ASK JEEVES INC, S-1/A, 1999-06-30

ASK JEEVES INC
S-1/A, 1999-06-30
BUSINESS SERVICES, NEC

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<PAGE> 1

AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JUNE 30, 1999

REGISTRATION NO. 333-77539
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------

AMENDMENT NO. 6

FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933

ASK JEEVES, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

<TABLE>
<S> <C> <C>
DELAWARE 7375 94-3256053
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE) IDENTIFICATION NO.)
</TABLE>

918 PARKER STREET
BERKELEY, CALIFORNIA 94710
(510) 649-8685
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)

ROBERT W. WRUBEL
PRESIDENT AND CHIEF EXECUTIVE OFFICER
ASK JEEVES, INC.
918 PARKER STREET
BERKELEY, CALIFORNIA 94710
(510) 649-8685
(NAME, ADDRESS, INCLUDING ZIP CODE, AND
TELEPHONE NUMBER, INCLUDING AREA CODE, OF AGENT FOR SERVICE)

COPIES TO:

<TABLE>
<S> <C>
ANDREI M. MANOLIU, ESQ. JAMES N. STRAWBRIDGE, ESQ.
MICHAEL L. WEINER, ESQ. JOSE F. MACIAS, ESQ.
COOLEY GODWARD LLP WILSON SONSINI GOODRICH & ROSATI
FIVE PALO ALTO SQUARE PROFESSIONAL CORPORATION
3000 EL CAMINO REAL 650 PAGE MILL ROAD
PALO ALTO, CALIFORNIA 94306 PALO ALTO, CALIFORNIA 94304
(650) 843-5000 (650) 493-9300
</TABLE>

APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO PUBLIC:
As soon as practicable after the effective date of this Registration Statement.

If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933 check the following box: [ ]

If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement number for the same offering: [ ]

If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering: [ ]

If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering: [ ]

THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION, ACTING
PURSUANT TO SAID SECTION 8(a), MAY DETERMINE.

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<PAGE> 2

THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE MAY
NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER
TO SELL THESE SECURITIES AND WE ARE NOT SOLICITING OFFERS TO BUY THESE
SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.

PROSPECTUS (Subject to Completion)
Issued June 17, 1999

3,000,000 Shares
LOGO

COMMON STOCK
-------------------------

ASK JEEVES, INC. IS OFFERING SHARES OF ITS COMMON STOCK. THIS IS OUR INITIAL
PUBLIC OFFERING AND NO PUBLIC MARKET CURRENTLY EXISTS FOR OUR SHARES. WE
ANTICIPATE THAT THE INITIAL PUBLIC OFFERING PRICE WILL BE BETWEEN $12 AND $13
PER SHARE.
-------------------------

OUR COMMON STOCK HAS BEEN APPROVED FOR QUOTATION ON THE NASDAQ NATIONAL MARKET
UNDER THE SYMBOL "ASKJ."

-------------------------

INVESTING IN THE COMMON STOCK INVOLVES RISKS. SEE "RISK FACTORS" BEGINNING ON
PAGE 5.
-------------------------

PRICE $ A SHARE

-------------------------

<TABLE>
<CAPTION>
UNDERWRITING
PRICE TO DISCOUNTS AND PROCEEDS TO
PUBLIC COMMISSIONS ASK JEEVES
-------- ------------- -----------
<S> <C> <C> <C>
Per Share.................................................. $ $ $
Total...................................................... $ $ $
</TABLE>

The Securities and Exchange Commission and state securities regulators have not
approved or disapproved these securities, or determined if this prospectus is
truthful or complete. Any representation to the contrary is a criminal offense.

Ask Jeeves has granted the underwriters the right to purchase up to an
additional 450,000 shares of common stock to cover over-allotments. Morgan
Stanley & Co. Incorporated expects to deliver the shares to purchasers on
, 1999.

-------------------------

MORGAN STANLEY DEAN WITTER

BANCBOSTON ROBERTSON STEPHENS

HAMBRECHT & QUIST
-------------------------

, 1999

<PAGE> 3

TABLE OF CONTENTS

<TABLE>
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PAGE
----
<S> <C>
Prospectus Summary.................... 3
Risk Factors.......................... 5
Special Note Regarding Forward-Looking
Statements.......................... 17
Use of Proceeds....................... 18
Dividend Policy....................... 18
Capitalization........................ 19
Dilution.............................. 20
Selected Financial Data............... 21
Management's Discussion and Analysis
of Financial Condition and Results
of Operations....................... 22
</TABLE>

<TABLE>
<CAPTION>
PAGE
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<S> <C>
Business.............................. 31
Management............................ 48
Certain Transactions.................. 60
Principal Stockholders................ 64
Description of Capital Stock.......... 66
Shares Eligible for Future Sale....... 69
Underwriters.......................... 71
Legal Matters......................... 73
Experts............................... 73
Where You Can Find More Information... 73
Index to Financial Statements......... F-1
</TABLE>

You should rely only on the information contained in this prospectus. We
have not authorized anyone to provide you with information different from that
contained in this prospectus. We are offering to sell, and seeking offers to
buy, shares of common stock only in jurisdictions where offers and sales are
permitted. The information contained in this prospectus is accurate only as to
the date of this prospectus, regardless of the time of delivery of the
prospectus or of any sale of the common stock.

Unless otherwise indicated, all information in this prospectus:

-- has been adjusted to give effect to a 1-for-2 reverse stock split to
be completed prior to this offering;

-- gives effect to the conversion of all outstanding shares of preferred
stock into shares of common stock, which will become effective upon
the closing of this offering;

-- assumes no exercise of the underwriters' over-allotment option;

-- assumes no exercise of outstanding options and warrants to purchase
shares of our common stock after April 30, 1999; and

-- assumes our reincorporation from California to Delaware.

UNTIL , 1999, 25 DAYS AFTER COMMENCEMENT OF THE
OFFERING, ALL DEALERS THAT BUY, SELL OR TRADE SHARES, WHETHER OR NOT
PARTICIPATING IN THIS OFFERING, MAY BE REQUIRED TO DELIVER A PROSPECTUS. THIS
REQUIREMENT IS IN ADDITION TO THE DEALERS' OBLIGATION TO DELIVER A PROSPECTUS
WHEN ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR
SUBSCRIPTIONS.

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<PAGE> 4

PROSPECTUS SUMMARY

You should read the following summary together with the more detailed
information regarding our company and the common stock being sold in this
offering and our financial statements and notes to our financial statements
appearing elsewhere in this prospectus.

THE COMPANY

Ask Jeeves is a provider of natural-language question answering services on
the Internet for consumers and companies, establishing a new way to interact
with the World Wide Web. Ask Jeeves was first introduced to the public in April
1997 to provide Web users with a more satisfactory and productive experience by
quickly directing users to relevant answers. Our mission is to humanize the
Internet by making it easier and more intuitive for consumers to find the
information, products and services they need, and for companies to better
acquire, retain and maximize the value of their online customers. Our branding
strategy centers on the Jeeves character, a friendly and trusted assistant who
provides help and guidance on the Web. The Ask Jeeves question answering
services allow users ask a question in plain English and receive a response
pointing the user to relevant Internet destinations that provide the answers. We
believe that our question answering services make interaction with the Internet
more intuitive, less frustrating and significantly more productive.

While the growth of the Internet has drawn users at an unprecedented pace,
we believe it has become increasingly difficult for users to effectively
navigate the growing volume of online information. To take full advantage of the
Internet, users must be able to successfully navigate a network of dispersed Web
sites, which are generally not connected in a logical fashion. In addition, once
at the Web site, users are faced with the difficulty of sorting through an
overwhelming amount of information. Users currently rely on Internet search
engines or directories to locate information and make online purchases. These
methods typically require consumers to use keywords and construct complex search
strings that often result in hundreds or thousands of matches. Given the
magnitude of this problem, companies are recognizing the need to provide a means
by which their customers and potential customers can more easily find relevant
information, products and services on company Web sites. We believe that
consumers are frustrated with their online experience, and that companies are
frustrated by their inability to maximize returns on their investments in
Internet strategies. We further believe that this frustration will continue
until navigation on the Internet improves.

Beginning with only 3,000 questions per day in our first month of
operation, Ask Jeeves answered nearly 1 million questions per day in April 1999,
and the number of users has grown from 425,000 in September 1998 to more than
1.9 million in March 1999. Although we have experienced significant growth in
questions asked per day, we have incurred significant net losses in each fiscal
quarter since our inception, and as of March 31, 1999, we had an accumulated
deficit of approximately $9.7 million. Ask Jeeves, at Ask.com, provides users
with relevant answers to a wide range of questions from "Is it raining in
Paris?" to "Where can I comparison shop for cameras?" We believe that our
ability to provide users with a more satisfactory and productive Web experience
will allow us to connect users to providers of products and services in a more
targeted way than other services on the Internet, thereby better unlocking the
power of electronic commerce.

Our Corporate Question Answering Service helps companies provide a higher
quality, human-like online interface for their customers and is designed to
improve customer satisfaction on Web sites, increase the number of browsers on
Web sites that become purchasers and reduce expensive support costs such as
phone calls to call centers. Because we introduced our Corporate Question
Answering Service in December 1998, our revenues from this service have not been
material through March 31, 1999.
------------------------

We were incorporated in California in June 1996 and reincorporated in
Delaware in June 1999. Our principal executive offices are located at 918 Parker
Street, Berkeley, CA 94710, and our telephone number is (510) 649-8685. Our
World Wide Web site address is Ask.com. The information in the Web site is not
incorporated by reference into this prospectus.

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THE OFFERING

Common stock offered.................. 3,000,000 shares

Common stock to be outstanding after
the offering.......................... 24,349,424 shares

Over-allotment option................. 450,000 shares

Use of proceeds....................... We intend to use the proceeds for the
marketing and promotion of our
brand and for other
general corporate
purposes, including
working capital. See
"Use of Proceeds."

Proposed Nasdaq National Market
symbol................................ ASKJ

The foregoing information is based upon shares outstanding as of April 30,
1999.

SUMMARY FINANCIAL DATA

The "as adjusted" column below reflects the issuance and the sale of
3,000,000 shares of our common stock at an assumed initial public offering price
of $12.50 per share, and the application of net proceeds from the offering,
after deducting estimated underwriting discounts and commissions and estimated
offering expenses, as set forth under "Use of Proceeds."

<TABLE>
<CAPTION>
PERIOD FROM
JUNE 13, 1996
(INCEPTION) THREE MONTHS
THROUGH YEAR ENDED DECEMBER 31, ENDED MARCH 31,
DECEMBER 31, ----------------------- -----------------------
1996 1997 1998 1998 1999
------------------- --------- ----------- --------- -----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenues....................... $ -- $ -- $ 592,659 $ 14,766 $ 1,131,568
Gross profit (loss)............ -- -- (466,035) (52,904) (390,144)
Operating loss................. (107,797) (451,984) (4,314,005) (339,153) (5,000,353)
Net loss....................... (107,797) (447,777) (4,261,625) (335,355) (4,869,160)
Pro forma basic and diluted net
loss per share............... $ (.48) $ (.29)
Weighted average shares
outstanding used in computing
pro forma basic and diluted
net loss per common share.... 8,828,646 16,730,099
</TABLE>

<TABLE>
<CAPTION>
AS OF MARCH 31, 1999
--------------------------
ACTUAL AS ADJUSTED
----------- -----------
<S> <C> <C>
BALANCE SHEET DATA:
Cash and cash equivalents and short-term investments........ $25,144,341 $58,819,341
Working capital............................................. 22,622,918 56,297,918
Total assets................................................ 31,924,787 65,599,787
Capital lease obligations, less current portion............. 33,606 33,606
Total stockholders' equity.................................. 27,680,649 61,355,649
</TABLE>

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<PAGE> 6

RISK FACTORS

You should carefully consider the risks described below, together with all
of the other information included in this prospectus, before making an
investment decision. If any of the following risks actually occurs, our
business, financial condition or operating results could be materially adversely
affected. In such case, the trading price of our common stock could decline, and
you may lose all or part of your investment.

OUR BUSINESS IS EXTREMELY DIFFICULT TO EVALUATE BECAUSE OUR OPERATING HISTORY IS
LIMITED

We were incorporated in June 1996 and launched Ask Jeeves, at Ask.com, our
public Web site, in April 1997. Because of our limited operating history, it is
extremely difficult to evaluate our business and prospects. Our revenue and
income potential are unproven and our business model is constantly evolving. For
example, in the quarter ended March 31, 1999, we restructured our organization
into two business units: the Consumer Question Answering Service and the
Corporate Question Answering Service. Our new operating structure is entirely
untested, and we cannot be sure that this structure will provide the value to us
that we expect. Because the Internet is constantly changing, we may need to
change our business model again to adapt to those changes. Frequent changes in
organizational structure could impose significant burdens on our management and
our employees and could result in loss of productivity or even increased
attrition.

Any investment in our company must be considered in light of the problems
frequently encountered by companies in an early stage of development in new and
rapidly evolving markets. To address the risks we face, we must, among other
things:

-- maintain and enhance our brand;

-- expand our product and service offerings;

-- increase the amount of traffic to Ask Jeeves;

-- increase the number and types of businesses that use the products and
services of our question answering services;

-- increase the value of our question answering services to our users,
customers, electronic commerce merchants and advertisers;

-- attract, integrate, retain and motivate qualified personnel; and

-- maintain the leadership and quality of our services.

We cannot be certain that our business strategy will be successful or that
we will successfully address these risks.

WE HAVE A HISTORY OF NET LOSSES AND EXPECT TO CONTINUE TO INCUR NET LOSSES

We have incurred significant net losses in each fiscal quarter since our
inception, including a net loss of approximately $4.9 million in the quarter
ended March 31, 1999. We incurred net losses for the years ended December 31,
1996, 1997 and 1998 of approximately $108,000, $448,000 and $4.3 million,
respectively. As of March 31, 1999, we had an accumulated deficit of
approximately $9.7 million. We expect to have increasing net losses and negative
cash flows for the foreseeable future. The size of these net losses will depend,
in part, on the rate of growth in our revenues from our advertisers, corporate
customers and electronic commerce merchants and on our expenses. It is critical
to our success that we continue to expend financial and management resources to
develop our brand loyalty through marketing and promotion, enhancement of our
question answering services and expansion of our other services. As a result, we
expect that our operating expenses will increase significantly for the
foreseeable future. With increased expenses, we will need to generate
significant additional revenues to achieve profitability. Consequently, it is
possible that we may never achieve profitability, and even if we do achieve
profitability, we may not sustain or increase profitability on a quarterly or
annual basis in the future. If we do not achieve or sustain profitability in the
future, then we will be unable to continue our operations.

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<PAGE> 7

OUR QUESTION ANSWERING SERVICES ARE NOVEL AND UNPROVEN

Our question answering services are novel and unproven. We will be
successful only if Internet users adopt our natural-language question answering
services on Ask Jeeves and on the Web sites of our corporate customers. Prior to
the launch of Ask Jeeves, Internet users only had traditional search techniques,
such as search engines, to navigate the Internet. Traditionally, users relied on
methods, such as call centers, chat rooms and e-mail, rather than
difficult-to-navigate corporate Web sites, to obtain information on products and
services. It is difficult to predict the extent and rate of user adoption of our
question answering services. We cannot assure you that widespread acceptance of
our question answering services will occur. Visitors to our service may use it
once or twice and then revert to traditional search techniques to navigate the
Internet.

OUR METHODS OF GENERATING REVENUE ARE RELATIVELY NEW AND LARGELY UNTESTED

We generated approximately 77%, 20% and 3% of our revenues in 1998 through
Internet advertising, knowledge base licensing fees to three companies that
provide Internet-wide navigation services and sales of our Corporate Question
Answering Service to corporate customers, respectively. Although we have not
generated any revenues through the facilitation of electronic commerce from
inception through March 31, 1999, we expect to generate a portion of our future
revenues through the facilitation of electronic commerce. We facilitate
electronic commerce by directing users who ask a shopping question to electronic
commerce merchants, some of whom compensate us for the referral. These methods
of revenue generation are relatively new and largely untested.

Revenues from Internet advertising will make up a significant amount of our
revenues for the foreseeable future. Since the Internet advertising market is
new and rapidly evolving, we cannot yet gauge its effectiveness as compared to
traditional advertising media. Advertisers that have traditionally relied on
other advertising media may be reluctant to advertise on the Internet believing
that Internet advertising is less effective than traditional advertising media
for promoting their products and services. Consequently, they may allocate only
limited portions of their advertising budgets to Internet advertising. Our
business could be materially adversely affected if Internet advertising does not
continue to grow or if we are unsuccessful in increasing our advertising
revenues. Furthermore, we rely on a third-party advertising serving service,
which is provided by DoubleClick, Inc., to deliver advertisements to our users.
If DoubleClick fails to deliver the advertisements as contracted for, due to
reliability or performance problems, or if advertisements cannot be targeted as
promised to advertisers, our revenues will decrease.

In addition, a portion of our revenues for the foreseeable future are
expected to be derived from the facilitation of electronic commerce
transactions. We have not generated any revenues through the facilitation of
electronic commerce from inception through March 31, 1999. The market for
Internet products and services has only recently begun to develop and is rapidly
changing. Therefore, the success of our business depends upon the adoption of
the Internet as a medium for commerce by a broad base of customers. If this
market fails to develop or develops more slowly than expected, or if our
electronic commerce services do not achieve market acceptance, our business may
suffer.

Furthermore, we expect sales to corporate customers to constitute a growing
percentage of our revenues. As of March 31, 1999, we had provided customized
solutions to only five companies. In addition, our question answering service
has only been recently implemented onto these corporate Web sites. As such, we
cannot yet determine the effectiveness of our Corporate Question Answering
Service compared to traditional methods of customer relationship management,
such as e-mail, call centers and other traditional Web solutions. If we cannot
demonstrate to corporate customers that our Corporate Question Answering Service
increases the rate at which browsers become purchasers, improves customer
satisfaction on their Web sites and reduces expensive support costs, such as
those associated with call centers, our ability to attract and retain corporate
customers may be impaired. Our business would be materially adversely affected
if we are unsuccessful in increasing the number of corporate customers.

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OUR GROWTH WILL DEPEND ON OUR ABILITY TO DEVELOP OUR BRAND

We believe that broader brand recognition and a favorable consumer
perception of the Ask Jeeves brand are essential to our future success.
Accordingly, we intend to continue pursuing an aggressive brand-enhancement
strategy, which will include mass market and multimedia advertising, promotional
programs and public relations activities. We intend to incur significant
expenditures, approximately $15 million to $20 million in 1999, on these
advertising and promotional programs and activities in the future. These
expenditures may not result in a sufficient increase in revenues to cover such
advertising and promotional expenses. In addition, even if brand recognition
increases, the number of new users may not increase. Further, even if the number
of new users increases, the amount of traffic on Ask Jeeves and the number of
corporate customers may not increase sufficiently to justify the expenditures.
If our brand enhancement strategy is unsuccessful, these expenses may never be
recovered and we may be unable to increase future revenues.

TO MANAGE OUR GROWTH, WE NEED TO IMPROVE OUR SYSTEMS, CONTROLS AND PROCEDURES
AND COORDINATE OUR QUESTION ANSWERING SERVICES

We have experienced and may continue to experience rapid growth, which has
placed, and could continue to place, a significant strain on our managerial,
financial and operational resources. This growth will place a significant strain
on our personnel, management systems and resources. We expect that the number of
our employees, including management-level employees, will continue to increase
for the foreseeable future. We must continue to improve our operational and
financial systems and managerial controls and procedures, and we will need to
continue to expand, train and manage our workforce. We must also maintain close
coordination between our Consumer Question Answering Service and Corporate
Question Answering Service, as well as our technical, accounting, finance,
marketing, sales and editorial organizations. We cannot assure you that our
systems, procedures or controls will be adequate to support our operations or
that we will be able to manage any growth effectively. If we do not manage
growth effectively, our business would be materially adversely affected.

WE MAY NOT BE ABLE TO EFFECTIVELY COMPETE AGAINST OUR CURRENT AND POTENTIAL
COMPETITORS

We have a number of competitors in both the consumer and the corporate
areas.

CONSUMER QUESTION ANSWERING SERVICE

We face direct competition from companies that provide Internet-wide search
and directory services. For example, we compete with search engines, including
At Home Corporation, Inktomi Corporation and AltaVista Company, for the traffic
generated by Internet users seeking links to third-party content to address
their online information needs. We also compete with directory services, such as
Yahoo! Inc. and LookSmart, Ltd. because they provide alternative ways for users
to obtain the desired information.

CORPORATE QUESTION ANSWERING SERVICE

Our Corporate Question Answering Service competes with a number of
companies that are addressing the same need to improve automated or online
customer service for corporate clients. The companies that

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provide automated online customer products and services against whom we compete
can be categorized as follows:

<TABLE>
<CAPTION>
CATEGORY FOCUS COMPETITORS
-------- ----- -----------
<S> <C> <C>
Web-based Web-site specific search engine, Inktomi Corporation, Primus
"frequently asked questions," self- Telecommunications Group, Inc., Inference
help problem resolution and expert Corporation, Verity, Inc. and WebAnswers,
systems LLC

E-mail Automated response to customer Aptex Software, Inc., Brightware, Inc.,
generated e-mail and automated routing Egain Communications Corp., Kana
of customer e-mail to appropriate Communications, Inc. and Mustang Software,
answer provider Inc.

Phone call Receive, manage and track telephonic Clarify, Inc., Siebel Systems, Inc.,
with customers communications FaceTime Communications, Inc., Vantive
Corporation and Remedy Corporation
</TABLE>

Our ability to compete depends on many factors, many of which are outside
of our control. These factors include: the quality of content, the ease of use
of online services, the timing and market acceptance of new and enhanced online
services, and sales and marketing efforts by us and our competitors.

Many of our existing competitors, as well as potential new competitors,
have longer operating histories, greater name recognition, larger customer bases
and significantly greater financial, technical and marketing resources than we
do. This may allow them to devote greater resources than we can to the
development and promotion of their services. Many of these competitors offer a
wider range of services than we do. These services may attract users to our
competitors' sites and, consequently, result in a decrease of traffic to our
site. These competitors may also engage in more extensive research and
development, adopt more aggressive pricing policies and make more attractive
offers to existing and potential employees, partners, advertisers and electronic
commerce merchants. Our competitors may develop products and services that are
equal or superior to ours or that achieve greater market acceptance. In
addition, current and potential competitors have established or may establish
cooperative relationships among themselves or with third parties to better
address the needs of advertisers and businesses engaged in electronic commerce.
As a result, it is possible that new competitors may emerge and rapidly acquire
significant market share.

OUR OPERATING RESULTS ARE VOLATILE AND DIFFICULT TO PREDICT

You should not rely on our results of operations during any particular
quarter as an indication of our future results for a full year or any other
quarter. Our quarterly revenues and operating results have varied significantly
in the past and may vary significantly in the future due to a number of factors,
including:

-- our ability to obtain new corporate customers, the length of the
development cycle of the question answering service for corporate
customers and the timing of revenue recognition with respect to
contracts with corporate customers;

-- our ability to obtain new advertising contracts, maintain existing
ones, and effectively manage our advertising inventory;

-- the number of questions asked and answered on Ask Jeeves and on the
Web sites of our corporate customers;

-- our ability to attract and retain advertisers and our ability to link
our electronic commerce merchants to potential customers;

-- seasonal and other fluctuations in demand for our electronic commerce
services and for advertising space on Ask Jeeves;

-- our ability to develop and introduce new technology;

-- announcements and new technology introductions by our competitors;

-- our ability to attract and retain key personnel;

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<PAGE> 10

-- costs relating to possible acquisitions and integration of
technologies or businesses;

-- rate changes for advertising on Ask Jeeves; and

-- marketing expenses and technology infrastructure costs as well as
other costs that we may incur as we expand our operations.

We have experienced lower traffic during the year-end holiday season and a
slower rate of growth during the summer months. Given our limited operating
history, user traffic on our Web site is extremely difficult to forecast
accurately. Moreover, obtaining new corporate customers depends on many factors
that we are not able to control, such as the allocation of budgetary resources
by potential customers. The average sales cycle for obtaining new corporate
customers has typically ranged between one and three months. Therefore, it is
difficult to predict the number of corporate customers that we will have in the
future. In particular, we intend to expend significant amounts, approximately
$15 million to $20 million in 1999, to build brand awareness of Ask Jeeves. We
may be unable to adjust spending quickly to offset any unexpected revenue
shortfall. Consequently, as fees are generated from advertising, corporate
customers and, to a lesser extent in the near term, our electronic commerce
service, they will constitute a significant portion of our revenues for the
foreseeable future. As such, our revenues are difficult to accurately predict.

IF WE FAIL TO MEET THE EXPECTATIONS OF PUBLIC MARKET ANALYSTS AND INVESTORS, THE
MARKET PRICE OF OUR COMMON STOCK MAY DECREASE SIGNIFICANTLY

Public market analysts and investors have not been able to develop
consistent financial models for the Internet market because of the unpredictable
rate of growth of Internet users, the rapidly changing models of doing business
on the Internet and the Internet's relatively low barriers to entry. As a
result, and because of the other risks discussed in this prospectus, it is
unlikely that our actual results will meet the expectations of public market
analysts and investors in future periods. If this occurs, the price of our
common stock will likely fall.

OUR CONSUMER QUESTION ANSWERING SERVICE DEPENDS ON THIRD-PARTY CONTENT

Our Consumer Question Answering Service is designed to directly link users
into a page within a third-party Web site that contains the answer to a question
asked. However, when our Consumer Question Answering Service attempts to direct
the user to a page within the Web site, some companies have automatically
redirected users to their home page. If companies prevent us from directly
linking our consumer users to a page within a third-party Web site, and if there
are no comparable alternative Web sites to which we can direct our users, the
utility and attractiveness of our services to consumers may be reduced. If this
occurs, traffic on Ask Jeeves could significantly decrease, which would have an
adverse effect on our business.

Visitors to Ask Jeeves use our Consumer Question Answering Service to
obtain direct access to the information, products and services they need through
the display of a third-party Web page containing the answer to the user's
question. We have little control over the content contained on these third-party
Web sites. If these third-party Web sites do not contain high-quality,
up-to-date and useful information to the user, the utility of our service to the
user will be reduced, which could materially and adversely affect our business.

WE MAY BE LIABLE FOR OUR LINKS TO THIRD PARTY WEB SITES

We could be exposed to liability with respect to the selection of
third-party Web sites that may be accessible through Ask Jeeves. Such claims
might include, among others, that by linking to Web sites operated by third
parties, we may be liable for copyright or trademark infringement or other
unauthorized actions by such third parties through such Web sites. Other claims
may be based on errors or false or misleading information provided on Ask
Jeeves, including information deemed to constitute professional advice such as
legal, medical, financial or investment advice. Other claims may be based on our
links to sexually explicit Web sites and our provision of sexually explicit
advertisements when this content is displayed. Our business could be materially
adversely affected due to the cost of investigating and defending such claims,
even to the extent such claims do not result in liability. Implementing measures
to reduce our exposure to this liability may require us to spend substantial
resources and limit the attractiveness of our service to users.
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FAILURE TO RETAIN CUSTOMERS OR ADD NEW CUSTOMERS TO OUR CORPORATE QUESTION
ANSWERING SERVICE MAY HAVE AN ADVERSE EFFECT ON OUR REVENUES

To date, a significant portion of our revenues has been attributable to a
limited number of customers. AltaVista and theglobe.com, inc. accounted for
approximately 14% and 13% of total revenues, respectively, for the year ended
December 31, 1998, and approximately 11% and 21%, respectively, of total
revenues for the quarter ended March 31, 1999. In addition, in the coming year
we expect that revenues associated with the Corporate Question Answering Service
will be heavily dependent on a limited number of customers, comprised primarily
of corporations with large, difficult-to-navigate Web sites. As a result, if we
do not complete sales to a sufficient number of customers, our future revenues
will be adversely affected.

Most of our customer contracts in the Corporate Question Answering Service
have a term of one year. As a result, if we are unable to offer value to our
customers during the term of these contracts, or if our customers choose a
competitor's service over our service, or if such customers decide to use their
own proprietary technology to develop services similar to ours, such customers
may not renew their contracts. If we do not obtain a sufficient amount of
contract renewals or if such renewal contracts are obtained on terms less
favorable than the original contract, our business could be materially adversely
affected.

OUR DEVELOPMENT CYCLE FOR CORPORATE QUESTION ANSWERING SERVICES IS LONG AND
LABOR INTENSIVE

Because the customization of our Corporate Question Answering Service is
labor intensive, it is difficult to predict the length of the development cycle.
Factors that affect the length of the development cycle include the overall size
and complexity of the Web site, the interaction with the customer and the
dynamic nature of the content. Generally, it takes three to five months to
launch a custom question answering service. However, because we have a limited
number of corporate customers, it is difficult to predict whether the
development cycle will stay in this timeframe. The long development cycle makes
it difficult to predict the delivery time to the customer, realize our revenue
goals and manage our internal hiring needs to meet new projects. In addition, in
order to meet increased demand for custom question answering services, we may
have to hire additional people and train them in advance of orders. If we
outsource development of custom knowledge bases, we will have little control
over the speed and quality of the development. Any decline in the speed or
quality of the implementation of custom knowledge bases could adversely affect
our business.

Our revenue growth is dependent, in part, on our ability to leverage our
customization of knowledge bases. We intend to outsource our knowledge base
creation process to providers of integrated Internet solutions to leverage our
sales efforts. If we are unable to outsource the labor intensive process of
creating customized knowledge bases, our expenses in developing a customized
corporate Web site will continue to be high which may have an adverse effect on
our business.

WE FACE RISKS RELATED TO EXPANDING INTO RELATIVELY NEW SERVICES AND BUSINESS
AREAS, IN PARTICULAR, ELECTRONIC COMMERCE

To increase our revenues, we will need to expand our operations by
promoting new or complementary products and by expanding the breadth and depth
of our services. In particular, our future success will largely depend on our
ability to substantially increase revenues through the facilitation of
electronic commerce transactions. The market for electronic commerce services is
extremely competitive. Because we only recently entered this market and we have
little experience in it, we may have limited success in this market. The
expansion of our electronic commerce services will require additional
development resources. Such expansion may strain our management, financial and
operational resources. Our expansion into new product and service offerings may
not be timely or may not generate sufficient revenues to offset their cost. If
this occurs, our business, operating results and financial condition will be
materially adversely affected.

OUR FUTURE SUCCESS DEPENDS ON OUR ABILITY TO RETAIN OUR PRESIDENT AND CHIEF
EXECUTIVE OFFICER AND OUR CHIEF TECHNOLOGY OFFICER

Our future success depends, in part, on the continued service of Robert
Wrubel, our President and Chief Executive Officer, and David Warthen, our Chief
Technical Officer. Neither Mr. Wrubel nor Mr. Warthen are
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bound by an employment agreement for any specific term. Our relationships with
these officers are at will. Although we are the beneficiary of a key person life
insurance policy on Mr. Wrubel's life, the loss of his services, or the services
of Mr. Warthen, would have a material adverse effect on our business.

OUR FUTURE SUCCESS DEPENDS ON OUR ABILITY TO ATTRACT, RETAIN AND MOTIVATE HIGHLY
SKILLED EMPLOYEES

Our future success also depends on our ability to attract, retain and
motivate highly skilled employees. Competition for employees in our industry is
intense. Additionally, it is often more difficult to attract employees once a
company's stock is publicly traded because the exercise price of equity awards
such as stock options are based on the public market, which is highly volatile.
We may be unable to attract, assimilate or retain other highly qualified
employees in the future. We have from time to time in the past experienced, and
we expect to continue to experience in the future, difficulty in hiring and
retaining highly skilled employees with appropriate qualifications.

WE RECENTLY RECRUITED MOST OF OUR MANAGEMENT TEAM

Many members of our management team have recently been hired, including the
General Managers of both our Consumer Question Answering Service and Corporate
Question Answering Service, as well as our Chief Financial Officer, Senior Vice
President of Business Development, President of Ask Jeeves International and
Corporate Controller. These individuals do not have significant experience
working with us or the rest of our management team. We cannot assure you that
they will be able to successfully work together or manage any growth we
experience. The process of integrating these individuals may detract from the
operation of, and have an adverse effect on, our business.

WE WILL ONLY BE ABLE TO EXECUTE OUR BUSINESS PLAN IF INTERNET USAGE GROWS

Our business would be adversely affected if Internet usage does not
continue to grow or grows at significantly lower rates compared to current
trends. The continued growth of the Internet depends on various factors, many of
which are outside our control. These factors include:

-- the Internet infrastructure may not be able to support the demands
placed on it;

-- performance and reliability of the Internet may decline as usage
grows;

-- security and authentication concerns with respect to the transmission
over the Internet of confidential information, such as credit card
numbers, and attempts by unauthorized computer users, so-called
hackers, to penetrate online security systems; and

-- privacy concerns, including those related to the ability of Web sites
to gather user information without the user's knowledge or consent.

THE OPERATING PERFORMANCE OF OUR SYSTEMS AND SERVERS IS CRITICAL TO OUR BUSINESS
AND REPUTATION

Any system failure, including network, software or hardware failure, that
causes an interruption in our service or a decrease in responsiveness of Ask
Jeeves could result in reduced user traffic on Ask Jeeves and reduced revenues.
Our network and server equipment is located at Frontier Global Center in Palo
Alto, California. Although we believe that our current back-up methods are
adequate, we cannot assure you that the back-up servers will not fail or cause
an interruption in our service.

Our question answering service on both Ask Jeeves and our corporate
customer sites have from time to time experienced slower response times and
interruptions in service from interruptions at our hosting facilities and on the
Internet backbone networks, major software upgrades at Ask Jeeves and undetected
software defects. The Ask Jeeves Web site has been interrupted for periods
ranging from a few minutes to three hours. In addition, these Web sites could
also be affected by computer viruses, electronic break-ins or other similar
disruptions. If we experience outages, frequent or persistent system failures or
degraded response times, our reputation and brand could be permanently harmed.
In addition, we could lose advertising revenues during these interruptions and
user satisfaction could be negatively impacted if the service is slow or
unavailable.

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Our users and customers depend on Internet service providers, online
service providers and other Web site operators for access to Ask Jeeves. Each of
these providers has experienced significant outages in the past and could
experience outages, delays and other difficulties due to system failures
unrelated to our systems.

The occurrence of an earthquake or other natural disaster or unanticipated
problems at our leased facility in Berkeley, California or at the servers that
host or back-up our systems could cause interruptions or delays in our business,
loss of data or render us unable to provide question answering services. Our
systems are vulnerable to damage or interruption from fire, flood, power loss,
telecommunications failure, break-ins, earthquake and similar events. Our
general liability insurance policies may not adequately compensate us for losses
that may occur due to interruptions in our service.

WE MAY NOT BE ABLE TO ADAPT TO EVOLVING INTERNET TECHNOLOGIES AND CUSTOMER
DEMANDS

To be successful, we must adapt to rapidly changing Internet technologies
by continually enhancing our products and services and introducing new services
to address our customers' changing needs. We could incur substantial development
or acquisition costs if we need to modify our services or infrastructure to
adapt to changes affecting providers of Internet services. Our business could be
materially adversely affected if we incur significant costs to adapt to these
changes. If we cannot adapt to these changes, or do not sufficiently increase
the features and functionality of our products and services, our customers may
switch to the product and service offerings of our competitors. Furthermore, our
competitors or potential competitors may develop a novel method of Internet
navigation that is equal or superior to our question answering services. As a
result, demand for our question answering services may decrease.

WE MAY FACE POTENTIAL LIABILITY FOR INVASION OF PRIVACY

Although we have a policy against using personal information, current
computing and Internet technology allows us to collect personal information
about our users. We may decide in the future to compile and provide such
information to our corporate customers and electronic commerce merchants. In the
past, the Federal Trade Commission has investigated companies that have taken
such actions without permission or in violation of a stated privacy policy. If
we begin collecting such information without permission or in violation of our
privacy policy, we may face potential liability for invasion of privacy for
compiling and providing information to our corporate customers and electronic
commerce merchants based on questions asked by users and visitors on Ask Jeeves
and corporate sites.

WE NEED TO EXPAND OUR SALES AND SUPPORT ORGANIZATIONS

We will need to substantially expand both our advertising sales and
corporate sales operations and marketing efforts to increase market awareness
and sales of our products and services. We recently expanded our sales forces
and plan to hire additional sales personnel. Competition for highly-qualified
sales personnel is intense, and we may not be able to hire the kind and number
of sales personnel we are targeting. We will need to increase our staff to
support new customers and the expanding needs of our existing customers. Hiring
highly-qualified customer service and support personnel is very competitive in
our industry due to the limited number of people available with the necessary
technical skills and understanding of the Internet.

GOVERNMENT REGULATION AND LEGAL UNCERTAINTIES COULD HARM OUR BUSINESS

Any new law or regulation pertaining to the Internet, or the application or
interpretation of existing laws, could decrease the demand for our services,
increase our cost of doing business or otherwise have a material adverse effect
on our business. There is, and will likely continue to be, an increasing number
of laws and regulations pertaining to the Internet. These laws or regulations
may relate to liability for information retrieved from or transmitted over the
Internet, online content regulation, user privacy, taxation and the quality of
products and services. Furthermore, the growth and development of electronic
commerce may prompt calls for more stringent consumer protection laws that may
impose additional burdens on electronic commerce companies as well as companies
like us that provide electronic commerce services. Moreover, the applicability
to the Internet of existing laws governing intellectual property ownership and
infringement, copyright,

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trademark, trade secret, obscenity, libel, employment, personal privacy and
other issues is uncertain and developing.

We file tax returns in such states as required by law based on principles
applicable to traditional businesses. However, one or more states could seek to
impose additional income tax obligations or sales tax collection obligations on
out-of-state companies, such as ours, which engage in or facilitate electronic
commerce. A number of proposals have been made at state and local levels that
could impose such taxes on the sale of products and services through the
Internet or the income derived from such sales. Such proposals, if adopted,
could substantially impair the growth of electronic commerce and adversely
affect our opportunity to become profitable.

Legislation limiting the ability of the states to impose taxes on
Internet-based transactions recently has been enacted by the United States
Congress. However, this legislation, known as the Internet Tax Freedom Act,
imposes only a three-year moratorium, which commenced October 1, 1998 and ends
on October 21, 2001, on state and local taxes on electronic commerce, where such
taxes are discriminatory and Internet access, unless such taxes were generally
imposed and actually enforced prior to October 1, 1998. It is possible that the
tax moratorium could fail to be renewed prior to October 21, 2001. Failure to
renew this legislation would allow various states to impose taxes on
Internet-based commerce. The imposition of such taxes could adversely affect our
ability to become profitable.

In addition, we are not certain how our business may be affected by the
application of existing laws governing issues such as property ownership,
copyrights, encryption and other intellectual property issues, taxation, libel,
obscenity and export or import matters. The vast majority of such laws were
adopted prior to the advent of the Internet. As a result, they do not
contemplate or address the unique issues of the Internet and related
technologies. Changes in laws intended to address such issues could create
uncertainty in the Internet market. Such uncertainty could reduce demand for our
services or increase the cost of doing business as a result of litigation costs
or increased service delivery costs.

WE MAY FACE POTENTIAL ELECTRONIC COMMERCE-RELATED LIABILITIES AND EXPENSES

Arrangements with electronic commerce merchants may expose us to legal
risks and uncertainties, including potential liabilities to consumers of such
products and services. Although we carry general liability insurance, our
insurance may not cover potential claims of this type or may not be adequate to
indemnify us for all liability that may be imposed.

Some of the risks that may result from these arrangements with businesses
engaged in electronic commerce include:

-- potential liabilities for illegal activities that may be conducted by
participating merchants;

-- product liability or other tort claims relating to goods or services
sold through third-party commerce sites;

-- consumer fraud and false or deceptive advertising or sales practices;

-- breach of contract claims relating to merchant transactions;

-- claims that materials included in merchant sites or sold by merchants
through these sites infringe third-party patents, copyrights,
trademarks or other intellectual property rights, or are libelous,
defamatory or in breach of third-party confidentiality or privacy
rights; and

-- claims relating to any failure of merchants to appropriately collect
and remit sales or other taxes arising from electronic commerce
transactions.

Even to the extent that such claims do not result in material liability,
investigating and defending such claims could have a material adverse effect on
our business, operating results or financial condition.

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WE MAY BE UNABLE TO PROTECT OUR INTELLECTUAL PROPERTY RIGHTS AND WE MAY BE
LIABLE FOR INFRINGING THE INTELLECTUAL PROPERTY RIGHTS OF OTHERS

Third parties may infringe or misappropriate our patents, trademarks or
other proprietary rights, which could have a material adverse effect on our
business. We have applied for a patent on our "Grammar Template Query System"
with the United States Patent and Trademark Office. We have also applied for
registered trademark status for "Ask Jeeves," "Ask.com," "Ask Jeeves Kids," and
"KidsAsk.com" and our logo and service marks in the United States. We have also
applied for registered trademark status of "Ask.com" with the appropriate
offices in Tunisia for international protection. In addition, we do not know
whether we will be able to defend our proprietary rights since the validity,
enforceability and scope of protection of proprietary rights in Internet-related
industries is uncertain and still evolving. Because we are devoting significant
resources to building our brands, primarily "Ask Jeeves" and "Ask.com," through
media advertising campaigns, if we are unable to register the trade and service
marks for which we have applied, or if we are unable to defend our intellectual
property rights, our business may be materially and adversely affected.

Third parties may assert infringement claims against us. From time to time
in the ordinary course of business we have been, and we expect to continue to
be, subject to claims of alleged infringement of the trademarks and other
intellectual property rights of third parties. These claims and any resultant
litigation, should it occur, could subject us to significant liability for
damages. In addition, even if we prevail, litigation could be time-consuming and
expensive to defend, and could result in the diversion of our time and
attention. Any claims from third parties may also result in limitations on our
ability to use the intellectual property subject to these claims unless we are
able to enter into agreements with the third parties making these claims.

WE COULD FACE ADDITIONAL STOCK-BASED COMPENSATION RELATED TO OUR RELATIONSHIP
WITH TRINET

Until May 31, 1999, we used TriNet VCO, an independent professional
employer organization, to provide payroll services and employee benefits for all
our employees. Under the co-employment arrangement, we paid a percentage of
compensation per co-employee, in addition to compensation costs, to TriNet to
cover payroll processing and related taxes and insurance. On March 31, 1999, the
Financial Accounting Standards Board ("FASB") issued an Exposure Draft of a FASB
Interpretation, Accounting for Certain Transactions involving Stock
Compensation -- an interpretation of APB Opinion No. 25. Such FASB Exposure
Draft, if adopted in its current form, could be interpreted to indicate that
employees subject to co-employment arrangements, would not be considered our
employees for purposes of applying APB No. 25. On April 30, 1999, we gave notice
of termination of this co-employment arrangement. If additional clarification
regarding the definition of an employee is not provided in the final
pronouncement, we may be required to establish a new measurement date for stock
options granted after December 15, 1998 to our employees for the purpose of
accounting for stock options under APB No. 25. If a new measurement date is
required to be established, we would recognize deferred stock-based compensation
which would be amortized as stock-based compensation over the remaining vesting
periods of the options. We estimate that this charge could be approximately $7.0
million in the aggregate, which would be amortized beginning with the fourth
quarter of fiscal 1999, the estimated date the final pronouncement will be
effective, and ending in 2003. Such amortization could have a material adverse
effect on our operating results.

WE WOULD LOSE REVENUES AND INCUR SIGNIFICANT COSTS IF OUR SYSTEMS OR MATERIAL
THIRD-PARTY SYSTEMS ARE NOT YEAR 2000 COMPLIANT

Many currently installed computer systems and software products are coded
to accept or recognize only two digit entries in the date code field. These
systems and software products will need to accept four digit entries to
distinguish 21st century dates from 20th century dates. As a result, computer
systems and software used by many companies and governmental agencies may need
to be upgraded to comply with such Year 2000 requirements or risk system failure
or miscalculations causing disruptions of normal business activities. The
failure of our internal systems, or any material third-party systems, to be Year
2000 compliant would have a material adverse effect on our business. Even if our
material systems are Year 2000 compliant, any failure of these third-party
systems to become Year 2000 compliant could adversely affect our systems and
cause disruption in our normal business

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activities. See the "Management's Discussion and Analysis of Financial Condition
and Results of Operations -- Year 2000 Compliance" section of this prospectus
for a more detailed discussion.

WE MAY NOT BE ABLE TO SECURE ADDITIONAL FINANCING TO MEET OUR FUTURE CAPITAL
NEEDS

We currently anticipate that our available cash resources combined with the
net proceeds from this offering will be sufficient to meet our anticipated needs
for working capital and capital expenditures for at least eighteen months
following the date of this prospectus. If we are unable to generate sufficient
cash flows from operations to meet our anticipated needs for working capital and
capital expenditures, we will need to raise additional funds after eighteen
months to fund brand promotion, develop new or enhanced services, respond to
competitive pressures or make acquisitions. We may be unable to obtain any
required additional financing on terms favorable to us, if at all. If adequate
funds are not available on acceptable terms, we may be unable to fund our
expansion, successfully promote our brand, develop or enhance services, respond
to competitive pressures or take advantage of acquisition opportunities, any of
which could have a material adverse effect on our business. If we raise
additional funds through the issuance of equity securities, our stockholders may
experience dilution of their ownership interest, and the newly-issued securities
may have rights superior to those of the common stock. If we raise additional
funds by issuing debt, we may be subject to limitations on our operations,
including limitations on the payment of dividends.

SUBSTANTIAL SALES OF COMMON STOCK BY OUR EXISTING STOCKHOLDERS COULD CAUSE OUR
STOCK PRICE TO FALL

The market price of our common stock could decline as a result of sales by
our existing stockholders of shares of common stock in the market after this
offering or the perception that these sales could occur. These sales also might
make it more difficult for us to sell equity securities in the future at a time
and at a price that we deem appropriate. Upon completion of this offering,
assuming the number of outstanding shares as of April 30, 1999 we will have
24,349,424 outstanding shares of common stock, 24,799,424 shares if the
underwriters exercise their over-allotment option in full. Of these shares,
3,000,000 shares, plus an additional 450,000 shares if the underwriters exercise
their over-allotment option in full, of common stock sold in this offering, will
be freely tradeable without restriction or further registration under the
Securities Act. Of the remaining shares, a total of approximately 21,106,168
shares held by our directors, executive officers and our existing stockholders
are subject to lock-up agreements generally providing that these stockholders
will not sell or otherwise dispose of any of their shares for a period of 180
days following the date of the final prospectus for this offering without the
prior written consent of Morgan Stanley & Co. Incorporated. In addition, options
to purchase up to 5,281,833 shares of our common stock are outstanding as of
April 30, 1999 under our 1996 Equity Incentive Plan, our 1999 Equity Incentive
Plan and pursuant to options granted outside of these plans. Following the
offering, we expect to register the shares underlying these options. Subject to
the exercise of these options, shares registered under such registration will be
available for sale in the open market immediately after the 180-day lock-up
period expires. See the "Shares Eligible" section of this prospectus for a more
detailed discussion.

AFTER THIS OFFERING, OUR OFFICERS AND DIRECTORS WILL OWN A LARGE PERCENTAGE OF
OUR OUTSTANDING SHARES AND WILL THEREBY BE ABLE TO CONTROL MATTERS REQUIRING
STOCKHOLDER APPROVAL

Our executive officers and directors will, in the aggregate, beneficially
own approximately 56% of our outstanding common stock following this offering.
These stockholders will be able to exercise control over matters requiring
approval by our stockholders, including the election of directors and the
approval of significant corporate transactions. This concentration of ownership
may also have the effect of delaying or preventing an acquisition or change of
control of Ask Jeeves, which could have a material adverse effect on our stock
price.

OUR SHARES MAY EXPERIENCE EXTREME PRICE AND VOLUME FLUCTUATIONS WHICH COULD
RESULT IN SUBSTANTIAL LOSSES FOR INDIVIDUAL STOCKHOLDERS

Prior to the offering, there has been no public market for our common
stock. The initial public offering price will be determined by negotiations
between the underwriters and us and may not be indicative of the
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market price for our common stock after the offering. We do not know the extent
to which investor interest will lead to the development of an active public
market. As such, investors may not be able to sell our common stock at or above
the initial public offering price. In particular, the market for the stocks of
Internet-related companies has experienced extreme price and volume
fluctuations. Following this offering, investor interest in us may not lead to
the development of an active or liquid trading market. The market price of our
common stock may be volatile and may decline below the initial public offering
price. In the past, securities class action litigation has often been instituted
against companies following periods of volatility in the market price of their
securities. If instituted against us, regardless of the outcome, litigation
could result in substantial costs and a diversion of our management's attention
and resources and have a material adverse effect on our business, results of
operations or financial condition.

PROVISIONS IN DELAWARE LAW AND OUR CHARTER, STOCK OPTION AGREEMENTS AND OFFER
LETTERS TO EXECUTIVE OFFICERS MAY PREVENT OR DELAY A CHANGE OF CONTROL

Upon the closing of this offering, we will be subject to the Delaware
anti-takeover laws regulating corporate takeovers. These anti-takeover laws
prevent Delaware corporations from engaging in a merger or sale of more than 10%
of its assets with any stockholder, including all affiliates and associates of
the stockholder, who owns 15% or more of the corporation's outstanding voting
stock, for three years following the date that the stockholder acquired 15% or
more of the corporation's assets unless:

-- the board of directors approved the transaction where the stockholder
acquired 15% or more of the corporation's assets;

-- after the transaction where the stockholder acquired 15% or more of
the corporation's assets, the stockholder owned at least 85% of the
corporation's outstanding voting stock, excluding shares owned by
directors, officers and employee stock plans in which employee
participants do not have the right to determine confidentially whether
shares held under the plan will be tendered in a tender or exchange
offer; or

-- on or after this date, the merger or sale is approved by the board of
directors and the holders of at least two-thirds of the outstanding
voting stock that is not owned by the stockholder.

A Delaware corporation may opt out of the Delaware anti-takeover laws if
its original certificate of incorporation or amended certificate of
incorporation or bylaws so provide. We have not opted out of the provisions of
the anti-takeover laws. As such, these laws could prohibit or delay mergers or
other takeover or change of control of Ask Jeeves and may discourage attempts by
other companies to acquire us.

Our Amended and Restated Certificate of Incorporation and Bylaws include a
number of provisions that may deter or impede hostile takeovers or changes of
control or management. These provisions include:

-- our board is classified into three classes of directors as nearly
equal in size as possible with staggered three year-terms;

-- the authority of our board to issue up to 5,000,000 shares of
preferred stock and to determine the price, rights, preferences and
privileges of these shares, without stockholder approval;

-- all stockholder actions must be effected at a duly called meeting of
stockholders and not by written consent;

-- special meetings of the stockholders may be called only by the
Chairman of the Board, the Chief Executive Officer or the board; and

-- the elimination of cumulative voting.

These provisions may have the effect of delaying or preventing a change of
control.

Our Amended and Restated Certificate of Incorporation and Bylaws provide
that we will indemnify officers and directors against losses that may incur in
investigations and legal proceedings resulting from their

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services to us, which may include services in connection with takeover defense
measures. These provisions may have the effect of preventing changes in our
management.

In addition, our option agreements under the 1996 Equity Incentive Plan
provide that if a change of control of Ask Jeeves occurs prior to the first
anniversary of the vesting commencement date of an option, then the vesting
which would have occurred by such anniversary shall occur. After the first
anniversary of the date of grant, these option agreements provide that the
vesting of each option shall accelerate by six months upon a change of control.
As of April 30, 1999, there were 4,814,004 unvested shares of common stock
reserved for options granted under this plan. Furthermore, offer letters with
our executive officers provide for the payment of severance and acceleration of
options upon the termination of these executive officers following a change of
control of Ask Jeeves. These provisions in our stock option agreements and offer
letters could have the effect of discouraging potential takeover attempts.

YOU WILL SUFFER IMMEDIATE AND SUBSTANTIAL DILUTION

The initial public offering price per share will significantly exceed the
net tangible book value per share. Accordingly, investors purchasing shares in
this offering will suffer immediate and substantial dilution of their investment
of $9.95 per share.

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

Some of the statements under "Prospectus Summary," "Risk Factors,"
"Management's Discussion and Analysis of Financial Condition and Results of
Operations," "Business" and elsewhere in this prospectus constitute
forward-looking statements. These statements involve known and unknown risks,
uncertainties and other factors that may cause our actual results, levels of
activity, performance or achievements to be materially different from any future
results, levels of activity, performance or achievements expressed or implied by
such forward-looking statements. Such factors include, among other things, those
listed under "Risk Factors" and elsewhere in this prospectus.

In some cases, you can identify forward-looking statements by terminology
such as "may," "will," "should," "could," "expects," "plans," "intends,"
"anticipates," "believes," "estimates," "predicts," "potential" or "continue" or
the negative of such terms and other comparable terminology.

Although we believe that the expectations reflected in the forward-looking
statements are reasonable, we cannot guarantee future results, levels of
activity, performance or achievements.

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USE OF PROCEEDS

The net proceeds to be received by Ask Jeeves from the sale of 3,000,000
shares of common stock in this offering are estimated to be $33.7 million, or
$38.9 million if the underwriters exercise their over-allotment option in full,
at an assumed initial public offering price of $12.50 and after deducting
estimated underwriting discounts and commissions and estimated offering
expenses.

We plan to use $15 million to $20 million of the net proceeds for
advertising and marketing expenditures in 1999 to promote our brand and the
remaining net proceeds from this offering for general corporate purposes,
including working capital, expenditures for the growth and expansion of our
business, building our brand both online and offline, enhancing our product
development and possible acquisitions. We are not currently a party to any
contracts or letters of intent with respect to any acquisitions, and there can
be no assurance that any of our expansion plans will be realized or, if
realized, will prove profitable for us. We have not identified specific uses for
all of such proceeds, and management will have discretion over their use and
investment. We intend to invest the net proceeds from this offering in
short-term, investment grade, interest-bearing securities until they are used.
We reserve the right to increase or decrease the size of this offering and the
price per share of the shares offered hereby.

DIVIDEND POLICY

We have never declared or paid any cash dividends on our capital stock. We
presently intend to retain future earnings, if any, to finance the expansion of
our business, and we do not expect to pay any cash dividends in the foreseeable
future.

18
<PAGE> 20

CAPITALIZATION

The following table sets forth our capitalization as of March 31, 1999:

-- on an actual basis;

-- on a pro forma basis to reflect the conversion upon the closing of
this offering of all outstanding shares of preferred stock into
9,485,690 shares of common stock; and

-- on a pro forma basis as adjusted to reflect the sale of the common
stock offered in this offering and the receipt of the net proceeds
from the sale of the common stock at an assumed initial public
offering price of $12.50 and after deducting estimated underwriting
discounts and commissions and estimated offering expenses.

This information should be read in conjunction with the Financial
Statements and related notes thereto included elsewhere in this prospectus.

<TABLE>
<CAPTION>
AS OF MARCH 31, 1999
-----------------------------------------
PRO FORMA
ACTUAL PRO FORMA AS ADJUSTED
----------- ----------- -----------
<S> <C> <C> <C>
Capital lease obligations, less current portion..... $ 33,606 $ 33,606 $ 33,606
----------- ----------- -----------
Stockholders' equity(1):
Convertible preferred stock; 10,000,000 shares
authorized (actual and pro forma); (5,000,000
pro forma as adjusted); issuable in series:
Series A convertible preferred stock: 3,750,000
shares designated; 3,709,884 shares issued
and outstanding (actual); no shares issued
and outstanding (pro forma and pro forma as
adjusted).................................... 7,581,708 -- --
Series B convertible preferred stock: 6,250,000
shares designated; 5,775,806 shares issued
and outstanding (actual); no shares issued
and outstanding (pro forma and pro forma as
adjusted).................................... 24,961,680 -- --
Common stock: 40,000,000 shares authorized;
11,583,733 shares issued and outstanding
(actual); 150,000,000 shares authorized and
21,069,423 shares issued and outstanding (pro
forma); 150,000,000 shares authorized and
24,069,423 shares issued and outstanding (pro
forma as adjusted)............................. 6,876,194 39,419,582 73,094,582
Deferred stock compensation....................... (2,052,574) (2,052,574) (2,052,574)
Accumulated deficit............................... (9,686,359) (9,686,359) (9,686,359)
----------- ----------- -----------
Total stockholders' equity..................... 27,680,649 27,680,649 61,355,649
----------- ----------- -----------
Total capitalization...................... $27,714,255 $27,714,255 $61,389,255
=========== =========== ===========
</TABLE>

- ---------------
(1) Excludes (a) 4,122,457 shares of common stock issuable upon the exercise of
options outstanding as of March 31, 1999, with a weighted average exercise
price of approximately $.90 per share and (b) 39,000 shares of common stock
issuable upon the exercise of warrants outstanding as of March 31, 1999,
with a weighted average exercise price of approximately $.62 per share.

19
<PAGE> 21

DILUTION

The pro forma net tangible book value of Ask Jeeves at March 31, 1999 was
approximately $27.7 million, or $1.31 per share. Pro forma net tangible book
value per share is determined by dividing our pro forma tangible net worth
(total tangible assets less total liabilities) by the number of outstanding
shares of common stock, after giving effect to the conversion of all outstanding
shares of our convertible preferred stock into 9,485,690 shares of common stock.
Assuming the sale of the 3,000,000 shares of common stock offered hereby at an
assumed initial public offering price of $12.50 per share and after deducting
estimated underwriting discounts and commissions and estimated offering
expenses, the pro forma net tangible book value of Ask Jeeves, Inc. as of March
31, 1999 would have been approximately $61.4 million, or $2.55 per share. This
represents an immediate increase in the pro forma net tangible book value per
share of $1.24 to existing stockholders and an immediate dilution of $9.95 per
share to new investors purchasing shares at the assumed initial public offering
price. If the assumed initial public offering price is higher or lower, the
dilution to new investors will be greater or less, respectively. The following
table illustrates this dilution per share:

<TABLE>
<S> <C> <C>
Assumed initial public offering price per share............. $12.50
Pro forma net tangible book value per share as of March
31, 1999.............................................. $1.31
Increase in pro forma tangible book value per share
attributable to new investors......................... 1.24
-----
Pro forma net tangible book value per share after the
offering.................................................. 2.55
------
Dilution per share to new investors......................... $ 9.95
======
</TABLE>

The calculation is based on an assumed initial public offering of $12.50
per share, before deducting the estimated underwriting discounts and commissions
and estimated offering expenses payable.

<TABLE>
<CAPTION>
SHARES PURCHASED(1) TOTAL CONSIDERATION AVERAGE
------------------------ ------------------------- PRICE PER
NUMBER PERCENTAGE AMOUNT PERCENTAGE SHARE
---------- ---------- ----------- ---------- ---------
<S> <C> <C> <C> <C> <C>
Existing stockholders............ 21,069,423 87.5% $36,829,538 49.6% $ 1.75
New investors.................... 3,000,000 12.5 $37,500,000 50.4% $12.50
---------- ----- ----------- -----
Total............................ 24,069,423 100.0% $74,329,538 100.0%
========== ===== =========== =====
</TABLE>

20
<PAGE> 22

SELECTED FINANCIAL DATA

The following selected financial data are qualified by reference to, and
should be read in conjunction with, our Financial Statements and the Notes
thereto and "Management's Discussion and Analysis of Financial Condition and
Results Of Operations" appearing elsewhere in this prospectus. The statement of
operations data presented below for the period from inception through December
31, 1996 and for the years ended December 31, 1997 and 1998 and the selected
balance sheet data at December 31, 1997 and 1998 are derived from our financial
statements that have been audited by Ernst & Young LLP, independent auditors,
included elsewhere in this prospectus. The selected statement of operations data
for the three months ended March 31, 1998 and 1999 and the balance sheet data at
March 31, 1999 are derived from our unaudited financial statements included
elsewhere in this prospectus. The unaudited financial statements include all
adjustments, consisting only of normal recurring adjustments, necessary for a
fair presentation of our financial position and results of operations for these
periods. The financial data for the three months ended March 31, 1999 are not
necessarily indicative of the results that may be expected for the year ending
December 31, 1999 or any other future period.

<TABLE>
<CAPTION>
PERIOD FROM YEAR ENDED THREE MONTHS
JUNE 13, 1996 DECEMBER 31, ENDED MARCH 31,
(INCEPTION) THROUGH ----------------------- -----------------------
DECEMBER 31, 1996 1997 1998 1998 1999
------------------- --------- ----------- --------- -----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenues:
Consumer..................... $ -- $ -- $ 577,159 $ 14,766 $ 1,059,068
Corporate.................... -- -- 15,500 -- 72,500
--------- --------- ----------- --------- -----------
Total revenues................. -- -- 592,659 14,766 1,131,568
Cost of revenues:
Consumer..................... -- -- 602,716 46,371 699,131
Corporate.................... -- -- 455,978 21,299 822,581
--------- --------- ----------- --------- -----------
Total cost of revenues......... -- -- 1,058,694 67,670 1,521,712
--------- --------- ----------- --------- -----------
Gross profit (loss)............ -- -- (466,035) (52,904) (390,144)
Operating expenses:
Product development.......... 107,797 319,824 1,104,193 127,772 742,166
Sales and marketing.......... -- 17,509 1,613,846 80,872 2,669,165
General and administrative... -- 114,651 1,100,921 77,605 881,830
Amortization of deferred
stock compensation........ -- -- 29,010 -- 317,048
--------- --------- ----------- --------- -----------
Total operating expenses....... 107,797 451,984 3,847,970 286,249 4,610,209
--------- --------- ----------- --------- -----------
Operating loss................. (107,797) (451,984) (4,314,005) (339,153) (5,000,353)
Interest income................ -- 4,207 52,380 3,798 131,193
--------- --------- ----------- --------- -----------
Net loss....................... $(107,797) $(447,777) $(4,261,625) $(335,355) $(4,869,160)
========= ========= =========== ========= ===========
Pro forma basic and diluted net
loss per share............... $ (0.48) $ (0.29)
=========== ===========
Weighted average shares
outstanding used in computing
pro forma basic and diluted
net loss per common share.... 8,828,046 16,730,099
=========== ===========
</TABLE>

<TABLE>
<CAPTION>
AS OF DECEMBER 31,
------------------------------- AS OF
1996 1997 1998 MARCH 31, 1999
------- -------- ---------- --------------
(UNAUDITED)
<S> <C> <C> <C> <C>
BALANCE SHEET DATA:
Cash and cash equivalents and short-term
investments..................................... $ -- $521,247 $5,587,883 $25,144,341
Working capital................................... -- 476,011 4,776,279 22,622,918
Total assets...................................... -- 608,259 6,808,172 31,924,787
Capital lease obligations, less current portion... -- -- 45,945 33,606
Total stockholders' equity (deficit).............. (6,219) 542,992 5,565,820 27,680,649
</TABLE>

21
<PAGE> 23

MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion should be read in conjunction with our Financial
Statements and the related notes contained elsewhere in this prospectus.

OVERVIEW

We have two principal businesses based on the same underlying technology.
The Consumer Question Answering Service allows users to obtain answers to
frequently asked questions online. The Corporate Question Answering Service
helps companies provide a human-like online interface for their customers.

Revenues from the Consumer Question Answering Service consist primarily of
two components:

-- advertising revenues; and

-- knowledge base licensing fees.

We earn advertising revenues from short-term advertising contracts, by
delivering impressions to users over a specified period of time. Advertising
rates, measured on a cost per thousand impressions ("CPM") basis, are dependent
on whether the impressions are displayed in general rotation throughout our Web
site or are directed to targeted audiences or channels within Ask Jeeves, such
as the computer, entertainment, family, health, money, shopping and travel
channels. Revenues are based upon actual impressions delivered as measured by
our third party advertising delivery provider, Doubleclick, Inc. Approximately
79% of the Consumer Question Answering Service revenues for the year ended
December 31, 1998 were derived from advertising contracts. Total revenues from
advertising contracts were approximately $455,000 for the year ended December
31, 1998 and approximately $923,000 for the three months ended March 31, 1999.
We currently license the Ask Jeeves knowledge base to three companies that
provide Internet-wide navigation services. These companies are AltaVista
Company, Netscape Communications, Inc., and Infonautics Corporation. Knowledge
base licensing fees consist of a fixed fee that is recognized ratably over the
contract term, generally a twelve month period. Revenues for knowledge base
licensing fees totaled approximately $122,000 for the year ended December 31,
1998 and $136,000 for the three months ended March 31, 1999. We expect that
licensing of the knowledge base will not be a significant part of our business
model in the future. In the future, we expect to generate a portion of our
revenues from a third component, the facilitation of electronic commerce. We
will generate revenues from electronic commerce transactions through
arrangements with our electronic commerce merchants. Typically, we receive
payment only if the user clicks on the answer that links to such electronic
commerce merchant's Web site, a cost per click ("CPC") basis. We have not
generated any revenues from the facilitation of electronic commerce from
inception through March 31, 1999.

Revenues from the Corporate Question Answering Service consist of three
components:

-- knowledge base customization;

-- maintenance and information service fees; and

-- per-answer fees.

We recognize knowledge base customization and maintenance and information
service fees ratably over the contract term, generally twelve months. We
recognize per-answer fees based on answers delivered at contractual per-answer
rates, subject to negotiated annual minimums and maximums, if applicable.
Payments received prior to delivering the knowledge base or providing
maintenance and information services are recorded as deferred revenues and are
recognized ratably over the contract term. Revenues from the Corporate Question
Answering Service were $15,500 for the year ended December 31, 1998 and $72,500
for the three months ended March 31, 1999.

Cost of revenues for our Consumer Question Answering Service consists
primarily of salaries and personnel costs associated with the content
development and maintenance of Ask Jeeves and providing data analysis, testing
and training. Cost of revenues for our Corporate Question Answering Service
consists
22
<PAGE> 24

primarily of salaries and related personnel costs and other direct costs to
provide knowledge base information and maintenance services to corporate
customers. We believe that ongoing content development is required to remain
competitive, and we expect that our production and content expenses will
continue to increase in absolute dollars in the future.

Product development expenses consist primarily of salaries and related
personnel costs, consultant fees and expenses related to the design,
development, testing and enhancement of our technology and services. To date all
software development costs have been expensed as incurred. We believe that
continued investment in product development is critical to attaining our
strategic product objectives and, as a result, we expect these expenses to
increase in absolute dollars in the future.

Sales and marketing expenses consist primarily of salaries, commissions and
related personnel expenses as well as advertising and promotional expenditures.
We intend to pursue aggressive sales and marketing campaigns and expand our
sales and marketing organization, which will result in an increase in absolute
dollars in our sales and marketing expenses in the future.

General and administrative expenses consist primarily of salaries and
related personnel costs and other related costs for general corporate functions,
including executive management, finance, facilities administration, legal,
recruiting and fees for other professional services. We expect general and
administrative expenses to increase in absolute dollars in the future as we add
personnel and incur additional costs related to the growth of our business and
our operation as a public company.

During the year ended December 31, 1998 and the three months ended March
31, 1999, in connection with the grant of certain stock options to employees, we
recorded deferred stock compensation totaling approximately $2.2 million,
representing the difference between the deemed fair value of our common stock on
the date such options were granted and the exercise price. Such amount is
included as a reduction of stockholders' equity and is being amortized by
charges to operations on a graded vesting method. We recorded amortization of
deferred stock compensation expense of approximately $29,000 and $269,000 for
the year ended December 31, 1998 and the three months ended March 31, 1999,
respectively. At March 31, 1999, we had a total of approximately $1.9 million
remaining to be amortized over the corresponding vesting periods of the options,
generally four years. In April 1999, we recorded additional deferred stock
compensation of approximately $573,000 representing the difference between the
deemed fair value of our common stock on the date such options were granted and
the exercise price. For the years ending December 31, 1999 and 2000, we will
record amortization expense relating to deferred stock compensation totaling
approximately $1,509,000 and $737,000, respectively. Due to the graded vesting
method of amortization, most of the deferred compensation charge will be
incurred over the first two years of the vesting of the options. The
amortization expense relates to options awarded to employees in all operating
expense categories. See Note 5 of Notes to Financial Statements.

Additionally, for the three months ended March 31, 1999, in connection with
the grant of stock options to Roger A. Strauch and Daniel H. Miller, who served
as our consultants, we recorded deferred stock compensation of $245,000. This
amount represents the difference between the deemed fair value of our common
stock on the date such options were granted and the exercise price and is being
amortized by charges to operations over the service period which concludes in
December 1999. We recorded amortization of deferred stock compensation expense
of approximately $48,000 in the three months ended March 31, 1999.

We have outsourced our payroll processing and other aspects related to our
employee benefits programs under a co-employment arrangement with TriNet VCO, an
independent professional employer organization. On March 31, 1999, the Financial
Accounting Standards Board ("FASB") issued an Exposure Draft of a FASB
Interpretation, Accounting for Certain Transactions involving Stock
Compensation -- an interpretation of APB Opinion No. 25. Such FASB Exposure
Draft, if adopted in its current form, could be interpreted to indicate that
employees subject to co-employment arrangements, would not be considered
employees for purposes of applying APB No. 25. On April 30, 1999, we gave notice
of termination of this co-employment arrangement. If additional clarification
regarding the definition of an employee is not provided in the final
pronouncement, we may be required to establish a new measurement date for stock
options granted after December 15, 1998 to these employees for the purpose of
accounting for stock options under APB No. 25. If a
23
<PAGE> 25

new measurement date is required to be established, we would recognize the
deferred stock-based compensation which would be amortized over the remaining
vesting periods of the options. We estimate that this charge would aggregate
approximately $7.0 million, which would be recognized beginning with the fourth
quarter of fiscal 1999, the estimated date the final pronouncement will be
effective, and ending in 2003. Such amortization could have a material adverse
effect on our operating results.

We have incurred significant net losses and negative cash flows from
operations since our inception, and at March 31, 1999, we had an accumulated
deficit of approximately $9.7 million. These losses have been funded primarily
through the issuance of preferred and common equity securities. We believe that
we will continue to incur operating and net losses and negative cash flows from
operations for the foreseeable future and that the rate at which we will incur
such losses may increase from current levels.

There was no provision for federal or state income taxes for any period
since inception due to our operating losses. At December 31, 1998, we had net
operating loss carryforwards for federal income tax purposes of approximately
$303,000 which will expire in fiscal year 2018 if not utilized. Utilization of
our net operating loss carryforwards may be subject to a substantial annual
limitation due to the ownership change limitations provided by the Internal
Revenue Code and similar state provisions. Such an annual limitation could
result in the expiration of the net operating loss carryforwards before
utilization. A valuation allowance has been established and, accordingly, no
benefit has been recognized for our net operating losses and other deferred tax
assets. The net valuation allowance increased by $978,634 during the year ended
December 31, 1998. We believe that, based on a number of factors, the available
objective evidence creates sufficient uncertainty regarding the realizability of
the deferred tax assets such that a full valuation allowance has been recorded.
These factors include our history of net losses since inception and expected
near-term future losses. We will continue to assess the realizability of the
deferred tax assets based on actual and forecasted operating results. See Note 4
of Notes to Financial Statements.

ANNUAL RESULTS OF OPERATIONS
YEARS ENDED DECEMBER 31, 1998 AND DECEMBER 31, 1997

Revenues. Revenues were approximately $593,000 for the year ended December
31, 1998. Prior to this period, we were a development stage company and
generated no revenues. Revenues for the year ended December 31, 1998 consisted
of approximately $577,000 in revenues from the Consumer Question Answering
Service, of which approximately $455,000 was generated from advertising revenues
and approximately $122,000 in knowledge base licensing fees for the year ended
December 31, 1998. Revenues from the Corporate Question Answering Service were
$15,500 for the year ended December 31, 1998.

Cost of Revenues. Cost of revenues for our Consumer Question Answering
Service and Corporate Question Answering Service were approximately $603,000 and
$456,000, respectively, for the year ended December 31, 1998. We had no cost of
revenues for the year ended December 31, 1997 since we generated no revenues
prior to January 1, 1998. The primary reason for the increase in cost of
revenues during the year ended December 31, 1998 related to the hiring of
personnel and related personnel costs associated with development of our public
site, specifically in the areas of content development, maintenance, data
analysis, and testing, in addition to costs associated with personnel and
related personnel costs required to provide knowledge base information and
maintenance services to our corporate customers.

Product Development Expenses. Product development expenses increased to
$1.1 million for the year ended December 31, 1998, from $320,000 for the same
period a year ago. The primary reasons for the dollar increase were the hiring
of additional personnel and related personnel costs and consultant fees and
expenses related to the design, development, testing and enhancement of our
technology and services.

Sales and Marketing Expenses. Sales and marketing expenses increased to
$1.6 million for the year ended December 31, 1998, from approximately $17,500
for the same period a year ago. The dollar increase was primarily due to
increases in advertising expenses related to our branding campaign, the hiring
of additional sales and marketing personnel and commissions needed to support
the increase in revenues.

24
<PAGE> 26

General and Administrative Expenses. General and administrative expenses
increased to approximately $1.1 million for the year ended December 31, 1998,
from $115,000 for the same period a year ago. The dollar increase in general and
administrative expenses was primarily due to increased depreciation, and
increase in the number of personnel to support the growth of our business, and
recruiting costs related to filling key senior executive positions.

ANNUAL RESULTS OF OPERATIONS
INCEPTION TO DECEMBER 31, 1996 AND YEAR ENDED DECEMBER 31, 1997

Because we were a development stage company during 1996 and the year ended
December 31, 1997, we generated no revenues for these periods. Operating
expenses increased to $451,000 in 1997 from $108,000 in the period from June 13,
1996 through December 31, 1996. During 1996, we incurred only product
development expenses as our sole focus was the development of our question
processing technology. In 1997, product development expenses totaled $320,000,
an increase from $108,000 in 1996, which was attributable to the addition of
product development personnel and related costs and consultant fees.
Additionally, in 1997 we began to build our infrastructure and added finance,
information technology, legal, executive management and administrative personnel
and related costs, which amounted to $115,000 for the period ending December 31,
1997. Sales and marketing expenses were not significant in 1997. We believe that
period-to-period comparisons prior to 1998 are less meaningful than an analysis
of recent quarterly operating results. Accordingly, we are providing a
discussion and analysis of our results of operations that is focused on the five
quarters ended March 31, 1999.

QUARTERLY RESULTS OF OPERATIONS

The following table sets forth unaudited quarterly statements of operations
results for the five quarters ended March 31, 1999. Prior to December 31, 1997,
Ask Jeeves was a development stage company and, as such, the Company believes
that the quarterly data for this period is not meaningful. We believe that this
information reflects all adjustments, consisting only of normal recurring
adjustments, that we consider necessary for a fair presentation of such
information in accordance with generally accepted accounting principles. The
results for any quarter are not necessarily indicative of results for any future
period.

<TABLE>
<CAPTION>
QUARTER ENDED
-----------------------------------------------------------------
MAR. 31, JUNE 30, SEPT. 30, DEC. 31, MAR. 31,
1998 1998 1998 1998 1999
--------- --------- --------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Revenues:
Consumer.................. $ 14,766 $ 35,355 $ 105,265 $ 421,773 $ 1,059,068
Corporate................. -- -- 7,500 8,000 72,500
--------- --------- --------- ----------- -----------
Total revenues.............. 14,766 35,355 112,765 429,773 1,131,568
Cost of revenues:
Consumer.................. 46,371 69,734 169,144 317,467 699,131
Corporate................. 21,299 29,408 60,878 344,393 822,581
--------- --------- --------- ----------- -----------
Total cost of revenues...... 67,670 99,142 230,022 661,860 1,521,712
--------- --------- --------- ----------- -----------
Gross loss.................. (52,904) (63,787) (117,257) (232,087) (390,144)
Operating expenses:
Product development....... 127,772 170,463 226,188 579,770 742,166
Sales and marketing....... 80,872 183,343 323,828 1,025,803 2,669,165
General and
administrative......... 77,605 157,354 260,565 605,397 881,830
Amortization of deferred
stock compensation..... -- -- -- 29,010 317,048
--------- --------- --------- ----------- -----------
Total operating expenses.... 286,249 511,160 810,581 2,239,980 4,610,209
--------- --------- --------- ----------- -----------
Operating loss.............. (339,153) (574,947) (927,838) (2,472,067) (5,000,353)
Interest income............. 3,798 1,292 9,643 37,647 131,193
--------- --------- --------- ----------- -----------
Net loss.................... $(335,355) $(573,655) $(918,195) $(2,434,420) $(4,869,160)
========= ========= ========= =========== ===========
</TABLE>

25
<PAGE> 27

Revenues. Revenues increased in each of the five quarters ended March 31,
1999. The increase in revenues in these periods primarily reflected increased
advertising revenues for our Consumer Question Answering Service, related to an
increase in sales personnel and an aggressive marketing campaign that began in
late 1998. To date, a significant portion of our revenues has been attributable
to a limited number of customers. AltaVista and theglobe.com accounted for
approximately 14% and 13% of total revenues, respectively, for the year ended
December 31, 1998, and approximately 11% and 21%, respectively, of total
revenues for the quarter ended March 31, 1999. Because we introduced our
Corporate Question Answering Service in October 1998 and we recognize revenues
relating to these contracts ratably over twelve months, our Corporate Question
Answering Service revenues have not been material over the five quarters ended
March 31, 1999. See Note 1 of "Notes to Financial Statements" for a more
detailed discussion.

Cost of Revenues. Cost of revenues increased in each of the five quarters
ended March 31, 1999. These quarterly increases primarily related to additional
personnel and related costs associated with the content development and
maintenance of Ask Jeeves and personnel required to provide services to new
customers. The significant increases in cost of revenues for the Corporate
Question Answering Service during the quarter ended December 31, 1998 and the
quarter ended March 31, 1999 related primarily to the addition of personnel and
related costs required to implement and support customized knowledge bases for
our corporate customers.

Product Development Expenses. Product development expenses increased in
each of the five quarters ended March 31, 1999. The increases were primarily due
to expenses related to the addition of product development personnel and related
costs and consultant fees.

Sales and Marketing Expenses. Sales and marketing expenses increased in
each of the five quarters ended March 31, 1999. The increases were primarily due
to expenses related to the addition of sales personnel. Furthermore, we embarked
on aggressive marketing campaigns in late 1998, resulting in advertising and
promotional expenses of $748,000 and $1.9 million in the quarter ended December
31, 1998 and the quarter ended March 31, 1999, respectively.

General and Administrative Expenses. General and administrative expenses
increased in each of the five quarters ended March 31, 1999. The increases
primarily reflected the addition of finance, information technology, legal,
executive management and administrative personnel and related costs.

RECENT EVENTS

In April 1999, we entered into an asset purchase agreement and a license
agreement with Lumina Decision Systems, Inc. ("Lumina") for the acquisition of
technology assets of Lumina in exchange for total consideration of $1,538,000
which is comprised of $700,000 in cash, 225,000 shares of our common stock
valued at $3.50 per share and $50,000 in acquisition costs. We allocated
approximately $1,177,000 of the purchase price to core technology and $361,000
to in-process technology. The core technology will be amortized over a three
year period. The in-process technology will be written off as a one-time charge
in the second quarter of 1999. In addition, approximately 107,500 shares of the
shares issued are to be held in escrow for a two year period subject to a right
of repurchase by us.

We acquired Lumina's Personal Decision Engine ("PDE") technology as well as
the right to use Lumina's Analytica and Analytica Decision Engine ("ADE")
technologies. The ADE technologies and a non-configurable version of the PDE
technology have reached technological feasibility and have been classified as
core technology. The configurable PDE technology has yet to reach technological
feasibility and therefore, this product is classified as in-process technology.
This acquisition provides technology and expertise that will complement our
existing technology. Although we believe that the purchased in-process
technology will be successfully developed, there can be no assurance that
commercial viability of these products will be achieved. The estimated cost
incurred to develop the configured PDE prior to the acquisition was $214,000.
The estimated cost to develop the in-process technology is approximately
$226,000, which is expected to be incurred in 1999.

The value of the purchased in-process technology was determined by
estimating the projected net cash flows related to such products, including
costs to complete the development of the technology and the future

26
<PAGE> 28

revenues to be earned upon commercialization of the products. These cash flows
were discounted back to their net present value. The resulting projected net
cash flows from such products were based on our estimates of revenues and
operating profits related to such products. These estimates were based on
several assumptions, including the use of a discount rate of 35% for purchased
in-process technology, which was calculated based on the weighted average cost
of capital, adjusted for the technology risk associated with the purchased
in-process technology, which was considered to be significant due to the rapid
pace of technological change in the Internet industry. For projected cash flows
attributable to existing technology, a discount rate of 25% was used, which
reflects the weighted average cost of capital, adjusted for the technology risk
associated with these technologies. Our analysis considered only future
operating results of the existing and in-process technology on a stand-alone
basis and did not take into consideration any potential increased revenue or
operating efficiency that may occur post-acquisition.

SEASONALITY AND QUARTERLY FLUCTUATIONS IN OPERATING RESULTS

Our operating results may fluctuate significantly in the future as a result
of a variety of factors, many of which are beyond our control. Factors that may
adversely affect our results of operations include:

-- our ability to obtain new advertising contracts, maintain existing
ones, and effectively manage our advertising inventory;

-- the number of questions asked and answered on Ask Jeeves and on the
Web sites of our corporate customers;

-- our ability to attract and retain advertisers and our ability to link
our electronic commerce merchants to potential customers;

-- seasonal and other fluctuations in demand for our electronic commerce
services and for advertising space on Ask Jeeves;

-- our ability to develop and introduce new technology;

-- announcements and new technology introductions by our competitors;

-- our ability to attract and retain key personnel;

-- costs relating to possible acquisitions and integration of
technologies or businesses;

-- rate changes for advertising on Ask Jeeves; and

-- marketing expenses and technology infrastructure costs as well as
other costs that we may incur as we expand our operations.

Because of the foregoing factors, we believe that period-to-period
comparisons of our operating results should not be relied upon as an indicator
of our future performance.

As Internet advertising makes the transition from an emerging to a more
developed market, seasonal and cyclical patterns may develop in our industry and
may also affect our revenues. For instance, during 1998 the rate of growth of
our traffic decreased in the summer months and traffic levels on Ask Jeeves
decreased during the year-end vacation and holiday periods. Similar to
traditional media, this may result in our advertising sales being lower during
such periods. In addition, we anticipate that sales from electronic commerce may
increase during the fourth quarter as a result of the holiday season and may
decline during other periods. Seasonality in the retail industry and in Internet
service usage are likely to cause quarterly fluctuations in our results of
operations and could have a material adverse effect on our business, results of
operations and financial condition.

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LIQUIDITY AND CAPITAL RESOURCES

Since our inception, we have financed our operations primarily through the
private placement of equity securities. As of March 31, 1999, we had
approximately $28.3 million in cash, cash equivalents and investments. Net cash
used in operating activities was $3.0 million for the year ended December 31,
1998 and $2.6 million for the three months ended March 31, 1999. The net cash
used in operating activities in each period resulted primarily from net losses,
offset by the timing of payable settlements and depreciation and amortization
expense. Net cash used in investing activities was $782,000 for the year ended
December 31, 1998 and $6.4 million for the three months ended March 31, 1999.
Net cash used in investing activities related to purchases of $782,000 of
property and equipment for the year ended December 31, 1998 and $1.2 million for
purchases of property and equipment for the three months ended March 31, 1999.
In addition, in the three months ended March 31, 1999, we purchased $5.2 million
of short-term and long-term investments. Net cash provided by financing
activities was $8.9 million and $26.5 million for the year ended December 31,
1998 and the three months ended March 31, 1999, respectively, and related
primarily to net proceeds from the sale of common and preferred equity
securities.

We have no material commitments or obligations other than capital and
operating leases. In June 1999, we entered into a leasing agreement with
Comdisco, Inc. to finance equipment and software purchases up to a maximum of
$3.5 million. Interest accrues under the terms of this agreement at 8% per annum
based on the outstanding utilized line of credit. Each borrowing under the line
of credit shall have a term of up to four years and we shall pay outstanding
principal and interest on a monthly basis. In addition, as consideration for
improved lease terms we agreed to issue Comdisco a warrant to purchase that
number of shares of common stock equal to $157,500 divided by the initial public
offering price. The exercise price of this warrant will be the initial public
offering price and the term of this warrant will be the earlier of (i) ten years
or (ii) five years from the offering. We expect to utilize the maximum amount
under this equipment credit line over the next twelve to eighteen months.

Our capital requirements depend on numerous factors, including market
acceptance of our question answering services and the amount of resources we
invest in site and content development, marketing and selling our services and
our brand promotions. We have experienced a substantial increase in our
expenditures since our inception consistent with growth in our operations and
staffing, and we anticipate that this will continue for the foreseeable future.
Additionally, we will continue to evaluate possible investments in businesses
and technologies, and we plan to expand our sales and marketing programs and
conduct more aggressive brand promotions.

We currently anticipate that our available cash resources combined with the
net proceeds from this offering will be sufficient to meet our anticipated needs
for working capital and capital expenditures for at least the next eighteen
months following the date of this prospectus. At the end of such period we will
need to generate sufficient cash flow from operations to meet our anticipated
needs for working capital and capital expenditures or we will need to raise
additional capital. However, if during that eighteen-month period or thereafter
we are not successful in generating sufficient cash flow from operations or in
raising additional capital when required in sufficient amounts and on terms
acceptable to us, these failures could have a material adverse effect on our
business, results of operations and financial condition. If we raise additional
funds through the issuance of equity or convertible debt securities, the
percentage ownership of our stockholders will be reduced.

DISCLOSURE ABOUT MARKET RISK

Our exposure to market risk is principally confined to our cash and cash
equivalents and available-for-sale securities, which have short maturities and,
therefore, minimal and immaterial market risk.

YEAR 2000 COMPLIANCE

used by many companies and governmental agencies may need to be upgraded to
comply with such Year 2000 requirements or risk system failure or
miscalculations causing disruptions of normal business activities.

STATE OF READINESS

We have made an assessment of the Year 2000 readiness of all our relevant
operating, financial and administrative systems, including the hardware and
software that support our information technology ("IT") and non-IT systems. Our
assessment plan consists of:

-- quality assurance testing of our internally developed proprietary
software;

-- contacting third-party vendors and licensors of material hardware,
software and services that are both directly and indirectly related to
the delivery of our services to our users;

-- contacting vendors of third-party systems;

-- assessing repair or replacement requirements;

-- implementing repair or replacement;

-- implementation of the plan; and

-- creating contingency plans in the event of Year 2000 failures.

All of our third party software and hardware vendors have provided written
statements, which were obtained at our request or from their public Web sites,
indicating that they are Year 2000 compliant. We performed a Year 2000
simulation on our material IT and non-IT systems during the first half of 1999
to test system readiness. Simulation tests have been performed on all but the
router system provided by Cisco Systems, Inc. Our business would experience an
interruption of service if simulation tests were conducted on this router system
and therefore we are relying on Cisco's Year 2000 Compliance Statement, which is
on its Web site. We have three hardware and software non-compliant systems which
will be retired in the second half of 1999. Replacement systems have been
identified and simulation tests are expected to be completed in the second half
of 1999. If these replacement systems do not pass our simulation tests, we will
have to revise these systems or find further replacements. All of our material
third party service providers have represented in writing that they are in the
process of remediating Year 2000 problems and are expected to be Year 2000
compliant in the fourth quarter of 1999.

RISKS OF YEAR 2000 ISSUES

We are not currently aware of any Year 2000 compliance problems relating to
our software or our IT or non-IT systems that would have a material adverse
effect on our business, results of operations and financial condition,
notwithstanding our efforts to detect and correct such problems. There can be no
assurance that we will not discover Year 2000 compliance problems in our
software that will require substantial revisions or replacements. In addition,
there can be no assurance that third-party software, hardware or services
incorporated into our material IT and material non-IT systems will not need to
be revised or replaced, which could be time consuming and expensive. Our failure
to fix our software, if necessary, or to fix or replace third-party software,
hardware or services, if necessary, on a timely basis could result in lost
revenues, increased operating costs and other business interruptions, any of
which could have a material adverse effect on our business, results of
operations and financial condition. Moreover, the failure to adequately address
Year 2000 compliance issues in our IT and non-IT systems could result in claims
of mismanagement, misrepresentation or breach of contract and related
litigation, which could be costly and time-consuming to defend. In addition,
there can be no assurance that governmental agencies, utility companies,
Internet access companies, third-party service providers and others outside our
control will be Year 2000 compliant. The failure by such entities to be Year
2000 compliant could result in a systemic failure beyond our control, such as a
prolonged Internet, telecommunications or electrical failure, which could
prevent us from operating our Web site.

Because our needs for additional hardware and software change, we are
engaged in an ongoing Year 2000 assessment. We have not developed any
contingency plans. The completion of our Year 2000 simulation

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testing and the responses received from third-party vendors and service
providers will be taken into account in determining the need for and nature and
extent of any contingency plans.

COSTS TO DATE

Costs associated with Year 2000 compliance matters have been approximately
$100,000 to date and the Company anticipates additional costs of $100,000. Most
of our expenses have related to, and are expected to continue to relate to, the
operating costs associated with time spent by employees in the evaluation and
testing process and Year 2000 compliance matters generally. Such costs, if
higher than anticipated, could have a material adverse effect on our business,
results of operations and financial condition.

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BUSINESS

OVERVIEW

Ask Jeeves is a provider of natural-language question answering services on
the Internet for consumers and companies, establishing a new way to interact
with the World Wide Web. Ask Jeeves was first introduced to the public in April
1997 to provide Web users with a more satisfactory and productive experience by
quickly directing users to relevant answers. Our mission is to humanize the
Internet by making it easier and more intuitive for consumers to find the
information, products and services they need, and for companies to better
acquire, retain and maximize the value of their online customers. Our branding
strategy centers on the Jeeves character, a friendly and trusted assistant who
provides help and guidance on the Web. The Ask Jeeves question answering
services allow users to ask questions in plain English and receive a response
pointing the user to relevant Internet destinations that provide the answers. We
believe that our question answering services make interaction with the Internet
more intuitive, less frustrating and significantly more productive.

Our question answering services combine sophisticated, proprietary
technologies with human editorial judgment to create a system that dynamically
responds to questions consumers ask every day. We have two principal businesses
based on the same underlying technology. The core of our Consumer Question
Answering Service, Ask Jeeves, at Ask.com, allows users to obtain answers to
millions of questions online. Our Corporate Question Answering Service helps
companies provide a human-like online interface for their customers. Answering
more than 1.5 million questions per day across our question answering services,
we believe that we handle answers to a broad range of plain English questions.

Beginning with only 3,000 questions per day in our first month of
operation, Ask Jeeves answered nearly 1 million questions per day in April 1999,
and the number of users has grown from 425,000 in September 1998 to more than
1.9 million in March 1999. Although we have experienced significant growth in
questions asked per day, we have incurred significant net losses in each fiscal
quarter since our inception, and as of March 31, 1999, we had an accumulated
deficit of approximately $9.7 million. By leveraging our proprietary tools and
technologies, we have been able to grow the knowledge base supporting Ask Jeeves
from 30,000 answers to more than 7 million answers over the past two years. Ask
Jeeves has grown from answering a small number of reference and Web-related
questions, to answering a wide range of questions from "Is it raining in Paris?"
and "Where can I comparison shop for cameras?" to "How can I improve my golf
game?" and "Am I in love?" We believe that our ability to provide users with a
more satisfactory and productive Web experience will allow us to connect users
to providers of products and services in a more targeted way than other services
on the Internet, thereby better unlocking the power of electronic commerce.

Our Corporate Question Answering Service is designed to improve customer
satisfaction on corporate Web sites, improve conversion rates of browsers to
purchasers and reduce expensive support costs such as phone calls to call
centers. Because we introduced our Corporate Question Answering Service in
December 1998, our revenues from this service have not been material through
March 31, 1999.

INDUSTRY BACKGROUND

The Internet has emerged as a mass-market communications medium, enabling
millions of users to obtain and share information, interact with each other and
conduct business electronically. International Data Corporation ("IDC")
estimates that the number of Internet users will increase from approximately 97
million at the end of 1998 to approximately 320 million by the end of 2002,
representing a compound annual growth rate of approximately 35%. This growth is
being driven by an increasing base of computers in the home and in the
workplace, improvements in network infrastructure, more convenient, faster and
inexpensive Internet access, advances in computer and modem technology,
increased public awareness of benefits of using the Internet and improving user
interfaces. These factors make the Internet accessible to inexperienced users as
well as the technologically sophisticated. In addition to its benefits for
individuals, the ubiquity of the Internet as a global communications tool
provides businesses with a new, attractive vehicle to deliver product
information, market and sell products and services and provide post-sales
support. According to IDC, worldwide electronic commerce revenue is expected to
increase from approximately $32 billion in 1998 to

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more than $425 billion in 2002, representing a compound annual growth rate of
approximately 90%. The market for the facilitation of electronic commerce is
expected to continue to represent only a small portion of the overall electronic
commerce market. We have not generated any revenues through the facilitation of
electronic commerce from inception through March 31, 1999.

EVOLVING USE OF THE INTERNET BY INDIVIDUALS AND COMPANIES

The Internet has evolved from a mere repository of information to a
powerful personal tool for managing important aspects of users' lives. In
addition to searching for information, individuals can, for instance, buy and
sell products, maintain personal calendars and contact information, engage in
personal securities transactions and communicate with others. In the future,
individuals will have the opportunity to conduct more personal and professional
activities through the Internet, creating more opportunities for businesses to
reach users in a direct and focused manner.

As the Internet has grown, many businesses have come to realize the
commercial potential it offers. Businesses are embracing the Internet as an
important vehicle for communicating with customers and changing traditional
business processes and practices. As advertisers have turned to the Internet as
a new way to reach consumers, businesses have developed content-rich Web sites
designed to hold users' attention for extended time periods. More recently, new
technology has enabled commercial transactions to be conducted over the
Internet, creating the opportunity for business-to-consumer and
business-to-business electronic commerce.

We believe that the creation of highly intuitive and intelligent Web sites
designed to manage a company's interactions with its customers is an emerging
market opportunity. Given its pervasiveness, the Internet has the potential to
enable companies to electronically manage the entire customer value chain,
including:

-- attracting or delivering the customer;

-- providing the customer with easy access to requested information;

-- retaining the customer's attention by expanding the scope of the
interaction;

-- enabling the customer transaction;

-- dealing with customer post-sales questions; and

-- improving management of the customer relationship by collecting and
analyzing customer data.

Properly developed, these consumer-friendly Web sites may alter the way
businesses interact with their customers. Nevertheless, significant shortcomings
in the way users interact with the Internet must be overcome for this market
opportunity to be fully realized.

CURRENT INTERNET NAVIGATION

While the growth of the Internet has drawn users at an unprecedented pace,
the volume of online information has made it increasingly difficult for users to
navigate the Internet effectively. According to Forrester Research, 1.5 million
new Web pages are added to the Internet every day. To take full advantage of the
Web, users must be able to successfully navigate a network of dispersed Web
sites, which are generally not connected in a logical fashion.

Users currently rely on Internet search engines or directories of Web sites
and Web pages to locate information and make online purchases. Search engines
typically require consumers to construct keyword or complex search strings that
often result in hundreds or thousands of matches. As directories become larger,
they require users to move through large and complex hierarchies of information.
As the Internet grows, consumers using conventional search and directory
products are finding that locating the information they need is increasingly
difficult and electronic commerce vendors are losing opportunities for sales.

The difficulty of online navigation does not end with finding the desired
Web site. Once there, users are faced with the difficulty of searching an
overwhelming amount of information. According to Forrester

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Research, major corporate Web sites now have thousands of pages, which often
makes finding relevant information a frustrating and time-consuming experience.
Consumers often must click through multiple "frequently asked questions" pages
or navigate long data trees to locate desired information. Unable to find
answers to their questions about a product, service or price, consumers often
delay the buying decision or give up entirely. Compounding the problem,
corporate Web sites are generally not tailored to individual needs. In addition,
we believe that corporate Web sites do not currently have the ability to carry
on an effective dialogue with existing or potential customers.

Further, companies need to provide a means by which their customers and
potential customers can more easily find relevant information about products and
services on their Web site. While online shoppers cite convenience as the reason
for choosing electronic commerce, according to IDC, over 70% abandon their
"shopping carts" because they have problems or questions. According to Forrester
Research, the online conversion rate or the percentage of visitors who complete
a purchase, is 2.7%, similar to that of unsolicited direct mailings through
conventional mail.

We believe that to fulfill the promise of the Internet, access to relevant
information, products and services must become simpler and quicker. Until
navigation on the Internet improves, consumers will become increasingly
frustrated with their online experiences, and companies will be frustrated by
their inability to provide an easy and intuitive user interface and as a result
to maximize returns on their investments in Internet strategies. We believe that
a more direct and personal means of interacting with the Internet will improve
the user's experience and enhance companies' returns from Internet strategies.
This will, in turn, make the Internet more valuable to consumers and companies
alike.

THE ASK JEEVES SOLUTION

We have developed and deployed natural-language question answering
services, creating an easier, more intuitive and more efficient way of finding
answers on the Internet. Our proprietary technologies, including
natural-language parsing software, knowledge base technology and data mining
processes, allow our users to ask questions and find answers without human
intervention. Our editors create new confirming questions on an ongoing basis to
update the Ask Jeeves knowledge base. However, our users' retrieval of
information is entirely automated. Our question answering services make relevant
information, products and services on the Web directly accessible to consumers
and enhance the commercial potential of corporate Web sites. Answering more than
1.5 million questions a day across our question answering services, we believe
that we handle a broad range of plain English questions. We designed our
question answering services to provide answers to the estimated 20% of the
questions that are asked approximately 80% of the time.

We have two principal businesses based on the same underlying technology.
The core of our Consumer Question Answering Service, Ask Jeeves, at Ask.com,
allows users to obtain answers to millions of questions online. Our Corporate
Question Answering Service helps companies provide a human-like interface for
their customers and is supported by professional services, maintenance and per
answer fees. We generated approximately 77%, 20% and 3% of our revenues in 1998
through Internet advertising, knowledge base licensing fees to three companies
that provide Internet-wide navigation services and sales of our Corporate
Question Answering Service to corporate customers, respectively.

HOW ASK JEEVES WORKS

A user of our question answering services begins by entering a question in
plain English. Our proprietary question processing engine ("QPE") parses the
question for word meaning and grammar and then maps it to a set of questions in
the Ask Jeeves knowledge base. Our interactive system suggests additional
related questions that are likely to be responsive to the user's needs. These
questions create an electronic dialogue with the user that not only helps the
user find the desired information but also educates the user about a range of
related topics and electronic commerce possibilities. After the user chooses
from among these dialogue questions, Ask Jeeves connects the user to a page on a
Web site containing the desired information without requiring any additional
navigation. The user can return to the dialogue questions for other information
and shopping links offered by our question answering services.

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We created the Ask Jeeves question answering services to become smarter in
response to consumer questions and needs. Our system is built on the belief that
a large percentage of the questions asked can be mapped to a manageable number
of answers. The Ask Jeeves technology records all the questions consumers ask
and our editors apply this information to update the knowledge bases.

THE CONSUMER QUESTION ANSWERING SERVICE

Ask Jeeves, at Ask.com, was launched in April 1997 to make finding answers
to questions easier. We believe that Ask Jeeves offers consumers the following
benefits:

Ease of use. Users have access to a human-like, intuitive interface with
the Web and can ask their questions in plain English. Users can spend less time
searching and more time obtaining relevant information.

Relevance. Ask Jeeves parses a user's query for word meaning and grammar.
Our proprietary technology allows us to respond with matching dialogue questions
even if the user asks a question in a different way or uses words different than
used in the question template in our knowledge base.

Precision. Ask Jeeves can answer a wide range of questions, by pointing the
consumer to a small set of relevant answers, avoiding hundreds or thousands of
search results which are often produced by search engines or directory searches.
These answers have been selected by our editors and validated for accuracy and
quality.

Ability to learn. Our technology monitors and analyzes all the questions
asked on Ask Jeeves. Our editors use the information to update the knowledge
base regularly, making Ask Jeeves smarter. Because our knowledge base is built
on past usage by other consumers, we believe it is better adapted to the needs
of future consumers than traditional software-driven search engines.

In addition to being a valuable advertising medium, Ask Jeeves can link
users with electronic commerce merchants who offer relevant products and
services. Approximately 79% and 21% of our revenues attributable to the Consumer
Question Answering Service are derived from Internet advertising and knowledge
base licensing fees, respectively.

THE CORPORATE QUESTION ANSWERING SERVICE

We also deploy our proprietary technologies and editorial tools to
customize our question answering service for a company's Web site to enable
intuitive online interaction between the company and its customers. We believe
visitors to a corporate question answering service-enabled Web site can readily
find desired information through a simple question and answer dialogue. Further,
we believe that our Corporate Question Answering Service provides companies with
the following advantages:

Increased conversion rates. The Corporate Question Answering Service is
designed to provide quick and direct answers, reduce the customer's frustration
level and supply additional product suggestions relevant to the question asked
by the customer or potential customers on a company's Web site. As a result, we
believe that more users will make purchases on these Web sites.

Lowered support costs. The Corporate Question Answering Service is designed
to enable more effective online customer self-service. We believe that
implementation of the Company's technology on our corporate customers' Web
sites, will facilitate their users' access to information, on a self-service
basis, thereby reducing the costs to our corporate customers of phone and e-mail
interactions with their customers.

Improved customer satisfaction and retention. By providing intuitive
interaction and relevant answers, we believe that the Corporate Question
Answering Service makes interacting with a company's Web site faster and easier.

Valuable customer data. By collecting and analyzing questions and customer
preferences, we believe that the Corporate Question Answering Service offers an
efficient and inexpensive means for companies to obtain market data and improve
customer loyalty.

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Outsourced development. By providing a stand-alone, fully outsourced
service, the Corporate Question Answering Service can be easily developed using
existing company Web content and maintained without interference with a
company's other information systems infrastructure.

THE ASK JEEVES STRATEGY

Our strategy is to establish Ask Jeeves as the leading question answering
service provider for information, products and services on the Internet. The key
elements of our strategy are as follows:

Continue to Build the Ask Jeeves Brand. To enhance public awareness of our
question answering services, we are pursuing an aggressive brand development
strategy through mass market and targeted advertising, promotions and public
relations. Our branding strategy centers on the Jeeves character, a friendly and
trusted assistant who provides help and guidance on the Web. We believe that
building our brand will increase traffic to Ask Jeeves and, as a result,
increase revenues from advertising and transactions. We also believe that
enhancing our brand will increase licensing opportunities with corporate
customers.

Unlock Electronic Commerce for Consumers and Corporations. Because Ask
Jeeves' question answering services can intuitively and intelligently connect
users with product and service purchase opportunities, we believe it offers
powerful targeting advantages over other Internet-based alternatives. To further
enhance the electronic commerce potential of our services, we plan to
aggressively devote resources to expanding the scope and breadth of
shopping-related questions. For example, we will continue to leverage our
technology to provide users with access to consumer information, such as product
reviews and pricing data, which empowers the user with enough knowledge to
complete a transaction. For our corporate service customers, we plan to continue
broadening the application of our question answering service beyond customer and
technical support into services specifically geared to guiding customers through
purchases directly on a corporate Web site.

Leverage the Ask Jeeves Brand to Continue Expansion of Our Corporate
Question Answering Service. We believe that the Jeeves brand is attractive to
corporations seeking to improve their online customer interactions. To continue
expanding our corporate question answering service, we are initially focusing on
technology and financial services, both of which are markets with complex
products and services requiring a high level of pre- and post-sales customer
support. We believe that our strategy of focusing on key markets will enhance
our competitive advantage by allowing us to leverage the expertise gained in
building each successive knowledge base.

Outsource Corporate Question Answering Service Implementation. To enable us
to provide our corporate question answering service to the broadest possible
range of corporate customers, we intend to supplement our direct sales and
implementation capability by licensing tools to selected third-party technology
integration vendors. This outsourcing strategy will allow us to reach the
significant customer base of these strategic partners, while reducing the amount
of direct labor we must apply to implement new Corporate Question Answering
Services. For example, we recently entered into a relationship with USWeb/CKS
under which USWeb will provide outsourced professional services to create,
implement and maintain corporate question answering services.

Make Ask Jeeves Smarter. To maintain our competitive advantage, we must
continue to develop a rich base of questions and related answer links for our
knowledge base. To supplement the ongoing efforts of our editors in increasing
the breadth of our knowledge base, we intend to enter into arrangements with
large content providers to link answers in their content to a base of questions
contained in Ask Jeeves.

PRODUCTS AND SERVICES

The Ask Jeeves question answering services provide users a fast, easy and
intuitive way to find information, products and services on the Internet. We
combine proprietary tools and technologies with editorial judgment to let users
ask questions in plain English and to direct them to a small selection of
relevant destinations on the Internet. Unlike traditional Web navigation methods
that require keywords or complex search strings, and often generate hundreds or
thousands of responses, our natural-language question answering service
generally provides "two-click" access to relevant Web sites.

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CONSUMER QUESTION ANSWERING SERVICE

Ask Jeeves at Ask.com. Initially introduced to handle general reference and
Web-related questions, Ask Jeeves has become a popular destination site, where
users get answers to a broad range of questions from "Why is the sky blue?" to
"Where can I buy flowers online?" The following table illustrates the breadth of
questions that Ask Jeeves can answer:

<TABLE>
<S> <C>
COMPUTERS MONEY
- --------------------------------------------- ---------------------------------------------
What are Web cookies? How much do I need to save for retirement?
Where can I find computer deals online? What is an annuity?
How do I install a modem? Where can I bank online?
Where can I find anti-virus software? How much life insurance do I need?
How can I create my own Web page? How does the stock market work?
ENTERTAINMENT REFERENCE
- --------------------------------------------- ---------------------------------------------
What parties are happening on New Year's Eve? How many feet are in a mile?
Where can I see a magic trick online? What does my phone number spell?
Are the Rolling Stones on tour? How can I become Miss America?
What's on TV tonight? Why is the sky blue?
What happened on this day in rock and roll Who was the first woman in space?
history?
ROMANCE
FAMILY ---------------------------------------------
- ---------------------------------------------
Am I in love?
How can I help my child with her homework? How do I get out of the doghouse?
How do I train my dog? How do I write a love poem?
Where can I find a good summer camp for kids? What are some good date ideas?
What should I name my baby? How can I prepare a romantic dinner?
How much will it cost to send my child to
college? SHOPPING
---------------------------------------------
GEOGRAPHY
- --------------------------------------------- How can I order a pizza over the Internet?
What is a good anniversary present?
What are the Seven Wonders of the World? What are the latest fashions?
How deep is the ocean? Where can I comparison shop for cameras?
Where can I find a current map of the world? Where can I find recommendations on software?
Where are the deserts of the world?
What is the capital of Malaysia? SPORTS
---------------------------------------------
HEALTH
- --------------------------------------------- Where can I buy a snowboard?
When are the Giants playing next?
How can I cure my headache? Where can I sign up for a fantasy football
Is yawning contagious? league?
How can I get rid of allergies? Who won the first World Series?
Where can I find a good gym? Where can I get my scuba diving
How do antioxidants work? certification?
KIDS TRAVEL
- --------------------------------------------- ---------------------------------------------
Where can I play a game with Elmo? What's the weather in New York?
When do I capitalize a letter? How can I renew my passport?
Where can I get facts on dinosaurs? How can I optimize my frequent flier miles?
What is static electricity? What are good travel tips for going abroad?
Where can I hear the sound a lion makes? Where can I find cheap airline tickets?
</TABLE>

Ask Jeeves was designed to create a more personal interaction with users.
The Jeeves character is intended to be a helpful, trusted assistant for our
users, providing help and guidance when they visit our Web site. We believe that
Jeeves will help us increase awareness and user loyalty to Ask Jeeves.

The Question Answering Process. Visitors to our Web site can type a
question in plain English and click the "Ask" button. Ask Jeeves creates an
interaction with the user by presenting a selection of dialogue questions based
on the word meaning and grammar of the original query. When the user clicks on
the appropriate dialogue question, Ask Jeeves provides a direct link to the page
on a third-party Web site that contains the answer.

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For example, a visitor to Ask Jeeves can enter the question:

[Screen shot of Ask Jeeve's Web site home page with the question "Where can I
find a recipe for creme brulee?"]

LOGO

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Ask Jeeves parses the question for word meaning and grammar and displays a
selection of dialogue questions, which help refine the visitor's query. The
dialogue questions also alert users to related possibilities, including relevant
electronic commerce opportunities. For example, in addition to answering the
question "Where can I find a recipe for creme brulee?" our service gives users
the option to click on the "Shop" question "Where can I buy a book about
cooking?" Ask Jeeves also presents results from several leading search engines
to supplement the Ask Jeeves answers. We believe that the question answering and
"Shop" functionalities provide significant opportunities for existing and new
advertising and electronic commerce partners.

[Screen shot of Ask Jeeve's Web site second page containing a set for dialogue
questions in response to the question "Where can I find a recipe for creme
brulee?"]

LOGO

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<PAGE> 40

After users click on the "Ask" or "Shop" button next to the question that
most clearly represents what they are looking for, Ask Jeeves links users to a
relevant Internet destination containing the answer. We are generally able to
point users directly to the specific page of a third-party Web site that
contains the answer, rather than the home page, thus eliminating several
unnecessary clicks. All answers have been selected by our editors and checked
for credibility, accuracy and relevance.
LOGO
[Screen shot page on a third party Web site containing the answer to the
question "Where can I find a recipe for creme brulee?"]

Features. Ask Jeeves offers a number of features:

- Shopping. We believe that our ability to answer questions and connect
consumers with the relevant providers of goods and services in a
non-intrusive way presents a compelling electronic commerce opportunity.
We direct users to a wide variety of shopping-related information, such
as price comparisons and product reviews. We believe these features will
create loyal users who will use Ask Jeeves as an online personal shopping
assistant.

- Channels. Ask Jeeves has created a series of vertical channels that
present frequently asked questions on specific subjects. We created Ask
Jeeves for Kids, at ajkids.com, and the computer, entertainment, family,
health, money, shopping and travel channels, to reflect the topics most
frequently asked by Web users. These channels allow users to browse
questions which we have answered for other users. These channels offer
highly targeted opportunities for our advertising and electronic commerce
partners. Currently, advertisers directly sponsor our presentation of
these channels.

Ask Jeeves for Kids, at ajkids.com, our flagship channel, is geared to
children, teachers and parents. A special editorial team ensures that all
answers are appropriate for children. Accessed through a link on Ask Jeeves or
at Ask Jeeves for Kids, children can find answers to their questions using the
same question answering service used on Ask Jeeves. A kid-safe meta-search
option is also provided using a filtering system provided by SurfWatch. Ask
Jeeves for Kids received an Editor's Choice Award from PC Magazine in 1998.

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<PAGE> 41

We believe that our ability to offer an easy, safe and credible resource for
children will present corporate partnership opportunities.

- Meta-search. We offer a meta-search capability that provides results
from leading search engines in response to each question. This feature
supplements the information in our knowledge base. We believe that this
functionality increases user satisfaction and loyalty.

- Other Features. Ask Jeeves includes a "Take a Peek" feature to allow
users to see the most recently answered questions, which are refreshed
every 30 seconds. This provides both entertainment and guidance about the
types of questions Ask Jeeves can answer. Visitors can also take
advantage of the "New User Tour" to receive instruction on how to use Ask
Jeeves. Visitors can also click on the "Play a Game" feature to build
familiarity with the capabilities of the site.

We have selectively licensed our Consumer Question Answering Service
knowledge base to enhance the Internet-wide search capabilities of company's Web
sites. We entered into these arrangements to endorse and promote our brand
awareness. We currently license our knowledge base to AltaVista, Infonautics
Corporation and Netscape Communications, Inc. We do not currently anticipate
entering into similar knowledge base licensing arrangements in the future.

CORPORATE QUESTION ANSWERING SERVICE

We provide a custom question answering service for companies to help them
quickly connect their customers with relevant information, products and services
on their Web sites. Our customers use our Corporate Question Answering Service
to increase conversion rates of browsers to purchasers, improve customer
satisfaction on their Web sites, and reduce expensive support costs, such as
those associated with call centers. We currently provide question answering
services to BellSouth Corporation, Compaq Computer Corporation, Datek Online
Holdings Corporation, Dell Computer Corporation, Iomega Corporation, Micron
Technology, Inc., Oxygen Media, Inc., Office Depot, Inc., Toshiba America
Information Systems, Inc. and WebTV, Inc.

Companies can use our question answering service across their entire Web
site or limit it to a specific section or function. For example, a company can
use our question answering service to address only pre-sales or support-related
questions. Companies can also license the knowledge bases that support Ask
Jeeves to provide their visitors access to answers that reside on other Web
sites.

Ask Jeeves provides its custom question answering services on an outsourced
basis with little involvement from the customer's technical personnel. The
development of the service begins with the creation of a customized knowledge
base by our professional services group or, in the future, one of our strategic
implementation partners. The editors creating the knowledge base are trained to
develop dialogue questions and to provide links to content on the company Web
site that provides answers to the questions visitors are most likely to ask. A
typical implementation, which takes approximately three months, requires the
development of question templates that link to the customer's existing Web site
content.

Once the Corporate Question Answering Service is operational, our
proprietary tools are used to collect, analyze and report the questions asked
and overall user behavior patterns. Our customers pay us to maintain their
knowledge bases. In addition, we provide user question data to our customers,
allowing them to improve their Web site content and adjust their marketing,
merchandising and product development strategies.

The following table illustrates the breadth of questions that a corporate
question answering service can answer:

<TABLE>
<CAPTION>
GENERAL INFORMATION PRODUCT INFORMATION
------------------- -------------------
<S> <C>
Where are you located? What is the best printer for digital photos?
Where can I find recent press releases? What are the advantages of online banking?
Are you hiring? How can I upgrade my computer to Windows 98?
Who are your customers? Do you have educational software to help
Where can I get a copy of your annual report? with math?
How can I invest in mutual funds?
</TABLE>

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<PAGE> 42

<TABLE>
<CAPTION>
TRANSACTION SUPPORT
----------- -------
<S> <C>
How much tax do I have to pay in Wisconsin? How do I get rid of the black lines on my
What is your return policy? monitor?
Do you offer any discounts? Where can I find technical support
Will an extra charges be added to my documentation?
purchase? How do I troubleshoot my floppy disk drive?
How quickly can I receive my order? What services are available in my support
plan?
How can I check the status of my order?
</TABLE>

TECHNOLOGY AND OPERATIONS

Ask Jeeves has created a proprietary technology and production system aimed
at creating a unique user experience that emphasizes ease of use, relevance,
precision and ability to learn. The goal of the Ask Jeeves technology is to
combine the strengths of natural-language parsing software, data mining
processes, knowledge base creation and maintenance tools with the cognitive
strengths and capabilities of human editors. Our technology matches our user's
question to a short list of dialogue questions and directs the user to
corresponding answers on the Internet. To do this, we focus on five main areas:
the question processing engine, the knowledge base creation and maintenance
process, the customer data mining process, the editorial process and the
scalable operation of the entire system.

THE QUESTION PROCESSING ENGINE

The Question Processing Engine ("QPE") is an internally-developed
proprietary engine that drives our question answering services. The QPE uses our
natural-language parsing software to tokenize, or identify the terms in, each
user question. The QPE then takes the user's question and analyzes it
syntactically and semantically. The syntactic analysis extracts information
about the role that each word fills in the question, while the semantic analysis
extracts information about the meaning of the words in the question. Then the
question is reorganized into a structure that is compatible with our "question
templates." A question template is a master question to which many natural
language questions are matched. This processing allows the system to match
appropriate question templates to the user's question, even if the user asks the
question in a different way or is using different words than used in the
question templates. For example, if a user asks "Who is the king of Siam?" the
service can correctly tell that this is equivalent to "Who is the head of state
of Thailand?" a question template that is stored in the knowledge base.

The matching question templates are then displayed for the user as dialogue
questions. A dialogue question is a question template customized to respond to a
user query. When the user picks a dialogue question, the QPE then extracts an
"answer template" from the knowledge base that contains the information to link
the user directly to a destination on the Internet, including static and dynamic
Hypertext Markup Language ("HTML") pages. The answer templates have been
editorially selected for relevance, accuracy, credibility and quality of the
answer link. A meta-search, which generates links to answers from several
leading search engines, is included with every response to supplement answer
templates available or to provide answers when there are no matching question
templates.

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<PAGE> 43

The diagram below shows the Ask Jeeves QPE and question answering process:
LOGO
Description of the Diagram depicting the QPE and question answering process:
1) Graphic depicting person at computer
Caption: User visits Ask Jeeves and asks a question
2) Box with heading: Question Processing Engine
a) Box containing word: Tokenize
Box containing question: Where can I buy antique furniture?
Caption: QPE identifies the terms within the question
b) Box containing word: Parse
Box containing question: Where can I buy antique furniture?
Caption: QPE parses the question for word meaning and grammar using
semantic and syntactic analysis
c) Box containing word: Normalize
Box containing question: Where can I buy antique furniture?
Caption: Question is reorganized into a structure that is compatible with
Ask Jeeves question templates
d) Box containing word: Match
Box containing text: Ask Jeeves Knowledge Base; Where can I buy; How much
is; Why is: Who is; How can I find a yellow pages listing for
Caption: Question is matched against question templates
e) Arrow to box outside larger box with text: User Log
Caption: User questions are recorded daily
3) User selects from a set of customized question templates presented as
dialogue questions by the QPE
4) Box depicting Web page frame containing text: Answer
Caption: User is directed to the Internet destination containing the answer

THE KNOWLEDGE BASE

Our knowledge base is a collection of question templates and answer
templates. Each knowledge base for the Consumer and Corporate Question Answering
Services is created and maintained using a set of internally developed
proprietary tools which allow content editors to make efficient editorial
judgments about what questions should be included and which Web pages, databases
or other sources of information on the Internet provide the best answer to a
particular question. These tools facilitate a variety of tasks such as creating
question templates and managing knowledge base content. In addition, these tools
enable editors to automatically map sites for answers and content, making the
integration of new content into a knowledge base more efficient. The tools also
help content editors maintain the knowledge base for accuracy and quality by
frequently checking all links from the knowledge base to the Web to ensure that
links are functioning and that the content is still appropriate for the related
question.

DATA MINING PROCESS

The Ask Jeeves data mining process stores, analyzes and reports on all
queries asked of the Ask Jeeves question answering services. In the process of
responding to user questions, the QPE logs all questions and the selected
dialogue questions to a "user log." This user log tracks whether or not the
user's questions were answered. We carefully analyze this information to
determine patterns in the usage of our question answering services. This data
not only helps editors determine what questions should be answered, but it also
enables corporate customers to identify content gaps on their Web sites. Our
data mining process improves the performance of the underlying system by
automatically discovering terms not previously identified by the system.

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<PAGE> 44

THE EDITORIAL PROCESS

Our editorial process is aimed at taking advantage of the cognitive ability
of individuals to understand the questions people ask and to determine the
quality of the Web sites containing the answers. Our editors focus on conforming
the knowledge base to the questions most frequently asked by our users. We have
found that people tend to ask the same or similar questions. Therefore, we
designed our question answering services to provide answers to the estimated 20%
of questions that are asked approximately 80% of the time. As editors build up a
base of questions, answers, terms and phrases in a specific area of knowledge
and interest, the human effort required to add to that knowledge base
diminishes.

The diagram below illustrates our editorial process:
LOGO

SCALABILITY AND OPERATIONS

Our Consumer and Corporate Question Answering Services run on arrays of
Intel-based server systems running Microsoft Windows NT and Internet Information
Server Software. The QPE is written in the C++ computer language and is
optimized to handle high traffic volumes. The Ask Jeeves' knowledge bases are
deployed on these servers as read-only, memory mapped files. To scale our
service as traffic increases, we only need to install our QPE and knowledge base
on additional servers.

The servers hosting Ask Jeeves, and some of our corporate customers' Web
sites, are located at Frontier Global Center in Palo Alto, California. This
hosting center provides routing and communication lines with a variety of major
Internet backbone providers, as well as continuous monitoring and communications
support. It also provides its own power generators and multiple, redundant
backup systems. We maintain significant server over-capacity at Frontier Global
Center so that if certain servers fail, the remaining servers can service our
entire user traffic.

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<PAGE> 45

CUSTOMERS

The following is a list of our ten largest advertisers by revenues in 1999,
and a complete list of our electronic commerce merchants and licensing
customers, as of May 31, 1999:

<TABLE>
<CAPTION>
ADVERTISING ELECTRONIC COMMERCE LICENSING CUSTOMERS
----------- ------------------- -------------------
<S> <C> <C>
theglobe.com Amazon.com AltaVista Company
WebPower BarnesandNoble.com BellSouth Corporation
GoTo.com Bigstar Compaq Computer Corporation
AutoNation, Inc. Big Words Datek Online Holdings Corporation
MSN.com CDNow.com Dell Computer Corporation
Fortunecity CD Universe Iomega Corporation
eBay, Inc. Computer Discount Infonautics Corporation
NetVision, Inc. Warehouse Micron Technology, Inc.
WebShopper Creative Computers Netscape Communications
Finet Holdings Corp. DVD Express Corporation
DVD Wave Office Depot, Inc.
eBay Oxygen Media, Inc.
eToys Toshiba America Information
First Source Systems, Inc.
FTD Florist WebTV, Inc.
Global Electronic
Music Marketplace
Gift Tree
IC-Direct
My Simon
PC Flowers
Powell's
Pro Flowers
Reel.com
911 Gifts
</TABLE>

To date, a significant portion of our revenue has been attributable to a
limited number of customers. AltaVista Company and theglobe.com accounted for
approximately 14% and 13%, respectively, of our total revenues for the year
ended December 31, 1998 and approximately 11% and 21%, respectively, of total
revenues for the period ended March 31, 1999. In addition, in the coming year we
expect that revenues associated with the Corporate Question Answering Service
will be heavily dependent on a limited number of customers.

SALES AND MARKETING

We have a direct sales force that targets advertisers and electronic
commerce merchants. Advertising sales on Ask Jeeves have been generated
primarily by our internal advertising sales organization. Our internal
advertising sales force maintains close relationships with advertisers by
consulting regularly with them on design and placement of their Internet-based
advertising, by providing them with advertising measurement analysis and by
providing a high level of customer support. We also have agreements with
third-party advertising sales organizations. We allocate a percentage of our
advertising inventory to these third parties to include in their advertising
sales networks. Our direct sales force consists of seven professionals as of
April 30, 1999.

We also employ a team of professionals that sell our question answering
service to companies. The sales cycle for corporate sales takes approximately
one to three months. During such time, our sales force works with customers on
the design and functionality of our question answering service on the customer's
Web site. This direct sales force consists of six professionals as of April 30,
1999.

We believe that an aggressive brand promotion campaign will increase usage
of Ask Jeeves, as well as attract additional advertisers and electronic commerce
partners. Historically, we have relied on word-of-mouth publicity and some
online advertising. Today, we engage a number of marketing tools to reach
consumers, including online and offline advertising, public relations, direct
mail, trade shows and ongoing customer

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<PAGE> 46

communications programs. We recently began media advertising campaigns to build
brand awareness, drive consumers to Ask Jeeves and generate increased awareness
among corporate customers.

COMPETITION

CONSUMER QUESTION ANSWERING SERVICE

We face direct competition from companies that provide Internet-wide search
and directory services. For example, we compete with search engines, including
At Home Corporation, Inktomi and AltaVista, for the traffic generated by
Internet users seeking links to third-party content to address their online
information needs. We also compete with directory services, such as Yahoo and
LookSmart because they provide alternative ways for users to obtain the desired
information.

CORPORATE QUESTION ANSWERING SERVICE

Our Corporate Question Answering Service competes with a number of
companies which are addressing the same need to improve automated or online
customer service for corporate clients. While various companies are addressing
this problem through a range of solutions, none competes directly with our
approach of providing human-like online interfaces for company Web sites. The
companies that provide automated online customer products and services against
whom we compete can be categorized as follows:

<TABLE>
<CAPTION>
CATEGORY FOCUS COMPETITORS
-------- ----- -----------
<S> <C> <C>
Web-based Web-site specific: Inktomi Corporation, Primus
Search engine, "frequently asked Telecommunication Group, Inc., Inference
questions" self-help problem resolution Corporation, Verity, Inc. and Web Answers
and expert systems
E-mail Automated response to customer Aptex Software, Inc., Brightware, Inc.,
generated e-mail and automated routing Egain Communications Corp., Kana
of customer e-mail to appropriate Communications, Inc. and Mustang Software,
answer provider Inc.
Phone call Receive, manage and track telephonic Clarify, Inc., Siebel Systems, Inc.,
with customers communications FaceTime Communications, Inc., Vantive
Corporation and Remedy Corporation
</TABLE>

Our ability to compete depends on many factors, many of which are outside
of our control. These factors include: the quality of content, the ease of use
of online services and the timing and market acceptance of new and enhanced
online services. We believe we compete favorably with respect to each of these
factors.

Many of our existing competitors, as well as potential new competitors,
have longer operating histories, greater name recognition, larger customer bases
and significantly greater financial, technical and marketing resources than we
do. This may allow them to devote greater resources than we can to the
development and promotion of their services. Many of these competitors offer a
wider range of services than we do. These services may attract users to our
competitors' sites and, consequently, result in a decrease of traffic to our
site. These competitors may also engage in more extensive research and
development, adopt more aggressive pricing policies and make more attractive
offers to existing and potential employees, partners, advertisers and electronic
commerce partners. Our competitors may develop products and services that are
equal or superior to ours or that achieve greater market acceptance. In
addition, current and potential competitors have established or may establish
cooperative relationships among themselves or with third parties to better
address the needs of advertisers and businesses engaged in electronic commerce.
As a result, it is possible that new competitors may emerge and rapidly acquire
significant market share.

INTELLECTUAL PROPERTY

Ask Jeeves seeks to protect its proprietary rights, but its actions may be
inadequate to protect its patents, trademarks or other proprietary rights to
prevent others from claiming violations of their proprietary rights. Ask Jeeves
has one patent application on file with the United States Patent and Trademark
Office for its "Grammar Template Query System." The "Grammar Template Query
System" is an essential component of

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<PAGE> 47

our technology, but if we are unable to receive a patent, our business will
unlikely be materially and adversely affected. Ask Jeeves enters into
confidentiality agreements with its employees and consultants and generally
controls access to and distribution of its proprietary information. We also
enter into non-disclosure agreements with third parties to whom we disclose
confidential information. Despite Ask Jeeves' efforts to protect its proprietary
rights from unauthorized use or disclosure, parties may attempt to disclose,
obtain or use its proprietary information. The steps Ask Jeeves has taken may
not prevent misappropriation of its proprietary information. Third parties may
infringe or misappropriate Ask Jeeves' proprietary rights, which could have a
material adverse effect on Ask Jeeves' business, results of operations and
financial condition. The validity, enforceability and scope of protection of
proprietary rights in Internet-related industries is uncertain and still
evolving.

Furthermore, third parties may assert infringement claims against Ask
Jeeves. Claims relating to infringement of the trademarks and other intellectual
property rights of third parties and any resultant litigation, should it occur,
could subject Ask Jeeves to significant liability for damages and could result
in the invalidation of Ask Jeeves' proprietary rights. In addition, even if Ask
Jeeves prevails, any litigation could be time-consuming and expensive to defend,
and could result in the diversion of management's time and attention, any of
which could materially adversely affect Ask Jeeves' business, results of
operations and financial condition. Any claims from third parties may also
result in limitations on Ask Jeeves ability to use the trademarks and other
intellectual property subject to those claims unless Ask Jeeves enters into
agreements with the third parties responsible for those claims, which may be
unavailable on commercially reasonable terms.

To date, we have copyrighted all of our computer code, Web site design and
the knowledgebases by affixing a standard copyright notice in the appropriate
places. We have not registered any copyrights. We have also applied for
registered trademark status for "Ask Jeeves," "Ask.com," "Ask Jeeves Kids," and
"KidsAsk.com" and our logo and service marks in the United States. We have
applied for registered trademark status of "Ask.com" with the appropriate
offices in Tunisia for international protection. We seek to protect our
copyrights, service marks, trademarks, trade dress and trade secrets through a
combination of laws and contractual restrictions, such as confidentiality
agreements. For example, we attempt to register our trademarks and service marks
in the United States and internationally. However, effective trademark, service
mark, copyright and trade secret protection may not be available in every
country in which our services are made available online. Because we are devoting
significant resources to building our brands, primarily "Ask Jeeves" and
"Ask.com," through media advertising campaigns, if we are not granted registered
status for the trade and service marks for which we have applied, or if we are
unable to defend our intellectual property rights, our business may be
materially and adversely affected.

We currently own a number of Internet domain names including Ask.com,
askjeeves.com and ajkids.com. Domain names generally are regulated by Internet
regulatory bodies. The relationship between regulations governing domain names
and laws protecting trademarks and similar proprietary rights is unclear. We,
therefore, could be unable to prevent third parties from acquiring domain names
that infringe or otherwise decrease the value of our trademarks and other
proprietary rights.

NEW AND EXISTING REGULATION ON THE INTERNET

We are subject to the same federal, state and local laws as other companies
conducting business on the Internet. Today there are relatively few laws
specifically directed towards online services. However, due to the increasing
popularity and use of the Internet and online services, it is possible that laws
and regulations will be adopted with respect to the Internet or online services.
These laws and regulations could cover issues such as online contracts, user
privacy, freedom of expression, pricing, fraud, content and quality of products
and services, taxation, advertising, intellectual property rights and
information security. Applicability to the Internet of existing laws governing
issues such as property ownership, copyrights and other intellectual property
issues, taxation, libel, obscenity and personal privacy is uncertain.

Several states have proposed legislation that would limit the uses of
personal user information gathered online or require online services to
establish privacy policies. The Federal Trade Commission also has recently

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<PAGE> 48

started a proceeding with one online service regarding the manner in which
personal information is collected from users and provided to third parties.
Changes to existing laws or the passage of new laws intended to address these
issues could directly affect the way we do business or could create uncertainty
in the marketplace. This could reduce demand for our services or increase the
cost of doing business as a result of litigation costs or increased service
delivery costs, or could otherwise harm our business. In addition, goods to
users worldwide, foreign jurisdictions may claim that we are required to comply
with their laws. In some jurisdictions, we will be required to collect
value-added taxes on our fees. Our failure to comply with foreign laws could
subject it to penalties ranging from fines to bans on our ability to offer our
services.

EMPLOYEES

As of April 30, 1999, we had approximately 200 employees. We have never had
a work stoppage, and no employees are represented under collective bargaining
agreements. We consider our relations with our employees to be good.

FACILITIES

Our headquarters are currently located in a leased facility in Berkeley,
California, consisting of approximately 13,000 square feet of office space that
is under a three-year lease with two years remaining. Our annual rental expense
under this lease during 1998 was approximately $81,000, which is subject to
annual increases. We have entered into a lease agreement to relocate our
headquarters to a new facility located in Emeryville, California in the third
quarter of 1999. The original term of the lease is sixty-one months, with an
option, exercisable by us, to extend the lease for up to two additional
five-year terms. The new facility will consist of approximately 37,500 square
feet and our annual rental expense under this lease during 1999 is expected to
be approximately $1,050,000. We also have an option to lease up to an additional
36,000 square feet in the same facility. We believe that this facility will be
adequate for our current and foreseeable future needs.

LEGAL PROCEEDINGS

We are not a party to any material legal proceedings.

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<PAGE> 49

MANAGEMENT

EXECUTIVE OFFICERS, DIRECTORS AND KEY EMPLOYEES

The following table sets forth information regarding the executive
officers, directors and key employees of Ask Jeeves as of May 31, 1999:

<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- --------
<S> <C> <C>
Roger A. Strauch(1)...................... 43 Chairman of the Board
Robert W. Wrubel......................... 38 President, Chief Executive Officer and
Director
David C. Warthen......................... 41 Chief Technical Officer
Edward D. Briscoe III.................... 36 Senior Vice President and General
Manager, Consumer Question Answering
Service
Laurence G. Fishkin...................... 45 Senior Vice President, Business
Development
M. Bruce Nakao........................... 55 Chief Financial Officer
Frank A. Vaculin......................... 41 Senior Vice President and General
Manager, Corporate Question Answering
Service
George Lichter........................... 48 President of Ask Jeeves International
Amy Slater............................... 45 General Counsel and Secretary
Christine M. Davis....................... 41 Controller
A. George Battle(1)(2)................... 55 Director
Garrett Gruener(1)....................... 44 Director
Daniel J. Nova(2)........................ 37 Director
Benjamin M. Rosen........................ 65 Director
Geoffrey Y. Yang(1)...................... 40 Director
</TABLE>

- ---------------

(1) Member of the compensation committee.

(2) Member of the audit committee.

Roger A. Strauch has served as Chairman of the Board of Ask Jeeves since
August 1997. Mr. Strauch was Chief Executive Officer of Ask Jeeves from January
1998 to November 1998. Mr. Strauch served as Chief Executive Officer and Chief
Financial Officer of Symmetricom, Inc., a manufacturer of mixed signal
integrated circuits and telecommunications hardware, from June 1998 and July
1998, respectively, through December 1998. Since July 1997, Mr. Strauch has
served as Chairman of the Board of the Roda Group, a venture development firm
based in Berkeley, California. From 1989 to June 1997, Mr. Strauch served as
President and Chief Executive Officer, then Chairman of the Board of TCSI
Corporation, a telecommunications software company.

Robert W. Wrubel has served as Chief Executive Officer and a director of
Ask Jeeves since November 1998 and has served as President since May 1998. From
February 1993 to May 1998, Mr. Wrubel was employed by Knowledge Adventure, Inc.,
an educational software company, in various capacities, including Chief
Operating Officer from February 1997 to May 1998, Vice President, Product
Development from August 1995 to February 1997 and Executive Producer from
February 1993 to July 1995.

David C. Warthen has served as Chief Technical Officer of Ask Jeeves since
August 1997. Mr. Warthen is a founder of Ask Jeeves and served as a director
from June 1996 to February 1999 and as Chief Executive Officer and Chief
Financial Officer from June 1996 to August 1997. In May 1988, Mr. Warthen
founded Desktop Software, a custom software development firm, where he served as
sole proprietor until June 1996. From 1983 to 1988, Mr. Warthen served as
Director of Engineering at Virtual Microsystems, Inc., a software and hardware
company.

Edward D. Briscoe III has served as Senior Vice President and General
Manager, Consumer Question Answering Service of Ask Jeeves since February 1999.
From January 1995 to January 1999, Mr. Briscoe was employed by Iomega
Corporation, a data storage company, in various capacities including President,
Personal

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<PAGE> 50

Storage Division from January 1997 to January 1999 and Vice President, Global
Sales from January 1995 to December 1996. From May 1993 to December 1994, Mr.
Briscoe was Director of Sales and Marketing for the Personal Interactive
Electronics Division of Apple Computer, Inc., a computer manufacturing company.

Laurence G. Fishkin has served as Senior Vice President, Business
Development of Ask Jeeves since January 1999. From January 1998 to September
1998, Mr. Fishkin served as Vice President of Business Development for Relevance
Technologies, Inc., a knowledge management software company. From September 1996
to June 1997, Mr. Fishkin served as Vice President of Business Development and
Acting General Manager for Yahoo! Marketplace, a joint venture between Yahoo!
Inc., an Internet portal company, and Visa International, Inc., a credit
services provider. From June 1992 to February 1994, Mr. Fishkin served as
Director of Business Development and from February 1994 through August 1996, Mr.
Fishkin served as Vice President of Business Development for Information Access
Company, a database publishing company and a division of Ziff-Davis Publishing.

M. Bruce Nakao has served as Chief Financial Officer of Ask Jeeves since
April 1999. From August 1996 to April 1999, Mr. Nakao served as Senior Vice
President and Chief Financial Officer of Puma Technology, Inc., a software
company. From May 1986 to August 1996, Mr. Nakao served as Senior Vice President
and Chief Financial Officer of Adobe Systems Incorporated, a graphic software
company. Mr. Nakao is a member of The Roda Group advisory board.

Frank A. Vaculin has served as Senior Vice President and General Manager,
Corporate Question Answering Service of Ask Jeeves since January 1999. From
August 1996 to January 1999, Mr. Vaculin served as Vice President of North
American Sales for Softbank Services Group, a leading provider of outsource
services to technology companies. From October 1993 to August 1996, Mr. Vaculin
was employed by Borland International, a software company, in various
capacities, including Senior Vice President and General Manager, Desktop and LAN
Tools, Vice President North American Sales, Technical Support and Service, and
Director of Channel Sales.

George Lichter has served as President of Ask Jeeves International since
May 1999. From January 1997 to May 1999, Mr. Lichter served as Senior Vice
President, Business Development of Havas Interactive/Cendant Software. From 1994
to 1997, Mr. Lichter served as Vice President New Business Development of
Knowledge Adventure. From 1993 to 1994, Mr. Lichter was employed as an attorney
at the law firm of Rosenfeld, Meger & Susman.

Amy Slater has served as General Counsel and Secretary for Ask Jeeves since
November 1997. From January 1996 to November 1997, Ms. Slater was in private law
practice with an emphasis on intellectual property law. From December 1993 to
October 1995, Ms. Slater was employed by Oracle Corporation, a relational
database software company. From October 1990 to June 1993, Ms. Slater was of
counsel at the law firm of Townsend & Townsend & Crew L.L.P. Ms. Slater is
married to Mr. Gruener, a director of the Company.

Christine M. Davis has served as Controller of Ask Jeeves since January
1999. From January 1999 to April 1999, Ms. Davis served as Acting Chief
Financial Officer of the Company. From December 1997 to January 1999, Ms. Davis
served as Corporate Controller of TIBCO Software, Inc., a software company. From
April 1987 to December 1997, Ms. Davis served as Corporate Controller, Assistant
Secretary and Treasurer of TCSI Corporation, a telecommunications software
company.

Skip Battle has served as a director of Ask Jeeves since August 1998. Mr.
Battle retired from Andersen Consulting in June 1995. Mr. Battle joined the firm
in 1968, became a partner in 1978 and held a series of management positions in
the firm including Worldwide Managing Partner Market Development and a member of
the firm's Executive Committee, Global Management Council and Partner Income
Committee. Mr. Battle is a member of the Boards of Directors of PeopleSoft,
Inc., Barra Inc. and Fair, Isaac and Company, Incorporated as well as a director
of Masters Select Equity Fund and Masters Select International, registered
investment companies. He is chairman of The Roda Group advisory board.

Garrett Gruener is a founder of the Company and has served as a director
since June 1996 and Secretary from June 1996 to August 1997. Mr. Gruener is a
founding general partner of Alta Partners, a venture capital
49
<PAGE> 51

firm, which was formed in February 1996. Since September 1992, Mr. Gruener has
been a general partner of Burr, Egan, Deleage & Co., a venture capital firm. Mr.
Gruener is married to Ms. Slater, General Counsel and Secretary of Ask Jeeves.

Daniel J. Nova has served as a director of Ask Jeeves since February 1999.
Since August 1996, Mr. Nova has served as a general partner of Highland Capital
Partners, a venture capital firm. From January 1995 to August 1996, he was a
general partner of CMG@Ventures, a venture capital firm. From June 1991 to
January 1995, he was a Senior Associate at Summit Partners, a venture capital
firm. Mr. Nova is a director of Lycos, Inc., an online portal company, and eToys
Inc., a web-based retailer of toys.

Benjamin M. Rosen has served as a director of Ask Jeeves since January
1999. Mr. Rosen is the Acting Chief Executive Officer and a member of the Office
of the Chief Executive of Compaq Computer Corporation, a computer company and a
global supplier of computer systems. Mr. Rosen has served as Chairman of the
Board of Directors of Compaq since 1983. Mr. Rosen is Vice Chairman of the Board
of Trustees of the California Institute of Technology.

Geoffrey Y. Yang has served as a director of Ask Jeeves since February
1999. Since June 1989, Mr. Yang has been a general partner of Institutional
Venture Partners, a venture capital firm. He is a director of Excite, Inc., an
online portal company, and MMC Networks, Inc., a developer of network
processors.

BOARD COMPOSITION

Upon the closing of this offering, our board will be divided into three
classes designated as Class I, Class II and Class III and our directors will be
assigned to each class by the board. At the first annual meeting of stockholders
following the closing of this offering, the term of office of the Class I
directors will expire and Class I directors will be elected for a full term of
three years. At the second annual meeting of stockholders following the closing
of this offering, the term of office of the Class II directors will expire and
Class II directors will be elected for a full term of three years. At the third
annual meeting of stockholders following the closing of this offering, the term
of office of the Class III directors will expire and Class III directors will be
elected for a full term of three years. At each succeeding annual meeting of
stockholders, directors will be elected for a full term of three years to
succeed the directors of the class whose terms expire at such annual meeting.
The Class I directors are Geoffrey Y. Yang and Daniel J. Nova; the Class II
directors are Skip Battle, Roger A. Strauch and Garrett Gruener; and the Class
III directors are Robert W. Wrubel and Benjamin M. Rosen.

BOARD COMMITTEES

The audit committee of the board consists of Skip Battle and Daniel J.
Nova. The audit committee reviews our financial statements and accounting
practices, makes recommendations to the board regarding the selection of
independent auditors and reviews the results, scope, extent and procedures of
the audit and other services provided by our independent auditors. The
compensation committee of the board consists of Roger A. Strauch, Skip Battle
and Garrett Gruener. The compensation committee makes recommendations to the
board concerning salaries and incentive compensation for our officers and
employees and administers our employee benefit plans.

DIRECTOR COMPENSATION

We do not currently pay any cash compensation to our directors for their
service as members of the board. For his services as Chairman of the Board,
Roger A. Strauch received options to purchase an aggregate of 102,892 shares on
August 31, 1998 and an aggregate of 104,078 shares on December 14, 1998, at a
weighted average exercise price of $.20 per share. Skip Battle, one of our
directors, received options to purchase 30,000 shares on August 31, 1998 and
30,000 shares on December 14, 1998, at a weighted average exercise price of $.63
per share. Our directors are eligible to participate in the 1996 Equity
Incentive Plan and the 1999 Equity Incentive Plan.

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<PAGE> 52

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

As noted above, the compensation committee of the board consists of Messrs.
Strauch, Battle and Gruener. Mr. Strauch was Chief Executive Officer of Ask
Jeeves from April 1998 to November 1998. Mr. Gruener was Secretary of Ask Jeeves
from June 1996 to August 1997 and is married to Amy Slater, General Counsel and
Secretary of Ask Jeeves. None of our executive officers serve as members of the
board of directors or compensation committee of any entity that has one or more
executive officers who serve on our board or compensation committee. See
"Certain Transactions" for information regarding transactions with members of
the compensation committee.

EXECUTIVE COMPENSATION

The following table sets forth information concerning compensation earned
in the fiscal year ended December 31, 1998 for our President and Chief Executive
Officer and our three other most highly compensated executive officers, whose
compensation as defined by the Securities and Exchange Commission exceeded
$100,000. These people are referred to as the "named executive officers." The
information in the table includes salaries, bonuses, stock options granted and
other miscellaneous compensation. Ask Jeeves has not granted stock appreciation
rights or restricted stock awards and has no long-term compensation benefits
other than stock options.

SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION COMPENSATION
------------------------------------------- ------------------
NAME AND 1998 OTHER ANNUAL SECURITIES ALL OTHER
PRINCIPAL POSITION YEAR SALARY BONUS(1) COMPENSATION(2) UNDERLYING OPTIONS COMPENSATION(3)
------------------ ---- ------- -------- --------------- ------------------ ---------------
<S> <C> <C> <C> <C> <C> <C>
Roger A. Strauch......... 1998 $ -- $ -- $ -- 205,485 $79,116
Chairman of the Board
and former Chief
Executive Officer
Robert W. Wrubel......... 1998 96,231 9,844 300 1,050,000 --
President and Chief
Executive Officer
David C. Warthen......... 1998 77,590 -- -- 88,209 40,552
Executive Vice
President and Chief
Technical Officer
Daniel H. Miller......... 1998 -- -- -- 205,485 79,116
Former President and
former Vice President
of Sales
</TABLE>

- ---------------
(1) Represents a relocation assistance allowance.

(2) Represents payments received in lieu of health benefits.

(3) Represents the difference between the fair market value and the exercise
prices of options granted during the year consistent with the Common Stock
and Warrant Purchase Agreement among Ask Jeeves, Roger A. Strauch, Daniel H.
Miller, David C. Warthen and The Roda Group Venture Development Company, LLC
for management services. A description of the agreement is contained in
"Certain Transactions."

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<PAGE> 53

OPTION GRANTS IN LAST FISCAL YEAR

The following table sets forth information concerning the grant of stock
options to each of the named executive officers during the fiscal year ended
December 31, 1998.

<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
---------------------------------------------------
% OF TOTAL POTENTIAL REALIZABLE VALUE AT
NUMBER OF OPTIONS ASSUMED ANNUAL RATES OF STOCK
SECURITIES GRANTED TO PRICE APPRECIATION FOR
UNDERLYING EMPLOYEES EXERCISE OPTION TERM(3)
OPTIONS IN FISCAL PRICE EXPIRATION --------------------------------------
NAME GRANTED(1) 1998(2) PER SHARE DATE 0% 5% 10%
---- ---------- ---------- ------------ ---------- ---------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Roger A. Strauch..... 65,028 2.6% $.12 05/29/08 $ 805,047 $ 1,308,363 $ 2,092,601
37,864 1.5 .13 07/30/08 468,378 761,066 1,217,706
37,500 1.5 .73 12/13/08 441,375 708,750 1,161,000
18,932 0.8 .13 12/13/08 234,189 380,533 608,853
47,646 1.9 .18 12/13/08 586,999 952,920 1,527,531
Robert W. Wrubel..... 675,000 26.9 .46 05/25/08 8,127,000 13,122,000 21,262,500
375,000 15.0 .73 10/11/08 4,413,750 7,067,500 11,610,000
David C. Warthen..... 9,633 0.4 .12 02/27/08 119,250 193,806 309,974
28,900 1.2 .12 05/29/08 357,776 581,458 929,986
8,413 0.3 .13 06/29/08 104,069 169,101 270,562
8,413 0.3 .13 07/30/08 104,069 169,101 270,562
8,414 0.3 .13 12/13/08 104,075 169,111 270,578
24,434 1.0 .18 12/13/08 301,027 488,680 783,354
Daniel H. Miller..... 65,028 2.6 .12 05/30/08 805,047 1,308,363 2,092,601
37,864 1.5 .13 07/30/08 468,378 761,066 1,217,706
37,500 1.5 .73 12/13/08 441,375 708,750 1,161,000
18,932 0.8 .13 12/13/08 234,189 380,533 608,853
47,646 1.9 .18 12/13/08 586,999 952,920 1,527,531
</TABLE>

- ---------------
(1) Options granted during the fiscal year ended December 31, 1998 were granted
under either the 1996 Equity Incentive Plan or pursuant to certain
nonstatutory stock option agreements. All of the options granted to Mr.
Strauch and Mr. Miller are fully vested except the options to purchase
37,500 shares. 6,250 shares under each of these options vested in December
1998 and 31,250 shares under each of these options vest in June 1999. Mr.
Wrubel's options vest over four years with 25% vesting on the first
anniversary of the vesting commencement date of such options and the
remainder vesting monthly over the next three years; provided, however, that
in the event Mr. Wrubel's employment is terminated less than six months
before or less than one year after a change of control, all unvested options
held by Mr. Wrubel shall vest and become immediately exercisable. All of Mr.
Warthen's options are fully vested.

(2) Based on granted options to purchase 2,504,979 shares of common stock during
the period from January 1, 1998 to December 31, 1998.

(3) Potential realizable values are computed by multiplying the number of shares
of common stock subject to a given option by the assumed initial public
offering price of $12.50 per share, assuming that the aggregate stock value
derived from that calculation compounds at the annual 0%, 5% or 10% rate
shown in the table for the entire ten-year term of the option and
subtracting from that result the aggregate option exercise price. The 5% and
10% assumed annual rates of stock appreciation are mandated by the rules of
the SEC and do not reflect our estimate or projection of future stock price
growth.

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<PAGE> 54

AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION
VALUES

The following table sets forth the number of shares acquired and the value
realized upon the exercise of stock options during the fiscal year ended
December 31, 1998 and the number of shares of common stock subject to
exercisable and unexercisable stock options held as of December 31, 1998 by each
of the named executive officers. Also reported are values of unexercised
in-the-money options, which represent the positive spread between the respective
exercise prices of outstanding stock options and the assumed initial public
offering price of $12.50 per share.

<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
NUMBER OF OPTIONS IN-THE-MONEY OPTIONS
SHARES AT DECEMBER 31, 1998 AT DECEMBER 31, 1998
ACQUIRED ON VALUE --------------------------- ---------------------------
NAME EXERCISE REALIZED(1) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Roger A. Strauch.......... 102,892 $1,273,648 66,578 37,500 $ 821,054 $ 441,465
Robert W. Wrubel.......... -- -- -- 1,050,000 -- 12,540,705
David C. Warthen.......... 25,002 312,435 184,457 -- 2,286,823 --
Daniel H. Miller.......... 102,892 1,273,648 66,578 37,500 821,054 441,465
</TABLE>

- ---------------
(1) Based on the assumed initial public offering price per share of $12.50,
minus the per share exercise price, multiplied by the number of shares
issued upon exercise of the option.

EMPLOYEE BENEFIT PLANS

1996 EQUITY INCENTIVE PLAN

Our 1996 Equity Incentive Plan was adopted by the board and approved by the
stockholders in December 1996. The 1996 Incentive Plan was amended in January
1999 and February 1999. There is currently an aggregate of 5,502,852 shares of
common stock authorized for issuance under the 1996 Incentive Plan. Options
currently outstanding under the 1996 Incentive Plan will continue in full force
and effect under the terms of the 1996 Incentive Plan until they are exercised
or terminated in accordance with their terms.

As of April 30, 1999, we had granted options under the 1996 Incentive Plan
to purchase an aggregate of approximately 5,379,335 shares of common stock, of
which options to purchase approximately 301,960 shares had been exercised,
options to purchase approximately 22,500 shares had been cancelled and options
to purchase approximately 5,054,875 shares at exercise prices ranging from
$.0036 to $9.50 per share remained outstanding. We will not make future grants
under the 1996 Incentive Plan.

The 1996 Incentive Plan provides for the grant of incentive stock options
under the Internal Revenue Code, as amended to employees and nonstatutory stock
options to employees, non-employee directors and consultants. The 1996 Incentive
Plan also provides for the grant of restricted stock awards and stock bonuses
although no such awards were granted prior to the termination of the plan. The
1996 Incentive Plan is administered by the board, or a committee appointed by
the board which determines recipients and types of awards to be granted,
including the exercise price, number of shares subject to the award and the
exercisability thereof. Currently, the 1996 Incentive Plan is being administered
by the compensation committee of the board.

The terms of stock options granted under the 1996 Incentive Plan may not
exceed 10 years. The exercise price of options granted under the 1996 Incentive
Plan is determined by the board or a committee appointed by the board provided
that the exercise price of an incentive stock option cannot be less than 100% of
the fair market value of the common stock on the date of the option grant and
the exercise price of a nonstatutory stock option cannot be less than 85% of the
fair market value of the common stock on the date of the option grant. Options
granted under the 1996 Incentive Plan vest at the rate specified in the
applicable option agreement. No options may be transferred by the optionholder
other than by will or the laws of descent or distribution; provided that, an
optionholder whose employment or other service relationship with us or any
affiliate terminates for any reason other than by death or permanent and total
disability, may exercise vested options in the three-month period following such
cessation, unless such options terminate or expire sooner by

53
<PAGE> 55

their terms, or in such longer or shorter period specified in the option
agreement. Vested options may be exercised for up to 12 months after an
optionholder's employment or other service relationship with us or any affiliate
ceases due to death or disability, unless such options terminate or expire
sooner by their terms.

Prior to the termination of the 1996 Incentive Plan, shares subject to
stock options that have expired or otherwise terminated without having been
exercised in full become available again for the grant of awards under the 1996
Incentive Plan.

No incentive stock option may be granted to any person who, at the time of
the grant, owns stock possessing more than 10% of the total combined voting
power of Ask Jeeves or any affiliate of Ask Jeeves, unless the option exercise
price is at least 110% of the fair market value of the stock subject to the
option on the date of grant, and the term of the option does not exceed five
years from the date of grant. The aggregate fair market value, determined at the
time of grant, of the shares of common stock with respect to which incentive
stock options are exercisable for the first time by an optionholder during any
calendar year under all stock option plans of Ask Jeeves and its affiliates may
not exceed $100,000.

The option agreements may provide that we may exercise a right of first
refusal on any proposed transfer of shares exercised. Substantially all of the
option agreements provide that if a change of control of Ask Jeeves occurs prior
to the first anniversary of the vesting commencement date of the option
agreement, then the vesting which would have occurred by such anniversary shall
occur. After the first anniversary of the date of grant, these option agreements
provide that the vesting of each option shall accelerate by six months.

Upon a change of control of Ask Jeeves, each outstanding option shall be
assumed or an equivalent option substituted by the successor corporation or, if
the successor corporation does not assume or substitute for outstanding options,
the vesting provisions of all such options shall accelerate.

1999 EQUITY INCENTIVE PLAN

In April 1999, the board adopted the 1999 Equity Incentive Plan. In May
1999, the board amended and the stockholders approved the 1999 Incentive Plan.
There is currently an aggregate of 2,125,000 shares of common stock authorized
for issuance under the 1999 Incentive Plan; provided, however, that each year on
the date of the annual stockholders meeting, beginning on the date of the annual
meeting in 2000, the share reserve under the 1999 Incentive Plan shall be
increased by the least of the following: (1) 2,250,000 shares, (2) 5% of shares
outstanding or (3) a smaller number of shares as determined by the board.

The 1999 Incentive Plan provides for the grant of incentive stock options,
as defined under the Internal Revenue Code, to employees and nonstatutory stock
options, restricted stock purchase awards and stock bonuses to employees,
non-employee directors, consultants and advisors of Ask Jeeves and its
affiliates. The 1999 Incentive Plan is administered by the board, or a committee
appointed by the board, which determines recipients and types of awards to be
granted, including the exercise price, number of shares subject to the award and
the exercisability thereof. Currently, the 1999 Incentive Plan is administered
by the compensation committee of the board.

The terms of options granted under the 1999 Incentive Plan may not exceed
10 years. The board, or a committee appointed by the board, determines the
exercise price of options granted under the 1999 Incentive Plan. However, the
exercise price for an incentive stock option cannot be less than 100% of the
fair market value of the common stock on the date of the option grant, and the
exercise price for a nonstatutory stock option cannot be less than 85% of the
fair market value of the common stock on the date of the option grant. Options
granted under the 1999 Incentive Plan vest at the rate specified in the option
agreement. Generally, the optionholder may not transfer a stock option other
than by will or the laws of descent or distribution unless the optionholder
holds a nonstatutory stock option that provides for transfer in the stock option
agreement. However, an optionholder may designate a beneficiary who may exercise
the option following the optionholder's death. An optionholder whose employment
or other service relationship with Ask Jeeves or any affiliate ceases for any
reason may exercise vested options for the term provided in the option
agreement.

unless the option exercise price is at least 110% of the fair market value of
the stock subject to the option on the date of grant and the term of the option
does not exceed five years from the date of grant. In addition, the aggregate
fair market value, determined at the time of grant of the shares of common stock
with respect to which incentive stock options are exercisable for the first time
by an optionholder during any calendar year under all stock plans of Ask Jeeves
and its affiliates, may not exceed $100,000.

Subject to Section 162(m) of the Internal Revenue Code which denies a
deduction to publicly held corporations for certain compensation paid to
specified employees in a taxable year to the extent that the compensation
exceeds $1,000,000, no person may be granted options under the 1999 Incentive
Plan covering more than 500,000 shares of common stock in any calendar year.

Shares subject to stock awards that have expired or otherwise terminated
without having been exercised in full again become available for the grant of
awards under the 1999 Incentive Plan.

Restricted stock purchase awards granted under the 1999 Incentive Plan may
be granted pursuant to a repurchase option in favor of Ask Jeeves in accordance
with a vesting schedule determined by the board or a committee appointed by the
board. The price of a restricted stock purchase award under the 1999 Incentive
Plan cannot be less than 85% of the fair market value of the stock subject to
the award on the date of grant. Stock bonuses may be awarded in consideration of
past services without a purchase payment. Unless otherwise specified, rights
under a stock bonus or restricted stock bonus agreement generally may not be
transferred other than by will or the laws of descent and distribution during
such period as the stock awarded pursuant to such an agreement remains subject
to the agreement.

If there is any sale, lease or other disposition of all or substantially
all of Ask Jeeves' assets, any merger, reverse merger or any consolidation in
which Ask Jeeves is not the surviving corporation, then all outstanding awards
under the 1999 Incentive Plan either will be assumed or substituted for by any
surviving entity. If the surviving entity determines not to assume or substitute
for such awards, the vesting provisions of such stock awards held by persons
whose continuous service with Ask Jeeves has not terminated will be accelerated
and the awards terminated if not exercised prior to such transaction.

As of April 30, 1999, no options to purchase shares of common stock, stock
bonuses or restricted stock grants have been granted under the 1999 Incentive
Plan. The 1999 Incentive Plan will terminate on April 15, 2009 unless sooner
terminated by the board, or a committee appointed by the board.

OPTIONS GRANTED OUTSIDE THE PLANS

From time to time through March 1999, Ask Jeeves granted options to
purchase common stock of Ask Jeeves to employees and consultants outside of the
1996 Incentive Plan and the 1999 Incentive Plan. Such options have exercise
prices which were below 85% of the fair market value of the common stock of Ask
Jeeves on the date of grant. Since inception, Ask Jeeves issued options to
purchase an aggregate of 1,050,518 shares of common stock at a weighted average
exercise price of $.13 per share outside of the 1996 Incentive Plan and the 1999
Incentive Plan. Of these options, options to purchase 823,561 shares have been
exercised.

EMPLOYEE STOCK PURCHASE PLAN

In April 1999, the board adopted the Employee Stock Purchase Plan covering
an aggregate of 125,000 shares of common stock. In May 1999, the board amended
and the stockholders approved the Purchase Plan to increase the number of shares
reserved under the Purchase Plan to 400,000 shares of common stock and to
provide that each year on the date of the annual stockholders meeting, beginning
in 2000, the share reserve under the Purchase Plan shall be increased by the
least of the following (1) 300,000 shares, (2) 0.5% of shares outstanding or (3)
a smaller number of shares as determined by the board. The Purchase Plan will
become effective on the effective date of the initial public offering. The
Purchase Plan is intended to qualify as an "employee stock purchase plan" within
the meaning of Section 423 of the Internal Revenue Code. Under the Purchase
Plan, the board may authorize participation by eligible employees, including
officers, in periodic

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<PAGE> 57

offerings following the adoption of the Purchase Plan. The offering period for
any offering will be no longer than 27 months.

The Purchase Plan provides a means by which employees of Ask Jeeves and
designated affiliates may purchase common stock of Ask Jeeves through payroll
deductions. The Purchase Plan is implemented by offerings of rights to eligible
employees. Under the Purchase Plan, Ask Jeeves may specify offerings with a
duration of not more than 27 months and may specify shorter purchase periods
within each offering. The first offering will begin on the effective date of the
initial public offering and will end on July 31, 2001. Purchases will occur on
January 31, 2000, July 31, 2000 and each subsequent January 31 and July 31
thereafter. Unless otherwise determined by the board, common stock is purchased
for accounts of employees participating in the Purchase Plan at a price per
share equal to the lower of (1) 85% of the fair market value of a share of
common stock on the date of commencement of participation in the offering or (2)
85% of the fair market value of a share of common stock on the date of purchase.
Generally, all regular employees, including executive officers, who work at
least 20 hours per week and are customarily employed by Ask Jeeves or by an
affiliate of Ask Jeeves for at least five months per calendar year may
participate in the Purchase Plan and may authorize payroll deductions of up to
15% of their base compensation for the purchase of stock under the Purchase
Plan.

Eligible employees may be granted rights only if the rights together with
any other rights granted under employee stock purchase plans do not permit such
employee's rights to purchase stock of Ask Jeeves to accrue at a rate that
exceeds $25,000 of fair market value of such stock for each calendar year in
which such rights are outstanding. No employee shall be eligible for the grant
of any rights under the Purchase Plan if immediately after such rights are
granted, such employee has voting power of more than 5% of the outstanding
capital stock of Ask Jeeves.

As of April 30, 1999, no shares of common stock had been purchased under
the Purchase Plan.

In the event of certain changes of control, the board has discretion to
provide that each right to purchase common stock will be assumed or an
equivalent right substituted by the successor corporation, or the board may
shorten the offering period and provide for all sums collected by payroll
deductions to be applied to purchase stock immediately prior to the change in
control. The Purchase Plan will terminate at the direction of the board or when
all of the shares reserved for issuance have been purchased.

401(k) PLAN

Effective January 1, 1999, the board adopted a tax-qualified employee
savings and retirement plan covering all employees. Pursuant to the 401(k) Plan,
employees may elect to reduce their current compensation by up to the lesser of
25%, decreased by amounts contributed in the form of a matching contribution, if
any, of eligible compensation, or $10,000, the statutorily prescribed annual
limit in 1999, and have the amount of reduction contributed to the 401(k) Plan.
The trustee under the 401(k) Plan, at the direction of each participant, invests
the assets of the 401(k) Plan in any of eight investment options. The 401(k)
Plan is intended to qualify under Section 401(a) of the Internal Revenue Code so
that contributions by employees to the 401(k) Plan, and income earned on plan
contributions, are not taxable to employees until withdrawn, and so that we can
deduct the contributions by employees when made. We may make matching or
additional contributions to the 401(k) Plan, in amounts to be determined
annually by the board. We do not expect to make matching or additional
contributions to the 401(k) Plan in 1999.

COMPENSATION ARRANGEMENTS

Mr. Wrubel's employment letter of May 22, 1998 with Ask Jeeves provides for
an initial annual base salary of $180,000. Pursuant to the offer letter, Mr.
Wrubel received a loan of $75,000 for 90 days with an annual interest rate of
7.5%. The loan was repaid in full in February 1999. In May 1998, Mr. Wrubel was
granted an option to purchase 675,000 shares of common stock at an exercise
price of $.46 per share. Based on an assumed initial public offering price of
$12.50 per share and assuming the full vesting of such option, this option will
have an aggregate net value of $8,127,000. Pursuant to the offer letter, upon
his promotion to Chief Executive Officer in November 1998, Mr. Wrubel received
an additional option to purchase 375,000 shares of common stock at an exercise
price of $.73 per share. Based on an assumed initial public offering price of
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<PAGE> 58

$12.50 per share and assuming the full vesting of such option, this option will
have an aggregate net value of $4,413,750. In May 1999, the board granted Mr.
Wrubel an option to purchase an additional 200,000 shares at an exercise price
of $10.00 per share. Based on the assumed initial public offering price of
$12.50 per share and assuming the full vesting of such option, this option will
have an aggregate net value of $500,000. The options vest over four years;
provided however, that in the event Mr. Wrubel's employment is terminated less
than six months before or less than one year after a change of control, all
unvested options held by Mr. Wrubel shall vest and become immediately
exercisable. In addition, Ask Jeeves paid $9,844 in relocation expenses for Mr.
Wrubel. On June 1, 1999, Mr. Wrubel's offer letter was revised to provide that,
in the event Mr. Wrubel's employment is terminated for any reason other than
cause, he will receive six months base salary and the equivalent of six months
expected bonus, with a total of expected bonus and salary cost not to exceed
$200,000.

Mr. Briscoe's employment offer letter of January 18, 1999 with Ask Jeeves
provides for an initial annual base salary of $170,000, approximately $156,000
of which he has elected to defer until February 2000, a bonus of $30,000 payable
on January 20, 2000 and a potential performance-based bonus of $100,000 payable
on January 20, 2000. Mr. Briscoe was granted an option to purchase 400,000
shares of common stock at an exercise price of $.73 per share. Based on the
assumed initial public offering price of $12.50 per share and assuming the full
vesting of such option, this option will have an aggregate net value of
$4,708,000. The option vests over a period of four years with 100,000 shares
vesting in January 2000 and 8,333 shares vesting at the end of each month
thereafter. The offer letter also provided Mr. Briscoe with the right to
purchase 231,032 shares of Series B Preferred Stock at a price of $4.33 per
share in our March 1999 financing. These shares all automatically convert into
common stock on a one-for-one basis upon the completion of this offering. Based
on the assumed initial public offering price of $12.50 per share, these shares
have an aggregate net value of $1,887,531. Mr. Briscoe also received a
relocation allowance of up to $150,000. Mr. Briscoe's offer letter was revised
on June 1, 1999 to increase his annual base salary to $175,000 and to provide
that in the event Mr. Briscoe's employment is terminated without cause he will
receive six months base salary and the equivalent of six months expected bonus,
with the total payment not to exceed $150,000. In addition, if Mr. Briscoe's
employment is terminated due to a change of control, in addition to any
accelerated vesting contained in his option agreement, six months of vesting
under the option shall become immediately exercisable.

Mr. Nakao's employment offer letter of April 16, 1999 with Ask Jeeves
provides for an initial annual base salary of $175,000. It also provides that,
in the event Mr. Nakao's employment is terminated for any reason other than
cause, he will receive six months salary. Mr. Nakao was also granted an option
to purchase 250,000 shares of common stock at an exercise price of $9.50 per
share. Based on the assumed initial public offering price of $12.50 per share
and assuming the full vesting of such option, this option will have an aggregate
net value of $750,000. The option vests over a period of four years, with 62,500
shares vesting in April 2000 and 5,208 shares vesting at the end of each month
thereafter; provided, however, that in the event Mr. Nakao's employment is
terminated without cause, (i) prior to April 19, 2000, 100,000 of the shares
will become immediately exercisable or (ii) after April 19, 2000, 37,500 of the
shares will become immediately exercisable. However, if Mr. Nakao resigns and a
transition to a successor Chief Financial Officer approved by the board has been
accomplished, Mr. Nakao will receive the same vesting acceleration as if he was
terminated without cause.

Mr. Fishkin's employment offer letter of January 11, 1999 with Ask Jeeves
provides for an initial annual base salary of $130,000 and an initial bonus of
$50,000. It also provides that, in the event Mr. Fishkin's employment is
terminated due to a change of control, he will receive six months base salary.
Mr. Fishkin was also granted an option to purchase 225,000 shares of common
stock at an exercise price of $.73 per share. Based on the assumed initial
public offering price of $12.50 per share and assuming the full vesting of such
option, this option will have an aggregate net value of $2,648,250. The option
vests over four years, with 56,250 shares vesting in January 2000 and 4,687
shares vesting at the end of each month thereafter; provided, however, that in
the event of a change of control, in addition to any acceleration of vesting
contained in his option agreement, twelve months of vesting under the options
shall become immediately exercisable.

Mr. Vaculin's employment offer letter of January 5, 1999 with Ask Jeeves
provides for an initial annual base salary of $175,000 and quarterly
performance-based bonuses based upon achievement of recognized
57
<PAGE> 59

revenues. It also provides that in the event Mr. Vaculin's employment is
terminated for any reason other than cause, he will receive six months base
salary and the equivalent of six months expected bonus, with a total of expected
bonus and salary not to exceed $150,000. Mr. Vaculin was also granted an option
to purchase 300,000 shares of common stock at an exercise price of $.73 per
share. Based on the assumed initial public offering price of $12.50 per share
and assuming the full vesting of such option, this option will have an aggregate
net value of $3,519,000. The option vests over four years, with 75,000 shares
vesting in January 2000 and 6,250 shares vesting at the end of each month
thereafter; provided, however, in the event Mr. Vaculin's employment is
terminated due to a change of control of Ask Jeeves, in addition to any
acceleration of vesting contained in his option agreement, six months of vesting
under the option shall become immediately exercisable.

Mr. Lichter's employment offer letter of May 19, 1999 with Ask Jeeves
provides for an initial annual base salary of $150,000 and an initial annual
bonus of $50,000 paid on the first anniversary of his start date. Mr. Lichter
was also granted an option to purchase 100,000 shares of common stock at an
exercise price of $10.00 per share. Based on the assumed initial public offering
price of $12.50 per share and assuming the full vesting of such option, this
option will have an aggregate net value of $250,000. The option vests over four
years, with 25,000 shares vesting in May 2000 and 2,083 shares vesting at the
end of each month thereafter; provided, however, in the event of a change of
control, in addition to any vested options, six months of vesting under the
option shall become immediately exercisable. The offer letter also provides
that, in the event Mr. Lichter's employment is terminated without cause, he will
receive six months base salary and, in addition to any vested options, six
months of vesting under the options shall become immediately exercisable.

As described under "Certain Transactions," Mr. Warthen's employment
agreement contained in the Common Stock and Warrant to Purchase Common Stock
Purchase Agreement dated August 20, 1997 provides for an initial annual base
salary of $80,000 and the grant of immediately exercisable nonstatutory stock
options at an exercise price equal to 25% of the fair market value of the common
stock on the date of grant. Pursuant to this provision, we granted Mr. Warthen
options to purchase an aggregate of 184,458 shares of common stock at a weighted
average exercise price of $.10 per share. This provision has expired and the
Company will not grant any further options under this provision. To date, Mr.
Warthen has not exercised such options. Based on the assumed initial public
offering price of $12.50 per share, these options will have an aggregate net
value of $2,287,279. If Mr. Warthen voluntarily terminates his employment with
us prior to August 20, 1999, we have the right to repurchase a portion of the
total number of our shares held by him.

INDEMNIFICATION OF DIRECTORS AND EXECUTIVE OFFICERS AND LIMITATION OF LIABILITY

Section 145 of the Delaware General Corporation Law authorizes a court to
award, or a corporation's board of directors to grant indemnity to directors and
officers in terms sufficiently broad to permit such indemnification under
certain circumstances for liabilities, including reimbursement for expenses
incurred, arising under the Securities Act.

As permitted by Delaware Law, our Amended and Restated Certificate of
Incorporation, which will become effective upon the closing of this offering,
includes a provision that eliminates the personal liability of its directors for
monetary damages for breach of fiduciary duty as a director, except for
liability:

- for any breach of the director's duty of loyalty to us or our
stockholders;

- for acts or omissions not in good faith or that involve intentional
misconduct or a knowing violation of law;

- under Section 174 of the Delaware Law regarding unlawful dividends and
stock purchases; or

- for any transaction from which the director derived an improper personal
benefit.

As permitted by Delaware Law, our Amended and Restated Certificate of
Incorporation and/or our Bylaws, which will become effective upon the closing of
this offering, provide that:

- we are required to indemnify our directors and officers to the fullest
extent permitted by Delaware Law, so long as such person acted in good
faith and in a manner the person reasonably believed to be in or

58
<PAGE> 60

not opposed to the best interests of Ask Jeeves, and with respect to any
criminal action or proceeding, had no reasonable cause to believe the
person's conduct was unlawful.

- we are permitted to indemnify our other employees to the extent that we
indemnify our officers and directors, unless otherwise required by law,
our Amended and Restated Certificate of Incorporation, our Bylaws or
agreements;

- we are required to advance expenses, as incurred, to our directors and
officers in connection with a legal proceeding to the fullest extent
permitted by Delaware Law, subject to certain very limited exceptions;
and

- the rights conferred in our Bylaws are not exclusive.

Prior to the closing of this offering, we intend to enter into Indemnity
Agreements with each of our current directors and officers to give such
directors and officers additional contractual assurances regarding the scope of
the indemnification set forth in our Amended and Restated Certificate of
Incorporation and our Bylaws and to provide additional procedural protections.
At present, there is no pending litigation or proceeding involving any of our
directors, officers or employees regarding which indemnification is sought, nor
are we aware of any threatened litigation that may result in claims for
indemnification.

We expect to obtain directors' and officers' liability insurance prior to
the offering.

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<PAGE> 61

CERTAIN TRANSACTIONS

COMMON STOCK FINANCINGS

We issued 1,083,498 shares of common stock at a purchase price of $.23 per
share and warrants to purchase 541,749 shares of common stock with an exercise
price of $.23 to each of Roger A. Strauch, our Chairman of the Board, and Daniel
H. Miller, a 5% stockholder and our former officer and director, pursuant to the
Common Stock and Warrant to Purchase Common Stock Purchase Agreement dated
August 20, 1997 among Ask Jeeves, Roger A. Strauch, Daniel H. Miller, The Roda
Group Venture Development Company, LLC ("The Roda Group") and David C. Warthen
(the "Purchase Agreement"). Mr. Strauch and Mr. Miller are managing members of
The Roda Group. As a condition of the Purchase Agreement, The Roda Group agreed
to lease us 1,700 square feet of office space at 918 Parker Street, Berkeley,
California, 94710 through December 31, 1998. We paid a total of $4,157 in lease
payments to The Roda Group during such term. As a further condition of the
Purchase Agreement, Mr. Strauch and Mr. Miller agreed to provide us with
management services through December 31, 1998 for which they each received
nonstatutory stock options at an exercise price equal to 25% of the fair market
value of the common stock on the date of grant. Pursuant to such provision, Mr.
Strauch and Mr. Miller each received options to purchase an aggregate of 169,470
shares of common stock at a weighted average exercise price of $.14 per share.
This provision has expired and we will not grant any further options under it.
As a further condition of the Purchase Agreement, Mr. Warthen agreed to act as
our Executive Vice President and Chief Technical Officer, for which he received
an annual salary of $80,000 and nonstatutory stock options at an exercise price
equal to 25% of the fair market value of the common stock on the date of grant.
Pursuant to this provision, we granted Mr. Warthen options to purchase an
aggregate of 184,458 shares of common stock at a weighted average price of $.10
per share. This provision has expired and we will not grant any further options
under it. If Mr. Warthen voluntarily terminates his employment with us prior to
August 20, 1999, we have the right to repurchase a portion of the total number
of our shares held by him at the original issuance price.

In June 1998, we sold an aggregate of 2,148,805 shares of common stock at a
purchase price of $.53 per share. The following executive officers, directors,
holders of more than 5% of our securities and members of such persons' immediate
families purchased shares of common stock:

<TABLE>
<CAPTION>
AGGREGATE
SHARES OF PURCHASE VALUE OF
PURCHASER COMMON STOCK PRICE SHARES(1)
--------- ------------ --------- -------------
<S> <C> <C> <C>
EXECUTIVE OFFICERS AND DIRECTORS
Roger A. Strauch...................... 94,661 $ 50,170 $ 1,183,263
Daniel H. Miller...................... 94,661 50,170 1,183,263
M. Bruce Nakao........................ 47,330 25,085 591,625
Skip Battle........................... 47,330 25,085 591,625
Garrett Gruener....................... 94,661 50,170 1,183,263
Benjamin M. Rosen..................... 141,991 75,255 1,774,888

5% STOCKHOLDERS
Leavitt Family Trust.................. 236,653 $125,426 $ 2,958,163
</TABLE>

- ---------------

(1) Based on the assumed initial public offering price per share of $12.50.

See the notes to the table on beneficial ownership in "Principal
Stockholders" for information relating to the beneficial ownership of such
shares.

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<PAGE> 62

In September 1998, we sold an aggregate of 1,855,415 shares of common stock
at a purchase price of $.73 per share. The following executive officers,
directors, holders of more than 5% of our securities and members of such
persons' immediate families purchased shares of Common Stock:

<TABLE>
<CAPTION>
SHARES OF AGGREGATE
COMMON PURCHASE VALUE OF
PURCHASER STOCK PRICE SHARES(1)
--------- ------------ --------- -------------
<S> <C> <C> <C>
EXECUTIVE OFFICERS AND DIRECTORS
Roger A. Strauch...................... 137,438 $100,330 $ 1,717,975
Daniel H. Miller...................... 137,438 100,330 1,717,975
Garrett Gruener....................... 137,438 100,330 1,717,975
Benjamin M. Rosen..................... 584,112 426,402 7,301,400

5% STOCKHOLDERS
Leavitt Family Trust.................. 103,078 $ 75,247 $ 1,288,475
</TABLE>

- ---------------

(1) Based on the assumed initial public offering per share of $12.50.

See the notes to the table on beneficial ownership in "Principal
Stockholders" for information relating to the beneficial ownership of such
shares.

PREFERRED STOCK FINANCINGS

In November 1998 and January 1999, we sold an aggregate of 3,709,884 shares
of Series A preferred stock at a purchase price of $2.06 per share. Upon the
closing of this offering, all outstanding shares of Series A preferred stock
will automatically convert into shares of common stock on a one-for-one basis.
The following executive officers, directors, holders of more than 5% of our
securities and members of such persons' immediate families purchased shares of
Series A preferred stock.

<TABLE>
<CAPTION>
SHARES OF AGGREGATE
SERIES A PURCHASE VALUE OF
PURCHASER PREFERRED STOCK PRICE SHARES(1)
--------- --------------- ---------- --------------
<S> <C> <C> <C>
EXECUTIVE OFFICERS AND DIRECTORS
Roger A. Strauch.................... 106,125 $ 218,618 $ 1,326,563
M. Bruce Nakao...................... 4,847 9,985 60,588
Amy Slater.......................... 4,847 9,985 60,588
Daniel H. Miller.................... 106,125 218,618 1,326,563
Garrett Gruener..................... 92,595 190,746 1,157,438
Benjamin M. Rosen................... 519,544 1,070,261 6,494,300

5% STOCKHOLDERS
CPQ Holdings, Inc. ................. 2,480,765 $5,110,376 $ 31,009,562
Leavitt Family Trust................ 42,248 87,031 528,100
</TABLE>

- ---------------

(1) Based on the assumed initial public offering per share of $12.50.

In February and March 1999, we sold an aggregate of 5,775,806 shares of
Series B preferred stock at a purchase price of $4.33 per share. Based on the
number of shares outstanding and the number of shares reserved for issuance
pursuant to options and warrants immediately following such sale, the value of
the Company was approximately $115 million immediately following such sale. Upon
the closing of this offering, all outstanding shares of Series B preferred stock
will automatically convert into shares of common stock on a

61
<PAGE> 63

one-for-one basis. The following executive officers, directors, holders of more
than 5% of our securities and members of such persons' immediate families
purchased shares of Series B preferred stock.

<TABLE>
<CAPTION>
SHARES OF AGGREGATE
SERIES B PURCHASE VALUE OF
PURCHASER PREFERRED STOCK PRICE SHARES(1)
--------- --------------- ----------- -----------------
<S> <C> <C> <C>
EXECUTIVE OFFICERS AND DIRECTORS
Edward D. Briscoe III............... 231,032 $ 1,000,368 $ 2,887,900
M. Bruce Nakao...................... 8,645 37,433 108,062
Amy Slater.......................... 8,520 36,892 106,500
Skip Battle......................... 13,458 58,273 168,225
Garrett Gruener..................... 57,758 250,092 7,219,750
Benjamin M. Rosen................... 172,776 748,120 2,159,700

5% STOCKHOLDERS
CPQ Holdings, Inc................... 344,091 $ 1,489,914 $ 4,301,138
Entities affiliated with Highland
Capital........................... 2,310,322 10,003,694 28,879,025
Entities affiliated with
Institutional Venture Partners.... 1,386,193 $ 6,002,216 $ 17,327,412
Leavitt Family Trust................ 128,136 554,829 1,601,700
Roda Group Investment Fund I, LLC... 856,732 3,709,650 10,709,150
</TABLE>

- ---------------

(1) Based on the assumed initial public offering price per share of $12.50.

See the notes to the table on beneficial ownership in "Principal
Stockholders" for information relating to the beneficial ownership of such
shares.

VOTING AGREEMENT

In connection with our Series B preferred stock financing, we entered into
the Amended and Restated Voting Agreement dated February 24, 1999 with the
holders of the Series A preferred stock, the holders of the Series B preferred
stock and certain of our common stockholders to provide for the future voting of
such holders' shares. Under the Voting Agreement, the preferred stockholders
agreed to vote their shares in connection with any class or series vote pursuant
to our Amended and Restated Certificate of Incorporation, Bylaws or the law in
the same proportion as the overall vote of the eligible stock of Ask Jeeves. In
addition, these holders agreed to elect one individual nominated by entities
affiliated with Highland Capital to our board, so long as entities affiliated
with Highland Capital hold at least 5% of our outstanding common stock. The
Voting Agreement terminates on the closing date of this offering.

INVESTOR RIGHTS AGREEMENT

In connection with our Series B preferred stock financing, we entered into
the Amended and Restated Investor Rights Agreement dated February 24, 1999 with
the holders of Series A and Series B preferred stock. The Investor Rights
Agreement provided these stockholders rights relating to the registration of
their stock with the Securities and Exchange Commission. These rights have been
waived as to this offering by the holders of the Series A and Series B preferred
stock. In addition, the Investors Rights Agreement granted these investors a
right of first refusal to participate in future issuances of equity securities
by Ask Jeeves. This offering is not covered by this right of first refusal and
it terminates on the closing date of this offering. The other registration
rights will survive this offering and will terminate no later than three years
after the closing date of this offering.

CO-SALE AGREEMENT

In connection with our Series B preferred stock financing, we entered into
a Co-Sale Rights Agreement on February 24, 1999 with each holder of more than
1,000,000 shares of our capital stock. The Co-Sale Agreement provides that each
holder has a right to participate on a pro rata basis in the sale of any shares
of

62
<PAGE> 64

our capital stock by any other party to the Co-Sale Agreement unless such
proposed sale is a sale between parties, a sale or series of sales that amounts
to less than 15% of the shares of capital stock held by a party or a transfer
for estate planning purposes. The Co-Sale Agreement terminates on the closing
date of this offering.

CONSULTING AGREEMENT

The Consulting Agreement with The Roda Group dated December 14, 1998
provides for cash payments and the grant of nonstatutory stock options to
purchase a total of 37,500 shares of common stock with an exercise price of $.73
per share to each of Roger A. Strauch and Daniel H. Miller, one-sixth of the
options vest each month. Roger A. Strauch, our Chairman of the Board, and Daniel
H. Miller, our former director and President, are managing members of The Roda
Group.

OPTIONS TO EXECUTIVE OFFICERS

In March 1999, the Board of Directors granted David Warthen, our Chief
Technical Officer, an option to purchase 100,000 shares of common stock at an
exercise price of $3.50 per share. In May 1999, the board granted Robert Wrubel,
our President and Chief Executive Officer, an option to purchase 200,000 shares
of common stock at an exercise price of $10.00 per share. Both options vest over
four years. The exercise prices of these options were equal to the fair market
value of our common stock on the date of grant, as determined by the board.

DIRECTED SHARES TO EXECUTIVE OFFICERS

At our request, the underwriters have reserved up to 300,000 shares of
common stock to be issued by us and offered hereby for sale, at the initial
public offering price, to directors, officers, employees, business associates
and persons related to us, including M. Bruce Nakao, Chief Financial Officer,
and George Lichter, President of Ask Jeeves International, who are each
purchasing 10,000 shares.

PERSONAL GUARANTEES BY EXECUTIVE OFFICERS

During 1998, Roger A. Strauch, the Chairman of the Board, and Daniel H.
Miller, our former director and President, personally guaranteed obligations by
us to make payments in the aggregate of approximately $77,000 in connection with
certain equipment leases.

LOANS TO EXECUTIVE OFFICERS

In June 1999, we loaned Robert Wrubel, our President and Chief Executive
Officer, Frank Vaculin, our Senior Vice President and General Manager, Corporate
Question Answering Service, and George Lichter, our President of Ask Jeeves
International, $200,000, $100,000 and $100,000, respectively. Such loans are due
within one year, are full recourse and are secured by pledges of shares of
common stock of Ask Jeeves. Interest at the rate of 7.5% shall accrue on such
loans until paid.

ASSUMPTION OF LEASE OBLIGATIONS

In January 1999, The Roda Group assigned its leases for office space at 918
Parker Street, Berkeley, California 94710, Suites A-11, A-12 and A-14 to us, and
we assumed all of The Roda Group's obligations under these leases. Our rental
payments under these leases total approximately $519,000 over the remaining
terms of the leases. Roger A. Strauch, our Chairman of the Board, and Daniel H.
Miller, our former director and President, are managing members of The Roda
Group.

We believe that the foregoing transactions were on terms no less favorable
to us than could be obtained from unaffiliated third parties.

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<PAGE> 65

PRINCIPAL STOCKHOLDERS

The following table sets forth information with respect to beneficial
ownership of our common stock as of April 30, 1999 and as adjusted to reflect
the sale of common stock in this offering for:

- each person or entity known by us to beneficially own more than 5% of our
outstanding common stock;

- each of our directors;

- each of the named executive officers listed in the Summary Compensation
Table; and

- all of our directors and executive officers as a group.

<TABLE>
<CAPTION>
PERCENTAGE OF SHARES
NUMBER OF BENEFICIALLY OWNED
SHARES -------------------------
BENEFICIALLY BEFORE AFTER
NAME AND ADDRESS OF BENEFICIAL OWNER OWNED(1) OFFERING(1) OFFERING(2)
------------------------------------ ------------ ----------- -----------
<S> <C> <C> <C>
CPQ Holdings, Inc.(3).............................. 2,824,856 13.23% 11.60%
529 Bryant Street
Palo Alto, CA 94301
Entities affiliated with Highland Capital Partners,
Inc.(4).......................................... 2,310,322 10.82 9.49
Two International Place
Boston, MA 02110
Entities affiliated with Institutional Venture
Partners(5)...................................... 1,386,193 6.49 5.69
3000 Sand Hill Road
Building Two, Suite 290
Menlo Park, CA 94025
Roda Group Investment Fund I, L.L.C.(6)............ 856,732 4.01 3.51
918 Parker Street
Berkeley, CA 94710
Roger A. Strauch(7)................................ 3,078,340 14.40 12.63
Skip Battle(8)..................................... 140,125 * *
Garrett Gruener(9)................................. 2,820,881 13.21 11.59
Daniel J. Nova(4).................................. 2,310,322 10.82 9.49
Benjamin M. Rosen.................................. 1,413,802 6.62 5.81
Geoffrey Y. Yang(5)................................ 1,386,193 6.49 5.69
Robert W. Wrubel(10)............................... 189,424 * *
Daniel H. Miller(11)............................... 2,954,456 13.83 12.13
David C. Warthen(12)............................... 1,034,457 4.80 4.21
All executive officers and directors as a group
(14 persons)(13)................................. 13,934,551 63.94 56.21
</TABLE>

- ---------------
* Represents beneficial ownership of less than 1%.

(1) Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission and includes voting or investment power
with respect to the securities. Common stock subject to options or warrants
that are currently exercisable or exercisable within 60 days of April 30,
1999 are deemed to be outstanding and to be beneficially owned by the
person holding such options or warrants for the purpose of computing the
percentage ownership of such person but are not treated as outstanding for
the purpose of computing the percentage ownership of any other person.
Unless otherwise indicated, the address for each of the individuals listed
in the table is care of Ask Jeeves, 918 Parker Street, Berkeley, CA 94710.
Unless otherwise indicated by footnote, the persons named in the table have
sole voting and sole investment power with respect to all shares of common
stock shown as beneficially owned by them, subject to applicable community
property laws. Percentage of beneficial ownership is based on 21,349,424
shares of common stock outstanding as of April 30, 1999, after giving
effect to the conversion of the preferred stock and 24,349,424 shares of
common stock issued and outstanding after completion of this offering.

(2) Assumes no exercise of the underwriters' over-allotment option.

(3) Benjamin M. Rosen is Chairman of the Board of Compaq Computer Corporation,
of which CPQ Holdings, Inc. is a wholly-owned subsidiary.
64
<PAGE> 66

(4) Highland Capital Partners, Inc. manages Highland Capital Partners IV
Limited Partnership ("HCP IV") and Highland Entrepreneurs' Fund IV Limited
Partnership ("HEF IV", and together with HCP IV, the "Highland Entities").
Includes 2,217,910 shares of common stock owned by HCP IV and 92,413 shares
of common stock owned by HEF IV. Daniel J. Nova, a director of Ask Jeeves,
is a general partner of the Highland Entities and can be deemed to be a
beneficial owner of the shares held by the Highland Entities as he has
shared voting and investment power in connection with his role as general
partner.

(5) Includes 1,365,400 shares of common stock owned by Institutional Venture
Partners VIII, L.P. ("IVP") and 20,793 shares of common stock owned by IVM
Investment Fund VIII, LLC ("IVM"). Geoffrey Y. Yang, a director of Ask
Jeeves, is a Managing Director of Institutional Venture Management VIII,
LLC, the manager of IVP and IVM, and disclaims beneficial ownership of
these shares except to the extent of his individual interests in IVP and
IVM, but exercises shared voting and investment power with respect to these
shares.

(6) Roger A. Strauch and Daniel H. Miller are managing members, and Garrett
Gruener is a beneficiary of, The Roda Group Investment Fund I, L.L.C.

(7) Includes 2,036,921 shares held by the Strauch Kulhanjian Family Trust UAD
December 3, 1992. Includes 856,732 shares held by The Roda Group Investment
Fund I, L.L.C., of which Mr. Strauch is a managing member, and as to which
Mr. Strauch disclaims beneficial ownership except to the extent of his pro
rata interest in such shares. Also includes 1,500 shares held by Benno S.M.
Kling Educational Trust, Roger A. Strauch, Trustee, 1,500 shares held by
Samuel J.M. Kling Educational Trust, Roger A. Strauch, Trustee, 1,500
shares held by Jesse Kling Educational Trust, Roger A. Strauch, Trustee,
1,500 shares held by Rebecca A. Miller Educational Trust, Roger A. Strauch,
Trustee, 1,500 shares held by Sarah Miller Educational Trust, Roger A.
Strauch, Trustee, 1,500 shares held by Julia F. Dan Educational Trust,
Roger A. Strauch, Trustee, 1,500 shares held by Kalden Gonsar Educational
Trust, Roger A. Strauch, Trustee, 1,500 shares held by Fletcher Kennamer
Educational Trust, Roger A. Strauch, Trustee, 1,500 shares held by Aidan
Clements Educational Trust, Roger A. Strauch, Trustee, 15,000 shares held
by Cooper Ogden Miller Educational Trust, Roger A. Strauch, Trustee, 45,813
shares held by Roger Strauch as Custodian Under CUTMA for Alexan K.
Strauch, 45,812 shares held by Roger Strauch as Custodian Under CUTMA for
Paul K. Strauch and 45,812 shares held by Roger Strauch as Custodian Under
CUTMA for Nairi S. Strauch, as to which Mr. Strauch disclaims beneficial
ownership. Includes 18,750 shares issuable pursuant to options exercisable
within 60 days.

(8) Includes 96,431 shares held by Mr. Battle, 6,847 shares held by A. George
Battle Custodian Emily Taylor Battle UTMA IL, 4,847 shares held by A.
George Battle TTEE UA Daniel Kurt Webster Battle Trust and 2,000 shares
held by Daniel Kurt Webster Battle, as to which Mr. Battle disclaims
beneficial ownership. Includes 30,000 shares issuable pursuant to options
exercisable within 60 days.

(9) Includes 1,885,383 shares held by Mr. Gruener, 78,766 shares held by Amy
Slater, General Counsel and Secretary of Ask Jeeves, and 856,732 shares
held by The Roda Group Investment Fund I, L.L.C. Amy Slater is the spouse
of Mr. Gruener. Mr. Gruener, a director of Ask Jeeves is a beneficiary of
The Roda Group Investments Fund I, L.L.C and disclaims beneficial ownership
of the shares held by such entity.

(10) Includes 182,812 shares issuable pursuant to options exercisable within 60
days.

(11) Includes 2,063,974 shares held by Mr. Miller. Includes 856,732 shares held
by The Roda Group Investment Fund I, L.L.C., of which he is a managing
member, as to which Mr. Miller disclaims beneficial ownership except to the
extent of his pro rata interest in such shares. Also includes 15,000 shares
held by Cooper Ogden Miller Educational Trust, Roger A. Strauch, Trustee,
as to which Mr. Miller disclaims beneficial ownership. Includes 18,750
shares issuable pursuant to options exercisable within 60 days.

(12) Includes 184,457 shares issuable pursuant to options exercisable within 60
days.

(13) Represents 13,493,532 shares and options to purchase 441,019 shares that
are currently exercisable or exercisable within 60 days.

65
<PAGE> 67

DESCRIPTION OF CAPITAL STOCK

GENERAL

Immediately following the closing of this offering, our authorized capital
stock will consist of 150,000,000 shares of common stock, $.001 par value per
share, and 5,000,000 shares of preferred stock, $.001 par value per share. Upon
completion of this offering, based on the number of shares, options and warrants
outstanding as of April 30, 1999, there will be 24,349,424 outstanding shares of
common stock, outstanding options to purchase 5,281,833 shares of common stock
and outstanding warrants to purchase 24,000 shares of common stock.

COMMON STOCK

Subject to preferences that may apply to shares of preferred stock
outstanding at the time, the holders of outstanding shares of common stock are
entitled to receive dividends out of assets legally available at such time and
in such amounts as the board of directors may from time to time determine. Each
stockholder is entitled to vote each share of common stock on all matters
submitted to a vote of stockholders. Cumulative voting for the election of
directors is not provided for in our Amended and Restated Certificate of
Incorporation, which means that the holders of a majority of the shares voted
can elect all of the directors then standing for election. The common stock is
not entitled to preemptive rights and is not subject to conversion or
redemption. Upon the occurrence of a liquidation, dissolution or winding-up, the
holders of shares of common stock would be entitled to share ratably in the
distribution of all our assets remaining available for distribution after
satisfaction of all of our liabilities and the payment of the liquidation
preference of any outstanding preferred stock. Each outstanding share of common
stock is, and all shares of common stock to be outstanding upon completion of
this offering will be, fully paid and nonassessable.

PREFERRED STOCK

The board of directors has the authority, within the limitations and
restrictions stated in the Amended and Restated Certificate of Incorporation, to
authorize the issuance of shares of preferred stock, in one or more classes or
series, and to fix the rights, preferences, privileges and restrictions thereof,
including dividend rights, conversion rights, voting rights, terms of
redemption, liquidation preferences and the number of shares constituting any
series or the designation of such series. The issuance of preferred stock could
have the effect of decreasing the market price of the common stock and could
adversely affect the voting and other rights of the holders of common stock.

WARRANTS

As of April 30, 1999, we had outstanding warrants to purchase 21,500 shares
of common stock at an exercise price of $.53 per share and 2,500 shares of
common stock at an exercise price of $4.33 per share.

ANTI-TAKEOVER PROVISIONS

DELAWARE LAW

Upon the closing of this offering, we will be subject to the provisions of
Section 203 of the Delaware General Corporation Law (the "Anti-Takeover Law")
regulating corporate takeovers. The Anti-Takeover Law prevents Delaware
corporations, including those that are listed on the Nasdaq National Market,
from engaging, under certain circumstances, in a "business combination," which
includes a merger or sale of more than 10% of the corporation's assets, with any
"interested stockholder," that is, a stockholder who owns 15% or more of the
corporation's outstanding voting stock, as well as affiliates and associates of
any such person, for three years following the date that such stockholder became
an "interested stockholder" unless:

-- the transaction that resulted in the stockholder becoming an
"interested stockholder" was approved by the board of directors prior
to the date the "interested stockholder" attained such status;

66
<PAGE> 68

-- upon consummation of the transaction that resulted in the stockholder
becoming an "interested stockholder," the "interested stockholder"
owned at least 85% of the voting stock of the corporation outstanding
at the time the transaction commenced, excluding those shares owned by
(i) persons who are directors as well as officers and (ii) employee
stock plans in which employee participants do not have the right to
determine confidentially whether shares held subject to the plan will
be tendered in a tender or exchange offer; or

-- on or subsequent to such date, the "business combination" is approved
by the board of directors and authorized at an annual or special
meeting of stockholders by the affirmative vote of at least two-thirds
of the outstanding voting stock that is not owned by the "interested
stockholder."

A Delaware corporation may "opt out" of the Anti-Takeover Law with an
express provision in its original certificate of incorporation or an express
provision in its certificate of incorporation or bylaws resulting from a
stockholders' amendment approved by at least a majority of the outstanding
voting shares. We have not "opted out" of the provisions of the Anti-Takeover
Law. This statute could prohibit or delay mergers or other takeover or
change-of-control attempts with respect to Ask Jeeves and, accordingly, may
discourage attempts to acquire us.

CHARTER AND BYLAW PROVISIONS

Our Amended and Restated Certificate of Incorporation and Bylaws include a
number of provisions that may have the effect of deterring or impeding hostile
takeovers or changes of control or management. These provisions include:

-- our board of directors is classified into three classes of directors
as nearly equal in size as possible with staggered three year terms;

-- the authority of our board to issue up to 5,000,000 shares of
preferred stock and to determine the price and the rights preferences
and privileges of these shares, without stockholder approval;

-- all stockholder action must be effected at a duly called meeting of
stockholders and not by written consent;

-- special meetings of the stockholders may be called only by the
Chairman of the Board, the Chief Executive Officer or the board;

-- the elimination of cumulative voting;

Such provisions may have the effect of delaying or preventing a change of
control.

Our Amended and Restated Certificate of Incorporation and Bylaws provide
that we will indemnify officers and directors against losses that they may incur
in investigations and legal proceedings resulting from their services to Ask
Jeeves, which may include services in connection with takeover defense measures.
Such provisions may have the effect of preventing changes in our management.

AGREEMENTS

In addition, our option agreements under the 1996 Equity Incentive Plan
provide that if a change of control of Ask Jeeves occurs prior to the first
anniversary of the vesting commencement date of an option, then the vesting
which would have occurred by such anniversary shall occur. After the first
anniversary of the date of grant, these option agreements provide that the
vesting of each option shall accelerate by six months upon a change of control.
As of April 30, 1999 there were 4,814,004 unvested shares of common stock
reserved pursuant to options granted under this plan. Furthermore, offer letters
with our executive officers provide for the payment of severance and
acceleration of options upon the termination of these executive officers upon a
change of control of Ask Jeeves. These provisions in our stock option agreements
and offer letters could have the effect of discouraging potential takeover
attempts.

67
<PAGE> 69

REGISTRATION RIGHTS

We entered into the Amended and Restated Investor Rights Agreement with the
purchasers of our Series A and Series B preferred stock. Under this agreement,
these purchasers are entitled to rights relating to the registration of their
shares with the Securities and Exchange Commission. These rights have been
waived as to this offering by the holders of preferred stock. The registration
rights will survive this offering and terminate no later than three years after
the closing date of this offering.

TRANSFER AGENT AND REGISTRAR

The Transfer Agent and Registrar for our common stock is Boston EquiServe,
N.A.

LISTING

We have applied for quotation of our common stock on the Nasdaq National
Market under the trading symbol "ASKJ."

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<PAGE> 70

SHARES ELIGIBLE FOR FUTURE SALE

Prior to this offering, there has been no market for our common stock, and
there can be no assurance that a significant public market for our common stock
will develop or be sustained after this offering. Future sales of substantial
amounts of common stock, including shares issued upon exercise of outstanding
options and warrants, in the public market after this offering could adversely
affect market prices prevailing from time to time and could impair our ability
to raise capital through the sale of our equity securities. Sales of substantial
amounts of our common stock in the public market could adversely affect the
prevailing market price and our ability to raise equity capital in the future.

Upon completion of this offering, based on the number of shares outstanding
on April 30, 1999, we will have 24,349,424 outstanding shares of common stock,
24,799,424 shares if the underwriters exercise their over-allotment option in
full, assuming no exercise of outstanding warrants and options. Of these shares,
3,000,000 shares, plus an additional 450,000 shares if the underwriters exercise
their over-allotment option in full, of common stock sold in this offering will
be freely tradable without restriction or further registration under the
Securities Act unless purchased by our affiliates.

Of the remaining shares, a total of approximately 21,106,168 shares held by
our directors, executive officers and our existing stockholders are subject to
"lock-up" agreements generally providing that, these stockholders will not (1)
offer, pledge, sell, contract to sell, sell any option or contract to purchase,
purchase any option or contract to sell, grant any option, right or warrant to
purchase, lend, file a registration statement, or otherwise transfer or dispose
of, directly or indirectly, any shares of common stock or any securities
convertible into or exercisable or exchangeable for common stock or (2) enter
into any swap or other arrangement that transfers to another, in whole or in
part, any of the economic consequences of ownership of the common stock, whether
any of these transactions described in (1) or (2) are to be settled by delivery
of common stock or such other securities, in cash or otherwise, for a period of
180 days following the date of the final prospectus for this offering without
the prior written consent of Morgan Stanley & Co. Incorporated. The restrictions
described in this paragraph do not apply to:

-- the sale of shares to the underwriters;

-- the issuance by us of shares of common stock upon the exercise of an
option or a warrant or the conversion of a security outstanding on the
date of this prospectus of which the underwriters have been advised in
writing;

-- transactions by any person other than us relating to shares of common
stock or other securities acquired in open market transactions after
the completion of the offering of the shares; or

-- transfers by gift or distributions by a partnership to its partners,
so long as, in any such instance, such transferee executes a lock-up
agreement with terms identical to those described in this paragraph.

In general, under Rule 144 as currently in effect, beginning 90 days after
the date of this prospectus, a person or persons whose shares are aggregated,
who has beneficially owned restricted shares for at least one year, including
the holding period of any prior owner except an affiliate, would be entitled to
sell within any three-month period a number of shares that does not exceed the
greater of (1) 1% of the number of shares of common stock then outstanding,
which will equal approximately 243,494 shares immediately after this offering or
(2) the average weekly trading volume of the common stock during the four
calendar weeks preceding the filing of a Form 144 with respect to such sale.
Sales under Rule 144 also are subject to certain manner of sale provisions and
notice requirements and to the availability of current public information about
us. Under Rule 144(k), a person who is not deemed to have been an affiliate of
Ask Jeeves at any time during the three months preceding a sale, and who has
beneficially owned the shares proposed to be sold for at least two years,
including the holding period of any prior owner except an affiliate, is entitled
to sell such shares without complying with the manner of sale, public
information, volume limitation or notice provisions of Rule 144.

Rule 701 permits resales of shares in reliance upon Rule 144 but without
compliance with certain restrictions, including the holding period requirement,
of Rule 144. Any employee, officer or director of or

69
<PAGE> 71

consultant to Ask Jeeves who purchased his or her shares pursuant to a written
compensatory plan or contract may be entitled to rely on the resale provisions
of Rule 701. Rule 701 permits affiliates to sell their Rule 701 shares under
Rule 144 without complying with the holding period requirements of Rule 144.
Rule 701 further provides that non-affiliates may sell such shares in reliance
on Rule 144 without having to comply with the holding period, public
information, volume limitation or notice provisions of Rule 144. All holders of
Rule 701 shares are required to wait until 90 days after the date of this
prospectus before selling such shares.

Following the closing of this offering, we intend to file a registration
statement on Form S-8 under the Securities Act covering shares of common stock
subject to (1) outstanding options under the 1996 Incentive Plan, 1999 Incentive
Plan and nonstatutory stock option agreements which are outside of either of
these plans and (2) rights outstanding under the Purchase Plan. Based on the
number of shares subject to outstanding options as of April 30, 1999 and
currently reserved for issuance under all such plans and agreements, such
registration statement would cover approximately 5,200,892 shares. Such
registration statement will automatically become effective upon filing.
Accordingly, subject to the exercise of such options, shares registered under
such registration statement will be available for sale in the open market
immediately after the 180-day lock-up period expires.

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<PAGE> 72

UNDERWRITERS

Under the terms and subject to the conditions contained in the underwriting
agreement dated the date of this prospectus, the underwriters named below, for
whom Morgan Stanley & Co. Incorporated, BancBoston Robertson Stephens Inc. and
Hambrecht & Quist LLC are acting as representatives, have severally agreed to
purchase, and we have agreed to sell to them, severally, the respective number
of shares of common stock set forth opposite the names of the underwriters
below:

<TABLE>
<CAPTION>
NUMBER OF
NAME SHARES
---- ---------
<S> <C>
Morgan Stanley & Co. Incorporated...........................
BancBoston Robertson Stephens Inc. .........................
Hambrecht & Quist LLC.......................................
--------

Total............................................. 3,000,000
========
</TABLE>

The underwriters are offering the shares subject to their acceptance of the
shares from us and subject to prior sale. The underwriting agreement provides
that the obligations of the several underwriters to pay for and accept delivery
of the shares of common stock offered hereby are subject to the approval of
certain legal matters by their counsel and to certain other conditions. The
underwriters are obligated to take and pay for all of the shares of common stock
offered by this prospectus, other than those covered by the over-allotment
option described below, if any such shares are taken. Discover Brokerage Direct,
Inc., an affiliate of Morgan Stanley & Co. Incorporated, is acting as a selected
dealer in connection with the offering and will be the sole distributor of
shares of common stock over the Internet to its eligible account holders.

The underwriters initially propose to offer part of the shares of common
stock directly to the public at the initial public offering price set forth on
the cover page hereof and part to certain dealers at a price that represents a
concession not in excess of $ a share under the public offering price.
Any underwriter may allow, and such dealers may reallow, a concession not in
excess of $ a share to other underwriters or to certain other dealers.
After the initial offering of the shares of common stock, the offering price and
other selling terms may from time to time be varied by the representatives of
the underwriters.

The following table summarizes the per share and total underwriting
discounts and commissions we will pay to the underwriters.

<TABLE>
<CAPTION>
WITHOUT WITH
OVER-ALLOTMENT OVER-ALLOTMENT
-------------- --------------
<S> <C> <C>
Per Share................................................
Total....................................................
</TABLE>

Ask Jeeves estimates that the total expenses of the offering, excluding
underwriting discounts and commissions, will be approximately $1.2 million.

We have granted to the underwriters an option, exercisable for 30 days from
the date of this prospectus, to purchase up to an aggregate of 450,000
additional shares of common stock at the initial public offering price set forth
on the cover page hereof, less underwriting discounts and commissions. The
underwriters may exercise this option solely for the purpose of covering
over-allotments, if any, made in connection with this offering of common stock.
To the extent this option is exercised, each underwriter will become obligated,
subject to certain conditions, to purchase approximately the same percentage of
additional shares of common stock as the number set forth next to such
underwriter's name in the preceding table bears to the total number of shares of
common stock set forth next to the names of all underwriters in the preceding
table.

At our request, the underwriters have reserved up to 300,000 shares of
common stock to be issued by us and offered hereby for sale, at the initial
public offering price, to directors, officers, employees, business associates
and persons related to us. The number of shares of common stock available for
sale to the general

71
<PAGE> 73

public will be reduced to the extent these individuals purchase such reserved
shares. Any reserved shares that are not so purchased will be offered by the
underwriters to the general public on the same basis as the other shares offered
by this prospectus. Pursuant to the regulations of the National Association of
Securities Dealers, Inc., certain purchasers of the reserved shares may have to
agree not to sell, transfer, assign or hypothecate their shares for a period of
90 days after the date of this prospectus.

The underwriters have informed us that they do not intend sales to
discretionary accounts to exceed five percent of the total number of shares of
common stock offered by them.

Each of Ask Jeeves and the holders of approximately 21,106,168 shares has
agreed that, without the prior written consent of Morgan Stanley & Co.
Incorporated on behalf of the underwriters, it will not, during the period
ending 180 days after the date of this prospectus (1) offer, pledge, sell,
contract to sell, sell any option or contract to purchase, purchase any option
or contract to sell, grant any option, right or warrant to purchase, lend or
otherwise transfer or dispose of directly or indirectly, any shares of common
stock or any securities convertible into or exercisable or exchangeable for
common stock or (2) enter into any swap or other arrangement that transfers to
another, in whole or in part, any of the economic consequences of ownership of
the common stock, whether any of these transactions are to be settled by
delivery of common stock or such other securities, in cash or otherwise. The
restrictions described in this paragraph do not apply to:

-- the sale of shares to the underwriters;

-- transactions by any person other than us relating to shares of common
stock or other securities acquired in open market transactions after
the completion of the offering of the shares; or

In order to facilitate the offering of the common stock, the underwriters
may engage in transactions that stabilize, maintain or otherwise affect the
price of the common stock. Specifically, the underwriters may over-allot in
connection with the offering, creating a short position in the common stock for
their own account. In addition, to cover over-allotments or to stabilize the
price of the common stock, the underwriters may bid for, and purchase, shares of
common stock in the open market. Finally, the underwriting syndicate may reclaim
selling concessions allowed to an underwriter or a dealer for distributing the
common stock in the offering, if the syndicate repurchases previously
distributed common stock in transactions to cover syndicate short positions or
in stabilization transactions. Any of these activities may stabilize or maintain
the market price of the common stock above independent market levels. The
underwriters are not required to engage in these activities and may end any of
these activities at any time.

Ask Jeeves and the underwriters have agreed to indemnify each other against
certain liabilities, including liabilities under the Securities Act.

PRICING OF THE OFFERING

Prior to this offering, there has been no public market for the common
stock. The initial public offering price will be determined by negotiations
between us and the representatives of the underwriters. Among the factors to be
considered in determining the initial public offering price will be our future
prospects and our industry in general, sales, earnings and certain other
financial and operating information of Ask Jeeves in recent periods, and the
price-earnings ratios, price-sales ratios, market prices of securities and
certain financial and operating information of companies engaged in activities
similar to those of Ask Jeeves. The estimated initial public offering price
range set forth on the cover page of this preliminary prospectus is subject to
change as a result of market conditions and other factors.

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<PAGE> 74

LEGAL MATTERS

The validity of the issuance of the shares of common stock offered hereby
and certain other matters will be passed upon for us by Cooley Godward LLP, Palo
Alto, California. An investment partnership of Cooley Godward attorneys
beneficially own an aggregate of 27,598 shares of our common stock. Legal
matters relating to this offering will be passed upon for the underwriters by
Wilson Sonsini Goodrich & Rosati, Professional Corporation, Palo Alto,
California. Wilson Sonsini Goodrich & Rosati attorneys and an entity affiliated
with Wilson Sonsini Goodrich & Rosati beneficially own an aggregate of 273,773
shares of our common stock.

EXPERTS

Ernst & Young LLP, independent auditors, have audited our financial
statements at December 31, 1997 and 1998, for the period from June 13, 1996
(inception) through December 31, 1996, and for each of the years in the two-year
period ended December 31, 1998 as set forth in their report. We have included
our financial statements in the prospectus and elsewhere in the registration
statement in reliance on Ernst & Young LLP's report, given upon the authority of
such firm as experts in accounting and auditing.

WHERE YOU CAN FIND MORE INFORMATION

We have filed with the Securities and Exchange Commission a registration
statement on Form S-1 with respect to the shares of common stock offered by this
prospectus. This prospectus, which constitutes a part of the registration
statement, does not contain all of the information set forth in the registration
statement or the exhibits and schedules which are part of the registration
statement. For further information with respect to us and our common stock, see
the registration statement and the exhibits thereto. Statements contained in
this prospectus regarding the contents of any contract or any other document to
which reference is made are not necessarily complete, and, in each instance
where a copy of such contract or other document has been filed as an exhibit to
the registration statement, reference is made to the copy so filed, each such
statement being qualified in all respects by such reference. Any document we
file may be read and copied at the Public Reference Room of the Commission at
Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549. The public may
obtain information on the operation of the Public Reference Room by calling the
Commission at 1-800-SEC-0330. Our filings with the Commission are also available
to the public from the Commission's Web site (http://www.sec.gov).

Upon completion of this offering, we will become subject to the information
and periodic reporting requirements of the Securities Exchange Act and,
accordingly, will file periodic reports, proxy statements and other information
with the Commission. Such periodic reports, proxy statements and other
information will be available for inspection and copying at the Commission's
public reference rooms, and the Web site of the Commission referred to above.

Our principal executive offices are located at 918 Parker Street, Berkeley,
California 94710 and our telephone number is (510) 649-8685. Our fiscal year
ends on December 31. We maintain a worldwide web site at http://www.ask.com. The
reference to our worldwide web address does not constitute incorporation by
reference of the information contained at this site.

73
<PAGE> 75

ASK JEEVES, INC.

INDEX TO FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Report of Ernst & Young, LLP Independent Auditors........... F-2
Balance Sheets.............................................. F-3
Statements of Operations.................................... F-4
Statements of Stockholders' Equity (Deficit)................ F-5
Statements of Cash Flows.................................... F-6
Notes to Financial Statements............................... F-7
</TABLE>

F-1
<PAGE> 76

REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS

The Board of Directors and Stockholders
Ask Jeeves, Inc.

We have audited the accompanying balance sheets of Ask Jeeves, Inc. as of
December 31, 1997 and 1998, and the related statements of operations,
stockholders' equity (deficit), and cash flows for the period from June 13, 1996
(inception) through December 31, 1996 and for each of the two years ended
December 31, 1998. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Ask Jeeves, Inc. at December
31, 1997 and 1998, and the results of its operations and its cash flows for the
period from June 13, 1996 (inception) through December 31, 1996 and for each of
the two years ended December 31, 1998 in conformity with generally accepted
accounting principles.

Walnut Creek, California
March 10, 1999, except for Note 7,

as to which the date is June 30, 1999

/s/ ERNST & YOUNG LLP

F-2
<PAGE> 77

ASK JEEVES, INC.

BALANCE SHEETS

<TABLE>
<CAPTION>
PRO FORMA
STOCKHOLDERS'
DECEMBER 31, EQUITY AT
------------------------- MARCH 31, MARCH 31,
1997 1998 1999 1999
---------- ----------- ----------- -------------
(UNAUDITED)
<S> <C> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents................................ $ 521,247 $ 5,587,883 $23,125,357
Short-term investments................................... -- -- 2,018,984
Restricted cash.......................................... -- 45,000 545,000
Accounts receivable, net of allowance for doubtful
accounts of none at December 31, 1997 and $85,000 at
December 31, 1998 and March 31, 1999................... 20,031 236,258 1,056,491
Prepaid expenses and other current assets................ -- 103,545 87,618
---------- ----------- -----------
Total current assets.............................. 541,278 5,972,686 26,833,450
---------- ----------- -----------
Property and equipment, net................................ 66,981 835,486 1,941,337
Investments................................................ -- -- 3,150,000
---------- ----------- -----------
Total assets...................................... $ 608,259 $ 6,808,172 $31,924,787
========== =========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable......................................... $ -- $ 605,283 $ 1,299,012
Accrued compensation and related expenses................ 33,665 253,062 626,769
Accrued marketing expenses............................... -- -- 1,134,000
Other accrued liabilities................................ 18,602 160,000 343,804
Deferred revenue......................................... 13,000 149,842 776,083
Current portion of capital lease obligations............. -- 28,220 30,864
---------- ----------- -----------
Total current liabilities......................... 65,267 1,196,407 4,210,532
Capital lease obligations, less current portion............ -- 45,945 33,606
Commitments
Stockholders' equity:
Convertible preferred stock, no par value; 10,000,000
shares authorized at March 31, 1999 (5,000,000 pro
forma); issuable in series:
Series A convertible preferred stock, no par value;
3,750,000 shares designated at March 31, 1999 (none
pro forma), 2,970,655 and 3,709,884 shares issued and
outstanding at December 31, 1998 and March 31, 1999,
respectively (none pro forma); aggregate liquidation
preference of $7,653,337 at March 31, 1999 (none pro
forma)............................................... -- 6,088,222 7,581,708 --
Series B convertible preferred stock, no par value;
6,250,000 shares designated at March 31, 1999 (none
pro forma); 5,775,806 shares issued and outstanding
at March 31, 1999 (none pro forma); aggregate
liquidation preference of $25,000,000 at March 31,
1999 (none pro forma)................................ -- -- 24,961,680 --
Common stock, no par value; 40,000,000 shares authorized
(150,000,000 pro forma); 5,912,519, 11,358,077 and
11,583,733 shares issued and outstanding at December
31, 1997 and 1998 and March 31, 1999, respectively,
(21,069,423 pro forma)................................. 1,098,566 4,771,781 6,876,194 39,419,582
Deferred stock compensation.............................. -- (476,984) (2,052,574) (2,052,574)
Accumulated deficit...................................... (555,574) (4,817,199) (9,686,359) (9,686,359)
---------- ----------- ----------- -----------
Total stockholders' equity........................ 542,992 5,565,820 27,680,649 $27,680,649
---------- ----------- ----------- ===========
Total liabilities and stockholders' equity........ $ 608,259 $ 6,808,172 $31,924,787
========== =========== ===========
</TABLE>

See accompanying notes.
F-3
<PAGE> 78

ASK JEEVES, INC.

STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
PERIOD FROM THREE MONTHS ENDED
JUNE 13, 1996 YEAR ENDED DECEMBER 31, MARCH 31,
(INCEPTION) THROUGH ------------------------ ------------------------
DECEMBER 31, 1996 1997 1998 1998 1999
------------------- ---------- ----------- ---------- -----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Revenues:
Consumer........................ $ -- $ -- $ 577,159 $ 14,766 $ 1,059,068
Corporate....................... -- -- 15,500 -- 72,500
---------- ---------- ----------- ---------- -----------
Total revenues.......... -- -- 592,659 14,766 1,131,568
Cost of revenues:
Consumer........................ -- -- 602,716 46,371 699,131
Corporate....................... -- -- 455,978 21,299 822,581
---------- ---------- ----------- ---------- -----------
Total cost of
revenues.............. -- -- 1,058,694 67,670 1,521,712
---------- ---------- ----------- ---------- -----------
Gross profit (loss)............... -- -- (466,035) (52,904) (390,144)
Operating expenses:
Product development............. 107,797 319,824 1,104,193 127,772 742,166
Sales and marketing............. -- 17,509 1,613,846 80,872 2,669,165
General and administrative...... -- 114,651 1,100,921 77,605 881,830
Amortization of deferred stock
compensation................. -- -- 29,010 -- 317,048
---------- ---------- ----------- ---------- -----------
Total operating
expenses.............. 107,797 451,984 3,847,970 286,249 4,610,209
---------- ---------- ----------- ---------- -----------
Operating loss.................... (107,797) (451,984) (4,314,005) (339,153) (5,000,353)
Interest income................... -- 4,207 52,380 3,798 131,193
---------- ---------- ----------- ---------- -----------
Net loss.......................... $ (107,797) $ (447,777) $(4,261,625) $ (335,355) $(4,869,160)
========== ========== =========== ========== ===========
Basic and diluted net loss per
share........................... $ (.08) $ (.13) $ (.51) $ (.06) $ (.43)
========== ========== =========== ========== ===========
Weighted average shares
outstanding used in computing
basic and diluted net loss per
share........................... 1,295,342 3,319,187 8,413,568 5,912,519 11,388,164
========== ========== =========== ========== ===========
Pro forma basic and diluted net
loss per share.................. $ (.48) $ (.29)
=========== ===========
Weighted average shares
outstanding used in computing
pro forma basic and diluted net
loss per common share........... 8,828,646 16,730,099
=========== ===========
</TABLE>

See accompanying notes.
F-4
<PAGE> 79

ASK JEEVES, INC.

STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)
<TABLE>
<CAPTION>
SERIES A CONVERTIBLE SERIES B CONVERTIBLE
PREFERRED STOCK PREFERRED STOCK COMMON STOCK
---------------------- ----------------------- -----------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
--------- ---------- --------- ----------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Issuance of common stock to founders for
assets of Cameo Technology, Inc. and
contributed services at inception, June 13,
1996......................................... -- $ -- -- $ -- 2,400,000 $ 53,333
Contribution of capital by founders.......... -- -- -- -- -- 48,245
Net loss and comprehensive loss.............. -- -- -- -- -- --
--------- ---------- --------- ----------- ---------- ----------
Balances at December 31, 1996................. -- -- -- -- 2,400,000 101,578
Contribution of capital by founders.......... -- -- -- -- -- 86,536
Contribution of services by stockholders..... -- -- -- -- -- 105,000
Issuance of common stock for cash, net of
issuance costs............................. -- -- -- -- 2,937,521 771,169
Issuance of common stock upon exercise of
stock options.............................. -- -- -- -- 574,998 2,108
Issuance of stock options to consultants..... -- -- -- -- -- 15,510
Compensation charge related to grants of
stock options.............................. -- -- -- -- -- 16,665
Net loss and comprehensive loss.............. -- -- -- -- -- --
--------- ---------- --------- ----------- ---------- ----------
Balances at December 31, 1997................. -- -- -- -- 5,912,519 1,098,566
Issuance of preferred stock for cash, net of
issuance costs............................. 2,970,655 6,088,222 -- -- -- --
Issuance of common stock options to
stockholders in exchange for services...... -- -- -- -- -- 300,000
Issuance of common stock for cash............ -- -- -- -- 5,141,892 2,747,500
Issuance of common stock upon exercise of
stock options.............................. -- -- -- -- 287,366 31,765
Issuance of common stock to consultants...... -- -- -- -- 16,300 7,521
Issuance of common stock warrants to
consultants................................ -- -- -- -- -- 23,780
Compensation charge related to grants of
stock options.............................. -- -- -- -- -- 56,655
Deferred stock compensation.................. -- -- -- -- -- 505,994
Amortization of deferred stock
compensation............................... -- -- -- -- -- --
Net loss and comprehensive loss.............. -- -- -- -- -- --
--------- ---------- --------- ----------- ---------- ----------
Balances at December 31, 1998................. 2,970,655 6,088,222 -- -- 11,358,077 4,771,781
Issuance of preferred stock for cash, net of
issuance costs (unaudited)................. 739,229 1,493,486 5,775,806 24,961,680 -- --
Issuance of common stock upon exercise of
stock options (unaudited).................. -- -- -- -- 225,656 28,525
Issuance of common stock warrants to
consultants (unaudited).................... -- -- -- -- -- 8,750
Compensation charge related to grants of
stock options (unaudited).................. -- -- -- -- -- 174,500
Deferred stock compensation (unaudited)...... -- -- -- -- -- 1,892,638
Amortization of deferred stock compensation
(unaudited)................................ -- -- -- -- -- --
Net loss and comprehensive loss
(unaudited)................................ -- -- -- -- -- --
--------- ---------- --------- ----------- ---------- ----------
Balances at March 31, 1999 (unaudited)........ 3,709,884 $7,581,708 5,775,806 $24,961,680 11,583,733 $6,876,194
========= ========== ========= =========== ========== ==========

<CAPTION>
TOTAL
DEFERRED STOCKHOLDERS'
STOCK ACCUMULATED EQUITY
COMPENSATION DEFICIT (DEFICIT)
------------ ----------- -------------
<S> <C> <C> <C>
Issuance of common stock to founders for
assets of Cameo Technology, Inc. and
contributed services at inception, June 13,
1996......................................... $ -- $ -- $ 53,333
Contribution of capital by founders.......... -- -- 48,245
Net loss and comprehensive loss.............. -- (107,797) (107,797)
----------- ----------- -----------
Balances at December 31, 1996................. -- (107,797) (6,219)
Contribution of capital by founders.......... -- -- 86,536
Contribution of services by stockholders..... -- -- 105,000
Issuance of common stock for cash, net of
issuance costs............................. -- -- 771,169
Issuance of common stock upon exercise of
stock options.............................. -- -- 2,108
Issuance of stock options to consultants..... -- -- 15,510
Compensation charge related to grants of
stock options.............................. -- -- 16,665
Net loss and comprehensive loss.............. -- (447,777) (447,777)
----------- ----------- -----------
Balances at December 31, 1997................. -- (555,574) 542,992
Issuance of preferred stock for cash, net of
issuance costs............................. -- -- 6,088,222
Issuance of common stock options to
stockholders in exchange for services...... -- -- 300,000
Issuance of common stock for cash............ -- -- 2,747,500
Issuance of common stock upon exercise of
stock options.............................. -- -- 31,765
Issuance of common stock to consultants...... -- -- 7,521
Issuance of common stock warrants to
consultants................................ -- -- 23,780
Compensation charge related to grants of
stock options.............................. -- -- 56,655
Deferred stock compensation.................. (505,994) -- --
Amortization of deferred stock
compensation............................... 29,010 -- 29,010
Net loss and comprehensive loss.............. -- (4,261,625) (4,261,625)
----------- ----------- -----------
Balances at December 31, 1998................. (476,984) (4,817,199) 5,565,820
Issuance of preferred stock for cash, net of
issuance costs (unaudited)................. -- -- 26,455,166
Issuance of common stock upon exercise of
stock options (unaudited).................. -- -- 28,525
Issuance of common stock warrants to
consultants (unaudited).................... -- -- 8,750
Compensation charge related to grants of
stock options (unaudited).................. -- -- 174,500
Deferred stock compensation (unaudited)...... (1,892,638) -- --
Amortization of deferred stock compensation
(unaudited)................................ 317,048 -- 317,048
Net loss and comprehensive loss
(unaudited)................................ -- (4,869,160) (4,869,160)
----------- ----------- -----------
Balances at March 31, 1999 (unaudited)........ $(2,052,574) $(9,686,359) $27,680,649
=========== =========== ===========
</TABLE>

See accompanying notes.
F-5
<PAGE> 80

ASK JEEVES, INC.

STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
PERIOD FROM THREE MONTHS ENDED
JUNE 13, 1996 YEAR ENDED DECEMBER 31, MARCH 31,
(INCEPTION) THROUGH ----------------------- -----------------------
DECEMBER 31, 1996 1997 1998 1998 1999
------------------- --------- ----------- --------- -----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
OPERATING ACTIVITIES
Net loss................................. $(107,797) $(447,777) $(4,261,625) $(335,355) $(4,869,160)
Adjustments to reconcile net loss to net
cash used in operating activities:
Depreciation and amortization.......... -- 4,098 102,214 8,245 103,344
Issuance of stock options to
consultants......................... -- 15,510 -- -- --
Issuance of common stock to
consultants......................... -- -- 7,521 -- --
Issuance of common stock warrants to
consultants......................... -- -- 23,780 5,996 8,750
Contribution of assets and services by
stockholders........................ 53,333 105,000 300,000 75,000 --
Compensation charge related to grants
of stock options.................... -- 16,665 56,655 3,333 174,500
Amortization of deferred stock
compensation........................ -- -- 29,010 -- 317,048
Changes in operating assets and
liabilities:
Restricted cash..................... -- -- (45,000) -- (500,000)
Accounts receivable................. -- (20,031) (216,227) 13,031 (820,233)
Prepaids and other current assets... -- -- (103,545) -- 15,927
Accounts payable.................... -- -- 605,283 -- 693,729
Accrued compensation and related
expenses.......................... 6,219 27,446 219,397 (16,934) 373,707
Accrued marketing expenses.......... -- -- -- 1,110 1,134,000
Other accrued liabilities........... -- 18,602 141,398 30,983 183,804
Deferred revenue.................... -- 13,000 136,842 -- 626,241
--------- --------- ----------- --------- -----------
Net cash used in operating activities.... (48,245) (267,487) (3,004,297) (214,591) (2,558,343)
INVESTING ACTIVITIES
Purchases of property and equipment...... -- (71,079) (781,543) (55,588) (1,209,195)
Purchases of investments................. -- -- -- -- (5,168,984)
--------- --------- ----------- --------- -----------
Net cash used in investing activities.... -- (71,079) (781,543) (55,588) (6,378,179)
FINANCING ACTIVITIES
Issuance of common stock for cash........ -- 773,277 2,747,500 -- --
Issuance of common stock upon exercise of
stock options.......................... -- -- 31,765 -- 28,525
Issuance of preferred stock for cash, net
of issuance costs...................... -- -- 6,088,222 -- 26,455,166
Contribution of capital by founders...... 48,245 86,536 -- -- --
Repayment of capital lease obligations... -- -- (15,011) -- (9,695)
--------- --------- ----------- --------- -----------
Net cash provided by financing
activities............................. 48,245 859,813 8,852,476 -- 26,473,996
--------- --------- ----------- --------- -----------
Increase (decrease) in cash and cash
equivalents............................ -- 521,247 5,066,636 (270,179) 17,537,474
Cash and cash equivalents at beginning of
period................................. -- -- 521,247 521,247 5,587,883
--------- --------- ----------- --------- -----------
Cash and cash equivalents at end of
period................................. $ -- $ 521,247 $ 5,587,883 $ 251,068 $23,125,357
========= ========= =========== ========= ===========
SUPPLEMENTAL DISCLOSURE OF NONCASH
INVESTING AND FINANCING ACTIVITIES
Capital lease obligations incurred..... $ -- $ -- $ 89,176 $ -- $ --
========= ========= =========== ========= ===========
</TABLE>

See accompanying notes.
F-6
<PAGE> 81

ASK JEEVES, INC.

NOTES TO FINANCIAL STATEMENTS
(INFORMATION AS OF MARCH 31, 1999 AND FOR THE THREE MONTHS ENDED
MARCH 31, 1998 AND MARCH 31, 1999 IS UNAUDITED)

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The Company

Ask Jeeves, Inc. ("Ask Jeeves" or the "Company") develops and deploys
natural-language question answering services on the Internet for consumers and
companies. The Company was incorporated in the State of California on June 13,
1996. The Company was in the development stage in 1996 and 1997.

Unaudited Interim Financial Information

The accompanying financial statements at March 31, 1999 and for the three
months ended March 31, 1998 and 1999 are unaudited but include all adjustments
(consisting of normal recurring accruals) which, in the opinion of management,
are necessary for a fair statement of the financial position and the operating
results and cash flows for the interim date and periods presented. Results for
the interim period ended March 31, 1999 are not necessarily indicative of
results for the entire fiscal year or future periods.

Use of Estimates

The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities at the
date of the financial statements and the reported amounts of revenue and
expenses during the reporting period. Actual results could differ materially
from those estimates.

Cash Equivalents, Short-Term Investments, and Long-Term Investments

The Company invests its excess cash in money market accounts and debt
instruments and considers all highly liquid debt instruments purchased with an
original maturity of three months or less to be cash equivalents. Investments
with an original maturity at the time of purchase of over three months but less
than a year are classified as short-term investments. Investments with an
original maturity at the time of purchase of greater than a year are classified
as long-term investments. Management determines the appropriate classification
of investments at the time of purchase and reevaluates such designation at the
end of each period.

At March 31, 1999, all of the Company's investments were classified as
available-for-sale and consisted of obligations of domestic municipalities or
corporate commercial paper. The amortized cost of cash equivalents, short-term
investments and long-term investments at December 31, 1997 and 1998 and March
31, 1999 approximated fair value and the amount of unrealized gains or losses
was not significant. The estimated fair values of cash equivalents and
short-term investments are based on quoted market prices. The amount of realized
gains or losses for the years ended December 31, 1997 and 1998 and three months
ended March 31, 1998 and 1999 were not significant.

Restricted Cash

Restricted cash consists of two certificates of deposit required under
standby letters of credit for certain advertising and other obligations which
expire in 1999. The certificates of deposit are held by a domestic financial
institution.

Concentrations of Credit Risk and Credit Risk Evaluations

Financial instruments which subject the Company to concentrations of credit
risk consist primarily of cash and cash equivalents, investments and accounts
receivable. Cash and cash equivalents consist principally

F-7
<PAGE> 82
ASK JEEVES, INC.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(INFORMATION AS OF MARCH 31, 1999 AND FOR THE THREE MONTHS ENDED
MARCH 31, 1998 AND MARCH 31, 1999 IS UNAUDITED)

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
of demand deposit and money market accounts held with domestic financial
institutions with high credit standing. Investments consist primarily of debt
securities of domestic municipalities and corporations with strong credit
ratings. The Company has not experienced any significant losses on its cash and
cash equivalents or investments.

The Company conducts business with companies in various industries
primarily in the United States. The Company performs ongoing credit evaluations
of its customers and generally does not require collateral. Allowances are
maintained for potential credit issues, and such losses to date have been within
management's expectations.

Property and Equipment

Property and equipment is stated at cost and depreciated using the
straight-line method over three to five years. Leasehold improvements are
amortized over the shorter of the useful life or the remaining lease term.

Software Development Costs

The Company accounts for software development costs in accordance with
Statement of Financial Accounting Standards No. 86, "Accounting for the Costs of
Computer Software to be Sold, Leased, or Otherwise Marketed" ("FAS 86") under
which certain software development costs incurred subsequent to the
establishment of technological feasibility are capitalized and amortized over
the estimated lives of the related products. Technological feasibility is
established upon completion of a working model. To date, costs incurred
subsequent to the establishment of technological feasibility have not been
significant, and all software development costs have been charged to product
development expense in the accompanying statements of operations.

Revenue Recognition

The Company currently conducts business within two business units, the
Consumer Question Answering Service and the Corporate Question Answering
Service. The Consumer Question Answering Service, Ask Jeeves, at Ask.com, allows
users to obtain answers to the most frequently asked questions online. The
Corporate Question Answering Service helps companies provide a high quality,
human-like online interface for their customers.

Revenues from the Consumer Question Answering Service consist primarily of
advertising revenues that are derived from short-term advertising contracts.
Under these contracts, the Company delivers impressions to users over a
specified period of time. Advertising rates, measured on a cost per thousand
impressions ("CPMs") basis, are dependent on whether the impressions are for
general rotation throughout the Company's Web site or for targeted audiences and
properties within specific areas of Ask Jeeves such as the computer,
entertainment, family, health, money, shopping and travel channels. The Company
recognizes revenues based upon actual impressions delivered. Substantially all
of the Company's revenues for the year ended December 31, 1998 were derived from
Ask Jeeves advertising contracts.

Revenues from the Corporate Question Answering Service consist of three
components: (1) knowledge base customization; (2) maintenance and information
service fees; and (3) per-answer fees. The Company recognizes knowledge base
customization and maintenance fees ratably over the contractual term, generally
twelve months. The Company recognizes per-answer fees based on answers delivered
at contractual per-answer rates, subject to negotiated annual minimums and
maximums, if applicable. Payments received prior to delivery of the knowledge
base, information and maintenance services are recorded as deferred revenues
F-8
<PAGE> 83
ASK JEEVES, INC.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(INFORMATION AS OF MARCH 31, 1999 AND FOR THE THREE MONTHS ENDED
MARCH 31, 1998 AND MARCH 31, 1999 IS UNAUDITED)

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
and are recognized ratably over the contractual term. To date, revenues from the
Corporate Question Answering Service have not been material.

Significant Customers

Revenues from two customers accounted for 14% and 13%, respectively, of
total revenues for the year ended December 31, 1998 and 11% and 21%,
respectively, of total revenues for the three months ended March 31, 1999.
Receivables from these same two customers were none and $80,000, respectively at
December 31, 1998 and none and $147,555, respectively as of March 31, 1999.

Accounting for Stock-Based Compensation

The Company accounts for employee stock options using the intrinsic value
method in accordance with Accounting Principles Board Opinion No. 25 ("APB 25")
and makes the pro forma disclosures required by Statement of Financial
Accounting Standards No. 123, "Accounting for Stock-Based Compensation" ("FAS
123").

Advertising Costs

The Company expenses the costs of advertising as incurred. Advertising
expense for the years ended December 31, 1997 and 1998 was $12,512 and $960,735,
respectively.

Income Taxes

The Company uses the liability method to account for income taxes as
required by Statement of Financial Accounting Standards No. 109, "Accounting for
Income Taxes" ("FAS 109"). Under this method, deferred tax assets and
liabilities are determined based on differences between financial reporting and
tax bases of assets and liabilities. Deferred tax assets and liabilities are
measured using enacted tax rates and laws that will be in effect when the
differences are expected to reverse.

Prior to the issuance of Series A convertible preferred stock on November
10, 1998, the Company's shareholders elected to be treated as an S Corporation
for federal and state income tax purposes. Accordingly, the accompanying
financial statements for the periods prior to that date do not include a
provision for federal or state income taxes. Subsequent to November 10, 1998,
the Company became a C Corporation subject to federal and state statutory income
tax rates.

Net Loss Per Share

Basic net loss per share is computed by dividing net loss by the weighted
average number of common shares outstanding for the period. Diluted earnings per
share reflects the potential dilution of securities by adding other common stock
equivalents, including stock options, warrants and convertible preferred stock,
in the weighted average number of common shares outstanding for a period, if
dilutive. Potentially dilutive securities have been excluded from the
computation as their effect is antidilutive.

Pro Forma Net Loss Per Share

Pro forma net loss per share has been computed as described above and also
gives effect, under Securities and Exchange Commission guidance, to the
conversion of preferred shares not included above that will

F-9
<PAGE> 84
ASK JEEVES, INC.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(INFORMATION AS OF MARCH 31, 1999 AND FOR THE THREE MONTHS ENDED
MARCH 31, 1998 AND MARCH 31, 1999 IS UNAUDITED)

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
automatically convert upon completion of the Company's initial public offering,
using the as if-converted method.

The calculation of historical and pro forma basic and diluted net loss per
share is as follows:

Other Comprehensive Income

In June 1997, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards No. 130, "Reportable Comprehensive
Income" ("FAS 130") which establishes standards for reporting and display of
comprehensive income and its components in a full set of general purpose
financial statements. There is no difference in the Company's historical net
losses as reported and the comprehensive net losses under the provisions of FAS
130 for all periods presented. Accordingly, the adoption of FAS 130 had no
effect on the Company's reported results of operations.

F-10
<PAGE> 85
ASK JEEVES, INC.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(INFORMATION AS OF MARCH 31, 1999 AND FOR THE THREE MONTHS ENDED
MARCH 31, 1998 AND MARCH 31, 1999 IS UNAUDITED)

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Business Segments

In June 1997, the FASB issued Statement of Financial Accounting Standards
No. 131, "Disclosures about Segments of an Enterprise and Related Information"
("FAS 131") which establishes standards for reporting information about
operating segments in annual financial statements. It also establishes standards
for related disclosures about products and services, geographic areas and major
customers. For management purposes, the Company is divided into two business
units, the Consumer Question Answering Service and the Corporate Question
Answering Service. Each of these groups has a vice president who reports
directly to the Chief Executive Officer ("CEO"), who is the Chief Operating
Decision Maker as defined by FAS 131. Results of operations for these business
units which are provided to the CEO include only revenue and gross profit (loss)
information which is disclosed in the statement of operations in accordance with
FAS 131. The majority of the Company's operating expenses are not allocated to
the business units, but instead are treated as corporate expenses.

Computer Software

In March 1998, the American Institute of Certified Public Accountants
issued SOP 98-1, "Accounting for the Costs of Computer Software Developed or
Obtained for Internal Use" ("SOP 98-1"). SOP 98-1 requires that entities
capitalize certain costs related to internal use software once certain criteria
have been met. The Company is required to implement SOP 98-1 for the year ending
December 31, 1999. Adoption of SOP 98-1 is expected to have no material impact
on the Company's financial condition or results of operations.

Reclassifications

Certain prior year balances have been restated to conform with current year
presentation.

2. PROPERTY AND EQUIPMENT

Property and equipment consists of the following:

<TABLE>
<CAPTION>
DECEMBER 31,
-------------------- MARCH 31,
1997 1998 1999
------- --------- -----------
(UNAUDITED)
<S> <C> <C> <C>
Equipment......................................... $71,079 $ 813,381 $1,968,488
Furniture and fixtures............................ -- 18,289 54,796
Leasehold improvements............................ -- 110,128 127,709
------- --------- ----------
71,079 941,798 2,150,993
Less accumulated depreciation and amortization.... (4,098) (106,312) (209,656)
------- --------- ----------
Property and equipment, net....................... $66,981 $ 835,486 $1,941,337
======= ========= ==========
</TABLE>

Cost and accumulated amortization related to assets under capital lease
obligations at December 31, 1998 were $89,176 and $16,801, respectively, and at
March 31, 1999 (unaudited) were $89,176 and $24,232, respectively. No assets
were acquired under capital lease arrangements in 1997.

3. LEASE COMMITMENTS

The Company has entered into operating and capital leases for certain
office space and equipment which contain certain renewal options.

F-11
<PAGE> 86
ASK JEEVES, INC.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(INFORMATION AS OF MARCH 31, 1999 AND FOR THE THREE MONTHS ENDED
MARCH 31, 1998 AND MARCH 31, 1999 IS UNAUDITED)

3. LEASE COMMITMENTS (CONTINUED)
Capital lease obligations for equipment represent the present value of
future lease payments under the agreements. The Company has options to purchase
the leased assets at the end of the lease terms.

The future minimum lease payments under all noncancellable leases with
terms in excess of one year are as follows:

<TABLE>
<CAPTION>
CAPITAL OPERATING
LEASES LEASES
------- ---------
<S> <C> <C>
Years ending December 31:
1999...................................................... $36,939 $259,326
2000...................................................... 36,939 248,628
2001...................................................... 10,651 126,791
------- --------
Total minimum lease payments................................ 84,529 $634,745
========
Less interest............................................... 10,364
-------
Present value of minimum lease payments..................... 74,165
Less current portion of capital lease obligations........... 28,220
-------
Capital lease obligations, less current portion............. $45,945
=======
</TABLE>

Rent expense was none, $4,157 and $80,916 for the period from June 13, 1996
(inception) through December 31, 1996 and the years ended December 31, 1997 and
1998, respectively.

4. INCOME TAXES

Subsequent to the issuance of Series A convertible preferred stock in
November 1998, the Company was no longer eligible for S Corporation status and
became a C Corporation subject to statutory federal and state income tax rates.

There has been no provision for U.S. federal or state income taxes for any
period as the Company has incurred operating losses in all periods.

Deferred income taxes reflect the net tax effects of temporary differences
between the carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for income tax purposes. Significant components of
the Company's deferred tax assets are as follows:

<TABLE>
<CAPTION>
DECEMBER 31,
----------------------
1997 1998
--------- ---------
<S> <C> <C>
Net operating loss carryforwards............................ $ -- $ 121,295
Capitalized research and development costs.................. -- 478,751
Accrued expenses............................................ -- 352,638
Other....................................................... -- 25,950
--------- ---------
Total deferred tax assets................................... -- 978,634
Valuation allowance......................................... -- (978,634)
--------- ---------
Net deferred tax assets..................................... $ -- $ --
========= =========
</TABLE>

A valuation allowance has been established and, accordingly, no benefit has
been recognized for the Company's net operating losses and other deferred tax
assets. The net valuation allowance increased by $978,634 during the year ended
December 31, 1998. The Company believes that, based on a number of factors, the
available objective evidence creates sufficient uncertainty regarding the
realizability of the

F-12
<PAGE> 87
ASK JEEVES, INC.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(INFORMATION AS OF MARCH 31, 1999 AND FOR THE THREE MONTHS ENDED
MARCH 31, 1998 AND MARCH 31, 1999 IS UNAUDITED)

4. INCOME TAXES (CONTINUED)
deferred tax assets such that a full valuation allowance has been recorded.
These factors include the Company's history of net losses since its inception
and expected near-term future losses. The Company will continue to assess the
realizability of the deferred tax assets based on actual and forecasted
operating results. There was no valuation allowance at December 31, 1997 because
the Company was a S corporation for federal and state income tax purposes.

At December 31, 1998, the Company has net operating loss carryforwards for
federal income tax purposes of approximately $303,000 which expire in the year
2018.

Utilization of the Company's net operating loss may be subject to a
substantial annual limitation due to the ownership change limitations provided
by the Internal Revenue Code and similar state provisions. Such an annual
limitation could result in the expiration of the net operating loss before
utilization.

5. STOCKHOLDERS' EQUITY

Convertible Preferred Stock

Preferred Stock at December 31, 1997 and 1998 and March 31, 1999 is as
follows by series:

<TABLE>
<CAPTION>
SHARES ISSUED AND OUTSTANDING
--------------------------------
DECEMBER 31,
DESIGNATED ----------------- MARCH 31,
SERIES SHARES 1997 1998 1999
------ ---------- ---- --------- -----------
(UNAUDITED)
<S> <C> <C> <C> <C>
A Convertible....................... 3,750,000 -- 2,970,655 3,709,884
B Convertible....................... 6,250,000 -- -- 5,775,806
---------- -- --------- ---------
10,000,000 -- 2,970,655 9,485,690
========== == ========= =========
</TABLE>

Subject to certain anti-dilutive provisions, each share of Series A and B
convertible preferred stock is convertible at the option of the holder into the
same number of shares of common stock. The Series A and B convertible preferred
stock will be automatically converted into common stock in the event of an
affirmative election of the holders of at least a majority of the outstanding
shares of preferred stock, voting as separate classes, or a public offering,
with gross proceeds of at least $7,500,000 and a per share offering price of at
least $5.00.

The holders of the Series A and B convertible preferred stock are entitled
to receive noncumulative dividends when and if declared by the Board of
Directors. These dividends are in preference to any declaration or payment of
any dividend on the common stock of the Company. As of December 31, 1998, no
dividends have been declared.

In the event of any liquidation, the holders of the Series A and B
convertible preferred stock have a liquidation preference over holders of common
stock equal to the original issuance price of $2.06 and $4.33 per share, plus
any declared and unpaid dividends. The remaining assets will be distributed to
the common and preferred stockholders on an as-if-converted basis.

Stock Compensation

The Company recorded a compensation charge of $16,665 and $56,655 during
the years ended December 31, 1997 and 1998 for the difference between the
exercise price and the deemed fair value of certain stock options granted by the
Company. These amounts were expensed immediately as the options vested at the
grant date.

F-13
<PAGE> 88
ASK JEEVES, INC.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(INFORMATION AS OF MARCH 31, 1999 AND FOR THE THREE MONTHS ENDED
MARCH 31, 1998 AND MARCH 31, 1999 IS UNAUDITED)

5. STOCKHOLDERS' EQUITY (CONTINUED)
In April 1998, the Company issued 16,300 shares of common stock to an
independent contractor for services performed. The Company imputed a value for
the services of $13,221, of which $5,700 was paid in cash, and the remainder was
allocated to the shares issued.

The Company recorded deferred stock compensation of $505,994 during the
year ended December 31, 1998 and $1,892,638 during the three months ended March
31, 1999 representing the difference between the exercise price and the deemed
fair value of certain of the Company's stock options granted to employees. These
amounts are being amortized by charges to operations on a graded vesting method
over the vesting periods of the individual stock options. Such amortization
amounted to $29,010 for the year ended December 31, 1998 and $317,048 for the
three months ended March 31, 1999.

Warrants

In connection with the issuances of common stock in August, September and
October 1997, the Company issued to purchasers of common stock a warrant
exercisable into one share of common stock for each two shares of common stock
purchased. In total, the Company issued warrants exercisable into 1,137,672
shares of common stock at a per share exercise price of $.24. In April and June
1998, all of the Company's outstanding warrants were exercised and the Company
issued 1,137,672 shares of common stock for cash proceeds of $262,500.

In May, June, July and December 1998, the Company issued warrants
exercisable into 39,000 shares of common stock to various contractors for
services performed. The warrants are exercisable at any time into shares of
common stock at per share exercise prices ranging from $.53 to $.73. The
warrants expire on various dates between May and December 2003. The Company
determined the fair value of the warrants to be $.53 to $1.65 per share or
$23,780 in total using the Black Scholes valuation model and recorded a charge
to operations over the consulting period, which concluded in 1998.

Options Issued to Consultants

The Company granted options to purchase 70,500 shares of common stock to
consultants at an exercise price of $.01 in September 1997. These options were
granted in exchange for consulting services provided. The Company valued these
options using the Black Scholes valuation model. Amounts recorded totaling
$15,510 were charged to operations over the consulting period, which concluded
in 1997.

Under the Company's 1996 Equity Incentive Plan ("1996 Plan"), 3,000,000
shares of common stock are reserved for the issuance of incentive stock options
("ISOs") or non-statutory stock options ("NSOs") to employees, officers,
directors, and consultants. The ISOs may be granted at a price per share not
less than the fair market value on the date of the grant. The NSOs may be
granted at a price per share not less than 85% of the fair market value at the
date of grant. Options granted under the 1996 Plan are exercisable over a
maximum term of 10 years from the date of grant and generally vest over periods
of up to 4 years. Options granted under the 1996 plan contain an accelerated
vesting feature based upon a change in control of the Company.

F-14
<PAGE> 89
ASK JEEVES, INC.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(INFORMATION AS OF MARCH 31, 1999 AND FOR THE THREE MONTHS ENDED
MARCH 31, 1998 AND MARCH 31, 1999 IS UNAUDITED)

5. STOCKHOLDERS' EQUITY (CONTINUED)
Stock Option Activity

A summary of stock option activity is set forth below:

<TABLE>
<CAPTION>
OPTIONS OUTSTANDING
-----------------------------
WEIGHTED-AVERAGE
EXERCISE PRICE
SHARES PER SHARE
--------- ----------------
<S> <C> <C>
Granted.................................................. 780,000 $ .02
--------- -----
Outstanding at December 31, 1996......................... 780,000 .02
Granted................................................ 256,748 .10
Exercised.............................................. (574,998) .02
--------- -----
Outstanding at December 31, 1997......................... 461,750 .06
Granted................................................ 2,504,979 .50
Canceled............................................... (22,500) .60
Exercised.............................................. (287,366) .12
--------- -----
Outstanding at December 31, 1998......................... 2,656,863 .46
Granted (unaudited).................................... 1,691,250 1.46
Exercised (unaudited).................................. (225,656) .12
--------- -----
Outstanding at March 31, 1999 (unaudited)................ 4,122,457 $ .90
========= =====
Vested and exercisable at December 31, 1998.............. 547,168 $ .12
========= =====
Vested and exercisable at March 31, 1999 (unaudited)..... 376,251 $ .44
========= =====
</TABLE>

The weighted-average remaining contractual life of options outstanding at
December 31, 1997 and 1998 was 9.4 years and 9.5 years, respectively.

Pro Forma Disclosures of the Effect of Stock-Based Compensation

Pro forma information regarding the results of operations and net loss per
share is required by FAS 123, which also requires that the information be
determined as if the Company had accounted for its employee stock options using
the fair value method of FAS 123. The fair value of each option granted is
estimated on the date of grant using the Black Scholes valuation model. The
risk-free interest rate for 1997 and 1998 was 6.0% and 6.5%, respectively. The
expected life of options granted in the years ended December 31, 1997 and 1998
was 5 years. No dividend and a near zero volatility factor were used.

The Company has elected to follow APB 25 and related interpretations in
accounting for its employee stock options because, as discussed below, the
alternative fair value accounting provided for under FAS 123 requires the use of
option valuation models that were not developed for use in valuing employee
stock options. Under APB 25, when the exercise price of the Company's employee
stock options equals the market price of the underlying stock on the date of
grant, no compensation expense is recognized.

The option valuations models were developed for use in estimating the fair
value of traded options that have no vesting restrictions and are fully
transferable. In addition, option valuation models require the input of highly
subjective assumptions, including the expected life of the option. Because the
Company's employee stock options have characteristics significantly different
from those of traded options and because changes in the subjective input
assumptions can materially affect the fair value of estimate, in management's
opinion, the existing models do not necessarily provide a reliable single
measure of the fair value of its employee stock options.

F-15
<PAGE> 90
ASK JEEVES, INC.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(INFORMATION AS OF MARCH 31, 1999 AND FOR THE THREE MONTHS ENDED
MARCH 31, 1998 AND MARCH 31, 1999 IS UNAUDITED)

5. STOCKHOLDERS' EQUITY (CONTINUED)
Had compensation cost for the Company's stock-based compensation plans been
determined using the fair value at the grant dates for awards under those plans
calculated using the minimum value method of FAS 123, the Company's net loss and
basic and diluted net loss per share would have been increased to the pro forma
amounts indicated below:

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------
1997 1998
--------- -----------
<S> <C> <C>
Pro forma net loss......................................... $(456,864) $(4,295,512)
Pro forma basic and diluted net loss per share............. $ (.14) $ (.51)
</TABLE>

The weighted-average grant-date fair value of options granted, which is the
value assigned to the options under FAS 123, was $0.08 and $0.16 for grants made
during years ended December 31, 1997 and 1998, respectively.

The pro forma impact of options on the net loss for the years ended
December 31, 1997 and 1998 is not representative of the effects on net income
(loss) for future years, as future years will include the effects of additional
years of stock option grants.

6. RELATED PARTY TRANSACTIONS

Certain members of the Company's Board of Directors are also owners of a
related entity to which the Company paid facilities fees for rent, utilities,
and administrative services of approximately $4,000 and $109,000 for the years
ended December 31, 1997 and 1998. For the years ended December 31, 1997 and
1998, these directors served in management positions of the Company and received
common stock options as compensation. The Company determined the fair value of
the services contributed to be $105,000 and $300,000 for the years ended
December 31, 1997 and 1998, respectively.

All of the employees of the Company were paid from the Company's inception
until August 1997 by a separate related entity. The contributions provided by
this entity have been recorded as a capital contribution and as a charge to
operations of $86,536 in the year ended December 31, 1997. In 1997, the Company
also purchased approximately $22,000 of computer and office equipment and
furniture from this related entity. In 1998, the related entity paid certain
expenses totaling $80,440 on the Company's behalf. The Company reimbursed the
related entity for all amounts paid on its behalf during 1998.

7. SUBSEQUENT EVENTS (UNAUDITED)

Sale of Preferred Stock

In January 1999, the Company issued to new and existing investors 739,229
shares of Series A convertible preferred stock at $2.06 per share resulting in
net proceeds of $1,493,485. Series A convertible preferred shares are
convertible into common stock at a one-to-one ratio.

In February and March 1999, the Company issued to new and existing
investors 5,775,806 shares of Series B convertible preferred stock at $4.33 per
share resulting in net proceeds of $24,961,680. Series B convertible preferred
shares are convertible into common stock at a one-to-one ratio.

Defined Contribution Plan

Effective January 1, 1999, the Company adopted a defined contribution
retirement plan under Section 401(k) of the Internal Revenue Code which covers
substantially all employees. Eligible employees may

F-16
<PAGE> 91
ASK JEEVES, INC.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(INFORMATION AS OF MARCH 31, 1999 AND FOR THE THREE MONTHS ENDED
MARCH 31, 1998 AND MARCH 31, 1999 IS UNAUDITED)

7. SUBSEQUENT EVENTS (UNAUDITED) (CONTINUED)
contribute amounts to the plan, via payroll withholding, subject to certain
limitations. The Company does not match contributions by plan participants.

Proposed Public Offering of Common Stock

On April 16, 1999, the Board of Directors authorized the Company to proceed
with an initial public offering of its common stock. If the offering is
consummated as presently anticipated, all of the outstanding preferred stock
will automatically convert into common stock. The unaudited pro forma
stockholders' equity (deficit) at March 31, 1999 gives effect to the conversion
of all outstanding shares of convertible preferred stock at March 31, 1999 into
9,485,690 shares of common stock upon completion of the offering. The Board also
approved and the stockholders approved in June 1999, the reincorporation of the
Company in the State of Delaware and a change in the total number of shares
which the Company is authorized to issue to 155,000,000 shares, of which
150,000,000 will be common stock and 5,000,000 will be preferred stock.

Stock Split

On April 16, 1999, the Board of Directors approved, and the stockholders
approved in June 1999, a 1 for 2 reverse stock split of issued and outstanding
common and preferred stock. All common and preferred share and per share amounts
in the accompanying financial statements have been retroactively adjusted to
reflect the stock split.

1999 Employee Stock Purchase Plan

The Company's amended 1999 Employee Stock Purchase Plan was adopted by the
Board of Directors and approved by the stockholders in May 1999 to be effective
upon the completion of the Company's initial public offering of its common
stock. The Company has reserved a total of 400,000 shares of common stock for
issuance under the plan. Eligible employees may purchase common stock at 85% of
the lesser of the fair market value of the Company's common stock on the first
day of the applicable one year offering period or the last day of the applicable
six month purchase period.

1999 Equity Incentive Plan

In April 1999, the Board of Directors adopted the 1999 Equity Incentive
Plan which will become effective upon stockholder approval. The Company has
reserved a total of 2,125,000 shares of common stock for the issuance of ISOs or
NSOs to employees, officers, directors, or consultants under the 1999 plan.

Asset Purchase

In April 1999, the Company entered into an asset purchase agreement and a
license agreement with Lumina Decision Systems, Inc. for the acquisition of
certain technology of Lumina in exchange for total consideration of $1,537,500
which is comprised of cash of $700,000, 225,000 shares of the Company's common
stock valued at $3.50 per share and $50,000 in acquisition costs. The Company
allocated $1,176,803 of the purchase price to core technology and $360,697 to
in-process technology. The core technology will be amortized over a three year
period. The in-process technology will be written off as a one-time charge in
the second quarter of 1999. In addition, approximately 107,500 shares of the
shares issued are to be held in escrow for a two year period.

The Company acquired Lumina's Personal Decision Engine ("PDE") technology
as well as the right to use Lumina's Analytica and Analytica Decision Engine
("ADE") technologies. The ADE technologies and a
F-17
<PAGE> 92
ASK JEEVES, INC.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(INFORMATION AS OF MARCH 31, 1999 AND FOR THE THREE MONTHS ENDED
MARCH 31, 1998 AND MARCH 31, 1999 IS UNAUDITED)

7. SUBSEQUENT EVENTS (UNAUDITED) (CONTINUED)
non-configurable version of the PDE technology had reached technological
feasibility and have been classified as core technology. The configurable PDE
technology had yet to reach technological feasibility and therefore, this
product was classified as in-process technology. The value of the purchased
in-process technology was determined by estimating the projected net cash flows
related to such products, including costs to complete the development of the
technology and the future revenues to be earned upon commercialization of the
products. These cash flows were discounted back to their net present value. The
resulting projected net cash from such projects were based on the Company's
estimates of revenues and operating profits related to such projects. These
estimates were based on several assumptions, including those summarized below.

Revenues and operating profit attributable to the in-process research and
development were estimated over a three-year projection period, beginning in
fiscal 1999. The resulting projected net cash flows were discounted to their
present value using a discount rate of 35%, which was calculated based on the
weighted average cost of capital, adjusted for the technology risk associated
with the purchased in-process technology, which was considered to be significant
due to the rapid pace of technological change in the internet industry. For
projected cash flows attributable to existing technology, a discount rate of 25%
was used, which reflects the weighted average cost of capital, adjusted for the
technology risk associated with these technologies. The Company's analysis
considered only future operating results of the existing and in-process
technology on a stand-alone basis and did not take into consideration any
potential increased revenue or operating efficiency that may occur
post-acquisition.

F-18
<PAGE> 93

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.

The following table sets forth the costs and expenses, other than
underwriting discounts and commissions, payable by us in connection with the
sale of common stock being registered. All amounts are estimates.

<TABLE>
<S> <C>
SEC registration fee........................................ $ 12,468
NASD Filing fee............................................. 4,640
Nasdaq National Market listing fee.......................... 95,000
Printing and engraving expenses............................. 200,000
Legal fees and expenses..................................... 400,000
Accounting fees and expenses................................ 350,000
Blue sky fees and expenses.................................. 10,000
Transfer agent fees......................................... 10,000
Miscellaneous fees and expenses............................. 99,042
----------
Total............................................. $1,200,000
==========
</TABLE>

ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS.

Section 145 of the Delaware General Corporation Law (the "DGCL") authorizes
a court to award, or a corporation's board of directors to grant indemnity to
directors and officers in terms sufficiently broad to permit such
indemnification under certain circumstances for liabilities, including
reimbursement for expenses incurred, arising under the Securities Act.

As permitted by the DGCL, our Amended and Restated Certificate of
Incorporation, which will become effective upon the closing of this offering,
includes a provision that eliminates the personal liability of its directors for
monetary damages for breach of fiduciary duty as a director, except for
liability (1) for any breach of the director's duty of loyalty to us or our
stockholders; (2) for acts or omissions not in good faith or that involve
intentional misconduct or a knowing violation of law; (3) under Section 174 of
the DGCL regarding unlawful dividends and stock purchases; or (4) for any
transaction from which the director derived an improper personal benefit.

As permitted by the DGCL, our Amended and Restated Certificate of
Incorporation and/or our Bylaws, which will become effective upon the closing of
this offering, provide that (1) we are required to indemnify our directors and
officers to the fullest extent permitted by the DGCL, subject to certain very
limited exceptions; (2) we are permitted to indemnify our other employees to the
extent that we indemnify our officers and directors, unless otherwise required
by law, our Amended and Restated Certificate of Incorporation, our Bylaws or
agreements; (3) we are required to advance expenses, as incurred, to our
directors and officers in connection with a legal proceeding to the fullest
extent permitted by the DGCL, subject to certain very limited exceptions; and
(4) the rights conferred in our Bylaws are not exclusive.

Prior to the closing of this offering, we intend to enter into Indemnity
Agreements with each of our current directors and officers to give such
directors and officers additional contractual assurances regarding the scope of
the indemnification set forth in our Amended and Restated Certificate of
Incorporation and our Bylaws and to provide additional procedural protections.
At present, there is no pending litigation or proceeding involving a director,
officer or employee of the Company regarding which indemnification is sought,
nor are we aware of any threatened litigation that may result in claims for
indemnification.

With approval by the Board, we expect to obtain directors' and officers'
liability insurance. Reference is made to the Underwriting Agreement contained
in Exhibit 1.1 hereto, which contains provisions indemnifying our officers and
directors against certain liabilities.

II-1
<PAGE> 94

ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES.

Since the Company's inception on June 13, 1996, the Company has issued and
sold the following unregistered securities:

1. Prior to the completion of this offering, the Company intends to effect
a one-for-two reverse stock split of its outstanding common stock in
which each two outstanding shares of common stock will be split into
one share of common stock.

2. On June 17, 1996, the Company issued 1,500,000 shares of its common
stock to Garrett Gruener in consideration of the assets of Cameo
Technology, Inc. a company owned by Garrett Gruener, with a value of
$13,333 and $20,000 pursuant to the Asset Purchase Agreement and Plan
of Reorganization by and between the Company and Cameo Technology, Inc.
This sale was made in reliance on Section 4(2).

3. On June 17, 1996, the Company issued 900,000 shares of its common stock
to David Warthen in consideration of $20,000. This sale was made in
reliance on Section 4(2).

4. From inception through April 30, 1999, the Company granted options to
purchase 5,379,335 shares of common stock at a weighted average
exercise price of $2.40 per share to employees, consultants, directors
and other service providers pursuant to its 1996 Equity Incentive Plan
and issued an aggregate of 301,960 shares of its common stock to
employees, consultants, directors and other service providers for
aggregate consideration of approximately $89,602 pursuant to exercises
of options granted under the 1996 Equity Incentive Plan. These grants
were made in reliance on Rule 701.

5. From inception through April 30, 1999, the Company granted options to
purchase 1,050,518 shares of common stock at a weighted average
exercise price of $0.26 per share to employees and consultants pursuant
to option agreements outside of the 1996 Equity Incentive Plan and
issued an aggregate of 823,561 shares of its common stock to employees
and consultants for aggregate consideration of approximately $41,353
pursuant to exercises of options granted outside of the 1996 Equity
Incentive Plan. These grants were made in reliance on Rule 701.

6. In August 1997, the Company issued 1,083,498 shares of common stock at
a purchase price of $0.23 and warrants to purchase 541,749 shares of
common stock to Roger A. Strauch, and Daniel H. Miller. The warrants
have a per share exercise price of $0.23 per share. These sales were
made in reliance on Section 4(2).

7. In November 1997, the Company issued 12,000 shares of common stock at
$0.23 per share to Albert J. Janschewitz in exchange for assets related
to the domain name "AJ.com." This sale was made in reliance on Section
4(2).

8. In December 1997, the Company issued 541,829 shares of common stock for
an aggregate purchase price of $249,241 or $0.46 per share to the
Leavitt Family Trust. This sale was made in reliance on Section 4(2).

9. In April 1998, the Company issued 16,300 shares of common stock to
Soren Jacobsen in exchange for assets related to the domain name
"ask.com". The Company imputed a value for the services of $13,221, of
which $5,700 was paid in cash, and the remainder was allocated to the
shares issued. This sale was made in reliance on Section 4(2).

10. In May, June and July 1998, the Company issued warrants exercisable
into 21,500 shares of common stock to Antenna Group PR, for public
relations services performed with a value of $11,005. The warrants are
exercisable into shares of common stock at a per share exercise price
of $.53. This sale was made in reliance on Section 4(2).

11. In June 1998, the Company issued and sold an aggregate of 2,148,807
shares of its common stock for an aggregate purchase price of
approximately $1,135,000 or $0.53 per share to 16 investors including

II-2
<PAGE> 95

Roger A. Strauch, Daniel H. Miller, M. Bruce Nakao, A. George Battle,
Garrett Gruener, Benjamin M. Rosen and the Leavitt Family Trust. This
sale was made in reliance on Section 4(2).

12. In September 1998, the Company issued and sold 1,855,415 shares of its
common stock for an aggregate purchase price of approximately
$1,350,000 or $0.73 per share to 11 investors including Roger A.
Strauch, Daniel H. Miller, Garrett Gruener, Benjamin M. Rosen and the
Leavitt Family Trust. This sale was made in reliance on Section 4(2).

13. In November 1998 and January 1999, the Company issued and sold
3,709,884 shares of its Series A preferred stock for an aggregate
purchase price of approximately $7,653,492 or $2.06 per share to 25
investors including Roger A. Strauch, M. Bruce Nakao, Amy Slater,
Daniel H. Miller, Garrett Gruener, Benjamin M. Rosen, CPQ Holdings,
Inc. and the Leavitt Family Trust. These sales were made in reliance on
Rule 506 of Regulation D.

14. In December 1998, the Company issued a warrant to purchase 17,500
shares of common stock at an exercise price of $0.73 per share to
Michael Goldin, the Company's landlord, in consideration for improved
lease terms valued at $12,775. The warrant was exercised in April 1999.

15. In February and March 1999, the Company issued and sold 5,775,806
shares of its Series B preferred stock for an aggregate purchase price
of approximately $25,000,000, or $4.33 per share to 44 investors
including Roger A. Strauch, M. Bruce Nakao, Amy Slater, Daniel H.
Miller, Garrett Gruener, Benjamin M. Rosen, CPQ Holdings, Inc. and the
Leavitt Family Trust. These sales were made in reliance on Rule 506 of
Regulation D.

16. In March 1999, the Company issued a warrant exercisable into 2,500
shares of common stock to, Marco Sorensen, consultant in consideration
for graphic design services performed. The warrant is exercisable into
shares of common stock at a per share exercise price of $4.33. The
issuance was made in reliance on Section 4(2).

17. On April 16, 1999, the Company issued 225,000 shares of common stock
with a value of $3.50 per share along with $700,000 in cash in
consideration for assets of Lumina Decision Systems, Inc. valued at
$1,538,000. The assets were related to the Personal Decision Engine
technology and the Analytica and Analytica Decision Engine
technologies. The sale was made in reliance on Section 4(2).

18. On June 15, 1999, the Company entered into a Warrant Agreement to
purchase shares of the common stock of the Company with Comdisco, Inc.,
the Company's equipment lease provider, in consideration for improved
lease terms. Under the Warrant Agreement the Company agreed to issue a
warrant to purchase that number of shares of common stock equal to
$157,500 divided by the initial public offering price. The exercise
price of the warrant will be equal to the initial public offering
price. The issuance will be made in reliance on Section 4(2).

The sale of the above securities was deemed to be exempt from registration
under the Securities Act in reliance upon Section 4(2) of the Securities Act or
Regulation D promulgated thereunder, or Rule 701 promulgated under Section 3(b)
of the Securities Act as transactions by an issuer not involving any public
offering or transactions pursuant to compensation benefit plans and contracts
relating to compensation as provided under Rule 701. The recipients of
securities in each such transaction represented their intentions to acquire the
securities for investment only and not with a view to or for sale in connection
with any distribution thereof, and appropriate legends were affixed to the share
certificates issued in such transactions. All recipients had adequate access,
through their relationships with us, to information about Ask Jeeves.

II-3
<PAGE> 96

ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.

(a) EXHIBITS.

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<C> <S>
1.1* Form of Underwriting Agreement.
3.1* Form of Certificate of Incorporation of the Registrant.
3.2* Certificate of Merger to be filed with the Secretary of
State of the State of Delaware on ,
1999.
3.3* Form of Certificate of Incorporation of the registrant to be
filed on the closing of the offering made hereby.
3.4* Bylaws of the Registrant.
4.1* Reference is made to Exhibits 3.1, 3.2 and 3.3 hereof.
4.2* Specimen Certificate for Registrant's Common Stock.
4.3* Warrant to purchase 15,000 shares of Common Stock granted by
the Registrant to Antenna Group PR dated as of June 30,
1998.
4.4* Warrant to purchase 20,000 shares of Common Stock granted by
the Registrant to Antenna Group PR dated as of July 31,
1998.
4.5* Warrant to purchase 8,000 shares of Common Stock granted by
the Registrant to Antenna Group PR dated as of May 31, 1998.
4.6* Warrant to purchase 5,000 shares of Common Stock granted by
the Registrant to Soren Jacobsen dated as of March 10, 1999.
4.7* Amended and Restated Investor Rights Agreement by and
between the Registrant and certain investors of the
Registrant dated as of February 24, 1999.
4.8* Warrant Agreement to purchase shares of the Common Stock of
the Registrant with Comdisco, Inc. dated as of June 15,
1999.
5.1* Opinion of Cooley Godward LLP.
10.1* Amended and Restated 1996 Equity Incentive Plan.
10.2* Form of Option Agreement for the Amended and Restated 1996
Equity Incentive Plan.
10.3.1* 1999 Equity Incentive Plan.
10.3.2* 1999 Equity Incentive Plan, as amended.
10.4* Form of Option Agreement for the 1999 Equity Incentive Plan.
10.5.1* 1999 Employee Stock Purchase Plan.
10.5.2* 1999 Employee Stock Purchase Plan, as amended.
10.6* Commercial Office Lease by and between Eat/Work Development,
L.P. and the Roda Group Venture Development Company dated as
of August 20, 1997.
10.7* Commercial Office Lease by and between Eat/Work Development,
L.P. and the Roda Development Company dated as of August 14,
1998.
10.8* Commercial Office Lease by and between Eat/Work Development,
L.P. and the Roda Development Company dated as of November
15, 1998.
10.9* Commercial Office Lease by and between Eat/Work Development,
L.P. and the Registrant dated as of May 15, 1998.
10.10* Lease Agreement by and between Parker Associates and the
Registrant dated as of January 26, 1999.
</TABLE>

II-4
<PAGE> 97

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<C> <S>
10.11* Assignment and Assumption of Standard Commercial Office
Lease for Eat/Work Development by and between The Roda Group
Venture Development Company, L.L.C. and the Registrant dated
as of January 1, 1999 (relating to 918 Parker Street, Suite
A-14, Berkeley, California).
10.12* Assignment and Assumption of Standard Commercial Office
Lease for Eat/Work Development by and between The Roda Group
Venture Development Company, L.L.C. and the Registrant dated
as of January 1, 1999 (relating to 918 Parker Street, Suite
A-1-1 and A-1-2, Berkeley, California).
10.13 License Agreement between the Registrant and Compaq Computer
Corporation dated as of October 2, 1998.
10.14 License and Development Agreement between the Registrant and
Compaq Computer Corporation dated as of March 31, 1999.
10.15* Consulting Services Agreement by and between the Registrant
and The Roda Development. Group dated as of December 14,
1998.
10.16* Offer letter by and between the Company and M. Bruce Nakao
dated as of April 16, 1999.
10.17* Offer letter by and between the Registrant and Laurence
Fishkin dated as of January 11, 1999.
10.18.1* Offer letter by and between the Registrant and Edward
Briscoe III dated as of January 18, 1999.
10.18.2* Offer letter by and between the Registrant and Edward Brisco
III, as amended, dated as of June 1, 1999.
10.19* Offer letter by and between the Registrant and Frank Vaculin
dated as of January 5, 1999.
10.20.1* Offer letter by and between the Registrant and Robert W.
Wrubel dated as of May 22, 1998.
10.20.2* Offer letter by and between the Registrant and Robert W.
Wrubel, as amended, dated as of June 1, 1999.
10.21* Common Stock and Warrant Purchase Agreement by and between
the Registrant, and each of Daniel H. Miller, Roger A.
Strauch, David C. Warthen and The Roda Group Venture
Development Company, LLC dated as of August 20, 1997.
10.22* Common Stock Subscription Agreement, by and between the
Registrant and certain investors of the Registrant dated as
of June 26, 1998.
10.23* Common Stock Subscription Agreement, by and between the
Registrant and certain investors of the Registrant dated as
of August 31, 1998.
10.24* Series A Preferred Stock Purchase Agreement by and between
the Registrant and certain investors of the Registrant dated
as of November 13, 1998.
10.25* Series B Preferred Stock Purchase Agreement by and between
the Registrant and certain investors of the Registrant dated
as of February 24, 1999.
10.26 Asset Purchase Agreement by and between the Registrant and
Lumina Decision Systems, Inc. dated as of April 16, 1999.
10.27* Form of Indemnity Agreement by and between the Registrant
and each of its directors and executive officers.
10.28* Office Lease by and between Emery Station Associates, L.L.C.
and the Registrant dated as of April 29, 1999.
10.29* Offer Letter by and between the Registrant and George
Lichter dated as of May 27, 1999.
10.30* Master Lease Agreement by and between the Registrant and
Comdisco, Inc. dated as of June 15, 1999.
10.31 Forms of Promissory Note and Stock Pledge Agreement for
loans to executive officers.
</TABLE>

II-5
<PAGE> 98

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<C> <S>
23.1 Consent of Ernst & Young LLP.
23.2* Consent of Cooley Godward LLP. Reference is made to Exhibit
5.1.
24.1* Power of attorney. Reference is made to Page II-6.
27.1* Financial Data Schedule.
</TABLE>

- ---------------

* Previously filed.

(b) FINANCIAL STATEMENT SCHEDULES.

All schedules have been omitted because the information required to be set
forth therein is not applicable or is shown in the combined financial statements
or notes thereto.

ITEM 17. UNDERTAKINGS

The undersigned Registrant hereby undertakes to provide to the underwriters
at the closing specified in the underwriting agreement, certificates in such
denominations and registered in such names as required by the underwriters to
permit prompt delivery to each purchaser.

Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Securities Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, officer or controlling person of the Registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.

The undersigned Registrant hereby undertakes that:

(1) For purposes of determining any liability under the Securities
Act, the information omitted from the form of prospectus filed as part of
this registration statement in reliance upon rule 430A and contained in a
form of Prospectus filed by the Registrant pursuant to Rule 424(b)(1) of
(4) or 497(h) under the Securities Act shall be deemed to be part of this
registration statement as of the time it was declared effective.

(2) For the purposes of determining any liability under the Securities
Act, each post-effective amendment that contains a form of prospectus shall
be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.

II-6
<PAGE> 99

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant has duly caused this Amendment No. 6 to the Registration Statement to
be signed on its behalf by the undersigned, thereunto duly authorized, in the
City of Berkeley, State of California, on June 30, 1999.

ASK JEEVES, INC.

By: /s/ CHRISTINE M. DAVIS
------------------------------------
Christine M. Davis
Controller

Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated:

<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
PRINCIPAL EXECUTIVE OFFICER:

* President, Chief Executive June 30, 1999
- ----------------------------------------------------- Officer and Director
Robert W. Wrubel

PRINCIPAL FINANCIAL OFFICER:

* Chief Financial Officer June 30, 1999
- -----------------------------------------------------
M. Bruce Nakao

PRINCIPAL ACCOUNTING OFFICER:

/s/ CHRISTINE M. DAVIS Controller June 30, 1999
- -----------------------------------------------------
Christine M. Davis

ADDITIONAL DIRECTORS:

* Chairman of the Board of June 30, 1999
- ----------------------------------------------------- Directors
Roger A. Strauch

* Director June 30, 1999
- -----------------------------------------------------
A. George Battle

* Director June 30, 1999
- -----------------------------------------------------
Benjamin M. Rosen

* Director June 30, 1999
- -----------------------------------------------------
Daniel J. Nova

* Director June 30, 1999
- -----------------------------------------------------
Geoffrey Y. Yang

* Director June 30, 1999
- -----------------------------------------------------
Garrett Gruener
</TABLE>

*By: /s/ CHRISTINE M. DAVIS
-------------------------------
Christine M. Davis
Attorney-in-Fact

II-7
<PAGE> 100

EXHIBIT INDEX

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<C> <S>
10.12* Assignment and Assumption of Standard Commercial Office
Lease for Eat/Work Development by and between The Roda Group
Venture Development Company, L.L.C. and the Registrant dated
as of January 1, 1999 (relating to 918 Parker Street, Suite
A-1-1 and A-1-2, Berkeley, California).
10.13 License Agreement between the Registrant and Compaq Computer
Corporation dated as of October 2, 1998.
10.14 License and Development Agreement between the Registrant and
Compaq Computer Corporation dated as of March 31, 1999.
10.15* Consulting Services Agreement by and between the Registrant
and The Roda Development. Group dated as of December 14,
1998.
10.16* Offer letter by and between the Company and M. Bruce Nakao
dated as of April 16, 1999.
10.17* Offer letter by and between the Registrant and Laurence
Fishkin dated as of January 11, 1999.
10.18.1* Offer letter by and between the Registrant and Edward
Briscoe III dated as of January 18, 1999.
10.18.2* Offer letter by and between the Registrant and Edward Brisco
III, as amended, dated as of June 1, 1999.
10.19* Offer letter by and between the Registrant and Frank Vaculin
dated as of January 5, 1999.
10.20.1* Offer letter by and between the Registrant and Robert W.
Wrubel dated as of May 22, 1998.
10.20.2* Offer letter by and between the Registrant and Robert W.
Wrubel, as amended, dated as of June 1, 1999.
10.21* Common Stock and Warrant Purchase Agreement by and between
the Registrant, and each of Daniel H. Miller, Roger A.
Strauch, David C. Warthen and The Roda Group Venture
Development Company, LLC dated as of August 20, 1997.
10.22* Common Stock Subscription Agreement, by and between the
Registrant and certain investors of the Registrant dated as
of June 26, 1998.
10.23* Common Stock Subscription Agreement, by and between the
Registrant and certain investors of the Registrant dated as
of August 31, 1998.
10.24* Series A Preferred Stock Purchase Agreement by and between
the Registrant and certain investors of the Registrant dated
as of November 13, 1998.
10.25* Series B Preferred Stock Purchase Agreement by and between
the Registrant and certain investors of the Registrant dated
as of February 24, 1999.
10.26 Asset Purchase Agreement by and between the Registrant and
Lumina Decision Systems, Inc. dated as of April 16, 1999.
10.27* Form of Indemnity Agreement by and between the Registrant
and each of its directors and executive officers.
10.28* Office Lease by and between Emery Station Associates, L.L.C.
and the Registrant dated as of April 29, 1999.
10.29* Offer Letter by and between the Registrant and George
Lichter dated as of May 27, 1999.
10.30* Master Lease Agreement by and between the Registrant and
Comdisco, Inc. dated as of June 15, 1999.
10.31 Form of Promissory Note and Stock Pledge Agreement for loans
to executive officers.
</TABLE>

<PAGE> 102

- ---------------

* Previously filed.

<PAGE> 1
EXHIBIT 10.13

LICENSE AGREEMENT

BETWEEN

ASK JEEVES, INC. AND COMPAQ COMPUTER CORPORATION

THIS LICENSE AGREEMENT (the "Agreement") is made as of October 2, 1998 (the
"Effective Date") by and between ASK JEEVES, INC., a California corporation
("Ask Jeeves"), with its principal place of business at 918 Parker Street,
Berkeley, CA 94710 ("Ask Jeeves"), and COMPAQ COMPUTER CORPORATION ("Compaq"),
with its principal place of business at 20555 SH 249, Houston, TX 77070.

RECITALS

A. Ask Jeeves has developed and owns Internet navigation tools and
databases that simplify the process of locating information on the World
Wide Web through the use of a question and answer format (the
"Service").

B. Compaq owns and operates an Internet search engine known as Alta Vista
located at www.altavista.com ("Alta Vista").

C. Compaq would like to facilitate its users' ability to locate information
on the World Wide Web by integrating the Service into Alta Vista, and
Ask Jeeves desires to license the Service to Compaq on the terms and
conditions set forth below.

AGREEMENT

In consideration of the mutual covenants contained in this Agreement,
the parties agree as follows:

1. DEFINITIONS.

1.1 "AJ ANSWER LINK" means the specific instances of Answer Templates
contained in the Ask Jeeves Knowledgebase, excluding AV Answer
Links.

1.2 "AV ANSWER LINK" means the specific instances of Answer Templates
that are modified at the request of Compaq under the conditions
and procedures set forth in this Agreement.

1.3 "ALTA VISTA" means the search engine owned and operated by Compaq
located at www.altavista.com.

1.4 "ANNUAL PERIOD" means the twelve (12) month period beginning on
Launch Date and each twelve (12) month period thereafter
beginning on the anniversary date of the Launch Date. "Quarterly
Period" means one-quarter of an Annual Period.

1.5 "ANSWER LINK" means an AJ Answer Link or an AV Answer Link.

1.6 "ANSWER LINK RELATIONSHIP" means an agreement with a third party
to provide it the privilege of being the destination of an Answer
Link (i.e., make their site the answer to an Ask Jeeves Question)
in return for compensation.

1.7 "ANSWER LINK REVENUE" means any monetary compensation paid by a
third party, as a result of being the Answer Link to an Ask
Jeeves Question. Answer Link Revenue will be calculated on a
gross basis, without deduction for sales commissions or other
sales expenses.

1.
<PAGE> 2

1.8 "ANSWER TEMPLATE" means the general form of answer scripts stored
in the Ask Jeeves Knowledgebase that when associated with a
specific Ask Jeeves Question and processed by the Question
Processing Engine forms a specific Answer Link.

1.9 "ASK JEEVES INTELLECTUAL PROPERTY" means the Software, the Ask
Jeeves Knowledgebase, the Ask Jeeves Questions, the Question
Processing Engine and all other intellectual property owned by
Ask Jeeves.

1.10 "ASK JEEVES KNOWLEDGEBASE" means the collection of Question
Templates and Answer Templates (and associated data structures)
that operates with the Question Processing Engine and is
currently used by Ask Jeeves in the service it operates at
www.askjeeves.com.

1.11 "ASK JEEVES QUESTION" means a specific instance of a Question
Template in the Ask Jeeves Knowledgebase, which the Service will
offer to its users to confirm the users' query. (For example, if
a user asks "Is it raining in Portland?" the Service will offer
the Ask Jeeves Question "What is the weather forecast for
Portland?" to confirm the user's question.)

1.12 "CLICK" means the return of an Answer Link from the Question
Processing Engine in response to the submittal of a selected Ask
Jeeves Question.

1.13 "CLICK RATE FEE" means the amount of money to be paid by Compaq
to Ask Jeeves for each Click.

1.14 "LAUNCH DATE" means the date the Service is first offered to
Compaq users on a regular, publicly available basis.

1.15 "NUMBER OF QUERIES" means the number of times users submit a new
search, resulting in a first results page that contains Ask
Jeeves questions.

1.16 "QUESTION PROCESSING ENGINE" means the proprietary, software
developed and owned by Ask Jeeves that allows users to pose
questions and be directed to appropriate web sites that answer
associated Ask Jeeves Questions.

1.17 "QUESTION TEMPLATE" means the general form of a question stored
in the Ask Jeeves Knowledgebase that when associated with a
specific user query and processed by the Question Processing
Engine forms one or more Ask Jeeves Questions.

1.18 "SERVICE" means the Ask Jeeves navigation service using the
Question Processing Engine and the Ask Jeeves Knowledgebase as it
will appear on and/or within Alta Vista.

1.19 "SOFTWARE" means the software and documentation provided to
Compaq by Ask Jeeves in connection with implementing the Service
on Alta Vista platforms meeting the technical specifications set
forth in Exhibit A.

2. DESCRIPTION OF THE SERVICE.

a. ASK JEEVES OBLIGATIONS.

(1) SERVICE AND KNOWLEDGEBASE. Ask Jeeves will provide Compaq
with the Software, the Ask Jeeves Knowledgebase (and regular
updates to the Ask Jeeves Knowledgebase) and technical
support as may be needed for Compaq to implement the Service
on Alta Vista.

(2) EDITORIAL CONTROL OF ASK JEEVES KNOWLEDGEBASE. Ask Jeeves
will define the content of the Ask Jeeves Knowledgebase,
including the determination of what constitutes appropriate
questions and answers. Compaq may request that the Ask
Jeeves Knowledgebase Answer

2.
<PAGE> 3

Templates be modified to link appropriate questions to Compaq
and Alta Vista's content and e-commerce partners or to avoid
links to Alta Vista's or Compaq's competitors when other
appropriate answers are available. Such modified Assayer Links
are referred to as "AV Answer Links". Ask Jeeves and Compaq
will cooperate to develop a formal process to accept and
process AV Answer Links including reasonable limits on the
number of AV Answer Links processed in a given time period and
the amount of labor involved (including the labor to maintain
the AV Answer Links).

b. COMPAQ OBLIGATIONS. Compaq will configure and operate the Service
on Alta Vista. Compaq's operation of the Service on Alta Vista
will be done in a manner that does not reflect negatively on Ask
Jeeves or the functionality of the Service.

3. LICENSE

a. GRANT OF LICENSE. Upon receipt of the fees set forth in Section
4, below, and subject to the terms and conditions of this
Agreement, Ask Jeeves grants Compaq a non-exclusive,
non-sublicensable, worldwide, nontransferable, license for the
duration of this Agreement (including any extensions) to use,
reproduce, store, distribute and display the information, data,
content, Software or other intellectual property provided by Ask
Jeeves to Compaq, for the sole purpose of providing the Service.

Ask Jeeves further grants to Compaq a non-exclusive,
non-transferable worldwide license to publicly perform and
publicly display the Service or other intellectual property
provided by Ask Jeeves at trade shows, exhibitions, and to
prospective Customers, as long as such performance or display is
of the Service as implemented on Alta Vista.

b. LICENSE RESTRICTIONS. Except as specifically granted in this
Agreement, Ask Jeeves owns and retains all right, title and
interest in all information, data, content, software or other
intellectual property provided by Ask Jeeves to Compaq in
connection with the Service. This Agreement does not transfer
ownership rights of any description in Ask Jeeves' intellectual
property to Compaq or to any other third party. Compaq will
install, reproduce and render the Service operational only for
the purposes of implementing it on Alta Vista. Compaq agrees not
to modify, reverse engineer or decompile any intellectual
property of Ask Jeeves, or to intentionally create derivative
works based on such intellectual property. Compaq agrees not to
distribute the Service to any person or entity other than as
contemplated by this Agreement or to make any other use of the
Service. Compaq agrees to display Ask Jeeves' copyright and
trademark notices on the Software and Service as stated in
Section 11.b. "Copyright Notice" and to take other steps
necessary to protect Ask Jeeves' intellectual property rights as
specified within Section 12.2 "Confidentiality."

C. COMPAQ RIGHTS. Except as otherwise stated in this Agreement, Ask
Jeeves shall place no restrictions regarding (i) the placement of
the Ask Jeeves Questions (including but not limited to follow-up
questions) on Alta Vista and (ii) Ask Jeeves shall have no rights
within the banner advertising or other advertising on Alta Vista.

4. PAYMENT. In consideration for providing the Service, Compaq will pay Ask
Jeeves as follows:

a. PER CLICK FEE.

(1) for the first two (2) billion Clicks per Annual Period,
Compaq will pay Ask Jeeves at a Click Rate Fee of One-Tenth
of One Cent ($0.001) per Click:

(2) for all Clicks in excess of two (2) billion per Annual
Period, Compaq will pay Ask Jeeves at a Click Rate Fee of
One-Twentieth of One Cent ($0.0005) per Click.

3.
<PAGE> 4

(3) In the event that the actual number of Clicks exceeds the
actual Number of Queries in any given calendar month, then
Ask Jeeves will be paid based on the actual Number of
Queries that month.

b. MINIMUM FEE PAYMENT. Compaq will pay Ask Jeeves a "Minimum Fee"
of One Hundred and Twenty-Five Thousand Dollars ($125,000) per
Quarterly Period, with the first payment to be made no later than
two (2) weeks after the Launch Date and the subsequent payments
to be made on the first day of each Quarterly Period thereafter.
If the Click Rate Fee in any Quarterly Period exceeds the Minimum
Fee, Compaq will pay the excess amount to Ask Jeeves within
forty-five (45) days of the end of such Quarterly Period. If the
Click Rate Fee in any Quarterly Period is less than the Minimum
Fee, Ask Jeeves will retain the entire Minimum Fee, without
refund or credit to Compaq. Provided, however, that the Minimum
Fee may be adjusted on a calendar prorated basis as set forth in
subsection 4.f., below.

c. ANSWER LINK REVENUES. In addition to the payments described in
2.a and 2.b., above. Compaq and Ask Jeeves agree that they will
share in any Answer Link Revenue which may occur as follows:

(1) for all Answer Link Revenue resulting from Answer Link
Relationships established by Compaq, Compaq will retain
seventy percent (70%) of such Answer Link Revenues and will
pay Ask Jeeves the remaining thirty percent (30%);

(2) for all Answer Link Revenues resulting from Answer Link
Relationships established by Ask Jeeves, Ask Jeeves will
retain seventy percent (70%) of the Answer Link Revenues and
will pay Compaq the remaining thirty percent (30%).

(3) In the case where one party receives a monetary benefit that
is not easily calculated as Answer Link Revenue, the parties
will compensate each other based on a compensation method
jointly determined by the parties.

(4) Compaq shall have the right to market and establish Answer
Link Relationships associated with AV Answer Links and Ask
Jeeves shaft have the right to market and establish Answer
Link Relationships associated with AJ Answer Links. Either
party may assign the other the right to market and establish
Answer Link Relationships associated with a specified
portion of its Answer Links.

d. TAXES. All fees and payments stated herein exclude, and the party
receiving payment shall pay, any sales, use. property, license,
value added, withholding, excise or similar tax, federal, state
or local, related to the parties' performance of its obligations
or exercise of its rights under this Agreement and any related
duties, tariffs, imposts and similar charges, exclusive of taxes
based on the paying party's net income.

e. 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 accounting records of the
other party to verify, reports 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 amount of royalties
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 5% 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

4.
<PAGE> 5

request, during normal business hours, but not more frequently
than once each calendar year, provide access to such accounting
records.

f. ADJUSTMENT TO PAYMENTS

In the event that the Software licensed under this Agreement
encounters problems with scalability or other functional problems
that render the Software not viable to Compaq, and Ask Jeeves is
unable to correct such problems after written notice and the
opportunity to cure as set forth in Section 5.b (2), than Compaq
may terminate this Agreement and adjust on a prorated calendar
basis the Minimum Fees payable to Ask Jeeves.

5. TERM AND TERMINATION.

a. TERM. The term (the "Term") of the Agreement is two (2) years
from the Effective Date. The Agreement will renew automatically
for additional one (1) year terms (a "Renewal Term") unless
either party notifies the other m writing at least ninety (90)
days before the expiration of the Term or any Renewal Term of its
desire to terminate the Agreement.

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 Compaq as set forth in Section 4.f. above.

(2) By either party, upon thirty (30) days written notice, in
the event that the either party fails to pay the amounts due
to the other party, pursuant to this Agreement;

(3) By either party, for any material breach of this Agreement,
other than the failure to make payments under this
Agreement, that is not cured within sixty (60) 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. ASK JEEVES RIGHTS ON TERMINATION. On termination, (a) all rights
granted to Compaq under this Agreement cease and Compaq agrees to
use all commercially reasonable efforts, which shall in no event
extend for more than one (1) week from the date of termination,
to cease all use and reproduction of the Ask Jeeves Intellectual
Property, and (b) Compaq will promptly return all copies of the
Ask Jeeves Intellectual Property 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 Ask Jeeves
Intellectual Property.

d. COMPAQ RIGHTS ON TERMINATION

(1) Ask Jeeves shall grant Compaq a fully paid up, irrevocable,
worldwide license to the Software in the event that Compaq
terminates this Agreement pursuant to Section 5.b (4),
above, and that Ask Jeeves, or a trustee or receiver for Ask
Jeeves, does not assume this Agreement in the bankruptcy
proceeding, with no modification to existing terms. This
license grant shall not grant any right to future
maintenance, upgrades, enhancements or fixes.

(2) Upon material breach by Ask Jeeves, Compaq shall have the
right, at no additional cost, to continue to provide the
Service on Alta Vista until the earlier to occur of (i)
Compaq securing a replacement technology or (ii) ninety (90)
days.

5.
<PAGE> 6

e. SURVIVAL FOLLOWING TERMINATION. Sections 4, 5, 8, 9, 10 and 12
will survive termination or expiration of this Agreement. In
addition, provisions of this Agreement which, by their nature,
are intended to remain in effect beyond the termination or
expiration of this Agreement, shall survive its termination or
expiration.

6. MAINTENANCE, UPGRADES AND SUPPORT. Ask Jeeves will provide maintenance
and support for the Service as follows:

a. MAINTENANCE. Ask Jeeves will provide bug fixes for the Software
and the Ask Jeeves Knowledgebase at no additional cost to Compaq.
Non-bug fix support and changes specifically requested by Compaq
for use in connection with the Service may be charged by Ask
Jeeves to Compaq at the then current Ask Jeeves' standard rates.

b. UPGRADES. For a period of time coterminous with this Agreement
and consistent with Ask Jeeves standard distribution practices,
Ask Jeeves will provide Compaq with periodic upgrades,
enhancements, modifications, versions to the Software and the Ask
Jeeves Knowledgebase (including beta versions, if appropriate at
no additional cost) to Compaq. The periodic upgrades,
enhancements, modifications, versions shall automatically become
part of the licensed Software for purposes of this Agreement. The
rights to, said upgrades, enhancements, modifications, versions
shall remain with Ask Jeeves, and provided however, that said
rights shall not exceed the granting party's ability to grant
such rights.

c. TECHNICAL SUPPORT. Ask Jeeves will provide Compaq with standard
technical support during normal business hours. Ask Jeeves
technical support will be available through pager contact on a
24x7 basis in the event of a major software failure. Ask Jeeves
will work with Compaq as it relates to a catastrophic failure, or
to correct software failures or errors that prevent the Software
from functioning, on the following basis:

(1) Severity 1 - catastrophic failure, an emergency, condition
that causes critical impact and that makes the performance
or continued performance of any one or more functions
impossible. Ask Jeeves will use its best efforts to resolve
technical issues of Severity 1 within twenty-four hours and
will develop and communicate to Compaq a resolution plan
within twenty-four hours.

(2) Severity 2 - is a condition which significantly affects and
makes the performance or continued performance of any one or
more functions difficult and which cannot be circumvented or
avoid on a temporary basis by the user. Ask Jeeves will use
its best efforts to resolve technical issues of Severity 2
within seventy-two hours and will develop and communicate to
Compaq a resolution plan within seventy-two hours.

7. REPORTS AND REPORTING. Ask Jeeves will provide Compaq with user log
analysis tools that will allow Compaq to determine the number of
questions asked and answered in a given period as well as determine the
number of times a given Answer Template was selected (by both total
count and percentage.) Alta Vista will, on a weekly basis, provide Ask
Jeeves with copies of its Service user logs for Ask Jeeves' internal
use.

8. INFRINGEMENT INDEMNITY BY ASK JEEVES. Ask Jeeves agrees to indemnify,
defend and hold Compaq harmless from and against any claims, actions or
demands alleging that all or any part of the Ask Jeeves Intellectual
Property infringes any United States patent, copyright, trademark, or
other United States intellectual property right of a third party. If use
of the Ask Jeeves Intellectual Property is permanently enjoined for any
reason, Ask Jeeves, at Ask Jeeves' option, and in its sole discretion,
may (a) modify the Ask Jeeves Intellectual Property so as to avoid
infringement; (b) procure the right for Compaq to continue to use and
reproduce the Service; or (c) terminate this Agreement, in which case
Compaq shall be given a refund of all Minimum Fees actually paid to the
date of termination as its sole and exclusive remedy. Ask Jeeves shall
have no obligation under this Section 8 for or with respect to claims,
actions or demands alleging infringement that arise solely as a result
of (i) the combination of noninfringing items supplied by

6.
<PAGE> 7

Ask Jeeves with any items not supplied by Ask Jeeves, (ii) modification
of the Ask Jeeves Intellectual Property by Compaq or without the
authorization or consent of Ask Jeeves, or (iii) continued alleging
infringing activity by Compaq after Compaq has been notified Ask Jeeves'
decision to terminate under subsection 8 (c), above.

9. OTHER INDEMNITY. Each party (the "Indemnifying Party") shall indemnify
the other party (the "Indemnified Party") against any and all claims,
losses, costs and expenses, including reasonable attorneys' fees, which
the Indemnified Party may incur as a result of claims in any form by
third parties arising from: (a) the Indemnifying Party's acts, omissions
or misrepresentations, or (b) the violation of any third party
proprietary right by the Indemnifying Party's domain name, software or
any content provided by the Indemnifying Party for use on the
Indemnified Party's servers. The Indemnified Party shall (i) give the
Indemnifying Party notice of the relevant claim, (ii) cooperate with the
Indemnifying Party, at the Indemnifying Party's expense, in the defense
of such claim, and (iii) give the Indemnifying Party the right to
control the defense and settlement of any such claim, except that the
Indemnifying Party shall not enter into any settlement that affects the
Indemnified Party's rights or interest without the Indemnified Party's
prior written approval. The Indemnified Party shall have the right to
participate in the defense at its expense.

10. WARRANTIES, DISCLAIMER AND LIMITATIONS.

a. WARRANTY. Ask Jeeves warrants that (a) it holds the necessary
rights to provide and permit the use of the Service (b when the
Service is delivered to Compaq, it will be of substantially the
same quality as the service operated by Ask Jeeves at
askjeeves.com; (c) the media containing the Software will be free
from defects for a period of thirty (30) days from the date of
delivery to Compaq, provided that this warranty does not cover
defects due to Compaq's misuse of the media or an accident
subsequent to delivery, to Compaq; and (d) It has not made and
will not make any commitments to any third party inconsistent
with or in derogation of the rights and licenses granted to
Compaq and that it is free of any obligation that would prevent
it from entering into this Agreement.

b. DISCLAIMER. THE WARRANTIES SET FORTH IN SECTION 10.a. 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 SOFTWARE IS ERROR-FREE,
WILL OPERATE WITHOUT INTERRUPTION, OR IS COMPATIBLE WITH ALL
EQUIPMENT OR SOFTWARE CONFIGURATIONS; (b) ANY AND ALL IMPLIED
WARRANTIES OF MERCHANTABILITY; AND (c) ANY AND ALL WARRANTIES OF
FITNESS FOR A PARTICULAR PURPOSE.

c. LIMITATION ON LIABILITY. EXCEPT IN THE EVENT OF A BREACH OF A
LICENSE GRANT BY LICENSEE, NEITHER PARTY SHALL BE LIABLE FOR
SPECIAL, INCIDENTAL OR CONSEQUENTIAL DAMAGES OR LOST PROFITS
(HOWEVER ARISING, INCLUDING NEGLIGENCE) ARISING OUT OF OR IN
CONNECTION WITH THIS AGREEMENT. EXCEPT IN THE EVENT OF A BREACH
OF A LICENSE GRANT, A FAILURE TO PAY FEES, OR AN INDEMNITY CLAIM,
IN NO EVENT SHALL EITHER PARTY BE LIABLE TO THE OTHER PARTY IN AN
AMOUNT GREATER THAN THE AMOUNTS ACTUALLY PAID BY COMPAQ TO ASK
JEEVES UNDER THIS AGREEMENT.

11. PROMOTION, PUBLICITY AND COPYRIGHT NOTICE.

a. PROMOTION ON ALTA VISTA. Compaq agrees that it will place a
Question Answering Powered by Ask Jeeves," "Question Answering
Technology by Ask Jeeves," "Question Answering by Ask Jeeves" or
other reference mutually agreed upon by. the parties on the
results page of the Service. Compaq will have control over the
placement, size, font, and color of the reference. However,
Compaq agrees that the reference will be clearly readable to an
average consumer user.

7.
<PAGE> 8

b. COPYRIGHT NOTICE. Compaq also agrees to place "Question and
Answer Templates copyrighted by Ask Jeeves, Inc., 1996-98, all
rights reserved" notice on its copyright notice page in a manner
similar to the other copyright notices on that page. In no event
shall the notice "Question and Answer Templates copyrighted by
Ask Jeeves" be more prominately displayed that that of the Compaq
or Alta Vista copyright notices.

c. PRESS RELEASES. The parties may issue press releases announcing
the Service. The parties agree that any such press releases shall
acknowledge that the Service is based on technology licensed from
Ask Jeeves. Each party, agrees to obtain the permission of the
other, which shall not be unreasonably withheld, BEFORE RELEASING
PRESS RELEASES OR OTHER FORMS OF PROMOTION THAT MENTION THE OTHER
IN REGARDS TO THIS AGREEMENT, except that each party may use
specific information previously approved for public release by
the other, without further approval. Neither party shall disclose
the terms and conditions of this Agreement to any, third party,
including, but not limited to, any information relating to the
royalties or fees paid by Compaq to Licensor pursuant to this
Agreement. except as required by law.

12. GENERAL PROVISIONS.

12.1 GOVERNING LAW. This Agreement will be governed and construed in
accordance with the laws of the State of New York without giving
effect to conflict of laws principles. Both parties agree that
the Agreement shall be interpreted as if the actions within the
Agreement where performed within the State of New York.

12.2 CONFIDENTIALITY. All disclosures of proprietary and/or
confidential information in connection with this Agreement or the
transaction contemplated by this Agreement shall be governed by
the terms of the Corporate Disclosure Agreement previously
executed by the parties, a copy of which is attached as Exhibit B
to this Agreement.

12.3 ASSIGNMENT. Neither party may assign this Agreement, or any part
of this Agreement, without the prior written consent of the other
party., except that this Agreement may be assigned by either
party, without the other party's consent, to an entity acquiring
all or substantially all of the outstanding shares of the
assigning party's stock or all or substantially all of the
assigning party's assets.

A further exception to the above shall be as it regards Alta
Vista and the Alta Vista Division within Compaq. In the event
that there is a restructuring of the current Alta Vista Division
within the Compaq Consumer Products Group, and such restructuring
would effect a change of control of the assets within the
Division or a change including but not limited to creation of a
Subsidiary, to which Compaq will sell transfer or assign the
majority of the assets of the Alta Vista Division, including Alta
Vista, then Compaq shall have no limitation placed on it and it
may assign all rights and obligations within this Agreement,
without prior written consent of Ask Jeeves.

12.4 SEVERABILITY; HEADINGS. If any provision herein is held to be
invalid or unenforceable for any reason, the remaining provisions
will continue in full force without being impaired or invalidated
in any way. Headings are for reference purposes only and in no
way define, limit, construe or describe the scope or extent of
such section.

12.5 FORCE MAJEURE. If performance hereunder is prevented, restricted
or interfered with by any act or condition whatsoever beyond the
reasonable control of a party, the party, so affected, upon
giving prompt notice to the other party, shall be excused from
such performance to the extent of such prevention, restriction or
interference.

12.6 INDEPENDENT CONTRACTORS. The parties are independent contractors,
and no agency, partnership, joint venture, employee-employer or
franchisor-franchisee relationship is intended or created by

8.
<PAGE> 9

this Agreement. Neither party shall make any warranties or
representations on behalf of the other party.

12.7 COMPLIANCE WITH LAWS. At its own expense, each party shall comply
with all applicable laws, regulations, rules, ordinances and
orders regarding its activities related to this Agreement.

12.8 NOTICE. Any notices hereunder shall be given to the appropriate
party, at the following addresses or at such other address as the
party shall specify, in writing.

For Ask Jeeves: For Compaq:

Ask Jeeves, Inc. Compaq Computer Corporation
918 Parker Street 20555 SH 249
Berkeley, CA 94710 Houston. TX 77070
Attn: Robert Wrubel, President Attn: Law Department

Notice shall be deemed given: upon personal delivery; if sent by
fax, upon confirmation of receipt; or if sent by certified or
registered mail, postage prepaid, 5 days after the date of
mailing.

12.9 ENTIRE AGREEMENT, AMENDMENT AND WAIVER. This Agreement sets forth
the entire understanding and agreement of the parties, and
supersedes any and all oral or written agreements or
understandings between the parties, as to the subject matter of
this Agreement. It may be changed only by a writing signed by
both parties. The waiver of a breach of any provision of this
Agreement will not operate or be interpreted as a waiver of any
other or subsequent breach.

12.10 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all
of which together constitute one and the same agreement. A
facsimile copy of this Agreement, including the signature pages,
will be deemed to be an original.

IN WITNESS WHEREOF, ASK JEEVES, INC. and COMPAQ COMPUTER CORPORATION have
executed this License Agreement as of the Effective Date.

ASK JEEVES, INC. COMPAQ COMPUTER CORPORATION

By: /s/ R. W. Wrubel By: /s/ Kurt Losart
-------------------------------- --------------------------------

Name: R. W. Wrubel Name: Kurt Losart
----------------------------- ------------------------------

Title: President Title: VP, Internet Services
----------------------------- -----------------------------

9.
<PAGE> 10

EXHIBIT A

SYSTEMS REQUIREMENTS

The Ask Jeeves software requires the following software environment:

- Windows NT Server 4.0 operating system, with Service Pack 3
installed

Ask Jeeves is compiled to run on Intel CPUs, and has been deployed on both
single and dual processer systems. Minimum system requirements are:

- 400MHz Intel Pentium II processor (dual 400 MHz or faster
processors recommended)

- 256 MB RAM

- 2GB Hard Disk

- Fast Ethernet Hardware (PCI bus or other fast bus)

The QPE runs as a Windows NT service. The QPE is accessed using a TCP/IP sockets
interface.

The Ask Jeeves knowledge base resides in two components. The Question Template
set (which includes the Semantic and Syntactic Networks) resides in a set of 9
files, which are memory mapped and highly optimized for fast, efficient run time
performance. The Answer Template set (that is, the set of URLs - and other
answers - to which the Question Template set points) resides in several SQL
Server tables.

It is important to note that the Ask Jeeves servers are essentially read-only
systems. To handle increased traffic, one need only add additional servers. The
separate Ask Jeeves systems do not interact (except for accessing a common User
Log), so they are highly scalable, and ultimately limited in the number of users
they can service by external factors such as the speed of the Internet
connection.

10.
<PAGE> 11

EXHIBIT B

CORPORATE NONDISCLOSURE

Effective Date: Aug. 6 , 1998
----------------------------------- --

In order to protect certain Confidential Information, Compaq Computer
Corporation and its wholly owned subsidiaries ("COMPAQ"), and the "Participant"
identified below, agree that:

1. DISCLOSING PARTY: The party disclosing Confidential Information

("Discloser") is Both Parties
------------------------------------------
(Note: Fill in "COMPAQ", "Participant", or "both parties".)

2. REPRESENTATIVES: Each party's representative for coordinating disclosure or
receipt of Confidential Information is:

COMPAQ Celia Francis
------------------------------------------
Participant: Rob Wrubel
------------------------------------------

3. DESCRIPTION OF CONFIDENTIAL INFORMATION: The Confidential Information
disclosed under this Agreement is described as:

COMPAQ: Altavista Strategy and
------------------------------------------

Technology
------------------------------------------

Participant: Ask Jeeves Strategy and Technology
--------------------------------------------------

(Note: Be specific: for example, individually list materials provided, if
necessary. Please attach additional sheets referencing this Agreement and signed
by the parties.)

4. RESTRICTIONS: The party receiving Confidential Information ("Recipient")
shall maintain the Confidential Information in confidence and disclose the
Confidential Information only to its employees, subcontractors, and consultants
that have a need to know such Confidential Information in order to fulfill the
purpose described below provided that Recipient shall first have entered into a
confidentiality agreement with such employees, subcontractors, and consultants
that is substantially similar to this. Recipient shall make use of the
Confidential Information only for the following purpose (check one):

[ ] Evaluation in anticipation of a business relationship between the parties.

[ ] Developing a proposal for Discloser.

[ ] Modification of Recipient's product to enhance compatibility with
Discloser's product.

[ ] Furthering the business relationship between the parties.

[ ] Other
----------------------------------------------------------------------
(Requires approval from Compaq's legal dept. Be specific. If necessary, please
attach additional sheet referencing this Agreement and signed by the parties.)

5. CONFIDENTIALITY PERIOD: This Agreement and Recipient's duty to protect
Confidential Information expires three (3) years from the date of receipt of
Confidential Information.

6. DISCLOSURE PERIOD: This Agreement applies to Confidential Information
described in Paragraph 3 that is disclosed between the Effective Date and two
(2) years thereafter.

7. STANDARD OF CARE: Recipient shall protect the disclosed Confidential
Information by using the same degree of care as Recipient uses to protect its
own Confidential Information _______ less than a reasonable degree of care to
prevent the unauthorized use, disclosure, dissemination, or publication of the
Confidential Information.

COMPAQ COMPUTER CORPORATION
20555 SH 249, P.O. Box 692000
Houston, TX 77269-2000

By /s/Celia Francis
---------------------------------------
Printed Name Celia Francis
-----------------------------
Title
-----------------------------------

8. MARKING: Recipient's obligations shall only extend to Confidential
Information that is described in Paragraph 3, and that: (a) is marked as
confidential at the time of disclosure; or (b) is unmarked (e.g. orally
disclosed) but treated as confidential at the time of disclosure, and is
designated as confidential in a written memorandum sent to Recipient's
representative within thirty (30) days of disclosure, summarizing the
Confidential Information sufficiently for identification.

9. EXCLUSIONS: This Agreement imposes no obligation upon Recipient with respect
to Confidential Information that: (a) was rightfully in Recipient's possession
before receipt from Discloser; (b) is or becomes a matter of public knowledge
through no fault of Recipient; (c) is rightfully received by Recipient from a
third party without a duty of confidentiality; (d) is disclosed by Discloser to
a third party without a duty of confidentiality on the third party; (e) is
independently developed by Recipient; (f) must be disclosed under operation of
law or regulation; or (g) is disclosed by Recipient with Discloser's prior
written approval.

10. WARRANTY: Each Discloser warrants that it has the right to make the
disclosures under this Agreement. NO OTHER WARRANTIES, INCLUDING WARRANTIES
AGAINST INFRINGEMENT, ARE MADE BY EITHER PARTY UNDER THIS AGREEMENT. ANY
INFORMATION EXCHANGED UNDER THIS AGREEMENT IS PROVIDED "AS IS".

11. RIGHTS: Neither party acquires any intellectual property rights under this
Agreement except the limited rights necessary to carry out the Purpose set forth
in Paragraph 4. This Agreement shall not restrict reassignment of Recipient's
employees.

12. EXPORT LAWS AND REGULATIONS: The parties agree to adhere to all applicable
U.S. Export Laws and Regulations and that absent any required prior
authorization from the Office of Export Licensing. U.S. Department of Commerce,
they will knowingly export or re-export (as defined in Part 779 of the Export
Administration Regulations), directly or indirectly, through their affiliates,
licensees, or subsidiaries, any of the Confidential Information (or any product,
process, or service resulting directly therefrom) to any country restricted by
U.S. law or governmental order.

13. ECONOMIC ESPIONAGE ACT: The Confidential Information disclosed under this
Agreement is subject to the provisions of the Economic Espionage Act of 1995.

14. MISCELLANEOUS:
14a. This Agreement imposes no obligation on either party to purchase, transfer
or otherwise dispose of any technology, services or products.

14b. This Agreement does not create any agency or partnership relationship. Each
party is responsible for its own expenses incurred as a result of any
discussions between the parties.

14c. This Agreement embodies the entire understanding between the parties
pertaining to the subject matter hereof. Any additions or modifications to this
Agreement must be made in writing and must be signed by both parties. Facsimile
signatures are deemed equivalent to original signatures for purposes of this
Agreement.

14d. This Agreement shall be construed according to the substantive laws of the
State of Texas, U.S.A.

PARTICIPANT

Name Ask Jeeves
---------------------------------------------------------
(Name of Participant)

Address 918 Parker St.
---------------------------------------------------------

Berkeley, CA 94710
---------------------------------------------------------
(Address of Participant)

By /s/Robert Wrubel
---------------------------------------------------------
(Signature of Authorized Participant)

Printed Name Robert Wrubel
-----------------------------------------------

Title President
-------------------------------------------------------

EXHIBIT B-PAGE 1 OF 1

<PAGE> 1
EXHIBIT 10.14

License and Development Agreement
between Ask Jeeves, Inc. and
Compaq Computer Corporation

This License and Development Agreement (the "Agreement") is made as of March 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 principal place of business at 20555 SH 249, Houston TX
77070 ("Customer") on behalf of its worldwide divisions, affiliates and
subsidiaries.

RECITALS

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.

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

<PAGE> 2

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,
below.

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
Agreement.

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

2
<PAGE> 3

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"):

<TABLE>
<S> <C>
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
</TABLE>

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:

<TABLE>
<CAPTION>
Project Monthly Fee
<S> <C>
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
</TABLE>

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

3
<PAGE> 4

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
Permit.

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:

<TABLE>
<S> <C>
Engineering: $120.00/hour
Knowledgebase Creation $ 75.00/hour
Consulting $ 90.00/hour
</TABLE>

4
<PAGE> 5

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

5
<PAGE> 6

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

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<PAGE> 7

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
documentation.

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

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<PAGE> 8

(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 JEEVES IS NOT LIABLE FOR ANY DIRECT, INDIRECT,
INCIDENTAL, SPECIAL, OR CONSEQUENTIAL DAMAGES, INCLUDING THE LOSS OF
PROFITS, REVENUE, DATA, OR USE OR COST OF PROCUREMENT OF SUBSTITUTE
GOODS INCURRED BY CUSTOMER OR ANY THIRD PARTY, WHETHER IN AN ACTION IN
CONTRACT OR TORT OR BASED ON A WARRANTY, EVEN IF ASK JEEVES OR ANY OTHER
PERSON HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES. ASK JEEVES'
LIABILITY FOR DAMAGES UNDER THIS AGREEMENT SHALL NOT UNDER ANY
CIRCUMSTANCES EXCEED THE GREATER OF THE AMOUNTS ACTUALLY PAID BY
CUSTOMER TO ASK JEEVES OR ONE MILLION DOLLARS ($1,000,000.00) (NET OF
TRAVEL AND OUT OF POCKET COSTS) UNDER THIS AGREEMENT.

15. EXPORT CONTROLS. Customer agrees to comply with and be responsible for
understanding any and all export regulations and rules now in effect or
that may be issued from time to time by the Office of Export
Administration of the United States Department of Commerce or any other
governmental authority that has jurisdiction relating to export laws.
Customer agrees to comply fully and strictly with the export controls
and laws of any country in which it does, or intends to do, business.
Ask Jeeves agrees to provide Customer with sufficient technical
information concerning the Licensed Products so that Customer may make
application for a U. S. export license and Ask Jeeves agrees to assign
any existing Ask Jeeves obtained export license for Customer's use in
exporting the Licensed Products.

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<PAGE> 9

16. CONFIDENTIALITY. All disclosures of proprietary and confidential
information in connection with this Agreement or the transaction
contemplated by this Agreement are governed by the terms of the
Corporate Non Disclosure Agreement previously executed by the parties, a
copy of which is attached as Exhibit F to this Agreement.

17. PUBLICITY.

a. PRESS RELEASES AND ANNOUNCEMENTS. Ask Jeeves and Customer agree
that upon the execution of this Agreement, Customer and Ask
Jeeves will issue a joint press release, with text mutually
agreed to by the parties. Thereafter, neither party shall use the
name(s), trademark(s), tradename(s) or logo(s), whether or not
registered, of the other party in publicity releases without
securing the prior written approval of the other party; provided,
however, that (i) Ask Jeeves may use Customer's name in its
customer list; and (ii) each party may use specific information
previously approved for public release by the other, without
further approval. Each party agrees not to disclose to any third
party the terms of this Agreement.

b. OTHER PUBLICITY. Beginning on the Release Date, Customer agrees
to (a) mention Ask Jeeves in directly related press releases; (b)
consider including mentions of Ask Jeeves in relevant promotions
and advertisements and, if requested to do so by Ask Jeeves, not
to unreasonably withhold consent; and (c) prominently display the
"Powered by Ask Jeeves" logo on the question confirmation page,
with a link from such logo to the corporate systems information
page on the Ask Jeeves website.

18. GENERAL PROVISIONS.

a. ASSIGNMENT. Neither party may assign, sublicense or transfer its
rights or delegate its obligation under this Agreement without
the other party's prior written consent, which will not be
unreasonably withheld. This Agreement is binding on the
successors and assigns of the parties to the Agreement.

b. WAIVER AND SEVERABILITY. The failure of either party to enforce
any provision of this Agreement shall not be deemed a waiver of
that provision or of the right of the party to thereafter enforce
that or any other provision. In case any provision of this
Agreement is held to be invalid, unenforceable or illegal, the
provision will be severed from this Agreement and such
invalidity, unenforceability or illegality will not affect any
other provision of the Agreement.

c. RELATIONSHIP OF THE PARTIES. Ask Jeeves' relationship to Customer
is that of an independent contractor. Nothing in this Agreement
shall be deemed to create an employer/employee, principal/agent
or joint venture relationship. Neither party shall have the
authority to enter into any contract on behalf of the other party
without that party's express written consent.

d. GOVERNING LAW. This Agreement shall be governed and construed in
accordance with the laws of the State of New York.

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<PAGE> 10

e. ENTIRE AGREEMENT. This Agreement, along with the exhibits
attached and referenced in this Agreement, constitutes the final
and complete understanding between the parties and replaces and
supercedes all previous oral or written agreements,
understandings or arrangements between the parties with respect
to the subject matter of this Agreement. This Agreement may not
be amended or modified except in a writing duly executed by both
parties.

f. EXHIBITS. The following exhibits are attached to the Agreement
and incorporated by reference:

<TABLE>
<S> <C>
Exhibit A Knowledgebase Creation Services
Exhibit B Knowledgebase Maintenance and Update Services
Exhibit C Required Software Environment
Exhibit D Compaq Standard Travel Guidelines
Exhibit E Technical Support Guidelines
Exhibit F Mutual Non-Disclosure Agreement
</TABLE>

g. NOTICES. Except as otherwise provided in this Agreement, notices
required to be given pursuant to this Agreement shall be
effective when received and shall be sufficient if given in
writing and (a) hand-delivered, (b) sent by facsimile with
confirmation of receipt, (c) sent by First Class Mail, return
receipt requested and postage pre-paid, or (d) sent by overnight
courier service and addressed as follows:

To Ask Jeeves: Ask Jeeves, Inc.
918 Parker Street
Berkeley, CA 94710
Attn: General Counsel
Telephone: (510) 649-8685
Fax: (510) 649-8633

To Customer: Compaq Computer Corporation
20555 S.H. 249
Houston, TX 77070
Attn: Legal Dept. 110701
and
Compaq Computer Corporation
20555 S.H. 249 MC060308
Houston, TX 77070
Attn: Cora Nell Worthy-Blumberg
Sr. Commodity Manager,
Corp. Software Procurement
Ph: 281-514-0961

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<PAGE> 11

IN WITNESS WHEREOF, ASK JEEVES, INC. and COMPAQ COMPUTER CORPORATION
have duly executed this Agreement as of the Effective Date.

ASK JEEVES, INC. COMPAQ COMPUTER CORPORATION

By: /s/ R. W. Wrubel By: /s/ Kenny Kurtzman
-------------------------------- -------------------------------------
Robert W Wrubel, President

Printed/Typed Name: Kenny Kurtzman
---------------------

Title: President Title: V.P. and General Manager Compaq
----------------------------- ---------------------------------

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<PAGE> 12

EXHIBIT A1

KNOWLEDGEBASE CREATION SERVICE FOR PROSIGNIA PRE-SALES

Ask Jeeves will create and deliver a Knowledgebase ("KB") that is mapped to
certain sections of the Customer Site. These sections are defined below as the
"Project Content".

PROJECT CONTENT
INCLUDED SECTIONS
The following sections of the Customer Site are included in the Project Content:

<TABLE>
<S> <C>
- --------------------------------------------------------------------------------------------
SECTION NAME www.compaq.com/smb/onlineservices
- --------------------------------------------------------------------------------------------
www.compaq.com/smb/desktops www.directplus.compaq.com/(for these sections)
- --------------------------------------------------------------------------------------------
www.compaq.com/smb/notebooks Additional FAQ style content created for Prosignia
questions
- --------------------------------------------------------------------------------------------
www.compaq.com/smb/servers
- --------------------------------------------------------------------------------------------
</TABLE>

EXCLUDED SECTIONS
Anything off-site and the following sections of the Customer Site are
specifically excluded from the Project Content:

- --------------------------------------------------------------------------------
Section Name
- --------------------------------------------------------------------------------
For sections listed above, no PDF files unless they were turned into HTML pages
- --------------------------------------------------------------------------------

STYLE GUIDELINES
Ask Jeeves will use its best efforts to follow the Customer's style guidelines.

CUSTOMER EXTRANET
Ask Jeeves will set up and maintain a password-protected Extranet to enable
Customer to view the project schedule, contact information, and overall
performance metrics, and generally to facilitate communication between Ask
Jeeves and Customer. Ask Jeeves will normally update the Extranet, when
required, on a weekly basis.

KNOWLEDGEBASE CREATION SCHEDULE

It is expected that the Knowledgebase ("KB") creation and implementation
activities will be conducted according to the schedule below. This schedule may
be changed jointly by Ask Jeeves and Customer. Ask Jeeves will post the most
up-to-date version of the schedule to the Customer Extranet.

PRE-PRODUCTION: One week
Week 1: February 23 -March 1

- - Project intake
- - Team assignment
- - Content strategy set
- - Style guide developed

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<PAGE> 13

- - Extranet created

CONTENT PRODUCTION AND UNIT TESTING: 3 weeks
Weeks 1 - 3: Feb. 23 - March 12

- - Editors develop questions, working closely with Don Skarzenski and Kathy
Berry

- - Testing reports back to editors on unit performance; content adjusted in
response

- - QA gives green light for Alpha

ALPHA TESTING: Two weeks
Weeks 2 - 4: March 1 - March 12

- - KB tested in its entirety
- - QA reports on performance
- - Content adjustments made/issues tracked
- - Engineering adjustments made/issues tracked
- - QA gives green light for Beta

BETA TESTING: Two weeks
Weeks 4 - 6: March 15 - March 26

- - KB installed on Customer's designated Web site
- - Submission of bugs & issues via Extranet
- - Content adjustments made/issues tracked
- - Reporting of issues & fixes via Extranet
- - Final adjustments of KB and User Interface
- - Final reports on issues/fixes
- - Final report on KB performance from QA
- - Metrics from beta made available via Extranet

RELEASE:
March 29

- - KB delivered to Customer and available for public release

MONTHLY MAINTENANCE OBLIGATION

Ask Jeeves will have no obligation to maintain the Prosignia II Pre-Sale
Knowledgebase for the first ninety (90) days after its Release Date. Thereafter,
in the event Ask Jeeves and Customer do not reach agreement concerning further
development of this Knowledgebase, Ask Jeeves' obligation to maintain the
Prosignia II Pre-Sale Knowledgebase will be limited to fifty-seven and one-half
(57.5) person hours per month.

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<PAGE> 14

EXHIBIT A2

KNOWLEDGEBASE CREATION SERVICE FOR HOME COMPUTING

Ask Jeeves will create and deliver a Knowledgebase ("KB") that is mapped to
certain sections of the Customer Site. These sections are defined below as the
"Project Content".

PROJECT CONTENT
INCLUDED SECTIONS
The following sections of the Customer Site are included in the Project Content:

- --------------------------------------------------------------------------------
SECTION NAME
- --------------------------------------------------------------------------------
compaq.com/athome/support/serv_desk
serv_note
serv_print
serv_pcthe
- --------------------------------------------------------------------------------

EXCLUDED SECTIONS
Anything off-site and the following sections of the Customer Site are
specifically excluded from the Project Content:

- --------------------------------------------------------------------------------
SECTION NAME
- --------------------------------------------------------------------------------
For the above sections, no PDF files
- --------------------------------------------------------------------------------

STYLE GUIDELINES
Ask Jeeves will use its best efforts to follow the Customer's style guidelines,

KNOWLEDGEBASE CREATION SCHEDULE

PRE-PRODUCTION: 6 weeks (Completed)
Weeks 1-6: Jan. 4 - Feb. 12

- - Team assignment
- - Content strategy set, including development of extensive Core Vocabulary and
Question Architecture
- - Style guide developed
- - Extranet created

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<PAGE> 15

CONTENT PRODUCTION AND UNIT TESTING: 7 weeks
Weeks 7 - 8: Feb. 14 - Feb. 23
Weeks 9 - 13:

- - Editors develop questions
- - Testing reports back to editors on unit performance; content adjusted in
response
- - QA gives green light for Alpha

ALPHA TESTING: 4 weeks
Weeks 14 - 17: ____________ - ______________

- - KB tested in its entirety
- - QA reports on performance
- - Content adjustments made/issues tracked
- - Engineering adjustments made/issues tracked
- - QA gives green light for Beta

BETA TESTING: 3 weeks
Weeks 18 - 21: ____________ - ______________

RELEASE:
Beginning of Week 21: ____________ - ______________

- - KB delivered to Customer and available for public release

MONTHLY MAINTENANCE OBLIGATION

Ask Jeeves obligation to maintain the Home Computing Knowledgebase is
limited to one hundred (100) person hours per month.

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EXHIBIT A3

KNOWLEDGEBASE CREATION SERVICE FOR ENTERPRISE PC TECHNICAL SUPPORT
(EXCLUDING SERVERS)

Ask Jeeves will create and deliver a Knowledgebase ("KB") that is mapped to
certain sections of the Customer Site. These sections are defined below as the
"Project Content".

PROJECT CONTENT
INCLUDED SECTIONS
The following sections of the Customer Site are included in the Project Content:

- --------------------------------------------------------------------------------
SECTION NAME
- --------------------------------------------------------------------------------
compaq.corn/support/desktops
/portables
/workstations
/options
- --------------------------------------------------------------------------------

EXCLUDED SECTIONS
Anything off-site and the following sections of the Customer Site are
specifically excluded from the Project Content:

- --------------------------------------------------------------------------------
SECTION NAME
- --------------------------------------------------------------------------------
For above sections, no PDF files
- --------------------------------------------------------------------------------

STYLE GUIDELINES
Ask Jeeves will use its best efforts to follow the Customer's style guidelines.

KNOWLEDGEBASE CREATION SCHEDULE

PRE-PRODUCTION: 6 weeks (Completed)
Weeks 1-6: Jan. 4- Feb. 12

- - Team assignment
- - Project intake

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<PAGE> 17

- - Team assignment
- - Content strategy set, including development of extensive Core Vocabulary and
Question Architecture
- - Style guide developed
- - Extranet created

CONTENT PRODUCTION AND UNIT TESTING: 7 weeks
Weeks 7- 8: Feb. 14- Feb. 23
Weeks 9 - 13:
- - Editors develop questions
- - Testing reports back to editors on unit performance; content adjusted in
response
- - QA gives green light for Alpha

ALPHA TESTING: 4 weeks
Weeks 14- 17: ____________ - ______________
- - KB tested in its entirety
- - QA reports on performance
- - Content adjustments made/issues tracked
- - Engineering adjustments made/issues tracked
- - QA gives green light for Beta

BETA TESTING: 3 weeks
Weeks 18 - 21: ____________ - ______________
- - KB installed on Customer's designated Web site
- - Submission of bugs & issues via Extranet
- - Content adjustments made/issues tracked
- - Reporting of issues & fixes via Extranet
- - Final adjustments of KB and User Interface
- - Final reports on issues/fixes
- - Final report on KB performance from QA
- - Metrics from beta made available via Extranet

RELEASE:
Beginning of Week 21: ____________ - ______________

- - KB delivered to Customer and available for public release

MONTHLY MAINTENANCE OBLIGATION

Ask Jeeves obligation to maintain the Enterprise PC Technical Support
Knowledgebase is limited to eighty (80) person hours per month.

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<PAGE> 18

EXHIBIT B

KNOWLEDGEBASE MAINTENANCE AND UPDATE SERVICES

Notification of Site Changes; KB Updates

- - As the contents of the Customer Site are changed, Customer will notify Ask
Jeeves of modifications to the Project Content.
- - Ask Jeeves will promptly update the Knowledgebase ("KB") to reflect changes
in or additions to the Customer Site and Project Content. In addition, Ask
Jeeves will maintain and update the KB on an ongoing and regular basis to
improve performance of the KB.
- - Ask Jeeves will use its best efforts to update the KB within 10 business
days of receipt of the modification notice. Substantial or numerous
modifications may require more than 10 business days for implementation.

KB UPDATE SCHEDULE

Ask Jeeves will release updates to the KB on a weekly basis and post them to an
Ask Jeeves FTP server for retrieval by Customer. Customer is responsible for
retrieving and installing the KB updates.

LOG FILES; DATA AND REPORTING

- - Ask Jeeves will provide Customer access to a Web site ("the Extranet")
containing tools for analyzing end user questions and evaluating the
completeness of the KB. Up to three representatives of Customer may
simultaneously access the Extranet. Access for additional representatives
may be available for a fee.

- - Customer will send Ask Jeeves all log files generated by the QPE, on a
weekly or otherwise mutually scheduled basis, formatted according to Ask
Jeeves specifications, and in a manner reasonably specified by Ask Jeeves
("User Logs").

- - Within twenty-four hours of receiving the User Logs, Ask Jeeves will update
the Extranet with the information from the User Logs, for the purpose of
enabling Customer and Ask Jeeves to view the reports described hereunder.
Ask Jeeves may from time to time modify the number, format or content of
these reports, in order to provide more useful data and insights into the
operation of the KB.

1. OVERALL STATISTICS: lists some aggregate statistics about site usage.

a) Total Questions Asked

b) Total Picks

c) Match Percent (percentage of questions which had one or more
matches)

d) Pick Percent

2. USER QUERIES - NO MATCH: lists the user queries that did not have a question
match. This report lists the queries that couldn't be answered by the KB. By
listing users' queries by frequency, this report helps identify subject
areas where the KB could be more complete.

3. USER QUERIES - NO PICK: lists the user queries that had a match, but where
the user picked no matches. This report helps better understand users'
questions and identify topics where the KB could be more complete.

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<PAGE> 19

4. MOST POPULAR PICKS: Of the questions matched, view those that are most often
picked by the users. This report helps identify the topics of greatest
interest to the users.

5. MOST POPULAR WORDS: View the most frequently used words in users' questions.
This report is helpful for fine-tuning the KB to better match users'
questions. It is also useful for identifying emerging areas of user
interest.

6. USER QUERIES CONTAINING A PARTICULAR WORD: This report allows a sampling of
user interest in definable topic areas, as expressed through the user
queries.

7. PICKS CONTAINING A PARTICULAR WORD: This report is helpful for evaluating
user interest in specific topics.

- - Ask Jeeves will, when necessary, post or update on the Extranet a "Content
Holes" report. This report is prepared as a result of further analyzing the
log files and reports listed above, and will serve to indicate to the
Customer possible topics or subject areas for which user queries are
received, but for which there are no answers in the Project Content.

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<PAGE> 20

EXHIBIT C

Required Software Environment

The Ask Jeeves software requires the following software environment:

a. Windows NT Server 4.0 operating system, with Service Pack 4
installed

b. Microsoft Internet Information Server (IIS) 4.0

Ask Jeeves is compiled to run on Intel Pentium II CPUs, and has been deployed on
both single and dual processor systems. Minimum system requirements are:

c. 400MHz (or higher) Intel Pentium II processor (dual processors
recommended)

d. 512 MBRAM

e. 9 GB Hard Disk

f. Fast Ethernet Hardware (100 Mbps)

The Ask Jeeves software is comprised of several dynamic link library (DLL)
files, some HTML files, and several Active Server Page (ASP) files. The ASP
files are a mixture of HTML and Visual Basic Script (VBScript) language
routines. The DLLs encapsulate the Ask Jeeves linguistic and matching
algorithms, while the ASP files embody the user interface.

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<PAGE> 21

EXHIBIT D
ASK JEEVES-COMPAQ
COMPAQ TRAVEL GUIDELINES FOR
CONTRACTORS AND CONSULTANTS
4/98 revision

This document describes guidelines to be used by Ask Jeeves (`Contractors and
Consultants") who are providing a service to Compaq when travel expenses are
reimbursable. Travel expenses require prior approval of Compaq Computer Company
("Compaq"). Approved expenses shall be detailed separately on invoicing.

COMPAQ TRAVEL SERVICES
Compaq Travel Services (CTS) has been established by Compaq to help reduce
overall travel costs. Contract rates with travel suppliers are maintained via
our on-site agency. CTS should be used by Contractors and Consultants whenever
possible, unless Contractor/Consultant rates are lower. All airline reservations
should be made via CTS using Compaq's preferred carriers. CTS is also available
to assist with car rentals and hotel reservations. Reservations may be made with
CTS during regular business hours (7:30 a.m. to 6:00 p.m. Central Time, Monday -
Friday) by calling 281-518-7770.

AIR TRAVEL
Compaq has agreement in place with various airlines for travel within the United
States and around the world.

Coach Class is the appropriate choice for a domestic travel. Business Class is
appropriate only for international travel, recognizing that Coach Class may be
necessary if Business is unavailable. CTS will provide the most economical means
of booking.

Consistent with reasonable planning, air travel should generally be booked at
the lowest available rate within the required time constraints. The use of
restricted fares (non-refundable tickets) can result in substantial savings and
is encouraged if travelers are certain of their schedules.

The cost of upgrading beyond the Guidelines stated above is not considered a
reimbursable expense.

LODGING
Compaq has select agreements in place with hotel properties throughout the
United States and around the world. A single room with private bath in a
business class hotel or motel should be requested.

It is recommended that Contractor or Consultant calls CTS for reservations in
order to secure Compaq rates. If not possible, request Compaq Contractor rates.

Should an extended stay be required at any location, long-term, apartment-style
lodging should be investigated.

GROUND TRANSPORTATION, GASOLINE, PARKING AND TOLLS
Fuel expenses, parking and tolls are reimbursable. An original receipt is
required for reimbursement of expenses of $15.00 or more.

Compaq has a worldwide agreement in place for car rental requirements. Rental
cars are to be returned with a full tank of gasoline.

CTS can provide information pertaining to alternate ground transportation
requirements, such as taxis or limousines.

MEALS
Because the cost of meals varies widely according to location and environment,
there are no guidelines on dollars per meal or dollars per day. However,
Contractor/Consultant personnel are expected to exercise prudence. Original
receipts must be submitted with the Expense Statement for meals costing $15.00
or more.

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<PAGE> 22

TELEPHONE CALLS
While traveling, business calls specifically relevant to the scope of Compaq
business are reimbursable. For extended stay, one (1) personal call per day
domestically or three (3) personal calls per week for international travel is
considered reasonable and shall be reimbursable.

NON-REIMBURSABLE EXPENDITURES
The following miscellaneous items are expenses that will not be considered for
reimbursement:

- - Travel expenses for spouse or companion
- - Personal portion of trip when combined with Compaq business
- - Non-Compaq business portion of trip when combined with Compaq business
- - Personal grooming items
- - Flight insurance
- - Airline or rental club dues
- - In-room hotel movies
- - Personal (or other non-Compaq) mail or packages
- - Items for personal use
- - Over weight luggage fees
- - Drugs (prescription or over-the-counter)
- - Sundries such as candy, gum, tobacco
- - Newspapers of magazines
- - Haircuts, shoe shines
- - Spa, gym or golf fees
- - Entertainment (movies, theater tickets, sporting events)
- - Gifts
- - In-flight movies

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EXHIBIT E

Technical Support Guidelines

1. Definitions.

(a) Hours of Operation. Ask Jeeves will provide Customer with 7X24
support as set forth herein.

(b) Problem. Any error, bug, or malfunction that makes any feature of
the Ask Jeeves Service perform unpredictably or otherwise become
intermittently available, or that causes the Service to have a
material degradation in response time performance.

(c) Severe Problem. Any error, bug or malfunction that causes the Ask
Jeeves Service to become inaccessible to Customer and its
end-users, or that causes any feature of the Service to become
continuously unavailable.

(d) Enhancement Request. A request by Customer to incorporate a new
feature or enhance an existing feature of the Service (exclusive
of maintenance of the Knowledgebase.)

(e) Fix. A correction, fix, alteration or workaround that solves a
Problem or a Severe Problem.

2. Contact Points.

(a) Customer Technical Support Personnel. Customer will designate no
more than three Customer employees as qualified to contact Ask
Jeeves for technical support.

(b) Ask Jeeves Technical Support Personnel. Ask Jeeves will ensure
that its technical support personnel are adequately trained to
provide technical support to Customer. Ask Jeeves will provide
Customer with a web interface or an email address (the "Support
Address") as well as a pager number (the "Support Pager") for
contacting the Ask Jeeves Technical Support Personnel no later
than one week prior to the Launch Date. Ask Jeeves will provide
Customer with contact information for executive escalation no
later than one week prior to the Launch Date. Ask Jeeves may
change its designated Technical Support Personnel and the
executive escalation personnel at its discretion with reasonable
notice to Customer.

3. Support Procedures.

(a) All Problems reported by Customer Technical Support Personnel to
Ask Jeeves must be submitted via web site or email to the Support
Address.

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<PAGE> 24

(b) If Customer believes it is reporting a severe problem, Customer
will accompany its web site or email request with a page to the
Support Pager.

(c) Upon receiving a report from Customer, Ask Jeeves will determine
whether the request is a Problem, a Severe Problem or an
Enhancement Request. Ask Jeeves will respond to the request and
use reasonable commercial efforts to provide a Fix as described
in the response table, below.

(d) Ask Jeeves will use commercially reasonable efforts to inform
Customer Technical Support Personnel of Fixes.

4. Support Levels.

(a) Customer will provide technical support to end users who email or
otherwise contact Customer directly with questions about the
Customer Site or the Service. Customer will use commercially
reasonable efforts to Fix any Problems without escalation to Ask
Jeeves.

(b) Ask Jeeves will provide the following technical support solely to
Customer Technical Support Personnel.

<TABLE>
<CAPTION>
TARGET RESPONSE
RECEIPT OF EMAIL TYPE OF EMAIL TIME FROM EMAIL TARGET FIX TIME AND
REQUEST REQUEST RECEIPT REPORTING
<S> <C> <C> <C>
During business hours Problem Within one business Commercially
or other times day reasonable best
efforts with weekly
status reports to
Customer

During the hours of Severe Problem Within four hours Commercially
8:00 a.m. and 6:00 reasonable best
p.m. Pacific time efforts with daily
status reports to
Customer

During other times Severe problem Within four hours Commercially
reasonable best
efforts with daily
status reports to
Customer

During business hours Enhancement Requests Within five business At Ask Jeeves
or other times days discretion
</TABLE>

(c) In the event Ask Jeeves does not respond to Customer within the
target response time from email receipt set froth above, then
Customer may contact the following Ask Jeeves executive
escalation personnel in order:

Project Manager

24
<PAGE> 25

Lauren Guzak,

General Manager, Corporate Systems

Fadi Samaha,

Chief Technical Officer

David Warthen,

Chief Executive Officer

Robert Wrubel,

25
<PAGE> 26

EXHIBIT F

Mutual Non-Disclosure Agreement

26
<PAGE> 27

MUTUAL NON-DISCLOSURE AGREEMENT

Effective Date: February 1, 1999

In order to protect certain Confidential Information, Compaq Computer
Corporation and its wholly owned subsidiaries ("COMPAQ"), and the "Participant"
identified below, agree that:

1. DISCLOSING PARTY: The party disclosing Confidential Information

("Discloser") is both parties
(Note: Fill in "COMPAQ", "Participant", or "both parties".)

2. REPRESENTATIVES: Each party's representative for coordinating disclosure or
receipt of Confidential Information is:

COMPAQ /s/Seth Romanow
----------------------------------------------------
Participant: /s/ Dan Miller
------------------------------------------------

3. DESCRIPTION OF CONFIDENTIAL INFORMATION: The Confidential Information
disclosed under this Agreement is described as:

COMPAQ Compaq.com and Compaq intranet information and related data not publicly
available. Compaq intranet/internet configuration, related software/equipment
support structure, network configuration and related data, pre-release Compaq
product information.

Participant Ask Jeeves technology, research and development and business plans
(Note: Be specific: for example, individually list materials provided, if
necessary. Please attach additional sheets referencing this Agreement and signed
by the parties.)

[ ] Evaluation in anticipation of a business relationship between the parties.

[ ] Developing a proposal for Discloser.

[ ] Modification of Recipient's product to enhance compatibility with
Discloser's product.

[X] Furthering the business relationship between the parties.

[ ] Other
---------------------------------------------------------------------

- --------------------------------------------------------------------------------
(Requires approval from Compaq's legal dept. Be specific. If necessary, please
attach additional sheet referencing this Agreement and signed by the parties.)

5. CONFIDENTIALITY PERIOD: This Agreement and Recipient's duty to protect
Confidential Information expires three (3) years from the date of receipt of
Confidential Information.

6. DISCLOSURE PERIOD: This Agreement applies to Confidential Information
described in Paragraph 3 that is disclosed between the Effective Date and two
(2) years thereafter.

7. STANDARD OF CARE: Recipient shall protect the disclosed Confidential
Information by using the same degree of care as Recipient

COMPAQ COMPUTER CORPORATION
20555 SH 249, P.O. Box 692000
Houston, TX 77269-2000

By /s/H. Seth Romanow
-----------------------------------------------------
Printed Name H. Seth Romanow
-----------------------------------------
Title Director, Internet/Marketing
----------------------------------------------

uses to protect its own Confidential Information _________ less than a
reasonable degree of care to prevent the unauthorized use, disclosure,
dissemination, or publication of the Confidential Information.

8. MARKETING: Recipient's obligations shall only extend to Confidential
Information that is described in Paragraph 3, and that: (a) is marked as
confidential at the time of disclosure; or (b) is unmarked (e.g. orally
disclosed) but treated as confidential at the time of disclosure, and is
designated as confidential in a written memorandum sent to Recipient's
representative within thirty (30) days of disclosure, summarizing the
Confidential Information sufficiently for identification.
27

13. ECONOMIC ESPIONAGE ACT: The Confidential Information disclosed under this
Agreement is subject to the provisions of the Economic Espionage Act of 1995.

14. MISCELLANEOUS:

14a. This Agreement imposes no obligation on either party to purchase, transfer
or otherwise dispose of any technology, services or products.

14b. This Agreement does not create any agency or partnership relationship. Each
party is responsible for its own expenses incurred as a result of any
discussions between the parties.

14d. This Agreement shall be construed according to the substantive laws of the
State of Texas, U.S.A.

PARTICIPANT

Name Ask Jeeves, Inc.
-----------------------------------------------------------------
(Name of Participant)

Address 918 Parker St.
-----------------------------------------------------------------

Berkeley, CA 94710
-----------------------------------------------------------------
(Address of Participant)

By /s/ Dan Miller
-----------------------------------------------------------------
(Signature of Authorized Participant)

Printed Name Dan Miller
-----------------------------------------------------------------

Title EVP
-----------------------------------------------------------------

<PAGE> 1
EXHIBIT 10.26

================================================================================

ASSET PURCHASE AGREEMENT

between

ASK JEEVES , INC.
a California corporation; and

LUMINA DECISION SYSTEMS, INC.
a California corporation.

Dated as of April 16, 1999

----------------------------

================================================================================

<PAGE> 2

ASSET PURCHASE AGREEMENT

This ASSET PURCHASE AGREEMENT is entered into effective as of
April __, 1999 (the "Effective Date") between ASK JEEVES, INC., a California
corporation ("Ask Jeeves"), and LUMINA DECISION SYSTEMS, INC. a California
corporation ("Lumina"). Certain capitalized terms used in this Agreement are
defined in the License Agreement.

RECITALS

A. Lumina is engaged in the business of developing and marketing
business decision support software and related products.

B. Pursuant to the terms and conditions of this Agreement, Lumina wishes
to sell to Ask Jeeves, and Ask Jeeves desires to purchase from Lumina certain
assets related to the Personal Decision Expert ("PDE").

C. Ask Jeeves and Lumina are entering into, concurrently with the
execution of this Agreement, a License Agreement (the "License Agreement")
pursuant to which Lumina is granting to Ask Jeeves an exclusive license to the
Licensed Technology in the Ask Jeeves Field of Use, as defined in the License
Agreement.

D. As a condition of entering this Agreement and the License Agreement,
Ask Jeeves has requested that Lumina agree to certain restrictions in the
License Agreement regarding Lumina's development and use of the Licensed
Technology.

AGREEMENT

The parties to this Agreement, intending to be legally bound, agree as
follows:

1. SALE OF ASSETS; RELATED TRANSACTIONS.

1.1 PURCHASE AND SALE. Subject to the terms and conditions contained
herein, Ask Jeeves agrees to buy and Lumina agrees to sell those certain
tangible and intangible assets, contracts, rights, and properties, including
without limitation the PDE and related Intellectual Property Rights (as defined
below), all as more particularly described in Exhibit A to this Agreement
(collectively, the "Assets").

1.2 ASSIGNMENT OF CONTRACTS. To the best of each parties' knowledge,
there are no contracts directly related to the Assets (collectively, the
"Contracts"). Lumina agrees to assign all of its rights in such Contracts, if
any, to Ask Jeeves. Lumina shall give all such assistance to Ask Jeeves as Ask
Jeeves reasonably requests to enable Ask Jeeves to enjoy the benefit of such
Contracts. If consents to the transfer or assignment of such Contracts from
third parties are required or in Ask Jeeves' reasonable opinion desirable and
such consents have not already been obtained, Lumina will use its best efforts
to obtain such consents prior to the Closing Date.

1.3 COMPLETE TRANSFER. Lumina expressly agrees that the sale of the
Assets under this Agreement constitutes a complete transfer of all of its
rights, title and interest with respect to the Assets and that Lumina reserves
no rights to market or otherwise transfer the Assets. Lumina

1
<PAGE> 3

hereby assigns, waives, and/or sublicenses any and all Moral Rights (as defined
below) Lumina may have in or with respect to the Assets to the maximum extent
permitted under the laws of any relevant jurisdiction worldwide. For purposes of
this Section "Moral Rights" means any right to (i) divulge a copyrighted work to
the public; (ii) retract a copyrighted work from the public; (iii) claim
authorship of a copyrighted work; (iv) object to any distortion, mutilation or
other modification of a copyrighted work; or (v) any and all similar rights,
existing under the law of any jurisdiction in the world, or under any treaty.
Ask Jeeves shall have no obligation to Lumina to support, maintain, offer, or do
any other act relating to the Assets and may dispose of the Assets as Ask
Jeeves, in its sole discretion, decides. Notwithstanding the foregoing, Lumina
will retain all rights to the Licensed Technology (as defined in the License
Agreement) outside the Ask Jeeves Field of Use (as defined in the License
Agreement). Further, except as restricted by any noncompetition obligations set
forth in the License Agreement, Lumina shall retain the right to create
derivative works from the Licensed Technology (as defined in the License
Agreement).

1.3.1 NO ASSUMPTION OF LIABILITIES. This Agreement does not
transfer, Ask Jeeves does not assume, and Ask Jeeves expressly disclaims any and
all liabilities, costs, debts, claims and obligations of Lumina relating to the
Assets or otherwise. Ask Jeeves shall have no obligation with respect to any
obligations of Lumina arising prior to the Closing Date.

2. PAYMENT.

2.1 PURCHASE PRICE. The aggregate purchase price for the Assets shall be
eight hundred twelve thousand five hundred ($812,500) dollars and shall be paid
as set forth on Exhibit B subject to the successful completion of the closing as
set forth in Section 3.1.

2.2 TAXES. Lumina shall be responsible for any and all sales or other
transaction taxes, duties and other similar charges payable in connection with
the sale of the Assets or the transactions and payments contemplated hereby.

3. CLOSING.

3.1 CLOSING. On the Closing Date, (a) Ask Jeeves shall pay to Lumina,
the amount in cash and other consideration set forth in Exhibit B, and (b)
Lumina shall deliver the following to Ask Jeeves: (i) a bill of sale relating to
the Assets in a form reasonably acceptable to Ask Jeeves; (ii) a duly executed
assignment of the Contracts in a form reasonably acceptable to Ask Jeeves; and
(iii) a duly executed assignment of the Intellectual Property Rights (as defined
in Section 4.3.1) included in the Assets in a form reasonably acceptable to Ask
Jeeves.

3.2 TRANSFER OF ASSETS. On the Closing Date, Lumina shall deliver to Ask
Jeeves at Ask Jeeves' premises, or at such other place as the parties to this
Agreement may mutually agree, the Assets (including without limitation, all
source code thereto and programmers' notes, test scripts, build scripts and any
and all other documentation and information necessary and useful to
understanding and using the source code for the Assets, which shall be
transferred on CD-ROM).

2
<PAGE> 4

4. REPRESENTATIONS AND WARRANTIES OF LUMINA.

Except as disclosed or excepted in the Schedule of Exceptions (the
"Schedule"), which shall state the specific subsection of this Section 4 to
which each disclosure or exception is made, Lumina represents and warrants to
Ask Jeeves as set forth in this Section 4.

4.1 ORGANIZATION AND STANDING. Lumina is a corporation organized,
validly existing and in good standing under the laws of the State of California.

4.2 POWER AND AUTHORIZATION. Lumina has all requisite legal power and
authority to enter into and perform this Agreement in accordance with its terms.
The execution and delivery of this Agreement and the transactions contemplated
hereby have been validly and duly authorized by all necessary corporate action
on the part of Lumina and no further authorization or approval, whether from
directors or shareholders of Lumina, or governmental bodies or otherwise, is
necessary to enable Lumina to enter into and perform the same; and this
Agreement, when executed and delivered, shall constitute the legal and binding
obligation of Lumina, enforceable against Lumina in accordance with its terms.

4.3 TITLE TO ASSETS; INTELLECTUAL PROPERTY.

4.3.1 GOOD TITLE. Lumina has good and marketable title in and to
all of the Assets including any patents, patent applications, service marks,
trade names, trademarks, trademark applications, copyrights, copyright
applications, trade secrets, know-how, data or other proprietary or intellectual
property rights included in the Assets (collectively, "Intellectual Property
Rights") and such are not subject to any mortgage, pledge, lien, lease, claim,
encumbrance, charge, security interest, royalty obligations or other interest or
claim of any kind or nature whatsoever, and Lumina and does not license any
component thereof from a third party. There are no material agreements or
arrangements between Lumina and any third party which are reasonably likely to
have a material effect upon Lumina's title to and other rights respecting the
Assets. Lumina has the sole right to bring actions for infringement of any
Intellectual Property Rights included in the Assets.

4.3.2 EMPLOYEES. The Assets do not include any inventions of any
of Lumina's officers, employees or consultants made or owned prior to their
appointment by Lumina. All current or former employees and consultants have
assigned in writing all of their rights in the Intellectual Property Rights
related to the Assets to Lumina. No current or former employee or consultant of
Lumina owns or has claimed an interest in any Intellectual Property Rights
related to the Assets or, to the best of Lumina's knowledge, any other
Intellectual Property Rights directly or indirectly competitive with those
related to the Assets.

4.3.3 PROTECTION OF OWNERSHIP INTEREST. Lumina has taken and will
take all reasonable security measures to protect the secrecy, confidentiality
and value of all Intellectual Property Rights transferred in accordance with
this Agreement. Lumina has not taken any action or, to its knowledge, failed to
take an action that directly or indirectly caused the proprietary information
contained in the Assets to enter the public domain or in any way affected its
value or Lumina's absolute and unconditional ownership thereof. No source code
or object code of any

3
<PAGE> 5

Intellectual Property Rights is subject to escrow and such source code has not
been disclosed to any third party.

4.3.4 NO LIMITATIONS ON ASSETS. With respect to the transfer of
rights in and to the Assets under this Agreement, except as to the Contracts
assigned to Ask Jeeves under Section 1.2, Ask Jeeves shall be subject to no
limitations, obligations or restrictions with regard to the sale, license,
distribution or other transfer or exploitation of the Assets, whether in the
form transferred to Ask Jeeves or after modification. All rights to any tangible
or intangible property material (including, but not limited to, all Intellectual
Property Rights in the Assets) to the Assets and used in Lumina's business as
presently conducted or currently planned by Lumina, or as conducted by any
predecessor entity to Lumina or prior owner of any portion of the Assets, have
been validly transferred to Lumina free of any adverse claims by any such
predecessor entity, or any partner, limited partner, security holder or creditor
of any such predecessor entity, and no such property rights remain in any such
entity. Lumina is under no obligation to pay any other party any royalties or
other fixed or contingent amounts based upon the sale, license, distribution or
other use or exploitation of the Assets.

4.3.5 NO VIOLATION OF THIRD PARTY RIGHTS. The use of the Assets
and the Intellectual Property Rights in the Assets in the conduct of Lumina's
business have not and do not infringe or conflict with the rights of others
under any Intellectual Property Rights in any jurisdiction in the world.

4.3.6 NO INDEMNITY OBLIGATIONS. Lumina has not agreed to
indemnify any third party for or against any infringement of any Intellectual
Property Rights.

4.3.7 YEAR 2000. To Lumina's knowledge, the Assets and the
Intellectual Property Rights in the Assets include design, performance and
functionality so that Lumina does not reasonably expect that the Assets and the
Intellectual Property Rights in the Assets will experience invalid or incorrect
results or abnormal hardware or software operation related to calendar year
2000. To Lumina's knowledge, the Assets and the Intellectual Property Rights in
the Assets include calendar year 2000 date conversion and compatibility
capabilities, including, but not limited to, date data century recognition, same
century and multiple century formula and date value calculations, and user
interface date data values that reflect the century and accurately accept date
input and process, store and output date data and date-related data, including,
without limitation, calculating, comparing, sorting and sequencing such data and
calculating leap years before, during and after the calendar year 2000 A.D.
without manual intervention.

4.4 CONFLICTING AGREEMENTS. Neither the execution nor delivery by Lumina
of this Agreement nor compliance by Lumina with the terms and provisions hereof
will (a) conflict with, or result in a breach of the terms, conditions or
provisions of, or constitute a default under, or result in any violation of, the
bylaws or articles of incorporation of Lumina, any award of any arbitrator or
any other agreement, any regulation, law, judgment, order or the like to which
Lumina is subject or any Contract, or (b) result in the creation of any lien
upon all or any of the Assets. Lumina is not a party to, or otherwise subject to
any provision contained in, any instrument evidencing indebtedness, any
agreement relating thereto or any other contract or agreement which restricts or
otherwise limits the transfer of the Assets.

4
<PAGE> 6

4.5 CAPITALIZATION. The shareholders of Lumina listed on Part 4.5 of the
Schedule beneficially own the shares listed on Part 4.5, and will be as of the
Closing Date, the sole shareholders of Lumina (the "Shareholders"). Only the
Shareholders shall have the right to receive the Shares (as defined in Exhibit
B) upon the Company's distribution of the Shares (as defined in Exhibit B) after
the Closing Date.

4.6 LITIGATION. No action, suit, proceeding or investigation is pending
or threatened against Lumina: (a) which questions the validity of this Agreement
or the License Agreement or the right of Lumina to enter into this Agreement or
the License Agreement or seeks to prevent any of the transactions contemplated
under this Agreement or the License Agreement, (b) which is reasonably likely to
have a material adverse effect on the Assets, (c) which challenges the ownership
or use, in any respect, of the Assets, or (d) which challenges the rights of
Lumina under or the validity of any of the Intellectual Property Rights. There
is no judgment, decree, injunction, rule or order of any court, governmental
department, commission agency, instrumentality or arbitrator or other similar
ruling outstanding against Lumina relating to the Assets or this transaction. No
action, suit, proceeding or investigation is pending or threatened by Lumina
against any third party relating to the Assets.

4.7 GOVERNMENTAL AUTHORIZATIONS AND REGULATIONS. Lumina is not in
violation of any laws, material governmental orders, rules or regulations,
whether federal, state or local, to which Lumina or the Assets are subject
except for any such violations which are not reasonably likely to have a
material adverse effect on Lumina. Lumina has prior to the Closing Date
delivered to Ask Jeeves a true and correct list of all licenses, franchises,
permits and other governmental authorizations held by Lumina that are material
in connection with Lumina's business related to the ownership and use of the
Assets.

4.8 BULK SALES LAWS. The Bulk Sales laws of no state are applicable to
the sale and transfer of the Assets.

4.9 MATERIAL CONTRACTS, COMMITMENTS, AND PRODUCT WARRANTIES. Lumina has
supplied Ask Jeeves true and correct copies of all of the Contracts. Except for
terminated agreements, each of the Contracts is valid, binding and in full force
and effect in all material respects and enforceable by Lumina, in accordance
with its terms. Lumina is not in default under any of the Contracts. No party to
a Contract has terminated or overtly threatened termination of any contractual
arrangement with Lumina directly related to the Assets. To the knowledge of
Lumina, no other party to any of the Contracts is in material default
thereunder. Lumina has supplied to Ask Jeeves copies of any and all written
warranties by Lumina granted with respect to the Assets.

4.10 MANUFACTURING AND TECHNOLOGY RIGHTS. Lumina has not granted rights
to manufacture, publish, produce, assemble, license or sell the Intellectual
Property Rights or any of its technology to any other person and is not bound by
any agreement which affects Lumina's exclusive right to manufacture, publish,
produce, assemble, license, distribute or sell the Intellectual Property Rights.

4.11 TAXES. There are no tax liens against the Assets and there is no
basis for any such lien.

5
<PAGE> 7

4.12 BROKERAGE. There are no claims for brokerage commissions, finders'
fees or similar compensation in connection with the transactions contemplated by
this Agreement based on any arrangement or agreement made by or on behalf of
Lumina.

4.13 FULL DISCLOSURE. This Agreement, the Exhibits and Schedules hereto,
the License Agreement, and all other documents delivered by Lumina to Ask Jeeves
or their attorneys or agents in connection herewith or therewith or with the
transactions contemplated hereby or thereby, when taken as a whole, do not
contain any untrue statement of a material fact nor, to Lumina's knowledge, omit
to state a material fact necessary in order to make the statements contained
herein or therein not misleading.

5. REPRESENTATIONS AND WARRANTIES OF ASK JEEVES.

Ask Jeeves represents and warrants to Lumina as follows:

5.1 ORGANIZATION AND STANDING. Ask Jeeves is a corporation duly
organized, validly existing and in good standing under the law of California.

5.2 POWER; AUTHORIZATION. Ask Jeeves has all requisite legal power and
authority to enter into and perform this Agreement in accordance with its terms.
The execution and delivery of this Agreement and the transactions contemplated
hereby have been validly and duly authorized by all necessary corporate action
on the part of Ask Jeeves and no further authorization or approval, whether from
directors or shareholders of Ask Jeeves or governmental bodies or otherwise, is
necessary to enable Ask Jeeves to enter into and perform the same; and this
Agreement, when executed and delivered, shall constitute the legal and binding
obligation of Ask Jeeves, enforceable against Ask Jeeves in accordance with its
terms.

5.3 CAPITALIZATION. As of April 6, 1999, Ask Jeeve's authorized capital
stock consists of (a) Eighty Million (80,000,000) shares of Common Stock,
without par value, of which Twenty Three Million One Hundred Sixty Seven
Thousand Four Hundred Sixty Six (23,167,466) shares are issued and outstanding
and of which Eleven Million Nine Hundred Forty Six Thousand Seven Hundred Forty
Five (11,946,745) shares are reserved for issuance under Ask Jeeves' 1996 Equity
Incentive Plan and of which Seventy Eight Thousand (78,000) shares are reserved
for issuance pursuant to outstanding warrants, and (b) Twenty Million
(20,000,000) shares of Preferred Stock, without par value, of which Seven
Million Five Hundred Thousand (7,500,000) shares have been designated Series A
Preferred Stock, without par value, of which Seven Million Four Hundred Nineteen
Thousand Seven Hundred Sixty Nine (7,419,769) shares are issued and outstanding
and Twelve Million Five Hundred Thousand (12,500,000) shares have been
designated Series B Preferred Stock, without par value, of which Eleven Million
Five Hundred Fifty One Thousand Six Hundred Thirteen (11,551,613) shares are
issued and outstanding. There are no outstanding options other than pursuant to
the 1996 Equity Incentive Plan.

5.4 SHARES VALIDLY ISSUED. When issued in compliance with the provisions
of this Agreement, the Shares (as defined in Exhibit B) will be validly issued,
fully paid and nonassessable, and will be free of any liens or encumbrances;
provided, however, that the Shares (as defined in Exhibit B) may be subject to
restrictions on transfer under state and/or federal

6
<PAGE> 8

securities laws as set forth herein or as otherwise required by such laws at the
time a transfer is proposed.

5.5 CONFLICTING AGREEMENTS. Neither the execution nor delivery by Ask
Jeeves of this Agreement nor compliance by Ask Jeeves with the terms and
provisions hereof will conflict with, or result in a breach of (a) the terms,
conditions or provisions of, or constitute a default under, or result in any
violation of, the bylaws or articles of incorporation of Ask Jeeves or any
agreement to which Ask Jeeves is a party, which would prevent any of the
transactions contemplated under this Agreement or the License Agreement, or (b)
any regulation, law, judgment, order or the like to which Ask Jeeves is subject,
the default or violation of which would prevent any of the transactions
contemplated under this Agreement or the License Agreement.

5.6 LITIGATION. No action, suit, proceeding or investigation is pending
or threatened against Ask Jeeves which questions the validity of this Agreement
or the License Agreement or the right of Ask Jeeves to enter into this Agreement
or the License Agreement or seeks to prevent any of the transactions
contemplated under this Agreement or the License Agreement.

5.7 BROKERAGE. There are no claims for brokerage commissions, finders'
fees or similar compensation in connection with the transactions contemplated by
this Agreement based on any arrangement or agreement made by or on behalf of Ask
Jeeves.

5.8 FINANCIAL STATEMENTS. Ask Jeeves has delivered to Lumina (a) its
audited balance sheet as at December 31, 1997 and audited statement of income
and cash flows for the twelve months ending December 31, 1997, and (b) its
unaudited balance sheet as at December 31, 1998 and unaudited statement of
income and cash flows for the twelve months ending December 31, 1998
(collectively, the "Financial Statements"). The Financial Statements, together
with the notes thereto, have been prepared in accordance with generally accepted
accounting principles applied on a consistent basis throughout the periods
indicated, except as disclosed therein, and present fairly the financial
condition and position of Ask Jeeves as of December 31, 1998; provided, however,
that the unaudited financial statements are subject to normal recurring year end
audit adjustments (which are not expected to be material), and do not contain
all footnotes required under generally accepted accounting principles.

6. CLOSING CONDITIONS OF LUMINA. Lumina's obligations to sell the Assets are
subject to the fulfillment on or prior to the Closing Date of all of the
conditions set forth in this Section 6. Ask Jeeves acknowledges and agrees that
Lumina shall not owe Ask Jeeves any amount for a failure of the closing to occur
as a result of a closing condition.

6.1 MATERIAL ADVERSE CHANGE. Lumina shall be satisfied in its sole
discretion that the representations and warranties made by Ask Jeeves in Section
5 above are true and correct as of the Closing Date.

6.2 CONSENTS, APPROVALS AND WAIVERS. Lumina and Ask Jeeves shall have
obtained, in a manner satisfactory to Lumina and its counsel, any and all
approvals, consents, permits and waivers and made all filings necessary or
appropriate for the sale and transfer of the Assets under this Agreement.

7
<PAGE> 9

6.3 COVENANTS. All covenants, agreements and conditions contained in
this Agreement to be performed by Ask Jeeves on or prior to the Closing Date
shall have been performed or complied with in all respects.

6.4 PROCEEDINGS AND DOCUMENTS. All corporate and other proceedings in
connection with the transactions contemplated hereby and all documents and
instruments incident to such transactions shall be satisfactory in substance and
form to Lumina and its counsel, and Lumina and its counsel shall have received
all such counterpart originals or certified or other copies of such documents
and instruments as they may reasonably request.

6.5 OFFER LETTERS. Ask Jeeves and the Lumina employees to whom Ask
Jeeves has offered employment prior to Closing shall have entered into offer
letters substantially in the form attached hereto as Exhibit C (each an "Offer
Letter").

6.6 LICENSE AGREEMENT. The License Agreement shall have been executed
and delivered by the parties thereto.

7. CLOSING CONDITIONS OF ASK JEEVES. Ask Jeeves' obligations to purchase the
Assets are subject to the fulfillment on or prior to the Closing Date of all of
the conditions set forth in this Section 7.

7.1 SATISFACTORY DUE DILIGENCE; MATERIAL ADVERSE CHANGE. Ask Jeeves
shall be satisfied in its sole discretion (a) that the representations and
warranties made by Lumina in Section 4 above are true and correct as of the
Closing Date, (b) that any matters included in the Schedule which Ask Jeeves
deems to be unacceptable and which have been specified in writing to Lumina have
been remedied to Ask Jeeves's satisfaction, and (c) with the results of its
business, technical, legal and financial review of the books, records,
agreements and other legal documents and business organization of Lumina.

7.2 CONSENTS, APPROVALS AND WAIVERS. Lumina and Ask Jeeves shall have
obtained, in a manner satisfactory to Ask Jeeves and its counsel, any and all
approvals, consents, permits and waivers and made all filings necessary or
appropriate for the sale and transfer of the Assets under this Agreement.

7.3 COVENANTS. All covenants, agreements and conditions contained in
this Agreement to be performed by Lumina on or prior to the Closing Date shall
have been performed or complied with in all respects.

7.4 PROCEEDINGS AND DOCUMENTS. All corporate and other proceedings in
connection with the transactions contemplated hereby and all documents and
instruments incident to such transactions shall be satisfactory in substance and
form to Ask Jeeves and its counsel, and Ask Jeeves and its counsel shall have
received all such counterpart originals or certified or other copies of such
documents and instruments as they may reasonably request.

7.5 OFFERS OF EMPLOYMENT. Ask Jeeves and the Lumina employees to whom
Ask Jeeves has offered employment prior to Closing shall have executed Offer
Letters.

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<PAGE> 10

7.6 LICENSE AGREEMENT. The License Agreement shall have been executed
and delivered by the parties thereto.

7.7 ESCROW AGREEMENT. The escrow agreement among Ask Jeeves, Lumina,
certain shareholders of Lumina, Max Henrion as the shareholder representative,
and ___________ as the escrow agent (the "Escrow Agreement") shall have been
executed and delivered by the parties thereto.

8. INDEMNIFICATION.

8.1 LUMINA INDEMNITY. Lumina and its successors (collectively, the
"Sellers") agree to indemnify Ask Jeeves, its affiliates, its subsidiaries, or
its successors (collectively the "Purchasers") and hold them harmless from and
against any and all liabilities, losses, damages, costs or expenses (including
without limitation reasonable legal and expert witnesses' fees and expenses)
incurred by the Purchasers, directly or indirectly, to the extent that such
liabilities, losses, damages, costs or expenses ("Damages") are occasioned by,
caused by or arise out of:

8.1.1 Any breach of any of the representations or warranties or
failure to perform any of the covenants made by the Sellers in this Agreement,
or any certificate, exhibit, instrument or other document delivered pursuant to
this Agreement; or

8.1.2 Any debts, claims, liabilities, or obligations of the
Sellers not expressly assumed by Purchaser pursuant to this Agreement; or

8.1.3 Any breach of any of the representations or warranties or
failure to perform any of the covenants made by the Sellers in the License
Agreement, or any certificate, exhibit, instrument or other document delivered
pursuant to the License Agreement.

8.2 ASK JEEVES INDEMNITY. Purchaser agrees to indemnify Seller and hold
them harmless from and against any and all liabilities, losses, damages, costs
or expenses (including without limitation reasonable legal and expert witnesses'
fees and expenses) incurred by the Sellers to the extent that such Damages are
occasioned by, caused by or arise out of:

8.2.1 any breach of any of the representations or warranties or
failure to perform any of the covenants made by Purchasers in this Agreement, or
any certificate, exhibit, instrument or other document delivered pursuant to
this Agreement; or

8.2.2 Any breach of any of the representations or warranties or
failure to perform any of the covenants made by the Purchasers in the License
Agreement, or any certificate, exhibit, instrument or other document delivered
pursuant to the License Agreement.

8.3 INDEMNIFICATION CLAIMS. If either party hereto (the "Claimant")
wishes to assert an indemnification claim against the other party hereto, the
Claimant shall deliver to the other party a written notice setting forth:

8.3.1 the specific representation and warranty alleged to have
been breached by such other party;

9
<PAGE> 11

8.3.2 a detailed description of the facts and circumstances
giving rise to the alleged breach of such representation and warranty; and

8.3.3 a detailed description of, and a reasonable estimate of the
total amount of, the Damages actually incurred or expected to be incurred by the
Claimant as a direct result of such alleged breach.

A copy of any notice delivered to the Sellers shall be delivered by the
Purchasers to the Escrow Agent and the Shareholder Representative, each as
defined in the Escrow Agreement.

8.4 DEFENSE OF THIRD PARTY ACTIONS. If either party hereto (the
"Indemnified Party") receives notice or otherwise obtains knowledge of the
commencement or threat of any claim, demand, dispute, action, suit, examination,
audit, proceeding, investigation, inquiry or other similar matter that may give
rise to an indemnification claim against the other party hereto (the
"Indemnifying Party"), then the Indemnitee shall promptly deliver to the
Indemnified Party a written notice describing such complaint or the commencement
of such action or proceeding; provided, however, that the failure to so notify
the Indemnifying Party shall relieve the Indemnifying Party from liability under
this Agreement with respect to such claim only if, and only to the extent that,
such failure to notify the Indemnifying Party results in the forfeiture by the
Indemnifying Party of rights and defenses otherwise available to the
Indemnifying Party with respect to such claim or the opportunity to defend or
participate in the defense of said claim. The Indemnifying Party shall have the
right, upon written notice delivered to the Indemnified Party within 20 days
thereafter to assume the defense of such action or proceeding, including the
employment of counsel reasonably satisfactory to the Indemnified Party and the
payment of the fees and disbursements of such counsel. In the event, however,
that the Indemnifying Party declines or fails to assume the defense of the
action or proceeding or to employ counsel reasonably satisfactory to the
Indemnified Party, in either case within such 20 day period, then such
Indemnified Party may employ counsel, reasonably acceptable to the Indemnifying
Party, to represent or defend it in any such action or proceeding and the
Indemnifying Party shall pay the reasonable fees and disbursements of such
counsel as incurred; provided, however, that the Indemnifying Party shall not be
required to pay the fees and disbursements of more than one counsel for all
Indemnified Parties in any jurisdiction in any single action or proceeding. In
any action or proceeding with respect to which indemnification is being sought
hereunder, the Indemnified Party or the Indemnifying Party, whichever is not
assuming the defense of such action, shall have the right to participate in such
litigation and to retain its own counsel at such party's own expense. The
Indemnifying Party or the Indemnified Party, as the case may be, shall at all
times use all commercially reasonable efforts to keep the Indemnifying Party or
the Indemnified Party, as the case may be, reasonably apprised of the status of
the defense of any action, the defense of which they are maintaining, and to
cooperate in good faith with each other with respect to the defense of any such
action. No Indemnified Party may settle or compromise any claim or consent to
the entry of any judgment with respect to which indemnification is being sought
hereunder without the prior written consent of the Indemnifying Party, which
shall not be unreasonably withheld. The Indemnifying Party shall not settle any
claim or assertion, unless the Indemnified Party consents in writing to such
settlement, which consent shall not be unreasonably withheld.

10
<PAGE> 12

8.5 EXPIRATION OF REPRESENTATIONS AND WARRANTIES. All of the
representations and warranties set forth in this Agreement shall terminate and
expire, and shall cease to be of any force or effect on the first anniversary of
the Closing Date, and all liability of Lumina and Ask Jeeves with respect to
such representations and warranties shall thereupon be extinguished; provided,
however, that if, prior to such first anniversary, Claimant delivers a written
notice to the other party hereto or to the Escrow Agent, then the specific
indemnification claim set forth in such notice shall survive such first
anniversary (and shall not be extinguished thereby) until the settlement of such
specific claim.

8.6 THRESHOLD. Neither the Sellers nor the Purchasers shall be required
to make any indemnification payment pursuant to Section 8.1 or 8.2,
respectively, until such time as the total amount of all Damages that have been
directly or indirectly suffered or incurred by an Indemnified Party, or to which
an Indemnified Party has or otherwise becomes subject to, exceeds $50,000 in the
aggregate. At such time as the total amount of such Damages exceeds $50,000 in
the aggregate, the Indemnified Party shall be entitled to be indemnified against
the full amount of such Damages (and not merely the portion of such Damages
exceeding $50,000).

9. POST-CLOSING COVENANTS.

9.1 FURTHER ASSURANCES. Lumina shall not voluntarily undertake any
course of action which interferes in any way with the rights obtained by Ask
Jeeves hereunder or is otherwise inconsistent with the satisfaction of its
obligations or agreements set forth in this Agreement. Lumina hereby agrees not
to contest Ask Jeeves's ownership of the Intellectual Property Rights or Ask
Jeeves's title to the Assets. Lumina shall execute, acknowledge and deliver any
further assignments, conveyances and other assurances, documents and instruments
of transfer, consistent with the terms of this Agreement, which are reasonably
requested and prepared by Ask Jeeves or its counsel and shall take any other
action, consistent with the terms of this Agreement, that may be reasonably
requested and prepared by Ask Jeeves or its counsel for the purpose of
assigning, transferring, granting, conveying, and confirming to Ask Jeeves or
reducing to its possession, any or all of the Assets or the liabilities. Ask
Jeeves shall be solely responsible for all out-of-pocket costs related to such
requests. If Ask Jeeves cannot secure Lumina's signature for any of the
foregoing after reasonable efforts, Lumina appoints Ask Jeeves as Lumina's
attorney-in-fact to take all actions Ask Jeeves deems reasonably necessary to
exercise its rights under this Section.

9.2 CONFIDENTIALITY. From and after the Closing Date, to the maximum
extent permitted by applicable law, all technical, marketing and other
information directly relating to the Assets and Intellectual Property Rights
thereto shall at all times be and remain the sole and exclusive property of Ask
Jeeves. At all times after the Closing Date, Lumina shall retain in strictest
confidence, and shall not disclose to third parties or use for its benefit or
for the benefit of any third party, all information assigned under this
Agreement or disclosed by Ask Jeeves or in any other way relating to the Assets.
Lumina understands and agrees that Ask Jeeves's remedies at law for a breach by
Lumina of its obligations under this Section will be inadequate and that Ask
Jeeves shall, in the event of any such breach, be entitled to equitable relief
(including without limitation injunctive relief and specific performance) in
addition to all other remedies provided under this Agreement or available to Ask
Jeeves at law.

11
<PAGE> 13

10. MISCELLANEOUS.

10.1 GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the substantive laws of the State of California applicable to
contracts between California residents entered into and to be performed entirely
within the State of California. Any action or proceeding brought by either party
against the other arising out of or related to this Agreement shall be brought
exclusively in a state or federal court in Santa Clara County, California.

10.2 WAIVERS; CUMULATIVE REMEDIES. Any waiver, consent or the like must
be in writing. Any waiver by either party of any breach of this Agreement by the
other party shall not constitute a waiver of any other or subsequent breach of
this Agreement. All remedies, either under this Agreement or by law or
otherwise, afforded to the parties hereunder shall be cumulative and not
alternative.

10.3 NOTICES. All notices and other communications required or permitted
hereunder shall be in writing and shall be effective upon receipt by facsimile
with a confirming copy sent by first-class mail, postage prepaid, or five (5)
days after deposit in the U.S. postal system by certified or registered mail,
return receipt requested, postage prepaid to the addresses first set forth below
such other address as a party may designate for itself by providing notice
hereunder:

If to Lumina: If to Ask Jeeves:
Max Henrion Amy Slater
Lumina Decision Systems, Inc. Ask Jeeves, Inc.
59 N. Santa Cruz Avenue, Suite Q 918 Parker Street
Los Gatos, California 95030 Berkeley, California 94210
Fax: (408) 354-9562 Fax: (510) 649-8663

10.4 AUDIT. Each party shall provide the other with notice of an audit
by any tax authority of such party's books and records which is reasonably
likely to relate to the Assets or the sale of the Assets in this transaction.

10.5 ATTORNEYS' FEES. In any action brought to construe or enforce this
Agreement, the prevailing party shall receive in addition to any other remedy to
which it may be entitled, compensation for all costs incurred in pursuing such
action, including, but not limited to, reasonable attorneys' and expert
witnesses' fees and costs.

10.6 EXPENSES. Each party shall bear its own expenses and legal fees
incurred on its behalf with respect to this Agreement and the transaction
contemplated hereby.

10.7 SEVERABILITY. In case any provision of this Agreement is held to be
invalid or unenforceable, such provision shall be deemed amended to the extent
required to make it valid and enforceable and such amended provision and the
remaining provisions of this Agreement will remain in full force and effect.

10.8 TITLE AND HEADINGS. The titles and headings contained in this
Agreement are inserted for convenience only and shall not affect in any way the
meaning or interpretation of this Agreement.

12
<PAGE> 14

10.9 SUCCESSOR AND ASSIGNS. The provisions hereof shall inure to the
benefit of, and be binding upon, the successors and assigns of the parties
hereto.

10.10 RIGHTS OF THIRD PARTIES. Nothing contained in this Agreement,
express or implied, shall be deemed to confer any rights or remedies upon, or
obligate any of the parties hereto, to any person or entity.

10.11 PUBLICITY. The terms of this Agreement shall be considered
confidential information of Ask Jeeves and Lumina. Both parties agree that the
specific provisions hereof shall not be revealed or disclosed by it without the
prior written consent of the other except to the extent such disclosure is
required by applicable law or regulation.

10.12 ENTIRE AGREEMENT; AMENDMENT. This Agreement, the Exhibits hereto
and the other documents delivered pursuant hereto constitute the full,
exclusive, complete and entire understanding and agreement between the parties
with regard to the subject matter hereof and thereof and supersedes and revokes
all other previous discussions, understanding and agreements, whether oral or
written, between the parties with regard to the subject matter hereof. Any term
of this Agreement may be amended and the observance of any term of this
Agreement may be waived (either generally or in a particular instance and either
retroactively or prospectively), only with the written consent of the affected
party.

13
<PAGE> 15

The parties to this Agreement have caused this Agreement to be executed
and delivered as of April 16, 1999.

ASK JEEVES, INC.,
a California corporation

By: /s/ Rob Wrubel
------------------------------------

Printed Name: Rob Wrubel
--------------------------

Title: CEO
---------------------------------

LUMINA DECISION SYSTEMS, INC.
a California corporation

By: /s/ Max Henrion
---------------------------------

Printed Name: Max Henrion
-----------------------

Title: CEO
------------------------------

<PAGE> 16

EXHIBIT A

ASSETS

The following assets are the subject of this Purchase Agreement:

1. The Lumina Shopping Advisor prototype for digital cameras, as of 15 April
1999 including

a. The general template Customer-Value model for consumer products written
in Analytica(R)

b. The Category Knowledgebase for the product category of digital cameras
written in Analytica(R)

c. The ASP (Microsoft Active Server Pages) Code for the Web user interface
for the digital camera advisor

d. The digital camera product database

e. Existing design documentation

2. The Lumina Shopping Advisor prototype for Laptop computers, as of 15 April,
1999 including

a. The general template Customer-Value model for configurable products
written in Analytica(R)

b. The Category Knowledgebase for configurable laptop computers written in
Analytica(R)

c. The ASP Code for the Web user interface for the above

d. The Dell laptop product database

e. Existing design documentation

3. Draft marketing materials for the Lumina Shopping Advisor including

a. Draft Powerpoint marketing presentation

b. Report analyzing market segments

Items 1 and 2 are included in a Microsoft Source Safe database, as of April 15,
1999. These assets will be installed by Lumina on computer hardware systems of
the Purchaser.

<PAGE> 17

EXHIBIT B

PAYMENT TERMS

On the Closing Date, Ask Jeeves shall deliver to Lumina the following:

(1) by wire transfer or check made payable to Lumina, the amount of
$700,000;

(2) 450,000 shares of the common stock of Ask Jeeves (the "Shares").

Within five (5) business days following the Closing Date, Lumina shall
deliver the following:

(1) 150,000 Shares to State Street Bank and Trust Company of California,
N.A. (the "Escrow Agent") pursuant to a distribution to the Shareholders in
accordance with the terms of the Escrow Agreement; and

(2) 300,000 Shares to the Shareholders pursuant to a distribution.

Within six (6) business days following the Closing Date, the Employees
(as defined below) shall deliver between 213,018 and 221,614 Shares (the
"Buyback Shares") to Ask Jeeves to be held in escrow subject to the following
right of repurchase by Ask Jeeves contained in the Offer Letters (the "Buyback
Option"):

If an Employee's continuous service with Ask Jeeves is voluntarily
terminated by such Employee or by Ask Jeeves with Cause, Ask Jeeves will have
the right at any time within ninety (90) days after such Employee's termination
of continuous service with Ask Jeeves to purchase from such Employee such
Employee's pro rata portion of the Buyback Shares then subject to the Buyback
Option, at the price per share of $0.25. For purposes of the Buyback Option,
"Employee" shall mean a former employee of Lumina who accepts an offer of
employment by Ask Jeeves pursuant to an Offer Letter at or prior to the Closing
Date. Twenty-Five percent (25%) of the Buyback Shares will be released from the
Buyback Option on the date which is six months following the Closing Date of the
Asset Purchase Agreement to which this Exhibit B is attached. An additional
4.16667% of the Buyback Shares will be released from the Buyback Option monthly
thereafter. For the purpose of the Buyback Option, "Cause" shall mean (a) an
intentional refusal or failure to follow lawful and reasonable directions of the
Board of Directors of Ask Jeeves or the Chief Executive Officer or Chief
Technical Officer; (b) a willful and habitual neglect of duties as reasonably
determined by the Chief Executive Officer or Chief Technical Officer; or (c) a
conviction of a felony involving moral turpitude which is reasonably likely to
inflict or has inflicted material injury on Ask Jeeves. For the purpose of the
Buyback Option, an Employee will be deemed to have been terminated without Cause
and, therefore, the Buyback Option will terminate with respect to such Employee,
if the Employee voluntarily terminates for "Good Reason". Termination for "Good
Reason" shall occur in the event that (a) there is a diminution in the
Employees' office, title, duties, salary or benefits from the Closing Date, (b)
Ask Jeeves breaches its Offer Letter with such Employee, (c) such Employee is
disabled or dies, or (d) the Employee is relocated to an office that is more
than twenty (20) miles away from Lumina's current office in Los Gatos.

<PAGE> 18

EXHIBIT C

Form of Offer Letter

<PAGE> 19

April __, 1999

Dear ____________:

In connection with our proposed acquisition of certain assets of Lumina Decision
Systems, Inc. (the "Transaction") we are pleased to offer you the position of
_________________________________________ for Ask Jeeves, Inc. (the "Company")
effective upon the closing of the Transaction. Your first day of employment will
be approximately April 19, 1999, or as soon after the closing of the Transaction
as feasible (your "Start Date"). You will report to ________________.

You will receive an annual salary of $_______, which will be paid semi-monthly
in accordance with the Company's normal payroll procedures. You will also be
eligible to participate in any employee benefit programs that are, or may
become, available to a full time _____________________________________, or an
employee at a comparable level, at Ask Jeeves. You acknowledge, by signing this
letter where indicated below, that Ask Jeeves is not assuming any liability of
Lumina in connection with your employment by Lumina.

Upon your employment you will be awarded _______ non-statutory stock options to
purchase stock in the Company pursuant to the Company's incentive stock option
plan (the Plan), vesting over a period of four years, with 25% of the shares
vesting on the first anniversary of your employment, and the remaining shares
vesting in 36 equal monthly installments thereafter, with a ten-year term, at an
exercise price of $____, with a vesting commencement date of February 8, 1999.

You will be eligible for a one-time performance bonus payment if Ask Jeeves,
within 18 months of the closing date of the Transaction, has sold and invoiced,
with the expectation of receiving payment, five licensing deals incorporating
the Lumina PDE software. To be counted towards the performance bonus, such deals
must have an average total selling price of $100,000 per deal. If this goal is
met, you will, at your option, receive either (a) $_______ in cash; (b) $_______
worth of Ask Jeeves common stock valued at the fair market value for the shares
on the day that the Company's Board of Directors approves the bonus payment; or
(c) a combination of stock and cash with an aggregate value of $_______. Subject
to Board approval, your share of the performance bonus will be paid within 30
days of the date that this goal is met.

The Company agrees that for the lesser of (i) the duration of your employment
with the Company or (ii) two (2) years from your Start Date you will be able to
perform your duties at a location that is not more than twenty (20) miles from
Lumina's current offices in Los Gatos.

Notwithstanding anything else contained in this letter, your employment with the
Company is for no specified period and constitutes at will employment. As a
result, you are free to resign at any time, for any reason or for no reason.
Similarly, the Company is free to conclude its employment

<PAGE> 20

relationship with you at any time, with or without cause. We agree that up to
199,874 shares of the Company stock you received in connection with the
Transaction may be subject to the buyback described in Attachment A (the
"Buyback Shares").

Enclosed is a summary of current Company benefits. Our benefits, payroll and
other human resource management services are provided through TriNet Employer
Group, Inc. TriNet is a professional employer organization (PEO) contracted by
Ask Jeeves to perform selected employer responsibilities on our behalf. As a
result of our arrangement with TriNet, TriNet will be considered your employer
of record for payroll, benefits and other functions involving employer related
administration. However, your managers at Ask Jeeves will be responsible for
reviewing your performance and otherwise directing your work

For purposes of federal immigration law, you will be required to provide to the
Company documentary evidence of your identity and eligibility for employment in
the United States. Such documentation must be provided to us within three (3)
business days of your date of hire or our employment relationship with you may
be terminated.

I have enclosed our Confidential Information and Invention Assignment Agreement.
If you accept this offer, please return to me a signed copy of this agreement.

In the event of any dispute or claim relating to or arising out of our
employment relationship, you and the Company agree that all such disputes shall
be fully and finally resolved by binding arbitration conducted by the American
Arbitration Association in Berkeley, California.

However, we agree that this arbitration provision shall not apply to any
disputes or claims relating to or arising out of the misuse or misappropriation
of the Company's trade secrets or proprietary information.

To indicate your acceptance of the Company's offer, please sign and date this
letter in the space provided below and return it to me. A duplicate original is
enclosed for your records.

<PAGE> 21

This letter, along with the Confidential Information and Invention Assignment
Agreement between you and the Company, sets forth the terms of your employment
with the Company and supersedes any prior representations or agreements, whether
written or oral. This letter may not be modified or amended except by a written
agreement signed by the Company and by you.

Welcome to Ask Jeeves

Sincerely,

Robert W. Wrubel
President & CEO

Enclosures

Accepted:

Date:
- ----------------------------------- -----------------------------

<PAGE> 22

ATTACHMENT A

If an Employee's continuous service with Ask Jeeves is voluntarily
terminated by such Employee or by Ask Jeeves with Cause, Ask Jeeves will have
the right at any time within ninety (90) days after such Employee's termination
of continuous service with Ask Jeeves to purchase from such Employee such
Employee's pro rata portion of the Buyback Shares then subject to the Buyback
Option, at the price per share of $0.25. For purposes of the Buyback Option,
"Employee" shall mean a former employee of Lumina who accepts an offer of
employment by Ask Jeeves pursuant to an Offer Letter at or prior to the Closing
Date. Twenty-Five percent (25%) of the Buyback Shares will be released from the
Buyback Option on the date which is six months following the Closing Date of the
Asset Purchase Agreement to which this Attachment A is attached as Exhibit B. An
additional 4.16667% of the Buyback Shares will be released from the Buyback
Option monthly thereafter. For the purpose of the Buyback Option, "Cause" shall
mean (a) an intentional refusal or failure to follow lawful and reasonable
directions of the Board of Directors of Ask Jeeves or the Chief Executive
Officer or Chief Technical Officer; (b) a willful and habitual neglect of duties
as reasonably determined by the Chief Executive Officer or Chief Technical
Officer; or (c) a conviction of a felony involving moral turpitude which is
reasonably likely to inflict or has inflicted material injury on Ask Jeeves. For
the purpose of the Buyback Option, an Employee will be deemed to have been
terminated without Cause and, therefore, the Buyback Option will terminate with
respect to such Employee, if the Employee voluntarily terminates for "Good
Reason". Termination for "Good Reason" shall occur in the event that (a) there
is a diminution in the Employees' office, title, duties, salary or benefits from
the Closing Date, (b) Ask Jeeves breaches its Offer Letter with such Employee,
(c) such Employee is disabled or dies, or (d) the Employee is relocated to an
office that is more than twenty (20) miles away from Lumina's current office in
Los Gatos.

<PAGE> 23
TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
<S> <C> <C>
1. SALE OF ASSETS; RELATED TRANSACTIONS...................................1

1.1 Purchase and Sale...............................................1

1.2 Assignment of Contracts.........................................1

1.3 Complete Transfer...............................................1

1.3.1 No Assumption of Liabilities.............................2

2. PAYMENT................................................................2

2.1 Purchase Price..................................................2

2.2 Taxes...........................................................2

3. CLOSING................................................................2

3.1 Closing.........................................................2

3.2 Transfer of Assets..............................................2

4. REPRESENTATIONS AND WARRANTIES OF LUMINA..............................3

4.1 Organization and Standing.......................................3

4.2 Power and Authorization.........................................3

4.3 Title to Assets; Intellectual Property..........................3

4.4 Conflicting Agreements..........................................4

4.5 Capitalization..................................................5

4.6 Litigation......................................................5

4.7 Governmental Authorizations and Regulations.....................5

4.8 Bulk Sales Laws.................................................5

4.9 Material Contracts, Commitments, and Product Warranties.........5

4.10 Manufacturing and Technology Rights.............................5

4.11 Taxes...........................................................5

4.12 Brokerage.......................................................6

4.13 Full Disclosure.................................................6

5. REPRESENTATIONS AND WARRANTIES OF ASK JEEVES...........................6

5.1 Organization and Standing.......................................6

5.2 Power; Authorization............................................6

5.3 Capitalization..................................................6

5.4 Shares Validly Issued...........................................6

5.5 Conflicting Agreements..........................................7
</TABLE>

i
<PAGE> 24
TABLE OF CONTENTS
(CONTINUED)

<TABLE>
<CAPTION>
PAGE
<S> <C> <C>
5.6 Litigation.....................................................7

5.7 Brokerage......................................................7

5.8 Financial Statements...........................................7

6. CLOSING CONDITIONS OF LUMINA..........................................7

6.1 Material Adverse Change........................................7

6.2 Consents, Approvals and Waivers................................7

6.3 Covenants......................................................8

6.4 Proceedings and Documents......................................8

6.5 Offer Letters..................................................8

6.6 License Agreement..............................................8

7. CLOSING CONDITIONS OF ASK JEEVES......................................8

7.1 Satisfactory Due Diligence; Material Adverse Change............8

7.2 Consents, Approvals and Waivers................................8

7.3 Covenants......................................................8

7.4 Proceedings and Documents......................................8

7.5 Offers of Employment...........................................8

7.6 License Agreement..............................................9

7.7 Escrow Agreement...............................................9

8. INDEMNIFICATION.......................................................9

8.1 Lumina Indemnity...............................................9

8.2 Ask Jeeves Indemnity...........................................9

8.3 Indemnification Claims.........................................9

8.4 Defense of Third Party Actions................................10

8.5 Expiration of Representations and Warranties..................11

8.6 Threshold.....................................................11

9. POST-CLOSING COVENANTS...............................................11

9.1 Further Assurances............................................11

9.2 Confidentiality...............................................11

10. MISCELLANEOUS........................................................12

10.1 Governing Law.................................................12

10.2 Waivers; Cumulative Remedies..................................12
</TABLE>

ii.
<PAGE> 25

TABLE OF CONTENTS
(CONTINUED)

<TABLE>
<CAPTION>
PAGE
<S> <C> <C>
10.3 Notices.......................................................12

10.4 Audit.........................................................12

10.5 Attorneys' Fees...............................................12

10.6 Expenses......................................................12

10.7 Severability..................................................12

10.8 Title and Headings............................................12

10.9 Successor and Assigns.........................................13

10.10 Rights of Third Parties.......................................13

10.11 Publicity.....................................................13

10.12 Entire Agreement; Amendment...................................13
</TABLE>

iii.

<PAGE> 1
Exhibit 10.31

PROMISSORY NOTE

$______________ Berkeley, California
Date:________________

FOR VALUE RECEIVED, the undersigned hereby unconditionally promises to
pay to the order of Ask Jeeves, Inc., a California corporation (the "Company"),
at 918 Parker Street, Berkeley, California, or at such other place as the holder
hereof may designate in writing, in lawful money of the United States of America
and in immediately available funds, the principal sum of _______________ Dollars
($_______________) together with interest accrued from the date hereof on the
unpaid principal at the rate of _____% per annum, or the maximum rate
permissible by law (which under the laws of the State of California shall be
deemed to be the laws relating to permissible rates of interest on commercial
loans), whichever is less, as follows:

PRINCIPAL REPAYMENT. The outstanding principal amount hereunder
shall be due and payable in full on _______________, and

INTEREST PAYMENTS. Interest shall be payable annually in arrears
and shall be calculated on the basis of a 360-day year for the actual
number of days elapsed;

provided, however, that in the event that the undersigned's employment by or
association with the Company or its Affiliate is terminated for any reason prior
to payment in full of this Note, this Note shall be accelerated and all
remaining unpaid principal and interest shall become due and payable immediately
after such termination.

If the undersigned fails to pay any of the principal and accrued
interest when due, the Company, at its sole option, shall have the right to
accelerate this Note, in which event the entire principal balance and all
accrued interest shall become immediately due and payable, and immediately
collectible by the Company pursuant to applicable law.

This Note may be prepaid at any time without penalty. All money paid
toward the satisfaction of this Note shall be applied first to the payment of
interest as required hereunder and then to the retirement of the principal.

The full amount of this Note is secured by a pledge of shares of Common
Stock of the Company, and is subject to all of the terms and provisions of the
Early Exercise Stock Purchase Agreement and Stock Pledge Agreement of even date
herewith between the undersigned and the Company.

The undersigned hereby represents and agrees that the amounts due under
this Note are not consumer debt, and are not incurred primarily for personal,
family or household purposes, but are for business and commercial purposes only.

1.
<PAGE> 2
The undersigned hereby waives presentment, protest and notice of
protest, demand for payment, notice of dishonor and all other notices or demands
in connection with the delivery, acceptance, performance, default or endorsement
of this Note.

The holder hereof shall be entitled to recover, and the undersigned
agrees to pay when incurred, all costs and expenses of collection of this Note,
including without limitation, reasonable attorneys' fees.

This Note shall be governed by, and construed, enforced and interpreted
in accordance with, the laws of the State of California, excluding conflict of
laws principles that would cause the application of laws of any other
jurisdiction.

Signed ___________________________________

<PAGE> 3
STOCK PLEDGE AGREEMENT

THIS STOCK PLEDGE AGREEMENT ("Pledge Agreement") is made by
______________________________ ("Pledgor"), in favor of Ask Jeeves, Inc. a
California corporation with its principal place of business at 918 Parker
Street, Berkeley, California ("Pledgee").

WHEREAS, Pledgor has concurrently herewith executed that certain
Promissory Note (the "Note") in favor of Pledgee in the amount of
_______________ Dollars ($_______________) in payment of the purchase price of
_______________ (_______________) shares of the Common Stock of Pledgee; and

WHEREAS, Pledgee is willing to accept the Note from Pledgor, but only
upon the condition, among others, that Pledgor shall have executed and delivered
to Pledgee this Pledge Agreement and the Collateral (as defined below):

NOW, THEREFORE, in consideration of the foregoing recitals and for
other good and valuable consideration, the receipt and adequacy of which are
hereby acknowledged, and intending to be legally bound, Pledgor hereby agrees as
follows:

As security for the full, prompt and complete payment and performance
when due (whether by stated maturity, by acceleration or otherwise) of all
indebtedness of Pledgor to Pledgee created under the Note (all such indebtedness
being the "Liabilities"), together with, without limitation, the prompt payment
of all expenses, including, without limitation, reasonable attorneys' fees and
legal expenses, incidental to the collection of the Liabilities and the
enforcement or protection of Pledgee's lien in and to the collateral pledged
hereunder, Pledgor hereby pledges to Pledgee, and grants to Pledgee, a first
priority security interest in all of the following (collectively, the "Pledged
Collateral"):

(A) _______________ (_______________) shares of Common Stock of Pledgee
represented by Certificates numbered _______________ (the "Pledged Shares"), and
all dividends, cash, instruments, and other property or proceeds from time to
time received, receivable, or otherwise distributed in respect of or in exchange
for any or all of the Pledged Shares;

(B) all voting trust certificates held by Pledgor evidencing the right
to vote any Pledged Shares subject to any voting trust; and (C) all additional
shares and voting trust certificates from time to time acquired by Pledgor in
any manner (which additional shares shall be deemed to be part of the Pledged
Shares), and the certificates representing such additional shares, and all
dividends, cash, instruments, and other property or proceeds from time to time
received, receivable, or otherwise distributed in respect of or in exchange for
any or all of such shares.

The term "indebtedness" is used herein in its most comprehensive sense
and includes any and all advances, debts, obligations and Liabilities
heretofore, now or hereafter made, incurred or

<PAGE> 4
created, whether voluntary or involuntary and whether due or not due, absolute
or contingent, liquidated or unliquidated, determined or undetermined, and
whether recovery upon such indebtedness may be or hereafter becomes
unenforceable.

2. At any time, without notice, and at the expense of Pledgor, Pledgee in
its name or in the name of its nominee or of Pledgor may, but shall not be
obligated to: (1) collect by legal proceedings or otherwise all dividends
(except cash dividends other than liquidating dividends), interest, principal
payments and other sums now or hereafter payable upon or on account of said
Pledged Collateral; (2) enter into any extension, reorganization, deposit,
merger or consolidation agreement, or any agreement in any wise relating to or
affecting the Pledged Collateral, and in connection therewith may deposit or
surrender control of such Pledged Collateral thereunder, accept other property
in exchange for such Pledged Collateral and do and perform such acts and things
as it may deem proper, and any money or property received in exchange for such
Pledged Collateral shall be applied to the indebtedness or thereafter held by it
pursuant to the provisions hereof; (3) insure, process and preserve the Pledged
Collateral; (4) cause the Pledged Collateral to be transferred to its name or to
the name of its nominee; (5) exercise as to such Pledged Collateral all the
rights, powers and remedies of an owner, except that so long as no default
exists under the Note or hereunder Pledgor shall retain all voting rights as to
the Pledged Shares.

3. Pledgor agrees to pay prior to delinquency all taxes, charges, liens and
assessments against the Pledged Collateral, and upon the failure of Pledgor to
do so, Pledgee at its option may pay any of them and shall be the sole judge of
the legality or validity thereof and the amount necessary to discharge the same.

4. At the option of Pledgee and without necessity of demand or notice, all
or any part of the indebtedness of Pledgor shall immediately become due and
payable irrespective of any agreed maturity, upon the happening of any of the
following events: (1) failure to keep or perform any of the terms or provisions
of this Pledge Agreement; (2) failure to pay any installment of principal or
interest on the Note when due; (3) the levy of any attachment, execution or
other process against the Pledged Collateral; or (4) the insolvency, commission
of an act of bankruptcy, general assignment for the benefit of creditors, filing
of any petition in bankruptcy or for relief under the provisions of Title 11 of
the United States Code of, by, or against Pledgor.

5. In the event of the nonpayment of any indebtedness when due, whether by
acceleration or otherwise, or upon the happening of any of the events specified
in the last preceding section, Pledgee may then, or at any time thereafter, at
its election, apply, set off, collect or sell in one or more sales, or take such
steps as may be necessary to liquidate and reduce to cash in the hands of
Pledgee in whole or in part, with or without any previous demands or demand of
performance or notice or advertisement, the whole or any part of the Pledged
Collateral in such order as Pledgee may elect, and any such sale may be made
either at public or private sale at its place of business or elsewhere, or at
any broker's board or securities exchange, either for cash or upon credit or for
future delivery; provided, however, that if such disposition is at private sale,
then the purchase price of the Pledged Collateral shall be equal to the public
market price then in effect, or, if at the time of sale no public market for the
Pledged Collateral exists, then, in recognition of the fact that the sale of the
Pledged Collateral would have to be registered under the Securities Act of 1933
and that the expenses of such registration are

2.
<PAGE> 5
commercially unreasonable for the type and amount of collateral pledged
hereunder, Pledgee and Pledgor hereby agree that such private sale shall be at a
purchase price mutually agreed to by Pledgee and Pledgor or, if the parties
cannot agree upon a purchase price, then at a purchase price established by a
majority of three independent appraisers knowledgeable of the value of such
collateral, one named by Pledgor within ten (10) days after written request by
the Pledgee to do so, one named by Pledgee within such 10-day period, and the
third named by the two appraisers so selected, with the appraisal to be rendered
by such body within thirty (30) days of the appointment of the third appraiser.
The cost of such appraisal, including all appraiser's fees, shall be charged
against the proceeds of sale as an expense of such sale. Pledgee may be the
purchaser of any or all Pledged Collateral so sold and hold the same thereafter
in its own right free from any claim of Pledgor or right of redemption. Demands
of performance, notices of sale, advertisements and presence of property at sale
are hereby waived, and Pledgee is hereby authorized to sell hereunder any
evidence of debt pledged to it. Any officer or agent of Pledgee may conduct any
sale hereunder.

6. The proceeds of the sale of any of the Pledged Collateral and all sums
received or collected by Pledgee from or on account of such Pledged Collateral
shall be applied by Pledgee to the payment of expenses incurred or paid by
Pledgee in connection with any sale, transfer or delivery of the Pledged
Collateral, to the payment of any other costs, charges, attorneys' fees or
expenses mentioned herein, and to the payment of the indebtedness or any part
hereof, all in such order and manner as Pledgee in its discretion may determine.
Pledgee shall then pay any balance to Pledgor.

7. Upon the transfer of all or any part of the indebtedness Pledgee may
transfer all or any part of the Pledged Collateral and shall be fully discharged
thereafter from all liability and responsibility with respect to such Pledged
Collateral so transferred, and the transferee shall be vested with all the
rights and powers of Pledgee hereunder with respect to such Pledged Collateral
so transferred; but with respect to any Pledged Collateral not so transferred
Pledgee shall retain all rights and powers hereby given.

8. Until all indebtedness shall have been paid in full the power of sale
and all other rights, powers and remedies granted to Pledgee hereunder shall
continue to exist and may be exercised by Pledgee at any time and from time to
time irrespective of the fact that the indebtedness or any part thereof may have
become barred by any statute of limitations, or that the personal liability of
Pledgor may have ceased.

9. Pledgee agrees that so long as no default exists under the Note or
hereunder, the Pledged Shares shall, upon the request of Pledgor, be released
from pledge as the indebtedness is paid. Such releases shall be at the rate of
one share for each _______________ ($_______________) of principal amount of
indebtedness paid. Release from pledge, however, shall not result in release
from the provisions of those certain Joint Escrow Instructions, if any, of even
date herewith among the parties to this Pledge Agreement and the Escrow Agent
named therein.

10. Pledgee may at any time deliver the Pledged Collateral or any part
thereof to Pledgor and the receipt of Pledgor shall be a complete and full
acquittance for the Pledged

<PAGE> 6
Collateral so delivered, and Pledgee shall thereafter be discharged from any
liability or responsibility therefor.

11. The rights, powers and remedies given to Pledgee by this Pledge
Agreement shall be in addition to all rights, powers and remedies given to
Pledgee by virtue of any statute or rule of law. Any forbearance or failure or
delay by Pledgee in exercising any right, power or remedy hereunder shall not be
deemed to be a waiver of such right, power or remedy, and any single or partial
exercise of any right, power or remedy hereunder shall not preclude the further
exercise thereof; and every right, power and remedy of Pledgee shall continue in
full force and effect until such right, power or remedy is specifically waived
by an instrument in writing executed by Pledgee.

12. If any provision of this Pledge Agreement is held to be unenforceable
for any reason, it shall be adjusted, if possible, rather than voided in order
to achieve the intent of the parties to the extent possible. In any event, all
other provisions of this Pledge Agreement shall be deemed valid and enforceable
to the full extent possible.

13. This Pledge Agreement shall be governed by, and construed in accordance
with, the laws of the State of California as applied to contracts made and
performed entirely within the State of California by residents of such State.

Dated: _______________
PLEDGOR

____________________________________________

Printed Name: ______________________________

<PAGE> 1
EXHIBIT 23.1

CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS

We consent to the references to our firm under the captions "Selected Financial
Data" and "Experts" and to the use of our report dated March 10, 1999, except
for Note 7, as to which the date is June 30, 1999, in Amendment No. 6 to the
Registration Statement (Form S-1) and related Prospectus of Ask Jeeves, Inc. for
the registration of 3,450,000 shares of its common stock.

/s/ ERNST & YOUNG LLP

Walnut Creek, California
June 30, 1999