OVERTURE SERVICES INC
OVERTURE SERVICES, INC. EXHIBIT 10.5
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<TYPE>EX-10.5
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<FILENAME>v91904exv10w5.txt
<DESCRIPTION>OVERTURE SERVICES, INC. EXHIBIT 10.5
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                                                                    Exhibit 10.5

March 21, 2003

Leonard R. Stein
2218 Clay Street
San Francisco, CA 94115

Dear Lenny:

I am delighted to confirm our offer to join Overture Services, Inc. (the
"Company") as Chief Legal Officer commencing on or before April 7, 2003. This
position will report to the President and Chief Executive Officer and you will
be a member of our Executive Management Team.

The following are the specific terms of our offer:

-        You will earn a base salary of $12,916.67 per semi-monthly pay period,
         which is equivalent to $310,000.00 on an annual basis. You will be paid
         in accordance with the Company's normal payroll procedures.

-        Your annual short-term incentive will be $175,000 at Target with a
         maximum payout of 200% ($350,000) of target. Bonuses are reviewed and
         earned on an annual basis prorated from the date of hire, and subject
         to the Company's eligibility rules, available funding and payout
         schedule. For 2003, Overture agrees that your short-term incentive will
         be $160,000 at Target with a maximum payout of 200% ($320,000) and to
         pay you a minimum of 100% of this bonus target amount (i.e.$160,000).
         Your 2003 short-term incentive shall not be prorated to reflect the
         portion of the year you are employed with us.

-        You will receive a one-time hiring bonus of $25,000 within ten days
         after you commence work.

-        We understand that between your start date and August 2004, you expect
         to commute from your home in San Francisco. As we've discussed, we
         would expect that you will typically spend 4 days per week at our
         corporate headquarters in Pasadena except when traveling on company
         business outside of the Pasadena area. You will be provided with the
         necessary assistance to support your commute between your home and
         Overture's office in Pasadena until you are able to permanently
         relocate to Southern California. Overture agrees to cover reasonable
         commuting expenses through August, 2004. Reasonable expenses would
         include lodging and transportation consistent with Company policy. In
         addition, the Company will reimburse incidental expenses including, for
         example, meals or health club, up to $25 per day (if traveling to other
         locations on company business, reimbursement would follow the Company's
         Travel and Entertainment expense guidelines).

-        You will be provided with an allowance not to exceed $50,000 to help
         you relocate your primary residence within a reasonable commuting
         distance of our Pasadena office within 18

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         months of your start date. This allowance can only be used for IRS
         allowable expenses and must follow company policy for the type of
         allowable expense, the reimbursement process for submitting receipts,
         and other reasonable guidelines. We use a professional third party
         reloca tion administrator to provide you with expert assistance in
         facilitating your move, and we expect you to work through the
         administrator.

-        We will recommend to the Board of Directors of the Company (or the
         Compensation Committee if it has delegated the assignment) that, at the
         next meeting, you be granted an option to purchase 50,000 shares of
         Common Stock of the Company (the "Initial Half Grant") at the fair
         market value as determined by the closing price for the Common Stock on
         the last market trading day prior to the grant date, as reported in the
         Wall Street Journal. The vesting commencement date of the Initial Half
         Grant will be your Start Date. Subject to your continued employment by
         the Company, at the first meeting of the Board of Directors (or the
         Compensation Committee if it has delegated the assignment) after the
         three month anniversary of your first date of full-time employment with
         the Company, we will recommend that you be granted a stock option to
         purchase 50,000 shares of Common Stock of the Company (the "Subsequent
         Half Grant") at the fair market value as determined by the closing
         price for the Common Stock on the last market trading day prior to the
         grant date, as reported in the Wall Street Journal. The vesting
         commencement date for the "Subsequent Half Grant" will be the
         three-month anniversary of your Start Date. Options granted under both
         the Initial Half Grant and the Subsequent Half Grant shall be subject
         to the terms and conditions of the Company's Stock Option Plan and
         Stock Option Agreement, including vesting requirements. Subject to the
         terms of the Stock Option Plan, these stock option agreements shall
         provide you with the ability to exercise vested options up to 1 year
         from the date of termination, in the event you are terminated without
         Cause as that term is defined in the Overture Services, Inc. Change of
         Control Severance Agreement, hereafter the "Change of Control
         Agreement).

-        As a Section 16 employee, it is our policy to recommend to the
         Committee that you receive a set of severance benefits in the event you
         are terminated pursuant to a change of control ("double-trigger"
         termination). Standard double-trigger benefits include accelerated
         vesting of stock options, 24-months exercise extension, and twelve (12)
         months of base salary as severance. Please refer to this "Tier I"
         Change of Control Agreement for the complete terms.

-        In the future, your annual salary and short and long term incentive
         awards will be reviewed on a regular basis at the same time and in the
         same manner as other peer senior managers.

-        You will receive 10 days of paid vacation in 2003 and per calendar year
         thereafter until your years of service make you eligible for a higher
         accrual. You will also receive 2 personal days per calendar year; each
         accrues on a 6-month basis. In addition, you may take additional days
         on an unpaid basis. You may take your previously planned vacation on
         April 14th-18th and May 2nd.

-        You will be eligible for all benefit programs offered to employees,
         subject to the eligibility rules of each program.

-        We will pay on your behalf your California and District of Columbia Bar
         fees and section memberships, reasonable expenses to meet your
         continuing education requirements, and your memberships in the American
         Bar Association, American Corporate Counsel Association,

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         Silicon Valley Association of General Counsel and one local bar
         association (San Francisco or Los Angeles) of your choice, including
         reasonable expenses of attending appropriate meetings of these
         organization consistent with your job responsibilities.

-        At present, the Company purchases and maintains in effect for its
         employees short- and long-term disability insurance. The short-term
         disability coverage provides employees with an income equal to 70% of
         base compensation up to a maximum of $2,500 per week (short-term
         disability), while the long-term coverage provides 60% of the
         employee's base salary up to a maximum of $10,000 per month. As
         discussed, and in order to address your desire to secure income
         protection in the 60% range of your yearly base salary, the Company is
         exploring how it might make its disability coverage more attractive to
         you and similarly situated Company executives (including the possible
         modification of current monthly "caps" on the amount of disability
         coverage). The Company agrees that it shall purchase and maintain in
         effect disability insurance coverage sufficient to provide you with an
         income of not less than 60% of your base compensation in the event that
         you are not able to perform your duties as Chief Legal Officer. The
         cost of such insurance shall be reflected as additional compensation to
         you for tax purposes.

-        If your employment is terminated by us other than for Cause (as that
         term is defined in the Change of Control Agreement) within the first 12
         months of your employment, you will become entitled to six (6) months
         of severance pay in the aggregate of your total annual target
         compensation (computed as base plus short term incentive at Target).
         Your severance payments shall be made monthly and will be subject to
         withholding of all applicable taxes.

Your employment with the Company shall be on an at-will basis.

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 the Company within
three (3) business days of your date of hire, or our employment relationship
with you may be terminated.

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. This letter, along with
the agreement relating to proprietary rights 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 written agreement, signed by a designated Company
representative and by you.

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We look forward to working with you.

Sincerely,

/s/ Jackie DeMaria
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Jackie DeMaria
Chief People Officer
Overture Services, Inc.

         Accepted and agreed to:

         Signature: /s/ Leonard R. Stein          Date: April 4, 2003
                    --------------------
                    Leonard R. Stein

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