As filed with the Securities and Exchange Commission on December 26, 2007

 

File No. 001-33807

 

 

UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

 

 

 

 

Amendment No. 2

to

Form 10

 

GENERAL FORM FOR REGISTRATION OF SECURITIES

PURSUANT TO SECTION 12(b) OR 12(g)

OF THE SECURITIES EXCHANGE ACT OF 1934

 

 

 

 

EchoStar Holding Corporation

(Exact name of registrant as specified in its charter)

 

 

 

 

Registrant’s telephone number, including area code:

(303) 723-1000

 

 

 

 

Securities to be registered pursuant to Section 12(b) of the Act:

 

 

 

Securities to be registered pursuant to Section 12(g) of the Act:

None

 

 

EchoStar Holding Corporation

 

Cross-Reference Sheet Between the Information Statement and Items of Form 10

 

Information Included in the Information Statement and Incorporated by Reference
into the Registration Statement on Form 10

 

Our information statement may be found as Exhibit 99.1 to this Form 10. For your convenience, we have provided below a cross-reference sheet identifying where the items required by Form 10 can be found in the information statement.

 

 

(a) List of Financial Statements and Schedules.

The following financial statements are included in the information statement and filed as part of this Registration Statement on Form 10:

 

(1) Combined Financial Statements of EchoStar Holding Corporation, including Report of Independent Registered Public Accounting Firm;

 

(2) Statement of Net Assets to be Contributed by EchoStar Communications Corporation, including Report of Independent Registered Public Accounting Firm; and

 

(3) Consolidated Financial Statements of Sling Media, Inc., including Report of Independent Registered Public Accounting Firm.

 

The following financial statement schedule for the fiscal years ended December 31, 2006, 2005 and 2004 is included in the information statement and filed as part of this Registration Statement:

 

None. All schedules have been included in the Combined Financial Statements of EchoStar Holding Corporation or Notes thereto.

 

(b) Exhibits. The following documents are filed as exhibits hereto:

 

 

 

 

SIGNATURE

 

Pursuant to the requirements of Section 12 of the Securities Exchange Act of 1934, the registrant has duly caused this Amendment No. 2 to Registration Statement on Form 10 to be signed on its behalf by the undersigned, thereunto duly authorized.

 

ECHOSTAR HOLDING CORPORATION

 

Charles W. Ergen

Chairman and Chief Executive Officer

 

Dated: December 26, 2007

EXHIBIT INDEX

 

 

 

 

Exhibit 10.26

[FORM OF]

RECEIVER AGREEMENT

     This Receiver Agreement (“Agreement”) is entered into as of this ___ day of December, 2007, by and between EchoStar Technologies L.L.C. (“ETLLC”), having a principal place of business at 90 Inverness Circle East, Englewood CO, 80112 and EchoSphere L.L.C. (“Licensee”), having a principal place of business at 9601 S. Meridian Blvd., Englewood CO 80112.

INTRODUCTION

     A. ETLLC has developed a proprietary Digital Satellite Receiver (as defined in Section 1.4 below) for use in conjunction with the DISH Network, a digital direct broadcast satellite (“DBS”) programming service network owned and operated by Affiliates of Licensee in the United States (the “DISH System”, as defined in Section 1.5 below).

     B. Licensee is a distributor of consumer electronics products and desires to purchase OEM Products (as defined in Section 1.10 below) from ETLLC solely for distribution and sale in connection with the DISH Network in the Territory (as defined in Section 1.16 below).

     C. ETLLC is willing to sell OEM Products to Licensee for such purposes, subject to and in accordance with the terms and conditions set forth below.

          NOW THEREFORE, in consideration of the foregoing and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto agree as follows:

1. DEFINITIONS

     In addition to any other defined terms in this Agreement and except as otherwise expressly provided for in this Agreement, the following terms shall have the following meanings:

     1.1 “Accessories” means an antenna, LNB, feedhorn, feedarm, and other equipment necessary to bring a satellite signal into the home, as such components may change from time to time in ETLLC’s sole discretion.

     1.2 “Affiliate” means, with respect to a party to this Agreement, any person or entity directly or indirectly controlling, controlled by or under common control with such party.

     1.3 “Approved OEM Brand Name” means those Licensee Marks, which have been approved in writing by ETLLC (which approval shall not be unreasonably withheld), for placement on the bezel (front panel) of OEM Products and packaging therefor in accordance with the trademark usage guidelines (or as otherwise mutually agreed) of both Licensee and ETLLC.

     1.4 “Digital Satellite Receiver” means a digital satellite receiver/decoder for use in connection with direct to home satellite programming services (including any remotes and related components), whether stand alone or incorporated into another product (i.e., a television or VCR), which may include Accessories.

     1.5 “DISH System” means an MPEG-2, MPEG-4/DVB compliant Digital Satellite Receiver manufactured by or on behalf of ETLLC solely for use in connection with the DISH Network.

     1.6 “ETLLC Marks” means those trademarks, service marks or trade names owned by ETLLC or for which ETLLC has the right to grant a sublicense, as such ETLLC Marks may change from time to time in ETLLC’s discretion.

     1.7 “Intellectual Property” means all patents, copyrights, design rights, trademarks, service marks, trade secrets, know-how and any other intellectual or industrial property rights (whether registered or unregistered) and all applications for the same owned or controlled by ETLLC or Licensee, as the case may be, anywhere in the world, but does not include patents, copyrights, design rights, trademarks, service marks, trade secrets, know-how or any other intellectual or industrial property rights (whether registered or unregistered) or applications for the same owned or controlled by Affiliates of either ETLLC or Licensee.

     1.8 “Licensee Marks” means the trademarks or trade names owned by Licensee, or for which Licensee has a license to use or the right to grant a sublicense sufficient for the purposes of this Agreement.

     1.9 Reserved.

     1.10 “OEM Product” means a Digital Satellite Receiver that: (i) is manufactured by or on behalf of ETLLC; (ii) is branded with an Approved OEM Brand Name; (iii) is designed to be compatible only with the DISH Network; and (iv) after being equipped with a Smart Card is designed to be unable to receive, decode or descramble signals transmitted by satellite transponders that are not owned, leased, or controlled by Licensee or an Affiliate of Licensee. For clarity and the avoidance of doubt, a Digital Satellite Receiver which is specifically designed for a third party other than Licensee or an Affiliate of Licensee shall not be considered an OEM Product.

     1.11 Reserved.

     1.12 “Programming” means the video and audio signals transmitted by DBS satellite transponders that are owned or controlled by Licensee or an Affiliate and are part of the DISH Network’s regular programming services.

     1.13 Reserved.

     1.14 “Smart Card” means the card or smart chip, which, through the use of a secure microprocessor, controls the ability of the OEM Product to access the Programming.

     1.15 “Term” means the duration of this Agreement as specified in Section 10.1 hereof.

     1.16 “Territory” means the geographic boundaries of: (i) the United States of America; (ii) Puerto Rico; and (iii) any other territorial possession of the United States within DISH Network’s existing satellite footprint as of the date of this Agreement.

2. MANUFACTURE AND SALE OF OEM PRODUCTS BY ETLLC

     2.1 Manufacture. ETLLC agrees to manufacture and sell OEM Products to Licensee during the Term, and Licensee has the right, but not the obligation, to purchase OEM Products from ETLLC during the Term, in accordance with and subject to the terms of this Agreement. ETLLC may select and authorize any third party to manufacture OEM Products on ETLLC’s behalf.

     2.2 Authorization; Territory. Licensee shall be authorized to resell OEM Products within the Territory solely to: (i) retailers, distributors, installers and end users of the DISH Network; and (ii) solely for use in conjunction with the DISH Network in the Territory. Licensee agrees that it shall not sell any OEM Product to: (a) any person or entity other than those authorized in clauses (i) and (ii) of the preceding sentence; (b) any person or entity who Licensee knows or has reason to know intends to use it, or resell it for use, in Canada or at any other location outside of the Territory; or (c) any person or entity who Licensee knows or has reason to know intends to use it, or resell it for use, in conjunction with a DBS service other than the DISH Network.

     2.3 Approved OEM Brand Names. Upon request by Licensee, ETLLC shall manufacture the OEM Product with any of the Approved OEM Brand Names affixed to the bezel (front panel) of the OEM Products in accordance with Section 8 below; provided, however, that ETLLC shall have no obligation under this Section 2.3 unless at the time of such request Licensee issues and delivers to ETLLC a firm Purchase Order for not less than 10,000 units of an OEM Product with an Approved OEM Brand Name requested by Licensee which has not been previously manufactured by ETLLC hereunder At the request of Licensee, new Approved OEM Brand Names may be added upon prior written approval of ETLLC (which approval shall not be unreasonably withheld). The

provisions of Section 8.1 shall apply to the use of ETLLC Marks on or in connection with OEM Product delivered hereunder which include any Approved OEM Brand Name.

     2.4 Costs. Licensee shall be responsible, and shall pay ETLLC in advance, for all costs of labor and materials for the customization of an OEM Product with any Approved OEM Brand Name hereunder, including without limitation: (a) any tooling required; (b) silk-screening front panels of the satellite receivers; and (c) all costs in connection with the customization of any packaging for OEM Products.

     2.5 Identical Products. All OEM Products delivered hereunder to Licensee shall be identical in functionality and technical specifications to DISH Systems, and shall be identical in appearance to the DISH Systems except for the placement of Approved OEM Brand Names on OEM Products pursuant to Section 2.3 above, as otherwise expressly provided herein and as otherwise mutually agreed by the parties in writing.

     2.6 Freedom of Action. Licensee acknowledges and agrees that this Agreement is non-exclusive in nature and that nothing in this Agreement shall prohibit or otherwise restrict ETLLC and/or any of their Affiliates from entering into an agreement with any third party concerning activities which are the same or similar activities to those contemplated in this Agreement, or any other activity. ETLLC agrees that it shall not directly sell any OEM Product to any person or entity other than Licensee.

3. TRADEMARK LICENSE AGREEMENT

     3.1 Trademark License Agreement. Licensee shall sign the Trademark License Agreement in ETLLC’s customary form.

4. PRICE; PAYMENT TERMS; RELATED MATTERS

     4.1 Price. Licensee shall pay ETLLC for OEM Products cost plus a mutually agreed upon margin based upon the fair market value of the OEM Products taking into consideration, among other things, the performance capabilities and technical specifications of the applicable model of OEM Product (such as encryption technology used; size of hard drive; ability to decode high definition programming and number of tuners) (the “OEM Product Price”). In the event the parties are unable to agree upon the OEM Product Price, the dispute resolution procedures set forth in Article VIII of the Separation Agreement by and between EchoStar Communications Corporation and EchoStar Holding Corporation dated [___] (the “Dispute Resolution Procedures”) will be used to determine the fair market value of the applicable OEM Product and such fair

market value as so determined shall be deemed to be the OEM Product Price for the applicable model.

     4.2 Price Increases. Notwithstanding Section 4.1 above, increases in the OEM Product Price shall not apply to any OEM Products that have been ordered under a firm and binding Purchase Order by Licensee on or before the effective date of such price increase, provided the original shipment date specified by Licensee is not more than thirty days after the date of ETLLC’s acceptance of such order.

     4.3 Price Reductions. Notwithstanding Section 4.1 above:

          (a) Price reductions shall be effective immediately, unless ETLLC specifies otherwise. In the event of a price reduction on an OEM Product, Licensee is entitled to request in writing a credit (“Price Reduction Credit”) in an amount based on the inventory of Licensee of that particular OEM Product, in accordance with the terms of this section. The amount of credit shall equal the net amount of the price per unit reduction (the difference between the old and new net price of the particular OEM Product to Licensee less any applicable discounts, rebates, incentives, promotions or any other items which tend to have the economic effect of reducing the bottom line price of the particular OEM Product to Licensee), multiplied by the lesser of: (i) the number of units of that particular OEM Product which were purchased and paid for by Licensee during a period of time to be mutually agreed upon immediately preceding the effective date of the price reduction; or (ii) the sum of the number of units of that particular OEM Product which were in the inventory of Licensee, plus the number of units of that particular OEM Product which were in transit to Licensee (first-in first-out basis always assumed, “FIFO”) as of the effective date of the price reduction.

          (b) The OEM Products shall be compared for “sameness”, counted and priced as systems or individual components in accordance with how they were originally purchased by Licensee from ETLLC (OEM Products originally purchased as systems shall not be eligible for a Price Reduction Credit if the price reduction applies to an individual component, and OEM Products originally purchased as individual components shall not be eligible for a Price Reduction Credit if the price reduction applies to a system). Within a reasonable period after the effective date of such price change, Licensee shall furnish ETLLC an itemized inventory with serial numbers, of the relevant OEM Products and corresponding Smart Cards for each OEM Product, as of such date, including information as to the mode of original purchase from ETLLC (as systems or individual components), the amount of time such OEM Products have been held in the inventory of Licensee and any other information ETLLC may reasonably request. Any Price Reduction Credit shall be applied by ETLLC to the purchase price of Licensee’s subsequent orders of OEM Products from ETLLC. If at the time of the price reduction, Licensee has ordered but not yet paid for OEM Products, Licensee shall only

be required to pay for such OEM Products at the reduced price. Therefore, no Price Reduction Credit shall accrue to those orders.

          (c) ETLLC shall have the right to audit upon reasonable notice the inventory of Licensee to verify the accuracy of any request by Licensee for a Price Reduction Credit. Licensee shall also provide, at ETLLC’s request, the supporting information described in the preceding paragraph in electronic format to facilitate the verification by ETLLC that an OEM Product subject to a request for a Price Reduction Credit has not been activated on the DISH Network.

     4.4 Payment. Except as otherwise agreed to by the parties, all invoices to Licensee hereunder shall be due, in immediately available funds, within 30 days from the date of invoice, which shall be issued no earlier than the ship date for the OEM Products covered by the invoice.

     4.5 Taxes. In addition to the prices Licensee pays for OEM Products, as provided above, Licensee is responsible for any and all sales, use, gross receipts, excise and other taxes applicable to the sale, use, transportation or addition to value of the OEM Products.

     4.6 Shipping Costs. All OEM Products shall be shipped F.O.B. point of shipment Denver, Colorado USA or such other location mutually agreed upon between the parties. Title and risk of loss of OEM Products purchased under this Agreement shall pass to Licensee upon delivery by ETLLC or its agent to the carrier for shipment thereof. Licensee shall be responsible for all costs of shipping and insurance of OEM Products. Licensee shall have the sole responsibility to file any claims with the carrier for damage, missing items or otherwise, and ETLLC shall have no liability or responsibility if Licensee is unable to obtain full compensation for any loss from the claim. Licensee shall select the method of shipment and carrier; provided, however, that, in the event that Licensee fails to make the necessary arrangements for shipment, Licensee acknowledges and agrees that ETLLC shall, without incurring any liability, have the option, in its sole discretion, to select the method of shipment and the carrier on Licensee’s behalf and at Licensee’s expense.

     4.7 Default. If Licensee defaults in any payment due ETLLC, or Licensee violates any term or condition of this Agreement or of any credit extended by ETLLC or any Affiliate to Licensee, ETLLC reserves the right to: (i) suspend any shipment to Licensee; (ii) require payment for shipments prior to shipment or delivery; and/or (iii) require payment of all unpaid balances prior to any shipment and payment for that shipment. Exercise of any of the above rights by ETLLC shall not be construed as a limitation of ETLLC’s authority to exercise any other rights which ETLLC may have at law, in equity or pursuant to this Agreement.

5. ORDERS, SHIPMENT; FORECASTS; AND RETURNS

     5.1 Forecast. Commencing on the fifth business day after this Agreement is executed by all parties and by the fifteenth (15th) day of each month thereafter during the Term, Licensee will send ETLLC a rolling forecast in accordance with the forecasting procedures set forth in Schedule 1 (the “Forecast”), the first month of which will be the following month. Subject to the forecasting modification procedures set forth in Schedule 1, each Forecast shall be deemed a firm and binding commitment for the purchase of the OEM Products specified therein. Upon failure of Licensee to issue a Forecast by the twentieth (20^th) day of any month, the previous month’s Forecast shall automatically roll forward by one month and shall be subject to the provisions of this Section 5. ETLLC shall confirm receipt and acceptance of the Forecast by facsimile notice to Licensee within a reasonable time from receipt, which acceptance will confirm the extent to which ETLLC can deliver the OEM Product and ETLLC’s estimated delivery dates for the OEM Product. The Forecast will be translated into a Purchase Order (as defined below), including requested delivery dates, by Licensee in accordance with the Purchase Order procedures set forth in Schedule 1.

     5.2 Purchase Orders. Licensee will order OEM Products by written purchase order (“Purchase Order”) issued during the term of this Agreement. A Purchase Order shall be a binding commitment by Licensee and is subject to confirmation and acceptance by ETLLC. Any failure to confirm a Purchase Order shall not be deemed acceptance by ETLLC. ETLLC will make commercially reasonable efforts to fulfill all valid Purchase Orders issued by Licensee. ETLLC will inform Licensee of any rejection of a Purchase Order, in whole or in part, within a reasonable time after such rejection. Purchase Orders of Licensee shall state only: (i) identity of goods; (ii) quantity of goods; (iii) purchase price of goods; and (iv) requested ship date of goods. Any additional terms stated in a Purchase Order shall not be binding upon ETLLC unless expressly agreed to in writing by ETLLC. In the event of any conflict between the terms of a Purchase Order and the terms of this Agreement, the terms of this Agreement shall prevail.

     5.3 Cancellations and Modifications. Licensee may not cancel or modify any Purchase Order that has been confirmed and accepted by ETLLC, except with the prior written consent of ETLLC.

     5.4 Shipment. Shipments will be made in standard shipping packages that have been approved by Licensee. All shipments will include a packing slip which lists items contained in the shipment by part number, descriptions (including the serial number and corresponding Smart Card number for each OEM Product), quantity, and purchase order number. Not later than a reasonable time before the scheduled delivery dates, Licensee will notify ETLLC in writing of the specific shipping destinations and the specific quantity of OEM Products to be shipped to each destination, which Licensee agrees will be at least one full truckload per destination or such other minimum quantity as the parties may agree to from time to time in writing.

     5.5 Shipment Dates; Quantities. ETLLC will use reasonable commercial efforts to make shipments of OEM Products by the dates specified in Purchase Orders

accepted from Licensee; provided however, that ETLLC shall be permitted to modify shipping dates due to circumstances beyond ETLLC’s reasonable control. All deliveries are contingent on ETLLC or its third party manufacturer receiving timely shipment of necessary materials for production. Within a reasonable time after ETLLC becomes aware that it will not be able to make shipment of all or a portion of the OEM Products by the date specified in a particular Purchase Order accepted from Licensee, ETLLC shall give Licensee notice setting forth an estimated delivery date. Licensee shall have the right, but not the obligation to reduce the total quantity of OEM Products requested in that Purchase Order in accordance with the Purchase Order modification procedures set forth in Schedule 1.

     5.6 Partial Shipments. ETLLC reserves the right to ship OEM Products in a single or by multiple deliveries. Except as expressly provided herein, failure of ETLLC to ship on or about the date requested in any Purchase Order shall not entitle Licensee to cancel or amend such order. ETLLC reserves the right to ship all or a portion of any Purchase Order, including partial Purchase Orders. Licensee shall pay for such portion of the shipment as is actually shipped.

     5.7 Sale of OEM Products by ETLLC. While, subject to Section 5.5, Licensee’s obligation to honor Purchase Orders submitted to ETLLC is absolute, in the event that Licensee breaches this obligation, then, in addition to all other remedies available to ETLLC under this Agreement, at law, in equity or otherwise, and notwithstanding anything to the contrary herein ETLLC and/or any of its Affiliates shall have the right, but not the obligation, to sell the OEM Products covered by the relevant Purchase Order(s) (“Excess Inventory”) without removing Licensee’s markings.

6. WARRANTY

     6.1 Warranty of OEM Products.

          6.1.1 General Warranty. ETLLC warrants that each OEM Product will be free from defects in materials and workmanship for the warranty period customarily provided by ETLLC to Licensee for like product (the “Warranty”). The materials portion of this Warranty shall not apply to: (i) any OEM Product that is abused, damaged by external causes, altered or misused; or (ii) OEM Product damaged due to improper installation or use. OEM Products shall be considered free from defects in workmanship if they are manufactured in accordance with ETLLC’s manufacturing workmanship standards (or those of any third party which manufactures the OEM Product on ETLLC’s behalf), conform to the product specifications, and successfully complete product acceptance tests for the product.

          6.1.2 Deadline for Claims; Disclaimer. ALL CLAIMS FOR WARRANTY FULFILLMENT MUST BE RECEIVED BY ETLLC (OR ITS DESIGNEE) NO LATER THAN A REASONABLE PERIOD OF TIME AFTER THE EXPIRATION OF THE WARRANTY PERIOD FOR THE PRODUCT. THIS WARRANTY IS THE ONLY WARRANTY GIVEN BY ETLLC. ETLLC MAKES, AND LICENSEE RECEIVES, NO

OTHER WARRANTY EITHER EXPRESS OR IMPLIED. ALL WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE, ARE EXPRESSLY DISCLAIMED AND EXCLUDED HEREFROM.

          6.1.3 Exclusive Remedy. Licensee’s exclusive remedy for fulfillment of the Warranty shall be at, at ETLLC’s option, repair by ETLLC at an ETLLC or third party facility of ETLLC’s choice, replacement of the defective OEM Product, or return of the Purchase Price within a reasonable period of time after receipt of the OEM Product by ETLLC.

     6.2 Licensee’s Warranty Obligations. In addition to the obligations of Licensee elsewhere in this Article 6, Licensee shall:

          6.2.1 receive at a Licensee facility all OEM Products returned for both in-warranty and out-of-warranty repair;

          6.2.2 submit a daily report to ETLLC listing the serial number of each OEM Product and corresponding Smart Card number which have been received by Licensee and for which the subscriber has received a replacement OEM Product and/or Smart Card;

          6.2.3 for in-warranty and out-of-warranty returns, conduct, at its own expense, an initial review of the OEM Product to verify the existence of a defect;

          6.2.4 in the case of OEM Products for which no defect is found, take such actions as it deems appropriate and ETLLC shall have no liability hereunder;

          6.2.5 in the case of in-warranty OEM Products with defects which are covered by the Warranty and verified by Licensee, ship such OEM Products at Licensee’s expense, to an ETLLC or third party facility, as designated by ETLLC, for treatment in accordance with the Warranty in Section 6.1.1 above, with ETLLC responsible for all costs associated with the shipment of conforming OEM Products to Licensee’s facility to replace failed units covered by the Warranty;

          6.2.6 in the case of out-of-warranty OEM Products with defects verified by Licensee (including in-warranty OEM Products with defects not covered by the Warranty), Licensee shall take such actions as it deems appropriate and ETLLC shall have no liability hereunder; and

          6.2.7 reimburse ETLLC, within a reasonable period of time the customary screening fee, and any out of pocket expenses of ETLLC to third parties, including but not limited to the costs of returning the OEM Product to Licensee, in relation to OEM Products returned by Licensee under the preceding subsections for which there was no problem found upon testing by ETLLC, or with respect to which problems were identified which are not covered by the warranty.

     6.3 Licensee Warranty.

          6.3.1 Reserved.

          6.3.2 Reserved.

          6.3.3 Licensee shall purchase all Smart Cards necessary to repair OEM Products exclusively from ETLLC. ETLLC shall supply Licensee with a float of Smart Cards for use in the repair of OEM Products in a quantity per 1,000 combined sales of OEM Products to end users that is consistent with ETLLC’s Smart Card warranty replacement history; provided, however, that ETLLC shall provide Smart Cards in excess of that quantity in the event that Licensee can adequately justify its need therefore for the repair of OEM Products. ETLLC shall supply Smart Cards to Licensee for the purposes set forth in this Section 6.3.3 in accordance with the customary practice of the parties. In the event that NagraStar LLC, or other entity from which ETLLC purchases Smart Cards, subsequently increases the price charged to ETLLC for Smart Cards, ETLLC shall increase the price of Smart Cards to be supplied to Licensee under this Section 6.3.3 consistent with the parties’ customary practice. Licensee acknowledges and agrees that Smart Cards are only being made available to Licensee under this Section 6.3.3 in order to for Licensee to repair OEM Products. In view of the potential for a subscriber to defraud DISH Network by improperly obtaining a replacement Smart Card under a false warranty claim, Licensee agrees that it will not use Smart Cards provided by ETLLC under this Section 6.3.3 for any purpose whatsoever other than repair of OEM Products. Licensee further acknowledges and agrees that, with respect to Smart Cards that have been lost, end users must purchase replacement Smart Cards directly from ETLLC (or such other entity as ETLLC may designate from time to time in writing) subject to such terms and conditions and at such prices as ETLLC may determine from time to time in its sole discretion.

     6.4 ETLLC Smart Card Warranty.

          (a) ETLLC warrants that any Smart Cards purchased by Licensee from ETLLC in conjunction with an OEM Product or under Section 6.3.3 above shall be free from defects in materials and workmanship for the warranty period customarily provided by ETLLC to Licensee for like product (“Warranty Period”). Licensee shall return defective Smart Cards purchased by Licensee from ETLLC in conjunction with an OEM Product or under Section 6.3.3 above at Licensee’s expense. If a Smart Card purchased by Licensee from ETLLC in conjunction with an OEM Product or under Section 6.3.3 above is: (i) verified as having failed during the Warranty Period; (ii) returned to ETLLC by Licensee within a reasonable period of time after expiration of the Warranty Period; and (iii) confirmed as defective by ETLLC, Licensee’s exclusive remedy for fulfillment of this warranty shall be, at ETLLC’s option, for ETLLC to repair and return or replace and return conforming Smart Cards to Licensee at no charge to Licensee, or refund Licensee the purchase price of such defective Smart Cards.

          (b) THE LIMITED WARRANTY PROVIDED BY ETLLC FOR SMART CARDS IN SECTION 6.4 IS IN LIEU OF ALL OTHER WARRANTIES, WHETHER STATUTORY, EXPRESS OR IMPLIED, INCLUDING WARRANTIES OF MERCHANTABILITY OF FITNESS FOR A PARTICULAR USE OR PURPOSE. IN NO EVENT SHALL ETLLC BE LIABLE FOR ANY INDIRECT, EXEMPLARY, INCIDENTAL, SPECIAL OR CONSEQUENTIAL DAMAGES (INCLUDING LOSS OF USE) ARISING OUT OF OR IN CONNECTION WITH THE SALE, USE OR PERFORMANCE OF ANY SMART CARDS AND REGARDLESS OF WHETHER SUCH DAMAGES ARE BASED UPON BREACH OF WARRANTY OR CONTRACT, NEGLIGENCE, STRICT LIABILITY OR ANY OTHER LEGAL THEORY.

          (c) Licensee agrees to provide ETLLC with a written report matching the identification number of each replacement Smart Card with the serial number of the OEM Product into which it is installed prior to returning the OEM Product to the end-user. In addition, Licensee shall notify ETLLC of the disposition and identification number of all Smart Cards that Licensee has replaced but not returned to ETLLC within a reasonable time of such replacement.

7. EXPORT RESTRICTIONS

     Licensee acknowledges and understands that U.S. export laws relating to the OEM Products and Smart Cards provided therewith may change from time to time in the future. Licensee acknowledges that it is Licensee’s sole responsibility to be and remain informed of all U.S. laws relating to the export of OEM Products and Smart Cards outside of the U.S. Licensee further acknowledges and agrees that ETLLC has absolutely no obligation to update Licensee regarding the status of U.S. export laws or any other U.S. laws relating to the export of OEM Products or Smart Cards outside of the U.S. Without ETLLC giving any consent for export of the OEM Products or Smart Cards and subject to territorial limitations of this Agreement, Licensee represents, warrants and covenants that: (i) prior to exporting or selling any OEM Products or Smart Cards outside of the U.S., it will investigate all applicable U.S. laws relating to the export of OEM Products and Smart Cards outside of the U.S.; (ii) it will not export or reexport any OEM Product or Smart Card to Cuba, Iran, Iraq, Libya, North Korea, Sudan or Syria or any other any destination in any country prohibited by U.S. export laws governing OEM Products or Smart Cards without the prior approval of the United States Government; and (iii) it will not use any OEM Product or Smart Card directly or indirectly to support the design, development, production or use of nuclear, chemical or biological weapons or ballistic missiles. Licensee is strictly prohibited from violating any U.S. law relating to the export or sale of OEM Products or Smart Cards outside of the U.S. Should Licensee export or sell any OEM Product or Smart Card outside of the U.S. in violation of this Agreement and/or U.S. law, this Agreement shall automatically terminate.

8. TRADEMARKS

     8.1 ETLLC’s Marks.

          8.1.1 In addition to the Approved OEM Brand Names affixed to the OEM Products under this Agreement, ETLLC shall have the right to affix such of the ETLLC Marks on or in connection with the OEM Products, including, but not limited to, on the Accessories and packaging and on the electronic on screen guide, in accordance with the usage guidelines for the ETLLC Marks or ETLLC’s User Interface Specification, as such guidelines and/or specification may change from time to time in ETLLC’s sole discretion. ETLLC agrees that Licensee shall not be required to accept the use of the ETLLC Marks on the OEM Products in any manner inconsistent with the usage guidelines for the Licensee Marks and the terms of this Section 8.1 without the prior written consent of Licensee, which consent shall not be unreasonably withheld.

          8.1.2 Notwithstanding Section 8.1.1 above and Section 8.1.3 below, Licensee acknowledges and agrees that the ETLLC Marks customarily used and the minimum size and manner of placement requirements for the ETLLC Marks currently set forth in: (i) ETLLC’s trademark usage guidelines and User Interface Specification; and (ii) this Section 8.1.2, are consistent with Licensee’s usage guidelines for use in connection with the Licensee Marks, and may continue to be applied by ETLLC in the size and manner customarily used and set forth in ETLLC’s trademark usage guidelines and User Interface Specification respectively and this Section 8.1.2 for the term of this Agreement, including any extensions thereto. Specifically, and without limitation of the foregoing, Licensee agrees that ETLLC shall have the right for the duration of the term and any extensions thereof to affix the ETLLC Marks on or in connection with the OEM Products, including without limitation on the Accessories and packaging and on the electronic program guide, such that the ETLLC Marks are displayed in a manner which is at least equally as prominent as the Approved OEM Brand Names affixed to the same. In the event that Licensee desires to change its usage guidelines in a manner that would effect the rights granted to ETLLC by Licensee under this Section 8.1.2, the parties agree to discuss the possibility of altering the application of the ETLLC Marks, Licensee Marks and Third Party Marks to the OEM Products in such a manner as will be consistent with the new usage guidelines proposed by Licensee and insure to ETLLC as nearly as possible the same results to which ETLLC is entitled under this Section 8.1.2.

          8.1.3 Licensee agrees not to use any of the ETLLC Marks in any manner inconsistent with the usage guidelines for the ETLLC Marks and without the prior written consent of ETLLC, and, subject to Section 8.1.2 above, ETLLC agrees that Licensee shall not be required to use the ETLLC Marks in any manner inconsistent with the usage guidelines for the Licensee Marks without the prior written consent of Licensee which consent shall not be unreasonably withheld. Licensee shall not use any of the ETLLC Marks without the prior written consent of ETLLC, which consent ETLLC may withhold in its sole discretion. Licensee expressly acknowledges and understands that ETLLC and its Affiliates claim to have the absolute ownership of, or right to allow Licensee to use, the ETLLC Marks.

          8.1.4 Regardless of whether ETLLC grants Licensee permission to use any ETLLC Mark, Licensee agrees that it will not in any way dispute or impugn the validity of any of the ETLLC Marks or registrations of the ETLLC Marks, nor the sole proprietary right of ETLLC and its Affiliates thereto, nor the right of ETLLC and its Affiliates to use or license the use of the ETLLC Marks in the Territory or elsewhere, either during the Term or at any time thereafter. Licensee further agrees not to perform, either during the Term or at any time thereafter, any act or deed either of commission or of omission which is inconsistent with ETLLC or its Affiliates’ proprietary rights in and to the ETLLC Marks, whether or not the ETLLC Marks are registered.

     8.2 Licensee’s Marks.

          8.2.1 ETLLC agrees not to use any of the Licensee Marks in any manner inconsistent with the usage guidelines for the Licensee Marks and without the prior written consent of Licensee, and Licensee agrees that ETLLC shall not be required to use the Licensee Marks in any manner inconsistent with the usage guidelines for the ETLLC Marks without the prior written consent of ETLLC which consent shall not be unreasonably withheld. ETLLC shall not use any of the Licensee Marks without the prior written consent of Licensee, which consent Licensee may withhold in its sole discretion; provided however, that no consent shall be required for ETLLC or an Affiliate to sell Excess Inventory under Section 5.7 above, for which Licensee hereby grants to ETLLC and its Affiliates a license to the Licensee Marks and any Approved OEM Brand names only as necessary for the marketing and sale of such Excess Inventory. ETLLC expressly acknowledges and understands that Licensee and its Affiliates claim to have the absolute ownership of, or right to allow ETLLC to use, the Licensee Marks.

          8.2.2 Regardless of whether Licensee grants ETLLC permission to use any Licensee Mark, ETLLC agrees that it will not in any way dispute or impugn the validity of any of the Licensee Marks or registrations of the Licensee Marks, nor the sole proprietary right of Licensee and its Affiliates thereto, nor the right of Licensee and its Affiliates to use or license the use of the Licensee Marks in the Territory or elsewhere, either during the Term or at any time thereafter. ETLLC further agrees not to perform, either during the Term or at any time thereafter, any act or deed either of commission or of omission which is inconsistent with Licensee or its Affiliates proprietary rights in and to the Licensee Marks, whether or not the Licensee Marks are registered.

     8.3 Third Party Trademarks. Licensee may also request that ETLLC affix to the OEM Products the “DVB” and “MPEG 2”, “MPEG 4” standard trademarks, provided that no third party trademarks shall be more than half as large as the Licensee and ETLLC trademarks. Licensee recognizes and understands that ETLLC has no authority to grant Licensee any rights to affix the “DVB”, “MPEG 2” and “MPEG 4” standard trademarks to an OEM Product. Should Licensee desire to do so, Licensee must negotiate the entitlement of such rights with the applicable rights holders. Licensee hereby acknowledges that, in the future, ETLLC may be obligated to affix the trademarks, service marks or trade names of the owners of third party technology that is presently, or at some time in the future, incorporated into the OEM Product, and

Licensee hereby grants its approval for ETLLC to affix any such trademarks, service marks or trade names to the OEM Product subject to the size requirements set forth above, unless the parties mutually agree otherwise.

9. CONFIDENTIAL AND PROPRIETARY INFORMATION

     9.1 General. At all times during the term of this Agreement and for a period of five (5) years thereafter, the parties and their employees will maintain, in confidence, the terms and provisions of this Agreement, as well as all data, summaries, reports or information of all kinds, whether oral or written, acquired, devised or developed in any manner from the other party’s personnel or files, or as a direct or indirect result of a party’s actions or performance under this Agreement, and each party represents that it has not and will not reveal the same to any persons not employed by such party, except: (i) at the written direction of the party which is the owner of such information; (ii) to the extent necessary to comply with law, the valid order of a court of competent jurisdiction or the valid order or requirement of a governmental agency or any successor agency thereto, in which event the disclosing party shall notify the owner of the information in advance, prior to making any disclosure, and shall seek confidential treatment of such information; (iii) as part of its normal reporting or review procedure to its parent company, its auditors and its attorneys, provided such parent company, auditors and attorneys agree to be bound by the provisions of this paragraph; or (iv) to the extent necessary to permit the performance of obligations under this Agreement.

     9.2 Subscriber Information. All subscribers who subscribe to any of the Programming and/or any other programming services offered by Licensee and/or any of its Affiliates shall be deemed customers of Licensee for all purposes relating to programming services (including without limitation video, audio and data services) and the hardware necessary to receive programming services. ETLLC acknowledges and agrees that the names, addresses and other identifying information of such subscribers (“Subscriber Information”) are as between ETLLC and Licensee, with respect to the delivery of programming services and the hardware necessary to receive programming services, proprietary to Licensee, and shall be treated with the highest degree of confidentiality by ETLLC. ETLLC will not directly or indirectly use any Subscriber Information for the purpose of soliciting, or to permit any others to solicit, such subscribers to subscribe to any other programming services or to promote the sale of any hardware product used in connection with programming services, and ETLLC shall under no circumstance directly or indirectly reveal any Subscriber Information to any third party for any reason without the express prior written consent of Licensee, which Licensee may withhold in its sole and absolute discretion; provided, however, that nothing shall prohibit ETLLC from utilizing its own customer list for its general business operations unrelated to the delivery and/or promotion of programming services or the sale of any product used in conjunction with programming services. The provisions of this Section 9.2 shall survive termination or expiration of this Agreement indefinitely.

     9.3 Equitable Relief. ETLLC agrees that a breach of the obligations set forth in this Section 9 will result in the substantial likelihood of irreparable harm and injury to the Licensee or its Affiliates for which monetary damages alone would be an inadequate remedy, and which damages are difficult to accurately measure. Accordingly, ETLLC agrees that Licensee and its Affiliates (or either of them) shall have the right, in addition to any other remedies available, to obtain immediate injunctive relief (without the necessity of posting or filing a bond or other security) to restrain the threatened or actual violation hereof by the ETLLC, its Affiliates, its employees and agents, as well as other equitable relief allowed by the federal and state courts. The foregoing is agreed to without prejudice to the Licensee and its Affiliates (or either of them) to exercise any other rights and remedies they may have, including without limitation, the right to terminate this Agreement and seek damages or other legal or equitable relief. The provisions of this Section 9.3 shall survive termination or expiration of this Agreement indefinitely.

     9.4 Economic Benefits Derived Held in Trust. In the event that ETLLC derives an economic benefit, in any form, from a violation of its obligations under Section 9.2, it is hereby agreed that such economic benefit is the property of Licensee and that ETLLC shall deliver the cash value of the economic benefit to Licensee immediately upon receipt of the economic benefit. It is further agreed that ETLLC shall hold such economic benefit in trust for the benefit of Licensee until such time as its cash value is delivered to Licensee. The foregoing is agreed to without prejudice to Licensee to exercise any other rights and remedies it may have, including without limitation, the right to terminate this Agreement and seek damages or other legal or equitable relief. The provisions of this Section 9.4 shall survive termination or expiration of this Agreement indefinitely.

10. TERM AND TERMINATION

     10.1 Term. This Agreement shall commence on the date first written above and shall continue for two (2) years thereafter (the “Initial Term”) unless terminated sooner as provided in this Agreement. Licensee shall have the exclusive right, but not the obligation, to extend this Agreement annually for up to two (2) years (each a “Renewal Term” and the Initial Term and any Renewal Term collectively the “Term”), upon submission of written notice to ETLLC no less than one hundred eighty (180) calendar days prior to expiration of the current Term.

     10.2 Termination By Either Party Upon Default. This Agreement may be terminated by a party (the “Affected Party”) upon the occurrence of any of the following with respect to the other party (the “Other Party”):

          10.2.1 The Other Party commits a payment default which is not cured within ten (10) days of receipt of written notice from the Affected Party.

          10.2.2 The Other Party defaults on any obligation or breaches any representation, warranty or covenant in this Agreement (regardless of whether breach

or default of such obligation, representation, warranty or covenant is designated as giving rise to a termination right), and such default or breach is not cured within thirty (30) days of receipt of written notice from the Affected Party. The parties agree that all obligations, representations, warranties and covenants contained in this Agreement, whether or not specifically designated as such, are material to the agreement of the parties to enter into and continue this Agreement.

     10.3 Termination by ETLLC. ETLLC may terminate this Agreement upon written notice to Licensee at any time in case of: (i) acquisition of Licensee, directly or indirectly, by a third party, or the merger of Licensee with a third party, which manufactures set-top boxes (this Section 10.3 will not apply to an acquisition of Licensee by, or the merger of Licensee with, an Affiliate of Licensee; provided that such Affiliate is not a direct or indirect manufacturer of set-top boxes); (ii) Licensee’s falsification of any material records or reports required hereunder; or (iii) a material breach, as determined in ETLLC’s sole judgment, by Licensee of the confidentiality provisions contained in Section 9 above.

     10.4 Purchase During Notice Period. During any notice and cure period under Section 10.2, ETLLC will determine in its sole judgment the amount of OEM Products, if any, Licensee may purchase.

     10.5 Termination for Convenience by Licensee. Licensee may terminate this Agreement for any or no reason by providing ETLLC not less than sixty (60) days prior written notice setting forth the termination date for this Agreement.

     10.6 Payment, Forfeiture and Cancellation. Upon expiration or termination of this Agreement for any reason, all sums due ETLLC must be immediately paid. Any credit or allowance under any cooperative or incentive program or other promotion (including any credit or allowance against the future purchase of OEM Products) which has not been applied by such date shall be forfeited unless otherwise expressly provided in the program or promotion, and all orders in process may at ETLLC’s option be deemed canceled unless in transit or paid for in advance by Licensee. ETLLC and Licensee hereby waive all claims against each other in connection with such forfeiture and cancellation.

     10.7 Survival of Certain Obligations. Termination or expiration of this Agreement for any reason shall not terminate any obligation or liability of one party to the other which is specified in this Agreement to expressly survive termination or expiration, which arises by operation of law or which logically is to be performed after termination or expiration, nor preclude or foreclose recovery of damages or additional remedies available to any party under applicable law, except as otherwise provided in this Agreement.

11 REPRESENTATIONS AND WARRANTIES

     11.1 Representations, Warranties and Covenants of Licensee. Licensee represents, warrants and covenants, as follows, which representations, warranties and covenants shall survive the execution of this Agreement:

          11.1.1 Licensee has the right and authority to enter into this Agreement and the execution, delivery and performance by Licensee of this Agreement have been duly authorized by all requisite corporate action and will not violate any provision of Licensee’s articles of organization, or any provision of any agreement by which Licensee is bound or affected.

          11.1.2 Licensee acknowledges the applicability of U.S. export control regulations which prohibit the sale, export, reexport or diversion of certain products and technology to certain countries, and will not sell, export or reexport any of the OEM Products, in the form received, or as modified or incorporated into other equipment, except as permitted under this Agreement and authorized by such regulations.

          11.1.3 Licensee is not, nor at any time will it be, in violation of any applicable Law by entering into and undertaking the performance of this Agreement and in performing its obligations pursuant to this Agreement. Licensee agrees to comply with any and all applicable laws.

          11.1.4 Licensee shall provide to ETLLC such adequate assurances as ETLLC may require from time to time in order to ensure that the requirements of this Section 11.1 have been met, and will continue to be met on an ongoing basis, by Licensee.

          11.1.5 Except as otherwise expressly stated in this Agreement, Licensee makes no other representations or warranties, either express or implied, statutory or otherwise, and all such warranties are hereby excluded except to the extent such exclusion is absolutely prohibited by law.

     11.2 Representations, Warranties and Covenants of ETLLC. ETLLC represents, warrants and covenants as follows, which representations, warranties and covenants shall survive the execution of this Agreement:

          11.2.1 ETLLC has the right and authority to enter into this Agreement and the execution, delivery and performance by ETLLC of this Agreement have been duly authorized by all requisite corporate action and will not violate any provision of ETLLC’s articles of organization, or any provision of any agreement by which ETLLC is bound or affected.

          11.2.2 ETLLC is the beneficial owner of Intellectual Property created independently by it, and such Intellectual Property is not subject to any covenant or other restriction preventing or limiting ETLLC’s right to manufacture the OEM Products as contemplated by this Agreement.

          11.2.3 ETLLC is not, nor at any time will it be, in violation of any applicable Law by entering into and undertaking the performance of this Agreement and in performing their obligations pursuant to this Agreement. ETLLC agrees to comply with any and all applicable Laws.

          11.2.4 ETLLC shall provide to Licensee such adequate assurances as Licensee may require from time to time in order to ensure that the requirements of this Section 11.2 have been met, and will continue to be met on an ongoing basis, by ETLLC.

          11.2.5 Except as otherwise expressly stated in this Agreement, ETLLC makes no other representations or warranties, either express or implied, statutory or otherwise, and all such warranties are hereby excluded except to the extent such exclusion is absolutely prohibited by law.

12. LIMITATION OF LIABILITY

     12.1 Limitation. IN NO EVENT SHALL ANY PARTY BE LIABLE FOR ANY INDIRECT, SPECIAL, EXEMPLARY, INCIDENTAL OR CONSEQUENTIAL DAMAGES (INCLUDING, BUT NOT LIMITED TO, LOSS OF USE OR LOST BUSINESS, REVENUE, PROFITS OR GOODWILL) ARISING OUT OF OR IN ANY WAY CONNECTED WITH THIS AGREEMENT, TERMINATION OR ANY OTHER MATTER RELATED HERETO. IN ADDITION TO AND WITHOUT LIMITATION OF THE FOREGOING, ETLLC SHALL HAVE NO LIABILITY OR RESPONSIBILITY TO LICENSEE OR ANYONE CLAIMING THROUGH LICENSEE FOR ANY LOSS OR DAMAGE (INCLUDING, GENERAL, INDIRECT, EXEMPLARY, INCIDENTAL, SPECIAL AND CONSEQUENTIAL DAMAGES) ARISING OUT OF ANY FAILURE OR DELAY IN SHIPMENT, LATE SHIPMENT, OR DELIVERY OF ALL OR ANY PART OF ANY ORDER.

     12.2 Risk Allocation. The parties agree that each and every provision of this Agreement which provides for a limitation of liability, disclaimer of warranties or exclusion of damages is expressly intended to be severable and independent of any other provision since they represent separate elements of risk allocation between the parties and shall be separately enforced. This Section 12.2 shall expressly survive the expiration or termination of this Agreement.

13. INDEMNIFICATION

     13.1 General Indemnity

          13.1.1 By Licensee. In addition to the intellectual property indemnity in Section 13.2.1 below, Licensee shall defend, indemnify and hold ETLLC and its Affiliates, and any and all of its and their respective officers, directors, shareholders,

employees, agents and representatives, and any and all of its and their assigns, successors, heirs and legal representatives (collectively the “ETLLC Group”), harmless from and against any and all claims, demands, litigation, settlements, judgments, damages, liabilities, costs and expenses (including, but not limited to, reasonable attorneys’ fees) incurred by the ETLLC Group arising directly out of: (i) a breach or default of any obligation, representation, warranty or covenant of Licensee hereunder; (ii) manufacture and sale to Licensee of OEM Products bearing, or use by ETLLC or an Affiliate of, any Approved OEM Brand Name on or in connection with the OEM Products as provided in this Agreement; and (iii) any claims of third parties otherwise arising out of or in connection with the marketing, promotion, sale and distribution of OEM Products.

          13.1.2 By ETLLC. In addition to the intellectual property indemnity in Section 13.2.2 below, ETLLC shall defend, indemnify and hold Licensee and its Affiliates, and any and all of its and their respective officers, directors, shareholders, employees, agents and representatives, and any and all of its and their assigns, successors, heirs and legal representatives (collectively the “Licensee Group”), harmless from and against any and all claims, demands, litigation, settlements, judgments, damages, liabilities, costs and expenses (including, but not limited to, reasonable attorneys’ fees) incurred by the Licensee Group arising directly out of: (i) a breach or default of any obligation, representation, warranty or covenant of ETLLC hereunder; and (ii) any claim whatsoever of product liability with respect to the OEM Products.

     13.2 Intellectual Property Indemnity

          13.2.1 By Licensee.

               (a) Licensee, at its own expense, shall defend any suit brought against ETLLC insofar as based upon a claim that the OEM Product(s), as such, directly infringes any third party trademark, trade name or service mark (“Third Party Mark”) due to any trademark, trade name or service mark affixed to the OEM Products at Licensee’s request, and shall indemnify ETLLC against any final award of damages or costs in such suit. This indemnity is conditional upon ETLLC giving Licensee prompt notice in writing of any suit for such infringement, full authority at Licensee’s option to settle or conduct the defense thereof and full assistance and cooperation in said defense.

               (b) No cost or expense shall be incurred on behalf of Licensee without its written consent.

               (c) The foregoing states the entire liability of Licensee in connection with infringement of a Third Party Mark by an OEM Product, and except as stated in this clause, Licensee will not be liable for any loss or damage of whatever kind (including in particular any incidental, indirect, special or consequential damage)

suffered by ETLLC in respect of the infringement of any Third Party Intellectual Property by an OEM Product.

          13.2.2 By ETLLC.

               (a) Except as otherwise agreed to by the parties, ETLLC, at its own expense, shall defend any suit brought against Licensee insofar as based upon a claim that an OEM Product or any Accessory thereto directly infringes (excluding Third Party Marks affixed to the OEM Products at Licensee’s request) any third party patent, copyright, trademark, service mark, trade secret, mask work or other intellectual or industrial property right (“Third Party Intellectual Property”) and shall indemnify Licensee against any final award of damages or costs in such suit. This indemnity is conditional upon Licensee giving ETLLC prompt notice in writing of any suit for such infringement, full authority at ETLLC option to settle or conduct the defense thereof and full assistance and cooperation in said defense.

               (b) No cost or expense shall be incurred on behalf of ETLLC without its written consent.

               (c) Except as otherwise agreed to by the parties, in the event that a OEM Product is in such suit held to constitute infringement, ETLLC at its own election and at its own expense may either procure for Licensee the rights to continue the sale of a OEM Product, or modify a OEM Product so that it becomes non-infringing.

               (d) ETLLC shall not be obligated to defend against, and shall not be liable for infringement of any Third Party Intellectual Property claim covering combination of a OEM Product with any other product not supplied by ETLLC.

               (e) ETLLC is not liable for any claim or demand, based upon infringement or alleged infringement of any Third Party Intellectual Property, when the damages in such claim or demand are directly or indirectly measured by amount of use of any OEM Product, irrespective of whether such claim or demand alleges that the OEM Product as such, or its use, infringes or contributes to the infringement of such Third Party Intellectual Property.

               (f) Except as otherwise agreed to by the parties, ETLLC’s liability under this Section 13.2 shall be limited to US $2,500,000.00 per occurrence or US $5,000,000.00 in the aggregate.

               (g) Except as otherwise agreed to by the parties, the foregoing states the entire liability of ETLLC in connection with infringement of Third Party Intellectual Property by the OEM Products and except as stated in this clause, ETLLC will not be liable for any loss or damage of whatever kind (including in particular any incidental, indirect, special or consequential damage) suffered by Licensee or any other person in respect of the infringement of any Third Party Intellectual Property.

     13.3 Indemnification Procedure. The party seeking indemnification (the “Indemnified Party”) shall promptly notify the party from whom indemnification is being sought (the “Indemnifying Party”). The Indemnified Party shall not make any admission as to liability or agree to any settlement of or compromise any claim without the prior written consent of the Indemnifying Party. The Indemnifying Party shall be entitled to have the exclusive conduct of and/or settle all negotiations and litigation arising from any claim and the Indemnified Party shall, at the Indemnifying Party request and expense, give the Indemnifying Party all reasonable assistance in connection with those negotiations and litigation.

14. GENERAL

     14.1 Taxes. Any and all payments required to be made by Licensee to ETLLC under this Agreement are exclusive of any tax, levy or similar governmental charge (“Taxes”) that may be assessed against Licensee by any jurisdiction. In the event that, under the laws of any jurisdiction, Licensee is required to withhold Taxes on any such payment (with the exception for income Taxes assessed against ETLLC, or any Affiliate thereof), the amount of the payment will be automatically increased so that the amount actually remitted to ETLLC, net of all Taxes, equals the amount invoiced or otherwise due. Licensee shall forthwith pay any amounts deducted or withheld from such payments to the relevant taxing or other authority in accordance with applicable law. Within thirty (30) days after the date of any payment of Taxes, Licensee will furnish to ETLLC a copy of a receipt evidencing payment thereof.

     14.2 Remedies Cumulative. It is agreed that the rights and remedies herein provided in case of default or breach of this Agreement are cumulative and shall not affect in any manner any other remedies that any party may have by reason of such default or breach. The exercise of any right or remedy herein provided shall be without prejudice to the right to exercise any other right or remedy provided herein, at law, or in equity.

     14.3 Notice. Any notice to be given hereunder shall be in writing and shall be sent by facsimile transmission, or by first class certified mail, postage prepaid, or by overnight courier service, charges prepaid, to the party notified, addressed to such party at the following address, or sent by facsimile to the following fax number, or such other address or fax number as such party may have substituted by written notice to the other party. The sending of such notice with confirmation of receipt thereof (in the case of facsimile transmission) or receipt of such notice (in the case of delivery by mail or by overnight courier service) shall constitute the giving thereof:

		If to Licensee:		9601 South Meridian Boulevard Englewood, Colorado 80112 Attn: General Counsel

		If to ETLLC:		90 Inverness Circle East Englewood, Colorado 80112 Attn: Mark Jackson
				and to Attn: General Counsel

     14.4 Independent Contractors. This Agreement and the transactions contemplated hereby are not intended to create an agency, partnership or joint venture relationship between the parties, or confer any benefit on any third party. All agents and employees of each party shall be deemed to be that party’s agents and employees exclusively, and the entire management, direction, and control thereof shall be vested exclusively in such party. Each party, its agents and employees, shall not be entitled to any benefits, privileges or compensation given or extended by the other party to its employees.

     14.5 Waiver. The failure or delay of either party to exercise any right hereunder shall not be deemed to be a waiver of such right, and the delay or failure of either party to give notice of, or to terminate this Agreement for, breach or default shall not be deemed to be a waiver of the right to do so for that or any subsequent breach or default or for the persistence in a breach or default of a continuing nature.

     14.6 Choice of Law and Exclusive Jurisdiction.

          14.6.1 This Agreement shall be governed, construed and enforced in accordance with the laws of the State of Colorado and the United States of America, without giving effect to the conflict of law provisions thereof. The parties acknowledge and agree that they and their counsel have reviewed, or have been given a reasonable opportunity to review, this Agreement and that the normal rule of construction to the effect that any ambiguities are to be resolved against the drafting party shall not be employed in the interpretation of this Agreement or any amendments or Schedules hereto.

          14.6.2 Except as otherwise agreed to by the parties, any and all disputes arising out of, or in connection with, the interpretation, performance or the nonperformance of this Agreement or any and all disputes arising out of, or in connection with, transactions in any way related to this Agreement and/or the relationship between the parties (including but not limited to the termination of this Agreement or the relationship or disputes under rights granted pursuant to statutes or common law, including those in the country in which Licensee is located) shall be litigated solely and exclusively before the United States District Court for the District of Colorado. The parties consent to the in personam jurisdiction of said court for the purposes of any such litigation, and waive, fully and completely, any right to dismiss and/or transfer any action pursuant to 28 U.S.C.A. 1404 or 1406 (or any successor statute). In the event the United States District Court for the District of Colorado does

not have subject matter jurisdiction of said matter, then such matter shall be litigated solely and exclusively before the appropriate state court of competent jurisdiction located in Arapahoe County, State of Colorado.

     14.7 Entire Agreement. This Agreement sets forth the entire, final and complete understanding between the parties hereto relevant to the subject matter of this Agreement, and it supersedes and replaces all previous understandings or agreements, written, oral, or implied, relevant to the subject matter of this Agreement made or existing before the date of this Agreement. Except as expressly provided by this Agreement, no waiver or modification of any of the terms or conditions of this Agreement shall be effective unless in writing and signed by both parties.

     14.8 Force Majeure. Neither party shall be liable to the other party for nonperformance or delay in performance of any of its obligations under this Agreement due to causes reasonably beyond its control or which cause makes performance a commercial impracticability, including: (i) materials or part shortages and software discrepancies or anomalies (provided such shortages, discrepancies, or anomalies are not reasonably within the control of ETLLC); and (ii) acts of God, fire, explosion, flood, windstorm, earthquake, trade embargoes, strikes, labor troubles or other industrial disturbances, accidents, governmental regulations, riots, and insurrections (“Force Majeure”). Upon the occurrence of a Force Majeure condition, the affected party shall immediately notify the other party with as much detail as possible and shall promptly inform the other party of any further developments. Immediately after the Force Majeure event is removed or abates, the affected party shall perform such obligations with all due speed. Neither party shall be deemed in default of this Agreement if a delay or other breach is caused by a Force Majeure event. If a Force Majeure event is expected to continue for more than three (3) months, any party may terminate this Agreement by providing thirty (30) days prior written notice to the other party. Such termination shall be without any continuing liabilities or obligations on the part of one party to the other of any kind except as expressly set forth herein.

     14.9 Severability. If any term or provision herein, or the application thereof to any person, entity, or circumstances shall to any extent be invalid or unenforceable in any pertinent jurisdiction, the remainder hereof shall not be affected thereby but shall be valid and enforceable as if the invalid term or provision were not a part hereof.

     14.10 Headings. The descriptive headings contained in this Agreement are included for convenience and reference only and shall not be held to expand, modify, amplify or aid in the interpretation, construction or meaning of this Agreement.

     14.11 Assignment. Subject to Section 10.3, Licensee may assign its rights and delegate its duties under this Agreement in whole or in part at any time; provided, however, that, in the event that Licensee assigns this Agreement to a non-Affiliate, the assignee must be at least as creditworthy as Licensee at the time they originally executed this Agreement. ETLLC may not assign any rights or delegate any duties under this Agreement without Licensee’s prior written consent, which consent shall not be unreasonably withheld,

except to an Affiliate of ETLLC; provided, however, that, such Affiliate is: (i) at least as creditworthy as ETLLC at the time it originally executed this Agreement; and (ii) is not a direct or indirect provider of direct to home programming. Any attempt to assign the Agreement without such consent shall be void. This Agreement will bind and inure to the benefit of the parties and their respective successors and permitted assigns.

     14.12 Compliance with Law. The parties shall comply with, and agree that this Agreement is subject to, all applicable federal, state, and local laws, rules and regulations, and all amendments thereto, now enacted or hereafter promulgated in force during the term of this Agreement.

          IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be executed by their duly authorized officers or representatives as of the date first written above.

Exhibit 10.27

[Form of]

Broadcast Services Agreement (Uplinking)

          This Broadcast Services Agreement (“Broadcast Agreement”) and the EHC Service Order Form attached hereto and incorporated herein (the “Service Order”) is binding and made effective as of the “Effective Date” (as defined in the Service Order), by and between EchoStar Holding Corporation, a Nevada Corporation, (“EHC”) and EchoStar Satellite L.L.C., a Colorado limited liability company, (“Customer”). Collectively the Broadcast Agreement and the Service Order shall be referred to as the “Agreement.” EHC and Customer shall each be referred to herein as a “Party” and collectively as the “Parties.”

1. Teleport Services. EHC shall provide, and Customer shall purchase, all or any of the applicable services set forth in this Article 1 (collectively “Teleport Services”) as specifically requested and priced within the Service Order. The Teleport Services shall be provided at an EHC owned, operated and/or controlled facility at such location as delineated in the Service Order (a “Teleport”). Collectively, the Teleport Services, Channel Origination Services and/or the Channel Management Services (each as described below) shall be referred to as the “Service(s).” EHC shall have the right to re-configure, re-specify or relocate all or any portion of the Services or Teleport at its sole discretion so long as such does not materially alter the quality of any of the Services.

          (a) Downlinking Customer Channel Content. EHC shall downlink “Customer Channel(s)” (as defined in the Service Order) from either a Customer-provided or a EHC-provided satellite space segment (hereinafter referred to as a “Transponder” and the specified bandwidth thereon allocated to Customer Channel(s), referred to as the “Transponder Capacity”, both as specified in the Service Order). At an antenna located at the Teleport, EHC shall receive the Customer Channel(s) downlinked from either a Customer-provided or a EHC-provided Transponder. Either Customer or EHC may provide the integrated receiver decoders (“IRD’s”) as specified in the Service Order. Unless expressly set forth in the Agreement to the contrary, Customer is responsible for providing, operating and maintaining all equipment, at locations other than the Teleport, necessary for reception of the downlinked Customer Channel(s). If EHC provides the IRD’s, then upon termination or expiration of the Teleport Services set forth in this Section 1(a), Customer shall at its cost, return all such IRD’s to the Teleport. Failure to return such IRD’s to the Teleport within thirty (30) days subsequent to such termination or expiration shall entitle EHC to, and Customer shall pay EHC, a dollar amount equal to the replacement cost of such IRD’s.

          (b) Transmission of Customer Channel Content. EHC shall receive and transmit (in a format and/or quality which is acceptable to EHC) the content contained in the Customer Channel(s), (“Content”), such Content which may include video, audio, data and/or other information in accordance with the provisions of this Agreement).

          (c) HVAC and Power. HVAC and Utility power (120vac or 208vac) at the Teleport for all the applicable equipment (whether such equipment is provided by EHC or

Customer) shall be supplied by EHC. In the event of utility power failure at the Teleport, all such critical equipment will have power supplied by an uninterruptible power supply with sufficient battery capacity to allow time for a EHC-supplied generator to be automatically switched on-line.

          (d) Rack Space for Necessary Equipment. EHC will provide environmentally controlled rack space adequate for all the applicable equipment (whether such equipment is provided by EHC or Customer) within equipment racks owned by EHC and located within the Teleport, (“Rack Space”). The EHC racks in which the necessary equipment is located may not be dedicated solely or exclusively to the Customer.

          (e) EHC Provided Equipment. EHC shall provide and configure at its sole discretion all, or a portion of, the equipment necessary equipment within the Teleport to provide the Service(s) requested by Customer pursuant to this Agreement. Such EHC equipment may not be dedicated solely or exclusively to the Customer. All equipment provided by EHC shall remain the sole property of EHC.

          (f) Additional Teleport Services and Limitations. (i) Any additional Teleport Services required or requested by Customer over and above that as initially contemplated in the Service Order shall be subject to availability and additional charges. (ii) Additional Rack Space may not be contiguous with the initial Rack Space. (iii) In no event shall EHC be required, nor shall Customer request, any Services which exceed the Transponder Capacity.

2. Satellite Services. In the event EHC provides a Transponder and/or Transponder Capacity (collectively “Satellite Services”) such Satellite Services may be subject to the terms and conditions of satellite services agreement(s). For the avoidance of doubt the satellite services agreements are not incorporated into this Agreement and are separate, severable contract(s) from this Agreement.

3. Channel Origination Services. EHC shall provide, and Customer agrees to pay for any applicable Services set forth in this Article 3 (collectively “Channel Origination Services”), as specifically requested and priced within the Service Order.

          (a) Channel Monitoring. EHC shall provide the necessary personnel and equipment at the Teleport for monitoring the transmission of the Content at the Beginning Demarcation Point to the Ending Demarcation Point on a 24 hours per day, 7 days per week (24 x 7) basis. EHC will monitor the Content and communicate with Customer regarding any technical problems in connection with the Content.

          (b) Commercial Insertion Reports and Tapes. Upon written request from Customer, EHC shall provide to Customer commercial insertion reports indicating which commercials were transmitted to the Ending Demarcation Point and the time each such insert was completed (the “As Run Logs”); and (ii) a video / audio tape with a time stamp of each program (per Customer Channel) that was transmitted by EHC (the “Logger Tapes”). As a general rule, Customer should request As Run Logs in advance; however, EHC shall make commercially reasonable efforts to maintain As Run Logs, which can be provided to Customer upon request, for a period of thirty (30) days following the transmission date. Logger Tapes must be requested in advance so as to reasonably give EHC the opportunity to purchase and configure any necessary equipment therefor.

4. Channel Management Services. EHC shall provide, and Customer agrees to pay for any applicable Services set forth in this Article 4 (collectively “Channel Management Services”) as specifically requested and priced in the Service Order.

          (a) Additional Graphics Creation. One time, upon written request from Customer, EHC will develop and implement industry standard graphics file(s) (“Basic Graphics”) for each Customer Channel for which any Services are being provided under this Agreement pursuant to each then current Service Order at no charge to Customer. Customer’s written request shall delineate all information necessary for the creation of such Basic Graphics. Such Basic Graphics shall be limited to station logos, station identification bugs and trouble slides. Subsequent to EHC providing any Basic Graphics, Customer may request, and EHC shall provide, additional graphics (“Additional Graphics”) including but limited to text scrolls and custom slides. Customer shall pay EHC an hourly rate (as set forth in the Service Order) for the creation of any Additional Graphics. EHC shall provide Customer the specifications for any such graphics and Customer shall be responsible for providing EHC with all applicable images for the creation of any such graphics.

          (b) Additional Graphics Insertion. EHC shall insert such Basic Graphics or Additional Graphics into programs within a Customer Channel as per Customer’s written request. Any Additional Graphics which are inserted into programs within a Customer Channel shall incur additional charges (as set forth in the Service Order) per program (per Customer Channel) in which Additional Graphics are inserted. In the event Customer provides any graphics for insertion EHC shall provide Customer the specifications for any such graphics.

          (c) Voice Overs Creation. At its studios and subject to availability, EHC will develop, produce and record audio voice messages for the insertion into programs within a Customer Channel (“Voice Overs”) per Customer’s written request. Voice Over studio / production sessions shall be booked by Customer in blocks of four (4) hours of recording and production time (each a “Production Session”). Customer shall provide EHC with all information necessary to create any Voice Overs.

          (d) Voice Overs Insertion. EHC shall insert Voice Overs (either Customer produced or EHC produced) into programs within a Customer Channel as per Customer’s written request. Any such Voice Overs which are inserted shall incur additional charges (as set forth in the Service Order) per program (per Customer Channel) in which Voice Overs are inserted.

          (e) Dubbing from Tape-to-Tape. Upon written request from Customer, EHC shall record, tape-to-tape, any program (each program not to exceed two (2) hours) on the Customer Channel which it receives via tape. EHC shall charge Customer (as set forth in the Service Order) per program (per Customer Channel) that it dubs from tape-to-tape for Customer.

          (f) Dubbing from Downlink. Upon written request from Customer, EHC shall record any program (each program not to exceed two (2) hours) on the Customer Channel which it receives via downlink. EHC shall charge Customer (as set forth in the Service Order) per program (per Customer Channel) that it dubs from downlink for Customer.

          (g) Re-Configuring Data Rate for Customer Channels. In the event Customer elects to re-configure the data rate at which a Customer Channel is transmitted, then EHC shall re-configure such data rate in the manner customarily used by the Parties to re-configure data rates.

5. Customer Provided Equipment. Customer shall have the right, but not the obligation to: (i) provide a portion of, or all of, the equipment necessary for EHC to provision the Services to Customer; or (ii) have EHC purchase on Customer’s behalf a portion of, or all of, the equipment necessary for EHC to provision the Services to Customer (clause (i) and (ii) collectively “Customer Equipment”). In the event that Customer exercises its right to have EHC purchase Customer Equipment (an “Equipment Purchase”) then: (a) such Equipment Purchase shall be included within the definition of “Services”; (b) EHC shall use commercially reasonable efforts to promptly procure the Equipment Purchase; and (c) Customer shall pay to EHC a cost plus a mutually agreed margin based upon the fair market value for such Equipment Purchase taking into consideration, among other things, the performance capabilities and technical specifications of the Equipment Purchase and the expertise of the services required to procure the Equipment Purchase (the "Equipment Cost"). In the event that the Parties are unable to agree on the Equipment Cost, the dispute resolution procedures set forth in Article VIII of the Separation Agreement by and between EchoStar Communications Corporation and EchoStar Holding Corporation dated [          ] (the “Dispute Resolution Procedures”) will be used to determine the fair market value of the Equipment Cost and such fair market value as so determined shall be deemed the Equipment Cost. All Customer Equipment provided by Customer or to be purchased on Customer’s behalf shall be listed in an Appendix A to the Service Order.

          (a) Limitations. Customer Equipment shall remain the property of Customer, and maintenance, repair, or replacement of Customer Equipment shall be the sole responsibility of Customer.

          (b) Removal of Customer Equipment. Within thirty (30) calendar days after the end of the Service Term Expiration (as delineated in the Service Order) for Teleport Services or any extension period thereof (if any), or termination of the Agreement, Customer shall remove all Customer Equipment from the Rack Space and/or Teleport at Customer’s sole cost under EHC supervision. Customer shall provide EHC with at least ten (10) calendar days’ written notice prior to such removal. Customer shall not be entitled to use the Teleport Services after expiration or termination thereof. If Customer Equipment is located at the Teleport and Customer fails to remove such Customer Equipment from the Teleport within such thirty (30) calendar day period, EHC shall have the right to either: (i) remove such Customer Equipment and issue an invoice to Customer for the cost of removal and shipment to the address set forth on Customer’s Notice Information (as set forth in the Service Order); or (ii) notify Customer that EHC elects to take ownership of such Customer Equipment, in which case Customer hereby

consents and agrees to such change of ownership. In the event any damage to the Rack Space or Teleport (reasonable wear and tear excepted) results from any use of the Rack Space and/or removal of Customer Equipment, Customer shall pay EHC the cost of repairs. Customer accepts all responsibility for Customer Equipment, including but not limited to risk of loss of its Equipment, except to the extent caused by EHC’s gross negligence or willful misconduct.

6. Teleport Access. In the event Customer is providing Customer Equipment or EHC has purchased Customer Equipment on Customer’s behalf, and such Customer Equipment is located at a EHC owned, operated or leased facility, Customer shall have access to Customer Equipment for normal maintenance purposes from 08:00 to 17:00 local time, weekends and holidays excluded, and Customer shall give the Teleport a minimum of five (5) business days advance written notice of its need for access to such Customer Equipment. For emergency servicing purposes, Customer shall have access to Customer Equipment located at the Teleport upon notice that is reasonable under such emergency circumstances. EHC may revoke, effective immediately without notice, the access of any individual to the Teleport. EHC reserves the right to escort any entities entering a Teleport and to monitor (and/or inspect) such entities’ work, means and methods, and EHC may charge Customer, on a per hour basis in accordance with Article 9 below, for such. Such right is intended only for the benefit of EHC and shall not be construed as constituting any: warranty; certification of compliance or performance by EHC; or in any way alleviating or diminishing any of Customer’s obligations. Customer acknowledges that EHC is granting only permission to access and utilize the Rack Space (as defined in the Service Order) and that EHC is not granting any leasehold or other real property interests in the Rack Space or the Teleport.

7. Demarcation Points. The demarcation points for Teleport Services are as follows: (a) the point at which EHC obtains control of Customer Channel(s) (as defined in the Service Order) for downlinking or transmitting in accordance with the Agreement (“Beginning Demarcation Point”); and (b) the point at which EHC relinquishes control of the Customer Channel(s) having already downlinked or transmitted them in accordance with the Agreement (“Ending Demarcation Point”). Collectively the Beginning Demarcation Point and the Ending Demarcation Point are referred to herein as the “Demarcation Points”. The Demarcation Points shall be set forth in the Service Order. Notwithstanding anything contained herein to the contrary, Customer shall be solely responsible for: (i) delivery of properly formatted Content to the Beginning Demarcation Point; and (ii) for receiving such Content at the Ending Demarcation Point.

8. Service Initiation Date. EHC shall initiate the Service(s) described herein on the date(s) set forth in the Service Order (the “Service Initiation Date” for each applicable Service). Customer’s obligation to pay for the Service(s) shall begin on the Service Initiation Date for each applicable Service, unless the applicable Service has not begun as of that date due to some fault of EHC. If a delay in the readiness of any Service is caused for any other reason which is the fault of Customer, including but not limited to the failure of Customer Equipment and/or Customer-provided Transponder to be ready, then the delay shall not affect Customer’s obligation to begin payment on the Service Initiation Date for the applicable Service(s).

9. Charges and Payment. MRC / NRC. Monthly recurring charges (“MRC(s)”) as further defined in this sentence) and non-recurring charges (“NRC(s)” as further defined in this sentence) shall be provided to Customer by EHC at a cost plus a mutually agreed margin based upon the fair market value of the Service, taking into consideration, among other things, the performance capabilities and technical specifications of the Services. In the event the Parties are unable to agree upon the MRC or NRC, the dispute resolution procedures set forth in Article VIII of the Separation Agreement by and between EchoStar Communications Corporation and EchoStar Holding Corporation dated [            ] (the “Dispute Resolution Procedures”) will be used to determine the fair market value of the applicable Service and such fair market value as so determined shall be deemed to be the MRC or NRC (as the case may be) for the applicable Service.

          (a) Payment. MRCs and NRCs for the Service(s) shall be paid monthly in advance in US Dollars by no later than the last business day of each month preceding the month in which a Service is to be rendered. EHC shall invoice each month’s MRC based upon its projected Cost Formula with the projected Cost Formula calculated by EHC by utilizing historical Costs (as defined in Schedule 1) as well as taking into account future business and technology plans. The Parties shall “true-up” any difference between the projected Cost Formula and the actual Cost Formula at such times as mutually agreed upon, but in any event not less than once per calendar year. Any payment not received within five (5) business days of its due date will be subject to late payment interest at a rate of one and a half percent (1.5%) per month or the maximum rate allowed by law, whichever is greater. Customer shall not offset any sums due to it pursuant to any other agreement(s) between Customer, or any of its Affiliates, and EHC, or any of its Affiliates, against any amount which is due to EHC pursuant to this Agreement. “Affiliate” means any person or entity directly or indirectly controlling, controlled by or under common control with another person or entity.

          (b) Labor Charges. If at Customer’s request, EHC performs labor related to the Service(s) but which is outside the scope of EHC’s responsibilities as set forth in this Agreement (“Additional Labor”), then EHC shall be entitled to charge Customer for such Additional Labor in accordance with this Article 9.

          (c) Deposit. EHC may require Customer to provide EHC with financial security (“Deposit”) as security in the amount set forth in the Service Order for payment of any charges and other liabilities of Customer. The Customer shall still be responsible for the timely payment of charges for the Service(s). EHC shall be entitled to draw upon the Deposit for any late payment or any other liabilities that the Customer may incur in connection with any Service, and the Customer shall be obliged to replenish the Deposit. Failure to do so shall be a material breach of the Agreement. Following termination of the entire Agreement EHC will return to the Customer any remaining Deposit minus any offsets (if any) which EHC may deduct from the Deposit to cover any outstanding liabilities for any Service.

          (d) Taxes. EHC’s rates and charges for Service(s) do not include taxes. Except for EHC’s taxes on (i) gross and/or net income and/or (ii) real estate, Customer will pay all local, state, national taxes or charges, including any Universal Service Fees which are imposed on or based upon the provision to, sale to or use of Service(s) by Customer.

10. Term.

          (a) Term of Agreement. This Agreement shall commence on the Effective Date and shall expire on the earlier of: (i) the date all Services have been terminated in accordance with the terms of this Agreement; (ii) the date all Services have expired in

accordance with the terms of the Service Order; or (iii) the secondary anniversary of the first Service Initiation Date (as defined in Section 8 above) for the first Service provided to Customer.

          (b) Renewal. Customer shall have the exclusive right, but not the obligation, to extend the Agreement annually for up to two (2) years, upon submission of written notice to EHC no later than one hundred eighty (180) calendar days prior to expiration of the current term.

          (c) Service Orders. Notwithstanding anything to the contrary contained herein or in any Service Order, in no event shall a Service Order continue to be effective following the expiration or earlier termination of this Agreement.

11. Teleport Service Outages and Service Failures.

          (a) Teleport Service Outages.

          (i) Customer acknowledges the possibility of an unscheduled period of time during which a Customer Channel is not available (“Outage”). An Outage shall be measured on a per Customer Channel basis and shall begin when EHC receives notice of the Outage from the Customer, or when EHC discovers the Outage (whichever occurs first) and will be considered to have ended when the affected Customer Channel has been restored. For an Outage to be counted toward the accumulated Outage time for which Customer may be entitled to a credit as set forth in Section 11(b) below (“Outage Credit”), Customer shall submit a written Outage notice to EHC (which identifies the Outage and requests an Outage Credit) within five (5) calendar days of the Outage. If EHC does not receive Customer’s written Outage notice within such five (5) calendar day period, the Outage shall not be counted toward the accumulated Outage time. For the avoidance of doubt, the term “Outage” shall include all Outages specified in Section 11(a)(ii).

          (ii) Termination for Chronic Outages. In the event that the cumulative Outages experienced on a Customer Channel exceed the industry standard service level (a “Chronic Channel Outage”), Customer shall have the right to terminate this Agreement in whole or in part as to any one or more Customer Channels, so long as such Chronic Channel Outage condition is not remedied within thirty (30) days after EHC’s receipt of such written notice.

          (b) Outage Credit Calculation. In the event that Outages exceed the industry standard service level (an “Excessive Outage”), Customer shall be entitled to an Outage Credit based upon that Customer Channel’s prorated portion of the applicable Teleport Service’s MRC and the length of such Outage as calculated pursuant to the equation in the table below. Any Outage Credit due shall be credited on Customer’s monthly invoices. The total Outage Credits for any one (1) calendar year for a Customer Channel shall not exceed an amount equal to one (1) month of a Customer Channel’s prorated portion of the applicable Teleport Service’s MRC for such affected Customer Channel.

Outage Credit Calculation

Outage duration (in number of minutes), multiplied by the Customer Channel’s
prorated portion of the applicable Teleport Service’s MRC, divided by 43,200
(deemed number of minutes in a month.)

For the avoidance of doubt and solely by way of example, an affected Customer Channel’s prorated portion of the applicable Teleport Service’s MRC shall be calculated as follows: If the Teleport Service’s MRC is $100 for all Customer Channels and there are an aggregate of 10 Customer Channels, one Customer Channel’s prorated portion of the Teleport Service’s MRC would be $10.

          (c) Service Failure. Customer acknowledges the possibility of an unscheduled period of time during which all or any portion of the Service(s) (excluding Teleport Services which are subject to Section 11(a) above) are not available, are interrupted or otherwise fail (“Service Failure”). In the event of a Service Failure, Customer shall be entitled to receive a credit (pro rata if applicable) for the applicable Service Failure (“Service Failure Credit”).

          (d) Exceptions. Notwithstanding any contrary provision herein, EHC shall not be responsible for and shall not be in default or breach of this Agreement as a result of, nor shall it be held liable for any Outages, Service Failures, Outage Credits, Service Failure Credits or other damages, claims, losses, or costs and expenses on account of, any interruption of any Services, nor shall such interruption be deemed an Outage or Service Failure, if such interruption or failure occurs due to any of the following: (i) de minimus degradation or interruptions of Customer Channel(s) due to protection switching; (ii) any failure on the part of Customer to perform its obligations pursuant to the Agreement, including, but not limited to the failure of Customer to provide Content to EHC in a format and/or quality in accordance with EHC specifications; (iii) the failure of transmission lines, fiber, Customer Equipment, equipment, connections, or other facilities provided by Customer or any third party; (iv) the failure or nonperformance of any earth station not operated by EHC; (v) interference from a third party transmission or usage; (vi) testing of the Services as mutually agreed to in advance; (vii) interruption or degradation due to atmospheric attenuation of the Content signal including but limited to sun transit outage, rain fade or weather; (viii) Force Majeure Events (as defined in Section 20(b)); (ix) telecommunications interruptions and/or failure of the Transponder; (x) any act or failure to act by Customer; (xi) interruptions due to tests and adjustments necessary to maintain the Services in satisfactory operating condition; (xii) reconfiguration(s) performed or directed by Customer; and/or (xiii) scheduled EHC maintenance.

          (e) Exclusive Remedy. Except as expressly set forth in Section 11(b) (i.e. Outage Credits) and 11(c) (i.e. Service Failure Credits) of this Agreement, neither EHC nor its Affiliates shall have any liability for any Outages or Services Failure. For Outages, Outage Credits from EHC (as set forth in Section 11(b) above) and termination rights for Chronic

Outages (as set forth in Section 11(a)(ii) above) are Customer’s sole and exclusive remedy(s) with respect to Outages. For a Service Failure, Service Failure Credits from EHC (as set forth in Section 11(c) above) are Customer’s sole and exclusive remedy(s) with respect to Service Failures. In no event shall an Outage or a Service Failure be deemed a breach of this Agreement and all other remedies or damages at law or in equity Customer may have against EHC in connection with any Outage or Service Failure are waived.

12. Insurance. In the event Customer is providing Customer Equipment and such Customer Equipment is located at a EHC owned, operated or leased facility, to cover its employees and/or agents performing work at the Teleport, and Customer Equipment or other property located at the Teleport, Customer shall carry and maintain at its sole cost during the Service Term of the Teleport Services, with insurance companies having at least A- and be assigned a financial size category of at least Class IX as rated in the most recent edition of “Best’s Key Rating Guide” for insurance companies or a rating of at least AAA as rated by Standard & Poor’s, the insurance indicated below as a minimum requirement:

Type of Coverage:		Limits of Liability:
(i) Worker’s Compensation		Statutory per State
(ii) Employers Liability		$1,000,000 per occurrence
(iii) Broad Form Property Damage		$3,000,000* per occurrence
(iv) Third Party Property Damage		$3,000,000* per occurrence

Customer shall provide to EHC at or prior to the Effective Date, certificates of insurance or proof of subscription to any state fund evidencing that Customer is maintaining all of the insurance required hereunder, and stating that EHC shall be provided with a copy of such certificates at the execution of any amendment thereto and at each policy renewal thereof, which certificates or proofs shall be in a form acceptable to EHC. All policies shall (a) be endorsed to include EHC, its stockholders, Affiliates, directors, officers and employees as additional insureds (the “Additional Insureds”); (b) be primary and non-contributory coverage to any insurance or self-insurance maintained by the Additional Insureds; (c) contain an endorsement waiving subrogation rights of insurer against the Additional Insureds, and (d) shall be issued by insurer(s) and in a form reasonably satisfactory to EHC. All deductibles shall be paid by Customer, assumed by Customer, for the account of Customer and EHC, and at Customer’s sole risk.

          (a) No Obligation on EHC. EHC will not insure nor be responsible for any loss or damage, regardless of cause, to any Customer Equipment or property of any kind, including loss of use thereof, owned, leased or borrowed by the Customer, its employees, servants or agents.

          (b) Contractors. If Customer utilizes contractor(s) per the Agreement, then Customer shall require such contractor(s) to comply with these insurance requirements. Customer will supply subcontractor’s certificates of insurance to EHC before any work commences.

13. Operational Notices. To report Outages, Service Failures and/or technical problems Customer shall call the Teleport, which shall be available to answer customer’s call on a 24 x 7 basis. EHC will communicate with Customer regarding any technical problems with any Customer Channel or Service. For purposes of these communications from EHC, Customer agrees that EHC should contact the operational contacts of Customer set forth in the Service Order and in the order listed therein. Customer shall update its list of operational contacts with EHC as needed. EHC shall not be responsible for any Outages, Service Failures or other technical problems with any Customer Channel(s) or Service in the event that EHC has attempted to communicate with Customer’s operational contacts according to the information provided by Customer to EHC and EHC is unable to establish communications with them.

14. Warranty. EXCEPT AS SET FORTH HEREIN, ANY SERVICE(S), SYSTEMS, EQUIPMENT OR PRODUCTS PROVIDED BY EHC TO CUSTOMER, EITHER DIRECTLY OR INDIRECTLY, SHALL BE “AS IS” WITHOUT WARRANTY OF ANY KIND WHETHER EXPRESSED OR IMPLIED OR STATUTORY, AND EHC MAKES NO WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE. CUSTOMER EXPRESSLY ACKNOWLEDGES THAT NO OTHER REPRESENTATIONS OR WARRANTIES HAVE BEEN MADE.

15. Liability Restrictions.

          (a) NOTWITHSTANDING ANYTHING IN THIS AGREEMENT TO THE CONTRARY, IN NO EVENT SHALL EITHER PARTY, ITS AFFILIATES, OFFICERS, DIRECTORS, EMPLOYEES, AGENTS OR ASSIGNS BE LIABLE FOR ANY CONSEQUENTIAL, INCIDENTAL, PUNITIVE, SPECIAL, EXEMPLARY OR INDIRECT DAMAGES, INCLUDING, BY WAY OF EXAMPLE AND NOT LIMITATION, LOSS OF BUSINESS, PROFITS, USE, DATA, OR OTHER ECONOMIC ADVANTAGE, WHETHER SUCH CLAIM IS CHOATE OR INCHOATE, WHETHER BY STATUTE, IN TORT, OR IN CONTRACT, EVEN IF SUCH PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.

          (b) IN NO EVENT SHALL EHC, AND ITS AFFILIATES AND ITS AND THEIR RESPECTIVE OFFICERS, DIRECTORS, EMPLOYEES, AGENTS AND SHAREHOLDERS, AND ITS AND THEIR RESPECTIVE ASSIGNS, HEIRS, SUCCESSORS AND LEGAL REPRESENTATIVES (THE “EHC GROUP”) BE LIABLE FOR: (i) CONTENT THAT IS TRANSMITTED BY CUSTOMER OR THIRD PARTIES VIA THE SERVICE(S); OR (ii) FOR ANY OUTAGE OR SERVICE FAILURE ATTRIBUTABLE IN WHOLE OR IN PART TO ANY OF THE EXCEPTIONS SET FORTH SECTION 11(d) OR OTHER CAUSES BEYOND EHC’S CONTROL.

          (c) EXCEPT AS SET FORTH IN SECTION 11(b) AND 11(c) OF THIS AGREEMENT, IN NO EVENT SHALL THE EHC GROUP BE LIABLE FOR ANY OUTAGE, SERVICE FAILURE, DEFECT, ERROR, INTERRUPTION, DELAY, OR ATTENUATION OF ANY OF THE SERVICES.

          (d) AS A MATERIAL CONDITION OF ENTERING INTO THIS AGREEMENT AT THE PRICE SPECIFIED IN THE SERVICE ORDER, AND IN REGARD

TO ANY AND ALL CAUSES ARISING OUT OF OR RELATING TO THIS AGREEMENT, CUSTOMER AGREES EHC’S AGGREGATE LIABILITY SHALL BE LIMITED TO THE LESSER OF: (i) THE ACTUAL DIRECT DAMAGES; OR (ii) THE MRC AND/OR NRC AMOUNTS ACTUALLY PAID (EXCLUDING ANY DEPOSITS) TO EHC BY CUSTOMER IN CONNECTION WITH THE CONTESTED SERVICE DURING THE PRECEEDING MONTH FROM THE TIME THE EVENT RESULTING IN LIABILITY OCCURS. IN THE EVENT OF EHC LIABILITY PURSUANT TO THIS AGREEMENT, EHC MAY ELECT, AT ITS DISCRETION AND SOLE OPTION, TO PAY SUCH REQUIRED AMOUNTS OR PROVIDE A CREDIT AGAINST SERVICES. THE PROVISIONS OF THIS ARTICLE SHALL SURVIVE EXPIRATION OR TERMINATION OF THIS AGREEMENT (FOR ANY REASON OR NO REASON WHATSOEVER) INDEFINITELY.

16. Indemnification.

          (a) Notwithstanding anything to contrary contained herein, Customer shall indemnify, defend and hold the EHC Group harmless from and against, any and all costs, losses, liabilities, damages, lawsuits, judgments, claims, actions, penalties, fines and expenses (including, without limitation, interest, penalties, reasonable attorney fees and all monies paid in the investigation, defense or settlement of any or all of the foregoing), that arise out of, or are incurred in connection with: (i) material breach of the Agreement, breach of any warranty, representation or covenant, or fault, negligence, act or omission, by the Customer or its Affiliates, directors, employees, agents or contractors; (ii) bodily injury including death, or property damage incurred by Customer or its Affiliates, directors, employees, agents or contractors as related to any Service, howsoever caused; (iii) the quality, content, alleged defects in, or failure (however caused) of any Service; (iv) the failure by Customer, its Affiliates or downstream customers of Customer, or any third party, to obtain approval, consent, or authorization relating to the content transmitted over any Service, including without limitation claims relating to any violation of copyright law, export control laws; (v) Customer’s or its Affiliates alleged breach of any national or international laws, rules and regulations applicable to it; (vi) alleged infringement of intellectual property rights including patents arising from Content, Customer Equipment, Customer-provided facilities, apparatus, or systems, or combining such with any of the Services and/or EHC-provided equipment; and/or (vii) EHC acting in accordance with the instructions of the Customer.

          In the event of any claim for indemnification by the EHC Group under this Section, the EHC Group shall be entitled to representation by counsel of its own choosing, at Customer’s sole cost and expense. The EHC Group shall have the right to the exclusive conduct of all negotiations, litigation, settlements and other proceedings arising from any such claim and Customer shall, at its own cost and expense, render all assistance reasonably requested by EHC in connection with any such negotiation, litigation, settlement or other proceeding.

          The provisions of this Section 16 shall survive expiration or termination of this Agreement (for any reason or no reason whatsoever) indefinitely.

17. Termination and Suspension.

          (a) EHC may, at its option, terminate or suspend all or any portion of the Agreement (i.e. all or any Services provided hereunder) without liability by giving Customer written notice as follows: (i) if Customer fails to make any payment due to EHC within (5) days of Customer’s receipt from EHC of written notice of such failure; (ii) if Customer breaches any material provision of this Agreement, and (A) if such breach is capable of remedy, Customer does not cure such breach within thirty (30) days of Customer’s receipt from EHC of written notice of such breach, or (B) if such breach is not capable of remedy, or has occurred more than once, immediately upon Customer’s receipt of written notice from EHC of such breach; or (iii) if Customer files a petition in bankruptcy or is adjudicated bankrupt or insolvent, or files or has filed against it any petition or answer seeking any reorganization, composition, liquidation or similar relief for itself under any applicable statute, law or regulation or makes any general assignment for the benefit of its creditors, or admits in writing its inability to pay its debts generally as they become due. In no event shall EHC’s election to suspend the Agreement and/or any Service(s) be construed as a waiver of EHC’s right to terminate the Agreement and/or any Service(s).

          (b) Customer may terminate any Channel Origination Services and/or any Channel Management Services for any reason or no reason, by giving EHC sixty (60) days written notice without any Customer Termination Liability as defined in Section 17(d) below. Provided that the Customer is not in breach of any material provision of this Agreement, Customer may terminate all or any portion of the Teleport Services, without any Customer Termination Liability, by giving EHC written notice as follows: (i) if EHC breaches any material provision of this Agreement, and (A) if such breach is capable of remedy, EHC does not cure such breach within thirty (30) days of receipt of written notice of such breach, or (B) if such breach is not capable of remedy, immediately upon receipt of written notice of such breach; or (ii) if EHC files a petition in bankruptcy or is adjudicated bankrupt or insolvent, or files or has filed against it any petition or answer seeking any reorganization, composition, liquidation or similar relief for itself under any applicable statute, law or regulation or makes any general assignment for the benefit of its creditors, or admits in writing its inability to pay its debts generally as they become due.

          (c) Upon termination or expiration of all or any portion of any Services and/or the Agreement for whatever reason, the Customer shall cease using all the terminated or expired Services. Notwithstanding anything contained herein to the contrary, in such event all outstanding indebtedness of the Customer to EHC under this Agreement, adjusted for any applicable Outage Credits and/or Service Failure Credits, shall become immediately due and payable.

          (d) In the event Customer terminates any portion of the Agreement for any reason except for that as set forth in Section 17(b) above, within thirty (30) days of such termination Customer shall pay EHC a sum equal to the projected Cost Formula that Customer would have paid EHC to provide the Teleport Services for the remainder of the Service Term, had such Teleport Services not been terminated (a “Customer Termination Liability”). The Parties agree this is a proper assessment of the loss of bargain and damages EHC will incur, and is not a penalty.

          (e) The Customer shall remain liable to pay all charges for any suspended Services during any period of suspension and, for the avoidance of doubt, any such suspensions shall not be deemed an Outage or Service Failure and no Outage Credits or Service Failure Credits are payable by EHC to the Customer for any such period of suspension.

18. Confidentiality. The terms and conditions of this Agreement as well as all financial, business, technical and other confidential and proprietary information that is disclosed or provided in connection herewith by any Party to the Agreement or their Affiliates shall be kept and treated as strictly confidential by each Party and their Affiliates and shall not be disclosed to any third party without the other Party’s prior written consent.

19. Representations, Covenants and Warranties.

          (a) Customer represents, covenants and warrants that: (i) it has and will obtain all applicable clearances and licenses, consents and approvals necessary to enable it to operate, receive and use the Services and to perform its other obligations under this Agreement; (ii) it is in compliance with, and performance of its obligations hereunder will not violate or conflict with, any applicable law or regulation of any jurisdiction to which it is subject; (iii) it will only use the Services and/or display or transmit any information or Content in connection with the Services in compliance at all times with all applicable laws and regulations; (iv) it is and shall be solely responsible for the acquisition of sufficient rights from, and all payments to, the owners of all Content it transmits or receives and shall adhere to all applicable Federal Communications Commission and regulatory guidelines as related to such Content; and (v) no Content provided to EHC in connection with the Agreement shall contain any material which is patently obscene, libelous, or that violates or infringes any copyright, right of privacy or literary or dramatic right of any person or entity; (vi) it will follow established standard industry practices and procedures for frequency co-ordination and will not request any Service in a manner that could reasonably be expected to interfere with or cause physical harm to satellites or other services that EHC offers.

          (b) EHC covenants that it shall provide the Services lawfully and with reasonable skill and care to recognized industry standards using appropriately experienced and trained personnel.

20. Miscellaneous.

          (a) Assignment. Neither Party may assign its rights or delegate its duties under the Agreement without the other Party’s written consent which consent will not be unreasonably withheld, except that notwithstanding anything contained herein to the contrary, either Party may assign its rights and/or delegate any portion of its duties under the Agreement without the other Party’s consent to any of such Party’s Affiliates capable of performing the assigning Party’s obligations hereunder, or in connection with a change of control whether by merger, sale of stock, sale of assets or otherwise. Any attempted assignment in violation of the foregoing will be void and of no effect.

          (b) Force Majeure. Neither Party shall be held liable for any delay or failure in performance of any part of the Agreement from any cause beyond its control and without its

fault or negligence, such as acts of God, acts of civil or military authority, government regulations, embargoes, epidemics, war, terrorist acts, riots, insurrections, fires, explosions, earthquakes, nuclear accidents, floods, power blackouts, meteorological or astronomical disturbances, satellite failure, satellite launch failure, Transponder failure and/or unusually severe weather conditions (each a “Force Majeure Event”). Notwithstanding anything to the contrary contained herein, if any Force Majeure Event affects EHC’s ability to provide a Service and continues for: (i) thirty (30) consecutive days or less, then the affected Service shall remain in effect; and (ii) more than thirty (30) consecutive days, then either Party may cancel the affected Service with no liability on the part of any Party. Notwithstanding anything contained herein to the contrary, if after the occurrence of a Force Majeure Event, EHC is able to provide Services to Customer via a manner outside that which the parties normally provision and accept Services, Customer hereby agrees to utilize commercially reasonable efforts to accept such provision of such Services by EHC.

          (c) Choice of Law and Jurisdiction. Except as otherwise agreed to by the Parties, this Agreement and the legal relations between the Parties hereto, including all disputes and claims, whether arising in contract, tort or under statute, shall be governed by and construed in accordance with the laws of the State of Colorado, USA, without giving effect to its conflict of law provisions. Any and all disputes arising out of, or in connection with, the interpretation, performance or the nonperformance of the Agreement or any and all disputes arising out of, or in connection with, transactions in any way related to the Agreement and/or the relationship between the Parties shall be litigated solely and exclusively before the United States District Court for the District of Colorado. The Parties consent to the in personam jurisdiction of said court for the purposes of any such litigation, and waive, fully and completely, any right to dismiss and/or transfer any action pursuant to 28 U.S.C. §1404 or §1406 (or any successor statute). In the event the United States District Court for the District of Colorado does not have subject matter jurisdiction of said matter, then such matter shall be litigated solely and exclusively before the appropriate state court of competent jurisdiction located in Arapahoe County, State of Colorado, USA.

          (d) Entire Agreement/Amendments. This Agreement together with any Service Orders constitutes the Parties’ entire agreement and supersedes all prior agreements, proposals, or discussions, whether oral or written with respect to the matters set forth herein. This Agreement may only be modified by a written amendment signed by an authorized representative of each Party.

          (e) Independent Contractor. The Parties are independent contractors for all purposes and at all times. Each Party has the responsibility for, and control over, the methods and details of performing it obligations hereunder. Each Party will be responsible for the hiring, training, supervision, tools, work policies and procedures of its own employees, and each will be responsible for the compensation, discipline and termination of its own personnel. Neither Party will have any authority to act on behalf of, nor bind the other Party to any obligation other than as expressly provided in the Agreement.

          (f) Notices. Except for the communication of Operational Notices (pursuant to Section 13) or other information of an urgent nature for which telephone communication between the operational contacts of the Parties is appropriate, or as otherwise expressly set forth

to the contrary herein, any notice or other communications required or permitted to be given hereunder shall be in English, in writing and shall be delivered personally or sent by facsimile transmission, or by first class certified mail, postage prepaid, or by overnight courier service, charges prepaid, to the Party to be notified, addressed to such Party at the address set forth below, or sent by facsimile to the fax number set forth below, or such other address or fax number as such Party may have substituted by written notice to the other Party. The sending of such notice with confirmation of receipt thereof (in the case of facsimile transmission) or receipt of such notice (in the case of personal delivery or delivery by mail or by overnight courier service) shall constitute the giving thereof:

If to EHC:

EchoStar Holding Corporation
Attn: General Counsel
Address: 90 Inverness Circle East, Englewood, Colorado 80112

With Copy To:

EchoStar Holding Corporation
Attn: Vice President of Engineering
Address: 530 Echostar Drive, Cheyenne, Wyoming 82007

If to the Customer to:

EchoStar Satellite L.L.C.
Attn: General Counsel
Address: 9601 S. Meridian Blvd., Englewood, Colorado 80112

          (g) Waiver. Except where timeframes for a specific action by a Party are expressly delineated in the Agreement, if either Party fails to enforce any right or remedy under the Agreement, that failure is not a waiver of the right or remedy for any other breach or failure by the other Party. No waiver shall be binding unless executed in writing by the Party making the waiver.

          (h) Construction. Because the Parties actively negotiated the Agreement, the Agreement will not be construed against the drafter.

          (i) Severability. If any provision of the Agreement is found to be unenforceable, the Agreement’s unaffected provisions will remain in effect and the Parties will negotiate a mutually acceptable replacement provision consistent with the Parties’ original intent.

          (j) Third-Party Beneficiaries. This Agreement shall not provide any person who is not a Party to the Agreement with any remedy, claim, liability, reimbursement, cause of action, or other right in excess of those existing without reference to the Agreement.

          (k) Headings. The headings and numbering of Articles, Sections and Subsections in the Agreement are for convenience only and shall not be construed to define or limit any of the terms herein or affect the meaning or interpretation of the Agreement.

          (l) Trademarks. Nothing in the Agreement will be construed to give the Customer any rights to use any EHC trademarks, service marks, or logos without the express prior written consent of EHC.

          (m) Supremacy. In the event of a conflict between the main body of this Agreement and language in the Service Order, the language of this Agreement shall prevail and the Service Order shall automatically be modified to conform to the language of the main body of this Agreement.

          (n) Attorney’s Fees. In the event of litigation involving the Agreement, the prevailing Party in any such action or proceeding shall be entitled to recover its reasonable costs and expenses incurred in such action from the other Party, including without limitation the cost of reasonable attorneys’ fees as determined by the judge of the court.

          (o) Counterparts. This Agreement may be executed by facsimile and in counterparts, each of which shall be deemed an original but all of which shall constitute one and the same document.

[AGREEMENT SIGNATURE PAGE FOLLOWS]

     IN WITNESS WHEREOF, the Parties hereto have caused the Agreement to be entered into as of the Effective Date.

Exhibit 10.28

[FORM OF]

ECHOSTAR HOLDING CORPORATION
SATELLITE TRANSPONDER SERVICE AGREEMENT

          THIS SATELLITE TRANSPONDER SERVICE AGREEMENT (the “Agreement”) by and between EchoStar Holding Corporation (“EHC”), a Nevada corporation with a place of business at 90 Inverness Circle East, Englewood, Colorado 80112 and EchoStar Satellite L.L.C. (“Customer”), a Colorado limited liability company with a place of business at 9601 South Meridian Blvd., Englewood, Colorado 80112 is made effective as of the [___] day of December, 2007. Defined terms used in this Agreement shall have the meanings specified below.

ARTICLE I.

Service Provided

          1.1. Scope. During the Service Term, EHC will provide to Customer Non-Preemptible Service on [___] Ku-Band Transponder(s) (or the equivalent thereof) on the [___] Satellite presently located at the [___]° W.L. orbital position (“Service”). Service will be provided subject to and in accordance with the terms and conditions set forth in this Agreement, including, but not limited to, Attachment A (Transponder Performance Specifications) and Attachment B (EHC Satellite Users’ Guide), which are hereby incorporated by reference in their entirety.

          The Satellite is authorized to be and is located at the [___]°W.L. orbital position. The Satellite may, however, be located at any other orbital position hereafter authorized by the Federal Communications Commission (the “FCC”). Technical performance criteria for the Satellite are described in the Transponder Performance Specifications set forth in Attachment A. The Service shall initially be provided using Transponders Nos. [___] on the Satellite.

          1.2. Term. The term for Service provided under this Agreement (the “Service Term”) shall commence on January 1, 2008 (the “Commencement Date”) and, except as otherwise provided herein, shall continue, unless terminated earlier in accordance with the terms and conditions of this Agreement, until the earliest of: (i) the End-of-Life or Replacement Date of the Satellite unless EHC elects to provide Service on the Replacement Satellite in accordance with Section 3.3; (ii) the date the Satellite becomes a Satellite Failure; (iii) the date the Transponder on which Service is being provided hereunder becomes a Transponder Failure; or (4) 2 years from the Commencement Date (the “Projected Termination Date”).

          1.3. Service Priorities. In the event that Customer’s Transponder becomes a Transponder Failure, Customer acknowledges and agrees that neither Customer’s Service nor any Transponder on which such Service is provided shall be restored by preempting any other service or by using a Replacement Transponder and/or a vacant transponder (or any portion thereof), and Customer’s Service and/or the Transponder on which such Service is provided shall not be restored.

          1.4. Notices. All notices regarding technical or operational matters requiring immediate attention will be given by telephone to the telephone numbers set forth below and shall be followed by written notification. All other notices or requests that are required or permitted to be given hereunder shall be in writing and shall be sent by facsimile transmission, or by first class certified mail, postage prepaid, or by overnight courier service, charges prepaid, to the party to be notified, addressed to such party at the address set forth below, or sent by facsimile to the fax number set forth below, or such other address(es) or fax number(s) as such party may have substituted by written notice to the other party. The sending of such notice with confirmation of receipt thereof (in the case of facsimile transmission) or receipt of such notice (in the case of delivery by mail or by overnight courier service) shall constitute the giving thereof.

If to be given to Customer:		If to be given to EHC:
Attn: [                                                                  ]		Attn: [                                                                  ]
EchoStar Satellite L.L.C.		EchoStar Holding Corporation
If by overnight courier:		If by overnight courier:
9601 South Meridian Blvd.		90 Inverness Circle East
Englewood, Colorado 80112		Englewood, Colorado 80112
If by U.S. mail:		If by U.S. mail:
P.O. Box 6655		[__________]
Englewood, Colorado 80155		Englewood, Colorado 80155
Fax #: [___]		Fax #: [___]
cc: EchoStar Satellite L.L.C.		cc EchoStar Holding Corporation
Attention: Office of the General Counsel		Attention: Office of the General Counsel
Same address as above		Same address as above
Fax #: [___]		Fax #: [___]

EHC’s 24 Hour Emergency Telephone # for Technical/Operational Issues:
Tel #: [___]

Customer’s 24 Hour Emergency Telephone # for Technical/Operational Issues:
Tel #: [___]

ARTICLE II.

Payment

          2.1. Monthly Recurring Service Charge. During the Service Term, Customer will pay to EHC for Service a monthly recurring service charge based upon the fair market value of the Service taking into consideration, among other things, the spot market prices for similar satellite capacity, the orbital location of the Satellite and

the frequency on which the Satellite is providing the Services (the "MRC"). In the event the parties are unable to agree upon the MRC, the dispute resolution procedures set forth in Article VIII of the Separation Agreement by and between EchoStar Communications Corporation and EchoStar Holding Corporation dated [___] (the “Dispute Resolution Procedures”) will be used to determine the MRC and such fair market value as so determined shall be deemed to be the MRC for the applicable Services.

          2.2. Billing and Payment. Unless mutually agreed upon otherwise, invoices will be issued monthly thirty (30) days in advance of the quarter in which Service is to be provided and are payable on the first day of such quarter by wire transfer as per the remittance instructions on the respective monthly invoice. On payments not received by the due date (“Delinquent Payments”), EHC will assess, until such time as payment in full is made, a late payment charge of the lesser of the Delinquent Payment multiplied by: (i) one and one-half percent (1.5%) per month compounded monthly; or (ii) the maximum rate permitted by applicable law. A failure or delay by EHC to send an invoice will not relieve Customer either of its obligation to pay for Service on a timely basis or of its obligation to pay late payment charges in the event of late payment. In addition to any other rights EHC may have under this Agreement, at law, in equity or otherwise (all of which are hereby expressly reserved), EHC may suspend provision of Service on seventy-two (72) hours’ notice for Customer’s failure to pay any sums due to EHC and/or any of its Affiliates.

          2.3. Taxes and Other Charges. All charges under this Agreement (including but not limited to the MRC) are exclusive of taxes, duties and other fees or charges levied by governmental authority (including but not limited to Universal Service Fees, if applicable) on the Service or the facilities used to provide the Service. Customer will pay directly or reimburse EHC for all such taxes, duties and other fees or charges, including but not limited to Universal Service Fees, if applicable. The provisions of this Article II shall survive expiration or termination of this Agreement (for any reason or no reason whatsoever) indefinitely.

ARTICLE III.

Service Parameters

          3.1. Credits. Credits for Interruptions in Service of five (5) minutes or more (“Interruption Credit”) shall be granted to Customer as follows:

     Interruption Credit = (Number of minutes in Interruption/43,200) multiplied by the MRC

The length of an Interruption will be measured from the time EHC is notified by Customer of the Interruption until Service is restored.

          3.2. Exceptions. Notwithstanding any contrary provision herein, EHC shall not be responsible for and shall not be in default or breach of this Agreement as a result of, nor shall it be held liable for any Interruption Credits or other damages, claims, losses, or costs and

expenses on account of, any interruption of the Service, if such interruption or failure occurs due to any of the following: (i) de minimus degradation or Interruptions of the Service due to reasonable protection switching in conformance with industry standards; (ii) Interruption or degradation due to atmospheric attenuation of the signal; (iii) any failure on the part of Customer to perform its obligations as required under this Agreement; (iv) the failure of transmission lines, fiber, any Customer provided equipment, connections, or other facilities provided by Customer or any third party, excluding any EHC Affiliates; (v) the failure or nonperformance of any earth station not operated by EHC; (vi) EHC’s compliance with an action by any court, agency, legislature or other governmental authority that makes it unlawful for EHC to provide the Services or any part thereof in accordance with this Agreement (vii) interference from a third party transmission or usage other than by EHC or its Affiliates; (viii) testing of the Service as mutually agreed to in advance; (ix) sun transit outage, rain fade, weather or Force Majeure Events; (x) any act or failure to act by Customer; (xi) any outage caused by any reconfigurations performed or directed by Customer, however unlikely; or (xii) scheduled maintenance. Any Interruption Credit shall be reflected on the first invoice issued by EHC following an Interruption. The aforementioned credit will be Customer’s sole and exclusive remedy for unavailability of Service and/or failure of Service to meet the Transponder Performance Specifications set forth in Attachment A.

          3.3. Transponder Assignment/Reassignment. Customer agrees that the Services will be used solely for the transmission of digital signals. The Transponder assignments may be changed from time to time in the manner customarily used by the parties to change Transponder assignments in the past.

ARTICLE IV.

Service Responsibilities

          4.1. Laws and Regulations Governing Service. Location and operation of the Satellite, EHC’s satellite system and EHC’s ability to perform are subject to all applicable laws and regulations, including without limitation, the Communications Act of 1934, as amended, and the rules and regulations of the FCC.

          4.2. Use Conditions. Customer’s use of the Service and use of the Service by any other person or entity (“Customer’s Designees”) shall be: (i) in compliance with all applicable laws and the Transponder Authority; and (ii) only within the United States of America or such other jurisdiction(s) as permitted by applicable law. Customer will not use, and will cause Customer’s Designees not to use the Service: (a) for any unlawful purpose, including violation of laws governing the content of material transmitted using the Service; and/or (b) without first obtaining any and all necessary Transponder Authority. Customer is permitted to allow Customer’s Designees to access use of the Service for the purpose of transmitting digital signals to the extent that such use is not prohibited by rule, regulation or law and subject to the terms and conditions of this Agreement. Customer shall provide EHC with at least five (5) business days’ prior written notice of any use of Service by Customer’s Designees and of the identity of any such Customer’s Designee. Should Customer permit use of such Service by any Customer’s Designee, Customer shall be a guarantor of compliance by each such Customer’s Designee with all of the terms, conditions, representations and warranties of this Agreement and any breach or

default of any of the terms, conditions, representations and/or warranties of this Agreement by any such Customer’s Designee shall be deemed to be a breach or default of this Agreement by Customer and any acts or omissions of Customer’s Designees related to the use of the Service shall be deemed to be acts or omissions of Customer for purposes of this Agreement. If Customer’s or Customer’s Designees’ use of Service or non-compliance with the terms and conditions of this Agreement (including but not limited to this Section 4.2.): (i) causes, or would reasonably be expected to cause, interference to or threatens the availability or operation of any services or facilities provided by EHC; or (ii) would reasonably be expected to result in: (a) a breach or violation of any other agreement between Customer or any of its Affiliates one the one hand and any member of the EHC Group on the other hand; (b) a claim against the EHC Group; or (c) the institution of criminal proceedings or administrative proceedings that would reasonably be expected to result in sanctions or other non-monetary remedies against EHC and/or any of its Affiliates, then, in addition to any other remedies that may be available to EHC hereunder, EHC shall be entitled to suspend and/or restrict such non-compliant use of the Service.

ARTICLE V.

Operational Matters

          5.1. Service Access. Customer is responsible for providing, operating and maintaining the equipment necessary to access the Satellite and Service. Customer at its expense shall provide EHC with any descrambling or decoding devices that may be required for signal monitoring. At a mutually agreed time, and prior to Customer transmitting from its earth station(s), Customer will demonstrate to EHC’s designated Technical Operations Center that its earth station(s) comply with the satellite access specifications contained in the EHC Satellite Users’ Guide.

          5.2. Action to Protect Satellite. EHC shall have sole and exclusive control of operation of the Satellite. If circumstances occur which in EHC’s reasonable judgment pose a threat to the stable operation of the Satellite, EHC shall have the right to take any and all actions it reasonably believes are or may be necessary or advisable to protect the Satellite, including discontinuance or suspension of operation of the Satellite, the Transponder(s) or any other transponder, without any liability to Customer, except that Customer may receive an Interruption Credit computed as provided in Article III of this Agreement. EHC shall give Customer as much notice as practical under the circumstances of any such discontinuance or suspension. If it becomes necessary to discontinue or suspend service on one or more transponders on the Satellite, and operational circumstances allow EHC to select the transponder or transponders to be discontinued or suspended, EHC will make such selection in Reverse Contract Order.

ARTICLE VI.

Indemnification

          Customer shall indemnify, defend and hold EHC and its Affiliates, and its and their respective officers, directors, employees, agents and shareholders, and its and their respective assigns, heirs, successors and legal representatives (collectively the “EHC Group”) harmless from and against, any and all costs, losses, liabilities, damages, lawsuits, judgments,

claims, actions, penalties, fines and expenses (including, without limitation, interest, penalties, reasonable attorney fees and all monies paid in the investigation, defense or settlement of any or all of the foregoing), that arise directly or indirectly out of, or are incurred in connection with: (i) Customer’s performance or failure of performance under this Agreement; (ii) the failure of Customer to comply with, or any violation of, any applicable laws; (iii) any claim of pirating, infringement or imitation of the logos, trademarks or service marks of programming providers; (iv) the acts or omissions of Customer or Customer’s Designees arising out of, resulting from or in connection with the Service or any use of the Service; and (v) third party claims (including those of Customer’s Designees) arising out of, resulting from or in connection with any failure to provide Service or any use of Service provided hereunder. In the event of any claim for indemnification by the EHC Group under this Article VI, the EHC Group shall be entitled to representation by counsel of its own choosing, at Customer’s sole cost and expense. The EHC Group shall have the right to the exclusive conduct of all negotiations, litigation, settlements and other proceedings arising from any such claim and Customer shall, at its own cost and expense, render all assistance reasonably requested by EHC in connection with any such negotiation, litigation, settlement or other proceeding. The provisions of this Article VI shall survive expiration or termination of this Agreement (for any reason or no reason whatsoever) indefinitely.

ARTICLE VII.

Warranty Disclaimer; Limitation of Liability

          7.1. Warranty Disclaimer. NO WARRANTIES, EXPRESS, IMPLIED, OR STATUTORY, INCLUDING ANY WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE, APPLY TO SERVICE PROVIDED HEREUNDER OR THE EQUIPMENT AND FACILITIES USED TO PROVIDE SERVICE. THE CONVEYING BY EHC OF PROPRIETARY INFORMATION OR OTHER INFORMATION TO CUSTOMER SHALL IN NO WAY ALTER THIS DISCLAIMER.

          7.2. Limitation of Liability. As a material condition of entering into this Agreement at the price specified herein, and in regard to any and all causes arising out of or relating to this Agreement, including but not limited to claims of negligence, breach of contract or warranty, failure of a remedy to accomplish its essential purpose or otherwise, Customer agrees that EHC’s and EHC’s Affiliates’ entire liability shall not exceed in the aggregate, the MRC paid by Customer to EHC for Service in the month preceding the event that is the cause of liability, plus any credits or refunds that are due with respect to such event pursuant to Article III or Section 9.3, respectively. Customer agrees that in no event shall EHC or any of its Affiliates or the manufacturer or launch service provider of the Satellite be liable for (i) any indirect, incidental, consequential, punitive, special or other similar damages (whether in contract, tort (including negligence), strict liability or under any other theory of liability), including but not limited to loss of actual or anticipated revenues or profits, loss of business, customers or goodwill, or damages and expenses arising out of third party claims or (ii) any damages of whatever kind, in the event the Satellite is positioned at an orbital location other than as specified in Section 1.1. The foregoing exclusions shall apply even if such party(s) has been advised of the possibility of such damages. The provisions of this Article VII shall survive expiration or termination of this Agreement (for any reason or no reason whatsoever) indefinitely.

ARTICLE VIII.

Confidentiality and Nondisclosure

          8.1. Certain Information Regarding Service. Customer hereby agrees not to disclose to third parties (without the prior written consent of EHC, which consent may be withheld in the sole and absolute discretion of EHC for any reason or no reason) the terms and conditions of this Agreement (including but not limited to the prices, payment terms, schedules, protection arrangements, and restoration provisions of this Agreement) and all information provided to Customer related to the design and performance characteristics of the Satellite, and any subsystems or components thereof, including but not limited to the Transponder.

          8.2. Proprietary Information. To the extent that either party discloses to the other any other information which it considers proprietary, said party shall identify such information as proprietary when disclosing it to the other party by marking it clearly and conspicuously as proprietary information. Any proprietary disclosure to either party, if made orally, shall be identified as proprietary information at the time of disclosure. Any such information disclosed under this Agreement shall be used by the recipient thereof only in its performance under this Agreement. Neither party shall be liable for the inadvertent or accidental disclosure of such information marked as proprietary, if such disclosure occurs despite the exercising of the same degree of care as the receiving party normally takes to preserve and safeguard its own proprietary information (but not less than reasonable care) or if such information: (i) is or becomes lawfully available to the public from a source other than the receiving party before or during the period of this Agreement; (ii) is released in writing by the disclosing party without restrictions; (iii) is lawfully obtained by the receiving party from a third party or parties without obligation of confidentiality; (iv) is lawfully known by the receiving party prior to such disclosure; or (v) is at any time lawfully developed by the receiving party completely independently of any such disclosure or disclosures from the disclosing party. In addition, neither party shall be liable for the disclosure of any proprietary information which it receives under this Agreement pursuant to judicial action or decree, or pursuant to any requirement of any government or any agency or department thereof, having jurisdiction over such party, provided that in the reasonable opinion of counsel for such party such disclosure is required, and provided further that such party to the extent reasonably practical shall have given the other party notice prior to such disclosure. The provisions of this Article shall survive expiration or termination of this Agreement (for any reason or no reason whatsoever) indefinitely.

ARTICLE IX.

Termination

          9.1. Termination for Convenience. Customer may terminate this Agreement for any reason or no reason without penalty or any further obligation by providing at least sixty (60) days prior written notice of termination to EHC.

          9.2. Termination for Cause. In addition to any rights of termination provided in other Articles of this Agreement, either party may terminate this Agreement by giving the other party written notice thereof in the event: (i) the other party materially breaches this Agreement

and fails to cure such breach within thirty (30) days after receipt of written notice thereof (except that if Customer fails to pay amounts due hereunder, such cure period shall be reduced to five (5) business days), provided, however, except for failure of Customer to pay amounts due under this Agreement and except for breaches by Customer that could be expected to result in harm to the Satellite and/or the Transponder, that if the event for which the notice is given is of a nature that may not reasonably be cured within said thirty (30) day period, the non-breaching party shall not have the right to terminate this Agreement under this Article for so long as the other party commences good faith efforts to cure such breach within said thirty (30) day period and diligently pursues such efforts to conclusion; or (ii) the other party is unable to perform its obligations as a result of its becoming insolvent or the subject of insolvency proceedings, including without limitation if the other party is judicially declared insolvent or bankrupt, or if any assignment is made of the other party’s property for the benefit of its creditors, or if a receiver, conservator, trustee in bankruptcy or other similar officer is appointed by a court of competent jurisdiction to take charge of all or any substantial part of the other party’s property, or if a petition is filed by or against the other party under any provision of the Bankruptcy Act now or hereafter enacted, and such proceeding is not dismissed within sixty (60) days after filing; or (iii) Interruption(s) with respect to more than fifty percent (50%) of the transponders leased hereunder continue for thirty (30) consecutive days and the sole cause of the Interruption is a Force Majeure Event. Notwithstanding anything to the contrary contained in this Agreement, Customer acknowledges and agrees that this Agreement may be terminated by EHC upon the expiration or earlier termination of any agreement(s) between Customer and/or any of its Affiliates, on the one hand, and EHC and/or any of its Affiliates, on the other hand.

          9.3. Refunds. In the event of the expiration of this Agreement pursuant to Section 1.2 EHC shall be entitled to retain all amounts paid by Customer to EHC under this Agreement, except that EHC shall refund any portion of amounts paid by Customer to EHC which relate to Service not provided by EHC plus any credits that may be due to Customer pursuant to Article III.

          9.4. Termination Liability. In the event of termination of this Agreement, EHC shall be entitled to retain all amounts paid by Customer to EHC under this Agreement, and any credits that may otherwise be due to Customer pursuant to Article III shall be forfeited. In addition, EHC may, in its sole and absolute discretion for any reason or no reason, elect to: (i) pursue any and all rights and remedies it may have at law, in equity or otherwise (all of which are hereby expressly reserved); or (ii) immediately recover from Customer as liquidated damages and not as a penalty an amount equal to the net present value (as of the date of such termination) of the remaining unpaid MRC, computed as if this Agreement remained in effect until the Projected Termination Date, utilizing a discount rate of 5% per annum, plus late payment charges pursuant to Section 2.2 on such amount from the date of termination until payment in full (the “Termination Value”). If EHC elects (ii) above and recovers such amount, EHC agrees to use reasonable efforts to obtain a qualified replacement customer(s), but shall not be required to obtain a customer(s) for service on the surrendered Transponder(s) before obtaining a customer(s) for any other unused transponder, to obtain any particular customer(s) or to set any particular minimum price in connection with such service. In the event EHC does obtain a qualified replacement customer(s), EHC thereafter shall pay to Customer eighty-five percent (85%) of the gross proceeds received by EHC either (x) from the provision of service to such replacement customer(s) using the Transponder(s) prior to the Projected Termination Date, or (y)

from the sale of the Transponder(s) to such replacement customer(s) and attributable to the period prior to the Projected Termination Date; provided that in no event shall such payment exceed the Termination Value paid by Customer.

          9.5. Inability to Regain Transponder. If upon expiration or termination of this Agreement for any reason or no reason by either party, EHC is unable to regain the use of all, or any part of, the Transponder(s) free and clear of any claims (including, but not limited to, claims of a debtor in bankruptcy) or liens arising as a result of the use of the Transponder(s) by Customer or Customer’s Designees, then in addition to all other remedies available to EHC pursuant to this Agreement, at law, in equity, or otherwise (all of which are hereby expressly reserved), Customer shall be obligated, without regard to any such termination or expiration, to continue to pay EHC the payments provided for in Article II.

ARTICLE X.

General Provisions

          10.1. Force Majeure. Neither party will be liable to the other by reason of any failure in performance of this Agreement if the failure arises out of acts of God or of the public enemy, acts of the other party, acts of any local, county, state, federal or other government in its sovereign or contractual capacity, fires, floods, adverse weather conditions (including but not limited to solar flares or sun outages with respect to satellite transmission interference), epidemics, quarantines, restrictions, sabotage, acts of terrorism, acts of third parties, strikes or other labor disturbances, freight embargoes, whole or partial satellite malfunctions, uplink failure, or any other event which is beyond the reasonable control of that party (each, a “Force Majeure Event”). In no event shall Customer’s failure to make payment when due be excused by a Force Majeure Event.

          10.2. No Implied License. The provision of services or the conveying of any information under this Agreement shall not convey any license by implication, estoppel or otherwise, under any patents or other intellectual property rights of Customer or EHC, and/or their Affiliates, contractors and/or vendors.

          10.3. No Third Party Rights; No Fiduciary Relationship. Nothing contained in this Agreement shall be deemed or construed by the parties or by any third party to create any rights, obligations or interests in third parties, or to create the relationship of principal and agent, partnership or joint venture or any other fiduciary relationship or association between the parties.

          10.4. No Waiver; Remedies Cumulative. No waiver, alteration, or modification of any of the terms of this Agreement will be binding unless in writing and signed by both parties. All remedies and rights hereunder and those available under contract, in law, in equity and otherwise shall be cumulative, and the exercise by a party of any such right or remedy shall not preclude the exercise of any other right or remedy available under this Agreement in law, in equity, under contract or otherwise (all of which are hereby expressly reserved). The failure of any party to insist upon strict performance of any provision of this Agreement shall not be construed as a waiver of any subsequent breach of the same or similar nature.

          10.5. Costs and Attorneys’ Fees. In addition to all other amounts payable under this Agreement, EHC shall be entitled to recover from Customer: (i) costs of collection of any amounts, including reasonable attorneys’ fees and disbursements; and (ii) costs, including reasonable attorneys’ fees and disbursements, incurred in seeking to prevent use of Service contrary to the terms of this Agreement. The provisions of this Article shall survive expiration or termination of this Agreement (for any reason or no reason whatsoever) indefinitely.

          10.6. Governing Law and Jurisdiction. Except as otherwise agreed to by the parties, the relationship between the parties and their present and future Affiliates, including without limitation all disputes, controversies or claims, whether arising in contract, tort, under statute or otherwise, shall be governed by and construed in accordance with the laws of the State of Colorado, applicable to contracts to be made and performed entirely within the State of Colorado by residents of the State of Colorado, without giving any effect to its conflict of law provisions. The parties and their present and future Affiliates consent to and submit to the in personam jurisdiction of the United States District Court for the District of Colorado and the appropriate State Court located in Arapahoe County, State of Colorado for the purposes set forth in this Article and waive, fully and completely, any objection to venue and right to dismiss and/or transfer any action pursuant to Title 28 U.S.C. Section 1404 or 1406 (or any successor statute). In the event that the United States District Court for the District of Colorado does not have subject matter jurisdiction over any such matter, then such matter shall be litigated solely and exclusively before the appropriate state court of competent jurisdiction located in Arapahoe County, State of Colorado. The provisions of this Article shall survive expiration or termination of this Agreement (for any reason or no reason whatsoever) indefinitely.

          10.7. Headings; Severability; Customer Purchase Orders. All titles and headings in this Agreement are for reference purposes only and will not affect the meaning or construction of the terms of this Agreement. The parties agree that each provision of this Agreement shall be construed as separable and divisible from every other provision and that the enforceability of any one provision shall not limit the enforceability, in whole or in part, of any other provision hereof. If any one or more of the provisions contained herein, or the application thereof to any person, entity, or circumstance, for any reason are held to be invalid, illegal, or unenforceable in any respect, then such provision(s) shall be enforced to the maximum extent permissible, and the remaining provisions of this Agreement shall be unaffected thereby and will remain in full force and effect. Customer agrees that any purchase order or other similar document that Customer may issue in connection with this Agreement will be for Customer’s internal purposes only and, therefore, even if acknowledged by EHC, will not in any way add to, subtract from, or in any way modify the terms and conditions of this Agreement.

          10.8. Assignment. Customer may not assign or otherwise transfer this Agreement or any or all of its rights and/or obligations under this Agreement to any third party without EHC’s prior written consent to such assignment or transfer, which consent may be withheld in the sole and absolute discretion of EHC for any reason or no reason. EHC may, at any time and from time to time in its sole and absolute discretion for any reason or no reason, assign this Agreement to an Affiliate of EHC in whole or in part without the consent of Customer, which consent shall not be required.

          10.9. Construction. Customer and EHC hereby represent, warrant, acknowledge and agree that the normal rule of construction to the effect that any ambiguities are to be resolved against the drafting party shall not be employed in the interpretation of this Agreement, including without limitation any amendments hereto.

          10.10. Facsimile Signatures; Counterparts. This Agreement may be executed by facsimile and/or in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

          10.11. Trademarks. Nothing in this Agreement will be construed to give Customer any rights to use any EHC trademarks, service marks, or logos without the express prior written consent of EHC, which consent may be withheld for any reason or no reason in the sole and absolute discretion of EHC.

          10.12. Entire Agreement/Amendments. This Agreement constitutes the entire agreement between the parties with respect to the subject matter of this Agreement. Except as otherwise expressly provided herein, no party shall be bound by any communications between them on the subject matter of this Agreement, unless the communication is: (i) in writing; (ii) bears a date contemporaneous with or subsequent to the date of this Agreement; and (iii) is signed by all parties to this Agreement. The parties specifically acknowledge there are no unwritten side agreements or oral agreements between the parties regarding the subject matter of this Agreement which alter, amend, modify or supplement this Agreement. In the event of any conflict or inconsistency between the terms and conditions set forth in the body of this Agreement and the terms and conditions set forth in any Attachment hereto, the terms and conditions set forth in the body of this Agreement shall control. In addition to any provisions of this Agreement that expressly survive termination or expiration, any provision of this Agreement that logically would be expected to survive termination or expiration, shall survive for a reasonable time period under the circumstances.

          10.13. No Offsets. In no event shall Customer or any of its Affiliates offset any amounts due to EHC or any of its Affiliates from Customer or any of its Affiliates for any reason, against amounts owed to Customer or any of its Affiliates by EHC or any of its Affiliates. If Customer and/or any of its Affiliates are indebted to EHC or any of its Affiliates for any reason, Customer and its Affiliates hereby acknowledge and agree that EHC and its Affiliates shall have the right, but not the obligation, to offset any such amounts due to EHC or its Affiliates from Customer or its Affiliates for any reason against any money otherwise due to Customer or its Affiliates from EHC or its Affiliates, as well as any and all amounts for which EHC and/or any of its Affiliates may become liable to third parties by reason of Customer’s and/or any of it’s Affiliates’ acts in performing or failing to perform, Customer’s and/or any of its Affiliates’ obligations under this Agreement or any other agreement. Further, EHC and/or its Affiliates may, but shall have no obligation to, withhold such sums from any monies due or to become due to Customer and/or its Affiliates under this Agreement and/or any other agreement or from funds or equipment to be paid or disbursed to Customer and/or its Affiliates pursuant to business dealings between the parties and/or their respective Affiliates not reflected in any contract, as EHC, at any time and from time to time in its sole and absolute discretion for any reason or no reason, deems necessary to protect EHC and/or any of its Affiliates from any loss, damage, or expense relating to or arising out of Customer’s or any of its Affiliates’ actions,

inaction or performance under this Agreement or any other agreement, or in response to any claim or threatened claim of which EHC becomes aware concerning Customer or its Affiliates or the performance of Customer’s or any of its Affiliate’s duties under this Agreement or any other agreement. The provisions of this Article shall survive expiration or termination of this Agreement for any reason or no reason indefinitely.

ARTICLE XI.

Definitions

          The following definitions shall apply to all capitalized terms, whether used in the singular or plural form, which are not otherwise defined in this Agreement:

          “Affiliate” means any person or entity directly or indirectly controlling, controlled by or under common control with another person or entity.

          “Business Preemptible Service” or “Business Preemptible Transponder” means a satellite service or transponder that is not entitled to restoration in the event it becomes a Transponder Failure and may be preempted at any time to restore: (i) a satellite failure; (ii) a Protected Service or Protected Transponder that becomes a transponder failure; (iii) any other service or transponder (including a Preemptible Service or Preemptible Transponder) experiencing technical difficulties or interference; or (iv) other service offerings of EHC or any of its Affiliates, including but not limited to mass move protection, construction and launch delay protection and launch failure protection. In addition, such Business Preemptible Service or Business Preemptible Transponder may be preempted for any other reason (including but not limited to, EHC’s desire to provide service on such Transponder to another customer).

          “End-of-Life” means the date on which, in EHC’s reasonable judgment, a satellite should be taken out of service because of insufficient fuel.

          “Fully Protected Service” means a satellite service that may not be preempted to restore another service, and if restoration thereof is needed as a result of a satellite failure or as a result of a transponder failure under circumstances in which no Protection Transponder is available on the satellite on which such satellite service is located, is entitled to restoration, subject to availability of facilities and to the conditions of the applicable contract, on another satellite.

          “Interruption” means any period during which a Transponder fails to meet the Transponder Performance Specifications set forth in Attachment A (or, following a reassignment or relocation pursuant to Section 3.3, the substantial equivalent thereof) and such circumstances preclude the use of the Transponder for its intended purpose.

          “Non-Preemptible Service” means a satellite service on which such service is provided that may not be preempted to restore another service and that is not itself entitled to be restored by preempting any other service or by using a Replacement Transponder or a vacant transponder.

          “Preemptible Service” or “Preemptible Transponder” means a satellite service or transponder that is not entitled to restoration in the event it becomes a Transponder Failure and may be preempted at any time to restore: (i) a satellite failure; (ii) a Protected Service or Protected Transponder that becomes a transponder failure; or (iii) other service offerings of EHC or any of its Affiliates, including but not limited to mass move protection, construction and launch delay protection and launch failure protection.

          “Protected Service” or “Protected Transponder” means a service or transponder that is entitled to preempt a Preemptible Service or Preemptible Transponder.

          “Protection Transponder” means a Replacement Transponder or Preemptible Transponder used to restore a Protected Service.

          “Replacement Date” means the date on which a Replacement Satellite is made capable of carrying communications traffic at the orbital location to which the Satellite is assigned and, following EHC testing and verification, EHC determines that such satellite is ready for commercial operation.

          “Replacement Satellite” means any replacement or successor to the then-current Satellite or to the Ku-band payload of the Satellite which is capable of carrying communications traffic at the orbital location to which the Satellite is assigned and providing performance substantially equivalent to the Transponder Performance Specifications set forth in Attachment A.

          “Replacement Transponder” means a spare transponder, which is accessible for purposes of providing restoration and which is capable of carrying communications traffic within the parameters as described in the transponder performance specifications for the transponder to be restored.

          “Reverse Contract Order” means, as to each service or transponder on the Satellite, in order from the latest date on which a binding agreement for the taking of such service has been executed by both a customer and EHC, to the earliest such date. If Reverse Contract Order is to be determined among more than one class of service, then Reverse Contract Order means first in order from the latest such date to the earliest such date among Business Preemptible Services, second in such order among Preemptible Services, third in such order among Non-Preemptible Services, fourth in such order among Transponder Protected Services and last in such order among Fully Protected Services. Notwithstanding the foregoing, any service being provided to the United States government or any department or agency thereof, whether through a prime contract or a subcontract, shall be deemed to have an earlier date of binding agreement than Customer hereunder.

          “Satellite” means the communications spacecraft designated [__________] to be operated by EHC or in accordance with Section 1.1, a Replacement Satellite. When used in the lower case, “satellite” means a domestic communications satellite operating in Ku-band.

          “Satellite Failure” means a satellite:

          1) on which one or more of the basic subsystems fail, rendering the use of the satellite for its intended purposes impractical, as determined by EHC in its reasonable business judgment, or on which more than one-half of the transponders on the payload are transponder failures; and

          2) that EHC has declared a failure.

          For purposes of this definition, a hybrid satellite with multiple band payloads shall be treated, at EHC’s option, either: (i) as a single satellite; or (ii) as though the multiple band payloads were located on separate satellites.

          “Transponder” means a Ku-band radio frequency transmission channel on the Satellite, used to provide service to Customer pursuant to the terms of this Agreement. Customer acknowledges and agrees that due to circumstances, including but not limited to the characteristics of Customer’s traffic, Customer’s ground segment configuration, and the characteristics of traffic on cross polarized transponders on the Satellite and of carriers on satellites in proximity to the Satellite, the entire bandwidth of the Transponder may not be usable by Customer for the operation of all types of carriers. When used in the lower case, “transponder” means a Ku-band radio frequency transmission channel on a communications satellite.

          “Transponder Authority” means all retransmission consents and any and all other consents, authorizations and approvals required by law or under contract and/or pursuant to any governmental action (including but not limited to any consent, authorization and/or approval required under the rules and regulations of the Federal Communications Commission) for Customer’s use of the Services, Satellite and/or Transponder.

          “Transponder Failure” means, with respect to any Transponder used to provide service to Customer under this Agreement, any of the following events:

          1) such Transponder fails to meet the Transponder Performance Specifications set forth in Attachment A (or, following a reassignment or relocation pursuant to Section 1.1 or Section 3.3, the substantial equivalent thereof) in any material respect for any period of five (5) consecutive days;

          2) twenty (20) or more creditable Interruptions of fifteen (15) minutes or more in duration shall occur within any ninety (90) consecutive days; or

          3) such Transponder shall fail to meet the Transponder Performance Specifications set forth in Attachment A (or, following a relocation or reassignment pursuant to Section 1.1 or Section 3.3, the substantial equivalent thereof) in any material respect for any period of time under circumstances that make it clearly ascertainable or predictable, based on satellite industry engineering standards, that a failure set forth in Paragraphs 1) or 2) above will occur.

          For the purpose of this definition, measurement of periods of failure hereunder shall commence when Customer has vacated its signal to permit verification of the existence of the failure by EHC.

          “Transponder Protected Service” means a satellite service that may not be preempted to restore another service, that is itself entitled to be restored by Protection Transponders on the same satellite in the event it becomes a Transponder Failure but that is not entitled to be restored if there is no such Protection Transponder available.

          IN WITNESS WHEREOF, the parties have caused their duly authorized representatives to execute this Agreement as of the date and year first above written.

 

EXHIBIT 99.1

 

EchoStar Communications Corporation
9601 S. Meridian Blvd.
Englewood, Colorado 80112

 

 

December [  ], 2007

 

Dear EchoStar Communications Corporation Shareholder:

 

We are pleased to inform you that on December 11, 2007, the Board of Directors of EchoStar Communications Corporation approved the spin-off of EchoStar Holding Corporation, a wholly-owned subsidiary of EchoStar Communications Corporation. EchoStar Holding Corporation will hold the technology and certain infrastructure assets of EchoStar Communications Corporation. EchoStar Communications Corporation will retain its consumer pay-TV business, DISH Network. We believe that our separation into two independent publicly-traded companies is in the best interests of each of the businesses. Immediately following the completion of the spin-off, EchoStar Communications Corporation intends to change its name to “DISH Network Corporation.”

 

The spin-off of EchoStar Holding Corporation is anticipated to occur on or about January 1, 2008 by way of a pro rata dividend to EchoStar Communications Corporation shareholders. For each share of EchoStar Communications Corporation Class A common stock or Class B common stock you hold as of 5:00 p.m., New York City time, on December 27, 2007, which is the record date of the spin-off, you will be entitled to receive a dividend of 0.20 of a share of the same class of EchoStar Holding Corporation common stock. Please note that if you sell your shares of Class A common stock of EchoStar Communications Corporation after the record date but before the distribution date, the buyer of those shares will be entitled to receive the shares of our Class A common stock issuable in respect of the shares sold. The distribution of shares of our Class A common stock will be made in book-entry form, which means that no physical Class A stock certificates will be issued in the distribution. No fractional shares of EchoStar Holding Corporation Class A or Class B common stock will be issued. If you would have been entitled to a fractional share of EchoStar Holding Corporation Class A common stock in the distribution, you will receive cash in lieu of a fractional share interest.

 

Shareholder approval of the spin-off is not required, and you are not required to take any action to receive shares of EchoStar Holding Corporation common stock.

 

Immediately following the spin-off, you will own shares of common stock of both EchoStar Communications Corporation and EchoStar Holding Corporation. EchoStar Communications Corporation Class A common stock will continue to trade on the Nasdaq Global Select Market under the symbol “DISH.” We have applied to list our Class A common stock on the Nasdaq Global Select Market under the symbol “SATS.”

 

We expect the spin-off to be tax-free for all shareholders of EchoStar Communications Corporation, except for any cash received in lieu of fractional shares. To that end, we have received a ruling from the Internal Revenue Service confirming that the spin-off will be tax free to shareholders of EchoStar Communications Corporation for U.S. federal income tax purposes. The spin-off is subject to certain customary conditions, including the receipt of any necessary regulatory approvals.

 

The enclosed information statement, which is being mailed to all EchoStar Communications Corporation shareholders, describes the spin-off and contains important information about EchoStar Holding Corporation, including its historical and pro forma combined financial statements.

 

We look forward to your continued support as a shareholder in both EchoStar Communications Corporation and EchoStar Holding Corporation.

 

Sincerely,

 

Charles W. Ergen

Chairman and Chief Executive Officer

EchoStar Holding Corporation
90 Inverness Circle East
Englewood, Colorado 80112

 

December [  ], 2007

 

Dear EchoStar Holding Corporation Shareholder:

 

It is my pleasure to welcome you as a shareholder of our new company, EchoStar Holding Corporation. As an independent, publicly-traded company, we believe we can more effectively focus on our objectives and satisfy the strategic needs of our company. In addition, we will have the opportunity to offer our employees incentive opportunities linked to our performance as an independent, publicly-traded company, which we believe will enhance employee performance.

 

EchoStar Holding Corporation intends to operate two primary businesses, a digital set-top box business and a fixed satellite services business:

 

 

We have applied to list our Class A common stock on the Nasdaq Global Select Market under the symbol “SATS.” We currently expect that our Class A common stock will begin trading on January 2, 2008.

 

I invite you to learn more about EchoStar Holding Corporation by reviewing the enclosed information statement. We thank you in advance for your support as a shareholder in EchoStar Holding Corporation.

 

Sincerely,

 

Charles W. Ergen

Chairman and Chief Executive Officer

 

SUBJECT TO COMPLETION, DATED DECEMBER 26, 2007

 

INFORMATION STATEMENT

 

ECHOSTAR HOLDING CORPORATION

90 Inverness Circle E.

Englewood, Colorado 80112

 

Class A Common Stock

Class B Common Stock

(par value $0.001 per share)

 

We are sending this information statement to you to describe the spin-off of EchoStar Holding Corporation. Prior to the spin-off described in this information statement, we were a wholly-owned subsidiary of EchoStar Communications Corporation, which we refer to as ECC. We are engaged in the design, development and distribution of set-top boxes, antennae and other equipment for the “direct to home” satellite television industry. Following the spin-off, we will also be engaged in the provision of fixed satellite transmission services. We expect that the spin-off will be tax-free to ECC shareholders for U.S. federal income tax purposes, except for any cash received in lieu of fractional shares. We have received a ruling from the Internal Revenue Service confirming that the spin-off will be tax free to shareholders of EchoStar Communications Corporation for U.S. federal income tax purposes. Immediately following the spin-off, ECC intends to change its name to “DISH Network Corporation.”

 

For each share of ECC Class A common stock or ECC Class B common stock held by you as of 5:00 p.m., New York City time, on December 27, 2007, the record date for the spin-off, you will receive 0.20 of a share of the same class of our common stock. The distribution of shares of our Class A common stock will be made in book-entry form, which means that no physical Class A stock certificates will be issued in the distribution. No fractional shares of EchoStar Holding Corporation Class A or Class B common stock will be issued. If as a result of the foregoing ratio you would be entitled to receive a fraction of a share of our Class A common stock, you will receive cash in lieu of such fractional share interest. We expect the shares of our Class A common stock and Class B common stock to be distributed by ECC to you on or about January 1, 2008, which we refer to as the distribution date.

 

No vote of ECC’s shareholders is required in connection with the spin-off. We are not asking you for a proxy and you are requested not to send us a proxy. No action is required of you to receive shares of our common stock, which means that:

 

 

There is no current trading market for any class of our common stock. We expect, however, that a limited trading market for our Class A common stock, commonly known as a “when issued” trading market, will develop shortly after the record date for the spin-off, and we expect “regular way” trading of our Class A common stock will begin the first trading day after the distribution date. We have applied to list our Class A common stock on the Nasdaq Global Select Market under the symbol “SATS.” We expect that our Class A common stock will begin trading on January 2, 2008. Charles W. Ergen, our Chairman and Chief Executive Officer, will immediately after the distribution date beneficially own approximately 50.0% of our outstanding equity and possess approximately 80.0% of the total voting power represented by all of our common stock, which is equivalent to his ownership and voting interests in ECC.

 

In reviewing this information statement, you should carefully consider the matters described under the caption “Risk Factors” beginning on page 16.

 

 

 

 

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved these securities or determined if this information statement is truthful or complete. Any representation to the contrary is a criminal offense.

 

This information statement is not an offer to sell, or a solicitation of an offer to buy, any securities.

 

 

 

 

 

The date of this information statement is December [  ], 2007.

 

TABLE OF CONTENTS

 

•	Expand set-top box business to additional customers.  We believe our separation from ECC may enhance our opportunities to sell set-top boxes to a broader group of multi-channel video distributors. Historically, certain multi-channel video distributors have perceived us as a competitor due to our affiliation with ECC. After the spin-off, we believe we could have opportunities to enter into commercial relationships with these multi-channel video distributors. There can be no assurance, however, that we will be successful in entering into any of these commercial relationships, particularly if we continue to be perceived as affiliated with ECC as a result of common ownership and related management.
•	Leverage satellite capacity and related infrastructure.  Our fixed satellite services business has excess satellite and leased fiber capacity that we believe was in large part created through innovation and operational efficiencies at ECC. While we expect that ECC will initially be our primary customer for fixed satellite services, we believe market opportunities exist to utilize our capacity to provide digital video distribution, satellite-delivered IP, corporate communications and government services to a broader customer base.
•	Offer comprehensive network infrastructure solutions.  We intend to leverage our over 700 engineers to customize infrastructure solutions for a broader base of customers. For example, we could offer a customer the ability to deliver a fully integrated video programming delivery solution, incorporating our satellite and backhaul capacity, customized set-top boxes and network design and management services.
•	Capitalize on change in regulations.  Changes in federal law and regulations applicable to the set-box industry may create opportunities for us to expand our business.

	•	Digital transition.  Congress has mandated that by February 2009 all network broadcasts be transmitted digitally, which will require households that receive over-the-air broadcast signals with an analog television to obtain a digital converter device. This digital converter device is a new product

	•	Removable security systems.  The Federal Communications Commission, or FCC, mandated that by July 2007 cable providers use removable security modules to provide conditional access security for television content. The FCC intends for this regulation to spur competition in the retail cable set-top box market, providing an even playing field between leased cable set-top boxes and retail-bought, cable-ready TVs and cable set-top box equipment. We believe this new regulation may create an opportunity for us to compete on a more level field in the domestic market for cable set-top boxes.

•	Exploit international opportunities.  We believe that direct-to-home satellite service is particularly well-suited for countries without extensive cable infrastructure, and we intend to continue to try to secure new customer relationships from international direct-to-home satellite service providers.
•	Pursue strategic partnerships, joint ventures and acquisitions.  We intend to selectively pursue partnerships, joint ventures and strategic acquisition opportunities that we believe may allow us to expand into new markets, broaden our portfolio of products or intellectual property, and strengthen our relationships with our customers.
•	Act on the set-top box replacement cycle.  The broader adoption of high definition television by consumers will require more advanced compression and security technologies within set-top boxes. This may launch a replacement cycle, particularly among subscription television providers with substantial bases of legacy equipment, which may create additional market opportunities for us.

•	We may not realize the potential benefits that we expect from the spin-off. Certain of these benefits depend upon market acceptance of our separation from ECC which we cannot predict and which may be affected by significant common stock ownership by our Chairman and Chief Executive Officer as well as interlocks between our management and board of directors. In addition, we will incur significant costs as a separate company, which may exceed our estimates. We will also incur some negative effects from our separation from ECC, including loss of access to ECC’s financial resources.
•	We currently depend on ECC and Bell Express Vu for substantially all of our revenue, and the loss of, or a significant reduction in orders from, either of these two customers would significantly reduce our revenue and adversely impact our operating results. ECC accounted for over 80% of our revenue in each of the last three years and the nine months ended September 30, 2007 and it is under no obligation to remain our customer in the future.

•

We currently have substantial unused satellite capacity. Future costs associated with this excess capacity will negatively impact our margins if we do not generate revenue to offset these costs. In addition, because a substantial portion of the capacity of each of our AMC-15, AMC-16 and EchoStar IX satellites remains unused, there is a significant risk that in the future, in addition to reporting lower than expected revenues and profitability, we will be required to record a substantial impairment charge relating to one or more of these satellites. We currently estimate that these potential charges could aggregate up to $250 million, which, if incurred would have a material adverse effect on our reported operating results and financial position. Furthermore, it is possible that in 2008 ECC will discontinue the use of some or all of the capacity on one or more other satellites that it will initially lease from us. To the extent that this occurs and we are unable to find other customers to lease this additional excess capacity, we may be required to record substantial additional impairment charges that we currently estimate could aggregate up to $100 million. We performed a preliminary assessment of the recoverability of the satellites to be contributed by ECC as if the

	spin-off had been consummated and preliminarily concluded that the recoverability of the satellites will not be impaired as of the distribution date.

•	Our historical combined and pro forma financial information included in this information statement are not indicative of our future financial position, future results of operations or future cash flows, nor do they reflect what our financial position, results of operations or cash flows would have been as a stand-alone company during the periods presented. We were not profitable in the nine months ended September 30, 2007 and each of 2006, 2005 and 2004, as our operations have historically been dedicated primarily to support ECC and we provided our products and services to ECC at cost.
•	Our ability to decrease our losses or to generate revenues will depend in part on our ability to grow our business. This may require significant additional capital that may not be available to us. We may also use a significant portion of our existing cash and marketable securities to fund stock buyback programs. Our board of directors has approved a program in which we may repurchase up to $1.0 billion of our Class A common stock during 2008.
•	If ECC enters into a business combination transaction, or Mr. Ergen no longer controls a majority of the voting power of ECC or of us, our relationship with ECC could be terminated or substantially curtailed with little or no advance notice. Any material reduction in our sales to ECC as a result of a change in control of ECC would have a significant material adverse effect on our business and financial position.
•	Our future success may depend on our ability to identify and successfully exploit opportunities to acquire other businesses or technologies to complement, enhance or expand our current business or products or otherwise offer us growth opportunities. We may not be able to pursue these growth opportunities successfully.
•	We have entered into certain strategic transactions and investments in Asia and elsewhere, and we may increase our strategic investment activity in the United States and in international markets. These investments, which we believe could become substantial over time, involve a high degree of risk, are concentrated in a few companies and could expose us to significant financial losses if the underlying ventures are not successful. These investments may also cause us to defer or suspend share repurchases.
•	Our business relies on intellectual property, some of which is owned by third parties, and we may inadvertently infringe their patents and proprietary rights. We may be required to cease developing or marketing infringing products, to obtain licenses from the holders of the intellectual property at a material cost, or to redesign those products in such a way as to avoid infringing the patent claims of others.
•	Our businesses change rapidly as new technologies are developed. These new technologies may cause our services and products to become obsolete. Changes in existing technologies could also cause demand for our products and services to decline.

•	We depend on sales of set-top boxes for nearly all of our revenue, and if sales of our set-top boxes decline, our business and financial position will suffer. The set-top box business is highly competitive and our ability to compete in this industry will depend substantially on our ability to develop and manufacture products and services at competitive costs, successfully bring new technologies to market and penetrate new markets for set-top boxes, including among customers such as cable television operators that are competitors of DISH Network and have historically been and may continue to be reluctant to deal with us. These potential customers also have well established relationships with other set-top box providers, such as Motorola and Cisco Systems, which acquired Scientific Atlanta in 2006.
•	Our commercial success in selling our set-top boxes to cable television operators depends significantly on our ability to obtain licenses to use the conditional access systems deployed by these operators in our set-top boxes. The owners of these conditional access systems are also in many cases competitors of ours. There can be no assurance we will be able to obtain such licenses on acceptable terms or at all.
•	In order to grow our revenue and business and to build a large customer base, we believe we will be required to increase our sales of set-top boxes in international markets. We have limited experience selling our set-top boxes internationally. To succeed in expanding these sales efforts, we believe we must hire

	additional sales personnel and develop and manage new relationships with cable operators and other providers of digital television in international markets.

•	Our set-top boxes are extremely complex and can have defects in design, manufacture or associated software. We could incur significant expenses, lost revenue, and reputational harm if we fail to detect or effectively address such issues through design, testing or warranty repairs.
•	We obtain many components for our set-top boxes from a single supplier or a limited group of suppliers. Our reliance on a single or limited group of suppliers, particularly foreign suppliers, and our increasing reliance on subcontractors, involves several risks. These risks include a potential inability to obtain an adequate supply of required components, and reduced control over pricing, quality, and timely delivery of these components.
•	Future demand for our set-top boxes will depend significantly on the growing market acceptance of high definition television, or HDTV. The effective delivery of HDTV will depend on digital television operators developing and building infrastructure to provide wide-spread HDTV programming.
•	During April 2006, a jury concluded that certain of our digital video recorders, or DVRs, infringed a patent held by Tivo. If the Tivo jury verdict is upheld on appeal, to the extent that ECC does not indemnify us, we will be required to pay substantial damages and/or license fees, and if we were not able to successfully implement alternative technology (including the successful defense of any challenge that such technology infringes Tivo’s patent), we could also be prohibited from distributing DVRs, or be required to modify or eliminate certain user-friendly DVR features that we currently offer to consumers.

•	The fixed satellite services industry is highly competitive and is characterized by long-term leases and high switching costs. Therefore, it will be difficult to displace customers from their current relationships with our well-established competitors and we may face competition from others in the future.
•	Satellites are subject to significant operational risks while in orbit. While we believe that our satellite fleet is generally in good condition, certain satellites in our fleet have experienced malfunctions or anomalies, some of which have had a significant adverse impact on their commercial operation. There can be no assurance that we can recover critical transmission capacity in the event one or more of our in-orbit satellites were to fail. Therefore, the loss of a satellite or other satellite malfunctions or anomalies could have a material adverse effect on us.
•	We are subject to comprehensive governmental regulation by the FCC for our domestic satellite operations. We are also regulated by other federal agencies, state and local authorities and the International Telecommunication Union. Domestic and international regulations regarding the licensing, authorization and operations of satellite communications providers may restrict our fixed satellite services operations.
•	ECC has not historically carried and we do not anticipate carrying insurance for any of the in-orbit satellites that we will own.

•	The allocation of assets, liabilities, rights, indemnifications and other obligations between ECC and us under the separation agreement and the related commercial and other agreements we will enter into with ECC may not reflect what two unaffiliated parties might have agreed to.

•

ECC has received a private letter ruling from the Internal Revenue Service, or IRS, to the effect that, among other things, the spin-off, together with certain related transactions, will qualify for tax-free treatment under Sections 355 and 368(a)(1)(D) of the Code. Although a private letter ruling relating to the qualification of the spin-off under Sections 355 and 368(a)(l)(D) of the Internal Revenue Code of 1986, as amended, generally will be binding on the IRS, the validity of such ruling, if obtained, will be subject to the accuracy of factual representations and assumptions made in the ruling request. If the spin-off does not qualify for tax-free treatment for U.S. federal income tax purposes, then, in general, ECC would be subject to tax as if it had sold the common stock of our company in a taxable sale for its fair market value. ECC’s shareholders would be subject to tax as if they had received a distribution equal to the fair market value of our common stock that was distributed to them, which would be treated as a taxable dividend to the extent of ECC’s

	earnings and profits. It is expected that the amount of any such taxes to ECC and its shareholders would be substantial.

•

Actual or perceived conflicts of interest may arise between ECC and us in a number of areas relating to our past and ongoing relationships, including: (i) cross officerships, directorships and stock ownership, (ii) intercompany transactions, (iii) intercompany agreements and (iv) business opportunities. In particular, Charles W. Ergen will be the Chief Executive Officer and Chairman of the Board and will beneficially own approximately 50.0% of the total equity and control 80.0% of the total voting power, of each of ECC and us. Thus, Mr. Ergen will have the ability to elect a majority of ECC’s and our directors and to control all other matters requiring the approval of ECC’s and our shareholders.

•	An active trading market may not develop or be sustained for our Class A common stock after the spin-off. In addition, the prices at which our Class A common stock may trade after the spin-off may decline or be subject to volatility.
•	We expect that some of our shareholders, including possibly some of our larger shareholders, will sell the Class A common stock that they receive in the spin-off because, among other reasons, our business profile or market capitalization as an independent, publicly-traded company do not fit their investment objectives. These sales may adversely affect the market price for our Class A common stock as well as the market perception of our business.
•	We have never declared or paid any dividends on our common stock. We intend to retain any earnings to finance the operation and expansion of our business, and we do not anticipate paying any cash dividends in the future.

		For the Nine Months
		Ended September 30,												For the Years Ended December 31,
		2007												2006
Statements of Operations Data:		Pro Forma				2007				2006				Pro Forma				2006				2005				2004
						(Unaudited)								(Unaudited)
		(In thousands, except per share data)
Revenue		$	1,592,381			$	1,182,768			$	1,132,899			$	2,080,259			$	1,525,320			$	1,513,691			$	1,720,091
Operating expenses			1,606,709				1,222,936				1,152,875				2,058,924				1,562,767				1,546,755				1,760,714
Operating income (loss)		$	(14,328	)		$	(40,168	)		$	(19,976	)		$	21,335			$	(37,447	)		$	(33,064	)		$	(40,623	)
Net income (loss)		$	(9,296	)		$	(39,943	)		$	(20,486	)		$	104,835			$	(34,162	)		$	(44,940	)		$	(43,237	)
Pro forma earnings per share:
Basic		$	(0.10	)										$	1.17
Diluted		$	(0.10	)										$	1.16
Pro forma shares outstanding:
Basic			89,699												89,699
Diluted			90,056												90,056

		For the Nine Months
		Ended September 30,								For the Years Ended December 31,
Cash Flow Data:		2007				2006				2006				2005				2004
		(Unaudited)
		(In thousands)
Net cash flows from:
Operating activities		$	(34,276	)		$	(3,780	)		$	(36,374	)		$	(14,193	)		$	(78,916	)
Investing activities		$	(160,236	)		$	(75,953	)		$	(54,781	)		$	(16,700	)		$	(5,619	)
Financing activities		$	198,625			$	91,176			$	104,534			$	39,782			$	69,715

		As of September 30,
		2007								As of December 31,
Balance Sheet Data:		Pro Forma				2007				2006				2005				2004
		(Unaudited)																(Unaudited)
		(In thousands)
Cash, cash equivalents and marketable securities		$	1,538,516			$	530,753			$	323,576			$	106,109			$	143,437
Total assets		$	3,837,454			$	919,624			$	517,821			$	229,392			$	277,843
Long-term debt (including current portion)		$	389,137			$	—			$	—			$	495			$	647
Net investment in EHC		$	3,242,225			$	863,768			$	502,283			$	217,132			$	258,452

Distributing Company		EchoStar Communications Corporation, a Nevada corporation. After the distribution, EchoStar Communications Corporation will not own any shares of common stock of EchoStar Holding Corporation.

Separated Company		EchoStar Holding Corporation, a Nevada corporation and a wholly-owned subsidiary of ECC. After the distribution, EchoStar Holding Corporation will be an independent, publicly-traded company. However, all of ECC’s directors after the distribution, except James DeFranco, Cantey Ergen and Gary S. Howard, will also be directors of EHC. Charles W. Ergen, our Chairman and Chief Executive Officer, will continue to be the Chairman and Chief Executive Officer of ECC. In addition, certain executive officers of ECC will also serve as our executive officers. Based on Mr. Ergen’s ownership as of November 30, 2007, Mr. Ergen will beneficially own approximately 50.0% of the total equity and approximately 80.0% of the total voting power of each of ECC and us.

Primary purposes of the spin-off		The board of directors of ECC believes that creating independent, focused companies is the best way to realize the full value of ECC’s businesses. The board of directors of ECC considered the following potential benefits, among others, in making its determination to consummate the spin-off:

		• creating effective management incentives tied to each of EHC and ECC’s performance and increasing the ability to attract and retain personnel;

		• creating opportunities to effectively develop and finance expansion plans;

		• creating separate companies that have different financial characteristics, which may appeal to different investor bases; and

		• allowing each company to separately pursue the business strategies that best suit its long-term interest.

		The board of directors of ECC also considered the costs and risks associated with the spin-off. The board of directors of ECC considered, among other factors:

		• the potential negative impact on ECC’s credit ratings as a result of the divestiture of assets that will be contributed to us;

		• the possibility that either we or ECC may experience disruptions in our respective businesses as a result of the spin-off;

		• the risk that the combined trading prices of our Class A common stock and ECC’s Class A common stock after the spin-off may be lower than the trading price of ECC’s Class A common stock before the spin-off;

		• actual or perceived conflicts of interest that may arise between ECC and us in a number of areas relating to our past and ongoing relationships, including: (i) cross officerships, directorships and stock ownership, (ii) intercompany transactions, (iii) intercompany agreements and (iv) business opportunities;

		• the loss of synergies from operating as one company; and

		• the additional legal, accounting, administrative and other costs that we would incur as a separate, publicly-traded company.

		In view of the variety of factors considered by the ECC board of directors in connection with the evaluation of the spin-off and the complexity of these matters, the ECC board of directors did not find it useful to, and did not attempt to, quantify, rank or otherwise assign relative weights to the factors considered. The board of directors of ECC concluded that considered in the aggregate the potential benefits of the spin-off outweigh the potential negative factors, and that separating the non-core business of ECC from ECC in the form of a tax-free distribution to ECC shareholders is appropriate, advisable and in the best interests of ECC and its shareholders.

Conditions to the spin-off		The spin-off is subject to the satisfaction or waiver by ECC under the separation agreement of the following conditions, each of which is waivable by ECC in its sole discretion (other than the effectiveness of our registration statement on Form 10 and other required material regulatory approvals):

		• the Securities and Exchange Commission shall have declared effective our registration statement on Form 10 and no stop order shall be in effect;
		• all permits, registrations and consents required under the securities or blue sky laws in connection with the spin-off shall have been received;
		• ECC shall have received the opinion of White & Case LLP confirming the tax-free status of the spin-off and certain related transactions for U.S. federal income tax purposes on the distribution date;

		• the listing of our Class A common stock on the Nasdaq Global Market or Nasdaq Global Select Market shall have been approved;

		• all material governmental approvals and other consents necessary to consummate the distribution shall have been received; and
		• no order, injunction or decree issued by any court of competent jurisdiction or other legal restraint or prohibition preventing consummation of the distribution or any of the transactions related thereto shall be in effect.
		The fulfillment of the foregoing conditions will not create any obligation on ECC’s part to effect the spin-off. ECC has the right not to complete the spin-off if, at any time, ECC’s board of directors determines, in its sole discretion, that the spin-off is not in the best interests of ECC or its shareholders, or that market conditions are such that it is not advisable to separate EHC from ECC.
Securities to be Distributed		Shares of EHC Class A common stock and Class B common stock will constitute all of the outstanding shares of our common stock immediately after the distribution. We expect the shares of our Class A common stock and Class B common stock to be distributed by ECC to you, based on the same class of ECC common stock that you own, on or about January 1, 2008, which we refer to as the distribution date. Charles Ergen, our Chairman and Chief Executive Officer, will, immediately after the distribution date, beneficially own approximately 50.0% of our equity and possess approximately 80.0% of the total voting power represented by our common stock.

Distribution Ratio		For each share of ECC Class A common stock or ECC Class B common stock held by you as of 5:00 p.m., New York City time, on December 27, 2007, the record date for the spin-off, you will receive 0.20 of a share of the same class of our common stock. Please note that if you sell your shares of Class A common stock of ECC after the record date but before the distribution date, the buyer of those shares will be entitled to receive the shares of our Class A common stock issuable in respect of the shares sold. If as a result of the foregoing ratio you would be entitled to receive a fraction of a share of our Class A common stock, you will receive cash in lieu of such fractional share interest. The distribution of shares will be made in book-entry form.
Record Date		The record date is December 27, 2007.
Distribution Date		The distribution date is expected to be January 1, 2008.

Trading Market and Symbol		We have applied to list our Class A common stock on the Nasdaq Global Select Market under the ticker symbol “SATS.” We anticipate that, on or prior to the distribution date, a limited market for our Class A common stock, commonly known as a “when issued” trading market, will develop, and we expect “regular way” trading of our Class A common stock will begin the first trading day after the distribution date.

Tax Consequences to Shareholders		ECC shareholders are not expected to recognize any gain or loss for U.S. federal income tax purposes as a result of the spin-off, except for any gain or loss attributable to the receipt of cash in lieu of a fractional share of our Class A common stock. See “The Spin-Off — Material U.S. Federal Income Tax Consequences of the Spin-Off” for a more detailed description of the U.S. federal income tax consequences of the spin-off.
		Each shareholder is urged to consult his, her or its tax advisor as to the specific tax consequences of the spin-off to that shareholder, including the effect of any state, local or U.S. tax laws and of changes in applicable tax laws.
Relationship with ECC after the Separation		We will enter into a separation agreement and other agreements with ECC to effect the spin-off and provide a framework for our relationship with ECC after the distribution. These agreements generally expire after two years and will govern our relationship with ECC subsequent to the completion of the spin-off and provide for the allocation between us and ECC of certain of ECC’s assets, liabilities and obligations attributable to the period prior to our separation from ECC. The separation agreement, in particular, establishes the amount of cash and indebtedness that each company initially will retain and incur. For a discussion of these arrangements, see “Certain Intercompany Agreements — Agreements with ECC,” included elsewhere in this information statement.
Dividend Policy		We presently intend to retain future earnings, if any, to finance the expansion of our businesses and to conduct a possible stock-buyback of up to $1.0 billion. As a result, we do not expect to pay any cash dividends for the foreseeable future. All decisions regarding the payment of dividends by our company will be made by our board of directors from time to time in accordance with applicable law.

Q:		What is the spin-off?
A:		The spin-off is the method by which ECC will separate its existing business segments into two independent, publicly-traded companies. In the spin-off, ECC will distribute to its shareholders as of the distribution date all of the shares of our Class A common stock and Class B common stock that it owns. Following the spin-off, we will be a separate company from ECC, and ECC will not retain any ownership interest in us. The number of shares of ECC common stock you own will not change as a result of the spin-off.
Q:		What is being distributed in the spin-off?
A:		Approximately 42.0 million shares of our Class A common stock and 47.7 million shares of our Class B common stock will be distributed in the spin-off, based upon the number of shares of ECC Class A common stock and ECC Class B common stock outstanding on the record date. The shares of our Class A common stock and Class B common stock to be distributed by ECC will constitute all of the issued and outstanding shares of our Class A common stock and Class B common stock immediately after the distribution. For more information on the shares being distributed in the spin-off, see “Description of Our Capital Stock — Our Class A Common Stock” and “Description of Our Capital Stock — Our Class B Common Stock” beginning on page 116 of this information statement.
Q:		What will I receive in the spin-off?
A:		Holders of ECC Class A common stock will receive a dividend of 0.20 of a share of our Class A common stock for each share of ECC Class A common stock held by them on the record date, and holders of ECC Class B common stock will receive a dividend of 0.20 of a share of our Class B common stock for every share of ECC Class B common stock held by them on the record date. As a result of the spin-off, your proportionate interest in ECC will not change and you will own the same percentage of equity securities and voting power in EHC as you previously did in ECC. For a more detailed description, see “The Spin-Off.”
Q:		What is the record date for the distribution?
A:		Record ownership will be determined as of 5:00 p.m., New York City time on December 27, 2007 which we refer to as the record date.
Q:		When will the distribution occur?
A:		We expect that shares of our Class A common stock and Class B common stock will be distributed by the distribution agent, on behalf of ECC, on or about January 1, 2008, which we refer to as the distribution date.
Q:		What will the relationship between EchoStar Communications Corporation and EchoStar Holding Corporation be following the spin-off?
A:		After the spin-off, ECC will not own any shares of our common stock and we will not own any shares of ECC common stock. Five of our directors after the distribution will also be directors of ECC, and our Chairman and Chief Executive Officer will continue to serve as the Chairman and Chief Executive Officer of ECC. In addition, in connection with the spin-off, we and ECC are entering into a number of agreements that will govern our spin-off from ECC and our future relationship. We cannot assure you that these agreements will be on terms as favorable to us as agreements with unaffiliated parties. See “Certain Intercompany Agreements.” In addition, if we acquire knowledge of a potential transaction or matter which may be a corporate opportunity for both us and ECC, our mutual officers and directors are only required to first present the opportunity to us if (A) we have expressed an interest in such corporate opportunity as evidenced by resolutions appearing in the minutes of our board of directors; (B) such

		potential corporate opportunity was expressly offered to one of our directors or officers solely in his or her capacity as a director or officer of us or as a director or officer of any subsidiary of us; and (C) such opportunity relates to a line of business in which we or any subsidiary of us is then directly engaged. See “Description of Our Capital Stock — Provisions of Our Articles of Incorporation Relating to Related-Party Transactions and Corporate Opportunities.”
Q:		What do I have to do to participate in the spin-off?
A:		No action is required on your part. Shareholders of ECC on the record date for the distribution are not required to pay any cash or deliver any other consideration, including any shares of ECC common stock, for the shares of our common stock distributable to them in the spin-off.
Q:		If I sell, on or before the distribution date, shares of ECC Class A common stock that I held on the record date, am I still entitled to receive shares of EHC Class A common stock distributable with respect to the shares of ECC Class A common stock I sold?
A:		No. No ex-dividend market will be established for our Class A common stock until the first trading day following the distribution date. Therefore, if you own shares of ECC Class A common stock on the record date and thereafter sell those shares on or prior to the distribution date, you will also be selling the shares of our Class A common stock that would have been distributed to you in the spin-off with respect to the shares of ECC Class A common stock you sell.
Q:		How will fractional shares be treated in the spin-off?
A:		If you would be entitled to receive a fractional share of Class A common stock in the spin-off, you will instead receive a cash payment. See “The Spin-Off — Treatment of Fractional Shares” for an explanation of how the cash payments will be determined.
Q:		How will ECC distribute shares of EHC common stock to me?
A:		Holders of shares of ECC’s Class A or Class B common stock on the record date will receive shares of the same class of our common stock, in book-entry form. See “The Spin-Off — Manner of Effecting the Spin-Off” for a more detailed explanation.
Q:		What is the reason for the spin-off?
A:		The potential benefits considered by ECC’s board of directors in making the determination to consummate the spin-off included the following:

	•	The spin-off is expected to allow the creation of effective management incentives tied to each of EHC’s and ECC’s respective performance, increasing the ability to attract and retain personnel.
	•	The spin-off is expected to create opportunities to effectively develop and finance expansion plans of each independent company.
	•	The spin-off is expected to allow the creation of separate companies that have different financial characteristics, which may appeal to different investor bases, which could enhance the ability of each company to raise capital to fund its growth plans and initiatives.
	•	The spin-off is expected to allow each company to separately pursue the business strategies that best suit its long-term interests.

		The board of directors of ECC also considered the costs and risks associated with the spin-off. The board of directors of ECC considered, among other factors, the following:

	•	The potential negative impact on ECC’s credit ratings as a result of the divestiture of assets that will be contributed to us.
	•	The possibility that either we or ECC may experience disruptions in our respective businesses as a result of the spin-off.

	•	The risk that the combined trading prices of our Class A common stock and ECC’s Class A common stock after the spin-off may be lower than the trading price of ECC’s Class A common stock before the spin-off.
	•	Actual or perceived conflicts of interest that may arise between ECC and us in a number of areas relating to our past and ongoing relationships, including: (i) cross officerships, directorships and stock ownership, (ii) intercompany transactions, (iii) intercompany agreements and (iv) business opportunities.
	•	The loss of synergies from operating as one company.
	•	The additional legal, accounting, administrative and other costs that would be incurred by us as a separate, publicly-traded company.

		In view of the variety of factors considered by the ECC board of directors in connection with the evaluation of the spin-off and the complexity of these matters, the ECC board of directors did not find it useful to, and did not attempt to, quantify, rank or otherwise assign relative weights to the factors considered. The board of directors of ECC concluded that considered in the aggregate, the potential benefits of the spin-off outweigh the potential negative factors, and that separating the non-core business of ECC from ECC in the form of a tax-free distribution to ECC shareholders is appropriate, advisable and in the best interests of ECC and its shareholders.
Q:		What are the federal income tax consequences to me of the spin-off?

A:		ECC has received a private letter ruling from the IRS, and the spin-off is conditioned upon the receipt by ECC of the opinion of White & Case LLP on the distribution date (which condition ECC may waive in its sole discretion), in each case, substantially to the effect that the spin-off, together with certain related transactions, will qualify as reorganizations under Sections 355 and 368(a)(l)(D) of the Code and that, accordingly, for U.S. federal income tax purposes, no gain or loss will be recognized by, and no amount will be included in the income of, a holder of ECC common stock upon the receipt of shares of our common stock pursuant to the spin-off. A holder of ECC common stock will generally recognize gain or loss with respect to cash received in lieu of a fractional share of our common stock.

Q:		Does EHC intend to pay cash dividends?
A:		No. We currently intend to retain future earnings, if any, to finance the expansion of our businesses. As a result, we do not expect to pay any cash dividends for the foreseeable future. All decisions regarding the payment of dividends by our company will be made by our board of directors from time to time in accordance with applicable law.
Q:		How will EHC common stock trade?

A:		Currently, there is no public market for our common stock. We have applied to list our Class A common stock on the Nasdaq Global Select Market under the symbol “SATS.”

Q:		Will the spin-off and distribution affect the trading price of my ECC Class A common stock?
A:		Yes. After the distribution of EHC Class A common stock, the trading price of ECC Class A common stock may be lower than the trading price of the ECC Class A common stock immediately prior to the distribution. Moreover, until the market has evaluated the operations of ECC without the operations of EHC, the trading price of ECC Class A common stock may fluctuate significantly. ECC believes the separation of EHC from ECC offers its shareholders the greatest long-term value. However, the combined trading prices of ECC Class A common stock and EHC Class A common stock after the spin-off may be lower than the trading price of ECC Class A common stock prior to the spin-off. See “Risk Factors” beginning on page 16.
Q:		Do I have appraisal rights?
A:		No. Holders of ECC common stock are not entitled to appraisal rights in connection with the spin-off.
Q:		Who is the transfer agent for your common stock?
A:		Computershare Trust Company, N.A. 250 Royall Street Canton, MA 02021
Q:		Where can I get more information?
A:		If you have questions relating to the mechanics of the distribution of shares of EHC common stock, you should contact the distribution agent:

 

RISK FACTORS

 

The risks and uncertainties described below are not the only ones facing us. Additional risks and uncertainties that we are unaware of or that we currently believe to be immaterial also may become important factors that affect us. This information statement also contains forward-looking statements that involve risks and uncertainties. See “Cautionary Statement Concerning Forward-Looking Statements.”

 

If any of the following events occur, our business, financial condition or results of operation could be materially and adversely affected.

 

General Risks Affecting Our Business

 

We may not realize the potential benefits from the spin-off.

 

We may not realize the potential benefits that we expect from the spin-off which are described elsewhere in this information statement. Certain of these benefits depend upon market acceptance of our separation from ECC which we cannot predict and which may be affected by the significant common stock ownership by our Chairman and Chief Executive Officer, as well as interlocks between our management and board of directors. In addition, we will incur significant costs, including those described elsewhere in this information statement, which may exceed our estimates. We will also incur some negative effects from our separation from ECC, including loss of access to ECC’s financial resources.

 

We currently depend on ECC and Bell ExpressVu for substantially all of our revenue and ECC accounted for over 80% of our revenue in the nine months ended September 30, 2007 and each of 2006, 2005 and 2004; the loss of, or a significant reduction in orders from, either of ECC or Bell ExpressVu would significantly reduce our revenue and adversely impact our operating results.

 

ECC accounted for approximately 86.2%, 84.5%, 85.6% and 89.7% of our revenue in the nine months ended September 30, 2007 and in 2006, 2005 and 2004, respectively. In addition, Bell ExpressVu accounted for approximately 10.0%, 12.2%, 11.4% and 7.3% of our revenue in the nine months ended September 30, 2007 and in 2006, 2005 and 2004, respectively. Any reduction in sales to ECC or Bell ExpressVu or in the prices they pay for the products and services they purchase from us would have a significant negative impact on our business. Moreover, because our sales to these customers are made pursuant to standard purchase orders, these customers have no future obligation to purchase set-top boxes from us and existing orders may be cancelled or reduced on short notice. Cancellations or reductions may be more frequent once we are separated from ECC. Cancellations or reductions of customer orders could result in the loss of anticipated sales without allowing us sufficient time to reduce our inventory and operating expenses. In addition, the timing of orders from these two customers could vary significantly depending on equipment promotions these customers offer to their subscribers, changes in technology, and their use of remanufactured set-top boxes, which may cause our revenue to vary significantly quarter over quarter and could expose us to the risks of inventory shortages or excess inventory. These inventory risks are particularly acute during end product transitions in which a new generation of set-top boxes is being deployed and inventory of older generation set-top boxes is at a higher risk of obsolescence. This in turn could cause our operating results to fluctuate significantly.

 

In addition, because substantially all of our revenue is tied to ECC and Bell ExpressVu, our success also depends to a significant degree on the continued success of ECC and Bell ExpressVu in attracting new subscribers or in marketing programming packages to subscribers that will require the purchase of new set-top boxes.

 

There is a relatively small number of potential new customers for our set-top boxes and fixed satellite services, and we expect this customer concentration to continue for the foreseeable future. Therefore, our operating results will likely continue to depend on sales to a relatively small number of customers, as well as the continued success of these customers. In addition, we may from time to time enter into customer agreements providing for exclusivity periods during which we may sell a specified product only to that customer. If we do not develop relationships with new customers, we may not be able to expand our customer base or maintain or increase our revenue.

We currently have substantial unused satellite capacity; our results of operations could be materially adversely affected if we are not able to utilize all of this capacity.

 

While we are currently evaluating various opportunities to make profitable use of our satellite capacity (including, but not limited to, supplying satellite capacity for new international ventures), we do not have firm plans to utilize all of our satellite capacity. In addition, there can be no assurance that we can successfully develop the business opportunities we currently plan to pursue with this capacity. Future costs associated with our excess satellite capacity will negatively impact our margins if we do not generate revenue to offset the costs of this capacity.

 

In addition, we currently have leased minimal capacity on our two leased satellites, AMC-15 and AMC-16, and have substantial unleased capacity on one of our owned satellites, EchoStar IX. Each of our satellites must be reviewed for possible impairment whenever events or changes in circumstances indicate that their carrying value may not be recoverable. In the event that we are unsuccessful in marketing capacity on these satellite assets and do not achieve sufficient utilization and prices, in addition to reporting lower than expected revenues and profitability, we will be required to record a substantial impairment charge relating to one or more of these satellites. We currently estimate that these potential charges could aggregate up to $250 million, which, if incurred would have a material adverse effect on our reported operating results and financial position. Furthermore, it is possible that in 2008 ECC will discontinue the use of some or all of the capacity on one or more other satellites that it will initially lease from us. To the extent that this occurs and we are unable to lease this additional excess capacity, we may be required to record substantial additional impairment charges that we currently estimate could aggregate up to $100 million. We performed a preliminary assessment of the recoverability of the satellites to be contributed by ECC as if the spin-off had been consummated and preliminarily concluded that the recoverability of the satellites will not be impaired as of the distribution date.

 

Our historical combined and pro forma financial information included in this information statement are not necessarily indicative of our future financial position, future results of operations or future cash flows nor do they reflect what our financial position, results of operations or cash flows would have been as a stand-alone company during the periods presented.

 

The historical and pro forma combined financial information included in this information statement do not reflect the financial condition, results of operations or cash flows we would have achieved as an independent publicly-traded company during the periods presented or those results we will achieve in the future. This is primarily a result of the following factors:

 

requirements. Without the opportunity to obtain financing from ECC, we may in the future need to obtain additional financing from banks, or through public offerings or private placements of debt or equity securities, strategic relationships or other arrangements. Such financing may not be available to us on acceptable terms, or at all. We may have a credit rating that is lower than ECC’s credit rating and may incur debt on terms and at interest rates that will not be as favorable as those historically enjoyed by ECC.

 

 

The acquisition of EchoStar Communication Corporation by a third party could have a material adverse effect on our business and financial position.

 

Our sales to ECC accounted for approximately 86.2%, 84.5%, 85.6% and 89.7% of our revenue in the nine months ended September 30, 2007 and in 2006, 2005 and 2004, respectively. Because sales to ECC following the spin-off will primarily be made pursuant to short-term contracts, ECC will have no obligation to continue to purchase our principal products and services following the spin-off. Therefore, if ECC enters into a business combination transaction, or Mr. Ergen no longer controls a majority of the voting power of ECC or of us, our relationship with ECC could be terminated or substantially curtailed with little or no advance notice. Any material reduction in our sales to ECC would have a significant adverse effect on our business, results of operations and financial position.

 

Furthermore, because there are a relatively small number of potential customers for our products and services, if we lose ECC as a customer, it will be difficult for us to obtain alternative customer relationships that would replace our historical revenues from ECC.

 

We may not be able to obtain additional capital on acceptable terms or at all in order to grow and to increase earnings.

 

Our ability to increase earnings will depend in part on our ability to grow our business. While we expect to satisfy our need for funds to meet our growth plans to be satisfied from cash and marketable investment securities to be contributed to us in connection with the spin-off, cash we generate from operations and future financings, we cannot assure you that we will generate sufficient cash from operations or that additional financing will be available on acceptable terms, or at all, if needed in the future.

 

In addition, we currently have contracts to construct, and conditional licenses and pending FCC applications for, a number of Ku-band, Ka-band and extended Ku-band satellites. We may need to raise additional capital to construct, launch, and insure these satellites. Depending on market conditions and our results of operations and financial condition we may not be able to raise such additional capital on acceptable terms or at all. We also periodically evaluate various strategic initiatives, the pursuit of which also could require us to raise significant additional capital. We may also use a significant portion of our existing cash to fund a potential stock buyback program during 2008 of up to $1 billion of our Class A common stock.

 

We also have substantial satellite-related payment obligations under our various satellite service agreements.

 

We could be exposed to significant financial losses if our investments are unsuccessful.

 

We have entered into certain strategic transactions and investments in Asia and elsewhere, and we expect to increase our strategic investment activity in the United States and in international markets. These investments, which we expect will become substantial, involve a high degree of risk. These investments could also expose us to significant financial losses, and may restrict our ability to make other investments or limit alternative uses of our capital resources, particularly if the underlying ventures are not successful. In particular, the laws, regulations and practices of certain countries may make it harder for our investments to be successful.

 

In addition, the companies in which we invest or with whom we partner may not be able to compete effectively or there may be insufficient demand for the services and products offered by these companies.

We may pursue new acquisitions, joint ventures and other transactions to complement or expand our business which may not be successful.

 

We may not be able to complete such transactions and such transactions, if executed, pose significant risks and could have a negative effect on our operations. Our future success may depend on opportunities to buy other businesses or technologies that could complement, enhance or expand our current business or products or that might otherwise offer us growth opportunities. Any transactions that we are able to identify and complete may involve a number of risks, including:

 

 

In addition, we may not be able to successfully or profitably integrate, operate, maintain and manage our newly acquired operations or employees. We may not be able to maintain uniform standards, controls, procedures and policies, and this may lead to operational inefficiencies.

 

New acquisitions, joint ventures and other transactions may require the commitment of significant capital that would otherwise be directed to investments in our existing businesses or be distributed to shareholders. Commitment of this capital may cause us to defer or suspend any share repurchases that we otherwise may have made.

 

Our business relies on intellectual property, some of which is owned by third parties, and we may inadvertently infringe their patents and proprietary rights.

 

Many entities, including some of our competitors, have or may in the future obtain patents and other intellectual property rights that cover or affect products or services related to those that we offer. In general, if a court determines that one or more of our products infringes on intellectual property held by others, we may be required to cease developing or marketing those products, to obtain licenses from the holders of intellectual property or to redesign those products in such a way as to avoid infringing the patent claims, each of which may require material expenditures by us. If those intellectual property rights are held by a competitor, we may be unable to obtain the intellectual property at any price, which could adversely affect our competitive position.

 

If we fail to protect our intellectual property rights, it could harm our business and competitive position.

 

Our business relies on intellectual property rights to stay competitive in the market place. We rely on a combination of patent, trademark and copyright laws, trade secrets, confidentiality procedures and contractual provisions to protect our intellectual property rights and the obligations we have to third parties from whom we license intellectual property rights. Nevertheless, these afford only limited protection and policing unauthorized use of proprietary technology can be difficult and expensive. We may not be able to take appropriate steps to enforce our intellectual property rights and this could have a material adverse effect on our business, operating results and financial condition.

 

Our accounting and other management systems and resources may not be adequately prepared to meet the financial reporting and other requirements to which we will be subject following the spin-off. If we are unable to achieve and maintain effective internal controls, our business, financial position and results of operations could be adversely affected.

 

Our financial results previously were included within the consolidated results of ECC, and our reporting and control systems were appropriate for those of subsidiaries of a public company. However, we were not directly subject to reporting and other requirements of the Securities Exchange Act of 1934, as amended, which we refer to as the Exchange Act. As a result of the spin-off, we will be directly subject to these requirements, including the requirements of Section 404 of the Sarbanes-Oxley Act of 2002, which will require annual management assessments of the effectiveness of our internal control over financial reporting and a report by

our independent registered public accounting firm addressing these controls. These reporting and other obligations will place significant demands on our management and administrative and operational resources, including accounting resources. To comply with these requirements, we anticipate that we will need to upgrade our systems, including information technology, implement additional financial and management controls, reporting systems and procedures and hire additional accounting and finance staff. If we are unable to upgrade our financial and management controls, reporting systems, information technology and procedures in a timely and effective fashion, our ability to comply with our financial reporting requirements and other rules that apply to reporting companies could be impaired.

 

Prior to the spin-off, we will not have been an independent company and we may be unable to make, on a timely or cost-effective basis, the changes necessary to operate as an independent company.

 

Prior to the spin-off, our business was operated by ECC as part of its broader corporate organization, rather than as an independent company. ECC’s senior management oversaw the strategic direction of our businesses and ECC performed various corporate functions for us, including, but not limited to:

 

 

Following the spin-off, neither ECC nor any of its affiliates will have any obligation to provide these functions to us other than those services that will be provided for a limited period of time by ECC pursuant to the services agreement between us and ECC. See “Certain Intercompany Agreements — Agreements with ECC — Services Agreement.” If, once this services agreement terminates, we do not have in place our own systems and business functions, we do not have agreements with other providers of these services or we are not able to make these changes cost effectively, we may not be able to operate our business effectively and our profitability may decline. If ECC does not continue to perform effectively the services that are called for under the services agreement, we may not be able to operate our business effectively after the spin-off.

 

Changes in existing technologies or the emergence of new products or technologies could significantly harm our business.

 

Our businesses change rapidly as new technologies are developed. These new technologies may cause our services and products to become obsolete. Changes in existing technologies could also cause demand for our products and services to decline. For example, if changes in technology allow digital television subscribers to use devices such as personal computers, cable ready televisions and network based digital video recording services in place of set-top boxes, our customers may not need to purchase our set-top boxes to provide their digital television subscribers with digital video recording and other set-top box features. One or more new technologies also could be introduced that compete favorably with our set-top boxes or that cause our set-top boxes to no longer be of significant benefit to our customers.

 

We and our suppliers also may not be able to keep pace with technological developments. Alternatively, if the new technologies on which we intend to focus our research and development investments fail to achieve acceptance in the marketplace, we could suffer a material adverse effect on our future competitive position that could cause a reduction in our revenues and earnings. Our competitors could also obtain or develop proprietary technologies that are perceived by the market as being superior to ours. Further, after we have incurred substantial research and development costs, one or more of the technologies under our development, or under development by one or more of our strategic partners, could become obsolete prior to its introduction. Finally, delays in the delivery of components or other unforeseen problems may occur that could materially and adversely affect our ability to generate revenue, offer new services and remain competitive.

Technological innovation is important to our success and depends, to a significant degree, on the work of technically skilled employees. Competition for the services of these types of employees is intense. We may not be able to attract and retain these employees. If we are unable to attract and maintain technically skilled employees, our competitive position could be materially and adversely affected.

 

We intend to make significant investments in new products and services that may not be profitable.

 

We have made and will continue to make significant investments in research, development, and marketing for new products, services, and technologies, including new set-top box designs and entry into new business areas. Investments in new technology are inherently speculative and commercial success depends on many factors including novelty, service and support, and effective sales and marketing. We may not achieve significant revenue from new product and service investments for a number of years, if at all. Moreover, new products and services may not be profitable, and even if they are profitable, operating margins for new products and businesses may be minimal.

 

We rely on key personnel.

 

We believe that our future success will depend to a significant extent upon the performance of Charles W. Ergen, our Chairman and Chief Executive Officer and certain other executives. Mr. Ergen and certain of these executives will also continue to devote significant time to their employment at ECC. The loss of Mr. Ergen or of certain other key executives or their ability to devote sufficient time and effort to our business could have a material adverse effect on our business, financial condition and results of operations. Although all of our executives will execute agreements limiting their ability to work for or consult with competitors if they leave us, we do not have employment agreements with any of them.

 

Risks Affecting Our Set-Top Business

 

We depend on sales of set-top boxes for nearly all of our revenue, and if sales of our set-top boxes decline, our business and financial position will suffer.

 

Our historical revenues consist primarily of sales of our set-top boxes. In addition, we currently derive, and expect to continue to derive in the near term, nearly all of our revenue from sales of our set-top boxes to ECC and Bell ExpressVu. Continued market acceptance of our set-top boxes is critical to our future success. If we are not able to expand sales of our set-top boxes to other providers of digital television, including cable operators, our growth prospects will be limited, and our revenues will be substantially impacted if sales of our set-top boxes to providers of satellite-delivered digital television decline.

 

Our business may suffer if direct-to-home satellite service providers, who currently comprise our customer base, do not compete successfully with existing and emerging alternative platforms for delivering digital television, including terrestrial networks, Internet protocol television and cable television operators.

 

Our existing customers are direct-to-home satellite video providers, which compete with cable television operators and terrestrial broadcasters for the same pool of viewers. As technologies develop, other means of delivering information and entertainment to television viewers are evolving. For example, some telecommunications companies, such as AT&T Inc. and Verizon Communications, are seeking to compete with terrestrial broadcasters, cable television network operators and direct-to-home satellite services by offering IPTV, which allows telecommunications companies to stream television programs through telephone lines or fiber optic lines. To the extent that the terrestrial television networks, telecommunications companies and cable television network operators compete successfully against direct-to-home satellite services for viewers, the ability of our existing customer base to attract and retain subscribers may be adversely affected. As a result, demand for our satellite television set-top boxes could decline and we may not be able to sustain our current revenue levels.

Our future financial performance depends on our ability to penetrate new markets for set-top boxes.

 

Our products were initially designed for, and have been deployed mostly by, providers of satellite-delivered digital television. To date, we have not made any sales of our set-top boxes to cable operators. In addition, the cable set-top box market is highly competitive and we expect competition to intensify in the future. This competition may make it more difficult for us to sell cable set-top boxes and may result in pricing pressure, small profit margins, high sales and marketing expenses and failure to obtain market share, any of which would likely seriously harm our business, operating results and financial condition.

 

Our ability to sell our set-top boxes to cable television operators depends on our ability to obtain licenses to use the conditional access systems utilized by these cable television operators.

 

Our commercial success in selling our set-top boxes to cable television operators depends significantly on our ability to obtain licenses to use the conditional access systems deployed by these operators in our set-top boxes. In many cases, the intellectual property rights to these conditional access systems are owned by the set-top box manufacturer that currently provides the cable television operator with its set-top boxes. We cannot assure you that we will able to obtain any required license on commercially favorable terms, if at all. If we do not obtain the necessary licenses, we may be delayed or prevented from pursuing the development of some potential products with cable television operators. Our failure to obtain a license to any technology that we may require to develop or commercialize our set-top boxes with cable television operators will significantly and negatively affect our business.

 

Growth in our set-top box business likely requires expansion of our sales to international customers; we may be unsuccessful in expanding international sales.

 

We believe that in order to grow our set-top box revenue and business and to build a large customer base, we must increase sales of our set-top boxes in international markets. We have limited experience selling our set-top boxes internationally. To succeed in these sales efforts, we believe we must hire additional sales personnel and develop and manage new relationships with cable operators and other providers of digital television in international markets. If we do not succeed in our efforts to sell to these target markets and customers, the size of our total addressable market may be limited. This, in turn, would harm our ability to grow our customer base and revenue.

 

The set-top box business is extremely competitive.

 

Currently, there are many significant competitors in the set-top box business including several established companies who have sold set-top boxes to major cable operators in the United States for many years. These competitors include companies such as Motorola, Cisco Systems, which acquired Scientific Atlanta in 2006, and Pace. In addition, a number of rapidly growing companies have recently entered the market, many of them with set-top box offerings similar to our existing satellite set-top box products. We also expect additional competition in the future from new and existing companies who do not currently compete in the market for set-top boxes. As the set-top box business evolves, our current and potential competitors may establish cooperative relationships among themselves or with third parties, including software and hardware companies that could acquire significant market share, which could adversely affect our business. We also face competition from set-top boxes that have been internally developed by digital video providers. Any of these competitive threats, alone or in combination with others, could seriously harm our business, operating results and financial condition.

 

Our set-top boxes are highly complex and may experience quality or supply problems.

 

Our set-top boxes are extremely complex and can have defects in design, manufacture or associated software. Set-top boxes often contain “bugs” that can unexpectedly interfere with their operation. Defects may also occur in components and products that we purchase from third-parties. There can be no assurance that we will be able to detect and fix all defects in the set-top boxes that we sell. We could incur significant expenses, lost

revenue, and harm to our reputation if we fail to detect or effectively address such issues through design, testing or warranty repairs.

 

The average selling price of our set-top boxes may decrease, which could negatively impact our operating results.

 

As a part of ECC, we have historically sold set-top boxes to ECC at our cost. In order to operate a profitable business we will be required to sell our set-top boxes to ECC at higher prices. It is possible that our ability to increase the average selling prices of our set-top boxes will be limited and that prices may decrease in the future in response to competitive pricing pressures, new product introductions by us or our competitors or other factors. If we are unable to increase or at least maintain the average selling prices of our set-top boxes, or if such selling prices decline, and we are unable to respond in a timely manner by developing and introducing new products and continually reducing our product costs, our revenues and gross margin may be negatively affected, which will harm our business and results of operations.

 

If significant numbers of television viewers are unwilling to pay for premium programming packages that utilize set-top boxes, we may not be able to sustain our current revenue level.

 

Our revenues are derived entirely from direct-to-home satellite service providers who purchase our set-top boxes for their subscribers. Therefore, we are substantially dependent upon the ability of these providers to promote the delivery of premium programming packages that utilize technology incorporated into our set-top boxes, such as DVR technology and IPTV, to generate future revenues.

 

However, direct-to-home satellite service providers may be unsuccessful in promoting value-added services. Subscribers of direct-to-home satellite services have historically purchased stand-alone satellite receivers without the advanced set-top box functionality that we offer. If direct-to-home satellite service providers are unable to develop compelling reasons for their subscribers to purchase our more advanced set-top boxes, it will be difficult for us to sustain our historical revenues.

 

Our reliance on several key components used in our set-top boxes could restrict production and result in higher set-top box costs.

 

We obtain many components for our set-top boxes from a single supplier or a limited group of suppliers. Our reliance on a single or limited group of suppliers, particularly foreign suppliers, and our increasing reliance on subcontractors, involves several risks. These risks include a potential inability to obtain an adequate supply of required components, and reduced control over pricing, quality, and timely delivery of these components. We do not generally maintain long-term agreements with any of our suppliers or subcontractors. An inability to obtain adequate deliveries or any other circumstances requiring us to seek alternative sources of supply could affect our ability to ship our set-top boxes on a timely basis, which could damage our relationships with current and prospective customers and harm our business, resulting in a loss of market share, and reduce revenues and income.

 

We generally maintain low inventory levels and do not make binding long-term commitments to suppliers. As a result, it may be difficult in the future to obtain components required for our products or to increase the volume of components if demand for our products increases.

 

Our future growth depends on market acceptance of HDTV.

 

Future demand for our set-top boxes will depend significantly on the growing market acceptance of high definition television, or HDTV. The effective delivery of HDTV will depend on digital television operators developing and building infrastructure to provide wide-spread HDTV programming. If the introduction or adoption of HDTV or the deployment of HDTV is not as widespread or as rapid as we or our customers expect, our revenue growth will be limited.

During April 2006, a jury concluded that certain of our digital video recorders, or DVRs, infringed a patent held by Tivo. If the verdict is upheld on appeal and we are not able to successfully implement alternative technology, we could be prohibited from distributing DVRs, or be required to modify or eliminate certain user-friendly DVR features that we currently offer to consumers.

 

If the Tivo jury verdict is upheld on appeal, to the extent that ECC does not indemnify us, we will be required to pay substantial damages and/or license fees, and if we were not able to successfully implement alternative technology (including the successful defense of any challenge that such technology infringes Tivo’s patent), we could also be prohibited from distributing DVRs, or be required to modify or eliminate certain user-friendly DVR features that we currently offer to consumers. In that event we would be at a significant disadvantage to our competitors who could offer this functionality and, while we would attempt to provide that functionality through other manufacturers, the adverse affect on our business could be material.

 

Risks Affecting Our Fixed Satellite Services Business

 

We currently face competition from established competitors in the fixed satellite service business and may face competition from others in the future.

 

In our fixed satellite services business, we will compete against larger, well-established fixed satellite service companies, such as Intelsat, SES Americom and Telesat Canada. Because the satellite services industry is relatively mature, our growth strategy depends largely on our ability to displace current incumbent providers, which often have the benefit of long-term contracts with customers. These long-term contracts and other factors result in relatively high switching costs for customers, making it more difficult for us to displace customers from their current relationships with our competitors. In addition, the supply of satellite capacity has increased in recent years, which will make it more difficult for us to sell our services in certain markets and to price our capacity at acceptable levels. Competition may cause downward pressure on prices and further reduce the utilization of our fleet capacity, both of which would have an adverse effect on our financial performance. Our fixed satellite services business also competes with fiber optic cable and other terrestrial delivery systems, which may have a cost advantage, particularly in point-to-point applications where such delivery systems have been installed.

 

Our satellites are subject to significant operational risks.

 

Satellites are subject to significant operational risks while in orbit. These risks include malfunctions, commonly referred to as anomalies, that have occurred in our satellites and the satellites of other operators as a result of various factors, such as satellite manufacturers’ errors, problems with the power systems or control systems of the satellites and general failures resulting from operating satellites in the harsh environment of space.

 

Although we work closely with the satellite manufacturers to determine and eliminate the cause of anomalies in new satellites and provide for redundancies of many critical components in the satellites, we may experience anomalies in the future, whether of the types described above or arising from the failure of other systems or components.

 

Any single anomaly or series of anomalies could materially and adversely affect our operations and revenues and our relationship with current customers, as well as our ability to attract new customers for our satellite services. In particular, future anomalies may result in the loss of individual transponders on a satellite, a group of transponders on that satellite or the entire satellite, depending on the nature of the anomaly. Anomalies may also reduce the expected useful life of a satellite, thereby reducing the revenue that could be generated by that satellite, or create additional expenses due to the need to provide replacement or back-up satellites.

 

Meteoroid events pose a potential threat to all in-orbit satellites. The probability that meteoroids will damage those satellites increases significantly when the Earth passes through the particulate stream left behind by comets. Occasionally, increased solar activity also poses a potential threat to all in-orbit satellites.

 

Some decommissioned spacecraft are in uncontrolled orbits which pass through the geostationary belt at various points, and present hazards to operational spacecraft, including our satellites. We may be required to

perform maneuvers to avoid collisions and these maneuvers may prove unsuccessful or could reduce the useful life of the satellite through the expenditure of fuel to perform these maneuvers. The loss, damage or destruction of any of our satellites as a result of an electrostatic storm, collision with space debris, malfunction or other event could have a material adverse effect on our business, financial condition and results of operations.

 

Our satellites have minimum design lives of 12 years, but could fail or suffer reduced capacity before then.

 

Our ability to earn revenue depends on the usefulness of our satellites. Each satellite has a limited useful life. A number of factors affect the useful lives of the satellites, including, among other things, the quality of their construction, the durability of their component parts, the ability to continue to maintain proper orbit and control over the satellite’s functions, the efficiency of the launch vehicle used, and the remaining on-board fuel following orbit insertion. Generally, the minimum design life of each of our satellites is 12 years. We can provide no assurance, however, as to the actual useful lives of the satellites.

 

In the event of a failure or loss of any of our satellites, we may relocate another satellite and use it as a replacement for the failed or lost satellite, which could have a material adverse effect on our business, financial condition and results of operations. Such a relocation would require FCC approval and, among other things, a showing to the FCC that the replacement satellite would not cause additional interference compared to the failed or lost satellite. We cannot be certain that we could obtain such FCC approval.

 

Our satellites are subject to risks related to launch.

 

Satellite launches are subject to significant risks, including launch failure, incorrect orbital placement or improper commercial operation. Certain launch vehicles that may be used by us have either unproven track records or have experienced launch failures in the past. The risks of launch delay and failure are usually greater when the launch vehicle does not have a track record of previous successful flights. Launch failures result in significant delays in the deployment of satellites because of the need both to construct replacement satellites, which can take more than two years, and to obtain other launch opportunities. Such significant delays could materially and adversely affect our ability to generate revenues. If we were unable to obtain launch insurance, or obtain launch insurance at rates we deem commercially reasonable, and a significant launch failure were to occur, it could have a material adverse effect on our ability to generate revenues and fund future satellite procurement and launch opportunities. In addition, the occurrence of launch failures whether on our satellites or those of others may significantly reduce the availability of launch insurance on our satellites or make launch insurance premiums uneconomical.

 

Our fixed satellite services business is subject to risks of adverse government regulation.

 

Our satellite services business is subject to varying degrees of regulation in the United States by the FCC, and other entities, and in foreign countries by similar entities. These regulations are subject to the political process and have been in constant flux over the past decade. Moreover, a substantial number of foreign countries in which we have, or may in the future make, an investment, regulate, in varying degrees, the ownership of satellites and the distribution and ownership of programming services and foreign investment in programming companies. Further material changes in law and regulatory requirements must be anticipated, and there can be no assurance that our business and the business of our affiliates will not be adversely affected by future legislation, new regulation or deregulation.

 

Our business depends substantially on FCC licenses that can expire or be revoked or modified and applications that may not be granted.

 

If the FCC were to cancel, revoke, suspend or fail to renew any of our licenses or authorizations, it could have a material adverse effect on our business, financial condition and results of operations. Specifically, loss of a frequency authorization would reduce the amount of spectrum available to us, potentially reducing the amount of services available to our customers. The materiality of such a loss of authorizations would vary based upon,

among other things, the location of the frequency used or the availability of replacement spectrum. In addition, Congress often considers and enacts legislation that could affect us, and FCC proceedings to implement the Communications Act and enforce its regulations are ongoing. We cannot predict the outcomes of these legislative or regulatory proceedings or their effect on our business.

 

We may not be aware of certain foreign government regulations.

 

Because regulatory schemes vary by country, we may be subject to regulations in foreign countries of which we are not presently aware. If that were to be the case, we could be subject to sanctions by a foreign government that could materially and adversely affect our ability to operate in that country. We cannot assure you that any current regulatory approvals held by us are, or will remain, sufficient in the view of foreign regulatory authorities, or that any additional necessary approvals will be granted on a timely basis or at all, in all jurisdictions in which we wish to operate new satellites, or that applicable restrictions in those jurisdictions will not be unduly burdensome. The failure to obtain the authorizations necessary to operate satellites internationally could have a material adverse effect on our ability to generate revenue and our overall competitive position.

 

We, our customers and companies with which we do business may be required to have authority from each country in which we or they provide services or provide our customers use of our satellites. Because regulations in each country are different, we may not be aware if some of our customers and/or companies with which we do business do not hold the requisite licenses and approvals.

 

Our dependence on outside contractors could result in delays related to the design, manufacture and launch of our new satellites, which could in turn adversely affect our operating results.

 

There are a limited number of manufacturers that are able to design and build satellites according to the technical specifications and standards of quality we require, including Astrium Satellites, Boeing Satellite Systems, Lockheed Martin, Loral and Thales Alenia Space. There are also a limited number of agencies able to launch such satellites, including International Launch Services, Arianespace, Lockheed Martin Launch Systems and Sea Launch Company. The loss of any of our manufacturers or launch agencies could result in the delay of the design, building or launch of our satellites. Even if alternate suppliers for such services are available, we may have difficulty identifying them in a timely manner, we may incur significant additional expense in changing suppliers, and this could result in difficulties or delays in the design, manufacturing or launch of our satellites. Any delays in the design, building or launch of our satellites could have a material adverse effect on our business, financial condition and results of operations.

 

We currently have no commercial insurance coverage on the satellites we own.

 

We do not insure our owned satellites against in-orbit or other failures. The loss of a satellite or other satellite malfunctions or anomalies could have a material adverse effect on our financial performance which we may not be able to mitigate by using available capacity on other satellites. In addition, the loss of a satellite or other satellite malfunctions or anomalies could affect our ability to comply with FCC regulatory obligations and our ability to fund the construction or acquisition of replacement satellites for our in-orbit fleet in a timely fashion, or at all.

 

Risks Relating to the Spin-Off

 

Our agreements with ECC may not reflect what two unaffiliated parties might have agreed to.

 

The allocation of assets, liabilities, rights, indemnifications and other obligations between ECC and us under the separation and ancillary agreements we will enter into with ECC do not necessarily reflect what two unaffiliated parties might have agreed to. Had these agreements been negotiated with unaffiliated third parties, their terms may have been more favorable, or less favorable, to us.

The spin-off could result in significant tax liability.

 

ECC has received a private letter ruling from the IRS to the effect that, among other things, the spin-off, together with certain related transactions, will qualify for tax-free treatment under Sections 355 and 368(a)(1)(D) of the Code. In addition, the spin-off is conditioned upon the receipt by ECC of the opinion of White & Case LLP on the distribution date (which condition ECC may waive in its sole discretion) substantially to the effect that, among other things, the spin-off, together with certain related transactions, will qualify as reorganizations for U.S. federal income tax purposes under Sections 355 and 368(a)(1)(D) of the Code, and that, accordingly for U.S. federal income tax purposes, no gain or loss will be recognized by, and no amount will be included in the income of, a holder of ECC common stock upon the receipt of shares of our common stock pursuant to the spin-off, except to the extent such holder receives cash in lieu of fractional shares of our common stock. See “The Spin-Off — Material U.S. Federal Income Tax Consequences of the Spin-Off.”

 

Although a private letter ruling from the IRS generally is binding on the IRS, if the factual representations or assumptions made in the letter ruling request are untrue or incomplete in any material respect, we will not be able to rely on the ruling. Furthermore, the IRS will not rule on whether a distribution satisfies certain requirements necessary to obtain tax-free treatment under Section 355 of the Code. Rather, the ruling is based upon representations by ECC that these conditions have been satisfied, and any inaccuracy in such representations could invalidate the ruling. ECC has made it a condition to the spin-off that ECC obtain the opinion of counsel described above. The opinion will be based on, among other things, certain assumptions and representations made by ECC and us, which if incorrect or inaccurate in any material respect would jeopardize the conclusions reached by counsel in its opinion. The opinion will not be binding on the IRS or the courts. See “The Spin-Off — Material U.S. Federal Income Tax Consequences of the Spin-Off” for more information regarding the private letter ruling and the tax opinion.

 

If the spin-off does not qualify for tax-free treatment for U.S. federal income tax purposes, then, in general, ECC would be subject to tax as if it had sold the common stock of our company in a taxable sale for its fair market value. ECC’s shareholders would be subject to tax as if they had received a distribution equal to the fair market value of our common stock that was distributed to them, which would be treated as a taxable dividend to the extent of ECC’s earnings and profits. It is expected that the amount of any such taxes to ECC’s shareholders and ECC would be substantial. See “The Spin-Off — Material U.S. Federal Income Tax Consequences of the Spin-Off.”

 

A potential indemnity liability to ECC if the spin-off is treated as a taxable transaction could materially adversely affect our company.

 

In the tax sharing agreement with ECC, we have agreed to indemnify ECC for any losses, claims, and expenses (including any resulting taxes) resulting from the spin-off or certain related transactions failing to qualify as tax-free transactions pursuant to any provision of Section 355 or Section 361 of the Code because of (i) a direct or indirect acquisition of any of our stock, stock options or assets, (ii) any action that we take or fail to take or (iii) any action that we take 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. For a more detailed discussion, see “Certain Intercompany Agreements — Agreements with ECC — Tax Sharing Agreement.” Our indemnification obligations to ECC and its subsidiaries are not limited in amount or subject to any cap. If we are required to indemnify ECC and its subsidiaries under the circumstances set forth in the tax sharing agreement, we may be subject to substantial liabilities.

We will have potential conflicts of interest with ECC after the spin-off.

 

Questions relating to conflicts of interest may arise between ECC and us in a number of areas relating to our past and ongoing relationships. Areas in which conflicts of interest between ECC and us could arise include, but are not limited to, the following:

 

 

 

 

We may not be able to resolve any potential conflicts, and, even if we do so, the resolution may be less favorable to us than if we were dealing with an unaffiliated party.

 

We do not have any agreements with ECC that restrict us from selling our products to competitors of ECC. We also do not have any agreements with ECC that would prevent us from competing with each other.

 

In addition, the corporate opportunity policy set forth in our articles of incorporation addresses potential conflicts of interest for officers and directors of ECC who are also officers or directors of us. This policy could restrict our ability to take advantage of certain corporate opportunities. The principles for resolving such

potential conflicts of interest are described under “Description of Our Capital Stock — Provisions of Our Articles of Incorporation Relating to Related-Party Transactions and Corporate Opportunities.”

 

We may incur material costs and expenses as a result of our separation from ECC.

 

We may incur costs and expenses greater than those we currently incur as a result of our separation from ECC. These increased costs and expenses may arise from various factors, including financial reporting, costs associated with complying with federal securities laws (including compliance with the Sarbanes-Oxley Act of 2002), tax administration and human resources related functions. Although ECC will continue to provide many of these services to us under the services agreement, such services are for a limited period of time. We cannot assure you that these costs will not be material to our business.

 

Substantial sales of our common stock may occur in connection with or following the spin-off, which could cause our share price to decline.

 

The EHC Class A common stock that is distributed in the spin-off generally may be sold immediately in the public market. We expect that some of our shareholders, including possibly some of our larger shareholders, will sell the Class A common stock that they receive in the spin-off because, among other reasons, our business profile or market capitalization as an independent, publicly-traded company do not fit their investment objectives. Moreover, index funds hold ECC Class A common stock. Unless we are included in these indices from the date of the spin-off, these index funds will be required to sell our Class A common stock that they receive in the distribution. The sales of significant amounts of our Class A common stock or the perception in the market that these sales will occur could adversely affect the market price of our Class A common stock.

 

Risks Relating to our Common Stock and the Securities Market

 

We cannot be certain that an active trading market will develop or be sustained after the spin-off, and following the spin-off our stock price may fluctuate significantly.

 

We cannot assure you that an active trading market will develop or be sustained for our common stock after the spin-off. Nor can we predict the prices at which classes of our common stock may trade after the spin-off. Similarly, we cannot predict the effect of the spin-off on the trading prices of ECC’s common stock or whether the market value of the shares of a class of our common stock and the shares of the same class of ECC’s common stock held by a shareholder after the spin-off will be less than, equal to or greater than the market value of the shares of that class of ECC’s common stock held by such shareholder prior to the spin-off.

 

The market price of our common stock may fluctuate significantly due to a number of factors, some of which may be beyond our control, including:

 

 

If, following the spin-off, we are unable to satisfy the requirements of Section 404 of the Sarbanes-Oxley Act of 2002, or our internal control over financial reporting is not effective, the reliability of our financial statements may be questioned and our stock price may suffer.

 

Section 404 of the Sarbanes-Oxley Act of 2002 requires any company subject to the reporting requirements of the U.S. securities laws to do a comprehensive evaluation of its and its consolidated subsidiaries’ internal control over financial reporting. To comply with this statute, we will eventually be required to document and test our internal control procedures, our management will be required to assess and issue a report concerning our internal control over financial reporting, and our independent auditors will be required to issue an opinion on management’s assessment of those matters. The rules governing the standards that must be met for

management to assess our internal control over financial reporting are complex and require significant documentation, testing and possible remediation to meet the detailed standards under the rules. During the course of its testing, our management may identify material weaknesses or deficiencies which may not be remedied in time to meet the deadline imposed by the Sarbanes-Oxley Act. If our management cannot favorably assess the effectiveness of our internal control over financial reporting or our auditors identify material weaknesses in our internal controls, investor confidence in our financial results may weaken, and our stock price may suffer.

 

It may be difficult for a third party to acquire us, even if doing so may be beneficial to our shareholders.

 

Certain provisions of our certificate of incorporation and bylaws may discourage, delay or prevent a change in control of our company that a shareholder may consider favorable. These provisions include the following:

 

 

After the spin-off, we will be controlled by one principal shareholder.

 

Immediately after the spin-off, Charles W. Ergen, our Chairman and Chief Executive Officer, will beneficially own approximately 80.0% of our total equity securities and possess approximately 50.0% of the total voting power. Thus, Mr. Ergen will have the ability to elect a majority of our directors and to control all other matters requiring the approval of our shareholders. As a result of Mr. Ergen’s voting power, we will be a “controlled company” as defined in the Nasdaq listing rules and, therefore, will not be subject to Nasdaq requirements that would otherwise require us to have (i) a majority of independent directors; (ii) a nominating committee composed solely of independent directors; (iii) compensation of our executive officers determined by a majority of the independent directors or a compensation committee composed solely of independent directors; and (iv) director nominees selected, or recommended for the Board’s selection, either by a majority of the independent directors or a nominating committee composed solely of independent directors. Mr. Ergen will also beneficially own approximately 50.0% of the total equity and 80.0% of the total voting power of ECC and will continue to be the Chairman and Chief Executive Officer of ECC, which will directly and through its subsidiaries continue to be our largest customer, accounting for a substantial majority of our revenues.

 

Holders of any single class of our common stock may not have any remedies if any action by our directors or officers has an adverse effect on only that series of our common stock.

 

Principles of Nevada law and the provisions of our certificate of incorporation may protect decisions of our board of directors that have a disparate impact upon holders of any single class of our common stock. Under Nevada law, the board of directors has a duty to act with due care and in the best interests of all of our shareholders, including the holders of all classes of our common stock. Principles of Nevada law established in cases involving differing treatment of multiple classes or series of stock provide that a board of directors owes an equal duty to all common shareholders regardless of class or series and does not have separate or additional duties to any group of shareholders. As a result, in some circumstances, our directors may be

required to make a decision that is adverse to the holders of one class of our common stock. Under the principles of Nevada law referred to above, you may not be able to challenge these decisions if our board of directors is disinterested and adequately informed with respect to these decisions and acts in good faith and in the honest belief that it is acting in the best interests of all of our shareholders.

 

We do not intend to pay dividends for the foreseeable future.

 

We have never declared or paid any dividends on our common stock. We intend to retain any earnings to finance the operation and expansion of our business, and we do not anticipate paying any cash dividends in the future. As a result, you may only receive a return on your investment in our common stock if the market price of our common stock increases.

 

If securities or industry analysts do not publish research or publish unfavorable research about our business, our stock price and trading volume could decline.

 

The trading market for our common stock will depend in part on any research reports that securities or industry analysts publish about us or our business. After our separation from ECC, if no securities or industry analysts initiate coverage of us, the trading price for our stock may be negatively impacted. In the event securities or industry analysts cover us and one or more of these analysts downgrade our stock or publish unfavorable reports about our business, our stock price would likely decline. In addition, if any securities or industry analysts cease coverage of our company or fail to publish reports on us regularly, demand for our stock could decrease, which could cause our stock price and trading volume to decline.

 

CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS

 

This information statement contains certain forward-looking statements regarding business strategies, market potential, future financial performance and other matters. In particular, information included under the headings “The Spin-Off,” “Risk Factors,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Business” contain forward-looking statements. Forward-looking statements inherently involve many risks and uncertainties that could cause actual results to differ materially from those projected in these statements. Where, in any forward-looking statement, we express an expectation or belief as to future results or events, such expectation or belief is expressed in good faith and believed to have a reasonable basis, but there can be no assurance that the expectation or belief will result or be achieved or accomplished. Please refer to “Risk Factors” for some but not all of the factors that could cause actual results or events to differ materially from those anticipated.

 

All cautionary statements made herein should be read as being applicable to all forward-looking statements wherever they appear. In this connection, investors should consider the risks described herein and should not place undue reliance on any forward-looking statements.

 

These forward-looking statements and such risks, uncertainties and other factors speak only as of the date of this information statement, and we expressly disclaim any obligation or undertaking to disseminate any updates or revisions to any forward-looking statement contained herein, or to reflect any change in our expectations with regard thereto or any other change in events, conditions or circumstances on which any such statement is based.

 

THE SPIN-OFF

 

Background

 

The board of directors of ECC has approved the spin-off of EchoStar Holding Corporation, a wholly owned subsidiary of ECC. EHC will hold the technology and certain infrastructure assets of ECC. ECC will retain its consumer business, including DISH Network, its U.S. consumer pay-TV business. In making its determination, the ECC board of directors met numerous times and considered, among other things, the continuation of ECC’s current operating strategy, and concluded that we and ECC would be able to compete more effectively and have the opportunity to achieve better revenue growth and profitability as a result of the spin-off.

 

Prior to the spin-off, we were a wholly-owned subsidiary of ECC. Following a series of distributions and contributions from ECC and its subsidiaries to us, we and the companies that will be our subsidiaries after the spin-off, which we refer to as EchoStar Holding Corporation, or EHC, will be engaged in the digital set-top box business and the fixed satellite services business.

 

To accomplish the spin-off, ECC will distribute all of its equity interest in us, consisting of shares of our Class A common stock and our Class B common stock, to ECC’s shareholders on a pro rata basis based on the class of ECC common stock held by each such shareholder. Following the spin-off, ECC will cease to own any equity interest in us, and we will operate independently from ECC. No vote of ECC’s shareholders is required or being sought in connection with the spin-off, and ECC’s shareholders will not have any appraisal rights in connection with the spin-off.

 

The distribution of our common stock as described in this information statement is subject to the satisfaction or waiver of certain conditions. For a more detailed description of these conditions, see “— Conditions to the Spin-Off.”

 

Reasons for the Spin-off

 

The ECC board of directors regularly reviews the operations that ECC conducts to ensure that ECC’s resources are being put to use in a manner that is in the best interests of ECC and its shareholders. As a result of this ongoing evaluation, ECC concluded that some of its existing non-core businesses were being undervalued by analysts and the market generally, and that these businesses would be in a better competitive position if they were operated as a separate entity from DISH Network. Neither we nor ECC can assure you that, following the spin-off, any benefits will be realized to the extent we anticipate or at all. The board of directors of ECC considered the following potential benefits in making its determination to consummate the spin-off:

 

 

 

 

The board of directors of ECC also considered the costs and risks associated with the spin-off. The board of directors of ECC considered, among other factors, any potential negative impact on ECC’s credit ratings as a result of the divestiture of assets that will be contributed to us; the possibility that either we or ECC may experience disruptions in our respective businesses as a result of the spin-off; actual or perceived conflicts of interest that may arise between ECC and us in a number of areas relating to our past and ongoing relationships, including: (i) cross officerships, directorships and stock ownership, (ii) intercompany transactions, (iii) intercompany agreements and (iv) business opportunities; the risk that the combined trading prices of our common stock and ECC’s common stock after the spin-off may be lower than the trading price of ECC’s common stock before the spin-off; the loss of synergies from operating as one company; and the additional legal, accounting and administrative costs associated with our becoming a separate, publicly-traded company. In view of the wide variety of factors considered in connection with the evaluation of the spin-off and the complexity of these matters, the ECC board of directors did not find it useful to, and did not attempt to quantify, rank or otherwise assign relative weights to the factors considered. The board of directors of ECC concluded, however, that the potential benefits of the spin-off outweigh the potential negative factors, and that separating the non-core business of ECC from ECC in the form of a tax-free distribution to ECC shareholders is appropriate and advisable for ECC and its shareholders.

 

Manner of Effecting the Spin-Off

 

ECC will effect the spin-off by distributing to its shareholders as a dividend:

 

 

and

 

 

in each case, owned of record by each shareholder on the record date.

 

Prior to the spin-off, ECC will deliver all of the issued and outstanding shares of our Class A common stock and Class B common stock to the distribution agent. On or about January 1, 2008, which we refer to as the distribution date, the distribution agent will effect delivery of the shares of our common stock issuable in the spin-off electronically, as of the distribution date, to you or to your bank or brokerage firm on your behalf by

way of direct registration in book-entry form. Registration in book-entry form refers to a method of recording share ownership when no physical share certificates are issued to shareholders, as is the case in this distribution.

 

Commencing on or shortly after the distribution date, if you hold physical share certificates that represent your common stock of ECC and you are the registered holder of the ECC shares represented by those certificates, the distribution agent will mail to you an account statement that indicates the number of shares of our common stock that have been registered in book-entry form in your name.

 

Please note that if any shareholder of ECC on the record date sells shares of ECC common stock after the record date but on or before the distribution date, the buyer of those shares, and not the seller, will become entitled to receive the shares of our common stock issuable in respect of the shares sold. See “ — Trading Between the Record Date and Distribution Date” below for more information.

 

Most ECC shareholders hold their common stock of ECC through a bank or brokerage firm. In such cases, the bank or brokerage firm would be said to hold the shares in “street name” and ownership would be recorded on the bank or brokerage firm’s books. If you hold your ECC common stock through a bank or brokerage firm, your bank or brokerage firm will credit your account for the common stock of our company that you are entitled to receive in the spin-off. If you have any questions concerning the mechanics of having shares held in “street name,” we encourage you to contact your bank or brokerage firm.

 

Shareholders of ECC are not being asked to take any action in connection with the spin-off. No shareholder approval of the spin-off is required or being sought. We are not asking you for a proxy, and you are requested not to send us a proxy. You are also not being asked to surrender any of your shares of ECC common stock for shares of our common stock. The number of outstanding shares of ECC common stock will not change as a result of the spin-off.

 

Interests of EHC directors and officers in the spin-off

 

In connection with the spin-off, EHC directors and executive officers have interests in the spin-off that are different from, or in addition to, your interests as a shareholder, and that may present actual or potential conflicts of interest. These interests include:

 

 

Treatment of Fractional Shares

 

The distribution agent will not distribute any fractional shares in connection with the spin-off. Instead, any shareholder who would be entitled to receive a fractional share of our Class A common stock will instead receive a cash payment in lieu of such fractional share. The distribution agent will aggregate all fractional shares into whole shares and sell the whole shares in the open market at prevailing market prices. The distribution agent will then distribute the aggregate net cash proceeds of the sales pro rata to each holder who otherwise would have been entitled to receive a fractional share. The distribution agent, in its sole discretion, without any influence by ECC or us, will determine when, how, through which broker-dealer and at what price to sell the whole shares. We will reimburse the distribution agent for the cost of any brokerage fees incurred

by the distribution agent in connection with these sales, which we expect to be reasonable and customary for transactions of this type. The distribution agent and any broker-dealer used by the distribution agent will not be an affiliate of either ECC or us. Any shareholder who would be entitled to receive a fractional share of our Class B common stock will have such fractional share rounded off and will instead receive the number of whole shares they are entitled to receive without regard to any fractional share. The elimination of fractional shares of our Class B common stock is due the limited number of Class B shareholders and the small number of fractional shares that would therefore result from the spin-off, making an aggregation and public sale of such fractional shares impractical.

 

The distribution agent will distribute a check to each record holder of Class A shares representing the cash amount deliverable in lieu of the record holder’s fractional share interest as soon as practicable following the calculation of these cash amounts. If you hold your shares through a bank or brokerage firm, your bank or brokerage firm will receive, on your behalf, your pro rata share of the aggregate net cash proceeds of the sales and will electronically credit your account for your share of such proceeds. No interest will be paid on any cash distributed in lieu of fractional shares. The receipt of cash in lieu of fractional shares will generally be taxable to the recipient shareholders. See “— Material U.S. Federal Income Tax Consequences of the Spin-Off” below for more information.

 

Treatment of ECC Stock Incentive Awards

 

Options to purchase shares of ECC Class A common stock, which we refer to as ECC Options, and restricted stock units with respect to shares of ECC Class A common stock, which we refer to as ECC RSUs have been granted to various directors, officers and employees of ECC and certain of its subsidiaries pursuant to the EchoStar Communications Corporation 1995 Stock Incentive Plan, the Amended and Restated EchoStar Communications Corporation 1999 Stock Incentive Plan, the Amended and Restated EchoStar Communications 2001 Nonemployee Director Stock Option Plan and the EchoStar Communications Corporation 1995 Nonemployee Director Stock Option Plan and various other stock incentive plans administered by the compensation committee of ECC’s board of directors. Under the anti-dilution provisions of the applicable plans, the ECC compensation committee has the authority to make equitable adjustments to outstanding ECC Options and ECC RSUs in the event of certain transactions, including the distribution of our common stock in connection with the spin-off. The ECC compensation committee has determined to make various adjustments to outstanding ECC Options and ECC RSUs, as described below, to preserve the economic benefits of the original award following the spin-off. These adjustments will be made in the same manner for all holders of ECC options and other stock-based awards of ECC, including ECC’s executive officers and directors. Any options to purchase, or awards relating to, shares of our common stock issued in connection with such adjustments will be obligations of our company. All options exercisable for, and all awards relating to, shares of ECC Class A common stock, regardless of any adjustment, will remain obligations of ECC.

 

We intend to file a registration statement with respect to shares of our common stock issuable upon exercise, or vesting, of the equity awards that we issue, as soon as practicable following the effective date of this registration statement.

 

Option Awards

 

As of the distribution date, each ECC Option will be divided into two options as follows:

 

 

 

The aggregate exercise price of each outstanding ECC option will be allocated between the EHC Option and the Adjusted ECC Option as follows:

 

 

 

Set forth below is an example of how the allocation would work.

 

Assume that a current employee, executive officer or director of ECC holds an option to purchase 100 shares of ECC Class A common stock with an exercise price of $10.00 per share. Also assume that the closing trading price of ECC common stock on the first regular trading day after the distribution date is $35.00, the closing trading price of EHC common stock on the first regular trading day after the distribution date is $25.00 and 0.20 of a share of EHC Class A common stock has been issued for every share of ECC Class A common stock held by a shareholder of ECC. The EHC Option would be an option to purchase 20 shares of EHC Class A common stock (i.e., 100 x 0.20) with an exercise price of $6.25 per share (i.e., $10 * ($25 / ($35 + $5))). The Adjusted ECC Option would be an option to purchase 100 shares of ECC Class A common stock with an exercise price of $8.75 per share (i.e., $10 * ($35 / ($35 + $5))). Assuming that the value of ECC immediately prior to the allocation was equal to the combined value of ECC and EHC following the spin-off (i.e., ($35 + ($25 * 0.2)), or $40), the intrinsic value of the ECC stock option prior to the allocation was $3,000 (i.e., ($40 − $10) * 100), and after the allocation, the intrinsic value of the EHC Option and Adjusted ECC Option, taken together, would still be $3,000 (i.e., ($25 − $6.25) * 20, or $375) plus (i.e., ($35 − $8.75) * 100, or $2,625).

 

Each Adjusted ECC Option and EHC Option will take into account all employment with both ECC and EHC for purposes of determining when the option vests and terminates. Fractional shares will be adjusted or compensated by ECC as appropriate in the sole discretion of the ECC compensation committee. All other terms and conditions of the EHC Option and the Adjusted ECC Option will generally be the same as the outstanding ECC Option, in all material respects.

 

As a result of these adjustments, certain persons who are employed by or associated with ECC immediately following the distribution date will hold EHC Options, and certain persons who will be employed by or associated with our company immediately following the distribution date may hold Adjusted ECC Options. Regardless of these employment or other relationships, ECC will not be responsible for the exercise or settlement of any EHC Option, and we will not be responsible for the exercise or settlement of any option to purchase ECC common stock (including an Adjusted ECC Option). Any exercising holder of an EHC Option must exercise the security directly with us. Similarly, any exercising holder of an option to purchase ECC common stock must exercise the security directly with ECC. In this regard, we will enter into an option agreement with each holder of an EHC Option, and, if necessary, ECC will amend its existing option agreement with each holder of an outstanding ECC Option, in each case to reflect the provisions described above.

 

Restricted Stock Unit Awards

 

For each ECC RSU outstanding as of the distribution date, the holder of such ECC RSU will be entitled to receive, for each share of ECC Class A common stock subject thereto, an EHC RSU with respect to the

number of shares our Class A common stock that would have been issued in the spin-off in respect of the shares of ECC Class A common stock subject to the applicable ECC RSU.

 

The distribution will not have any other effect on the outstanding ECC RSUs, and the RSUs relating to our common stock will be subject to the same terms and conditions as apply to the ECC awards with respect to which the adjustment, or distribution, as applicable, is made. Each such award will take into account all employment with both ECC and EHC for purposes of determining when the award vests or the restrictions on the award lapse, as applicable. Fractional shares will be adjusted or compensated by ECC as appropriate in the sole discretion of the ECC compensation committee.

 

Material U.S. Federal Income Tax Consequences of the Spin-Off

 

The following is a summary of certain material U.S. federal income tax consequences to the holders of ECC common stock in connection with the spin-off. The summary is based on the Code, the Treasury Regulations promulgated thereunder and judicial and administrative interpretations thereof, in each case as in effect and available as of the date of this document and all of which are subject to change at any time, possibly with retroactive effect. Any such change could affect the tax consequences described below.

 

This summary does not discuss all tax considerations that may be relevant to shareholders in light of their particular circumstances, nor does it address the consequences to shareholders subject to special treatment under the U.S. federal income tax laws, such as:

 

 

This summary does not address the U.S. federal income tax consequences to ECC shareholders who do not hold ECC common stock as a capital asset. Moreover, this summary does not address any state, local or foreign tax consequences.

 

If a partnership (or any other entity treated as a partnership for U.S. federal income tax purposes) holds ECC common stock, the tax treatment of a partner in such partnership will generally depend on the status of the partner and the activities of the partnership. Such a partner or partnership should consult its own tax advisor as to its tax consequences.

You should consult your own tax advisor with respect to the U.S. federal, state, local and foreign tax consequences of the distribution.

 

The spin-off is conditioned upon ECC’s receipt of an opinion of White & Case LLP to be delivered on the distribution date (which condition ECC may waive in its sole discretion), substantially to the effect that the spin-off, together with certain related transactions, will qualify as reorganizations under Sections 355 and 368(a)(1)(D) of the Code. In addition, ECC has received a private letter ruling from the IRS that the distribution will so qualify. Assuming the spin-off so qualifies for U.S. federal income tax purposes:

 

 

ECC shareholders that have acquired different blocks of ECC common stock at different times or at different prices should consult their tax advisors regarding the allocation of their aggregate adjusted basis among, and their holding period of, shares of our common stock distributed with respect to such blocks of ECC common stock.

 

If you receive cash in lieu of a fractional share of Class A common stock as part of the spin-off, you will be treated as though you first received a distribution of the fractional share in the spin-off and then sold it for the amount of such cash. You will generally recognize capital gain or loss, provided that the fractional share is considered to be held as a capital asset, measured by the difference between the cash you receive for such fractional share and your tax basis in that fractional share, as determined above. Such capital gain or loss will be a long-term capital gain or loss if your holding period for your ECC common stock is more than one year on the distribution date.

 

Although a private letter ruling relating to the qualification of the spin-off and certain related transactions under Sections 355 and 368(a)(l)(D) of the Code will generally be binding on the IRS, the continuing validity of such ruling, if obtained, will be subject to the accuracy of factual representations and assumptions made in the ruling request. Also, as part of the IRS’s general policy with respect to rulings on spin-off transactions under Section 355 of the Code, any private letter ruling obtained by ECC will not be based upon a determination by the IRS that certain conditions which are necessary to obtain tax-free treatment under Section 355 of the Code have been satisfied. Rather, such private letter ruling will be based upon representations by ECC that these conditions have been satisfied, and any inaccuracy in such representations could invalidate the private letter ruling. As a result of this IRS policy, ECC has made it a condition to the spin-off that ECC obtain an opinion of White & Case LLP on the distribution date substantially to the effect that the spin-off, together with certain related transactions, will qualify as reorganizations under Sections 355 and 368(a)(1)(D) of the Code (which condition ECC may waive in its sole discretion). The opinion will be based upon various factual representations and assumptions, as well as certain undertakings made by ECC and us. If any of those factual representations or assumptions were untrue or incomplete in any material respect, any undertaking was not complied with, or the facts upon which the opinion is based were materially different from the facts at the time of the spin-off, the spin-off may not qualify for tax-free treatment. Opinions of counsel are not binding on the IRS. As a result, the conclusions expressed in the opinion of counsel could be challenged by the IRS, and if the IRS prevails in such challenge, the tax consequences to you could be materially less favorable.

The Spin-off

 

If the spin-off were not to qualify as a tax-free transaction, ECC would recognize taxable gain equal to the excess of the fair market value of our common stock distributed to ECC shareholders over ECC’s tax basis in our common stock. In addition, each shareholder who receives our common stock in the spin-off would generally be treated as receiving a distribution in an amount equal to the fair market value of our common stock received, which would generally result in:

 

 

Even if the spin-off otherwise qualifies for tax-free treatment under Section 355 of the Code, it may be disqualified as tax-free to ECC under Section 355(e) of the Code if 50% or more of the stock of either ECC or us is acquired as part of a plan or series of related transactions that include the distribution. For this purpose, any acquisitions of our stock or ECC’s stock within two years before or after the distribution are presumed to be part of such a plan, although ECC or we may be able to rebut that presumption. If such an acquisition of our stock or ECCs stock triggers the application of Section 355(e) of the Code, ECC would recognize taxable gain as described above with respect to the spin-off, but the spin-off would generally be tax-free to each ECC shareholder. Under the tax sharing agreement between ECC and us, we would be required to indemnify ECC against that taxable gain if it were triggered by an acquisition of our stock, stock options or assets. Additionally, pursuant to the tax sharing agreement between ECC and us, we would be required to indemnify ECC against any taxes, losses, claims and expenses resulting from the spin-off and certain related transactions failing to qualify as tax-free distributions pursuant to any provision of Section 355 or Section 361 of the Code in certain other circumstances.

 

ECC may incur some tax cost in connection with the spin-off (as a result of certain intercompany transactions or as a result of certain differences between federal, on the one hand, and foreign or state tax rules, on the other), whether or not the spin-off qualifies for tax-free treatment under Sections 355 and 368(a)(1)(D) of the Code.

 

Information Statement

 

U.S. Treasury Regulations require each ECC shareholder that (i) receives shares of our stock in the spin-off and (ii) immediately before the spin-off owned five percent or more (by vote or value) of the total outstanding stock of ECC, to attach to such shareholder’s U.S. federal income tax return for the year in which such stock is received a statement setting forth certain information related to the spin-off.

 

THE ABOVE DESCRIPTION IS NOT INTENDED TO CONSTITUTE A COMPLETE ANALYSIS OF ALL TAX CONSEQUENCES RELATING TO THE SPIN-OFF. YOU SHOULD CONSULT YOUR OWN TAX ADVISOR CONCERNING THE TAX CONSEQUENCES OF YOUR PARTICULAR SITUATION.

 

Results of the Spin-Off

 

After the spin-off, we will be an independent, publicly-traded company. Immediately following the spin-off, we expect to have outstanding approximately 42.0 million shares of our Class A common stock and approximately 47.7 million shares of our Class B common stock, based upon the number of shares of ECC Class A common stock and ECC Class B common stock outstanding as of November 30, 2007. The actual number of shares of our Class A common stock and Class B common stock to be distributed in the spin-off will depend upon the actual number of shares of ECC Class A common stock and ECC Class B common stock outstanding on the record date and will reflect any exercise of ECC options between the date the ECC

board of directors declares the dividend for the spin-off and the record date of the spin-off. In addition, no shares of our Class C common stock or Class D common stock will be outstanding immediately following the spin-off. The spin-off will not affect the number of outstanding shares of ECC common stock or any rights of ECC shareholders, although it will affect the market value of each outstanding share of ECC common stock.

 

Immediately following the spin-off, we expect to have approximately 11,500 holders of record of shares of our Class A common stock. Mr. Ergen and entities related to Mr. Ergen will be the only holders of record of our Class B common stock following the spin-off.

 

Before the spin-off, we will enter into a Separation Agreement and other agreements with ECC to effect the spin-off and provide a framework for our relationship with ECC after the spin-off. These agreements will govern the relationships among ECC and us subsequent to the completion of the spin-off and provide for the allocation among ECC and us of ECC’s assets, liabilities and obligations attributable to periods prior to our separation from ECC. The Separation Agreement, in particular, requires ECC to assume certain of ECC’s contingent corporate liabilities and debt.

 

Listing and Trading of our Common Stock

 

On the date of this information statement, we are a wholly-owned subsidiary of ECC. Accordingly, there is currently no public market for our common stock; although a “when-issued” market in our Class A common stock may develop. See “— Trading Between the Record Date and Distribution Date” below for an explanation of a “when-issued” market. We have applied to list our shares of Class A common stock on the Nasdaq Global Select Market under the symbol “SATS.” Following the spin-off, ECC Class A common stock will continue to trade on the Nasdaq Global Select Market under the symbol “DISH.”

 

Neither we nor ECC can assure you as to the trading price of ECC Class A common stock or our Class A common stock after the spin-off or as to whether the combined trading prices of our Class A common stock and the ECC Class A common stock after the spin-off will be less than, equal to or greater than the trading prices of ECC Class A common stock prior to the spin-off. The trading price of our Class A common stock may fluctuate significantly following the spin-off. See “Risk Factors — Risks Relating to Our Common Stock and the Securities Market.”

 

The shares of our common stock distributed to ECC’s shareholders will be freely transferable, except for shares received by individuals who are our affiliates and any shares distributed in respect of any ECC RSUs. Individuals who may be considered our affiliates after the spin-off include individuals who control, are controlled by or are under common control with us, as those terms generally are interpreted for federal securities law purposes. This may include some or all of our executive officers and directors. Individuals who are our affiliates will be permitted to sell their shares of our common stock only pursuant to an effective registration statement under the Securities Act of 1933, as amended, or an exemption from the registration requirements of the Securities Act, such as the exemptions afforded by Section 4(1) of the Securities Act or Rule 144 thereunder. Our affiliates will not be permitted to sell shares of our common stock under Rule 144 until 90 days after the date on which the registration statement of which this information statement forms a part is declared effective.

 

Trading Between the Record Date and Distribution Date

 

Between the record date and the distribution date, ECC Class A common stock will continue to trade on the Nasdaq Global Select Market in the regular way market. During this time, shares of ECC Class A common stock that trade on the regular way market will trade with an entitlement to receive shares of our Class A common stock distributable in the spin-off. No ex-dividend market will be established for any class of our common stock until the first trading day following the distribution date. Therefore, if you own shares of ECC common stock on the record date and thereafter sell those shares on or prior to the distribution date, you will also be selling the shares of our common stock that would have been distributed to you in the spin-off with respect to the shares of ECC common stock you sell. On the first trading day following the distribution date, shares of ECC Class A common stock will begin trading without any entitlement to receive shares of our common stock. Shares of ECC Class A common stock trade under the symbol “DISH.”

 

Between the record date and the distribution date, a when-issued trading market in our Class A common stock may develop. Our Class A common stock is expected to be listed for trading on the Nasdaq Global Select Market. The when-issued trading market would be a market for the shares of our Class A common stock that will be distributed in the spin-off. If you own shares of ECC common stock on the record date (and do not sell those shares of ECC common stock on or before the distribution date), then you are entitled to a number of shares of the same class of our common stock based upon the number of shares of such class of ECC common stock you held at that time. If you own ECC Class A common stock, you may trade this entitlement to receive shares of our common stock, without the shares of ECC Class A common stock you own, on the when-issued trading market. We expect when-issued trades of our Class A common stock to settle within three trading days after the distribution date. On the first trading day following the distribution date, any when-issued trading with respect to our Class A common stock will end and regular way trading will begin. If when-issued trading occurs, the listing for our Class A common stock is expected to be under trading symbols different from our regular way trading symbols. Following the distribution date, shares of our Class A common stock are expected to be listed on the Nasdaq Global Select Market under the trading symbol “SATS.” If the spin-off does not occur, all when-issued trading will be null and void.

 

Conditions to the Spin-Off

 

We expect that the spin-off will be effective on the distribution date, provided, that among other conditions described in this information statement, the following conditions shall have been satisfied or waived by ECC under the Separation Agreement, each of which conditions may be waived by ECC in its sole discretion (other than the effectiveness of our registration statement on Form 10 and other required material regulatory approvals):

 

 

 

 

The fulfillment of the foregoing conditions will not create any obligation on ECC’s part to effect the spin-off. ECC has the right not to complete the spin-off if, at any time, ECC’s board of directors determines, in its sole discretion, that the distribution is not in the best interests of ECC or its stockholders or that market conditions are such that it is not advisable to separate EHC from ECC.

 

Reasons for Furnishing this Information Statement

 

This information statement is being furnished solely to provide information to ECC shareholders who will receive shares of our common stock in the spin-off. It is not to be construed as an inducement or encouragement to buy or sell any of our securities or any securities of ECC. We believe that the information contained in this information statement is accurate as of the date set forth on the cover. Changes to the information contained in this information statement may occur after that date, and neither our company nor ECC undertakes any obligation to update the information except in the normal course of our respective public disclosure obligations and practices.

 

SELECTED HISTORICAL AND UNAUDITED PRO FORMA COMBINED
AND ADJUSTED FINANCIAL DATA

 

The following tables present selected historical information relating to our combined financial condition and results of operations for the nine months ended September 30, 2007 and 2006 and the past five years. The financial data for the three years ended December 31, 2006 has been derived from our audited combined financial statements for the corresponding periods. Data for the other periods presented has been derived from unaudited information. The data should be read in conjunction with our combined financial statements and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included elsewhere herein. Our historical and pro forma financial data included in this information statement may not be indicative of our future performance and does not necessarily reflect what our financial condition and results of operations would have been had we operated as a separate, stand-alone entity during the periods presented, particularly since changes will occur in our operations and capitalization as a result of our spin-off from ECC. Our audited combined financial statements reflect the historical financial position and results of operations of entities included in consolidated financial statements of ECC, representing almost exclusively ECC’s set-top box business, using the historical results of operations and historical bases of assets and liabilities of this business. Our historical combined financial statements reflect sales to ECC at cost and do not include certain satellites, uplink and satellite transmission assets, real estate and other assets and related liabilities that will be contributed to us by ECC in the spin-off. These assets and liabilities, which will primarily comprise our fixed satellite services business, have been separately audited and are included in the Statement of Net Assets to be Contributed by ECC and Unaudited Pro Forma Combined and Adjusted Financial Information included herein. The financial condition and results of operations of our fixed satellite services business have not been included in our historical combined financial statements because our fixed satellite services business was operated as an integral part of ECC’s subscription television business and did not constitute a “business” in the historical financial statements of ECC. Our historical financial data also does not include financial information of Sling Media, Inc., which was recently acquired by ECC and will be contributed to us in the spin-off. Sling Media’s audited consolidated financial statements are included elsewhere in this information statement, and its historical financial information also has been included in our “Unaudited Pro Forma Combined and Adjusted Financial Information.”