Dish Network 2009 Annual Report Download - page 142

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DISH NETWORK CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued
F-52
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 has a term of one year ending on January 1, 2011, but renews automatically for
successive one-year periods thereafter, unless terminated earlier by either party at the end of the term, upon at
least 60 days’ prior notice. However, either party may terminate the services it receives with respect to a
particular service for any reason upon 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, Bernard L. Han, R. Stanton
Dodge and Paul W. Orban remain employed by us, but also serve as EchoStar’s Executive Vice President and
Chief Financial Officer, 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.
The management services agreement automatically renewed on January 1, 2010 for an additional one-year
period through January 1, 2011 and renews automatically for successive one-year periods thereafter, unless
terminated earlier (i) by EchoStar at any time upon at least 30 days’ prior written notice, (ii) by us at the end of
any renewal term, upon at least 180 days’ prior notice; or (iii) by us upon written notice to EchoStar, following
certain changes in control.
Satellite Capacity Leased to EchoStar. In December 2009, we entered into a satellite capacity agreement
pursuant to which EchoStar leases satellite capacity on a certain satellite owned by us. The fee for the services
provided under this satellite capacity agreement depends, among other things, upon the orbital location of the
satellite and the frequency on which the satellite provides services. The term of this lease is set forth below:
EchoStar I. EchoStar leases certain satellite capacity from us on EchoStar I. The lease generally
terminates upon the earlier of: (i) the end of the life or the replacement of the satellite (unless
EchoStar determines to renew on a year-to-year basis); (ii) the date the satellite fails; (iii) the date the
transponder 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 in service, and the exercise of certain renewal options.
EchoStar generally has the option to renew this lease on a year-to-year basis through the end of the
satellite’s life. There can be no assurance that any options to renew this agreement will be exercised.
Real Estate Lease Agreement. During 2008, we entered into a sublease for space at 185 Varick Street, New
York, New York to EchoStar for a period of approximately seven years. The rent on a per square foot basis for
this sublease was comparable to per square foot rental rates of similar commercial property in the same
geographic area at the time of the sublease, and EchoStar is responsible for its portion of the taxes, insurance,
utilities and maintenance of the premises.
Packout Services Agreement. In connection with the Spin-off, we entered into a packout services agreement
with EchoStar, whereby EchoStar had the right, but not the obligation, to engage us to package and ship
satellite receivers to customers that are not associated with us. This agreement expired on January 1, 2010.