11
	 	 Expenses of Lender
	  	38
			
	ARTICLE VIII	 	FINANCIAL COVENANTS	  	38
			
	 Section 8.1  
	 	 Current Ratio
	  	38
			
	 Section 8.2  
	 	 Liquidity Covenant
	  	39
			
	 Section 8.3  
	 	 Adjusted Continuing Business EBITDA
	  	39
			
	 Section 8.4  
	 	 Capital Expenditures
	  	39
			
	 Section 8.5  
	 	 Effect of No Outstanding Revolving Loans
	  	39
			
	ARTICLE IX	 	NEGATIVE COVENANTS	  	40
			
	 Section 9.1  
	 	 Liquidation, Merger, or Sale of Assets
	  	40
			
	 Section 9.2  
	 	 Indebtedness
	  	40
			
	 Section 9.3  
	 	 Liens
	  	41
			
	 Section 9.4  
	 	 Restricted Payments
	  	43

  

 -iii- 

 TABLE OF CONTENTS 
  

					
	 	 	 	  	Page
			
	Section 9.5  	 	 Investments; Purchase of Assets
	  	43
			
	Section 9.6  	 	 Obligations Relating to Guaranties
	  	45
			
	Section 9.7  	 	 Transactions With Affiliates
	  	45
			
	Section 9.8  	 	 Fiscal Year and Accounting Changes
	  	45
			
	Section 9.9  	 	 Operations
	  	45
			
	Section 9.10	 	 Prohibition on Change in Control
	  	45
			
	Section 9.11	 	 Subsidiaries
	  	45
			
	ARTICLE X	 	EVENTS OF DEFAULT	  	46
			
	Section 10.1  	 	 Events of Default
	  	46
			
	Section 10.2  	 	 Consequences of Default
	  	47
			
	Section 10.3  	 	 Remedies
	  	47
			
	ARTICLE XI	 	MISCELLANEOUS AND GENERAL TERMS AND CONDITIONS	  	47
			
	Section 11.1  	 	 Remedies Cumulative
	  	47
			
	Section 11.2  	 	 Governing Law
	  	48
			
	Section 11.3  	 	 Consent to Jurisdiction and Venue, Waiver of Immunities
	  	48
			
	Section 11.4  	 	 Notices
	  	48
			
	Section 11.5  	 	 Assignment
	  	49
			
	Section 11.6  	 	 Severability
	  	49
			
	Section 11.7  	 	 Waiver of Jury Trial
	  	49
			
	Section 11.8  	 	 Indemnification of Lender by Borrower
	  	50
			
	Section 11.9  	 	 Waiver of Consequential Damages
	  	50
			
	Section 11.10	 	 Payments Set Aside
	  	50
			
	Section 11.11	 	 Waiver of Various Matters; No Suretyship Defenses
	  	51
			
	Section 11.12	 	 USA Patriot Act Notice
	  	51
			
	Section 11.13	 	 Entire Agreement
	  	51
			
	Section 11.14	 	 Amendment
	  	51
			
	Section 11.15	 	 Interpretation
	  	51
			
	Section 11.16	 	 Waiver
	  	51
			
	Section 11.17	 	 Standard for Discretion
	  	52
			
	Section 11.18	 	 Headings
	  	52
			
	Section 11.19	 	 Construction
	  	52

  

 -iv- 

 TABLE OF CONTENTS 
  

					
	 	 	 	  	Page
			
	Section 11.20	 	 Statutory Notice
	  	52

  

 -v- 

 CREDIT AGREEMENT 
 This CREDIT AGREEMENT (the “Agreement”) dated March 8, 2010, is by and between BANK OF THE WEST (the “Lender”) and
NAUTILUS, INC., a Washington corporation (“Borrower”). 
 RECITALS 
 A. Borrower has requested that Lender extend a $15,000,000 revolving credit facility, with a $10,000,000 sublimit for letters of credit, to
Borrower. 
 B. Lender is willing to provide Borrower with the credit facilities requested, subject to the terms and conditions
set forth in this Agreement. 
 NOW, THEREFORE, for valuable consideration, the receipt and sufficiency of which hereby are
acknowledged, Lender and Borrower agrees as follows: 
 ARTICLE I 
 DEFINITIONS 
 Section 1.1 Defined Terms. As used
in this Agreement, the following terms have the following meanings: 
 “Accounts” means all accounts (as
defined in RCW 62A.9A-102(a)(2) (or any successor statute)) of Borrower. 
 “Adjusted Continuing Business
EBITDA” means, for any measurement period in question, Continuing Business EBITDA plus restructuring charges, Mobia launch charges, asset (including intellectual property) impairment charges related to the Continuing Business, and
transaction costs and expenses incurred in connection with this Agreement and in connection with the termination of Borrower’s previous senior revolving credit facility. 
 “Adjustment Date” means June 1, 2010, and, thereafter, the first day of each month following the delivery of the
Quarterly Compliance Certificate. 
 “Affiliate” means any Person (a) that directly or indirectly
controls, is controlled by, or is under common control with Borrower; provided that, Affiliate will not include Persons that would otherwise be Affiliates solely because of common control by Borrower’s shareholders if such Persons are portfolio
companies independently operated by such shareholders, (b) that directly or indirectly owns or holds 10 percent or more of any class of voting stock of Borrower, or (c) 10 percent or more of the voting stock of which is directly
or indirectly owned or held by Borrower. The term “control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting
securities or interests, by contract, or otherwise. 
 “Agreement” means this Credit Agreement, and any
amendments, extensions, modifications, renewals, replacements, or restatements thereof. 
  

 -1- 

 “Annual Compliance Certificate” has the meaning specified in
Section 7.10(i) of this Agreement. 
 “Applicable Floating Rate” means, as of any date, the One-Month
Eurodollar Rate on such day multiplied by the Statutory Reserve Rate, where “Statutory Reserve Rate” means a fraction (expressed as a decimal), the numerator of which is the number one and the denominator of which is the number one minus
the aggregate of the maximum reserve percentages (including any marginal, special, emergency or supplemental reserves) expressed as a decimal established by the Board of Governors of the Federal Reserve System with respect to the One-Month
Eurodollar Rate for Eurocurrency funding (currently referred to as “Eurocurrencies Liabilities” in Regulation D of the Board of Governors of the Federal Reserve System), including those reserve percentages imposed pursuant to
Regulation D, adjusted automatically and as of the effective date of any change in any reserve percentage. 
 “Applicable Floating Rate Loan” means any Revolving Loan (or a portion thereof) bearing interest at the Applicable Floating Rate that is not a Base Rate Loan. 
 “Applicable Margin” means 350 Basis Points for LIBOR Rate Loans and Applicable Floating Rate Loans and 250 Basis
Points for Base Rate Loans from the Closing Date to (but not including) the first Adjustment Date. Thereafter, the Applicable Margin shall be determined by measuring the Revolver Availability as of the end of a calendar quarter and determining which
pricing level in the table below is applicable to the Revolver Availability at the time in question: 
  

					
	 Revolver Availability
	  	 Applicable Margin for
 LIBOR Rate Loans and
 Applicable Floating
 Rate Loans
	  	 Applicable Margin for
 Base Rate Loans

			
	 $0.00 to $4,000,000.00
	  	375 Basis Points	  	275 Basis Points
			
	 $4,000,000.01 to $8,000,000.00
	  	350 Basis Points	  	250 Basis Points
			
	 $8,000,000.01 to $12,000,000.00
	  	325 Basis Points	  	225 Basis Points
			
	 $12,000,000.01 and above
	  	300 Basis Points	  	200 Basis Points

 Changes in the Applicable
Margin (if any) shall become effective on the corresponding Adjustment Date. If Borrower does not timely provide Lender with the Quarterly Compliance Certificate pursuant to Section 7.10(f) of this Agreement, Lender, at its option, may set the
Applicable Margin at the highest level listed above until such time as such Quarterly Compliance Certificate is delivered. 
 “Authorized Officer” means the Chief Financial Officer, Chief Administrative Officer or Chief Executive Officer of Borrower, or any other officer of Borrower who by written notice to Lender is designated by the Chief
Financial Officer, Chief Administrative Officer or Chief Executive Officer to request Revolving Loans pursuant to the terms of this Agreement. 
  

 -2- 

 “Base Rate” means, for any day, a rate per annum equal to the greatest of
(a) the Prime Rate in effect on such day, (b) the Federal Funds Rate in effect on such day plus 50 Basis Points, and (c) the Applicable Floating Rate on such date (or, if such date is not a Business Day, the immediately preceding
Business Day) plus 100 Basis Points. Any change in the Base Rate due to a change in the Prime Rate, the Federal Funds Rate or the Applicable Floating Rate shall be effective from and including the effective date of such change in the Prime
Rate, the Federal Funds Rate or the Applicable Floating Rate, respectively. 
 “Base Rate Loans” means any
Revolving Loan (or portion thereof) bearing interest at the Base Rate. 
 “Basis Point”
means  1/100th of 1 percent per annum. 
 “Borrower” means Nautilus, Inc., and any Successor or permitted assign (if any) thereof. 
 “Borrowing Base” means the sum of (a) 80 percent of (i) Eligible Commercial Accounts Receivable, multiplied
by (ii) 100 percent minus the Dilution Reserve Percentage for the calendar quarter covered by the most recent Quarterly Compliance Certificate, (b) 60 percent of Eligible Inventory but not to exceed $10,000,000, and
(c) 50 percent of Eligible Consumer Finance Accounts Receivable but not to exceed $5,000,000. 
 “Borrowing
Base Certificate” has the meaning specified in Section 7.10(b) of this Agreement. 
 “Business
Day” means a day on which Lender is open for business in Portland, Oregon, and on which banks are open in London, England, for dealings in United States dollar deposits on the London interbank market. 
 “Capital Expenditures” means, with respect to any measurement period in question, all capital expenditures of Borrower
(including, but not limited to, expenditures under Capital Leases), as determined in accordance with GAAP. 
 “Capital
Lease” means any lease of property (real, personal, or mixed) that in accordance with GAAP should be capitalized on the lessee’s balance sheet. 
 “Capital Stock” means, with respect to any Person, all (a) shares, interests, participations or other equivalents (howsoever designated) of capital stock and other equity or
ownership interests of such Person and (b) rights (other than debt securities convertible into capital stock or other equity interests), warrants or options to acquire any such capital stock or other equity interests. 
 “Cash Secured Letters of Credit” means Letters of Credit secured by cash collateral pursuant to Section 3.6(a) of this
Agreement. 
 “Change in Control” means that (a) a majority of the directors of Borrower shall be Persons
other than Persons (i) for whose election proxies shall have been solicited by the board of directors of Borrower or for whose appointment or election is otherwise approved or

  

 -3- 

 
ratified by the board of directors of Borrower or (ii) who are then serving as directors appointed by the board of directors to fill vacancies on the board of directors caused by death or
resignation (but not by removal) or to fill newly-created directorships or (b) any “person” or “group” (as such terms are used in Section 13(d) of the Securities Exchange Act of 1934) becomes the “beneficial
owner” (as defined in Rules 13d-3 and 13d-5 under the Securities Exchange Act of 1934, except that a person or group shall be deemed to have “beneficial ownership” of all securities that such person or group has the right to acquire
whether such right is immediately exercisable or only after the passage of time), directly or indirectly, of Voting Stock of Borrower (or other securities convertible into such Voting Stock) representing 30 percent or more of the combined
voting power of all Voting Stock of Borrower (provided that any Voting Stock held by Sherborne Investors Management LP shall be excluded from calculation for the purposes of this clause (b)). 
 “Closing Date” means March 8, 2010, or such other date as the parties mutually agree. 
 “Collateral” means substantially all existing and after-acquired assets of Borrower as described in the Security Agreement
and the IP Security Agreements. 
 “Commercial Accounts Receivable” means all Accounts of Borrower that are not
Consumer Finance Accounts Receivable. 
 “Commercial Business” means the assets of Borrower held for sale as
described in the Borrower’s report on Form 10-Q for fiscal quarter ending September 30, 2009 as filed with the SEC. 
 “Consumer Finance Accounts Receivable” means Accounts of Borrower where the account debtors are individuals who purchased Inventory directly from Borrower. 
 “Consumer Protection Laws” means any and all applicable federal, state, and local statutes, laws, regulations, rules, and
ordinances (whether now existing or hereafter enacted or promulgated), and all applicable judicial, administrative, and regulatory decrees, judgments, and orders, including common law rulings and determinations, relating to consumer credit or the
protection of consumers, including, but not limited to, the Consumer Credit Protection Act. 
 “Continuing
Business” means all business operations of Borrower, other than the Commercial Business and any other discontinued operations of the Borrower. 
 “Continuing Business EBITDA” means, for any measurement period in question, an amount equal to Continuing Business Net Income for such period, plus the following, to the extent deducted
or excluded in computing such Continuing Business Net Income: (a) interest expense of Borrower, (b) income taxes (and franchise taxes in the nature and in lieu of income taxes), any state single business or unitary or similar taxes of
Borrower, (c) depreciation expense of Borrower, (d) amortization expense of Borrower (all as determined in accordance with GAAP), and (e) cash gains arising from the write-up of assets. 
 “Continuing Business Net Income” means, for any measurement period in question, the net income of Borrower arising from the
Continuing Business for such period,

  

 -4- 

 
determined in accordance with GAAP, but in any event the following items shall be excluded or deducted from such net income arising from the Continuing Business: (a) any after tax gain or
loss resulting from dispositions of assets outside of the ordinary course of business, (b) earnings of any Subsidiary accrued prior to the date it became a Subsidiary, (c) any deferred credit or other credit representing any excess of the
equity of any Subsidiary at the date of acquisition thereof over the amount invested in such Subsidiary, (d) the net earnings of any entity (other than a Subsidiary) in which Borrower has an ownership interest, except to the extent such net
earnings actually shall have been received by Borrower in the form of cash distributions, (e) any reversal of any contingency reserve, except to the extent that Borrower received cash associated with such reversal during the period in which the
reversal occurred, and (f) to the extent not included in clauses (a) through (e) above, any extraordinary or non-recurring gains or losses. 
 “Credit Exposure Reserve” means, as of any date in question, an amount determined by Lender in its Permitted Discretion as the credit exposure of Lender based upon merchant services,
corporate and purchase card programs, ACH, treasury management, foreign exchange, derivative and swap products or similar facilities or products provided by Lender or its Affiliates to Borrower. 
 “Credit Exposure Documents” means all documents executed by Borrower in favor of Lender related to merchant services,
corporate and purchase card programs, ACH, treasury management, foreign exchange, derivative and swap products or similar facilities or products provided by Lender or its Affiliates to Borrower, including, without limitation, all documents executed
by Borrower to grant Lender a security interest in cash collateral securing the Credit Exposure Reserve pursuant to Section 3.6 of this Agreement. 
 “Current Ratio” means, as of the end of the calendar quarter in question, the ratio of (a) the current assets of Borrower as of the end of such calendar quarter (determined in
accordance with GAAP) plus the cash collateral pledged to Lender pursuant to Section 3.6(a) and Section 3.6(b) (to the extent not included in current assets) as of the end of such calendar quarter to (b) the current liabilities of
Borrower as of the end of such calendar quarter (as determined in accordance with GAAP) plus the principal amount of all Revolving Loans outstanding on the last day of such quarter (to the extent not included in the calculation of current
liabilities determined in accordance with GAAP). 
 “Dating” means the practice of giving credit beyond a
stated period by forward dating of an invoice. For example, a buyer otherwise obligated to pay for goods or services within 30 days might be given a postdated invoice bearing a date a month later than the actual date of purchase or receipt of
the goods or services, which, in effect, would mean that the buyer now would have 60 days in which to make payment. 
 “Debt to Tangible Net Worth” means, as of any date in question, the ratio of (a) total Indebtedness on the balance sheet of Borrower to (b) the fair market value of all assets on the balance sheet of Borrower
except for (i) goodwill, including any amounts representing the excess of the purchase price paid for assets or stock acquired over the value assigned thereto on the balance sheet of Borrower, (ii) patents, trademarks, trade names,
copyrights and other intellectual property, (iii) shares of Capital Stock of Borrower, (iv) loans and notes receivable from officers, employees, stockholders, or directors of Borrower or any Affiliate or Subsidiary of

  

 -5- 

 
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,

  

 -6- 

 
or adjustments against any Commercial Accounts Receivable outstanding at the time in question that are included in the calculation of Eligible Commercial Accounts Receivable; provided further
that Commercial Accounts Receivable subject to such claims may be included in the Borrowing Base after deduction of the amount of such claims); 
 (e) A Commercial Account Receivable as to which the account debtor is not an Affiliate of Borrower, or an officer, director, or employee of Borrower (or an Affiliate of Borrower); 
 (f) A Commercial Account Receivable as to which the account debtor is not a Governmental Authority unless (i) the account debtor is
the United States or any department, agency, or instrumentality thereof and the account has been assigned to Lender in compliance with the Assignment of Claims Act and (ii) the aggregate amount of all such Commercial Accounts Receivable does
not exceed 10 percent of the total amount of Eligible Commercial Accounts Receivable; 
 (g) A Commercial Account Receivable to
the extent that it does not result from, include, or constitute late charges, service charges, or interest; 
 (h) A Commercial
Account Receivable as to which the account debtor is a Person residing in, or having its principal place of business in, the United States (or, if the account debtor is in another country, the account debtor’s obligations to Borrower are
supported by a letter of credit in favor of Borrower in amount, form, and content satisfactory to Lender, and issued by a bank satisfactory to Lender); 
 (i) A Commercial Account Receivable from a Tier I Account Debtor that is not more than 120 days old (as measured from the date of invoice) or more than 60 days past due or a Commercial
Account Receivable from an account debtor other than a Tier I Account Debtor that is not more than 90 days old (as measured from the date of invoice) or more than 60 days past due; 
 (j) A Commercial Account Receivable that does not arise out of a contract with, or order from, an account debtor that by its terms forbids
or makes the assignment of that Commercial Account Receivable to Lender void or unenforceable; 
 (k) A Commercial Account
Receivable as to which Borrower has not received any note, trade acceptance, draft, or other negotiable instrument with respect to the goods or services giving rise to the Commercial Account Receivable unless Borrower promptly notifies Lender of
such negotiable instrument and, at Lender’s request, endorses or assigns and delivers the same to Lender); 
 (l) A
Commercial Account Receivable as to which Borrower has not received any notice of the death of the account debtor, or of the dissolution, termination of existence, insolvency, business failure, appointment of a receiver for any part of the property
of, assignment for the benefit of creditors by, or the filing of a petition in bankruptcy or the commencement of any proceeding under any bankruptcy or insolvency laws by or against the account debtor (and, upon the receipt of any such notice,
Borrower promptly shall advise Lender of the event or occurrence in question); 
  

 -7- 

 ( m) A Commercial Account Receivable as to which the account debtor’s obligation to
Borrower is denominated and payable in United States currency; 
 (n) A Commercial Account Receivable to the extent that it
does not consist of Retainage; 
 (o) A Commercial Account Receivable to the extent that it does not relate to work-in-process
or result from or consist of progress billings in excess of the amount permitted by the terms of the applicable contract; 
 (p) A Commercial Account Receivable that does not arise out of (i) a consignment transaction, (ii) a sale or return agreement, (iii) a transaction in which goods are delivered on a bill-and-hold basis, (iv) a sale with
cash-on-delivery terms, (v) a guaranteed sale, or (vi) other sale terms by reason of which the payment by the account debtor is or may be conditional; 
 (q) A Commercial Account Receivable that is not subject to an agreement providing for Dating of the account debtor’s obligation to pay for the goods or services in question; 
 (r) A Commercial Account Receivable from a Tier I Account Debtor as to which not more than 25 percent of the total amount owed by such
Tier I Account Debtor to Borrower is more than 120 days old (as measured from the date of invoice) or a Commercial Account Receivable from an account debtor other than a Tier I Account Debtor as to which not more than 10 percent of the
total amount owed by such account debtor to Borrower is more than 90 days old (as measured from the date of invoice); 
 (s) A Commercial Account Receivable from a Tier I Account Debtor as to which the total amount owed by such debtor to Borrower does not exceed 25 percent of Borrower’s total Eligible Commercial Accounts Receivable at the time in
question or a Commercial Account Receivable from an account debtor other than a Tier I Account Debtor as to which the total amount owed by such debtor to Borrower does not exceed 10 percent of Borrower’s total Eligible Commercial Accounts
Receivable at the time in question; 
 (t) A Commercial Account Receivable as to which the account debtor’s financial
condition is acceptable to Lender in its Permitted Discretion; and 
 (u) A Commercial Account Receivable that is not a
Commercial Account Receivable that Lender determines in its Permitted Discretion to be ineligible in whole or in part and has provided Borrower written notice thereof. 
 Lender’s calculation and determination of Eligible Commercial Accounts Receivable shall be binding and conclusive, absent manifest error. 
 “Eligible Consumer Finance Accounts Receivable” means all Consumer Finance Accounts Receivable of Borrower meeting all of
the following criteria and in which Lender has a valid, perfected first priority security interest: 
 (v) A Consumer Finance
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; 
  

 -8- 

 (w) A Consumer Finance Account Receivable as to which the title of Borrower to the Consumer
Finance 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; 
 (x) A Consumer Finance Account Receivable as to which the amount shown on the books of Borrower is owing to Borrower; 
 (y) A Consumer Finance Account Receivable to the extent that it is not subject to any reduction, counterclaim, setoff, recoupment,
defenses, claims, or any present claim for credits, allowances, or adjustment by the account debtor because of returned, inferior, or damaged goods, unsatisfactory services, claims or defenses under Consumer Protection Laws, 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 Consumer Finance Accounts Receivable by the actual amount of credits, offsets, allowances, or adjustments
against any Consumer Finance Accounts Receivable outstanding at the time in question that are included in the calculation of Eligible Consumer Finance Accounts Receivable; provided further that Consumer Finance Accounts Receivable subject to such
claims may be included in the Borrowing Base after deduction of the amount of such claims); 
 (z) A Consumer Finance Account
Receivable as to which the account debtor is not an Affiliate of Borrower, or an officer, director, or employee of Borrower (or an Affiliate of Borrower); 
 (aa) A Consumer Finance Account Receivable as to which the account debtor is a Person residing in and a citizen of the United States; 
 (bb) A Consumer Finance Account Receivable that is not more than 18 months old (as measured from the date of incurrence), or more than
45 days past due under the original terms of such Consumer Finance Account Receivable; 
 (cc) A Consumer Finance Account
Receivable that does not arise out of a contract with, or order from, an account debtor that by its terms forbids or makes the assignment of that Consumer Finance Account Receivable to Lender void or unenforceable; 
 (dd) A Consumer Finance Account Receivable as to which Borrower has not received any note, trade acceptance, draft, or other negotiable
instrument with respect to the goods or services giving rise to the Consumer Finance Account Receivable (and, if any such instrument or chattel paper is received, unless Borrower promptly notifies Lender and, at Lender’s request, endorses or
assigns and delivers the same to Lender); 
  

 -9- 

 (ee) A Consumer Finance Account Receivable as to which Borrower has not received any notice
of the death or insolvency of the account debtor (and, upon the receipt of any such notice, Borrower promptly shall advise Lender of the event or occurrence in question); 
 (ff) A Consumer Finance Account Receivable as to which the account debtor’s obligation to Borrower is denominated and payable in
United States currency; 
 (gg) A Consumer Finance Account Receivable to the extent that it does not consist of Retainage;

 (hh) A Consumer Finance Account Receivable to the extent that it does not result from or consist of billings for goods not
delivered or services not performed; 
 (ii) A Consumer Finance Account Receivable to the extent that it does not relate to
work-in-progress result from or consist of progress billings in excess of the amount permitted by the terms of the applicable contract; 
 (jj) A Consumer Finance Account Receivable from an account creditor whose FICO score is greater than 680; and 
 (kk) A Consumer Finance Account Receivable that is not a Consumer Finance Accounts Receivable that Lender determines in its Permitted Discretion to be ineligible in whole or in part and has provided
Borrower written notice thereof. 
 Lender’s calculation and determination of Eligible Consumer Finance Accounts Receivable shall be
binding and conclusive, absent manifest error. 
 “Eligible Inventory” means all Inventory of Borrower in which
Lender has a valid, perfected first priority security interest, except the following: 
 (a) Work in progress or works in
process; 
 (b) Inventory located outside the United States; 
 (c) Inventory that is in transit; 
 (d) Inventory that consists of parts and components; 
 (e) Damaged or obsolete
Inventory; 
 (f) Inventory that is not merchantable; 
 (g) Inventory to the extent of any progress payments, pre-delivery payments, deposits, or other amounts received by Borrower in
anticipation of the sale of such Inventory to another Person; 
 (h) All goods that are leased to or from others by Borrower;

  

 -10- 

 (i) Inventory that is located on premises leased or rented by Borrower, unless
(i) Borrower has delivered to Lender a landlord’s lien waiver or subordination in a form satisfactory to Lender in its Permitted Discretion, or (ii) Borrower has established reserves in an amount equal to three months’ rent;

 (j) Inventory stored with a bailee or warehouseman, unless (i) Borrower has delivered to Lender a written
acknowledgment of such bailee or warehouseman, in a form satisfactory to Lender in its Permitted Discretion, that such Person does not have a Lien in the Inventory in question, or (ii) Borrower has established reserves in an amount equal to
three months’ rent or three months of charges from such bailee or warehouseman; 
 (k) Inventory stored with a consignee,
unless Borrower has demonstrated to Lender’s reasonable satisfaction, that Borrower has taken reasonable steps to ensure that the Inventory in question shall not become subject to security interests or claims of creditors of the consignee;

 (l) Inventory located at a location owned by Borrower that is subject to a mortgage or deed of trust in favor of a lender
other than Lender, unless Borrower has delivered to Lender a mortgagee’s lien waiver or subordination in a form satisfactory to Lender in its Permitted Discretion; 
 (m) Inventory that is covered by a negotiable document of title, unless such document and evidence of acceptable insurance covering such Inventory have been delivered to Lender with all necessary
endorsements, free and clear of all Liens, except those in favor of Lender and inchoate tax Liens; or 
 (n) Other Inventory
that Lender determines in its Permitted Discretion should not be included in the Borrowing Base. 
 The value of Eligible Inventory shall be
determined in accordance with the lower of cost or market method of determining Inventory value. Lender’s calculation and determination of Eligible Inventory shall be binding and conclusive, absent manifest error. 
 “Environmental Laws” means any and all applicable federal, state, and local environmental, health, or safety statutes,
laws, regulations, rules, and ordinances (whether now existing or hereafter enacted or promulgated), and all applicable judicial, administrative, and regulatory decrees, judgments, and orders, including common law rulings and determinations,
relating to injury to, or the protection of, human health or the environment, including, without limitation, all requirements pertaining to reporting, licensing, permitting, investigation, remediation, and removal of emissions, discharges, releases,
or threatened releases of Hazardous Materials into the environment, or relating to the manufacture, processing, distribution, use, treatment, storage, disposal, transport, or handling of such Hazardous Materials. 
 “ERISA” means The Employee Retirement Income Security Act of 1974 and the rules and regulations thereunder, collectively,
as the same from time to time may be supplemented or amended and remain in effect. 
 “Event of Default” has
the meaning specified in Section 10.1 of this Agreement. 
  

 -11- 

 “Federal Funds Rate” means, for any day, the weighted
average (rounded upwards, if necessary to the next  1/100 of 1 percent) of the rates on overnight Federal funds transactions with members of the Federal Reserve System arranged by Federal funds brokers, as published on the next succeeding Business Day by the Federal Reserve Bank of New York,
or, if such rate is not so published for any day that is a Business Day, the average (rounded upwards, if necessary, to the next  1/
100 of 1 percent) of the quotations for such day for such transactions received by Lender from three Federal funds brokers of recognized standing selected by it.

 “Financial Covenant Failure” has the meaning specified in Section 8.5 of this Agreement.

 “Funded Indebtedness” means, on the measurement date in question, without duplication, (a) Indebtedness
for borrowed money, (b) Indebtedness in respect of Capital Leases, (c) all obligations of the Person in question in respect of letters of credit, (d) all other interest-bearing obligations of the Person in question that, in accordance
with GAAP, should be included as a liability on the consolidated balance sheet of the Person in question, and (e) all Guaranties executed with respect to any of the obligations described in items (a) through (d) of this
definition. 
 “GAAP” means the generally accepted accounting principles issued by the American Institute of
Certified Public Accountants in effect in the United States at the time of application to the provisions of this Agreement. 
 “Government Approval” means an approval, permit, license, authorization, certificate, or consent of any Governmental Authority. 
 “Governmental Authority” means the government of the United States, or any state or any foreign country or any political subdivision of any thereof, or any branch, department, agency,
instrumentality, court, tribunal, or regulatory authority that constitutes a part of or exercises any sovereign power of any of the foregoing. 
 “Guaranties” means all guaranties, endorsements (other than endorsements of negotiable instruments for collection in the ordinary course of business), or other contingent or surety
liabilities with respect to obligations of others, whether or not reflected on the balance sheet of the Person in question, including any obligation to furnish funds, directly or indirectly (whether by virtue of partnership arrangements, by
agreement to keep-well, or otherwise), through the purchase of goods, supplies, or services, or by way of stock purchase, capital contribution, advance, or loan, or to enter into a contract for any of the foregoing, for the purpose of payment of
obligations of any other Person. 
 “Hazardous Materials” means any substance (a) the presence of which
requires notification, removal, or remediation under any Environmental Law; (b) that is or becomes defined as a “hazardous waste,” “hazardous material,” or “hazardous substance” under any present or future
Environmental Law, or amendments thereto, including, without limitation, the Comprehensive Environmental Response, Compensation and Liability Act (42 U.S.C. Section 9601, et seq.) and any applicable local statutes and the regulations
promulgated thereunder; (c) that is toxic, explosive, corrosive, flammable, infectious, radioactive,

  

 -12- 

 
carcinogenic, or otherwise hazardous and that is or becomes regulated pursuant to any Environmental Law; or (d) without limitation, that contains gasoline, diesel fuel, or other petroleum
products, asbestos, or polychlorinated biphenyls. 
 “Indebtedness” means, with respect to the Person in
question, (a) all obligations of such Person for borrowed money or other extensions of credit, whether secured or unsecured, absolute or contingent, including, without limitation, unmatured reimbursement obligations with respect to letters of
credit, and all obligations representing the deferred purchase price of property, (b) all obligations evidenced by bonds, notes, debentures, or other similar instruments, (c) all obligations secured by any Lien on property owned or
acquired by the Person, (d) that portion of all obligations arising under leases that is required to be capitalized on the balance sheet of the Person, (e) all Guaranties executed by such Person, and (f) all other obligations that, in
accordance with GAAP, should be included as a liability in the balance sheet of the Person. 
 “Interest
Period” means, with respect to each LIBOR Rate Loan, the period commencing on the date of the making or continuation of or conversion to such LIBOR Rate Loan and ending one, two, three, or six months thereafter (as Borrower may elect in the
applicable Notice of Borrowing or Conversion), provided that: 
 (a) Any Interest Period (other than an Interest Period
determined pursuant to clause (c) below) that otherwise would end on a day that is not a Business Day shall be extended to the next succeeding Business Day, unless such next succeeding Business Day falls in the next calendar month, in which
case such Interest Period shall end on the immediately preceding Business Day; 
 (b) Any Interest Period that begins on the
last Business Day of a calendar month (or on a day for which there is no numerically corresponding day in the calendar month at the end of such Interest Period) shall, subject to clause (c) below, end on the last Business Day of a calendar
month; and 
 (c) Any Interest Period that otherwise would end after the Revolving Credit Facility Maturity Date shall end on
the Revolving Credit Facility Maturity Date. 
 “Inventory” means all inventory (as defined in
RCW 62A.9A-102(a)(48), or any successor statute) of Borrower. 
 “Investment” means the purchase or
acquisition of any share of Capital Stock, partnership interest, limited liability company interest, evidence of indebtedness, or other equity security of any other Person (including any Subsidiary or Affiliate), any loan, advance, or extension of
credit (excluding Accounts arising in the ordinary course of business) to, or contribution to the capital of, any other Person (including any Subsidiary or Affiliate), any securities or commodities futures contracts held, any other investment in any
other Person (including any Subsidiary or Affiliate), and the making of any commitment or acquisition of any option to make an Investment. 
 “IP Security Agreements” means the security agreements referenced in Section 5.1 of this Agreement, and includes any amendments, extensions, modifications, renewals, replacements,
and restatements thereof. 
  

 -13- 

 “Lender” means Bank of the West, and any Successor or permitted assignee
thereof. 
 “Letter of Credit” means a standby or commercial letter of credit in a form acceptable to Lender
issued by Lender for the account of Borrower pursuant to Section 3.3 of this Agreement and the Letter of Credit Documents. 
 “Letter of Credit Documents” has the meaning specified in Section 3.3 of this Agreement, and includes all amendments, extensions, modifications, renewals, replacements, or restatements thereof. 
 “LIBOR” means the average offered rate for deposits in United States dollars (rounded upwards, if
necessary, to the nearest  1/16 of 1 percent)
for delivery of such deposits on the first day of an Interest Period, for the number of days in such Interest Period, which appears in Bloomberg British Association LIBOR, or any successor thereto (or such other commercially available reporting
service selected by Lender in its reasonable discretion), at or about 11:00 a.m. London time (or such other time that such rate is available to Lender) on the day that is two Business Days preceding the first day of the Interest Period, or the
rate for such deposits determined by Lender at such time based on such other published service of general application as shall be selected by Lender for such purpose; provided, that in lieu of determining the rate in the foregoing manner, Lender may
determine the rate based on rates offered to Lender for deposits in United States dollars (rounded upwards, if necessary, to the nearest  1/16 of 1 percent) in the London Interbank Eurodollar market at such time for delivery on the first day of the Interest Period for the number of days in
such Interest Period. 
 “LIBOR Rate” means a per annum interest rate
(rounded upward, if necessary, to the nearest  1/16
of 1 percent) calculated for the Interest Period of a LIBOR Rate Loan in accordance with the following formula (in each instance determined by Lender in its reasonable discretion): 
  

							
	LIBOR Rate	 	=	 	 LIBOR
	 	
		 		 	1 – LIBOR Reserve Percentage	 	

 Lender’s determination of the LIBOR Rate for any Interest Period shall be conclusive in the absence of
manifest error. 
 “LIBOR Rate Loan” means any Revolving Loan bearing interest at a rate determined with
reference to the LIBOR Rate. 
 “LIBOR Reserve Percentage” means, for any Interest Period, the aggregate of the
maximum reserve percentages (including any basic, marginal, special, emergency, or supplemental reserves), expressed as a decimal, established (or as may be modified or adopted) by the Board of Governors of the Federal Reserve System and any other
domestic or foreign banking authority to which Lender is subject with respect to “Eurocurrency Liabilities” (as defined in regulations issued from time to time by the Board of Governors of the Federal Reserve System), or applicable to
extensions of credit by Lender, the rate of interest on which is determined with regard to rates applicable to “Eurocurrency Liabilities.” The LIBOR Reserve Percentage shall be adjusted automatically on and as of the effective date of any
change in any such reserve percentage. 
  

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 “Lien” means any mortgage, trust deed, pledge, charge, hypothecation,
assignment, deposit arrangement, security interest, attachment, garnishment, execution, encumbrance (including, but not limited to, easements, rights of way, and the like), lien (statutory or other), security agreement, transfer intended as security
(including, without limitation, any conditional sale or other title retention agreement, the interest of a lessor under a Capital Lease, or any financing lease having substantially the same economic effect as any of the foregoing), or other
voluntary or involuntary lien or charge upon (or affecting the revenues of) any real property or personal property. 
 “Liquidity” means, as of the end of the calendar quarter in question, the sum of Borrower’s cash and cash equivalents, including cash collateral pledged to Lender pursuant to Section 3.6(a) and
Section 3.6(b), as of the last day of such calendar quarter plus the Revolver Availability on the last day of such quarter. 
 “Loan Documents” means this Agreement, the Note, the Security Agreement, the IP Security Agreements, the Letter of Credit Documents, the Subsidiary Guaranty, any Swap Agreement, the Credit Exposure Documents, any other
documents executed by Borrower in favor of Lender (whether before, on, or after the date of this Agreement) in relation to the Revolving Loans, the Letters of Credit or any security for or guaranties of the Revolving Loans or the Letters of Credit
evidenced thereby, and any amendments, extensions, modifications, renewals, replacements, and restatements thereof. 
 “Material Adverse Effect” means (a) a material adverse effect on the business, assets, operations, or financial condition of Borrower, (b) a material impairment of the ability of Borrower to pay or perform its
obligations under the Loan Documents in accordance with the terms thereof, (c) a material impairment of the Collateral, Lender’s Liens with respect to the Collateral, or the priority of such Liens, or (d) a material impairment of
Lender’s rights and remedies under the Loan Documents. 
 “Non-Cash Secured Election” has the meaning
specified in Section 3.6(c) of this Agreement. 
 “Non-Cash Secured Letters of Credit” means Letters of
Credit that are not secured pursuant to Section 3.6(a) of this Agreement after Borrower has received the Non-Cash Secured Election pursuant to Section 3.6(c) of this Agreement. 
 “Note” means the promissory note referred to in Section 3.2 of this Agreement, and includes any amendments,
extensions, modifications, renewals, replacements, and restatements thereof. 
 “Notice of Borrowing or
Conversion” means a notice in form and content satisfactory to Lender in Lender’s reasonable discretion signed by an Authorized Officer and given to Lender to request a Revolving Loan or convert a Revolving Loan. 
  

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 “Obligations” means all of Borrower’s indebtedness, obligations, and
liabilities to Lender arising under or with respect to the Loan Documents, individually or collectively, whether direct or indirect, joint or several, absolute or contingent, due or to become due, now existing or hereafter arising, including, but
not limited to, Borrower’s obligations, indebtedness, and liabilities pursuant to the Note and this Agreement. 
 “One-Month Eurodollar Rate” means, for any day, the rate of interest per annum that is equal to the one month LIBOR rate appearing in Bloomberg British Association LIBOR (or on any successor or substitute thereof) at
approximately 11:00 a.m. London time on such day. 
 “Patriot Act” has the meaning specified in
Section 11.12 of this Agreement, and includes any amendments thereof. 
 “Permitted Discretion” means a
determination or judgment made by Lender in good faith in the exercise of its commercially reasonable credit or business judgment from the perspective of a commercial secured lender. 
 “Permitted Liens” has the meaning specified in Section 9.3 of this Agreement. 
 “Person” means an individual, sole proprietorship, partnership, corporation, limited liability company, business trust,
joint stock company, trust, unincorporated association, joint venture, Governmental Authority, or other entity of whatever nature. 
 “Pledge Agreement” means the pledge agreement referenced to in Section 5.2 of this Agreement, and includes any amendments, extensions, modifications, renewals, replacements, and restatements thereof. 
 “Prime Rate” means the rate of interest publicly announced from time to time by Lender as its “prime rate,” or
“reference rate.” The Prime Rate is not necessarily the lowest rate of interest that Lender charges or collects from any borrower, or class of borrowers. Any change in the Prime Rate announced by Lender shall take effect at the opening of
business on the day specified in the public announcement of such change. 
 “Quarterly Compliance Certificate”
has the meaning specified in Section 7.10(f) of this Agreement. 
 “Restricted Payment” means any
dividend, distribution, or other similar payment (whether in cash or property) by Borrower, and any purchase, redemption, retirement, or other acquisition for value of any capital stock or other ownership interests of Borrower, whether now or
hereafter outstanding, or of any options, warrants, or similar rights to purchase such capital stock or other ownership interests, or any security convertible into or exchangeable for such capital stock or other ownership interests. 
 “Retainage” means that portion of the purchase price of goods sold or services provided by Borrower that the buyer thereof
is not obligated to pay to Borrower until the end of a specified period of time following the satisfactory performance by Borrower under the agreement governing the transaction in question. 
  

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 “Revolver Availability” means, at any time in question, the lesser of
(a) $15,000,000 and (b) the Borrowing Base at the time in question, in either case with such lesser amount reduced by the sum of (x) the aggregate principal amount of Revolving Loans outstanding on such date and (y) the aggregate
amount of Letters of Credit outstanding on such date. 
 “Revolving Credit Facility” has the meaning specified
in Section 3.1 of this Agreement. 
 “Revolving Credit Facility Maturity Date” has the meaning specified
in Section 3.14 of this Agreement. 
 “Revolving Loans” means amounts borrowed by Borrower under the
Revolving Credit Facility, which shall be either Base Rate Loans, LIBOR Rate Loans, or Applicable Floating Rate Loans. 
 “SEC” means the Securities and Exchange Commission. 
 “Security Agreement” means the
security agreement referred to in Section 5.1 of this Agreement, and includes any amendments, extensions, modifications, renewals, replacements, and restatements thereof. 
 “Solvent” means, with respect to any Person on a particular date, that on such date (a) the fair value of the property
of such Person, taken as a going concern, is greater than the total amount of liabilities, including contingent liabilities, of such Person; (b) the present fair salable value of the assets of such Person, taken as a going concern, is not less
than the amount that will be required to pay the probable liability of such Person on its debts as they become absolute and matured; (c) such Person does not intend to, and does not believe that it will, incur debts or liabilities beyond such
Person’s ability to pay as such debts and liabilities mature; and (d) such Person is not engaged in a business or transaction, and is not about to engage in a business or transaction, for which such Person’s property would constitute
an unreasonably small capital. The amount of contingent liabilities (such as litigation, guaranties and pension plan liabilities) at any time shall be computed as the amount that, in light of all facts and circumstances existing at the time,
represents the amount that can reasonably be expected to become an actual or matured liability. 
 “Subsidiary”
means any corporation, association, limited liability company, joint stock company, business trust, or other similar organization of which 50 percent or more of the ordinary voting power for the election of a majority of the members of the
board of directors or other governing body of such entity is held or controlled by Borrower; or any other such organization the management of which is directly or indirectly controlled by Borrower through the exercise of voting power or otherwise;
or any joint venture or partnership in which Borrower has a 50 percent or greater ownership interest. 
 “Successor” means, for any corporation, limited liability company, or banking association, any successor by merger or consolidation, or by acquisition of substantially all of the stock, membership interests, or assets of
the predecessor. 
  

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 “Swap Agreement” means any interest rate swap agreement, interest rate cap
agreement, interest collar agreement, or similar agreement or arrangement between Borrower and Lender or an Affiliate of Lender. 
 “Tax” or “Taxes” means any tax, assessment, duty, levy, or other charge imposed by any Governmental Authority on any property, revenue, income, or franchise of any Person, and any interest or penalty with
respect to any of the foregoing. 
 “Testing Date” means March 31, 2010, and the last day of each calendar
quarter thereafter. 
 “Tier I Account Debtors” means Dick’s Sporting Goods, The Sports Authority,
Amazon, Sears, Wal-Mart, Sam’s Club, or Costco. Lender may, in its Permitted Discretion, remove account debtors of Borrower from the definition of Tier I Account Debtors upon notice to Borrower. Account debtors of Borrower may be added to the
definition of Tier I Account Debtors upon written request from Borrower to Lender and approval of such account debtors by Lender in its Permitted Discretion. 
 “Unused Commitment Amount” has the meaning specified in Section 3.12 of this Agreement. 
 “Unused Commitment Fee” has the meaning specified in Section 3.12 of this Agreement. 
 “Unused Commitment Fee Margin” means 30 Basis Points from the Closing Date to (but not including) the first Adjustment Date. Thereafter, the Unused Commitment Fee Margin shall be
determined by measuring the Revolver Availability as of the end of a calendar quarter and determining which fee level in the table below is applicable to the Revolver Availability at the time in question: 
  

			
	 Revolver Availability
	  	Unused Commitment Fee
	 $0.00 to $4,000,000.00
	  	35 Basis Points
	 $4,000,000.01 to $8,000,000.00
	  	30 Basis Points
	 $8,000,000.01 to $12,000,000.00
	  	25 Basis Points
	 $12,000,000.01 and above
	  	20 Basis Points

 Changes in the Unused
Commitment Fee Margin (if any) shall become effective on the corresponding Adjustment Date. If Borrower does not timely provide Lender with the Quarterly Compliance Certificate pursuant to Section 7.10(f) of this Agreement, Lender, at its
option, may designate the Unused Commitment Fee Margin as 35 Basis Points until such time as such Quarterly Compliance Certificate is delivered. 
  

 -18- 

 “Voting Stock” means Capital Stock issued by a corporation, or equivalent
interests in any other Person, the holders of which are ordinarily, in the absence of contingencies, entitled to vote for the election of directors (or persons performing similar functions) of such Person, even though the right to so vote has been
suspended by the happening of a contingency. 
 Section 1.2 Accounting Terms. 
 (a) All accounting terms not specifically or completely defined herein shall be construed in conformity with, and all financial data
(including financial ratios and other financial calculations) required to be submitted pursuant to this Agreement shall be prepared in conformity with, GAAP applied on a consistent basis, as in effect from time to time. 
 (b) If at any time any change in GAAP would affect the computation of any financial ratio or requirement set forth in any Loan Document,
and either Borrower or Lender shall so request, Lender and Borrower shall negotiate in good faith to amend such ratio or requirement to preserve the original intent thereof in light of such change in GAAP; provided that, until so amended,
(i) such ratio or requirement shall continue to be computed in accordance with GAAP prior to such change therein and (ii) Borrower shall provide to Lender financial statements and other documents required under this Agreement or as
reasonably requested hereunder setting forth a reconciliation between calculations of such ratio or requirement made before and after giving effect to such change in GAAP. 
 Section 1.3 Rules of Construction. The definitions of terms in this Agreement shall apply equally to the singular and plural
forms of the terms defined. Whenever the context may require, any pronoun shall include the corresponding masculine, feminine, and neuter forms. The words “include,” “includes,” and “including” shall be deemed to be
followed by the phrase “without limitation.” The word “will” shall be construed to have the same meaning and effect as the word “shall.” Unless the context requires otherwise (a) any reference in this Agreement to
any Person shall be construed to include such Person’s successors and assigns, (b) the words “herein,” “hereof,” and “hereunder,” and words of similar import, shall be construed to refer to this Agreement in
its entirety and not to any particular provision of this Agreement, (c) all references in this Agreement to Articles, Sections, Exhibits, and Schedules shall be construed to refer to Articles and Sections of, and Exhibits and Schedules to, this
Agreement, (d) any reference to any law or regulation in this Agreement shall, unless otherwise specified, refer to such law or regulation as amended, modified, or supplemented from time to time, (e) the words “asset” and
“property” shall be construed to have the same meaning and effect and to refer to any and all tangible and intangible assets and properties, including cash, securities, accounts, and contract rights, (f) the use of the word
“or” is not exclusive, and (g) in the computation of periods of time from a specified date to a later specified date, the word “from” means “from and including;” the words “to” and “until” each
mean “to but excluding;” and the word “through” means “to and including.” 
 Section 1.4
Rounding. Any financial ratios required to be maintained by Borrower pursuant to this Agreement shall be calculated by dividing the appropriate component by the other component, carrying the result to one place more than the number of places
by which such ratio is expressed herein and rounding the result up or down to the nearest number (with a rounding-up if there is no nearest number). 
  

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 Section 1.5 Times of Day. Unless otherwise specified, all references herein to
times of day shall be references to Pacific time (daylight or standard, as applicable). 
 Section 1.6 References to
Agreements. Unless otherwise expressly provided herein, definitions of or references to organizational documents, agreements (including the Loan Documents) and other contractual instruments shall be deemed to include all subsequent amendments,
restatements, extensions, supplements and other modifications thereto, but only to the extent that such amendments, restatements, extensions, supplements and other modifications are not prohibited by any Loan Document. 
 Section 1.7 Incorporation of Recitals. The Recitals to this Agreement hereby are incorporated into and constitute a part of this
Agreement. 
 ARTICLE II 
 CONDITIONS OF LENDING 
 Section 2.1 Conditions Precedent.
Lender’s agreements, obligations, and commitments under this Agreement (including, but not limited to, Lender’s agreement to make the initial advance under the Revolving Credit Facility) are subject to fulfillment, or waiver by Lender, of
each of the following conditions on or before the Closing Date: 
 (a) Lender shall have received the following agreements,
documents, certificates, and opinions in form and substance satisfactory to Lender and, where applicable, duly executed and delivered by the parties thereto: 
 (i) This Agreement; 
 (ii) The Note; 
 (iii) The Pledge Agreement; 
 (iv) The Security Agreement; 
 (v) The IP Security Agreements; 
 (vi) Certificates of insurance
or insurance binders evidencing compliance with Section 7.8 of this Agreement and the applicable provisions of the Security Agreement; 
 (vii) A certificate of the Secretary of Borrower with respect to resolutions of the directors of Borrower authorizing the execution and delivery of the Loan Documents and identifying the responsible
Person authorized to execute, deliver, and take all other actions required under this Agreement and the other Loan Documents on behalf of Borrower, and providing specimen signatures of each such Person; 
 (viii) The articles of incorporation of Borrower and all amendments and supplements thereto, as filed in the office of the
Washington Secretary of State, certified by the Washington Secretary of State as being a true and correct copy thereof; 
  

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 (ix) The by-laws of Borrower and all amendments and supplements thereto,
certified by the Secretary of Borrower as being a true and correct copy thereof; 
 (x) A certificate of the
Washington Secretary of State as to the legal existence and status of Borrower in such state dated within 30 days of the Closing Date; 
 (xi) An opinion of counsel for Borrower as to the validity and enforceability of the Loan Documents and such other matters as required by Lender or its counsel (which opinion shall be in form and content
satisfactory to Lender); and 
 (b) All necessary filings and recordings against the Collateral required to be performed in
order to create and perfect Lender’s first priority lien therein shall have been completed (which shall include termination of any existing financing statements with respect to the assets of Borrower); 
 (c) Borrower shall have paid (or are irrevocably committed to pay) Lender the fees owed pursuant to Section 3.9 of this Agreement;

 (d) Borrower shall have reimbursed (or irrevocably committed to reimburse) Lender for reasonable out-of-pocket attorney fees
and costs incurred by Lender in connection with the inspection of the Collateral and the negotiation and preparation of this Agreement and the other Loan Documents through the Closing Date; 
 (e) No litigation, arbitration, proceeding, or investigation shall be pending or threatened that (i) questions the validity or
legality of the transactions contemplated by any Loan Document, or seeks a restraining order, injunction, or damages in connection therewith, or (ii) in the reasonable judgment of Lender, reasonably could be expected to have a Material Adverse
Effect; 
 (f) As of the date of this Agreement, no Default or Event of Default exists (or would result from the initial
advance under the Revolving Credit Facility); 
 (g) A third-party examiner acceptable to Lender shall have performed an
examination, and Lender shall have approved such examination, of Borrower’s Accounts and Borrower’s Inventory; 
 (h)
There shall have been no Material Adverse Effect since September 30, 2009; and 
 (i) Lender shall have received such
other statements, opinions, certificates, documents, and information with respect to the matters contemplated by this Agreement as Lender may request in Lender’s reasonable discretion. 
  

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 If all of the above-referenced conditions are satisfied by the Closing Date, the Loan Documents and
Lender’s obligations under this Agreement in respect of the Revolving Loans and Letters of Credit shall become effective. If any of the above-referenced conditions precedent are not satisfied by the Closing Date, and such conditions are not
waived or deferred (in writing) by Lender (in its sole and absolute discretion), Lender shall have no commitment or obligation to enter into this Agreement, or to make any Revolving Loans or issue any Letters of Credit. 
 Section 2.2 Conditions to Revolving Loans and Issuance of Letters of Credit. The following conditions must be satisfied (or
waived or otherwise met) before Borrower shall be entitled to Revolving Loans or Letters of Credit under this Agreement after the Closing Date: 
 (a) No Default or Event of Default shall have occurred and be continuing; 
 (b)
No Default or Event of Default exists or shall result from the Revolving Loan or Letter of Credit requested by Borrower; 
 (c)
All of the Loan Documents shall be in full force and effect in all material respects; 
 (d) Each of the representations and
warranties contained in Article VI of this Agreement shall be true and correct in all material respects except for representations and warranties which speak as of the Closing Date, with such exceptions as may be acceptable to Lender in the
reasonable exercise of its judgment; and 
 (e) Borrower shall be in compliance in all material respects with all of the
covenants set forth in Article VII, Article VIII, and Article IX of this Agreement, with such exceptions as may be acceptable to Lender. 
 In addition to the foregoing conditions, Borrower must be in compliance with the financial covenants set forth in Section 8.1, Section 8.2, Section 8.3 and Section 8.4 of this
Agreement for the period covered by the most recent Quarterly Compliance Certificate or Annual Compliance Certificate delivered to Lender as of the date of a request for a Revolving Loan before Borrower shall be entitled to such Revolving Loan.

 In addition to the foregoing conditions, Borrower must (x) deliver to Lender a written report in the form attached as
Exhibit B hereto identifying Borrower’s performance with respect to the financial covenants set forth in Section 8.1, Section 8.2, Section 8.3 and Section 8.4 of this Agreement as of December 31, 2009, which
report shall be in a form satisfactory to Lender in its Permitted Discretion, shall include reasonable detail regarding the manner in which the financial covenants were calculated, and shall be accompanied by a certificate of an Authorized Officer
that the calculation of each of the financial covenants is true and correct in all material respects, (y) deliver to Lender lien searches acceptable to Lender in its Permitted Discretion on all of Borrower’s intellectual property, and
(z) deliver to Lender a written report in a form satisfactory to Lender (in Lender’s Permitted Discretion) identifying the amount of the Borrowing Base as of month-ended January 31, 2010, before Borrower shall be entitled to the first
Revolving Loan and shall deliver such report in the form of Exhibit B and lien searches within 30 days after the Closing Date, and shall deliver such Borrowing Base report within five Business Days after the

  

 -22- 

 
Closing Date, even if Borrower shall not request a Revolving Loan prior to such date. In addition, if such liens searches show that Borrower’s intellectual property is subject to liens other
than Permitted Liens, Borrower shall remove such liens before Borrower shall be entitled to the first Revolving Loan. 
 Each request for a
Revolving Loan or a Letter of Credit under this Agreement shall constitute a representation and warranty by Borrower that all of the foregoing conditions have been satisfied. 
 ARTICLE III 
 THE REVOLVING CREDIT FACILITY 

Section 3.1 The Revolving Credit Facility Commitment. Upon satisfaction of the conditions precedent specified in
Section 2.1 and Section 2.2 of this Agreement (as applicable), and subject to the terms and conditions of this Agreement, Lender agrees to make Revolving Loans to Borrower and issue Letters of Credit for the account of Borrower. Subject to
the terms and conditions of this Agreement, Lender’s maximum commitment in respect to Revolving Loans and Letters of Credit in respect of the credit facility described in the preceding sentence (which credit facility is referred to in this
Agreement as the “Revolving Credit Facility”) is $15,000,000. 
 Section 3.2 The Note. Contemporaneously
with the execution of this Agreement, Borrower shall execute and deliver to Lender a promissory note (the “Note”) in form and content satisfactory to Lender in its Permitted Discretion. The Revolving Loans extended to Borrower pursuant to
the Revolving Credit Facility shall be evidenced by and repaid by Borrower in accordance with the Note and this Agreement. 
 Section 3.3 The Letter of Credit Subfacility. Pursuant to the terms and conditions of this Agreement and any other applications, documents, or agreements from Borrower to Lender related to the Letters of Credit (the “Letter
of Credit Documents”), Lender shall issue Letters of Credit up to an aggregate amount outstanding at any time of $10,000,000 for the account of Borrower (which Letters of Credit shall be part of (and not in addition to) Lender’s commitment
in respect of the Revolving Credit Facility). Each Letter of Credit outstanding on or after the date of this Agreement shall be deemed to be an advance under the Revolving Credit Facility in an amount equal to the maximum amount of the Letter of
Credit (as such maximum amount is determined in accordance with this Section 3.3). Lender shall not be obligated to issue any Letters of Credit on or after the Revolving Credit Facility Maturity Date. Furthermore, Lender shall not be required
to issue any Letter of Credit with a maturity date after the Revolving Credit Facility Maturity Date. The amount of a Letter of Credit at any time shall be deemed to be the stated amount of such Letter of Credit in effect at such time; provided,
however, that with respect to any Letter of Credit that by its terms, or the terms of any document related thereto, provides for one or more automatic increases in the stated amount thereof, the amount of such Letter of Credit shall be deemed to be
the maximum stated amount of such Letter of Credit after giving effect to all such increases, whether or not such maximum stated amount is in effect at the time in question. Borrower agrees that it shall execute any documents that Lender in its
Permitted Discretion requires Borrower to execute in relation to the Letters of Credit. Within the foregoing limits, and subject to the terms and conditions of this Agreement,

  

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Borrower’s ability to obtain Letters of Credit shall be fully revolving, and accordingly, Borrower may obtain Letters of Credit to replace Letters of Credit that have expired, or that have
been drawn upon and reimbursed. 
 Section 3.4 Letter of Credit Fees. Borrower shall pay Lender a fee (the
“Letter of Credit Fee”) (a) with respect to each Cash Secured Letter of Credit equal to 2 percent per annum multiplied by the maximum amount available to be drawn under such Cash Secured Letter of Credit (which fee shall be prorated
to take into account the fact that this fee is paid quarterly by Borrower) and (b) with respect to each Non-Cash Secured Letter of Credit equal to the Applicable Margin for LIBOR Rate Loans multiplied by the maximum amount available to be drawn
under such Non-Cash Secured Letter of Credit (which fee shall be prorated to take into account the fact that this fee is paid quarterly by Borrower). For purposes of computing the amount available to be drawn under any Letter of Credit, the amount
of such Letter of Credit shall be the maximum amount determined in accordance with Section 3.3. The Letter of Credit Fees shall be computed on a quarterly basis in arrears. The Letter of Credit Fees shall be due and payable by Borrower on the
first Business Day of each calendar quarter, on the expiration date of the Letter of Credit in question, and, thereafter, on demand by Lender. Notwithstanding anything to the contrary contained in this Agreement, while any Event of Default exists,
all Letter of Credit Fees shall accrue at an additional 3 percent. Borrower shall also pay to Lender the customary presentation fees, amendment fees, and other processing fees, and other standard costs and charges, of Lender relating to Letters of
Credit as from time to time in effect. Such customary fees and standard costs and charges are due and payable by Borrower to Lender promptly on demand and are not refundable. 
 Section 3.5 Reimbursement Obligation of Borrower. Borrower hereby agrees to reimburse or pay to Lender with respect to each
Letter of Credit on each date that any draft presented under any Letter of Credit is honored by Lender (or Lender otherwise makes payment with respect thereto), the following amounts: 
 (a) the amount paid by Lender under or with respect to such Letter of Credit, and 
 (b) the amount of any Taxes, fees, charges, or other costs and expenses incurred by Lender in connection with any payment made by Lender
under, or with respect to, such Letter of Credit. 
 Borrower may use the proceeds of Revolving Loans to make a payment owed pursuant to this
Section 3.5, provided Borrower is entitled to such a loan hereunder at the time in question. Interest on any and all amounts remaining unpaid by Borrower under this Section 3.5 at any time from the date such amounts become due and payable,
until payment in full, shall be payable by Borrower to Lender on demand at the Default Rate for Base Rate Loans. 
 Section 3.6 Cash Collateral for Letters of Credit and Credit Exposure Reserve. 
 (a) Prior to the
Borrower making the Non-Cash Secured Election, Borrower shall provide cash collateral to Lender prior to, and as a condition precedent to, the issuance of any Letter of Credit in an amount equal to 105 percent of the maximum amount of

  

 -24- 

 
such Letter of Credit determined in accordance with Section 3.3. Borrower hereby grants Lender a security interest in such cash collateral to secure Borrower’s reimbursement obligations
in respect of such Letter of Credit. Borrower agrees to execute any documents required by Lender to evidence or perfect Lender’s security interest in such cash collateral. Such cash collateral shall be held by Lender in a bank-controlled
deposit account and Borrower shall have no right to withdraw or access such cash collateral so long as the applicable Letter of Credit is outstanding. Lender shall have the right to debit such account upon a drawing under such Letter of Credit.

 (b) Borrower shall, on the Closing Date and at all times thereafter, maintain with Lender cash collateral in an amount equal
to the Credit Exposure Reserve. Borrower hereby grants Lender a security interest in such cash collateral to secure payment and performance of all of the Obligations. Borrower agrees to execute any documents required by Lender to evidence or perfect
Lender’s security interest in such cash collateral. Such cash collateral shall be held by Lender in a bank-controlled deposit account. Borrower shall deposit additional cash collateral with Lender within three Business Days of receipt of
written notice from Lender that the Credit Exposure Reserve has increased. Borrower shall have no right to withdraw or access such cash collateral. This requirement is in addition to Borrower’s obligations to deposit cash collateral with Lender
pursuant to Section 3.6(a). 
 (c) Borrower shall be entitled to obtain Letters of Credit without complying with the
requirements of Section 3.6(a) provided that (i) no Default or Event of Default exists, (ii) Borrower is in compliance with Section 8.1, Section 8.2, Section 8.3 and Section 8.4 of this Agreement for the period
covered by the most recent Quarterly Compliance Certificate or Annual Compliance Certificate delivered to Lender (as applicable) and (iii) Borrower provides written notice to Lender (the “Non-Cash Secured Election”) of its irrevocable
election to obtain Letters of Credit without complying with the requirements of Section 3.6(a). After receipt by Lender of the Non-Cash Secured Election, Section 8.5 of this Agreement shall have no further force or effect and any Financial
Covenant Failure shall constitute an Event of Default. Within 30 days after receipt by Lender of the Non-Cash Secured Election, Lender shall distribute all cash pledged by Borrower pursuant to Section 3.6(a) as directed by Borrower.

 Section 3.7 Permitted Use of Funds. Borrower shall use proceeds of the Revolving Credit Facility for general
corporate purposes in the ordinary course of business. 
 Section 3.8 Limitation on Amount Outstanding. The maximum
principal amount of credit that may be outstanding to Borrower under the Revolving Credit Facility at any time (including any outstanding Letters of Credit) is the lesser of (a) $15,000,000, and (b) the Borrowing Base at the time in
question. If the total principal amount outstanding under the Revolving Credit Facility at any time (including any outstanding Letters of Credit) exceeds the lesser of the amounts specified in the preceding sentence, Borrower within three Business
Days of the date Lender notifies Borrower of such situation shall pay Lender such excess amount (and Borrower’s failure to make such payment shall constitute an Event of Default under Section 10.1(a) of this Agreement). 
 Section 3.9 The Revolving Credit Facility Commitment Fee. On the Closing Date, Borrower shall pay Lender a fee of $52,500 in
consideration of Lender’s commitment to extend the Revolving Credit Facility to Borrower on the basis set forth in this Agreement. Such fee shall be fully earned when paid, non-refundable, and shall not apply as a payment toward principal or
interest. 
  

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 Section 3.10 Available Interest Rates on the Revolving Credit Facility. Borrower
hereby acknowledges and agrees that interest shall accrue (and shall be paid by Borrower as more particularly specified below) on Revolving Loans extended to Borrower under the Revolving Credit Facility at the LIBOR Rate plus the Applicable Margin,
the Base Rate plus the Applicable Margin, or the Applicable Floating Rate plus the Applicable Margin (as selected by Borrower pursuant to Section 4.5 of this Agreement). 
 Section 3.11 Revolving Loan Interest Payments. Borrower shall pay Lender interest that accrues on Revolving Loans at the times
specified in Section 4.2 of this Agreement. 
 Section 3.12 The Unused Commitment Fee. On the first Business
Day of April, 2010, and the first Business Day of each third month thereafter, and on the Revolving Credit Facility Maturity Date, Borrower shall pay Lender a fee (the “Unused Commitment Fee”) equal to the Unused Commitment Amount for the
immediately preceding three-month period (or portion thereof) multiplied by the Unused Commitment Fee Margin (which fee shall be prorated to take into account the fact that this fee is paid quarterly by Borrower). As used in this Agreement, the term
“Unused Commitment Amount” means the average of the difference on each day in the immediately preceding three-month period (or, in the case of the fee payable on the Revolving Credit Facility Maturity Date, on each day after the end of the
prior three-month period for which the Unused Commitment Fee was due hereunder through the Revolving Credit Facility Maturity Date) between (a) $15,000,000 and (b) the aggregate principal amount of Revolving Loans and Letters of Credit
outstanding. 
 Section 3.13 Revolving Nature of the Revolving Credit Facility. The Revolving Credit Facility is a
revolving credit facility. Therefore, subject to the terms and conditions of this Agreement, Borrower may pay, repay, and re-borrow amounts under that credit facility. 
 Section 3.14 Maturity Date of the Revolving Credit Facility. On the earlier of (a) August 31, 2012, or (b) acceleration of the Obligations following an Event of Default, if any,
under this Agreement, Lender’s commitment to extend credit (including Letters of Credit) to Borrower pursuant to the Revolving Credit Facility shall terminate. The earlier of the dates specified in the preceding sentence of this Agreement is
referred to in this Agreement as the “Revolving Credit Facility Maturity Date.” On the Revolving Credit Facility Maturity Date, Borrower shall be obligated to pay Lender the entire balance of principal, accrued interest and Unused
Commitment Fee owed pursuant to the Note, this Agreement, and the other Loan Documents (including Letter of Credit Documents) (together with any fees and costs owed thereunder or hereunder). 
 Section 3.15 No Borrowing During Pendency of an Event of Default. Borrower shall not be entitled to borrow (or obtain a Letter
of Credit) under the Revolving Credit Facility at any time that a Default or an Event of Default exists. 
 Section 3.16
Cash Collateral After the Revolving Credit Facility Maturity Date. If any Non-Cash Secured Letter of Credit remains outstanding on or after the Revolving Credit

  

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Facility Maturity Date, Borrower shall provide cash collateral to Lender on or before the Revolving Credit Facility Maturity Date (and, if required by Lender, shall grant a security interest in
such cash collateral in favor of Lender in accordance with the requirements of Section 3.6(a)) in an amount equal to 105 percent of the aggregate undrawn face amount of such outstanding Non-Cash Secured Letters of Credit and such cash
collateral shall secure Borrower’s continuing obligations in respect of such outstanding Letters of Credit. 
 ARTICLE IV 
 TERMS RELATING GENERALLY TO PAYMENTS AND INTEREST RATES 
 Section 4.1 Computation of Interest and Fees. Each Revolving Loan that is a LIBOR Rate Loan shall bear interest on the
outstanding principal amount thereof, for each Interest Period applicable thereto, at a rate per annum equal to the LIBOR Rate plus the Applicable Margin. Each Revolving Loan that is a Base Rate Loan shall bear interest on the outstanding principal
amount thereof at the Base Rate plus the Applicable Margin, which rate shall change contemporaneously with any change in the Base Rate. Each Revolving Loan that is an Applicable Floating Rate Loan shall bear interest on the outstanding principal
amount thereof at the Applicable Floating Rate plus the Applicable Margin, which rate shall change contemporaneously with any change in the Applicable Floating Rate. Interest payable by Borrower under this Agreement shall be computed daily on the
basis of a year of 360 days and shall be paid for the actual number of days for which due. If the due date for any payment of principal is extended by operation of law, interest shall be payable for such extended time. If any payment required
by this Agreement or the Note becomes due on a day that is not a Business Day, such payment shall be due on the next succeeding Business Day (subject to the definition of the term Interest Period), and such extension shall be included in computing
interest in connection with such payment. 
 Section 4.2 Payment of Interest. Borrower shall pay Lender interest
accrued on Base Rate Loans and Applicable Floating Rate Loans monthly in arrears on the first Business Day of each calendar month, commencing April 1, 2010. Except as specified in the following sentence, Borrower shall pay Lender interest
accrued on LIBOR Rate Loans on the last day of the Interest Period for each such LIBOR Rate Loan. Notwithstanding the foregoing, if Borrower selects an Interest Period of six months with respect to any LIBOR Rate Loan, Borrower shall pay Lender
interest accrued on the principal amount of such LIBOR Rate Loan on the last day of the third month of such Interest Period and on the last day of the Interest Period for such LIBOR Rate Loan. 
 Section 4.3 Default Rate of Interest. Following the occurrence of an Event of Default and during the continuance thereof,
interest shall accrue, at Lender’s option and upon notice to Borrower, (and shall be payable by Borrower) on the principal balances outstanding under the Note at the Default Rate. 
 Section 4.4 Limitations on Amounts of LIBOR Rate Loans. Borrower shall not request a LIBOR Rate Loan for less than a minimum of
$500,000 in principal amount. Borrower shall not be entitled to have more than five LIBOR Rate Loans outstanding at any time. 
  

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 Section 4.5 Notice of Borrowing or Conversion of Revolving Loans. Whenever
Borrower desires to obtain a Revolving Loan under this Agreement or to convert an outstanding Revolving Loan to another interest rate option hereunder, Borrower shall give Lender a written Notice of Borrowing or Conversion (or a telephonic notice
promptly confirmed by a written Notice of Borrowing or Conversion), which notice shall be irrevocable and which must be received no later than 1:00 p.m. on the date (a) one Business Day before the day on which the requested Revolving Loan
is to be made as or converted to a Base Rate Loan or Applicable Floating Rate Loan, and (b) two Business Days before the day on which the requested Revolving Loan is to be made or converted to a LIBOR Rate Loan. Such Notice of Borrowing or
Conversion shall specify (x) the effective date and amount of each Revolving Loan requested to be made or converted, (y) the interest rate option requested to be applicable thereto, and (z) the duration of the applicable Interest
Period, if any (subject to the provisions of the definition of the term Interest Period). If any Notice of Borrowing or Conversion fails to specify the interest rate option applicable to the requested Revolving Loan (or the amount to be converted),
then Borrower shall be deemed to have requested a Base Rate Loan. If no Interest Period is specified in a Notice of Borrowing or Conversion with respect to a requested LIBOR Rate Loan, then Borrower shall be deemed to have selected an Interest
Period of one month’s duration, and Lender promptly shall notify Borrower of such selection. If Lender receives a Notice of Borrowing or Conversion after the time specified in the first sentence of this Section 4.5, such Notice of
Borrowing or Conversion shall not be effective unless Lender notifies Borrower of its intent to comply with such Notice of Borrowing or Conversion. If Lender does not receive an effective Notice of Borrowing or Conversion with respect to an
outstanding LIBOR Rate Loan prior to the end of the Interest Period of such LIBOR Rate Loan, Borrower shall be deemed to have elected to convert such outstanding LIBOR Rate Loan in whole into a Base Rate Loan on the last day of the then current
Interest Period with respect to the LIBOR Rate Loan in question. If the written confirmation of any telephonic notification differs in any material respect from Lender’s record of the telephonic notification, the records of Lender shall
control, absent manifest error. Borrower agrees that Lender shall have no obligation to verify the identity of any person making any request pursuant to this Section, and Borrower assumes all risks of the validity and authorization of such requests.
If Borrower and Lender enter into any cash management, treasury management or other agreement that provides that the payment of checks and other items drawn on an account of Borrower that does not have sufficient funds at the time of drawing are
deemed to be advances of a Revolving Loan, such Revolving Loans shall be Base Rate Loans. 
 Section 4.6 Advances of
Loan Proceeds. Lender shall cause proceeds of the Revolving Loans requested by Borrower to which Borrower is entitled under the terms of this Agreement to be disbursed as directed by Borrower. 
 Section 4.7 No LIBOR Rate Loans or Applicable Floating Rate Loans When Default Exists. Notwithstanding any contrary provisions
of this Agreement, and without limiting any other rights of Lender, if a Default or an Event of Default has occurred and is continuing, at Lender’s election, (a) Borrower may not select a LIBOR Rate Loan or an Applicable Floating Rate
Loan, (b) Borrower may not convert any Revolving Loan to a LIBOR Rate Loan or an Applicable Floating Rate Loan, and (c) no LIBOR Rate Loan may be continued as a LIBOR Rate Loan for a new Interest Period. If a Default or an Event of Default
has occurred and is continuing, at Lender’s election, each LIBOR Rate Loan shall convert to a Base Rate Loan at the expiration of the applicable Interest Period and, at Lender’s election, all Applicable Floating Rate Loans will be
converted to Base Rate Loans. 
  

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 Section 4.8 Conversion of Loans. Upon the terms and subject to the conditions of
this Agreement, Borrower may convert all or any part of any outstanding Base Rate Loan, Applicable Floating Rate Loan, or LIBOR Rate Loan into another Revolving Loan on any Business Day (which, in the case of a conversion of an outstanding LIBOR
Rate Loan shall be the last day of the Interest Period applicable to such LIBOR Rate Loan). Borrower shall give Lender prior notice of each such conversion (which notice shall be effective upon receipt) in accordance with Section 4.5 of this
Agreement. 
 Section 4.9 Lender’s Note Records. Borrower irrevocably authorizes Lender to make or cause to be
made, at or about the time of any Revolving Loan, or at the time of receipt of any payment of principal or interest on the Note, an appropriate notation in Lender’s records reflecting (as the case may be) the making of such Revolving Loan or
the receipt of such payment. The outstanding amount of the Revolving Loans set forth in the records of Lender shall be prima facie evidence, absent manifest error, of the amount of principal and interest owing and unpaid to Lender pursuant to the
Note. Notwithstanding the foregoing, the failure of Lender to record (or any error in so recording) the amount of any Revolving Loan or payment in Lender’s records shall not limit or otherwise affect the obligations of Borrower under this
Agreement (or the Note) to make payments of principal of or interest thereunder when due. 
 Section 4.10 Voluntary
Prepayments. LIBOR Rate Loans may not be prepaid in whole or in part (unless contemporaneously with or promptly after any prepayment thereof Borrower pay Lender all amounts owed pursuant to Section 4.12 of this Agreement). Base Rate Loans
and Applicable Floating Rate Loans may be prepaid at any time, without any premium or prepayment charge. 
 Section 4.11
Method of Payments. All payments of principal of and interest by Borrower in respect of amounts due by Borrower under this Agreement shall be made by Borrower to Lender at Lender’s Portland, Oregon, office (or at such other location that
Lender may from time to time designate), in each case in immediately available funds denominated in United States dollars. All payments by Borrower under this Agreement and under any of the other Loan Documents shall be made without set-off or
counterclaim and free and clear of and without deduction for any taxes, levies, imposts, duties, charges, fees, deductions, withholdings, compulsory loans, restrictions, or conditions of any nature now or hereafter imposed or levied by any
jurisdiction or any political subdivision thereof or taxing or other authority therein, unless Borrower is compelled by law to make such deduction or withholding. If any such obligation is imposed upon Borrower with respect to any amount payable by
Borrower under this Agreement or under any of the other Loan Documents, Borrower shall pay to Lender such additional amount in United States dollars as shall be necessary to enable Lender to receive the same net amount that Lender would have
received on such due date had no such obligation been imposed upon Borrower. Borrower promptly shall deliver to Lender certificates or other valid vouchers or evidence of payment satisfactory to Lender in Lender’s reasonable discretion for all
taxes or other charges deducted from or paid with respect to payments made by Borrower under this Agreement or under such other Loan Document. Borrower hereby authorizes Lender to debit Borrower’s operating account at Lender to make the
payments then due and payable by Borrower

  

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pursuant to this Agreement. Lender plans to implement procedures that will automatically result in a debit or other draft on the above-referenced account to collect the payments owed by Borrower
pursuant to this Agreement and the Note. Notwithstanding the provisions of the preceding sentence, Borrower hereby acknowledges and agrees that Lender’s failure to debit the above-referenced account to collect a payment owed pursuant to this
Agreement and the Note shall not relieve Borrower of Borrower’s obligation to make the payment in question. 
 Section 4.12 LIBOR Indemnity. If Borrower for any reason makes any payment of principal with respect to any LIBOR Rate Loan on any day other than the last day of an Interest Period applicable to such LIBOR Rate Loan, or fails to
borrow or continue or convert to a LIBOR Rate Loan after giving a Notice of Borrowing or Conversion thereof pursuant to Section 4.5 of this Agreement, or fails to prepay a LIBOR Rate Loan after having given notice thereof, Borrower shall pay to
Lender any amount required to compensate Lender for any additional losses, costs, or expenses that Lender reasonably may incur as a result of such payment or failure (calculated in accordance with Lender’s standard practice at the time in
question), including, without limitation, any loss (including loss of anticipated profits), costs, or expense incurred by reason of the liquidation or re-employment of deposits or other funds required by Lender to fund or maintain such LIBOR Rate
Loan. Borrower shall pay such amount upon presentation by Lender of a statement setting forth the amount and Lender’s calculation thereof in reasonable detail, which statement shall be deemed true and correct, absent manifest error. 

Section 4.13 Changed Circumstances. Notwithstanding any other provision of this Agreement, in the event that: 
 (a) On any date on which the LIBOR Rate or the Applicable Floating Rate otherwise would be set Lender shall determine in good faith (which
determination shall be final and conclusive) that adequate and fair means do not exist for ascertaining the LIBOR Rate or the Applicable Floating Rate, or 
 (b) At any time Lender shall determine in good faith (which determination shall be final and conclusive) that: 
 (i) The making or continuation of or conversion of any loan to a LIBOR Rate Loan or an Applicable Floating Rate Loan has
been made impracticable or unlawful by (a) the occurrence of a contingency that materially and adversely affects the interbank Eurodollar market, or (b) compliance by Lender in good faith with any applicable law or governmental regulation,
guideline, or order or interpretation or change thereof by any governmental authority charged with the interpretation or administration thereof or with any request or directive of any such governmental authority (whether or not having the force of
law); or 
 (ii) The LIBOR Rate or the Applicable Floating Rate no longer shall represent the effective cost to
Lender for United States dollar deposits in the interbank market for deposits in which Lender regularly participates; 
  

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 then, and in any such event, Lender promptly shall notify Borrower thereof. Until Lender
notifies Borrower that the circumstances giving rise to such notice no longer apply, the obligation of Lender to allow selection by Borrower of LIBOR Rate Loans or Applicable Floating Rate Loans affected by the contingencies described in this
Section 4.13 shall be suspended. If, at the time Lender so notifies Borrower, Borrower previously has given Lender a Notice of Borrowing or Conversion with respect to one or more LIBOR Rate Loans or Applicable Floating Rate Loans but such
Revolving Loans have not yet gone into effect, such notification shall be deemed to be a request for a Base Rate Loan. 
 Section 4.14 Prepayment Due to Illegality. In the event of a determination of illegality pursuant to Section 4.13 of this Agreement with respect to the outstanding affected LIBOR Rate Loans or Applicable Floating Rate
Loans, Borrower shall prepay the same, together with interest thereon and any amount due pursuant to Section 4.12, if any, of this Agreement, on such date as shall be specified in Lender’s notice to Borrower (which shall not be earlier
than the date such notice is given), unless Lender is permitted to maintain such Revolving Loans as LIBOR Rate Loans until the end of each then-applicable Interest Period. Unless otherwise agreed by Borrower and Lender, any payment required in
accordance with the preceding sentence shall (subject to the terms and conditions of this Agreement) be made automatically with a Base Rate Loan. 
 ARTICLE V 
 COLLATERAL FOR BORROWER’S OBLIGATIONS 
 Section 5.1 Execution by Borrower of the Security Agreement and the IP Security Agreements. Contemporaneously with the
execution of this Agreement, Borrower shall execute and deliver to Lender a security agreement (the “Security Agreement”) in form and content satisfactory to Lender. The Security Agreement shall grant Lender a security interest in the
Collateral to secure payment of the Obligations. In addition, contemporaneously with the execution of this Agreement, Borrower shall execute and deliver to Lender security agreements (the “IP Security Agreements”) in form and
substance satisfactory to Lender in its Permitted Discretion. The IP Security Agreements shall grant Lender a security interest in all existing and after-acquired intellectual property of Borrower to secure payment of the Obligations.

 Section 5.2 Execution by Borrower of the Pledge Agreement. Contemporaneously with the execution of this
Agreement, Borrower shall execute and deliver to Lender a pledge agreement (the “Pledge Agreement”) in form and content satisfactory to Lender. The Pledge Agreement shall grant Lender a security interest and lien in 65 percent of the
Capital Stock of Nautilus Fitness Canada Ltd. to secure payment of the Obligations. 
 Section 5.3 Right of Setoff.
In addition to any rights now or hereafter granted under this Agreement, applicable law, or otherwise, and not by way of limitation of any such rights, upon the occurrence and during the continuance of an Event of Default, Borrower hereby authorizes
Lender at any time, or from time to time, without presentment, demand, protest, or other notice of any kind to Borrower or to any other Person, any such notice being hereby expressly waived, to set off, and grants to Lender a security interest in
and a lien on, any Indebtedness at any time held or owing by Lender to or for the credit or the account of Borrower,

  

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including, without limitation, all depository account balances, cash and any other property of Borrower now or hereafter in the possession of Lender, against and on account of the Obligations and
liabilities of Borrower to Lender, irrespective of whether the Obligations have matured and/or Lender may refuse to allow withdrawals from any such account. 
 Section 5.4 Other Documents. Borrower hereby agrees that until Borrower satisfies the Obligations in full and Lender has no further commitment to make Revolving Loans or issue Letters of
Credit for the account of Borrower, Borrower shall promptly execute and deliver to Lender all documents deemed necessary or desirable by Lender in its Permitted Discretion to create, evidence, perfect, or continue Lender’s security interests in
the Collateral. In addition, Borrower hereby authorizes Lender to file such financing statements or other documents, and to take such other actions, that Lender believes in its Permitted Discretion need to be filed or taken in order to create,
evidence, perfect, or continue Lender’s security interests in the Collateral. 
 Section 5.5 Appraisals and
Collateral Examinations. Lender shall require examinations of the Collateral annually. The examinations shall be conducted by a third-party examiner acceptable to Lender in its Permitted Discretion. Borrower hereby agrees to cooperate to
facilitate such examinations of the Collateral. Borrower acknowledges and agrees that it shall pay for the reasonable cost of the annual examinations of the Collateral conducted on behalf of Lender, or any other inspection, examination, or appraisal
of the Collateral obtained by Lender at any time that an Event of Default exists hereunder (which payments shall be made in accordance with Section 7.11 of this Agreement). 
 ARTICLE VI 
 REPRESENTATIONS AND WARRANTIES 

Borrower represents and warrants to Lender as follows: 
 Section 6.1 Existence and Power of Borrower. Borrower is a corporation duly organized and existing under the laws of the state of Washington and is qualified to do business in each
jurisdiction where the failure to be so qualified could be reasonably likely to result in a Material Adverse Effect. Borrower has full power, authority, and legal right to carry on Borrower’s businesses as presently conducted, to own and
operate Borrower’s properties and assets, and to execute, deliver, and perform this Agreement and the other Loan Documents. 
 Section 6.2 Authorization by Borrower. The execution, delivery, and performance by Borrower of this Agreement, the Note, and the other Loan Documents, and any borrowing under this Agreement, have been duly authorized by all
necessary corporate action of Borrower, does not require shareholder approval, or the approval or consent of any trustee or the holders of any Indebtedness of Borrower, does not contravene any law, regulation, rule, or order binding on Borrower, or
any of Borrower’s organizational documents, and do not contravene the provisions of or constitute a default under any indenture, mortgage, material contract, or other material agreement or instrument to which Borrower is a party, or by which
Borrower (or any of its properties) may be bound or affected, except as has been disclosed to Lender in writing. 
  

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 Section 6.3 Government Approvals. No Government Approval or filing or
registration with any Governmental Authority is required for the making and performance by Borrower of this Agreement or any Loan Document, or in connection with any of the transactions contemplated hereby, except those that have been obtained or
made and are in full force and effect. Borrower has obtained all Governmental Approvals that are necessary or required in connection with the conduct of Borrower’s business, except any Governmental Approvals the failure to obtain which could
not be reasonably likely to result in a Material Adverse Effect. 
 Section 6.4 Binding Obligations. This Agreement,
the Note, and the other Loan Documents have been duly executed and delivered by Borrower and constitutes the legal, valid, and binding obligations of Borrower. This Agreement, the Note, and the other Loan Documents are enforceable against Borrower
and its property in accordance with their respective terms, except as limited by bankruptcy, insolvency, reorganization, moratorium, or other similar laws affecting the enforcement of creditors’ rights generally, and except as the remedy of
specific performance, or the remedy of injunctive relief, is subject to the discretion of the court before which any proceeding therefor may be brought. 
 Section 6.5 Litigation. Except as set forth in Schedule 6.5 of this Agreement, there are no actions, proceedings, investigations, or claims against or affecting Borrower now pending
before any court, arbitrator, or Governmental Authority, which individually or in the aggregate, could be reasonably likely to result in a Material Adverse Effect. 
 Section 6.6 Financial Condition of Borrower. Borrower has delivered to Lender Borrower’s report on Form 10-Q for fiscal quarter ending September 30, 2009 as filed with the SEC, which
presents fairly in all material respects Borrower’s financial condition and results of operations for the period covered thereby. Since the date of such report, there has been no Material Adverse Effect, except as has been disclosed to Lender
in writing. 
 Section 6.7 Title and Liens. Borrower has good and marketable title to all of Borrower’s
material properties and assets. The Collateral is not subject to any Lien, other than Permitted Liens. 
 Section 6.8
Intellectual Property; Licenses, Etc. Borrower owns, licenses or otherwise possesses the right to use, all material trademarks, service marks, trade names, copyrights, patents, patent rights, franchises, licenses and other intellectual
property rights that are reasonably necessary for the operation of its businesses, without conflict with the rights of any other Person, except to the extent such conflict could not be reasonably likely to result in a Material Adverse Effect. To the
knowledge of Borrower, no slogan or other advertising device, product, process, method, substance, part or other material now employed, or now contemplated to be employed, by Borrower infringes upon any rights held by any other Person in any
material respect. No claim or litigation regarding any of the foregoing is pending or, to the knowledge of Borrower, threatened. 
 Section 6.9 Taxes. Borrower has filed all federal and state and all other material tax returns and reports required of Borrower and has paid all material Taxes that are due and payable (except to the extent such Taxes are being
properly contested in good faith by

  

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appropriate legal proceedings). The charges and accruals on the books of Borrower in respect of Taxes for all fiscal periods to date are accurate in all material respects. Taxes not yet due have
been provided for as a reserve on the books of Borrower to the extent required under GAAP. There are no claims or assessments against Borrower by any Governmental Authority with respect to any Taxes, except those (if any) disclosed to Lender in
writing, and except any claims or assessments that could not be reasonably likely to result in a Material Adverse Effect. 
 Section 6.10 Other Agreements. Borrower is not in breach of or default under any agreement to which Borrower is a party, or that is binding on Borrower (or any of its assets), except to the extent any such breach or default
could not be reasonably likely to result in a Material Adverse Effect. 
 Section 6.11 Federal Reserve Regulations.
Borrower is not engaged principally or as one of Borrower’s important activities in the business of extending credit for the purpose of purchasing or carrying any margin stock (within the meaning of Federal Reserve Regulation U), and no
part of the proceeds of any Revolving Loan will be used to purchase or carry any such margin stock, or to extend credit to others for the purpose of purchasing or carrying any such margin stock, or for any other purpose that violates the applicable
provisions of any Federal Reserve Regulation. If requested to do so by Lender, Borrower will furnish to Lender a statement conforming with the requirements of Regulation U. 
 Section 6.12 Compliance With Laws. Borrower is in compliance in all respects with all laws, regulations, rules, and orders of
Governmental Authorities applicable to Borrower, or to Borrower’s operations or property (including, but not limited to, Environmental Laws, Consumer Protection Laws and ERISA), except any thereof whose validity is being contested in good faith
by appropriate proceedings upon stay of execution of the enforcement thereof and except to the extent any non-compliance could not be reasonably likely to result in a Material Adverse Effect. 
 Section 6.13 Labor Relations. There is (a) no unfair labor practice complaint pending against Borrower or, to the best
knowledge of Borrower, threatened, before the National Labor Relations Board, and no grievance or arbitration proceeding arising out of or under any collective bargaining agreement is so pending against Borrower or, to the best knowledge of
Borrower, threatened, and (b) no strike, labor dispute, slowdown, or stoppage pending against Borrower or, to the best knowledge of Borrower, threatened against Borrower, except, in each case, to the extent such complaint, strike, labor
dispute, slowdown or stoppage could not be reasonably likely to result in a Material Adverse Effect. 
 Section 6.14
Material Adverse Effect. Between September 30, 2009, and the Closing Date, no event has occurred, that alone or together with other events, could reasonably be expected to have a Material Adverse Effect. 
 Section 6.15 Full Disclosure. No information contained in this Agreement, any of the other Loan Documents, any projections,
financial statements or collateral reports or other written reports from time to time delivered hereunder or any written statement furnished by or on behalf of Borrower to Lender pursuant to the terms of this Agreement contains or will contain any
untrue statement of a material fact or omits or will omit to state a material fact necessary to make the statements contained herein or therein not materially misleading in light of the circumstances under which they were made. 
  

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 Section 6.16 Solvency. Borrower is Solvent. 
 Section 6.17 Continuing Representations and Warranties. Borrower hereby acknowledges and agrees that the representations and
warranties of Borrower in this Article VI are continuing representations and warranties and that each request for a Revolving Loan or the issuance of a Letter of Credit for the account of Borrower under this Agreement constitutes a
reaffirmation by Borrower that each such representation and warranty are accurate as of the date of the Revolving Loan or the issuance of a Letter of Credit requested by Borrower, unless such representation and warranty specifically relates to an
earlier date, in which case it shall be accurate in all material respects as of such date. 
 ARTICLE VII 
 AFFIRMATIVE COVENANTS 
 Until Borrower has paid the Obligations (other than contingent indemnification obligations) in full and Lender’s lending and letter of credit commitment with respect to the Revolving Credit Facility has terminated, Borrower agrees to
do all of the following, unless Lender otherwise shall consent in writing: 
 Section 7.1 Additional Acts. Upon
written demand by Lender, Borrower shall promptly execute and deliver all such instruments and perform all such other acts as Lender may reasonably request to carry out the transactions and establish or preserve the lien status and priority
contemplated by this Agreement or any other Loan Document. Borrower authorizes Lender to file all financing statements necessary to perfect and continue its interests hereunder or under the Loan Documents. 
 Section 7.2 Use of Loan Proceeds. Borrower shall use funds borrowed under the Revolving Credit Facility only for purposes
permitted by Section 3.3 of this Agreement. 
 Section 7.3 Preservation of Existence. Except as otherwise
permitted in this Agreement, Borrower shall preserve and maintain its corporate existence, rights, franchises, and privileges in the jurisdiction of its organization and shall qualify and remain qualified as a foreign organization in each
jurisdiction where the failure to do so could be reasonably likely to result in a Material Adverse Effect. 
 Section 7.4
Visitation Rights. At any reasonable time during normal business hours, and from time to time at reasonable intervals at mutually agreeable dates and times (not to exceed twice a year; provided that such limitation shall not be applicable
when an Event of Default has occurred and is continuing), on reasonable advance notice, Borrower shall permit Lender to examine and make copies of and abstracts from Borrower’s records and books of account, to visit the properties of Borrower,
and to discuss the affairs, finances, and accounts of Borrower with any of the officers and directors of Borrower. 
  

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 Section 7.5 Keeping of Books and Records. Borrower shall keep adequate records
and books of account in which entries complete in all material respects will be made, in accordance with GAAP, reflecting all financial transactions of Borrower. 
 Section 7.6 Maintenance of Property. Borrower shall maintain and preserve all of Borrower’s properties which are material to its business in good working order and condition, ordinary
wear and tear and casualty (to the extent insured) excepted, and shall from time to time make all needed repairs, renewals, or replacements so that the efficiency of such properties shall be fully maintained and preserved. 
 Section 7.7 Other Obligations. Borrower shall pay and discharge before the same shall become delinquent all material
Indebtedness, Taxes, and other material obligations for which Borrower is liable, or to which the income or property of the Borrower is subject, and all claims for labor, materials, or supplies that, if unpaid, might become by law a Lien upon assets
of the Borrower, except such Indebtedness, Taxes, claims, and obligations that are being contested in good faith by appropriate proceedings. 
 Section 7.8 Insurance. Borrower shall keep in force upon all of Borrower’s properties and operations policies of insurance carried with companies in such amounts and covering all such
risks as shall be customary in the industry (as determined by Lender in its Permitted Discretion) naming Lender as a loss payee in respect of insurance covering the Collateral. Borrower, within 30 days of request, shall deliver to Lender
certificates of insurance or duplicate policies evidencing such coverage and a schedule setting forth the amounts and types of insurance then maintained by Borrower. 
 Section 7.9 Compliance with Laws. Subject to the right of Borrower to contest any laws, regulations, rules or orders of any Governmental Authority in good faith by appropriate legal
proceedings, and provided that Borrower establishes and maintains adequate reserves to the extent required by GAAP in relation to the matter being contested, Borrower shall comply with all laws, regulations, rules, and orders of any Governmental
Authority applicable to Borrower, including, but not limited to, Environmental Laws, Consumer Protection Laws and ERISA, except where failure to so comply could not be reasonably likely to result in a Material Adverse Effect. 
 Section 7.10 Financial Information/Reporting. Borrower shall deliver to Lender the statements, reports, and other information
listed below at the times noted below: 
 (a) On or before May 15, 2010, and within 45 days of the end of each
calendar quarter thereafter, the unaudited balance sheet and statements of cash flow, income, and retained earnings of Borrower for the immediately preceding quarter (and for the period from the start of Borrower’s then-current fiscal year
through the last day of the immediately preceding quarter) on a consolidated and consolidating basis (it being agreed that the furnishing of Borrower’s report on Form 10-Q for such fiscal quarter as filed with the SEC will satisfy such
requirement); 
 (b) On or before March 25, 2010, and the 25th day of each month thereafter, a written report in the form of
Exhibit A attached hereto describing in reasonable

  

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detail the Borrowing Base (and the computation thereof) as of the end of the immediately preceding month, which shall be reconciled to the corresponding month-end balance sheets of Borrower and
shall be certified to be true and correct in all material respects by an Authorized Officer (the “Borrowing Base Certificate”); 
 (c) On or before March 25, 2010, and the 25th day of each month thereafter, a written report with respect to the Commercial Accounts Receivable as of the end of the immediately preceding month, which reports shall include reasonable detail regarding
the aging of such Commercial Accounts Receivable, and otherwise shall be in a form satisfactory to Lender in Lender’s reasonable discretion; 
 (d) On or before March 25, 2010, and on the 25th day of each month thereafter, a written report with respect to the Consumer Finance Accounts Receivable as of the end of the immediately preceding month, which reports shall include reasonable detail
regarding the aging of such Consumer Finance Accounts Receivable, and otherwise shall be in a form satisfactory to Lender in Lender’s reasonable discretion; 
 (e) On or before March 25, 2010, and the 25th day of each month thereafter, a written summary of aging of Borrower’s accounts payable as of the end of the
immediately preceding month, which reports shall include reasonable detail regarding the aging of such accounts payable, and otherwise shall be in a form satisfactory to Lender in Lender’s reasonable discretion; 
 (f) On or before March 25, 2010, and on the 25th day of each month thereafter, a written report with respect to Borrower’s Inventory as of the end of the
immediately preceding month, which report shall include reasonable detail regarding the aging of the Inventory, and otherwise shall be in a form satisfactory to Lender in Lender’s reasonable discretion; 
 (g) On or before May 15, 2010, and within 45 days after the end of each calendar quarter thereafter, a written report in the form
attached as Exhibit B hereto identifying Borrower’s performance with respect to the financial covenants set forth in Section 8.1, Section 8.2, Section 8.3 and Section 8.4 of this Agreement as of the end of the
calendar quarter in question, which reports shall be in a form satisfactory to Lender in Lender’s reasonable discretion, shall include reasonable detail regarding the manner in which the financial covenants were calculated, and shall be
accompanied by a certificate of an Authorized Officer that (i) the calculation of each of the financial covenants is true and correct in all material respects, and (ii) as of the end of such quarter, no Default or Event of Default had
occurred and was continuing (or, if a Default or an Event of Default existed at such time, identifying the Default or the Event of Default) (the “Quarterly Compliance Certificate”); 
 (h) Within 120 days of each fiscal year end of Borrower, a copy of an audited statement (on a consolidated and consolidating basis) of
Borrower’s financial condition as of the end of the preceding fiscal year prepared by a certified public accounting firm acceptable to Lender in Lender’s reasonable discretion (it being agreed that the furnishing of Borrower’s annual
report on form 10-K for such fiscal year as filed with the SEC will satisfy such requirement); 
  

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 (i) Within 120 days after the end of each fiscal year of Borrower, a written report in
the form attached as Exhibit B hereto, based upon the audited financial statement referred to in item (h) above, identifying Borrower’s performance with respect to the financial covenants set forth in Section 8.1,
Section 8.2, Section 8.3 and Section 8.4 of this Agreement as of the end of the fiscal year in question, which reports shall be in a form satisfactory to Lender in Lender’s reasonable discretion, shall include reasonable detail
regarding the manner in which the financial covenants were calculated, and shall be accompanied by a certificate of an Authorized Officer that (i) the calculation of each of the financial covenants is true and correct in all material respects,
and (ii) as of the end of such year, no Default or Event of Default had occurred and was continuing (or, if a Default or an Event of Default existed at such time, identifying the Default or the Event of Default) (the “Annual Compliance
Certificate”); 
 (j) Within 60 days of each fiscal year end of Borrower (provided that a forecast for 2010 shall be
delivered on the Closing Date), a forecast (including a balance sheet, income statement, and cash forecast acceptable to Lender in its Permitted Discretion) of the projected financial performance of Borrower for the current fiscal year of Borrower,
which forecast shall be in a format satisfactory to Lender in Lender’s reasonable discretion; and 
 (k) Other
Information. All other statements, reports, and information as Lender reasonably may request concerning the Collateral, or the financial condition and business affairs of Borrower, their Subsidiaries, and their Affiliates. 
 Section 7.11 Expenses of Lender. Borrower shall reimburse Lender for all reasonable out-of-pocket expenses incurred by Lender in
connection with Lender’s banking and lending relationships with Borrower, including, but not limited to, recording charges, appraisal costs, environmental survey and investigation costs, collateral examination and inspection costs, travel
expense, and the reasonable fees and expenses of outside legal counsel for Lender (including fees and expenses incurred in connection with the preparation, negotiation, closing, administration, amendment, modification, and enforcement of this
Agreement, or the agreement evidenced hereby); the preservation, protection, or disposition of the Collateral (or Lender’s security interests therein); or as required by applicable law, rules, policies, and regulations. The amounts owed by
Borrower pursuant to the preceding sentence of this Agreement shall be paid by Borrower in the ordinary course of Borrower’s business after Lender bills Borrower for such amounts, or on the Revolving Credit Facility Maturity Date, whichever
occurs first. 
 ARTICLE VIII 
 FINANCIAL COVENANTS 
 Until Borrower has paid the Obligations (other than
contingent indemnification obligations) in full and Lender’s lending and letter of credit commitment with respect to the Revolving Credit Facility has terminated, Borrower agrees to do all of the following: 
 Section 8.1 Current Ratio. Borrower shall maintain a Current Ratio of not less than 1.10 to 1.00 as of March 31, 2010, and
as of the last day of each calendar quarter thereafter. 
  

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 Section 8.2 Liquidity Covenant. Borrower shall not permit Liquidity as of the
dates set forth below to be less than the amount set forth below opposite such date: 
  

				
	 Dates
	  	Minimum
Liquidity
	 March 31, 2010
	  	$	18,000,000
	 June 30, 2010
	  	$	15,000,000
	 September 30, 2010
	  	$	15,000,000

 Borrower shall not permit
Liquidity as of December 31, 2010, and as of the last day of each calendar quarter thereafter to be less than the amount required below based on Borrower’s Adjusted Continuing Business EBITDA for the four quarters ending on such date:

  

				
	 Adjusted Continuing Business EBITDA
	  	Minimum
Liquidity
	 $2,500,000-$5,000,000
	  	$	15,000,000
	 $5,000,000.01-$7,500,000
	  	$	12,500,000
	 $7,500,000.01-$10,000,000
	  	$	10,000,000
	 $10,000,000.01-$12,500,000
	  	$	5,000,000
	 $12,500,000.01 and above
	  	$	0.00

 Section 8.3
Adjusted Continuing Business EBITDA. Borrower shall not permit Adjusted Continuing Business EBITDA to be less than $2,500,000 for the four quarters ending March 31, 2010, and for the four quarters ending on the last day of each calendar
quarter thereafter. 
 Section 8.4 Capital Expenditures. Borrower shall not make Capital Expenditures in any
calendar year in excess of $1,500,000 (the “Capital Expenditure Limitation”); provided, that in the event Borrower does not expend the entire Capital Expenditure Limitation in any calendar year, Borrower may carry forward 50 percent
of such un-expended amount to the immediately succeeding calendar year. All Capital Expenditures shall first be applied to reduce the applicable Capital Expenditure Limitation and then to reduce the carry-forward from the previous calendar year, if
any, provided that notwithstanding anything herein to the contrary, Borrower shall not be entitled to carry forward any un-utilized Capital Expenditure Limitation for more than one year. 
 Section 8.5 Effect of No Outstanding Revolving Loans. If Borrower fails to perform or observe any financial covenant in
Section 8.1, Section 8.2, Section 8.3, or Section 8.4 of this Agreement on any Testing Date (a “Financial Covenant Failure”) prior to receipt by Lender of the Non-Cash Secured Election, such Financial Covenant Failure
shall not constitute a Default or Event of Default if no Revolving Loan shall have been outstanding at any time during the calendar quarter ending on such Testing Date. 
  

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 ARTICLE IX 
 NEGATIVE COVENANTS 
 Until Borrower has paid the Obligations (other than
contingent indemnification obligations) in full and Lender’s lending and letter of credit commitment with respect to the Revolving Credit Facility has terminated, Borrower agrees that Borrower shall not do any of the following, unless Lender
otherwise shall consent in writing: 
 Section 9.1 Liquidation, Merger, or Sale of Assets. Borrower shall not
(a) liquidate, dissolve, or enter into any merger or consolidation in which Borrower would not be the surviving entity, or (b) sell, lease, or dispose of any material portion of the business or assets of Borrower (except (A) sales of
goods in the ordinary course of business; (B) sales or other dispositions of surplus or obsolete equipment in the ordinary course of business; (C) disposition of any property in connection with discontinuation of Commercial Business;
(D) dispositions of Inventory that is obsolete, unmerchantable or otherwise unsalable in the ordinary course of business; (E) termination of any lease of real or personal property that is not necessary for the ordinary course of business
of Borrower, could not reasonably be expected to have a Material Adverse Effect and does not result from Borrower’s default thereunder; (F) licenses, sublicenses, leases or subleases granted to others not interfering in any material
respect with the business of the Borrower and which could not reasonably be expected to have a Material Adverse Effect, (G) sales or dispositions of cash and cash equivalents in the ordinary course of business which are not reasonably likely to
have a Material Adverse Effect; (H) abandonment of intellectual property of the Borrower that is immaterial, unnecessary or no longer used in the ordinary course of business, the abandonment of which could not reasonably be expected to have a
Material Adverse Effect; (I) dispositions of Accounts not constituting Eligible Consumer Finance Accounts Receivable or Eligible Commercial Accounts Receivable in the ordinary course of business in connection with the collection or compromise
thereof, and (J) dispositions of equipment that, in the aggregate during any 12-month period, has a fair market or book value (whichever is more) of $250,000 or less). 
 Section 9.2 Indebtedness. Borrower shall not create, incur, assume, guarantee, or be or remain liable with respect to any
Indebtedness, other than the following: 
 (a) The Obligations; 
 (b) Funded Indebtedness of Borrower existing as of the date of this Agreement and secured by the Permitted Liens disclosed on
Schedule 9.3(b) to this Agreement, and all renewals, extensions, refundings, and refinancings of such Indebtedness in a principal amount that does not exceed the principal amount outstanding on the Closing Date; 
 (c) Indebtedness for Taxes, assessments, or governmental charges to the extent that payment therefor shall at the time not be required to
be made in accordance with Section 6.8 of this Agreement; 
 (d) Liabilities incurred by Borrower in the ordinary course
of business (not as a result of borrowing); 
  

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 (e) The endorsement of checks in the ordinary course of business; 
 (f) Indebtedness incurred to refinance any Indebtedness permitted by this Section 9.2 of this Agreement; 
 (g) Capital Leases and purchase money Indebtedness in an aggregate amount not to exceed $500,000; 
 (h) Intercompany Indebtedness existing as of the Closing Date to Borrower’s Subsidiaries in an aggregate amount not to exceed
$7,000,000 and intercompany Indebtedness to Borrower’s Subsidiaries involved exclusively in the Continuing Business in an amount not to exceed $1,000,000 after the Closing Date; 
 (i) Indebtedness to an insurance company, the proceeds which are used by Borrower to finance their insurance premiums payable on
workers’ compensation insurance policies maintained by Borrower; 
 (j) Indebtedness incurred in respect of the deferred
purchase price for any acquisition of intellectual property or constituting the obligation to make purchase price adjustments in connection with any such acquisition of intellectual property; 
 (k) Indebtedness that is not included in any of the preceding clauses of this Section, is not secured by a Lien and does not exceed
$500,000 in the aggregate at any time; 
 (l) Contingent obligations (A) arising from endorsements of payment items for
collection or deposit in the ordinary course of business; (B) arising from any foreign currency hedging agreements not to exceed $500,000 in the aggregate and not prohibited hereunder; (C) existing on the Closing Date and disclosed in
writing to Lender, and any extension or renewal thereof that does not increase the amount of such contingent obligation when extended or renewed; (D) arising from customary indemnification obligations in favor of purchasers in connection with
dispositions permitted under Section 9.1(b) hereof if such obligations could not reasonably be expected to have a Material Adverse Effect; or (E) Guaranties of Subsidiaries’ Indebtedness that do not exceed $500,000 in the aggregate
and incurred in the ordinary course of business; and 
 (m) Reimbursement obligations to Bank of America, N.A. with respect to
the letters of credit listed on Schedule 9.2. 
 Section 9.3 Liens. Borrower shall not create, incur, assume,
or suffer to exist any Lien of any kind upon or with respect to any of Borrower’s property or assets, or assign or otherwise convey any right to receive income, including the sale or discount of Accounts with or without recourse, except the
following (“Permitted Liens”): 
 (a) Liens in favor of Lender to secure the Obligations; 
 (b) Liens existing as of the date of this Agreement and disclosed in Schedule 9.3(b) to this Agreement; 
  

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 (c) Liens for Taxes, assessments, or other governmental charges not delinquent or being
contested in good faith and by appropriate proceedings and with respect to which proper reserves have been taken by Borrower; provided, however, that the Lien shall have no effect on (i) the priority of the Liens in favor of Lender, other than
inchoate tax Liens arising prior to the due date of such taxes, or (ii) the value of the assets in which Lender has such a Lien, and, provided further, that a stay of enforcement of any such Lien (other than such inchoate tax Liens) shall be in
effect; 
 (d) Landlords’ and lessors’ Liens in respect of rent not in default, or Liens in respect of pledges or
deposits under workers’ compensation, unemployment insurance, social security laws, or similar legislation (other than ERISA), or in connection with appeal and similar bonds incidental to litigation; mechanics’, warehouseman’s,
laborers’, and materialmen’s and similar Liens, if the obligations secured by such Liens are not then delinquent; 
 (e) Easements, rights of way, restrictions, and other similar charges or Liens relating to real property and not interfering in a material way with the ordinary conduct of Borrower’s businesses; 
 (f) Liens constituting a renewal, extension, or replacement of any Permitted Lien; 
 (g) Purchase money Liens in connection with Indebtedness permitted under Section 9.2(g); 
 (h) Deposits of cash with the owner or lessor of premises leased and operated by Borrower in the ordinary course of business to secure the
performance by Borrower of its obligations under the terms of the lease for such premises; 
 (i) Liens arising from
precautionary UCC filings regarding “true” operating leases or the consignment of goods to Borrower; 
 (j) Liens
arising by operation of law under Article 2 of the UCC in favor of a reclaiming seller of goods or buyer of goods, provided that any such Liens are subordinated under law to the Liens in favor of Lender; 
 (k) Normal and customary rights of setoff upon deposits in favor of depository institutions, and Liens of a collecting bank on payment
items in the course of collection; 
 (l) Licenses of intellectual property owned by Borrower and granted to any person in the
ordinary course of business and any restrictions or conditions on transfer, assignment or renewal customarily imposed in a license to use intellectual property; 
 (m) Judgments and other similar Liens arising in connection with court proceedings that do not constitute a Default or Event of Default; 
 (n) Pledges and deposits of cash of less than $100,000 to secure obligations under appeal bonds or as otherwise required in connection with
court proceedings (including, without limitation, surety bonds, security for costs of litigation where required by law and letters of credit) or any other instruments serving a similar purpose; 
  

 -42- 

 (o) Liens in favor of an insurance company to secure Indebtedness permitted in
Section 9.2(i) hereof to finance insurance premiums; and 
 (p) Liens in the nature of rights of set off in favor of
contractual counterparties in the ordinary course of business. 
 Section 9.4 Restricted Payments. Borrower shall
not pay, make, declare, or authorize any Restricted Payment, redeem any of Borrower’s common stock or redeem, refinance, or otherwise dispose of or acquire any of Borrower’s preferred stock other than: (a) reasonable compensation paid
to employees, officers, and directors in the ordinary course of business and consistent with prudent business practices; (b) dividends to shareholders of Borrower or dispositions to preferred shareholders of Borrower declared as of the last day
of a calendar quarter and paid in the immediately following calendar quarter and redemptions of common stock of Borrower on a the last day of a calendar quarter, provided that (i) no Revolving Loans are outstanding on the date such dividends
and dispositions are declared and made and on the date such redemptions are made and (ii) the aggregate amount of such dividends, dispositions, or redemptions (together with any other dividends, dispositions, and redemptions paid to
shareholders of Borrower during the 12 months ending on the such date) do not exceed (A) 50 percent of the Continuing Business Net Income for the 12 months ending on such date when the Debt to Tangible Net Worth Ratio is equal to
or greater than 2.50 to 1.00 on such date, and (B) 100 percent of the Continuing Business Net Income for the 12 months ending on such date when the Debt to Tangible Net Worth Ratio is less than 2.50 to 1.00 on such date; and
(c) conversion of preferred stock of Borrower to common stock of Borrower. 
 Section 9.5 Investments; Purchase of
Assets. Borrower shall not make or maintain any Investments, or purchase or otherwise acquire any material amount of assets, other than: 
 (a) Purchases of Inventory in the ordinary course of business; 
 (b) Purchases of
intellectual property that do not exceed $1,000,000 in any calendar year and $2,000,000 in the aggregate and other purchases approved by Lender in its Permitted Discretion; 
 (c) Normal trade credit extended in the ordinary course of business and consistent with prudent business practice; 
 (d) Capital Expenditures allowed under Section 8.4 of this Agreement; or 
 (e) Investments in development of new product lines that are permitted under Section 9.9; 
  

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 (f) Investment in Subsidiaries listed on Schedule 9.5 and Investments in Subsidiaries
engaged exclusively in the Continuing Business made after the Closing Date that do not exceed $1,000,000 in the aggregate; 
 (g) Investment in joint ventures engaged exclusively in the Continuing Business made after the Closing Date that do not exceed $1,000,000 and other Investments in joint ventures engaged exclusively in the Continuing Business and approved by
Lender in its Permitted Discretion; 
 (h) Loans and advances to officers and employees for salary, travel expenses,
commissions and similar items in the ordinary course of business in the aggregate amount at any one time outstanding not to exceed $500,000; 
 (i) Payables permitted under Section 9.7 hereof; 
 (j) The endorsement of
instruments for collection or deposit in the ordinary course of business; 
 (k) Stock or obligations issued to Borrower by any
person (or the representative of such person) in respect of debt or other trade obligations of such person owing to Borrower in connection with the insolvency, bankruptcy, receivership or reorganization of such person or a composition, readjustment
or settlement of the debts of such person or in respect of a settlement of a dispute with such person, provided, that the original of any such stock or instrument evidencing such obligations owing to Borrower shall be promptly delivered to Lender
together with such stock power, assignment or endorsement by Borrower required by Lender; 
 (l) Investments in existence on
the Closing Date set forth on Schedule 9.5; 
 (m) Securities, instruments or other Investments that Borrower may acquire
in connection with any disposition permitted hereunder; provided that such securities, instruments or other Investments shall constitute not more that 25 percent of the purchase price; provided further that the original of any such securities
or instruments owned by Borrower evidencing such Investments shall be promptly delivered to Lender together with such stock power or endorsement by Borrower required by Lender; 
 (n) Contingent obligations to the extent permitted under Section 9.2(l); 
 (o) Foreign currency hedging agreements entered into in the ordinary course of business for non-speculative purposes in an aggregate amount
not to exceed $500,000; 
 (p) Loans to Subsidiaries of Borrower that are to be repaid within five Business Days of being made
in an aggregate amount not to exceed $2,000,000 and other loans to Subsidiaries of Borrower approved by Lender in its Permitted Discretion; 
  

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 (q) Investments not otherwise permitted hereunder not to exceed $500,000 at any one time,
provided that no Default or Event of Default has occurred at the time of such Investments or would result therefrom; or 
 (r)
Maintenance of deposits with Lender or Investments in cash equivalents. 
 Section 9.6 Obligations Relating to
Guaranties. Borrower shall not create, incur, assume or permit to exist any obligations arising under Guaranties except (a) by endorsement of instruments or items of payment for deposit to the general account of Borrower, and (b) for
obligations arising under Guaranties incurred for the benefit of Borrower if the primary obligation is expressly permitted by this Agreement. 
 Section 9.7 Transactions With Affiliates. Borrower shall not directly or indirectly enter into any purchase, sale, lease, sale-leaseback, or other transaction with any Affiliate, except
transactions in the ordinary course of business on terms that are no less favorable to Borrower than those that might be obtained at the time in a comparable arm’s-length transaction with any Person that is not an Affiliate, provided, however,
that Borrower (a) may in any event enter into employment and severance arrangements with their respective officers and employees in the ordinary course of business, (b) may engage in transactions with Affiliates expressly permitted in
Section 9 hereof, and (c) may pay customary fees and reasonable out-of-pocket costs to, and indemnities provided on behalf of, directors, officers, and employees in the ordinary course of business. 
 Section 9.8 Fiscal Year and Accounting Changes. Borrower shall not (a) change its fiscal year, or (b) make any
significant change (i) in accounting treatment and reporting practices (except as permitted by GAAP), or (ii) in tax reporting treatment (except as required by law). 
 Section 9.9 Operations. Borrower shall not engage in any activity or introduce any major product that is substantially different
from or unrelated to the present business activities or products of Borrower (other than any activities or products that are complimentary or ancillary to the present Continuing Business activities or products of Borrower), or discontinue any
portion of Borrower’s present business activities (other than the Commercial Business) that constitutes a substantial portion thereof. 
 Section 9.10 Prohibition on Change in Control. Borrower shall not undergo a Change in Control. 
 Section 9.11 Subsidiaries. Borrower shall not create or acquire any Subsidiary unless such Subsidiary is organized under the laws of the United States and becomes a party to and bound by, as a
borrower, this Agreement and all other Loan Documents, as required by Lender. Any such Subsidiary that becomes a new borrower shall also cause Borrower to pledge all of such Subsidiary’s Capital Stock to Lender to secure the Obligations in a
form of agreement substantially similar to the Pledge Agreement. 
  

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 ARTICLE X 
 EVENTS OF DEFAULT 
 Section 10.1 Events of Default. The occurrence of
any of the following events shall constitute an “Event of Default” under this Agreement: 
 (a) Borrower shall fail
to pay any amount of principal (and such failure is not cured within three days) or interest (and such failure is not cured within five days) owed pursuant to the Note when due, or Borrower shall fail to pay any other amount payable by Borrower
under this Agreement or any other the Loan Document when due (and such failure is not cured within 30 days); 
 (b) Any
representation or warranty made by Borrower under or in connection with this Agreement or any Loan Document shall prove to have been incorrect in any material respect when made; 
 (c) Borrower shall fail to perform or observe (i) any covenant set forth in Section 7.8, Section 7.10, Article VIII
(subject to Section 8.5) or Article IX, or (ii) any other covenant, obligation or term hereunder or under any of the Loan Documents and such failure is not cured within 30 days of the earlier of Lender’s written notice
thereof or Borrower becoming aware of such failure; 
 (d) Borrower shall (i) fail to pay when due (after any applicable
grace period) any amount payable in respect of any Indebtedness (including undrawn, committed, or available amounts and including amounts owing to all creditors under any combined or syndicated credit arrangement) exceeding $250,000 in principal
amount, unless the amount in question is subject to a bona fide dispute by Borrower and has not been determined by a court, arbitrator, or other finder of fact to be owed by Borrower, or (ii) fail to observe or perform (after any applicable
notice or grace period) any term, covenant, or agreement evidencing or securing such Indebtedness, and the effect of such failure to observe or perform is to cause the acceleration of the maturity of such Indebtedness; 
 (e) A judgment or order for the payment of money in excess of $250,000 shall be entered against Borrower by any court, or a warrant of
attachment or execution or similar process shall be issued or levied against property of Borrower that in the aggregate exceeds $250,000 in value, the payment of which is not fully covered by insurance in excess of any deductibles not exceeding
$50,000 in the aggregate, and such judgment, order, warrant, or process shall continue undischarged or unstayed or unbonded for 60 days; 
 (f) Any occurrence or event that has a Material Adverse Effect; or 
 (g) Borrower
shall admit in writing its inability to pay its debts, or shall make a general assignment for the benefit of creditors; or any proceeding shall be instituted by Borrower in any jurisdiction seeking to adjudicate Borrower bankrupt or insolvent, or
seeking reorganization, arrangement, adjustment, or composition of Borrower or Borrower’s debt under any law relating to bankruptcy, insolvency, or reorganization or relief of debtors, or seeking appointment of a receiver, trustee, or other
similar official for Borrower for such part of

  

 -46- 

 
Borrower’s property as in the opinion of Lender (in Lender’s reasonable discretion) is a substantial part; or any such proceeding shall be instituted against Borrower that is not
dismissed within 60 days after the institution thereof, or Borrower shall take any corporate action to authorize any of the actions set forth above in this Section 10.1(g); or any Governmental Authority shall declare or take any action
that operates as a moratorium on the payment of debts of Borrower. 
 Section 10.2 Consequences of Default. If any
Event of Default shall occur and be continuing, then in any such case and at any time thereafter so long as any such Event of Default shall be continuing, Lender at its option (and without prior notice to Borrower) immediately may terminate its
commitment with respect to the Revolving Credit Facility. In addition, in the event of an uncured Event of Default, Lender at its option may declare the principal of and the interest on the Note and all other sums payable by Borrower under this
Agreement or under any of the Loan Documents to be immediately due and payable (with interest accruing thereon at the Default Rate), whereupon the same shall become immediately due and payable without protest, presentment, notice, or demand, all of
which Borrower expressly waives. Furthermore, upon the occurrence of an Event of Default pursuant to Section 10.1(g) of this Agreement, all of the Obligations immediately shall be due and payable (with interest accruing and payable thereon at
the Default Rate) and Lender’s commitment in respect of the Revolving Credit Facility shall terminate. 
 Section 10.3
Remedies. Upon the occurrence of an Event of Default, Lender from time to time may exercise any rights and remedies available to it under the Uniform Commercial Code and any other applicable law in addition to, and not in lieu of, any rights
and remedies expressly granted in this Agreement, or in any of the other Loan Documents. 
 ARTICLE XI 
 MISCELLANEOUS AND GENERAL TERMS AND CONDITIONS 
 Section 11.1 Remedies Cumulative. No failure by Lender to exercise any right, power, or remedy under this Agreement, or any Loan Document, and no delay by Lender in exercising any right,
power, or remedy under this Agreement or any Loan Document, shall operate as a waiver thereof, nor shall any single or partial exercise of any right, power, or remedy under this Agreement or any Loan Document preclude any other or further exercise
thereof, or the exercise of any other right, power, or remedy. The exercise of any right, power, or remedy shall in no event constitute a cure or waiver of any Event of Default under this Agreement, the Note, or the other Loan Documents, or the
right of Lender to exercise any right under this Agreement, the Note, or any of the other Loan Documents, unless, in the exercise of such right, all obligations of Borrower under this Agreement, the Note, and the other Loan Documents are paid in
full. The rights and remedies provided in this Agreement and the other Loan Documents are cumulative and not exclusive of any right or remedy provided by law. Time is of the essence and the provisions of this Agreement, the Note, and the other Loan
Documents shall be enforced strictly. 
  

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 Section 11.2 Governing Law. This Agreement, the Note, and the other Loan
Documents shall be governed by and construed in accordance with the laws of Washington, without regard to conflicts of law principles. 
 Section 11.3 Consent to Jurisdiction and Venue, Waiver of Immunities. Each party hereto hereby irrevocably submits to the jurisdiction and venue of any state or federal court sitting in Vancouver, Washington, in any action or
proceeding brought to enforce or otherwise arising out of or relating to this Agreement, the Note, or any other Loan Document. Each party hereto irrevocably waives to the fullest extent permitted by law any objection that each such party now or
hereafter may have to the laying of venue in any such action or proceeding in any such forum, and hereby further irrevocably waive any claim that any such forum is an inconvenient forum. Each party hereto agrees that a final judgment in any such
action or proceeding shall be conclusive and may be enforced in any other jurisdiction by suit on the judgment, or in any other manner provided by law. Nothing in this Agreement shall impair the right of Lender to bring any action or proceeding
against Borrower, or Borrower’s property, in the courts of any other jurisdiction, and Borrower irrevocably submits to the nonexclusive jurisdiction of the appropriate courts of the jurisdiction in which Borrower is incorporated, or any court
sitting in any place where property or an office of Borrower is located. 
 Section 11.4 Notices. All notices and
other communications provided for in this Agreement shall be in writing and shall be sent (unless otherwise specified) by e-mail, certified mail, return receipt requested (with postage prepaid) or delivered to each party at the following addresses,
or at such other address as shall be designated by such party in a written notice to each other party: 
  

	 	Lender:	Bank of the West 

 222 S.W.
Columbia Street, Suite 1200 
 Portland, Oregon 97201 
 Attention: Sean Edwards, Vice President 
 E-mail: Sean.Edwards@bankofthewest.com 
 with a copy (which shall not constitute
notice to Lender) to: 
 Miller Nash LLP 
 Suite 3500 
 111 S.W. Fifth Avenue 
 Portland, Oregon 97204 
 Attention: Clifton Molatore 
 E-mail: Clifton.Molatore@millernash.com 
  

	 	Borrower:	Nautilus, Inc. 

 16400 S.E.
Nautilus Drive 
 Vancouver, Washington 98683 
 Attention: Alec Anderson 
 E-mail: aanderson@nautilus.com 
  

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 with a copy (which shall not constitute notice to Borrower) to: 
 Kirkland & Ellis LLP 
 300 N. LaSalle Street 
 Chicago, Illinois 60602 
 Attention: Jocelyn Hirsch 
 E-mail: Jocelyn.hirsch@kirkland.com 
 Except as otherwise specified, e-mail notice shall be effective upon receipt confirmed in
writing, and all other notices and communications if duly given or made shall be effective upon receipt. 
 Section 11.5
Assignment. This Agreement shall be binding upon and inure to the benefit of the parties and their respective Successors and permitted assigns. Borrower may not assign or otherwise transfer all or any part of Borrower’s rights or
obligations under this Agreement, the Note, or any of the other Loan Documents without the prior, written consent of Lender (which consent may be withheld by Lender in its sole and absolute discretion), and any such assignment or transfer purported
to be made by Borrower without such consent shall be ineffective. Lender at any time, with the prior written consent of Borrower (which consent shall not be unreasonably withheld or delayed and shall not be required during the continuance of an
Event of Default), may assign or otherwise transfer all or any part of Lender’s interest under this Agreement, the Note, and the other Loan Documents (including assignments for security and sales of participations) to any Person and, to the
extent of such assignment, the assignee shall have the same rights and benefits as if such assignee were Lender. Borrower acknowledges and agrees that Lender may share such information regarding Borrower with a prospective assignee or transferee of
Lender’s interest in this Agreement, the Note, and the other Loan Documents as Lender reasonably deems appropriate, provided that the prospective assignee or transferee agrees in writing to maintain the confidentiality of such information.

 Section 11.6 Severability. Any provision of this Agreement, the Note, or any other Loan Document that is
prohibited or unenforceable in any jurisdiction shall as to such jurisdiction be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions of this Agreement, or affecting the validity or
enforceability of such provision in any other jurisdiction. To the extent permitted by applicable law, the parties to this Agreement waive any provision of law that renders any provision of this Agreement prohibited or unenforceable in any respect.

 Section 11.7 Waiver of Jury Trial. EACH PARTY HERETO IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY
APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY (WHETHER BASED ON
CONTRACT, TORT, OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT, OR ATTORNEY OF ANY OTHER PERSON HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PERSON WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO
ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS
SECTION 11.7. 
  

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 Section 11.8 Indemnification of Lender by Borrower. Borrower agrees to indemnify
and hold harmless Lender, as well as Lender’s shareholders, directors, officers, agents, attorneys, Subsidiaries, and Affiliates, from and against all damages, losses, settlement payments, obligations, liabilities, claims, suits, penalties,
assessments, citations, directives, demands, judgments, actions, or causes of action, whether statutorily created or under the common law, all reasonable out-of-pocket costs and expenses (including, without limitation, attorneys’ fees), and all
other liabilities whatsoever (including, without limitation, liabilities under Environmental Laws) that at any time or times shall be incurred, suffered, sustained, or required to be paid by any such indemnified Person (except any of the foregoing
to the extent that they result from the bad faith, gross negligence or willful misconduct of any indemnified Person) on account of, in relation to, or in any way in connection with any of the arrangements or transactions contemplated by, associated
with, or ancillary to this Agreement, any of the other Loan Documents, or any other documents executed or delivered in connection herewith or therewith, all as the same may be amended from time to time. In any investigation, proceeding, or
litigation, or the preparation therefor, Lender shall select its own counsel and, in addition to the foregoing indemnity, Borrower agrees to pay promptly the reasonable out-of-pocket fees and expenses of such counsel. In the event of the
commencement of any such proceeding or litigation, Borrower shall be entitled to participate in such proceeding or litigation with counsel of Borrower’s choice at Borrower’s own expense, provided that such counsel shall be satisfactory to
Lender, in Lender’s reasonable discretion. The provisions of this Section 11.8 of this Agreement shall survive payment (or satisfaction of payment) of all amounts owing with respect to the Note or any other Loan Document. 
 Section 11.9 Waiver of Consequential Damages. To the fullest extent permitted by applicable law, Borrower hereby agrees not to
assert, and Borrower hereby waives, any claim against any indemnitee under Section 11.8 of this Agreement on any theory of liability for special damages, indirect damages, consequential damages, or punitive damages (as opposed to direct or
actual damages) arising out of, in connection with, or as a result of, this Agreement, any other Loan Document, or any agreement or instrument contemplated hereby, the transactions contemplated hereby or thereby, any Revolving Loan, or the use of
the proceeds thereof. 
 Section 11.10 Payments Set Aside. To the extent any payments in respect of the Obligations
(or any proceeds of any Collateral, including, but not limited to, any proceeds received by Lender as a result of any enforcement proceeding or setoff), or any part thereof, subsequently are invalidated, declared to be fraudulent or preferential,
set aside, or required to be repaid to a trustee, receiver, or any other Person under any law or equitable cause, then, to the extent of such repayment (including any such repayment made voluntarily by Lender in its reasonable discretion), the
Obligation or part thereof originally intended to be satisfied, and all rights and remedies therefor, shall be revived and shall continue in full force and effect, and Lender’s rights, powers, and remedies under this Agreement and the Loan
Documents shall continue in full force and effect, as if such payment had not been made, or such enforcement proceeding or setoff had not occurred. In such event, each Loan Document automatically shall be reinstated and Borrower shall take such
action as reasonably may be requested by Lender to effect such reinstatement. 
  

 -50- 

 Section 11.11 Waiver of Various Matters; No Suretyship Defenses. Borrower hereby
waives demand, protest, notice of protest, notice of default (except to the extent specifically and expressly required under this Agreement or the other Loan Documents) or dishonor, notice of payment and nonpayment, nonpayment at maturity, release,
compromise, settlement, extension, modification, amendment, or renewal of documents, instruments, chattel paper, and guarantees at any time held by Lender on which Borrower may in any way be liable. Borrower acknowledges and agrees that its
obligations to repay the amounts owed pursuant to the Note and this Agreement are direct and unconditional. Borrower hereby waives any claim that it is merely a surety in respect of the Obligations and Borrower hereby waives any rights or defenses
that are (or might be) available to a surety in relation to this Agreement, the Note, the other Loan Documents, and the Obligations. 
 Section 11.12 USA Patriot Act Notice. Lender hereby notifies Borrower that pursuant to the requirements of the USA Patriot Act (Title III of Pub. L. 107-56 (signed into law October 26, 2001)) (the “Patriot
Act”), Lender is required to obtain, verify, and record information that identifies Borrower, which information includes the name and address of Borrower and other information that will allow Lender to identify Borrower in accordance with the
Patriot Act. 
 Section 11.13 Entire Agreement. This Agreement, the Note, and the other Loan Documents set forth and
constitute the entire agreement among Lender and Borrower with respect to the Revolving Loans evidenced by the Note and the security for those Revolving Loans. No oral promise or agreement of any kind or nature, other than those that have been
reduced to writing and have been set forth in this Agreement, the Note, or the other Loan Documents, has been made among Lender and Borrower with respect to the Revolving Loans evidenced by the Note and the security for those Revolving Loans.
Borrower acknowledges that Borrower has been represented by legal counsel in connection with the negotiation and execution of this Agreement and the other Loan Documents. Borrower voluntarily executed this Agreement and the other agreements and
instruments referred to in this Agreement. 
 Section 11.14 Amendment. This Agreement, the Note, and the other Loan
Documents may be amended or modified only by a written agreement signed by authorized representatives of Borrower and Lender that by its terms expressly supersedes, modifies, amends, or alters this Agreement (or another Loan Document, as
applicable). 
 Section 11.15 Interpretation. This Agreement is a negotiated agreement. In the event of any
ambiguity in this Agreement, such ambiguity shall not be subject to a rule of contract interpretation that would cause the ambiguity to be construed against any of the parties to this Agreement. 
 Section 11.16 Waiver. No waiver of any provision of this Agreement, the Note, or the other Loan Documents by Lender, or consent
by Lender to any failure by Borrower to comply with any provision of this Agreement, the Note, or the other Loan Documents shall be effective unless the same shall be in writing and signed by Lender, and then such waiver or consent shall be
effective only in the specific instance and for the specific purpose for which given. 
  

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 Section 11.17 Standard for Discretion. In the event this Agreement is silent on
the standard for any consent, approval, determination, or similar discretionary action by Lender, the standard shall be sole and unfettered discretion. 
 Section 11.18 Headings. The headings of the various provisions of this Agreement are for convenience of reference only, do not constitute a part of this Agreement, and shall not affect the
meaning or construction of any provision of this Agreement. 
 Section 11.19 Construction. In the event of any
conflict between the terms, conditions, and provisions of this Agreement and those of any other document or instrument referred to in this Agreement, the terms, conditions, and provisions of this Agreement shall control. 
 Section 11.20 Statutory Notice. UNDER WASHINGTON LAW, ORAL AGREEMENTS OR ORAL COMMITMENTS TO LOAN MONEY, EXTEND CREDIT, OR TO
FORBEAR FROM ENFORCING REPAYMENT OF A DEBT ARE NOT ENFORCEABLE. 
 [Remainder of page intentionally left blank.]

  

 -52- 

 IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the day and year
first written above. 
  

									
	BORROWER:	 		 	LENDER:
			
	NAUTILUS, INC.	 		 	BANK OF THE WEST
					
	By:	 	 /s/ Kenneth Fish
	 		 	By:	 	 /s/ Sean Edwards

		 	Kenneth Fish, Chief Financial Officer	 		 		 	Sean Edwards, Vice President

  

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