**CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL  PORTIONS OF THIS DOCUMENT HAVE
BEEN REDACTED AND HAVE BEEN SEPARATELY FILED WITH THE SECURITIES AND EXCHANGE
COMMISSION.**

 

 

 

Exhibit 10.2

 

AMENDMENT TO MASTER SERVICES AGREEMENT

 

THIS AMENDEMENT TO MASTER SERVICES AGREEMENT (this “Amendment”) dated August 2,
2002 is made by and between Hilton Hotels Corporation, a Delaware corporation
(hereinafter referred to as “Hilton”), and LodgeNet Entertainment Corporation, a
Delaware corporation (hereinafter referred to as “LodgeNet”) in reference to
that certain Master Services Agreement dated October 9, 2000 by and between
Hilton and LodgeNet (the “MSA”).

 

W I T N E S S E T H:

 

WHEREAS, Hilton and LodgeNet are members of InnMedia LLC, a Delaware limited
liability company (“InnMedia”);

 

WHEREAS, Hilton and InnMedia entered into that certain Content Carriage
Agreement as the 9th day of October, 2000 (the “CCA”), which is being terminated
concurrently herewith, and Hilton and LodgeNet desire for LodgeNet to provide to
Hilton and its Participating Hotels under the MSA certain of the services
previously provided by InnMedia under the CCA, as herein provided; and

 

WHEREAS, Hilton and LodgeNet desire to make other changes to the terms of the
MSA to further clarify and refine their obligations to one another thereunder,
including the extension for six (6) months of certain Hotel Service License
Agreements with respect to certain Owned Hotels, as further provided herein.

 

NOW, THEREFORE, the parties agree as follows:

 

1.        Capitalized terms not otherwise defined herein shall have the meanings
given such terms in the MSA.

 

2.        The following capitalized terms shall have the following definitions:

 

“Archived Television Service” shall mean delivery of non-movie video content,
including content originally distributed via broadcast, satellite or cable
television networks, which service shall be offered to guests on a pay-per-use
basis, provided however that LodgeNet shall only be required to provide such
services in Canada to the extent doing so would not affect LodgeNet’s exemption
from licensure under the Canadian Broadcast Act and the rules promulgated
thereunder by the Canadian Radio-television and Telecommunications Commission.

 

“Content” shall mean the content delivered as part of a VOD Service or New Media
Service.

 

“Internet Access Service” shall mean a service consisting of generally available
access to the Internet through a television-based Internet browser, with at
least the specifications and functionality of the Espial browser v.4.86
currently being implemented by LodgeNet, as browsers for such access may be
enhanced from time to time (“New Browser”), via a high-speed connection.  The
Internet Access Service shall be capable of accessing AOL, Yahoo, MSN, and
Hotmail e-mail services and hilton.com and hhonors.com, to the extent they
utilize formats generally accessible to television-based Internet browsers.

 

“Link to Web Site Service” shall mean a service consisting of direct sandboxed
links to (i) hilton.com, hhonors.com, brand.com (i.e., Hilton-associated brands
such as doubletree.com, embassy.com, etc.), and Participating Hotel sites
(collectively, “Hotel Links”) and (ii) up to four (4) links per Participating
Hotel to Hilton Partners (as defined below) (the “Partner Links”), in

 

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each case to the extent provided by the GUI Description (as hereinafter defined)
and to the extent they utilize formats generally accessible to television-based
Internet browsers.  The Hotel Links shall be accessed via a bar or icon on the
main menu and/or under the “Hotel Services” menus in Hilton’s discretion and the
Partner Links shall be accessed via a bar or icon under the “Hotel Services”
menus.  The Hotel Links and Partner Links shall only be available for
Participating Hotels receiving the Internet Access Service, and shall be offered
to guests on a free basis, provided none of Hilton, HHonors, any affiliate of
either or any Hotel Partner charges LodgeNet a fee.  LodgeNet shall implement
the necessary sandboxing controls but shall have no responsibility for designing
the linked sites to ensure the adequacy and appearance of display content.  The
parties agree to negotiate in good faith to reimburse LodgeNet for costs
actually incurred by it as a result of any unreasonably frequent changes in the
Links.  “Hilton Partners” shall mean companies that enter into agreements with
Hilton, pursuant to which such companies provide access to their web sites. 
Notwithstanding the foregoing, portals containing links to the Internet at
large, commercial e-mail service sites and sites providing streaming videos,
music, games or archived television content on a pay-per-view, pay-per-day,
subscription, or other pay basis shall not be Partner Links and LodgeNet shall
have no obligation to display or provide access to such portals or links.

 

“Marketing Materials” shall include New Media Marketing Materials.

 

“New Media Marketing Materials” shall include specialized promotional
literature, demonstration software and trade show materials, as appropriate, for
the New Media Services.

 

“New Media Services” shall mean Archived Television Service, Internet Access
Service, Link to Web Site Service and the TV Portal Service.

 

“Services” shall mean any of the VOD Services and New Media Services, and
additional services that may be implemented by LodgeNet from to time in
Participating Hotels, pursuant to the MSA.

 

“Superior Content or Services” shall mean commercially available
television-based content or services, including but not limited to software,
that (i) is deployed in more than 25,000 rooms in the United States or Canada or
is being actively deployed to reach more than 25,000 rooms by a service provider
that services more than 25,000 rooms (regardless of the number of rooms in which
it is deployed by such servicer); and (ii) has more functionality, has more or a
wider range of content, operates faster or more efficiently, or has a higher
economic value to the hotel taking into account all economic benefits of the
relationship between the hotel and the service provider.  This clause shall not
be implicated by an immaterial difference or improvement.

 

“Superior Technology” shall mean a system that is deployed in more than 25,000
rooms in the United States or Canada or is being actively deployed to reach more
than 25,000 rooms by a service provider that services more than 25,000 rooms
(regardless of the number of rooms in which it is deployed by such servicer);
and (i) delivers content or services via the television with greater reliability
or more functionality, or (ii) delivers substantially equivalent services at a
lower cost per equipped room to the Hotel.  This clause shall not be implicated
by an immaterial difference or improvement.

 

“TV Portal Service” shall mean a service consisting of a television-based
Internet portal accessible by the guest at no charge which provides limited
aggregated content generally including some or all of the following information
categories;  news, sports, weather and financial information LodgeNet shall make
commercially reasonable efforts to ensure that content shall be dynamically
refreshed at a minimum of every 30 minutes.

 

3.        Except for the definition of what constitutes VOD Services, the term
“VOD Services” In the MSA is deleted and  “Services” inserted in lieu thereof in
each instance.  Nothing in the MSA shall preclude Hilton, and nothing in any
HSLA shall preclude any Participating Hotel, from entering into agreements to
offer non-television based services of the same or similar nature, except for
agreements with third parties for the provision of streaming

 

2

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videos, music, games or archived television content, which shall be subject to
the exclusivity terms of Section 1.1(a) of the MSA.

 

4.        Subject only to the limitations of this Paragraph, LodgeNet shall
provide the TV Portal Service and Internet Access Service meeting all of the
requirements of this Agreement that is available for utilization and access at
all Participating Hotels.  LodgeNet shall make the Parental Control
functionality set forth in Section 5 of Schedule A applicable to the Internet
Access Service and will use commercially reasonable efforts to evaluate
technologies that limit access to specific sites or categories of sites. 
CONFIDENTIAL MATERIAL REDACTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION.  In the event LodgeNet is no longer able to provide actual
invoices for each Participating Hotel, the Parties will review and adjust
connectivity billing by mutual agreement.

 

5.        The Parties agree to negotiate in good faith with the goal of
finalizing within sixty (60) days of the date hereof the terms under which
Hilton shall have the right to provide connectivity required to provide the
Internet Access Service, the TV Portal Service, the Link to Web Site Service,
and any other Internet-dependent Service at any Participating Hotel; provided,
the terms and conditions of said connectivity provisioning are on terms,
conditions and service level guarantees as or more favorable than LodgeNet could
otherwise obtain.

 

6.        LodgeNet shall be responsible for the design and implementation of the
initial screen (i.e., the first screen or channel that appears when the
television is turned on) and all graphical user interfaces (“GUI”), consisting
of multiple user controlled navigation and selection screens for the Services in
accordance with the GUI requirements provided by a letter dated July 31, 2002
from LodgeNet to Hilton (the “GUI Description”) and subject to Hilton’s approval
in its discretion of the Hilton-specific implementation and Hilton-specific
appearance of the initial screen and such GUI.  LodgeNet shall also be
responsible for designing and providing the functionality of the remote control
and/or keyboarding devices, which shall be subject to Section 20.1(i) of the
MSA.

 

7.        LodgeNet agrees to use commercially reasonable efforts to assure that
all commercial matter or advertisements it, or any third party acting on its
behalf, inserts as part of the Services (i) are not offensive in nature (subject
to Hilton’s approval in its sole discretion within ten (10) days of receipt by
Hilton of all necessary materials), (ii) do no suggest an affiliation between
Hilton and advertiser unless explicitly authorized in writing in advance by
Hilton, (iii) are generally compatible with the commercial standards of the
Participating Hotels, (iv) do not violate any agreements that Hilton has with
any third party; (v) do not otherwise adversely affect Hilton’s relationships
with any third party; and (vi) are not competitive or predatory to Hilton’s
business or the business of any Participating Hotel.  Hilton shall have the
right in its sole discretion to disapprove any such materials within ten (10)
days of receipt of such materials.

 

8.        LodgeNet agrees to provide the New Media Services according to the
following specifications, unless otherwise agreed by and between the parties:
CONFIDENTIAL MATERIAL REDACTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION.

 

9.        The following is added to Section 1.7(a) of the MSA:

 

3

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Notwithstanding the foregoing, in regard to New Media Services, LodgeNet shall
(i) use its commercially reasonable efforts to continue to develop and enhance
the New Media Content and Services on an ongoing basis using and incorporating
new content concepts and delivery formats to provide New Media Content and
Services, and (ii) to offer and, if accepted, provide such enhancements to
Participating Hotels on an ongoing basis.

 

10.      Section 1.7(b) of the MSA is deleted in its entirety and the following
inserted in lieu thereof:

 

In the event LodgeNet releases new products or services to another hotel or
company, CONFIDENTIAL MATERIAL REDACTED AND FILED SEPARATELY WITH THE SECURITIES
AND EXCHANGE COMMISSION, LodgeNet agrees to make any and all products or
services available to Hilton and the Participating Hotels.  CONFIDENTIAL
MATERIAL REDACTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION.

 

11.      The following is added to Section 5.2(d) of the MSA after “Services
usage reports” and before “as the [sic] Hilton may reasonably request”: 
“including usage and revenue, if any, from other Service-based sources in
Participating Hotels (i.e., revenues generated by e-commerce, ad insertions,
banner ads, and the like)”.  LodgeNet shall provide such reports within
twenty-one (21) days of the end of each calendar month in electronic form to
Hilton and the relevant Participating Hotel in the form presently being
provided.  Reports to Hilton shall also include detail by Participating Hotel of
the guest buy or use of each Service which is a pay Service as well as the
non-pay services of TV Portal, Link to Website, video checkout and guest survey
(listed by service).  Within thirty (30) days of the execution of this
Amendment, the Parties will mutually agree upon the report format and content
for the additional information to be provided to Hilton.  Without limitation to
other rights of Hilton or the Participating Hotel hereunder, in the event of a
failure by LodgeNet to timely provide any such reports, Hilton or the relevant
Owned or Managed Hotel may withhold Allocation Shares otherwise payable to
LodgeNet unless and until LodgeNet provides all such reports.

 

12.      Section 5.3 of the MSA is hereby deleted in its entirety and the
following inserted in lieu thereof:

 

Notwithstanding anything to the contrary contained in this Agreement, the
schedules, or exhibits hereto, the parties agree to review Usage Fees annually
at the beginning of each calendar year and adjust them, up or down, as necessary
at either the individual Participating Hotels or collectively as the case may be
to accurately reflect the “market rate” for the Services. The market rate shall
reflect the prices charged for comparable services in other hotels within the
Participating Hotel’s competitive set, and the need for adjustment may vary from
service to service.

 

13.      The following is inserted after the first sentence and before the
second sentence of Section 10.2 of the MSA:

 

During the pendency of any default by LodgeNet hereunder, the Participating
Hotel in its sole discretion may continue to use any and all LodgeNet Equipment
and LodgeNet shall continue to provide all Services required hereunder.

 

4

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14.      The following is added to the MSA as a new Subsection 18.3(f):

 

Privacy and Confidentiality Policy.  LodgeNet shall ensure that the Services are
provided subject to Hilton’s standard Site Usage and Information Agreement,
which may be modified by Hilton from time to time in its discretion.  LodgeNet’s
obligation to comply with any substantive modifications to such Agreement that
may affect its systems shall be subject to receipt of such modifications and
reasonable periods to come into compliance therewith using commercially
reasonable efforts.

 

15.      Sections 7(a) and 8 of Schedule A of the MSA are hereby deleted and the
following inserted in lieu of Section 8:

 

8. Free-to-guest (“FTG”) television programming, on a non-exclusive basis,
including but not limited to the television channels carrying cable, satellite
and network programming as designated by the Participating Hotels, which
LodgeNet shall offer to each Participating Hotel at no less than the Hilton
minimum standard as it may be changed from time to time.  LodgeNet will provide
FTG television programming under the terms outlined on Schedule C-1 until and/or
unless a Participating Hotel selects their local cable television provider or
another provider. In the event the Participating Hotel elects to drop LodgeNet
as the FTG provider after LodgeNet has already begun to provide such
programming, the Participating Hotel shall make a payment to LodgeNet calculated
in accordance with the following schedule. The payment shall be calculated by
reducing the rack price applicable to the number of FTG channels in place at the
Participating Hotel by the product of the monthly reduction times the number of
months that have passed since the date of the Participating Hotel’s HSLA. 
Following any payment required by this paragraph, LodgeNet shall remove its FTG
equipment from the Participating Hotel and will take all commercially reasonable
steps necessary to ensure that such provider can provide the FTG television
programming to the Participating Hotel as soon as reasonably practicable.

 

CONFIDENTIAL MATERIAL REDACTED AND FILED SEPARATELY WITH

THE SECURITIES AND EXCHANGE COMMISSION.

 

16.      The first sentence of Section 19.2 of the MSA is hereby deleted and the
following inserted in lieu thereof: “LodgeNet shall be obligated to provide the
Services and functionality described in Schedule E and Schedule E-1 in
accordance with the deadlines set forth therein.  LodgeNet agrees that the time
set forth in each deadline in Schedule E and E-1 is of the essence.”  Schedule
E-1 is attached hereto and hereby incorporated herein by this reference. The
words “achieve the following targets” in the first sentence of Schedule E of the
MSA are hereby deleted and “meet the deadlines” inserted in lieu thereof.

 

17.      The covenants referred to in Section 19.3 of the MSA are conformed to
be those terms and conditions contained in LodgeNet’s senior bank credit
facility as the same may be amended, replaced and/or superceded from time to
time.

 

5

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18.           The title to Section 19.4 of the MSA is hereby amended to add “and
Hardware” after “Disabling of Software” and a comma is inserted after "providing
the VOD Services to any Participating Hotel" and before "absent a temporary
restraining order".

 

19.      Section 20.1(i) of the MSA is hereby deleted and the following inserted
in lieu thereof:

 

In total, if during the Term, LodgeNet CONFIDENTIAL MATERIAL REDACTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

 

20.      The word “Master” in the first sentence of the second paragraph of
Section 20.1(o) of the MSA is hereby deleted and “Hotel” inserted in lieu
thereof.

 

21.           The following new Section 20.1(p) is hereby added to the MSA
following Section 20.1(o): “In the event LodgeNet fails to meet or maintain
compliance with any Milestone as specifically set forth on Schedule E-1 within
the time period specified in Paragraph 4(c) hereof, the (i) as to any affected
Participating Hotel or (ii) in total if such failure affects any CONFIDENTIAL
MATERIAL REDACTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION or CONFIDENTIAL MATERIAL REDACTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION or more Participating Hotels."

 

 

22.           The following new Section 20.1(q) is hereby added to the MSA
following Section 20.1(p):  “In total, if such failure affects any CONFIDENTIAL
MATERIAL REDACTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION Hotels or CONFIDENTIAL MATERIAL REDACTED AND FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION or more Participating Hotels or as to any
affected Participating Hotel, in the event LodgeNet fails to meet the
availability standard set forth in Section 26.1 for any period of CONFIDENTIAL
MATERIAL REDACTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION consecutive months.

 

 

23.           Section 26.1 of the MSA is deleted and the following inserted in
lieu thereof:  LodgeNet shall track Services uptime as follows: “uptime” as the
CONFIDENTIAL MATERIAL REDACTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION.  If the foregoing uptime commitment is not met, the
affected Participating Hotel may CONFIDENTIAL MATERIAL REDACTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. On a quarterly basis,
LodgeNet will provide Hilton and the respective Participating Hotel with a
written report showing total detailed Service statistics, including
availability, and the total number of usage access

 

6

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connections attempted and completed and failed.  Failure to deliver an accurate
report by the 21st day of the month following the end of each quarter shall
entitle the respective Participating Hotel(s) to CONFIDENTIAL MATERIAL REDACTED
AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

 

24.      The following new sentence is added at the end of Section 32.3 of the
MSA: “Notwithstanding the foregoing, the Parties agree that any dispute
concerning the availability of Superior Technology or Superior Content or
Services shall be resolved exclusively by binding arbitration under the
Streamlined Arbitration Rules and Procedures of JAMS/Endispure administered in
Los Angeles, California. There shall be a single arbitrator, who shall be an
industry professional to be mutually agreed upon by the Parties or, in the event
the Parties are unable to agree, appointed from a list of former judicial
officers.  The parties shall have the right to obtain reasonable discovery by
means of requests for the production of documents and oral depositions in
advance of any hearing, and each party waives the right to trial by jury in such
proceedings. The arbitrator’s authority shall be limited to determining whether
Superior Technology or Superior Content or Services is available. The cost of
the arbitration shall be split evenly between the Parties, with each Party
bearing its own attorneys’ fees and costs.

 

25.      Schedule C of the MSA is hereby deleted and the attached Schedule C
inserted in lieu thereof.

 

26.      The first paragraph of Schedule C-1 of the MSA is hereby deleted in its
entirety and the following inserted in lieu thereof. 

 

Participating Hotels receiving FTG from LodgeNet shall have several programming
options designed to meet the Hilton Brand Standards for both Limited Service and
Full Service Participating Hotels: The “Standard Package” for the programming
delineated in such being required in all Hilton Hotels is CONFIDENTIAL MATERIAL
REDACTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.  The
FTG Programming Fees include hardware, installation and on-going service and
maintenance. Free to guest programming is provided on a property by property
non-exclusive basis and can be terminated by any Participating Hotel with 30
days’ notice as provided in, and subject to any payment required by, Section 8
of Schedule A of the MSA.  Participating Hotels may add and subtract any and all
programming channels at any time and from time to time at their sole discretion,
without requiring any extension to such Participating Hotel’s FTG agreements
subject to appropriate adjustment of price based on actual changes in costs
payable by LodgeNet to third parties and required or deleted hardware.

 

27.      Schedule C-2 of the MSA is hereby deleted and the attached Schedule C-2
inserted in lieu thereof.

 

28.      Schedule C-4 of the MSA is deleted in its entirety.

 

29.      Schedule D is hereby deleted and the attached Schedule D inserted in
lieu thereof.

 

30.      The attached Schedule E-1 is hereby inserted immediately following
Schedule E.

 

31.      Drafting and Preparation.  Each party has cooperated and participated
in the drafting and preparation of this Amendment.  Therefore, if any
construction is to be made of this Amendment of any of its terms, both parties
shall be construed to be equally responsible for the drafting and preparation of
same.

 

32.      Further Assurances.  LodgeNet will provide the terms of this Amendment
to every Participating Hotel and use its commercially reasonable efforts to
obtain fully-executed originals of an amendment to each such Participating
Hotel’s Hotel Service License Agreement or other agreement with LodgeNet to
cover New Media Services and with terms no less favorable than the terms
contained herein as expeditiously as practicable.  LodgeNet and Hilton further
agree to extend by six (6) additional months the Term of the Hotel Service
License Agreement for Participating Hotels that are listed on Schedule F-2
attached hereto and incorporated herein by this reference and to use
commercially reasonable efforts to document such extension.  Hilton and LodgeNet
agree to do any further acts and execute such additional documents as the other
may reasonably require to confirm this Amendment and carry out the purpose of
this Amendment.

 

7

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33.      Titles and Subtitles.  The titles and subtitles used in this Amendment
are used for convenience only and are not considered in construing or
interpreting this Amendment.

 

34.      Faxed Signature Pages.  Any signature page delivered by a fax machine
or telecopy machine shall be binding to the same extent as an original signature
page, with regard to any agreement subject to the terms hereof or any amendment
thereto.  Any party who delivers such a signature page agrees to promptly
deliver an original counterpart to any party which requests it.

 

35.      Counterparts.  This Amendment may be executed in any number of
counterparts, and shall be effective and enforceable once all Parties have
signed the Amendment.

 

36.      Severability.  It is agreed that if any provision of this Amendment
shall be determined to be void by any court of competent jurisdiction, then such
determination shall not affect any other provision of this Amendment and all
such other provisions shall remain in full force and effect, and it is the
intention of the parties hereto that if any provision of the license is capable
of two constructions, one of which would render the provision void and the other
of which would render the provision valid, then the provision shall have the
meaning which renders it valid.

 

37.      Entire Agreement.  This Amendment contains the full and complete
understanding of the parties concerning the subjects contained herein and
supersedes any and all prior written or oral agreements between the parties and
cannot be amended except in writing signed by both parties.

 

38.      Attorneys’ Fees.  In the event Hilton or LodgeNet breaches any of the
terms of this Amendment, whereby the party not in default employs attorneys to
protect or enforce its rights hereunder and prevails, then the defaulting party
agrees to pay the other party reasonable attorneys’ fees so incurred by such
other party.

 

The remainder of this page is intentionally left blank.

 

8

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IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed as of date first above written.

 

HILTON HOTELS CORPORATION,

 

LODGENET ENTERTAINMENT CORPORATION,

a Delaware corporation

 

a Delaware corporation

 

 

 

By:

/s/ Dieter H. Huckestein

 

By:

/s/ Scott C. Petersen

 

 

Dieter H. Huckestein

 

 

Scott C. Petersen

 

Its: Executive Vice President

 

 

Its: President

 

9

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SCHEDULE C

 

Allocation of Usage Fees

 

The Participating Hotel’s Allocation of Usage Fees shall be determined monthly
and shall be based on CONFIDENTIAL MATERIAL REDACTED AND FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION.  Usage Fees, as defined in Section 5 of
the MSA, shall be allocated between the Participating Hotels and LodgeNet as
follows:

 

 

VIDEO ON DEMAND SERVICES

 

CONFIDENTIAL MATERIAL REDACTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION.

 

MUSIC ON DEMAND SERVICES

 

CONFIDENTIAL MATERIAL REDACTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION.

 

GAMES ON DEMAND SERVICES

 

CONFIDENTIAL MATERIAL REDACTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION.

 

NEW MEDIA SERVICES

 

CONFIDENTIAL MATERIAL REDACTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION.

--------------------------------------------------------------------------------

 

SCHEDULE C-2

 

VOD SERVICES PRICING SCHEDULE

 

VOD PRICING SCHEDULE

 

CONFIDENTIAL MATERIAL REDACTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION.

 

MUSIC ON DEMAND PRICING SCHEDULE

 

CONFIDENTIAL MATERIAL REDACTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION.

 

 

GAMES ON DEMAND SCHEDULE

 

CONFIDENTIAL MATERIAL REDACTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION.

 

--------------------------------------------------------------------------------

 

NEW MEDIA PRICING SCHEDULE

 

Subject to change from time-to-time pursuant to Section 5.2(b) of the MSA

 

 

CONFIDENTIAL MATERIAL REDACTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION.

 

--------------------------------------------------------------------------------

 

SCHEDULE D

 

Equipment (Systems, Hardware and Software)

to be provided to hotels by LodgeNet

 

LodgeNet shall install or have available for the Participating Hotels all of the
other Equipment identified on this Schedule D.

 

1)   HOTEL EQUIPMENT

 

 

a)

Head End Network Backbone with the following qualities:

 

 

Includes all switching equipment, head-end cabling and network equipment
necessary to provide communications between all the devices within the hotel
head end for services delivered on the RF based coaxial network.

 

 

 

 

 

b)

Digital Content Server with the following qualities:

 

 

i)

Capable of storing and decoding video and audio files.

 

 

ii)

Capable of generating a signal suitable for MATV system distribution.

 

 

iii)

Capable of concurrently providing CONFIDENTIAL MATERIAL REDACTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

 

 

iv)

Configured for sufficient storage for VOD services CONFIDENTIAL MATERIAL
REDACTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

 

 

v)

RAID fault protected storage.

 

 

vi)

Capable of providing fast forward, rewind and pause functionality in the guest
rooms.

 

 

 

 

 

c)

Where the Internet Access Service is provided, Web Browser ports with the
following qualities:

 

 

i)

Capable of concurrently providing CONFIDENTIAL MATERIAL REDACTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. of guest rooms with
interactive browsing.

 

 

ii)

Capable of generating a signal suitable for MATV system distribution.

 

 

iii)

Web Browsing Software operating on Web Browser ports that will enable the
display of content generally accessible by television based Internet Browsers.

 

 

 

 

 

d)

Interactive ports with the following qualities:

 

 

i)

Capable of concurrently providing CONFIDENTIAL MATERIAL REDACTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

 

ii)

Capable of generating a signal suitable for MATV system distribution.

 

 

 

 

 

e)

Nintendo 64 Gateway Array with the following qualities:

 

SCHEDULE D

 

1

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Capable of concurrently providing a minimum of CONFIDENTIAL MATERIAL REDACTED
AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. of guest rooms
with N64 Games on Demand.

 

 

 

 

 

f)

UNIX Host Computer (UHC) with the following qualities:

 

 

Install and utilize a control system to manage video resources, control two-way
communications, interface with the property management system, and provide back
office interfaces for operations and accounting reports, server functions for
various content and navigation display functions.

 

 

 

 

g)

Head end to Room RF Communications with the following qualities:

 

 

Includes modulators, cabling, keystroke router, force tuners, RF Modem back
channel, satellite receivers for free-to-guest programming (If contracted, as
per Schedule A), any equipment and cabling necessary to modulate or transmit
data to hotel rooms over the RF network, as well as any equipment that is
distributed throughout the hotel (amps, taps, and splitters). LodgeNet will be
responsible for upgrading and maintaining the hotel cable plant but will charge
the Participating Hotels for associated costs.

 

 

 

 

 

h)

Video Cassette Players with the following qualities:

 

 

An appropriate number of video cassette players sufficient to handle video
content for VOD Services that cannot be provided digitally due to studio
restrictions.

 

 

 

 

 

i)

Music On Demand Jukebox Software Application

 

 

 

 

 

j)

Local Asset Management Module

 

 

Database containing the metadata for any digital assets, e.g. language-specific
data for multi-lingual menuing, and a database containing a list of all the
assets installed on the system, with their associated metadata and location
information.  The Local Asset Management Module must be remotely accessible.

 

 

 

 

 

k)

Remote Content Receiver Module

 

 

i)

Server that receives digital assets from the Content Management Module in the
operations center; able to deploy content onto the hotel head end.

 

 

ii)

Initial installation of infrastructure will support updates of its resident
large file content stores via satellite network.

 

 

iii)

Secure IP terrestrial backup system.

 

 

 

 

 

l)

Data Collection Module

 

 

 

Receives and stores customer and transactional data from VOD Services deployed
in the Hotel.

 

2

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2)   GUESTROOM EQUIPMENT

 

a)           RF Communications Module

The Guest Terminal (set top, set back or integrated terminal) capable of force
tuning and keystroke transport.

 

b)          Remote control and game controller.

 

c)           Wireless keyboard.

 

3)   NETWORK OPERATIONS CENTER EQUIPMENT

 

a)     Content Management system

i)                          Digital library that hosts all digital content,
allows deliverable or copyright assets to be registered on the system, controls
their deployment to head ends/data centers, and tracks content stored at each
Participating Hotel.

ii)                       Produces content packages that are deployed and
unpacked at each Participating Hotel (content must be encoded for remote
transmission).

iii)                    Provides alternative delivery mechanism where secure IP
terrestrial and/or satellite delivery is not accessible.

 

b)    Digital Rights Management System

Tracks royalty payments to content providers (distributors/studios), records the
terms of content provision to the Participating Hotels (e.g. pay-per-view, pay
once – multiple view, etc.) for VOD Services.

 

c)     Electronic Copyright Management System

Electronically protects Services’ content for distribution to and within the
Participating Hotels and manages encryption keys for VOD Services.

 

d)    Content Publishing System

Delivers content for VOD Services to remote properties and groups of properties
(queuing system that resolves whether content is distributed terrestrially or
via satellite to the Participating Hotels).

 

e)     Content Compilation System

Encodes and composes new digital assets, including quality assurance and testing
for VOD Services.

 

f)     Reporting Module.

Produces and distributes reports to internal departments and external
institutions (e.g. guest behavior data, movie purchases, financial data, etc.)
for VOD Services.

 

3

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g)    Operations Center to Hotel Communications

Provides terrestrial and satellite connectivity from the Network Operations
Center to the Participating Hotel.

 

4

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SCHEDULE E-1

New Media Milestones

 

LodgeNet shall meet the deadlines in providing the Services to the Participating
Hotels set forth below ("Milestones"):

 

1)          TV Internet Browser Upgrade.    LodgeNet shall have the New Browser
ready for deployment to eligible Participating Hotels by CONFIDENTIAL MATERIAL
REDACTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. and
will deploy said New Browser to such Participating Hotels as quickly as is
reasonably practicable, but in no event later than CONFIDENTIAL MATERIAL
REDACTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. 
Hilton and LodgeNet will cooperate in good faith to agree on a disclaimer notice
regarding the existing browser's limitations, which disclaimer shall, upon
Hilton's request, appear on each of the "Web Access" and "Full Internet Access"
screens.

 

2)          Graphical User Interface Design for Hilton.    CONFIDENTIAL MATERIAL
REDACTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

LodgeNet begins implementation of any hotel or property-specific GUI for any
other LodgeNet customer or hotel, and shall not delay full implementation of the
HGUI by allocating resources to any other LodgeNet customer or hotel.

 

3)          On-Screen Controls ("OSC").    CONFIDENTIAL MATERIAL REDACTED AND
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

4)          Multilingual.    CONFIDENTIAL MATERIAL REDACTED AND FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

5)          Consequences of Failure To Meet Above Milestones:      CONFIDENTIAL
MATERIAL REDACTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION.

 

Subscription-Based Cable Programming Test.    CONFIDENTIAL MATERIAL REDACTED AND
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

5

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Hilton's Customer Relationship Management Initiative ("HCRM").    CONFIDENTIAL
MATERIAL REDACTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION.

 

6

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SCHEDULE F-1

 

CONFIDENTIAL MATERIAL REDACTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION.

 

7

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SCHEDULE F-2

 

CONFIDENTIAL MATERIAL REDACTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION.

 

8

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