Nutrisystem 2011 Annual Report Download - page 28

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upon which relief may be granted under Pennsylvania Rule of Civil Procedure 1028(a)(4); and (3) lack of
capacity to sue under Pennsylvania Rule of Civil Procedure 1028(a)(5) because the plaintiff did not make a
demand on the company’s directors and failed to adequately allege that such demand was excused. On
November 21, 2011, defendants filed a praecipe for argument in which they requested oral argument. On
December 23, 2011, plaintiff filed his opposition to the defendants’ preliminary objections and alleged that the
directors issued false and misleading statements in the Company’s proxy statement by stating that the Company
adhered to a pay-for-performance policy when in fact it did not. On January 23, 2012, defendants filed their reply
brief in support of their preliminary objections to the complaint. Oral argument was heard by the court on
February 8, 2012. On February 13, 2012, the court denied the defendants’ preliminary objections. The
defendants’ answer to the complaint is now required to be filed by March 13, 2012. The Company believes that
the claims are without merit and intends to defend the litigation vigorously.
The Company is also involved in other various claims and routine litigation matters. In the opinion of
management, after consultation with legal counsel, the outcomes of such matters are not anticipated to have a
material adverse effect on the Company’s consolidated financial position, results of operations or cash flows in
future years.
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