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Media Publishing & Developer Agreement

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Sectors: Computer Software and Services
Governing Law: Georgia, View Georgia State Laws
Effective Date: November 30, 1995
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THIS PUBLISHING/DEVELOPER AGREEMENT (this "Agreement") is made and entered into as of November 30, 1995, by and between A.D.A.M. SOFTWARE, INC. ("ADAM"), a Georgia corporation having its principal place of business at 1600 RiverEdge Parkway, Suite 800, Atlanta, Georgia 30328, and J.S.K., INC., D/B/A MEDICAL-LEGAL ILLUSTRATIONS ("MLI"), a Georgia corporation, having its principal place of business at 1600 RiverEdge Parkway, Suite 700, Atlanta, Georgia 30328.


ADAM is the owner of certain interactive multimedia computer software products which illustrate the various anatomical structures of the human body, simulate dissection of the human body through use of various tools and methods contained in the products, provide descriptive and illustrative information relating to anatomical structures and physiological functions displayed by the products, and allow for the organization of and linking to material prepared by users of the products.

MLI is engaged in the production of customized medical illustrations for use as demonstrative evidence by trial lawyers, primarily in medical-related civil lawsuits.

Pursuant to the terms of the Medical-Legal Illustrations License Agreement between ADAM and MLI dated April 7, 1994 (the "MLI License Agreement"), ADAM granted to MLI the right to use images from ADAM's database of anatomical images to create Animations and Boards (as defined in the MLI License Agreement) and the right to use the "Medical-Legal Illustrations" service mark in the conduct of MLI's business.

MLI desires to develop, and ADAM desires to publish, certain multimedia computer software products containing images owned by ADAM, specifically for the legal market, on the terms and subject to the conditions set forth in this Agreement.

In consideration of the premises hereof and other good and valuable consideration, the receipt and sufficiency of which are hereby mutually acknowledged, the parties, intending to be legally bound, hereby agree as follows: 2

1. CERTAIN DEFINITIONS. As used in this Agreement, the following defined terms have the meaning specified below:

1.1 "ADAM Images" means anatomical illustrations contained in the database of illustrations maintained by ADAM.

1.2 "Alpha Stage" means a working model or prototype. At the Alpha Stage, the potential risk that the software code will not do what is expected has been resolved.

1.3 "Beta Stage" means the point in a Product's development at which all functionality is complete (there are no specifications which are not yet implemented), all content is complete and implemented in the Product, and the software code is essentially complete, but not all bugs have been resolved. All major functional pieces of the Product work, and all user interface features are in place and work. The Product's program may have many problems that cause it to be unstable, such as major operating failures (crashes) and installation problems. The remaining tasks prior to shipment include full functionality testing, with subsequent bug fixing by engineers to fix all identified problems. Thus, testing and bug fixing is not complete and continues all the way up to product release.

1.4 "COGS" means the cost-of-goods-sold incurred by ADAM in producing a Product, determined by ADAM in accordance with generally accepted accounting principles, as provided in writing by ADAM to MLI from time to time.

1.5 "Content" means illustrations, pictures, images, animations, video, sound, text, and other material.

1.6 "Legal Market" means potential customers who are attorneys or entities providing services to attorneys who acquire Products for use in developing demonstrative evidence (boards and animations) in connection with lawsuits and other legal dispute resolution mechanisms.

1.7 "Marketing Materials" means all materials used by MLI in connection with the marketing and promotion of Products, including without limitation, Product packaging (including box design, jewel case liners and CD- ROM artwork), marketing software, print materials, marketing messages and Product names.

1.8 "Programming" means computer programming incorporated in Products.

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1.9 "Product" means a multimedia computer software product created by MLI utilizing ADAM Images, which is authorized under the terms of this Agreement. The Product may also include a companion videocassette recording of the Content of the multimedia software Product (a "Companion Video") which is intended for distribution solely with copies of the multimedia software Product. In no event may a copy of a Companion Video be sold or otherwise distributed separately from a copy of the multimedia software Product.

1.10 "Prototype" means the first draft of the Product, including its Content, features and functionality (though it will generally not include all of the functionality of the final Product).

1.11 "Royalty Base" means an amount equal to one-half of the suggested retail price of a Product, as agreed by ADAM and MLI.


2.1 Subject to the provisions of Paragraph 2.2 and the prior written approval of ADAM in accordance with Paragraph 2.3, ADAM hereby grants to MLI and MLI hereby accepts a non-exclusive, non-transferable license (i) to make and modify copies of the ADAM Images, solely in the creation of Products, and (ii) to distribute copies of the Products obtained from ADAM solely in the United States and Canada.

2.2 MLI's license to use the ADAM Images is subject to the following conditions:

(a) Each Product must be created by MLI solely for the
Legal Market, or other markets specifically authorized in advance in
writing by ADAM, and copies of such Products may not be distributed,
delivered, furnished or otherwise provided by MLI to any person or
entity other than the Legal Market.

(b) Each Product must be intended solely for internal use
by such Legal Market customer (or customer of other markets
specifically authorized in advance in writing by ADAM) and its
employees in connection with the conduct of the customer's business or
the delivery of legal services.

(c) Any resale or distribution of a Product by such Legal
Market customer shall be expressly prohibited.

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(d) Each Product shall be subject to the terms and
conditions of an end-user license agreement substantially in the form
of Exhibit A which protects the proprietary rights of ADAM in the
Product and restricts the copying and use of the Product and its

(e) Prior to producing any Product, MLI must first obtain
the written consent of ADAM (in the sole discretion of ADAM) in
accordance with the provisions of Paragraph 2.3 below.

(f) MLI agrees to notify ADAM periodically (but not less
than twice per year), or upon ADAM's request, for information regarding
MLI's development activities in the Legal Market and MLI's plans with
respect to Products.

(g) Representatives of MLI will obtain ADAM Images
required in connection with the production of a particular Product from
ADAM's database of images using procedures mutually agreed upon by the
parties (and which are designed to protect ADAM's proprietary interest
in the ADAM Images). Such representatives will not copy any images
other than the particular images needed in connection with the
production of a specific Product. MLI will not make more than one copy
of any image copied from the ADAM database of images as contemplated
above. The copied images may then be used to create the Product. All
images utilized in the Product or in the production of the Product will
then be returned to ADAM, as contemplated in Paragraph 7.1 below, by
means mutually agreed upon by the parties. MLI will in no event retain
copies of the ADAM Images originally copied from the ADAM database of
images, or of any images produced using the ADAM Images once a product
has been completed. In no event will MLI permit any third party to
have access to any electronic copies of any ADAM Images copied from the
ADAM database of images or of images created in connection with the
production of the Product (for example, a copy of such an image on
optical disk), except for copies distributed as an integral part of
Products distributed as authorized under this Agreement, and except for
copies to Authorized Subcontractors (as defined in Paragraph 3.14) who
are given access to images solely for use in the development of a
Product pursuant to Paragraph 3 below.

(h) MLI shall use the ADAM images solely for internal
purposes in connection with the development of Products and in the
production of Marketing Materials for use in the marketing and
promotion of Products, and not for any other purpose.

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(i) It is expressly understood and agreed that MLI will
not have the right to make copies of any Product, and MLI shall
prohibit any other person or entity (including without limitation MLI
customers) from copying Products; provided that (1) MLI will have the
right to make copies of Content from Products solely as needed to
create Marketing Materials for the Products and (2) MLI will have the
right to make a single copy of an Alpha Stage version of the Product to
furnish to a Primary Physician expert reviewer for review and
evaluation during the development process as contemplated in Paragraph
4 (subject to execution by the physician reviewer of an appropriate
confidentiality and non-disclosure agreement in form furnished by

(j) All Marketing Materials shall be accompanied by
ADAM's copyright notice in form specified by ADAM.

2.3 (a) MLI shall submit a written specification (in
accordance with the outline set forth in Exhibit B) for each Product
which MLI desires to create and shall obtain the written approval of
ADAM prior to undertaking the development of any such Product. ADAM
shall have the sole right to approve or to disapprove any such proposed
Product, in the sole and absolute discretion of ADAM. If ADAM elects
to reject a proposed Product, ADAM will notify MLI of the reasons for
such rejection. ADAM will make a good faith effort to review proposals
for Products submitted by MLI and to respond to MLI with its decision
within thirty (30) days.

(b) Such written proposals for Products (including
specifications for the proposed Product) required under Paragraph
2.3(a) above shall be submitted by MLI to ADAM at the address of ADAM
specified above, Attention: Stephanie Calabrese, with separate copies
of the transmittal letter (only) for such proposals to be addressed to
the attention of each of (i) ADAM's Vice President, Production, Greg
Swayne, at the address of ADAM specified above, (ii) ADAM's Vice
President, Sales and Marketing, Cary Chandler, at the address of ADAM
specified above, and (iii) to ADAM's counsel, William G. Roche, King &
Spalding, 191 Peachtree Street, Atlanta, Georgia 30303.

2.4 ADAM grants to MLI a nonexclusive, non-transferable, royalty-free license and right to use the mark "A.D.A.M." or "Published by A.D.A.M. Software, Inc." (the "Marks") solely in the marketing, advertising and promotion of Products in the United States and Canada, in accordance with Paragraph 4 of this Agreement, as approved in writing by ADAM.

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2.5 The license to use the Marks is subject to the following conditions:

(a) MLI shall ensure that the Marks are used solely in
Marketing Materials prepared in accordance with the terms hereof in
connection with the marketing and promotion of Products. Any such
display of the marks shall be made in accordance with the "Trademark
Usage Guidelines" furnished by ADAM from time to time (the current
guidelines are attached as Exhibit C). The Marks shall, at all times,
remain ADAM's exclusive property. MLI will not adopt or use a mark
that is confusingly similar to the Marks. Upon termination of this
Agreement for any reason, MLI will promptly cease all use of the Marks.

(b) ADAM shall have the right to review and approve all
Marketing Materials, including, without limitation, box designs, CD-ROM
artwork, Product names and print materials, prepared by MLI. MLI must
submit to ADAM all packaging materials (including box design, jewel
case liners and CD-ROM artwork), together with samples of all other
marketing or promotional pieces prepared by MLI. ADAM will make a good
faith effort to review materials submitted by MLI and to respond to MLI
with its decision within fourteen (14) days.

(c) MLI agrees that if it "bundles" its services with
sales of Products or runs promotions involving services and copies of
such Products, MLI will make it clear to the customer that MLI is
solely responsible for such services and that ADAM will have absolutely
no liability or obligation with respect thereto.

(d) MLI will not, in any event, hold itself out as having
the authority to bind ADAM or to create any liability or obligation
binding on ADAM, nor will MLI take (or omit to take) any other action,
the effect of which would be to create any liability on the part of


3.1 MLI agrees to undertake the design, development, and technical Alpha Stage testing of Products for both Macintosh and Windows platforms (including all current versions of such platforms specified by ADAM, such as Win 95 and Win 3.1). MLI will be responsible for doing initial market research for a proposed Product, developing initial specifications for the Product, and submitting such specifications (together with a marketing justification for the proposed Product) to ADAM for ADAM's approval in accordance with Paragraph 2.3. if approved by ADAM, MLI will be responsible for developing all Content and

6 7 Programming as may be required for such Product. To promote a consistent appearance and operation for all Products, all Products created by MLI must conform to the Product specifications approved by ADAM in advance, in accordance with Paragraph 2.3. In addition, MLI shall provide ongoing editorial review of Products by a primary physician.

3.2 During the course of creating any Product, MLI shall provide to ADAM Prototype versions of such Product for ADAM's review, comment, and final approval in writing. ADAM will make a good faith effort to complete its review within fourteen (14) days after receipt of a Prototype from MLI (or within thirty (30) days if ADAM elects to have external reviewers, such as potential customers, review the Prototype).

3.3 MLI shall deliver each Product in Alpha Stage to ADAM for its review and evaluation with (1) potential customers, (2) anatomical or physician reviewers, and/or (3) ADAM internal reviewers. ADAM will make a good faith effort to complete internal Alpha Stage review within fourteen (14) days after receipt of Alpha Stage Product from MLI and to complete external Alpha Stage review (potential customers and anatomical or physician reviewers) within thirty (30) days after receipt of Alpha Stage Product from MLI.

3.4 MLI shall submit to ADAM a completed Beta Stage electronic copy of the Product at least thirty (30) days prior to the date on which a Product is to be golden mastered. ADAM will perform Beta Stage testing, including, without limitation:

(a) Quality assurance testing of technical functionality for
Macintosh and Windows on various hardware configurations; and

(b) Final content review.

ADAM will make a good faith effort to complete Beta Stage testing within thirty (30) days after receipt of Beta Stage Product from MLI. ADAM's testing time is contingent upon MLI's ability to make changes to the Product in a timely manner so that ADAM is able to complete testing within thirty (30) days.

It is expressly understood and agreed that the time frame specified in Paragraph 3.4 for ADAM's review of the Beta Stage version, as well as the time frames specified in Paragraphs 3.2 and 3.3 for ADAM's review of the Prototype and Alpha Stage, respectively, is based upon the nature of the products currently contemplated by the parties (including the levels of Content and functionality of such products). If Products proposed after the date of this Agreement contain materially different levels of

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Content or functionality, it may be necessary to adjust the time frames specified in Paragraphs 3.2, 3.3 and 3.4 to allow for additional review time.

3.5 As part of its review of each Product, ADAM will conduct Editorial Review - Legal (customer review); Editorial Review - Anatomical and Medical Accuracy; Usability Testing; Online Help Review; and User Guide Review.

3.6 If ADAM's review and evaluation at either Prototype, Alpha Stage or Beta Stage discloses problems or deficiencies in the Product as delivered by MLI, ADAM may elect to return the Product to MLI for correction of any such problems and deficiencies. MLI agrees to exercise its best efforts to correct promptly the problems and deficiencies identified by ADAM and return the corrected encoded material to ADAM for further review and evaluation within thirty (30) days, or any reasonable extension thereof, after receipt of the returned material, at which time ADAM may conduct further review and evaluation in accordance with the foregoing procedure.

3.7 MLI and ADAM agree to prepare minor modifications and enhancements (i.e., updates) to the Product(s), upon the request of ADAM or MLI, pursuant to a mutually agreeable time schedule and specification of changes. Further, MLI and ADAM agree to negotiate in good faith to reach agreement on the preparation of any substantial enhancements to the Product(s) (i.e., upgrades), which either may request from time to time.

3.8 MLI agrees that each and every copy of Products will include a copyright notice in form furnished by ADAM to MLI for this purpose from time to time.

3.9 MLI also agrees to undertake the design and development of Marketing Materials, which Marketing Materials are subject to ADAM's PRIOR approval in accordance with Paragraph 2.5, and to perform initial market research with respect to proposed Products.

3.10 The "A.D.A.M." brand name must be incorporated into the name of each Product, in the manner specified by ADAM.

3.11 MLI will be responsible for obtaining (at MLI's expense) all third party intellectual property rights required in connection with a Product (including, without limitation, tools/environments, Programming and Content owned by third parties and incorporated in, or used in the development of, Products). MLI will furnish ADAM with copies of all license agreements with third parties at the time of delivery of the Alpha Stage copy of the Product, and ADAM will review such licenses for intellectual property rights concerns.

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3.12 Each of ADAM and MLI will be responsible for bearing the expenses incurred by it in connection with the performance of its respective obligations under this Paragraph 3 in connection with the development of Products, and neither party will be entitled to be reimbursed by the other for such development expenses, except as specified above.

3.13 No Product will be published until ADAM has given its final written approval, by an authorized representative of ADAM, of publication of that Product.

3.14 In no event will MLI engage any consultant or other third party vendor to provide consulting or development services in connection with the development of a Product, without the prior written consent of ADAM. Any consultant approved in writing by ADAM (an "Approved Consultant") must first execute and deliver a consulting and non-disclosure agreement in form furnished by ADAM which provides for the assignment of all intellectual property rights to ADAM and the agreement of the consultant not to use or disclose any confidential information pertaining to the Product.

3.15 Upon delivery of the Alpha Stage copy of the Product to ADAM, MLI will deliver a complete copy of the source code for the Product and will deliver revised and updated source code with each revision of the Product until completion. Upon final approval of the Product for publication, MLI will deliver a final, complete copy of the source code for the Product. MLI will not use such source code except as needed to support and maintain the Products in accordance with this Agreement and will not disclose the source code to any third party.

4. Manufacture and Distribution of Products.

4.1 Upon final approval of a Prod
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