Twenty-First Century Fox 2007 Annual Report Download - page 102

NEWS CORPORATION
Notes to the Consolidated Financial Statements (continued)
plaintiff alleges that certain defendants disseminated false and misleading definitive proxy statements on two occasions: one on
December 30, 2003 in connection with the shareholder vote on January 29, 2004 on the election of directors and ratification of
financing transactions with certain entities of VantagePoint Venture Partners (“VantagePoint”), a former large stockholder of Inter-
mix, and another on August 25, 2005 in connection with the shareholder vote on the FIM Transaction. The complaint names as
defendants certain VantagePoint related entities and the members of the Intermix Board who were incumbent on the dates of the
respective proxy statements. Intermix is not named as a defendant, but has certain indemnity obligations to the former officer and
director defendants in connection with these claims and allegations. Intermix believes that the claims are without merit and expects
that the individual defendants will vigorously defend themselves in the matter. On August 25, 2006, plaintiff amended his complaint
to add certain investment banks (the “Investment Banks”) as defendants. Intermix has certain indemnity obligations to the Invest-
ment Banks as well. After conferring with defendants concerning deficiencies in the amended complaint pursuant to local rule and
entering a stipulation with defendants regarding a briefing schedule, plaintiff amended his complaint again on September 27, 2006.
On October 19, 2006, defendants filed motions to dismiss all claims in the Second Amended Complaint. These motions were
scheduled to be heard on February 12, 2007. On February 9, 2007, the case was transferred from Judge Walter to Judge George H.
King, the judge assigned to the LeBoyer action on the grounds that it raises substantially related questions of law and fact as LeBoyer,
and would entail substantial duplication of labor if heard by different judges. Judge King took the February 26, 2007 hearing date
for the motions to dismiss off-calendar. On May 22, 2007, Judge King ordered a combined status conference with the LeBoyer action
occur on June 11, 2007 at which he ordered the Brown case be consolidated with the LeBoyer action. Judge King also stated that he
was not going to consider the pending motions to dismiss but rather ordered plaintiffs’ counsel to file a consolidated first amended
complaint setting forth the causes of action in the LeBoyer and Brown matters and further ordered the parties to file a joint brief
regarding dismissal of the first amended complaint. On July 11, 2007, plaintiffs filed the consolidated first amended complaint.
Pursuant to the stipulated briefing schedule ordered by the court, the parties’ joint brief is due to be filed on October 11, 2007.
Intermix believes that the claims are without merit and expects the individual defendants will vigorously defend themselves in the
matter.
Greenspan Litigation
On February 10, 2005, Brad Greenspan, Intermix’s former Chairman and Chief Executive Officer who was asked to resign as CEO
and was removed as Chairman in the fall of 2003, filed a derivative complaint in Los Angeles Superior Court against Intermix, vari-
ous of its former directors and officers, VantagePoint and certain of VantagePoint’s principals and affiliates. The complaint alleged
claims of libel and fraud against Intermix and various of its then current and former officers and directors, claims of intentional inter-
ference with contract and prospective economic advantage, unfair competition and fraud against VantagePoint and certain of its
affiliates and principals and claims alleging that Intermix’s forecasts of profitability leading up to its January 2004 annual stockholder
meeting and associated proxy contest waged by Mr. Greenspan were false and misleading. These claims generally related to Inter-
mix’s decision to consummate its Series C Preferred Stock financing with VantagePoint in October 2003, Mr. Greenspan’s con-
temporaneous separation from Intermix and matters arising during the proxy contest. The complaint also alleged that Intermix’s
acquisition of the assets of a company known as Supernation LLC (“Supernation”) in July 2004 involved breaches of fiduciary duty.
Mr. Greenspan sought remittance of compensation received by the various then current and former Intermix director and officer
defendants, unspecified damages, removal of various Intermix directors, disgorgement of unspecified profits, reformation of the
Supernation purchase, punitive damages, fees and costs, injunctive relief and other remedies. Intermix and the other defendants
filed motions challenging the validity of the action and Mr. Greenspan’s ability to pursue it. Mr. Greenspan voluntarily dismissed this
action in October 2005.
Prior to dismissing his derivative lawsuit, in August 2005, Mr. Greenspan filed another complaint in Los Angeles Superior Court
against the same defendants. The complaint, for breach of fiduciary duty, included substantially the same allegations made by
Mr. Greenspan in the above-referenced lawsuit. Mr. Greenspan further alleged that defendants’ actions have, with the FIM Trans-
action, culminated in the loss of Mr. Greenspan’s interest in Intermix for a cash payment allegedly below its value. On October 31,
2005, the defendants filed motions seeking dismissal of the lawsuit on the grounds that the complaint fails to state any cause of
action. Instead of responding to these motions, Mr. Greenspan filed an amended complaint on February 21, 2006, in which
Mr. Greenspan omitted certain previously named defendants and added two other former directors as defendants. In this amended
complaint, Mr. Greenspan asserts seven causes of action. The first two causes of action, for intentional interference with prospective
economic advantage and violation of California’s Business Professions Code section 17200, generally related to Intermix’s decision
to consummate its Series C Preferred Stock financing with VantagePoint in October 2003 and allege that Mr. Greenspan was
“forced” to resign. The third through sixth causes of action assert various claims for breach of fiduciary duty related to the FIM
Transaction and substantially mirror the allegations in the Intermix Media Shareholder Litigation. By Order of March 20, 2006, the
court ordered that Mr. Greenspan’s claims based on the FIM Transaction be severed from the rest of his complaint and coordinated
with the claims asserted in the Intermix Media Shareholder Litigation. The seventh cause of action is asserted against Intermix for
indemnification. In his amended complaint, Mr. Greenspan seeks compensatory and consequential damages, punitive damages, fees
and costs, injunctive relief and other remedies. Motions to dismiss the first six causes of action were filed and, on October 6, 2006,
granted without leave to amend. On November 21, 2006, Mr. Greenspan dismissed with prejudice the seventh cause of action for
indemnity, which was the only remaining claim and his sole cause of action against Intermix. On January 24, 2007, Mr. Greenspan
filed a notice of appeal of the court’s October 6, 2006 ruling. Mr. Greenspan’s opening brief in the Court of Appeal is currently due
August 24, 2007. The matter will likely not be fully briefed and ready for oral argument until the first half of 2008.
NEWS CORPORATION 2007 Annual Report 101