Thanks for the feedback so far! By "without fee" I meant that <copyright holder(s)> were not imposing a fee; this was confusing and unnecessary so I removed it.
I see what you meant meant about the "rights not specifically granted are reserved" being superfluous. I've removed it for now, but might add it back. Not sure whether the license is easier to understand with or without that. Nailing down the copyleft scope was the tricky bit. This doubled the length of the license terms. As soon as you start talking about what's inside the scope of copyleft, you also have to talk about what's outside the scope. I taken a stab at this but I think I could use some help with the wording, especially in the last paragraph. Here's the current revision: <software program name>. Copyright (c) <year(s)> <copyright holder(s)>. All rights reserved. LICENSE AGREEMENT: This license agreement applies to the accompanying software, documentation, and related materials ("software"). This license also applies to derivative works. Permission to use, copy, and distribute this software is hereby granted, provided that the above copyright notice appear in all copies or substantial portions of the software; and that the above copyright notice, this permission notice, and the following disclaimers appear in the documentation and/or other materials provided with the software. When you distribute this software outside your organization, the source code must be made available to the recipients under these license terms, and/or under the terms of the GNU General Public License (GPL) as published by the Free Software Foundation. You may create derivative works by modifing this software; and/or by combining part or all of this software with other materials. Derivative works must be plainly marked as such, and must not be misrepresented as being the original software. When you distribute a derivative work based on the software, the source code for the entire derivative work must be made available under the terms of this license and/or the GPL. A work that does not itself contain any portion of the software is not considered a derivative work, even if it accesses services exposed by this software or a derivative work; even when it is stored or distributed on the same medium with software licensed under this agreement. Your rights under this license will terminate automatically if you fail to comply with the terms and conditions set forth herein. DISCLAIMER OF WARRANTY: THIS SOFTWARE AND THE ACCOMPANYING FILES ARE PROVIDED "AS IS". NO WARRANTY OF FITNESS FOR ANY PARTICULAR PURPOSE IS OFFERED. ANY AND ALL WARRANTIES, WHETHER EXPRESS OR IMPLIED, ARE DISCLAIMED. IN NO EVENT SHALL THE COPYRIGHT HOLDERS OR CONTRIBUTING AUTHORS BE LIABLE FOR ANY DIRECT, INDIRECT, INCIDENTAL, SPECIAL, EXEMPLARY, OR CONSEQUENTIAL DAMAGES (INCLUDING, BUT NOT LIMITED TO, PROCUREMENT OF SUBSTITUTE GOODS OR SERVICES; LOSS OF USE, DATA, OR PROFITS; OR BUSINESS INTERRUPTION) HOWEVER CAUSED AND ON ANY THEORY OF LIABILITY, WHETHER IN CONTRACT, STRICT LIABILITY, OR TORT (INCLUDING NEGLIGENCE OR OTHERWISE) ARISING IN ANY WAY OUT OF THE USE OF THIS SOFTWARE, EVEN IF ADVISED OF THE POSSIBILITY OF SUCH DAMAGE. The recipient must assume the entire risk of using this software. -- license-discuss archive is at http://crynwr.com/cgi-bin/ezmlm-cgi?3