Dish Network 2014 Annual Report Download - page 59

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 a provision establishing advance notice requirements for nominations of candidates for election to our
Board of Directors or for proposing matters that can be acted upon by shareholders at shareholder meetings.
In addition, pursuant to our certificate of incorporation we have a significant amount of authorized and unissued
stock which would allow our Board of Directors to issue shares to persons friendly to current management, thereby
protecting the continuity of its management, or which could be used to dilute the stock ownership of persons
seeking to obtain control of us.
We are controlled by one principal stockholder who is also our Chairman.
Charles W. Ergen, our Chairman, owns approximately 46.8% of our total equity securities (assuming conversion of
all Class B Common Stock into Class A Common Stock) and beneficially owns approximately 49.5% of our total
equity securities (assuming conversion of only the Class B Common Stock held by Mr. Ergen into Class A
Common Stock). Under either a beneficial or equity calculation method, Mr. Ergen controls approximately 81.9%
of the total voting power. Mr. Ergen’s beneficial ownership of shares of Class A Common Stock excludes
25,188,204 shares of Class A Common Stock issuable upon conversion of shares of Class B Common Stock
currently held by certain trusts established by Mr. Ergen for the benefit of his family. These trusts own
approximately 5.5% of our total equity securities (assuming conversion of all Class B Common Stock into Class A
Common Stock) and beneficially own approximately 10.1% of our total equity securities (assuming conversion of
only the Class B Common Stock held by such trusts into Class A Common Stock). Under either a beneficial or
equity calculation method, these trusts possess approximately 9.7% of the total voting power. Through his voting
power, Mr. Ergen has the ability to elect a majority of our directors and to control all other matters requiring the
approval of our stockholders. As a result, DISH Network is a “controlled company” as defined in the Nasdaq
listing rules and is, therefore, not subject to Nasdaq requirements that would otherwise require us to have: (i) a
majority of independent directors; (ii) a nominating committee composed solely of independent directors; (iii)
compensation of our executive officers determined by a majority of the independent directors or a compensation
committee composed solely of independent directors; and (iv) director nominees selected, or recommended for the
Board’s selection, either by a majority of the independent directors or a nominating committee composed solely of
independent directors. Mr. Ergen is also the principal stockholder and Chairman of EchoStar.
Legal and Regulatory Risks Affecting our Business
Our business depends on certain intellectual property rights and on not infringing the intellectual property rights
of others.
We rely on our patents, copyrights, trademarks and trade secrets, as well as licenses and other agreements with our
vendors and other parties, to use our technologies, conduct our operations and sell our products and services. Legal
challenges to our intellectual property rights and claims of intellectual property infringement by third parties could
require that we enter into royalty or licensing agreements on unfavorable terms, incur substantial monetary liability
or be enjoined preliminarily or permanently from further use of the intellectual property in question or from the
continuation of our businesses as currently conducted, which could require us to change our business practices or
limit our ability to compete effectively or could have an adverse effect on our results of operations. Even if we
believe any such challenges or claims are without merit, they can be time-consuming and costly to defend and divert
management’s attention and resources away from our business. We currently have pending lawsuits with two major
broadcast television networks alleging, among other things, that the PrimeTime Anytime™ and AutoHop™ features
of the Hopper® set-top box infringe their copyrights. Additionally, Fox has alleged, among other things, that the
Slingbox “placeshifting” functionality and Hopper Transfers™ features of our Hopper set-top box infringe its
copyrights. See Note 16 in the Notes to our Consolidated Financial Statements in this Annual Report on Form 10-K
for further information. In the event a court ultimately determines that we infringe the asserted copyrights, we may
be subject to, among other things, an injunction that could require us to materially modify or cease to offer these
features. Moreover, because of the rapid pace of technological change, we rely on technologies developed or
licensed by third parties, and if we are unable to obtain or continue to obtain licenses from these third parties on
reasonable terms, our business, financial condition and results of operations could be adversely affected.