Dish Network 2010 Annual Report Download - page 139

DISH NETWORK CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued
F-54
“Equipment sales - EchoStar”
Remanufactured Receiver Agreement. In connection with the Spin-off, we entered into a remanufactured
receiver agreement with EchoStar pursuant to which 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. This agreement expires on January 1, 2012.
EchoStar may terminate the remanufactured receiver agreement for any reason upon at least 60 days notice
to us. We may also terminate this agreement if certain entities acquire us.
“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 calculated at 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 shall 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 2009, we and EchoStar agreed that EchoStar shall 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
management and other support services. Additionally, we and EchoStar agreed that we shall continue to
have the right, but not the obligation, to engage EchoStar to manage the process of procuring new satellite
capacity for DISH Network (as discussed below, previously provided under the satellite procurement
agreement) and receive logistics, procurement and quality assurance services from EchoStar (as discussed
below, previously provided under the services agreement). The professional services agreement expires on
January 1, 2012, but renews automatically for successive one-year periods thereafter, unless terminated
earlier by either party upon at least 60 days notice. However, either party may terminate the services it
receives with respect to a particular service for any reason upon at least 30 days notice.
Management Services Agreement. In connection with the Spin-off, we entered into a management services
agreement with EchoStar pursuant to which we make certain of our officers available to provide services
(which are primarily legal and accounting services) to EchoStar. Specifically, R. Stanton Dodge and Paul
W. Orban remain employed by us, but also serve as EchoStar’s Executive Vice President and General
Counsel, and Senior Vice President and Controller, respectively. EchoStar makes payments to us based
upon an allocable portion of the personnel costs and expenses incurred by us with respect to such officers
(taking into account wages and fringe benefits). These allocations are based upon the estimated
percentages of time to be spent by our executive officers performing services for EchoStar under the
management services agreement. EchoStar also reimburses us for direct out-of-pocket costs incurred by us
for management services provided to EchoStar. We and EchoStar evaluate all charges for reasonableness
at least annually and make any adjustments to these charges as we and EchoStar mutually agree upon.