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• BANKRUPTCY Power company to get $520M in settlement ATLANTA (AP) � Mirant Corp. said last week that it has reached a settlement with bankruptcy creditors who challenged a 2006 agreement in legal disputes over a distribution contract with Potomac Electric and Power Co. Under the latest agreement, last year’s settlement, which would pay Pepco $520 million in cash and stock, will become effective in the third quarter, Mirant said. The company said it resolves any remaining disputes between Pepco and Mirant in Mirant’s bankruptcy proceedings, and will end Mirant’s obligations to make any further payments under out-of-market electricity supply contracts for which Mirant became responsible through its purchase of Pepco’s generation assets in 2000. Parts supplier settles dispute over contracts NEW YORK (AP) � A federal judge last week approved a settlement between Toledo, Ohio-based Dana Corp. and component supplier Sypris Technologies Inc. that ends long-running litigation between the two companies and saves Dana millions of dollars. Sypris, Dana’s biggest component-part supplier, has agreed to cut prices on some parts and make quality enhancements. The new agreement relieves Dana of its obligations under the previous contract to purchase certain parts from Sypris, a unit of Louisville, Ky.-based Sypris Solutions Inc. Under the settlement approved by U.S. Bankruptcy Judge Burton R. Lifland, Dana and Sypris will enter into a new, long-term master supply agreement in lieu of the three existing agreements. The new pact, which runs through 2014, provides Dana with enhanced pricing for certain commodities starting next year and “improved coverage in the areas of quality and warranty,” Sypris said last month. In return, Sypris will receive an $89.9 million unsecured claim in Dana’s bankruptcy case. Dana sought Chapter 11 bankruptcy protection in March 2006 amid cutbacks by U.S. automakers. • CONTRACTS Iowa to pay $1.7M in suit against gambling ban DES MOINES, IOWA (AP) � The state agreed last week to pay a West Des Moines company $1.7 million to settle a lawsuit over the Legislature’s decision to end TouchPlay gambling, a game resembling slot machines that rapidly expanded across the state. Royal Financial was the largest individual owner of TouchPlay machines when lawmakers voted in March 2006 to outlaw the game. The ban went into effect on May 4, 2006, when the TouchPlay machines were turned off and removed from businesses. Royal Financial owned 1,599 machines, which generated about $23.6 million in net revenue. Royal Financial, created by William Krause, a West Des Moines businessman whose family owns the Kum & Go convenience store chain, filed a lawsuit against the state and the Iowa Lottery claiming breach of contract and unjust enrichment. Krause claimed the lottery’s CEO, Ed Stanek, had urged him to buy the machines and promised that the program would last for at least five years, giving the company an opportunity to recover its investment and expenses. • INTELLECTUAL PROPERTY Microsoft dodges $1.53B in damages after trial SEATTLE (AP) � Microsoft Corp. does not have to pay $1.53 billion in damages to Alcatel-Lucent S.A., a federal judge ruled last week, reversing a March jury decision that Microsoft programs infringe on Alcatel-Lucent’s digital music patents. U.S. District Judge Rudi M. Brewster in San Diego said on Aug. 6 that Microsoft’s Windows Media Player software does not infringe on one of the two patents in question. Brewster also said the second patent is owned by both Alcatel-Lucent and Fraunhofer Gesellschaft, a German company Microsoft paid $16 million for rights to use the technology. Since Fraunhofer did not also sue Microsoft, the software maker is in the clear, the judge decided. Both patents cover the encoding and decoding of audio into the digital MP3 format, a popular way to convert music from a CD into a file on a personal computer and vice versa. • WHITE-COLLAR CRIME Brocade executive guilty of options backdating SAN FRANCISCO (AP) � Former Brocade Communications Systems Inc. CEO Gregory Reyes was convicted on Aug. 7 of defrauding investors in the first stock-options backdating case to go to trial. The guilty verdict on all counts is an important validation of the Justice Department’s options backdating probe, which has so far led to criminal charges against at least 10 executives. Reyes was seen as an important test of whether a jury considers it a crime worthy of jai. Reyes was charged with 10 felony counts of securities fraud, with prosecutors accusing him of doctoring company records and lying to investors and auditors about the company’s options practices to falsely boost Brocade’s profit. The trial, which lasted six weeks, went to the jury on July 30. Backdating refers to the practice of selecting favorable grant dates in the past when the company’s stock price was low, and retroactively pegging awards to those dates. The goal is to boost the recipient’s potential windfall, and it’s only illegal if it’s not properly accounted for.

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