Document:

adro-ex102_221.htm

Exhibit 10.2

 

 

		
	

	
 

 

TERMINATION AGREEMENT

 

Parties:

 

This Agreement ("Agreement") is made between:

 

	
I.
	
Aduro Biotech Holdings, Europe B.V., a private company with limited liability incorporated under the laws of the Netherlands, having its registered address at Kloosterstraat 9 RX1101, 5349 AB Oss ("Employer");

 

	
II.
	
Aduro Biotech, Inc.  with its registered office in Berkeley, USA ("Aduro Biotech, Inc."); and

 

	
III.
	
Andrea van Elsas, residing at Oss, (5343 JL) Russbroecgaarde 193, the Netherlands ("Employee").

 

hereinafter jointly referred to as "the Parties".

 

Recitals:

 

	
A.
	
Employee has been employed by Employer on the basis of the employment agreement as of 30 October 2015 ("Employment Agreement") and the addendum to the employment agreement of 4 October 2017 (the "Addendum");

 

	
B.
	
Employee currently holds the position of Chief Scientific Officer of Aduro Biotech, Inc. (“CSO”) for a gross annual salary of € 385,848.00 (including 8% holiday allowance and excluding other emoluments) on a full-time basis;

 

	
C.
	
Employee has been appointed as a board member (statutair bestuurder) of the Employer effective as per 1 May 2014;

 

	
D.
	
Parties have agreed to terminate the Employment Agreement in connection with the Employer’s corporate restructuring, which includes closure of the Aduro Biotech Europe headquarters in Oss. No urgent cause ex art. 7:677/678 Dutch Civil Code exists, and Employee is not to blame for this termination;

 

	
E.
	
the Parties wish to formalize the termination of the Employment Agreement and all other arrangements between the Parties in relation thereto and wish to arrange the effects of the termination of the Employment Agreement between them and the matters that will arise as a consequence thereof in this settlement agreement ("Agreement");

 

	
F.
	
this Agreement intends to depict all terms and conditions of the settlement, as well as any dispute which may arise in the future;

 

	
G.
	
Employee has obtained legal counsel prior to executing this Agreement; and

 

	
H.
	
for the purpose of clause 7 of this Agreement Aduro Biotech Inc. is also a party to this Agreement,

 

It is hereby agreed as follows:

 

	
1.
	
Termination date

 

	
1.1
	
The Parties terminate the Employment Agreement by mutual consent on 1 July 2020 (the "Termination Date") without any additional legal act being required.

	
1.2
	
Employee resigns as CSO and board member (statutair bestuurder) under the articles of association of the Employer (by signing the attached template form resignation letter (see Annex I)), effective as of June 30, 2020. As of the same date Employee's corporate responsibility for Employer will end. At the request of the shareholder of Employer (the "Shareholder"), Employee will execute each and every instrument considered necessary to effectuate such resignation. This provision will be reasonably considered to create third party rights for the benefit of the Shareholder.

 

 

 

			
	
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Employee
	
 
	
Employer

 

 

	
2.
	
Severance

 

	
2.1
	
To or for the benefit of Employee an amount of € 385, 848.00 gross will be paid within a month after the Termination Date, which figure shall be considered to include the severance benefits in connection with his termination pursuant to the Aduro Biotech, Inc.'s Amended and Restated Severance Plan with effective date December 9, 2016 ("Severance Plan"). Furthermore, Employee shall be awarded his statutory severance (transitievergoeding) in the amount of € 66,293,37.

 

	
2.2
	
With respect to the amounts referred to in this article, Employer will make the usual withholdings for payroll taxes (loonheffing) as required under the applicable tax legislation. All current and future income tax (inkomstenbelasting) consequences thereof, if any, are for the account of Employee. Employer will pay the net equivalent of the severance by remittance to Employee’s usual salary account within one month from the Termination Date.

 

	
3.
	
Full payment of salary

 

	
3.1
	
Until the Termination Date, Employee will be entitled to his actual salary and emoluments, unless provided otherwise in this Agreement.

 

	
3.2
	
Employee will continue to carry out his duties loyally and to the best of his abilities until the Termination Date, including but not limited to closing ABE and supporting the sale or other disposition of its assets to third parties, and transferring CMC/QA activities to Berkeley, as well as support the [*] and investor relations matters as chief scientific officer.

 

	
4.
	
Final settlement

 

	
4.1
	
As per the Termination Date, a final settlement of accounts (eindafrekening) will be made within one month after the Termination Date, taking into account the provisions of this Agreement and the relevant provisions of Dutch law. 

 

	
4.2
	
Employee will be deemed to have used up all his vacation entitlements by the Termination Date and hereby waives any right to compensation for any not used vacation entitlement.

 

	
4.3
	
With respect to the final settlement of accounts, Employer will make the usual withholdings for payroll taxes (loonheffing) as required under the applicable tax legislation. Employer will pay the net equivalent of the final settlement of accounts by remittance to Employee's usual salary account within one month from the Termination Date. 

 

	
5.
	
Company property

 

	
5.1
	
Ultimately on the Termination Date, Employee will return as included in section 18 of the Employment Agreement, in good condition to Employer all items in Employee’s possession which belong to Employer or any of its group companies or which Employee has in connection to Employer (including without limitation the entrance tag and laptop, as well as all documents and  Data Carriers (as defined in article 16 of the Employment Agreement) and other data carriers containing information relating to Employer's business), irrespective of the fact whether these documents/data carriers originated from Employer, from Employee or from third parties. By signing this Agreement the Employee declares that he will not keep any copies of the mentioned items.

 

	
5.1
	
In deviation of Article 5.1, Employee will be allowed to keep his mobile phone and Employee will be allowed to retain his mobile telephone number. Employer will provide the necessary assistance to transfer the mobile telephone number into the name of Employee at the costs of Employee.

 

	
5.2
	
In relation to the return of property as included in section 18 of the Employment Agreement, the corresponding penalty clause included in section 19 of the Employment Agreement remains in effect. 

 

	
6.
	
No bonus 

 

	
6.1
	
Employee will not be entitled to any bonus over 2020 and will not be entitled to receive the annual prorated (discretionary) bonus over the year 2020 or any other bonus in accordance with or under the Severance Plan. 

 

	
7.
	
Equity Incentive Plan

 

	
7.1
	
Employee participates in Aduro Biotech, Inc.'s 2015 Equity Incentive Plan ("EIP"). Employee's entitlements in this respect are subject to terms and conditions as laid down in the EIP. As the termination of the Employment is being treated as not "for Cause" within the meaning of both the EIP and the Severance Plan, section III (a) (2) (i) "Accelerated Vesting of Stock Awards") of the Severance Plan applies.  The letter agreement dated January 27, 2020 with respect to an extended time period for you to exercise any vesting options under the EIP applies.

 

 

			
	
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Employee
	
 
	
Employer

 

 

	
8.
	
Post-contractual provisions 

 

	
8.1
	
 After the Termination Date any clause in the Employment Agreement that by its nature is intended to survive termination will remain in full force and effect (e.g. section 14 (confidentiality), 16 (data carriers), 17.2, 17,3 and 17.4 (non-solicitation and non-poaching) and section 13 and Annex 2 (Proprietary information and inventions agreement of 30 October 2015).

 

	
8.2
	
After the Termination Date the penalty clause included section 19 of the Employment agreement that corresponds with the post-contractual provisions included article 8.1 of this Agreement will remain in full force and effect.

 

	
9.
	
Legal expenses incurred by Employee

 

	
9.1
	
Employer shall – upon submission of the itemized invoice which has been made out in the name of the Employee – pay a contribution to the Employee of not more than € 3,500 which includes disbursements and office expenses and excludes VAT, as its share of the costs incurred by Employee for legal assistance.

 

	
10.
	
Communication

 

	
10.1
	
Parties to this Agreement shall in the future (continue to) conduct themselves with respect to the other party within the confines of generally accepted standards of behavior. The Parties to this Agreement will refrain from any statements that may be detrimental to (the good reputation of) the other party. 

 

	
11.
	
Confidentiality

 

	
11.1
	
Employer and Employee shall not disclose and keep strictly confidential any information to any third party regarding the existence or the contents of this Agreement, except to their legal advisor(s) or in cases where there is a statutory obligation to do so.

 

	
12.
	
Discharge

 

	
12.1
	
Upon compliance with each provision in this Agreement, each party grants the other a full and final discharge (finale kwijting) with respect to the Employment Agreement (including the Addendum and the Severance Plan), the termination thereof or any employment related claim. For the sake of completeness, it is noted that this discharge should be regarded as a general release as is required under clause II b of the Severance Plan. This discharge also applies to all other entities associated with Employer. 

 

	
12.2
	
The final discharge of article 12.1 of this Agreement is not applicable to the discharge of the Employee as director of the Employer. Employer shall use its best efforts to have the Shareholder adopt a resolution granting discharge (décharge) in the next (extraordinary) shareholders’ meeting to Employee for the performance of Employee's duties as board member of Employer up to and including the Termination Date, to the extent that the Shareholder has knowledge (wetenschap) of such performance and hence subject to the condition that no facts and circumstances will become known to the Shareholder after the date of issuing such discharge, which would have been ground for not granting such discharge. Employer nor Employee are aware of facts or circumstances that may stand in the way of this discharge being granted.

 

	
13.
	
Final provisions

 

	
13.1
	
This Agreement constitutes the final and entire agreement between the Parties with respect to the termination of the Employment Agreement between them. Except as set forth in article 9 of this Agreement, this Agreement replaces all previous agreements, which are therefore no longer valid.

 

	
13.2
	
If one or more articles or parts of articles of this Agreement are declared partially or totally null, the other provisions will not be affected by the nullity and will consequently retain their validity

 

	
13.3
	
The Parties consider this Agreement to be a “vaststellingsovereenkomst” within the meaning of article 7:900 Dutch Civil Code.

	
13.4
	
The Parties hereby waive their respective rights to rescind this Agreement or have this Agreement rescinded, irrespective of the nature of the breach of contract (“tekortkoming in de nakoming”).

 

	
13.5
	
This Agreement is construed in accordance with and shall be governed by the laws of the Netherlands.

 

[signature page follows]

 

			
	
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Employee
	
 
	
Employer

 

 

As agreed upon on [date] April 2020 and signed in twofold by:

 

 

 

					
	
 
	
/s/ Blaine Templeman
	
 
	
/s/ Andrea van Elsas
	
 

	
Employer:
	
Aduro Biotech Holdings, Europe B.V.
	
 
	
Employee: Andrea van Elsas
	
 

	
by:
	
B. E. Templeman
	
 
	
 
	
 

	
capacity:
	
Corporate Development Head, Chief Legal

Officer, Secretary
	
 
	
 
	
 

 

 

				
	
place:
	
 
	
place:
	
 

	
date:
	
 
	
date:
	
 

 

 

			
	
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Employer

 

 

ANNEX I

 

Private & Confidential

 

 

Aduro Biotech Holdings, Europe B.V.

Kloosterstraat 9

5349 AB Oss

 

[date] April 2020

 

Dear Sirs,

 

I hereby resign as a managing director (statutair bestuurder) of Aduro Biotech Holdings, Europe B.V. (the Company). My resignation is to be effective as of June 30, 2020.

 

I hereby acknowledge that I will have no claim against the Company on any account or have, or have had, any claims against the Company relating to my appointment as managing director with the Company or the termination thereof. In addition, I confirm that vice versa I shall be unconditionally granted full and final discharge as director at the next (extraordinary) shareholders meeting (under the assumption that currently no facts or circumstances are currently known (or you could have reasonably be familiar with) that would obstruct a discharge).

 

Please arrange for particulars of my resignation to be filed at the Chamber of Commerce (Kamer van Koophandel) in the Netherlands.

 

 

Yours faithfully,

 

 

Mr Andrea van Elsas

 

 

 

/s/ Andrea van Elsas____

 

 

 

			
	
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Employera2015ltipamended

                                             NAUTILUS, INC.                       AMENDED AND RESTATED 2015 LONG-TERM INCENTIVE PLAN  1.     PURPOSE  The purpose of the Nautilus, Inc. 2015 Long-Term Incentive Plan (the “Plan”) is to advance the interests of Nautilus, Inc., a  Washington  corporation  (“Nautilus”),  and  its  Subsidiaries  (Nautilus  and  its  Subsidiaries  hereinafter  collectively,  the  “Corporation”),  by  enhancing  the  Corporation's  ability  to  attract  and  retain  highly  qualified  personnel  and  directors  and  aligning  the  long-term  interests of participants with those of shareholders. This Plan permits the grant of stock options, stock  appreciation rights, restricted stock, performance units and stock units, each of which shall be subject to such conditions based  upon continued employment, passage of time or satisfaction of performance criteria as shall be specified pursuant to the Plan.   2.     DEFINITIONS         (a)     “Administrator” means the officer or officers of the Corporation appointed by the Committee to perform certain                Plan ministerial functions pursuant to subsection 3(b).         (b)     “Award” means a Stock Option, Stock Appreciation Right, Restricted Stock, Performance Unit or Stock Unit                granted to a Participant pursuant to the Plan.         (c)     “Award  Agreement”  means  (as  applicable)  an  Option Agreement,  an  SAR Agreement,  a  Restricted  Stock                Agreement, a Stock Unit Agreement and/or a Performance Unit Agreement.         (d)     “Board of Directors” means the Board of Directors of Nautilus.         (e)     “Change in Control” means either: (a) the sale, liquidation or other disposition of all or substantially all of the                Company’s assets; (ii) a merger or consolidation of the Company with one or more corporations as a result of                which, immediately following such merger or consolidation, the shareholders of the Company as a group hold                less than a majority of the outstanding capital stock of the surviving corporation; or (iii) any person or entity,                including any “person” as such term is used in Section 13(d) (3) of the Securities Exchange Act of 1934, as                amended (the “Exchange Act”), becomes the “beneficial owner” as defined in the Exchange Act, of shares of                the Common Stock representing fifty percent (50%) or more of the combined voting power of the voting securities                of the Company.         (f)     “Cause” means (i) Participant’s indictment or conviction in a court of law for any felony that in the Company’s                reasonable judgment makes Participant unfit for continued employment, prevents Participant from performing                Participant’s duties or other obligations or adversely affects the reputation of the Company if Participant remained                in Participant’s position; (ii) dishonesty by Participant related to Participant’s employment that has an adverse                effect on the Company; (iii) violation of a key Company policy, the employment agreement, offer letter or the                Business Protection Agreement between Participant and the Company (including, but not limited to, acts of                harassment or discrimination, use of or being under the influence of unlawful drugs on the Company’s premises                or  while  performing  duties  on  behalf  of  the  Company)  that  has  an  adverse  effect  on  the  Company;                (iv) insubordination (i.e. conduct such as refusal to follow direct orders of the Participant’s manager), provided,                however, conduct based on adherence to legal requirements (i.e. tax and securities laws) shall not constitute                insubordination; (v) Participant’s failure to perform minimum duties after warning and failure to correct to the                Company’s reasonable satisfaction; (vi) Participant’s competition with the Company, diversion of any corporate                opportunity or other similarly serious conflict of interest or self dealing incurring to Participant’s direct or indirect                benefit and the Company’s detriment; or (vii) intentional or grossly negligent conduct by Participant that is                injurious to the Company or its affiliates after warning and failure to correct to the Company’s reasonable                satisfaction.         (g)     “Code” means the Internal Revenue Code of 1986, as amended from time to time and any successor thereto,                the Treasury Regulations promulgated thereunder and other relevant interpretive guidance issued by the Internal                Revenue Service or Treasury Department. Any reference to a section of the Code shall be deemed to include                such regulations and guidance and any successor provision of the Code.         (h)     “Committee” means the Compensation Committee of Nautilus.                                                      1

 

(i)     “Common Stock” means the common stock, without par value, of Nautilus authorized for issuance by Nautilus.  (j)     “Exchange Act” means the Securities Exchange Act of 1934, as amended from time to time. Any reference to a         section of the Exchange Act shall include any successor provision of the Exchange Act.  (k)     “Executive Officer” means any “officer” of Nautilus as such term is defined in Rule 16a· I under the Exchange         Act.  (l)     “Fair Market Value” means, with respect to any given date, the value of a Share determined as follows:          (1)    If the Common Stock is publicly traded and is then listed on a national securities exchange, its closing                price on the date of determination on the principal national securities exchange on which the Common                Stock is listed or admitted to trading, as reported in The Wall Street Journal or such other source as the                Committee deems reliable (or, if there are no reported sales on such date, on the last date prior to such                date on which there was a reported sale);          (2)    If the Common Stock is publicly traded but is neither listed nor admitted to trading on a national                securities exchange, the average of the closing bid and asked prices of a Share as reported in The Wall                Street Journal, or as quoted by an established quotation service for over-the-counter securities, or as                reported by such other source as the Committee deems reliable, and if there is no such reported price                for the Common Stock for the date in question, then such price on the last preceding date for which                such price exists shall be determinative of Fair Market Value; or          (3)    If none of the foregoing is applicable, by the Committee in good faith and in a manner that satisfies                Code Sections 409A and 422(c)(1), as applicable.  (m)     “Incentive Stock Option” or “ISO” means a Stock Option designated as, and qualified as, an “incentive stock         option” within the meaning of Code Section 422.  (n)     “Nonqualified Stock Options” or “NSO” means a Stock Option other than an Incentive Stock Option.  (o)     “Option Agreement” means the document(s) evidencing the Award of a Stock Option.  (p)     “Outside Director” means a member of the Board of Directors who is not otherwise an employee of the         Corporation.  (q)     “Participants” means those individuals who hold unexercised Awards and any authorized transferee of such         individuals.  (r)     “Performance Period” means the period described in subsection l0(d) during which a Performance Unit Award         is earned.  (s)     “Performance-Based Award” means an Award that vests only upon the satisfaction of one or more of the         Qualifying Performance Criteria specified in subsection 11(b).  (t)     “Performance Unit” means and Award granting the right to receive Shares or cash upon achievement of certain         goals related to performance as stated in a Performance Unit Agreement.  (u)     “Performance Unit Agreement” means the document(s) evidencing a Performance Unit Award.  (v)     “Plan” means the Nautilus, Inc. 2015 Long Term Incentive Plan as stated in this document and any amendments         to it.  (w)     “Qualifying Performance Criteria” has the meaning set forth in subsection l l(b).  (x)     “Restricted Stock Award” means an Award of Shares, the grant, issuance, retention, vesting, termination and/or         forfeiture of which is subject to the terms and conditions stated in a Restricted Stock Agreement.  (y)     “Restricted Stock Agreement” means the document(s) evidencing an Award of Restricted Stock.                                               2

 

       (z)     “SAR Agreement” means the document(s) evidencing a Stock Appreciation Right Award.         (aa)    “Share” means a share of Common Stock or the number and kind of shares of stock or other securities which                shall be substituted or adjusted for such shares as provided in Section 12.         (ab)    “Stock Appreciation Right” or “SAR” means a right to receive, in cash or stock (as determined by the Committee),                an amount, with respect to a specific number of Shares, equal to or otherwise based on the excess of:                 (1)    The market value of a Share at the time of exercise over;                 (2)    The exercise price of the right, subject to the terms and conditions stated in the SAR Agreement.         (ac)    “Stock Option” means a right to purchase a number of Shares at such exercise price, at such times, and on such                 other terms and conditions as are specified in or determined pursuant to the Option Agreement. The Committee                 may grant Stock Options intended to qualify as Incentive Stock Options and Stock Options that are Nonqualified                 Stock Options, as the Committee, in its sole discretion, shall determine.         (ad)    “Stock Unit Award” means an Award of a right to receive, in cash or stock (as determined by the Committee),                 the market value of one Share, the grant, issuance, retention, vesting, termination and/or forfeiture of which is                 subject to the terms and conditions stated in a Stock Unit Agreement.         (ae)    “Stock Unit Agreement” means the document(s) evidencing a Stock Unit Award.         (af)    “Subsidiary” means any corporation, partnership, joint venture, limited liability company or other entity in which                 at least 50% or more of the voting power or economic interests is owned, directly or indirectly, by Nautilus.  3.     ADMINISTRATION         (a)     Administration by the Committee or Board.                 (1)    Subject to paragraph (2) below, this Plan shall be administered by the Committee in accordance with                       its Charter.                 (2)    The Board of Directors, in its sole discretion, may exercise any authority of the Committee under this                       Plan in lieu of the Committee's exercise thereof and, in such instances, references in the Plan to the                       Committee shall refer to the Board of Directors.         (b)     Delegation.                 (1)    The  Board of Directors or the Committee may delegate to one or more separate committees (a                       “Subcommittee”) composed of one or more members of the Board of Directors who are Outside                       Directors (and who may but need not be members of the Committee) the ability to grant Awards and                       take the other actions described in subsection 3(c) with respect to any Participant who is not an Executive                       Officer, and such actions shall be treated for all purposes as if taken by the Committee.                 (2)    The Committee may delegate to an Executive Officer the authority to grant Awards within parameters                       established by the Committee to any Participant who is not an Executive Officer.                 (3)    Any action by any such Subcommittee or Executive Officer within the scope of such delegation shall                       be deemed for all purposes to have been taken by the Committee, and references in this Plan to the                       Committee shall include any such Subcommittee or Executive Officer.                 (4)    The Committee may delegate certain ministerial functions with respect to the administration of the                       Plan to an officer or officers of the Corporation (an “Administrator”) as follows:                        (A)     Subject to paragraphs (B) and (D) below, the Administrator(s) shall have the authority to:                                (i)    Execute and distribute documents, instruments and other agreements evidencing or                                      relating to Awards granted under this Plan;                                                      3

 

                       (ii)   To maintain records relating to the grant, vesting, exercise, forfeiture or expiration                               of Awards;                         (iii)  To process or oversee the issuance of Shares upon the exercise, vesting and/or                               settlement of an Award; and                         (iv)   To take such other actions as the Committee may specify.                 (B)     In no case shall any Administrator be authorized to grant Awards under the Plan or to take any                        discretionary actions with respect to the Plan or any Award, including, by way of example and                        not of limitation, interpreting the provisions of the Plan or any Award.                 (C)     Any action by any Administrator within the scope of its delegation shall be deemed for all                        purposes to have been taken by the Committee, and references in this Plan to the Committee                        shall include any such Administrator, provided that the actions and interpretations of any such                        Administrator shall be subject to final review and approval, disapproval or modification by                        the Committee.                 (D)     Notwithstanding anything to the contrary in this subsection 3(b), no power or authority may                        be delegated that is required by law, regulation or applicable stock exchange listing standards                        to be exercised by the Committee.  (c)     Powers of the Committee. Subject to the express provisions and limitations set forth in this Plan, the Committee         shall be authorized and empowered to do all things necessary or desirable, in its sole discretion, in connection         with the administration of the Plan, including, without limitation, the following:          (1)    To prescribe, amend and rescind rules, policies and practices relating to the administration of the Plan                and to define terms not otherwise defined in the Plan;          (2)    To determine which persons are Participants, to which of such Participants, if any, Awards shall be                granted under the Plan, and the timing of any such Awards;          (3)    To grant Awards to Participants and, subject to the terms of the Plan, determine the terms and conditions                of each Award, including the number of Shares covered by each Award, the exercise or purchase price,                and any terms or conditions relating to vesting, exercise, forfeiture or expiration, which terms may, but                need not be, conditioned upon the passage of time, continued employment, the satisfaction of                performance criteria, the occurrence of certain events or other factors, provided that in no event will                any portion of an Award become vested prior to the first anniversary of the date of grant of such Award                (except in the case of death or disability and except that up to 5% of the Shares authorized for grant                pursuant to Section 6(a) may be granted with a minimum vesting schedule of less than one year) and                provided that in no event will any portion of an Award become vested immediately prior to or upon a                Change in Control, except that each Award will become fully vested if the Participant holding the Award                is terminated by the Company for a reason other than Cause upon or within twelve (12) months following                the Change in Control;          (4)    To establish or verify the extent of satisfaction of any performance goals or other conditions applicable                to the grant, issuance, exercisability, vesting and/or ability to retain any Award;          (5)    To prescribe and amend the terms of the Award Agreements and related documents and instruments                pursuant to which Awards may be settled or exercised or beneficiaries may be designated;          (6)    To determine whether, and the extent to which, adjustments are required pursuant to Section 12;          (7)    To determine whether and to what extent an Award may be settled in cash, Shares, or a combination                thereof;          (8)    To interpret and construe the Plan, any rules, polices or procedures relating to the Plan and the terms                and conditions of any Award Agreement and related documents and instruments pursuant to which                                               4

 

                      Awards may be settled or exercised or beneficiaries may be designated, and to make exceptions to any                        such provisions in good faith and for the benefit of the Corporation; and                 (9)    To make all other determinations deemed necessary or advisable for the administration of this Plan.         (d)     Effect of Change in Status. The Committee shall have the discretion to determine the effect upon an Award of                a change in a Participant's employment status (including whether a Participant shall be deemed to have                experienced a termination of employment or other change in status), including the vesting, expiration or forfeiture                of an Award in the case of:                 (1)    Any individual who is employed by an entity that ceases to be a Subsidiary;                 (2)    Any leave of absence approved by the Corporation;                 (3)    Any transfer between locations of employment between Nautilus and any Subsidiary or between any                       Subsidiaries;                 (4)    Any change in the Participant's status from an employee to a consultant or member of the Board of                       Directors, or vice versa; and                 (5)    Any employee who at the request of the Corporation becomes employed by any partnership, joint                       venture, limited liability company, corporation or other entity that is not a Subsidiary.         (e)     Determinations of the Committee. All decisions, determinations and interpretations by the Committee                regarding this Plan shall be final, conclusive and binding on all persons, including, the Participants and any                other individual claiming benefits or rights under the Plan. Any dispute regarding the interpretation of the Plan                or any Award shall be submitted by the Participant to the Committee for review. The resolution of such a dispute                by the Committee shall be final, conclusive and binding on the Participant. The Committee shall consider such                factors as it deems relevant to making such decisions, determinations and interpretations including, without                limitation, the recommendations or advice of any attorneys, consultants and accountants as it may select.  4.     PARTICIPANTS  Awards under the Plan may be granted to:         (a)     Any employee of the Corporation;         (b)     Any non-employee member of the Board of Directors or the board of directors (or other governing body) of any                Subsidiary; and         (c)     Any non-employee consultant who provides services to the Corporation.  5.     EFFECTIVE DATE AND EXPIRATION OF PLAN         (a)     Effective Date. This Plan was approved by the Board of Directors on February 12, 2015 and became effective                on April 28, 2015 with shareholder approval at the 2015 Annual Meeting of the shareholders of Nautilus. The                amendment and restatement of this Plan was approved by the Board of Directors on March 19, 2020, subject to                shareholder approval at the 2020 Annual Meeting of the shareholders of Nautilus.         (b)     Expiration Date.                 (1)    The Plan shall remain available for the grant of Awards until the earlier of:                        (A)     April 28, 2025; or                        (B)     The date on which all Shares available for issuance under the Plan have been issued as fully                               vested Shares.                                                       5

 

               (2)    The expiration of the Committee's authority to grant Awards under the Plan will not affect the operation                       of the terms of the Plan or the Corporation's and Participants' rights and obligations with respect to                       Awards granted on or prior to the expiration date of the Plan.  6.     SHARES SUBJECT TO THE PLAN         (a)     Aggregate Limits.                 (1)    Subject to adjustment as provided in paragraph (2) below and in Section 12, the aggregate number of                       Shares that may be granted pursuant to Awards under the Plan is 3,300,000 plus any Shares reserved                       under Nautilus' 2005 Long-Term Incentive Plan, as amended, that are not subject to a grant on April                       28, 2015, or as to which the option award is forfeited on or after April 28, 2015. The Shares that may                       be granted pursuant to Awards under the Plan may include Shares reacquired by Nautilus (including                       Shares purchased in the open market) or authorized but unissued Shares. To the extent any Award is                       forfeited, terminates, expires or lapses instead of being exercised, is not earned in full or is settled in                       cash, the Shares subject to such Awards not delivered as a result shall again be available to be granted                       as Awards under this Plan. Notwithstanding anything to the contrary contained herein, the following                       Shares shall not be added to the Shares authorized for grant under this Section 6(a)(1) and shall not be                       available for future grants of Awards: (i) Shares tendered by a Participant or withheld by the Company                       in payment of the exercise price of an Option; (ii) Shares tendered by the Participant or withheld by                       the Company to satisfy any tax withholding obligation  with respect to an Award; (iii) Shares subject                       to a Stock Appreciation Right that are not issued in connection with the stock settlement of the Stock                       Appreciation Right on exercise thereof; and (iv) Shares purchased on the open market with the cash                       proceeds from the exercise of Options.                 (2)    The aggregate number of Shares available for issuance under the Plan shall be reduced by 1.5 Shares                       for each Share delivered in settlement of any SAR, Restricted Stock, Stock Unit or Performance Unit                       Award, and one (I) Share for each Share delivered in settlement of a Stock Option Award.         (b)     Limitations on Grants.                 (1)    The aggregate number of Shares subject to Stock Options or Stock Appreciation Rights granted under                       this Plan during any calendar year to any one Participant shall not exceed 1,000,000.                 (2)    The aggregate number of Shares subject to Restricted Stock or Stock Unit Awards granted under this                       Plan during any calendar year to any one Participant shall not exceed 1,000,000.                 (3)    Notwithstanding anything to the contrary in this Plan, the limitations in paragraphs (1) and (2) above                       shall be subject to adjustment under Section 12, but only to the extent that such adjustment will not                       affect the status of any Award intended to qualify as “performance-based compensation” within the                       meaning of Code Section 162(m).                 (4)    The aggregate number of Shares issued pursuant to Incentive Stock Options granted under the Plan                       shall not exceed 1,000,000, which limitation shall be subject to adjustment under Section 12 only to                       the extent that adjustment is allowable under Code Section 422.  7.     PLAN AWARDS         (a)     Award Types. The Committee is authorized to grant the following Awards under the Plan provided that their                terms and conditions are not inconsistent with the provisions of the Plan:                 (1)    Stock Options, pursuant to the terms and conditions of a Stock Option Agreement.                 (2)    Stock Appreciation Rights, pursuant to the terms and conditions of an SAR Agreement.                 (3)    Restricted Stock, pursuant to the terms and conditions of a Restricted Stock Agreement.                 (4)    Stock Units, pursuant to the terms and conditions of a Stock Unit Agreement.                                                       6

 

               (5)    Performance Units pursuant to the terms and conditions of a Performance Unit Agreement.         (b)     Grants of Awards; Designation as Performance-Based Awards.                 (1)    Awards may be granted separately or in tandem or in the alternative.                 (2)    The Committee, in its discretion, may designate any Award as a Performance- Based Award and                       designate in the Award Agreement the Qualifying Performance Criteria upon which the grant or vesting                       of the Award is conditioned.  8.     STOCK OPTIONS AND SARS         (a)     The Committee may grant Stock Options or SARs only to those eligible individuals described in Section 4 who                are selected by the Committee as Participants.         (b)     No Participant shall have any rights as a shareholder with respect to any Shares subject to Stock Options 6r                SARs under the Plan until the Shares have been issued.         (c)     Each Stock Option or SAR shall be evidenced only by an Option Agreement or SAR Agreement approved by                the Committee and executed by the Committee and the Participant. Each Stock Option grant will expressly                identify the Stock Option as an ISO or as a Nonqualified Stock Option. Awards of Stock Options or SARs granted                pursuant to the Plan need not be identical, but each must contain or be subject to the following terms and                conditions:                 (1)    Price. The exercise price of each Stock Option or SAR granted under the Plan shall be established by                       the Committee and set forth in the applicable Option Agreement or SAR Agreement. The exercise price                       per Share shall not be less than l00% of the Fair Market Value of a Share on the date of grant. The                       exercise price of a Stock Option shall be paid in cash or in such other form if and to the extent permitted                       by the Committee, including without limitation, by delivery of already-owned Shares with an aggregate                       value equal to the exercise price, withholding (either actually or by attestation) of Shares with an                       aggregate value equal to the exercise price otherwise issuable under such Stock Option and/or by                       payment under a broker•assisted  sale and remittance program acceptable to the Committee.                 (2)    No Repricing. Other than in connection with a change in the capitalization of Nautilus (as described                       in Section 12), in no event may any Stock Option or SAR without shareholder approval be amended                       to decrease the exercise price, be cancelled in exchange for cash or other Awards or in conjunction with                       the grant of any new Stock Option or SAR with a lower exercise price, or otherwise be subject to any                       action that would be treated as a “repricing” of such Stock Option or SAR under applicable stock                       exchange listing standards or accounting standards.                 (3)    Duration, Exercise and Termination of Stock Options and SARs. Each Stock Option or SAR shall                       be exercisable at such times and in such installments during the period prior to the expiration of the                       Stock Option or SAR as determined by the Committee and set forth in the Option Agreement or SAR                       Agreement. The Committee may make the exercise of any Stock Option or SAR subject to continued                       employment, the passage of time and/or such performance requirements as deemed appropriate by the                       Committee and set forth in the Option Agreement or SAR Agreement. At any time after the grant of a                       Stock Option or SAR, the Committee may reduce or eliminate any restrictions on the Participant's right                       to exercise all or part of the Stock Option or SAR. Upon exercise of a Stock Option or SAR, settlement                       and payment shall occur at the time(s) and in the manner set forth in the applicable Option Agreement                       or SAR Agreement.                 (4)    Termination of Employment. The Option Agreement or SAR Agreement may provide for the forfeiture                       or cancellation of the Stock Option or SAR, in whole or in part, in the event of the Participant's                       termination of employment or service. In all cases, the Option Agreement or SAR Agreement shall                       provide that vesting shall cease in the event of the Participant's termination of employment or service.                 (5)    Conditions and Restrictions Upon Securities Subject to Stock Options or SARs. Subject to the express                       provisions of the Plan, the Committee may provide in the Option Agreement or SAR Agreement that                       the Shares issued upon exercise of a Stock Option or SAR shall be subject to such further conditions                                                      7

 

                      or agreements as the Committee in its discretion may specify, including without limitation, conditions                        on vesting or transferability, forfeiture or repurchase provisions, provided that in no event will any                        portion of a Stock Option or SAR become vested prior to the first anniversary of the date of grant of                        such Stock Option or SAR (except in the case of death or disability and except that up to 5% of the                        Shares authorized for grant pursuant to Section 6(a) may be granted with a minimum vesting schedule                        of less than one year) and provided that in no event will any portion of a Stock Option or SAR become                        vested immediately prior to or upon a Change in Control, except that each Stock Option or SAR will                        become fully vested if the Participant holding the Stock Option or SAR is terminated by the Company                        for a reason other than Cause upon or within twelve (12) months following the Change in Control.                 (6)    Settlement of SARs. Settlement of SARs upon exercise may be satisfied through cash payments, the                       delivery of Shares, or a combination thereof, as the Committee shall determine.                 (7)    Other Terms and Conditions. Option Agreements and SAR Agreements may also contain such other                       provisions, which shall not be inconsistent with any of the foregoing terms, as the Committee shall                       deem appropriate, provided that no Option Agreements or SAR Agreements may have reload features                       under which the exercise of an Option or SAR by a Participant automatically entitles the Participant                       to a new Option or SAR.                 (8)    ISOs. Stock Options intending to qualify as ISOs shall be subject to the following conditions:                        (A)     ISOs may be granted only to employees of Nautilus or a “subsidiary corporation” of Nautilus                               within the meaning of Code Section 424(f).                        (B)     No Stock Option intended to qualify as an ISO shall be granted to any person if, immediately                               after the grant of such Award, such person would own stock, including stock subject to                               outstanding Awards held by that person under the Plan or any other plan established by the                               Corporation, amounting to more than I0% of the total combined voting power or value of all                               classes of stock of the Corporation.                        (C)     The aggregate Fair Market Value of the Common Stock (determined at the time of grant) for                               which ISOs are exercisable for the first time by the Participant during any calendar year, under                               all of the plans of the Corporation under which Incentive Stock Options may be issued, may                               not exceed $100,000.                        (D)     To the extent a Stock Option that, by its terms, is intended to be an Incentive Stock Option                               exceeds this $100,000 limit, the portion of the Stock Option in excess of such limit shall be                               treated as a Nonqualified Stock Option.                        (E)     To the extent that the Option Agreement specifies that a Stock Option is intended to qualify                               as an ISO, the provisions of the Option Agreement shall be construed and interpreted                               accordingly.  9.     RESTRICTED STOCK AND STOCK UNITS         (a)     The Committee may grant Restricted Stock or Stock Units only to those eligible individuals described in Section                4 who are selected by the Committee.         (b)     Awards of Restricted Stock or Stock Units shall be evidenced by Restricted Stock Agreements or Stock Unit                Agreements approved by the Committee and executed by the Committee and the Participant. Awards of Restricted                Stock or Stock Units granted pursuant to the Plan need not be identical, but each must contain or be subject to                the following terms and conditions:                 (1)    Mandatory Terms and Conditions. Each Restricted Stock Agreement and Stock Unit Agreement shall                       contain provisions regarding:                        (A)     The number of Shares granted under the Award or a formula for determining such;                                                       8

 

       (B)     The purchase price of the Shares, if any, and the means of payment for the Shares;         (C)     If the Award is a Performance-Based Award, the Qualifying Performance Criteria, if any, and                level of achievement versus these criteria that shall determine the number of Shares granted,                issued, retainable and/or vested;         (D)     Such other terms and conditions relating to the grant, issuance, vesting and/or forfeiture of                the Shares as determined by the Committee, to the extent not inconsistent with this Plan,                provided that in no event will any portion of Restricted Stock or Stock Units become vested                prior to the first anniversary of the date of grant of such Restricted Stock or Stock Units (except                in the case of death or disability and except that up to 5% of the Shares authorized for grant                pursuant to Section 6(a) may be granted with a minimum vesting schedule of less than one                year) and provided that in no event will any portion of Restricted Stock or Stock Units become                vested immediately prior to or upon a Change in Control, except that Restricted Stock and                Stock Units will become fully vested if the Participant holding the Restricted Stock or Stock                Units is terminated by the Company for a reason other than Cause upon or within twelve (12)                months following the Change in Control;         (E)     Restrictions on the transferability of the Shares, if any; and         (F)     Such further terms and conditions as may be determined from time to time by the Committee,                in each case not inconsistent with this Plan.  (2)    Sale or Award Price. Subject to the requirements of applicable law, the Restricted Stock Agreement        or Stock Unit Agreement shall set forth the price, if any, as determined by the Committee at which        Shares of Restricted Stock or Stock Units shall be sold or awarded to a Participant.  (3)    Share Vesting. The grant, issuance, retention and/or vesting of Shares under Restricted Stock or Stock        Unit Awards shall be at such time and in such installments as determined by the Committee or under        criteria established by the Committee, provided that in no event will any portion of Restricted Stock        or Stock Units become vested prior to the first anniversary of the date of grant of such Restricted Stock        or Stock Units (except in the case of death or disability and except that up to 5% of the Shares authorized        for grant pursuant to Section 6(a) may be granted with a minimum vesting schedule of less than one        year) and provided that in no event will any portion of Restricted Stock or Stock Units become vested        immediately prior to or upon a Change in Control, except that Restricted Stock and Stock Units will        become fully vested if the Participant holding the Restricted Stock or Stock Units is terminated by the        Company for a reason other than Cause upon or within twelve (12) months following the Change in        Control. The Committee shall have the right to make the timing of the grant and/or the issuance, ability        to retain and/or vesting of Shares under Restricted Stock or Stock Unit Awards subject to continued        employment, passage of time and/or such performance criteria and level of achievement versus these        criteria as deemed appropriate by the Committee, which criteria may be based on financial performance        and/or personal performance evaluations. Notwithstanding anything to the contrary in the Plan, the        performance criteria for any Restricted Stock Award or Stock Unit Award that is intended to satisfy the        requirements for “performance-based compensation” within the meaning of Code Section l62(m) shall        be measured based on one or more Qualifying Performance Criteria selected by the Committee and        specified at the time the Restricted Stock Award is granted.  (4)    Termination of Employment. The Restricted Stock Agreement or Stock Unit Agreement may provide        for the forfeiture or cancellation of the Restricted Stock or Stock Unit Award, in whole or in part, in        the event of the termination of employment or service of the Participant to whom it was granted. In all        cases, the Restricted Stock Agreement or Stock Unit Agreement shall provide that vesting shall cease        in the event of termination of employment or service of the Participant to whom it was granted.  (5)    Shareholder Rights. No Participant shall have any rights as a shareholder with respect to any Shares        subject to an Award of Stock Units under the Plan until said Shares have been issued. A Participant        shall have rights as a shareholder with respect to any Shares subject to a Restricted Stock Award under        the Plan only to the extent specified in this Plan or the Restricted Stock Agreement evidencing such        Award.                                        9

 

               (6)    Settlement of Stock Units. Upon expiration of the vesting period, settlement of Stock Units shall be                       made in Shares, cash or a combination thereof, as determined by the Committee, at the time(s) and in                       the manner set forth in the applicable Stock Unit Agreement. Until a Stock Unit is so settled, the number                       of Shares represented by a Stock Unit shall be subject to adjustment pursuant to Section 12.  10.    PERFORMANCE UNITS         (a)     General. The Committee may grant Performance Units only to those eligible individuals described in Section                4 who are selected by the Committee as Participants.         (b)     Awards. A Performance Unit may be awarded either alone or in addition to other Awards granted under the                Plan. The Committee shall determine the number of Performance Units granted to each Participant. Each                Performance Unit Award shall be evidenced by a Performance Unit Agreement approved by the Committee and                executed by the Committee and the Participant.         (c)     Settlement. The Performance Unit Agreement shall provide that Performance Units may be settled in Shares,                cash or a combination thereof, as determined by the Committee, at the time(s) and in the manner set forth in the                applicable Performance Unit Agreement. Until a Performance Unit is so settled, the number of Shares represented                by a Performance Unit shall be subject to adjustment pursuant to Section 12.         (d)     Performance Period and Criteria. The time period during which a Performance Unit Award shall be earned                shall be the “Performance Period,” and, except in the year in which the Plan is adopted, shall be at least the                length of one (I) fiscal year (whether of Nautilus or of any Subsidiary, determined in the discretion of the                Committee). Performance Units shall be subject to performance goals established by the Committee.                Notwithstanding anything to the contrary in the Plan, the performance criteria for any Performance Unit that is                intended to satisfy the requirements for “performance-based compensation” within the meaning of Code Section                162(m) shall be a measure based on one or more Qualifying Performance Criteria selected by the Committee                and specified in the Performance Unit Agreement.         (e)     Earning Performance Unit Awards. After the applicable Performance Period has ended, the Committee shall                determine the extent to which the established performance goals have been achieved.         (f)     Termination of Employment. The Performance Unit Agreement may provide for the forfeiture or cancellation                of the Performance Unit Award, in whole or in part, in the event of the termination of employment or service                of the Participant to whom it was granted. In all cases, the Performance Unit Agreement shall provide that vesting                shall cease in the event of termination of employment or service of the Participant to whom it was granted.  11.    OTHER PROVISIONS APPLICABLE TO AWARDS         (a)     Transferability. Unless the Award Agreement expressly states that the Award is transferable as provided under                the Plan, no Award granted under this Plan, nor any interest in such Award, may be sold, assigned, conveyed,                gifted, pledged, hypothecated or otherwise transferred in any manner prior to the vesting or lapse of any and all                applicable restrictions, other than by will or the laws of descent and distribution. The Committee may grant an                Award or amend an outstanding Award Agreement to provide that the Award is transferable or assignable:                 (1)    In the case of a transfer without the payment of any consideration, to any “family member” as such                       term is defined in Section A.1(a)(5) of the General Instructions to Form S-8 under the Securities Act                       of 1933, as amended from time to time;                 (2)    In any transfer described in clause (ii) of Section A.1(a)(5) of the General Instructions to Form S-8                       under the 1933 Act as amended from time to time, provided that, following the transfer or assignment,                       the Award will remain subject to substantially the same terms applicable to the Award while held by                       the Participant, as modified as the Committee shall determine appropriate, and as a condition to such                       transfer, the transferee shall execute an agreement agreeing to be bound by the terms; and                 (3)    In the case of a Stock Option intended to qualify as an ISO, only to the extent consistent with Code                       Section 422.                 Any purported assignment, transfer or encumbrance that does not qualify under this subsection shall be void                                                      10

 

        and unenforceable against the Corporation.  (b)     Qualifying Performance Criteria.          (1)    For purposes of this Plan, the term “Qualifying Performance Criteria” shall mean any one or more of                the following performance criteria, either individually, alternatively or in any combination, applied to                either the Corporation as a whole or to a business unit or Subsidiary, either individually, alternatively                or in any combination, and measured either annually or cumulatively over a period of years, on an                absolute basis or relative to a pre-established target, to previous years' results or to a designated                comparison group, in each case as specified by the Committee in the Award Agreement:                 (A)     Cash flow;                 (B)     Earnings per share;                 (C)     Earnings before interest, taxes and amortization;                 (D)     Return on equity;                 (E)     Total shareholder return;                 (F)     Share price performance;                 (G)     Return on capital;                 (H)     Return on assets or net assets;                 (I)     Revenue or revenue growth;                 (J)     Income or net income;                 (K)     Operating income or net operating income;                 (L)     Operating profit or net operating profit;                 (M)     Operating margin or profit margin;                 (N)     Return on operating revenue;                 (O)     Return on invested capital;                 (P)     Market segment share;                 (Q)     Product release schedules;                 (R)     New product innovation;                 (S)     Product cost reduction through advanced technology;                 (T)     Brand recognition/acceptance;                 (U)     Product ship targets; or                 (V)     Customer satisfaction.          (2)    The Committee  may adjust the performance goals and any evaluation of performance under any                Qualifying Performance Criteria to account for changes in law or accounting practices and to make                such adjustments the Committee deems necessary or appropriate to reflect the impact of extraordinary                                               11

 

               or unusual items, events or circumstances to avoid windfalls or hardships during a performance period,                 including without limitation:                 (A)     Asset write-downs;                 (B)     Litigation or claim judgments or settlements;                 (C)     The effect of changes in tax law, accounting principles or other such laws or provisions affecting                        reported results;                 (D)     Accruals for reorganization and restructuring programs;                 (E)     Any extraordinary non-recurring items as described in Accounting Standards Codification                        225-20 and/or in management's discussion and analysis of financial condition and results of                        operations appearing in the Corporation's annual report to shareholders for the applicable year;                        and                 (F)     Events either not directly related to Company operations or not under the reasonable control                        of Company management.          (3)    Notwithstanding satisfaction or completion of any Qualifying Performance Criteria, to the extent                specified at the time of grant, the number of Shares, Stock Options, SARs, Stock Units or other benefits                granted, issued, retainable and/or vested under an Award on account of satisfaction of such Qualifying                Performance Criteria may be reduced by the Committee on the basis of such further considerations as                the Committee in its sole discretion shall determine. However, such a reduction with respect to one                Participant may not result in an increase in the amount payable to another Participant.  (c)     Dividends. No adjustment shall be made in Shares issuable under the Award Agreement on account of cash         dividends that may be paid or other rights that may be issued to the holders of Common Stock prior to the         issuance or vesting of Shares under any Award. The Committee shall specify in the Award Agreement whether         dividends or dividend equivalent amounts shall be paid to any Participant with respect to the Shares subject to         the Award Agreement that are subject to any restrictions or conditions on the record date for dividends, provided         that in no event will unissued or unvested Shares under any Award receive dividends or dividend equivalent         amounts.  (d)     Award Agreements. The Committee shall, subject to applicable law, determine the date an Award is deemed         to be granted. The Committee may establish the terms of Award Agreements and related documents and may,         but need not, require as a condition to any such agreement's or document's effectiveness that such agreement or         document be executed by the Participant, including by electronic signature or other electronic indication of         acceptance, and that Participant agrees to such further terms and conditions as specified in such agreement or         document. The grant of an Award under this Plan shall not confer any rights upon the Participant holding such         Award other than such terms, and subject to such conditions, as are specified in this Plan as being applicable to         such type of Award (or to all Awards) or as are expressly set forth in the Award Agreement.  (e)     All Awards Subject to Company Clawback or Recoupment Policy. All Awards, subject to applicable law,         shall be subject to clawback or recoupment pursuant to any compensation clawback or recoupment policy adopted         by the Board of Directors or required by law during the term of Participant’s employment or other service with         the Company that is applicable to employees, Board of Director members or other service providers of the         Company, and in addition to any other remedies available under such policy and applicable law, may require         the cancellation of outstanding Awards and the recoupment of any gains realized with respect to Awards.  (f)     Additional Restrictions on Awards. Either at the time an Award is granted or by subsequent action, the         Committee may, but need not, impose such restrictions, conditions or limitations as it determines appropriate         as to the timing and manner of any resales by a Participant or other subsequent transfers by a Participant of any         Shares issued under an Award, including without limitation:          (1)    Restrictions under an insider trading policy;                                               12

 

               (2)    Restrictions designed to delay and/or coordinate the timing and manner of sales by the Participant or                       Participants; and                 (3)    Restrictions as to the use of a specified brokerage firm for such resales or other transfers.         (g)     Subsidiary Awards. In the case of a grant of an Award to any Participant who is employed by or a service                provider to a Subsidiary, such grant may, if the Committee so directs, be implemented by Nautilus issuing any                subject Shares to the Subsidiary, for such lawful consideration as the Committee may determine, upon the                condition or understanding that the Subsidiary will transfer the Shares to the Participant in accordance with the                terms of the Award specified by the Committee pursuant to the provisions of the Plan. Notwithstanding any                other provision hereof, such Award may be issued by and in the name of the Subsidiary and shall be deemed                granted on such date as the Committee shall determine.         (h)     Suspension or Termination of Awards Upon Misconduct.                 (1)    If at any time (including after a notice of exercise has been delivered) the Committee reasonably believes                       that a Participant, other than an Outside Director, has committed an act of misconduct as described                       below, the Committee may suspend the exercise, vesting and settlement, as applicable, of any Award                       granted to the Participant pending a final determination of whether such an act of misconduct has been                       committed. If the Committee determines a Participant, other than an Outside Director, has committed                       an act of misconduct, any Award granted to the Participant may, in the discretion of the Committee, be                       forfeited, in whole or in part.                 (2)    Any  determination by the Committee with respect to the foregoing shall be final, conclusive, and                       binding on all interested parties. For any Participant who is an Executive Officer, the determination of                       the Committee shall be subject to the approval of the Board of Directors.                 (3)    For purposes of this subsection, an “act of misconduct” means embezzlement, fraud, dishonesty in the                       performance of or willful neglect of job duties, nonpayment of any obligation owed to the Corporation,                       breach of fiduciary duty or deliberate disregard of Corporation rules, material breach of an agreement                       between the Participant and the Corporation, the unauthorized disclosure of any Corporation trade                       secret or confidential information, conduct constituting unfair competition, or inducing any customer                       to breach a contract with the Corporation, or any other conduct resulting in material (as determined by                       the Committee in its discretion) loss, damage or injury to the Corporation.  12.    ADJUSTMENT OF AND CHANGES IN THE COMMON STOCK         (a)     The existence of outstanding Awards shall not affect in any way the right or power of Nautilus or its shareholders                to make or authorize any or all adjustments, recapitalizations, reorganizations, exchanges, or other changes in                the capital structure or business of Nautilus, or any merger or consolidation of Nautilus or any issuance of Shares                or other securities or subscription rights thereto, or any issuance of bonds, debentures, preferred or prior                preference stock ahead of or affecting the Common Stock, the Shares or other securities of Nautilus or the rights                thereof, or the dissolution or liquidation of Nautilus, or any sale or transfer of all or any part of its assets or                business, or any other corporate act or proceeding, whether of a similar character or otherwise. Further, except                as expressly provided in the Plan or by the Committee unless the Committee determines, in its sole discretion,                that an adjustment is necessary or appropriate and is not inconsistent with applicable law, including Code Sections                409A and 424(h), no adjustment by reason thereof shall be made with respect to, the number of Shares subject                to any and all Awards previously granted or the exercise or purchase price per Share under such Awards because                of:                 (1)    The issuance by Nautilus of shares of stock or any class of securities convertible into shares of any                       class of stock, for cash, property, labor or services, upon direct sale, upon the exercise of rights or                       warrants to subscribe therefor, or upon conversion of shares or obligations of Nautilus convertible into                       such shares or other securities;                 (2)    The payment of a dividend in property other than Shares; or                 (3)    The occurrence of any similar transaction whether or not for fair value.                                                      13

 

       (b)     If the number of outstanding Shares of Nautilus for which the Award is then exercisable or as to which the Award                is to be settled shall at any time be changed or exchanged by declaration of a stock dividend, stock split, reverse                stock split, combination of shares, extraordinary dividend of cash and/or assets, recapitalization, reorganization                or any similar event affecting the capital structure of Nautilus or the number of Shares outstanding, the Committee                shall, subject to and consistent with the requirements of applicable law, including Code Sections 409A and                424(h), appropriately and equitably adjust the number and kind of Shares which are subject to this Plan or subject                to any Awards granted under the Plan, including Awards previously granted, and the exercise or settlement prices                of such Awards, so as to maintain the proportionate number of Shares without changing the aggregate exercise                or settlement price.         (c)     No right to purchase fractional Shares shall result from any adjustment of Stock Options or SARs pursuant to                this Section 12. In case of any such adjustment, the Shares subject to the Stock Option or SAR shall be rounded                down to the nearest whole share.         (d)     Any Award Agreement and related documents may include such terms relating to the effect of any merger,                reorganization or changes in control affecting Nautilus as the Committee determines in its discretion to be                appropriate, to the extent not inconsistent with Code Sections 409A and 424(h). Subject to any such terms, in                the event Nautilus is a party to a merger or other reorganization, outstanding Awards shall be subject to the                agreement of merger or reorganization. Such agreement may provide, without limitation, for the assumption of                outstanding Awards by the surviving corporation or its parent, for their continuation by Nautilus (if Nautilus is                a surviving corporation), for accelerated vesting and accelerated expiration, or for settlement in cash.  13.    LISTING OR QUALIFICATION OF COMMON STOCK  In the event that the Board of Directors determines in its discretion that the listing or qualification of the Shares available for  issuance under the Plan on any securities exchange or quotation or trading system or other consent or approval under any applicable  law or governmental regulation is necessary as a condition to the issuance of such Shares, a Stock Option or SAR may not be  exercised, in whole or in part, and a Restricted Stock Award, Stock Unit Award, Performance Unit Award, Stock Option or SAR  shall not vest unless such listing, qualification, consent or approval has been unconditionally obtained.  14.    TERMINATION OR AMENDMENT OF THE PLAN         (a)     The Board of Directors may amend, alter or discontinue the Plan, and the Board or the Committee may, to the                extent permitted by the Plan, amend any Award Agreement or other document relating to an Award made under                this Plan, provided, however, that Nautilus shall submit for shareholder approval any amendment (other than                an amendment pursuant to the adjustment provisions of Section 12) required to be submitted for shareholder                approval by the rules of any national securities exchange on which the Shares are listed for trading or that                otherwise would:                 (1)    Increase the maximum number of Shares for which Awards may be granted under this Plan;                 (2)    Reduce the price at which Stock Options may be granted below the price provided for in subsection                       8(c)(1);                 (3)    Reduce the exercise price of outstanding Stock Options;                 (4)    Extend the term of this Plan;                 (5)    Change the classes of persons eligible to be Participants (as described in Section 4); or                 (6)    Increase the limits provided for in Section 6.         (b)     In addition, no such amendment or alteration shall be made which would impair the rights of any Participant,                without such Participant's consent, under any Award theretofore granted, provided that no such consent shall be                required with respect to any amendment or alteration if the Committee determines in its sole discretion that such                amendment or alteration either:                 (1)    Is required or advisable in order for the Corporation, the Plan or the Award to satisfy or conform to any                       law or regulation or to meet the requirements of any accounting standard; or                                                     14

 

               (2)    ls not reasonably likely to significantly diminish the benefits provided under such Award or that any                       such diminishment has been adequately compensated.  15.    PARTICIPANTS IN FOREIGN COUNTRIES  The Committee shall have the authority to adopt such modifications, procedures and sub-plans as may be necessary or advisable  to comply with provisions of the laws of foreign countries in which the Corporation may operate.  16.    WITHHOLDING  To the extent required by applicable federal, state, local or foreign law, the Committee may and/or a Participant shall make  arrangements satisfactory to the Corporation for the satisfaction of any and all taxes, including any withholding tax or payroll tax  obligations, that arise with respect to any Award, the issuance of Shares or payment of cash upon exercise or settlement of an  Award or any sale of Shares. The Corporation shall not be required to issue Shares or to recognize the disposition of such Shares  until such tax obligations are satisfied. To the extent permitted or required by the Committee, these obligations may or shall be  satisfied by having the Corporation withhold a portion of the Shares of stock that otherwise would be issued to a Participant under  such Award or by tendering Shares previously acquired by the Participant.  17.    GENERAL PROVISIONS         (a)     Employment At Will. Neither the Plan nor the grant of any Award nor any action by Nautilus, any Subsidiary,                the Committee or any Administrator shall be held or construed to confer upon any person any right to be continued                in the employ of Nautilus or a Subsidiary. Nautilus and each Subsidiary expressly reserves the right to discharge,                without liability but subject to his or her rights under this Plan, any Participant whenever, in the sole discretion                of Nautilus or a Subsidiary, as the case may be, its interest may so require.         (b)     Governing Law. This Plan and any Award Agreements and other documents relating to Awards under the Plan                shall be interpreted and construed in accordance with the laws of the State of Washington and applicable federal                law. The Committee may provide that any dispute as to any Award shall be presented and determined in such                forum as the Committee may specify, including through binding arbitration. Any reference in this Plan, or in an                Award Agreement or related document, to a provision of law or to a rule or regulation shall be deemed to include                any successor law, rule or regulation of similar effect or applicability.         (c)     Unfunded Plan. Insofar as it provides for Awards, the Plan shall be unfunded. Although bookkeeping accounts                may be established with respect to Participants who are granted Awards under this Plan, any such accounts will                be used merely as a bookkeeping convenience. The Corporation shall not be required to segregate any assets                which may at any time be represented by Awards, nor shall this Plan be construed as providing for such                segregation, nor shall the Corporation or the Committee be deemed to be a trustee of stock or cash to be awarded                under the Plan.  18.    NON-EXCLUSIVITY OF PLAN  Neither the adoption of this Plan by the Board of Directors nor the submission of this Plan to the shareholders of the Corporation  for approval shall be construed as creating any limitations on the power of the Board of Directors or the Committee to adopt such  other incentive arrangements as either may deem desirable, including without limitation, the granting of stock options, stock  appreciation rights, restricted stock, stock units or performance units other than under this Plan, and such arrangements may be  either generally applicable or applicable only in specific cases.  19.    COMPLIANCE WITH OTHER LAWS AND REGULATIONS  This Plan, the grant and exercise of Awards under the Plan, and the obligation of the Corporation to sell, issue or deliver Shares  under such Awards, shall be subject to all applicable federal, state and local laws, rules and regulations and to such approvals by  any governmental or regulatory agency as may be required. The Corporation shall not be required to register in a Participant's  name or deliver any Shares prior to the completion of any registration or qualification of such Shares under any federal, state or  local law or any ruling or regulation of any government body which the Committee shall determine to be necessary or advisable.  To the extent the Corporation is unable (or the Committee deems it infeasible) to obtain authority from any regulatory body having  jurisdiction, which authority is deemed by the Corporation's counsel to be necessary to the lawful issuance and sale of any Shares                                                      15

 

under the Plan, the Corporation shall be relieved of any liability with respect to the failure to issue or sell such Shares as to which  such requisite authority shall not have been obtained. No Stock Option shall be exercisable and no Shares shall be issued and/or  transferable under any other Award unless a registration statement with respect to the Shares underlying such Stock Option or  Award is effective and current or the Corporation has determined that such registration is unnecessary.  20.    LIABILITY OF CORPORATION  The Corporation shall not be liable to a Participant or other persons as to:         (a)     The non-issuance or sale of Shares as to which the Corporation has been unable to obtain from any regulatory                body having jurisdiction the authority deemed by the Corporation's counsel to be necessary to the lawful issuance                and sale of any Shares under the Plan; and         (b)     Any tax consequence expected, but not realized, by any Participant or other person due to the receipt, exercise                or settlement of any Stock Option or other Award granted under the Plan.  21.    DESIGNATION OF BENEFICIARY  The Committee shall establish such procedures and prescribe such forms as it deems appropriate for a Participant to designate a  beneficiary to receive any amounts payable under an Award in the event of the Participant's death.                                                       16

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