NUTRISYSTEM, INC.

AMENDED AND RESTATED NUTRISYSTEM, INC.

2008 LONG-TERM INCENTIVE PLAN

PERFORMANCE-BASED RESTRICTED STOCK UNIT GRANT

Dawn Zier

This PERFORMANCE-BASED RESTRICTED STOCK UNIT GRANT (this "Grant"), dated as of
November __, 2012 (the "Date of Grant"), is delivered by NutriSystem, Inc. (the
"Company") to Dawn Zier (the "Grantee").

RECITALS

A. The Amended and Restated NutriSystem, Inc. 2008 Long-Term Incentive Plan (the
"Plan") permits the grant of performance-based restricted stock units that are
convertible into an equivalent number of shares of common stock of the Company,
par value $0.001 per share (the "Company Stock"), with the total number of
performance-based restricted stock units that may be earned and converted into
shares of Company Stock conditioned on the achievement of specified performance
goals and vesting conditions.

B. In satisfaction of the Company's commitment to issue performance-based
restricted stock units to the Grantee upon commencement of her employment, as
contained in the letter agreement between the Employer and the Grantee dated
November 1, 2012 (the "Employment Agreement"), the Compensation Committee (the
"Committee") of the Board of Directors of the Company (the "Board") has approved
this Grant.

NOW, THEREFORE, the parties to this Grant, intending to be legally bound hereby,
agree as follows:

    Grant of Performance-Based Restricted Stock Units
    . Subject to the terms and conditions set forth in this Grant and the Plan,
    the Company hereby grants to the Grantee
    [PRSUs with a grant date fair value of $300,000]
    performance-based restricted stock units (the "
    Performance Units
    "). The Performance Units are contingently awarded and will become vested
    and distributable if and only to the extent that the performance goals and
    other conditions set forth in this Grant are met. Each Performance Unit
    shall be a phantom right and shall be equivalent to one share of Company
    Stock on the applicable distribution date, as described in
    Paragraph 4
    below. The number of Performance Units set forth above is equal to the
    number of Performance Units that will vest upon achievement of the target
    level of performance (the "
    Target Award
    ").
    Acceptance of Grant
    . The Grantee hereby accepts this Grant and acknowledges that it satisfies
    the Company's commitment to issue performance-based restricted stock units
    to her upon commencement of her employment, as described in the Employment
    Agreement.
 1. Vesting.
     a. The Performance Units shall vest on December 31, 2015 (the "Service
        Date") to the extent determined based on the attached Exhibit A, if the
        Grantee remains in continuous service with the Employer through the
        Service Date. Any Performance Units that do not vest due to failure to
        fully satisfy the applicable performance goal shall be forfeited as of
        the Service Date and the Grantee shall not have any further rights with
        respect to those units.
     b. If the Grantee ceases to perform services for the Employer prior to the
        Service Date on account of a termination of the Grantee's employment or
        service due to her death or "disability" (as defined in the Employment
        Agreement), then subject to satisfaction of the requirements contained
        in the death and Disability provisions of the Employment Agreement
        regarding execution of a release and compliance with restrictive
        covenants, the Grantee shall become vested in a pro-rata portion of the
        Performance Units. The pro-rata portion shall be determined by
        multiplying (x) the Target Award by (y) a fraction, (I) the numerator of
        which is the number of days of continuous service performed by the
        Grantee for the Employer during the period beginning January 1, 2013 and
        ending on the Service Date (the "Performance Period"), and (II) the
        denominator of which is 1095. Any Performance Units that do not vest in
        connection with such death or Disability shall be forfeited as of the
        date the Grantee's service ceases and the Grantee shall not have any
        further rights with respect to those units.
     c. If the Grantee ceases to perform services for the Employer prior to the
        Service Date on account of (i) a termination by the Employer without
        "cause" (as defined in the Employment Agreement), or (ii) the
        resignation by the Grantee with "good reason" (as defined in the
        Employment Agreement), then subject to satisfaction of the requirements
        contained in severance provisions of the Employment Agreement regarding
        execution of a release and compliance with restrictive covenants, the
        Grantee shall become vested in a number of Performance Units determined
        by multiplying (x) the number of Performance Units that would otherwise
        have vested under Paragraph 3(a), above (but for the cessation of the
        Grantee's service), by (y) a fraction, (I) he numerator of which is the
        number of days of continuous service performed by the Grantee for the
        Employer during the Performance Period, and (II) the denominator of
        which is 1095. Any Performance Units that cannot vest because of the
        pro-ration described above will be forfeited as of the date the
        Grantee's service ceases and the Grantee shall not have any further
        rights with respect to those units. Any Performance Units that do not
        vest because of the failure to fully satisfy the applicable performance
        goal shall be forfeited as of the Service Date and the Grantee shall not
        have any further rights with respect to those units.
     d. If prior to the Service Date the Grantee's employment or service with
        the Employer ceases for any reason other than those described in
        Paragraphs 3(b) or 3(c), above, all the Performance Units shall be
        immediately forfeited and the Grantee shall not have any further rights
        with respect to this Grant.

    Time and Form of Payment with Respect to Performance Units
    . The Grantee shall receive a distribution with respect to vested
    Performance Units within two and one-half months following the applicable
    vesting date (i.e., the Service Date, for Performance Units vesting pursuant
    to Section 3(a) or 3(c), or the date of cessation of the Grantee's service,
    for Performance Units vesting pursuant to Section 3(b)). The Performance
    Units will be distributed in shares of Company Stock, with each vested
    Performance Unit representing the right to receive one share of Company
    Stock.
    
    Dividend Equivalents
    . At the same time that the Performance Units are converted to shares of
    Company Stock and distributed to the Grantee as set forth in
    Paragraph 4
    above, the Company shall pay to the Grantee a lump sum cash payment equal to
    the sum of the dividends that would have been payable between January 1,
    2013 and the date of such distribution with respect to a number of shares of
    Company Stock equal to the number of shares then distributable (equitable
    adjusted by the Committee to take into account any stock splits, reverse
    splits, mergers, recapitalizations or similar events occurring during such
    period).
    Dissolution or Liquidation; Sale or Merger
    . The provisions of the Plan applicable to a dissolution, liquidation, sale
    or merger of the Company shall apply to the Grant, and, in the event of a
    dissolution, liquidation, sale or merger of the Company, the Committee may
    shorten the Performance Period and accelerate settlement of this Grant based
    on performance through the end of such abbreviated performance period or
    take such other actions as it deems appropriate and consistent with the
    Plan.
    Acknowledgment by Grantee
    . By accepting this Grant, the Grantee acknowledges that with respect to any
    right to distribution and payment pursuant to this Grant, the Grantee is and
    shall be an unsecured general creditor of the Company without any preference
    as against other unsecured general creditors of the Company, and the Grantee
    hereby covenants for herself, and anyone at any time claiming through or
    under the Grantee, not to claim any such preference, and hereby disclaims
    and waives any such preference which may at any time be at issue, to the
    fullest extent permitted by applicable law. The Grantee also hereby agrees
    to be bound by the terms and conditions of the Plan and this Grant. The
    Grantee further agrees to be bound by the determinations and decisions of
    the Committee with respect to this Grant and the Plan and the Grantee's
    rights to benefits under this Grant and the Plan, and agrees that all such
    determinations and decisions of the Committee shall be binding on the
    Grantee, her beneficiaries and any other person having or claiming an
    interest under this Grant and the Plan on behalf of the Grantee.
    Restrictions on Issuance or Transfer of Shares of Company Stock
    .
     a. The obligation of the Company to deliver shares of Company Stock
        hereunder shall be subject to the condition that if at any time the
        Committee shall determine in its discretion that the listing,
        registration or qualification of the shares of Company Stock upon any
        securities exchange or under any state or federal law, or the consent or
        approval of any governmental regulatory body is necessary or desirable
        as a condition of, or in connection with, the issuance of shares of
        Company Stock, the shares of Company Stock may not be issued in whole or
        in part unless such listing, registration, qualification, consent or
        approval shall have been effected or obtained free of any conditions not
        acceptable to the Committee. The issuance of shares of Company Stock and
        the payment of cash to the Grantee pursuant to this Grant is subject to
        any applicable taxes and other laws or regulations of the United States
        and of any state having jurisdiction thereof.
     b. As a condition to the receipt of any shares of Company Stock upon
        distribution of the earned and vested Performance Units, the Grantee (i)
        agrees to be bound by the Company's policies, including, but not limited
        to, the Company's Insider Trading Policy, regarding the limitations on
        the transfer of such shares, and the Company's Clawback Policy and
        Anti-Hedging Policy, and (ii) understands that there may be certain
        times during the year that the Grantee will be prohibited from selling,
        transferring, donating, assigning, mortgaging, hypothecating or
        otherwise encumbering the shares.

    Grant Subject to Plan Provisions
    . This Grant is made pursuant to the Plan, the terms of which are
    incorporated herein by reference, and in all respects shall be interpreted
    in accordance with the Plan. In the event of any contradiction, distinction
    or difference between this Grant and the terms of the Plan, the terms of the
    Plan will control. Except as otherwise defined in this Grant, capitalized
    terms used in this Grant shall have the meanings set forth in the Plan. This
    Grant is subject to the interpretations, regulations and determinations
    concerning the Plan established from time to time by the Committee in
    accordance with the provisions of the Plan, including, but not limited to,
    provisions pertaining to (a) rights and obligations with respect to
    withholding taxes, (b) the registration, qualification or listing of the
    shares of Company Stock, (c) changes in capitalization of the Company, and
    (d) other requirements of applicable law. The Committee shall have the
    authority to interpret and construe this Grant pursuant to the terms of the
    Plan, its decisions shall be conclusive as to any questions arising
    hereunder and the Grantee's acceptance of this Grant is the Grantee's
    agreement to be bound by the interpretations and decisions of the Committee
    with respect to this Grant and the Plan.
    No Rights as Stockholder
    . The Grantee shall not have any rights as a stockholder of the Company,
    including the right to any cash dividends (except as provided in
    Paragraph 5
    hereof) or the right to vote, with respect to any Performance Units.
    No Rights to Continued Employment or Service
    . This Grant shall not confer upon the Grantee any right to be retained in
    the employment or service of the Employer and shall not interfere in any way
    with the right of the Employer to terminate the Grantee's employment or
    service at any time. The right of the Employer to terminate at will the
    Grantee's employment or service at any time for any reason is specifically
    reserved.
    Confidential Information, Non-Competition and Non-Solicitation
    .  The Grantee reaffirms and acknowledges the Grantee's obligations under
    the Nondisclosure and Noncompete Agreement for Management Employees.
    Assignment and Transfers
    . No Performance Units or dividend equivalents awarded to the Grantee under
    this Grant may be transferred, assigned, pledged, or encumbered by the
    Grantee and the Performance Units and dividend equivalents shall be
    distributed during the lifetime of the Grantee only for the benefit of the
    Grantee. Any attempt to transfer, assign, pledge, or encumber the
    Performance Units or dividend equivalents under this Grant by the Grantee
    shall be null, void and without effect. The rights and protections of the
    Company hereunder shall extend to any successors or assigns of the Company.
    This Grant may be assigned by the Company without the Grantee's consent.
    Withholding
    . The Grantee shall be required to pay to the Employer, or make other
    arrangements satisfactory to the Employer to provide for the payment of, any
    federal, state, local or other taxes that the Employer is required to
    withhold with respect to the grant, vesting and distribution of the
    Performance Units and dividend equivalents. Subject to Committee approval,
    the Grantee may elect to satisfy any tax withholding obligation of the
    Employer with respect to the distribution of shares of Company Stock
    pursuant to the Performance Units that are earned by the Grantee under this
    Grant by having shares of Company Stock withheld up to an amount that does
    not exceed the minimum applicable withholding tax rate for federal
    (including FICA), state, local and other tax liabilities. Notwithstanding
    anything to the contrary herein or the Plan, until the Grantee has satisfied
    the Employer's withholding obligation with respect to the shares of Company
    Stock as described in this
    Paragraph 14
    , the Grantee shall not have any rights to sell or transfer any shares of
    Company Stock that have been distributed to the Grantee pursuant to
    Paragraph 4
    above.
    Effect on Other Benefits
    . The value of this Grant and the shares of Company Stock and dividend
    equivalents potentially distributable hereunder shall not be considered
    eligible earnings for purposes of any other plan maintained by the Company
    or the Employer, and such value shall not be considered part of the
    Grantee's compensation for purposes of determining or calculating other
    benefits that are based on compensation, such as life insurance.
    Applicable Law
    . The validity, construction, interpretation and effect of this Grant shall
    be governed by and construed in accordance with the laws of the State of
    Delaware, without giving effect to the conflicts of laws provisions thereof.
    Notice
    . Notices permitted or required under this Agreement shall be in writing and
    shall be deemed to have been duly given when delivered by hand or overnight
    courier addressed, in the case of the Company, c/o its General Counsel at
    its principal executive office and, in the case of the Grantee, to her most
    recent address set forth in the personnel records of the Company.
    Contents of Agreement; Amendment
    . This Grant, including the terms of the Employment Agreement specifically
    incorporated by reference in Sections 3(b) and 3(c), represents the entire
    agreement between the parties hereto relating to the subject matter hereof,
    and merges and supersedes all prior and contemporaneous discussions,
    agreements and understandings of every nature relating to the subject matter
    hereof. This Grant agreement cannot be changed, modified, extended or
    terminated except upon written amendment executed by the parties hereto. Any
    such written amendment must be approved by the Committee to be effective
    against the Company.
    Consent to Electronic Delivery
    . The Grantee hereby authorizes the Company to deliver electronically any
    prospectuses or other documentation related to this Grant agreement, the
    Plan and any other compensation or benefit plan or arrangement in effect
    from time to time (including, without limitation, reports, proxy statements
    or other documents that are required to be delivered to participants in such
    plans or arrangements pursuant to federal or state laws, rules or
    regulations). For this purpose, electronic delivery will include, without
    limitation, delivery by means of e-mail or e-mail notification that such
    documentation is available on the Company's intranet site. Upon written
    request, the Company will provide to the Grantee a paper copy of any
    document also delivered to the Grantee electronically. The authorization
    described in this paragraph may be revoked by the Grantee at any time by
    written notice to the Company.

[Remainder of page intentionally left blank; signature page follows]

IN WITNESS WHEREOF, the Company has caused its duly authorized officer to
execute and attest this instrument, and the Grantee has placed his or her
signature hereon, on this ___ day of November, 2012.

 

Attest:

NUTRISYSTEM, INC.

       

By:__________________________________

By:__________________________________

Name: Kathleen Simone

Name: David D. Clark

Title: SVP, Finance & Controller

Title: Chief Financial Officer

   

 

I hereby accept the grant of Performance Units described in this Grant, and I
agree to be bound by the terms of the Plan and this Grant. I hereby further
agree that all of the decisions and determinations of the Committee shall be
final and binding.

 

 

__________________________________

Grantee: Dawn Zier

EXHIBIT A

PERFORMANCE GOALS

 

The performance measure applicable to the award of PRSUs shall be based on the
Company's Total Shareholder Return ("TSR") over the three year Performance
Period relative to the TSR of the Russell 3000 Index for the same Performance
Period. For these purposes, the TSR shall be determined based on the change in
the stock price of, and the dividends and distributions paid by, the relevant
entity during the Performance Period. At the end of the Performance Period, the
Company's TSR performance relative to the TSR performance of the companies in
the Russell 3000 Index shall be determined and the PRSUs shall vest and become
payable, if at all, based on the following schedule:

Company's Relative TSR Performance

Vesting as a Percentage of the Target Award

Less than 35th percentile

0%

35th percentile

50%

50th percentile

100%

85th percentile or greater

150%

If the Company's relative TSR results for the Performance Period are either (a)
between the 35th percentile and the 50th percentile or (b) between the 50th
percentile and the 85th percentile, then, in either such case, the percentage of
the Target Award that shall become vested and payable shall be determined by
linear interpolation.