INCENTIVE AGREEMENT

        This INCENTIVE AGREEMENT (the "Agreement") is entered into as of January 2, 2001 (the "Effective Date"), by and between Ask Jeeves, Inc. and George Lichter ("Employee").

RECITALS

        WHEREAS the parties signed a Letter of Intent dated December 23, 1999 ("Letter of Intent") as a framework proposed to compensate Employee; and

        NOW THEREFORE, the parties have agreed to address the subject matter of compensation with (a) a grant of equity in Company, and (b) a grant of equity in three Joint Ventures of Company, all as described herein.

AGREEMENT

        1.    Company Equity.    

        1.1    Option Grant.    On March 12, 2001, Employee will be granted an option to purchase 250,000 shares (the "Option Shares") of the Company's Common Stock pursuant to its 1999 Equity Incentive Plan at a strike price of $1.625.

        1.2    Exercise; Vesting Schedule.    The per share exercise price of the Option Shares shall be equal to fair market value of the Company's Common Stock on the date of grant. The Option shall be subject to Employee executing the Company's standard stock option agreement. So long as Employee remains employed with AJ, the Option Shares shall vest on the following schedule: fifty percent (50%) of the Option Shares shall vest on the date six months from the Effective Date of this Agreement; and the remaining Option Shares shall vest ratably over the next eighteen (18) months of Employee's employment thereafter. The term of the Option shall be ten (10) years, subject to earlier expiration in the event of termination of Employee's employment. Vested Option Shares would be exercisable by Employee for a period of 90 days following termination as described in Company's 1999 Equity Incentive Plan.

        1.3    Acceleration Provisions.    If either (a) Employee is terminated without cause, or (b) Company experiences a Change of Control and Employee is terminated without cause, then Employee will be entitled to acceleration of 50% of the Option Shares not vested at the time of termination; provided, however, that with respect to these options there shall be no acceleration for any constructive termination (defined as any material changes to Employee's duties, title, responsibilities, or compensation) where Employee is not terminated or is terminated for cause; except if there has first been a Change of Control and within six months Employee is constructively terminated, then the acceleration described above would occur.

        2.    Joint Venture Equity Transfers    

        2.1    Identification of Existing Joint Ventures.    Since the commencement of Employee's employment with AJI, AJI has formed the following three joint ventures:

Ask Jeeves UK
Ask Jeeves en Espanol (comprised of a holding company and a Delaware LLC)
Ask Jeeves Japan

        2.2    Grant.    

        (a)  On the Effective Date, and subject to approval of Company's joint venture partners for the joint ventures listed above, AJI will transfer to Employee a 0.95% equity interest (that percentage being out of Ask Jeeves' interest, and that percentage being of the whole entity) (the "Joint Venture Equity Transfers") in each of the three (3) AJI joint venture entities (the

"Existing Ventures") identified above in Section 2.1 pursuant to the terms set forth herein. Company shall not be in breach of its obligations hereunder if a joint venture partner of an Existing Venture refuses to permit transfer of the above equity percentage. Employee shall have no further right to equity in any other Company joint ventures.


 

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