License Agreement - CNN Newsource Sales Inc. and ADAM Software Inc.
CNN NEWSOURCE SALES. INC. LICENSE AGREEMENT
THIS AGREEMENT (the "Agreement") is made as of the 15th day of January, 1998,
by and between CNN Newsource Sales, Inc. ("CNN-NS"), having a principal place of
business at One CNN Center, Box 105366, Atlanta, Georgia 30348-5366, a Georgia
corporation, and ADAM Software, Inc. ("ADAM"), a Georgia corporation, with a
principal place of business at 1600 River Edge Parkway, Suite 800, Atlanta,
Georgia 30328.
WITNSSETH:
WHEREAS, CNN-NS is licensor throughout the United States and Canada in
all forms of media of the news services produced and/or procured by Cable News
Network, Inc. ("CNN"); and
WHEREAS, ADAM is a creator of various anatomical and medical/health
related images which can be used by television programmers to enhance their
medical related programming and has an anatomical and medical/health related
image library of over 20,000 images; and
WHEREAS, ADAM wishes to enter into this Agreement whereby it grants
CNN-NS the exclusive license to distribute a set of anatomical and
medical/health related graphic images developed and produced by ADAM to
potential licensees for use in television programming for exhibition throughout
the United States of America and Canada, and in certain limited cases as
specified below, worldwide;
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NOW, THEREFORE, for and in consideration of the foregoing premises, the
mutual covenants, conditions, representations and warranties contained herein,
and other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties hereto agree as follows:
1. Licensing of Adam Products.
(a) Image.
1. Right to License: Subject to the terms and conditions of this
Agreement, including all exhibits and schedules attached hereto, ADAM hereby
grants to CNN-NS a qualified and limited right to license the ADAM Images (which
shall be defined as collectively, the Image Package, the Breaking News Images
and the Custom Images, as defined herein), without any modifications or
alterations thereto to: (i) CNN Networks (except CNN Interactive) and Affiliates
solely for incorporation into news and information programming exhibited via
Television; (ii) to Affiliates solely for incorporation in entertainment
programming which is exhibited via Television only in a local market; and (iii)
CNN Interactive as specified in Paragraph l(b) below. "Image Package" means the
image databases (in visual form) contained on the compact discs listed on
Schedule I. "Breaking News Image" means a custom created anatomical and
medical/health related image by ADAM for CNN-NS that is associated with a major
national or international breaking news story. "Custom Image" means any images
that CNN-NS requests ADAM to produce that is not contained in the Image Package
and is not a Breaking News Image. "CNN Networks" shall mean: (A) the following
seven networks: (i) CNN; (ii) CNNI; (iii) CNNfn; (iv) CNN en Espanol; (v) CNN
Interactive; (vi) CNN Headline News; and (vii) CNN Airport; and (B) any future
network controlled by CNN. "Affiliate" means
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an entity who from time to time licenses certain news and information
programming from CNN-NS for exhibition via Television. "Territory" with respect
to Affiliates the United States of America and Canada and with respect to the
CNN Networks means worldwide. "Television" means exhibition via broadcast,
direct to home, cable, MMDS and SMATV as well as any other non-interactive
television medium either now in existence or created in the future during the
Term hereof. Any licenses granted by CNN-NS to an Affiliate shall only allow
such Affiliate the right to exhibit the ADAM Images via Television in the
Territory during the Term hereof. Any license granted by CNN-NS to a CNN Network
may allow only that particular CNN Network to exhibit the ADAM Images via
Television worldwide during the Term hereof. All rights not specifically and
expressly granted to CNN-NS herein are expressly reserved to and by ADAM.
2. Exclusivity: Subject to the provisions of Section 3 below, CNN-NS's right
to license the ADAM Images for use in Television news and information
programming within the Territory shall be exclusive. During the Term of this
Agreement, ADAM shall not grant any rights to any third party to use and/or
distribute the ADAM Images, or any other images that ADAM currently owns or
develops during the Term, for exhibition in news and information programming via
Television in the Territory. Notwithstanding anything to the contrary contained
herein, CNN-NS acknowledges that it is aware of the ADAM license deal with CBS
Network News (the "CBS Network News License Agreement") which expires as of June
30, 1998 whereby ADAM has licensed CBS Network News the right to use certain
ADAM images in its national newscasts as exhibited via broadcast television, as
such terms are commonly understood and used in the television industry, and that
such deal, as limited to broadcast television distribution and expiring on June
30, 1998, shall not be deemed a breach of this
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Agreement provided that such deal is not renewed and that the right to license
the certain ADAM images specified above is granted to CNN-NS as of June 30,
1998. CNN-NS expressly agrees that upon the expiration of the ADAM/CBS Network
News License Agreement specified above, CNN-NS shall negotiate with CBS Network
News in good faith for a license to the ADAM Image Products; provided, however,
that so long as CNN-NS has complied with the above and negotiated with CBS
Network News in good faith, CNN-NS's failure to reach a definitive agreement
with the CBS Network News for such images shall not be considered a breach
hereof CNN-NS further agrees that it will consult with ADAM about any network
exclusive deal that it is contemplating; provided, however, that the ultimate
decision to do such deal shall belong to CNN-NS.
3. Basset Images: CNN-NS is aware that the retail versions of the CD-ROM's
that make up the Image Package contain cadaver images that are commonly known as
the Basset Images. ADAM agrees to remove the Basset Images from the Image
Package that is being delivered to CNN-NS. Both CNN-NS and ADAM agree to treat
any and all external costs actually incurred by ADAM that are associated with
the removal of the Basset Images from the Image Package as a Sales and Marketing
Expense (as defined herein) and ADAM shall be reimbursed for such expenses from
the first year's Annual Gross Revenues in accordance with the applicable line
item set forth on Schedule I attached hereto and by this reference expressly
incorporated herein.
4. Additional License Rights: During the Term of this Agreement, ADAM
agrees to make a good faith effort to review any CNN-NS proposal for the right
to relicense the ADAM Images via Television outside of the Territory; provided,
however, that ADAM shall
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retain the right to negotiate such rights with any other party, and ADAM shall
be under no obligation to enter into any agreement with CNN-NS, accept any
CNN-NS offer or allow CNN-NS to match any other offer or to otherwise grant
CNN-NS the right to license the ADAM Images for exhibition via Television
outside of the Territory.
(b) Breaking News Images and Library Images. ADAM further agrees that
throughout the Term hereof CNN-NS shall have the right to license the Breaking
News Images at a rate of $50.00 per Image, the Custom Images at a rate of
$250.00 per hour spent to create such Image and the Image Package pursuant to a
standard rate card as determined by mutual agreement between CNN-NS and ADAM, to
the Affiliates and the CNN Networks throughout the Territory. CNN-NS understands
and agrees that CNN Interactive's use of such images is limited to (i) CNN
Interactive's video-streaming of any programming which aired on the CNN Networks
and included one of the ADAM Images and/or (ii) CNN Interactive's insertion of a
still frame of one of the ADAM Images image(s) in a web version of a story which
was already aired on any one of the CNN Networks (with such still frame used to
be a "Raster Image" in .JPG and/or .GIF graphic format or other "Raster Formats"
that may be used in the future, as such terms are commonly understood in the
interactive world wide web industry.) ADAM agrees that it will provide CNN-NS
with the name and contact numbers, facsimile number and address for the
person(s) responsible for taking the orders from CNN-NS for the Breaking News
Images and the Custom Images. ADAM agrees that it will use its commercially
reasonable efforts to create the Breaking News Images and the Custom Images
promptly from the time of CNN-NS's initial request, but in no case more than
forty-five (45) days of CNN-NS's initial request. Notwithstanding any provision
of this Agreement, during any twelve (12) month
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period from the date of this Agreement, ADAM has committed to produce in total
no more than four (4) Breaking News Images and Custom Images.
(c) Restrictions. CNN-NS acknowledges that with respect to the ADAM
Images, this license only grants CNN-NS the rights to relicense the visual
images to Affiliates and CNN Networks for exhibition via Television throughout
the Territory and excludes any and all other rights, including the rights to the
source code. CNN-NS covenants that it shall license the ADAM Images Products to
the Affiliates and the CNN Networks pursuant to a standard CNN-NS license
agreement which will contain all of the terms, restrictions and covenants set
forth herein (a copy of which shall be provided to ADAM within thirty (30) days
hereof as of courtesy). Except as expressly required or authorized herein,
CNN-NS will not, nor authorize any entity to, transmit, modify, alter,
distribute, exhibit, copy, duplicate, sublicense or otherwise use the ADAM
Images or any portion thereof by any means whatsoever outside the Territory or
to any entity not authorized herein. CNN-NS agrees that nothing in this
Agreement shall provide CNN-NS with any other rights whatsoever to the ADAM
Images, nor convey, confer, grant, assign or otherwise provide CNN-NS with
copyright, title or any other proprietary or ownership interest in or to the
ADAM Images or any elements thereof. CNN-NS further agrees that IT will not use
nor authorize any of its Affiliates to use any part of the ADAM Images or the
Logos, as defined in Paragraph 10 herein, as part of any kind of promotional
material without the prior written consent of ADAM. Notwithstanding anything
contained in this Agreement, CNN-NS does not have the right to license the ADAM
Images for use in: (A) health related programming which is produced by companies
primarily for internal distribution; or (B) in nationally distributed
entertainment programming.
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2. Term. This Agreement shall remain in full force and effect from the
date hereof through January 5, 2002 (the "Term"); provided, however, that should
CNN-NS fail to collect Two Hundred Thousand U.S. Dollars (US$200,000.00) in Net
Revenues, as such term is defined in Paragraph 5 below, per each year of the
Term hereof, calculated within forty-five (45) days after the termination of
each year during the Term, then both parties shall have the option to terminate
this Agreement anytime within the first four (4) months of the commencement of
each year of the Term starting in year 2 of the Term, upon either party's
delivery of fifteen (15) days prior written notice delivered to the other party.
Both parties agree that should either party terminate the Agreement after the
first year of the Term, as specified herein, each will honor any existing
agreements with the Affiliates for the distribution of the ADAM Images which
shall not extend beyond six (6) months after the applicable effective
termination date.
3. Limited Exclusivity. Except for the rights expressly granted to
CNN-NS pursuant to Paragraph I hereof, ADAM retains all rights with respect to
the ADAM Images. Subject to the terms of Paragraph 1, CNN-NS acknowledges and
agrees that ADAM reserves the right to use, license, distribute or license
others to do so (i) the ADAM Images to other television networks, solely outside
of the Territory (the United States of America) and (ii) the ADAM Images for
exhibition via any other medium other than Television, as defined above, within
or outside the Territory. ADAM further agrees that it is the intent of both
parties in this Agreement that CNN-NS be the sole licensee and distributor of
the ADAM Images throughout the Territory for exhibition via Television, and ADAM
will not license the ADAM Images during the Term hereof in any way that breaches
the intent of this Agreement.
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4. Delivery.
(a) ADAM Images. ADAM shall deliver the Image Package on four (4)
CDROM's to CNN-NS at its principal office in Atlanta within thirty (30) days of
CNN-NS's written request. CNN-NS shall be responsible for the repackaging and
distribution of the Image Package to the Affiliates and the CNN Networks in a
form mutually agreed upon by the parties hereto. ADAM shall also be responsible
for delivery of the Breaking News Images and the Custom Images to CNN-NS via the
World Wide Web or, per CNN-NS's instructions, directly to the Affiliates and the
CNN Networks directly via the World Wide Web, unless otherwise mutually agreed
upon by the parties hereto within thirty (30) days of CNN-NS's written request
or a reasonable time thereafter should such Breaking News Image or Custom Image
involved require additional preparation time.
(b) Equipment Responsibility. As between the parties hereto, CNN-NS,
the CNN Networks and/or its Affiliates shall be solely responsible for all
construction, equipment, telecommunications service, decoding (if the signal
carrying the Custom Images is encrypted) and any other charges necessary for the
reception, distribution and exhibition of ADAM Images by CNN-NS and/or its
Affiliates and/or the CNN Networks in the Territory. CNN-NS and/or its
Affiliates and/or the CNN Networks shall be responsible for obtaining and
complying with such necessary and appropriate authorizations, licenses and other
permissions, if any, that may be required of CNN-NS by appropriate authority for
the reception, transmission and exhibition of ADAM Images in the Territory. ADAM
shall be responsible for obtaining and complying with such necessary and
appropriate authorizations, licenses and other permissions, if any, that may be
required of ADAM by the appropriate authority for the delivery of the ADAM
Images, including,
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but not limited to, insurance for the shipment of the CD-ROM's containing the
Image Package to CNN-NS.
5. Payment of Expenses and Revenue Sharing.
(a) Expenses. CNN-NS and ADAM agree that throughout the Term, ADAM
shall be solely responsible for payment of all expenses directly and exclusively
associated with the creation and delivery of the ADAM Images as specified above,
including, but not limited to, the shipment of the CD-ROMs containing the Image
Package and the delivery of the Breaking News Images and the Custom Images via
the World Wide Web and all taxes associated therewith. The parties further agree
that CNN-NS shall be responsible for all delivery costs as specified in
Paragraph 4 as well as all sales and marketing expenses (the "Sales and
Marketing Expenses") actually incurred by CNN-NS associated with the marketing
and sale of the ADAM Images to the Affiliates and CNN Networks, including, but
not limited to, the repackaging of the four (4) CD-ROMs containing the Image
Package, production of the marketing material deemed necessary by CNN-NS in
order to sell the ADAM Images, and any taxes related thereto, along with any
other expenses the parties agree to in writing. If the parties mutually agree
that ADAM shall handle the repackaging of the four (4) CD-ROMs which contain the
Image Package instead of CNN-NS, ADAM shall be paid for any and all expenses
associated with such repackaging with such amount not to exceed the line item
set forth on the SM Expense Budget for the initial year of the Term, defined
below and attached hereto as Schedule II. Both parties agree that Schedule I,
attached hereto and by this reference expressly incorporated herein, sets forth
a budget of the Sales and Marketing Expenses (the "SM Expense Budget")
anticipated to be spent in year 1 of the Term of this Agreement as well as the
actual manufacturing costs of each Image Package. Both parties agree that
CNN-NS shall be responsible for submitting an updated SM
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Expense Budget to ADAM within forty-five (45) days of the expiration of the then
current year of the Term. Both parties agree that they will make a good faith
effort to agree on the terms of the most recently submitted SM Expense Budget
within thirty (30) days of CNN-NS's submission of the Budget; provided, however,
that should the parties fail to reach such agreement will use the SM Expense
Budget agreed to for year 1 of this Agreement for such applicable year of the
Term set forth as Schedule I and by this referenced incorporated herein.
(b) During each year of the Term, all revenues collected from the
license of the ADAM Images throughout the Territory as specified in Paragraph 1
(the "Annual Gross Revenues") shall be paid to CNN-NS. CNN-NS agrees that it
will use commercially reasonable efforts to maximize the Annual Gross Revenues
hereunder and to collect all such license fees charged for the ADAM Images. From
Annual Gross Revenues, CNN-NS shall be entitled each year to deduct and pay the
Sales and Marketing Expenses actually incurred by CNN-NS (with such amounts not
to exceed the SM Expenses Budget as submitted by CNN-NS quarterly to ADAM
pursuant to Paragraph 5(a) above, as well as the actual manufacturing costs of
the ADAM Images which amount per Image Package is set forth as a line Item on
Schedule I and shall remain the same each year of the Term hereof unless
otherwise agreed upon by the parties in writing. Sixty-five percent (65%) of
any remaining revenues actually collected after all deductions set forth in this
Subparagraph (the "Net Revenues") shall be paid to ADAM within forty-five (45)
days after the end of each quarter of each year of the Term hereof along with a
definitive report detailing the Sales and Marketing Expenses paid as well as the
revenues collected from the Affiliates and CNN Networks for the quarter just
ended (with the first such quarter terminating on April 14, 1998). Past due
payments on all amounts due and payable as
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provided for in this Agreement shall bear interest, which shall accrue fifteen
(15) days after the date such payment was due, at a rate of one and one-half
percent (1 1/2%) per month, or, in the event the parties are precluded by law
from establishing such rate, the maximum legal interest rate permitted by law.
CNN-NS agrees that it shall supply ADAM with estimate reports (the "Estimate
Reports") on a quarterly basis throughout the Term detailing estimates of the
Marketing and Sales Expenses paid as well as the revenues collected from the
Affiliates and the CNN Networks (with such Estimate Reports to be delivered no
later than thirty (30) days after the termination of each quarter of each year
throughout the Term hereof with the first such quarter terminating on April,
1998 and with ADAM understanding and agreeing that the amounts set forth in such
Reports are strictly estimates and not final numbers to be relied upon as such).
(c) Right to Audit. Subject to the terms and conditions of Paragraph 6
below, ADAM shall have the right to audit CNN-NS concerning the Sales and
Marketing Expenses actually incurred as provided for in Paragraph 5(a) above.
6. Audit.
(a) General Rights. ADAM or its authorized representative shall have
the right during the Term, at its sole cost and expense unless otherwise
expressly provided herein, to audit or inspect the books and records of CNN-NS
that relate to those specific items set forth in SubParagraph 5(c) above. These
audit rights may be exercised by ADAM during normal business hours upon no less
than ten (10) business days advance written notice and not more than once per
year at any time within thirteen (13) months following the end of each one (1)
year period during the Term hereof including any extensions or renewals thereof.
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(b) Challenge. In the event an audit conducted by or on behalf of ADAM
pursuant to Subparagraph (a) of this Paragraph 6 (the "Formal Audit") indicates
that any amounts previously paid by CNN-NS as Sales and Marketing Expenses,
pursuant to Paragraph 5 (a) and set forth in Schedule I, attached hereto, are
beyond those indicated on the SM Expenses Budgets and/or that CNN-NS withheld
more than the Sales and Marketing Expenses actually incurred as specified in
Paragraph 5(b) above, CNN-NS shall have thirty (30) days from receipt of notice
from the ADAM that such overpayment has occurred to: (a) pay back to ADAM all
such overpaid and/or withheld amounts, and if such overpayment or withholding is
determined to be as a result of willful malfeasance, to pay interest on such
amount at a rate of eighteen percent (18%) per annum; or (b) perform an audit
solely at CNN-NS's own expense, an audit (the "Challenge Audit") that concludes
whether or not the findings of the Formal Audit were correct and communicate to
ADAM the discrepancies between the Formal Audit and the Challenge Audit. The
parties agree to use reasonable efforts to settle such discrepancy within thirty
(30) days of conclusion of the Challenge Audit (the "30-Day Audit Settlement
Period"). In the event the parties are unable to settle such discrepancy within
the 30-Day Audit Settlement Period, the parties agree to submit the discrepancy
to a final audit (the "Final Audit") by a "Big 5" accounting firm that has never
performed and is not at the time of such discrepancy performing professional
accounting services for CNN-NS and/or ADAM or any of their related companies. If
a Final Audit is performed, the costs shall be borne as follows: (a) if the
Final Audit concludes that initial CNN-NS has excessively charged to and/or
withheld from the ADAM more than the SM Expenses Budget allocated during any one
(1) year period during the Term hereof, CNN-NS shall pay all reasonable outside
accountant fees and costs arising from or related to the
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Final Audit, the Challenge Audit as well as the Formal Audit; and (b) in all
other events, ADAM and CNN-NS shall equally share the costs arising from or
related to the Final Audit.
7. Withdrawal. Notwithstanding anything to the contrary which may be
contained herein, ADAM hereby expressly acknowledges and agrees that in the
event ADAM on any occasion reasonably considers it necessary or advisable to
withdraw any portions or particular portions of the ADAM Images due to any
question concerning any rights therein or any claim with respect thereto by any
person or entity other than CNN-NS, ADAM shall promptly notify CNN-NS thereof
and ADAM's license with respect to such positions or segments of ADAM Images
shall be deemed revoked thereby with respect to such withdrawn portions or
portions of ADAM Images as of the time of the Affiliates and the CNN Networks'
receipt of ADAM's notification, which in no instance shall be more than
twenty-four (24) hours from the date of CNN-NS's receipt of ADAM's notice. If
any such withdrawal results in a material reduction in the amount of ADAM Images
provided by ADAM to CNN-NS hereunder, the parties agree that ADAM shall use its
best efforts to provide images of a similar nature. CNN-NS expressly agrees to
have the Affiliates and the CNN Networks exhibit any and all retractions,
corrections, follow up images and/or materials similar in nature thereto in the
event that ADAM reasonably considers the exhibition thereof necessary or
advisable.
8. Right of Cancellation. CNN-NS reserve the right to terminate this
Agreement, upon thirty (30) days prior written notice to the other party (such
complete cancellation of the Agreement shall relieve the parties hereto of any
further obligations under this Agreement as of the date of such cancellation,
except for the payment of any fees or other sums past due at the time of such
cancellation and obligations expressly contained herein), if (a) the
distribution of the
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ADAM Images or any such particular format, as applicable, by CNN-NS would
violate any law, court order, governmental regulation or any other ruling of any
governmental entity binding upon or otherwise applicable to CNN-NS; (b) it
becomes unlawful for CNN-NS to license or syndicate ADAM Images or any
particular format, as applicable, due to any regulation or any other ruling of
any governmental entity binding upon or otherwise applicable to CNN-NS.
9. Ownership. All rights and title in and to the ADAM Images, or any
portion thereof, including but not limited to, the images, formats, and other
creative material included therein (other than material in the public domain)
shall, as between CNN-NS and ADAM, remain vested in ADAM. CNN-NS shall take all
reasonable precautions to prevent unauthorized use of ADAM Images and shall
promptly notify ADAM of any known unauthorized use or copying of ADAM Images.
10. Trademarks/Use of Logos.
(a) CNN Logos. ADAM agrees that CNN owns the CNN name, logos and all
other trademarks and/or service marks related to CNN programming (the "CNN
Logos"), and ADAM agrees that it will not use the CNN Logos without the prior
written consent of CNN-NS, and further not use the CNN Logos in any manner which
will adversely affect CNN's ownership of the CNN Logos. All rights in the CNN
Logos and the goodwill connected therewith shall at all times remain the
property of CNN. CNN and/or CNN-NS may withdraw consent for ADAM's usage of the
CNN Logos immediately if ADAM breaches any term or condition contained herein or
if CNN and/or CNN-NS, in its reasonable discretion, deems such termination
necessary or advisable. ADAM further agrees that during the term hereof and upon
termination
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of this Agreement, all rights in the CNN Logos and the goodwill connected
therewith shall be and remain the property of CNN.
(b) ADAM Logos. CNN-NS agrees that ADAM owns the ADAM name, Logos and
all other trademarks and/or service marks related to ADAM Images (the "ADAM
Logos"), and CNN-NS agrees that it will not use the ADAM Logos without the prior
written consent of ADAM, and further not use the ADAM Logos in any manner which
will adversely affect ADAM's ownership of the ADAM Logos. Notwithstanding
anything to the contrary contained herein, ADAM grants CNN-NS a limited
non-exclusive license to use the ADAM Logos in the Image Package packaging and
ADAM Images sales and marketing materials deemed necessary by CNN-NS to maximize
the Annual Gross Revenues specified in 5(b) above. CNN-NS agrees that it shall
contractually obligate the Affiliates to give ADAM appropriate credit for the
ADAM Images so used by such Affiliate to display the ADAM logo set forth on
Exhibit A, attached hereto and by this reference expressly incorporated herein,
during the entire time the ADAM Image(s) are being exhibited by such Affiliate
via Television. ADAM agrees that the ADAM logo shall not change during the Term
of this Agreement unless CNN-NS consents in writing to the change, which consent
shall not be unreasonably withheld. CNN-NS further agrees that it shall
contractually obligate each CNN Network (excluding CNN Interactive) to give ADAM
appropriate credit for the ADAM Image so used by requiring such CNN Network to
simultaneously display the ADAM logo appearing on Exhibit B during the first
three (3) seconds of exhibition via Television; such ADAM logo shall not change
during the Term unless CNN-NS consents to the change, which consent shall not be
unreasonably withheld. CNN-NS agrees that it shall contractually obligate CNN
Interactive to give ADAM appropriate credit for the ADAM
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Image so used by requiring CNN Interactive to display ADAM's web logo appearing
on Exhibit C at all times on any of its web pages that display an ADAM Image.
All rights in the ADAM Logos and the goodwill connected therewith shall at all
times remain the property of ADAM. ADAM may withdraw consent for CNN-NS's usage
of the ADAM Logos immediately if CNN-NS breaches any term or condition contained
herein or if CNN and/or ADAM, in its reasonable discretion, deems such
termination necessary or advisable. ADAM further agrees that during the term
hereof and upon termination of this Agreement, all rights in the ADAM Logos and
the goodwill connected therewith shall be and remain the property of ADAM.
CNN-NS agrees that it shall obligate the Affiliates and the CNN Networks to
exhibit the ADAM Logos as delivered by ADAM to CNN-NS for distribution to the
Affiliates and the CNN Networks.
11. Termination. Except as otherwise provided herein, either party
hereto may terminate this Agreement if the other party substantially breaches
any material representation or warranty made by it herein or defaults in the
performance of any of its material obligations hereunder, and fails to remedy
same within a period of sixty (60) days following receipt from the other party
of written notice specifying such breach or default; provided, however, that
notwithstanding the foregoing, such period of notice and right to cure shall be
thirty (30) days in the event of nonpayment by CNN-NS to ADAM of any of the
amounts set forth in Paragraph 5 herein above and ADAM's non-compliance with
Paragraph 4 above. A party shall be considered in default hereunder, and the
other party thereby shall have the right to terminate this Agreement
immediately, if it makes a general assignment for the benefit of creditors or
files a petition in bankruptcy, or has filed against it a petition in bankruptcy
which is not dismissed or stayed within sixty (60) days of such filing, or is
adjudicated as bankrupt, or has a receivers trustee or
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liquidator appointed for it, or a substantial portion of its properties or
assets, which is not removed within sixty (60) days of such appointment. No
remedy expressed herein shall be deemed exclusive of any rights or remedies
which either party may have and all such rights or remedies, whether at law or
in equity, are hereby expressly reserved.
12. Force Majeure. If the performance hereunder by either party is
prevented, suspended or postponed due to an event of force majeure, which for
purposes hereof shall include, without limitation, an act of God, flood, fire,
earthquake, war, riot, insurrection, strike or act of any governmental entity,
satellite or transponder failure or malfunction, or other cause of a similar or
dissimilar nature beyond the reasonable control of such party, this Agreement
may, at such party's option, be suspended in whole or in part during the
continuance of such event without any responsibility of either party to perform
hereunder for or during such period of suspension. The parties agree in such
event to resume performance hereunder as promptly as reasonably practicable
thereafter. Notwithstanding the foregoing, in the event of the continuance of
any such period of suspension for longer than thirty (30) consecutive days, or
in the event of sporadic suspensions which in the aggregate exceed thirty (30)
days in duration during any consecutive twelve months during the term hereof,
this Agreement, and all of the respective rights and obligations of the parties
hereunder, may, at the option of either party, be terminated (which shall
relieve the parties hereto of any further obligations under this Agreement as of
the date of such termination, except for payment of any fees or other sums past
due at the time of such termination and obligations of indemnification expressly
contained herein).
13. Representations and Warranties. Each party hereto represents and
warrants to the other that (a) it has the legal right and corporate power and
authority to execute, deliver and
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perform this Agreement; (b) its execution, delivery and performance of this
Agreement has been duly authorized in accordance with all appropriate corporate
power and authority; (c) its execution, delivery and performance of this
Agreement will not violate the terms or provisions of any other agreement,
contract or other instrument, whether oral or written, to which it is a party or
by which it or its properties or assets are bound or any order, judgment or
decree to which it is subject; (d) the individual signing this Agreement on its
behalf has been authorized to execute this Agreement in the capacity set forth
under such individual's name on the signature page hereof; and (e) the
execution, delivery and performance of this Agreement constitutes its legal,
valid and binding obligation enforceable against it in accordance with its
terms, except as enforcement may be limited by applicable bankruptcy,
insolvency, reorganization or other similar laws affecting the enforcement of
creditors' rights generally and that the remedy of specific performance may be
subject to judicial discretion. ADAM further represents and warrants that it
owns all rights necessary to license the ADAM Images to CNN-NS for distribution
and exhibition by the Affiliates and the CNN Networks as contemplated herein.
ADAM represents and warrants that the ADAM Images are not libelous or otherwise
unlawful, do not infringe upon any trademark, trade name or copyright, do not
violate the private, civil or property rights, the privacy or any other rights
of any third party. The representations and warranties set forth in this
Paragraph 13 are being made by each party to induce the other party to enter
this Agreement and shall survive the execution and delivery of this Agreement.
14. Indemnification. Each party hereto hereby agrees to indemnify
and hold harmless the other party and the other party's parent, subsidiaries and
affiliates, and the directors, officers, employees, agents and representatives
of such party and its parent, subsidiary and
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affiliates, from and against the full amount of any and all claims, actions,
counterclaims, suits, damages, losses, judgments and expenses, whether fixed or
contingent, including, without limitation, reasonable attorneys' fees and
expenses (including an allocable portion of in house counsel fees), reasonable
out-of-pocket expenses and court costs, that such party and/or any of the
foregoing entities or individuals may incur as the result of or otherwise
related to any act or omission of the performance by the indemnifying party
hereunder or a breach or default by the indemnifying party of any of its
representations, warranties or obligations set forth in this Agreement;
provided, owever, that the indemnified party must (i) give to the indemnifying
party prompt written notice of any claim, action or other matter to which this
indemnification applies; (ii) afford to the indemnifying party the opportunity
to participate in and fully control (with legal counsel of its choice; provided
such legal counsel is reasonably acceptable to the indemnified party), the
disposition (whether by compromise, settlement or other resolution) of such
claim, action, suit or other matter, provided that the indemnifying party
acknowledges its indemnification obligations; (iii) fully cooperate with the
reasonable requests of the indemnifying party to that end; and (iv) have
substantially complied with all of its duties and obligations hereunder at the
time thereof. Consistent with the provisions of this Paragraph 16, each party
hereto agrees that it shall have the obligation to defend and hold harmless the
other party against all claims, demands and suits to which this indemnification
applies. The obligations of the parties pursuant to this Paragraph 16 shall
survive the termination of this Agreement.
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<PAGE> 20
15. Notices. All notices required hereunder shall be in writing and
shall be either delivered in person, deposited in the United States Mail for
first class certified delivery, return receipt requested, or transmitted by
facsimile as follows:
if to CNN-NS:
CNN Newsource Sales, Inc.
One CNN Center
Box 105366
Atlanta, Georgia 30348-5366
Attention: Mr. Meade Camp, Senior Vice President
Fax No. (404) 827-4959
with a copy to:
Cable News Network, Inc.
Legal Department
One CNN Center
Box 105366
Atlanta, Georgia 30348-5366
Attention: CNN-NS Attorney
Fax No. (404) 827-1995
if to ADAM:
ADAM Software, Inc.
1600 River Edge Parkway
Suite 800
Atlanta, Georgia 30328
Attention: Mr. Bob Cramer
Fax No. (770) 955-6031
with a copy to:
King & Spalding
191 Peachtree Street, NE
Atlanta, Georgia 30303-1763
Attention: Mr. Bill Roche
Fax No. (404) 572-5145
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Notices shall be deemed effective either when hand delivered, or upon receipt
if sent by United States Certified Mail, or on the date sent if faxed prior to
5:00 p.m. and receipt is confirmed by telephone. Addresses may be changed in
the manner provided herein for notices.
16. General Provisions.
(a) Entire Agreement. This Agreement constitutes the sole
agreement of the parties hereto with respect to the subject matter hereof and
supersedes all previous written and oral agreements and understandings between
the parties with respect to the subject matter set forth herein.
(b) Capitalized Terms. All capitalized terms used herein shall
have the meaning as expressly defined in this Agreement; provided, however, that
proper nouns such as the names of the companies and the locations shall have
their commonly understood meaning unless otherwise expressly defined herein.
(c) Assignment. This Agreement, and any rights or obligations
contained herein, may not be assigned or delegated by either party, in whole or
in part nor voluntarily or by operation of law, without the prior written
consent of the other party, which shall not be unreasonably withheld.
(d) Governing Law. Regardless of the place of execution hereof,
this Agreement, all amendments hereto, and any and all issues or controversies
arising herefrom or related hereto, shall be governed by and construed
exclusively in accordance with the laws and decisions of the State of Georgia
(USA) applicable to contracts made, entered into and performed entirely therein.
ADAM hereby consents to personal jurisdiction in and service of process by any
competent state or federal court in the State of Georgia (USA). Additionally,
the parties hereto agree that the
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<PAGE> 22
State of Georgia (USA) shall be the exclusive forum and situs for the
resolution of any and all disputes, controversies or matters arising herefrom or
related hereto.
(e) Amendment and/or Modification. This Agreement may not be
amended or modified at anytime except by a writing executed by both of the
parties hereto.
(f) Invalidity and/or Unenforceability. The invalidity or
unenforceability of any particular term or provision of this Agreement shall not
affect the validity or enforceability of any other term or provision hereof, and
the remainder of this Agreement shall be construed in all respects as if such
invalid or unenforceable term or provision were omitted. If any clause,
provision or term of this Agreement is declared illegal, invalid or
unenforceable under applicable present or future laws, then it is the intention
of the parties that in lieu of such clause, provision or term, there shall be
substituted a clause, provision or term as similar in substance and effect to
such illegal, invalid or unenforceable clause, provision or term as may be
possible. In the event one or more terms or provisions of this Agreement shall
be illegal, invalid or unenforceable by reason of being excessive or otherwise
unreasonable as to duration, scope, subject matter or activity, this Agreement
shall be construed by limiting or modifying such terms or provisions so as to
render the same lawful, valid and enforceable to the greatest extent compatible
with applicable law as it shall then appear.
(g) Confidentiality. Each of the parties hereto agrees that, except as
they may otherwise mutually agree as contemplated by the immediately succeeding
sentence, such party shall keep the terms of this Agreement confidential and
shall not disclose the terms or provisions hereof, except (i) to its accountants
and attorneys; (ii) as may be required by applicable law or regulation; (iii)
pursuant to any applicable subpoena or other legal or regulatory process; or
(iv) if
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<PAGE> 23
the terms of this Agreement become generally known to the public other than
through a disclosure by such party which violates the terms of this Paragraph
(g); provided, however, that neither party shall be prohibited from disclosing
the general nature (but none of the economic terms) of the relationship set
forth in this Agreement. The parties will mutually agree in advance on the
timing and contents of all press releases and similar communications relating to
this Agreement or the transactions contemplated hereby.
(h) Rights and Remedies. All rights and remedies herein are
cumulative and in addition to any and all other rights and remedies available at
law or in equity.
(i) Waiver. The waiver by either party of any right or remedy
hereunder on any one occasion shall not constitute a waiver of such right or
remedy on any other occasion. No delay in the exercise of any right or remedy
hereunder shall constitute a waiver of such right or remedy or of any other
right or remedy.
(j) Relationship. Nothing herein shall be deemed to create an
employment, joint venture, agency or partnership relationship between the
parties hereto and neither party is authorized or shall act toward any third
party, individual, entity or the public in any manner which would indicate any
such relationship with the other.
(k) Counterparts. This Agreement may be executed in multiple
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
(1) Successors and Assigns. This Agreement shall be binding upon
and inure to the benefit of each of the parties' successors and, if permitted,
assigns.
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<PAGE> 24
(m) Time of the Essence. The parties hereto agree that time is of
the essence in the performance of the respective obligations hereunder.
(n) Headings. The headings contained in this Agreement are
inserted solely for purposes of reference and convenience and shall not affect
the meaning or construction thereof.
IN WITNESS WHEREOF, the parties hereto have duly authorized the
execution and delivery of this Agreement as of the date and year first above
written.
ADAM SOFTWARE, INC. CNN NEWSOURCE SALES, INC.
By: /s/ By: /s/
--------------------------- --------------------------------
Its: Chairman & CEO Its: President
-------------------------- -------------------------------
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<PAGE> 25
ATTACHMENT A
IMAGE PACKAGE FORMAT
25
<PAGE> 26
SCHEDULE I
IMAGE PACKAGE
CM-ROMS
1. A.D.A.M. Interactive Anatomy (AIA)
2. MLI's Winning Medical Illustrations - General Collection
3. A.D.A.M. Home Assistant (formerly called Medical Housecall)
4. A.D.A.M. the Inside Story
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SCHEDULE II
SALES AND MARKETING EXPENSES
PLUS IMAGE PACKAGE'S COST OF MANUFACTURING
-------------------------------------------------------------------------------------------------------------------
Per Week Per Month Per Year
-------------------------------------------------------------------------------------------------------------------
REVENUE
Cash sales to stations $1,051,250
Sales to CNN Networks $60,000
SUBTOTAL: $1,111,250
EXPENSES
Production
Studio space and time
Crew time
Graphics
Talent
Make-up
Travel/Entertainment
Writer/Researcher
SUBTOTAL: $0
Transmission/Distribution
Satellite for special images $1,500
Shipping to stations $1,000
Actual costs of ADAM Materials $4,600
SUBTOTAL: $7,100
Sales and Marketing Support
Brochure/one sheet $4,000
Logos for print sheet $500
Booth Graphics $1,000
Broadcast fax (3 per year) $1,500
Multimedia $3,000
Video presentation $10,000
Dubs $500
Public Relations Support $1,000
Conventions/Meetings
RTNDA Allocation $5,000
NATPE Allocation $5,000
Optional Expenditures
Trade Ad for Communicator
Creative $6,000
Film $1,000
Insertions $4,600
SUBTOTAL: $43,100
REVENUES: $1,111,250
LESS EXPENSES: $50,200
TOTAL FOR PROJECT: $1,061,050
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EXHIBIT A
ADAM LOGO
COURTESY FONT FORMAT FOR AFFILIATES
28
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EXHIBIT B
ADAM LOGO
COURTESY FONT FORMAT FOR CNN NETWORKS
29
<PAGE> 30
EXHIBIT C
ADAM LOGO
COURTESY FONT FORMAT FOR CNN INTERACTIVE
30
<PAGE> 31
AMENDMENT NO. 1 TO THE
CNN NEWSOURCE SALES, INC. LICENSE AGREEMENT
This Amendment No. I (this "Amendment") to the CNN Newsource Sales,
Inc. License Agreement dated January 15, 1998 (the "Agreement"), by and between
CNN Newsource Sales, Inc. ("CNN-NS"), a Georgia corporation, and ADAM Software,
Inc. ("ADAM"), a Georgia corporation, is dated as of April 1, 1998.
BACKGROUND STATEMENTS
A. Pursuant to the Agreement, ADAM licensed to CNN-NS the right to
relicense the visual images of the ADAM Images to Affiliates and CNN Networks
for exhibition via Television throughout the Territory.
B. Both ADAM and CNN-NS mutually agree that it is to each party's
benefit to amend the Agreement.
NOW, THEREFORE, in consideration of the agreements hereinafter set
forth the parties hereto agree as follows:
1. Definitions. Capitalized terms used in this Amendment, unless
specifically defined herein, have the meanings given to them in the Agreement.
2. Amendments. Notwithstanding anything to the contrary contained in
the Agreement, the parties hereto agree to the following amendments to the
Agreement:
2.1 Section 2 shall be deleted in its entirety and restated to read as
follows:
2. Term. This Agreement shall remain in full force and effect
from the date hereof through January 5, 2002 (the "Term"); provided,
however, that should CNN-NS fail to collect One Hundred Thousand U.S.
Dollars (US$100,000.00) in Net Revenues, as such term is defined in
Paragraph 5 below, per each year of the Term hereof, calculated within
forty-five (45) days after the termination of each year during the
Term, then both parties shall have the option to terminate this
Agreement anytime within the first four (4) months of the commencement
of each year of the Term starting in year 2 of the Term, upon either
party's delivery of fifteen (15) days prior written notice delivered to
the other party. Both parties agree that should either party terminate
the Agreement after the first year of the Term, as specified herein,
each will honor any existing agreements with the Affiliates for the
distribution of the ADAM Images which shall not extend beyond six (6)
months after the applicable effective termination date.
2.2 Section 5(b) shall be deleted in its entirety and restated to read
as follows:
<PAGE> 32
(b) During each year of the Term, all revenues collected from the
license of the ADAM Images throughout the Territory as specified in
Paragraph 1 (the "Annual Gross Revenues") shall be paid to CNN-NS.
CNN-NS agrees that it will use commercially reasonable efforts to
maximize the Annual Gross Revenues hereunder and to collect all such
license fees charged for the ADAM Images. From Annual Gross Revenues,
CNN-NS shall be entitled each year to deduct and pay the Sales and
Marketing Expenses actually incurred by CNN-NS (with such amounts not
to exceed the SM Expenses Budget as submitted by CNN-NS quarterly to
ADAM pursuant to Paragraph 5(a) above, as well as the actual
manufacturing costs of the ADAM Images which amount per Image Package
is set forth as a line Item on Schedule I and shall remain the same
each year of the Term hereof unless otherwise agreed upon by the
parties in writing. The following percent of any remaining revenues
actually collected after all deductions set forth in this Subparagraph
(the "Net Revenues") shall be paid to ADAM within forty-five (45) days
after the end of each quarter of each year of the Term hereof along
with a definitive report detailing the Sales and Marketing Expenses
paid as well as the revenues collected from the Affiliates and CNN
Networks for the quarter just ended (with the first such quarter
terminating on April 14, 1998):
Quarters Percentage of Net Revenue
-------- -------------------------
1-4 55%
5-8 60%
9+ 65%
Past due payments on all amounts due and payable as provided for in
this Agreement shall bear interest, which shall accrue fifteen (15)
days after the date such payment was due, at a rate of one and one-half
percent (1 1/2%) per month, or, in the event the parties are precluded
by law from establishing such rate, the maximum legal interest rate
permitted by law. CNN-NS agrees that it shall supply ADAM with estimate
reports (the "Estimate Reports") on a quarterly basis throughout the
Term detailing estimates of the Marketing and Sales Expenses paid as
well as the revenues collected from the Affiliates and the CNN Networks
(with such Estimate Reports to be delivered no later than thirty (30)
days after the termination of each quarter of each year throughout the
Term hereof with the first such quarter terminating on April, 1998 and
with ADAM understanding and agreeing that the amounts set forth in such
Reports are strictly estimates and not final numbers to be relied upon
as such).
2.3 Section 10(b) is hereby amended by adding the following sentences at
the end of the section:
<PAGE> 33
Notwithstanding any provision to the contrary in this Section, if
CNN-NS has negotiated in good faith to contractually obligate an
Affiliate to display the ADAM logo during the entire time the ADAM
Images are being exhibited by such Affiliate and such Affiliate is
unwilling to contractually obligate itself, CNN-NS may instead offer to
reduce the period of time that such Affiliate must simultaneously
display the ADAA4 logo to the first three (3) seconds of exhibition via
Television (the "Limited Credit"). If CNN-NS has negotiated in good
faith to contractually obligate an Affiliate to give ADAM the Limited
Credit and such Affiliate is unwilling to contractually obligate
itself, CNN-NS may offer, at a minimum, to only require such Affiliate
to display an on-screen credit at the end of the program that
broadcasted the ADAM Image as set forth in Attachment A to this
Amendment.
2.4 Section 13 is hereby amended by adding the following sentence at the
end of the section:
ADAM represents and warrants that it will not communicate with the
Affiliates or the CNN Networks during the Term of the Agreement for the
purpose of marketing or selling the Image Package .
2.5 Section 16(e) is hereby amended by adding the following sentence at the
end of the section:
Both parties agree that if any changes in facts and circumstances would
materially affect the rights or obligations of the parties under this
Agreement, each party will be willing to discuss in good faith
appropriate modifications to the Agreement as necessary to reflect such
changes; provided, however, that nothing contained herein shall be
deemed a waiver of either party's rights and remedies at law or in
equity pursuant to the terms hereof.
<PAGE> 34
IN WITNESS WHEREOF, the parties hereto have duly authorized
the execution and delivery of this Amendment as of the date and year first above
written.
ADAM SOFTWARE, INC.
By: /s/
-------------------------------
Its: Chairman & CEO
------------------------------
CNN NEWSOURCE SALES, INC.
By: /s/ Susan Grant
-----------------------------
Its: President
-----------------------------