Exhibit 10.5

CONFIDENTIAL SETTLEMENT AGREEMENT

THIS SETTLEMENT AGREEMENT (the “Agreement”) is entered into this 5th day of May
, 2008, by and between Land America Health and Fitness Co. Ltd., Treuriver
Investments Limited, Michael C. Bruno, and Yang Lin Qing (hereinafter
“Claimants”) and Nautilus, Inc. (“Nautilus” or “Respondents”) (collectively, the
“Parties”). Claimants and Nautilus are parties to several agreements and
understandings in relation to the proposed acquisition by Nautilus of the assets
of Land America Health and Fitness Co. Ltd and Treuriver Investments and other
issues related to Nautilus’ proposed acquisition, ownership, and operation of
fitness equipment business and assets of Claimants (hereinafter the
“Transaction.”). The Parties enter into this Agreement in settlement of any and
all claims, known or unknown, including but not limited to those that are, or
could have been, related to the Transaction, including any and all such claims
relating to the failure of the Transaction to close (hereinafter defined below
as “Released Claims”.)

1. Payment. Nautilus shall pay to Claimants the gross sum of $8,000,000.00
[eight million dollars and no/100] (“Settlement Payment”) on June 15, 2008.
Payment shall be made in accordance with Paragraph 2 below.

2. Payment Method. Nautilus will issue a check in the amount of $8,000,000.00 to
[insert]. Nautilus will have no further obligation or liability with respect to
the Settlement Payment or any portion thereof. Claimants acknowledge and agree
that they consulted with tax, legal and other professionals of their own
choosing prior to instructing Nautilus to disburse the Settlement Payment in the
manner provided herein, and that Nautilus has not provided them with any advice
regarding those instructions. Claimants also acknowledge and agree that Nautilus
has no responsibility, implied or otherwise, with regard to the manner of
payment of the Settlement Payment, and in particular that Nautilus is not
responsible for any past, present or future, known or unknown, tax consequences,
penalties (civil and/or criminal), loss, and/or liability of any kind
whatsoever, that may result from Nautilus’s making the Settlement Payment in the
manner provided for herein or from the receipt by any person of any portion of
such Settlement Payment.

3. Releases. In consideration of the Settlement Payment and for other good and
valuable consideration, the receipt of which is hereby acknowledged, Claimants
each hereby release Nautilus and each of the Additional Released Parties from
all Released Claims and Nautilus hereby releases Claimants from all Released
Claims.

(a) “Released Claims” means and includes any and all covenants, controversies,
agreements, promises, claims, demands, causes of action, actions, suits, rights,
liabilities, payments or penalties, damages, and attorneys’ fees and costs,
whatsoever, at law or in equity or otherwise, whether direct or indirect, known
or unknown, foreseen or unforeseen, anticipated or unanticipated, or suspected
or unsuspected, which either party now owns or holds, or has at any time
heretofore owned or held, against the other party, in any capacity, which:
(i) were or could have been alleged in any lawsuit or other proceeding arising
out of the Transaction or the failure of the Transaction to close; (ii) are or
may be based upon any facts, acts, omissions, representations, events,
agreements, or matters of any kind occurring or existing at any time on or
before the date of this Agreement relating to the Transaction; or (iii) relate
in any way, directly or indirectly, to the Transaction. Without limiting the
generality of the foregoing, “Released Claims” include, but are not limited to,
claims for: monetary and equitable relief; breach of express and implied
contract or warranty; loss of profits or revenue; rebates; breach of the
covenant of good faith and fair dealing; frivolity; costs or expenses incurred
in

 

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reliance on, or in anticipation of, the fact that the Transaction would close;
fraud; punitive damages under any theory; attorney fees; costs or expenses
including those of any consultants or service providers retained by Claimants;
and any all claims under any of the contracts or agreements relating to the
Transaction under the laws of any state or country.

(b) “Additional Released Parties” means and includes all of Nautilus’ past and
present shareholders, officers, directors, agents, employees, representatives,
attorneys, insurers, employee benefit plans, parents, subsidiaries, consultants,
affiliates, predecessors, successors, transferees, assigns, and related entities
thereof, and all past and present shareholders, officers, directors, agents,
employees, marital communities, representatives, and attorneys of any of those
persons and entities.

(c) Claimants represent, warrant and agree that: (i) they understand that they
are releasing potentially unknown claims; (ii) these releases are fairly and
knowingly made with the advice of counsel and/or other professionals (including
without limitation tax professionals); (iii) they are aware that they may have
limited knowledge with respect to certain of the Released Claims; and (iv) they
have specifically assumed the risk of any mistake in entering into this
Agreement.

(d) Upon the complete execution of this Settlement Agreement and payment of the
amounts set forth in Paragraph 2, the Parties agree that their counsel shall no
legal proceeding or arbitration proceeding shall be filed by any party with
reference to the Transaction or the failure of that transaction to close.

(e) Notwithstanding the foregoing, these releases do not extend to any claims
that arise out of this Agreement.

4. No Admission of Liability. The parties agree that the payment of the
Settlement Payment represents a full and complete settlement of any and all
disputed claims. Such payment and the execution of the Agreement do not
represent and are not to be construed as an admission of liability on the part
of Nautilus or any of the Additional Released Parties.

5. No Other Claims or Assignment of Claims. Claimants represent on behalf of
themselves that none of them has not filed or initiated any lawsuit, arbitration
or other proceeding of any kind against Nautilus, or any of the Additional
Released Parties, that has not been dismissed or otherwise completely
terminated, and further represent that Claimants solely own and have not
assigned or given to anyone any Released Claim they have, or ever had or claimed
to have, against Nautilus or any of the Additional Released Parties.

6. Confidentiality. Claimants and Nautilus agree to keep confidential the terms
of this Agreement, and not reveal, disclose, convey, discuss, relay, or in any
other manner permit to be known by any other person or entity, either directly
or indirectly, in whole or in part, any of the terms of this Agreement. Subject
to the exceptions listed below, Claimants may only disclose to third persons the
fact that the parties resolved their dispute pursuant to a confidential
settlement agreement. The only exceptions to this covenant of confidentiality
are that the Parties may disclose the terms of this Agreement to their attorneys
and accountants for legitimate business purposes, where necessary to enforce the
provisions of this Agreement, or where otherwise required by law, so long as
such persons also agree to abide by this covenant. Claimants also warrant and
represent that they have not already made any disclosure that violates the
letter or spirit of this covenant of confidentiality.

 

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7. Independent Legal Counsel. The Parties acknowledge, represent and agree that
they: (i) have read this Agreement; (ii) fully understand its terms; (iii) have
been fully advised by legal counsel and/or other professionals (including tax
professionals); and (iv) have had the opportunity to participate in the drafting
of this Agreement. The Parties waive the general rule of construction that an
agreement is to be construed against its drafter.

8. Each Party to Bear Own Fees, Costs and Expenses. Nautilus and Claimants,
respectively, are solely responsible for all costs, expenses and fees of their
own counsel or of any other costs, fees or expenses they have incurred in
connection with or arising from this dispute.

9. Binding on Successors. This Settlement Agreement shall be binding upon the
parties and their heirs, executors, administrators, successors, and assigns.

10. Integrated Agreement. This Settlement Agreement contains the entire
agreement and understanding of the parties hereto and is intended to be a
complete, integrated contract. No party knows of any undertaking, agreement or
promise not contained fully within the terms of this Settlement Agreement. No
party is entering into this Agreement in reliance on any oral or written
promises, inducements, representations, understandings, interpretations or
agreements other than those contained in this Agreement. This Agreement may be
modified only by a written addendum signed by each party.

11. Miscellaneous. The Agreement is governed by Washington law, without giving
effect to principles or provisions of those laws relating to conflicts or choice
of laws. The Parties agree that the state and federal courts located in
Washington shall have exclusive jurisdiction and venue over any dispute arising
out of or in relation to this Agreement. The Agreement is binding upon, and
inures to the benefit of, the Parties and their respective heirs, legatees,
representatives, successors, transferees and assigns.

12. Facsimile and Counterparts Execution. This Agreement may be executed in any
number of separate or counterpart originals. The Parties also agree that
facsimile signatures and executed facsimile copies of the Agreement shall be
treated as original and shall be binding; and the parties further agree that the
executed facsimile copies shall be promptly replaced by original signed copies
of the Agreement.

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The persons signing this Agreement declare under the penalty of perjury and the
laws of the state of Washington and the state in which they sign this Agreement,
that they are authorized to sign this document and agreement on their own behalf
and on behalf of the entities that they represent, and that they sign it as
their free and voluntary act and deed.

 

NAUTILUS, INC.     [Claimant Parties] By         By     Its         Its    

 

[Claimant Parties]     [Claimant Parties] By         By     Its         Its    

 

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