EMPLOYMENT AGREEMENT

(Scott A. Falconer)

This EMPLOYMENT AGREEMENT, dated May 14, 2008 (this "Agreement"), is between
NutriSystem, Inc., a Delaware corporation, with a principal place of business
located at 300 Welsh Road, Building 1, Suite 100, Horsham, Pennsylvania 19044
(the "Company"), and Scott A. Falconer (the "Employee").

Employment

This Agreement is effective on the Employee's first date of employment with the
Company, which is expected to be May 14, 2008 or such earlier date as may be
mutually agreed upon by the parties (the "Effective Date"). The Employee shall
be the Executive Vice President of Customer Management and Product Development
and shall perform duties consistent with this position as are assigned by the
President, the Chief Executive Officer or the Board of Directors of the Company
(the "Board"). The Employee shall report directly to the Chief Executive
Officer. The parties anticipate that, within six (6) months of employment, and
at the sole discretion of the Chief Executive Officer, Employee's title will
change to Executive Vice President of Global Operations.

Performance/Scope of Employment

The Employee shall devote substantially all of his business time and efforts to
the performance of his duties under this Agreement during normal business hours.
Employee's duties shall consist of, in addition to any others assigned to
Employee from time to time by the Chief Executive Officer, management of
telesales to new customers, customer management including design and
implementation of the customer experience, retention programs, additional sales
activities, management of Client Services and Counseling areas ("Customer
Management"), Product Development, Supply Chain, including relationships with
major suppliers and fulfillment of orders, Information Technology (within 90
days of start) and International Operations (soon after integration of Supply
Chain and IT into the role - approximately 90 days after start).

Term

The initial term of employment under this Agreement (the "Initial Term") begins
on the Effective Date and extends for three years. This Agreement renews
automatically for one year renewal terms (a "Renewal Term") unless either the
Employee or the Company gives the other party written notice of non-renewal at
least 3 months before the end of the Initial Term or any Renewal Term then in
effect. The Agreement renews automatically for a one year Renewal Term upon a
"Change of Control" (as defined below), beginning on the date of the Change of
Control. The Initial Term plus any Renewal Term then in effect are the term of
this Agreement (the "Employment Term"). The Employment Term may be terminated
early as provided in Sections 9 through 13 of this Agreement.

Salary

The Employee's annual salary (the "Salary") is payable in installments when the
Company customarily pays its officers (but no less often than twice per month).
The Salary is at the initial rate of $275,000 (the "Initial Salary"). The Board
or the Compensation Committee of the Board (the "Compensation Committee") shall
review the Salary at least once a year. The Salary shall never be less than the
Initial Salary.

Stock

The Compensation Committee has approved a restricted stock grant to the Employee
on the Effective Date in an amount equal to 70,000 shares (the "Initial Stock
Grant"). The Initial Stock Grant shall be in accordance with the terms and
conditions set forth in the Stock Award Agreement attached as Appendix A. The
Initial Stock Grant shall vest over four years from the Effective Date, with a
tranche of 25% vesting on each of the first four anniversaries of the Effective
Date, as set forth in Appendix A; provided that the Employee is employed by the
Company on each such vesting date.

The Compensation Committee has also approved a restricted stock grant to the
Employee on the Effective Date in an amount equal to 30,000 shares (the
"Performance Stock Grant"). The Performance Stock Grant shall vest based upon
the achievement of certain performance goals for fiscal years 2008 and 2009,
provided that the Employee is employed by the Company on the respective vesting
dates. The Performance Stock Grant shall be in accordance with the terms and
conditions set forth in the Performance Stock Award Agreement attached as
Appendix B.

Bonus

During the Employment Term, the Employee shall be entitled to participate in any
bonus program established for officers of the Company generally. The Employee
shall be entitled to participate in an annual bonus program to be established by
the Board or the Compensation Committee (the "Annual Bonus"). During the
Employment Term, the Employee shall be eligible to receive an Annual Bonus of
100% of the Employee's Salary; provided that the Annual Bonus shall be no less
than the Minimum Bonus (as defined below); and provided, further, that the
Annual Bonus is conditioned on the employment of the Employee with the Company
through the date that Annual Bonus is paid. The Annual Bonus shall be paid at
such time as bonuses are paid to the other officers of the Company, but no later
than March 15th of the year that follows the fiscal year to which the Annual
Bonus relates. The term "Minimum Bonus" shall mean $200,000 for the fiscal year
ending December 31, 2008, 70% of the Employee's Salary for the fiscal years
ending December 31, 2009 and 2010, and, if this Agreement is renewed for one
Renewal Term beyond the Initial Term, 70% of the Employee's Salary for the
fiscal year ending December 31, 2011.

The Employee will be paid a guaranteed cash bonus of $140,000 within 15 business
days following the Effective Date (the "Signing Bonus"), provided the Employee
has commenced employment as an employee with the Company on the Effective Date.

Relocation Package/Temporary Housing

If the Employee relocates to the Horsham, Pennsylvania area at any time during
the 2011 calendar year and while employed by the Company, then the Employee
shall receive a relocation package in an amount of $60,000 (the "Relocation
Amount"); provided, however, that this Relocation Amount is not subject to
liquidation or exchange for another benefit from the Company if the Employee
does not relocate to the Horsham, Pennsylvania area. The Employee will receive
the Relocation Amount as follows: (1) the Company will reimburse the Employee
for reimbursable Relocation Expenses upon the submission of written receipts for
an amount up to the Relocation Amount as soon as administratively practicable,
but no later than December 31, 2011, and to the extent such relocation
reimbursement payments made by the Company are subject to applicable tax
withholding, then the amount of any withholding taxes paid by the Company shall
be counted toward the Relocation Amount, and (2) to the extent the total
relocation reimbursements and withholding taxes thereon paid by the Company by
December 31, 2011 are less than the Relocation Amount, then the difference
between such total and the Relocation Amount will be paid out to the Employee,
less applicable withholding taxes, on December 31, 2011. For this purpose,
"Relocation Expenses" shall mean the following relocation expenses actually
incurred by the Employee in the 2011 calendar year: home sale transaction and
closing costs (including broker commission, inspection, title insurance,
mortgage fees and points and filing fees), moving expenses and temporary travel
while house hunting and relocation by the Employee and his family.

The Company, at its cost, shall provide temporary furnished housing for the
Employee on a month-to-month basis during the Initial Term, in reasonable
proximity to the Company's headquarters, on a reasonable basis as determined in
good faith by the Chief Executive Officer of the Company.

Confidential Information, Non-Competition and Non-Solicitation

The Employee agrees to execute and be covered by the terms of the Company's
Nondisclosure and Noncompete Agreement for Management Employees upon the
commencement of employment with the Company, which shall be in the form of
Appendix C hereto.

Death

If the Employee dies during the Employment Term, then the Employment Term shall
terminate, and thereafter the Company shall not have any further liability or
obligation to the Employee, the Employee's executors, administrators, heirs,
assigns or any other person claiming under or through the Employee, except (a)
that the Employee's estate shall receive any unpaid Salary that has accrued
through the date of termination, (b) Employee's estate shall receive a prorated
Annual Bonus (calculated as equal to 100% of Salary) from the first day of the
fiscal year in which the Employee dies through the date of death; and (c) the
Initial Stock Grant will be accelerated for an additional period of 12 months
following the month in which the Employee dies that is applied between scheduled
vesting dates to accelerate vesting on the pro rata portion of the vesting
schedule using a monthly basis instead of the scheduled vesting dates.

Total Disability

If the Employee becomes "totally disabled," then the Employment Term shall
terminate, and thereafter the Company shall have no further liability or
obligation to the Employee hereunder, except as follows: the Employee shall
receive (a) any unpaid Salary that has accrued through the date of termination,
(b) a lump sum equal to one month of Salary, (c) Employee shall receive a
prorated Annual Bonus (calculated as equal to 100% of Salary) from the first day
of the fiscal year in which the Employee is totally disabled through the date of
termination; and (d) the Initial Stock Grant will be accelerated for an
additional period of 12 months following the month in which the Employee is
totally disabled that is applied between scheduled vesting dates to accelerate
vesting on the pro rata portion of the vesting schedule using a monthly basis
instead of the scheduled vesting dates; and (e) whatever benefits that he may be
entitled to receive under any then existing disability benefit plans of the
Company.

The term "totally disabled" means the Employee is considered totally disabled
(a) under the Company's group disability plan in effect at that time, if any, or
(b) in the absence of any such plan, under applicable Social Security
regulations.

Termination for Cause

The Company may terminate the Employee for "cause" immediately upon notice from
the Company. If the Employee is terminated for "cause", then the Employment Term
shall terminate and thereafter the Company shall not have any further liability
or obligation to the Employee, except that the Employee shall receive any unpaid
Salary that has accrued through the date of termination.

The term "cause" means: (a) the Employee is convicted of a felony (excluding all
vehicular and traffic offenses), or (b) in the reasonable determination of the
Board, the Employee has done any one of the following: (1) committed an act of
fraud, embezzlement, or theft in connection with the Employee's duties in the
course of his employment with the Company, (2) caused intentional, wrongful
damage to the property of the Company, (3) materially breached (other than by
reason of illness, injury or incapacity) the Employee's obligations under this
Agreement or under any written confidentiality, non-competition, or
non-solicitation agreement between the Employee and the Company that the
Employee shall not have remedied within 30 days after receiving written notice
from the Board specifying the details of the breach, or (4) engaged in gross
misconduct or gross negligence in the course of the Employee's employment with
the Company.

Termination by the Employee

The Employee may terminate this Agreement by giving the Company written notice
of termination one month in advance of the termination date. The Company may
waive this notice period and set an earlier termination date. If the Employee
terminates this Agreement, then on the termination date, the Employment Term
shall terminate and thereafter the Company shall have no further liability or
obligation to the Employee under this Agreement, except that the Employee shall
receive any unpaid Salary that has accrued through the termination date. After
the termination date, the Employee shall be required to adhere to the covenants
against non-competition and non-solicitation described in Section 8 of this
Agreement.

The Employee also may terminate this Agreement for Good Reason, provided that
the Employee gives the Company written notice of the Good Reason condition
within 90 days from the initial existence of the Good Reason condition, and if
the Company has not cured the Good Reason condition within 30 days following
such notice from the Employee, then the Employee's employment will be terminated
effective as of the 30th day following the expiration of the Company's cure
period, unless the Company designates an earlier termination date, and upon such
a termination, the Employee will be treated in accordance with Section 13, as if
the Employee's employment had been terminated by the Company without cause. As
used herein, "Good Reason" means: (i) a material diminution in the Employee's
base compensation, which for this purpose shall mean the Salary and the target
Bonus which is 100% of Salary; (ii) a material diminution of the Employee's
authority, duties or responsibilities as an Executive Vice President; (iii) a
material diminution in the authority, duties or responsibilities of the
Employee's supervisor, including a requirement that the Employee report to an
officer or employee of the Company instead of reporting directly to the Chief
Executive Officer; (iv) a material change in the geographic location at which
the Employee performs services for the Company, which for this purpose shall
mean the Company relocating its executive offices more than 60 miles from
Horsham, Pennsylvania; and (v) any other action or inaction that constitutes a
material breach of this Agreement by the Company.

Termination without Cause or Non-Renewal by the Company

The Company may terminate the Employee without "cause" by giving the Employee
written notice of termination one month in advance of the termination date. The
Employee may waive this notice period and set an earlier termination date. If
(1) the Employee is terminated without "cause," or (2) the Employee is
terminated as a result of the non-renewal of this Agreement by the Company at
the end of the Initial Term or any Renewal Term in accordance with Section 3, or
(3) the Employee terminates his employment for Good Reason in accordance with
Section 12, then the Employment Term shall terminate and thereafter the Employee
shall be entitled only to the following under this Agreement:

 1. within 30 days following the Employee's termination date, but no sooner than
    the end of the revocation period for the release, the Company will pay to
    the Employee a lump sum severance payment in the amount equal to the sum of:
     a. 24 months of the Salary then in effect;
     b. a pro rated amount of the Annual Bonus (calculated at 100% of Salary)
        from the first day of the fiscal year in which the termination occurred
        through the date of termination; and
     c. the value of the premium cost to the Company to continue the Employee on
        the Company's group life and AD&D policy for the 12 month period
        following the Employee's termination date; and

 2. the Employee's group healthcare coverage will be continued for 12 months, at
    the Employee's normal contribution rates; and
 3. the Employee's covenants against non-competition (as described in Section 8
    of this Agreement) shall be reduced to a 12 month period from the
    termination date, from the period contained in the Agreement referred to in
    Section 8 above; and
 4. the Employee and the Company will enter into a mutual general release; and
 5. the Initial Stock Grant will be accelerated for an additional period of 12
    months following the month in which the Employee is terminated that is
    applied between scheduled vesting dates to accelerate vesting on the pro
    rata portion of the vesting schedule using a monthly basis instead of the
    scheduled vesting dates.

Change of Control

In the event a Change of Control occurs during the Employment Term, (a) on the
date of the Change of Control, the Employee shall become 100% vested in the
Initial Stock Grant and the Performance Stock Grant, and (b) if the Employee is
employed by the Company on the first anniversary of the Change of Control, then,
within 30 days after such anniversary (and without regard to whether the
Employee is employed by the Company after such anniversary), the Company shall
pay to the Employee a lump sum retention cash payment in an amount equal to 24
months of the monthly Salary as in effect for the Employee on the first
anniversary of the Change of Control.

For purposes of this Agreement, the term "Change of Control" shall mean the
consummation of any of the following events:

(i) any sale, lease, exchange, or other transfer of all or substantially all of
the assets of the Company to any other person or entity other than a
wholly-owned subsidiary of the Company (in one transaction or a series of
related transactions);

(ii) dissolution or liquidation of the Company;

(iii) when any person or entity, including a "group" as contemplated by Section
13(d)(3) of the Securities Exchange Act of 1934, as amended, acquires or gains
ownership or control (including, without limitation, power to vote) of more than
50% of the outstanding shares of the Company's voting securities (based upon
voting power), or

(iv) any reorganization, merger, consolidation, or similar transaction or series
of transactions that results in the record holders of the voting stock of the
Company immediately prior to such transaction or series of transactions holding
immediately following such transaction or series of transactions less than 50%
of the outstanding shares of any of the voting securities (based upon voting
power) of any one of the following: (1) the Company, (2) any entity which owns
(directly or indirectly) the stock of the Company, (3) any entity with which the
Company has merged, or (4) any entity that owns an entity with which the Company
has merged.

Governing Law/Jurisdiction

This Agreement is governed by Pennsylvania law. Any disputes, actions, claims or
causes of action arising out of or in connection with the terms of this
Agreement or the employment relationship between the Company and the Employee
shall be subject to the exclusive jurisdiction of the United States District
Court for the Eastern District of Pennsylvania or the Pennsylvania state courts
located in Montgomery County.

Entire Agreement; Amendments

This Agreement sets forth the entire understanding among the parties hereto, and
shall supersede all prior employment, severance and change of control agreements
and any related agreements that the Employee has with the Company or any
subsidiary, or any predecessor company.

This Agreement may not be modified or amended in any way except by a written
amendment executed by the Employee and the Company.

Withholding Taxes

Any payments provided for in this Agreement shall be paid net of any applicable
income tax withholding required by federal, state or local law.

No Assignment

All of the terms and provisions of this Agreement shall be binding upon and
inure to the benefit and be enforceable by the respective heirs,
representatives, successors (including any successor as a result of a merger or
similar reorganization) and assigns of the parties hereto, except that the
duties and responsibilities of the Employee hereunder are of a personal nature
and shall not be assignable in whole or in part by the Employee.

Jury Trial Waiver

The parties hereby agree that they shall and do waive trial by jury in any
action, proceeding or counterclaim, whether at law or at equity, brought by
either of them, or in any manner whatsoever, which arises out of or is connected
in any way with this Agreement or with the employment relationship established
between them.

Compliance with Section 409A of the Code

This Agreement shall be interpreted to avoid any penalty sanctions under section
409A of the Internal Revenue Code of 1986, as amended (the "Code"). All payments
to be made upon a termination of employment under this Agreement may only be
made upon a "separation from service" under section 409A of the Code. For
purposes of section 409A of the Code, each payment made under this Agreement
shall be treated as a separate payment and the right to a series of installment
payments shall be treated as the right to a series of separate payments. In no
event may Employee, directly or indirectly, designate the calendar year of
payment.

To the maximum extent permitted under section 409A of the Code and its
corresponding regulations, the cash severance benefits payable under this
Agreement are intended to meet the requirements of the short-term deferral
exemption under section 409A of the Code and the 'separation pay exception'
under Treas. Reg. section 1.409A-1(b)(9)(iii). However, if such severance
benefits do not qualify for such exemptions at the time of the Employee's
termination of employment and therefore are deemed as deferred compensation
subject to the requirements of section 409A of the Code, then if Employee is a
"specified employee" of a publicly traded corporation under section 409A of the
Code on the date of Employee's termination of employment, payment of severance
under this Agreement shall be delayed for a period of 6 months from the date of
the Employee's termination of employment if required by section 409A of the
Code. The accumulated postponed amount shall be paid in a lump sum payment
within 10 days after the end of the 6 month period. If Employee dies during the
postponement period prior to payment of the postponed amount, the amounts
withheld on account of section 409A of the Code shall be paid to the personal
representative of Employee's estate within 60 days after the date of Employee's
death. The determination of whether Employee is a "specified employee" shall be
made by the Compensation Committee (or its delegate) in accordance with section
409A of the Code and the regulations issued thereunder. The continuation of the
group healthcare coverage is intended to be exempt from the requirements of
section 409A of the Code pursuant to Treas. Reg. section 1.409A-1(b)(9)(v)(B).

Excise Tax on Change of Control Payments

(a) In the event that any payments or benefits to be received by Employee in
connection with a Change in Control (collectively, the "Original Payments") will
be subject to the excise tax (the "Excise Tax") imposed under Section 4999 of
the Internal Revenue Code of 1986, as amended from time to time (the "Code"),
then Company shall pay Employee an additional amount (the "Gross-Up Payment")
such that the net amount retained by Employee, after deduction of any Excise Tax
on the Original Payments and any Federal, state and local income and employment
taxes and Excise Tax upon the Gross-Up Payment, shall be equal to the Original
Payments to Employee; provided, however, that in no event shall the Gross-Up
Payment to Employee exceed One Million Dollars ($1,000,000.00) in the aggregate.

(b) If, notwithstanding the Company's payment of up to One Million Dollars in
Gross-Up Payments under sub-section (a), Employee would remain responsible for
the payment of Excise Tax (in addition to the Excise Tax paid by the Company as
part of the Gross-Up Payment), then the Original Payments to Employee shall be
reduced (but not below zero), but only if and to the extent that the net
after-tax benefit received by Employee by reason of such reduction shall exceed
the net after-tax benefit received by him if no such reduction was made. For
purposes of this Section, "net after-tax benefit" shall mean (a) the combined
Original Payments and Gross-Up Payments which Employee receives or is then
entitled to receive from the Company that would constitute "parachute payments"
within the meaning of Section 280G of the Code, less (b) the amount of all
federal, state and local income taxes payable with respect to the foregoing
calculated at the maximum marginal income tax rate for each year in which the
foregoing shall be paid to Employee (based on the rate in effect for such year
as set forth in the Code as in effect at the time of the first payment of the
foregoing), less (c) the amount of the Excise Tax imposed with respect to the
payments and benefits described above. If a reduction is required by this
provision, Employee in his sole and absolute discretion may determine which
Original Payments shall be reduced to the extent necessary so that no portion of
the Original Payments and Gross-Up Payments shall be subject to the Excise Tax,
and the Company shall pay such reduced amount to him. The Company shall bear all
costs incurred in connection with any calculations contemplated by this Section.

(c) If the Company or any taxing authority determines that the amounts
previously paid to Employee exceeds the amount to which the Employee is entitled
as a result of any reduction required by Section (b), Employee agrees to
promptly return the excess amount to the Company.

IN WITNESS WHEREOF, the parties hereto, intending to be legally bound, have
hereunto duly executed this Employment Agreement as of the day and year first
written above.

NUTRISYSTEM, INC.

By: /s/ Joseph M. Redling_______________

Name: Joseph M. Redling

Title: President and CEO

 

EMPLOYEE:

/s/ Scott A. Falconer

_______________________

Name: Scott A. Falconer