Copyright License Agreement

EXHIBIT 10.21


COPYRIGHT LICENSE AGREEMENT


This Agreement (this "Agreement") is made effective as of December 29, 1997 (the "Effective Date"), by A.D.A.M. SOFTWARE, INC., a Georgia corporation ("ADAM") and KAINOS LABORATORIES, INC., a Japanese corporation ("KAINOS").


RECITALS


A. ADAM is engaged in the business of developing, distributing, and marketing computer software products in the form of computer programs and written documentation relating to their use.


B. ADAM has acquired from Mosby Consumer Health (MCH) the rights of Applied Medical Informatics, Inc., a Utah corporation ("AMI"), with respect to three computer software products, known as "Medical HouseCall", "Pediatric HouseCall" and "Illiad" (those three products are referred to in this Agreement as the "Products"). KAINOS wishes to acquire an exclusive license to use and modify the Products to create and manufacture Japanese language versions of the Products and derivative products in the Japanese language, and the exclusive right to distribute Japanese language versions of the Products throughout the world, and ADAM is willing to grant the license and distribution rights in the Japanese language versions of the Products to KAINOS under the terms and conditions of this Agreement. These rights being granted to KAINOS include all of ADAM's rights in and to the current localized Japanese versions and derivatives of the Products developed during the period when MCH owned the rights in the Products. KAINOS also wishes to acquire the right to distribute English language versions of the Products in Japan, and ADAM is willing to grant such rights under the terms of this Agreement.


NOW, THEREFORE, in consideration of the premises and mutual covenants and agreements set forth in this Agreement, KAINOS and ADAM agree as follows:


Section 1
RIGHTS GRANTED TO KAINOS


1.1 Grant. Subject to the terms and conditions of this Agreement, ADAM grants to KAINOS the following exclusive license and related rights with respect to the Products in the Territory:


(a) to manufacture and reproduce, or have manufactured and
reproduced on its behalf, copies of Japanese language versions of the
Products (including any modified versions of the Products produced by
KAINOS pursuant to Section 1.1(c) below);


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(b) to market, sell and distribute Japanese language versions of
the Products (including any modified versions of the Products in the
Japanese language produced by KAINOS pursuant to Section 1.1(c) below) in
the Territory during the term of this Agreement. KAINOS shall have the
exclusive right to distribute, by any means or method of distribution, the
Japanese language versions of the Products (including any modified
versions of the Products in the Japanese language produced by KAINOS
pursuant to Section 1.1(c) below) in the Territory, including exclusive
copyrights with respect to the Japanese language versions of the Products
(including any modified versions of the Products in the Japanese language
produced by KAINOS pursuant to Section 1.1(c) below);


(c) to modify the Products in the Japanese language (which may
include a limited amount of English language where the English language
word or term cannot be properly translated into the Japanese language, or
which enhances the functions of the Japanese language version) and create
derivative works of the Products in the Japanese language, including
without limitation localized versions of the Products in the Japanese
language (which may include a limited amount of English language where the
English language word or term cannot be properly translated into the
Japanese language, or which enhances the functions of the Japanese
language version) designed for the Japanese market, and to manufacture and
reproduce, market, distribute and sell such modifications to and
derivatives of the Products (including localized versions of the Products)
in the Japanese language in the Territory during the term of this
Agreement; provided that any such modifications and derivatives (including
localized versions) must be in the Japanese language.


1.2 Sublicenses. ADAM hereby grants KAINOS the right to sublicense the manufacturing, reproduction and distribution (through multiple tiers of sublicenses) of the Japanese language versions of the Products in the Territory during the term of this Agreement; provided that KAINOS must cause all sublicenses to comply with the terms and conditions of this Agreement.


1.3 Distribution Rights. ADAM grants to KAINOS the exclusive right to distribute copies of the English language versions of the "Illiad" Product in Japan only, subject to the terms and conditions of this Agreement. ADAM also grants to KAINOS the exclusive right to distribute copies of the English language versions of the "Medical Housecall" and "Pediatric Housecall" Products in Japan only, subject to (1) the existing rights of Mindscape under the worldwide distribution agreement between Mindscape and ADAM which expires on December 31, 2000 (the "Mindscape Distribution Agreement"), and (2) the terms and conditions of this Agreement. Upon the termination of the existing Mindscape Distribution Agreement, KAINOS will have the exclusive right to distribute the English language versions of the Products in Japan only.


All copies of English language versions of the Products distributed by KAINOS in Japan must be obtained by KAINOS from ADAM pursuant to this Agreement; KAINOS will not have the right to manufacture, make or have made copies of the English language versions of the Products. ADAM will furnish KAINOS with 100 copies of the English language versions of each of the Products, solely for distribution in Japan, free of charge, at KAINOS' request. Thereafter, the per unit royalty for the English language versions of Medical Housecall and Pediatric Housecall will be U.S. $12.00 per unit. Units of the English language version of Iliad may be purchased by


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KAINOS at a royalty equal to the average price charged by ADAM in the U.S. to resellers of that Product. The Products will be shipped FOB ADAM by a method specified by KAINOS. KAINOS will be responsible for shipping and insurance.


1.4 No Implied Rights. Except as specifically set forth in this Agreement, no express or implied license or right of any kind is granted to KAINOS regarding the Products or any of the trademarks of ADAM, 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 Products or obtain possession of any source code or other technical material relating to the Licensed Products. KAINOS specifically acknowledges and agrees that the rights granted under this Agreement are limited to the Japanese language versions of the Products ("Medical HouseCall," "Pediatric HouseCall," and "Illiad"); the rights granted do not apply to any other products of ADAM.


Section 2


OBLIGATIONS OF KAINOS AND ADAM


2.1 Marketing. KAINOS will use reasonable efforts to promote and market (1) the modified Japanese language versions of the Products and derivatives of the Products in the Japanese language produced by KAINOS in the Territory, and (2) the English language versions of the Products in Japan. KAINOS will bear the cost of all marketing and advertising expenses related to the Japanese language versions and derivatives of the Products in the Japanese language produced by KAINOS and the English language versions of the Products distributed by KAINOS.


2.2 Product Support and Warranty. KAINOS shall be solely responsible for supporting all end-users of the Products distributed by KAINOS and for providing all warranty coverage and support in accordance with the customary end-user warranty included with the Products. ADAM will furnish end-user support and warranty coverage (returns of defective products) for copies of English-language versions of the Products distributed in Japan, in accordance with ADAM's standard end-user warranty and support policies. ADAM will provide to KAINOS, during the term of this Agreement and in a timely manner, all revisions, updates, enhancements or fixes to the Products that ADAM may, in its sole discretion, elect to develop, or have developed, and incorporate, or have incorporated, in the English language versions of the Products for general distribution in the United States; however, ADAM is not obligated to undertake any such revisions, updates, enhancements or fixes. ADAM will also use its commercially reasonable efforts to furnish KAINOS with access to any technical materials or information about the Products that is in ADAM's possession and control (including using reasonable efforts to obtain such materials or information from third parties) and would be useful to KAINOS in the development and manufacture of the Japanese language versions of the Products (including modifications of the Products developed by KAINOS). If the assistance requested by KAINOS exceeds 10 hours in any calendar quarter, ADAM will be compensated at its standard contracted services rate (currently U.S.$125 per hour).


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2.3 Packaging. KAINOS will develop any new packaging required for the Japanese language versions of the Products or derivatives of the Products in the Japanese language produced by KAINOS. Any copies of the English language versions of the Products distributed by KAINOS in Japan in accordance with this Agreement must be distributed in the original packaging furnished by ADAM; KAINOS will not have the right to repackage such copies of the English language versions of the Products without authorization from ADAM.


2.4 Notices. KAINOS will maintain any copyright and trademark notices which are included on and in the Products or otherwise specified by ADAM in writing from time to time.


2.5 No Authority to Bind A.D.A.M. KAINOS has and will exercise no authority to make statements, warranties or representations concerning the Products that exceed or are inconsistent with the marketing materials or technical specifications provided to KAINOS by ADAM. KAINOS has and will exercise no authority to bind ADAM to any undertaking or performance with respect to the Products.


2.6 Deliverables. ADAM will provide, upon execution of this Agreement, KAINOS all object code, source code, related technical materials in ADAM's possession relating to the development of the current versions of the Products, in electronic form, as listed on Exhibit A. ("Deliverables")


Section 3
PROPRIETARY RIGHTS


3.1 Ownership. Notwithstanding any provision in this Agreement to the contrary, as between KAINOS and ADAM, ADAM will retain and own all worldwide right, title and interest in and to the Products and the Trademarks, and all intellectual property and other rights therein, including but not limited to copyrights, patents, and trade secrets in the Products and derivatives thereof (both object code and source code form), and the Collateral Materials, including all copies and all portions thereof, and nothing in this Agreement will vest title in KAINOS to any rights therein, except as expressly set forth in this Agreement. KAINOS will own all rights in any derivative works of the Products in the Japanese language developed by KAINOS in accordance with Section 1.1(c); however, KAINOS' rights in such derivatives will be limited to the Japanese language versions only, and KAINOS will not have the right to translate such derivatives into any other language.


3.2 KAINOS Developed Materials. KAINOS may, at its own expense, adopt its own trademarks, artwork, copy and packaging in marketing and promoting the Japanese language versions of the Products and the derivatives of the Pr ...