Document:

**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

 

1

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

	

   

  	

   

  	

  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

 

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

 

g)    Operations Center to Hotel

Communications

Provides terrestrial and satellite connectivity from the Network

Operations Center to the Participating Hotel.

 

4

 

 

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

 

Hilton's Customer Relationship Management Initiative ("HCRM").    CONFIDENTIAL

MATERIAL REDACTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE

COMMISSION.

 

6

 

SCHEDULE F-1

 

CONFIDENTIAL MATERIAL REDACTED

AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

7

 

SCHEDULE F-2

 

CONFIDENTIAL MATERIAL REDACTED

AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

8Exhibit 10.1

         Agreement with Anthony Welch, as amended CONSULTING AGREEMENT

This Consulting Agreement (the "Agreement") made as of June 20, 2002 by and
between GoldenTree Capital, LLC ("GTC" ), to 1739 University Ave. #339, Oxford,
MS 38655 and Legends of the Faith, Inc. ("Company").

WITNESSETH

WHEREAS, the Company requires and will continue to require consulting services
relating to Mergers, Acquisitions, Private Placement Offerings, Public
Filings/Registration Statements, and Capital Formation Strategies for the
Company; and

WHEREAS, the Company wishes to induce GTC to provide these consulting services
to the Company,

WHEREAS, GTC wishes to provide Company with these consulting services.

NOW, THEREFORE, in consideration of the mutual covenants hereinafter stated, it
is agreed as follows:

1. APPOINTMENT

The Company hereby engages GTC and GTC agrees to render various consulting
services to the Company upon the terms and conditions hereinafter set forth.

2. TERMS

The term of this Agreement began as of the date of this Agreement, and shall
terminate 1 year from the date of this Agreement, unless earlier terminated as
provided below. At any time following the first 6 months, this Agreement may be
terminated by either party with 30 days written notice.

3. SERVICES

During the term of this Agreement, GTC shall provide advice to, undertake for
and consult with the Company concerning Mergers, Acquisitions, Private Placement
Offerings, Public Filings/Registration Statements, and Capital Formation
Strategies.

We understand that the Company anticipates several acquisitions and related
endeavors over the term of this agreement and desires to receive consulting,
facilitation, and management services provided by GTC relating to these
acquisitions and related endeavors.

We understand that it is the Company's intention to go public by a selling
stockholder registration statement on Form SB-2 and subsequently have those
shares traded on the NASDAQ: OTCBB ("NASDAQ Bulletin Board") or through a Merger
Agreement with a pre-existing company traded the AMEX ("American Stock
Exchange") or through a direct application to the AMEX exchange when the Company
qualifies.

GTC agrees to provide the following services, and additional services
contemplated thereby: Advise the Company on strategy to obtain funding through a
private placement or loan to the Company. Such loan may be secured by up to
2,000,000 shares held by J & J Holdings, Inc. The amount of the loan should be a
minimum of $250,000 up to a maximum of $500,000. The Company, at its discretion,
may award GTC 50,000 shares of stock in Legends of the Faith, Inc for the advice
and strategy received.

1) Assist Company with short-range and long-range strategic planning to develop
and enhance the Company's products and services;

2) Assist Company in locating a licensed Broker-Dealer to market their offering.
The Company will be solely responsible for convincing a Broker-Dealer to market
their offering and for compensation payable to the Broker-Dealer.

3) Advise Company on various fundraising and capital formation strategies.

4) Advise Company on strategy related to Company's Public Offerings and Private
Offerings under Regulation D.

5) Assist Company in preparation of documents concerning Company's Private
Placement Memorandums under Regulation D.

6) Assist Company in preparation of documents concerning the Company's selling
stockholder registration statement on Form SB-2.

7) Assist Company in preparation of documents concerning Form 15c211 to be filed
with the NASD for subsequent listing on the OTCBB.

8) Assist in the location of a suitable AMEX company for potential merger.

9) Assist Company in locating and securing representation with a Specialist on
the AMEX exchange should Company become listed on AMEX through direct
application or through a merger with a pre-existing AMEX company.

10) Assist Company with locating and negotiating a contract with a licensed
level three market maker.

11) Assist Company in answering any and all comment letters received from the
NASD or SEC.

12) Assist Company in the identification, evaluation, structuring, negotiating
and closing of strategic alliances and Mergers or Acquisitions.

4. DUTIES OF THE COMPANY

The Company shall provide GTC and its counsel, on a regular and timely basis,
with all data and information about it, its subsidiaries, its management, its
products and services and its operations as shall be reasonably requested by GTC
and its counsel, and shall advise GTC of any facts which would affect the
accuracy of any data and information previously supplied pursuant to this
paragraph.

5. COMPENSATION

Company shall pay the following compensation:

5.1 Company agrees to pay GTC $7,500 each month for months 4-12 of this
agreement, unless the agreement is terminated at an earlier date in accordance
with the Section 2.

5.2 This compensation in its entirety is deemed fully earned upon execution of
this agreement, is not contingent and is non-refundable, unless the agreement is
terminated as per the terms above.

        5.3a In lieu of cash, and at the discretion of Company, 33.33% of the
             above compensation may be paid in common stock of the Company (the
             "Shares") valued at the share-price as quoted in the most recent
             Private Placement Memorandum offered by the Company or if the
             Company is publicly-traded then one half of the average BID price,
             as quoted at market-close, from the previous 20 market trading days
             calculated from the date of Invoice. As soon as possible, these
             shares shall be registered with the United States Securities and
             Exchange Commission and applicable state securities agencies so as
             to enable the Shares to be freely saleable and tradable in the
             public securities markets. The Company shall use its best and
             diligent efforts to maintain all SEC and other registrations so as
             to enable said Shares to be fully saleable and tradable for a
             period of three (3) years from the date hereof.

        5.3b In lieu of cash, and at the discretion of Company and by agreement
             by GTC, 33.33% of the above compensation may be paid in common
             stock of the Company (the "Shares") valued at the share-price as
             quoted in the most recent Private Placement Memorandum offered by
             the Company or if the Company is publicly-traded then one half of
             the average BID price, as quoted at market-close, from the previous
             20 market trading days calculated from the date of Invoice. As soon
             as possible, these shares shall be registered with the United
             States Securities and Exchange Commission and applicable state
             securities agencies so as to enable the Shares to be freely
             saleable and tradable in the public securities markets. The Company
             shall use its best and diligent efforts to maintain all SEC and
             other registrations so as to enable said Shares to be fully
             saleable and tradable for a period of three (3) years from the date
             hereof.

        5.3c In lieu of cash, and at the discretion of GTC, 33.33% of the above
             compensation may be paid in common stock of the Company (the
             "Shares") valued at the share-price as quoted in the most recent
             Private Placement Memorandum offered by the Company or if the
             Company is publicly-traded then one half of the average BID price,
             as quoted at market-close, from the previous 20 market trading days
             calculated from the date of Invoice. As soon as possible, these
             shares shall be registered with the United States Securities and
             Exchange Commission and applicable state securities agencies so as
             to enable the Shares to be freely saleable and tradable in the
             public securities markets. The Company shall use its best and
             diligent efforts to maintain all SEC and other registrations so as
             to enable said Shares to be fully saleable and tradable for a
             period of three (3) years from the date hereof.

5.4 Concurrently with the filing of the Company's 15c211 or the signing of a
Merger Agreement with a public company (whichever comes first), the Company
shall issue to GTC 250,000 shares of common stock of the Company (the "Shares")
on a fully-diluted basis. These shares shall be registered with the United
States Securities and Exchange Commission and applicable state securities
agencies so as to enable the Shares to be freely saleable and tradable in the
public securities markets on the Company's SB-2 filing. The Company shall use
its best and diligent efforts to maintain all SEC and other registrations so as
to enable said Shares to be fully saleable and tradable for a period of three
(3) years from the date hereof.

6. REPRESENTATION AND INDEMNIFICATION

The Company shall be deemed to have been made a continuing representation of the
accuracy of any and all facts, material information and data which it supplies
to GTC and its counsel and acknowledges its awareness that GTC and its counsel
will rely on such continuing functions. GTC and its counsel in the absence of
notice in writing from the Company will rely on the continuing accuracy of
material, information and data supplied by the Company. In that connection, The
Company agrees that we may rely upon all information that is provided by the
Company or their agents without independent investigation. Further, the Company
agrees that we will not be responsible for a "due diligence" investigation of
the factual matters contained in documents we prepare. In connection with SEC
documents: The Company' s other officers and directors will be required to sign
an affidavit attesting that:

The offering or filing documents have been read and understood;

All documents provided to our office in connection with preparation of the
offering or filing documents are true and correct;

All matters contained in the offering or filing documents are true and correct;
and The offering or filing documents do not contain any misstatements or
omissions of any facts necessary to make the offering or filing documents not
misleading.

The Company agrees to indemnify, hold harmless and defend GTC and its counsel
from any and all claims or demands of any kind relating to the Company's breach
of its agreements hereunder.

7. MISCELLANEOUS

Termination: This Agreement may be terminated by GTC upon written notice to the
Company which shall be effective five (5) business days from the date of such
notice. If Company terminates this agreement, all compensation due for the
minimum term of 6 months is fully vested and immediately payable.

Modification: This Agreement sets forth the entire understanding of the Parties
with respect to the subject matter hereof, and may be amended only in a writing
signed by both parties.

Notices: Any notices required or permitted to be given hereunder shall be in
writing and shall be mailed or otherwise delivered in person or by facsimile
transmission at the address of such Party set forth above or to such other
address or facsimile telephone number, as the Party shall have furnished in
writing to the other Party. Waiver: Any waiver by either Party of a breach of
any provision of this Agreement shall not operate as or be construed to be a
waiver of any other breach of that provision or of any breach of any other
provision of this Agreement. The failure of a Party to insist upon strict
adherence to any term of this Agreement on one or more occasions will not be
considered a waiver or deprive the other Party of the right thereafter to insist
upon adherence to that term of any other term or this Agreement.

Assignment: The Shares, if any, under this Agreement are assignable at the
discretion of the GTC. Severability: If any provision of this Agreement is
invalid, illegal, or unenforceable, the balance of this Agreement shall remain
in effect, and if any provision is inapplicable to any person or circumstance,
it shall nevertheless remain applicable to all other persons and circumstances.

Disagreements: Any dispute or other disagreement arising from or out of this
Agreement shall be submitted to arbitration under the rules of the American
Arbitration Association and the decision of the arbitrator(s) shall be
enforceable in any court having jurisdiction thereof. Arbitration shall occur
only in Oxford, MS. The interpretation and the enforcement of this Agreement
shall be governed by Mississippi law as applied to residents of the State of
Mississippi relating to contracts executed in and to be performed solely within
the State of Mississippi. In the event any dispute is arbitrated, the prevailing
Party (as determined by the arbitrator(s)) shall be entitled to recover that
Party's reasonable attorney's fees incurred (as determined by the
arbitrator(s)).

Expenses: GTC's compensation does not include any direct filing fees required to
be submitted with any registration, filings, membership applications,
self-regulatory agency fees, bonding, fingerprinting, or testing expenses, all
of which must be paid directly by the Company. GTC will list such fees in a
cover letter included with the submission of the aforementioned documents to
Company for its review and execution. Company must issue check in full payment
of these fees, payable to the appropriate payee, in the appropriate amount, and
return the checks to GTC along with the executed documents. GTC will submit
these checks to the appropriate payees along with the associated documents.
Similarly, GTC is not responsible for certain printing or accounting expenses.
(Company is responsible for obtaining its own audited financial statements)
associated with the documentation described above. GTC will list such expenses
in the aforementioned cover letter (if applicable). Company will issue a check
for these costs and expenses and return the check to GTC along with the executed
documents for their submission to the appropriate authorities. Company agrees to
reimburse expenses incurred by GTC up to $300 per month. Expenses exceeding $300
within any month must be approved in writing by Company.

IN WITNESS WHEREOF, this Agreement has been executed by the Parties as of the
date first above written.

/s/ Anthony Welch                                       /s/ Gene Jackson
-------------------------                               -----------------------
    Anthony K. Welch, Chairman                              Gene Jackson, Legends of the Faith

Letter of Assignment GoldenTree Capital, LLC hereby assigns all our rights,
duties and obligations under the Agreement with Legends of the Faith, Inc.,
dated 6/20/02 to Anthony Welch, personally, who shall assume responsibility
personally for performing such duties.

Agreed and Accepted:

 /s/ Gene Jackson
     Gene Jackson, Chairman
     Legends of the Faith, Inc.

Agreed and Accepted:

 /s/ Anthony Welch
     Anthony Welch

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