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


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        2.5    Voting Rights.    

        Employee agrees to vote Employee's equity interests in the Joint Venture Equity Transfers in the manner specified by Company, and Employee agrees to enter into a Voting Rights Agreement waiving any right of voting, approval, or other like right (other than economic rights). In lieu of an equity grant in an Existing Venture, Company may grant Employee equity in a holding company which holds Company's equity stake in a Existing Venture (e.g., Ask Jeeves Jersey), provided that (a) the amount reflects an interest in the Existing Venture of the percentage listed in Section 3.2 above, and (b) Company grants Employee a liquidity opportunity equivalent to the terms set forth in Section 3.4.

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        2.6    Negotiation with Joint Venture Entities.    

        Employee will be permitted to be the primary negotiator of the Joint Venture Equity Transfers, provided the following: (a) Employee will notify Company of any discussions on the topic and Company may have a Company employee of its choice present for any discussion with a joint venture on this topic, (b) An employee of Company's designation shall be copied on all correspondence relating to this topic, and (c) Employee represents that except for the Joint Venture Equity Transfers, Employee shall not obtain any further compensation (whether in cash, equity, or debt) from the joint ventures during the term of Employee's employment with Company, except as agreed in writing between Company and Employee. Employee agrees that in the course of these discussions he will not compromise the relationship between Ask Jeeves and the joint venture partners. If Company, in its good faith reasonable discretion, believes that Employee's negotiation of the Joint Venture Equity Transfers may compromise its relationship with the joint venture partner, Company may assume the role of primary negotiator, with Employee present but not directly contacting the joint venture partner on the topic of the Joint Venture Equity Transfers.

3.    Miscellaneous.

        3.1    Notice.    Notices and all other communications contemplated by this Agreement shall be in writing and shall be deemed to have been duly given when personally delivered or when mailed by overnight courier, U.S. registered or certified mail, return receipt requested and postage prepaid. In the case of Employee, mailed notices shall be addressed to him at the home address that he most recently communicated to the Company in writing. In the case of the Company, mailed notices shall be addressed to its corporate headquarters, and all notices shall be directed to the attention of its General Counsel.

        3.2    Modifications and Waivers.    No provision of this Agreement shall be modified, waived or discharged unless the modification, waiver, or discharge is agreed to in writing and signed by Employee, an authorized officer of the Company. No waiver by any party of any breach of, or of compliance with, any condition or provision of this Agreement by any other party shall be considered a waiver of any other condition or provision or of the same condition or provision at another time.

        3.3    Whole Agreement.    This Agreement contains the entire understanding of the parties with respect to the subject matter hereof and supersedes any and all prior written, oral, or other types of representations and agreements between Employee and Company, except for Employee's prior equity grants in Ask Jeeves, Inc., as detailed on Exhibit C. Nothing in this Agreement or in any prior proposals or drafts shall constitute any obligation on the part of either Employee or Company to offer, agree or accept any additional terms of compensation except as may be agreed by the parties in a mutually signed writing after the date hereof. This Agreement may be modified only in a writing signed by an authorized officer of the Company and by Employee.

        3.4    Choice of Law.    The validity, interpretation, construction, and performance of this Agreement shall be governed by the laws of the State of California (except provisions governing choice of law).

        3.5    Severability.    The invalidity or unenforceability of any provision or provisions of this Agreement shall not affect the validity or enforceability of any other provision hereof, which shall remain in full force and effect.

        3.6    No Assignment.    This Agreement and all rights and obligations of Employee hereunder are personal to Employee and, except as described in Section 2.4 above, may not be transferred or assigned by Employee at any time, except that Employee may assign his financial interest to his spouse or children, or a trust created for their benefit. Company may assign its rights under this Agreement to any entity that assumes the Company's obligations hereunder in connection with any sale or transfer or all or a substantial portion of the Company's assets to such entity.

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        3.7    Headings.    The headings of the paragraphs contained in this Agreement are for reference purposes only and shall not in any way affect the meaning or interpretation of any provision of this Agreement.

        3.8    At Will Employee.    The terms of this Agreement do not change Employee's "at will" employment status with Company, and Company may terminate Employee's employment for any reason at any time, with or without notice, and with or without cause. Similarly, Employee is free to resign at any time, for any reason or for no reason.

        3.9    Counterparts.    This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

[signature page follows—remainder of page intentionally left blank]

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        IN WITNESS WHEREOF, each of the parties has executed this Agreement, in the case of the Company by its duly authorized officer, as of the day and year first above written.

  EMPLOYEE

 

 

/s/ George Lichter
George Lichter

 

 

ASK JEEVES, INC.

 

 

/s/ A. George Battle

 

 

By:

 

A. George Battle

 

 

Title:

 

CEO

 

 

Date:

 

3/23/2001

Exhibit A: Note

Exhibit B: Stock Pledge Agreement

Exhibit C: Employee's Prior Equity Grants & Offer Letters

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Exhibit A

ASK JEEVES, INC.
NOTE SECURED BY STOCK PLEDGE AGREEMENT


$              .00

 

March         , 2001

        FOR VALUE RECEIVED, George Lichter ("Maker") promises to pay to the order of Ask Jeeves, Inc., a Delaware corporation (the "Company"), at its corporate offices at 5858 Horton Street, Suite 350, Emeryville, California 94608, the principal sum of                  Dollars ($                 .00), together with all accrued interest thereon, upon the terms and conditions specified below.

        1.    Indebtedness.    The proceeds of this Note Secured by Stock Pledge Agreement ("Note") shall be applied solely and exclusively to the payment by Maker of U.S. federal or state income taxes due on the taxable income that must be recognized by Employee during calendar year 2001 as a result of the Joint Equity Venture Transfers (the "Collateral") (as defined in the Incentive Agreement between Maker and the Company, dated January 2, 2001 (the "Incentive Agreement")). In the event that the Company loans Maker an amount greater than required for payment of the taxes and interest stated in this paragraph 1, Maker shall immediately pay the overage to Company towards satisfaction of this Note.

        2.    Interest.    Interest shall accrue on the unpaid balance outstanding from time to time under this Note at the rate of       % per annum, the minimum applicable federal rate necessary to avoid both imputed income and accounting charges, compounded quarterly. Accrued and unpaid interest shall become due and payable quarterly, on each successive three (3)-month anniversary of the date first stated above. Interest on the outstanding principal balance of this Note shall accrue until the obligations hereunder are repaid in full.

        3.    Due Dates.    The principal balance of this Note shall become due and payable in one lump sum on March 12, 2005, the fourth anniversary of the date first stated above, subject to acceleration in accordance with the provisions of paragraph 5 below. The accrued and unpaid interest shall become due and payable as stated in paragraph 2 above.

        4.    Payment.    Payment shall be made in lawful tender of the United States of America and shall be applied first to the payment of all accrued and unpaid interest and then to the payment of principal. Prepayment of the principal balance of this Note, together with all accrued and unpaid interest on the portion of principal so prepaid, may be made in whole or in part at any time without penalty.

        5.    Events of Acceleration.    The entire unpaid principal balance of this Note, together with all accrued and unpaid interest thereon, shall become immediately due and payable prior to the due date of this Note specified in paragraph 3 above upon the occurrence of one or more of the following events:

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        6.    Special Acceleration Event.    In the event the Maker sells or otherwise transfers for value any portion of the Collateral, then any unpaid portion of the principal balance of this Note shall become immediately due and payable, together will all accrued and unpaid interest on that principal portion. Notwithstanding the foregoing, the amount accelerated upon any such transfer of the Collateral shall not exceed the amount received by Maker for the transfer.

        7.    Employment.    The Maker shall be deemed to continue in employment with the Company for so long as he renders services as an employee of the Company or one or more of the Company's fifty percent (50%) or more owned (directly or indirectly) subsidiaries.

        8.    Security.    Payment of this Note shall be secured by a pledge of all of the Collateral pursuant to the attached Stock Pledge Agreement to be executed this date by the Maker. Personal assets of the Maker (aside from the Collateral) will not be applied to the satisfaction of the Maker's obligations hereunder, and Company's sole recourse for the amount due under this Note shall be against the Collateral.

        9.    Collection.    The only recourse for default will be against the Collateral, and any value on those interests not necessary to pay off the Note will remain with Maker. If any action is instituted to collect this Note, the Maker promises to pay all costs and expenses (including reasonable attorneys' fees) incurred in connection with such action.

        10.    Waiver.    A waiver of any term of this Note, the Stock Pledge Agreement or of any of the obligations secured thereby must be made in writing and signed by a duly-authorized officer of the Corporation and any such waiver shall be limited to its express terms. No delay or previous waiver by the Corporation in acting with respect to the terms of this Note or the Stock Pledge Agreement shall constitute a waiver of any breach, default, or failure of a condition under this Note, the Stock Pledge Agreement or the obligations secured thereby.

        The Maker hereby expressly waives presentment, demand, notice of dishonor, notice of default or delinquency, notice of acceleration, notice of protest and nonpayment, notice of costs, expenses or losses and interest thereon, notice of interest on interest and diligence in taking any action to collect any sums owing under this Note or in proceeding against any of the rights or interests in or to properties securing payment of this Note.

        11.    Conflicting Agreements.    In the event of any inconsistency between the terms of this Note and the terms of any other document related to the loan evidenced by the Note (other than the Incentive Agreement or documents relevant to the Joint Venture Equity Transfer), the terms of this Note shall prevail. In the event of any inconsistency between the terms of the documents relevant to the Joint Venture Equity Transfer or the terms of the Incentive Agreement and the terms of this Note, the terms

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of the documents relevant to the Joint Venture Equity Transfer or the terms of the Incentive Agreement, as appropriate, shall apply.

        12.    Governing Law.    This Note shall be construed in accordance with the laws of the state of California without resort to that State's conflict-of-laws rules.

Date:   Signature  
  
   
George Lichter (Maker)

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Exhibit B

ASK JEEVES, INC.
STOCK PLEDGE AGREEMENT

        This STOCK PLEDGE AGREEMENT (the "Agreement") is made as of this        day of                        , 2001 by and between Ask Jeeves, Inc., a Delaware Corporation (the "Company") and George Lichter ("Pledgor"):

RECITALS

        A.    In connection with the Joint Venture Equity Transfers (as defined in the Incentive Agreement effective January 2, 2001 between Pledgor and the Company (the "Incentive Agreement")) made to Pledgor as of the Effective Date of the Incentive Agreement, Pledgor has issued that certain Note Secured by Stock Pledge Agreement (the "Note") dated the date hereof, payable to the order of the Company in the principal amount of                                        Dollars ($            ).

        B.    Such Note is secured by the Joint Venture Equity Transfersupon the terms set forth in this Agreement.

        NOW, THEREFORE, it is hereby agreed as follows:

        1.    Grant of Security Interest.    Pledgor hereby grants the Company a security interest in, and assigns, transfers to and pledges with the Company, the following securities and other property (collectively, the "Collateral"):

        2.    Warranties.    Pledgor hereby warrants that Pledgor is the owner of the Collateral and has the right to pledge the Collateral and that the Collateral is free from all liens, adverse claims and other security interests (other than those created hereby).

        3.    Duty to Deliver.    Any new, additional or different securities or other property (other than regular cash dividends) which may now or hereafter become distributable with respect to the Collateral by reason of (i) any stock split, stock dividend, recapitalization, combination of shares, exchange of shares or other change affecting the Joint Venture Equity Transfers without the Company's receipt of consideration or (ii) any merger, consolidation or other reorganization affecting the capital structure of the Company shall, upon receipt by Pledgor be promptly considered Collateral hereunder.

        4.    Payment of Taxes and Other Charges.    Except as set forth in the Note, Pledgor shall pay, prior to the delinquency date, all taxes, liens, assessments and other charges against the Collateral, and in the event of Pledgor's failure to do so, the Company may at its election pay any or all of such taxes and other charges without contesting the validity or legality thereof. The payments so made shall become part of the indebtedness secured hereunder and until paid shall bear interest at the minimum per annum rate, compounded annually, required to avoid the imputation of interest income to the Company and compensation income to Pledgor under the Federal tax laws and accounting charges to the Company.

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        5.    Shareholder Rights.    Under the terms of the Incentive Agreement, Company shall, and Pledgor may not, exercise any and all shareholder voting rights (if any exist) and all proxy statements and other shareholder materials pertaining to the Collateral. Pledgor shall be entitled to receive any all regular cash dividends paid on the Collateral.

        6.    Rights and Powers.    The Company may, without obligation to do so, exercise at any time and from time to time one or more of the following rights and powers with respect to any or all of the Collateral without prior notice:

        Expenses reasonably incurred in connection with such action shall be payable by Pledgor and form part of the indebtedness secured hereunder as provided in Paragraph 12.

        7.    Care of Collateral.    Company shall have no obligation to preserve the rights of Pledgor against adverse claims or protect the Collateral against the possibility of a decline in market value or take any action with respect to the Collateral requested by Pledgor unless the request is made in writing and the Company determines that the requested action will not unreasonably jeopardize the value of the Collateral as security for the Note and other indebtedness secured hereunder.

        Subject to the limitations of Paragraph 9, the Company may at any time release and deliver all or part of the Collateral to Pledgor, and the receipt thereof by Pledgor shall constitute a complete and full acquittance for the Collateral so released and delivered. The Company shall accordingly be discharged from any further liability or responsibility for the Collateral, and the released Collateral shall no longer be subject to the provisions of this Agreement.

        8.    Transfer of Collateral.    In connection with the transfer or assignment of the Note (whether by negotiation, discount or otherwise), the Company may transfer all or any part of the Collateral, and the transferee shall thereupon succeed to all the rights, powers and remedies granted the Company hereunder with respect to the Collateral so transferred. Upon such transfer, the Company shall be fully discharged from all liability and responsibility for the transferred Collateral.

        9.    Release of Collateral.    Provided all indebtedness secured hereunder shall at the time have been paid in full and there does not otherwise exist any event of default under Paragraph 10, the Joint Venture Equity Transfers, together with any additional Collateral which may hereafter be pledged and deposited hereunder, shall be released from pledge and returned to Pledgor. Under no circumstances, however, shall any Collateral be released if previously applied to the payment of any indebtedness secured hereunder.

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        10.    Events of Default.    The occurrence of one or more of the following events shall constitute an event of default under this Agreement:

        Upon the occurrence of any such event of default, the Company may, at its election, declare the Note and all other indebtedness secured hereunder to become immediately due and payable and may exercise any or all of the rights and remedies granted to a secured party under the provisions of the Delaware Uniform Commercial Code (as now or hereafter in effect), including (without limitation) the power to dispose of the Collateral by public or private sale or to accept the Collateral in full payment of the Note and all other indebtedness secured hereunder.

        Any proceeds realized from the disposition of the Collateral pursuant to the foregoing power of sale shall be applied first to the payment of expenses incurred by the Company in connection with the disposition, then to the payment of the Note and finally to any other indebtedness secured hereunder. Any surplus proceeds shall be paid over to Pledgor.

        Any transfer of the Collateral to Company (or its transferees) which Company and Pledgor agree is in satisfaction of the indebtedness under this Note shall be at the Collateral's fair value at the time of transfer, as determined under the Incentive Agreement. If the amount of the Collateral returned to Company exceeds the indebtedness, the excess Collateral shall be returned to Pledgor.

        11.    Other Remedies.    The rights, powers and remedies granted to the Company pursuant to the provisions of this Agreement shall be in addition to all rights, powers and remedies granted to the Company under any statute or rule of law. Any forbearance, failure or delay by the Company in exercising any right, power or remedy under this Agreement shall not be deemed to be a waiver of such right, power or remedy. Any single or partial exercise of any right, power or remedy under this Agreement shall not preclude the further exercise thereof, and every right, power and remedy of the Company under this Agreement shall continue in full force and effect unless such right, power or remedy is specifically waived by an instrument executed by the Company.

        12.    Costs and Expenses.    All costs and expenses (including reasonable attorneys' fees) incurred by the Company in the exercise or enforcement of any right, power or remedy granted it under this Agreement shall become part of the indebtedness secured hereunder and shall constitute a personal liability of Pledgor payable immediately upon demand and bearing interest until paid at the minimum per annum rate, compounded quarterly, required to avoid the imputation of interest income to the Company and compensation income to Pledgor under the Federal tax laws.

        13.    Applicable Law and Integration.    This Agreement shall be governed by and construed in accordance with the laws of the State of California without resort to that State's conflict-of-laws rules. To the extent that there is a conflict between the terms of this Agreement and the Incentive Agreement, the terms of the Incentive Agreement shall control.

        14.    Successors.    This Agreement shall be binding upon the Company and its successors and assigns and upon Pledgor and the executors, heirs and legatees of Pledgor's estate.

        15.    Severability.    If any provision of this Agreement is held to be invalid under applicable law, then such provision shall be ineffective only to the extent of such invalidity, and neither the remainder of such provision nor any other provisions of this Agreement shall be affected thereby.

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        IN WITNESS WHEREOF, this Agreement has been executed by Pledgor and the Company on this          day of                   , 2001.

AGREED TO AND ACCEPTED BY: George Lichter, PLEDGOR

ASK JEEVES, INC.

 

 

 

 

 

 

 

 



By:

 

 

 

Address:

 

 
  
   

Title:

 

 

 

 

 

 
  
 

Dated:

 

 

 

 

 

 
  
 

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Exhibit C
Employee's Prior Equity Grants & Offer Letters

Date

  Grant
  Price
  Notes
5/21/1999 10,000 $10.00 special acceleration in offer letter
5/21/1999 90,000 $10.00 special acceleration in offer letter
10/1/1999 91,667 $32.94  
10/1/1999 1,000 $32.94  
6/19/2000 5,405 $18.50  
6/19/2000 84,595 $18.50  

<attached: initial offer letter>

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Source: OneCLE Business Contracts.