<PAGE>
                                                                    EXHIBIT 10.6

                              BILL GROSS' IDEALAB!

                                 1996 STOCK PLAN

                    STOCK OPTION AGREEMENT -- EARLY EXERCISE


         Unless otherwise defined herein, the terms defined in the 1996 Employee
Stock Plan (the "Plan") shall have the same defined meanings in this Stock
Option Agreement (the "Option Agreement").

I.       NOTICE OF STOCK OPTION GRANT

         Name:             Howard Morgan

         Address:
                           ------------------
                           ------------------

     You have been granted an option to purchase Common Stock of the Company,
subject to the terms and conditions of the Plan and this Option Agreement, as
follows:

         Grant Number                                        39

         Date of Grant                                       January 1, 1999

         Vesting Commencement Date                           January 1, 1999

         Exercise Price per Share                            $0.20

         Total Number of Shares Granted                      2,000,000

         Total Exercise Price                                $400,000

         Type of Option:                                     NSO

         Term/Expiration Date:                               January 1, 2009


     VESTING SCHEDULE.

     This Option shall be exercisable in whole or in part, and shall vest
according to the following vesting schedule:

<PAGE>

          a. 20% of the Shares subject to this Option shall vest on Vesting
Commencement Date.

          b. The remaining Shares subject to this Option shall vest in equal
increments of 5% quarterly thereafter over a four (4) year period, beginning
three (3) months following this Option's Vesting Commencement Date, subject to
Optionee's continuing to be a Service Provider on each vesting date.

     c. Notwithstanding the foregoing, if Optionee's employment is terminated
within 18 months of the Vesting Commencement Date for any reason other than (A)
a voluntary termination by the Optionee, or (B) a termination for "Cause" (as
defined below), the number of Shares equal to the difference between 1,000,000
Shares and the number of Shares which is vested as of the employment termination
date shall become immediately vested as of the employment termination date.
"Cause" shall mean (i) any act of personal dishonesty taken by the Optionee in
connection with his or her responsibilities to the Company, or (ii) Optionee's
conviction of, or plea of NOLO CONTENDERE to, a felony, or (iii) a willful act
by the Optionee which constitutes misconduct and is injurious to the Company.

     TERMINATION PERIOD:

     This Option may be exercised, to the extent it is then vested, for three
months after Optionee ceases to be a Service Provider. Upon death or Disability
of the Optionee, this Option may be exercised, to the extent it is then vested,
for one year after Optionee ceases to be Service Provider. In no event shall
this Option be exercised later than the Term/Expiration Date as provided above.

II.      AGREEMENT

     1. GRANT OF OPTION. The Administrator of the Company hereby grants to the
Optionee named in the Notice of Grant (the "Optionee"), an option (the "Option")
to purchase the number of Shares set forth in the Notice of Grant, at the
exercise price per Share set forth in the Notice of Grant (the "Exercise
Price"), and subject to the terms and conditions of the Plan, which is
incorporated herein by reference. Subject to Section 14(c) of the Plan, in the
event of a conflict between the terms and conditions of the Plan and this Option
Agreement, the terms and conditions of the Plan shall prevail.

          If designated in the Notice of Grant as an Incentive Stock
Option ("ISO"), this Option is intended to qualify as an Incentive Stock Option
as defined in Section 422 of the Code. Nevertheless, to the extent that it
exceeds the $100,000 rule of Code Section 422(d), this Option shall be treated
as a Nonstatutory Stock Option ("NSO").

     2. EXERCISE OF OPTION. This Option shall be exercisable during its term in
accordance with the provisions of Section 9 of the Plan as follows:

          a. RIGHT TO EXERCISE.

               (i) Subject to subsections 2(a)(ii) and 2(a)(iii) below, this
Option shall be exercisable cumulatively according to the vesting schedule set
forth in the Notice of Grant. Alternatively, at the election of the Optionee,
this Option may be exercised in whole or in part at any time as to Shares which
have not yet vested. Vested Shares shall not be subject to the Company's
repurchase right (as set forth in the Restricted Stock Purchase Agreement,
attached hereto as EXHIBIT C-1).

                                       2
<PAGE>

               (ii) As a condition to exercising this Option for unvested
Shares, the Optionee shall execute the Restricted Stock Purchase Agreement.

               (iii) This Option may not be exercised for a fraction of a Share.

          b. Method of Exercise. This Option shall be exercisable by delivery
of an exercise notice in the form attached as Exhibit A (the "Exercise Notice")
which shall state the election to exercise the Option, the number of Shares with
respect to which the Option is being exercised, and such other representations
and agreements as may be required by the Company. The Exercise Notice shall be
accompanied by payment of the aggregate Exercise Price as to all Exercised
Shares. This Option shall be deemed to be exercised upon receipt by the Company
of such fully executed Exercise Notice accompanied by the aggregate Exercise
Price.

          No Shares shall be issued pursuant to the exercise of an
Option unless such issuance and such exercise complies with Applicable Laws.
Assuming such compliance, for income tax purposes the Shares shall be considered
transferred to the Optionee on the date on which the Option is exercised with
respect to such Shares.

     3. OPTIONEE'S REPRESENTATIONS. In the event the Shares have not been
registered under the Securities Act of 1933, as amended, at the time this Option
is exercised, the Optionee shall, if required by the Company, concurrently with
the exercise of all or any portion of this Option, deliver to the Company his or
her Investment Representation Statement in the form attached hereto as EXHIBIT
B, and shall read the applicable rules of the Commissioner of Corporations
attached to such Investment Representation Statement.

     4. LOCK-UP PERIOD. Optionee hereby agrees that, if so requested by the
Company or any representative of the underwriters (the "Managing Underwriter")
in connection with any registration of the offering of any securities of the
Company under the Securities Act, Optionee shall not sell or otherwise transfer
any Shares or other securities of the Company during the 180-day period (or such
other period as may be requested in writing by the Managing Underwriter and
agreed to in writing by the Company) (the "Market Standoff Period") following
the effective date of a registration statement of the Company filed under the
Securities Act. Such restriction shall apply only to the first registration
statement of the Company to become effective under the Securities Act that
includes securities to be sold on behalf of the Company to the public in an
underwritten public offering under the Securities Act. The Company may impose
stop-transfer instructions with respect to securities subject to the foregoing
restrictions until the end of such Market Standoff Period.

     5. METHOD OF PAYMENT. Payment of the aggregate Exercise Price shall be by
any of the following, or a combination thereof, at the election of the Optionee:

          a. cash or check;

          b. consideration received by the Company under a formal cashless
exercise program adopted by the Company in connection with the Plan;

          c. surrender of other Shares which, (i) in the case of Shares acquired
upon exercise of an option, have been owned by the Optionee for more than six
(6) months on the date of surrender, and

                                       3
<PAGE>

(ii) have a Fair Market Value on the date of surrender equal to the aggregate
Exercise Price of the Exercised Shares; or

          d. promissory note.

     6. RESTRICTIONS ON EXERCISE. This Option may not be exercised until such
time as the Plan has been approved by the shareholders of the Company, or if the
issuance of such Shares upon such exercise or the method of payment of
consideration for such shares would constitute a violation of any Applicable
Law.

     7. NON-TRANSFERABILITY OF OPTION. This Option may not be transferred in any
manner otherwise than by will or by the laws of descent or distribution and may
be exercised during the lifetime of Optionee only by Optionee. The terms of the
Plan and this Option Agreement shall be binding upon the executors,
administrators, heirs, successors and assigns of the Optionee.

     8. TERM OF OPTION. This Option may be exercised only within the term set
out in the Notice of Grant, and may be exercised during such term only in
accordance with the Plan and the terms of this Option.

     9. TAX CONSEQUENCES. Set forth below is a brief summary as of the date of
this Option of some of the federal tax consequences of exercise of this Option
and disposition of the Shares. THIS SUMMARY IS NECESSARILY INCOMPLETE, AND THE
TAX LAWS AND REGULATIONS ARE SUBJECT TO CHANGE. THE OPTIONEE SHOULD CONSULT A
TAX ADVISER BEFORE EXERCISING THIS OPTION OR DISPOSING OF THE SHARES.

          a. EXERCISE OF NONSTATUTORY STOCK OPTION. There may be a regular
federal income tax liability upon the exercise of an NSO. The Optionee will be
treated as having received compensation income (taxable at ordinary income tax
rates) equal to the excess, if any, of the Fair Market Value of the Exercised
Shares on the date of exercise over the Exercise Price. If Optionee is an
Employee or a former Employee, the Company will be required to withhold from
Optionee's compensation or collect from Optionee and pay to the applicable
taxing authorities an amount in cash equal to a percentage of this compensation
income at the time of exercise, and may refuse to honor the exercise and refuse
to deliver Shares if such withholding amounts are not delivered at the time of
exercise.

          b. EXERCISE OF ISO. If this Option qualifies as an ISO, there will be
no regular federal income tax liability upon the exercise of the Option,
although the excess, if any, of the Fair Market Value of the Exercised Shares on
the date of exercise over the Exercise Price will be treated as an adjustment to
the alternative minimum tax for federal tax purposes and may subject the
Optionee to the alternative minimum tax in the year of exercise.

          c. EXERCISE OF ISO FOLLOWING DISABILITY. If the Optionee ceases to
be an Employee as a result of a disability that is not a total and permanent
disability as defined in Section 22(e)(3) of the Code, to the extent permitted
on the date of termination, the Optionee must exercise an ISO within three
months of such termination for the ISO to be qualified as an ISO.

          d. DISPOSITION OF SHARES. In the case of an NSO, if Shares are held
for at least one year, any gain realized on disposition of the Shares will be
treated as long-term capital gain for federal income tax purposes. In the case
of an ISO, if Shares transferred pursuant to the Option are held for at

                                       4
<PAGE>

least one year after exercise and at least two years after the Date of Grant,
any gain realized on disposition of the Shares will also be treated as long-term
capital gain for federal income tax purposes. If Shares purchased under an ISO
are disposed of within one year after exercise or two years after the Date of
Grant, any gain realized on such disposition will be treated as compensation
income (taxable at ordinary income rates) to the extent of the difference
between the Exercise Price of the Exercised Shares and the lesser of (i) the
Fair Market Value of the Exercised Shares on the date of exercise, or (ii) the
sale price of the Exercised Shares. Different rules may apply if the Shares are
subject to a substantial risk of forfeiture (within the meaning of Section 83 of
the Code) at the time of purchase. Any additional gain will be taxed as capital
gain, short-term depending on the period that the ISO Shares were held.

          e. NOTICE OF DISQUALIFYING DISPOSITION OF ISO SHARES. If the Option
granted to Optionee herein is an ISO, and if Optionee sells or otherwise
disposes of any of the Shares acquired pursuant to the ISO on or before the
later of (i) the date two years after the Date of Grant, or (ii) the date one
year after the date of exercise, the Optionee shall immediately notify the
Company in writing of such disposition. Optionee agrees that Optionee may be
subject to income tax withholding by the Company on the compensation income
recognized by the Optionee.

          f. SECTION 83(B) ELECTION FOR UNVESTED SHARES PURCHASED PURSUANT TO
OPTIONS. With respect to the exercise of an Option for unvested Shares, an
election (the "Election") may be filed by the Optionee with the Internal Revenue
Service, within 30 days of the purchase of the Shares, electing pursuant to
Section 83(b) of the Code to be taxed currently on any difference between the
purchase price of the Shares and their Fair Market Value on the date of
purchase. In the case of an NSO, this will result in a recognition of taxable
income to the Optionee on the date of exercise, measured by the excess, if any,
of the Fair Market Value of the Exercised Shares, at the time the Option is
exercised over the purchase price for the Exercised Shares. Absent such an
election, taxable income will be measured and recognized by Optionee at the time
or times on which the Company's Repurchase Option lapses. In the case of an ISO,
such an election will result in a recognition of income to the Optionee for
alternative minimum tax purposes on the date of exercise, measured by the
excess, if any, of the Fair Market Value of the Exercised Shares, at the time
the Option is exercised, over the purchase price for the Exercised Shares.
Absent such an election, alternative minimum taxable income will be measured and
recognized by Optionee at the time or times on which the Company's Repurchase
Option lapses. Optionee is strongly encouraged to seek the advice of his or her
own tax consultants in connection with the purchase of the Shares and the
advisability of filing of the Election under Section 83(b) of the Code. A form
of Election under Section 83(b) is attached hereto as Exhibit C-5 for reference.

     OPTIONEE ACKNOWLEDGES THAT IT IS OPTIONEE'S SOLE RESPONSIBILITY AND NOT THE
COMPANY'S TO FILE TIMELY THE ELECTION UNDER SECTION 83(b), EVEN IF OPTIONEE
REQUESTS THE COMPANY OR ITS REPRESENTATIVE TO MAKE THIS FILING ON OPTIONEE'S
BEHALF.

     10. ENTIRE AGREEMENT; GOVERNING LAW. The Plan is incorporated herein by
reference. The Plan and this Option Agreement constitute the entire agreement of
the parties with respect to the subject matter hereof and supersede in their
entirety all prior undertakings and agreements of the Company and Optionee with
respect to the subject matter hereof, and may not be modified adversely to the
Optionee's interest except by means of a writing signed by the Company and
Optionee. This Option Agreement is governed by the internal substantive laws but
not the choice of law rules of California.

                                       5
<PAGE>

     11. No Guarantee of Continued Service. OPTIONEE ACKNOWLEDGES AND AGREES
THAT THE VESTING OF SHARES PURSUANT TO THE VESTING SCHEDULE HEREOF IS EARNED
ONLY BY CONTINUING AS A SERVICE PROVIDER AT THE WILL OF THE COMPANY (NOT THROUGH
THE ACT OF BEING HIRED, BEING GRANTED THIS OPTION OR ACQUIRING SHARES
HEREUNDER). OPTIONEE FURTHER ACKNOWLEDGES AND AGREES THAT THIS AGREEMENT, THE
TRANSACTIONS CONTEMPLATED HEREUNDER AND THE VESTING SCHEDULE SET FORTH HEREIN DO
NOT CONSTITUTE AN EXPRESS OR IMPLIED PROMISE OF CONTINUED ENGAGEMENT AS A
SERVICE PROVIDER FOR THE VESTING PERIOD, FOR ANY PERIOD, OR AT ALL, AND SHALL
NOT INTERFERE IN ANY WAY WITH OPTIONEE'S RIGHT OR THE COMPANY'S RIGHT TO
TERMINATE OPTIONEE'S RELATIONSHIP AS A SERVICE PROVIDER AT ANY TIME, WITH OR
WITHOUT CAUSE.

     Optionee acknowledges receipt of a copy of the Plan and represents that he
or she is familiar with the terms and provisions thereof, and hereby accepts
this Option subject to all of the terms and provisions thereof. Optionee has
reviewed the Plan and this Option in their entirety, has had an opportunity to
obtain the advice of counsel prior to executing this Option and fully
understands all provisions of the Option. Optionee hereby agrees to accept as
binding, conclusive and final all decisions or interpretations of the
Administrator upon any questions arising under the Plan or this Option. Optionee
further agrees to notify the Company upon any change in the residence address
indicated below.

OPTIONEE:                                                   BILL GROSS' IDEALAB!

---------------------------                                 --------------------
Signature                                                   By

HOWARD MORGAN
---------------------------                                 --------------------
Print Name                                                  Name, Title

                                       6
<PAGE>


                                    EXHIBIT A

                            1996 EMPLOYEE STOCK PLAN

                                EXERCISE NOTICE

Bill Gross' idealab!
130 W. Union Street
Pasadena, CA 91103
Attention: President

     1. EXERCISE OF OPTION. Effective as of today, January 29, 1999, the
undersigned ("Optionee") hereby elects to exercise Optionee's option (the
"Option") to purchase 2,000,000 shares of the Common Stock (the "Shares") of
Bill Gross' idealab! (the "Company") under and pursuant to the Bill Gross'
idealab! 1999 Employee Stock Plan (the "Plan") and the Stock Option Agreement
dated January 1, 1999 (the "Option Agreement").

     2. DELIVERY OF PAYMENT. Purchaser herewith delivers to the Company the full
purchase price of the Shares, as set forth in the Option Agreement.

     3. REPRESENTATIONS OF OPTIONEE. Optionee acknowledges that Optionee has
received, read and understood the Plan and the Option Agreement and agrees to
abide by and be bound by their terms and conditions.

     4. RIGHTS AS SHAREHOLDER. Until the issuance of the Shares (as evidenced by
the appropriate entry on the books of the Company or of a duly authorized
transfer agent of the Company), no right to vote or receive dividends or any
other rights as a shareholder shall exist with respect to the optioned stock,
notwithstanding the exercise of the Option. The Shares shall be issued to the
Optionee as soon as practicable after the Option is exercised. No adjustment
shall be made for a dividend or other right for which the record date is prior
to the date of issuance except as provided in Section 12 of the Plan.

     5. COMPANY'S RIGHT OF FIRST REFUSAL. Before any Shares held by Optionee or
any transferee (either being sometimes referred to herein as the "Holder") may
be sold or otherwise transferred (including transfer by gift or operation of
law), the Company or its assignee(s) shall have a right of first refusal to
purchase the Shares on the terms and conditions set forth in this Section (the
"Right of First Refusal").

          a. NOTICE OF PROPOSED TRANSFER. The Holder of the Shares shall deliver
to the Company a written notice (the "Notice") stating: (i) the Holder's bona
fide intention to sell or otherwise transfer such Shares; (ii) the name of each
proposed purchaser or other transferee ("Proposed Transferee"); (iii) the number
of Shares to be transferred to each Proposed Transferee; and (iv) the bona fide
cash price or other consideration for which the Holder proposes to transfer the
Shares (the "Offered Price"), and the Holder shall offer the Shares at the
Offered Price to the Company or its assignee(s).

          b. EXERCISE OF RIGHT OF FIRST REFUSAL. At any time within thirty (30)
days after receipt of the Notice, the Company and/or its assignee(s) may, by
giving written notice to the Holder, elect to purchase all, but not less than
all, of the Shares proposed to be transferred to any one or more of the Proposed
Transferees, at the purchase price determined in accordance with subsection (c)
below.

<PAGE>

          c. PURCHASE PRICE. The purchase price ("Purchase Price") for the
Shares purchased by the Company or its assignee(s) under this Section shall be
the Offered Price. If the Offered Price includes consideration other than cash,
the cash equivalent value of the non-cash consideration shall be determined by
the Board of Directors of the Company in good faith.

          d. PAYMENT. Payment of the Purchase Price shall be made, at the option
of the Company or its assignee(s), in cash (by check), by cancellation of all or
a portion of any outstanding indebtedness of the Holder to the Company (or, in
the case of repurchase by an assignee, to the assignee), or by any combination
thereof within 30 days after receipt of the Notice or in the manner and at the
times set forth in the Notice.

          e. HOLDER'S RIGHT TO TRANSFER. If all of the Shares proposed in the
Notice to be transferred to a given Proposed Transferee are not purchased by the
Company and/or its assignee(s) as provided in this Section, then the Holder may
sell or otherwise transfer such Shares to that Proposed Transferee at the
Offered Price or at a higher price, provided that such sale or other transfer is
consummated within 120 days after the date of the Notice, that any such sale or
other transfer is effected in accordance with any applicable securities laws and
that the Proposed Transferee agrees in writing that the provisions of this
Section shall continue to apply to the Shares in the hands of such Proposed
Transferee. If the Shares described in the Notice are not transferred to the
Proposed Transferee within such period, a new Notice shall be given to the
Company, and the Company and/or its assignees shall again be offered the Right
of First Refusal before any Shares held by the Holder may be sold or otherwise
transferred.

          f. EXCEPTION FOR CERTAIN FAMILY TRANSFERS. Anything to the contrary
contained in this Section notwithstanding, the transfer of any or all of the
Shares during the Optionee's lifetime or on the Optionee's death by will or
intestacy to the Optionee's immediate family or a trust for the benefit of the
Optionee's immediate family shall be exempt from the provisions of this Section.
"Immediate Family" as used herein shall mean spouse, lineal descendant or
antecedent, father, mother, brother or sister. In such case, the transferee or
other recipient shall receive and hold the Shares so transferred subject to the
provisions of this Section, and there shall be no further transfer of such
Shares except in accordance with the terms of this Section.

          g. TERMINATION OF RIGHT OF FIRST REFUSAL. The Right of First Refusal
shall terminate as to any Shares upon the first sale of Common Stock of the
Company to the general public pursuant to a registration statement filed with
and declared effective by the Securities and Exchange Commission under the
Securities Act of 1933, as amended.

     6. TAX CONSULTATION. Optionee understands that Optionee may suffer adverse
tax consequences as a result of Optionee's purchase or disposition of the
Shares. Optionee represents that Optionee has consulted with any tax consultants
Optionee deems advisable in connection with the purchase or disposition of the
Shares and that Optionee is not relying on the Company for any tax advice.

                                      2
<PAGE>

     7. RESTRICTIVE LEGENDS AND STOP-TRANSFER ORDERS.

          a. LEGENDS. Optionee understands and agrees that the Company shall
cause the legends set forth below or legends substantially equivalent thereto,
to be placed upon any certificate(s) evidencing ownership of the Shares together
with any other legends that may be required by the Company or by state or
federal securities laws:

           THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED
           UNDER THE SECURITIES ACT OF 1933 (THE "ACT") AND MAY NOT BE
           OFFERED, SOLD OR OTHERWISE TRANSFERRED, PLEDGED OR
           HYPOTHECATED UNLESS AND UNTIL REGISTERED UNDER THE ACT OR, IN
           THE OPINION OF COMPANY COUNSEL SATISFACTORY TO THE ISSUER OF
           THESE SECURITIES, SUCH OFFER, SALE OR TRANSFER, PLEDGE OR
           HYPOTHECATION IS IN COMPLIANCE THEREWITH.

           THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO
           CERTAIN RESTRICTIONS ON TRANSFER AND RIGHT OF FIRST REFUSAL
           OPTIONS HELD BY THE ISSUER OR ITS ASSIGNEE(S) AS SET FORTH IN
           THE EXERCISE NOTICE BETWEEN THE ISSUER AND THE ORIGINAL HOLDER
           OF THESE SHARES, A COPY OF WHICH MAY BE OBTAINED AT THE
           PRINCIPAL OFFICE OF THE ISSUER. SUCH TRANSFER RESTRICTIONS AND
           RIGHT OF FIRST REFUSAL ARE BINDING ON TRANSFEREES OF THESE
           SHARES.

          b. STOP-TRANSFER NOTICES. Optionee agrees that, in order to ensure
compliance with the restrictions referred to herein, the Company may issue
appropriate "stop transfer" instructions to its transfer agent, if any, and
that, if the Company transfers its own securities, it may make appropriate
notations to the same effect in its own records.

          c. REFUSAL TO TRANSFER. The Company shall not be required (i) to
transfer on its books any Shares that have been sold or otherwise transferred in
violation of any of the provisions of this Exercise Notice or (ii) to treat as
owner of such Shares or to accord the right to vote or pay dividends to any
purchaser or other transferee to whom such Shares shall have been so
transferred.

     8. SUCCESSORS AND ASSIGNS. The Company may assign any of its rights under
this Exercise Notice to single or multiple assignees, and the terms and
conditions of this Exercise Notice shall inure to the benefit of the successors
and assigns of the Company. Subject to the restrictions on transfer herein set
forth, the terms and conditions of this Exercise Notice shall be binding upon
Optionee and his or her heirs, executors, administrators, successors and
assigns.

     9. INTERPRETATION. Any dispute regarding the interpretation of this
Exercise Notice shall be submitted by Optionee or by the Company forthwith to
the Administrator which shall review such dispute at its next regular meeting.
The resolution of such a dispute by the Administrator shall be final and binding
on all parties.

     10. GOVERNING LAW; SEVERABILITY. This Exercise Notice is governed by the
internal substantive laws, but not the choice of law rules, of California.

                                       3
<PAGE>


     11. ENTIRE AGREEMENT. The Plan and Option Agreement are incorporated herein
by reference. This Exercise Notice, the Plan, the Restricted Stock Purchase
Agreement, the Option Agreement and the Investment Representation Statement
constitute the entire agreement of the parties with respect to the subject
matter hereof and supersede in their entirety all prior undertakings and
agreements of the Company and Optionee with respect to the subject matter
hereof, and may not be modified adversely to the Optionee's interest except by
means of a writing signed by the Company and Optionee.



Submitted by:                                               Accepted by:

OPTIONEE:                                                   BILL GROSS' IDEALAB!

---------------------------                                 --------------------
Signature                                                   By

HOWARD MORGAN
---------------------------                                 --------------------
Print Name                                                  Name, Title

ADDRESS:                                                    ADDRESS:
                                                            130 W. Union Street
                                                            Pasadena, CA 91103

                                                            --------------------
                                                            Date Received

                                       4
<PAGE>


                                    EXHIBIT B

                       INVESTMENT REPRESENTATION STATEMENT

OPTIONEE:         Howard Morgan

COMPANY:          BILL GROSS' IDEALAB!

SECURITY:         COMMON STOCK

AMOUNT:           2,000,000 Shares

DATE:             January 29, 1999


         In connection with the purchase of the above-listed Securities, the
undersigned Optionee represents to the Company the following:


          a. Optionee is aware of the Company's business affairs and financial
condition and has acquired sufficient information about the Company to reach an
informed and knowledgeable decision to acquire the Securities. Optionee is
acquiring these Securities for investment for Optionee's own account only and
not with a view to, or for resale in connection with, any "distribution" thereof
within the meaning of the Securities Act of 1933, as amended (the "Securities
Act").

          b. Optionee acknowledges and understands that the Securities
constitute "restricted securities" under the Securities Act and have not been
registered under the Securities Act in reliance upon a specific exemption
therefrom, which exemption depends upon, among other things, the bona fide
nature of Optionee's investment intent as expressed herein. In this connection,
Optionee understands that, in the view of the Securities and Exchange
Commission, the statutory basis for such exemption may be unavailable if
Optionee's representation was predicated solely upon a present intention to hold
these Securities for the minimum capital gains period specified under tax
statutes, for a deferred sale, for or until an increase or decrease in the
market price of the Securities, or for a period of one year or any other fixed
period in the future. Optionee further understands that the Securities must be
held indefinitely unless they are subsequently registered under the Securities
Act or an exemption from such registration is available. Optionee further
acknowledges and understands that the Company is under no obligation to register
the Securities. Optionee understands that the certificate evidencing the
Securities will be imprinted with a legend which prohibits the transfer of the
Securities unless they are registered or such registration is not required in
the opinion of counsel satisfactory to the Company, and with any other legend
required under applicable state securities laws.

          c. Optionee is familiar with the provisions of Rule 701 and Rule 144,
each promulgated under the Securities Act, which, in substance, permit limited
public resale of "restricted securities" acquired, directly or indirectly from
the issuer thereof, in a non-public offering subject to the satisfaction of
certain conditions. Rule 701 provides that if the issuer qualifies under Rule
701 at the time of the grant of the Option to the Optionee, the exercise will be
exempt from registration under the Securities Act. In the event the Company
becomes subject to the reporting requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, ninety (90) days thereafter (or such longer
period as any market stand-off agreement may require) the Securities exempt
under Rule 701 may be resold, subject to the satisfaction of certain of the
conditions specified by Rule 144, including: (1) the resale being made

<PAGE>

through a broker in an unsolicited "broker's transaction" or in transactions
directly with a market maker (as said term is defined under the Securities
Exchange Act of 1934); and, in the case of an affiliate, (2) the availability of
certain public information about the Company, (3) the amount of Securities being
sold during any three month period not exceeding the limitations specified in
Rule 144(e), and (4) the timely filing of a Form 144, if applicable.

     In the event that the Company does not qualify under Rule 701 at the time
of grant of the Option, then the Securities may be resold in certain limited
circumstances subject to the provisions of Rule 144, which requires the resale
to occur not less than one year after the later of the date the Securities were
sold by the Company or the date the Securities were sold by an affiliate of the
Company, within the meaning of Rule 144; and, in the case of acquisition of the
Securities by an affiliate, or by a non-affiliate who subsequently holds the
Securities less than two years, the satisfaction of the conditions set forth in
sections (1), (2), (3) and (4) of the paragraph immediately above.

          d. Optionee further understands that in the event all of the
applicable requirements of Rule 701 or 144 are not satisfied, registration under
the Securities Act, compliance with Regulation A, or some other registration
exemption will be required; and that, notwithstanding the fact that Rules 144
and 701 are not exclusive, the Staff of the Securities and Exchange Commission
has expressed its opinion that persons proposing to sell private placement
securities other than in a registered offering and otherwise than pursuant to
Rules 144 or 701 will have a substantial burden of proof in establishing that an
exemption from registration is available for such offers or sales, and that such
persons and their respective brokers who participate in such transactions do so
at their own risk. Optionee understands that no assurances can be given that any
such other registration exemption will be available in such event.

                                                     Signature of Optionee:

                                                     ---------------------------
                                                     Date: January 29, 1999

                                       2
<PAGE>

                                   EXHIBIT C-1

                              BILL GROSS' IDEALAB!

                            1999 EMPLOYEE STOCK PLAN

                       RESTRICTED STOCK PURCHASE AGREEMENT


     THIS AGREEMENT is made between Howard Morgan (the "Purchaser") and Bill
Gross' idealab! (the "Company") as of January 29, 1999.

     Unless otherwise defined herein, the terms defined in the 1999 Employee
Stock Plan shall have the same defined meanings in this Agreement.

                                    RECITALS

     A. Pursuant to the exercise of the option (grant number 39) granted to
Purchaser under the Plan and pursuant to the Option Agreement dated January 1,
1999 by and between the Company and Purchaser with respect to such grant (the
"Option"), which Plan and Option Agreement are hereby incorporated by reference,
Purchaser has elected to purchase 1,600,000 of those shares of Common Stock
which have not become vested under the vesting schedule set forth in the Option
Agreement ("Unvested Shares"). The Unvested Shares and the shares subject to the
Option Agreement which have become vested are sometimes collectively referred to
herein as the "Shares".

     B. As required by the Option Agreement, as a condition to Purchaser's
election to exercise the option, Purchaser must execute this Agreement, which
sets forth the rights and obligations of the parties with respect to Shares
acquired upon exercise of the Option.

     1. REPURCHASE OPTION.

          (a) If Purchaser's status as a Service Provider is terminated for any
reason, including for cause, death, and Disability, the Company shall have the
right and option to purchase from Purchaser, or Purchaser's personal
representative, as the case may be, all of the Purchaser's Unvested Shares as of
the date of such termination at the price paid by the Purchaser for such Shares
(the "Repurchase Option").

          (b) Upon the occurrence of such termination, the Company may exercise
its Repurchase Option by delivering personally or by registered mail, to
Purchaser (or his transferee or legal representative, as the case may be),
within ninety (90) days of the termination, a notice in writing indicating the
Company's intention to exercise the Repurchase Option and setting forth a date
for closing not later than thirty (30) days from the mailing of such notice. The
closing shall take place at the Company's office. At the closing, the holder of
the certificates for the Unvested Shares being transferred shall deliver the
stock certificate or certificates evidencing the Unvested Shares, and the
Company shall deliver the purchase price therefor.

          (c) At its option, the Company may elect to make payment for the
Unvested Shares to a bank selected by the Company. The Company shall avail
itself of this option by a notice in writing to Purchaser stating the name and
address of the bank, date of closing, and waiving the closing at the Company's
office.

<PAGE>

          (d) If the Company does not elect to exercise the Repurchase Option
conferred above by giving the requisite notice within ninety (90) days following
the termination, the Repurchase Option shall terminate.

          (e) The Repurchase Option shall terminate in accordance with the
vesting schedule contained in Optionee's Option Agreement.

     2. TRANSFERABILITY OF THE SHARES; ESCROW.

          (f) Purchaser hereby authorizes and directs the Secretary of the
Company, or such other person designated by the Company, to transfer the
Unvested Shares as to which the Repurchase Option has been exercised from
Purchaser to the Company.

          (g) To insure the availability for delivery of Purchaser's Unvested
Shares upon repurchase by the Company pursuant to the Repurchase Option under
Section 1, Purchaser hereby appoints the Secretary, or any other person
designated by the Company as escrow agent, as its attorney-in-fact to sell,
assign and transfer unto the Company, such Unvested Shares, if any, repurchased
by the Company pursuant to the Repurchase Option and shall, upon execution of
this Agreement, deliver and deposit with the Secretary of the Company, or such
other person designated by the Company, the share certificates representing the
Unvested Shares, together with the stock assignment duly endorsed in blank,
attached hereto as EXHIBIT C-2. The Unvested Shares, stock assignment and any
dividends paid to the Purchaser upon the Unvested Shares shall be held by the
secretary in escrow, pursuant to the Joint Escrow Instructions of the Company
and Purchaser attached as EXHIBIT C-3 hereto, until the Company exercises its
Repurchase Option, until such Unvested Shares are vested, or until such time as
this Agreement no longer is in effect. As a further condition to the Company's
obligations under this Agreement, the spouse of the Purchaser, if any, shall
execute and deliver to the Company the Consent of Spouse attached hereto as
EXHIBIT C-4. Upon vesting of the Unvested Shares, the escrow agent shall
promptly deliver to the Purchaser the certificate or certificates representing
such Shares, and any dividends paid thereon, in the escrow agent's possession
belonging to the Purchaser, and the escrow agent shall be discharged of all
further obligations hereunder; provided, however, that the escrow agent shall
nevertheless retain such certificate or certificates as escrow agent if so
required pursuant to other restrictions imposed pursuant to this Agreement.

          (h) The Company, or its designee, shall not be liable for any act it
may do or omit to do with respect to holding the Shares in escrow and while
acting in good faith and in the exercise of its judgment.

          (i) Transfer or sale of the Shares is subject to restrictions on
transfer imposed by any applicable state and federal securities laws. Any
transferee shall hold such Shares subject to all the provisions hereof and the
Exercise Notice executed by the Purchaser with respect to any Unvested Shares
purchased by Purchaser and shall acknowledge the same by signing a copy of this
Agreement.

     3. OWNERSHIP, VOTING RIGHTS, DUTIES. This Agreement shall not affect in any
way the ownership, voting rights or other rights or duties of Purchaser, except
as specifically provided herein.


     4. LEGENDS. The share certificate evidencing the Shares issued hereunder
shall be endorsed with the following legend (in addition to any legend required
under applicable federal and state securities laws):

                                       2
<PAGE>

     THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN
RESTRICTIONS UPON TRANSFER AND RIGHTS OF REPURCHASE AS SET FORTH IN AN AGREEMENT
BETWEEN THE COMPANY AND THE SHAREHOLDER, A COPY OF WHICH IS ON FILE WITH THE
SECRETARY OF THE COMPANY.

     5. ADJUSTMENT FOR STOCK SPLIT. All references to the number of Shares and
the purchase price of the Shares in this Agreement shall be appropriately
adjusted to reflect any stock split, stock dividend, cash dividend or any other
dividend paid to the holders of the Company's common Stock and other change in
the Shares which may be made by the Company pursuant to Section12 of the Plan
after the date of this Agreement.

     6. NOTICES. Notices required hereunder shall be given in person or by
registered mail to the address of Purchaser shown on the records of the Company,
and to the Company at their respective principal executive offices.

     7. SURVIVAL OF TERMS. This Agreement shall apply to and bind Purchaser and
the Company and their respective permitted assignees and transferees, heirs,
legatees, executors, administrators and legal successors.

     8. SECTION 83(B) ELECTION. Purchaser hereby acknowledges that he or she has
been informed that, with respect to the exercise of an Option for Unvested
Shares, an election (the "Election") may be filed by the Purchaser with the
Internal Revenue Service, WITHIN 30 DAYS of the purchase of the exercised
Shares, electing pursuant to Section 83(b) of the Code to be taxed currently on
any difference between the purchase price of the exercised Shares and their Fair
Market Value on the date of purchase. In the case of a Nonstatutory Stock
Option, this will result in a recognition of taxable income to the Purchaser on
the date of exercise, measured by the excess, if any, of the Fair Market Value
of the exercised Shares, at the time the Option is exercised over the purchase
price for the exercised Shares. Absent such an Election, taxable income will be
measured and recognized by Purchaser at the time or times on which the Company's
Repurchase Option lapses. In the case of an Incentive Stock Option, such an
Election will result in a recognition of income to the Purchaser for alternative
minimum tax purposes on the date of exercise, measured by the excess, if any, of
the Fair Market Value of the exercised Shares, at the time the option is
exercised, over the purchase price for the exercised Shares. Absent such an
Election, alternative minimum taxable income will be measured and recognized by
Purchaser at the time or times on which the Company's Repurchase Option lapses.
Purchaser is strongly encouraged to seek the advice of his or her own tax
consultants in connection with the purchase of the Shares and the advisability
of filing of the Election under Section 83(b) of the Code. A form of Election
under Section 83(b) is attached hereto as EXHIBIT C-5 for reference.

     PURCHASER ACKNOWLEDGES THAT IT IS PURCHASER'S SOLE RESPONSIBILITY AND NOT
THE COMPANY'S TO FILE TIMELY THE ELECTION UNDER SECTION 83(b) OF THE CODE, EVEN
IF PURCHASER REQUESTS THE COMPANY OR ITS REPRESENTATIVE TO MAKE THIS FILING ON
PURCHASER'S BEHALF.

     9. REPRESENTATIONS. Purchaser has reviewed with his own tax advisors the
federal, state, local and foreign tax consequences of this investment and the
transactions contemplated by this Agreement. Purchaser is relying solely on such
advisors and not on any statements or representations of the Company or any of
its agents. Purchaser understands that he (and not the Company) shall be
responsible for his

                                       3

<PAGE>

own tax liability that may arise as a result of this investment or the
transactions contemplated by this Agreement.

     10. GOVERNING LAW. This Agreement shall be governed by the internal
substantive laws, but not the choice of law rules, of California.

     Purchaser represents that he has read this Agreement and is familiar with
its terms and provisions. Purchaser hereby agrees to accept as binding,
conclusive and final all decisions or interpretations of the Board upon any
questions arising under this Agreement.

                                        4
<PAGE>

     IN WITNESS WHEREOF, this Agreement is deemed made as of the date first set
forth above.

OPTIONEE:                                                   BILL GROSS' IDEALAB!



---------------------------                                 --------------------
Signature                                                   By

HOWARD MORGAN
---------------------------                                 --------------------
Print Name                                                  Name, Title


Dated: January 29, 1999

                                       5
<PAGE>


                                   EXHIBIT C-2

                      ASSIGNMENT SEPARATE FROM CERTIFICATE


     FOR VALUE RECEIVED I, Howard Morgan, hereby sell, assign and transfer unto
Bill Gross' idealab! (_____________________) shares of the Common Stock of Bill
Gross' idealab! standing in my name of the books of said corporation represented
by Certificate No. C-___ herewith and do hereby irrevocably constitute and
appoint ___________________________ to transfer the said stock on the books of
the within named corporation with full power of substitution in the premises.

     This Stock Assignment may be used only in accordance with the Restricted
Stock Purchase Agreement between Bill Gross' idealab! and the undersigned dated
January 29, 1999.

Dated:                                    Signature:
                                                    ----------------------------












INSTRUCTIONS: Please do not fill in any blanks other than the signature line.
The purpose of this assignment is to enable the Company to exercise its
"repurchase option," as set forth in the Agreement, without requiring additional
signatures on the part of the Purchaser.

<PAGE>


                                   EXHIBIT C-3

                            JOINT ESCROW INSTRUCTIONS


Corporate Secretary
130 W. Union Street
Pasadena, CA 91103
Attention: Secretary

Dear_____________________:

     As Escrow Agent for both Bill Gross' idealab! (the "Company"), and the
undersigned purchaser of stock of the Company (the "Purchaser"), you are hereby
authorized and directed to hold the documents delivered to you pursuant to the
terms of that certain Restricted Stock Purchase Agreement ("Agreement") between
the Company and the undersigned, in accordance with the following instructions:

     1. In the event the Company and/or any assignee of the Company (referred to
collectively for convenience herein as the "Company") exercises the Company's
repurchase option set forth in the Agreement, the Company shall give to
Purchaser and you a written notice specifying the number of shares of stock to
be purchased, the purchase price, and the time for a closing hereunder at the
principal office of the Company. Purchaser and the Company hereby irrevocably
authorize and direct you to close the transaction contemplated by such notice in
accordance with the terms of said notice.

     2. At the closing, you are directed (a) to date the stock assignments
necessary for the transfer in question, (b) to fill in the number of shares
being transferred, and (c) to deliver the stock assignments, together with the
certificate evidencing the shares of stock to be transferred, to the Company or
its assignee, against the simultaneous delivery to you of the purchase price (by
cash, a check, or some combination thereof) for the number of shares of stock
being purchased pursuant to the exercise of the Company's repurchase option.

     3. Purchaser irrevocably authorizes the Company to deposit with you any
certificates evidencing shares of stock to be held by you hereunder and any
additions and substitutions to said shares as defined in the Agreement.
Purchaser does hereby irrevocably constitute and appoint you as Purchaser's
attorney-in-fact and agent for the term of this escrow to execute with respect
to such securities all documents necessary or appropriate to make such
securities negotiable and to complete any transaction herein contemplated,
including but not limited to the filing with any applicable state blue sky
authority of any required applications for consent to, or notice of transfer of,
the securities. Subject to the provisions of this paragraph 3, Purchaser shall
exercise all rights and privileges of a shareholder of the Company while the
stock is held by you.

     4. Upon written request of the Purchaser, but no more than once per
calendar year, unless the Company's repurchase option has been exercised, you
will deliver to Purchaser a certificate or certificates representing so many
shares of stock as are not then subject to the Company's repurchase option.
Within 120 days after cessation of Purchaser's continuous employment by or
services to the Company, or any parent or subsidiary of the Company, you will
deliver to Purchaser a certificate or

<PAGE>

certificates representing the aggregate number of shares held or issued pursuant
to the Agreement and not purchased by the Company or its assignees pursuant to
exercise of the Company's repurchase option.

     5. If at the time of termination of this escrow you should have in your
possession any documents, securities, or other property belonging to Purchaser,
you shall deliver all of the same to Purchaser and shall be discharged of all
further obligations hereunder.

     6. Your duties hereunder may be altered, amended, modified or revoked only
by a writing signed by all of the parties hereto.

     7. You shall be obligated only for the performance of such duties as are
specifically set forth herein and may rely and shall be protected in relying or
refraining from acting on any instrument reasonably believed by you to be
genuine and to have been signed or presented by the proper party or parties. You
shall not be personally liable for any act you may do or omit to do hereunder as
Escrow Agent or as attorney-in-fact for Purchaser while acting in good faith,
and any act done or omitted by you pursuant to the advice of your own attorneys
shall be conclusive evidence of such good faith.

     8. You are hereby expressly authorized to disregard any and all warnings
given by any of the parties hereto or by any other person or corporation,
excepting only orders or process of courts of law and are hereby expressly
authorized to comply with and obey orders, judgments or decrees of any court. In
case you obey or comply with any such order, judgment or decree, you shall not
be liable to any of the parties hereto or to any other person, firm or
corporation by reason of such compliance, notwithstanding any such order,
judgment or decree being subsequently reversed, modified, annulled, set aside,
vacated or found to have been entered without jurisdiction.


     9. You shall not be liable in any respect on account of the identity,
authorities or rights of the parties executing or delivering or purporting to
execute or deliver the Agreement or any documents or papers deposited or called
for hereunder.

     10. You shall not be liable for the outlawing of any rights under the
Statute of Limitations with respect to these Joint Escrow Instructions or any
documents deposited with you.

     11. You shall be entitled to employ such legal counsel and other experts as
you may deem necessary properly to advise you in connection with your
obligations hereunder, may rely upon the advice of such counsel, and may pay
such counsel reasonable compensation therefor.

     12. Your responsibilities as Escrow Agent hereunder shall terminate if you
shall cease to be an officer or agent of the Company or if you shall resign by
written notice to each party. In the event of any such termination, the Company
shall appoint a successor Escrow Agent.

     13. If you reasonably require other or further instruments in connection
with these Joint Escrow Instructions or obligations in respect hereto, the
necessary parties hereto shall join in furnishing such instruments.

     14. It is understood and agreed that should any dispute arise with respect
to the delivery and/or ownership or right of possession of the securities held
by you hereunder, you are authorized and directed to retain in your possession
without liability to anyone all or any part of said securities until such
disputes shall have been settled either by mutual written agreement of the
parties concerned or by a final

                                       2
<PAGE>

order, decree or judgment of a court of competent jurisdiction after the
time for appeal has expired and no appeal has been perfected, but you shall be
under no duty whatsoever to institute or defend any such proceedings.

     15. Any notice required or permitted hereunder shall be given in writing
and shall be deemed effectively given upon personal delivery or upon deposit in
the United States Post Office, by registered or certified mail with postage and
fees prepaid, addressed to each of the other parties thereunto entitled at the
following addresses or at such other addresses as a party may designate by ten
days' advance written notice to each of the other parties hereto.

     16. By signing these Joint Escrow Instructions, you become a party hereto
only for the purpose of said Joint Escrow Instructions; you do not become a
party to the Agreement.

     17. This instrument shall be binding upon and inure to the benefit of the
parties hereto, and their respective successors and permitted assigns.

     18. These Joint Escrow Instructions shall be governed by the internal
substantive laws, but not the choice of law rules, of California.

                                       3
<PAGE>

PURCHASER:                                                  BILL GROSS' IDEALAB!

---------------------------                                 --------------------
Signature                                                   By

HOWARD MORGAN
---------------------------                                 --------------------
Print Name                                                  Name, Title



ESCROW AGENT


---------------------------
Secretary
Bill Gross' idealab!

Dated:

                                       4
<PAGE>

                                   EXHIBIT C-4

                                CONSENT OF SPOUSE

     I, ____________________, spouse of Howard Morgan, have read and approve the
foregoing Restricted Stock Purchase Agreement (the "Agreement"). In
consideration of granting of the right to my spouse to purchase shares of Bill
Gross' idealab!, as set forth in the Agreement, I hereby appoint my spouse as my
attorney-in-fact in respect to the exercise of any rights under the Agreement
and agree to be bound by the provisions of the Agreement insofar as I may have
any rights in said Agreement or any shares issued pursuant thereto under the
community property laws or similar laws relating to marital property in effect
in the state of our residence as of the date of the signing of the foregoing
Agreement.

Dated:                                     Signature:
                                                     ---------------------------

<PAGE>


                                    EXHIBIT D

                               SECURITY AGREEMENT


     This Security Agreement is made as of January 29, 1999 between Bill Gross'
idealab!, a California corporation ("Pledgee"), and Howard Morgan ("Pledgor").

                                    RECITALS

     Pursuant to Pledgor's election to purchase Shares under the Option
Agreement dated January 1, 1999 (the "Option"), between Pledgor and Pledgee
under Pledgee's 1999 Stock Plan, and Pledgor's election under the terms of the
Option to pay for such shares with his promissory note (the "Note"), Pledgor has
purchased 2,000,000 shares of Pledgee's Common Stock (the "Shares") at a price
of $ 0.20 per share, for a total purchase price of $400,000. The Note and the
obligations thereunder are as set forth in EXHIBIT E to the Option.

     NOW, THEREFORE, it is agreed as follows:

     1. CREATION AND DESCRIPTION OF SECURITY INTEREST. In consideration of the
transfer of the Shares to Pledgor under the Option Agreement, Pledgor, pursuant
to the California Corporations Code, hereby pledges all of such Shares (herein
sometimes referred to as the "Collateral") represented by certificate number
CS-_____, duly endorsed in blank or with executed stock powers, and herewith
delivers said certificate to the Secretary of Pledgee ("Pledgeholder"), who
shall hold said certificate subject to the terms and conditions of this Security
Agreement.

     The pledged stock (together with an executed blank stock assignment for use
in transferring all or a portion of the Shares to Pledgee if, as and when
required pursuant to this Security Agreement) shall be held by the Pledgeholder
as security for the repayment of the Note, and any extensions or renewals
thereof, to be executed by Pledgor pursuant to the terms of the Option, and the
Pledgeholder shall not encumber or dispose of such Shares except in accordance
with the provisions of this Security Agreement.

     2. PLEDGOR'S REPRESENTATIONS AND COVENANTS. To induce Pledgee to enter into
this Security Agreement, Pledgor represents and covenants to Pledgee, its
successors and assigns, as follows:

          (a) PAYMENT OF INDEBTEDNESS. Pledgor will pay the principal sum of the
Note secured hereby, together with interest thereon, at the time and in the
manner provided in the Note.

          (b) ENCUMBRANCES. The Shares are free of all other encumbrances,
defenses and liens, and Pledgor will not further encumber the Shares without the
prior written consent of Pledgee.

          (c) MARGIN REGULATIONS. In the event that Pledgee's Common Stock is
now or later becomes margin-listed by the Federal Reserve Board and Pledgee is
classified as a "lender" within the meaning of the regulations under Part 207 of
Title 12 of the Code of Federal Regulations ("Regulation G"), Pledgor agrees to
cooperate with Pledgee in making any amendments to the Note or providing any
additional collateral as may be necessary to comply with such regulations.

                                       2
<PAGE>

     3. VOTING RIGHTS. During the term of this pledge and so long as all
payments of principal and interest are made as they become due under the terms
of the Note, Pledgor shall have the right to vote all of the Shares pledged
hereunder.

     4. STOCK ADJUSTMENTS. In the event that during the term of the pledge any
stock dividend, reclassification, readjustment or other changes are declared or
made in the capital structure of Pledgee, all new, substituted and additional
shares or other securities issued by reason of any such change shall be
delivered to and held by the Pledgee under the terms of this Security Agreement
in the same manner as the Shares originally pledged hereunder. In the event of
substitution of such securities, Pledgor, Pledgee and Pledgeholder shall
cooperate and execute such documents as are reasonable so as to provide for the
substitution of such Collateral and, upon such substitution, references to
"Shares" in this Security Agreement shall include the substituted shares of
capital stock of Pledgor as a result thereof.

     5. OPTIONS AND RIGHTS. In the event that, during the term of this pledge,
subscription Options or other rights or options shall be issued in connection
with the pledged Shares, such rights, Options and options shall be the property
of Pledgor and, if exercised by Pledgor, all new stock or other securities so
acquired by Pledgor as it relates to the pledged Shares then held by
Pledgeholder shall be immediately delivered to Pledgeholder, to be held under
the terms of this Security Agreement in the same manner as the Shares pledged.

     6. DEFAULT. Pledgor shall be deemed to be in default of the Note and of
this Security Agreement in the event:

          (a) Payment of principal or interest on the Note shall be delinquent
for a period of 10 days or more; or

          (b) Pledgor fails to perform any of the covenants set forth in the
Option or contained in this Security Agreement for a period of 10 days after
written notice thereof from Pledgee.

     In the case of an event of Default, as set forth above, Pledgee shall have
the right to accelerate payment of the Note upon notice to Pledgor, and Pledgee
shall thereafter be entitled to pursue its remedies under the California
Corporations Code.

     7. RELEASE OF COLLATERAL. Subject to any applicable contrary rules under
Regulation G, there shall be released from this pledge a portion of the pledged
Shares held by Pledgeholder hereunder upon payments of the principal of the
Note. The number of the pledged Shares which shall be released shall be that
number of full Shares which bears the same proportion to the initial number of
Shares pledged hereunder as the payment of principal bears to the initial full
principal amount of the Note.

     8. WITHDRAWAL OR SUBSTITUTION OF COLLATERAL. Pledgor shall not sell,
withdraw, pledge, substitute or otherwise dispose of all or any part of the
Collateral without the prior written consent of Pledgee.

     9. TERM. The within pledge of Shares shall continue until the payment of
all indebtedness secured hereby, at which time the remaining pledged stock shall
be promptly delivered to Pledgor, subject to the provisions for prior release of
a portion of the Collateral as provided in paragraph 7 above.

                                       3
<PAGE>

     10. INSOLVENCY. Pledgor agrees that if a bankruptcy or insolvency
proceeding is instituted by or against it, or if a receiver is appointed for the
property of Pledgor, or if Pledgor makes an assignment for the benefit of
creditors, the entire amount unpaid on the Note shall become immediately due and
payable, and Pledgee may proceed as provided in the case of default.

     11. PLEDGEHOLDER LIABILITY. In the absence of willful or gross negligence,
Pledgeholder shall not be liable to any party for any of his acts, or omissions
to act, as Pledgeholder.

     12. INVALIDITY OF PARTICULAR PROVISIONS. Pledgor and Pledgee agree that the
enforceability or invalidity of any provision or provisions of this Security
Agreement shall not render any other provision or provisions herein contained
unenforceable or invalid.

     13. SUCCESSORS OR ASSIGNS. Pledgor and Pledgee agree that all of the terms
of this Security Agreement shall be binding on their respective successors and
assigns, and that the term "Pledgor" and the term "Pledgee" as used herein shall
be deemed to include, for all purposes, the respective designees, successors,
assigns, heirs, executors and administrators.

     14. GOVERNING LAW. This Security Agreement shall be interpreted and
governed under the internal substantive laws, but not the choice of law rules,
of California.


<PAGE>

     IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.

"PLEDGOR"
                                                       -------------------------
                                                       Signature

                                                       HOWARD MORGAN
                                                       -------------------------
                                                       Print Name

Address:




"PLEDGEE"                                               BILL GROSS' IDEALAB!
                                                        a California corporation

                                                       -------------------------
                                                       Signature

                                                       -------------------------
                                                       Print Name

                                                       -------------------------
                                                       Title

"PLEDGEHOLDER"
                                                       -------------------------
                                                       Secretary
                                                       Bill Gross' idealab!

                                       5
<PAGE>


                                    EXHIBIT E

                                      NOTE

$400,000                                                            Pasadena, CA

                                                                January 29, 1999

     FOR VALUE RECEIVED, Howard Morgan (the "Obligor") promises to pay to Bill
Gross' idealab!, a California corporation (the "Company"), or order, the
principal sum of Four Hundred Thousand Dollars ($400,000), together with
interest on the unpaid principal hereof from the date hereof at the rate of
seven percent (7%) per annum, compounded semiannually.


     1. Subject to the terms and conditions of Section 2, (i) interest shall be
paid annually commencing on January 29, 2000, and continuing on the same day of
each successive year thereafter and (ii) unpaid principal on this Note
applicable to the shares that have vested under that certain Restricted Stock
Purchase Agreement dated of even date herewith between the Company and the
Obligor (the "Purchase Agreement") on the date of determination (the "Vested
Shares"), and all interest accrued on this Note and not otherwise paid, shall be
due and payable on the earlier to occur of (A) January 29, 2003, (B) the date
the Company pays to the Obligor cash dividends (or a portion of a cash
liquidation) on the shares of Common Stock then held by the Obligor, provided
that if the proceeds from such cash dividend or cash liquidation is not
sufficient to pay the principal and all accrued but unpaid interest attributable
to such Vested Shares, the entire amount of such cash dividend or cash
liquidation shall be paid by Obligor to the Company as partial payment of this
Note or (C) the date the Obligor sells any Vested Shares. If principal and/or
interest are paid pursuant to clause (ii)(B) or (C) above, all unpaid principal
(and interest accruing thereon) shall again be subject to the repayment terms in
clauses (i) and (ii) above. Payment of principal and interest shall be made in
lawful money of the United States of America.

     2. On the date Obligor ceases to be a service provider (i.e. an employee,
director or consultant) for the Company, (i) payment for all outstanding
principal under this Note applicable to the Vested Shares (and all interest
accrued on this Note) shall be due and payable and (ii) the principal of this
Note attributable to the shares that have not vested under the Purchase
Agreement shall be applied to the Company's payment for such unvested shares
pursuant to Section 4 of the Purchase Agreement.

     3. Except as set forth above, the Obligor may not prepay the principal or
interest on this Note without the prior written consent of the Company.

     4. This Note is secured in part by a pledge of the Company's Common Stock
under the terms of a Security Agreement of even date herewith and is subject to
all the provisions thereof.

     5. The holder of this Note shall have full recourse against the
undersigned, and shall not be required to proceed against the collateral
securing this Note in the event of default.

     6. Should any action be instituted for the collection of this Note, the
reasonable costs and attorneys' fees therein of the holder shall be paid by the
undersigned.


                                            ------------------------------------
                                            Howard Morgan