Confidential License Agreement - Nintendo of America Inc. and LodgeNet Entertainment Corp.
CONFIDENTIAL
LICENSE AGREEMENT FOR
USE OF NINTENDO VIDEO GAME SYSTEMS
WITH HOTEL GUEST ENTERTAINMENT SYSTEM
THIS AGREEMENT is entered into by and between NINTENDO OF AMERICA INC.,
a corporation of Washington, having an address for notice purposes of 4820 -
150th Avenue N.E., P.O. Box 957, Redmond, Washington 98052, Attn: General
Counsel (Fax: 425-882-3585) ("NINTENDO"), and LODGENET ENTERTAINMENT
CORPORATION, a corporation of Delaware, having an address for notice purposes
of 3900 West Innovation Street, Sioux Falls, South Dakota 57107-7200 Attn:
President (Fax: 605-988-1323) ("LODGENET").
1. RECITALS
1.1 NINTENDO distributes and sells high-quality video game systems,
including the SUPER NINTENDO ENTERTAINMENT SYSTEM-Registered Trademark- or
SUPER NES-Registered Trademark- and the NINTENDO 64-Registered Trademark- or
N64-TM-
1.2 NINTENDO or its parent corporation, Nintendo Co., Ltd. ("NCL"), is
the holder of various patents, trademarks, copyrights, mask works and other
proprietary rights and information which relate to NINTENDO's video game
systems.
1.3 LODGENET is engaged in the business of owning, operating and
providing in-room hotel guest entertainment systems for the lodging industry.
1.4 LODGENET owns certain intellectual property rights which relate to
in-room hotel guest entertainment for the lodging industry.
1.5 NINTENDO and LODGENET previously entered into an agreement pursuant
to which LODGENET has placed a modified version of NINTENDO's SUPER NES in
various hotels as part of LODGENET's hotel guest entertainment system.
1.6 The parties desire to terminate their prior agreement (but not the
continuing obligations set forth under Paragraph 12.5 of the prior agreement)
and enter into a new agreement pursuant to which LODGENET would acquire a
non-exclusive license under NINTENDO or NCL's intellectual property rights to
use, license and sell modified versions of NINTENDO's N64 as part of
LODGENET's hotel guest entertainment system.
NOW, THEREFORE, the parties agree as follows:
2. DEFINITIONS
2.1 "Actual Cost(s)" shall mean NINTENDO's actual cost to provide the
product to LODGENET, including order processing, materials, production,
shipping, warranty and administration, as determined by NINTENDO on an order
by order basis.
2.2 "Approved Subdistributor(s)" shall mean the subdistributors of
LODGENET set forth at SCHEDULE 1, together with any other subdistributors
that the parties may mutually agree upon in writing in the future.
2.3 "Approved Subdistributor Acknowledgment" shall mean a written
acknowledgment in the form set forth at SCHEDULE 4.
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2.4 "Approved Subdistributor Request" shall mean a written request in
the form set forth at SCHEDULE 3.
2.5 "Delivery" shall mean F.O.B. NINTENDO, Redmond, Washington, USA.
2.6 "Effective Date" shall mean the last date of signature below.
2.7 "Game Media" shall mean floppy disks, CDS or other medium containing
the Licensed Games in a format which can be downloaded for use on the
applicable Nintendo System.
2.8 "Game List" shall mean a listing of the then-current Licensed Game
titles available for license to LODGENET under this Agreement.
2.9 "Gross Revenue" shall mean 100% of all revenue generated from the
Nintendo Systems and/or Licensed Games by a Licensed Hotel, without deduction
for any costs, fees or bad debt, but not including any Licensed Hotel guest
adjustments or applicable sales taxes which a Licensed Hotel is required to
pay on such revenue.
2.10 "Guest Information Record" shall mean a written report from a
Licensed Hotel to LODGENET or an Approved Subdistributor in the form set
forth at SCHEDULE 6.
2.11 "Hotel Guest System(s)" shall mean interactive hotel guest
entertainment systems.
2.12 "Licensed Game(s)" shall mean video games approved by NINTENDO for
play on the Nintendo Systems.
2.13 "Licensed Hotel(s)" shall mean any hotel property in which a Hotel
Guest System from LODGENET that incorporates a Nintendo System has been
installed.
2.14 "Licensed Hotel Acknowledgment" shall mean a written acknowledgment
in the form set forth at SCHEDULE 2.
2.15 "Licensed Intellectual Proper(ties)" shall mean the Licensed
Patents and the Licensed Proprietary Information, together with the
trademarks, copyrights, mask works and trade secrets owned by or licensed to
NINTENDO or NCL and associated with the Licensed Products.
2.16 "Licensed Patent(s)" shall mean the patents and patent applications
owned or used under license by NINTENDO or NCL and associated with Hotel
Guest Systems for video game play and/or to the Licensed Products,
specifically including US Patent No. 5,581,270 and any divisionals,
continuations, reissues or reexaminations thereof, and also including any
patent applications owned or used under license by NINTENDO or NCL which are
filed during the Term that cover or relate to Hotel Guest Systems for video
game play.
2.17 "Licensed Product(s)" shall mean collectively or individually the
Super NES, Super NES Controller, N64, N64 Controller, Licensed Games and Game
Media. The Licensed Products shall not include the communication protocols
developed by LODGENET and incorporated into the Super NES, Super NES
Controller, N64 or N64 Controller.
2.18 "Licensed Proprietary Information" shall mean collectively or
individually, technical and proprietary information, know-how, techniques,
methods, information and trade secrets owned by or licensed to NINTENDO or
NCL, relating to the development, design, operation, manufacture and sale of
the Licensed Products.
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2.19 "Licensee Monthly Royalty Report" shall mean a written report from
LODGENET or an Approved Subdistributor in the form set forth at SCHEDULE 5.
2.20 "Monthly Board Reconciliation Report" shall mean a written report
from LODGENET to NINTENDO in the form set forth at SCHEDULE 7.
2.21 "N64" shall mean NINTENDO's N64 video game system modified for use
with LODGENET's Hotel Guest System.
2.22 "N64 Controller(s)" shall mean NINTENDO's standard hand controller
for use with the N64, as adapted for use with LODGENET's Hotel Guest System.
2.23 "NDA(s)" shall mean, individually or collectively, those certain
agreements between the parties entitled: (a) "Nintendo of America Inc.
Non-Disclosure Agreement" dated March 11, 1992; and, (b) "Product Developer
Non-Disclosure Agreement For "Nintendo 64" Home System" dated October 16,
1996.
2.24 "Nintendo System(s)" shall mean, individually or collectively, the
Super NES and the N64, adapted for use with LODGENET's Hotel Guest System.
2.25 "Notice(s)" shall mean all notices, reports, and statements under
this Agreement, which shall be sufficiently given when placed in writing and:
(a) personally served or delivered to the party entitled to such Notice; (b)
deposited, postage prepaid, with an overnight air courier service, addressed
to the person and address stated herein, or to such other person or address
as may be provided in a Notice by one party to the other, or, (c) transmitted
by facsimile with an original sent concurrently by overnight air courier,
addressed to the person, facsimile number, and address stated above, or to
such other person, address or facsimile number as may be provided in a Notice
by one party to the other. Notice shall be deemed effective upon the earlier
of actual receipt or five (5) business days after mailing or transmittal.
2.26 "Prior Agreement" shall mean the agreement between the parties
entitled "Confidential License Agreement for Use of Super Nintendo
Entertainment System With Integrated Hotel Entertainment and Hotel Guest
Related Communications System", as amended, with an effective date of May 12,
1993 and an expiration date of May 12, 2000.
2.27 "Product Specification(s)" shall mean the technical and operating
specifications for the Nintendo Systems and the N64 Controller, as mutually
agreed upon by the parties.
2.28 "Room(s)" shall mean hotel guest rooms, and shall include each
location in which a Nintendo System is available for use or which has the
capability of accessing the use of a Nintendo System by means of a
communication link or other system, including, but not limited to a Hotel
Guest System. A suite within a Licensed Hotel shall be considered as one
"Room" for purposes of this Agreement. Rooms shall not include public areas
within a Licensed Hotel or any other location.
2.29 "Super NES" shall mean NINTENDO's Super NES modified for use with
LODGENET's Hotel Guest System
2.30 "Super NES Controller(s)" shall mean a hand controller designed by
or for LODGENET for use with the Super NES.
2.31 "Term" shall mean ten (10) years from the Effective Date, together
with any extension of the Term under Paragraph 13.6 herein.
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2.32 "Territory" shall mean those countries set forth at SCHEDULE 1,
together with any other countries that the parties may mutually agree upon in
writing in the future.
2.33 "Test Game(s)" shall mean up to five (5) N64 video games selected
by NINTENDO and provided on Game Media for use during an approved beta test.
3. PRODUCT SPECIFICATIONS; DEVELOPMENT OF PROTOTYPE N64; BETA TEST
3.1 PROTOTYPE N64 AND N64 CONTROLLER DELIVERY. NINTENDO agrees to
develop prototypes of the N64 and the N64 Controller to operate in connection
with LODGENET's Hotel Guest System, in accordance with the schedule mutually
to be agreed upon by the parties. NINTENDO and LODGENET shall confer on an
ongoing basis to discuss specifications for the prototype N64 and N64
Controller. To the extent necessary during the testing process, NINTENDO
shall provide to LODGENET prototypes of the N64 or N64 Controller for use in
the testing process.
3.2 BETA TEST: TEST GAMES. LODGENET agrees to undertake beta testing at
two operational hotel properties (each of which shall also be a Licensed
Hotel) to ascertain the technical, operational and marketing compatibility of
the N64 and the N64 Controller prototypes with LODGENET's Hotel Guest System.
NINTENDO agrees to supply to LODGENET a sufficient number of prototypes for
use during the beta test only. LODGENET is authorized to install and utilize
the Test Games during the beta test in Rooms of the Licensed Hotels for a
period of not more than sixty (60) days. In the event LODGENET or the
Licensed Hotels elect to charge for use of the Test Games during the beta
test, LODGENET shall pay royalties to NINTENDO with respect to the use of the
Test Games as specified at Section 8 herein.
3.3 BETA TEST COMPLETION; N64 AND N64 CONTROLLER PRODUCT
SPECIFICATIONS. Following completion of the beta test, the parties shall
mutually agree in writing on the Product Specifications for the N64 and N64
Controllers to be provided under this Agreement.
3.4 PROVISION OF APPROVED PRODUCT. NINTENDO agrees to sell to LODGENET
the N64 and N64 Controllers meeting the Product Specifications. NINTENDO may,
at its option, utilize remanufactured parts or components in the N64 and the
N64 Controllers, provided all Product Specifications are met.
3.5 CHANGE IN PRODUCT SPECIFICATIONS. Changes in the Product
Specifications shall be made only upon the mutual agreement of the parties.
In the event it is necessary to change Product Specifications for the PAL
television standard, the parties shall mutually agree upon a development
schedule and a beta test program.
4. GRANT OF RIGHTS; SALE: LICENSE BY NINTENDO
4.1 GRANT. NINTENDO hereby grants to LODGENET and LODGENET hereby
accepts under the terms and conditions provided herein, a nonexclusive right
and license to the Licensed Intellectual Properties to: (a) use (but, with
the exception of the Super NES Controller, not make) the Licensed Products;
and, (b) make, use or sell Hotel Guest Systems incorporating the Licensed
Products for video game play. All such rights and licenses shall be exercised
solely in connection with the placement of LODGENET's Hotel Guest System for
video game play in Rooms of Licensed Hotels in the Territory.
4.2 SALE AND LICENSE OF LICENSED PRODUCTS TO LODGENET. To carry out the
grant in Paragraph 4.1, NINTENDO agrees sell to LODGENET the N64 and the N64
Controllers and to license and provide to LODGENET the Licensed Games for
play on the Super NES and the N64.
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4.3 RIGHT TO UTILIZE THE LICENSED PRODUCTS IN THE LICENSED HOTELS.
LODGENET shall have the right to utilize the Licensed Products in the
Licensed Hotels. Prior to the commencement of services incorporating the
Licensed Products, each Licensed Hotel shall have either: (a) signed a
Licensed Hotel Acknowledgment; or, (b) signed an agreement with LODGENET or
an Approved Subdistributor which includes all provisions contained in the
Licensed Hotel Acknowledgment. LODGENET agrees to enforce such acknowledgment
or agreement, in addition to all applicable restrictions, conditions and
limitations of this Agreement with respect to each Licensed Hotel. If
LODGENET does not undertake such enforcement efforts, NINTENDO may, without
prejudice to any rights or claim of indemnity it may have for breach of this
Agreement, upon twenty (20) days' Notice to LODGENET, undertake such
enforcement efforts, recovering from LODGENET all reasonable costs and
expenses associated with such enforcement efforts. LODGENET shall provide
reasonable assistance as may be requested by NINTENDO.
4.4 EXCEPTION TO REQUIREMENT TO OBTAIN LICENSED HOTEL ACKNOWLEDGMENT OR
AGREEMENT. With respect to Licensed Hotels of LODGENET continuing from the
Prior Agreement, LODGENET or an Approved Subdistributor shall not be required
to obtain a Licensed Hotel Acknowledgment or an agreement containing those
provisions if the following conditions apply: (a) the Licensed Hotel has not
purchased or otherwise acquired title to or an ownership interest of any kind
whatsoever to all or any part of the Licensed Products; (b) LODGENET
continuously maintains the ability to immediately render the Licensed
Products inoperable by the Licensed Hotel; and, (c) LODGENET shall
immediately render the Licensed Products inoperable by the Licensed Hotel in
the event LODGENET becomes aware of a default by the Licensed Hotel with
respect to any representation, warranty or agreement relating to the use of
the Licensed Products or in the event of any termination of the Agreement
between NINTENDO and LODGENET or the business relationship between LODGENET
and the Licensed Hotel. Notwithstanding this exception, LODGENET shall obtain
a Licensed Hotel Acknowledgment or agreement containing those provisions for
any new Licensed Hotel hereunder and for any renewal or restatement of its
agreements with Licensed Hotels continuing from the Prior Agreement.
4.5 RIGHT TO APPOINT APPROVED SUBDISTRIBUTORS. LODGENET shall have the
right to appoint Approved Subdistributors of the Licensed Products in the
Territory, following submission to and approval by NINTENDO of an Approved
Subdistributor Request. Prior to receiving the Licensed Products, each
Approved Subdistributor shall have either: (a) signed an Approved
Subdistributor Acknowledgment; or, (b) signed a written agreement with
LODGENET which includes all provisions contained in the Approved
Subdistributor Acknowledgment. LODGENET agrees to enforce such acknowledgment
or agreement, in addition to all applicable restrictions, conditions and
limitations of this Agreement with respect to each Approved Subdistributor.
If LODGENET does not undertake such enforcement efforts, NINTENDO may, upon
twenty (20) days' Notice to LODGENET, undertake such enforcement efforts,
recovering from LODGENET all reasonable costs and expenses associated with
such enforcement efforts. LODGENET shall provide reasonable assistance as may
be requested by NINTENDO.
4.6 LICENSED GAME TITLES: GAME LIST. The license of the Licensed Games
to LODGENET shall include the right to utilize a minimum of Five (5) Licensed
Game titles from the current Game List in each Licensed Hotel. Upon execution
of this Agreement, NINTENDO shall provide LODGENET with the current Game List
and expiration date for use of each game title. Thereafter, NINTENDO may add
or delete game titles from the Game List by providing a new Game List to
LODGENET. LODGENET represents and warrants that on or before the expiration
date for each game title, it shall remove, disable or destroy all copies of
the game title, whether in the possession of LODGENET, an Approved
Subdistributor or a Licensed Hotel, including copies installed on any
Licensed Hotel's host computer.
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4.7 DELIVERY; AUTHORIZATION TO COPY. NINTENDO has previously provided
LODGENET with Game Media for Licensed Game titles on the current Game List.
In the future, NINTENDO shall provide LODGENET with Game Media for any game
titles on the then-current Game List that may be requested by LODGENET. Upon
delivery to NINTENDO of a signed Approved Subdistributor Acknowledgment,
LODGENET is authorized to copy the Game Media for any titles on the
then-current Game List and to provide them to an Approved Subdistributor.
LODGENET or an Approved Subdistributor may load the Licensed Games onto the
Hotel Guest System of the Licensed Hotels. In the event Licensed Games are
copied or delivered electronically hereunder, LODGENET and/or an Approved
Subdistributor shall use a secure network line or such state-of-the-art
encryption technology in making the transfer as is commercially available at
the time. LODGENET shall remain liable for the security of the Licensed Games
at all times during and after such transfers as set forth in Paragraphs 4.4
and 5.7.
4.8 CONTROLLER FOR SUPER NES. LODGENET shall have the right to develop
or purchase third party game controllers for use only with the Super NES,
subject to NINTENDO's prior approval with respect to its quality and
operation of such Super NES Controller. Such approval shall not be
unreasonably withheld or delayed.
4.9 CONTROLLER FOR N64. LODGENET and NINTENDO shall cooperate in the
adaptation of the N64 Controller for use in LODGENET's Hotel Guest System. As
between NINTENDO and LODGENET, all adaptations and inventions associated with
or derived from such adaptations, including all design patents and industrial
design rights, but excluding LODGENET's copyrights in communication
protocols, shall be owned solely by NINTENDO and/or NCL. During the Term and
any extension thereof, NINTENDO shall not sell or license any N64 Controller
for use in Hotel Guest Systems that bears the LODGENET logo or the same
button color configuration as the N64 Controller adapted for use with the
LODGENET Hotel Guest System.
5. OBLIGATIONS AND UNDERTAKINGS OF LODGENET
5.1 GOOD FAITH OBLIGATION TO MARKET AND PROMOTE. LODGENET undertakes and
agrees to use good faith efforts to market and promote the Licensed Products
throughout the Territory.
5.2 MINIMUM INSTALLATION REQUIREMENTS FOR N64. LODGENET agrees to
install the N64 as a part of LODGENET's Hotel Guest System in not less than
*** Rooms during each of the first seven (7) calendar years during the
Term commencing in 1999. Installations may consist of new Rooms and/or
existing Rooms converted from the Super NES to the N64. Installations in
excess of the required minimum installation in any year may be counted toward
the minimum installation for the following year.
5.3 DISPOSITION OF REMOVED OR RETIRED SUPER NES. As LODGENET replaces
the existing Super NES units in Hotel Guest Systems with the N64, the removed
or retired Super NES units shall be destroyed or secured by LODGENET for
reuse only in Rooms of a Licensed Hotel as set forth in the Monthly Board
Reconciliation Report at SCHEDULE 7.
5.4 DISPOSITION OF LICENSED GAMES FOR REMOVED OR RETIRED SUPER NES. As
LODGENET replaces the existing Super NES units in Hotel Guest Systems with
the N64, all copies of the removed Super NES Licensed Games shall be
destroyed or returned to NINTENDO.
5.5 MINIMUM PLACEMENT LEVEL WITHIN EACH LICENSED HOTEL. Except with
NINTENDO's prior consent, which shall not be unreasonably withheld or
delayed, the Licensed Products shall not be placed at or in a Licensed Hotel
unless the Licensed Products are accessible to or operating within at least
75% of the Rooms in a particular hotel.
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5.6 LIMITATIONS ON SALE AND LICENSE. With regard to all aspects of the
Licensed Products, LODGENET may only sell to, license to, or permit
utilization by: (a) Approved Subdistributors who have signed an Approved
Subdistributor Acknowledgment; or, (b) Licensed Hotels who have signed a
Licensed Hotel Acknowledgment or who have otherwise met the conditions of
paragraph 4.4 herein. During the Term and continuing after the expiration or
termination hereof, the Nintendo Systems shall be used by LODGENET, the
Approved Subdistributors and the Licensed Hotels only in combination with
Licensed Games authorized and supplied by NINTENDO under a then current
license agreement.
5.7 SECURITY OF LICENSED GAMES AND GAME MEDIA. LODGENET shall take all
reasonable measures to insure that the Licensed Games, Test Games, Game Media
and any backup copies thereof are maintained in a secure location and/or
transmitted or copied only as permitted herein by a secure means, whether by
LODGENET, the Approved Subdistributors and/or the Licensed Hotels.
6. PROTECTION, OWNERSHIP AND ASSIGNMENT OF INTELLECTUAL PROPERTIES
6.1 RIGHTS IN THE LICENSED INTELLECTUAL PROPERTIES. LODGENET agrees
that, as between LODGENET and NINTENDO, all right, title, and interest in the
Licensed Intellectual Properties are solely the property of NINTENDO and/or
NCL.
6.2 LIMITATION ON USE OF LICENSED INTELLECTUAL PROPERTIES. LODGENET, the
Approved Subdistributors and the Licensed Hotels shall not in any manner
represent that they have any ownership in the Licensed Intellectual
Properties. Use of the Licensed Intellectual Properties shall not create any
right, title or interest in or to the Licensed Intellectual Properties in
favor of LODGENET, an Approved Subdistributor or a Licensed Hotel. LODGENET,
the Approved Subdistributors and the Licensed Hotels are not authorized to
use the Licensed Intellectual Properties in any manner not specifically
authorized under this Agreement.
6.3 MODIFICATIONS TO THE LICENSED PRODUCTS. LODGENET shall not make any
modifications to the Licensed Products nor shall LODGENET permit, instruct or
encourage an Approved Subdistributor or a Licensed Hotel to make such
modifications.
6.4 ASSIGNMENT AND CROSS LICENSE OF PATENTS.
6.4.1 ASSIGNMENT TO NINTENDO. LODGENET assigns to NINTENDO all
right, title and interest to: (a) any inventions, modifications, improvements
or alterations which relate to Hotel Guest Systems incorporating video game
play that LODGENET may jointly develop with NINTENDO during the Term; and,
(b) any inventions, modifications, improvements or alterations which
incorporate, use, or enhance the Licensed Products or the Licensed
Intellectual Properties or any other proprietary information, trade secrets
or know-how owned, developed or acquired by NINTENDO and/or NCL that LODGENET
may individually or jointly develop with NINTENDO during the Term. Upon
request of NINTENDO, LODGENET will assist in, testify and/or execute any
documents, statements, affidavits or assignments relating to such inventions,
modifications, improvements or alterations that NINTENDO deems appropriate to
establish and protect its rights hereunder, at no out-of-pocket cost to
LODGENET.
6.4.2 LICENSE TO LODGENET. NINTENDO grants back to LODGENET and its
customers a non-exclusive, royalty free license to make, use and sell any of
the inventions, modifications, improvements or alterations which have been
assigned to NINTENDO by LODGENET under paragraph 6.4.1 for use in connection
with LODGENET's Hotel Guest Systems, for the Term.
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6.4.3 LICENSE TO NINTENDO. If during the Term, without the
assistance of NINTENDO and without the violation of the Non-Disclosure
Agreements, LODGENET files or obtains any patents incorporating, enhancing,
or using video game play in Hotel Guest Systems, LODGENET grants to NINTENDO
and its customers a non-exclusive, royalty-free license to make, use and sell
such patented technology solely for the purpose of providing: (a) NINTENDO's
video game products; or, (b) aspects of systems which are necessary to
deliver video game products sold or licensed by NINTENDO, and for no other
purpose, for the respective terms of the patents.
6.5 PATENT MARKINGS. LODGENET will place in a conspicuous location on
any product made or sold under any Licensed Patent, a patent notice in
accordance with 35 USC Section 287, as may be specified by NINTENDO. LODGENET
shall not be responsible for any such markings on any Licensed Products
purchased from or supplied by NINTENDO (it being understood that the
responsibility for any such markings shall be NINTENDO's). LODGENET shall not
mark the Licensed Products with any patent marking other than with markings
of NINTENDO's patents as specified by NINTENDO.
7. PRODUCT WARRANTY; SERVICE TRAINING
7.1 NINTENDO SYSTEMS WARRANTY. NINTENDO hereby warrants to LODGENET
that the Nintendo Systems: (a) are free from material defects in material and
workmanship; and, (b) will operate in accordance with the Product
Specifications for a period of fourteen (14) months from the date of
manufacture. If a covered defect occurs within the warranty period, upon
return of the defective Nintendo System to NINTENDO, NINTENDO agrees to
repair or replace (at NINTENDO's option) the Nintendo System, in conformance
with the Product Specifications, within fourteen (14) business days from the
date of receipt by NINTENDO. NINTENDO shall pay shipping charges on the
return shipment to LODGENET. All other shipping, freight, duty and tax
charges as may be incurred for warranty service shall be for LODGENET's
account.
7.2 LICENSED GAME WARRANTY. NINTENDO hereby warrants to LODGENET that,
during the Term, the Licensed Games: (a) shall be free from material defects
in operation; and, (b) will operate on the Nintendo Systems in accordance the
game play instructions provided by NINTENDO. If a defect covered under this
warranty occurs within the warranty period, upon Notice from LODGENET to
NINTENDO designating the Licensed Game title and the nature of the defect,
NINTENDO will either replace the Licensed Game title with a new copy of the
Licensed Game title or, if NINTENDO elects not to replace the Licensed Game
Title, allow LODGENET to select an alternate Licensed Game title from the
Game List provided by NINTENDO, at no additional charge. NINTENDO shall
fulfill its warranty obligation hereunder within fourteen (14) business days
from the date Notice is received by NINTENDO.
7.3 OUT-OF-WARRANTY SERVICE. During the Term, NINTENDO agrees to make
available to LODGENET out-of-warranty service for the Nintendo Systems within
fourteen (14) business days from the date of receipt by NINTENDO. The charge
for each out-of-warranty repair shall be *** for each Super NES and *** for
each N64, or such other amounts as the parties may agree on, in writing, from
time to time. Service pricing shall be subject to reasonable adjustment by
NINTENDO. LODGENET shall contact NINTENDO in advance of submitting an
out-of-warranty service request to obtain a return authorization number,
NINTENDO shall pay shipping charges on the return shipment to LODGENET. All
other shipping, freight, duty and tax charges as may be incurred for
out-of-warranty service shall be for LODGENET's account. Payment for
out-of-warranty service shall be made by LODGENET to NINTENDO net thirty (30)
days from the date of the return shipment.
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7.4 QUALITY CONTROL FOR N64 CONTROLLERS. In lieu of warranty coverage,
NINTENDO agrees to inspect and conduct random tests prior to shipment of all
N64 Controllers purchased by LODGENET under this Agreement, using customary
and reasonable industry standards.
8. ORDER PURCHASE AND PAYMENTS
8.1 PURCHASE PRICE AND PAYMENT FOR THE NINTENDO SYSTEMS AND N64
CONTROLLERS. The purchase price for each N64 Controller and each Nintendo
System shall be ***. Following receipt of a price request from LODGENET,
NINTENDO shall provide LODGENET with an estimate of cost for use on the
written purchase order and the standby letter of credit. The purchase price
shall be subject to adjustment by NINTENDO within a reasonable period after
Delivery (provided that such price shall not exceed ***. Payment shall be
made net thirty (30) days from Delivery and shall be secured by an
irrevocable standby letter of credit for the amount of the order, issued by a
bank approved by NINTENDO or confirmed, at LODGENET's expense, if requested
by NINTENDO. Concurrently with the payment hereunder, LODGENET shall transmit
to NINTENDO (Attn: Gateway Program Manager, Facsimile: 425-558-7100) the date
and number of the purchase order to which the payment is to be applied.
8.2 DELIVERY OF N64 AND N64 CONTROLLERS. NINTENDO agrees to make
Delivery of the N64 and N64 Controllers conforming to the Product
Specifications within one hundred and twenty (120) days from the date
NINTENDO receives LODGENET's written purchase order.
8.3 LICENSED GAME ROYALTY. LODGENET shall pay NINTENDO a royalty for
the Licensed Games utilized in a Hotel Guest System. Royalty payments to
NINTENDO shall commence when the Licensed Games are available for use in a
Licensed Hotel Room. The royalty payable by LODGENET to NINTENDO shall be as
follows:
8.3.1 ROYALTY PAYABLE UPON EFFECTIVE DATE. Upon the Effective Date,
and continuing until LODGENET shall have: (i) placed orders for the N64 with
NINTENDO for cumulative amounts in excess of ***; and, (ii) installed and
commenced payment of royalties for Licensed Games on the N64 as a part of the
Hotel Guest System in at least *** Rooms in Licensed Hotels, LODGENET shall
pay a royalty for any Licensed Games utilized in a Hotel Guest System of ***
per calendar month, per Room.
8.3.2 ROYALTY PAYABLE AFTER N64 CONDITIONS ARE MET. From and after
the first day of the month following the month in which LODGENET shall have:
(i) placed orders for the N64 with NINTENDO for cumulative amounts in excess
of ***; and, (ii) installed and commenced payment of royalties for Licensed
Games on the N64 as a part of the Hotel Guest System in at least *** Rooms in
Licensed Hotels, LODGENET shall pay a revised royalty for any Licensed Games
utilized in a Hotel Guest System as follows:
(a) For the first *** Rooms, a royalty shall be paid of *** per
calendar month, per Room for use of the Licensed Games; and,
(b) For each additional Room thereafter, a royalty shall be paid of
*** of the Gross Revenue for all such additional Rooms per calendar month,
but in no event less than *** per Room per calendar month or any portion
thereof. The calculation of Rooms covered under this Agreement and royalties
payable thereon shall be made monthly as set forth in the Licensee Monthly
Royalty Report at Schedule 5.
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8.3.3 *** IF N64 CONDITIONS ARE MET. Within forty-five (45) days
after meeting the conditions set forth at Paragraph 8.3.2, *** equal to the
difference between the royalties paid under Paragraph 8.3.1 and the royalties
that would have been payable under Paragraph 8.3.2 for the time period
commencing with the first month after LODGENET has placed in excess of *** in
orders for the N64 and ending with the month in which LODGENET shall have
installed and commenced payment of royalties for Licensed Games on the N64 as
a part of the Hotel Guest System in at least *** Rooms in Licensed Hotels. No
interest shall be payable by NINTENDO on the *** royalties.
8.4 MINIMUM ROYALTY TERM FOR EACH LICENSED HOTEL. Each Licensed Hotel
shall agree to use the Licensed Games for a minimum initial term of twelve
(12) months for each Room able to access a Nintendo System. LODGENET shall
not be obligated to enforce this requirement with respect to any Licensed
Hotel that is in bankruptcy or otherwise ceases to do business.
8.5 TERMS OF PAYMENT FOR LICENSED GAME ROYALTY. Royalties shall be
payable monthly by LODGENET to NINTENDO on or before the 20th day of the
month for the prior month's use. Payments shall be made either by wire
transfer to a bank designated by NINTENDO in the United States or by a check
drawn on a US Bank, in either case to be received by NINTENDO on or before
the due date. Royalties shall be payable only in US Dollars. Concurrently
with the payment hereunder, LODGENET shall transmit to NINTENDO (Attn:
Gateway Program Manager, Facsimile: 425-558-7100) a copy of the Licensee
Monthly Royalty Report, in the form set forth at SCHEDULE 5, compiled by
LODGENET for the time period covered by the payment.
8.6 LATE PAYMENT INTEREST. Any payment due under this Agreement which is
overdue by more than ten (10) calendar days, shall be assessed interest at
the rate of one and one-half percent (1 1/2%) per month. In the event that
during any twelve (12) month period during the Term, late payments occur
during more than two (2) consecutive months or any four (4) months,
regardless of whether consecutive, NINTENDO, at its option, may require
LODGENET to place a standby letter of credit, at LODGENET's expense, to
secure timely payment of estimated royalty amounts owing or to become owing.
8.7 WITHHOLDING; TAXES. Any withholding by an Approved Subdistributor or
a Licensed Hotel on payments to LODGENET shall be for LODGENET's account and
shall not reduce the royalty payment due to NINTENDO by LODGENET.
9. ADVERTISING AND PROMOTION OF THE LICENSED PRODUCTS
9.1 QUALITY. LODGENET agrees that any promotional materials or items or
any advertisements, in whatever medium, for the Licensed Products shall be of
a high-quality, comparable to that currently employed by NINTENDO for its
video game products.
9.2 ARTWORK AND GAME PLAY INFORMATION SUBMISSIONS AND APPROVALS. For
each Licensed Game title, NINTENDO shall provide to LODGENET, in the form of
digital files or hard copy, as NINTENDO may elect,: (a) a short summary of
each game title and general operating information; (b) camera ready art work
featuring screen shots, package art or advertising graphics; and, (c)
trademark and copyright marking notices. LODGENET shall, in turn, incorporate
such materials into the Hotel Guest Systems and/or copy and provide such
materials to each Approved Subdistributor and each Licensed Hotel. LODGENET,
the Approved Subdistributors and the Licensed Hotels are authorized to
utilize such materials solely in connection with the advertising and
promotion of the Licensed Games.
-----------------
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<PAGE>
9.3 ART WORK APPROVALS; SUBMISSION OF SAMPLES. LODGENET, the Approved
Subdistributors and the Licensed Hotels may create advertising and
promotional materials featuring the Licensed Games to be used in connection
with the advertising and promotion of the Licensed Products and/or LODGENET's
Hotel Guest System. The Approved Subdistributors and the Licensed Hotels
shall submit such materials to LODGENET and LODGENET, in turn, shall submit
such materials to NINTENDO for review and evaluation. NINTENDO shall within
fifteen (15) business days of receipt of such samples, in writing, approve or
disapprove such samples. If any of the samples are disapproved as to quality,
NINTENDO shall specify the reasons for such disapproval and state what
corrections and/or improvements are necessary. After making any necessary
corrections and/or any necessary improvements to the disapproved samples, the
Approved Subdistributor or the Licensed Hotel shall resubmit new samples to
LODGENET who shall, in turn, submit such samples to NINTENDO for approval by
NINTENDO. Submitted materials may be forwarded by LODGENET to NINTENDO by
facsimile transmission, provided they remain legible. No promotional items or
advertisements, in whatever medium, for the Licensed Games shall be
distributed or utilized by LODGENET, the Approved Subdistributors or the
Licensed Hotels without obtaining prior written approval by NINTENDO.
9.4 PRESS RELEASES OR OTHER MATERIALS USING NINTENDO'S NAME OR
TRADEMARKS. LODGENET, the Approved Subdistributors and the Licensed Hotels
may prepare press releases, press remarks or other materials using NINTENDO's
name, trademarks and/or logos. All such materials shall be submitted in
advance to NINTENDO for review and evaluation. NINTENDO shall within fifteen
(15) business days of receipt, in writing, approve or disapprove such
materials. If any of the materials are disapproved, NINTENDO shall specify
the reasons and state what changes are necessary. After making any changes,
LODGENET shall submit revised materials to NINTENDO for approval by NINTENDO.
Submitted materials may be forwarded to NINTENDO by facsimile transmission.
No press releases, press remarks or other materials using NINTENDO's name,
trademarks or logos shall be made, released or distributed by LODGENET, the
Approved Subdistributors or the Licensed Hotels without obtaining prior
written approval by NINTENDO.
10. RECORDS AND AUDIT
10.1 RECORDS. LODGENET shall keep accurate and complete records with
respect to the sale or use of the Nintendo Systems and the license or use of
the Licensed Games to Approved Subdistributors and the Licensed Hotels in
sufficient detail to enable the royalties to be determined and to also enable
NINTENDO to monitor placement of the Licensed Products.
10.2 REPORT. On or before the 20th day of each month, LODGENET shall
furnish to NINTENDO (Attn: Gateway Program Manager, Facsimile 425-882-3585) a
Licensee Monthly Royalty Report, in the form set forth at SCHEDULE 5,
detailing the prior month's usage of the Licensed Games by LODGENET, the
Approved Subdistributors and the Licensed Hotels. To the extent the Territory
includes more than one country, LODGENET may provide such reports on a
country by country basis.
10.3 FAILURE TO REPORT LICENSED GAME USAGE; PENALTY. If at any time
NINTENDO reasonably determines that LODGENET has failed to pay royalties and
report commencement of a Licensed Hotel's use of Licensed Games in a given
hotel location or Room as a part of the Licensee Monthly Royalty Report and
royalty payment to NINTENDO and if such first royalty payment is not made
within forty-five (45) days from the date it would have been due, then, upon
NINTENDO's Notice to LODGENET, royalty payments calculated at the rate of
***, per calendar month, together with interest from the initial due date,
shall be due and payable retroactive to the date of LODGENET's installation
of the Nintendo Systems in such Licensed Hotel, without regard to actual use
or availability of Licensed Games in a Room.
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<PAGE>
10.4 TRACKING OF NINTENDO SYSTEMS. Within thirty (30) days following the
end of each month, LODGENET shall provide NINTENDO (Attn: Gateway Program
Manager, Facsimile 425-882-3585) with the Monthly Board Reconciliation
Report, in the form set forth at SCHEDULE 7, certified in writing by an
authorized officer of LODGENET, detailing the disposition of all Nintendo
Systems purchased under this Agreement and under the Prior Agreement.
10.5 CERTIFICATION; AUDIT. Upon the written request of NINTENDO, but no
more frequently than once per year, LODGENET shall submit to NINTENDO a
written certification from LODGENET's president or chief financial officer,
and/or from the President or chief financial officer of each Approved
Subdistributor, certifying that such individual has examined the records with
respect to the transactions contemplated by this Agreement for the period
(not to exceed 24 months) specified in NINTENDO's request and that the
royalty payments and reports submitted by LODGENET to NINTENDO during that
period are accurate and correct. In addition, NINTENDO may, at it's option,
arrange for a licensed accountant to examine the records of LODGENET or any
Approved Subdistributor to confirm the accuracy of records and royalty
payments submitted under this Agreement. NINTENDO shall conduct the audit
during normal business hours, upon not less than thirty (30) days Notice to
LODGENET. NINTENDO shall bear the expense of the audit unless the audit shows
an error in NINTENDO's favor amounting to a loss to NINTENDO in excess of
five percent (5%) of the actual royalty payable to NINTENDO for the period
examined, in which event LODGENET shall bear the expense of the audit.
10.6 CONFIDENTIALITY OF LODGENET RECORDS. Nintendo agrees to maintain as
confidential all records and royalty reports supplied by LODGENET to NINTENDO
under this Section 10. Notwithstanding this limitation, NINTENDO may use
information regarding use of the Licensed Games which has been included in
such records and reports in statistical reporting and general analysis or any
other manner which does not disclose the identity of LODGENET, the Approved
Subdistributors or the Licensed Hotels.
11. CONFIDENTIAL INFORMATION
11.1 NINTENDO'S CONFIDENTIAL INFORMATION. LODGENET agrees to hold all
Licensed Proprietary Information in confidence and will use such Licensed
Proprietary Information only in accordance with this Agreement. LODGENET
agrees, however, this obligation of confidentiality shall not apply to: (a)
information which was actually known by the receiving party (and not subject
to any limitation or restriction, including any other license,
confidentiality or nondisclosure agreement with the disclosing party) prior
to the disclosure thereof by the disclosing party; (b) information which
hereafter becomes publicly known and otherwise a part of the public domain
through no action or fault on the part of the receiving party and without
violation of any limitation or restriction by any third party; or, (c)
information of a general business nature that does not identify the
information source or constitute competitive information.
11.2 LODGENET'S CONFIDENTIAL INFORMATION. NINTENDO agrees that it will
hold all confidential information received from LODGENET in confidence and
will use such information only in accordance with this Agreement. LODGENET's
Confidential Information shall include the communication protocols and other
proprietary technical information relating to LODGENET's Hotel Guest System.
However, this obligation of confidentiality shall not apply to: (a)
information which was actually known by NINTENDO (and not subject to any
limitation or restriction, including any other license, confidentiality or
non-disclosure agreement with LODGENET) prior to the disclosure thereof by
LODGENET, (b) information which hereafter becomes publicly known and
otherwise a part of the public domain through no action or fault on the part
of NINTENDO and without violation of any limitation or restriction by any
third party; or, (c) information of a general business nature that does not
identify the information source or constitute competitive information.
NINTENDO-LODGENET HOTEL LICENSE AGREEMENT
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<PAGE>
11.3 AGREEMENT CONFIDENTIALITY. Both parties are to maintain the terms
of this Agreement in confidence. However, either party may disclose the
existence, date and general subject matter of this Agreement, but shall not
disclose to any third party any other terms of the Agreement.
12. WARRANTY; LIMITATION OF LIABILITY
12.1 CORPORATE AUTHORITY. NINTENDO represents and warrants that it has
the right to enter into this Agreement and to grant the rights and licenses
herein.
12.2 INTELLECTUAL PROPERTIES WARRANTY. NINTENDO warrants that it (or
NCL) is and will remain throughout the Term, the owner or authorized licensee
of the Licensed Intellectual Properties. NINTENDO agrees to defend, indemnify
and hold harmless LODGENET and the Licensed Hotels from all damages arising
out of any infringement or claim of infringement by the Licensed Products or
the Licensed Intellectual Properties. NINTENDO's obligations shall be
contingent upon: (a) the absence of any claim of infringement based upon a
Licensed Hotel, Approved Subdistributor or LODGENET's modification or
combination of the Licensed Products with other elements, if the infringement
would not have occurred but for such combined use or modification; (b)
LODGENET giving NINTENDO prompt written notice of any claim; (c) NINTENDO
being granted control of the defense, compromise or settlement of such claim;
and, (d) NINTENDO being given an immediate right to provide a substitution
for any allegedly infringing Licensed Game title with another Licensed Game
title. LODGENET shall assist NINTENDO to the extent reasonably required to
effect a removal or substitution of a Licensed Game or to defend against any
infringement claim, at no out-of-pocket expense to LODGENET. LODGENET shall
be entitled to extend this warranty to the Approved Subdistributors and the
Licensed Hotels; provided, however, that in the event of a claim for
indemnity by an Approved Subdistributor or a Licensed Hotel, LODGENET, the
Approved Subdistributor (if applicable) and the Licensed Hotel must each meet
the requirements set forth in this paragraph 12.2 (a) through (d). Subject to
the terms of a protective order specified by NINTENDO, LODGENET may at its
expense, monitor any defense or proceeding in connection with any such claim.
12.3 HOLD HARMLESS; LIMITS OF INDEMNIFICATION. NINTENDO agrees to
indemnify and hold harmless LODGENET from any act or omission, whether
negligent or otherwise, in the performance of the obligations,
representations or warranties as are specifically set forth in this
Agreement. LODGENET agrees to indemnify and hold harmless NINTENDO from any
act or omission, whether negligent or otherwise, by LODGENET, its Approved
Subdistributors or its Licensed Hotels, in the performance of the
obligations, representations or warranties as are specifically set forth in
this Agreement. In no circumstance shall either party be liable in contract,
tort (including negligence or breach of statutory duty) or otherwise for loss
(whether direct or indirect) of profits, business, or anticipated savings or
for any indirect or consequential loss.
13. TERM AND TERMINATION
13.1 TERM. This Agreement shall not be binding until it has been signed
by or on behalf of each party, in which event it shall be effective as of the
Effective Date. Unless otherwise terminated as provided in this Section, this
Agreement is to continue in full force and effect for the Term.
13.2 DEFAULT OR BREACH. In the event that either party is in default or
commits a breach of this Agreement, and if such default or breach shall not
be cured within thirty (30) days after Notice of such default or breach is
given by the non-defaulting party to the defaulting party, then at any time
after the expiration of such thirty (30) days, the non-defaulting party may
give Notice to the defaulted party of its election to terminate this
Agreement. Thereupon the Agreement shall
NINTENDO-LODGENET HOTEL LICENSE AGREEMENT
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MAY 12, 1998 (FINAL)
<PAGE>
terminate on the date specified in such Notice, which shall not be less than
fifteen (15) days following the receipt of such Notice. Such right of
termination shall not be exclusive of any other remedies or means of redress
to which the non-defaulting party may be lawfully entitled.
13.3 BANKRUPTCY/INSOLVENCY. At NINTENDO's option, this Agreement can be
terminated immediately and without notice in the event that LODGENET: (a)
makes an assignment for the benefit of creditors; (b) becomes insolvent; (c)
files a voluntary petition for bankruptcy; (d) acquiesces to any involuntary
bankruptcy petition; (e) is adjudicated as a bankrupt; or, (f) ceases to do
business.
13.4 SURVIVAL OF TERMINATION. The following rights and obligations
survive any expiration and/or termination of this Agreement to the degree
necessary to permit their complete fulfillment or discharge: (a) NINTENDO's
right to receive, and LODGENET's obligation to make payment for any order of
the Licensed Products or for any royalties for the Licensed Games accrued on
the date of termination; (b) the confidentiality obligations specified
herein; (c) any cause of action or claim of either party, accrued or to
accrue, because of any breach or default by the other party; (d) the
indemnity obligations as specified herein; (e) NINTENDO's warranty
obligations under paragraph 7.1 with respect to Nintendo Systems purchased
during the Term; and, (f) LODGENET's software royalty obligations under any
period of continued software use that may be elected by LODGENET under
paragraph 13.6 herein.
13.5 TERMINATION OF USE OF LICENSED INTELLECTUAL PROPERTIES. Upon
expiration and/or termination of this Agreement, LODGENET, the Approved
Subdistributors and the Licensed Hotels will cease all use of the Licensed
Products and the Licensed Intellectual Properties for any purpose, and will
not disclose to third parties any Licensed Proprietary Information. LODGENET
shall also return to NINTENDO all writings, drawings, models, data and other
materials and things, without making any copies, in LODGENET's possession or
in the possession of any employee, agent or contractor receiving the
information through LODGENET, which constitute or relate to or disclose any
Licensed Proprietary Information. LODGENET shall also obtain and destroy all
copies of the Licensed Games and the Test Games, including copies installed
on the computers of the Licensed Hotels or backup copies thereof, whether in
the possession of LODGENET, an Approved Subdistributor, the Licensed Hotel or
any past or present employee, agent or contractor of LODGENET, an Approved
Subdistributor or the Licensed Hotels. LODGENET shall provide a written
certification signed by an authorized corporate officer, confirming the
destruction of all such copies within twenty (20) days after the date of
expiration or termination of this Agreement.
13.6 OPTION TO EXTEND USE OF LICENSED GAMES ONLY. Provided this
Agreement has not been terminated due to breach or default by LODGENET, upon
Notice to NINTENDO within 90 days prior to the expiration of the Term,
LODGENET (and its Approved Subdistributors and Licensed Hotels) may extend
this Agreement and continue use of the Licensed Games on the Nintendo Systems
as a part of the Hotel Guest System for up to two (2) years after the
expiration of the Term, provided that NINTENDO shall have no continuing
obligation to sell or provide warranties regarding the Nintendo Systems or
the N64 Controllers, and, provided further, that neither party shall be bound
by any obligation under paragraph 14.2 herein.
14. COVENANT NOT TO SUE
14.1 COVENANT NOT TO SUE. Each party agrees and covenants not to
directly or indirectly bring any legal action against the other party, or
against the licensed customers, purchasers and/or users of the products made,
sold or used by the other party, for patent infringement of US Patent No.
5,581,270 owned by NINTENDO and US Patent Nos. 5,675,828 and
NINTENDO-LODGENET HOTEL LICENSE AGREEMENT
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MAY 12, 1998 (FINAL)
<PAGE>
5,641,319 owned by LODGENET. This covenant shall be binding upon the parties
and their assigns and successors for the term of the patents.
14.2 EXCEPTION TO RELEASE. The foregoing covenant shall not apply to any
claim against the entities identified at SCHEDULE 8, or their assignees or
successors in interest, until the earlier of: (a) the expiration or
termination of this Agreement; or (b) the conclusion of the legal actions
identified at SCHEDULE 9.
15. GENERAL PROVISIONS
15.1 RECITALS. The recitals herein constitute an integral part of the
agreement reached and are to be considered as such.
15.2 CAPTIONS. The captions contained in this Agreement have been
inserted for reference and convenience only and do not define, limit or
describe the scope of this Agreement or the intent of any provision.
15.3 NON-ASSIGNABILITY/SUBLICENSING. Neither party may assign, delegate,
sublicense or otherwise transfer this Agreement, including by operation of
law or by the sale or transfer of more than fifty percent (50%) of the stock,
assets or ownership interest or control of one party, without the prior
written consent of the other party. Such consent shall not be unreasonably
withheld or delayed.
15.4 FORCE MAJEURE. Neither party shall be liable for any breach of this
Agreement occasioned by any cause beyond the reasonable control of such
party, which, for purposes of this Agreement shall include governmental
action, war, riot or civil commotion, fire, floods, labor disputes,
restraints affecting shipping or credit, delay of carriers, inadequate supply
of suitable materials, or any other cause which could not with reasonable
diligence be controlled or prevented by the parties.
15.5 WAIVER. The waiver by any party of a breach or default of any
provision of this Agreement or any right hereunder by the other party shall
not constitute a waiver by such party of any succeeding breach of the same or
other provision; nor shall any delay or omission on the part of either party
to exercise or avail itself of any right, power or privilege that it has or
may have hereunder, operate as a waiver of any such right, power or privilege
by such party.
15.6 COMPLIANCE WITH APPLICABLE LAWS. The parties shall at all times
comply with all applicable laws and regulations affecting this Agreement and
the performance by the parties of this Agreement. LODGENET, at its own
expense, shall negotiate and obtain any approval, license or permit required
for its provision of the Licensed Products to the Approved Subdistributors or
the Licensed Hotels in the Territory, including but not limited to, any
necessary safety, electronic emissions or electrical approvals.
15.7 GOVERNING LAW; VENUE. This Agreement shall be governed by, subject
to and construed under the laws of the State of Washington.
15.8 UNENFORCEABILITY. In the event that any term, clause or provision
of this Agreement shall be construed to be or adjudged invalid, void or
unenforceable, such term, clause or provision shall be construed as severed
from this Agreement, and the remaining terms, clauses and provisions shall
remain in effect.
NINTENDO-LODGENET HOTEL LICENSE AGREEMENT
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15.9 ASSOCIATION: The parties, by this Agreement, do not intend to
create a partnership, principal/agent, master/servant, or joint venture
relationship, and nothing in this Agreement shall be construed as creating
such a relationship between the parties.
15.10 INTEGRATION. This Agreement, together with the NDAs, constitute
the entire agreement between the parties relating to the subject matter
hereof. All prior negotiations, representations, agreements and
understandings are merged into, extinguished by and completely expressed by
it. Neither party shall be bound by any definition, condition, warranty,
representation, modification, consent or waiver other than as expressly
stated herein unless set forth in a writing executed by the party to be bound.
15.11 EQUITABLE RELIEF. Both parties acknowledge that in the event of a
breach of this Agreement, no adequate remedy at law will be available to
either party and that either party will be entitled to injunctive or other
equitable relief in addition to any relief available at law.
15.12 ATTORNEYS' FEES. In the event that it is necessary for either
party to this Agreement to undertake legal action to enforce any of the
terms, conditions or rights contained herein, or to defend any such action,
the prevailing party in any such action shall be entitled to recover from the
other party all reasonable attorneys' fees, costs and expenses relating to
such legal action.
15.13 SIGNATURE AUTHORITY WARRANTY. Each party represents and warrants
that the party signing this Agreement on behalf of their respective company
is empowered with full authority and authorization to so act.
15.14 SIGNATURE BY FAX; COUNTERPARTS. This Agreement may be signed in
counterparts. A signature transmitted by facsimile shall be considered an
original for purposes of this Agreement.
IN WITNESS WHEREOF, NINTENDO and LODGENET have signed this Agreement on
the dates set forth below, to be effective as of the Effective Date.
NINTENDO: LODGENET:
NINTENDO OF AMERICA INC. LODGENET ENTERTAINMENT CORPORATION
By: /s/ Phil Rogers By: /s/ Steve Truckenmiller
--------------------------- --------------------------
Title: Executive Vice President, Title: Vice President,
Operations Guest Pay
-------------------- ----------------------
Date: 5/12/98 Date: 5/18/98
-------------------- ----------------------
Schedule 1: Territory and Approved Subdistributors
Schedule 2: Licensed Hotel Acknowledgment
Schedule 3: Approved Subdistributor Request
Schedule 4: Approved Subdistributor Acknowledgment
Schedule 5: Licensee Monthly Royalty Report
Schedule 6: Guest Information Record
Schedule 7: Monthly Board Reconciliation Report
Schedule 8: List of Entities Under Paragraph 14.2
Schedule 9: List of Actions Under Paragraph 14.2
NINTENDO-LODGENET HOTEL LICENSE AGREEMENT
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<PAGE>
SCHEDULE 1
TERRITORY
<CAPTION>
TERRITORY SUBDISTRIBUTOR
United States N/A
Canada N/A
Brazil Sistema de Televisao
Rua do Ruocia, 313
Sao Paulo, Brazil
Attn: Ms. Katia Murgell
Dominican Republic Roombar, SA
Aristides Fiallo Cabral, No. 2, Ste. 301
Santo Domingo, Dominican Republic
Panama, Costa Rica, Belize, C.C. Video
Guatemala, El Salvador, a/k/a Five Star Entertainment
Honduras, Nicaragua Apartado 5007, Balboa
Panama, Panama
Peru Ditel, SA
Calle S. Juan 705
Urbanizacion las Gardenias-Surco
Lima 33, Peru
Venezuela TCI Netvision
Edificio Galipan, Torre B
Planta Baja, Locales 8 y 9
El Rosal, Venezuela
*This Schedule 1 may be revised from time to time by the parties to add or
delete Territories and/or Approved Subdistributors by signature of both
parties below.
Revised Schedule 1 With an Effective Date of: 5/12/98
-------------------
Signed by NINTENDO: /s/ Phil Rogers Date: 5/12/98
---------------------- -------------------
Signed by LODGENET:/s/ Steve Truckenmiller Date: 5/18/98
----------------------- -------------------
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SCHEDULE 2
LICENSED HOTEL ACKNOWLEDGMENT
LODGENET ENTERTAINMENT CORP. ("LodgeNet") is an authorized licensee of
Nintendo of America Inc. ("Nintendo") for use of select NINTENDO video game
products in authorized hotel guest rooms. As a customer of LODGENET, you are
subject to limitations on the use of NINTENDO products and Nintendo's
intellectual properties as part of the LodgeNet System, and agree as follows:
1. NONEXCLUSIVE RIGHTS: LICENSED INTELLECTUAL PROPERTIES. You agree that all
right, title and interest in the intellectual properties associated with the
NINTENDO video game system and game software belong to Nintendo. You shall
not represent that you have any ownership in Nintendo's intellectual
properties.
2. MODIFICATION AND USE OF THE NINTENDO GAME SYSTEM. You agree not to modify
the NINTENDO game system or game software provided with your LodgeNet System.
You agree to use only the licensed NINTENDO games. You may not operate any
games or other software on the NINTENDO game system.
3. SECURITY OF NINTENDO GAME MEDIA. You agree to keep the NINTENDO games in a
secure location and not to permit any copying of any NINTENDO games.
4. TERMINATION; NO CONTINUING USE. Upon termination of your agreement with
LodgeNet or upon written notice from LodgeNet or Nintendo of the termination
of the license agreement between Nintendo and LodgeNet, you acknowledge that
all use of the NINTENDO game systems and NINTENDO games at your hotel shall
terminate.
5. ADVERTISING AND PROMOTION OF NINTENDO GAMES. You agree to use Nintendo's
trademarks and copyrights only as authorized by LodgeNet or Nintendo and in
connection with the advertising and promotion of the authorized NINTENDO
games on the LodgeNet System. All such advertising and promotion shall be of
good quality. Advertising and promotion materials related to the NINTENDO
products which are created by you or your agents must be approved in advance
of use.
Such materials must be transmitted to LodgeNet prior to use (Fax:__________
Attn:__________ who, in turn, will provide them to Nintendo. Nintendo will
promptly review and provide approval and/or corrections for such materials.
You may also obtain preapproved Nintendo art from LodgeNet, which, if not
modified, may be used without additional approval, solely in connection with
the advertising and promotion of the licensed NINTENDO products. You must
properly identify ownership of all trademarks and copyrights of Nintendo in
all advertising and promotional materials.
6. LIMITATION ON LIABILITY. Nintendo makes no representations or warranties
to you or your customers regarding the NINTENDO products. Nintendo disc!aims
all implied representations and warranties, including warranties of
merchantability and fitness for a particular purpose. Nintendo does not
warrant to you that use of Nintendo's products or intellectual property
rights will not infringe upon the rights of others.
7. REPRESENTATIONS. You represent and warrant to Nintendo that you are not
engaged in any illegal activities; there are no criminal proceedings pending
against you; you respect the intellectual property rights of others; and, you
are not engaged in the manufacture, sale or distribution of products which
infringe the intellectual property rights of others.
Please acknowledge your acceptance by signing and returning an original of
this Acknowledgment to LodgeNet.
Accepted this __ day of __________, 19__.
------------------------------------------
Printed Name of Licensed Hotel
By:
---------------------------------------
Printed Name:
Title:
------------------------------------
NINTENDO-LODGENET HOTEL LICENSE AGREEMENT
PAGE 18
MAY 12, 1998 (FINAL)
<PAGE>
SCHEDULE 3
APPROVED SUBDISTRIBUTOR REQUEST
TO: Nintendo of America Inc.
ATTN: Nintendo Gateway Manager
FAX: (425) 882-3585
LODGENET ENTERTAINMENT CORP. ("LodgeNet") desires to appoint the following
SUBDISTRIBUTOR ("Subdistributor") under our agreement with Nintendo of
America Inc. ("Nintendo") for use of select NINTENDO products in authorized
hotel guest rooms:
------------------------------------------
(Subdistributor's Name)
------------------------------------------
(Subdistributor's Street Address)
------------------------------------------
(Subdistributor's City/Province/Country)
------------------------------------------
(Subdistributor's Phone &, Fax Numbers)
------------------------------------------
(Subdistributor's Contact Person)
------------------------------------------
(Territory to be Served by Subdistributor)
LodgeNet represents and warrants to Nintendo that we have conducted a
reasonable investigation of the Subdistributor's financial condition and
business activities; and based on that investigation, we believe that:
1. Subdistributor will be able to fulfill its financial obligations to us;
2. Subdistributor respects the intellectual property rights of third parties,
is not engaged in any illegal or illicit activities and is not a party to any
criminal proceedings; and,
3. Subdistributor is not, directly or indirectly, owned in any part by Sony
or Sega.
These representations are an integral part of the agreement between LodgeNet
and Nintendo and any breach of these representations by LodgeNet to Nintendo
would constitute a material breach of the agreement between LodgeNet and
Nintendo.
With regard to the subdistributor agreement between LodgeNet and
Subdistributor:
1. We have enclosed a copy of the signed Approved Subdistributor
Acknowledgment; or,
2. We represent and warrant to Nintendo that LodgeNet has entered into a
written agreement with Subdistributor which contains all provisions of the
Approved Subdistributor Acknowledgment specified by Nintendo, including a
representation by Subdistributor that Subdistributor is not engaged in any
illegal or illicit activities, that there are no criminal proceedings pending
against the Subdistributor; and Subdistributor is not, directly or
indirectly, owned in any part by Sony or Sega.
LODGENET ENTERTAINMENT CORP.
By:
---------------------------------------
Printed Name:
Title:
------------------------------------
Date:
-------------------------------------
NINTENDO's RETURN APPROVAL:
NINTENDO OF AMERICA INC.
By:
---------------------------------------
Printed Name:
Title:
------------------------------------
Date:
-------------------------------------
NINTENDO-LODGENET HOTEL LICENSE AGREEMENT
PAGE 19
MAY 12, 1998 (FINAL)
<PAGE>
SCHEDULE 4
APPROVED SUBDISTRIBUTOR ACKNOWLEDGMENT
LODGENET ENTERTAINMENT CORP. ("LodgeNet") is an authorized licensee of select
NINTENDO brand video game products for use in authorized hotel guest rooms.
Pursuant to the terms of our license agreement with Nintendo of America Inc.
("Nintendo"), LodgeNet must obtain Nintendo's approval to your appointment as
our subdistributor for the territory of __________ and to your use of
proprietary information and intellectual property rights associated with the
NINTENDO products. In order to induce Nintendo to approve your appointment,
you must agree as follows:
1. LODGENET AGREEMENT. You are a subdistributor of LodgeNet and will not have
a contractual relationship with Nintendo. Nintendo requires that you
acknowledge Nintendo's rights as provided herein. Nintendo is a beneficiary
of your commitments and Nintendo has reserved the right to enforce its rights
directly.
2. APPROVED SUBDISTRIBUTOR RESPONSIBILITIES. Your hotel customers must also
acknowledge Nintendo's rights. It is your responsibility to obtain a Licensed
Hotel Acknowledgment, in the form attached as SCHEDULE 2, from each hotel in
which you place NINTENDO products.
3. NONEXCLUSIVE RIGHTS; INTELLECTUAL PROPERTY RIGHTS; CONFIDENTIALITY. You
agree that all right, title and interest in the proprietary information and
intellectual property rights associated with the NINTENDO products belong to
Nintendo and are licensed to LodgeNet on a nonexclusive basis and granted to
you, as an Approved Subdistributor of LodgeNet. You will not at any time do
or cause to be done anything impairing Nintendo's rights. You shall not
represent that you have any ownership in Nintendo's rights. You agree to keep
technical and proprietary information related to the NINTENDO products
confidential and to permit only those employees having a need to know such
information to have access thereto.
4. MODIFICATION AND USE OF NINTENDO PRODUCTS. You agree not to modify the
NINTENDO products. You acknowledge and agree that the NINTENDO video game
systems may only be used with the NINTENDO game software licensed for hotel
use and provided to LodgeNet by Nintendo.
5. SECURITY OF NINTENDO GAME SOFTWARE. You agree to keep the licensed
NINTENDO game software in a secure location and shall not copy or permit
copying thereof; provided, however, that you may make 1 backup copy.
6. TERMINATION; NO CONTINUING USE. Upon termination of your agreement with
LodgeNet or upon written notice that the agreement between Nintendo and
LodgeNet has terminated, you shall terminate all use of the NINTENDO products
and return or destroy all copies of the licensed NINTENDO game software
disks, backup copies thereof, and all documents materials containing
Nintendo's proprietary information or intellectual properties, including all
copies of game software in the possession of or on the host computer of any
hotel customer, agent or technician.
7. GUEST INFORMATION. You agree to provide Nintendo (through LodgeNet) with
information on the use of the NINTENDO products by your hotel customers. The
information shall be presented in a form substantially similar to the Guest
Information Record set forth at SCHEDULE 6.
8. RECORDS; AUDIT. For Nintendo's benefit, you shall retain and cause your
hotel customers to retain accurate and complete records with respect to the
use of the NINTENDO products. Such records shall provide the basis for the
information contained in attached SCHEDULE 6 and shall include: (a) total
number of NINTENDO video game engines installed and the total number of guest
rooms serviced by each LodgeNet System, by hotel; (b) the date of installation
NINTENDO-LODGENET HOTEL LICENSE AGREEMENT
PAGE 20
MAY 12, 1998 (FINAL)
<PAGE>
and use of each LodgeNet System incorporating NINTENDO products, by hotel;
and, (c) the licensed NINTENDO game software titles offered by each hotel.
9. ADVERTISING AND PROMOTION OF NINTENDO PRODUCTS. You agree to use
Nintendo's trademarks and copyrights only in connection with the advertising
and promotion of the authorized NINTENDO products. All such advertising and
promotion shall be of good quality. Advertising and promotion materials
related to the NINTENDO products which are created by you, your agents, or
your hotel customers must be approved in advance of use. Such materials must
be transmitted to LodgeNet prior to use (Fax:___________ Attn:_____________),
who, in turn, will provide them to Nintendo. Nintendo will promptly review
and provide approval and/or corrections for such materials. You may also
obtain preapproved NINTENDO art from LodgeNet, which, if not modified, may be
used without additional approval, solely in connection with the advertising
and promotion of the licensed NINTENDO products. You must properly identify
ownership of all trademarks and copyrights of Nintendo in all advertising and
promotional materials.
10. LIMITATION ON LIABILITY. Nintendo makes no representations or warranties
to you regarding their products. Nintendo disclaims all implied
representations and warranties, including implied warranties of
merchantability or fitness for a particular purpose. Nintendo does not
warrant to you that use of Nintendo's products or its intellectual property
rights will not infringe upon the rights of others.
11. HOLD HARMLESS. You agree to indemnify and hold Nintendo harmless against
any and all losses, claims, demands, damages, liabilities and expenses,
including reasonable attorneys' fees to the extent arising from any act or
omission by you or your employees or agents not authorized by Nintendo.
12. SUBDISTRIBUTOR REPRESENTATIONS. You represent and warrant to Nintendo
that you are not engaged in any illegal activities; there are no criminal
proceedings pending against you; you respect the intellectual property rights
of others; you are not engaged in the manufacture, sale or distribution of
products which infringe the intellectual property rights of others; and, you
are not, directly or indirectly, owned by Nintendo's competitors, Sony or
Sega.
13. OTHER AGREEMENTS. This agreement is signed by you for the benefit of
Nintendo and LodgeNet. This agreement does not supersede or amend any other
obligations you may have to LodgeNet, except where a conflict may exist, in
which event the terms of this agreement shall prevail.
14. COUNTERPARTS; FACSIMILE. This agreement may be signed in counterparts
with signatures submitted by facsimile.
Please acknowledge your understanding and acceptance of the provisions set
forth above by countersigning and returning two (2) copies of this letter to
LodgeNet.
LODGENET ENTERTAINMENT CORP.
By:
--------------------------------------
Printed Name:
Its:
--------------------------------------
Accepted this __ day of _____________, 19__.
APPROVED SUBDISTRIBUTOR
-------------------------------------------
(Printed Name of Approved Subdistributor)
By:
--------------------------------------
Printed Name:
Its:
--------------------------------------
SCHEDULE 2: Licensed Hotel Acknowledgment
SCHEDULE 6: Guest Information Record
NINTENDO-LODGENET HOTEL LICENSE AGREEMENT
PAGE 21
MAY 12, 1998 (FINAL)
<PAGE>
SCHEDULE 5
LICENSEE MONTHLY ROYALTY REPORT
FOR MONTH:
# OF GAMES AVAILABLE: TOTAL GROSS REVENUE FOR THIS MONTH ***
# OF DAYS IN MONTH AVAILABLE:
<CAPTION>
-------------------------------------------------------------------------------
Boards CURRENT
(New Installations) # OF # OF # OF # OF DAYS MONTH
HOTEL/NAME ROOMS SNES N64 AVAILABLE BUYS
-------------------------------------------------------------------------------
Beginning Balance 443,500 9540
Sleepy Time Inn 205 6 31 95
Dreamland Lodge 125 3 31 50
ZZZZ's 500 11 31 150
(Include any monthly adjustments in this section. Should an existing hotel
increase or decrease room count)
-------------------------------------------------------------------------------
Monthly Totals 660 9 11
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Cumulative Totals 444,360 9,649 11 295
-------------------------------------------------------------------------------
(Beginning Balance + Monthly Totals)
<CAPTION>
# OF TOTAL AVG. MIN. PLAYED
SNES GAME TIDES BUYS MINUTES PLAYED (TOTAL MIN/# BUYS)
--------------- ---- -------------- ------------------
Vegas Stake's 25 1,100 44
Super Punch Out 40 1,200 30
F-Zero 30 1,000 33
Super Play Action Football 25 1,200 48
Ken Griffey Major Leag Baseball 20 900 45
Super Mario World 35 800 23
Tetris & Dr. Mario 35 1,200 34
The Legend of Zelda 20 1,200 60
Donkey Kong Country 35 1,200 34
Super Soccer 30 1,200 40
Totals 295 11,000
ALL AMOUNTS SHOULD BE REFLECTED IN U.S. DOLLARS.
-------------------------------------------------------------------------------
ROYALTY PAYMENT DETAILS
*** ***
*** ***
*** ***
TOTAL ROYALTY DUE NOA: ***
-------------------------------------------------------------------------------
<CAPTION>
# OF TOTAL AVG. MIN. PLAYED
N64 GAME TITLES BUYS MINUTES PLAYED (TOTAL MIN/# BUYS)
--------------- ----- -------------- ------------------
Game #1
Game #2
Game #3
Game #4
Game #5
Totals
----------------------
*** - Confidential treatment requested.
NINTENDO-LODGENET HOTEL LICENSE AGREEMENT
PAGE 22
MAY 12 1998 (FINAL)
<PAGE>
SCHEDULE 6
GUEST INFORMATION RECORD
FOR MONTH:
# OF GAMES AVAILABLE:
# OF DAYS IN MONTH AVAILABLE:
<CAPTION>
------------------------------
Total Gross Revenues
--------------------------------------------------------------------------
Boards CURRENT
# OF # OF # OF # OF DAYS MONTH
HOTEL/NAME ROOMS SNES N64 AVAILABLE BUYS
--------------------------------------------------------------------------------------------------------
Beginning Balance 150 4 31 60
(New Installations)
---------------------------------------------------------------------------------------------
Monthly Totals 150 4
---------------------------------------------------------------------------------------------
--------------------------------------------------------------------------
Cumulative Totals 150 4 60
--------------------------------------------------------------------------
(BEGINNING BALANCE + MONTHLY TOTALS)
(Include any monthly adjustments in this section. Should an existing hotel
increase or decrease room count.)
<CAPTION>
# OF TOTAL AVG. MIN. PLAYED
GAME TITLES BUYS MINUTES PLAYED (TOTAL MIN/# BUYS)
----------- ---- -------------- ------------------
Vegas Stakes 20 1100 55
Super Punch Out 20 1200 60
F-Zero 12 1000 83
Super Play Action Football 10 1200 120
Ken Griffey Major Leag. 20 900 45
Baseball
Super Mario World 30 800 27
Tetris & Dr. Mario 30 1200 40
The Legend of Zelda 10 1200 120
Donkey Kong Country 35 1200 34
Super Soccer 18 1200 67
Totals 205 11000
NINTENDO-LODGENET HOTEL LICENSE AGREEMENT
PAGE 23
MAY 12 1998 (FINAL)
<PAGE>
SCHEDULE 7
MONTHLY BOARD RECONClLIATION REPORT
Total Boards Shipped to Date: 34
<CAPTION>
Cat. Total
---------------------------------------------------------------------------------
Installations: Active 30
---------------------------------------------------------------------------------
Hotel #1 Yes 24
Hotel #2 No 6
---------------------------------------------------------------------------------
Installations: In Transit 2
---------------------------------------------------------------------------------
Hotel #3 2
---------------------------------------------------------------------------------
Engineering 2
Samples:
---------------------------------------------------------------------------------
Mfg. Test. 2
---------------------------------------------------------------------------------
Spares: 0
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Demonstration Systems: 0
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Inventory 0
---------------------------------------------------------------------------------
(Within this category reflect any boards
that are obsolete, no longer in use, or boards that have been destroyed or
replaced with newer technology by using a separate line item for each sub
category. )
---------------------------------------------------------------------------------
R&D 0
---------------------------------------------------------------------------------
Category Combined Grand Total 34 34
NINTENDO-LODGENET HOTEL LICENSE AGREEMENT
PAGE 24
MAY 12, 1998 (FINAL)
<PAGE>
SCHEDULE 8
LIST OF ENTITIES UNDER PARAGRAPH 14.2
Paragraph 14.2 of the Agreement shall apply to the following entities:
On Command Corporation ("OCC")
On Command Video Corporation
On Command Development Corporation
SpectraVision, Inc.
On Command Canada, Inc.
Spectravision Barbados
Kalevision Systems, Inc.
Spectradyne of Bahamas
Spectradyne of Bermuda
Spectradyne of Texas
Spectradyne of GMBH
Spectradyne International, Inc.
On Command Hong Kong, Limited
On Command Australia Pty Limited
Spectradyne Singapore Pte Limited
On Command (Thailand) Limited
In addition, this Schedule 8 shall apply to any entity which is more than 30%
owned, directly or indirectly, by OCC, but excluding any entity not listed
above that as of the Effective Date is a party to a license agreement with
NINTENDO. LODGENET shall provide NINTENDO at least annually with an updated
list of entities known or believed by LODGENET to be owned, directly or
indirectly, by OCC.
NINTENDO-LODGENET HOTEL LICENSE AGREEMENT
PAGE 25
MAY 12, 1998 (FINAL)
<PAGE>
SCHEDULE 9
LIST OF ACTlONS UNDER PARAGRAPH 14.2
Paragraph 14.2(b) of the Agreement shall apply to the following legal
actions, including any appeals thereof:
<CAPTION>
CAUSE NUMBER COURT
------------------------------------------------------------------------------------------------
Civil Action 95-0546 MJJ US District Court for the N. District of California
Civil Action 96-4295-DLJ US District Court for the N. District of California
Civil Action 974135 US District Court for the District of S. Dakota, Southern Division
Civil Action 97-4136 US District Court for the District of S. Dakota, Southern Division
NINTENDO-LODGENET HOTEL LICENSE AGREEMENT
PAGE 26
MAY 12, 1998 (FINAL)