Securities Purchase Agreement


 Exhibit 10.1 
  
 SECURITIES PURCHASE AGREEMENT 
  
 THIS SECURITIES PURCHASE AGREEMENT (this “Agreement”), dated as of September 29, 2003, by and among NutriSystem, Inc., a Delaware
corporation (the “Company”), and the subscribers identified on the signature page hereto (each a “Investor” and collectively “Investors”). 
  
 WHEREAS, the Company and the Investors are executing and delivering this Agreement in reliance upon an exemption from
securities registration afforded by the provisions of Section 4(2), Section 4(6) and/or Regulation D (“Regulation D”) as promulgated by the United States Securities and Exchange Commission (the “SEC”) under the Securities Act of
1933, as amended (the “Securities Act”); and 
  
 WHEREAS, the parties desire that, upon the terms and subject to the conditions contained herein, the Company shall issue and sell to the Investors, as provided herein, and the Investors, in the aggregate, shall purchase not less than
$2,300,000 nor more than $2,600,000 of shares of the Company’s common stock, $0.001 par value (the “Common Stock”) at a per share purchase price of $1.00 (the “Offering”), which shall be purchased on the Closing Date (as
defined herein). The shares of Common Stock to be purchased hereunder are collectively referred to herein as the “Shares.” 
  
 NOW, THEREFORE, in consideration of the mutual covenants and other agreements contained in this Agreement the Company and the Investors hereby
agree as follows: 
  
 1. Agreement to Sell and Purchase the
Shares. At the Closing (as defined in Section 2), the Company will sell to each Investor, and each Investor will purchase from the Company, upon the terms and conditions hereinafter set forth, the number of shares of Common Stock designated on
the signature page hereto at a per share purchase price of $1.00. 
  
 2. Delivery of the Shares at Closing. The completion of the purchase and sale of the Shares (the “Closing”) shall occur (the “Closing Date”) on September 30, 2003, at the offices of the Company’s counsel,
Morgan, Lewis & Bockius LLP, 1701 Market Street, Philadelphia, PA 19103, or at such other date and place as may be mutually agreed by the parties. At the Closing, the Company shall deliver to each Investor, versus payment therefor, one or more
stock certificates representing the number of Shares purchased by the Investor, each such certificate to be registered in the name of the Investor or, if so indicated on the signature page hereof, in the name of a nominee designated by the Investor;
provided that delivery of such certificates within two business days after the Closing shall not be deemed to be a breach by the Company of this Agreement. 
  
 (a) The Company’s obligation to issue the Shares to the Investors shall be subject to the following conditions, any one or more of which may be
waived by the Company: (a) receipt by the Company of a certified or official bank check or wire transfer of funds in the full amount of the purchase price for the Shares being purchased hereunder; and (b) the accuracy of the representations and
warranties made by the Investors and the fulfillment of those undertakings of the Investors to be fulfilled prior to the Closing. 
  
 (b) Each Investor’s obligation to purchase the Shares shall be subject to the following conditions, any one or more of which may be waived by the
Investor: (a) the representations and warranties of the Company set forth herein shall be true and correct as of the Closing Date in all material respects and (b) the Investor shall have received compliance and Secretary’s certificates and a
standard opinion of Company counsel in the form attached hereto as Exhibit A. 






 3. Representations, Warranties and Covenants of the Company. Except as otherwise described in the
documents filed by the Company under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), since the end of its most recently completed fiscal year through the date hereof, including, without limitation, its most recent
reports on Form 10-K, Form 10-Q and Form 8-K (together with all exhibits thereto) (collectively, the “Exchange Act Documents”), which qualifies the following representations and warranties in their entirety, the Company hereby represents
and warrants to, and covenants with, the Investor, as follows: 
  
 3.1 Organization. The Company is duly organized and validly existing in good standing under the laws of the jurisdiction of its organization. Each of the Company and its Subsidiaries (as defined in Rule 405 under the Securities Act)
has full power and authority to own, operate and occupy its properties and to conduct its business as presently conducted and as described in the Exchange Act Documents and is registered or qualified to do business and in good standing in each
jurisdiction in which the nature of the business conducted by it or the location of the properties owned or leased by it requires such qualification and where the failure to be so qualified would have a material adverse effect upon the condition
(financial or otherwise), earnings, business or business prospects, properties or operations of the Company and its Subsidiaries, considered as one enterprise (a “Material Adverse Effect”), and no proceeding has been instituted in any such
jurisdiction, revoking, limiting or curtailing, or seeking to revoke, limit or curtail, such power and authority or qualification. 
  
 3.2 Due Authorization and Valid Issuance. The Company has all requisite power and authority to execute, deliver and perform its obligations under
this Agreement, and this Agreement has been duly authorized and validly executed and delivered by the Company and constitutes the legal, valid and binding agreement of the Company enforceable against the Company in accordance with its terms, except
as rights to indemnity and contribution may be limited by court decision or applicable law, including, without limitation, state or federal securities laws or the public policy underlying such laws, except as enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting creditors’ and contracting parties’ rights generally and except as enforceability may be subject to general principles of equity (regardless of whether
such enforceability is considered in a proceeding in equity or at law) or the discretion of the court before which any proceeding is brought. The Shares being purchased by the Investors hereunder will, upon issuance and payment therefor pursuant to
the terms hereof, be duly authorized, validly issued, fully paid and nonassessable. 
  
 3.3 Non-Contravention. The execution and delivery of this Agreement, the issuance and sale of the Shares hereunder, the fulfillment of the terms of this Agreement and the consummation of the transactions
contemplated thereby will not (A) conflict with or constitute a violation of, or default (with the passage of time or otherwise) under, (i) any material bond, debenture, note or other evidence of indebtedness, lease, contract, indenture, mortgage,
deed of trust, loan agreement, joint venture or other agreement or instrument to which the Company or any Subsidiary is a party or by which it or any of its Subsidiaries or their respective properties are bound, (ii) the charter, by-laws or other
organizational documents of the Company or any Subsidiary, or (iii) any law, administrative regulation, ordinance or order of any court or governmental agency, arbitration panel or authority applicable to the Company or any Subsidiary or their
respective properties, except in the case of clauses (i) and (iii) for any such conflicts, violations or defaults which are not reasonably likely to have a Material Adverse Effect or (B) result in the creation or imposition of any lien, encumbrance,
claim, security interest or restriction whatsoever upon any of the material properties or assets of the Company or any Subsidiary or an acceleration of indebtedness pursuant to any obligation, agreement or condition contained in any material bond,
debenture, note or any other evidence of indebtedness or any material indenture, mortgage, deed of trust or any other agreement or instrument to which the Company or any Subsidiary is a party or by which any of them is bound or to which any of the
material property or assets of the Company or any Subsidiary is subject. Assuming the correctness of the representations and warranties of each of the Investors set forth in Section 4 hereof, no consent, approval, authorization or other order of, or
registration, qualification or filing with, any regulatory body, administrative agency, or other governmental body in the United States or any other person is required for the execution and delivery of this Agreement and the valid issuance and sale
of the Shares to be sold and issued pursuant to this Agreement, other than such as have been made or obtained, and except for any post-closing securities filings or notifications required to be made under federal or state securities laws and
applicable OTC Bulletin Board rules. 
  
 3.4
Capitalization. The capitalization of the Company is as set forth in the most recent applicable Exchange Act Documents, increased as set forth in the next sentence. The Company has not issued any 







 
capital stock since that date other than (i) pursuant to employee benefit plans disclosed in the Exchange Act Documents (ii) pursuant to outstanding
warrants, options or other securities disclosed in the Exchange Act Documents or (iii) as set forth in this Section 3.4. The outstanding shares of capital stock of the Company have been duly and validly issued and are fully paid and nonassessable,
have been issued in compliance with all federal and state securities laws, and were not issued in violation of any preemptive rights or similar rights to subscribe for or purchase securities. Except as set forth in or contemplated by this Agreement
and the Exchange Act Documents, there are no outstanding rights (including, without limitation, preemptive rights), warrants or options to acquire, or instruments convertible into or exchangeable for, any unissued shares of capital stock or other
equity interest in the Company or any Subsidiary, or any contract, commitment, agreement, understanding or arrangement of any kind to which the Company is a party or of which the Company has knowledge and relating to the issuance or sale of any
capital stock of the Company or any Subsidiary, any such convertible or exchangeable securities or any such rights, warrants or options. Without limiting the foregoing, except as set forth in or contemplated by this Agreement and the Exchange Act
Documents or as set forth in this Section 3.4, no preemptive right, co-sale right, right of first refusal, registration right, or other similar right exists with respect to the Shares. No further approval or authorization of any stockholder, the
Board of Directors of the Company or others is required for the issuance and sale of the Shares. The Company owns the entire equity interest in each of its Subsidiaries, free and clear of any pledge, lien, security interest, encumbrance, claim or
equitable interest, other than as described in the Exchange Act Documents. Except as disclosed in the Exchange Act Documents, there are no stockholders agreements, voting agreements or other similar agreements with respect to the Common Stock to
which the Company is a party or, to the knowledge of the Company, between or among any of the Company’s stockholders. 
  
 3.5 Legal Proceedings. Except as set forth in the Exchange Act Documents, there is no material legal or governmental proceeding pending or, to the
knowledge of the Company, threatened (i) to which the Company or any Subsidiary is or may be a party or of which the business or property of the Company or any Subsidiary is subject that is not disclosed in the Exchange Act Documents or (ii) which
adversely affects or challenges the legality, validity or enforceability of this Agreement. 
  
 3.6 No Violations. Neither the Company nor any Subsidiary is in violation of its charter, bylaws, or other organizational document, or in violation of any law, administrative regulation, ordinance or order of
any court or governmental agency, arbitration panel or authority applicable to the Company or any Subsidiary, which violation, individually or in the aggregate, would be reasonably likely to have a Material Adverse Effect, or is in default (and
there exists no condition which, with the passage of time or otherwise, would constitute a default) in any material respect in the performance of any bond, debenture, note or any other evidence of indebtedness in any indenture, mortgage, deed of
trust or any other material agreement or instrument to which the Company or any Subsidiary is a party or by which the Company or any Subsidiary is bound or by which the properties of the Company or any Subsidiary are bound, which would be reasonably
likely to have a Material Adverse Effect. 
  
 3.7 Governmental
Permits, Etc. With the exception of the matters which are dealt with separately in Section 3.1, 3.12, and 3.13, each of the Company and its Subsidiaries has all necessary franchises, licenses, certificates and other authorizations from any
foreign, federal, state or local government or governmental agency, department, or body that are currently necessary for the operation of the business of the Company and its Subsidiaries as currently conducted and as described in the Exchange Act
Documents except where the failure to currently possess could not reasonably be expected to have a Material Adverse Effect. 
  
 3.8 Intellectual Property. Except as specifically disclosed in the Exchange Act Documents (i) each of the Company and its Subsidiaries owns or
possesses sufficient rights to use all material patents, patent rights, trademarks, copyrights, licenses, inventions, trade secrets, trade names, designs, manufacturing or other processes, systems, data compilation, research results, know-how or
other proprietary rights (collectively, “Intellectual Property”) that are necessary for the conduct of its business as now conducted or as proposed to be conducted as described in the Exchange Act Documents except where the failure to
currently own or possess would not have a Material Adverse Effect, (ii) neither the Company nor any of its Subsidiaries is infringing, or has received any notice of, or has any knowledge of, any asserted infringement by the Company or any of its
Subsidiaries of, any rights of a third party with respect to any Intellectual Property that, individually or in the aggregate, would have a Material Adverse Effect and (iii) neither the Company nor any of its Subsidiaries has received any notice of,
or has 







 
any knowledge of, infringement by a third party with respect to any Intellectual Property rights of the Company or of any Subsidiary that, individually or in
the aggregate, would have a Material Adverse Effect. 
  
 Except as
disclosed in the Exchange Act Documents, all material licenses or other material agreements under which (i) the Company is granted rights in Intellectual Property, other than Intellectual Property generally available on commercial terms from other
sources, and (ii) the Company has granted rights to others in Intellectual Property owned or licensed by the Company, are in full force and effect and, to the knowledge of the Company, there is no material default by the Company thereunder.

  
 To the knowledge of the Company, the Company is not making
unauthorized use of any confidential information or trade secrets of any person. Neither the Company nor, to the knowledge of the Company, any of its employees have any agreements or arrangements with any persons other than the Company related to
confidential information or trade secrets of such persons or restricting any such employee’s engagement in business activities of any nature that, individually or in the aggregate, would have a Material Adverse Effect. 
  
 3.9 Financial Statements. The financial statements of the Company and
the related notes contained in the Exchange Act Documents present fairly, in all material respects and in accordance with generally accepted accounting principles, the financial position of the Company and its Subsidiaries on a consolidated basis,
as of the dates indicated, and the results of their operations and cash flows for the periods therein specified, except that the unaudited interim financial statements were or are subject to normal and recurring year-end adjustments which are not
expected to be material in amount. Such financial statements (including the related notes) have been prepared in accordance with generally accepted accounting principles applied on a consistent basis throughout the periods therein specified, except
in the case of unaudited statements, as may be permitted by the SEC on Form 10-Q under the Exchange Act and except as disclosed in the Exchange Act Documents. 
  

3.10 No Material Adverse Change. Except as disclosed in the Exchange Act Documents, since June 30, 2003, there has not been (i) any Material
Adverse Effect affecting the Company and its Subsidiaries considered as one enterprise, (ii) any obligation, direct or contingent, that is material to the Company and its Subsidiaries considered as one enterprise, incurred by the Company, (iii) any
dividend or distribution of any kind declared, paid or made on the capital stock of the Company or any of its Subsidiaries, or (iv) any loss or damage (whether or not insured) to the physical property of the Company or any of its Subsidiaries which
has been sustained which has a Material Adverse Effect. 
  
 3.11
Disclosure. The representations and warranties of the Company contained in this Section 3 as of the date hereof and as of the Closing Date, do not contain any untrue statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. 
  
 3.12 Registration of Common Stock under Exchange Act. The Company’s Common Stock is registered pursuant to Section 12(g) of the Exchange Act
and trades in the over-the-counter market, and the Company has taken no action designed to, or likely to have the effect of, terminating the registration of the Common Stock under the Exchange Act, nor has the Company received any notification that
the SEC is contemplating terminating such registration. 
  
 3.13
Reporting Status. The Company has filed in a timely manner all documents that the Company was required to file under the Exchange Act during the 12 months preceding the date of this Agreement. The following documents complied in all material
respects with the SEC’s requirements as of their respective filing dates, and the information contained therein as of the date thereof did not contain an untrue statement of a material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading: 
  
 (a) Annual Report on Form 10-K for the year ended December 31, 2002; 
  
 (b) Quarterly Report on Form 10-Q for the quarter ended March 31, 2003; 






 (c) Quarterly Report on Form 10-Q for the quarter ended June 30, 2003; 
  
 (d) Definitive Proxy Statement, filed on March 24, 2003; and 
  
 (e) All other documents, if any, filed by the Company with the SEC since
December 31, 2002 pursuant to the reporting requirements of the Exchange Act. 
  
 3.14 Company not an “Investment Company”. The Company has been advised of the rules and requirements under the Investment Company Act of 1940, as amended (the “Investment Company Act”). The
Company is not, and immediately after receipt of payment for the Shares will not be, an “investment company” or an entity “controlled” by an “investment company” within the meaning of the Investment Company Act and
shall conduct its business in a manner so that it will not become subject to the Investment Company Act. 
  
 3.15 Foreign Corrupt Practices; Sarbanes-Oxley. 
  
 (a) Neither the Company, nor to the knowledge of the Company, any agent or other person acting on behalf of the Company, has (i) directly or indirectly,
used any corrupt funds for unlawful contributions, gifts, entertainment or other unlawful expenses related to foreign or domestic political activity, (ii) made any unlawful payment to foreign or domestic government officials or employees or to any
foreign or domestic political parties or campaigns from corporate funds, (iii) failed to disclose fully any contribution made by the Company (or made by any person acting on its behalf of which the Company is aware) which is in violation of law, or
(iv) violated in any material respect any provision of the Foreign Corrupt Practices Act of 1977, as amended. 
  
 (b) The Company is in compliance in all material respects with all provisions of the Sarbanes-Oxley Act of 2002 that are applicable to it as of the
Closing Date. 
  
 3.16 Environmental. Except as would not,
individually or in the aggregate, reasonably be expected to have a Material Adverse Effect (i) the Company and its Subsidiaries are in compliance with and not subject to any known liability under applicable Environmental Laws (as defined below),
(ii) the Company has made all filings and provided all notices required under any applicable Environmental Law, and has, and is in compliance with, all permits required under any applicable Environmental Laws and each of them is in full force and
effect, (iii) (a) there is no pending civil, criminal or administrative action, or pending hearing or suit, (b) the Company has not received any demand, claim or notice of violation and (c) to the knowledge of the Company, there is no investigation,
proceeding, notice or demand letter o request for information threatened against the Company in the case of (a), (b) and (c), under any Environmental Law, (iv) no lien, charge, encumbrance or restriction has been recorded under any Environmental Law
with respect to any assets, facility or property owned, operated, leased or controlled by the Company, (v) the Company has not received notice that it has been identified as a potentially responsible party under the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended (“CERCLA”), or any comparable state law and (vi) no property or facility of the Company is (a) listed or, to the knowledge of the Company, proposed for listing on the National
Priorities List under CERCLA or is (b) listed in the Comprehensive Environmental Response, Compensation, Liability Information System List promulgated pursuant to CERCLA, or on any comparable list maintained by any state or local governmental
authority. 
  
 For purposes of this Agreement, “Environmental
Laws” means all applicable federal, state and local laws or regulations, codes, orders, decrees, judgments or injunctions issued, promulgated, approved or entered thereunder, relating to pollution or protection of public or employee health and
safety or the environment, including, without limitation, laws relating to (i) emissions, discharges, releases or threatened releases of Hazardous Materials (as defined below) into the environment (including, without limitation, ambient air, surface
water, ground water, land surface or subsurface strata), (ii) the manufacture, processing, distribution, use, generation, treatment, storage, disposal, transport or handling of Hazardous Materials and (iii) underground and above ground storage tanks
and related piping, and emissions, discharges, releases or threatened releases therefrom. The term “Hazardous Material” means (a) any “hazardous substance,” as defined in the Comprehensive Environmental Response, the Resource
Conservation and Recovery Act, as amended, (b) any “hazardous waste,” as defined by the Resource Conservation 







 
and Recovery Act, as amended, (c) any petroleum or petroleum product, (d) any polychlorinated biphenyl and (e) any pollutant or contaminant or hazardous,
dangerous or toxic chemical, material, waste or substance. 
  
 3.17 Accountants. KPMG LLP, who the Company expects will issue their report with respect to the financial statements to be incorporated by reference from the Company’s Annual Report on Form 10-K for the year ended December 31,
2002 into the Registration Statement (as defined below) and the prospectus which forms a part thereof (“Prospectus”), are independent accountants as required by the Securities Act and the rules and regulations promulgated thereunder.

  
 3.18 Contracts. Except as otherwise described in the
Exchange Act Documents, the contracts described in the Exchange Act Documents that are currently material to the Company are in full force and effect on the date hereof, and neither the Company nor, to the Company’s knowledge, any other party
to such contracts is in breach of or default under any of such contracts which would have a Material Adverse Effect. 
  
 3.19 Taxes. The Company has filed all necessary federal, state and foreign income and franchise tax returns and has paid or accrued all taxes shown
as due thereon, and the Company has no knowledge of a tax deficiency which has been or might be asserted or threatened against it which would have a Material Adverse Effect. 
  
 3.20 Transfer Taxes. On the Closing Date, all stock transfer or other taxes (other than income taxes) which are
required to be paid in connection with the sale and transfer of the Shares to be sold to the Investors hereunder will be, or will have been, fully paid or provided for by the Company and all laws imposing such taxes will be or will have been fully
complied with. 
  
 3.21 Private Offering. Assuming the
correctness of the representations and warranties of each of the Investors set forth in Section 4 hereof, the offer and sale of Shares hereunder is exempt from registration under the Securities Act. The Company has not distributed and will not
distribute prior to the Closing Date any offering materials in connection with this Offering and sale of the Shares other than the documents of which this Agreement is a part or the Exchange Act Documents. The Company has not in the past nor will it
hereafter take any action to sell, offer for sale or solicit offers to buy any securities of the Company which would bring the offer, issuance or sale of the Shares as contemplated by this Agreement, within the provisions of Section 5 of the
Securities Act, unless such offer, issuance or sale was or shall be within the exemptions of Section 4 of the Securities Act. 
  
 3.22 Use of Proceeds. The Company shall use the proceeds from the Offering for working capital and general corporate purposes. 
  
 3.23 Brokers or Finders. The Company has not dealt with any broker or
finder in connection with the transactions contemplated by this Agreement, and the Company has not incurred, and shall not incur, directly or indirectly, any liability for any brokerage or finders’ fees or agents commissions or any similar
charges in connection with the transactions contemplated by this Agreement. The Investors shall have no obligation with respect to any fees or with respect to any claims made by or on behalf of other persons for fees of a type contemplated in this
Section that may be due in connection with the transactions contemplated by this Agreement. 
  
 4. Representations, Warranties and Covenants of the Investors. Each of the Investors, severally and not jointly, represents and warrants to, and covenants with, the Company that: 
  
 4.1 (i) the Investor is an “accredited investor” as defined in
Rule 501(a) of Regulation D under the Securities Act and the Investor is also knowledgeable, sophisticated and experienced in making, and is qualified to make decisions with respect to investments in shares presenting an investment decision like
that involved in the purchase of the Shares, including investments in securities issued by the Company and investments in comparable companies, and has requested, received, reviewed and considered all information it deemed relevant in making an
informed decision to purchase the Shares; (ii) the Investor is acquiring the Shares in the ordinary course of its business and for its own account for investment only and with no present intention of distributing any of such Shares or any
arrangement or understanding with any other persons regarding the distribution of such Shares; (iii) the 







 
Investor will not, directly or indirectly, offer, sell, pledge, transfer or otherwise dispose of (or solicit any offers to buy, purchase or otherwise acquire
or take a pledge of) any of the Shares except in compliance with the Securities Act, applicable state securities laws and the respective rules and regulations promulgated thereunder; and (iv) the Investor has, in connection with its decision to
purchase the Shares hereunder, relied only upon the Exchange Act Documents and the representations and warranties of the Company contained herein. The Investor understands that its acquisition of the Shares has not been registered under the
Securities Act or registered or qualified under any state securities law in reliance on specific exemptions therefrom, which exemptions may depend upon, among other things, the bona fide nature of the Investor’s investment intent as expressed
herein. Investor understands that the Shares purchased hereunder have to be held indefinitely unless there is an effective Registration Statement under the Securities Act with respect to the Shares or an exemption from registration available under
the Securities Act and applicable state securities laws, and the Investor is able to bear the economic risk of an investment in the Shares. 
  
 4.2 The Investor acknowledges, represents and agrees that no action has been or will be taken in any jurisdiction outside the United States by the Company
that would permit an offering of the Shares, or possession or distribution of offering materials in connection with the issue of the Shares, in any jurisdiction outside the United States where legal action by the Company for that purpose is
required. Each Investor outside the United States will comply with all applicable laws and regulations in each foreign jurisdiction in which it purchases, offers, sells or delivers Shares or has in its possession or distributes any offering
material, in all cases at its own expense. 
  
 4.3 The Investor
hereby covenants with the Company not to make any sale of the Shares without complying with the provisions of this Agreement, including Section 6.2 hereof, and if selling pursuant to the Registration Statement, without causing the prospectus
delivery requirement under the Securities Act to be satisfied, and the Investor acknowledges that the certificates evidencing the Shares will be imprinted with a legend that prohibits their transfer except in accordance therewith. The Investor
acknowledges that there may occasionally be times when the Company determines that it must suspend the use of the Prospectus forming a part of the Registration Statement, as set forth in Section 6.2(c). 
  
 4.4 The Investor further represents and warrants to, and covenants with, the
Company that (i) the Investor has full right, power, authority and capacity to enter into this Agreement and to consummate the transactions contemplated hereby and has taken all necessary action to authorize the execution, delivery and performance
of this Agreement, and (ii) this Agreement constitutes a valid and binding obligation of the Investor enforceable against the Investor in accordance with its terms, except as enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting creditors’ and contracting parties’ rights generally and except as enforceability may be subject to general principles of equity (regardless of whether such enforceability is considered
in a proceeding in equity or at law) and except as the indemnification agreements of the Investors herein may be legally unenforceable. 
  
 4.5 The Investor will not use any of the Shares acquired pursuant to this Agreement to cover any short position in the Common Stock of the Company if
doing so would be in violation of applicable securities laws. 
  
 4.6 The Investor understands that nothing in the Exchange Act Documents, this Agreement or any other materials presented to the Investor in connection with the purchase and sale of the Shares constitutes legal, tax or investment advice. The
Investor has consulted such legal, tax and investment advisors as it, in its sole discretion, has deemed necessary or appropriate in connection with its purchase of Shares. 
  
 5. Survival of Representations, Warranties and Agreements. Notwithstanding any investigation made by any party to
this Agreement, all representations and warranties made by the Company and the Investors herein shall survive the execution of this Agreement, the delivery to the Investor of the Shares being purchased and the payment therefor, until the third
anniversary of the date hereof. All covenants and agreements made by the Company and the Investors herein shall survive in accordance with the terms hereof. 
  
 6. Registration of the Shares; Compliance with the Securities Act. 
  






 6.1 Registration Procedures and Other Matters. The Company shall: 
  
 (a) On one occasion, if requested in writing during the period commencing
on the Closing Date and ending on the second anniversary of the Closing Date (the “Request Date”) by any Investor who is the record holder of any Shares issued in the Offering and not included in an effective or pending registration
statement, prepare and file with the SEC within ninety (90) days after the Request Date (the “Filing Date”), a registration statement on Form S-3 or such other successor form (except that if the Company is not then eligible to register for
resale the Registrable Securities (as defined below) on Form S-3, in which case such registration shall be on Form S-1 or any successor form) (the “Registration Statement”) to enable the resale of the Shares which are the subject of such
request, unless such Shares are included in an effective registration statement or included for registration in a pending registration statement (collectively, the “Registrable Securities”) by the Investors who are the record holders of
the Registrable Securities from time to time pursuant to the Plan of Distribution set forth as Exhibit B. In addition, upon the receipt of such request, the Company shall promptly give written notice to all other Investors who are record
holders of Registrable Securities that such registration statement is to be filed and shall include in the Registration Statement the Registrable Securities for which it has received written requests within 10 calendar days after the Company gives
such written notice. Such other requesting record holders shall be deemed to have exercised their demand registration right under this Section 6.1(a). Notwithstanding anything to the contrary contained herein, the Company’s obligation to file
the Registration Statement or include any Registrable Securities therein is subject to the Company’s receipt of necessary information from the Investors or other record holders of the Registrable Securities after requested by the Company to
provide such information; 
  
 (b) use its reasonable best efforts
to prepare and file with the SEC such amendments and supplements to the Registration Statement and the Prospectus used in connection therewith as may be necessary to keep the Registration Statement current, effective and free from any material
misstatement or omission to state a material fact for a period not exceeding, with respect to each Investor’s Registrable Securities purchased hereunder, the earlier of (i) the second anniversary of the date on which the Registrable Securities
were purchased, (ii) the date on which the Investors may sell all Registrable Securities then held by the Investors without restriction by the volume limitations of Rule 144(e) of the Securities Act, or (iii) such time as all Registrable Securities
purchased by such Investors in this Offering have been sold pursuant to a registration statement; 
  
 (c) so long as an Investor holds Registrable Securities, provide copies to and permit legal counsel designated by the Investor to review the Registration
Statement and all amendments and supplements thereto (at no additional expense to the Company), no fewer than two business days prior to their filing with the SEC, and not file any Registration Statement, amendment or supplement thereto to which
holders of a majority in interest of the Registrable Securities reasonably object in writing within such two business day period; 
  
 (d) furnish to each Investor with respect to the Registrable Securities registered under the Registration Statement such number of copies of the
Registration Statement, Prospectuses (under cover of the form of letter attached hereto as Exhibit D) and preliminary Prospectuses (“Preliminary Prospectuses” and individually, “Preliminary Prospectus”) in conformity with the
requirements of the Securities Act and such other documents as such Investor may reasonably request, in order to facilitate the public sale or other disposition of all or any of the Registrable Securities by the Investor; provided,
however, that the obligation of the Company to deliver copies of Prospectuses or Preliminary Prospectuses to the Investor shall be subject to the receipt by the Company of reasonable assurances from such Investor that such Investor will
comply with the applicable provisions of the Securities Act and of such other securities or blue sky laws as may be applicable in connection with any use of such Prospectuses or Preliminary Prospectuses; 
  
 (e) file documents required of the Company for normal blue sky clearance in
states specified in writing by the Investors and use its reasonable best efforts to maintain such blue sky qualifications during the period the Company is required to maintain the effectiveness of the Registration Statement pursuant to Section
6.1(b); provided, however, that the Company shall not be required to qualify to do business or consent to service of process in any jurisdiction in which it is not now so qualified or has not so consented; 







 (f) bear all expenses in connection with the procedures in paragraph (a) through (e) of this Section 6.1
and the registration of the Registrable Securities pursuant to the Registration Statement; 
  
 (g) advise the Investor, promptly after it shall receive notice or obtain knowledge of the issuance of any stop order by the SEC delaying or suspending the effectiveness of the Registration Statement or of the
initiation or threat of any proceeding for that purpose; and it will promptly use its commercially reasonable efforts to prevent the issuance of any stop order or to obtain its withdrawal at the earliest possible moment if such stop order should be
issued; and 
  
 (h) With a view to making available to the
Investors the benefits of Rule 144 (or its successor rule) and any other rule or regulation of the SEC that may at any time permit the Investors to sell Registrable Securities to the public without registration, the Company covenants and agrees to:
(i) make and keep public information available, as those terms are understood and defined in Rule 144, until the earlier of (A) such date as all of the Investor’s Registrable Securities may be resold pursuant to Rule 144(k) or any other rule of
similar effect or (B) such date as all of the Investor’s Registrable Securities shall have been resold; (ii) file with the SEC in a timely manner all reports and other documents required of the Company under the Exchange Act; and (iii) furnish
to any Investor upon request, as long as such Investor owns any Registrable Securities, (A) a written statement by the Company that it has complied with the reporting requirements of the Exchange Act; (B) a copy of the Company’s most recent
Annual Report on Form 10-K or Quarterly Report on Form 10-Q (exclusive of exhibits thereto), and (C) such other information as may be reasonably requested in order to avail such Investor of any rule or regulation of the SEC that permits the selling
of such Registrable Securities without registration. 
  
 6.2
Transfer of Shares After Registration, Suspension. 
  
 (a) Each Investor agrees that it will not effect any disposition of the Registrable Securities or its right to purchase the Registrable Securities that would constitute a sale within the meaning of the Securities Act except as contemplated
in the Registration Statement referred to in Section 6.1 (including, without limitation, the plan of distribution contained therein) and as described below or as otherwise permitted by law, and that it will promptly notify the Company in writing of
any changes in the information set forth in the Registration Statement regarding itself or its plan of distribution. 
  
 (b) Except in the event that paragraph (c) below applies, the Company shall (i) if deemed necessary by the Company, prepare and file from time to time
with the SEC a post-effective amendment to the Registration Statement or a supplement to the related Prospectus or a supplement or amendment to any document incorporated therein by reference or file any other required document so that such
Registration Statement will not contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not
misleading, and so that, as thereafter delivered to purchasers of the Registrable Securities being sold thereunder, such Prospectus will not contain an untrue statement of a material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading; (ii) provide the Investors copies of any documents filed pursuant to Section 6.2(b)(i); and (iii) inform each Investor
that the Company has complied with its obligations in Section 6.2(b)(i) (or that, if the Company has filed a post-effective amendment to the Registration Statement which has not yet been declared effective, the Company will notify the Investors to
that effect, will use its reasonable best efforts to secure the effectiveness of such post-effective amendment as promptly as possible and will promptly notify the Investors pursuant to Section 6.2(b)(i) hereof when the amendment has become
effective). 
  
 (c) In the event (i) of any request by the SEC or
any other federal or state governmental authority during the period of effectiveness of the Registration Statement for amendments or supplements to a Registration Statement or related Prospectus or for additional information; (ii) of the issuance by
the SEC or any other federal or state governmental authority of any stop order suspending the effectiveness of a Registration Statement or the initiation of any proceedings for that purpose; (iii) of the receipt by the Company of any notification
with respect to the suspension of the qualification or exemption from qualification of any of the Registrable Securities for sale in any jurisdiction or the initiation or threatening of any proceeding for such purpose; 







 
or (iv) of any event or circumstance which, upon the advice of its counsel, necessitates the making of any changes in the Registration Statement or
Prospectus, or any document incorporated or deemed to be incorporated therein by reference, so that, in the case of the Registration Statement, it will not contain any untrue statement of a material fact or any omission to state a material fact
required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading, and that in the case of the Prospectus, it will not contain any untrue statement of a material fact
or any omission to state a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; then the Company shall deliver a certificate in writing
to the Investors (the “Suspension Notice”) to the effect of the foregoing and, upon receipt of such Suspension Notice, each Investor will refrain from selling any Registrable Securities pursuant to the Registration Statement (a
“Suspension”) until such Investor’s receipt of copies of a supplemented or amended Prospectus prepared and filed by the Company, or until it is advised in writing by the Company that the current Prospectus may be used, and has
received copies of any additional or supplemental filings that are incorporated or deemed incorporated by reference in any such Prospectus. In the event of any Suspension, the Company will use its reasonable best efforts to cause the use of the
Prospectus so suspended to be resumed as soon as reasonably practicable after the delivery of a Suspension Notice to the Investor. 
  
 (d) The Investors shall provide the Company or its representatives all information necessary for use in preparation of the Registration Statement and
such information shall be true, correct and complete. Each Investor shall notify the Company in writing immediately of any change in any of such information until such time as the Investor has sold all of its Shares or until the Company is no longer
required to keep the Registration Statement effective. 
  
 (e)
Provided that a Suspension is not then in effect, the Investors may sell Registrable Securities under a Registration Statement in the manner set forth under the caption “Plan of Distribution” in the Prospectus, provided that it
arranges for delivery of a current Prospectus to the transferee of such Registrable Securities. Upon receipt of a request therefor, the Company has agreed to provide an adequate number of current Prospectuses to the Investors and to supply copies to
any other parties requiring such Prospectuses. 
  
 (f) In the
event of a sale of Registrable Securities by any Investor pursuant to the Registration Statement, such Investor must also deliver to the Company’s transfer agent, with a copy to the Company, a Certificate of Subsequent Sale substantially in the
form attached hereto as Exhibit C, so that the Registrable Securities may be properly transferred. 
  
 6.3 Indemnification. For the purpose of this Section 6.3: 
  

(i) the term “Selling Stockholder” shall include each Investor and any affiliate of such Investor; 
  
 (ii) the term “Registration Statement” shall include the Prospectus
in the form first filed with the SEC pursuant to Rule 424(b) of the Securities Act or filed as part of the Registration Statement at the time of effectiveness if no Rule 424(b) filing is required, exhibit, supplement or amendment included in or
relating to the Registration Statement referred to in Section 6.1; and 
  
 (iii) the term “untrue statement” shall include any untrue statement or alleged untrue statement of a material fact in the Registration Statement, or any omission or alleged omission to state in the Registration Statement a
material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading. 
  
 (a) The Company agrees to indemnify and hold harmless each Selling Stockholder from and against any losses, claims, damages
or liabilities to which such Selling Stockholder may become subject (under the Securities Act or otherwise) insofar as such losses, claims, damages or liabilities (or actions or proceedings in respect thereof) arise out of, or are based upon (i) any
breach of the representations or warranties of the Company contained herein, or failure to comply with the covenants and agreements of the Company contained herein, (ii) any untrue statement of a material fact contained in the Registration Statement
as amended at the time of effectiveness or any omission of a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances in which they were made, not misleading, or (iii) any failure by the
Company to 







 
fulfill any undertaking included in the Registration Statement as amended at the time of effectiveness, and the Company will reimburse such Selling
Stockholder for any reasonable legal or other expenses reasonably incurred in investigating, defending or preparing to defend any such action, proceeding or claim, provided, however, that the Company shall not be liable in any such
case to the extent that such loss, claim, damage or liability arises out of, or is based upon, an untrue statement made in such Registration Statement or any omission of a material fact required to be stated therein or necessary to make the
statements therein not misleading in reliance upon and in conformity with written information furnished to the Company by or on behalf of such Selling Stockholder specifically for use in preparation of the Registration Statement or the failure of
such Selling Stockholder to comply with its covenants and agreements contained in Sections 4.1, 4.2, 4.3 and 6.2 hereof or any statement or omission in any Prospectus that is corrected in any subsequent Prospectus that was delivered to the Selling
Stockholder prior to the pertinent sale or sales by the Selling Stockholder. The Company shall reimburse each Selling Stockholder for the amounts provided for herein on demand as such expenses are incurred. 
  
 (b) Each of the Investors, severally and not jointly, agrees to indemnify
and hold harmless the Company (and each person, if any, who controls the Company within the meaning of Section 15 of the Securities Act, each officer of the Company who signs the Registration Statement and each director of the Company) from and
against any losses, claims, damages or liabilities to which the Company (or any such officer, director or controlling person) may become subject (under the Securities Act or otherwise), insofar as such losses, claims, damages or liabilities (or
actions or proceedings in respect thereof) arise out of, or are based upon, (i) any failure to comply with the covenants and agreements of the Investor contained in Sections 4.1, 4.2, 4.3 or 6.2 hereof, or (ii) any untrue statement of a material
fact contained in the Registration Statement or any omission of a material fact required to be stated therein or necessary to make the statements therein not misleading if such untrue statement or omission was made in reliance upon and in conformity
with written information furnished by or on behalf of the Investor specifically for use in preparation of the Registration Statement, and the Investor will reimburse the Company (or such officer, director or controlling person), as the case maybe,
for any legal or other expenses reasonably incurred in investigating, defending or preparing to defend any such action, proceeding or claim. 
  
 (c) Promptly after receipt by any indemnified person of a notice of a claim or the beginning of any action in respect of which indemnity is to be sought
against an indemnifying person pursuant to this Section 6.3, such indemnified person shall notify the indemnifying person in writing of such claim or of the commencement of such action, but the omission to so notify the indemnifying person will not
relieve it from any liability which it may have to any indemnified person under this Section 6.3 (except to the extent that such omission materially and adversely affects the indemnifying person’s ability to defend such action) or from any
liability otherwise than under this Section 6.3. Subject to the provisions hereinafter stated, in case any such action shall be brought against an indemnified person, the indemnifying person shall be entitled to participate therein, and, to the
extent that it shall elect by written notice delivered to the indemnified person promptly after receiving the aforesaid notice from such indemnified person, shall be entitled to assume the defense thereof, with counsel reasonably satisfactory to
such indemnified person. After notice from the indemnifying person to such indemnified person of its election to assume the defense thereof, such indemnifying person shall not be liable to such indemnified person for any legal expenses subsequently
incurred by such indemnified person in connection with the defense thereof, provided, however, that if there exists or shall exist a conflict of interest that would make it inappropriate, in the opinion of counsel to the indemnified
person, for the same counsel to represent both the indemnified person and such indemnifying person or any affiliate or associate thereof, the indemnified person shall be entitled to retain its own counsel at the expense of such indemnifying person;
provided, however, that no indemnifying person shall be responsible for the fees and expenses of more than one separate counsel (together with appropriate local counsel) for all indemnified parties. In no event shall any indemnifying
person be liable in respect of any amounts paid in settlement of any action unless the indemnifying person shall have approved the terms of such settlement; provided that such consent shall not be unreasonably withheld. No indemnifying person
shall, without the prior written consent of the indemnified person, effect any settlement of any pending or threatened proceeding in respect of which any indemnified person is or could have been a party and indemnification could have been sought
hereunder by such indemnified person, unless such settlement includes an unconditional release of such indemnified person from all liability on claims that are the subject matter of such proceeding. 
  
 (d) If the indemnification provided for in this Section 6.3 is unavailable
to or insufficient to hold harmless an indemnified person under subsection (a) or (b) above in respect of any losses, claims, 







 
damages or liabilities (or actions or proceedings in respect thereof) referred to therein, then each indemnifying person shall contribute to the amount paid
or payable by such indemnified person as a result of such losses, claims, damages or liabilities (or actions in respect thereof) in such proportion as is appropriate to reflect the relative fault of the Company on the one hand and the Investor(s) on
the other in connection with the statements or omissions or other matters which resulted in such losses, claims, damages or liabilities (or actions in respect thereof), as well as any other relevant equitable considerations. The relative fault shall
be determined by reference to, among other things, in the case of an untrue statement, whether the untrue statement relates to information supplied by the Company on the one hand or an Investor(s) on the other and the parties’ relative intent,
knowledge, access to information and opportunity to correct or prevent such untrue statement. The Company and the Investors agree that it would not be just and equitable if contribution pursuant to this subsection (d) were determined by pro rata
allocation (even if the Investors were treated as one entity for such purpose) or by any other method of allocation which does not take into account the equitable considerations referred to above in this subsection (d). The amount paid or payable by
an indemnified person as a result of the losses, claims, damages or liabilities (or actions in respect thereof) referred to above in this subsection (d) shall be deemed to include any legal or other expenses reasonably incurred by such indemnified
person in connection with investigating or defending any such action or claim. Notwithstanding the provisions of this subsection (d), an Investor shall not be required to contribute any amount in excess of the amount by which the net amount received
by the Investor from the sale of the Registrable Securities to which such loss relates exceeds the amount of any damages which such Investor has otherwise been required to pay by reason of such untrue statement. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. The Investor’s obligations in this subsection to contribute
shall be in proportion to its sale of Registrable Securities to which such loss relates and shall not be joint with any other Selling Stockholders. 
  
 (e) The parties to this Agreement hereby acknowledge that they are sophisticated business persons who were represented by counsel during the negotiations
regarding the provisions hereof including, without limitation, the provisions of this Section 6.3, and are fully informed regarding said provisions. They further acknowledge that the provisions of this Section 6.3 fairly allocate the risks in light
of the ability of the parties to investigate the Company and its business in order to assure that adequate disclosure is made in the Registration Statement as required by the Securities Act. The parties are advised that federal or state public
policy as interpreted by the courts in certain jurisdictions may be contrary to certain of the provisions of this Section 6.3, and the parties hereto hereby expressly waive and relinquish any right or ability to assert such public policy as a
defense to a claim under this Section 6.3 and further agree not to attempt to assert any such defense. 
  
 6.4 Termination of Conditions and Obligations. The conditions precedent imposed by Section 4 or this Section 6 upon the transferability of the
Shares or the Registrable Securities, as applicable, shall cease and terminate as to any particular Shares or the Registrable Securities, as applicable, when such Shares or the Registrable Securities, as applicable, shall have been effectively
registered under the Securities Act and sold or otherwise disposed of in accordance with the intended method of disposition set forth in the Registration Statement covering the Registrable Securities or at such time as an opinion of counsel
reasonably satisfactory to the Company shall have been rendered to the effect that such conditions are not necessary in order to comply with the Securities Act. 
  

6.5 Restrictive Legends. The Investors agree to the imprinting of a legend on any of the Shares in the following form: 
  

	THESE SECURITIES HAVE NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A
TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO








	THE TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE OF WHICH AND SUCH COUNSEL SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY. THESE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE
MARGIN ACCOUNT WITH A REGISTERED BROKER-DEALER OR OTHER LOAN WITH A FINANCIAL INSTITUTION THAT IS AN “ACCREDITED INVESTOR” AS DEFINED IN RULE 501(a) UNDER THE SECURITIES ACT.

  
 7. Notices. All
notices, requests, consents and other communications hereunder shall be in writing, shall be mailed (A) if within the United States by first-class registered or certified airmail, or nationally recognized overnight express courier, postage prepaid,
or by facsimile, or (B) if delivered from outside the United States, by International Federal Express or facsimile, and shall be deemed given (i) if delivered by first-class registered or certified mail, three business days after so mailed, (ii) if
delivered by nationally recognized overnight carrier, one business day after so mailed, (iii) if delivered by International Federal Express, two business days after so mailed, (iv) if delivered by facsimile, upon electronic confirmation of receipt
and shall be delivered as addressed as follows: 
  
 (a) if to
the Company, to: 
  
 NutriSystem, Inc. 
 202 Welsh Road 
 Horsham, PA 19044

 Attn: Chief Executive Officer 
 Tel: (215) 706-5300 
 Fax: (215) 706-5388 
  

with a copy to: 
  
 Morgan, Lewis & Bockius LLP 
 1701
Market St. 
 Philadelphia, PA 19103 
 Attn: James W. McKenzie, Jr., Esq. 
 Tel: (215) 963-5000 
 Fax: (215) 963-5001 
  
 (b) if to the Investor, at its address on the signature page hereto, or at such other address or addresses as may have been furnished to the Company in
writing. 
  
 8. Changes. This Agreement may not be modified
or amended except pursuant to an instrument in writing signed by the Company and the Investors party hereto. 
  
 9. Headings. The headings of the various sections of this Agreement have been inserted for convenience of reference only and shall not be deemed to
be part of this Agreement. 
  
 10. Severability. In case
any provision contained in this Agreement should be invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained herein shall not in any way be affected or impaired thereby.

  
 11. Governing Law. This Agreement shall be governed by,
and construed in accordance with, the internal laws of the Commonwealth of Pennsylvania, without giving effect to the principles of conflicts of law. 
  
 12. Counterparts. This Agreement may be executed in two or more counterparts, each of which shall constitute an original, but all of which, when
taken together, shall constitute but one instrument, and shall become effective when one or more counterparts have been signed by each party hereto and delivered to the other parties. 






 13. Expenses The parties hereto shall pay their own costs and expenses incidental to the
negotiation, execution, delivery and performance of this Agreement and the transactions contemplated hereby. 
  
 14. Successors and Assigns. This Agreement shall inure to the benefit of and be binding upon the successors and permitted assigns of each of the
parties. Each Investor’s rights under Section 6 hereof, to have the Company register for resale Registrable Securities in accordance with the terms of this Agreement, shall be automatically assignable by each Investor if: (i) the Investor
agrees in writing with the transferee or assignee to assign such rights, and a copy of such agreement is furnished to the Company within a reasonable time after such assignment; (ii) the Company is, within a reasonable time after such transfer or
assignment, furnished with written notice of (A) the name and address of such transferee or assignee and (B) the securities with respect to which such registration rights are being transferred or assigned; (iii) following such transfer or assignment
the further disposition of such securities by the transferee or assignees is restricted under the Securities Act and applicable state securities laws; (iv) at or before the time the Company receives the written notice contemplated by clause (ii) of
this Section, the transferee or assignee agrees in writing with the Company to be bound by all of the provisions of this Agreement; and (v) such transfer shall have been made in accordance with the applicable requirements of this Agreement.

  
 15. Confidential Information. Each of the Investors
represents to the Company that, at all times during the Company’s offering of the Shares, the Investor has maintained in confidence the existence of this Offering and covenants that it will continue to maintain in confidence such information
until such information becomes generally publicly available other than through a violation of this provision by the Investor or its agents. 
  
 16. Securities Laws Disclosure; Publicity. The Company and each Investor shall consult with each other in issuing any press releases with respect
to the transactions contemplated hereby, and neither the Company nor any Investor shall issue any such press release or otherwise make any such public statement without the prior consent of the Company, with respect to any press release of any
Investor, or without the prior consent of each Investor, with respect to any press release of the Company, which consent shall not unreasonably be withheld, except if such disclosure is required by law, in which case the disclosing party shall, to
the extent not inconsistent with the disclosing party’s legal obligations, promptly provide the other party with prior notice of such public statement or communication. 






 SIGNATURE PAGE TO SUBSCRIPTION AGREEMENT 
  
 Please acknowledge your acceptance of the foregoing Securities Purchase
Agreement by signing and returning a copy to the undersigned whereupon it shall become a binding agreement between us. 
  

	 NUTRISYSTEM, INC.

		
	 By:
	 	 /s/ JAMES D. BROWN


	 	 	         Name: James D. Brown

	 	 	         Title: Chief Financial Officer

	
	 Dated: September 29, 2003



  

	 SUBSCRIBER

	  	PURCHASE PRICE

	    	SHARES


	 Kinderhook Partners L.L.C.
	  	$	1,260,000	    	1,260,000
				
	 By:
	  	 /s/ STEPHEN J. CLEARMAN

	  	 	 	    	 
	 	  	 Name: Stephen J. Clearman
 Title: General Partner
	  	 	 	    	 
			
	 Stephen J. Clearman
	  	$	415,000	    	415,000
			
	 /s/ STEPHEN J. CLEARMAN

	  	 	 	    	 
			
	 Madhavi Shah
	  	$	15,000	    	15,000
			
	 /s/ MADHAVI SHAH

	  	 	 	    	 
			
	 James F. Basili
	  	$	10,000	    	10,000
			
	 /s/ JAMES F. BASILI

	  	 	 	    	 
			
	 Tushar Shah
	  	$	20,000	    	20,000
			
	 /s/ TUSHAR SHAH

	  	 	 	    	 
			
	 Richard A. Vines
	  	$	25,000	    	25,000
			
	 /s/ RICHARD A. VINES

	  	 	 	    	 
			
	 Lawrence W. Lepard
	  	$	75,000	    	75,000
			
	 /s/ LAWRENCE W. LEPARD

	  	 	 	    	 
			
	 Timothy M. Riley
	  	$	100,000	    	100,000
			
	 /s/ TIMOTHY M. RILEY

	  	 	 	    	 
	
	(continued onto next page)








	 SUBSCRIBER

	  	PURCHASE PRICE

	    	SHARES


			
	 Vinodray Shah
	  	$	80,000	    	80,000
			
	 /s/ VINODRAY SHAH

	  	 	 	    	 
			
	 Bruce Evans
	  	$	100,000	    	100,000
			
	 /s/ BRUCE EVANS

	  	 	 	    	 
			
	 Kathleen A. Tornetta
	  	$	25,000	    	25,000
			
	 /s/ KATHLEEN A. TORNETTA

	  	 	 	    	 
			
	 Joseph F.Tornetta
	  	$	75,000	    	75,000
			
	 /s/ JOSEPH F. TORNETTA

	  	 	 	    	 
			
	 William Kronenberg III
	  	$	100,000	    	100,000
			
	 /s/ WILLIAM KRONENBERG III

	  	 	 	    	 
			
	 Total
	  	$	2,300,000	    	2,300,000







 EXHIBIT A to the SECURITIES PURCHASE AGREEMENT 
  
 FORM OF LEGAL OPINION 






 EXHIBIT B to the SECURITIES PURCHASE AGREEMENT 
  
 FORM OF PLAN OF DISTRIBUTION 
  
 We are registering the shares of common stock on behalf of the selling
security holders. Sales of shares may be made by selling security holders, including their respective donees, transferees, pledgees or other successors-in-interest, from time to time on the over-the-counter market, or any exchange upon which our
shares may trade in the future, at market prices prevailing at the time of sale, at prices related to market prices, or at negotiated or fixed prices. The shares may be sold by one or more of, or a combination of, the following: 
  

	•	a block trade in which the broker-dealer so engaged will attempt to sell the shares as agent but may position and resell a portion of the block as principal to facilitate the
transaction; 

  

	•	purchases by a broker-dealer as principal and resale by such broker-dealer for its account pursuant to this prospectus; 

  

	•	ordinary brokerage transactions and transactions in which the broker solicits purchases; 

  

	•	through options, swaps or derivatives; 

  

	•	in privately negotiated transactions; 

  

	•	through the settlement of short sales entered into after the date of this prospectus; and 

  

	•	put or call option transactions relating to the shares. 

  
 The selling security holders may effect these transactions by selling shares directly to purchasers or to or through broker-dealers, which may act as
agents or principals. These broker-dealers may receive compensation in the form of discounts, concessions or commissions from the selling security holders and/or the purchasers of shares for whom such broker-dealers may act as agents or to whom they
sell as principals, or both (which compensation as to a particular broker-dealer might be in excess of customary commissions). The selling security holders may also sell shares of common stock short and deliver shares covered by this prospectus to
close out short positions, provided that the short sale is made after the registration statement is declared effective and a copy of this prospectus is delivered in connection with the short sale. The selling security holders have advised us that
they have not entered into any agreements, understandings or arrangements with any underwriters or broker-dealers regarding the sale of their securities. 
  
 The selling security holders may enter into hedging transactions with broker-dealers or other financial institutions. In connection with those
transactions, the broker-dealers or other financial institutions may engage in short sales of the shares or of securities convertible into or exchangeable for the shares in the course of hedging positions they assume with the selling security
holders. The selling security holders may also enter into options or other transactions with broker-dealers or other financial institutions which require the delivery of shares offered by this prospectus to those broker-dealers or other financial
institutions. The broker-dealer or other financial institution may then resell the shares pursuant to this prospectus (as amended or supplemented, if required by applicable law, to reflect those transactions). 
  
 The selling security holders and any broker-dealers that act in connection
with the sale of shares may be deemed to be “underwriters” within the meaning of Section 2(11) of the Securities Act of 1933, and any commissions received by broker-dealers or any profit on the resale of the shares sold by them while
acting as principals may be deemed to be underwriting discounts or commissions under the Securities Act. The selling security holders may agree to indemnify any agent, dealer or broker-dealer that participates in transactions involving sales of the
shares against liabilities, including liabilities arising under the Securities Act. 






 The selling security holders will be subject to the prospectus delivery requirements of the Securities
Act. The selling security holders and any other person participating in the distribution of the shares will be subject to the applicable provisions of the Securities Exchange Act of 1934 and the rules and regulations thereunder, including, without
limitation, Regulation M of the Exchange Act, which may limit the timing of purchases and sales of any of the shares by the selling security holders and any other participating person. Regulation M may also restrict the ability of any person engaged
in the distribution of the shares to engage in market-making activities with respect to the shares of common stock. 
  
 The selling security holders also may resell all or a portion of the shares in open market transactions in reliance upon Rule 144 under the Securities
Act, provided they meet the criteria and conform to the requirements of Rule 144. 
  
 Upon being notified by a selling security holder that a material arrangement has been entered into with a broker-dealer for the sale of shares through a block trade, special offering, exchange distribution or
secondary distribution or a purchase by a broker or dealer, we will file a supplement to this prospectus, if required pursuant to Rule 424(b) under the Securities Act, disclosing: 
  

	 	-	the name of the selling security holder and of the participating broker-dealer(s); 

  

	 	-	the number of shares involved; 

  

	 	-	the initial price at which the shares were sold; 

  

	 	-	the commissions paid or discounts or concessions allowed to the broker-dealer(s), where applicable; 

  

	 	-	that such broker-dealer(s) did not conduct any investigation to verify the information set out or incorporated by reference in this prospectus; and 

  

	 	-	other facts material to the transactions. 

  
 In addition, we will file a supplement to this prospectus when a selling security holder notifies us that a donee or pledgee intends to sell more than 500
shares of common stock. 
  
 We have agreed to indemnify each of
the selling security holders and each selling security holder has agreed, severally and not jointly, to indemnify us against some liabilities in connection with the offering of the shares, including liabilities arising under the Securities Act.

  
 Expenses Associated with Registration. 
  
 We are paying all expenses and fees in connection with the registration of
the shares. The selling security holders will bear all brokerage or underwriting discounts or commissions paid to broker-dealers in connection with the sale of the shares. 






 EXHIBIT C to the SECURITIES PURCHASE AGREEMENT 
  
 FORM OF CERTIFICATE OF SUBSEQUENT SALE 
  
 CERTIFICATE OF SUBSEQUENT SALE 
  
 [Name and Address of Transfer Agent] 
  

	 	RE:	Sale of Shares of Common Stock of NutriSystem, Inc. (the “Company”) pursuant to the Company’s Prospectus dated
                    , 200     (the “Prospectus”) 

  
 Dear Sir/Madam: 
  
 The undersigned hereby certifies, in connection with the sale of shares of Common Stock of
the Company included in the table of Selling Stockholders in the Prospectus, that the undersigned has sold the shares pursuant to the Prospectus and in a manner described under the caption “Plan of Distribution” in the Prospectus and that
such sale complies with all securities laws applicable to the undersigned, including, without limitation, the Prospectus delivery requirements of the Securities Act of 1933, as amended. 
  

	
	 Selling Stockholder (the beneficial owner):


	
	 Record Holder (e.g., if held in name of nominee):


	
	 Stock Certificate No.(s):


	
	 Number of Shares Sold:


	
	 Date of Sale:



  
 In the event that you receive a stock
certificate(s) representing more shares of Common Stock than have been sold by the undersigned, then you should return to the undersigned a newly issued certificate for such excess shares in the name of the Record Holder and BEARING A RESTRICTIVE
LEGEND. Further, you should place a stop transfer on your records with regard to such certificate. 
  

	 	 	 	 	 Very truly yours,

					
	 Dated:
	 	  

	 	 	 	 By:
	 	  


	 	 	 	 	 	 	 Print Name:
	 	  


	 	 	 	 	 	 	 Title:
	 	  



  

	 cc:
	 	 NutriSystem, Inc.

	 	 	 202 Welsh Road

	 	 	 Horsham, PA 19044