Twenty-First Century Fox 2006 Annual Report Download - page 102

News Corporation
Notes totheConsolidated Financial Statements (CONTINUED)
At the Company’s 2006 annual meeting of stockholders, the Company’s stockholders will be askedtoapprove an
extension of the existing rights plan to October 2008, with theCompany having the right to extend the rights plan for one
year if the situation with Liberty, which led to the adoption of the rights plan, remains unresolved. If the Company’s
stockholders vote in favor of the rights plan, then at the expiration of the existing rights plan or any other rights plan, the
Company may adopt subsequent rights plans of one-year duration without stockholder approval, subject to interim periods
of nine months between rights plans.If during or prior to any interim period, any stockholder (i) acquires 5percent or
more of the Company’s voting stock, (ii) offers to purchase voting stock or assets that would result in their owning 30 per-
cent or more of the Company’s voting stock or assets or (iii) in certain other circumstances, the Company may immediately
adopt a new rights plan of one-year duration. The Company may,of course, also adopt new rights plans or extend existing
rights plans of unlimited duration with stockholder approval. The provisions discussed in this paragraph shall be in effect
until the twentieth anniversary of the Annual Meeting. The terms of the settlement agreement are not intended to limit,
restrict or eliminate the ability of the Company’s stockholders under applicable Delaware law to amend the Company’s
certificate of incorporation in anymanner. As part of the settlement, the Company has agreed to pay the plaintiffs’ attor-
neys fees and expenses in the litigation.
On April 18, 2006, the Delaware Court of Chancery entered a scheduling order (the “Scheduling Order”)
(i) preliminarily approving the lawsuit as aclass action on behalf of the class of Plaintiffs (the “Class”) set forth in the Stip-
ulation of Settlement and (ii) setting the date for ahearing for the purposesof:(a)determining whether the action should
be certified as aclass action, (b) determining whether the terms of the proposedsettlement are fair, reasonable and in the
best interests of the Class, and (c) considering the application of Plaintiffs’ counsel for an award of attorneys’ fees and
expenses. The settlement hearing was held on May 23, 2006. Liberty filed an objection to the settlement. Before approving
the settlement, the Court instructed the parties to clarify the terms of the releases that they were providing each other in
order to make them easier to read, and to make express that claims againstthe partiesbased on future conduct were not
being released. On June1,2006, the Court issued its order and final judgment approving the settlement.
NDS
Echostar Litigation
On June6,2003, Echostar Communications Corporation, Echostar Satellite Corporation, Echostar Technologies Corpo-
ration andNagrastar L.L.C. (collectively, “Echostar”) filed an action against NDS in the United States District Court for the
Central District of California. Echostar filed an amended complaint on October 8, 2003, which purported to allege claims
for violation of the Digital Millennium Copyright Act (“DMCA”), the Communications Act of 1934 (“CA”), the Electronic
Communications Privacy Act, the Computer Fraud and Abuse Act, California’s Unfair Competition statute and the federal
RICO statute. The complaint also purported to allege claims for civil conspiracy, misappropriation of trade secrets and
interference with prospective business advantage. The complaint sought injunctive relief, unspecified compensatory and
exemplary damages and restitution. On December 22, 2003, all of the claims were dismissed by the court, except for the
DMCA, CA and unfair competition claims, and the court limited these claims to acts allegedly occurring within three years
of the filing of Echostar’s original complaint.
After Echostar filed asecond amended complaint, NDS filed amotion to dismiss this complaint on March 31, 2004. On
July 21, 2004, the court issued an order directing Echostar to, among other things, file a third amended complaint within
ten days correcting various deficiencies noted in the second amended complaint. Echostar filed its third amended com-
plaint on August 4, 2004. On August 6, 2004, the court ruled that NDS was free to file amotion to dismiss the third
amended complaint, which NDS did on September 20, 2004. The hearing occurred on January 3, 2005. On February 28,
2005, the court issued an order treating NDS’s motion to dismiss as amotion for amore definite statement, granting the
motion andgiving Echostar until March 30, 2005 to file afourth amended compliant correcting various deficiencies noted
in the third amended complaint. On March 30, 2005, Echostar filed afourth amended complaint, which NDS moved to
dismiss. On July 27, 2005, the court granted in part and denied in part NDS’s motion to dismiss, and again limited Echo-
star’s surviving claims to acts allegedly occurring within three years of the filing of Echostar’s original complaint. NDS
believes thesesurviving claims are without merit and intends to vigorously defend against them.
On October 24, 2005, NDS filed its Amended Answer with Counterclaims, alleging that Echostar misappropriated
NDS’s trade secrets, violated the ComputerFraud and Abuse Act and engaged in unfair competition. On November 8, 2005,
Echostar moved to dismiss NDS’s counterclaims for conversion andclaim and delivery, arguing that these claims were
preempted and time-barred. Echostar also moved for amore definite statement of NDS’s trade secret misappropriation
claim. On December 8, 2005, the court granted in part and denied in part Echostar’s motion to dismiss and for amore
definite statement, but granted NDS leave to file amended counterclaims. On December 13, 2005, NDS filed its Second
Amended Answer with Counterclaims, which Echostar answered on December 27, 2005. The court has set this casefortrial
in April 2008.
Sogecable Litigation
On July 25, 2003, Sogecable, S.A. and its subsidiary Canalsatellite Digital, S.L., Spanish satellite broadcasters and customers
of Canal+ Technologies SA (together, “Sogecable”), filed an action against NDS in the United States District Court for the
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