Dish Network 2012 Annual Report Download - page 89

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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.
The Management Services Agreement automatically renewed on January 1, 2013 for an additional one-year period
until January 1, 2014 and renews automatically for successive one-year periods thereafter, unless terminated earlier:
(i) by EchoStar at any time upon at least 30 days notice; (ii) by us at the end of any renewal term, upon at least 180
days notice; or (iii) by us upon notice to EchoStar, following certain changes in control.
Satellite Capacity Leased to EchoStar. Since the Spin-off, we have entered into certain satellite capacity
agreements pursuant to which EchoStar leases certain satellite capacity on certain satellites owned by us. The term
of each lease is set forth below:
EchoStar I. During 2009, we entered into a satellite capacity agreement pursuant to which EchoStar leases
certain satellite capacity from us on EchoStar I. The fee for the services provided under this satellite capacity
agreement depends, among other things, upon the orbital location of the satellite and the length of the lease.
We and EchoStar mutually agreed to terminate this satellite capacity agreement effective as of July 1, 2012.
D1. Effective November 1, 2012, we entered into a satellite capacity agreement pursuant to which Hughes
Network Systems, LLC (“HNS”) leases certain satellite capacity from us on D1 for research and development.
This lease generally terminates upon the earlier of: (i) the end-of-life of the satellite; (ii) the date the satellite
fails; (iii) the date the spectrum capacity on which service is being provided under the agreement fails; or (iv)
December 31, 2013.
Real Estate Lease Agreements. Since the Spin-off, we have entered into lease agreements pursuant to which we
lease certain real estate to EchoStar. The rent on a per square foot basis for each of the leases is comparable to per
square foot rental rates of similar commercial property in the same geographic areas, and EchoStar is responsible for
its portion of the taxes, insurance, utilities and maintenance of the premises. The term of each of the leases is set
forth below:

Varick Sublease Agreement.During 2008, we subleased certain space at 185 Varick Street, New York, New
York to EchoStar for a period of approximately seven years.

El Paso Lease Agreement.During 2012, we leased certain space at 1285 Joe Battle Blvd. El Paso, Texas to
EchoStar for a period ending on August 1, 2015, which also provides EchoStar with renewal options for four
consecutive three-year terms.
“Satellite and transmission expenses – EchoStar”
Broadcast Agreement. In connection with the Spin-off, we and EchoStar entered into a broadcast agreement
pursuant to which EchoStar provided certain broadcast services to us, including teleport services such as
transmission and downlinking, channel origination services, and channel management services for a period ending
on January 1, 2012 (the “Prior Broadcast Agreement”). We had the ability to terminate channel origination services
and channel management services for any reason and without any liability upon at least 60 days notice to EchoStar.
If we terminated teleport services for a reason other than EchoStar’s breach, we were obligated to pay EchoStar the
aggregate amount of the remainder of the expected cost of providing the teleport services. The fees for the services
provided under the Prior Broadcast Agreement were calculated at cost plus a fixed margin, which varied depending
on the nature of the products and services provided.
Effective January 1, 2012, we and EchoStar entered into a new broadcast agreement (the “2012 Broadcast
Agreement”) pursuant to which EchoStar provides broadcast services to us, for the period from January 1, 2012 to
December 31, 2016. The material terms of the 2012 Broadcast Agreement are substantially the same as the material
terms of the Prior Broadcast Agreement, except that: (i) the fees for services provided under the 2012 Broadcast
Agreement are calculated at either: (a) EchoStar’s cost of providing the relevant service plus a fixed dollar fee,
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which is subject to certain adjustments; or (b) EchoStar’s cost of providing the relevant service plus a fixed margin,
which will depend on the nature of the services provided; and (ii) if we terminate the teleport services provided
under the 2012 Broadcast Agreement for a reason other than EchoStar’s breach, we are generally obligated to
reimburse EchoStar for any direct costs EchoStar incurs related to any such termination that it cannot reasonably
mitigate.
Broadcast Agreement for Certain Sports Related Programming. During May 2010, we and EchoStar entered into a
broadcast agreement pursuant to which EchoStar provides certain broadcast services to us in connection with our
carriage of certain sports related programming. The term of this agreement is for ten years. If we terminate this
agreement for a reason other than EchoStar’s breach, we are generally obligated to reimburse EchoStar for any
direct costs EchoStar incurs related to any such termination that it cannot reasonably mitigate. The fees for the
broadcast services provided under this agreement depend, among other things, upon the cost to develop and provide
such services.
Satellite Capacity Leased from EchoStar. Since the Spin-off, we have entered into certain satellite capacity
agreements pursuant to which we lease certain satellite capacity on certain satellites owned or leased by EchoStar.
The fees for the services provided under these satellite capacity agreements depend, among other things, upon the
orbital location of the applicable satellite and the length of the lease. The term of each lease is set forth below:
EchoStar VI, VIII and XII. We lease certain satellite capacity from EchoStar on EchoStar VI, VIII and XII.
The leases generally terminate upon the earlier of: (i) the end-of-life or replacement of the satellite (unless we
determine to renew on a year-to-year basis); (ii) the date the satellite fails; (iii) the date the transponders on
which service is being provided fails; or (iv) a certain date, which depends upon, among other things, the
estimated useful life of the satellite, whether the replacement satellite fails at launch or in orbit prior to being
placed into service and the exercise of certain renewal options. We generally have the option to renew each
lease on a year-to-year basis through the end of the respective satellite’s life. There can be no assurance that
any options to renew such agreements will be exercised.
EchoStar IX. We lease certain satellite capacity from EchoStar on EchoStar IX. Subject to availability, we
generally have the right to continue to lease satellite capacity from EchoStar on EchoStar IX on a month-to-
month basis.
EchoStar XVI. During December 2009, we entered into a transponder service agreement with EchoStar to lease
all of the capacity on EchoStar XVI, a DBS satellite, after its service commencement date. EchoStar XVI was
launched during November 2012 to replace EchoStar XV at the 61.5 degree orbital location and is currently in
service. Under the original transponder service agreement, the initial term generally expired upon the earlier
of: (i) the end-of-life or replacement of the satellite; (ii) the date the satellite failed; (iii) the date the
transponder(s) on which service was being provided under the agreement failed; or (iv) ten years following the
actual service commencement date. Prior to expiration of the initial term, we also had the option to renew on a
year-to-year basis through the end-of-life of the satellite. Effective December 21, 2012, we and EchoStar
amended the transponder service agreement to, among other things, change the initial term to generally expire
upon the earlier of: (i) the end-of-life or replacement of the satellite; (ii) the date the satellite fails; (iii) the date
the transponder(s) on which service is being provided under the agreement fails; or (iv) four years following the
actual service commencement date. Prior to expiration of the initial term, we have the option to renew for an
additional six-year period. Prior to expiration of the initial term, EchoStar also has the right, upon certain
conditions, to renew for an additional six-year period. If either we or EchoStar exercise our respective six-year
renewal options, then we have the option to renew for an additional five-year period prior to expiration of the
then-current term. There can be no assurance that any options to renew this agreement will be exercised.
EchoStar XV. EchoStar XV is owned by us and is operated at the 61.5 degree orbital location. The FCC has
granted EchoStar a temporary authorization to operate the satellite at the 61.5 degree orbital location. For so long as
EchoStar XV remains in service at the 61.5 degree orbital location, we are obligated to pay EchoStar a fee, which
varies depending on the number of frequencies being used by EchoStar XV.