Nutrisystem 2015 Annual Report Download - page 22

We may in the future be subject to intellectual property rights claims.
Third parties may in the future make claims against us alleging infringement of their intellectual property rights.
Any intellectual property claims, regardless of merit, could be time-consuming and expensive to litigate or settle
and could significantly divert management’s attention from other business concerns. In addition, if we were
unable to successfully defend against such claims, we may have to pay damages, stop selling the service or
product or stop using the software, technology or content found to be in violation of a third party’s rights, seek a
license for the infringing service, product, software, technology or content or develop alternative non-infringing
services, products, software, technology or content. If we cannot license on reasonable terms, develop
alternatives or stop using the service, product, software, technology or content for any infringing aspects of our
business, we may be forced to limit our service and product offerings. Any of these results could reduce our
revenue and our ability to compete effectively, increase our costs or harm our business.
Our credit agreement contains financial and other covenants. The failure to comply with such covenants
could have an adverse effect on us.
Our credit agreement contains certain financial and other covenants including a minimum consolidated fixed
charge coverage ratio, if there are outstanding borrowings, and limitations on, among other things, liens,
indebtedness, certain acquisitions, consolidations and sales of assets. There were no borrowings outstanding as of
December 31, 2015. Any failure to comply with the restrictions of the credit agreement may result in an event of
default under the agreement.
We are dependent on our key executive officers for future success. If we lose the services of any of our key
executive officers and we are unable to timely retain a qualified replacement, our business could be
harmed.
Our future success depends to a significant degree on the skills, experience and efforts of our key executive
officers. The loss of the services of any of these individuals could harm our business. We have not obtained life
insurance on any key executive officers. If any key executive officers left us or were seriously injured and
became unable to work, our business could be harmed.
Provisions in our certificate of incorporation may deter or delay an acquisition of us or prevent a change
in control, even if an acquisition or a change of control would be beneficial to our stockholders.
Provisions of our certificate of incorporation (as amended) may have the effect of deterring unsolicited takeovers
or delaying or preventing a third party from acquiring control of us, even if our stockholders might otherwise
receive a premium for their shares over then current market prices. In addition, these provisions may limit the
ability of stockholders to approve transactions that they may deem to be in their best interests.
Our certificate of incorporation (as amended) permits our Board of Directors to issue preferred stock without
stockholder approval upon such terms as the Board of Directors may determine. The rights of the holders of our
common stock will be junior to, and may be adversely affected by, the rights of the holders of any preferred stock
that may be issued in the future. The issuance of preferred stock could have the effect of making it more difficult
for a third party to acquire, or of discouraging a third party from acquiring, a majority of our outstanding
common stock. The issuance of a substantial number of preferred shares could adversely affect the price of our
common stock.
Changes in consumer preferences could negatively impact our operating results.
Our program features frozen and ready-to-go food selections, which we believe offer convenience and value to
our customers. Our continued success depends, to a large degree, upon the continued popularity of our program
versus various other weight loss, weight management and fitness regimens, such as low carbohydrate diets,
appetite suppressants and diets featured in the published media. Changes in consumer tastes and preferences
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