1
EXHIBIT 10.4
NOTE: THIS DOCUMENT IS THE SUBJECT OF A CONFIDENTIAL TREATMENT REQUEST PURSUANT
TO RULE 406 UNDER THE SECURITIES ACT OF 1933. PORTIONS OF THIS DOCUMENT FOR
WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED HAVE BEEN REDACTED AND ARE
MARKED HEREIN BY "***". SUCH REDACTED INFORMATION HAS BEEN FILED SEPARATELY WITH
THE COMMISSION PURSUANT TO THE CONFIDENTIAL TREATMENT REQUEST.
Hilton Hotels Corporation
ON COMMAND VIDEO Agreement
This Agreement between on Command Video Corporation, ("OCV") and Hilton Hotels
Corporation ("Hilton"), sets forth the terms for installation of video services
and all other material & services as described more fully herein. Hilton
operates the Hotels listed in Exhibit B ("Hotel") for the lodging of customers
in separate, private rooms and parlors which are customarily available for
overnight sleeping accommodation ("Rooms").
WHEREAS, Hilton desires to make available to its guests the opportunity to view
pre-recorded entertainment programs ("Programs") and broadcast television
channels conveniently in the privacy of their own Rooms at its Hotels using an
ON COMMAND VIDEO System provided by OCV;
Now, THEREFORE, the parties do hereby AGREE AS FOLLOWS:
1. ON COMMAND VIDEO SYSTEM. As used herein, the term "System" shall mean the
video entertainment system designed by OCV, whereby guests in a specified number
of separate rooms at the Hotel may remotely access, at will, a specified number
of prerecorded Program selections (such as movies), as well as the standard
network or broadcast television channels or other programming services
("Channels") that are available in the Hotel, for display on television
receiving sets ("TVs") in the guests' private rooms. The System includes a
specified number of pre-recorded Program selections; a remote control unit for
the TV in each room; an OCV communications module attached to or integrated into
each guest room TV; an adequate number of video playing devices; and all
necessary electronic, computer and switching equipment, software, printers or
other devices necessary to provide for video entertainment or for Interactive
Services as defined herein, not including TVs. OCV shall install the System at
no cost to Hotel. OCV shall supply the necessary reception, descrambling, and
remodulation equipment to supply ESPN, CNN, and HBO to each room at no charge.
The System does not include necessary power, electrical wiring, connections, or
cooling facilities, which are to be provided by Hotel pursuant to usual and
customary standards for a full service Hilton Hotel except as provided herein.
However, OCV will provide engineering and specifications for necessary signal
wiring and distribution, and will perform installation for any additional wiring
which is necessary, as part of the System, such engineering specifications
2
and wiring LO be provided at no cost to Hotel.
OCV shall supply each Hotel with new, closed caption, "smart plug",
network-affiliation displayed 20 inch TVs. OCV shall supply one TV for every old
or existing Hotel Room TV replaced. OCV shall also supply extra TVs up to a
limit of ten (10) TVs or two percent (2%) of the total number of replaced or
purchased TVs, whichever is greater. The TV package provided by OCV shall
include replacement swivel mounts (Hotel to receive cash credit if these are not
required), installation/labor costs, and remote controls plus 10% spares for all
guest rooms. In the event Hotel wishes to obtain 25 inch TVs in lieu of the 20
inch they will forfeit *** for each such TV from their revenue share.
In the event Hotel already has "smart plug" TVs, OCV, shall make payment to
Hotel of *** for each room TV, net of tax, and assume title to that TV. OCV
shall be responsible for all maintenance of TVs during the term of this
agreement at no cost to the Hotel.
OCV shall be responsible for all costs and all maintenance of TVs during the
Lien of this agreement.
Any value which may be gained from liquidation of the existing Hotel TVs which
are replaced by OCV shall belong to OCV, net of sales tax, and the replacement
TV's shall belong to the hotel at the conclusion of the term.
2. SYSTEM TERM.
(a) OCV shall design, construct and provide to Hotel a System and related
materials for operation in each of the Hotel's guest Rooms as set forth below
with access to a multitude of prerecorded Program selections in accordance with
section 4 hereof, as well as the Channels, for a term beginning on the Term
Commencement Date (as defined in Section 7) and ending on the seventh
anniversary of the Term Commencement Date (the "Term").
On the third anniversary of the term commence date, Hilton and OCV shall review
all other available hotel video systems. In the event they agree a superior
technology exists, OCV shall make the equivalent technology available to Hilton
on terms acceptable to Hilton. If they don't agree, a 3rd party industry
consultant may be retained by either party at their expense, to determine if a
superior technology exists. If any such 3rd party consultant determines that
superior technology does exist, OCV shall make the equivalent technology
available to Hilton on terms acceptable to Hilton. If OCV does not provide such
technology within 90 days, OCV shall be in default.
In the event that OCV releases new products or services to another hotel or
company, or makes the same or similar services available at more attractive
terms and conditions than such products and services are offered herein, OCV
agrees to immediately make such products and services or terms and
3
conditions available to hotel on the same or better terms and
conditions.
At the end of the initial Term of this Agreement, unless OCV is notified by
Hilton in writing to the contrary thirty (30) days prior to the Term expiration
date, this Agreement shall be extended on a month-to-month basis. In the event
of such extension, this Agreement including all revisions or extensions in
effect shall remain in force on a month-to-month basis unless terminated by
Hilton for any reason with thirty (30) days written notice.
3. FEE AND PAYMENT TERMS.
(a) Based upon daily information reported by the System monitoring unit to be
provided and installed by OCV at no cost to Hotel, Hotel shall charge Hotel
guests on a per use basis for access to the System an amount (the "Rental Fee")
based on a reasonable pricing schedule as established from time to time by OCV.
OCV shall use its best efforts to maximize revenue through the use of the OCV
system.
Hilton may, in its sole discretion, adjust the Rental Fee as to any guest of the
Hotel in conjunction with a controversy with such guest in which case the
"Rental Fee" shall mean the Rental Fee for such guest as so adjusted. OCV
understands and agrees that Hotel shall generally refund the Rental Fee to the
guest in the event the guest disputes the charge.
(b) In addition to the Rental Fee, Hotel shall collect from guests any
applicable taxes levied thereon and shall pay those taxes to the appropriate
government agencies.
(c) Hotel shall within 14 days of the end of each month remit to OCV an amount
equal to *** of the adjusted Rental Fee for the prior month and shall retain an
amount equal to *** of such adjusted Rental Fee as their fee.
(d) Rental Fees due OCV shall be held in trust for OCV and shall remain the
property of OCV.
(e) OCV shall provide Hilton Hotels ESPN, CNN and HBO, at no charge during the
duration of the term. Those hotels who can not take advantage of this free
programming, shall receive a monthly payment of *** per room per month from the
time the OCV system is installed until such time that they can receive this
benefit.
(f) The books and records of the Hotel pertinent to the Rental Fee for any month
in the Term of this Agreement shall be open to inspection and audit by an
authorized representative of OCV upon reasonable advance written notice to and
the approval of the Hilton. OCV shall have the tight to inspect and audit such
books for the two preceding years during which OCV was under contract. OCV must
bring any claim resulting from such audit within ninety
4
(90) days of such audit. OCV's light to inspect and audit the books and records
of the Hotel shall not extend beyond three months from the expiration or
termination of this Agreement.
(g) The System monitoring unit shall generate an accurate record ("Access
Record") of the access to the System by any guests, including a record of the
access charges for each individual guest's bill or Room account. OCV shall be
responsible for all costs associated with the programming of the computer within
the System monitoring unit to enable it to provide the aforesaid data.
Hotel and OCV agree that the Access Record shall be held in strictest confidence
by the personnel of OCV and Hotel; and that OCV shall make available to Hilton
information sufficient to ensure proper billing of guests and other information
or System usage reports as Hotel may reasonably request to track System usage.
OCV may review and use the Access Record for such purposes as OCV may reasonably
deem appropriate, except that OCV shall not disclose any such information to
third parties. In the event of any such disclosure by OCV, OCV shall indemnify
and hold harmless Hilton and Hotel from all claims, loss, damages or actions
arising from such disclosure.
(h) OCV agrees to provide a data communications link which shall include
equipment, software, and cabling sufficient to connect the Hotel's property
management computer to the System for the purpose of posting Rental Fee charges
to guest folios. OCV agrees that there shall be no cost to the Hotel for this
link or for development, testing or maintenance of the link.
(i) OCV shall be responsible for all personal property taxes on all System
equipment as well as Hotel TVs.
4. PROGRAM SELECTIONS.
(a) OCV agrees not to broadcast on the System or cause to be presented in the
Hotel any commercial or marketing message, information, or service promoting OCV
or any other entity, service, or product without the prior written consent o Hi
ton.
(b) Hotel has the tight to use *** up to three (3) percent of the System video
cassette players but not less than six players and other System components as
may be necessary to present Programs or other material that Hotel may desire to
make available to its guests on a free-to-the guest basis. OCV shall assist
Hotel in making these offerings easily available to the guest through the System
menus or as part of the regular channel line-up or by some other means.
Both parties agree that the System shall carry without charge to Hotel, Programs
or messages accessed without charge to the guest
5
including but not limited to free-to-the-guest programming services or network
TV programming; bulletin board or reader board messages; airline or airport
information; video and/or audio feeds from the Hotel, convention centers, or
other sources; hotel or local service information; and promotional or sales
messages for Hotel or Hilton Corporation products, services, or brands subject
to Hiltons approval. Except as otherwise stated in this agreement program costs
shall be the responsibility of ***. The cost of generation of a "barker" screen
and other Hilton specific screens and Hilton's Logo shall be born by ***.
(c) Program titles to be made available on the System shall be selected by OCV
following guidelines mutually agreed upon between OCV and Hilton; provided,
however, that the Hotel or Hilton may, in its sole discretion veto any number of
titles(s) which it finds to be inappropriate for guests of the hotel and OCV
shall provide a replacement acceptable to Hotel and Hilton. If the exercise of
such veto authority by Hotel or Hilton reduces revenues per occupied room
generated by the system to a level (for the top *** of Hilton rooms) 20% below
the revenues per occupied room in other similar full service non Hilton hotels
served by OCV for a period exceeding one year, OCV shall have the right to
terminate this agreement sixty days after written notification to Hilton of
OCV's intention to terminate.
Hilton and OCV shall review and revise from time to time, the "Standards and
Practices" and shall mutually agree on their content as a general guide to adult
programming. OCV assumes full responsibility and shall hold Hilton harmless
against any and all claims as a result of the showing of adult programming.
OCV agrees that less than 20% of the Program titles shown on the System at any
time will be Adult non-rated titles.
(d) OCV agrees to allow Hotel to use the System as a means to charge guests for
other services or Program offerings during the Term. Such offerings may include
but shall not be limited to video programming such as special events, sporting
events, teleconferences, network programming, or video tapes. Other offerings
may include informational services or messages. The content and format of these
offering and the manner in which they are provided shall be mutually agreed upon
by Hotel and OCV and approved by Hilton.
With Hilton's approval OCV shall be entitled to a mutually agreed upon revenue
generated by the System from Programs or services for which the guest or a third
party such as an advertiser or broker is directly charged a fee. OCV shall have
*** share of any revenue generated through the advertising, promotion, or sales
of Hotel or Hilton products or services.
5. OWNERSHIP OF THE SYSTEM.
(a) The parties agree that the System, which consists of the
6
racks and control boxes only, which are provided by OCV are the sole and
exclusive property of OCV. The then existing TVs shall belong to Hotel at the
completion of the term.
The parties further agree that the ultimate control and ownership of the Hotel
MATV system in general and regulation of the programming, presentation, and
services it provides to guests resides with Hotel. The MATV system ("MATV") is a
network of cables, wall Laps, antennas and specially designed radio frequency
signal processing components, which receive, process, amplify and distribute
video and audio TV and FM signals from a central location Lo a multiplicity of
TVs within a building or group of buildings.
(b) Hotel shall allow authorized personnel of OCV to have access to the System
in order to conduct routine maintenance, observation and monitoring of the
System, to ensure suitable operating conditions and to implement improvements in
the System. OCV access to System shall be in accordance with procedures agreed
to by Hotel.
(c) If, during the Term, OCV desires to change any System component or software
to improve service or to take advantage of technological advancements, OCV
shall, in writing, describe to Hotel the plans and specifications for the
installation thereof at ***. No changes to the System shall be made by OCV
without written approval from Hilton. Such changes approved by Hotel shall be
made without disruption of Hotel TVs or MATV service and with minimum
interruption of System service and guest inconvenience.
(d) Hotel shall use reasonable efforts to protect the safety and security of the
System and all related property of OCV at all times while the System is
installed at the Hotel, and shall be liable for any damage to the System
resulting from gross negligence on its part. Hotel shall use reasonable efforts
to prevent any vandalism, theft, or damage of or to any of the equipment
supplied by OCV. Any System components, software, or video tapes that are lost,
stolen, vandalized, or damaged, unless through gross negligence by Hotel, are
the responsibility of OCV.
6. HOTEL FACILITIES; INSURANCE.
(a) During the Term, Hotel shall provide and make reasonable efforts to maintain
a TV in each designated Room; signal wiring and connections; electrical power
and sockets; cooling facilities; and a location for all equipment comprising the
System (collectively, the "Hotel Facilities"); all in accordance with written
specifications provided by OCV and agreed to by Hotel.
(b) Hotel shall obtain and maintain, at its sole cost and expense throughout the
term of this Agreement, insurance policies reasonably acceptable to OCV and
Hotel. Said policies protecting
7
the System and related equipment supplied by OCV shall provide comprehensive
public liability insurance with limits of at least $2,000,000. A certificate of
insurance evidencing such insurance shall be delivered to OCV if requested.
(c) OCV shall obtain and maintain, at its sole cost and expense throughout the
term of this Agreement, insurance policies reasonably acceptable to OCV and
Hotel. Said policies shall provide comprehensive public liability insurance with
limits of at least $2,000,000. A certificate of insurance evidencing such
insurance shall be delivered to Hotel if requested. Such insurance shall name
Hotel and Hotel Operator as additional insured.
(d) OCV shall obtain and maintain, at its sole cost and expense throughout the
term of this Agreement, Workman's Compensation Insurance policies sufficient to
cover any and all claims made by OCV employees, agents, or subcontractors. Hotel
or Hotel Operator shall not be responsible for any such claims.
7. INSTALLATION.
(a) Hotel shall provide such access as OCV reasonably may request to enable OCV
to complete installation of the System, including providing all Hotel Facilities
as set forth in the specifications and in reasonable time to allow OCV to
complete installation. Such installation shall not exceed six months from
execution of this agreement. OCV shall test the System to ensure functionality
from the beginning of the Term, which shall begin on the date upon which OCV and
Hotel agree installation to be complete and the System to be functional (the
"Term Commencement Date") which agreement shall be attached hereto as Exhibit A,
when completed.
(b) OCV agrees to bear any costs associated with installing or maintaining the
System that Hotel would not have experienced if the OCV System were not
installed in the Hotel. These costs shall include but shall not be limited to
purchasing, installing, and maintaining: all cables required by the OCV System
or used to connect the OCV System to other Hotel systems such as the MATV system
or property management computer, telephone service to the System, the OCV
communications module attached to or integrated into each guest room TV
including TVs replaced during the Term, modifications to the Hotel's MATV system
and changes required Lo Room wall taps. OCV shall establish a budget for such
MATV upgrade of *** per room. In the event the upgrade costs exceed this budget,
the overage will come from Hotels portion of the revenue share.
OCV guarantees that the equipment installed and/or the connections to the
existing TV antenna or cable system, amplifiers and receivers will not impair in
any way the ordinary reception of broadcast programs or other services on the
cable system.
8
Installation and removal shall be of the highest quality workmanship and in
accordance With the terms and conditions of this Agreement OCV agrees to
coordinate with the Hotel any installation, repair, maintenance, replacement, or
removal so as not to disrupt or inconvenience the Hotel's guests or employees or
the daily Hotel operations and so as to initiate and complete those tasks as
expeditiously as possible.
(c) At the time of installation, OCV shall move or reassign any channels in the
Hotel's MATV system, with Hiltons approval, whose frequencies conflict with the
OCV System. If required by Hotel's or Hilton's licensing agreements with
individual networks or channels, OCV shall trap or filter out any channels so
moved so they cannot be viewed on any public or lobby TV and shall ensure
optimum signal levels for each channel so moved and the elimination of any
possible channel interference.
(d) All equipment installed, provided, or modified by OCV, its agents, or
subcontractors shall be listed by the Underwriters Laboratory, Inc. or shall be
built to their standards. OCV represents and warrants that all design,
equipment, and installation shall be in strict compliance with the National
Electrical Code Handbook as published by the National Fire Protection
Association and as amended periodically, Federal Communications Commission
requirements, and local or other governing codes.
8. OPERATION AND MAINTENANCE OF THE SYSTEM.
(a) Hotel shall, for day-to-day operations and at no cost to OCV, use reasonable
efforts to notify OCV by telephone of any failure of the System or the System's
functions in any given Room or as to any given Program. For the purpose of such
notification, Hotel staff shall call the following telephone number: (800)
915-7147 or the then current number, which shall be attended twenty-four hours a
day seven days a week by OCV staff having the capability of expeditiously
dispatching OCV service personnel to the Hotel.
(b) Any repairs or replacements to any equipment supplied by OCV made necessary
by any grossly negligent or willful act by Hotel or any of its employees,
contractors, servants, agents or others (not to include guests) authorized by
Hotel, shall be undertaken by OCV at Hotel's expense. All other repairs shall be
performed at OCV's expense.
(c) Hotel shall use reasonable efforts to ensure that no unauthorized person
tampers with or attempts to make repairs to any equipment supplied by OCV under
the terms of this Agreement. Should an emergency arise, Hotel agrees to use
reasonable efforts to contact OCV by telephone and thereupon any repairs then
authorized may be carried out in accordance with the directions so given by OCV.
Any costs of such repair other than a reasonable amount of the labor and time of
Hotel staff shall be
9
borne by OCV.
(d) OCV shall provide promptly all maintenance, repairs and replacement of
materials and equipment necessary to ensure satisfactory operation of the
System, including a high signal quality, throughout the Term as defined in 8g.
Upon being notified by Hotel that a repair or service is required at the Hotel,
OCV shall immediately dispatch repair representatives and it shall be incumbent
on OCV to ensure that these representatives arrive at the Hotel within twelve
(12) hours of the time OCV Is notified of the service requirement unless such
representatives are delayed in transit by strikes, natural disasters, extremely
adverse weather conditions or similar causes.
Upon arrival at the Hotel, OCV's service representatives shall immediately
undertake necessary repairs to return the entire System to the performance
standards required under this Agreement and said repair services shall be
completed within forty-eight (48) hours of the time OCV is initially notified of
the System breakdown unless by reason of fire, accident, natural disaster, or
similar cause, the Hotel or the System has been substantially destroyed. In the
event repairs are not effected within 48 hours, OCV shall be liable to the hotel
for the lost commissions (***) the hotel would have received if the rooms were
operable from the time of the failure based upon the average daily revenue for
the previous three months plus all other remedies at law or equity.
(e) AU maintenance and technical assistance shall be provided by OCV free of
charge except as provided in Section 8(b) or occasioned by a breach by Hotel of
Hotel's obligations under Section 6(a).
(f) Hotel staff shall be responsible for swapping inoperable guest room TVs with
spares maintained in inventory at the Hotel for situations in which a single TV
has failed. OCV shall be responsible for diagnosing and repairing failures
involving groups of TVs.
OCV shall contract with a TV service or maintenance organization acceptable to
Hotel for TV manufacturer's warranty repair or other TV repair work at OCV's
expense. At no time will the Hotel be without a working spare or OCV shall be in
default.
(g) OCV shall install, operate, and maintain the System and any other existing
equipment, video service, or MATV components used in the Hotel in accordance
with the following technical specifications.
1. In no case shall the signal levels measured exceed the maximum output rating
for the headend or modulators) employed.
10
2. The level difference between channel picture carriers shall not exceed 2 dB
for adjacent channels nor 12 dB between the strongest and weakest channel
normally carried.
3. The spurious signal level shall be at least 50 dB below the video carrier
level. Cross modulations shall be less than 51 dB.
4. Visual/aural carrier ratio on any channel will be 22 dB (+/- 2 dB.)
5. Amplitude response within any channel (visual carrier to aural carrier) will
be flat (+/-2 dB.)
6. The nominal signal level for every channel delivered at the point at which
the MATV channels (Free-To-Guest, Pay-Movies, Information Channels) are combined
shall be 48 dBmV (+/-3 dBmV).
7. Pay movie or other channels provided by OCV shall have a signal-to-noise
ratio of at least 50 dB or higher.
8. Equipment installed and/or the connections to the existing MATV system,
amplifiers and receivers will not impair in any way the ordinary reception or
transmission of broadcast programs or other services on the MATV.
9. All equipment, connections, cables, and passive devices will
be designed and installed so as to minimize radiation and
ingress.
10. Signal Strength from room outlet to TV must be 0 to 10 dbmv.
9. SPECIAL REPRESENTATIONS OF HOTEL.
Hotel agrees, confirms and covenants that:
(a) Unless otherwise authorized by Program copyright holder or licensor,
Programs provided by OCV shall be exhibited in the Rooms only, and not in public
areas (including lobbies, hallways, restaurants, bars, meeting rooms, etc.) of
the Hotel; and shall not be exhibited other than in accordance with this
Agreement or by any other means of transmission of any kind whatsoever. Hotel
shall not modify the System or means of transmission unless so authorized by
OCV.
(b) Equipment comprising part of the System shall not be removed by Hotel for
any purpose except in the case of any emergency where such removal is reasonably
necessary and Hotel uses reasonable efforts to notify OCV of such removal by
telephone.
(c) Hotel shall notify OCV as soon as is reasonably possible and upon Hotel's
actual notice of any unauthorized use, access, theft, damage, or malfunction of
or to the System or any other equipment of OCV.
11
(d) Program video cassettes shall be kept under lock and key provided by OCV and
shall not be accessible to unauthorized Hotel staff without OCV's prior consent.
There shall be no unauthorized use, exhibition or viewing of any cassette by any
person other than on the System on the terms set forth herein. Hotel shall use
reasonable efforts to prevent any person under its control from duplicating or
making alterations of any kind to cassettes. Hotel shall report promptly to OCV
any unauthorized use of the cassettes in the event that Hotel becomes aware of
such use. Hotel shall provide space in the Hotel for the placement of the
System. OCV understands that this space is also used daily by the Hotel staff.
(e) Subject to space being available, Hotel agrees to provide OCV's employees
with complimentary rooms at the Hotel during site surveys and initial
installation, up to twelve (12) room nights (including site surveys).
Thereafter, those OCV employees required to provide maintenance and repair
services to the Hotel System shall receive complimentary overnight
accommodations on a space available basis. Such complimentary guest rooms shall
not exceed one (1) room per day nor shall Hotel provide such rooms for a period
longer than two (2) days during repair stay.
10. PUBLICITY REGARDING THE SYSTEM.
The Hotel may in its sole discretion adequately publicize the existence of the
System and access to the Programs for use by guests. If OCV shall develop and
provide to Hotel in-room or other advertising materials to encourage use of the
System by guests of the Hotel, Hotel shall cause those materials to be placed in
the Rooms or elsewhere at the Hotel, as applicable, provided that Hotel, at its
sole discretion, may refuse to display such materials which it finds to be
unsuitable.
11. TRAINING AND CONSULTATION.
OCV shall provide a training course for as many employees of the Hotel as the
Hotel deems desirable, on the use and operation of the System. Such training
shall be available at installation or as requested by Hotel. Personnel of OCV
shall be available for reasonable telephone consultation to provide further
assistance to Hotel personnel regarding use and operation of the System.
12. CONFIDENTIALITY.
The parties agree that the functions and components of the System, facts
regarding the equipment and materials related thereto, the manner of operation
thereof and the terms of the Agreement, and Rental Fees payable hereunder, all
constitute proprietary information of OCV and that all guest information
constitutes proprietary information to Hotel. Such proprietary guest information
shall include but shall not be limited to guest names or other personal guest
information, hotel occupancy information or guest billing information not
related to usage of
12
the OCV System.
Hotel shall use reasonable efforts to prevent any third party from having access
to the System other than Hotel's personnel as may be reasonably necessary to
enable Hotel to maintain the Hotel Facilities and otherwise as expressly
permitted by OCV in writing. OCV shall not permit any third party to have access
to any proprietary or guest information obtained from Hotel or Hotel Operator.
13. EXCLUSIVE VIDEO ENTERTAINMENT SYSTEM.
As part of the consideration to OCV for Hilton's installation of the System,
Hilton agrees that the System shall be the sole and exclusive guest room
pay-per-view video entertainment system provided by the Hilton to guests during
the rental Term.
14. DEFAULT: FORCE MAJEURE.
(a) If Hotel should breach or become in default of performance of any material
term or condition contained in this Agreement, and should fail to begin efforts
to cure, correct or remedy such breach or default within thirty (30) days after
receipt of a written notice thereof specifying the nature of such default from
OCV, OCV may exercise any or all of the following remedies: (1) cancel and
terminate this Agreement and require Hotel to immediately make available to OCV
the repossession of the System and all components thereof in which case OCV
shall remove the System at OCV's expense as provided herein; (2) obtain
injunctive and other equitable relief; and (3) obtain such damages and other
rights and remedies as OCV may have at law or equity.
(b) If OCV should breach or default in the performance of any obligation or
covenant in this Agreement, which default shall continue for thirty (30) days
after Hilton has given OCV written notice thereof, specifying the nature of such
default, then Hilton may exercise any or all o the following remedies: (1)
cancel and terminate this Agreement by written notice Lo OCV in which case OCV
shall remove the System at OCV's expense as provided herein; (2) obtain
injunctive and other equitable relief; and (3) obtain such damages and remedies
as Hotel may have at law or equity. The TVs become the property of the Hotel at
no charge.
(c) In the event performance by either party is prevented due to weather, acts
of God, strikes, or labor disputes, ("Force Majeure") for a period not to exceed
thirty (30) days during any twelve (12) month period, such failure of
performance shall not be deemed default hereunder.
(d) In the event of default by Hotel, Hotel shall have the right to purchase the
TVs in their property by paying OCV a price based on straight line depreciation
over a seven year life starting at the actual cash price not more than *** on
day one, and ending at
13
*** on day 2,555. If the TVs were purchased by OCV from the Hotel for ***: the
depreciation start shall be ***.
15. OCV INDEMNITY AND REPRESENTATIONS
(a) OCV shall hold harmless, indemnify and defend Hotel, Hotel Operator, its
employees, owners, officers, subsidiaries or affiliates from and against all
claims, actions, suits, damages, proceedings or liability arising out of or in
connection with OCV's obligations under this Agreement, the System and related
products including, but not limited to, attorney's fees, except for claims,
actions, suits or liability resulting solely from the willful misconduct or
gross negligence of Hotel, its servants, agents, employees or subcontractors.
(b) Hotel shall hold harmless, indemnify and defend OCV, its employees, owners,
officers, subsidiaries or affiliates from and against all claims, actions,
suits, damages, proceedings or liability, costs and expenses arising out of or
in connection with any breach or claimed breach of Hotel's obligation under this
Agreement and solely out of willful misconduct or gross negligence of Hotel, its
servants, agents or employees.
(c) OCV agrees to defend or, at its option, to settle and Hotel agrees that OCV
shall have the right to defend or, at OCV's option, to settle at OCV's expense,
any indemnified claim, suit or proceeding brought against Hotel or Hotel
Operator, its employees, owners, officers, subsidiaries or affiliates including,
but not limited to, patent, copyright, publicity or privacy, trademark, unfair
competition, the viewing of program material and the content thereof,
infringement and the alleged misuse of the system, the system hardware or
software, or any product or any part thereof, supplied by OCV to Hotels or its
affiliates under this Agreement except that Hilton shall be told not less
frequently than monthly about the proceedings and have the right to reject any
Settlement which, in Hilton's sole discretion, negatively impacts the Company in
any way including, but not limited to, Hiltons right to the benefit of this
contract, reputation, licenses, etc. Nothing in this section in any way relieves
OCV of its obligations to provide the System and related products. Without
limitation, OCV specifically agrees that this indemnity covers the pending
actions by Spectradyne against OCV, and OCV is fully responsible for that
action.
OCV agrees to pay, subject to the limitation hereinafter set forth, any damages,
expenses, costs or final judgment entered against Hotel or Hotel Operator, its
employees, owners, officers, subsidiaries or affiliates, in any such suit or
proceeding brought against Hotel or Hotel Operator, its employees, owners,
officers, subsidiaries or affiliates.
Hotel agrees to notify OCV in writing of any such claim, suit or proceeding, to
the extent that Hotel knows of such claim, suit or proceeding within 180 days of
Hotel's first actual knowledge of
14
the claim, suit or proceeding, and at OCV's expense, Hotel will give OCV
reasonable, proper and full information and assistance to settle or to defend
any such claim, suit or proceeding.
(d) If the system, any related product or any part thereof, furnished by OCV to
Hotel or its affiliates becomes or its affiliates becomes or, in the opinion of
OCV, may become the subject of any claim, suit or proceeding described in this
Section 15, or in the event of an adjudication that such product or part
infringes or violates any United States patent or copyright or other claimed
right, or if the use, lease or sale of such product or part is enjoined, OCV
may, so long as there is no interruption of service, at its option and expense:
(1) procure for Hotel the light under such patent or copyright to use, lease or
sell, as appropriate, such product or part, or (2) replace, modify or remove
such product or part. If Hotel determines, in its sole discretion, that such
replacement, modification or removal of the product or part has a significant
negative impact on the overall functioning of the System or satisfaction of
Hotel guests, Hotel has the right to terminate this Agreement thirty (30) days
after giving written notification to OCV of Hotel's intention to terminate. This
right is in addition to all other legal remedies including but not limited to
equitable relief and damages. In the event of such termination, OCV agrees to
return the Hotel and MATV System to their original, working condition within 30
days of termination, and to cooperate and facilitate the installation of any
replacement system including, but not limited to, Spectradyne. OCV further
agrees to return the Hotel and TV's to original condition with the minimum
possible interruption of Hotel TV or MATV system services offered to guests and
at OCV's expense. OCV shall give 30 days written notice to Hotel before removing
any equipment.
(e) OCV shall indemnify and hold harmless Hilton, its affiliated companies,
participation hotels and their owners, and the foregoing indemnities respective
officers, directors, employees and agents from all liabilities, claims, causes,
damages and expenses incurred in connection with any claims against such
indemnities arising out of or caused by Hilton's or the participating hotel's
transmission in accordance with the Agreement of any programming services
delivered by OCV which contains any libelous or slanderous material, or violates
any copyright (other than music performance rights), right of privacy, or
literary or dramatic right and for any special, indirect, incidental or
consequential damages arising therefrom.
(f) OCV shall secure and maintain (i) licenses, permits and approvals required
by governmental authorities having jurisdiction over services to be performed by
OCV and (ii) necessary patents, copyrights, distribution rights, licenses,
releases, waivers and other necessary consents of third parties. OCV agrees to
indemnify, hold harmless and defend Hotel Owner, its agents and employees from
any claims or lawsuits arising from OCV's breach Of its obligations under this
Agreement.
15
(g) All regulations or laws pertaining to censorship, importation or display of
films as an in-hotel service or in general shall be complied with by OCV, and
OCV shall be solely responsible on a continuing basis to secure, at OCV's
expense, any and all permits and approvals respecting the Programs, copyrights,
distribution rights, music rights, releases and any other approvals as may be
necessary for the purposes of this Agreement. OCV further agrees to indemnify
and hold Hotel and Hotel Operator harmless and blameless for and against any
infringement, claims of any kind, royalties, violations and expenses associated
therewith.
(h) OCV represents and warrants that the System or any individual product or
part thereof or use of the System, shall not infringe any United States or other
patent or copyright, or any other intellectual property or proprietary rights.
Without limitation, OCV specifically agrees LO indemnify, defend and hold
harmless Hilton from any claim by Spectradyne arising from Hilton's use of OCV
services or this Agreement.
16. INTERACTIVE SERVICES.
(a) OCV shall make available to the Hotel upon election by the General Manager
of the Hotel the interactive guest services applications (individually
"Applications") underlined below ("Interactive Services") without charge.
Folio Review allows the guest to summon and examine the current status of their
hotel bills on the in-room TV screen at any time. If the Hotel desires, it may
designate a certain period of the day in which guests can also initiate Checkout
processing in the Hotel property management computer. A folio printer will
create a copy of the guest bill which can either be retrieved by the guest upon
departure or mailed to the guest.
Video Messaging in allows the hotel guest to summon and read current messages on
the in-room TV screen at any time. The Hotel shall be the exclusive contact with
the guest for all guest inquiries about Video Messaging.
Video Breakfast allows the Hotel guest to summon a specialized breakfast menu on
the in-room TV screen and place an order for the next morning's room-service
breakfast. Breakfast items are listed on the TV screen for the guest to select.
Upon selection, the order is verified, with costs, before the order is printed
on a dedicated OCV-owned printer in the kitchen.
Multiple Language Support automatically selects an appropriate language based on
information from the PMS or front desk terminal or the guest to allow all menus
to appear in the language selected.
Guest Survey allows guests to participate in survey as to their satisfaction
with the hotels performance.
16
Housekeeping Status allows the hotel personnel to update the room status in the
Computer.
Bellstand Application allows the guest to summon assistance from the bellman.
Guest Recognition provides the ability to customize menus and the look of the
system based on identifying information provided by hotel staff or the PMS
interface. Customized items should include menus presented, resources
available/privileges, pricing, etc.
Hotel Engineering proactively reports on potential problems in the system by
providing diagnostic data daily.
(b) OCV shall ensure that the System will not allow a guest to access any
message, folio, pay movie, or checkout function or any other service other than
those which are applicable to the room from which access is initiated. OCV shall
provide filters, traps, or some other mechanism sufficient to prevent TVs not
intended to provide System services or TVs in public areas from receiving images
or information intended for another guest room TV.
(c) OCV will use reasonable efforts to keep Interactive Services current with
changes required to the Hotel's property management system.
17. SYSTEM REMOVAL
(a) Upon expiration of this Agreement or its termination for whatever reason,
OCV agrees to return the Hotel and its MATV system to their original, working
condition excepting normal wear and tear in sufficient time, not to exceed six
months, to provide for an orderly transition to a new vendor. OCV further agrees
that System removal shall be conducted by OCV as expeditiously as possible with
minimum or no interruption of Hotel TV or TV master antenna services offered to
guests. System removal will be handled entirely at OCV's expense.
(b) Upon termination of this Agreement, Hotel shall take all reasonable actions
necessary to allow OCV to remove the System promptly.
(c) In the event the safety of the System is threatened due to earthquake,
flood, fire, strike, civil disruption or similar causes, OCV shall be entitled
to enter upon the Hotel premises and to remove the System from danger upon
reasonable notice to Hotel and without disruption to Hotel TVs, MATV system, the
daily operations of the Hotel, or any other Hotel service.
(d) OCV agrees to coordinate System removal with the Hotel so as not to disrupt
or inconvenience the Hotel's guests or employees or the daily Hotel operations
and so as to initiate and complete
17
System removal as expeditiously as possible.
18. GENERAL TERMS.
(a) This Agreement shall be governed by the laws of the State of California and
jurisdiction for any dispute shall be within the State of California.
(b) Except as otherwise set forth herein, the provisions hereof shall be binding
upon, and shall inure to the benefit of, the respective successors and assigns
of the patties hereto; provided that no assignment of this Agreement shall be
made without the express prior written consent of both parties, such consent not
to be withheld unreasonably.
(c) This Agreement may be modified or amended only by a written agreement signed
by both parties. No waiver by either party of any breach or default hereunder
shall be construed as a waiver of any precedent or subsequent breach or default.
(d) This Agreement together with Exhibits A & B, sets forth the entire agreement
and understanding of the Parties relating to the subject matter hereof, and
merges and supersedes all prior discussions and understanding between the
parties related thereto., whether written or oral.
(e) As a material inducement to Hilton entering this agreement, Hilton, in
Hiltons sole discretion may elect to apply the terms, conditions, and benefits
of this agreement to its franchise properties during the term of this agreement,
but shall have no obligation to do so.
Hilton Hotels Corporation: On Command Video Corporation:
By: /s/ Dennis Koci, VP-HCC By: Robert Snyder
Date: 4/27/93 Date: 4/27/93
18
Exhibit A
to
Hilton Hotels
ON COMMAND VIDEO Agreement
On Command Video has completed the functional testing of the On Command Video
System at the ________________ Hilton Hotel, and, On Command Video deems such
installation to be complete and the System to be functional as of
_______________ (Term Commencement Date).
19
Exhibit B
HILTON HOTELS
WESTERN REGION
ANAHEIM 1576
ANCHORAGE 591
LOS ANGELES 900
MINNEAPOLIS 816
NEW ORLEANS 1602
PALACIO DEL RIO 482
PASADENA 291
PORTLAND 455
SAN DIEGO 343
SEATTLE 173
CHICAGO 1543
O'HARE 858
PALMER HOUSE 1639
SAN ANTONIO 387
EASTERN REGION
ATLANTA AIRPORT 501
ATLANTA 1222
CAPITAL 541
FONTAINEBLEAU 1206
LOGAN 541
MCLEAN 458
MIAMI AIRPORT 500
PITTSBURGH 714
RYE TOWN 438
SHORT HILL 300
WASHINGTON 1123
NEW YORK 2042
WALDORF ASTORIA 1416
HAWAII/CALIF/ARIZONA
HAWAIIAN 2542
LAX 1279
KONA 431
TURTLE BAY 485
OAKLAND 362
SF AIRPORT 527
SAN FRANCISCO 1890
NEVADA REGION
RENO RESORT * 2001
SELECT HOTELS REGION
ANAHEIM/ORANGE * 230
AUBURN HILLS * 224
BRENTWOOD * 203
N.O. AIRPORT 312
NOVI 236
OAKBROOK TER 212
20
PHOENIX * 226
SOUTHFIELD INN * 195
TARRYTOWN 236
VALENCIA INN 152
NEWARK AIRPORT 336
BEVERLY REGION
BEVERLY HILTON 581
* To be covered by a mutually agreeable Agreement between Hilton Hotels
Corporation and On Command Video Corporation