License & Development Agreement

License and Development Agreement

between Ask Jeeves, Inc. and

Compaq Computer Corporation



This License and Development Agreement (the "Agreement") is made as of Mar ch 29, 1999 (the "Effective Date") by and between ASK JEEVES, INC., a California corporation, with its principal place of business at 918 Parker Street, Berkeley, CA 94710 ("Ask Jeeves") and COMPAQ COMPUTER CORPORATION, a Delaware corporation, with its pr incipal place of business at 20555 SH 249, Houston TX 77070 ("Customer") on behalf of its worldwide divisions, affiliates and subsidiaries.





A. Ask Jeeves is in the business of developing, marketing and licensing

on-line natural language question answering products and services,

including a software product known as the Question Processing Engine

("QPE"). The services Ask Jeeves provides include the creation and

maintenance of customized knowledgebases to be used in conjunction with

the QPE. The knowledgebases and the QPE when used together allow end

users to access online information using the Ask Jeeves' question and

answer format.



B. Customer manufactures and sells personal computers and related products

and services. Customer has created and maintains a website on the

Internet related to Customer's computer products located at

www.Compaq.com (the "Customer Site").



C. Customer desires to license the QPE and have Ask Jeeves develop

customized knowledgebases (the "Knowledgebases") that will allow

visitors to the Customer Site to navigate portions of the Customer Site

through the use of natural language questions.



D. Ask Jeeves desires to license the QPE to Customer and develop and

maintain the Knowledgebases on the terms set forth in this Agreement.





THEREFORE, the parties agree as follows:



1. SCOPE OF WORK.



a. KNOWLEDGEBASE CREATION SERVICES. Ask Jeeves agrees to create the

Knowledgebases as more specifically described in Exhibits Al, A2

and A3 (and any further additions or amendments to Exhibit A)

according to the schedules also set forth in Exhibit Al, A2 and

A3.



b. KNOWLEDGEBASE MAINTENANCE AND UPDATE SERVICES. Ask Jeeves agrees

to maintain and update the Knowledgebases as the content of the

Customer Site changes, as specified in Exhibit B. The maintenance

and updates will be done on an ongoing basis to promptly reflect

changes in or additions to the Customer Site. Customer agrees to

provide Ask Jeeves with a minimum of ten (10) days advance





notice of changes to the Customer Site to allow Ask Jeeves to

update the Knowledgebases. Ask Jeeves' obligation to maintain and

update each of the Knowledgebases is limited to the number of

hours set forth in the Exhibit A that describes the scope of work

for that Knowledgebase (the "Monthly Maintenance Obligations").

In the event Customer requires maintenance and update services

beyond the Monthly Maintenance Obligations, Ask Jeeves will

provide those services at the rates set forth in Section 5.g.



c. QPE Support and Upgrades. Ask Jeeves agrees to provide Customer

technical support as described in Exhibit E and bug fixes,

upgrades and updates to the QPE, including major and minor

releases, as such may be released from time to time. Ask Jeeves

agrees to assign a designated Ask Jeeves employee to manage the

technical support to be provided under this Agreement.



2. TECHNICAL REQUIREMENTS. The QPE and the Knowledgebases will operate in

the software environment described in Exhibit C.



3. OWNERSHIP OF KNOWLEDGEBASES; EXCLUSIVITY.



a. OWNERSHIP. The Knowledgebases will be the property of Ask Jeeves

and will be licensed to Customer under the terms of the license

set forth in Section 4, below. However, to the extent the

Knowledgebases contain any proprietary or confidential

information of Customer, such information will belong to Customer

("Customer Information"). Ask Jeeves will treat the Customer

Information used in the Knowledgebases as Confidential

Information of Customer, subject to the provisions of Section 16,



b. EXCLUSIVITY. Ask Jeeves agrees that for one hundred (100) days

after the Effective Date it will not deliver to IBM,

Hewlett-Packard, or Dell Computer Corporation, a production

version of a question-answering system that is primarily designed

to answer end-user pre-sale questions and that incorporates

portions of Knowledgebase content that was first used for the

Compaq "Prosignia II Pre-Sale" (Exhibit Al) system.



4. LICENSE.



a. GRANT. Upon receipt of the fees set forth in Section 5, below,

and subject to the terms and conditions of this Agreement, Ask

Jeeves grants Customer a non-exclusive, fully-paid,

nontransferable, non-sublicensable, worldwide license for the

term of this Agreement (including any extensions) in the QPE, the

Knowledgebases and any and all related materials, including,

without limitation, documentation, trademarks, and logos (the

"Licensed Products") solely for purposes set forth in this



b. LICENSE RESTRICTIONS. Except as specifically granted in this

Agreement, Ask Jeeves owns and retains all right, title and

interest in the Licensed Products and any and all related

materials. This Agreement does not transfer ownership rights









of any description in the Licensed Products to Customer or any

third party. Customer agrees not to modify, reverse engineer or

decompile the Licensed Products or create derivative works based

on them. Customer agrees to retain all copyright and trademark

notices on the Licensed Products and to take other steps

necessary to protect Ask Jeeves' intellectual property rights.



5. FEES AND PAYMENT. As consideration for the licenses granted and the

services rendered under this Agreement, Customer agrees to pay Ask

Jeeves as follows:



a. PROFESSIONAL SERVICES FEE. Customer agrees to pay Ask Jeeves the

following professional services fees for the creation of the

Knowledgebases (the "Knowledgebase Creation Fees"):





Prosignia II Pre-sales (Exhibit Al) $ 91,000.00



Home Computing PC Tech Support (Exhibit A2) $185,000.00



Enterprise PC Tech Support (excl. Servers) (Exhibit A3) $102,000.00



The Knowledgebase Creation Fees will be invoiced fifty percent

(50%) upon execution of this Agreement and the remaining fifty

percent (50%) on the Release Date for each of the Knowledgebases.

For purposes of this Agreement the "Release Date" is defined as

the date on which Ask Jeeves delivers a production ready copy of

each Knowledgebase to Customer.



b. KNOWLEDGEBASE MAINTENANCE FEE. Customer agrees to pay Ask Jeeves

for maintenance of the Knowledgebases (the "Knowledgebase

Maintenance Fees") as follows:



Project Monthly Fee

Home Computing PC Tech Support $ 4,000.00



Enterprise PC Tech Support (excluding. Servers) $ 3,200.00



Prosignia II Pre-Sale (deferred, see below) $ 2,300.00





The Knowledgebase Maintenance Fee for each of the Knowledgebases

will be invoiced in advance on a quarterly basis beginning on the

Release Date for each of the Knowledgebases. If the Release Date

for each Knowledgebase is a day other than the beginning of a

quarter, the Maintenance Fee will be prorated for the percentage

of the quarter remaining. The Knowledgebase Maintenance Fee for

the Prosignia II Pre-Sale Knowledgebase will be deferred for a

period of ninety (90) days after its Release Date pending the

conclusion of negotiations between









Ask Jeeves and Customer for additional Prosignia II Pre-Sale

Knowledgebase development. In the event the parties do not reach

an agreement concerning future development of the Prosignia II

Pre-Sale Knowledgebase within ninety (90) days of its Release

Date, Customer agrees to pay Ask Jeeves the amount shown above.



c. USAGE FEE. Customer agrees to pay Ask Jeeves a minimum yearly

usage fee (the "Minimum Yearly Usage Fee") of five hundred

thousand dollars ($500,000). The Minimum Yearly Usage Fee

includes up to 10 million Answers, as defined below. Each Answer

provided in excess of 10 million during any year will be billed

at $0.04 per answer (the "Excess Answer Fee"), provided, however,

that the total usage fee to be paid by Customer to Ask Jeeves

during the Initial Term will not exceed six hundred and fifty

thousand dollars ($650,000) (the "Maximum Yearly Usage Fee").

Customer will not receive any refund of the Yearly Usage Fee if

fewer than 10 million Answers are provided. An "Answer" occurs

when (a) an end user of the Licensed Products selects a matching

question presented to the user in response to a user's query or

(b) an alternative mechanism by which an end user is taken to an

answer to his or her query on the Customer Site. The Yearly Usage

Fees will be paid quarterly in advance. The Excess Answer Fee, if

any, will be billed quarterly in arrears, beginning on the date

that Customer provides in excess of 10 million Answers to users

of the Customer Site.



d. TRAVEL AND OUT OF POCKET EXPENSES. Customer agrees to reimburse

Ask Jeeves for all travel expenses and out of pocket expenses at

cost, which will not exceed Compaq's Standard Travel Guidelines

attached as Exhibit D to this Agreement.



e. PAYMENT. For all invoices hereunder, payment is due forty-five

(45) days from invoice date.



f. TAXES. Customer will also reimburse Ask Jeeves for any sales, use

and similar taxes associated with the Software, except for taxes

based on Ask Jeeves' net assets or net income. Customer reserves

the right to promptly pay all taxes due directly to the

applicable taxing authorities under Customer's Direct Pay Tax



g. PROFESSIONAL SERVICES. In the event Customer requests that Ask

Jeeves perform consulting, engineering, Knowledgebase creation or

other professional services that are beyond the scope of work

described in this Agreement, Customer agrees to pay Ask Jeeves

for such professional services in accordance with the applicable

scope-of-work at Ask Jeeves' customary rates, which, as of the

date of this Agreement, are as follows:



Engineering: $120.00/hour

Knowledgebase Creation $ 75.00/hour

Consulting $ 90.00/hour









Ask Jeeves agrees that for the term of this Agreement (including

any extensions) the maximum professional services fees it will

charge will be the lesser of (i) the actual rates for such

services charged by Ask Jeeves to its customers or (ii) the

amounts set forth above plus twenty percent (20%) per year.



6. AUDIT RIGHTS. Each party agrees that it will keep, for a minimum of two

(2) years, proper records and books of account relating to its

activities under this Agreement. Once every twelve (12) months, either

party may inspect the records of the other party to verify reports

provided to the other, each party's compliance with its obligations

under this Agreement and/or payment amounts. Any such inspection will be

conducted in a manner that does not unreasonably interfere with the

inspected party's business activities. Such inspection shall be

performed by an independent accounting firm chosen and compensated by

the requesting party, for purposes of audit. Such accounting firm shall

be required to sign an agreement protecting the party's confidential

information and shall be authorized to report only the amounts due and

payable for the period requested. The inspected party shall immediately

make any overdue payments disclosed by the audit. Such inspection shall

be at the inspecting party's expense; however, if the audit reveals

overdue payments in excess of 10% of the payments owed to date, the

inspected party shall immediately pay the cost of such audit, and the

inspecting party may conduct another audit during the same twelve (12)

month period. Each party shall, upon written request, during normal

business hours, in accordance with Customer's standard security

requirements, but not more frequently than once each calendar year,

provide access to such accounting records.



7. CUSTOMER LIAISON. Customer agrees to provide a designated employee to

act as liaison with Ask Jeeves for the installation, and technical

implementation and support of the QPE and the Knowledgebases. With

respect to the maintenance of the Knowledgebases, Customer, at its

option, may assign an individual liaison for each Customer product

group. Customer further agrees to comply with Ask Jeeves' reasonable

requests to modify the Customer Site (e.g. adding location tags to

answer content) in order to maximize the efficacy of the Knowledgebases.



8. ASK JEEVES ANSWER NETWORK. Upon future, separate mutual agreement of the

parties, the Knowledgebases may be included in the Ask Jeeves Answer

Network, allowing users at another website access to the publicly

available, non-confidential portions of the Knowledgebases and

vice-versa.



9. TERM AND TERMINATION.



a. TERM. This Agreement and the licenses granted under this

Agreement become effective as of the Effective Date and, unless

sooner terminated as set forth in Section 9.b, below, shall

continue in effect for a period of twelve (12) months from the

Release Date (the "Initial Term"). Upon expiration of the Initial

Term, this Agreement will automatically renew for additional

twelve-month terms (the "Renewal Terms") on the terms and

conditions set forth in this Agreement or such other terms and

conditions as the parties may agree to in writing. Ask Jeeves

agrees to notify Customer in writing not less than sixty (60)

days prior to









expiration of the Initial Term or any Renewal Term of the

termination date for that term (the "Expiration Notice"). In the

event that Ask Jeeves fails to provide Customer the Expiration

Notice, this Agreement will terminate upon the expiration of the

term to which it applies.



b. TERMINATION. Either party, as applicable, has the right, in

addition and without prejudice to any other rights or remedies,

to terminate this Agreement as follows:



(1) By either party for convenience upon thirty (30) days

written notice to the other party, given not more than

thirty (30) days prior to the expiration of the Initial

Term or not more than thirty (30) days prior to the

expiration of any quarter during a Renewal Term.



(2) By Ask Jeeves, upon thirty (30) days written notice, if

Customer fails to pay the amounts due to Ask Jeeves

pursuant to this Agreement;



(3) By either party for any material breach of this Agreement,

other than the failure to make payments under Section 5,

that is not cured within thirty (30) days of receipt by

the party in default of a written notice specifying the

breach and requiring its cure;



(4) By either party, immediately upon receiving written

notice, if (a) all or a substantial portion of the assets

of the other party are transferred to an assignee for the

benefit of creditors, or to a receiver or a trustee in

bankruptcy, (b) a proceeding is commenced by or against

the other party for relief under bankruptcy or similar

laws and such proceeding is not dismissed within sixty

(60) days, or (c) the other party is adjudged bankrupt.



c. RIGHTS ON TERMINATION. On termination, (a) all licenses granted

to Customer under this Agreement cease and Customer agrees to

promptly cease all use and reproduction of the Licensed Products;

and (b) Customer will promptly return all copies the Licensed

Products to Ask Jeeves or destroy all copies in its possession.

Ask Jeeves has and reserves all rights and remedies that it has

by operation of law or otherwise to enjoin the unlawful or

unauthorized use of the Licensed Products as long as Ask Jeeves

can meet the legal requirements therefor. Customer reserves the

right to terminate Maintenance and Support Services without

terminating the right to continue use of the licenses granted in

the state at the time of termination.



d. SURVIVAL FOLLOWING TERMINATION. 3, 5, 7, 9, 10, 11, 12, 13, 14,

15, 16 and 18 will survive termination or expiration of this

Agreement. In addition, provisions of the Agreement which, by

their nature, are intended to survive its termination or

expiration, shall survive its termination or expiration.



10. INFRINGEMENT INDEMNITY BY ASK JEEVES. Ask Jeeves indemnifies, defends

and holds Customer harmless from and against any claims, actions or

demands alleging that all or









any of the Licensed Products infringe any patent, copyright, trademark,

or other intellectual property right of a third party. If use of any or

all of the Licensed Products is permanently enjoined for any reason, Ask

Jeeves, at Ask Jeeves' option, and in its sole discretion, may (a)

modify the Licensed Products so as to avoid infringement without the

loss of functionality; (b) procure the right for Customer to continue to

use the Licensed Products; or (c) terminate this Agreement and refund to

Customer all fees paid. Ask Jeeves shall have no obligation under this

Section 10 for or with respect to claims, actions or demands alleging

infringement that arise as a result of (a) the combination of

noninfringing items supplied by Ask Jeeves with any items not supplied

by Ask Jeeves, unless prior approved by Ask Jeeves, (b) modification of

the Licensed Products by Customer, unless prior approved by Ask Jeeves,

or (c) continued allegedly infringing activity by Customer after

Customer has been notified of possible infringement, unless approved in

advance by Ask Jeeves.



11. CUSTOMER DISCLAIMER AND INDEMNITY AS TO CONTENT. Ask Jeeves assumes no

responsibility for the content of the Customer Site, and Customer agrees

to indemnify, defend and hold Ask Jeeves harmless from and against any

claims, actions or demands alleging that Ask Jeeves has any liability to

any third party arising from the third party's use of the Customer Site.



12. WARRANTIES.



a. PRODUCT WARRANTY. Ask Jeeves warrants that (a) it holds the

necessary rights to provide the services set forth in this

Agreement; (b) the media containing the Licensed Products will be

free from defects for a period of thirty (30) days from the date

of delivery to Customer, provided that this warranty does not

cover defects due to Customer's misuse of the media; (c) Ask

Jeeves is free of any obligation that would prevent it from

entering into this Agreement, and (d) the Licensed Products will

perform substantially in accordance with Ask Jeeves published



b. YEAR 2000 WARRANTY. Ask Jeeves warrants, at no additional cost to

Customer and until March 31, 2001, the following under this

Agreement:



(i) That the Licensed Products will accurately process,

calculate, compare and sequence date and time data

from, into and between the twentieth and

twenty-first centuries, including leap year

calculations, when used in accordance with Ask

Jeeves supplied documentation. As used herein, the

term accurately shall mean in accordance with

industry standard conventions with respect to the

environment in which the Licensed Products are

operating;



(ii) That the Licensed Products will accurately handle

dates utilizing the International Standards

Organization (ISO) 8601 standard formats, including

YYYY-MM-DD; and









(iii) That any licensing keys contained in the Licensed

Products will not expire or cause the Licensed

Products to perform at less than full function due

to the Software not performing as set out herein.



Customer's sole and exclusive remedy for Ask Jeeves'

breach of this warranty shall be either repair or

replacement of the non-compliant Licensed Product(s). Ask

Jeeves agrees to use all reasonable commercial efforts to

complete such repair or replacement within sixty (60) days

of receiving written notice from Customer of the

non-compliant Licensed Product(s). This warranty shall not

be construed to limit any rights or remedies that Customer

may otherwise have under this Agreement with respect to

defects other than Year 2000 performance.



13. DISCLAIMER. THE WARRANTIES SET FORTH IN SECTION 12, ABOVE, ARE IN LIEU

OF, AND THIS AGREEMENT EXPRESSLY EXCLUDES, ALL OTHER WARRANTIES, EXPRESS

OR IMPLIED, ORAL OR WRITTEN, INCLUDING, WITHOUT LIMITATION, (a) ANY

WARRANTY THAT THE LICENSED PRODUCTS ARE ERROR-FREE OR COMPATIBLE WITH

ALL EQUIPMENT AND SOFTWARE CONFIGURATIONS (b) ANY AND ALL WARRANTIES OF

MERCHANTABILITY; AND (c) ANY AND ALL WARRANTIES OF FITNESS FOR A

PARTICULAR PURPOSE.



14. LIMITATION OF LIABILITY. EXCEPT AS TO ITS INDEMNITY OBLIGATIONS UNDER

SECTION 10, ABOVE, ASK JEE ...