Dish Network 2009 Annual Report Download - page 141

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DISH NETWORK CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued
F-51
18. Related Party Transactions with EchoStar
Following the Spin-off, EchoStar has operated as a separate public company and we have no continued
ownership interest in EchoStar. However, a substantial majority of the voting power of the shares of both
companies is owned beneficially by our Chairman, President and Chief Executive Officer, Charles W. Ergen or
by certain trusts established by Mr. Ergen for the benefit of his family.
EchoStar is our primary supplier of set-top boxes and digital broadcast operations and our key supplier of
transponder leasing. Generally, the prices charged for products and services provided under the agreements
entered into in connection with the Spin-off are based on pricing equal to EchoStar’s cost plus a fixed margin
(unless noted differently below), which will vary depending on the nature of the products and services
provided. Prior to the Spin-off, these products were provided and services were performed internally at cost.
In connection with the Spin-off and subsequent to the Spin-off, we and EchoStar have entered into certain
agreements pursuant to which we obtain certain products, services and rights from EchoStar, EchoStar obtains
certain products, services and rights from us, and we and EchoStar have indemnified each other against certain
liabilities arising from our respective businesses. We also may enter into additional agreements with EchoStar
in the future. The following is a summary of the terms of the principal agreements that we have entered into
with EchoStar that may have an impact on our financial position and results of operations.
“Equipment sales - EchoStar”
Remanufactured Receiver Agreement. In connection with the Spin-off, we entered into a remanufactured
receiver agreement with EchoStar under which EchoStar has the right to purchase remanufactured receivers and
accessories from us for a two-year period ending on January 1, 2010. In August 2009, we and EchoStar agreed
to extend this agreement through January 1, 2011. Under the remanufactured receiver agreement, EchoStar has
the right, but not the obligation, to purchase remanufactured receivers and accessories from us at cost plus a
fixed margin, which varies depending on the nature of the equipment purchased. EchoStar may terminate the
remanufactured receiver agreement for any reason upon sixty days written notice to us. We may also terminate
this agreement if certain entities acquire us.
“Transitional services and other revenue - EchoStar”
Transition Services Agreement. In connection with the Spin-off, we entered into a transition services
agreement with EchoStar pursuant to which EchoStar had the right, but not the obligation, to receive the
following services from us: finance, information technology, benefits administration, travel and event
coordination, human resources, human resources development (training), program management, internal audit,
legal, accounting and tax, and other support services. The fees for the services provided under the transition
services agreement were equal to cost plus a fixed margin, which varied depending on the nature of the services
provided. The transition services agreement expired on January 1, 2010. However, we and EchoStar have
agreed that following January 1, 2010 EchoStar will continue to have the right, but not the obligation, to
receive from us certain of the services previously provided under the transition services agreement pursuant to
the Professional Services Agreement, as discussed below.
Professional Services Agreement. During December 2009, we and EchoStar agreed that following January 1,
2010 EchoStar will continue to have the right, but not the obligation, to receive from us the following services,
among others, certain of which were previously provided under the transition services agreement: information
technology, travel and event coordination, internal audit, legal, accounting and tax, benefits administration,
program acquisition services and other support services. Additionally, following January 1, 2010 we will
continue to have the right, but not the obligation, to engage