Confidential License Agreement [Amendment No. 1] - Nintendo of America Inc. and LodgeNet Entertainment Corp.
FIRST AMENDMENT
TO CONFIDENTIAL LICENSE AGREEMENT
FOR USE OF SUPER NINTENDO ENTERTAINMENT SYSTEM
WITH INTEGRATED HOTEL ENTERTAINMENT AND
HOTEL GUEST RELATED COMMUNICATIONS SYSTEM
THIS FIRST AMENDMENT ("Amendment") dated October 17, 1996, is between
NINTENDO of America Inc., having a place of business at 4820 150th Avenue
N.E., Redmond, Washington 98052, USA ("NINTENDO") and Lodgenet Entertainment
Corporation, having a place of business at 808 West Avenue North, Sioux
Falls, South Dakota 57104, USA ("LICENSEE").
RECITALS
I. Effective May 12, 1993, the parties entered into a Confidential
License Agreement for Use of Super Nintendo Entertainment System With
Integrated Hotel Entertainment and Hotel Guest Related Communications System
("Agreement"). Defined terms which are capitalized herein shall be deemed to
have the same definitions as set forth in the Agreement unless specified
otherwise herein.
II. NINTENDO and LICENSEE wish to amend the Agreement in accordance
with the terms and conditions of this Amendment.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing recitals and other
good and valuable consideration, NINTENDO and LICENSEE hereby agree as
follows:
A. The following shall be added to Section 2 of the Agreement:
2.8 "Territory" shall mean Brazil, Canada, South Korea and the
United States, together with any other countries that the parties may
mutually agree upon in writing.
2.9 "Approved Sub-Distributor(s)" shall mean and be limited to
those accounts of LICENSEE which specialize in selling the Licensed Products
to Licensed Hotels in all or a specified portion of the Territory. All
Approved Sub-Distributors must be approved, in writing, by NINTENDO (NINTENDO
shall make its best efforts to review and respond to such request for
approval within thirty (30) days of receipt thereof) and must have delivered
to NINTENDO a fully executed original Approved Sub-Distributor Acknowledgment
prior to performing such services. Those accounts of LICENSEE listed on
attached Exhibit A are hereby approved by NINTENDO for the portion of the
Territory described therein; provided, such accounts of LICENSEE must deliver
to NINTENDO fully executed original Approved Sub-Distributor Acknowledgment
prior to performing such services. LICENSEE may terminate any Approved
Sub-Distributor without NINTENDO's consent or approval.
2.10 "Approved Sub-Distributor Acknowledgment" shall mean a
written acknowledgment in the form attached hereto as Exhibit B, which sets
forth the conditions applicable to Approved Sub-Distributors.
2.11 "Licensed Hotel Acknowledgment" shall mean a written
acknowledgment in the form attached hereto as Exhibit C, which sets forth
conditions applicable to Licensed Hotels.
FIRST AMENDMENT
SNES INTEGRATED HOTEL LICENSE AGMT
LODGENET / NOA
October 9, 1996
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B. Sections 4.1 and 4.2 of the Agreement are hereby deleted in their
entirety and replaced with the following:
4.1 GRANT. NINTENDO hereby grants to LICENSEE and LICENSEE hereby
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accepts under the terms and conditions herein stated, a nonexclusive right
and license to solicit placement of the Licensed Products in conjunction with
LICENSEE's placement of the LodgeNet System in the Licensed Hotels in the
TERRITORY. To this end, the Modified Super NES units shall be sold to
LICENSEE by NINTENDO, and the Licensed Software shall be licensed to LICENSEE
by NINTENDO. NINTENDO hereby grants LICENSEE the right to appoint Approved
Sub-Distributors for the distribution and sale of the Licensed Products to
Licensed Hotels in the Territory, with NINTENDO's prior written approval.
4.2 SUBLICENSING. LICENSEE shall have the right to sublicense the
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rights granted herein with the Territory to Licensed Hotels and Approved
Sub-Distributors. Subject to Section 4.2.1, Licensed Hotels added after the
effective date of this Amendment shall execute and deliver a Licensed Hotel
Acknowledgment. All Approved Sub-Distributors shall execute and deliver to
LICENSEE an Approved Sub-Distributor Acknowledgment. Notwithstanding the
foregoing, LICENSEE shall enforce all applicable and material restrictions,
conditions and limitations of the Agreement and shall ensure that all
Approved Sub-Distributors and Licensed Hotels shall comply with the terms of
the Agreement. If LICENSEE does not undertake such enforcement efforts,
NINTENDO, upon twenty (20) days' written notice to LICENSEE, may undertake
such enforcement efforts and LICENSEE shall provide reasonable assistance as
may be requested by NINTENDO. No rights with respect to the Licensed
Products shall vest in any Approved Sub-Distributor appointed after the date
hereof until it has executed and delivered an Approved Sub-Distributor
Acknowledgment or Licensed Hotel Acknowledgment, as the case may be.
4.2.1 Exception to Requirement to Obtain Licensed Hotel
-------------------------------------------------
Acknowledgment. LICENSEE or an Approved Sub-Distributor is not required to
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obtain a Licensed Hotel Acknowledgment from a Licensed Hotel if the following
conditions apply:
i) The Licensed Hotel has not purchased or otherwise
acquired title or an ownership interest of any kind whatsoever to all or part
of the Licensed Products; and
ii) The LICENSEE continuously maintains the ability to
render the Licensed Products inoperable by the Licensed Hotels; and
iii) The LICENSEE shall render the Licensed Products
inoperable by the Licensed Hotels in the event of default by the Licensed
Hotel, any termination of the License Agreement (between NINTENDO and
LICENSEE) or the business relationship between LICENSEE and Licensed Hotel.
C. The following additions shall be made to Section 9 of the Agreement:
9.4 Approved Sub-Distributor Records Retention. All Approved
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Sub-Distributors shall maintain during the Term of the Agreement and for a
period of two (2) years thereafter, complete and accurate books and records
as well as copies of all correspondence between LICENSEE, the Licensed Hotels
and NINTENDO and all other correspondence of any kind relating to obligations
assumed by Approved Sub-Distributors under the Agreement.
9.5 Approved Sub-Distributor Record Audits. NINTENDO or its
---------------------------------------
authorized agent, upon reasonable notice to Approved Sub-Distributor,
reserves the right to conduct audits of all Approved Sub-Distributors'
records during the Term of the Agreement to verify Royalty Reports. NINTENDO
shall be
FIRST AMENDMENT
SNES INTEGRATED HOTEL LICENSE AGMT
LODGENET / NOA
October 9, 1996
Page 2
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allowed to make examinations of books, records and correspondence reasonably
relating to verification of such Royalty Reports and calculations. The
provisions of Section 9.3 apply to such audits.
D. Section 11.5 of the Agreement is hereby deleted in its entirety and
replaced with the following:
11.5 Hold Harmless. LICENSEE agrees to indemnify and hold harmless
--------------
NINTENDO against any and all losses, claims, demands, damages, liabilities
and expenses, including reasonable attorney fees, which are based in whole or
in part upon any act or omission, whether negligent or otherwise, of LICENSEE
or its employees, agents, sub-licensees, or sub-distributors including, but
not limited to, claim of products liability with respect to (a) the LodgeNet
System, the Modified LodgeNet System or Licensed Products, (b) failure to
comply with applicable laws, regulations or orders relating to or in any way
affecting this Agreement, (c) the performance by LICENSEE of this Agreement
as provided herein, (d) the performance by any Approved Sub-Distributor of
their obligations pursuant to the Approved Sub-Distributor Acknowledgment
and/or (e) the performance by any Licensed Hotel of their obligations
pursuant to the Licensed Hotel Acknowledgement, where required. The foregoing
indemnifications shall not extend to any losses, claims, demands, damages,
liabilities or expenses to the extent arising out of NINTENDO's negligence or
matters included in NINTENDO's indemnification of LICENSEE set forth in
Section 11.2 herein.
E. Section 13 of the Agreement is hereby deleted in its entirety and
replaced with the following:
13. Compliance With Applicable Laws, Duties, Tariffs
------------------------------------------------
13.1 Nintendo /Licensee. 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.
13.2 Approved Sub-Distributor. Licensee shall require that the
-------------------------
Approved Sub-Distributor shall abide all federal, state, local laws, orders
and regulations in the Territory relating to its activities as an Approved
Sub-Distributor. NINTENDO shall not be responsible for any taxes, duties,
tariffs, fees or costs assessed upon the purchase, importation or sale by
Approved Sub-Distributor of the Licensed Products. The royalties payable to
Nintendo shall be net of any taxes, duties, tariffs, fees or costs assessed
upon the purchase, importation or sale by Approved Sub-Distributor of the
Licensed Products.
F. Royalty Report. Nintendo and Licensee acknowledge and agree that
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Licensee has provided and shall continue to provide Nintendo a royalty report
on use of the Licensed Products by Licensed Hotels substantially in the form
attached as Exhibit D.
G. Miscellaneous. References in the Agreement to the "Agreement" shall
--------------
mean the Agreement as modified by this Agreement. Exhibits A, B, C and D are
attached hereto and are hereby incorporated by reference. Except as specifically
set forth herein, all terms and conditions of the Agreement shall remain in
full force and effect. This Amendment shall be effective as of the last
signature date below. For convenience of the parties, authorized signatures
may be transmitted via facsimile in counterparts.
FIRST AMENDMENT
SNES INTEGRATED HOTAL LICENSE AGMT
LODGENET/NOA
October 9, 1996
Page 3
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IN WITNESS WHEREOF, NINTENDO and LICENSEE have entered into this
Amendment as of the last date set forth below.
NINTENDO: LICENSEE:
NINTENDO OF AMERICA INC. LODGENET ENTERTAINMENT CORPORATION
By: /s/ PHILIP ROGERS By: /s/ LISA FERRIS
----------------------------- ----------------------------
Title: E.V.P. Ops Title: Contract Administrator
----------------------------- ----------------------------
Date: 11/1/96 Date: 10-17-96
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FIRST AMENDMENT
SNES INTEGRATED HOTAL LICENSE AGMT
LODGENET/NOA
October 9, 1996
Page 4
<PAGE>
EXHIBIT A
APPROVED SUB-DISTRIBUTORS
DISTRIBUTOR NAME/ADDRESS DISTRIBUTOR TERRITORY
------------------------ ---------------------
GTV South Korea
22 Jeong-Dong, Chung-Gu
Seoul Korea 100-702
Attn.: Mr. Michael Cho
Telephone No.:
Facsimile No.:
TVA Brazil
Rua do Rocio 313
Sao Paulo Brazil
Attn.: Ms. Katia Murgell
Telephone No.:
Facsimile No.:
FIRST AMENDMENT
SNES INTEGRATED HOTEL LICENSE AGMT
LODGENET/NOA
October 9, 1996
Page 5
<PAGE>
EXHIBIT B
-------------------------------------
(Date)
-------------------------------------
(Name of Approved Sub-Distributor)
-------------------------------------
(Address of Approval Sub-Distributor)
RE: Approved Sub-Distributor Acknowledgment
Dear Approved Sub-Distributor:
As you know, Lodgenet Entertainment Corporation ("Lodgenet") is an authorized
licensee of select NINTENDO brand video game products for commercial 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 sub-distributor for the territory of ____
_______________ (insert territory) and to your use of certain proprietary
information and intellectual property rights associated with Nintendo
products. In order to induce Nintendo to approve your appointment, we ask
that you acknowledge and agree as follows:
1. Lodgenet Agreement. You are a sub-distributor 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 under this letter agreement, and Nintendo has reserved the
right to enforce Nintendo's rights directly.
2. Approved Sub-Distributor Responsibilities. In the event that: (a)
-----------------------------------------
any Licensed Hotel purchases or otherwise acquires title or an ownership
interest of any kind in Nintendo products, and (b) you do not continuously
maintain the ability to render the Nintendo products inoperable by the
Licensed Hotel, then it is your responsibility to obtain a Licensed Hotel
Acknowledgment (form attached) from each such 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,
including the modified Super NES consoles and licensed Nintendo games, belong
to Nintendo and are licensed to Lodgenet and granted to you, as an Approved
Sub-Distributor, on a nonexclusive basis by Nintendo. 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 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 shall not modify the
------------------------------------------
Nintendo products, including the modified Super NES console or licensed
Nintendo games. You acknowledge and agree that the modified Super NES
consoles may only be used with the licensed Nintendo games provided by
Nintendo.
5. Security of Nintendo Game Disks. You shall keep the licensed
--------------------------------
Nintendo games and game disks in a secure location and shall not copy or
permit copying thereof.
6. Termination; No Continuing Use. Unless otherwise agreed in writing
-------------------------------
by Nintendo, you must return all copies of the licensed Nintendo games, game
disks and documents containing Nintendo's proprietary information or
intellectual property rights to Nintendo and all of your rights therein
terminate upon termination of your agreement with Lodgenet or upon
notification of termination of the agreement between Nintendo and Lodgenet.
FIRST AMENDMENT
SNES INTEGRATED HOTEL LICENSE AGMT
LODGENET/NOA
October 9, 1996
Page 6
<PAGE>
7. Guest Information. You agree to provide to Nintendo (through
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Lodgenet) information on use of the Nintendo products and licensed Nintendo
games by your hotel customers. The information shall be in a form
substantially similar to that in the report form attached as Schedule 1.
8. Records Audit. For Nintendo's benefit, you shall retain and use
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reasonable commercial efforts to 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 1 and shall include: (a) total number of Nintendo Super NES boards
installed and the total number of guest rooms serviced by such Super NES
boards, by hotel; (b) the date of installation and use by hotel; and, (c) the
licensed Nintendo software titles offered to each hotel.
9. Advertising and Promotion of Nintendo Products. You agree to use
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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 or your hotel
customers must be approved in advance of use by Nintendo. Such materials may
be transmitted to Lodgenet (Fax: ____________ Attn: ____________). Nintendo
has advised us that they will use their best efforts to review and provide
approval and/or corrections for such materials within thirty (30) days.
Approved Sub-Distributor may utilize pre-approved art solely in connection
with the advertising and promotion of the licensed products without prior
submission to or approval of Nintendo so long as the Approved Sub-Distributor
does not modify the pre-approved art. Sub-Distributor shall properly
attribute all intellectual property rights.
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 that use of Nintendo's products, or its intellectual property rights
will not infringe upon the rights of others.
11. Hold Harmless. You shall 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.
12. No Effect on Other Agreement. This letter is executed solely at the
---------------------------------
request of and solely for the benefit of Nintendo and Lodgenet and this
letter agreement does not alter or amend in any respect the obligations of
the Approved Sub-Distributor to Lodgenet under the Equipment Supply and
Technology License Agreement executed by Approved Sub-Distributor and
Lodgenet.
Please acknowledge your understanding and acceptance of the provisions set
forth above by signing and returning two (2) copies of this acknowledgment to
Lodgenet. We will forward the acknowledgment to Nintendo and retain a signed
copy for our files.
Lodgenet Entertainment Corporation
By:
-----------------------------------
Its:
----------------------------------
Acknowledged and Accepted this
____ day of _______ 1996.
Approved Sub-Distributor
By:
-----------------------------------
Its:
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Schedule 1, Royalty Report Form is attached
FIRST AMENDMENT
SNES INTEGRATED HOTEL LICENSE AGMT
LODGENET/NOA
October 9, 1996
Page 7
<PAGE>
MONTHLY ROYALTY REPORTING
FOR MONTH:
# OF GAMES AVAILABLE:
# OF DAYS IN MONTH AVAILABLE:
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CURRENT CURRENT
(New installations) # OF # OF # OF DAYS MONTH MONTH
HOTEL/NAME ROOMS SNES AVAILABLE BUYS GROSS SALES
------------------------------------------------------------------------------------------------------------
Beginning Balance 150 4 31 60 $239.40
235 6 31 95 $379.05
125 3 31 50 $199.50
(Include any monthly adjustments in this section. Should an existing hotel increase or decrease room count.)
------------------------------------------------------------------------------------------------------------
Monthly Totals 360 9 $817.95
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--------------------------------------------------------------------
Cumulative Totals 510 13 205
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(Beginning Balance + Monthly Totals)
# of Total Avg. Min. Played # of Rooms
Games Titles Bays Minutes Played (Total Min/# Buys) Available
------------ ---- -------------- ------------------ ----------
Vegas Stakes 20 1100 55 510
Super Punch Out 20 1200 60 510
F-Zero 12 1000 83 510
Super Play Action Football 10 1200 120 510
Ken Griffey Major Leag. Baseball 20 900 45 510
Super Mario World 30 800 27 510
Tetris & Dr. Malro 30 1200 40 510
The Legend of Zelda 10 1200 120 510
Donkey Kong Country 35 1200 34 510
Super Soccer 18 1200 67 510
Totals 205 11000
Schedule 1
<PAGE>
EXHIBIT C
LICENSED HOTEL ACKNOWLEDGMENT
Lodgenet Entertainment Corporation ("Lodgenet") is an authorized licensee of
select NINTENDO brand video game products for commercial use in authorized
hotel guest rooms. In certain circumstances Lodgenet has granted a portion
of its rights with regard to a specified territory to an approved
sub-distributor, such as __________________________ (if applicable, insert
name of approved sub-distributor) ("Sub-Distributor"). You are permitted to
use certain proprietary information and intellectual property rights
associated with Nintendo products only on condition that you acknowledge and
agree as follows:
1. 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,
including the modified Super NES consoles and licensed Nintendo games, belong
to Nintendo and are sublicensed to you on a nonexclusive basis by Nintendo.
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 information related to the Nintendo products
confidential and to permit only those employees having a need to know such
information to have access thereto.
2. Modification and Use of Nintendo Products. You shall not modify the
------------------------------------------
Nintendo products, including the modified Super NES console or licensed
Nintendo games. You acknowledge and agree that the modified Super NES
consoles may only be used with the licensed Nintendo games.
3. Security of Nintendo Game Disks. You shall keep the licensed
--------------------------------
Nintendo games and game disks in a secure location and shall not copy or
permit copying thereof.
4. Termination; No Continuing Use. Unless otherwise agreed in writing
-------------------------------
by Nintendo, you must return all copies of the licensed Nintendo games, game
disks and documents containing Nintendo's proprietary information or
intellectual property rights to Nintendo and all of your rights therein
terminate upon termination of your agreement with Lodgenet or its
Sub-Distributor, as the case may be, or upon notification of termination of
the agreement between Nintendo and Lodgenet.
5. 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 must be approved in
advance of use by Nintendo. Such materials should be transmitted to Lodgenet
or its Sub-Distributor, as the case may be, (Lodgenet Fax: ________________
Attn: _______________, Sub-Distributor Fax: ______________ Attn: ____________).
Nintendo has advised us that they will promptly review and provide approval
and/or corrections for such materials.
6. 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 that use of Nintendo's products, or its intellectual property rights
will not infringe upon the rights of others.
FIRST AMENDMENT
SNES INTEGRATED HOTEL LICENSE AGMT
LODGENET/NOA
October 9, 1996
Page 9
<PAGE>
Please acknowledge your understanding and acceptance of the provisions set
forth above by signing and returning a copy of this acknowledgment to
Lodgenet or its Sub-Distributor, as the case may be.
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(Print Name of Licensed Hotel)
By:
------------------------------------
Its:
-----------------------------------
Date:
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FIRST AMENDMENT
SNES INTEGRATED HOTEL LICENSE AGMT
LODGENET/NOA
October 9, 1996
Page 10
<PAGE>
Monthly Royalty Reporting
FOR MONTH:
# OF GAMES AVAILABLE:
# OF DAYS IN MONTH AVAILABLE:
-------------------------------------------------------------------------------------------------------------
CURRENT CURRENT
(New Installations) # OF # OF # OF DAYS MONTH MONTH
HOTEL/NAME ROOMS SNES AVAILABLE BUYS GROSS SALES
-------------------------------------------------------------------------------------------------------------
Beginning Balance 150 4 31 60 $239.40
235 6 31 95 $379.05
125 3 31 50 $199.50
(Include any monthly adjustments in this section. Should an existing hotel increase or decrease room count.)
------------------------------------------------------------------------------------------------------------
Monthly Totals 360 9 $817.95
------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------
Cumulative Totals 510 13 205
--------------------------------------------------------------------
(Beginning Balance & Monthly Totals)
# of Total Avg. Min. Played # of Rooms
Games Titles Bays Minutes Played (Total Min/# Buys) Available
------------ ---- -------------- ------------------ ----------
Vegas Stakes 20 1100 55 510
Super Punch Out 20 1200 60 510
F-Zero 12 1000 83 510
Super Play Action Football 10 1200 120 510
Ken Griffey Major Leag. Baseball 20 900 45 510
Super Mario World 30 800 27 510
Tetris & Dr. Malro 30 1200 40 510
The Legend of Zelda 10 1200 120 510
Donkey Kong Country 35 1200 34 510
Super Soccer 18 1200 67 510
Totals 205 11000
Exhibit "D"