Document:

Exhibit 10.2 Q1 14

EXHIBIT 10.2
NAUTILUS, INC.
STOCK UNIT AGREEMENT

THIS STOCK UNIT AWARD AGREEMENT (the “Agreement”), dated as of February 28, 2014 (the “Grant Date”), is made by and between Nautilus, Inc., a Washington corporation (the “Company”), through its Board of Directors or a Committee thereof (the “Administrator"), and Sidharth Nayar (the “Grantee”).
WHEREAS, the Company has adopted the Nautilus, Inc. 2005 Long Term Incentive Plan, as amended (the “Plan”), pursuant to which the Company may grant Stock Units; and
WHEREAS, the Company desires to give Grantee an opportunity to acquire or enlarge his equity ownership in the Company for the purpose of augmenting Grantee’s proprietary interest in the success of the Company and thereby focusing Grantees efforts on increasing shareholder value; and
WHEREAS, the Company wishes to award Stock Units to the Grantee as provided for herein;
NOW, THEREFORE, in consideration of the recitals and the mutual agreements herein contained, the parties hereto agree as follows:

1.    Grant of Stock Unit Award. 

1.1    In accordance with the Plan, the Company hereby grants the Grantee a Stock Unit Award (the “Award”) representing the right to receive shares of the Company’s common stock (“Shares”) with an aggregate value determined in accordance with this Agreement of One Hundred Thousand Dollars $100,000 (the “Award Amount”).  
 
1.2    The provisions of the Plan are hereby incorporated herein by reference. Except as otherwise expressly set forth herein, this Agreement shall be construed in accordance with the provisions of the Plan and any capitalized terms not otherwise defined in this Agreement shall have the definitions set forth in the Plan. 
1.3     The Administrator shall have final authority to interpret and construe the Plan and this Agreement and to make any and all determinations thereunder, and its decision shall be binding and conclusive upon Grantee and his/her legal representative in respect of any questions arising under the Plan or this Agreement.

2.    Vesting. 

2.1    The Award shall vest and become payable as to one third (1/3) of the total Award Amount on each of the first, second and third anniversaries of the Grant Date (each a “Vesting Date”).  On each Vesting Date, subject to Sections 2.2 through 2.4 below, Grantee shall be entitled to receive a number of Shares equal to the quotient obtained by dividing: (i) Thirty-Three Thousand Three Hundred Thirty-Three Dollars ($33,333) (the “Vesting Amount”) by (ii) the average daily closing sales price per Share on the New York Stock Exchange (or such other exchange or source of quotation on which the Shares are listed or quoted if the Shares are not then traded on the New York Stock Exchange) (the “Average Price”) for the twelve months preceding the applicable Vesting Date.

2.2    If (a) on or prior to the second anniversary of the Grant Date Grantee’s employment or service with the Company is terminated without Cause (as defined in the that certain Employment Agreement dated February 10, 2014 by and between Company and Grantee (the “Employment Agreement”)), or Grantee resigns for Good Reason (as defined in the Employment Agreement), or (b) Grantee’s employment or service with the Company is terminated as a result of Grantee’s death, then the unvested portion of the Award shall immediately become vested and Grantee shall be entitled to receive a number of Shares equal to the quotient obtained by dividing: (i) the unpaid portion of the Award Amount by (ii) the Average Price for the twelve months preceding the date of such termination.

2.3    Upon the occurrence of any Corporate Event (as defined below) the unvested portion of the Award shall immediately become vested and Grantee shall be entitled to receive a number of Shares equal to the quotient obtained by dividing: (i) the unpaid portion of the Award Amount by (ii) the Average Price for the twelve months preceding the day immediately prior to the effectiveness of the Corporate Event.  For purposes hereof, the term “Corporate Event” means the occurrence of any of the following events: (A) the sale, liquidation or other disposition of all or substantially all of the Company’s assets, other than to a related person (as described in Treas. Reg. 1.409A‐3(i)(5)(vii)(B)); (B) 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 (C) 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 Company’s common stock representing fifty percent (50%) or more of the combined voting power of the voting securities of the Company. 

2.4     Except as expressly provided in Section 2.2 and Section 2.3, if Grantee's employment or service with the Company terminates for any reason prior to a Vesting Date, then Grantee shall forfeit all rights, title, and interest in and to that portion of the Award which has not vested as of the date of such termination. Neither Grantee nor any of Grantee's successors, heirs, assigns or personal representatives shall have any rights or interests in any portion of the Award that is so forfeited.    

3.    Terms and Conditions of Award.

The Award shall be subject to the following terms, conditions and restrictions:

3.1    Prior to the issuance and delivery of Shares in settlement of the Award on a Vesting Date or pursuant to Sections 2.2 or 2.3 the Grantee shall have no rights as a stockholder of the Company, no dividend rights and no voting rights with respect to any Shares issuable pursuant to this Award.

3.2    The rights represented by this Award may not be transferred in any manner except as expressly permitted by the Plan. The terms of the Plan and this Agreement shall be binding upon the executors, administrators, heirs, successors and assigns of the Grantee.

4.    Delivery of Shares.    

4.1    As soon as administratively practicable after the date upon which any portion of the Award vests, and provided Grantee shall have paid the Withholding Liability to the Company pursuant to Section 5 hereof, the Company shall issue to Grantee or, at Grantee’s request, Grantee’s designated broker, the number of Shares determined in accordance with Section 2.1, Section 2.2 or Section 2.3, as applicable, free and clear of any restrictions in settlement of the vesting portion of the Award.

5.    Income Taxes.

5.1    The Grantee shall be liable for all applicable income and withholding taxes, including without limitation, any federal, state, local or other income taxes, or any FICA, state disability insurance tax or other employment tax (“Withholding Taxes”) with respect to any compensation income arising out of the award, vesting and settlement hereunder.

5.2    If the Company becomes obligated to withhold an amount on account of any Withholding Taxes imposed in connection with the vesting or settlement of the Award, Grantee shall, on the date the Shares are issued, or such other date upon which the Company becomes so obligated to withhold (the “Withholding Date”), pay such amount (the “Withholding Liability”) to the Company in cash or check payable to the Company. 

5.3    If Grantee does not pay such Withholding Liability to the Company on or before the Withholding Date, Grantee hereby authorizes the Company to withhold and/or reacquire from the earned award such number of whole shares as have an aggregate Fair Market Value on the date that the amount of tax to be withheld is to be determined as equals the amount of withholding tax so payable (the “Net Share Settlement”). Such withholding obligation shall be determined based on any applicable minimum statutory withholding rates. The Grantee will receive a cash refund for any fraction of a surrendered share not necessary for required Withholding Taxes.

5.4    In the event the Company cannot (under applicable legal, regulatory, listing or other requirements, or otherwise) satisfy such Withholding Liability in such methods as described in Sections 5.2 and 5.3, the Company may satisfy such withholding by deducting such amount out of any other compensation otherwise payable to the Grantee.  Grantee hereby consents to the Company withholding the full amount of the Withholding Liability from any compensation or other amounts otherwise payable to Grantee (including, without limitation, any Shares issuable in settlement of the Award) if Grantee does not pay the Withholding Liability to the Company on the Withholding Date, and Grantee agrees that the withholding and payment of any such amount by the Company to the relevant taxing authorities shall constitute full satisfaction of the Company’s obligation to pay such compensation of other amounts to Grantee. 

5.5    Regardless of any action the Company takes with respect to any or all Withholding Liability, the Grantee acknowledges and agrees that the ultimate liability for all Withholding Liability legally due from Grantee is and remains the Grantee’s responsibility.

		
	6.
	Miscellaneous Provisions.

6.1    Notices.  Any notices, designations, consents, offers, acceptances and any other communications required or permitted hereunder shall be given in writing and shall be delivered either personally or by registered or certified mail, postage prepaid, which shall be addressed, in the case of the Company to the principal office of the Company and, in the case of the Grantee, to the Grantee's address appearing on the books of the Company or to the Grantee's residence or to such other address as may be designated in writing by the Grantee.
6.2      Invalid Provision. The invalidity or unenforceability of any particular provision thereof shall not affect the other provisions hereof, and this Agreement shall be construed in all respects as if such invalid or unenforceable provision had been omitted.
6.3      Modifications. No change, modification or waiver of any provision of this Agreement shall be valid unless the same is in writing and signed by the parties hereto.
6.4     Entire Agreement. This Agreement sets forth the entire agreement and understanding of the parties with respect to the subject matter contained herein and supersedes all prior communications, representations and negotiations in respect thereto. 
6.5    Governing Law. This agreement shall be interpreted and construed in accordance with the laws of the State of Washington. 
 
    

IN WITNESS WHEREOF, the Company and the Grantee have executed this Stock Unit Award Agreement as of the date first set forth above.

NAUTILUS, INC.

By: /s/ Bruce Cazenave        
Name: Bruce Cazenave
Title: Chief Executive Officer

GRANTEE

/s/ Sidharth Nayar        
Sidharth NayarExhibit 10.3 Q1 14

EXHIBIT 10.3
July 26, 2013

PERSONAL AND CONFIDENTIAL

Jeffery Collins
2732 Broyles Lane
Franklin, TN 37069

Dear Jeff: 

This is to confirm the terms and conditions of your offer of employment with Nautilus, Inc. as Vice President, Retail Sales.  I have also enclosed a Business Protection Agreement that is part of the standard employment package. This letter is intended to highlight the material aspects of the offer and is contingent upon appropriate reference checks.  If accepted, we will enter into a standard employment agreement incorporating these terms.  

Your offer of employment with the Company will be on the following terms:

		
	1.
	Annual base salary in the amount of $200,000.

		
	2.
	An initial grant of 12,500 stock options in accordance with the terms of the Company’s 2005 Long Term Incentive Plan.  The stock options vest in equal annual amounts over three years.  You will be eligible for additional annual grants on the same basis as other similarly situated members of the management team.  

		
	3.
	Entitlement to a bonus in 2013 in the amount of 50% of your base salary earned in 2013, on the same basis as other members of the senior management team and premised on Company performance objectives and individual personal goals.  The short term incentive plan also allows you to earn an additional 50% of your target range if the Company exceeds its performance objectives which could result in a potential maximum, in total, of 75% of annual base salary earned.

		
	4.
	Severance benefits in the amount of 9 months upon relocation, reducing by one month for each calendar month of employment until the on-going level of 4 months is reached.  Severance includes base salary and continued health care benefits on the same basis as an active employee (and subject to regular employee contributions and deductions) for the severance period in the event you are terminated without cause.   

		
	5.
	Four weeks paid time off.

		
	6.
	A one-time signing bonus of $30,000 upon the beginning of employment.  The bonus will vest monthly in 1/12 increments beginning in your first month of employment and over the next 12 months.  Should you resign from the Company or be terminated for cause before 12 months of employment you agree to re-pay a pro rata amount of that bonus for any remaining time that you are no longer employed.  For example, if you begin employment on August 1, 2013 and you resign in February 2014, you will repay 6/12ths of the signing bonus to reflect the fact that you resigned 6 months before fulfilling the 12 month commitment. 

		
	7.
	A household goods allowance of up to $25,000.  Paid family travel for up to two house hunting trips in the Vancouver area.  Nautilus will also pay for temporary housing in the Vancouver area for up to three months.

Provided you satisfy eligibility criteria, you may participate in Nautilus, Inc.’s generally applicable benefit programs.  Details about current benefit programs, including policies concerning medical insurance coverage, are contained in the Company’s employee handbook and the Summary Plan Descriptions for those benefit plans.  A condition of your employment is complying with the guidelines set forth in the handbook as they are amended from time to time and with the terms of your employment application. Of course, all Company policies, including policies regarding medical coverage and other employee benefits, may be amended by the Company from time to time or discontinued, in the Company’s sole discretion.

Nautilus, Inc. generally obtains background information on all prospective employees, including in many instances reference checks, drug screening and a criminal background check.  As such, this offer of employment is contingent upon the Company completing these background checks without the disclosure of adverse information.   

This offer is also contingent upon your signing the following forms:
Business Protection Agreement:  This document refers to the non-disclosure of confidential information, ownership of inventions and contains certain non-compete protections.  The Company requires all employees to sign this document prior to employment.  This letter and the Business Protection Agreement constitute the entire agreement between you and the Company regarding your terms and conditions of employment and supersede and replace any prior agreement either written or oral.

Employment Eligibility Verification Form (Form I-9):  We are required by the Immigration Reform and Control Act of 1986 to have this form completed and on file for all Company employees. 

Further, you will be expected to comply with all rules, policies and procedures of the Company as they may be modified from time to time.

Should you have any questions concerning any part of the offer letter please contact me or Wayne M. Bolio. To confirm you acceptance of this offer, please sign the original of this letter where indicated and return to me.  If we are both in agreement, the Company will prepare a formal contract of employment which we will forward to you for your review and which will incorporate the terms of this offer letter.

Jeff, we have great expectations for the contributions you can bring to Nautilus.  We believe you will make an excellent addition to the Nautilus team and we look forward to you becoming part of our exciting future.  

Very truly yours,

/s/ William McMahon        
William McMahon 

Chief Operating Officer

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