Licensing And Distribution Agreement

EXHIBIT 10.19


LICENSING AND DISTRIBUTION AGREEMENT


This Agreement is made effective as of June 13, 1997 (the "Effective Date") by and between Mindscape, Inc., a Delaware corporation with offices at 88 Rowland Way, Novato, CA 94845 ("Mindscape") and A.D.A.M. Software, Inc., 1600 River Edge Parkway, Suite 800, Atlanta, Georgia 30323 ("A.D.A.M.").


RECITALS


A. Mindscape is engaged in the business, inter alia, of distributing and marketing computer Interactive entertainment software products in the form of computer programs and written documentation relating to their use.


B. A.D.A.M. desires to grant certain distribution rights in the Licensed Products (as defined below) which it has developed, and Mindscape desires to obtain said rights from A.D.A.M. under the terms and conditions set forth in this Agreement.


NOW, THEREFORE, in consideration of the premises and mutual covenants and agreements set forth herein, Mindscape and A.D.A.M. agree as follows:


SECTION 1
DEFINITIONS


The following definitions shall apply throughout this Agreement:


1.1 Programs. "Programs" shall mean the English language version of the software programs listed in Schedule "A" and other mutually agreed upon program titles. Unless expressly indicated to the contrary herein, the term "Program(s)" also includes "Upgrades."


1.2 Platform. "Platform" shall mean the hardware platforms on which the Programs have been developed by A.D.A.M.


1.3 Collateral Materials. "Collateral Materials" shall mean the instruction manuals (user's guide), packaging, labels, promotional and advertising materials which are or have been developed by A.D.A.M. for use in the sale and promotion of the Programs.


1.4 Licensed Products. "Licensed Products" shall mean the Programs, together with associated Collateral Materials.


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1.5 Upgrades. "Upgrades" shall mean revisions, modifications, updates, corrected and new versions, new editions, and add-ons which may be developed by A.D.A.M. during the term of this Agreement.


1.6 Net Cash Receipts. "Net Cash receipts" means gross receipts actually received by Mindscape from the sale, license, or sublicense of Programs less Cost of Goods, royalties, duties, credits for discounts, refunds (including price protection), replacements, and returns (including returns for stock balancing purposes).


1.7 Cost of Goods. "Cost of Goods" means the actual cost of the finished Licensed Product unit, including program media, manuals and other collateral materials.


1.8 Trademarks. "Trademarks" shall mean any trademarks, service marks or tradenames of A.D.A.M. associated with the Programs or as designated by A.D.A.M..


1.9 Territory. "Territory" shall mean the World, except with respect to A.D.A.M.'s prior contractual relationships set forth in Schedule "B".


SECTION 2
RIGHTS GRANTED TO MINDSCAPE


2.1 Grant. In accordance with the terms and conditions of this Agreement, A.D.A.M. hereby grants to Mindscape the following license and related rights with respect to the Licensed Products in the Territory:


(a) to reproduce or have reproduced on its behalf the
Licensed Products;


(b) to sell and distribute the Licensed Products during
the term of the Agreement. Mindscape shall have exclusive rights to
retail distribution, OEM licensing, and retail direct marketing of the
Licensed Programs, except in the Health Care Market. For this purpose,
the "Health Care Market" means individuals, companies and institutions
that provide health care services. Notwithstanding anything herein to
the contrary, in the Health Care Market, Mindscape shall only have the
limited, nonexclusive right to retail direct marketing solely with
respect to individuals that provide health care services. Mindscape
shall not have the right to retail direct marketing in the Health Care
Market, with respect to companies and institutions that provide health
care services. The parties acknowledge that Mindscape's mailing list
may have addresses for companies and institutions in the Health Care
Market, and that a mass mailing may result in promotional materials
being sent to said addresses. A mailing which incidentally includes
said addresses shall not be deemed a breach of this Section 2.1.
Mindscape shall have non-exclusive rights for on-line distribution of
the Licensed Products and Mindscape shall have the right to


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purchase all education SKU's related to the Licensed Products as
finished goods at standard reseller prices determined by A.D.A.M.
Mindscape shall distribute such educational SKUs in accordance with
A.D.A.M.'s standard and commercially reasonable educational reseller
practices. The rights granted to Mindscape are subject to A.D.A.M.'s
right to maintain its existing contractual relationships with the third
parties listed on Schedule "B". All rights not granted to Mindscape are
retained by A.D.A.M. Without limiting the generality of the foregoing,
A.D.A.M. expressly retains the right to retail direct marketing in the
Health Care Market in any manner that A.D.A.M. deems appropriate.
A.D.A.M. further retains the right to sell directly to an end-user who
contacts A.D.A.M. (but not through direct mailings or catalogs);


(c) to affix the Trademarks to the Licensed Products and
use the Trademarks in the promotion and distribution of the Licensed
Products; provided that Mindscape complies in all respects with any
commercially reasonable guidelines or directions provided by A.D.A.M.
with respect to proper usage of the Trademarks. At the request of
A.D.A.M., Mindscape will submit to A.D.A.M. any and all materials
bearing or including any Trademarks. Mindscape shall submit all
Licensed Product packaging to A.D.A.M. for prior review and approval.
Upon the request of A.D.A.M., Mindscape will discontinue the use of (i)
any Trademarks being used by Mindscape in a manner determined by
A.D.A.M. to be inconsistent with the guidelines set forth above or (ii)
any trademark, service mark, or tradename deemed by A.D.A.M. to create
a likelihood of confusion with a Trademark.


(d) to publicly display and perform the Licensed Products
incidental to the promotion and sale of the Licensed Products.


2.2 Sublicenses. A.D.A.M. hereby grants Mindscape the right to sublicense the reproduction and distribution (through multiple tiers of sublicenses) of the Licensed Products; provided that Mindscape shall cause all such sublicensees to comply with the terms and conditions of this Agreement.


2.3 No Implied Rights. Except as specifically set forth in this Agreement, no express or implied license or right of any kind is granted to Mindscape regarding the Licensed Products or the Trademarks, including, but not limited to, any right to know, use, produce, receive, reproduce, copy, market, sell, distribute, transfer, translate, modify, adapt, disassemble, decompile, or reverse-engineer the Licensed Products or create derivative works based on the Licensed Products or any portions thereof, or obtain possession of any source code or other technical material relating to the Licensed Products.


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SECTION 3
A.D.A.M.'s OBLIGATIONS


3.1 Upgrades. From time to time during the term of this Agreement, A.D.A.M. may create, at its own expense, Upgrades for the Program. A.D.A.M. shall provide Mindscape with the Program masters and Collateral Materials for any Upgrades created. Nothing contained in this Agreement shall be construed to obligate A.D.A.M. to create any Upgrades or Mindscape to publish them.


3.2 Development. A.D.A.M. shall prepare and deliver to Mindscape for reproduction a master copy (golden master disc) of each Program in CD-ROM format.


3.3 Product Quality. All A.D.A.M. titles published by Mindscape must be approved by the Mindscape quality assurance department, whose approval will not be unreasonably withheld, prior to publication. Licensor agrees, during the term of this Agreement, at its own expense, to use commercially reasonable efforts to promptly correct any material errors or defects which may be discovered in the Program.


3.4 Marketing Support. A.D.A.M. will provide Mindscape with all reasonable cooperation and support in Mindscape's efforts to market the Programs. Accordingly, A.D.A.M. will provide, upon request, in reasonable quantities determined by A.D.A.M., any reproducible artwork and other marketing materials which A.D.A.M. has prepared for the Programs.


3.5 Technical Support. A.D.A.M. will provide Mindscape with reasonable technical support and assistance throughout the term of this Agreement. A.D.A.M. further agrees to inform Mindscape, and Mindscape agrees to inform A.D.A.M. promptly of any known defects or operational errors in the Programs.


SECTION 4
OBLIGATIONS OF MINDSCAPE


4.1 Marketing. Mindscape will use reasonable efforts to promote and market the Licensed Products on the same basis as similar Mindscape products. Mindscape will submit to A.D.A.M. an initial marketing plan to be submitted to A.D.A.M. no later than April 15, 1997 and provide updated information upon request. Mindscape agrees to submit 2 sales plans in 1997, the first by April 15, 1997, and three plan in 1998 to A.D.A.M. Mindscape will bear the cost of all marketing and advertising expenses in connection with the promotion of Licensed Products in Mindscape's channels of distribution.


4.2 Product Support and Warranty. Mindscape shall be solely responsible for providing technical support for all end-users of the Licensed Products distributed by


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Mindscape. Warranty support and coverage shall be provided in accordance with the end-user license and warranty which has been approved by A.D.A.M. and which shall be included with the Licensed Product.


4.3 Order Solicitation. Subject to the restrictions in Section 2.1, Mindscape may solicit orders from, inter alia, distributors, retail stores and end users for the Licensed Products and distribute the Licensed Products so ordered in accordance with Mindscape's then-effective distribution policies.


4.4 Sales Policies. Mindscape shall sell, sublicense and distribute the Licensed Products using such sales policies and practices as are then implemented by Mindscape for its own products. A.D.A.M. understands that the sales policies maintained by Mindscape will vary from time to time, and from account to account (including discount rates, returns, adjustments, settlement, stock balance, price protection, payment and credit terms). Mindscape shall use commercially reasonable efforts to sell, promote, distribute and otherwise exploit the Licensed Products throughout the Territory.


4.5 Promotional Copies. Mindscape shall have the right to distribute copies of the Licensed Products royalty free solely for internal and promotional use by Mindscape; such use shall not exceed, in the aggregate, during the term of this Agreement, two percent (2%) of total retail units of Programs sold during the first year of this Agreement.


4.6 Packaging. Mindscape will display the Trademarks (or such other logos as are on the master materials and/or the Collateral Materials for the Programs which are specified by A.D.A.M.) on all packaging and sales material and will represent product with a label which has been approved in advance by A.D.A.M., that says "distributed by Mindscape." A.D.A.M. will provide Mindscape the package design for all products listed on Schedule "A". Mindscape will develop all new packaging for Licensed Products, which must be approved in advance and in writing by A.D.A.M. A.D.A.M. will approve or disapprove submitted packaging materials within five (5) business days after receipt.


4.7 Notices. Mindscape will maintain any copyright and trademark notices which are included on and in the Licensed Products.


4.8 Electronic Product Registration. A.D.A.M. will incur the operating expenses for the electronic registration services utilized in ATIS 97. Mindscape, at its own cost, may put electronic registration services on the other Programs. A.D.A.M. will own the registration records generated from all registration methods and will grant Mindscape a royalty free, non-exclusive, perpetual license to use and sublicense the use of such records. A.D.A.M. and Mindscape agree to share this information in an electronic form on a monthly basis.


4.9 No Authority to Bind A.D.A.M. Mindscape has and will exercise no authority to make statements, warranties or representations concerning the Programs that exceed or are inconsistent with the marketing materials or technical specifications


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provided to Mindscape by A.D.A.M. Mindscape has and will exercise no authority to bind A.D.A.M. to any undertaking or performance with respect to the Programs.


SECTION 5
PROPRIETARY RIGHTS


5.1 Ownership. Notwithstanding any provision herein to the contrary, as between Mindscape and A.D.A.M., A.D.A.M. shall retain and own all worldwide right, title and interest in and to the Licensed Products and the Trademarks and all intellectual property and other rights therein, including but not limited to copyrights, patents, and trade secrets in the Programs (both object code and source code form), Program masters, and the Collateral Materials, including all copies and all portions thereof, and nothing in this Agreement will vest title in Mindscape to any rights therein, except as expressly set forth in this Agreement.


5.2 Inventory Risk. Mindscape will assume all A.D.A.M. channel inventory of the Licensed Products. Mindscape shall own title to all media on which the Programs are copied by or for Mindscape, as well as any and all packaging and collateral materials developed by Mindscape or for its benefit. Those shall be and remain the properties of Mindscape subject to A.D.A.M.'s copyright ownership of the Programs and Collateral Materials.


5.3 Mindscape Developed Materials. Mindscape may, at its own expense, adopt its own trademarks, artwork, copy and packaging in marketing and promoting the Licensed Products subject to A.D.A.M.'s prior written approval and Sections 4.5. and 4.6 of this Agreement.


SECTION 6
CONFIDENTIALITY


6.1 Confidential Information. All documentation and information designated by the party disclosing the information (the "Disclosing Party") as proprietary or confidential, including without limitation drawings, source code, computer program listings, techniques, algorithms and processes and technical and marketing information ("Confidential Information") which is supplied by the Disclosing Party in connection with this Agreement shall be treated confidentially by the recipient of the confidential information ("Recipient") and its employees and contractors and shall not be disclosed by the Recipient, except as required in order to exercise the rights and obligations set forth in this Agreement, without the Disclosing Party's prior written consent. Recipients of Confidential Information shall disclose Confidential Information only to employees, contractors, and sublicensees who have a need to know and have executed written agreements requiring them to comply with the nondisclosure obligations set forth herein.


6.2 Limitations. Information shall not be considered to be Confidential Information if it (1) is already or otherwise becomes publicly known through no act of


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Recipient; or (2) is lawfully received from third parties subject to no restriction of confidentiality; or (3) can be shown by Recipient to have been independently developed by it; or (4) is authorized by the Disclosing Party to disclose, copy or use; or (5) is disclosed by the Disclosing Party to third parties without restriction on subsequent disclosure; or (6) is required to be disclosed in the context of an administrative or judicial proceeding.


6.3 Survival. The duty of confidentiality with respect to source code, which is disclosed pursuant to this Section 6, if any, shall survive the termination of the license granted in Secti ...