Dish Network 2010 Annual Report Download - page 144

DISH NETWORK CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued
F-59
SlingService Services Agreement. Effective February 23, 2010, we entered into an agreement with
EchoStar pursuant to which we will receive certain place-shifting services. The fees for the services
provided under this services agreement depend, among other things, upon the cost to develop and operate
such services. This agreement has a term of five years with automatic renewal for successive one year
terms and may be terminated for any reason upon at least 120 days notice to EchoStar.
Other Agreements – EchoStar
Tax Sharing Agreement. In connection with the Spin-off, we entered into a tax sharing agreement with
EchoStar which governs our respective rights, responsibilities and obligations after the Spin-off with
respect to taxes for the periods ending on or before the Spin-off. Generally, all pre-Spin-off taxes,
including any taxes that are incurred as a result of restructuring activities undertaken to implement the
Spin-off, are borne by us, and we will indemnify EchoStar for such taxes. However, we are not liable for
and will not indemnify EchoStar for any taxes that are incurred as a result of the Spin-off or certain related
transactions failing to qualify as tax-free distributions pursuant to any provision of Section 355 or Section
361 of the Code because of: (i) a direct or indirect acquisition of any of EchoStar’s stock, stock options or
assets; (ii) any action that EchoStar takes or fails to take; or (iii) any action that EchoStar takes that is
inconsistent with the information and representations furnished to the IRS in connection with the request
for the private letter ruling, or to counsel in connection with any opinion being delivered by counsel with
respect to the Spin-off or certain related transactions. In such case, EchoStar is solely liable for, and will
indemnify us for, any resulting taxes, as well as any losses, claims and expenses. The tax sharing
agreement will only terminate after the later of the full period of all applicable statutes of limitations,
including extensions, or once all rights and obligations are fully effectuated or performed.
Tivo. Because both we and EchoStar are defendants in the Tivo lawsuit, we and EchoStar are jointly and
severally liable to Tivo for any final damages and sanctions that may be awarded by the District Court. We
have determined that we are obligated under the agreements entered into in connection with the Spin-off to
indemnify EchoStar for substantially all liability arising from this lawsuit. EchoStar contributed an amount
equal to its $5 million intellectual property liability limit under the Receiver Agreement. We and EchoStar
have further agreed that EchoStar’s $5 million contribution would not exhaust EchoStar’s liability to us for
other intellectual property claims that may arise under the Receiver Agreement. We and EchoStar also
agreed that we would each be entitled to joint ownership of, and a cross-license to use, any intellectual
property developed in connection with any potential new alternative technology.
Multimedia Patent Trust. In December 2009, we determined that we are obligated under the agreements
entered into in connection with the Spin-off to indemnify EchoStar for all of the costs to settle this lawsuit
relating to the period prior to the Spin-off and a portion of such settlement costs relating to the period after
the Spin-off. EchoStar has agreed that its contribution towards such settlement costs shall not be applied
against EchoStar’s aggregate liability cap under the Receiver Agreement.
EchoStar XV Launch Service. During 2009, EchoStar assigned certain of its rights under a launch contract
to us for EchoStar’s fair value of $103 million. This amount was paid to EchoStar during the first quarter
of 2010. We recorded these rights at EchoStar’s net book value of $89 million and recorded the $14
million difference between EchoStar’s net book value and our purchase price as a capital transaction with
EchoStar. We used these rights to launch EchoStar XV in July 2010.
Weather Related Programming Agreement. During May 2010, we entered into an agreement pursuant to
which, among other things, EchoStar agreed to develop certain weather related programming and we
received the right to distribute such programming. This agreement was terminated during June 2010. In
July 2010, we purchased EchoStar’s interest in the entity that held such weather related programming for
$5 million.