NUTRISYSTEM, INC.

2008 LONG-TERM INCENTIVE PLAN

NONQUALIFIED STOCK OPTION GRANT

 

Dawn Zier

This NONQUALIFIED STOCK OPTION GRANT AGREEMENT (the "Agreement"), 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 stock options to purchase shares of common stock of
the Company, par value $0.001 per share ("Company Stock").

B. In satisfaction of the Company's commitment to issue stock options 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 of the Board of Directors of
the Company (the "Committee") has approved this grant.

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

    Grant of Option
    .
     a. Subject to the terms and conditions set forth in this Agreement and in
        the Plan, the Company hereby grants to the Grantee a nonqualified stock
        option (the "Option") to purchase [$300,000 divided by grant date fair
        value] shares of Company Stock at an exercise price of $[grant date FMV]
        per share of Company Stock. The Option shall become vested and
        exercisable according to Paragraph 2 below.
     b. The Grantee hereby accepts this stock award and acknowledges that it
        satisfies the Company's commitment to issue stock options to her upon
        commencement of her employment, as described in the Employment
        Agreement.

    Exercisability of Option
    .
     a. Except as provided below in Sections 2(b) and 2(c), the Option shall
        become vested and exercisable on the following dates, if the Grantee
        continues to be employed by, or provide services to, the Employer (as
        defined in the Plan) from the Date of Grant through the applicable
        vesting date (each, a "Vesting Date"):
    
         
    
         
        
        Vesting Date
        
        Portion of Option Becoming
        
        Exercisable on the Vesting Date
        
        
        
        First Anniversary of Date of Grant
        
        25%
        
        Second Anniversary of Date of Grant
        
        25%
        
        Third Anniversary of Date of Grant
        
        25%
        
        Fourth Anniversary of Date of Grant
        
        25%
    
        The vesting and exercisability of the Option is cumulative, but shall
        not exceed 100% of the shares of Company Stock subject to the Option. If
        the foregoing schedule would produce fractional shares of Company Stock,
        the number of shares of Company Stock for which the Option becomes
        vested and exercisable shall be rounded down to the nearest whole share.
    
     b. If at any time prior to the date the Option becomes vested and
        exercisable as described in subparagraph 2(a) above, the Grantee ceases
        to be employed by, or provide services to, the Employer on account of
        (i) the death of the Grantee, or (ii) termination by the Employer
        because the Grantee becomes "totally disabled" (defined as a condition
        entitling Grantee to benefits under any long-term disability plan or
        policy maintained or funded by the Employer), then the Option, 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, shall become fully
        vested and exercisable on the date of such cessation of employment or
        service.
     c. If at any time prior to the date the Option becomes vested and
        exercisable as described in subparagraph 2(a) above, the Grantee ceases
        to be employed by, or provide services to, the Employer 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), the vesting of the
        Option shall accelerate to the extent, and subject to the conditions,
        described in the severance provisions of the Employment Agreement.

    Term of Option
    .
     a. The Option shall have a term of seven years from the Date of Grant and
        shall terminate at the expiration of that period, unless it is
        terminated at an earlier date pursuant to the provisions of this
        Agreement or the Plan.
     b. The Option shall also automatically terminate upon the happening of the
        first of the following events:
         i.   The expiration of the 90-day period after the Grantee ceases to be
              employed by, or provide service to, the Employer, if the
              termination is for any reason other than "total disability," death
              or "cause."
         ii.  The expiration of the one-year period after the Grantee ceases to
              be employed by, or provide service to, the Employer on account of
              the Grantee's "total disability."
         iii. The expiration of the one-year period after the Grantee ceases to
              be employed by, or provide service to, the Employer, if the
              Grantee dies while employed by, or providing service to, the
              Employer or within 90 days after the Grantee ceases to be so
              employed or provide such services on account of a termination
              described in clause (i) above.
         iv.  The date on which the Grantee ceases to be employed by, or provide
              service to, the Employer for "cause." In addition, notwithstanding
              the prior provisions of this Paragraph 3, if the Grantee engages
              in conduct that constitutes "cause" after the Grantee's employment
              or service terminates, the Option shall immediately terminate and
              the Grantee shall automatically forfeit all shares of Company
              Stock underlying any exercised portion of the Option for which the
              Company has not yet delivered the share certificates, upon refund
              by the Company of the exercise price paid by the Grantee for such
              shares.

    Notwithstanding the foregoing, in no event may the Option be exercised after
    the date that is immediately before the seventh anniversary of the Date of
    Grant. Any portion of the Option that is not exercisable at the time the
    Grantee ceases to be employed by, or provide service to, the Employer
    (determined after giving effect to Paragraph 2(b) or 2(c), if applicable)
    shall immediately terminate.

    Exercise Procedures
    .
     a. Subject to the provisions of Paragraphs 2 and 3 above, the Grantee may
        exercise part or all of the exercisable portion of the Option by giving
        the Company written notice of intent to exercise in the manner provided
        in this Agreement, specifying the number of shares of Company Stock as
        to which the Option is to be exercised and the method of payment.
        Payment of the exercise price and applicable withholding taxes shall be
        made in accordance with procedures established by the Committee from
        time to time based on the type of payment being made but, in any event,
        prior to issuance of the shares of Company Stock. The Grantee shall pay
        the exercise price and applicable withholding taxes (i) in cash or
        certified check, (ii) if permitted by the Committee, by delivering
        shares of Company Stock owned by the Grantee and having a Fair Market
        Value (as defined in the Plan) on the date of exercise equal to the
        exercise price or by attestation (on a form prescribed by the Committee)
        to ownership of shares of Company Stock having an aggregate Fair Market
        Value on the date of exercise equal to the exercise price, (iii) by
        payment through a broker in accordance with procedures permitted by
        Regulation T of the Federal Reserve Board, or (iv) by such other method
        as the Committee may approve to the extent permitted by applicable law.
        The Committee may impose from time to time such limitations as it deems
        appropriate on the use of shares of Company Stock to exercise the
        Option.
     b. The obligation of the Company to deliver shares of Company Stock upon
        exercise of the Option shall be subject to all applicable laws, rules,
        and regulations and such approvals by governmental agencies as may be
        deemed appropriate by the Committee, including such actions as Company
        counsel shall deem necessary or appropriate to comply with relevant
        securities laws and regulations. The Company may require that the
        Grantee (or other person exercising the Option after the Grantee's
        death) represent that the Grantee is purchasing the shares of Company
        Stock for the Grantee's own account and not with a view to, or for sale
        in connection with, any distribution of the shares of Company Stock, or
        such other representations as the Committee deems appropriate. All
        shares of Company Stock issued pursuant to this Option shall be subject
        to any applicable clawback and other policies implemented by the Board
        of Directors of the Company, as in effect from time to time.
     c. All obligations of the Company under this Agreement shall be subject to
        the rights of the Company as set forth in the Plan to withhold amounts
        required to be withheld for all applicable taxes. Subject to Committee
        approval, the Grantee may elect to satisfy any tax withholding
        obligation of the Employer with respect to the Option 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 and local tax liabilities.

    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 Option and, in the event of a
    dissolution, liquidation, sale or merger of the Company, the Committee may
    take such actions as it deems appropriate pursuant to the Plan.
    Restrictions on Exercise
    . Except as the Committee may otherwise permit pursuant to the Plan, only
    the Grantee may exercise the Option during the Grantee's lifetime and, after
    the Grantee's death, the Option shall be exercisable (subject to the
    limitations specified in the Plan) solely by the person who acquires the
    right to exercise the Option by will or by the laws of descent and
    distribution, to the extent that the Option is exercisable pursuant to this
    Agreement.
    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. The grant and exercise of the Option are
    subject to 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 the Option pursuant to the terms of the Plan, and its decisions
    shall be conclusive as to any questions arising hereunder.
    Restrictions on Sale or Transfer of Shares.
 1. The Grantee agrees that the Grantee will not sell, transfer, pledge, donate,
    assign, mortgage, hypothecate or otherwise encumber the shares of Company
    Stock underlying the Option unless the shares of Company Stock are
    registered under the Securities Act of 1933, as amended (the "Securities
    Act"), or the Company is given an opinion of counsel reasonably acceptable
    to the Company that such registration is not required under the Securities
    Act.
 2. In consideration for this Option grant, the Grantee agrees to be bound by
    the Company's policies, including, but not limited to the Insider Trading
    Policy, Anti-Hedging and Clawback Policies, and 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 Company securities.

No Employment or Other Rights. The grant of the Option shall not confer upon the
Grantee any right to be retained by or in the employ or service of the Employer
and shall not interfere in any way with the right of the Employer to terminate
at will 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. No Stockholder Rights. Neither the
Grantee, nor any person entitled to exercise the Grantee's rights in the event
of the Grantee's death, shall have any of the rights and privileges of a
stockholder with respect to the shares of Company Stock subject to the Option,
until certificates for shares of Company Stock have been issued upon the
exercise of the Option. Confidential Information, Non-Competition and
Non-Solicitation. The Grantee affirms her obligations under the Nondisclosure
and Noncompete Agreement for Management Employees. Assignment and Transfers.
Except as the Committee may otherwise permit pursuant to the Plan, the rights
and interests of the Grantee under this Agreement may not be sold, assigned,
encumbered or otherwise transferred except, in the event of the death of the
Grantee, by will or by the laws of descent and distribution. In the event of any
attempt by the Grantee to alienate, assign, pledge, hypothecate, or otherwise
dispose of the Option or any right hereunder, except as provided for in this
Agreement, or in the event of the levy or any attachment, execution or similar
process upon the rights or interests hereby conferred, the Company may terminate
the Option by notice to the Grantee, and the Option and all rights hereunder
shall thereupon become null and void. The rights and protections of the Company
hereunder shall extend to any successors or assigns of the Company and to the
Company's parents, subsidiaries, and affiliates. This Agreement may be assigned
by the Company without the Grantee's consent. Effect on Other Benefits. The
value of this Option or the shares of Company Stock received upon exercise of
the Option shall not be considered eligible earnings for purposes of any other
plans maintained by the Company or the Employer. Neither shall such value 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 instrument 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. Entire Agreement. This Agreement, including the terms of the Employment
Agreement specifically incorporated by reference in Sections 2(b) and 2(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. Consent to Electronic Delivery. The Grantee hereby
authorizes the Company to deliver electronically any prospectuses or other
documentation related to this 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.

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

NUTRISYSTEM, INC.

Attest:

By:

Name: Kathleen Simone Name: David Clark

Title: SVP, Finance & Controller Title: Chief Financial Officer

 

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

 

Grantee: Dawn Zier