Motorola 2006 Annual Report Download - page 34

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Iridium-Related Cases
Class Action Securities Lawsuits
Motorola has been named as one of several defendants in putative class action securities lawsuits arising out of
alleged misrepresentations or omissions regarding the Iridium satellite communications business, which on
March 15, 2001, were consolidated in the federal district court in the District of Columbia under Freeland v.
Iridium World Communications, Inc., et al., originally filed on April 22, 1999. Plaintiff's motion for class
certification was granted on January 9, 2006 and the trial is scheduled to begin on May 22, 2008.
Bankruptcy Court Lawsuit
Motorola was sued by the Official Committee of the Unsecured Creditors of Iridium in the Bankruptcy Court
for the Southern District of New York on July 19, 2001. In re Iridium Operating LLC, et al. v. Motorola asserts
claims for breach of contract, warranty, fiduciary duty and fraudulent transfer and preferences, and seeks in excess
of $4 billion in damages. Trial began on the solvency portion of these claims on October 23, 2006.
On March 30, 2001, the United States Bankruptcy Court for the Southern District of New York presiding over
the Iridium bankruptcy proceeding approved a settlement between the unsecured creditors of the Iridium Debtors
and the Iridium Debtors' pre-petition secured lenders. The settlement agreement creates and provides for the
funding of a litigation vehicle for the purpose of pursuing litigation against Motorola. Motorola appealed the
approval of the settlement to the United States District Court for the Southern District of New York. On April 7,
2005, the District Court entered an order denying Motorola's appeal and affirming the settlement. On May 4, 2005,
Motorola filed a notice of appeal to the United States Court of Appeals for the Second Circuit. The appeal is fully
briefed and argued and remains pending.
Iridium India Lawsuits
Motorola and certain of its current and former officers and directors were named as defendants in a private
criminal complaint filed by Iridium India Telecom Ltd. (""Iridium India'') in October 2001 in the Court of the Extra
Judicial Magistrate, First Class, Khadki, Pune, India. The Iridium India Telecom Ltd. v. Motorola, Inc. et al. complaint
alleges that the defendants conspired to, and did, commit the criminal offense of ""cheating'' by fraudulently inducing
Iridium India to purchase gateway equipment from Motorola, to acquire Iridium stock, and to invest in developing a
market for Iridium services in India. Under the Indian penal code, ""cheating'' is punishable by imprisonment for up to
7 years and a fine of any amount. The court may also require defendants to compensate the victim for its losses, which
the complaint estimates at about $100 million. In August 2003, the Bombay High Court granted Motorola's petition to
dismiss the criminal action against Motorola and the individual defendants. Iridium India has petitioned the Indian
Supreme Court to exercise its discretion to review that dismissal, and that petition is pending.
In September 2002, Iridium India also filed a civil suit in the Bombay High Court against Motorola and Iridium.
The suit alleges fraud, intentional misrepresentation and negligent misrepresentation by Motorola and Iridium in
inducing Iridium India to purchase gateway equipment from Motorola, to acquire Iridium stock, and to invest in
developing a market for Iridium services in India. Iridium India claims in excess of $200 million in damages and
interest. Following extensive proceedings in the trial court and on appeal related to Iridium India's motion for interim
relief, Motorola has deposited approximately $44 million in a specially designated account in India, and the Indian
Supreme Court has accepted for a full hearing at a later date Motorola's appeal regarding interim relief.
Shareholder Derivative CaseÌIridium and Telsim
M&C Partners III v. Galvin, et al., filed January 10, 2002, in the Circuit Court of Cook County, Illinois, is a
shareholder derivative action against fifteen current and former members of the Motorola Board of Directors and
Motorola as a nominal defendant. The lawsuit alleges that the Motorola directors breached their fiduciary duty to
the Company and/or committed gross mismanagement of Motorola's business and assets by allowing Motorola to
engage in improper practices with respect to Iridium and Telsim (as defined below).
In April 2006, the Court held that the plaintiff could not pursue its Iridium-related claims, but denied without
prejudice plaintiff's motion to file a Third Amended Complaint with respect to new allegations pertaining to
Telsim. Following the Court's ruling for defendants on the Iridium-related claims and plaintiff's July 20, 2006
demand with respect to Telsim-related claims, the Motorola Board of Directors appointed an investigatory
committee to investigate those Telsim-related claims.