EMPLOYMENT AGREEMENT

This Employment Agreement (this ?Agreement?) is entered into as of January 14, 2004, by and between The Nautilus Group, Inc., a Washington corporation (the ?Company? or ?Employer?), and Darryl Thomas (?Employee?). In consideration of the premises and the mutual covenants and agreements hereinafter set forth, the Company and Employee hereby agree as follows:

1. Employment. Employee is being hired as Senior Vice President of Strategic Planning. Employee shall (a) devote his professional entire time, attention, and energies to his position, (b) use his best efforts to promote the interests of Employer; (c) perform faithfully and efficiently his responsibilities and duties, and (d) refrain from any endeavor outside of his employment which interferes with his ability to perform his obligations hereunder. Employee shall report to the President and Chief Executive Officer, and/or such other persons as may be designated by Employer, and perform his job duties subject to his general supervision, orders, advice and direction. Employee shall perform the duties normally associated with the position and/or such duties as delegated and assigned by the Company. Subject to the provisions of Section 7(b) herein, the Company retains the sole discretion to change Employee?s position and/or duties as it deems appropriate.

Employee additionally agrees to abide by any general employment guidelines or policies adopted by Employer such as those detailed in an employer?s handbook, as such guidelines or policies may be implemented and/or amended from time to time.

2. Salary. As compensation for services to be rendered hereunder, the Company shall pay Employee an initial annual salary in the gross amount of Two hundred twenty thousand dollars ($220,000). Said salary will be paid in accordance with the Company?s existing payroll policies, and shall be subject to normal and/or authorized deductions and withholdings. Employee will be eligible to receive an annual bonus up to forty-percent (40%) of Employee?s base salary. The amount of such bonus (if any) is determined at the discretion of the Company. Employee shall also be entitled to receive a one-time bonus payment in the gross amount of $100,000 payable on Employee obtaining residency in the state of Washington, from which normal and/or authorized deductions and withholdings may be made. Said bonus payments will vest in 1/24th increments over a 2 year period beginning in January 2004. Should employee resign from the Company between January 2004 and January 31, 2006 he will re-pay a pro rata amount of that bonus for any remaining time that he is no longer employed prior to January 31, 2006. For example, should employee resign after 11 months, he will repay the Company 13/24ths of the gross bonus amount to reflect that fact that she resigned 13 months before fulfilling the 24 month employment commitment.

3. Stock Options. Pursuant to the Company?s current Stock Option Plan (the ?Plan?), the Company shall recommend that Employee receive options (?Options?) to purchase 25,000 shares of Employer?s stock at a price of $13.59 per share. The terms of any option grant shall be governed by the Plan and a Stock Option Agreement (the ?Option Agreement?). Employee acknowledges that any stock options granted do not, and will not, constitute wages or

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