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					                      UNITED STATES
          SECURITIES AND EXCHANGE COMMISSION
                                                   Washington, D.C. 20549

                                                     FORM 10-Q
(Mark One)
È      QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
       SECURITIES EXCHANGE ACT OF 1934
                                    For the quarterly period ended March 31, 2006

                                                                OR

‘      TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
       SECURITIES EXCHANGE ACT OF 1934
                              For the transition period from                         to

                                       Commission file number: 000-50726

                                                   Google Inc.
                                        (Exact name of registrant as specified in its charter)


                         Delaware                                                                77-0493581
                 (State or other jurisdiction of                                             (I.R.S. Employer
                incorporation or organization)                                            Identification Number)

                                                   1600 Amphitheatre Parkway
                                                    Mountain View, CA 94043
                                               (Address of principal executive offices)
                                                             (Zip Code)

                                                         (650) 253-4000
                                       (Registrant’s telephone number, including area code)


     Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or
15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90
days. Yes È No ‘

    Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a
non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the
Exchange Act. (Check one):
                  Large accelerated filer È             Accelerated filer ‘            Non-acclerated filer ‘

       Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange
Act)     Yes ‘ No È

     At April 30, 2006, the number of shares outstanding of Google’s Class A common stock was 214,947,093
shares and the number of shares outstanding of Google’s Class B common stock was 88,138,358 shares.
                                                                        GOOGLE INC.
                                                                          INDEX

                                                                                                                                                                Page No.

                                                     PART I. FINANCIAL INFORMATION
Item 1         Financial Statements
               Condensed Consolidated Balance Sheets—December 31, 2005 and March 31, 2006
                 (unaudited) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .          3
               Condensed Consolidated Statements of Income—Three Months Ended March 31, 2005 and
                 2006 (unaudited) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .               4
               Condensed Consolidated Statements of Cash Flows—Three Months Ended March 31, 2005
                 and 2006 (unaudited) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                 5
               Notes to Unaudited Condensed Consolidated Financial Statements . . . . . . . . . . . . . . . . . . . . .                                             6
Item 2         Management’s Discussion and Analysis of Financial Condition and Results of Operations . .                                                          21
Item 3         Quantitative and Qualitative Disclosures About Market Risk . . . . . . . . . . . . . . . . . . . . . . . . . .                                     37
Item 4         Controls and Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                38
                                                        PART II. OTHER INFORMATION
Item 1         Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .            39
Item 1A Risk Factors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .              39
Item 2         Unregistered Sales of Equity Securities and Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . .                                    56
Item 6         Exhibits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .     57
               Signatures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .     58
               Exhibit Index
               Certifications




                                                                                    2
                                                    PART I—FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
                                                                        GOOGLE INC.
                                        CONDENSED CONSOLIDATED BALANCE SHEETS
                                               (in thousands, except par value)

                                                                                                                                    As of              As of
                                                                                                                                 December 31,        March 31,
                                                                                                                                     2005              2006
                                                                                                                                                    (unaudited)
Assets
Current assets:
    Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 3,877,174                   $ 2,935,179
    Marketable securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,157,073                     5,493,849
    Accounts receivable, net of allowance of $14,852 and $15,604 . . . . . . . . . . . . .                            687,976                       844,378
    Deferred income taxes, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .       49,341                        26,317
    Prepaid revenue share, expenses and other assets . . . . . . . . . . . . . . . . . . . . . . . .                  229,507                       256,234
     Total current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .            9,001,071         9,555,957
Property and equipment, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                  961,749         1,209,681
Goodwill . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .       194,900           318,806
Intangible assets, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .            82,783           160,573
Prepaid revenue share, expenses and other assets, non-current . . . . . . . . . . . . . . . . .                                       31,310            49,853
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   $10,271,813    $11,294,870
Liabilities and Stockholders’ Equity
Current liabilities:
    Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $               115,575    $      145,911
    Accrued compensation and benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                            198,788           118,395
    Accrued expenses and other current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . .                               114,377           156,784
    Accrued revenue share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                    215,771           267,202
    Deferred revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                73,099            80,172
    Income taxes payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                    27,774           211,560
     Total current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .               745,384           980,024
Deferred revenue, long-term . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                   10,468            17,123
Liability for stock options exercised early, long-term . . . . . . . . . . . . . . . . . . . . . . . .                                 2,083             1,368
Deferred income taxes, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                  35,419               —
Other long-term liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .               59,502            53,087
Stockholders’ equity:
     Common stock, $0.001 par value: 9,000,000 shares authorized and 293,027
        and 295,063 shares issued and outstanding, excluding 3,303 and 2,390
        shares subject to repurchase at December 31, 2005 and March 31, 2006 . . .                                                       293               295
     Additional paid-in capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                7,477,792         7,605,177
     Deferred stock-based compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                          (119,015)              —
     Accumulated other comprehensive income (loss) . . . . . . . . . . . . . . . . . . . . . . .                                       4,019           (10,363)
     Retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .             2,055,868         2,648,159
Total stockholders’ equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .             9,418,957     10,243,268
Total liabilities and stockholders’ equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                   $10,271,813    $11,294,870


                                                                  See accompanying notes.

                                                                                    3
                                                                         GOOGLE INC.
                                 CONDENSED CONSOLIDATED STATEMENTS OF INCOME
                                        (in thousands, except per share amounts)

                                                                                                                                           Three Months Ended
                                                                                                                                                March 31,
                                                                                                                                           2005           2006
                                                                                                                                               (unaudited)
Revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $1,256,516        $2,253,755
Costs and expenses:
    Cost of revenues (including stock-based compensation expense of $1,573 and
       $2,283)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .         546,781            904,119
    Research and development (including stock-based compensation expense of
       $29,299 and $73,086) (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                   108,711            246,599
    Sales and marketing (including stock-based compensation expense of $6,536 and
       $15,929) (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .          89,488            190,943
    General and administrative (including stock-based compensation expense of
       $11,500 and $23,366) (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                    68,766            169,395
Total costs and expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                 813,746     1,511,056
Income from operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                   442,770       742,699
Interest income and other, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                    13,686        67,919
Income before income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                     456,456       810,618
Provision for income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                    87,263       218,327
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .       $ 369,193     $ 592,291
Net income per share:
     Basic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .     $      1.39   $      2.02
       Diluted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   $      1.29   $      1.95
Number of shares used in per share calculations:
   Basic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .           266,106       293,896
       Diluted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .       286,612       304,123

(1) Stock-based compensation recognized in the three months ended March 31, 2005, accounted for under
    Accounting Principles Board Opinion No. 25, Accounting for Stock Issued to Employees, has been
    reclassified to these expense lines to conform with the presentation in the three months ended March 31,
    2006. As discussed in Note 1 of the accompanying notes, stock-based compensation for the three months
    ended March 31, 2006, is presented in conformity with Financial Accounting Standards Board Statement of
    Financial Accounting Standards No. 123 (revised 2004), Share-Based Payment.




                                                                   See accompanying notes.

                                                                                     4
                                                                       GOOGLE INC.
                            CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                              (in thousands)

                                                                                                                                    Three Months Ended
                                                                                                                                         March 31,
                                                                                                                                   2005             2006
                                                                                                                                        (unaudited)
Operating activities
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   $   369,193     $      592,291
Adjustments:
     Depreciation of property and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                             46,478             95,868
     Amortization of intangibles and warrants . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                              9,715             15,290
     In-process research and development . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                             —                4,000
     Stock-based compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                     48,908            114,664
     Excess tax benefits from stock-based award activity . . . . . . . . . . . . . . . . . . . . .                                  77,377                —
     Changes in assets and liabilities, net of effects of acquisitions:
          Accounts receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                   (60,069)         (155,221)
          Income taxes, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                   6,044           139,242
          Prepaid revenue share, expenses and other assets . . . . . . . . . . . . . . . . . . .                                    (29,571)          (26,525)
          Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                   42,694            30,232
          Accrued expenses and other liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . .                            (17,767)          (39,295)
          Accrued revenue share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                      32,085            51,216
          Deferred revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                    4,535             3,042
Net cash provided by operating activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                        529,622            824,804
Investing activities
Purchases of property and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                     (142,391)           (344,938)
Purchases of marketable securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                (1,160,160)        (13,111,471)
Maturities and sales of marketable securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                        835,223          11,755,756
Acquisitions, net of cash acquired, and purchases of intangible and other assets . . .                                              (5,000)           (187,964)
Net cash used in investing activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                  (472,328)        (1,888,617)
Financing activities
Proceeds from exercise of stock options, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                            4,097            42,611
Excess tax benefits from stock-based award activity . . . . . . . . . . . . . . . . . . . . . . . . .                                   —              77,285
Payments of principal on capital leases and equipment loans . . . . . . . . . . . . . . . . . .                                        (592)              —
Net cash provided by financing activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                           3,505           119,896
Effect of exchange rate changes on cash and cash equivalents . . . . . . . . . . . . . . . . .                                       (5,100)             1,922
Net increase (decrease) in cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . .                                55,699           (941,995)
Cash and cash equivalents at beginning of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                           426,873          3,877,174
Cash and cash equivalents at end of period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                     $   482,572     $ 2,935,179
Supplemental disclosures of cash flow information
Cash paid for interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .       $         93    $             8
Cash paid for income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .           $       396     $         1,126
Acquisition related activities:
    Issuance of equity in connection with acquisitions, net of deferred stock-based
       compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .          $      2,011    $           —

                                                                 See accompanying notes.

                                                                                   5
                                                 GOOGLE INC.
                NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                      (Unaudited)

Note 1. Google Inc. and Summary of Accounting Policies
  Nature of Operations
     We were incorporated in California in September 1998. We were re-incorporated in the State of Delaware in
August 2003. We provide highly targeted advertising and global Internet search solutions as well as intranet
solutions via an enterprise search appliance.


  Basis of Consolidation
     The condensed consolidated financial statements include the accounts of Google and our wholly-owned
subsidiaries. All intercompany balances and transactions have been eliminated.


  Unaudited Interim Financial Information
      The accompanying condensed consolidated balance sheet as of March 31, 2006, the condensed consolidated
statements of income for the three months ended March 31, 2005 and 2006, and the condensed consolidated
statements of cash flows for the three months ended March 31, 2005 and 2006 are unaudited. These unaudited
interim condensed consolidated financial statements have been prepared in accordance with U.S. generally
accepted accounting principles. In our opinion, the unaudited interim condensed consolidated financial
statements include all adjustments of a normal recurring nature necessary for the fair presentation of our financial
position as of March 31, 2006, our results of operations for the three months ended March 31, 2005 and 2006,
and our cash flows for the three months ended March 31, 2005 and 2006. The results of operations for the three
months ended March 31, 2006 are not necessarily indicative of the results to be expected for the year ending
December 31, 2006.

    These unaudited interim condensed consolidated financial statements should be read in conjunction with the
consolidated financial statements and related notes included in our 2005 Annual Report on Form 10-K filed on
March 16, 2006.


  Use of Estimates
     The preparation of interim condensed consolidated financial statements in conformity with accounting
principles generally accepted in the United States requires us to make estimates and assumptions that affect the
amounts reported and disclosed in the financial statements and the accompanying notes. Actual results could
differ materially from these estimates. On an ongoing basis, we evaluate our estimates, including those related to
the accounts receivable and sales allowances, fair values of marketable securities and investments, fair values of
acquired intangible assets and goodwill, useful lives of intangible assets and property and equipment, fair values
of options to purchase our common stock, and income taxes, among others. We base our estimates on historical
experience and on various other assumptions that are believed to be reasonable, the results of which form the
basis for making judgments about the carrying values of assets and liabilities.




                                                         6
                                                                  GOOGLE INC.
        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

  Revenue Recognition
     The following table presents our revenues (in thousands):

                                                                                                              Three Months Ended
                                                                                                                    March 31,
                                                                                                              2005             2006
                                                                                                                   (Unaudited)
          Advertising revenues:
              Google web sites . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .           $ 656,997      $1,297,317
              Google Network web sites . . . . . . . . . . . . . . . . . . . . . . . . .                     584,115         928,376
                   Total advertising revenues . . . . . . . . . . . . . . . . . . . . .                     1,241,112      2,225,693
          Licensing and other revenues . . . . . . . . . . . . . . . . . . . . . . . . . . .                   15,404         28,062
          Revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   $1,256,516     $2,253,755


      In the first quarter of 2000, we introduced our first advertising program through which we offered
advertisers the ability to place text-based ads on Google web sites targeted to users’ search queries. Advertisers
paid us based on the number of times their ads were displayed on users’ search results pages and we recognized
revenue at the time these ads appeared. In the fourth quarter of 2000, we launched Google AdWords, an online
self-service program that enables advertisers to place text-based ads on Google web sites. AdWords is also
available through our direct sales force. AdWords advertisers originally paid us based on the number of times
their ads appeared on users’ search results pages. In the first quarter of 2002, we began offering AdWords
exclusively on a cost-per-click basis, so that an advertiser pays us only when a user clicks on one of its ads. We
recognize as revenue the fees charged advertisers each time a user clicks on one of the text-based ads that are
displayed next to the search results on Google web sites. From January 1, 2004 until the end of the first quarter of
2005, the AdWords cost-per-click pricing structure was the only structure available to our advertisers. However,
during the second quarter of 2005, we launched an AdWords program that enables advertisers to pay us based on
the number of times their ads appear on Google Network member sites specified by the advertiser. We recognize
as revenue the fees charged advertisers each time their ads are displayed on the Google Network member sites.

      In the third quarter of 2005, we launched the Google Publication Ads Program through which we distribute
our advertisers’ ads for publication in magazines. We recognize as revenue the fees charged advertisers when ads
are published in magazines. Also in the first quarter of 2006, we acquired dMarc Broadcasting, Inc. (dMarc), a
digital solutions provider for the radio broadcast industry. dMarc, now one of our wholly-owned subsidiaries,
distributes our advertisers’ ads for broadcast by radio stations. We recognize as revenue the fees charged
advertisers each time an ad is broadcasted or a listener responds to that ad. We consider the magazines and radio
stations that participate in these programs to be members of our Google Network.

      Google AdSense is the program through which we distribute our advertisers’ ads for display on the web
sites of our Google Network members. In accordance with Emerging Issues Task Force (“EITF”) Issue
No. 99-19, Reporting Revenue Gross as a Principal Versus Net as an Agent (EITF 99-19), we recognize as
revenues the fees charged advertisers each time a user clicks on one of the text-based ads that are displayed next
to the search results or on the content pages of our Google Network members’ web sites and, for those
advertisers who use our cost-per impression pricing, the fees charged advertisers each time an ad is displayed on
our members’ sites. Finally, we recognize as revenues the fees charged advertisers for ads published in the
magazines or broadcasted by the radio stations of our Google Network members. These revenues are reported on
a gross basis primarily because we are the primary obligor to our advertisers.



                                                                              7
                                                 GOOGLE INC.
        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

     We generate fees from search services through a variety of contractual arrangements, which include
per-query search fees and search service hosting fees. Revenues from set-up and support fees and search service
hosting fees are recognized on a straight-line basis over the term of the contract, which is the expected period
during which these services will be provided. Our policy is to recognize revenues from per-query search fees in
the period queries are made and results are delivered.

     We provide search services pursuant to certain AdSense agreements. We believe that search services and
revenue share arrangements represent separate units of accounting pursuant to EITF 00-21 Revenue
Arrangements with Multiple Deliverables. These separate services are provided simultaneously to the Google
Network member and are recognized as revenues in the periods provided.

     In the first quarter of 2006, we launched Google Video through which we make video owned by others
available for download and purchase by end users. We recognize as revenue the fees we receive from end users
to the extent we are the primary obligor to them; however, to the extent we are not, we recognize as revenues the
fees we receive from end users net of the amounts we pay to our video content providers in accordance with
EITF 99-19.

      We also generate fees from the sale and license of our Search Appliance, which includes hardware, software
and 12 to 24 months of post-contract support. We recognize revenue in accordance with Statement of Position
97-2, Software Revenue Recognition, as amended. For transactions in which the elements are not sold separately,
sufficient vendor-specific objective evidence does not exist for the allocation of revenue. As a result, the entire
fee is recognized ratably over the term of the post-contract support arrangement.

     Deferred revenue is recorded when payments are received in advance of our performance in the underlying
agreement on the accompanying condensed consolidated balance sheets.


  Cost of Revenues
     Cost of revenues consists primarily of traffic acquisition costs. Traffic acquisition costs consist of amounts
ultimately paid to Google Network members, as well as to partners who direct search queries to our web site.
These amounts are primarily based on revenue share arrangements under which we pay our Google Network
members and other partners a portion of the fees we receive from our advertisers. In addition, certain AdSense
agreements obligate us to make guaranteed minimum revenue share payments to Google Network members
based on their achieving defined performance terms, such as number of search queries or advertisements
displayed. We amortize guaranteed minimum revenue share prepayments (or accrete an amount payable to a
Google Network member if the payment is due in arrears) based on the number of search queries or
advertisements displayed on the Google Network member’s web site or the actual revenue share amounts,
whichever is greater. In addition, concurrent with the commencement of a small number of AdSense and other
agreements, we have purchased certain items from, or provided other consideration to, our Google Network
members and partners. We have determined that certain of these amounts are prepaid traffic acquisition costs and
are amortized on a straight-line basis over the terms of the related agreements. Traffic acquisition costs were
$461.8 million and $722.7 million in the three months ended March 31, 2005 and 2006.

     In addition, cost of revenues includes the expenses associated with the operation of our data centers,
including depreciation, labor, energy and bandwidth costs, as well as credit card and other transaction fees
related to processing customer transactions.




                                                         8
                                                 GOOGLE INC.
        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

  Stock-based Compensation
      In December 2004, the Financial Accounting Standards Board issued Statement of Financial Accounting
Standards No. 123 (revised 2004), Share-Based Payment (SFAS 123R) that addresses the accounting for share-
based payment transactions in which an enterprise receives employee services in exchange for equity instruments of
the enterprise or liabilities that are based on the fair value of the enterprise’s equity instruments or that may be
settled by the issuance of such equity instruments. SFAS 123R eliminates the ability to account for share-based
compensation transactions using the intrinsic value method under Accounting Principles Board Opinion No. 25
(“APB 25”), Accounting for Stock Issued to Employees, and generally requires instead that such transactions be
accounted for using a fair-value-based method. We adopted SFAS 123R beginning January 1, 2006.

     SFAS 123R requires the use of a valuation model to calculate the fair value of stock-based awards. We have
elected to use the Black-Scholes-Merton (“BSM”) option-pricing model to determine the fair value of stock-
based awards on the dates of grant, consistent with that used for pro forma disclosures under SFAS No. 123,
Accounting for Stock-Based Compensation. Restricted Stock Units (“RSUs”) are measured based on the fair
market values of the underlying stock on the dates of grant. Shares are issued on the dates of vest net of the
statutory withholding requirements to be paid by us on behalf of our employees. As a result, the actual number of
shares issued will be less than the actual number of RSUs outstanding. Furthermore, in accordance with
SFAS 123R, the liability for withholding amounts to be paid by us will be recorded as a reduction to additional
paid-in capital when paid.

     We have elected the modified prospective transition method as permitted by SFAS 123R and accordingly
prior periods have not been restated to reflect the impact of SFAS 123R. Under this method, we are required to
recognize stock-based compensation for all new and unvested stock-based awards that are ultimately expected to
vest as the requisite service is rendered beginning January 1, 2006. Stock-based compensation is measured based
on the fair values of all stock-based awards on the dates of grant.

     We will recognize stock-based compensation using the straight-line method for all stock awards issued after
January 1, 2006. For stock awards issued prior to January 1, 2006, we continue to recognize stock-based
compensation using the accelerated method, other than RSUs issued to new employees that vest based on the
employee’s performance for which we use the straight-line method in accordance with FASB Interpretation
No. 28, Accounting for Stock Appreciation Rights and Other Variable Stock Option or Award Plans.

     SFAS 123R requires that the deferred stock-based compensation on our balance sheet on the date of
adoption be netted against additional paid-in capital. At December 31, 2005, we had $119.0 million of deferred
stock-based compensation which was netted against additional paid-in capital on January 1, 2006, as reflected in
the accompanying Condensed Consolidated Balance Sheet at March 31, 2006.

     Also, in accordance with SFAS 123R, beginning in the first quarter of 2006 we have presented the benefits
of tax deductions in excess of recognized compensation expense as a cash flow from financing activities in the
accompanying Condensed Consolidated Statement of Cash Flows, rather than as a cash flow from operating
activities, as was prescribed under accounting rules applicable through December 31, 2005. This requirement
reduces and increases the amounts we record as net cash provided by operating activities and net cash provided
by financing activities, respectively. Total cash flow remains unchanged from what would have been reported
under prior accounting rules.

     In March 2005, the Securities and Exchange Commission issued Staff Accounting Bulletin No. 107 (“SAB
No. 107”). In accordance with this Bulletin, beginning in the first quarter of 2006, we no longer present stock-
based compensation separately on our statements of income. Instead we present stock-based compensation in the

                                                         9
                                                             GOOGLE INC.
        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

same lines as cash compensation paid to the same individuals. Stock-based compensation in the first quarter of
2005 has been reclassified to conform to the presentation in the first quarter of 2006.

    We account for stock awards issued to non-employees in accordance with the provisions of SFAS 123R and
EITF 96-18, Accounting for Equity Instruments That Are Issued to Other Than Employees for Acquiring, or in
Conjunction with Selling, Goods or Services (EITF 96-18). Under SFAS 123R and EITF 96-18, we use the BSM
method to measure the value of options granted to non-employees at each vesting date to determine the
appropriate charge to stock-based compensation.

      Prior to the adoption of SFAS 123R, we accounted for our employee stock-based compensation using the
intrinsic value method prescribed by APB 25. We applied below the disclosure provisions of SFAS 123, as
amended by SFAS 148, Accounting for Stock-Based Compensation – Transition and Disclosure as if the fair
value method had been applied. If this method had been used, our net income and net income per share for the
three months ended March 31, 2005 would have been adjusted to the pro forma amounts below (in thousands
except per share data):
                                                                                                               Three Months Ended
                                                                                                                 March 31, 2005
                                                                                                                   (unaudited)
         Net income, as reported . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .       $369,193
         Add: Stock-based employee compensation expense included in
           reported net income, net of related tax effects . . . . . . . . . . . . . . . . . . .                       29,322
         Deduct: Total stock-based employee compensation expense under the
           fair value based method for all awards, net of related tax effects . . . .                                  (46,280)
         Net income, pro forma . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .       $352,235
         Net income per share:
              As reported for prior period—basic . . . . . . . . . . . . . . . . . . . . . . . . .                 $      1.39
              Pro forma—basic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .        $      1.32
              As reported for prior period—diluted . . . . . . . . . . . . . . . . . . . . . . .                   $      1.29
              Pro forma—diluted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .          $      1.23

    In the three months ended March 31, 2006, we recognized stock-based compensation and related tax
benefits of $114.7 million and $27.4 million respectively.

     As a result of adopting SFAS 123R, our income before income taxes and net income for the quarter ended
March 31, 2006, were $61.4 million and $46.7 million less than if we had continued to account for share-based
compensation under APB 25. Furthermore, basic and diluted earnings per share for the quarter ended March 31,
2006 would have been $2.17 and $2.10 if we had not adopted SFAS 123R, compared to reported basic and
diluted earnings per share of $2.02 and $1.95.

  Net Income per Share
     We compute net income per share in accordance with SFAS 128, Earnings per Share. Under the provisions
of SFAS 128, basic net income per share is computed using the weighted average number of common shares
outstanding during the period except that it does not include unvested common shares subject to repurchase or
cancellation. Diluted net income per share is computed using the weighted average number of common shares
and, if dilutive, potential common shares outstanding during the period. Potential common shares consist of the
incremental common shares issuable upon the exercise of stock options, restricted shares, restricted stock units
and unvested common shares subject to repurchase or cancellation. The dilutive effect of outstanding stock

                                                                       10
                                                             GOOGLE INC.
        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

options, restricted shares and restricted stock units is reflected in diluted earnings per share by application of the
treasury stock method.

    The following table sets forth the computation of basic and diluted net income per share (in thousands,
except per share amounts):
                                                                                                            Three Months Ended
                                                                                                                 March 31,
                                                                                                            2005           2006
                                                                                                                (unaudited)
          Basic and diluted net income per share:
               Numerator:
                   Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   $369,193       $592,291
                Denominator:
                    Weighted average common shares outstanding . . . . . . . .                           275,816        296,957
                    Less: Weighted average unvested common shares subject
                      to repurchase or cancellation . . . . . . . . . . . . . . . . . . . . .               (9,710)        (3,061)
                            Denominator for basic calculation . . . . . . . . . . . . . .                266,106        293,896
                       Effect of dilutive securities:
                       Add:
                            Weighted average stock options, restricted shares,
                               restricted stock units and unvested common
                               shares subject to repurchase or cancellation . . . . .                       20,506         10,227
                              Denominator for diluted calculation . . . . . . . . . . . . .              286,612        304,123
          Net income per share, basic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   $     1.39     $     2.02
          Net income per share, diluted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .     $     1.29     $     1.95


  Property and Equipment
     Property and equipment are stated at cost less accumulated depreciation and amortization. Depreciation is
computed using the straight-line method over the estimated useful lives of the assets, generally two to five years.
Buildings are depreciated over periods up to 25 years. Equipment under capital leases and leasehold
improvements are amortized over the shorter of the lease term or the estimated useful lives of the assets.
Construction in process is primarily related to the building of production equipment servers and leasehold
improvements. Depreciation for these assets commences once they are placed in service.

  Cash and Cash Equivalents and Marketable Securities
     We invest our excess cash in money market funds and in highly liquid debt instruments of U.S.
municipalities, corporations and the U.S. government and its agencies. All highly liquid investments with stated
maturities of three months or less from date of purchase are classified as cash equivalents; all highly liquid
investments with stated maturities of greater than three months are classified as marketable securities.

      We determine the appropriate classification of our investments in marketable debt and equity securities at
the time of purchase and reevaluate such designation at each balance sheet date. Our marketable debt and equity
securities have been classified and accounted for as available for sale. We may or may not hold securities with
stated maturities greater than twelve months until maturity. In response to changes in the availability of and the

                                                                       11
                                                                    GOOGLE INC.
         NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

yield on alternative investments as well as liquidity requirements, we occasionally sell these securities prior to
their stated maturities. As these debt and equity securities are viewed by us as available to support current
operations, based on the provisions of Accounting Research Bulletin No. 43, Chapter 3A, Working Capital-
Current Assets and Liabilities, equity securities, as well as debt securities with maturities beyond 12 months
(such as our auction rate securities) are classified as current assets in the accompanying Condensed Consolidated
Balance Sheets. These securities are carried at fair value, with the unrealized gains and losses, net of taxes,
reported as a component of stockholders’ equity, except for unrealized losses determined to be other than
temporary which are recorded as interest income and other, net, in accordance with our policy and FASB Staff
Position (FSP) Nos. FAS 115-1 and FAS 124-1, The Meaning of Other-Than-Temporary Impairment and its
Application to Certain Investments. Any realized gains or losses on the sale of marketable securities are
determined on a specific identification method, and such gains and losses are reflected as a component of interest
income and other, net.

  Derivative Financial Instruments
     We enter into forward foreign exchange contracts with financial institutions to reduce the risk that our cash
flows and earnings will be adversely affected by foreign currency exchange rate fluctuations. This program is not
designed for trading or speculative purposes.

     In accordance with SFAS No. 133, Accounting for Derivative Instruments and Hedging Activities, we
recognize derivative instruments as either assets or liabilities on the balance sheet at fair value. These forward
exchange contracts are not accounted for as hedges and, therefore, changes in the fair value of these instruments
are recorded as interest income and other, net. Neither the cost nor the fair value of these forward foreign
exchange contracts was material at March 31, 2006. The notional principal of forward foreign exchange contracts
to purchase U.S. dollars with foreign currencies was $477.0 and $629.5 million at December 31, 2005 and
March 31, 2006, respectively. There were no other forward foreign exchange contracts outstanding at
December 31, 2005 or March 31, 2006.

Note 2. Cash, Cash Equivalents and Marketable Securities
     Cash, cash equivalents and marketable securities consists of the following (in thousands):
                                                                                                                       As of             As of
                                                                                                                    December 31,      March 31,
                                                                                                                        2005             2006
                                                                                                                             (unaudited)
     Cash and cash equivalents:
         Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   $1,588,515      $2,002,399
         Cash equivalents:
              U.S. government notes and agencies . . . . . . . . . . . . . . . . . . . . .                           2,281,858         915,782
              Money market mutual funds . . . . . . . . . . . . . . . . . . . . . . . . . . . .                          6,801          16,998
                           Total cash and cash equivalents . . . . . . . . . . . . . . . . . . . . .                 3,877,174       2,935,179
     Marketable securities:
         Municipal securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .            1,203,209         700,965
         U.S. government notes and agencies . . . . . . . . . . . . . . . . . . . . . . . . .                        2,906,698       4,750,852
         Equity security . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .            47,166          42,032
                   Total marketable securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . .             4,157,073       5,493,849
                   Total cash, cash equivalents and marketable securities . . . . . . .                             $8,034,247      $8,429,028


                                                                               12
                                                                    GOOGLE INC.
          NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

     The following table summarizes unrealized gains and losses related to our investments in marketable
securities designated as available-for-sale (in thousands):

                                                                                                                   As of December 31, 2005
                                                                                                                     Gross        Gross
                                                                                               Adjusted            Unrealized Unrealized
                                                                                                Cost                 Gains       Losses      Fair Value

Municipal securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $1,219,078                  $       28    $(15,897) $1,203,209
U.S. government notes and agencies . . . . . . . . . . . . . . . . . . . . .                2,911,410                     418      (5,130) 2,906,698
Equity security . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .     5,000                  42,166         —        47,166
      Total marketable securities . . . . . . . . . . . . . . . . . . . . . . . .           $4,135,488             $42,612       $(21,027) $4,157,073

                                                                                                                    As of March 31, 2006
                                                                                                                     Gross        Gross
                                                                                               Adjusted            Unrealized Unrealized
                                                                                                Cost                 Gains        Losses     Fair Value
                                                                                                                         (unaudited)
Municipal securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 712,284                   $       30    $(11,349) $ 700,965
U.S. government notes and agencies . . . . . . . . . . . . . . . . . . . . .                4,773,944                       7     (23,099) 4,750,852
Equity security . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .     5,000                  37,032         —       42,032
      Total marketable securities . . . . . . . . . . . . . . . . . . . . . . . .           $5,491,228             $37,069       $(34,448) $5,493,849


     Gross unrealized gains and losses on cash equivalents were not material at December 31, 2005 and
March 31, 2006. We found no other-than-temporary impairments to our marketable securities in the three months
ended March 31, 2006 and March 31, 2005. We incurred $7.6 million and $4.6 million of realized losses on our
investments in the three months ended March 31, 2006 and March 31, 2005.

     The following table summarizes the estimated fair value of our investments in marketable securities
designated as available-for-sale classified by the contractual maturity date of the security (in thousands):

                                                                                                                           As of          As of
                                                                                                                        December 31,    March 31,
                                                                                                                            2005          2006
                                                                                                                                       (Unaudited)
      Due within 1 year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .         $ 970,073      $1,992,339
      Due after 1 year through 5 years . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                   2,967,148      3,390,137
      Due after 5 years through 10 years . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                      59,122         18,350
      Due after 10 years . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .           160,730         93,023
             Total marketable securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .              $4,157,073     $5,493,849




                                                                               13
                                                                         GOOGLE INC.
            NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

     In accordance with EITF 03-1, The Meaning of Other-Than-Temporary Impairment and Its Application to
Certain Investments, the following table shows gross unrealized losses and fair value for those investments that
were in an unrealized loss position as of December 31, 2005 and March 31, 2006, aggregated by investment
category and the length of time that individual securities have been in a continuous loss position (in thousands):
                                                                                                     As of December 31, 2005
                                                                 Less than 12 Months                  12 Months or Greater                       Total
                                                                              Unrealized                         Unrealized                           Unrealized
Security Description                                            Fair Value      Loss                 Fair Value     Loss                Fair Value      Loss

U.S. government notes and
  agencies . . . . . . . . . . . . . . . . . . . . . . $2,099,408                  $ (5,130) $   —                      $      —    $2,099,408        $ (5,130)
Municipal securities . . . . . . . . . . . . . . .        607,990                    (7,705) 513,425                        (8,192) 1,121,415          (15,897)
       Total . . . . . . . . . . . . . . . . . . . . . .      $2,707,398           $(12,835) $513,425                   $(8,192) $3,220,823           $(21,027)

                                                                                                      As of March 31, 2006
                                                                 Less than 12 Months                  12 Months or Greater                Total
                                                                              Unrealized                         Unrealized                           Unrealized
Security Description                                            Fair Value      Loss                 Fair Value      Loss               Fair Value      Loss
                                                                                                           (unaudited)
U.S. government notes and
  agencies . . . . . . . . . . . . . . . . . . . . . . $4,542,391                  $(23,099) $   —                      $ —      $4,542,391           $(23,099)
Municipal securities . . . . . . . . . . . . . . .        224,230                    (3,375) 435,030                     (7,974)    659,260            (11,349)
       Total . . . . . . . . . . . . . . . . . . . . . .      $4,766,621           $(26,474) $435,030                   $(7,974) $5,201,651           $(34,448)


Note 3. Property and Equipment
       Property and equipment consist of the following (in thousands):
                                                                                                                                        As of           As of
                                                                                                                                     December 31,     March 31,
                                                                                                                                         2005           2006
                                                                                                                                                     (unaudited)
Information technology assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                $ 949,758       $1,061,797
Construction in process . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .              211,088          349,462
Land and buildings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .           124,752          165,934
Leasehold improvements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                 115,108          153,870
Furniture and fixtures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .            16,719           18,505
     Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    1,417,425       1,749,568
Less accumulated depreciation and amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                              455,676         539,887
Property and equipment, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .              $ 961,749       $1,209,681


Note 4. Acquisitions
     During the three months ended March 31, 2006, we acquired all of the voting interests of dMarc
Broadcasting, Inc. (dMarc), a digital solutions provider for the radio broadcast industry. This transaction was
accounted for as a business combination. The total purchase price was $97.6 million which primarily consisted of
cash payments of $94.4 million. In addition, we are obligated to make additional cash payments of up to
$1.136 billion if certain product integration, net revenue and advertising inventory targets are met through

                                                                                    14
                                                                       GOOGLE INC.
         NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

December 2008. Since these contingent payments are based on the achievement of performance targets, actual
payments may be substantially lower. Substantially all of these contingent payments will be accounted for as
goodwill, and the remaining amounts will be expensed, when earned. No contingent payments were earned
through March 31, 2006.

     During the three months ended March 31, 2006, we also acquired all of the voting interests of four other
companies. One of these transactions was accounted for as a business combination. Because the remaining three
transactions were with companies considered to be development stage enterprises, they were accounted for as
asset purchases in accordance with EITF Issue No. 98-3, Determining Whether a Nonmonetary Transaction
Involves Receipt of Productive Assets or of a Business. The total purchase price of this business combination and
these asset purchases was $79.2 million, which primarily consisted of cash payments of $75.7 million. In
addition, we are obligated to make additional cash payments of up to $17.9 million if certain performance targets
are met through March 2010. Since these contingent payments are based on the achievement of performance
targets, actual payments may be substantially lower. Substantially all of these contingent payments will be
accounted for as goodwill, and the remaining amounts will be expensed, when earned.

      In addition, during the three months ended March 31, 2006, we acquired certain other intangible assets for
total cash payments of $15.7 million.

     The following table summarizes the allocation of the purchase price for all of the above acquisitions (in
thousands):

     Goodwill . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .     $123,906
     Patents and developed technology . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                       40,387
     Customer contracts and other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                   52,790
     Net liabilities assumed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .              (6,059)
     Deferred tax liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .            (22,527)
     Purchased in-process research and development . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                                 4,000
            Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   $192,497

     Goodwill is not deductible for tax purposes. The developed technology, customer contracts and other
intangible assets have a weighted-average useful life of 4.0 years from the date of acquisition. The amortization
of these intangibles is not deductible for tax purposes.

     Purchased in-process research and development of $4.0 million in the three months ended March 31, 2006
was expensed upon acquisition because technological feasibility had not been established and no future
alternative uses existed. This amount is included in research and development expenses on the accompanying
Condensed Consolidated Statements of Income and is not deductible for tax purposes.

Note 5. Goodwill and Other Intangible Assets
     The changes in the carrying amount of goodwill for the quarter ended March 31, 2006, are as follows (in
thousands):

     Balance as of December 31, 2005 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                      $194,900
     Goodwill acquired . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .             123,906
     Balance as of March 31, 2006 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                   $318,806


                                                                                  15
                                                                        GOOGLE INC.
          NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

     Information regarding our acquisition-related intangible assets that are being amortized is as follows (in
thousands):
                                                                                                                             As of December 31, 2005
                                                                                                                        Gross                        Net
                                                                                                                       Carrying    Accumulated    Carrying
                                                                                                                       Amount      Amortization     Value

Patents and developed technology . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                    $120,413              $46,272     $ 74,141
Customer contracts and other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                  26,145               17,503        8,642
      Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   $146,558              $63,775     $ 82,783

                                                                                                                               As of March 31, 2006
                                                                                                                        Gross                        Net
                                                                                                                       Carrying    Accumulated     Carrying
                                                                                                                       Amount      Amortization     Value
Patents and developed technology . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                    $155,724              $57,942     $ 97,782
Customer contracts and other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                  84,011               21,220       62,791
      Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   $239,735              $79,162     $160,573

    Patents and developed technology and customer contracts and other have weighted-average useful lives
from the date of purchase of 3.4 and 3.3 years.

     Amortization expense of acquisition-related intangible assets for the three month ended March 31, 2006 was
$15.4 million.

    Estimated amortization expense for acquisition-related intangible assets on our March 31, 2006 Condensed
Consolidated Balance Sheet for each of the next five years is as follows (in thousands):

             2006 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    $ 45,945
             2007 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .      55,613
             2008 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .      37,582
             2009 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .      10,599
             2010 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .       9,535
             Thereafter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .         1,299
                                                                                                                                             $160,573


Note 6. Interest Income and Other, Net
      The components of interest income and other, net were as follows (in thousands):
                                                                                                                                      Three Months Ended
                                                                                                                                           March 31,
                                                                                                                                       2005         2006
                                                                                                                                          (unaudited)
      Interest income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .         $11,729       $ 78,924
      Interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .             (123)            (8)
      Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .       2,080        (10,997)
             Interest income and other, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                   $13,686       $ 67,919


                                                                                   16
                                                   GOOGLE INC.
        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Note 7. Contingencies
  Legal Matters
     Certain companies have filed trademark infringement and related claims against us over the display of ads in
response to user queries that include trademark terms. The outcomes of these lawsuits have differed from
jurisdiction to jurisdiction. Courts in France have held us liable for allowing advertisers to select certain
trademarked terms as keywords. We are appealing those decisions. We were also subject to two lawsuits in
Germany on similar matters where the courts held that we are not liable for the actions of our advertisers prior to
notification of trademark rights. We are litigating or recently have litigated similar issues in other cases in the
U.S., France, Germany, Italy, Israel and Austria. Adverse results in these lawsuits may result in, or even compel,
a change in this practice which could result in a loss of revenue for us, which could harm our business.

      Certain entities have also filed intellectual property claims against us, alleging that features of certain of our
products, including Google Web Search, Google News, Google Image Search, and Google Book Search, infringe
their rights. Adverse results in these lawsuits may include awards of damages and may also result in, or even
compel, a change in our business practices, which could result in a loss of revenue for us or otherwise harm our
business.

     From time to time, we may also become a party to other litigation and subject to claims incident to the
ordinary course of business, including intellectual property claims (in addition to the trademark and copyright
matters noted above), labor and employment claims, breach of contract claims, and other matters.

     Although the results of litigation and claims cannot be predicted with certainty, we believe that the final
outcome of the matters discussed above will not have a material adverse effect on our business, consolidated
financial position, results of operations or cash flow. Regardless of the outcome, litigation can have an adverse
impact on us because of defense costs, diversion of management resources and other factors.

Note 8. Stockholders’ Equity
  Stock Plans
      We maintain the 1998 Stock Plan, the 2000 Stock Plan, the 2003 Stock Plan, the 2003 Stock Plan (No. 2),
the 2003 Stock Plan (No. 3), the 2004 Stock Plan and plans assumed through acquisitions which are collectively
referred to as the “Stock Plans.” Under our Stock Plans, incentive and nonqualified stock options or rights to
purchase common stock may be granted to eligible participants. Options must generally be priced to be at least
85% of our common stock’s fair market value at the date of grant (100% in the case of incentive stock options).
Options are generally granted for a term of ten years. Options granted under the Stock Plans generally vest 25%
after the first year of service and ratably each month over the remaining 36 month period contingent upon
employment with us on the date of vest. Options granted under plans other than the 2004 Stock Plan may be
exercised prior to vesting. We have also issued restricted stock units (“RSUs”) and restricted shares under our
Stock Plans. An RSU award is an agreement to issue shares of our stock at the time of vest. RSUs issued to new
employees vest over four years with a yearly cliff contingent upon employment with us on the dates of vest.
These RSUs vest from zero to 37.5 percent of the grant amount at the end of each of the four years from date of
hire based on the employee’s performance. RSUs under the Founders’ Award programs are issued to individuals
on teams that have made extraordinary contributions to Google. These awards vest quarterly over four years
contingent upon employment with us on the dates of vest.

     We estimated the fair value of each option award on the date of grant using the Black-Scholes-Merton
(BSM) valuation model. Our assumptions about stock-price volatility have been based exclusively on the implied
volatilities of publicly traded options to buy our stock with contractual terms closest to the expected life of

                                                          17
                                                                   GOOGLE INC.
         NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

options granted to our employees applying the guidance provided by SAB 107. In addition, our assumptions
about the expected term have been based primarily on that of companies that have option vesting and contractual
terms, expected stock volatility and employee demographics and physical locations that are similar to ours. We
have used this comparable data because we have limited relevant historical information to support the expected
exercise behavior of our employees who have been granted options recently. This relevant historical information
is limited because our stock has been publicly traded only since August 2004, and the fair market value of our
stock has increased substantially during this time. Accordingly, the exercise behavior of employees who have
been granted options recently may be different than that of employees who have exercised their significantly
in-the-money options after the initial public offering. The risk-free rate for periods within the contractual life of
the option is based on the U.S. Treasury yield curve in effect at the time of grant. Forfeitures were estimated
based on historical experience.

     The following table presents the weighted-average assumptions used to estimate the fair values of the stock
options granted in the periods presented:
                                                                                                 Three Months Ended    Three Months Ended
                                                                                                      March 31,             March 31,
                                                                                                        2005                  2006
                                                                                                                (unaudited)
     Risk-free interest rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                     3.64%                  4.63%
     Expected volatility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                       40%                    40%
     Expected life (in years) . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                       3.0                    3.1
     Dividend yield . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                   —                      —
     Weighted-average estimated fair value of options granted
       during the period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                 $59.32                 $128.21

    The following table summarizes the activity for outstanding stock options for the three months ended
March 31, 2006:
                                                                                                                     Options Outstanding
                                                                                                                                   Weighted-
                                                                                                                  Number of         Average
                                                                                                                   Shares        Exercise Price
                                                                                                                          (unaudited)
     Balance at December 31, 2005 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .               18,589,646       $113.51
     Options granted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .       364,534       $390.94
     Options exercised . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .      (2,045,336)      $ 39.40
     Options canceled/forfeited/expired . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                  (93,432)      $ 50.54
     Balance at March 31, 2006 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .            16,815,412       $126.75

     The weighted average remaining contractual terms for all outstanding stock options and those exercisable at
March 31, 2006 were 8.1 years and 7.0 years. The aggregate intrinsic values for all outstanding stock options and
those outstanding and exercisable at March 31, 2006 were $3.8 billion and $2.9 billion, based on our closing
stock price of $390.00 at March 31, 2006. Also, the number of options outstanding at March 31, 2006 includes
2,390,254 options granted and exercised subsequent to March 21, 2002 that are unvested at March 31, 2006, in
accordance with EITF 00-23, Issues Related to Accounting for Stock Compensation Under APB Opinion No. 25
and FASB Interpretation No. 44 (EITF 00-23). However, the computations of the weighted-average exercise
prices, weighted average remaining contractual term and aggregate intrinsic value for all stock options
outstanding and those exercisable do not consider these unvested shares. The aggregate intrinsic value of all
options exercised during the three months ended March 31, 2006 was $388.1 million. The total grant date fair
value of stock options vested during the three months ended March 31, 2006 was $77.0 million.

                                                                              18
                                                                  GOOGLE INC.
         NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

     As of March 31, 2006, there was $371.7 million of unrecognized compensation cost related to outstanding
stock options, net of forecasted forfeitures. This amount is expected to be recognized through year 2011. To the
extent forfeiture rates are different than we have anticipated, stock-based compensation related to these awards
will be different from our expectations.

    The following table summarizes the activity for our unvested restricted stock units for the three months
ended March 31, 2006:
                                                                                                      Unvested Restricted Stock Units
                                                                                                                    Weighted-Average
                                                                                                     Number of          Grant-Date
                                                                                                       Shares           Fair Value
                                                                                                               (unaudited)
           Unvested at December 31, 2005 . . . . . . . . . . . . . . . . . . . . . .                   920,057          $324.38
               Granted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .       279,096          $376.57
               Vested . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .      (12,889)         $391.88
               Forfeited . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .      (5,115)         $320.71
           Unvested at March 31, 2006 . . . . . . . . . . . . . . . . . . . . . . . . .              1,181,149          $347.33

      As of March 31, 2006, there was $293.9 million of unrecognized compensation cost related to unvested
restricted stock units, net of forecasted forfeitures. This amount is expected to be recognized through year 2010.
To the extent forfeiture rates are different than we have anticipated, stock-based compensation related to these
awards will be different from our expectations.

    The following table summarizes additional information regarding outstanding and exercisable stock options
at March 31, 2006:
                                                                 Options Outstanding                                       Options Exercisable
                                                          Unvested
                                                          Options
                                                        Granted and                              Weighted-
                                                         Exercised                                Average    Weighted                   Weighted
                                       Total            Subsequent to                            Remaining   Average                    Average
                                     Number of           March 21,       Number of                  Life     Exercise    Number of      Exercise
Range of Exercise Prices              Shares                2002          Shares                  (Years)     Price       Shares         Price

$ 0.05–$ 85.00        ......        10,111,033            2,390,254            7,720,779             7.2     $ 14.76     7,486,041      $ 14.45
$117.84–$198.41       ......         2,597,658                  —              2,597,658             8.8     $175.87       422,923      $173.94
$205.96–$298.91       ......         1,881,458                  —              1,881,458             9.2     $272.80         7,358       213.50
$300.97-$398.15       ......         1,920,754                  —              1,920,754             9.5     $319.51         2,048      $318.03
$401.78–$471.63       ......           304,509                  —                304,509             9.7     $428.98           —            —
$   0.05–$471.63 . . . . . .        16,815,412            2,390,254          14,425,158              8.1     $126.75     7,918,370      $ 23.23

     The number of options outstanding at March 31, 2006 includes 2,390,254 of options granted and exercised
subsequent to March 21, 2002 that are unvested at March 31, 2006, in accordance with EITF 00-23. However,
the computations of the weighted-average exercise prices and the weighted average remaining life in the table
above do not consider these unvested shares.

Note 9. Information about Geographic Areas
     Our chief operating decision-makers (i.e. chief executive officer and his direct reports) review financial
information presented on a consolidated basis, accompanied by disaggregated information about revenues by

                                                                            19
                                                                   GOOGLE INC.
         NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

geographic region for purposes of allocating resources and evaluating financial performance. There are no
segment managers who are held accountable for operations, operating results and planning for levels or
components below the consolidated unit level. Accordingly, we consider ourselves to be in a single reporting
segment and operating unit structure.

     Revenues by geography are based on the billing addresses of the advertisers. No single foreign country,
other than the United Kingdom, accounted for more than ten percent of total revenues in the three months ended
March 31, 2005 or 2006. The following table sets forth revenues and long-lived assets by geographic area (in
thousands):
                                                                                                                      Three Months Ended
                                                                                                                            March 31,
                                                                                                                      2005             2006
                                                                                                                           (unaudited)
     Revenues:
         United States . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    $ 771,812       $1,317,521
         United Kingdom . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .           186,215          342,871
         Rest of the world . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .        298,489          593,363
                   Total revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   $1,256,516      $2,253,755

                                                                                                                     As of            As of
                                                                                                                  December 31,      March 31,
                                                                                                                      2005            2006
                                                                                                                                   (unaudited)
     Long-lived assets:
         United States . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    $1,080,236      $1,527,257
         International . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .       190,506         211,656
                   Total long-lived assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .        $1,270,742      $1,738,913


Note 10. Subsequent Events
     In April, 2006, we issued 5,300,000 shares of our common stock upon the closing of a follow-on public
stock offering for net proceeds of approximately $2.064 billion.

     In April 2006, we completed our $1.0 billion cash purchase of a five percent equity interest in a wholly-
owned subsidiary of Time Warner, Inc. that owns all of the outstanding interests of America Online, Inc. (AOL).
Previously, in March 2006, we entered into certain commercial arrangements with AOL. We believe the terms of
those agreements are at fair value.

      Our investment in this non-marketable equity security will be accounted for at historical cost. In addition,
this investment will be subject to a periodic impairment review. To the extent any impairment is considered
other-than-temporary, this investment would be written down to its fair value and the loss would be recorded in
“interest income and other, net.”

     In April 2006, we received a preliminary approval for settlement of the Lane’s Gift class action lawsuit in
Arkansas which will require us to pay plaintiffs’ attorneys’ fees and issue total AdWords credits of no more than
$60 million. The Adwords credits will be accounted for as a reduction to revenues in the periods they are
redeemed. Plaintiffs’ attorneys’ fees were estimated to be $30 million and were expensed in the three months
ended March 31, 2006.

                                                                             20
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
        RESULTS OF OPERATIONS
     In addition to historical information, this report contains forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These
statements include, among other things, statements concerning our expectations:
     •   regarding the growth of our operations, business and revenues and the growth rate of our costs and
         expenses.
     •   that seasonal fluctuations in Internet usage and traditional advertising seasonality are likely to affect
         our business.
     •   that growth in advertising revenues from our web sites will continue to exceed that from our Google
         Network members’ web sites.
     •   that our operating margin may decrease as we invest in our infrastructure.
     •   that we will continue to employ a significant number of temporary employees.
     •   regarding our future stock-based compensation charges.
     •   that we will continue to pay most of the Google AdSense fees we receive from advertisers to our Google
         Network members.
     •   that our cost of revenues will increase in 2006 primarily as a result of anticipated increases in traffic
         acquisition and data center costs.
     •   that research and development, sales and marketing and general and administrative expenses will
         increase in the future.
     •   regarding our expansion into international markets.
     •   regarding our spending on property and equipment, including costs related to information technology
         infrastructure and land and buildings.
     •   regarding our income tax rates, tax liabilities and the expected higher proportion of our earnings we
         expect our Irish subsidiary to recognize.
     •   regarding the sufficiency of our existing cash, cash equivalents, marketable securities and cash
         generated from operations.
     •   regarding our expected further contributions to, and investments in, philanthropic endeavors.

as well as other statements regarding our future operations, financial condition and prospects and business
strategies. These forward-looking statements are subject to certain risks and uncertainties that could cause our
actual results to differ materially from those reflected in the forward-looking statements. Factors that could
cause or contribute to such differences include, but are not limited to, those discussed in this report, and in
particular, the risks discussed under the heading “Risk Factors” in Part II, Item 1A of this report and those
discussed in other documents we file with the Securities and Exchange Commission. The following discussion
should be read in conjunction with our Annual Report on Form 10-K filed March 16, 2006, and the consolidated
financial statements and notes thereto. We undertake no obligation to revise or publicly release the results of any
revision to these forward-looking statements. Given these risks and uncertainties, readers are cautioned not to
place undue reliance on such forward-looking statements.




                                                         21
     The following discussion and analysis of our financial condition and results of operations should be read
together with our condensed consolidated financial statements and related notes included elsewhere in this report.

Overview
     Google is a global technology leader focused on improving the ways people connect with information. Our
innovations in web search and advertising have made our web site a top Internet destination and our brand one of
the most recognized in the world. Our mission is to organize the world’s information and make it universally
accessible and useful. We serve three primary constituencies:
     •   Users. We provide users with products and services that enable people to more quickly and easily find,
         create and organize information that is useful to them.
     •   Advertisers. We provide advertisers our Google AdWords program, an auction-based advertising
         program that enables them to deliver relevant ads targeted to search results or web content. Our
         AdWords program provides advertisers with a cost-effective way to deliver ads to customers across
         Google sites and through the Google Network under our AdSense program.
     •   Web sites. We provide members of our Google Network our Google AdSense program, which allows
         these members to deliver AdWords ads that are relevant to the search results or content on their web
         sites. We share most of the fees these ads generate with our Google Network members—creating an
         important revenue stream for them.

How We Generate Revenue
     We derive most of our revenues from fees we receive from our advertisers.

      Our original business model consisted of licensing our search engine services to other web sites. In the first
quarter of 2000, we introduced our first advertising program. Through our direct sales force we offered
advertisers the ability to place text-based ads on our web sites targeted to our users’ search queries under a
program called Premium Sponsorships. Advertisers paid us based on the number of times their ads were
displayed on users’ search results pages, and we recognized revenue at the time these ads appeared. In the fourth
quarter of 2000, we launched Google AdWords, an online self-service program that enables advertisers to place
targeted text-based ads on our web sites. AdWords customers originally paid us based on the number of times
their ads appeared on users’ search results pages. In the first quarter of 2002, we began offering AdWords
exclusively on a cost-per-click basis, which means that an advertiser pays us only when a user clicks on one of its
ads. AdWords is also available through our direct sales force.

     Effective beginning the first quarter of 2004 until the end of the first quarter of 2005, the AdWords
cost-per-click pricing structure was the only pricing structure available to our advertisers. However, during the
second quarter of 2005, we launched an AdWords cost-per-impression program that enables advertisers to pay us
based on the number of times their ads appear on Google Network members’ sites specified by the advertiser. For
advertisers using our AdWords cost-per-click pricing, we recognize as revenue the fees charged advertisers each
time a user clicks on one of the text-based ads that appears next to the search results on our web sites, or next to
the search results or content on Google Network members’ sites. For advertisers using our AdWords
cost-per-impression pricing, we recognize as revenue the fees charged advertisers each time their ads are
displayed on the Google Network members’ sites. Our AdWords agreements are generally terminable at any time
by our advertisers.

     Google AdSense is the program through which we distribute our advertisers’ AdWords ads for display on
the web sites of our Google Network members. Our AdSense program includes AdSense for search and AdSense
for content. AdSense for search, launched in the first quarter of 2002, is our service for distributing relevant ads
from our advertisers for display with search results on our Google Network members’ sites. AdSense for content,
launched in the first quarter of 2003, is our service for distributing ads from our advertisers that are relevant to
content on our Google Network members’ sites. Our advertisers pay us a fee each time a user clicks on one of

                                                        22
our advertisers’ ads displayed on Google Network members’ web sites or, for those advertisers who choose our
cost-per-impression pricing, as their ads are displayed. To date, we have paid most of these advertiser fees to the
members of the Google Network, and we expect to continue doing so for the foreseeable future. We recognize
these advertiser fees as revenue and the portion of the advertiser fee we pay to our Google Network members as
traffic acquisition costs under cost of revenues. In some cases, we guarantee our Google Network members
minimum revenue share payments. Members of the Google Network do not pay any fees associated with the use
of our AdSense program on their web sites. Some of our Google Network members separately license our web
search technology and pay related licensing fees to us. Our agreements with Google Network members consist
largely of uniform online “click-wrap” agreements that members enter into by interacting with our registration
web sites. Agreements with our larger members are individually negotiated. The standard agreements have no
stated term and are terminable at will. The negotiated agreements vary in duration. Both the standard agreements
and the negotiated agreements contain provisions requiring us to share with the Google Network member a
portion of the advertiser fees generated by users clicking on ads on the Google Network member’s web site or,
for advertisers who choose our cost-per-impression pricing, as the ads are displayed on the Google Network
member’s web site. The standard agreements have uniform revenue share terms. The non-standard agreements
vary as to revenue share terms and are heavily negotiated.

      In the third quarter of 2005, we launched the Google Publication Ads Program through which we distribute
our advertisers’ ads for publication in magazines. We recognize as revenue the fees charged advertisers when
their ads are published in magazines. Also, in the first quarter of 2006, we acquired dMarc Broadcasting, Inc.
(dMarc), a digital solutions provider for the radio broadcast industry. dMarc, now one of our wholly owned
subsidiaries, distributes our advertisers’ ads for broadcast by radio stations. We recognize as revenue the fees
charged advertisers each time an ad is broadcasted or a listener responds to that ad. We consider the magazines
and radio stations that participate in these programs to be members of our Google Network.

     We believe the factors that influence the success of our advertising programs include the following:
     •   The relevance, objectivity and quality of our search results.
     •   The number and type of searches initiated at our web sites.
     •   The number and type of searches initiated at, as well as the number of visits to and the content of, our
         Google Network members’ web sites.
     •   The advertisers’ return on investment (ad cost per sale or cost per conversion) from advertising
         campaigns on our web sites or our Google Network members’ web sites or other media compared to
         other forms of advertising.
     •   The number of advertisers and the breadth of items advertised.
     •   The total and per click or per impression advertising spending budgets of each advertiser.
     •   The monetization of (or generation of revenue from) traffic on our web sites and our Google Network
         members’ web sites.

     We believe that the monetization of traffic on our web sites and our Google Network members’ web sites is
affected by the following factors:
     •   The relevance and quality of ads displayed with each search results page on our web sites and our
         Google Network members’ web sites, as well as with each content page on our Google Network
         members’ web sites.
     •   The number and prominence of ads displayed with each search results page on our web sites and our
         Google Network members’ web sites, as well as with each content page on our Google Network
         members’ web sites.
     •   The rate at which our users and users of our Google Network members’ web sites click on
         advertisements.
     •   Our minimum fee per click.

                                                         23
     Advertising revenues made up no less than 98% of our revenues in the three months ended March 31, 2005
and 2006. We derive the balance of our revenues from the license of our web search technology, the license of
our search solutions to enterprises and the sale and license of other products and services. In addition, in the first
quarter of 2006 we launched Google Video through which we make video content owned by others available for
download and purchase by end users. We recognize as revenue the fees we receive from end users to the extent
we are the primary obligor to them; however, to the extent we are not the primary obligor, we recognize as
revenues the fees we receive from the end users net of the amounts we pay to our video content providers.

Trends in Our Business
      Our business has grown rapidly since inception, resulting in substantially increased revenues, and we expect
that our business will continue to grow. However, our revenue growth rate has generally declined over time, and
we expect it will continue to do so as a result of increasing competition and the difficulty of maintaining growth
rates as our revenues increase to higher levels. In addition, the main focus of our advertising programs is to
provide relevant and useful advertising to our users, reflecting our commitment to constantly improve their
overall web experience. As a result, we may take steps to improve the relevance of the ads displayed on our web
sites, such as removing ads that generate low click-through rates, that could negatively affect our near-term
advertising revenues.

      Both seasonal fluctuations in Internet usage and traditional retail seasonality have affected, and are likely to
continue to affect, our business. Internet usage generally slows during the summer months, and commercial
queries typically increase significantly in the fourth quarter of each year. These seasonal trends have caused and
will likely continue to cause, fluctuations in our quarterly results, including fluctuations in sequential revenue
growth rates. Prior to the second quarter of 2004, these seasonal trends may have been masked by the substantial
quarter over quarter growth of Internet traffic focused on commercial transactions and ultimately by the
substantial quarter over quarter growth in our revenues.

     From the inception of the Google Network in 2002 through the first quarter of 2004, the growth in
advertising revenues from our Google Network members’ web sites exceeded that from our web sites, which had
a negative impact on our operating margins. The operating margin we realize on revenues generated from ads
placed on our Google Network members’ web sites through our AdSense program is significantly lower than
revenue generated from ads placed on our web sites because most of the advertiser fees from ads served on
Google Network member web sites are shared with our Google Network members. However, beginning in the
second quarter of 2004, growth in advertising revenues from our web sites has exceeded that from our Google
Network members’ web sites. This trend has had a positive impact on our operating margins and we expect that
this will continue for the foreseeable future although the relative rate of growth in revenues from our web sites
compared to the rate of growth in revenues from our Google Network members’ web sites may vary over time.

      Our operating margin may decrease as we invest in building the necessary employee and systems
infrastructures required to manage our anticipated growth. We have experienced and expect to continue to
experience substantial growth in our operations as we invest significantly in our research and development
programs, expand our user, advertiser and Google Network member bases and increase our presence in
international markets, as well as promote the distribution of our Google toolbar and other products in order to
make our services easier to access. This growth has required us to continually hire new personnel and make
substantial investments in property and equipment. Our full-time employee headcount has almost doubled over
the last twelve months, growing from 3,482 at March 31, 2005 to 6,790 at March 31, 2006. Also, we have
employed a significant number of temporary employees in the past and expect to continue to do so in the
foreseeable future. Our capital expenditures have grown from $142.4 million in the three months ended
March 31, 2005 to $344.9 million in the three months ended March 31, 2006. We expect the annual growth rate
of our investments in property and equipment for 2006, including information and technology infrastructure and
land and buildings, to be substantially greater than our annual revenue growth rate for 2006. Our capital spending
between periods may fluctuate significantly depending on the availability and price of suitable property and
equipment. Management of our growth will continue to require the devotion of significant employee and other

                                                          24
resources. We may not be able to manage this growth effectively. Finally, investments in our business are
generally made with a focus on our long-term operations. Accordingly, there may be little or no linkage between
our spending and our revenues in any particular quarter.

     Our international revenues have grown as a percentage of our total revenues to 42% in the three months
ended March 31, 2006 from 38% in the three months ended December 31, 2005 and from 39% in the three
months ended March 31, 2005. This increase in the portion of our revenues derived from international markets
results largely from increased acceptance of our advertising programs, increases in our direct sales resources and
customer support operations and our continued progress in developing localized versions of our products, in
these international markets. Although we expect to continue to make investments in international markets, they
may not result in an increase in our international revenues as a percentage of total revenues in 2006 or thereafter.

     We currently anticipate that our effective tax rate will be approximately 30% in 2006 compared to 31.6% in
2005, primarily because we expect that our Irish subsidiary will recognize proportionately more of our earnings
in 2006 compared to 2005, and such earnings are taxed at a lower statutory tax rate than in the U.S. However, if
future earnings recognized by our Irish subsidiary are not as proportionately great as we expect, our effective tax
rate will be higher than we currently expect.

Results of Operations
     The following is a more detailed discussion of our financial condition and results of operations for the
periods presented.

     The following table presents our historical operating results as a percentage of revenues for the periods
indicated (unaudited):
                                                                                                                               Three Months Ended
                                                                                                                       March 31, December 31, March 31,
                                                                                                                         2005         2005        2006

Consolidated Statements of Income Data:
Revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    100.0%      100.0%      100.0%
Costs and expenses:
    Cost of revenues(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .              43.5        40.5        40.1
    Research and development(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                         8.7         9.9        10.9
    Sales and marketing(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                  7.1         8.5         8.5
    General and administrative(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                       5.5         6.7         7.5
    Contribution to Google Foundation . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                           —           4.7         —
Total costs and expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .               64.8        70.3        67.0
Income from operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .               35.2        29.7        33.0
Interest income and other, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                  1.1         3.6         3.0
Income before income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                 36.3        33.3        36.0
Provision for income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                6.9        13.9         9.7
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .       29.4%       19.4%       26.3%

(1) Stock-based compensation recognized in the three months ended March 31, 2005, accounted for under
    Accounting Principles Board Opinion No. 25, Accounting for Stock Issued to Employees, has been
    reclassified to these expense lines to conform with the presentation in the three months ended March 31,
    2006. As discussed in Note 1 of the Condensed Consolidated Financial Statements included elsewhere in
    this Form 10-Q, stock-based compensation for the three months ended March 31, 2006, is presented in
    conformity with Financial Accounting Standards Board Statement of Financial Accounting Standards
    No. 123 (revised 2004), Share-Based Payment.

                                                                                   25
Revenues
    The following table presents our revenues, by revenue source, for the periods presented (in thousands,
unaudited):

                                                                                                                            Three Months Ended
                                                                                                                March 31,      December 31,    March 31,
                                                                                                                  2005             2005          2006

Advertising revenues:
    Google web sites . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .           $ 656,997       $1,098,213    $1,297,317
    Google Network web sites . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                     584,115          798,573       928,376
Total advertising revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .              1,241,112       1,896,786      2,225,693
Licensing and other revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                   15,404          22,307         28,062
Revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   $1,256,516      $1,919,093    $2,253,755


     The following table presents our revenues, by revenue source, as a percentage of total revenues for the
periods presented (unaudited):

                                                                                                                           Three Months Ended
                                                                                                                   March 31, December 31, March 31,
                                                                                                                     2005         2005        2006

Advertising revenues:
    Google web sites . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .           52%            57%          58%
    Google Network web sites . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                   47             42           41
         Total advertising revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                    99             99           99
              Google web sites as % of advertising revenues . . . . . . . . . . . .                                    53             58           58
              Google Network web sites as % of advertising revenues . . . . .                                          47             42           42
Licensing and other revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                1%             1%           1%

     Growth in our revenues in the three months ended March 31, 2006 compared to the three months ended
March 31, 2005 and the three months ended December 31, 2005 resulted primarily from growth in advertising
revenues. The advertising revenue growth resulted primarily from increases in the total number of paid clicks and
ads displayed through our programs, rather than from changes in the average fees realized. The increase in the
number of paid clicks and ads displayed through our programs was due to an increase in aggregate traffic both on
our web sites and those of our Google Network members, an increase in the number of Google Network
members, certain improvements in the monetization of increased traffic on our web sites and our Google
Network member sites and the continued global expansion of our advertising base.

     The sequential quarterly revenue growth rate decreased from 21.6% from the three months ended
September 30, 2005 to the three months ended December 31, 2005, to 17.4% from the three months ended
December 31, 2005 to the three months ended March 31, 2006. In addition, the sequential quarterly revenue
growth rate from our web sites decreased from 24.1% from the three months ended September 30, 2005 to the
three months ended December 31, 2005, to 18.1% from the three months ended December 31, 2005 to the three
months ended March 31, 2006, and the sequential quarterly revenue growth rate from our Google Network
members’ web sites decreased from 18.3% from the three months ended September 30, 2005 to the three months
ended December 31, 2005, to 16.3% from the three months ended December 31, 2005 to the three months ended
March 31, 2006. These decreases in the rates of sequential quarterly growth are primarily the result of our higher
revenue levels and seasonal slowdowns in Internet usage and commercial queries.

    Revenues realized through the Google Publication Ads Program, our radio advertising efforts and Google
Video were not material in any of the periods presented.

                                                                                   26
     Licensing and other revenues increased by $5.8 million or 25.8% from the three months ended
December 31, 2005 to the three months ended March 31, 2006 primarily as a result of increased sales of our
Search Appliances.

     We believe that the increase in the number of paid clicks and ads displayed through our programs is the
result of the relevance and quality of both the search results and advertisements displayed, which results in more
searches, advertisers, and Google Network members and other partners. We expect that our revenue growth rates
will generally decline in the future as a result of increasing competition and the difficulty of maintaining growth
rates as our revenues increase to higher levels.

     In April 2006, we received a preliminary approval for settlement of the Lane’s Gift class action lawsuit in
Arkansas which will require us to pay plaintiffs’ attorneys’ fees and issue total AdWords credits of no more than
$60 million. The AdWords credits will be accounted for as a reduction to revenues in the periods they are redeemed.
See further discussion below of the settlement of the Lane’s Gift class action lawsuit under General and
Administrative.

Revenues by Geography
      Domestic and international revenues as a percentage of consolidated revenues, determined based on the
billing addresses of our advertisers, are set forth below.
                                                                                                                              Three Months Ended
                                                                                                                      March 31, December 31, March 31,
                                                                                                                        2005         2005        2006
                                                                                                                                  (unaudited)
United States . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .     61%         62%         58%
United Kingdom . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .          15%         14%         15%
Rest of the world . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .         24%         24%         27%

      The growth in international revenues in the three months ended March 31, 2006 compared to the three
months ended March 31, 2005 and the three months ended December 31, 2005 resulted largely from increased
acceptance of our advertising programs and increases in our direct sales resources and customer support
operations in international markets and our continued progress in developing localized versions of our products
for these international markets. Furthermore, the growth in international revenues from the three months ended
December 31, 2005 to the three months ended March 31, 2006 also results from seasonally stronger traffic and
monetization in certain countries compared to the U.S.

     In addition, the strength of the U.S. dollar relative to other foreign currencies (primarily the Euro and the
Japanese Yen) in the three months ended March 31, 2006 compared to the three months ended March 31, 2005
had an unfavorable impact on our international revenues. Had foreign exchange rates remained constant in these
periods, our revenues would have been approximately $65.0 million or 0.3% higher. The impact on international
revenues due to the strength of the dollar relative to other foreign currencies in the three months ended March 31,
2006 compared to the three months ended December 31, 2005 was not material.

     While international revenues in each of the periods presented accounted for far less than half of our total
revenues, more than half of our user traffic during these periods came from outside the U.S. Although we expect
to continue to make investments in international markets, they may not result in an increase in our international
revenues as a percentage of total revenues in 2006 or thereafter. See Note 9 of Notes to Condensed Consolidated
Financial Statements included as part of this Form 10-Q for additional information about geographic areas.

Costs and Expenses
     Cost of Revenues. Cost of revenues consists primarily of traffic acquisition costs. Traffic acquisition costs
consist of amounts ultimately paid to Google Network members, as well as to partners who direct search queries
to our web site. These amounts are primarily based on revenue share arrangements under which we pay these

                                                                                  27
Google Network members and other partners a portion of the fees we receive from our advertisers. In addition,
certain AdSense agreements obligate us to make guaranteed minimum revenue share payments to Google
Network members based on their achieving defined performance terms, such as number of search queries or
advertisements displayed. We amortize guaranteed minimum revenue share prepayments (or accrete an amount
payable to a Google Network member if the payment is due in arrears) based on the number of search queries or
advertisements displayed on the Google Network member’s web site or the actual revenue share amounts,
whichever is greater. In addition, concurrent with the commencement of a small number of AdSense and other
agreements, we have purchased certain items from, or provided other consideration to, our Google Network
members and partners. We have determined that certain of these amounts are prepaid traffic acquisition costs and
are amortized on a straight-line basis over the terms of the related agreements.

     The following table presents our traffic acquisition costs (dollars in millions), and traffic acquisition costs as
a percentage of advertising revenues, for the periods presented.
                                                                                                                        Three Months Ended
                                                                                                                March 31, December 31, March 31,
                                                                                                                  2005         2005        2006
                                                                                                                            (unaudited)
Traffic acquisition costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   $461.8      $628.9      $722.7
Traffic acquisition costs as a percentage of advertising revenues . . . . . . . . . .                             37.2%       33.2%       32.5%

      In addition, other cost of revenues includes the expenses associated with the operation of our data centers,
including depreciation, labor, energy and bandwidth costs, as well as credit card and other transaction fees
related to processing customer transactions.

     Cost of revenues increased by $127.1 million to $904.1 million (or 40.1% of revenues) in the three months
ended March 31, 2006, from $777.0 million (or 40.5% of revenues) in the three months ended December 31,
2005. This increase in dollars was primarily the result of additional traffic acquisition costs, the depreciation of
additional information technology assets purchased in the current and prior periods, other additional data center
costs and additional credit card and other transaction fees. There was an increase in traffic acquisition costs of
$93.8 million primarily as a result of more advertiser fees generated through our AdSense program and an
increase in data center costs of $15.8 million primarily as a result of the depreciation of additional information
technology assets purchased in the current and prior periods as well as additional labor required to manage the
data centers. In addition, there was an increase in credit card and other transaction processing fees of $7.0 million
resulting from more advertiser fees being generated through AdWords. The decrease in cost of revenues as a
percentage of revenues was primarily the result of proportionately greater revenues from our web sites compared
to our Google Network members’ web sites.

     Traffic acquisition costs as a percentage of advertising revenues decreased from 33.2% in the three months
ended December 31, 2005 to 32.5% in the three months ended March 31, 2006. The reason for this decrease was
primarily due to an increase in the proportion of advertising revenues coming from our web sites rather than from
our Google Network members’ web sites, and an increase in the proportion of our AdSense revenues coming
from agreements with more favorable revenue share arrangements.

     Cost of revenues increased by $357.3 million to $904.1 million (or 40.1% of revenues) in the three months
ended March 31, 2006, from $546.8 million (or 43.5% of revenues) in the three months ended March 31, 2005.
This increase in dollars was primarily the result of additional traffic acquisition costs, the depreciation of
additional information technology assets purchased in the current and prior periods, other additional data center
costs and additional credit card and other transaction fees. There was an increase in traffic acquisition costs of
$260.9 million primarily resulting from more advertiser fees generated through our AdSense program, and an
increase in data center costs of $61.0 million primarily resulting from the depreciation of additional information
technology assets purchased in the current and prior periods as well as additional labor required to manage the
data centers. In addition, there was an increase in credit card and other transaction processing fees of $14.7

                                                                              28
million resulting from more advertiser fees being generated through AdWords. The decrease in cost of revenues
as a percentage of revenues was primarily the result of proportionately greater revenues from our web sites
compared to our Google Network members’ web sites.

     Traffic acquisition costs as a percentage of advertising revenues decreased from 37.2% in the three months
ended March 31, 2005 to 32.5% in the three months ended March 31, 2006. The reason for this decrease was
primarily due to an increase in the proportion of advertising revenues coming from our web sites rather than from
our Google Network members’ web sites, and an increase in the proportion of our AdSense revenues coming
from agreements with more favorable revenue share arrangements.

     We expect cost of revenues to continue to increase in dollars in 2006 compared to 2005, primarily as a result
of forecasted increases in traffic acquisition costs, data center costs, credit card and other transaction fees and
other costs. However, traffic acquisition costs as a percentage of advertising revenues may fluctuate in the future
based on a number of factors, including the following:
     •   the relative growth rates of revenues from our web sites and from our Google Network members’ web
         sites;
     •   whether we are able to enter into more AdSense arrangements that provide for lower revenue share
         obligations or whether increased competition for arrangements with existing and potential Google
         Network members results in less favorable revenue share arrangements, and
     •   whether we share with existing and new partners proportionately more of the aggregate advertising fees
         that we earn from paid clicks derived from search queries these partners direct to our web sites.

      Research and Development. Research and development expenses consist primarily of compensation and
related costs for personnel responsible for the research and development of new products and services, as well as
significant improvements to existing products and services. We expense research and development costs as they
are incurred.

     Research and development expenses increased by $56.7 million to $246.6 million (or 10.9% of revenues) in
the three months ended March 31, 2006, from $189.9 million (or 9.9% of revenues) in the three months ended
December 31, 2005, primarily due to an increase in stock-based compensation expense of $40.3 million (see
detailed discussion below). Labor and facilities related costs increased $8.1 million as a result of 21% and 38%
increases in research and development headcount from December 31, 2005 and September 30, 2005 to March 31,
2006. This $8.1 million increase would have been greater if not for the disproportionately large increase to our
annual bonus accrual recorded in the three months ended December 31, 2005 as a result of our better than
expected 2005 financial performance. In addition, there was an increase of $5.9 million in the amortization of
developed technology resulting from acquisitions in current and prior periods.

      Research and development expenses increased by $137.9 million to $246.6 million (or 10.9% of revenues)
in the three months ended March 31, 2006, from $108.7 million (or 8.7% of revenues) in the three months ended
March 31, 2005, primarily due to an increase in labor and facilities related costs of $69.2 million as a result of a
123% increase in research and development headcount from March 31, 2005 to March 31, 2006, and an increase
in stock-based compensation cost of $43.8 million (see detailed discussion below). In addition, there was an
increase in depreciation and related expenses of $11.1 million primarily as a result of additional information
technology assets purchased over the fifteen-month period ended March 31, 2006, and an increase of $7.5 million
in amortization of developed technology acquired in current and prior years.

     We anticipate that research and development expenses will increase in dollar amount and may increase as a
percentage of revenues in 2006 and future periods compared to 2005 because we expect to hire more research
and development personnel and build the infrastructure required to support the development of new, and improve
existing, products and services, and because we expect greater stock-based compensation expenses primarily
because of our adoption of SFAS 123R on January 1, 2006 (see detailed discussion below).

                                                        29
     Sales and Marketing. Sales and marketing expenses consist primarily of compensation and related costs for
personnel engaged in customer service and sales and sales support functions, as well as promotional and
advertising expenditures.

     Sales and marketing expenses increased $28.3 million to $190.9 million (or 8.5% of revenues) in the three
months ended March 31, 2006, from $162.6 million (or 8.5% of revenues) in the three months ended
December 31, 2005. This increase in dollars was primarily due to $12.0 million in expenses associated with our
annual sales conference held in the first quarter of 2006, as well as an increase in stock based compensation of
$8.1 million (see detailed discussion below) and in labor and facilities related costs of $7.4 million mostly as a
result of a 18% and 33% increase in sales and marketing headcount from December 31, 2005 and September 30,
2005 to March 31, 2006. However, this $7.4 million increase would have been greater if not for the
disproportionately large increase to our annual bonus accrual recorded in the three months ended December 31,
2005 as a result of our better than expected 2005 financial performance.

      Sales and marketing expenses increased $101.4 million to $190.9 million (or 8.5% of revenues) in the three
months ended March 31, 2006, from $89.5 million (or 7.1% of revenues) in the three months ended March 31,
2005. This increase was primarily due to an increase in labor and facilities related costs of $40.5 million mostly
as a result of a 69% increase in sales and marketing headcount from March 31, 2005 to March 31, 2006, an
increase in promotional and advertising expenses of $34.9 million, a majority of which were related to Google
Toolbar and other product distribution costs, an increase of $9.4 million in stock-based compensation (see
detailed discussion below) and an increase in expenses associated with our annual sales conference held in the
first quarter of each year of approximately $8.0 million.

      We anticipate sales and marketing expenses will continue to increase in dollar amount and may increase as a
percentage of revenues in 2006 and future periods compared to 2005 as we continue to expand our business on a
worldwide basis. A significant portion of these increases relate to our plan to increase promotional and
advertising expenditures, primarily through increases in expenditures related to certain toolbar and other product
distributions, and to hire additional personnel to increase the level of service we provide to our advertisers and
Google Network members. We also plan to add a significant number of international sales personnel to support
our worldwide expansion. We also expect greater stock-based compensation expenses primarily because of our
adoption of SFAS 123R on January 1, 2006 (see detailed discussion below).

      General and Administrative. General and administrative expenses consist primarily of compensation and
related costs for personnel and facilities related to our finance, human resources, facilities, information
technology and legal organizations, and fees for professional services. Professional services are principally
comprised of outside legal, audit, information technology consulting and outsourcing services.

     General and administrative expenses increased $39.5 million to $169.4 million (or 7.5% of revenues) in the
three months ended March 31, 2006, from $129.9 million (or 6.7% of revenues) in the three months ended
December 31, 2005. This increase was primarily due to the recognition of $30.0 million in estimated plaintiffs’
attorneys’ expenses related to the preliminary settlement of the Lane’s Gift class action lawsuit. Furthermore,
there was an increase in labor and facilities related costs of $3.4 million primarily as a result of 18% and 37%
increase in headcount from December 31, 2005 and September 30, 2005 to March 31, 2006. However, this $3.4
million increase would have been greater if not for the disproportionately large increase to our annual bonus
accrual recorded in the three months ended December 31, 2005 as a result of our better than expected 2005
financial performance. Also, stock based compensation expense increased $7.5 million (see detailed discussion
below). In addition, depreciation and related expenses increased $5.5 million primarily as a result of additional
information technology assets purchased over the six month period ended March 31, 2006. The additional
personnel and depreciation and related expenses are the result of the growth of our business. These increases
were partially offset by a decrease in bad debt expense of $7.0 million primarily related to collections of
previously reserved receivables.


                                                        30
     General and administrative expenses increased $100.6 million to $169.4 million (or 7.5% of revenues) in the
three months ended March 31, 2006, from $68.8 million (or 5.5% of revenues) in the three months ended
March 31, 2005. This increase was primarily due to the recognition of $30.0 million in estimated plaintiffs’
attorneys’ expenses related to the preliminary settlement of the Lane’s Gift class action lawsuit. Furthermore,
there was an increase in labor and facilities related costs of $29.3 million, primarily as a result of a 94% increase
in headcount from March 31, 2005 to March 31, 2006, an increase in professional services fees of $17.4 million,
and an increase in stock based compensation of $11.9 million (see detailed discussion below). In addition,
depreciation and related cost increased $9.7 million primarily as a result of additional information technology
assets purchased over the fifteen month period ended March 31, 2006. The additional personnel, professional
services and depreciation and related expenses are the result of the growth of our business.

     As we expand our business and incur additional expenses associated with being a public company, we
believe general and administrative expenses will increase in dollar amount and may increase as a percentage of
revenues in 2006 and future periods compared to 2005. We also expect greater stock-based compensation
expenses primarily because of our adoption of SFAS 123R on January 1, 2006 (see detailed discussion below).

     Contribution to Google Foundation. In the three months ended December 31, 2005, we made a
non-recourse, non-refundable $90.0 million contribution to the Google Foundation, a nonprofit related party of
Google. As a result, this contribution was recorded as an expense in the period made. We do not expect to make
further donations to the Google Foundation for the foreseeable future.


  Stock-Based Compensation.
    The following is a discussion of the accounting for our stock awards through the end of 2005 under the
accounting rules then in effect:

     We accounted for employee stock-based compensation using the intrinsic value method under Accounting
Principles Board Opinion No. 25, Accounting for Stock Issued to Employees (APB 25). Under APB 25, deferred
stock-based compensation for options granted to employees is equal to its intrinsic value, determined as the
difference between the exercise prices and the values of the underlying stock on the dates of grant.

     Prior to our initial public offering we typically granted stock options at exercise prices equal to or less than
the value of the underlying stock as determined by our board of directors on the date of option grant. For
purposes of financial accounting, we applied hindsight within each year or quarter prior to our initial public
offering to arrive at reassessed values for the shares underlying these options. We recognized the difference
between the exercise prices and the reassessed values as stock-based compensation over the vesting periods on an
accelerated basis.

     After the initial public offering, we have generally granted options at exercise prices equal to the fair market
value of the underlying stock on the dates of option grant. As a result, only an immaterial amount of stock-based
compensation was recognized over the vesting periods on an accelerated basis.

     In the fourth quarter of 2004, we began granting restricted stock units (“RSUs”) to certain employees under
our Founders’ Award and other programs. Under these programs, the fair values of the underlying stock on the
dates of grant are recognized as stock-based compensation over the four year vesting periods on an accelerated
basis. In the second quarter of 2005, we began granting RSUs to all newly hired employees. These RSUs vest
from zero to 37.5 percent of the grant amount at the end of each of the four years from date of hire based on the
employee’s performance. We recognized compensation expense for these RSUs under the variable method based
on the fair market value of the underlying shares at the end of each quarter within the vesting periods.

     On January 1, 2006, we adopted SFAS 123R using the modified-prospective method. Under this method, we
recognize stock-based compensation over the related service periods for any stock-awards issued after

                                                         31
December 31, 2005, as well as for all stock awards issued prior to January 1, 2006 for which the requisite service
has not been provided as of January 1, 2006 because these awards are unvested. Stock-based compensation is
measured based on the fair values of all stock awards on the dates of grant.

     We have elected to use the Black-Scholes-Merton (“BSM”) option-pricing model to determine the fair value
of stock-based awards under SFAS 123R, consistent with that used for pro forma disclosures under SFAS
No. 123, Accounting for Stock-Based Compensation.

     We continue to recognize stock-based compensation using the accelerated method for all stock awards
issued prior to January 1, 2006, other than RSUs issued to new employees that vest based on the employee’s
performance for which we use the straight-line method. We elected to recognize stock-based compensation using
the straight-line method for all stock awards issued after January 1, 2006, which will likely result in the
recognition of less stock-based compensation over at least the next several years compared to that which would
have been recognized had we continued to use the accelerated method.

     SFAS 123R requires that the deferred stock-based compensation on our balance sheet on the date of
adoption be netted against additional paid-in capital. At December 31, 2005, we had $119.0 million of deferred
stock-based compensation which had been netted against additional paid-in capital on January 1, 2006, as
reflected in the accompanying Condensed Consolidated Balance Sheet at March 31, 2006.

     As noted above, prior to the adoption of SFAS 123R, we accounted for RSUs issued to new employees that
vest based on the employee’s performance under the variable method, under which stock-based compensation is
measured based on the fair value of the underlying shares at the end of each quarter within the vesting periods.
As noted above, under SFAS 123R stock-based compensation is measured based on the fair values of the
underlying shares on the dates of grant for all such outstanding RSUs. As a result, to the extent the fair value of
the underlying shares is greater at the end of each quarter within the vesting periods compared to the fair values
on the dates of grant, then we will recognize less stock-based compensation than we would have had we
continued to use the variable method.

      SFAS 123R requires compensation expense to be recognized based on awards ultimately expected to vest.
As a result, forfeitures need to be estimated on the date of grant and revised, if necessary, in subsequent periods
if actual forfeitures differ from those estimates. On January 1, 2006, we began to estimate forfeitures based on
our historical experience to determine stock-based compensation to be recognized. For the periods prior to
January 1, 2006, we accounted for forfeitures as they occurred.

     In addition, we continue to account for stock awards issued to non-employees in accordance with the
provisions of SFAS 123R and EITF 96-18 under which we use the BSM method to measure the value of options
granted to non-employees at each vesting date to determine the appropriate charge to stock-based compensation.

    Stock-based compensation increased $56.5 million to $114.7 million (or 5.1% of revenues) in the three
months ended March 31, 2006 from $58.2 million (or 3.0% of revenues) in the three months ended December 31,
2005. This increase was primarily a result of our adoption of SFAS 123R on January 1, 2006 under which stock-
based compensation was recognized using the fair-value-based method as compared to the intrinsic value method
under APB 25.

     Stock-based compensation increased $65.8 million to $114.7 million (or 5.1% of revenues) in the three
months ended March 31, 2006 from $48.9 million (or 3.9% of revenues) in the three months ended March 31,
2005. This increase was primarily resulted from our adoption of SFAS 123R on January 1, 2006 under which
stock-based compensation was recognized using the fair-value-based method as compared to the intrinsic value
method under APB 25.

     We expect stock-based compensation to be approximately $370.0 million in 2006 and $410.3 million
thereafter. These amounts do not include stock-based compensation related to stock awards that have been and

                                                         32
may be granted to employees and directors subsequent to March 31, 2006 and stock awards that have been or
may be granted to non-employees. In addition, to the extent forfeiture rates are different than we have anticipated
stock-based compensation related to these awards will be different from our expectations.

     At December 31, 2005, there were 202,090 unvested options held by non-employees with a weighted-
average exercise price of $3.59 and a weighted-average 25 months remaining vesting period. These options
generally vest on a monthly and ratable basis. No options or other stock awards that vest over time were granted
to non-employees in the quarter ended March 31, 2006.


Interest Income and Other, Net
     Interest income and other of $67.9 million in the three months ended March 31, 2006 was primarily
comprised of $78.9 million of interest income earned on our cash, cash equivalents and marketable securities
balances. In addition, we recognized $1.0 million of rental income related to buildings we own. These income
sources were partially offset by $7.6 million of realized losses on sales of marketable securities, and $4.5 million
of net foreign exchange losses as a result of (i) the forward contracts that we entered into to purchase U.S. dollars
with foreign currencies to offset the foreign exchange risk on certain intercompany assets and (ii) the net
monetary assets denominated in currencies other than the local currencies.

     Interest income and other of $13.7 million in the three months ended March 31, 2005 was primarily the
result of $11.7 million of interest income earned on our cash, cash equivalents and marketable securities
balances. In addition, we recognized $2.4 million of net foreign exchange gains as a result of (i) the forward
contracts that we entered into to purchase U.S. dollars with Euros to offset the foreign exchange risk on certain
intercompany assets and (ii) the net monetary assets denominated in currencies other than the local currencies.
These income sources were also partially offset by approximately $300,000 of realized losses on sales of
marketable securities and approximately $100,000 of interest expense incurred on equipment leases, including
the amortization of the fair value of warrants issued to lenders in prior years.

Provision for Income Taxes
      Our provision for income taxes decreased to $218.3 million, or an effective tax rate of 26.9%, in the three
months ended March 31, 2006, from $267.6 million, or an effective tax rate of 41.8%, in the three months ended
December 31, 2005. The effective tax rate in the fourth quarter of 2005 was much higher than the effective tax
rates for the other quarters of 2005 as well as for all of 2005 (31.6%) primarily because, relative to our
expectations during the third quarter of 2005, proportionately more of our earnings in the fourth quarter of 2005
and for all of 2005 were recognized in the U.S. than by our subsidiaries outside the U.S., and such earnings were
taxed at a higher statutory tax rate than earnings generated outside the U.S. The effective tax rate of 26.9% in the
first quarter of 2006 approximately reflects our expected effective tax rate of approximately 30% for 2006. The
effective tax rate of 26.9% in the first quarter of 2006 is lower than the effective tax rate for 2005 of 31.6%
primarily because we expect more of our earnings in 2006 to be recognized by our subsidiaries outside the U.S.
and such earnings are taxed at a lower statutory tax rate than in the U.S.

      Our provision for income taxes increased to $218.3 million, or an effective tax rate of 26.9% in the three
months ended March, 2006, from $87.3 million, or an effective tax rate of 19.1% in the three months ended
March 31, 2005, primarily due to increases in federal and state income taxes, driven by higher taxable income
period over period. Also, in the three months ended March 31, 2005, we realized a $48.5 million reduction to our
tax provision as a result of disqualifying dispositions related to our incentive stock options. Our provision for
income taxes in the three months ended March 31, 2006 was not materially affected by disqualifying dispositions
related to incentive stock options.

     As noted above, our effective tax rate in 2006 is expected to be approximately 30%; however it could
fluctuate significantly on a quarterly basis and could be adversely affected to the extent earnings are lower than

                                                         33
anticipated in countries where we have lower statutory rates and higher than anticipated in countries where we
have higher statutory rates, by changes in the valuation of our deferred tax assets or liabilities, or by changes in
tax laws, regulations, accounting principles, or interpretations thereof. In addition, we are subject to the
continuous examination of our income tax returns by the Internal Revenue Service and other tax authorities. We
regularly assess the likelihood of adverse outcomes resulting from these examinations to determine the adequacy
of our provision for income taxes.

Liquidity and Capital Resources
      In summary, our cash flows were:
                                                                                                                          Three Months Ended
                                                                                                                               March 31,
                                                                                                                          2005           2006
                                                                                                                             (in thousands)
Net cash provided by operating activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .       $ 529,622 $ 824,804
Net cash used in investing activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    (472,328) (1,888,617)
Net cash provided by financing activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .           3,505     119,896

     As a result of the completion of our initial public offering in August 2004 and our follow-on stock offering
in September 2005, we raised $1,161.1 million and $4,287.2 million of net proceeds. At March 31, 2006, we had
$8,429.0 million of cash, cash equivalents and marketable securities. Cash equivalents and marketable securities
are comprised of highly liquid debt instruments of municipalities in the U.S. and the U.S. government and its
agencies, as well as an equity investment. Note 2 of Notes to Condensed Consolidated Financial Statements
included as part of this report describes further the composition of our cash, cash equivalents and marketable
securities.

      Our principal sources of liquidity are our cash, cash equivalents and marketable securities, as well as the
cash flow that we generate from our operations. At March 31, 2006 and December 31, 2005, we had unused
letters of credit for approximately $14.6 million. We believe that our existing cash, cash equivalents, marketable
securities and cash generated from operations will be sufficient to satisfy our currently anticipated cash
requirements through at least the next 12 months. Our liquidity could be negatively affected by a decrease in
demand for our products and services. In addition, we may make acquisitions or license products and
technologies complementary to our business and may need to raise additional capital through future debt or
equity financing to provide for greater flexibility to fund any such acquisitions and licensing activities.
Additional financing may not be available at all or on terms favorable to us.

     Cash provided by operating activities consisted of net income adjusted for certain non-cash items including
depreciation, amortization, in-process research and development, stock-based compensation, and the effect of
changes in working capital and other activities. Cash provided by operating activities in the three months ended
March 31, 2006 was $824.8 million and consisted of net income of $592.3 million, adjustments for non-cash
items of $229.8 million and cash provided by working capital and other activities of $2.7 million. Adjustments
for non-cash items primarily consisted of $95.9 million of depreciation and amortization expense on property and
equipment and $114.7 million of stock-based compensation. In addition, working capital activities primarily
consisted of an increase of $155.2 million in accounts receivable due to the growth in fees billed to our
advertisers, offset by a net increase in income taxes payable and deferred income taxes of $139.2 million and an
increase of $51.2 million in accrued revenue share due to the growth in our AdSense programs and the timing of
payments made to our Google Network members.

     SFAS 123(R) requires the benefits of tax deductions in excess of recognized compensation expense to be
reported as a cash flow from financing activities, rather than as a cash flow from operating activities, as was
prescribed under accounting rules applicable through December 31, 2005. In compliance with the modified
prospective transition method under SFAS 123R, the excess tax benefits from stock-based award activity

                                                                           34
generated in the three months ended March 31, 2006 and in the three months ended March 31, 2005 are reported
as a cash flow from financing activities and a cash flow from operating activities, respectively.

     Cash provided by operating activities in the three months ended March 31, 2005 was $529.6 million and
consisted of net income of $369.2 million, adjustments for non-cash items of $182.4 million and offset by $22.0
million used in working capital and other activities. Adjustments for non-cash items primarily consisted of $77.4
million of excess tax benefits from stock-based award activity, $46.5 million of depreciation and amortization
expense on property and equipment and $48.9 million of stock-based compensation. In addition, working capital
activities primarily consisted of an increase of $60.1 million in accounts receivable due to the growth in fees
billed to our advertisers. This was partially offset by an increase of $42.7 million in accounts payable due to the
increase in purchases of property and equipment.

     As we expand our business internationally, we have offered payment terms to certain advertisers that are
standard in their locales, but longer than terms we would generally offer to our domestic advertisers. This may
increase our working capital requirements and may have a negative effect on cash flow provided by our operating
activities. In addition, now that we have become a public company, our cash-based compensation per employee
has increased and will likely continue to increase (primarily in the form of variable bonus awards and other
incentive arrangements) in order to retain and attract employees.

      Cash used in investing activities in the three months ended March 31, 2006 of $1,888.6 million was
attributable to net purchases of marketable securities of $1,355.7 million, capital expenditures of $344.9 million
and cash consideration used in acquisitions and other investments of $188.0 million, a majority of which was
related to the acquisition of dMarc Broadcasting, Inc. Cash used in investing activities in the three months ended
March 31, 2005 of $472.3 million was attributable to net purchases of marketable securities of $324.9 million,
capital expenditures of $142.4 million and cash consideration used in acquisitions and other investments of $5.0
million.

     Capital expenditures are mainly for the purchase of information technology assets. In order to manage
expected increases in Internet traffic, advertising transactions and new products and services, and to support our
overall global business expansion, we will continue to invest heavily in data center operations, technology,
corporate facilities and information technology infrastructure. We expect the annual growth rate of our
investments in property and equipment in 2006, including information and technology infrastructure and land
and buildings, to be substantially greater than our annual revenue growth rate in 2006.

     In addition, we expect to spend a significant amount of cash on acquisitions and other investments from
time to time. Through these acquisitions and investments, we acquire engineering teams, technologies and other
assets. In April 2006, we completed our equity investment in America Online, Inc. for $1.0 billion in cash. Also
in connection with the acquisition of dMarc Broadcasting, Inc., we are obligated to make additional cash
payments of up to $1,136.0 million if certain performance targets are met through December 31, 2008. Since
these contingent payments are based on the achievement of performance targets, actual payments may be
substantially lower.

     Also, as part of our philanthropic program, we expect to make equity and other investments in for-profit
enterprises that aim to alleviate poverty, improve the environment or achieve other socially or economically
progressive objectives. We expect these investments to be made primarily in cash and to be approximately $175
million over the three years ended December 31, 2008.

     Cash provided by financing activities in the three months ended March 31, 2006 of $119.9 million was due
primarily to (i) excess tax benefits of $77.3 million from stock-based award activity during the period, which also
represents a reduction to our income taxes payable that related to the exercise, sale or vesting of these stock-
based awards, (ii) net proceeds from the issuance of common stock pursuant to stock option exercises of $42.6
million. Cash provided by financing activities in the three months ended March 31, 2005 of $3.5 million was due

                                                        35
primarily to net proceeds from the issuance of common stock pursuant to stock option exercises of $4.1 million,
net of purchases, offset by repayment of equipment loan and lease obligations of $600,000.

     In April 2006, we issued 5,300,000 shares of our Class A common stock in a public stock offering for net
proceeds of approximately $2.064 billion.


  Contractual Obligations
     We are obligated under certain agreements to make guaranteed minimum revenue share payments to Google
Network members and certain partners based on their achieving defined performance terms, such as number of
search queries or advertisements displayed. At March 31, 2006, our aggregate outstanding non-cancelable
minimum guarantee commitments totaled $201.2 million through 2008 compared to $234.3 million at
December 31, 2005.


Critical Accounting Policies and Estimates
      We prepare our condensed consolidated financial statements in accordance with accounting principles
generally accepted in the U.S. In doing so, we have to make estimates and assumptions that affect our reported
amounts of assets, liabilities, revenues and expenses, as well as related disclosure of contingent assets and
liabilities. In many cases, we could reasonably have used different accounting policies and estimates. In some
cases changes in the accounting estimates are reasonably likely to occur from period to period. Accordingly,
actual results could differ materially from our estimates. To the extent that there are material differences between
these estimates and actual results, our financial condition or results of operations will be affected. We base our
estimates on past experience and other assumptions that we believe are reasonable under the circumstances, and
we evaluate these estimates on an ongoing basis. We refer to accounting estimates of this type as critical
accounting policies and estimates, which we discuss further below. We have reviewed our critical accounting
policies and estimates with the audit committee of our board of directors.

  Income Taxes
     We are subject to income taxes in both the United States and numerous foreign jurisdictions. Significant
judgment is required in evaluating our tax positions and determining our provision for income taxes. During the
ordinary course of business, there are many transactions and calculations for which the ultimate tax
determination is uncertain. We establish reserves for tax-related uncertainties based on estimates of whether, and
the extent to which, additional taxes and interest will be due. These reserves are established when, despite our
belief that our tax return positions are fully supportable, we believe that certain positions are likely to be
challenged and may not be sustained on review by tax authorities. We adjust these reserves in light of changing
facts and circumstances, such as the closing of a tax audit. The provision for income taxes includes the impact of
reserve provisions and changes to reserves that are considered appropriate, as well as the related net interest.

     Our effective tax rates have differed from the statutory rate primarily due to the tax impact of foreign
operations, research and experimentation tax credits, state taxes, and certain benefits realized related to stock
option activity. The effective tax rate was 26.9% and 31.6% for the quarter ended March 31, 2006 and for the
year ended December 31, 2005. Our future effective tax rates could be adversely affected by earnings being
lower than anticipated in countries where we have lower statutory rates and higher than anticipated in countries
where we have higher statutory rates, by changes in the valuation of our deferred tax assets or liabilities, or by
changes in tax laws, regulations, accounting principles, or interpretations thereof. In addition, we are subject to
the continuous examination of our income tax returns by the Internal Revenue Service and other tax authorities.
We regularly assess the likelihood of adverse outcomes resulting from these examinations to determine the
adequacy of our provision for income taxes.



                                                         36
  Stock-Based Compensation
     We account for stock-based compensation in accordance with Statement of Financial Accounting Standards
(SFAS) No. 123R, Shared-Based Payment. Under the provisions of SFAS No. 123R, stock-based compensation
cost is estimated at the grant date based on the award’s fair value as calculated by the Black-Scholes-Merton
(BSM) option-pricing model and is recognized as expense over the requisite service period. The BSM model
requires various highly judgmental assumptions including volatility, forfeiture rates, and expected option life. If
any of the assumptions used in the BSM model change significantly, stock-based compensation expense may
differ materially in the future from that recorded in the current period.


ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
     We are exposed to financial market risks, including changes in currency exchange rates and interest rates.


  Foreign Exchange Risk
     Our exposure to foreign currency transaction gains and losses is the result of certain net receivables due
from our foreign subsidiaries and customers being denominated in currencies other than the U.S. dollar, primarily
the British Pound, the Euro, the Canadian Dollar and the Japanese Yen. Our foreign subsidiaries conduct their
businesses in local currency. Effective January 2004, our board of directors approved a foreign exchange hedging
program designed to minimize the future potential impact due to changes in foreign currency exchange rates. The
program allows for the hedging of transaction exposures. The types of derivatives that can be used under the
policy are forward contracts, options and foreign exchange swaps. The vehicle we use is forward contracts. We
also generate revenue in certain countries in Asia where there are limited forward currency exchange markets,
thus making these exposures difficult to hedge. We have entered into forward foreign exchange contracts to
offset the foreign exchange risk on certain intercompany assets, as well as cash denominated in currencies other
than the local currency of the subsidiary. The notional principal of forward exchange contracts to purchase U.S.
dollars with foreign currencies was $629.5 million at March 31, 2006. There were no other forward exchange
contracts outstanding at March 31, 2006.

     Our exposure to foreign currency translation gains and losses arises from the translation of net assets of our
subsidiaries to U.S. dollars during consolidation. We recognized translation losses of $3.2 million in the three
months ended March 31, 2006 primarily a result of generally weakening foreign currencies against the U.S. dollar.

     We considered the historical trends in currency exchange rates and determined that it was reasonably
possible that adverse changes in exchange rates of 10% for all currencies could be experienced in the near term.
These changes would have resulted in an adverse impact on income before taxes of approximately $30.3 million
and $2.2 million at March 31, 2006 and December 31, 2005. The adverse impact at March 31, 2006 is after
consideration of the offsetting effect of approximately $63.5 million and $63.3 million from forward exchange
contracts in place for the month of March 2006 and December 2005. These reasonably possible adverse changes
in exchange rates of 10% were applied to total monetary assets denominated in currencies other than the local
currencies at the balance sheet dates to compute the adverse impact these changes would have had on our income
before taxes in the near term.


  Interest Rate Risk
    We invest in a variety of securities, consisting primarily of investments in interest-bearing demand deposit
accounts with financial institutions, tax-exempt money market funds and highly liquid debt securities of
corporations and municipalities. By policy, we limit the amount of credit exposure to any one issuer.

    Investments in both fixed rate and floating rate interest earning products carry a degree of interest rate risk.
Fixed rate securities may have their fair market value adversely impacted due to a rise in interest rates, while

                                                         37
floating rate securities may produce less income than predicted if interest rates fall. Due in part to these factors,
our income from investments may decrease in the future.

     We considered the historical volatility of short term interest rates and determined that it was reasonably
possible that an adverse change of 100 basis points could be experienced in the near term. A hypothetical 1.00%
(100 basis-point) increase in interest rates would have resulted in a decrease in the fair values of our marketable
securities of approximately $63.9 million and $60.4 million at March 31, 2006 and December 31, 2005.


ITEM 4. CONTROLS AND PROCEDURES
  (a) Evaluation of disclosure controls and procedures.
     Our management, with the participation of our chief executive officer and chief financial officer, evaluated
the effectiveness of our disclosure controls and procedures pursuant to Rule 13a-15 under the Securities
Exchange Act of 1934 as of the end of the period covered by this Quarterly Report on Form 10-Q. In designing
and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures,
no matter how well designed and operated, can provide only reasonable assurance of achieving the desired
control objectives. In addition, the design of disclosure controls and procedures must reflect the fact that there are
resource constraints and that management is required to apply its judgment in evaluating the benefits of possible
controls and procedures relative to their costs.

     Based on our evaluation, our chief executive officer and chief financial officer concluded that our disclosure
controls and procedures are designed at a reasonable assurance level and are effective to provide reasonable
assurance that information we are required to disclose in reports that we file or submit under the Exchange Act is
recorded, processed, summarized and reported within the time periods specified in Securities and Exchange
Commission rules and forms, and that such information is accumulated and communicated to our management,
including our chief executive officer and chief financial officer, as appropriate, to allow timely decisions
regarding required disclosure.


  (b) Changes in internal control over financial reporting.
     We regularly review our system of internal control over financial reporting and make changes to our
processes and systems to improve controls and increase efficiency, while ensuring that we maintain an effective
internal control environment. Changes may include such activities as implementing new, more efficient systems,
consolidating activities, and migrating processes.

    There were no changes in our internal control over financial reporting that occurred during the period
covered by this Quarterly Report on Form 10-Q that have materially affected, or are reasonably likely to
materially affect, our internal control over financial reporting.




                                                          38
                                      PART II—OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
     Certain companies have filed trademark infringement and related claims against us over the display of ads in
response to user queries that include trademark terms. The outcomes of these lawsuits have differed from
jurisdiction to jurisdiction. Courts in France have held us liable for allowing advertisers to select certain
trademarked terms as keywords. We are appealing those decisions. We were also subject to two lawsuits in
Germany on similar matters where the courts held that we are not liable for the actions of our advertisers prior to
notification of trademark rights. We are litigating or recently have litigated similar issues in other cases in the
U.S., France, Germany, Italy, Israel and Austria. Adverse results in these lawsuits may result in, or even compel,
a change in this practice which could result in a loss of revenue for us, which could harm our business.

     Certain entities have also filed copyright claims against us, alleging that features of certain of our products,
including Google Web Search, Google News, Google Image Search, and Google Book Search, infringe their
rights. Adverse results in these lawsuits may include awards of damages and may also result in, or even compel,
a change in our business practices, which could result in a loss of revenue for us or otherwise harm our business.

     From time to time, we may also become a party to other litigation and subject to claims incident to the
ordinary course of business, including intellectual property claims (in addition to the trademark and copyright
matters noted above), labor and employment claims, breach of contract claims, and other matters.

     Although the results of litigation and claims cannot be predicted with certainty, we believe that the final
outcome of the matters discussed above will not have a material adverse effect on our business, consolidated
financial position, results of operations or cash flow. Regardless of the outcome, litigation can have an adverse
impact on us because of defense costs, diversion of management resources and other factors.


ITEM 1A.      RISK FACTORS
     A restated description of the risk factors associated with our business is set forth below. This description
includes any material changes to and supersedes the description of the risk factors associated with our business
previously disclosed in Part I, Item 1A of our Annual Report on Form 10-K for the fiscal year ended
December 31, 2005.


Risks Related to Our Business and Industry
     We face significant competition from Microsoft and Yahoo.
     We face formidable competition in every aspect of our business, and particularly from other companies that
seek to connect people with information on the web and provide them with relevant advertising. Currently, we
consider our primary competitors to be Microsoft Corporation and Yahoo! Inc. Microsoft has announced plans to
develop features that make web search a more integrated part of its Windows operating system or other desktop
software products. We expect that Microsoft will increasingly use its financial and engineering resources to
compete with us. Both Microsoft and Yahoo have more employees than we do (in Microsoft’s case,
approximately 9 times as many). Microsoft also has significantly more cash resources than we do. Both of these
companies also have longer operating histories and more established relationships with customers and end users.
They can use their experience and resources against us in a variety of competitive ways, including by making
acquisitions, investing more aggressively in research and development and competing more aggressively for
advertisers and web sites. Microsoft and Yahoo also may have a greater ability to attract and retain users than we
do because they operate Internet portals with a broad range of content products and services. If Microsoft or
Yahoo are successful in providing similar or better web search results compared to ours or leverage their
platforms or products to make their web search services easier to access than ours, we could experience a
significant decline in user traffic. Any such decline in traffic could negatively affect our revenues.

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     We face competition from other Internet companies, including web search providers, Internet access
providers, Internet advertising companies and destination web sites that may also bundle their services with
Internet access.
      In addition to Microsoft and Yahoo, we face competition from other web search providers, including
companies that are not yet known to us. We compete with Internet advertising companies, particularly in the
areas of pay-for-performance and keyword-targeted Internet advertising. Also, we may compete with companies
that sell products and services online because these companies, like us, are trying to attract users to their web
sites to search for information about products and services.

      We also compete with destination web sites that seek to increase their search-related traffic. These destination
web sites may include those operated by Internet access providers, such as cable and DSL service providers.
Because our users need to access our services through Internet access providers, they have direct relationships with
these providers. If an access provider or a computer or computing device manufacturer offers online services that
compete with ours, the user may find it more convenient to use the services of the access provider or manufacturer.
In addition, the access provider or manufacturer may make it hard to access our services by not listing them in the
access provider’s or manufacturer’s own menu of offerings, or may charge users to access our websites or the
websites of our Google Network members. Also, because the access provider gathers information from the user in
connection with the establishment of a billing relationship, the access provider may be more effective than we are in
tailoring services and advertisements to the specific tastes of the user.

     There has been a trend toward industry consolidation among our competitors, and so smaller competitors
today may become larger competitors in the future. If our competitors are more successful than we are at
generating traffic, our revenues may decline.

    We face competition from traditional media companies, and we may not be included in the advertising
budgets of large advertisers, which could harm our operating results.
     In addition to Internet companies, we face competition from companies that offer traditional media
advertising opportunities. Most large advertisers have set advertising budgets, a very small portion of which is
allocated to Internet advertising. We expect that large advertisers will continue to focus most of their advertising
efforts on traditional media. If we fail to convince these companies to spend a portion of their advertising budgets
with us, or if our existing advertisers reduce the amount they spend on our programs, our operating results would
be harmed.

     We expect our revenue growth rate to decline and anticipate downward pressure on our operating margin
in the future.
     We expect that our revenue growth rate will decline over time and anticipate that there will be downward
pressure on our operating margin. We believe our revenue growth rate will generally decline as a result of
increasing competition and the inevitable decline in growth rates as our revenues increase to higher levels. We
believe our operating margin will experience downward pressure as a result of increasing competition and
increased expenditures for many aspects of our business. Our operating margin will also experience downward
pressure to the extent the proportion of our revenues generated from our Google Network members increases.
The margin on revenue we generate from our Google Network members is significantly less than the margin on
revenue we generate from advertising on our web sites. Additionally, the margin we earn on revenue generated
from our Google Network could decrease in the future if our Google Network members demand a greater portion
of the advertising fees, which could be the result of increased competition for these members.

     Our operating results may fluctuate, which makes our results difficult to predict and could cause our
results to fall short of expectations.
     Our operating results may fluctuate as a result of a number of factors, many of which are outside of our
control. For these reasons, comparing our operating results on a period-to-period basis may not be meaningful,

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and you should not rely on our past results as an indication of our future performance. Our quarterly and annual
expenses as a percentage of our revenues may be significantly different from our historical or projected rates.
Our operating results in future quarters may fall below expectations. Any of these events could cause our stock
price to fall. Each of the risk factors listed in Item 1A, Risk Factors, and the following factors, may affect our
operating results:
     •   Our ability to continue to attract users to our web sites.
     •   Our ability to monetize (or generate revenue from) traffic on our web sites and our Google Network
         members’ web sites.
     •   Our ability to attract advertisers to our AdWords program.
     •   Our ability to attract web sites to our AdSense program.
     •   The mix in our revenues between those generated on our web sites and those generated through our
         Google Network.
     •   The amount and timing of operating costs and capital expenditures related to the maintenance and
         expansion of our businesses, operations and infrastructure.
     •   Our focus on long term goals over short term results.
     •   The results of our investments in risky projects.
     •   Payments made in connection with the resolution of litigation matters.
     •   General economic conditions and those economic conditions specific to the Internet and Internet
         advertising.
     •   Our ability to keep our web sites operational at a reasonable cost and without service interruptions.
     •   Our ability to forecast revenue from agreements under which we guarantee minimum payments.
     •   Geopolitical events such as war, threat of war or terrorist actions.

     Because our business is changing and evolving, our historical operating results may not be useful to you in
predicting our future operating results. In addition, advertising spending has historically been cyclical in nature,
reflecting overall economic conditions as well as budgeting and buying patterns. For example, in 1999,
advertisers spent heavily on Internet advertising. This was followed by a lengthy downturn in ad spending on the
web. Also, user traffic tends to be seasonal. Our rapid growth has masked the cyclicality and seasonality of our
business. As our growth rate has slowed, the cyclicality and seasonality in our business has become more
pronounced and may cause our operating results to fluctuate.

    If we do not continue to innovate and provide products and services that are useful to users, we may not
remain competitive, and our revenues and operating results could suffer.
     Our success depends on providing products and services that people use for a high quality Internet
experience. Our competitors are constantly developing innovations in web search, online advertising and
providing information to people. As a result, we must continue to invest significant resources in research and
development in order to enhance our web search technology and our existing products and services and introduce
new high-quality products and services that people can easily and effectively use. If we are unable to ensure that
our users and customers have a high quality experience with our products and services, then they may become
dissatisfied and move to competitors’ products and services. In addition, if we are unable to predict user
preferences or industry changes, or if we are unable to modify our products and services on a timely basis, we
may lose users, advertisers and Google Network members. Our operating results would also suffer if our
innovations are not responsive to the needs of our users, advertisers and Google Network members, are not
appropriately timed with market opportunity or are not effectively brought to market. As search technology
continues to develop, our competitors may be able to offer search results that are, or that are perceived to be,

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substantially similar or better than those generated by our search services. This may force us to compete in
different ways with our competitors and to expend significant resources in order to remain competitive.

    We generate our revenue almost entirely from advertising, and the reduction in spending by or loss of
advertisers could seriously harm our business.
     We generated approximately 99% of our revenues in 2005 from our advertisers. Our advertisers can generally
terminate their contracts with us at any time. Advertisers will not continue to do business with us if their investment
in advertising with us does not generate sales leads, and ultimately customers, or if we do not deliver their
advertisements in an appropriate and effective manner. If we are unable to remain competitive and provide value to
our advertisers, they may stop placing ads with us, which would negatively affect our revenues and business.

     We rely on our Google Network members for a significant portion of our revenues, and we benefit from
our association with them. The loss of these members could adversely affect our business.
     We provide advertising, web search and other services to members of our Google Network. The revenues
generated from the fees advertisers pay us when users click on ads that we have delivered to our Google Network
members’ web sites or as ads are displayed represented 44% of our revenues in 2005 and 41% of our revenues in
the three months ended March 31, 2006. We consider this network to be critical to the future growth of our
revenues. However, some of the participants in this network may compete with us in one or more areas.
Therefore, they may decide in the future to terminate their agreements with us. If our Google Network members
decide to use a competitor’s or their own web search or advertising services, our revenues would decline.

     Our agreements with a few of the largest Google Network members account for a significant portion of
revenues derived from our AdSense program. In addition, advertising and other fees generated from one Google
Network member, AOL, primarily through our AdSense program, accounted for approximately 9% and 8% of
our revenues in 2005 and in the three months ended March 31, 2006, respectively. We recently entered into an
arrangement with AOL and Time Warner under which we acquired a five percent indirect equity interest in AOL
in exchange for $1 billion in cash and expanded our strategic alliance with AOL. If our relationship with AOL
were terminated or renegotiated on terms less favorable to us, our business could be adversely affected.

     Also, certain of our key network members operate high-profile web sites, and we derive tangible and
intangible benefits from this affiliation. If one or more of these key relationships is terminated or not renewed,
and is not replaced with a comparable relationship, our business would be adversely affected.

     Our business and operations are experiencing rapid growth. If we fail to effectively manage our growth,
our business and operating results could be harmed and we may have to incur significant expenditures to
address the additional operational and control requirements of this growth.
     We have experienced, and continue to experience, rapid growth in our headcount and operations, which has
placed, and will continue to place, significant demands on our management, operational and financial
infrastructure. If we do not effectively manage our growth, the quality of our products and services could suffer,
which could negatively affect our brand and operating results. Our expansion and growth in international markets
heightens these risks as a result of the particular challenges of supporting a rapidly growing business in an
environment of multiple languages, cultures, customs, legal systems, alternative dispute systems, regulatory
systems and commercial infrastructures. To effectively manage this growth, we will need to continue to improve
our operational, financial and management controls and our reporting systems and procedures. These systems
enhancements and improvements will require significant capital expenditures and allocation of valuable
management resources. If the improvements are not implemented successfully, our ability to manage our growth
will be impaired and we may have to make significant additional expenditures to address these issues, which
could harm our financial position. The required improvements include:
     •   Enhancing our information and communication systems to ensure that our offices around the world are
         well coordinated and that we can effectively communicate with our growing base of users, advertisers
         and Google Network members.

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     •   Enhancing systems of internal controls to ensure timely and accurate reporting of all of our operations.
     •   Ensuring enhancements to our systems of internal controls are scalable to our anticipated growth in
         headcount and operations.
     •   Standardizing systems of internal controls and ensuring they are consistently applied at each of our
         operations around the world.
     •   Improving our information technology infrastructure to maintain the effectiveness of our search and ad
         systems.

     We are required to evaluate our internal control over financial reporting under Section 404 of the
Sarbanes Oxley Act of 2002, and any adverse results from such evaluation could result in a loss of investor
confidence in our financial reports and have an adverse effect on our stock price.
      Although we concluded that our internal controls over financial reporting were effective as of December 31,
2005, pursuant to Section 404 of the Sarbanes-Oxley Act of 2002, there can be no assurances that we will reach
the same conclusion at the end of future years. If our management identifies one or more material weaknesses in
our internal control over financial reporting, we will be unable to assert such internal control is effective. If we
are unable to assert that our internal control over financial reporting is effective, or if our auditors are unable to
attest that our management’s report is fairly stated or they are unable to express an opinion on the effectiveness
of our internal controls, we could lose investor confidence in the accuracy and completeness of our financial
reports, which would have an adverse effect on our stock price.

     We are migrating critical financial functions to a third-party provider. If this transition is not successful,
our business and operations could be disrupted and our operating results could be harmed.
      We have entered into an arrangement to transfer our worldwide billing, collection and credit evaluation
functions to a third-party service provider, Bertelsmann AG, and are currently in the process of implementing
this arrangement. However, we cannot be sure that the arrangement will be completed and implemented
successfully or at all. The third-party provider will also help track, on an automated basis, a majority of our
growing number of AdSense revenue share agreements. These functions are critical to our operations and involve
sensitive interactions between us and our advertisers and members of our Google Network. If we do not
successfully implement this project, our business, reputation and operating results could be harmed. We have no
experience managing and implementing this type of large-scale, cross-functional, international infrastructure
project. We also may not be able to integrate all of our systems and processes with those of the third-party
service provider on a timely basis, or at all. Even if this integration is completed on time, the service provider
may not perform to agreed-upon service levels. Failure of the service provider to perform satisfactorily could
disrupt our operations, result in customer dissatisfaction and adversely affect operating results. We will
implement monitoring controls over the systems and processes of the third-party vendor. However, there may be
more risk than if we maintained and operated the controls ourselves. If we need to find an alternative source for
performing these functions, we may have to expend significant resources in doing so, and we cannot guarantee
this would be accomplished in a timely manner or without significant additional disruption to our business.

      Our business depends on a strong brand, and if we are not able to maintain and enhance our brand, our
ability to expand our base of users, advertisers and Google Network members will be impaired and our
business and operating results will be harmed.
     We believe that the brand identity that we have developed has significantly contributed to the success of our
business. We also believe that maintaining and enhancing the “Google” brand is critical to expanding our base of
users, advertisers and Google Network members. Maintaining and enhancing our brand may require us to make
substantial investments and these investments may not be successful. If we fail to promote and maintain the
“Google” brand, or if we incur excessive expenses in this effort, our business, operating results and financial
condition will be materially and adversely affected. We anticipate that, as our market becomes increasingly
competitive, maintaining and enhancing our brand may become increasingly difficult and expensive. Maintaining

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and enhancing our brand will depend largely on our ability to be a technology leader and to continue to provide
high quality products and services, which we may not do successfully.

     People have in the past expressed, and may in the future express, objections to aspects of our products. For
example, people have raised privacy concerns relating to the ability of our Gmail email service to match relevant
ads to the content of email messages. In addition, some individuals and organizations have raised objections to
and sued us in connection with our scanning of copyrighted materials from library collections for use in our
Google Book Search product. Aspects of our future products may raise similar public concerns. Publicity
regarding such concerns could harm our brand. In addition, members of the Google Network and other third
parties may take actions that could impair the value of our brand. We are aware that third parties, from time to
time, use “Google” and similar variations in their domain names without our approval, and our brand may be
harmed if users and advertisers associate these domains with us.

     Proprietary document formats may limit the effectiveness of our search technology by preventing our
technology from accessing the content of documents in such formats which could limit the effectiveness of our
products and services.
     A large amount of information on the Internet is provided in proprietary document formats such as
Microsoft Word. The providers of the software application used to create these documents could engineer the
document format to prevent or interfere with our ability to access the document contents with our search
technology. This would mean that the document contents would not be included in our search results even if the
contents were directly relevant to a search. These types of activities could assist our competitors or diminish the
value of our search results. The software providers may also seek to require us to pay them royalties in exchange
for giving us the ability to search documents in their format. If the software provider also competes with us in the
search business, they may give their search technology a preferential ability to search documents in their
proprietary format. Any of these results could harm our brand and our operating results.

     New technologies could block our ads, which would harm our business.
     Technologies may be developed that can block the display of our ads. Most of our revenues are derived
from fees paid to us by advertisers in connection with the display of ads on web pages. As a result, ad-blocking
technology could, in the future, adversely affect our operating results.

    Our corporate culture has contributed to our success, and if we cannot maintain this culture as we grow,
we could lose the innovation, creativity and teamwork fostered by our culture, and our business may be
harmed.
     We believe that a critical contributor to our success has been our corporate culture, which we believe fosters
innovation, creativity and teamwork. As our organization grows, and we are required to implement more
complex organizational management structures, we may find it increasingly difficult to maintain the beneficial
aspects of our corporate culture. This could negatively impact our future success. In addition, our initial public
offering has created disparities in wealth among Google employees, which may adversely impact relations
among employees and our corporate culture in general.

     Our intellectual property rights are valuable, and any inability to protect them could reduce the value of
our products, services and brand.
     Our patents, trademarks, trade secrets, copyrights and all of our other intellectual property rights are
important assets for us. There are events that are outside of our control that pose a threat to our intellectual
property rights as well as to our products and services. For example, effective intellectual property protection
may not be available in every country in which our products and services are distributed or made available
through the Internet. Also, the efforts we have taken to protect our proprietary rights may not be sufficient or
effective. Any significant impairment of our intellectual property rights could harm our business or our ability to
compete. Also, protecting our intellectual property rights is costly and time consuming. Any increase in the

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unauthorized use of our intellectual property could make it more expensive to do business and harm our
operating results.

     Although we seek to obtain patent protection for our innovations, it is possible we may not be able to protect
some of these innovations. In addition, given the costs of obtaining patent protection, we may choose not to
protect certain innovations that later turn out to be important. Furthermore, there is always the possibility, despite
our efforts, that the scope of the protection gained will be insufficient or that an issued patent may be deemed
invalid or unenforceable. Finally, third parties increasingly have and will continue to allege that Google products
and services infringe their patent rights.

     We also face risks associated with our trademarks. For example, there is a risk that the word “Google” could
become so commonly used that it becomes synonymous with the word “search.” If this happens, we could lose
protection for this trademark, which could result in other people using the word “Google” to refer to their own
products, thus diminishing our brand.

     We also seek to maintain certain intellectual property as trade secrets. The secrecy could be compromised
by third parties, or intentionally or accidentally by our employees, which would cause us to lose the competitive
advantage resulting from these trade secrets.

     We are, and may in the future be, subject to intellectual property rights claims, which are costly to
defend, could require us to pay damages and could limit our ability to use certain technologies in the future.
     Companies in the Internet, technology and media industries own large numbers of patents, copyrights,
trademarks and trade secrets and frequently enter into litigation based on allegations of infringement or other
violations of intellectual property rights. As we face increasing competition and become increasingly high
profile, the possibility of intellectual property rights claims against us grows. Our technologies may not be able
to withstand any third-party claims or rights against their use. Any intellectual property claims, with or without
merit, could be time-consuming, expensive to litigate or settle and could divert resources and attention. In
addition, many of our agreements with members of our Google Network require us to indemnify these members
for certain third-party intellectual property infringement claims, which would increase our costs as a result of
defending such claims and may require that we pay damages if there were an adverse ruling in any such claims.
An adverse determination also could prevent us from offering our products and services to others and may
require that we procure substitute products or services for these members.

     With respect to any intellectual property rights claim, we may have to pay damages or discontinue the
practices found to be in violation of a third party’s rights. We may have to seek a license to continue such
practices, which may not be available on reasonable terms and may significantly increase our operating expenses.
A license to continue such practices may not be available to us at all. As a result, we may also be required to
develop alternative non-infringing technology or practices or discontinue the practices. The development of
alternative non-infringing technology or practices could require significant effort and expense. If we cannot
obtain a license to continue such practices or develop alternative technology or practices for the infringing
aspects of our business, we may be forced to limit our product and service offerings and may be unable to
compete effectively. Any of these results could harm our brand and operating results.

      From time to time, we receive notice letters from patent holders alleging that certain of our products and
services infringe their patent rights. Some of these have resulted in litigation against us. Companies have also
filed trademark infringement and related claims against us over the display of ads in response to user queries that
include trademark terms.

      The outcomes of these lawsuits have differed from jurisdiction to jurisdiction. Courts in France have held us
liable for allowing advertisers to select certain trademarked terms as keywords. We are appealing those
decisions. We were also subject to two lawsuits in Germany on similar matters where the courts held that we are

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not liable for the actions of our advertisers prior to notification of trademark rights. We are litigating or have
recently litigated similar issues in other cases in the U.S., France, Germany, Israel, Italy and Austria.

     In order to provide users with more useful ads, in 2004 we revised our trademark policy in the U.S. and
Canada. Under our revised policy, we no longer disable ads due to selection by our advertisers of trademarks as
keyword triggers for the ads. We are currently defending this policy in trademark infringement lawsuits in the
United States. Defending these lawsuits is consuming time and resources. Adverse results in these lawsuits may
result in, or even compel, a change in this practice which could result in a loss of revenue for us, which could
harm our business.

     Certain entities have also filed copyright claims against us, alleging that features of certain of our products,
including Google Web Search, Google News, Google Image Search, and Google Book Search, infringe their
rights. Adverse results in these lawsuits may include awards of damages and may also result in, or even compel,
a change in our business practices, which could result in a loss of revenue for us or otherwise harm our business.
In addition, generally speaking, any time that we have a product or service that links to or hosts material in which
others allege to own copyrights, we face the risk of being sued for copyright infringement or related claims.
Because these products and services comprise the majority of our products and services, the risk of potential
harm from such lawsuits is substantial.

     Our international operations are subject to increased risks which could harm our business, operating
results and financial condition.
     Although we only opened our first office outside the U.S. in 2001, international revenues accounted for
approximately 42% of our total revenues in the first quarter of 2006 and more than half of our user traffic came
from outside the U.S. during this period. We have only limited experience with operations outside the U.S. and
our ability to manage our business and conduct our operations internationally requires considerable management
attention and resources and is subject to a number of risks, including the following:
     •   Challenges caused by distance, language and cultural differences and in doing business with foreign
         agencies and governments.
     •   Difficulties in developing products and services in different languages and for different cultures.
     •   Longer payment cycles in some countries.
     •   Credit risk and higher levels of payment fraud.
     •   Currency exchange rate fluctuations.
     •   Foreign exchange controls that might prevent us from repatriating cash earned in countries outside the
         U.S.
     •   Import and export requirements that may prevent us from shipping products or providing services to a
         particular market and may increase our operating costs
     •   Political and economic instability.
     •   Potentially adverse tax consequences.
     •   Higher costs associated with doing business internationally.

     In addition, compliance with foreign and U.S. laws and regulations that are applicable to our international
operations is complex and may increase our cost of doing business in international jurisdictions and our
international operations could expose us to fines and penalties if we fail to comply with these regulations. These
laws and regulations include import and export requirements, U.S. laws such as the Foreign Corrupt Practices
Act, and local laws prohibiting corrupt payments to governmental officials. Although we have implemented
policies and procedures designed to ensure compliance with these laws, there can be no assurance that our
employees, contractors and agents will not take actions in violation of our policies. Any such violations could

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subject us to civil or criminal penalties, including substantial fines or prohibitions on our ability to offer our
products and services to one or more countries, and could also materially damage our reputation, our brand, our
international expansion efforts, our business and our operating results.

     We compete internationally with local information providers and with U.S. competitors who are currently
more successful than we are in various markets, and if we fail to compete effectively in international markets,
our business will be harmed.
      We face different market characteristics and competition outside the U.S. In certain markets, other web
search, advertising services and Internet companies have greater brand recognition, more users and more search
traffic than we have. Even in countries where we have a significant user following, we may not be as successful
in generating advertising revenue due to slower market development, our inability to provide attractive local
advertising services or other factors. In order to compete, we need to improve our brand recognition and our
selling efforts internationally and build stronger relationships with advertisers. We also need to better understand
our international users and their preferences. If we fail to do so, our global expansion efforts may be more costly
and less profitable than we expect.

     Our business may be adversely affected by malicious third-party applications that interfere with, or
exploit security flaws in, our products and services.
      Our business may be adversely affected by malicious applications that make changes to our users’
computers and interfere with the Google experience. These applications have in the past attempted, and may in
the future attempt, to change our users’ Internet experience, including hijacking queries to Google.com, altering
or replacing Google search results, or otherwise interfering with our ability to connect with our users. The
interference often occurs without disclosure to or consent from users, resulting in a negative experience that users
may associate with Google. These applications may be difficult or impossible to uninstall or disable, may
reinstall themselves and may circumvent other applications’ efforts to block or remove them. In addition, we
offer a number of products and services that our users download to their computers or that they rely on to store
information and transmit information to others over the Internet. These products and services are subject to attack
by viruses, worms and other malicious software programs, which could jeopardize the security of information
stored in a user’s computer or in our computer systems and networks. The ability to reach users and provide them
with a superior experience is critical to our success. If our efforts to combat these malicious applications are
unsuccessful, or if our products and services have actual or perceived vulnerabilities, our reputation may be
harmed and our user traffic could decline, which would damage our business.

     If we fail to detect click fraud or other invalid clicks, we could face potential litigation as well as lose the
confidence of our advertisers, which would cause our business to suffer.
     We are exposed to the risk of fraudulent clicks and other invalid clicks on our ads from a variety of potential
sources. We have regularly refunded fees that our advertisers have paid to us that were later attributed to click
fraud and other invalid clicks, and we expect to do so in the future. Invalid clicks are clicks that we have
determined are not intended by the user to link to the underlying content, such as inadvertent clicks on the same
ad twice and clicks resulting from click fraud. Click fraud occurs when a user intentionally clicks on a Google
AdWords ad displayed on a web site for a reason other than to view the underlying content. If we are unable to
stop these invalid clicks, these refunds may increase. If we find new evidence of past invalid clicks we may issue
refunds retroactively of amounts previously paid to our Google Network members. This would negatively affect
our profitability, and these invalid clicks could hurt our brand. If invalid clicks are not detected, the affected
advertisers may experience a reduced return on their investment in our advertising programs because the invalid
clicks will not lead to potential revenue for the advertisers. This could lead the advertisers to become dissatisfied
with our advertising programs, which has led to litigation alleging click fraud and could lead to further litigation,
as well as potentially leading to a loss of advertisers and revenues.




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    Index spammers could harm the integrity of our web search results, which could damage our reputation
and cause our users to be dissatisfied with our products and services.
      There is an ongoing and increasing effort by “index spammers” to develop ways to manipulate our web
search results. For example, because our web search technology ranks a web page’s relevance based in part on
the importance of the web sites that link to it, people have attempted to link a group of web sites together to
manipulate web search results. We take this problem very seriously because providing relevant information to
users is critical to our success. If our efforts to combat these and other types of index spamming are unsuccessful,
our reputation for delivering relevant information could be diminished. This could result in a decline in user
traffic, which would damage our business.

     Privacy concerns relating to our technology could damage our reputation and deter current and potential
users from using our products and services.
      From time to time, concerns may be expressed about whether our products and services compromise the
privacy of users and others. Concerns about our practices with regard to the collection, use, disclosure or security
of personal information or other privacy-related matters, even if unfounded, could damage our reputation and
operating results. While we strive to comply with all applicable data protection laws and regulations, as well as
our own posted privacy policies, any failure or perceived failure to comply may result in proceedings or actions
against us by government entities or others, which could potentially have an adverse affect on our business. Laws
related to data protection continue to evolve. It is possible that certain jurisdictions may enact laws or regulations
that impact our ability to offer our products and services in those jurisdictions, which could harm our business.

     Our business is subject to a variety of U.S. and foreign laws that could subject us to claims or other
remedies based on the nature and content of the information searched or displayed by our products and
services, and could limit our ability to provide information regarding regulated industries and products.
      The laws relating to the liability of providers of online services for activities of their users are currently
unsettled both within the U.S. and abroad. Claims have been threatened and filed under both U.S. and foreign law
for defamation, libel, invasion of privacy and other data protection claims, tort, unlawful activity, copyright or
trademark infringement, or other theories based on the nature and content of the materials searched and the ads
posted or the content generated by our users. From time to time we have received notices from individuals who
do not want their names or web sites to appear in our web search results when certain keywords are searched. It
is also possible that we could be held liable for misinformation provided over the web when that information
appears in our web search results. If one of these complaints results in liability to us, it could be potentially
costly, encourage similar lawsuits, distract management and harm our reputation and possibly our business. In
addition, increased attention focused on these issues and legislative proposals could harm our reputation or
otherwise affect the growth of our business.

      The application to us of existing laws regulating or requiring licenses for certain businesses of our
advertisers, including, for example, distribution of pharmaceuticals, adult content, financial services, alcohol or
firearms, can be unclear. Existing or new legislation could expose us to substantial liability, restrict our ability to
deliver services to our users, limit our ability to grow and cause us to incur significant expenses in order to
comply with such laws and regulations.

      Several other federal laws could have an impact on our business. Compliance with these laws and
regulations is complex and may impose significant additional costs on us. For example, the Digital Millennium
Copyright Act has provisions that limit, but do not eliminate, our liability for listing or linking to third-party web
sites that include materials that infringe copyrights or other rights, so long as we comply with the statutory
requirements of this act. The Children’s Online Protection Act and the Children’s Online Privacy Protection Act
restrict the distribution of materials considered harmful to children and impose additional restrictions on the
ability of online services to collect information from minors. In addition, the Protection of Children from Sexual
Predators Act of 1998 requires online service providers to report evidence of violations of federal child

                                                          48
pornography laws under certain circumstances. Any failure on our part to comply with these regulations may
subject us to additional liabilities.

      We also face risks associated with international data protection. The interpretation and application of data
protection laws in Europe and elsewhere are still uncertain and in flux. It is possible that these laws may be
interpreted and applied in a manner that is inconsistent with our data practices. If so, in addition to the possibility
of fines, this could result in an order requiring that we change our data practices, which in turn could have a
material effect on our business.

     If we were to lose the services of Eric, Larry, Sergey or our senior management team, we may not be able
to execute our business strategy.
     Our future success depends in a large part upon the continued service of key members of our senior
management team. In particular, our CEO Eric Schmidt and our founders Larry Page and Sergey Brin are critical
to the overall management of Google as well as the development of our technology, our culture and our strategic
direction. All of our executive officers and key employees are at-will employees, and we do not maintain any
key-person life insurance policies. The loss of any of our management or key personnel could seriously harm our
business.

     The initial option grants to many of our senior management and key employees are fully vested.
Therefore, these employees may not have sufficient financial incentive to stay with us, we may have to incur
costs to replace key employees who leave, and our ability to execute our business model could be impaired if
we cannot replace departing employees in a timely manner.
     Many of our senior management personnel and other key employees have become, or will soon become,
substantially vested in their initial stock option grants. While we often grant additional stock options to
management personnel and other key employees after their hire dates to provide additional incentives to remain
employed by us, these follow-on grants are typically much smaller than the initial grants. Employees may be
more likely to leave us after their initial option grant fully vests, especially if the shares underlying the options
have significantly appreciated in value relative to the option exercise price. We have not given any additional
stock grants to Eric, Larry or Sergey, and Eric, Larry and Sergey are fully vested in their existing grants. If any
members of our senior management team leave the company, our ability to successfully operate our business
could be impaired. We also may have to incur significant costs in identifying, hiring, training and retaining
replacements for departing employees.

     We rely on highly skilled personnel and, if we are unable to retain or motivate key personnel or hire
qualified personnel, we may not be able to grow effectively.
      Our performance is largely dependent on the talents and efforts of highly skilled individuals. Our future
success depends on our continuing ability to identify, hire, develop, motivate and retain highly skilled personnel
for all areas of our organization. Competition in our industry for qualified employees is intense, and we are aware
that certain of our competitors have directly targeted our employees. Our continued ability to compete effectively
depends on our ability to attract new employees and to retain and motivate our existing employees.

     We have in the past maintained a rigorous, highly selective and time-consuming hiring process. We believe
that our approach to hiring has significantly contributed to our success to date. As we grow, our hiring process
may prevent us from hiring the personnel we need in a timely manner. In addition, as we become a more mature
company, we may find our recruiting efforts more challenging. The incentives to attract, retain and motivate
employees provided by our option grants may not be as effective as in the past and our current and future
compensation arrangements, which include cash bonuses, may not be successful in attracting new employees and
retaining and motivating our existing employees. In addition, we have recently introduced new stock award
programs, and under these new programs new employees will be issued a portion of their stock awards in the
form of restricted stock units. These restricted stock units will vest based on individual performance, as well as
the exercise price of their stock options as compared to that of other employees who started at about the same

                                                          49
time. These new stock awards programs may not provide adequate incentives to attract, retain and motivate
outstanding performers. If we do not succeed in attracting excellent personnel or retaining or motivating existing
personnel, we may be unable to grow effectively.

    Our CEO and our two founders run the business and affairs of the company collectively, which may
harm their ability to manage effectively.
     Eric, our CEO, and Larry and Sergey, our founders and presidents, currently provide leadership to the
company as a team. Our bylaws provide that our CEO and our presidents will together have general supervision,
direction and control of the company, subject to the control of our board of directors. As a result, Eric, Larry and
Sergey tend to operate the company collectively and to consult extensively with each other before significant
decisions are made. This may slow the decision-making process, and a disagreement among these individuals
could prevent key strategic decisions from being made in a timely manner. In the event our CEO and our two
founders are unable to continue to work well together in providing cohesive leadership, our business could be
harmed.

     We have a short operating history and a relatively new business model in an emerging and rapidly
evolving market. This makes it difficult to evaluate our future prospects and may increase the risk that we will
not continue to be successful.
      We first derived revenue from our online search business in 1999 and from our advertising services in 2000,
and we have only a short operating history with our cost-per-click advertising model, which we launched in 2002
and our new cost-per-impression advertising model which we launched in the second quarter of 2005. As a result,
we have very little operating history for you to evaluate in assessing our future prospects. Also, we derive nearly
all of our revenues from online advertising, which is an immature industry that has undergone rapid and dramatic
changes in its short history. You must consider our business and prospects in light of the risks and difficulties we
will encounter as an early-stage company in a new and rapidly evolving market. We may not be able to
successfully address these risks and difficulties, which could materially harm our business and operating results.

     We may have difficulty scaling and adapting our existing architecture to accommodate increased traffic
and technology advances or changing business requirements, which could lead to the loss of users, advertisers
and Google Network members, and cause us to incur expenses to make architectural changes.
     To be successful, our network infrastructure has to perform well and be reliable. The greater the user traffic
and the greater the complexity of our products and services, the more computing power we will need. In 2005,
we spent substantial amounts and we expect this spending to continue as we purchase or lease data centers and
equipment and upgrade our technology and network infrastructure to handle increased traffic on our web sites
and to roll out new products and services. This expansion is expensive and complex and could result in
inefficiencies or operational failures. If we do not implement this expansion successfully, or if we experience
inefficiencies and operational failures during the implementation, the quality of our products and services and our
users’ experience could decline. This could damage our reputation and lead us to lose current and potential users,
advertisers and Google Network members. The costs associated with these adjustments to our architecture could
harm our operating results. Cost increases, loss of traffic or failure to accommodate new technologies or
changing business requirements could harm our operating results and financial condition.

     We rely on bandwidth providers, data centers or other third parties for key aspects of the process of
providing products and services to our users, and any failure or interruption in the services and products
provided by these third parties could harm our ability to operate our business and damage our reputation.
     We rely on third-party vendors, including data center and bandwidth providers. Any disruption in the
network access or colocation services provided by these third-party providers or any failure of these third-party
providers to handle current or higher volumes of use could significantly harm our business. Any financial or
other difficulties our providers face may have negative effects on our business, the nature and extent of which we
cannot predict. We exercise little control over these third-party vendors, which increases our vulnerability to

                                                         50
problems with the services they provide. We license technology and related databases from third parties to
facilitate aspects of our data center and connectivity operations including, among others, Internet traffic
management services. We have experienced and expect to continue to experience interruptions and delays in
service and availability for such elements. Any errors, failures, interruptions or delays experienced in connection
with these third-party technologies and information services could negatively impact our relationship with users
and adversely affect our brand and our business and could expose us to liabilities to third parties.

     Our systems are also heavily reliant on the availability of electricity, which also comes from third-party
providers. If we were to experience a major power outage, we would have to rely on back-up generators. These
back-up generators may not operate properly through a major power outage and their fuel supply could also be
inadequate during a major power outage. This could result in a disruption of our business.

      Interruption or failure of our information technology and communications systems could impair our
ability to effectively provide our products and services, which could damage our reputation and harm our
operating results.
      Our provision of our products and services depends on the continuing operation of our information
technology and communications systems. Any damage to or failure of our systems could result in interruptions in
our service. Interruptions in our service could reduce our revenues and profits, and our brand could be damaged
if people believe our system is unreliable. Our systems are vulnerable to damage or interruption from
earthquakes, terrorist attacks, floods, fires, power loss, telecommunications failures, computer viruses, computer
denial of service attacks or other attempts to harm our systems, and similar events. Some of our data centers are
located in areas with a high risk of major earthquakes. Our data centers are also subject to break-ins, sabotage
and intentional acts of vandalism, and to potential disruptions if the operators of these facilities have financial
difficulties. Some of our systems are not fully redundant, and our disaster recovery planning cannot account for
all eventualities. The occurrence of a natural disaster, a decision to close a facility we are using without adequate
notice for financial reasons or other unanticipated problems at our data centers could result in lengthy
interruptions in our service.

     We have experienced system failures in the past and may in the future. For example, in November 2003 we
failed to provide web search results for approximately 20% of our traffic for a period of about 30 minutes. Any
unscheduled interruption in our service puts a burden on our entire organization and would result in an
immediate loss of revenue. If we experience frequent or persistent system failures on our web sites, our
reputation and brand could be permanently harmed. The steps we have taken to increase the reliability and
redundancy of our systems are expensive, reduce our operating margin and may not be successful in reducing the
frequency or duration of unscheduled downtime.

     More individuals are using non-PC devices to access the Internet, and versions of our web search
technology developed for these devices may not be widely adopted by users of these devices.
     The number of people who access the Internet through devices other than personal computers, including
mobile telephones, hand-held calendaring and email assistants, and television set-top devices, has increased
dramatically in the past few years. The lower resolution, functionality and memory associated with alternative
devices make the use of our products and services through such devices difficult. If we are unable to attract and
retain a substantial number of alternative device users to our web search services or if we are slow to develop
products and technologies that are more compatible with non-PC communications devices, we will fail to capture
a significant share of an increasingly important portion of the market for online services.

    Payments to certain of our Google Network members have exceeded the related fees we receive from our
advertisers.
    We have entered into, and may continue to enter into, minimum fee guarantee agreements with a small
number of Google Network members. In these agreements, we promise to make minimum payments to the
Google Network member for a pre-negotiated period of time, typically from three months to a year or more. It is

                                                         51
difficult to forecast with certainty the fees that we will earn under our agreements, and sometimes the fees we
earn fall short of the minimum guarantee payment amounts. Also, increasing competition for arrangements with
web sites that are potential Google Network members could result in our entering into more of these minimum
fee guarantee agreements under which guaranteed payments exceed the fees we receive from advertisers whose
ads we place on those Google Network member sites. In each period to date, the aggregate fees we have earned
under these agreements have exceeded the aggregate amounts we have been obligated to pay these Google
Network members. However, individual agreements have resulted in guaranteed minimum and other payments to
certain Google Network members in excess of the related fees we receive from advertisers. We expect that some
individual agreements will continue to result in guaranteed minimum and other payments to certain Google
Network members in excess of the related fees we receive from advertisers, which will adversely affect our
profitability. However, we expect that the aggregate fees we will earn under agreements with guaranteed
minimum and other payments will exceed the aggregate amounts we will be obligated to pay these Google
Network members.

    To the extent our revenues are paid in foreign currencies, and currency exchange rates become
unfavorable, we may lose some of the economic value of the revenues in U.S. dollar terms.
      As we expand our international operations, more of our customers may pay us in foreign currencies.
Conducting business in currencies other than U.S. dollars subjects us to fluctuations in currency exchange rates.
If the currency exchange rates were to change unfavorably, the value of net receivables we receive in foreign
currencies and later convert to U.S. dollars after the unfavorable change would be diminished. This could have a
negative impact on our reported operating results. Hedging strategies, such as forward contracts, options and
foreign exchange swaps related to transaction exposures, that we have implemented or may implement to
mitigate this risk may not eliminate our exposure to foreign exchange fluctuations. Additionally, hedging
programs expose us to risks that could adversely affect our operating results, including the following:
     •   We have limited experience in implementing or operating hedging programs. Hedging programs are
         inherently risky and we could lose money as a result of poor trades.
     •   We may be unable to hedge currency risk for some transactions because of a high level of uncertainty or
         the inability to reasonably estimate our foreign exchange exposures.
     •   We may be unable to acquire foreign exchange hedging instruments in some of the geographic areas
         where we do business, or, where these derivatives are available, we may not be able to acquire enough
         of them to fully offset our exposure.

     We may have exposure to greater than anticipated tax liabilities.
     Our future income taxes could be adversely affected by earnings being lower than anticipated in
jurisdictions where we have lower statutory rates and higher than anticipated in jurisdictions where we have
higher statutory rates, by changes in the valuation of our deferred tax assets and liabilities, or by changes in tax
laws, regulations, accounting principles or interpretations thereof. Our determination of our tax liability (like any
company’s determination of its tax liability) is subject to review by applicable tax authorities. Any adverse
outcome of such a review could have an adverse effect on our operating results and financial condition. In
addition, the determination of our worldwide provision for income taxes and other tax liabilities requires
significant judgment and in the ordinary course of our business, there are many transactions and calculations
where the ultimate tax determination is uncertain. Although we believe our estimates are reasonable, the ultimate
tax outcome may differ from the amounts recorded in our financial statements and may materially affect our
financial results in the period or periods for which such determination is made.

     We rely on insurance to mitigate some risks and, to the extent the cost of insurance increases or we are
unable or choose not to maintain sufficient insurance to mitigate the risks facing our business, our operating
results may be diminished.
     We contract for insurance to cover certain potential risks and liabilities. In the current environment,
insurance companies are increasingly specific about what they will and will not insure. It is possible that we may

                                                         52
not be able to get enough insurance to meet our needs, may have to pay very high prices for the coverage we do
get or may not be able to acquire any insurance for certain types of business risk. In addition, we have in the past
and may in the future choose not to obtain insurance for certain risks facing our business. This could leave us
exposed to potential claims. If we were found liable for a significant claim in the future, our operating results
could be negatively impacted. Also, to the extent the cost of maintaining insurance increases, our operating
results will be negatively affected.

     Acquisitions could result in operating difficulties, dilution and other harmful consequences.
     We do not have a great deal of experience acquiring companies and the companies we have acquired have
typically been small. We have evaluated, and expect to continue to evaluate, a wide array of potential strategic
transactions. From time to time, we may engage in discussions regarding potential acquisitions. Any of these
transactions could be material to our financial condition and results of operations. In addition, the process of
integrating an acquired company, business or technology may create unforeseen operating difficulties and
expenditures and is risky. The areas where we may face risks include:
     •   The need to implement or remediate controls, procedures and policies appropriate for a larger public
         company at companies that prior to the acquisition lacked these controls, procedures and policies.
     •   Diversion of management time and focus from operating our business to acquisition integration
         challenges.
     •   Cultural challenges associated with integrating employees from the acquired company into our
         organization.
     •   Retaining employees from the businesses we acquire.
     •   The need to integrate each company’s accounting, management information, human resource and other
         administrative systems to permit effective management.

      Foreign acquisitions involve unique risks in addition to those mentioned above, including those related to
integration of operations across different cultures and languages, currency risks and the particular economic,
political and regulatory risks associated with specific countries.

     Also, the anticipated benefit of many of our acquisitions may not materialize. Future acquisitions or
dispositions could result in potentially dilutive issuances of our equity securities, the incurrence of debt,
contingent liabilities or amortization expenses, or write-offs of goodwill, any of which could harm our financial
condition. Future acquisitions may require us to obtain additional equity or debt financing, which may not be
available on favorable terms or at all.

     We occasionally become subject to commercial disputes that could harm our business by distracting our
management from the operation of our business, by increasing our expenses and, if we do not prevail, by
subjecting us to potential monetary damages and other remedies.
     From time to time we are engaged in disputes regarding our commercial transactions. These disputes could
result in monetary damages or other remedies that could adversely impact our financial position or operations.
Even if we prevail in these disputes, they may distract our management from operating our business and the cost
of defending these disputes would reduce our operating results.

    We have to keep up with rapid technological change to remain competitive in our rapidly evolving
industry.
      Our future success will depend on our ability to adapt to rapidly changing technologies, to adapt our
services to evolving industry standards and to improve the performance and reliability of our services. Our
failure to adapt to such changes would harm our business. New technologies and advertising media could
adversely affect us. In addition, the widespread adoption of new Internet, networking or telecommunications

                                                         53
technologies or other technological changes could require substantial expenditures to modify or adapt our
services or infrastructure.

     Our business depends on increasing use of the Internet by users searching for information, advertisers
marketing products and services and web sites seeking to earn revenue to support their web content. If the
Internet infrastructure does not grow and is not maintained to support these activities, our business will be
harmed.
     Our success will depend on the continued growth and maintenance of the Internet infrastructure. This
includes maintenance of a reliable network backbone with the necessary speed, data capacity and security for
providing reliable Internet services. Internet infrastructure may be unable to support the demands placed on it if
the number of Internet users continues to increase, or if existing or future Internet users access the Internet more
often or increase their bandwidth requirements. In addition, viruses, worms and similar programs may harm the
performance of the Internet. The Internet has experienced a variety of outages and other delays as a result of
damage to portions of its infrastructure, and it could face outages and delays in the future. These outages and
delays could reduce the level of Internet usage as well as our ability to provide our solutions.

     Changes in accounting rules for stock-based compensation may adversely affect our operating results,
our stock price and our competitiveness in the employee marketplace.
     We have a history of using employee stock options and other stock-based compensation to hire, motivate
and retain our employees. In December 2004, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 123R, “Share-Based Payment,” which required us, starting January 1, 2006,
to measure compensation costs for all stock-based compensation (including stock options) at fair value and to
recognize these costs as expenses in our statements of income. The recognition of these expenses in our
statements of income has had and will have a negative effect on our earnings per share, which could negatively
impact our stock price. In addition, if we reduce or alter our use of stock-based compensation to minimize the
recognition of these expenses, our ability to recruit, motivate and retain employees may be impaired, which could
put us at a competitive disadvantage in the employee marketplace.

Risks Related to Ownership of our Common Stock
     The trading price for our Class A common stock has been and may continue to be volatile.
     The trading price of our Class A common stock has been volatile since our initial public offering and will
likely continue to be volatile. The trading price of our Class A common stock may fluctuate widely in response to
various factors, some of which are beyond our control. These factors include:
     •   Quarterly variations in our results of operations or those of our competitors.
     •   Announcements by us or our competitors of acquisitions, new products, significant contracts,
         commercial relationships or capital commitments.
     •   Disruption to our operations or those of our Google Network members or our data centers.
     •   The emergence of new sales channels in which we are unable to compete effectively.
     •   Our ability to develop and market new and enhanced products on a timely basis.
     •   Commencement of, or our involvement in, litigation.
     •   Any major change in our board or management.
     •   Changes in governmental regulations or in the status of our regulatory approvals.
     •   Recommendations by securities analysts or changes in earnings estimates.
     •   Announcements about our earnings that are not in line with analyst expectations, the likelihood of which
         is enhanced because it is our policy not to give guidance on earnings.

                                                         54
     •   Announcements by our competitors of their earnings that are not in line with analyst expectations.
     •   The volume of shares of Class A common stock available for public sale.
     •   Sales of stock by us or by our stockholders.
     •   Short sales, hedging and other derivative transactions on shares of our Class A common stock.
     •   General economic conditions and slow or negative growth of related markets.

      In addition, the stock market in general, and the market for technology companies in particular, have
experienced extreme price and volume fluctuations that have often been unrelated or disproportionate to the
operating performance of those companies. These broad market and industry factors may seriously harm the
market price of our Class A common stock, regardless of our actual operating performance. In the past, following
periods of volatility in the overall market and the market price of a company’s securities, securities class action
litigation has often been instituted against these companies. This litigation, if instituted against us, could result in
substantial costs and a diversion of our management’s attention and resources.

     We do not intend to pay dividends on our common stock.
     We have never declared or paid any cash dividend on our capital stock. We currently intend to retain any
future earnings and do not expect to pay any dividends in the foreseeable future.

     The concentration of our capital stock ownership with our founders, executive officers and our directors
and their affiliates will limit your ability to influence corporate matters.
     Our Class B common stock has ten votes per share and our Class A common stock has one vote per share.
As of March 2006, our founders, executive officers and directors (and their affiliates) together owned shares of
Class A common stock and Class B common stock representing approximately 78% of the voting power of our
outstanding capital stock. In particular, as of December 31, 2005, our two founders and our CEO, Larry, Sergey
and Eric, controlled approximately 85% of our outstanding Class B common stock, representing approximately
69% of the voting power of our outstanding capital stock. Larry, Sergey and Eric therefore have significant
influence over management and affairs and over all matters requiring stockholder approval, including the
election of directors and significant corporate transactions, such as a merger or other sale of our company or its
assets, for the foreseeable future. In addition, because of this dual class structure, our founders, directors,
executives and employees will continue to be able to control all matters submitted to our stockholders for
approval even if they come to own less than 50% of the outstanding shares of our common stock. This
concentrated control limits your ability to influence corporate matters and, as a result, we may take actions that
our stockholders do not view as beneficial. As a result, the market price of our Class A common stock could be
adversely affected.

     Provisions in our charter documents and under Delaware law could discourage a takeover that
stockholders may consider favorable.
    Provisions in our certificate of incorporation and bylaws may have the effect of delaying or preventing a
change of control or changes in our management. These provisions include the following:
     •   Our certificate of incorporation provides for a dual class common stock structure. As a result of this
         structure our founders, executives and employees have significant influence over all matters requiring
         stockholder approval, including the election of directors and significant corporate transactions, such as a
         merger or other sale of our company or its assets. This concentrated control could discourage others
         from initiating any potential merger, takeover or other change of control transaction that other
         stockholders may view as beneficial.
     •   Our board of directors has the right to elect directors to fill a vacancy created by the expansion of the
         board of directors or the resignation, death or removal of a director, which prevents stockholders from
         being able to fill vacancies on our board of directors.

                                                          55
      •     Our stockholders may not act by written consent. As a result, a holder, or holders, controlling a majority
            of our capital stock would not be able to take certain actions without holding a stockholders’ meeting.
      •     Our certificate of incorporation prohibits cumulative voting in the election of directors. This limits the
            ability of minority stockholders to elect director candidates.
      •     Stockholders must provide advance notice to nominate individuals for election to the board of directors
            or to propose matters that can be acted upon at a stockholders’ meeting. These provisions may
            discourage or deter a potential acquiror from conducting a solicitation of proxies to elect the acquiror’s
            own slate of directors or otherwise attempting to obtain control of our company.
      •     Our board of directors may issue, without stockholder approval, shares of undesignated preferred stock.
            The ability to issue undesignated preferred stock makes it possible for our board of directors to issue
            preferred stock with voting or other rights or preferences that could impede the success of any attempt to
            acquire us.

     As a Delaware corporation, we are also subject to certain Delaware anti-takeover provisions. Under
Delaware law, a corporation may not engage in a business combination with any holder of 15% or more of its
capital stock unless the holder has held the stock for three years or, among other things, the board of directors has
approved the transaction. Our board of directors could rely on Delaware law to prevent or delay an acquisition of
us.


ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
Purchases of Equity Securities by Google
     Pursuant to the terms of our 1998 Stock Plan, 2000 Stock Plan, 2003 Stock Plan, 2003 Stock Plan (No. 2),
2003 Stock Plan (No. 3), 2004 Stock Plan and equity incentive plans assumed through acquisitions (collectively
referred to as our “Stock Plans”), options may typically be exercised prior to vesting. We have the right to
repurchase unvested shares from service providers upon their termination, and it is generally our policy to do so.
The following table provides information with respect to purchases made by us of shares of our common stock
during the three month period ended March 31, 2006:
                                                                                                                  Maximum Number (or
                                                                                                                   Approximate Dollar
                                                             Total                       Total Number of Shares   Value) of Shares that
                                                           Number of     Average Price    Purchased as Part of    May Yet Be Purchased
                                                            Shares         Paid per       Publicly Announced       Under the Plans or
Period                                                    Purchased(1)      Share          Plans or Programs           Programs

January 1 – 31 . . . . . . . . . . . . . . . . . . . .       4,603            $0.63              —                        —
February 1 – 28 . . . . . . . . . . . . . . . . . . .          —              $—                 —                        —
March 1 – 31 . . . . . . . . . . . . . . . . . . . . .       2,169            $4.95              —                        —
          Total . . . . . . . . . . . . . . . . . . . .      6,772            $2.01              —                        —

(1) All shares were originally purchased from us by employees pursuant to exercises of unvested stock options.
    During the months listed above, we routinely repurchased the shares from our service providers upon their
    termination of employment pursuant to our right to repurchase unvested shares at the original exercise price
    under the terms of our Stock Plans and the related stock option agreements.




                                                                         56
ITEM 6.      EXHIBITS

                                                                                     Location of Exhibit Incorporated by
                                                                                              reference herein
Exhibit
Number                                     Description                                   Form                 Date

 1.1           Underwriting Agreement dated March 31, 2006 between Google           Current Report     March 29, 2006
               Inc. and Goldman, Sachs & Co.                                         on Form 8-K
10.23*†        Agreement and Plan of Merger, dated as of January 16, 2006, by
               and among the Registrant, Enumclaw, Inc., dMarc
               Broadcasting, Inc. and certain other parties thereto
31.01*         Certification of Chief Executive Officer pursuant to Exchange
               Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to
               Section 302 of the Sarbanes-Oxley Act of 2003
31.02*         Certification of Chief Financial Officer pursuant to Exchange
               Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to
               Section 302 of the Sarbanes-Oxley Act of 2003
32.01‡         Certifications of Chief Executive Officer and Chief Financial
               Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant
               to Section 906 of the Sarbanes-Oxley Act of 2003

*      Filed herewith.
†      Confidential treatment has been requested for certain portions of this exhibit.
‡      Furnished herewith.




                                                          57
                                                SIGNATURES

     Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly
caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

                                                         GOOGLE INC.

Date: May 10, 2006                                       By:               /s/   ERIC SCHMIDT
                                                                                  Eric Schmidt
                                                                       Chairman of the Executive Committee
                                                                           and Chief Executive Officer




                                                       58
                                                EXHIBIT INDEX

                                                                                     Location of Exhibit Incorporated by
                                                                                              reference herein
Exhibit
Number                                   Description                                     Form                 Date

 1.1        Underwriting Agreement dated March 31, 2006 between Google              Current Report     March 29, 2006
            Inc. and Goldman, Sachs & Co.                                            on Form 8-K
10.23 *†    Agreement and Plan of Merger, dated as of January 16, 2006, by
            and among the Registrant, Enumclaw, Inc., dMarc Broadcasting,
            Inc. and certain other parties thereto
31.01 *     Certification of Chief Executive Officer pursuant to Exchange
            Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to
            Section 302 of the Sarbanes-Oxley Act of 2003
31.02 *     Certification of Chief Financial Officer pursuant to Exchange
            Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to
            Section 302 of the Sarbanes-Oxley Act of 2003
32.01‡      Certifications of Chief Executive Officer and Chief Financial
            Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant
            to Section 906 of the Sarbanes-Oxley Act of 2003

* Filed herewith.
† Confidential treatment has been requested for certain portions of this exhibit.
‡ Furnished herewith.
                                                     Exhibit 10.23

        AGREEMENT AND PLAN OF MERGER
                 BY AND AMONG
                   GOOGLE INC.
                 ENUMCLAW, INC.
           DMARC BROADCASTING, INC.
AND, WITH RESPECT TO ARTICLES VIII, IX AND X ONLY,
               H. RICHARD DALLAS
        AS STOCKHOLDER REPRESENTATIVE
                        AND
        U.S. BANK, NATIONAL ASSOCIATION
                AS ESCROW AGENT

             Dated as of January 16, 2006
                                                                   TABLE OF CONTENTS

                                                                                                                                                                             Page

ARTICLE I THE MERGER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .     1
        T
      1.1 he Merger                                                                                                                                                           1
        E
      1.2 ffective Time                                                                                                                                                       2
        E
      1.3 ffect of the Merger                                                                                                                                                 2
        C
      1.4 ertificate of Incorporation and Bylaws                                                                                                                              2
        D
      1.5 irectors and Officers                                                                                                                                               2
        E
      1.6 ffect of Merger on the Capital Stock of the Constituent Corporations                                                                                                3
        D
      1.7 issenting Shares                                                                                                                                                    7
        S
      1.8 urrender of Certificates                                                                                                                                            8
        N
      1.9 o Further Ownership Rights in Company Capital Stock                                                                                                                10
        Lost,
      1.10 Stolen or Destroyed Certificates                                                                                                                                  10
        Taking of Necessary Action; Further Action
      1.11                                                                                                                                                                   10
ARTICLE II CONTINGENT CONSIDERATION PROVISIONS                                                                                                                               10
        G
      2.1 eneral Provisions                                                                                                                                                  10
        D
      2.2 efinitions Applicable to this Article II                                                                                                                           12
        C
      2.3 ontingent Payments                                                                                                                                                 18
        R
      2.4 eports and Payment                                                                                                                                                 19
        S
      2.5 tockholder Representative Review                                                                                                                                   21
        D
      2.6 isagreements                                                                                                                                                       21
        E
      2.7 xclusion of Excludable Contracts                                                                                                                                   23
        S
      2.8 upport and Control                                                                                                                                                 26
        N
      2.9 o Guarantee of Employment                                                                                                                                          27
        No
      2.10 Other Representations, Warranties or Commitments                                                                                                                  27
        Certain Transactions
      2.11                                                                                                                                                                   27
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY                                                                                                                    27
        O
      3.1 rganization of the Company                                                                                                                                         28
        C
      3.2 ompany Capital Structure                                                                                                                                           28
        S
      3.3 ubsidiaries                                                                                                                                                        30
        A
      3.4 uthority                                                                                                                                                           30
        N
      3.5 o Conflict                                                                                                                                                         31
        C
      3.6 onsents                                                                                                                                                            31
        C
      3.7 ompany Financial Statements                                                                                                                                        32
        N
      3.8 o Undisclosed Liabilities                                                                                                                                          32
        N
      3.9 o Changes                                                                                                                                                          32
        Accounts Receivable
      3.10                                                                                                                                                                   34
        Tax
      3.11 Matters                                                                                                                                                           34
        Restrictions on Business Activities
      3.12                                                                                                                                                                   36
        Title
      3.13 to Properties; Absence of Liens and Encumbrances; Condition of Equipment                                                                                          37
        Intellectual Property
      3.14                                                                                                                                                                   37
        Agreements, Contracts and Commitments
      3.15                                                                                                                                                                   43
        Interested Party Transactions
      3.16                                                                                                                                                                   45
        Company Authorizations
      3.17                                                                                                                                                                   46
        Litigation
      3.18                                                                                                                                                                   46
        Minute Books
      3.19                                                                                                                                                                   46




                                                                                    -i-
                                                            TABLE OF CONTENTS
                                                                (continued)

                                                                                                                                                           Page

        Environmental Matters
      3.20                                                                                                                                                 46
        Brokers’ and Finders’ Fees
      3.21                                                                                                                                                 47
        Employee Benefit Plans and Compensation
      3.22                                                                                                                                                 47
        Insurance
      3.23                                                                                                                                                 52
        Compliance with Laws
      3.24                                                                                                                                                 52
        Export Control Laws
      3.25                                                                                                                                                 52
        Customers and Suppliers
      3.26                                                                                                                                                 52
        Complete Copies of Materials
      3.27                                                                                                                                                 53
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF PARENT AND SUB . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                                      53
        O
      4.1 rganization                                                                                                                                      54
        A
      4.2 uthority                                                                                                                                         54
        N
      4.3 o Conflict                                                                                                                                       54
        C
      4.4 onsents                                                                                                                                          54
        L
      4.5 itigation                                                                                                                                        54
ARTICLE V CONDUCT PRIOR TO THE EFFECTIVE TIME . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                54
        C
      5.1 onduct of Business of the Company and the Subsidiaries                                                                                           54
        N
      5.2 o Solicitation                                                                                                                                   57
        P
      5.3 rocedures for Requesting Parent Consent                                                                                                          58
ARTICLE VI ADDITIONAL AGREEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   59
        C
      6.1 ompany Stockholder Approval                                                                                                                      59
        A
      6.2 ccess to Information                                                                                                                             59
        C
      6.3 onfidentiality                                                                                                                                   60
        P
      6.4 ublic Disclosure                                                                                                                                 60
        R
      6.5 easonable Efforts                                                                                                                                60
        N
      6.6 otification of Certain Matters                                                                                                                   60
        A
      6.7 dditional Documents and Further Assurances                                                                                                       61
        C
      6.8 onversion of Preferred Stock                                                                                                                     61
        T
      6.9 reatment of Company Warrants                                                                                                                     61
        Amendment to Plans
      6.10                                                                                                                                                 61
        Consents
      6.11                                                                                                                                                 61
        Terminated Agreements
      6.12                                                                                                                                                 61
        Modified Agreements
      6.13                                                                                                                                                 62
        Notices
      6.14                                                                                                                                                 62
        Proprietary Information and Inventions Assignment Agreement
      6.15                                                                                                                                                 62
        New
      6.16 Employment Arrangements                                                                                                                         62
        Agreements and Documents Delivered at Signing
      6.17                                                                                                                                                 62
        Non-Competition Agreements
      6.18                                                                                                                                                 62
        Resignation of Officers and Directors
      6.19                                                                                                                                                 63
        Releases of Officers
      6.20                                                                                                                                                 63
        Termination of 401(k) Plan
      6.21                                                                                                                                                 63
        Expenses
      6.22                                                                                                                                                 63
        Spreadsheet
      6.23                                                                                                                                                 63
        Release of Liens
      6.24                                                                                                                                                 64
        FIRPTA Compliance
      6.25                                                                                                                                                 64
        Director and Officer Liability and Indemnification
      6.26                                                                                                                                                 64




                                                                           -ii-
                                                                   TABLE OF CONTENTS
                                                                       (continued)

                                                                                                                                                                       Page

ARTICLE VII CONDITIONS TO THE MERGER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .             65
      7.1Conditions to Obligations of Each Party to Effect the Merger                                                                                                  65
      7.2Conditions to Obligations of Parent and Sub                                                                                                                   65
      7.3Conditions to Obligations of the Company                                                                                                                      68
ARTICLE VIII SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ESCROW . . . . . . . . . . . . . . . . . . . . . . . . . . .                                                  69
      8.1Survival of Representations and Warranties                                                                                                                    69
      8.2Indemnification                                                                                                                                               70
      8.3Maximum Payments; Remedy                                                                                                                                      71
      8.4Claims for Indemnification; Resolution of Conflicts                                                                                                           72
      8.5Setoff for Losses                                                                                                                                             74
      8.6Escrow Arrangements                                                                                                                                           75
      8.7Third-Party Claims                                                                                                                                            78
      8.8Stockholder Representative                                                                                                                                    78
ARTICLE IX TERMINATION, AMENDMENT AND WAIVER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                           79
      9.1Termination                                                                                                                                                   79
      9.2Effect of Termination                                                                                                                                         80
      9.3Amendment                                                                                                                                                     80
      9.4Extension; Waiver                                                                                                                                             80
ARTICLE X GENERAL PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   81
         N
      10.1 otices                                                                                                                                                      81
         I
      10.2nterpretation                                                                                                                                                82
         C
      10.3 ounterparts                                                                                                                                                 82
         E
      10.4 ntire Agreement; Assignment                                                                                                                                 82
         S
      10.5 everability                                                                                                                                                 82
         O
      10.6 ther Remedies                                                                                                                                               82
         G
      10.7 overning Law; Exclusive Jurisdiction                                                                                                                        82
         R
      10.8 ules of Construction                                                                                                                                        83
         L
      10.9 egal Representation                                                                                                                                         83
         Resolution of Conflicts; Arbitration
      10.10                                                                                                                                                            83

                                                                              *****




                                                                                  -iii-
                                                         INDEX OF EXHIBITS

Exhibit                       Description

Exhibit A . . . . . . . .     Cash Bonus Plan
Exhibit B . . . . . . . .     Form of Written Consent
Exhibit C . . . . . . . .     Form of Proxy
Exhibit D . . . . . . . .     Form of Securityholder Agreement
Exhibit E . . . . . . . .     Form of Certificate of Merger
Exhibit F . . . . . . . .     Form of Letter of Transmittal
Exhibit G . . . . . . . .     Form of Non-Competition Agreements
Exhibit H . . . . . . . .     Form of Director and Officer Resignation Letter
Exhibit I . . . . . . . . .   Form of Officer Release Letter
Exhibit J . . . . . . . .     Form of Legal Opinion of Counsel of the Company
Exhibit K . . . . . . . .     Form of Legal Opinion of Reed Smith LLP
Exhibit L . . . . . . . .     Form of Legal Opinion of Counsel of Parent

Schedules                     Description

Schedule 1.6(a)(i) .          Key Employees
Schedule 1.6(a)(ii) .         Knowledge
Schedule 2.2(s) . . .         Approved Contracts
Schedule 2.2(z)(i) .          2006-2007 Inventory Table
Schedule 2.2(z)(ii) .         2008 Inventory Table
Schedule 2.2(kk)(i)           2006-2007 Revenue Table
Schedule 2.2(kk)(ii)          2008 Revenue Table
Schedule 3.14(p)(i)           Form of Employee Proprietary Information Agreement
Schedule 3.14(p)(ii)          Form of Consultant Proprietary Information Agreement
Schedule 6.1(a) . . .         Company Stockholder Approval
Schedule 6.23 . . . .         Spreadsheet
Schedule 7.2(j) . . .         Third Party Consents
Schedule 7.2(k) . . .         Terminated Agreements
Schedule 7.2(l) . . .         Modified Agreements
Schedule 7.2(m) . .           Notices
Schedule 7.2(n) . . .         Proprietary Information and Inventions Assignment Agreements
Schedule 7.2(p) . . .         Non-Competition Agreements
Schedule 7.2(u) . . .         Release of Liens
Schedule 8.2(a)(v) .          Other Indemnity Matters




                                                                   -iv-
                                                                               INDEX OF DEFINED TERMS

                                                                                                                                                                                          Section Reference
Term                                                                                                                                                                                        in Agreement

2006-2007 Inventory Table . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                         2.2(z)
2006-2007 Revenue Table . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                         2.2(kk)
2008 Inventory Table . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                    2.2(z)
2008 Revenue Table . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                    2.2(kk)
280G Approval . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                 6.1(d)
401(k) Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .           6.21
acquire . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .          2.2
Acquisition Contract . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                  2.7(a)
Action of Divestiture . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                  6.5
Additional Escrow Amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                          1.6(a)
Adjusted Listener Count . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                    2.2
Affiliate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .          2.2
Affiliated . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .           2.2
Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .           Preamble
[***] . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .        2.2
Arbitron . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .           2.2
AudioAds Product . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                   2.2
AudioAds Operating Group . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                         2.2
Authorized Claim . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                  8.6(d)
Balance Sheet Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                 3.7
Barter Transaction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                 2.2
Basket . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .          8.3(e)
[***] . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .         2.7(c)
[***] . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .         2.7(f)
Board Recommendation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                        6.1(c)
Bonus Unit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .              1.6(c)(iii)
Broadcast Automation Product . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                           2.2
Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .            1.6(a)
Business Day(s) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                 1.6(a)
California Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                1.7(a)
Cash Bonus Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .              Recitals
Certificate of Incorporation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                      3.1(a)
Certificate of Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                  1.2
Chad . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .          2.7(e)(i)
Charter Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                   3.1(a)
Claim Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .              8.4(a)(i)
Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .          1.2
Closing Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .             1.2
Closing Stockholder Consent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                         1.6(a)
COBRA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .              3.22(a)
Code . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .          1.6(a)
Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .         Preamble
Company Authorizations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                      3.17
Company Capital Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                       1.6(a)
Company Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                          1.6(a)
Company Disclosure Schedule . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                       Article III

***      Certain information on this page has been omitted and filed separately with the Securities and Exchange Commission.
         Confidential treatment has been requested with respect to the omitted portions.




                                                                                                       -v-
                                                                               INDEX OF DEFINED TERMS
                                                                                      (continued)

                                                                                                                                                                                          Section Reference
Term                                                                                                                                                                                        in Agreement

Company Employee Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                         3.22(a)
Company Indemnified Person . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                            6.26
Company Intellectual Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                         3.14(a)
Company Options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                    1.6(a)
Company Preferred Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                          1.6(a)
Company Registered Intellectual Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                                3.14(b)
Company Series A Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                                  1.6(a)
Company Series A Preferred Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                               1.6(a)
Company Series B Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                                  1.6(a)
Company Series B-1 Preferred Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                               1.6(a)
Company Series B-2 Preferred Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                               1.6(a)
Company Stock Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                         1.8(c)
Company System . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                     2.2
Company Warrants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                     1.6(a)
Confidential Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                       2.5(b)
Conflict . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .           3.5
Consultant Proprietary Information Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                                    3.14(p)
Contaminants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                3.14(v)
Contingent Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                     1.6(a)
Contingent Payment Holdback . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                            8.5(b)(ii)
Contingent Payment Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                         2.2
Contract . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .             1.6(a)
Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .            1.6(a)
Costs of Revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                    2.2
[***] . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .          2.2
Covered Inventory Amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                           2.2
Covered Net Revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                      2.2
Covered Radio Advertisement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                            2.2
[***] . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .          2.2
Covered Radio Media . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                      2.2
[***] . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .          2.2
Covered Radio Spot . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                     2.2
Covered Radio Station . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                     3.26(a)
Covered Unused Radio Spot . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                            2.2
Covered Used Radio Spot . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                          2.2
Current Balance Sheet . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                      3.7
Customers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .             3.26(a)
[***] . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .          2.2
[***] . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .          2.7(d)
[***] . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .          2.7(d)
Delaware Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                 1.1
Director and Officer Resignation Letter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                             6.19
Dispute Arbitration Decision . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                         2.6(c)
Dispute Period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                 2.6(a)
***      Certain information on this page has been omitted and filed separately with the Securities and Exchange Commission.
         Confidential treatment has been requested with respect to the omitted portions.




                                                                                                      -vi-
                                                                               INDEX OF DEFINED TERMS
                                                                                      (continued)

                                                                                                                                                                                          Section Reference
Term                                                                                                                                                                                        in Agreement

Dispute Settlement Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                           2.6(c)
Dissenting Share Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                          1.7(c)
Dissenting Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                  1.7(a)
DOL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .           3.22(a)
Dollars or $ . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .             1.6(a)
Effective Time . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                 1.2
Employee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .              3.22(a)
Employee Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                      3.22(a)
Employee Proprietary Information Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                                      3.14(p)
Environmental Permits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                     3.20(c)
Equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .             3.13(d)
ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .           3.22(a)
ERISA Affiliate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                 3.22(a)
Escrow Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                 1.6(a)
Escrow Amounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                     1.6(a)
Escrow Distribution Holdback . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                           8.6(b)
Escrow Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                8.6(a)
Escrow Period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                8.6(b)
Excess Third Party Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                         6.22
Exchange Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                   1.8(a)
Exchange Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                       1.8(c)
Exchange Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                  1.8(a)
Excludable Contract . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                    2.7(b)
Excludable Contract Notice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                         2.7(f)
[***] . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .          2.7(e)(iii)(2)
Excluded Contract . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                    2.7(e)
Export Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                  3.25(a)
Final Determination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                    2.6(c)
Financials . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .             3.7
FIRPTA Compliance Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                             6.25
FMLA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .            3.22(a)
GAAP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .             1.6(a)
Governmental Entity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                      3.6
Hazardous Material . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                    3.20(a)
Hazardous Materials Activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                          3.20(b)
HIPAA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .             3.22(a)
HSR Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .             3.6
Indemnifiable Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                      8.2(a)
Indemnified Parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                  8.2(a)
Indemnifying Party . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                   8.4(a)(ii)
Initial Escrow Amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                      1.6(a)
Initial Merger Consideration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                         1.6(a)
Intellectual Property Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                      3.14(a)
Interim Financials . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                 3.7
International Employee Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                         3.22(a)
***      Certain information on this page has been omitted and filed separately with the Securities and Exchange Commission.
         Confidential treatment has been requested with respect to the omitted portions.




                                                                                                     -vii-
                                                                               INDEX OF DEFINED TERMS
                                                                                      (continued)

                                                                                                                                                                                           Section Reference
Term                                                                                                                                                                                         in Agreement

[***] . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .         2.2
Inventory Contingency Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                             2.2
Inventory Contingency Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                           2.4(c)(i)
Inventory Payment Period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                        2.2
Inventory Reference Amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                          2.2
IRS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .         3.22(a)
Key Employees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                  1.6(a)
Knowledge . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                1.6(a)
Known . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .              1.6(a)
Launch Contingency Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                          2.3(a)
Launch Contingent Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                            2.3(a)
Launch Milestone . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                   2.3(a)
Lease Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                    3.13(b)
Leased Real Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                    3.13(b)
Letter of Transmittal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                  1.8(c)
Lien . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .         1.6(a)
Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .          1.6(a)
Listener Count . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                2.2
Loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .         8.2(a)
Losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .           8.2(a)
Material Adverse Effect . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                      1.6(a)
Material Contract . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                 3.15(a)
Material Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                  3.15(a)
Maximum Inventory Contingent Consideration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                                      2.2
Maximum Revenue Contingent Consideration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                                        2.2
Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .          Recitals
Merger Consideration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                     1.6(a)
Modified Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                    6.13
Non-Competition Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                           6.18
Non-Disclosure Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                           1.6(a)
Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .          6.14
Objection Deadline . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                   8.4(a)(iv)
Objection Notice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                 8.4(a)(iii)
Offer Letter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .            6.16(a)
Officer’s Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                  8.4(a)(i)
Officer Release Letter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                   6.20
Open Source Materials . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                     3.14(t)
Parent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .       Preamble
Parent (for purposes of Article II) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                         2.2
Parent Charter Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                        4.3
Parent Disclosure Schedule . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                     Article IV
Parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .         2.2
Party . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .         2.2
Payable Claim . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                8.5(c)
Payable Contingent Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                           8.5(b)

***      Certain information on this page has been omitted and filed separately with the Securities and Exchange Commission.
         Confidential treatment has been requested with respect to the omitted portions.




                                                                                                     -viii-
                                                                               INDEX OF DEFINED TERMS
                                                                                      (continued)

                                                                                                                                                                                          Section Reference
Term                                                                                                                                                                                        in Agreement

Payable Overage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                  2.6(e)
Payment Adjustment Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                          2.1(e)
Payment Dispute Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                       2.6(a)
Payment Overage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                    2.4(b)(iii)
PBGC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .            3.22(a)
Pension Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .              3.22(a)
Person . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .           1.6(a)
Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .          1.6(a)
Products . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .            3.14(a)
Programming Automation Customer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                                 3.26(a)
Pro Rata Portion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                 1.6(a)
Proxy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .      Recitals
PTO . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .         3.14(b)
[***] . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .         2.2
[***] . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .         2.2
Radio Spot . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .              2.2
Registered Intellectual Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                        3.14(a)
Related Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                     1.6(a)
Representative . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                 2.5(b)
Requisite Stockholder Vote . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                        3.4
Resolved Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                  8.4(b)(iii)
Returns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .           3.11(b)(i)
Revenue Contingency Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                             2.2
Revenue Contingency Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                           2.4(b)(i)
Revenue Payment Period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                        2.2
Revenue Reference Amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                          2.2
RevenueSuite Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                        3.15(a)(xiv)
RevenueSuite Customer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                       3.26(a)
Review Request . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                   2.5(a)
Ryan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .           2.7(e)(ii)
Securityholder Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                     Recitals
Settled Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .               8.4(b)(i)
Settlement Memorandum . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                          8.4(b)(i)
Shrink-Wrap Code . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                    3.14(a)
Source Code . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .               3.14(a)
Spreadsheet . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .            6.23
Standard Form Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                          3.14(i)
Statement of Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                    6.22
Stockholder . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .              1.6(a)
Stockholder Representative . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                     Preamble
Stockholder Representative Expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                               8.8(b)
Sub . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .      Preamble
Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .              3.3
Subsidiary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .            3.3
Subsidiary Organizational Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                               3.3

***      Certain information on this page has been omitted and filed separately with the Securities and Exchange Commission.
         Confidential treatment has been requested with respect to the omitted portions.




                                                                                                      -ix-
                                                                               INDEX OF DEFINED TERMS
                                                                                      (continued)

                                                                                                                                                                                          Section Reference
Term                                                                                                                                                                                        in Agreement

Survival Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .              8.1
Surviving Corporation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                    1.1
Tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .       3.11(a)
Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .       3.11(a)
Technology . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .            3.14(a)
Terminated Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                     6.12
Terrestrial Broadcast Radio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                      2.2
Third Party Claim . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                8.7
Third Party Expense Adjustment Amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                                  1.6(a)
Third Party Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                  6.22
Third Party Expense Cap . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                      1.6(a)
Total Outstanding Capitalization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                         1.6(a)
Unagreed Barter Transaction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                        2.2
Unobjected Claim . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                 8.4(a)(iv)
Unresolved Claim . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                 8.5(c)
WARN . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .            3.22(a)
Warrantholder . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .              1.6(a)
Written Consent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .              Recitals
Written Decision . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .               8.4(b)(iii)
Year-End Financials . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                  3.7

                                                                                                  *****




                                                                                                       -x-
     THIS AGREEMENT AND PLAN OF MERGER (the “Agreement”) is made and entered into as of January 16, 2006 by and
among Google Inc., a Delaware corporation (“Parent”), Enumclaw, Inc., a Delaware corporation and a wholly-owned subsidiary of
Parent (“Sub”), dMarc Broadcasting, Inc., a Delaware corporation (the “Company”), and with respect to Article VIII, Article IX
and Article X hereof only, H. Richard Dallas as stockholder representative (the “Stockholder Representative”), and U.S. Bank,
National Association as Escrow Agent.


                                                              RECITALS

    A. The Boards of Directors of each of Parent, Sub and the Company believe it is advisable and in the best interests of each
corporation and its respective stockholders that Parent acquire the Company through the statutory merger of Sub with and into the
Company (the “Merger”) and, in furtherance thereof, have approved this Agreement and the Merger.

      B. Pursuant to the Merger, among other things, and subject to the terms and conditions of this Agreement, (i) all of the issued and
outstanding Company Capital Stock shall be converted into the right to receive the consideration set forth herein, (ii) all of the issued
and outstanding Company Options shall be cancelled in exchange for certain cash rights which shall be granted pursuant to the terms
and conditions of a cash bonus plan, in substantially the form attached hereto as Exhibit A (the “Cash Bonus Plan”), and (iii) all of
the issued and outstanding Company Warrants shall be converted into the right to receive the consideration set forth herein.

     C. A portion of the Initial Merger Consideration otherwise payable by Parent in connection with the Merger and a portion of the
Launch Contingent Payment, if any, otherwise payable by Parent in connection with the terms and conditions described in Article II
hereof shall be placed in escrow by Parent as partial security for the indemnification obligations set forth in this Agreement.

    D. The Company, on the one hand, and Parent and Sub, on the other hand, desire to make certain representations, warranties,
covenants and other agreements in connection with the Merger.

     E. Immediately following the execution and delivery of this Agreement, certain Stockholders shall execute and deliver to the
Company, and the Company shall thereafter deliver to Parent, a true, correct and complete copy of an Action by Written Consent,
adopting this Agreement, the Merger and the transactions contemplated hereby, in the form attached hereto as Exhibit B (the
“Written Consent”) and an irrevocable proxy coupled with an interest in the form attached as Exhibit C (the “Proxy”). In addition,
certain Stockholders shall execute and deliver to Parent a stockholder agreement, in substantially the form attached hereto as
Exhibit D (the “Securityholder Agreement”).

     NOW, THEREFORE, in consideration of the mutual agreements, covenants and other premises set forth herein, the mutual
benefits to be gained by the performance thereof, and for other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged and accepted, the parties hereby agree as follows:

                                                              ARTICLE I

                                                            THE MERGER

     1.1 The Merger. At the Effective Time and subject to and upon the terms and conditions of this Agreement and the applicable
provisions of the General Corporation Law of the State of Delaware (“Delaware Law”), Sub shall be merged with and into the
Company, the separate corporate existence of Sub
shall cease, and the Company shall continue as the surviving corporation and as a wholly-owned subsidiary of Parent. The surviving
corporation after the Merger is sometimes referred to hereinafter as the “Surviving Corporation.”

     1.2 Effective Time. Unless this Agreement is earlier terminated pursuant to Section 9.1 hereof, the closing of the Merger (the
“Closing”) will take place on a Business Day as promptly as practicable after the execution and delivery hereof by the parties hereto,
and following the satisfaction or waiver of the conditions set forth in Article VII hereof, at the offices of Wilson Sonsini Goodrich &
Rosati, Professional Corporation, 650 Page Mill Road, Palo Alto, California, unless another time or place is mutually agreed upon in
writing by Parent and the Company. The date upon which the Closing actually occurs shall be referred to herein as the “Closing
Date.” On the Closing Date, the parties hereto shall cause the Merger to be consummated by filing a Certificate of Merger in
substantially the form attached hereto as Exhibit E with the Secretary of State of the State of Delaware (the “Certificate of
Merger”), in accordance with the applicable provisions of Delaware Law (the time of such filing shall be referred to herein as the
“Effective Time”).

     1.3 Effect of the Merger. At the Effective Time, the effect of the Merger shall be as provided in the applicable provisions of
Delaware Law. Without limiting the generality of the foregoing, and subject thereto, at the Effective Time, except as otherwise agreed
to pursuant to the terms of this Agreement, all of the property, rights, privileges, powers and franchises of the Company and Sub shall
vest in the Surviving Corporation, and all debts, liabilities and duties of the Company and Sub shall become the debts, liabilities and
duties of the Surviving Corporation.


     1.4 Certificate of Incorporation and Bylaws.
           (a) Unless otherwise determined by Parent prior to the Effective Time, the certificate of incorporation of the Surviving
Corporation shall be amended and restated as of the Effective Time to be identical to the certificate of incorporation of Sub as in
effect immediately prior to the Effective Time, until thereafter amended in accordance with Delaware Law and as provided in such
certificate of incorporation; provided, however, that at the Effective Time, Article I of the certificate of incorporation of the Surviving
Corporation shall be amended and restated in its entirety to read as follows: “The name of the corporation is dMarc Broadcasting,
Inc.”; provided further, however, that the provisions of the certificate of incorporation of Sub relating to the incorporator of Sub shall
be omitted from the certificate of incorporation of the Surviving Corporation.

          (b) Unless otherwise determined by Parent prior to the Effective Time, the bylaws of Sub, as in effect immediately prior to
the Effective Time, shall be the bylaws of the Surviving Corporation at the Effective Time until thereafter amended in accordance
with Delaware Law and as provided in the certificate of incorporation of the Surviving Corporation and such bylaws.


     1.5 Directors and Officers.
           (a) Directors of Surviving Corporation. Unless otherwise determined by Parent prior to the Effective Time, the directors of
Sub immediately prior to the Effective Time shall be the directors of the Surviving Corporation immediately after the Effective Time,
each to hold the office of a director of the Surviving Corporation in accordance with the provisions of Delaware Law and the
certificate of incorporation and bylaws of the Surviving Corporation until their successors are duly elected and qualified.

          (b) Officers of Surviving Corporation. Unless otherwise determined by Parent prior to the Effective Time, the officers of
Sub immediately prior to the Effective Time shall be the officers of the Surviving Corporation immediately after the Effective Time,
each to hold office in accordance with the provisions of the bylaws of the Surviving Corporation.




                                                                    -2-
          (c) Directors of Subsidiaries of Surviving Corporation. Unless otherwise determined by Parent prior to the Effective Time,
Parent, the Company and the Surviving Corporation shall cause the directors of Sub immediately prior to the Effective Time to be the
directors of any Subsidiaries immediately after the Effective Time, each to hold office as a director of each such Subsidiary in
accordance with the provisions of the laws of the respective jurisdiction of organization and the respective bylaws or equivalent
organizational documents of each such Subsidiary.

           (d) Officers of Subsidiaries of Surviving Corporation. Unless otherwise determined by Parent prior to the Effective Time,
Parent, the Company and the Surviving Corporation shall cause the officers of Sub immediately prior to the Effective Time to be the
officers of any Subsidiaries immediately after the Effective Time, each to hold office as an officer of each such Subsidiary in
accordance with the provisions of the laws of the respective jurisdiction of organization and the bylaws or equivalent organizational
documents of each such Subsidiary.


     1.6 Effect of Merger on the Capital Stock of the Constituent Corporations.
          (a) Definitions. For all purposes of this Agreement, the following terms shall have the following respective meanings:
         “Additional Escrow Amount” shall mean a dollar amount equal to ten percent (10%) of the Launch Contingent Payment, if
any, which amount shall be deducted from the distribution of such Launch Contingent Payment.

          “Business” shall mean the business conducted by Parent following the Closing of inserting audio advertisements into audio
radio programming broadcasts.

         “Business Day(s)” shall mean each day that is not a Saturday, Sunday or other day on which Parent is closed for business or
banking institutions located in San Francisco, California are authorized or obligated by law or executive order to close.

          “Closing Stockholder Consent” shall mean the approval by written consent of the holders of at least 95% of the
outstanding shares of Company Capital Stock.

          “Code” shall mean the Internal Revenue Code of 1986, as amended.

           “Company Capital Stock” shall mean the Company Common Stock, the Company Preferred Stock and any other shares of
capital stock, if any, of the Company. For the avoidance of doubt, Company Capital Stock excludes Company Warrants and Company
Options.

          “Company Common Stock” shall mean the Company Series A Common Stock and Company Series B Common Stock,
collectively.

       “Company Options” shall mean all issued and outstanding options (including commitments to grant options, but excluding
Company Warrants) to purchase or otherwise acquire Company Capital Stock (whether or not vested) held by any Person.

       “Company Preferred Stock” shall mean the Company Series A Preferred Stock, Company Series B-1 Preferred Stock and
Company Series B-2 Preferred Stock, collectively.

       “Company Series A Common Stock” shall mean the Series A Common Stock, par value $0.001 per share, of the
Company.




                                                                  -3-
       “Company Series A Preferred Stock” shall mean the Series A Preferred Stock, par value $0.001 per share, of the
Company.

       “Company Series B Common Stock” shall mean the Series B Common Stock, par value $0.001 per share, of the
Company.

       “Company Series B-1 Preferred Stock” shall mean the Series B-1 Preferred Stock, par value $0.001 per share, of the
Company.

       “Company Series B-2 Preferred Stock” shall mean the Series B-2 Preferred Stock, par value $0.001 per share, of the
Company.

          “Company Warrants” shall mean all issued and outstanding warrants to purchase Company Capital Stock.

          “Contingent Payment” shall mean each of the payments described in Article II hereto, payment of which is contingent
upon the satisfaction of the contingencies described therein.

           “Contract” shall mean any mortgage, indenture, lease, contract, covenant, plan, insurance policy or other agreement,
instrument, arrangement, obligation, understanding or commitment, permit, concession, franchise or license, whether oral or written
(collectively, “Contracts”).

          “Dollars” or “$” shall mean United States Dollars.

         “Escrow Agent” shall mean U.S. Bank, National Association, or another institution acceptable to Parent and the
Stockholder Representative.

          “Escrow Amounts” shall mean the Initial Escrow Amount and the Additional Escrow Amount, if any, collectively.

          “GAAP” shall mean U.S. generally accepted accounting principles consistently applied.

          “Initial Escrow Amount” shall mean a dollar amount equal to ten million two hundred thousand dollars ($10,200,000).

          “Initial Merger Consideration” shall mean an amount equal to one hundred two million dollars ($102,000,000) less the
Third Party Expense Adjustment Amount.

          “Key Employees” shall mean the individuals set forth on Schedule 1.6(a)(i) hereto.

          “Knowledge” or “Known” shall mean (i) with respect to the Company, the actual knowledge of the Persons identified on
Schedule 1.6(a)(ii), without any duty of inquiry, and (ii) with respect to Parent or Sub, the actual knowledge of the general counsel of
Parent without any duty of inquiry.

           “Lien” shall mean any lien, pledge, charge, claim, mortgage, security interest or other encumbrance of any sort
(collectively, “Liens”).

          “Material Adverse Effect” with respect to the Company or Parent shall mean any state of facts, condition, change,
development, event or effect that, either alone or in combination with any other change, event or effect, is, or is reasonably likely to
be, materially adverse to the business, assets (whether tangible or intangible), condition (financial or otherwise) or operations (or, in
the case of Section 7.2(b) only,




                                                                    -4-
prospects) of such entity and its subsidiaries, taken as a whole; provided, however, that “Material Adverse Effect” shall not include
the effect of any state of facts, condition, change, development, event or effect to the extent resulting from any of the following, either
alone or in combination:
                (i) the markets in which the company and its subsidiaries operate, to the extent such effect does not disproportionately
affect such entity and its subsidiaries;

               (ii) general economic or political conditions (including those affecting the securities markets), to the extent such
conditions do not disproportionately affect such entity and its subsidiaries;

               (iii) compliance with this Agreement;

                (iv) delays in or suspensions or terminations of contracts, or disruptions in supplier, customer, partner or similar
business relationships resulting from the public announcement of this Agreement or of the consummation of the transactions
contemplated hereby;

              (v) acts of war (whether or not declared), sabotage or terrorism, military actions or the escalation thereof or other force
majeure events occurring after the date hereof; or

               (vi) any changes in applicable laws, regulations or accounting rules.

          “Merger Consideration” shall mean the sum of the Initial Merger Consideration, plus any Contingent Payments that are
paid, plus any Contingent Payments that are earned but not yet paid pursuant to the terms of Article II (including, for the avoidance
of doubt, any Escrow Amounts or amounts that are subject to set-off pursuant to Section 8.5).

         “Non-Disclosure Agreement” shall mean that certain Mutual Non-Disclosure Agreement effective as of June 10, 2005 by
and between Parent and the Company.

          “Person” shall mean an individual or entity, including a partnership, a limited liability company, a corporation, an
association, a joint stock company, a trust, a joint venture, an unincorporated organization, or a Governmental Entity (or any
department, agency, or political subdivision thereof).

          “Plans” shall mean the Company’s 2005 Stock Incentive Plan.

          “Pro Rata Portion” shall mean (i) with respect to each Stockholder, a percentage equal to the quotient of (A) the total
number of shares of Company Capital Stock (on an as-converted to common stock basis) held by such Stockholder as of the Effective
Time, divided by (B) the Total Outstanding Capitalization, (ii) with respect to each Warrantholder, a percentage equal to the quotient
of (A) the maximum aggregate number of shares of Company Common Stock issuable to such Warrantholder upon full exercise,
exchange or conversion of all Company Warrants and any other rights (other than Company Options) whether vested or unvested
convertible into, exercisable for or exchangeable for, shares of Company Common Stock held by such Warrantholder, divided by
(B) the Total Outstanding Capitalization, and (iii) with respect to the Cash Bonus Plan, a percentage equal to the quotient of (A) the
aggregate number of Bonus Units authorized for issuance pursuant to the Cash Bonus Plan, divided by (B) the Total Outstanding
Capitalization.

         “Related Agreements” shall mean the Non-Disclosure Agreement, Non-Competition Agreements, Offer Letters,
Securityholder Agreements and Proxies.




                                                                    -5-
         “Stockholder” shall mean any holder of any Company Capital Stock immediately prior to the Effective Time. To the extent
a Stockholder also holds Company Options or Company Warrants, that Stockholder shall be deemed a Stockholder only as to that
Stockholder’s holdings of Company Capital Stock.

         “Third Party Expense Adjustment Amount” shall mean the difference between (i) the amount of the Third Party
Expenses reflected on the Statement of Expenses and (ii) the Third Party Expense Cap.

          “Third Party Expense Cap” shall mean Five Hundred Thousand Dollars ($500,000).

           “Total Outstanding Capitalization” shall mean the sum of the aggregate number of (i) shares of Company Common Stock
issued and outstanding immediately prior to the Effective Time, plus (ii) the maximum number of shares of Company Common Stock
issuable, immediately prior to the Effective Time, upon full conversion of the issued and outstanding Company Preferred Stock, plus
(iii) the maximum aggregate number of shares of Company Common Stock issuable upon full exercise, exchange or conversion of all
Company Warrants and any other rights (other than Company Options) whether vested or unvested convertible into, exercisable for or
exchangeable for, shares of Company Common Stock, plus (iv) the aggregate number of Bonus Units authorized for issuance pursuant
to the Cash Bonus Plan, which, for the avoidance of doubt, shall equal 600,000. Notwithstanding the foregoing, Total Outstanding
Capitalization shall not include any shares of Company Capital Stock issuable upon the exercise of Company Warrants that expire or
are canceled concurrently with or immediately prior to the Effective Time to the extent not exercised or converted into the right to
receive the consideration described in Section 1.6(c)(i).

          “Warrantholder” shall mean any holder of Company Warrants immediately prior to the Effective Time. To the extent a
Warrantholder also holds Company Capital Stock or Company Options, that Warrantholder shall be deemed a Warrantholder only as
to that Warrantholder’s holdings of Company Warrants.

          (b) Effect on Stockholders. At the Effective Time, by virtue of the Merger and without any action on the part of Sub, the
Company or the Stockholders, each Stockholder (other than any holders of Dissenting Shares and excluding, for avoidance of doubt,
any Company Warrants and Company Options held by Stockholders, which shall be treated as provided for in Section 1.6(c) below)
will receive, subject to the terms and conditions set forth in this Section 1.6 and throughout this Agreement, including the escrow and
setoff provisions set forth in Section 1.8(b) and Article VIII hereof and the contingent payment provisions set forth in Article II
hereof, upon surrender of any certificates representing shares of Company Capital Stock held by such Stockholder in the manner
provided in Section 1.8 hereof, an amount of cash equal to such Stockholder’s Pro Rata Portion of the Initial Merger Consideration
and a nontransferable (except by operation of law or pursuant to the terms of Article II) contingent right to receive, if, when and to
the extent payable in accordance with Article II, such Stockholder’s Pro Rata Portion of any Contingent Payments, in each case,
rounded to the nearest cent ($0.01) (with amounts greater than or equal to $0.005 rounded up).


          (c) Treatment of Company Warrants and Company Options.
                (i) Effect on Company Warrants. At the Effective Time, each Company Warrant that is outstanding prior to the
Effective Time hereof shall be converted, subject to the terms and conditions set forth in this Section 1.6 and throughout this
Agreement, including the escrow and setoff provisions set forth in Section 1.8(b) and Article VIII hereof and the contingent payment
provisions set forth in Article II hereof, upon surrender of such Company Warrants in the manner provided in Section 1.8 hereof, into
an amount of cash equal to such Warrantholder’s Pro Rata Portion of the Initial Merger Consideration and a nontransferable (except
by operation of law or pursuant to the terms of Article II) contingent right to receive, if, when and to




                                                                  -6-
the extent payable in accordance with Article II, such Warrantholder’s Pro Rata Portion of any Contingent Payments, in each case,
rounded to the nearest cent ($0.01) (with amounts greater than or equal to $0.005 rounded up). The amount of such Warrantholder’s
Pro Rata Portion of the Initial Merger Consideration shall be reduced by an amount equal to the aggregate exercise price of such
Warrantholder’s Company Warrants.

               (ii) Effect on Company Options. As of the Effective Time, each Company Option that is outstanding and not cancelled
by the Company at or prior to the Effective Time hereof shall be cancelled in exchange for the Bonus Units provided in
Section 1.6(c)(iii).

               (iii) Adoption of Cash Bonus Plan. The Company shall grant to eligible participants a conditional right (a “Bonus
Unit”) under the Cash Bonus Plan to receive a portion of the Initial Merger Consideration and a nontransferable (except by operation
of law) contingent right to receive, if, when and to the extent payable in accordance with Article II, a portion of each Contingent
Payment, subject to the terms and conditions of the Cash Bonus Plan. As of the Effective Time, Parent shall become obligated to
reserve an amount of cash for payment pursuant to the terms and conditions of the Cash Bonus Plan equal to the Cash Bonus Plan’s
Pro Rata Portion of the Initial Merger Consideration, and, if, when and to the extent payable in accordance with Article II, the Cash
Bonus Plan’s Pro Rata Portion of any Contingent Payments, in each case, rounded to the nearest cent ($0.01) (with amounts greater
than or equal to $0.005 rounded up).

                 (iv) Necessary Actions. Prior to the Effective Time, and subject to the review and approval of Parent, the Company
shall take all actions necessary to effect the transactions anticipated by Sections 1.6(b) and 1.6(c) under all Company Option
agreements, all Company Warrant agreements and any other plan or arrangement of the Company (whether written or oral, formal or
informal), including delivering all required notices.

          (d) Withholding Taxes. The Company, and on its behalf Parent and the Surviving Corporation, shall be entitled to deduct
and withhold from any consideration payable or otherwise deliverable pursuant to this Agreement such amounts as may be required to
be deducted or withheld therefrom under any provision of federal, local or foreign tax law or under any applicable legal requirement.
To the extent such amounts are so deducted or withheld, such amounts shall be treated for all purposes under this Agreement as
having been paid to the Person to whom such amounts would otherwise have been paid.

          (e) Capital Stock of Sub. Each share of common stock of Sub issued and outstanding immediately prior to the Effective
Time shall be converted into and exchanged for one validly issued, fully paid and nonassessable share of common stock of the
Surviving Corporation. Each stock certificate of Sub evidencing ownership of any such shares shall continue to evidence ownership of
such shares of capital stock of the Surviving Corporation.


     1.7 Dissenting Shares.
           (a) Notwithstanding any other provisions of this Agreement to the contrary, any shares of Company Capital Stock held by a
holder who has properly demanded and not effectively withdrawn or lost such holder’s appraisal, dissenters’ or similar rights for such
shares under Delaware Law and under Chapter 13 of the California Corporations Code (“California Law”), if applicable
(collectively, the “Dissenting Shares”), shall not be converted into or represent a right to receive the applicable consideration for
Company Capital Stock set forth in Section 1.6(b) hereof, but the holder thereof shall only be entitled to such rights as are provided
by Delaware Law and California Law, if applicable.

          (b) Notwithstanding the provisions of Section 1.7(a) hereof, if any holder of Dissenting Shares shall effectively withdraw or
lose (through failure to perfect or otherwise) such holder’s appraisal or




                                                                  -7-
dissenters’ rights under Delaware Law and California Law, if applicable, then, as of the later of the Effective Time and the occurrence
of such event, such holder’s shares shall automatically be converted into and represent only the right to receive the consideration for
Company Capital Stock, as applicable, set forth in Section 1.6(b) hereof, without interest thereon, and subject to the provisions of
Section 8.6 hereof, upon surrender of the certificate representing such shares.

           (c) The Company shall give Parent (i) prompt notice of any written demand for appraisal received by the Company pursuant
to the applicable provisions of Delaware Law or California Law, and (ii) the opportunity to participate in all negotiations and
proceedings with respect to such demands. The Company shall not, except with the prior written consent of Parent, make any payment
with respect to any such demands or offer to settle or settle any such demands. Any communication to be made by the Company to
any Stockholder with respect to such demands shall be submitted to Parent in advance and shall not be presented to any Stockholder
prior to the Company receiving Parent’s consent. Notwithstanding the foregoing, to the extent that Parent, the Surviving Corporation
or the Company (i) makes any payment or payments in respect of any Dissenting Shares in excess of the consideration that otherwise
would have been payable in respect of such shares in accordance with this Agreement (taking into account the expected value of any
Contingent Payments) or (ii) incurs any Losses, (including attorneys’ and consultants’ fees, costs and expenses and including any such
fees, costs and expenses incurred in connection with investigating, defending against or settling any action or proceeding) in respect
of any Dissenting Shares (excluding payments for such shares) ((i) and (ii) together “Dissenting Share Payments”), Parent shall be
entitled to recover under the terms of Article VIII hereof the amount of such Dissenting Share Payments.


     1.8 Surrender of Certificates.
           (a) Exchange Agent. Computershare Trust Company, N.A., or another Person selected by Parent to the reasonable
satisfaction of the Stockholder Representative, shall serve as the exchange agent (the “Exchange Agent”) for the Merger. Any cash
deposited with the Exchange Agent shall be referred to as the “Exchange Fund.”

          (b) Initial Merger Consideration and Escrow Deposits. Immediately following the Closing, Parent shall make available to
the Exchange Agent for exchange in accordance with this Article I the Initial Merger Consideration. Notwithstanding Sections 1.6(b)
and 1.6(c) hereof, Parent shall deposit into the Escrow Fund: (i) a portion of the Initial Merger Consideration otherwise payable
pursuant to Section 1.6 hereof equal to the Initial Escrow Amount, and (ii) a portion of the Launch Contingent Payment, if any,
otherwise payable pursuant to Section 1.6 in accordance with Article II hereof (at the time such Launch Contingent Payment
becomes payable) equal to the Additional Escrow Amount. Parent shall be deemed to have contributed with respect to each
Stockholder, Warrantholder and the Cash Bonus Plan his, her or its Pro Rata Portion of the Escrow Amounts to the Escrow Fund at
such times, rounded to the nearest cent ($0.01) (with amounts greater than or equal to $0.005 rounded up).

           (c) Exchange Procedures. As soon as commercially practicable after the date hereof, Parent or the Exchange Agent shall
deliver a letter of transmittal in substantially the form of Exhibit F (the “Letter of Transmittal”) to each Stockholder and
Warrantholder at the address set forth opposite each such Stockholder and Warrantholder’s name on the Spreadsheet. After receipt of
such letter of transmittal and any other documents that Parent or the Exchange Agent may require in order to effect the exchange (the
“Exchange Documents”), the Stockholders and Warrantholders will surrender the certificates representing their shares of Company
Capital Stock (the “Company Stock Certificates”) or Company Warrants, as the case may be, to the Exchange Agent for cancellation
together with duly completed and validly executed Exchange Documents. Upon surrender of a Company Stock Certificate or
Company Warrants, as the case




                                                                  -8-
may be, for cancellation to the Exchange Agent, or such other agent or agents as may be appointed by Parent, together with such
Exchange Documents, duly completed and validly executed in accordance with the instructions thereto, and subject to the terms of
Section 1.8(d) hereof, the holder of such Company Stock Certificate or Company Warrant, as the case may be, shall be entitled to
receive from the Exchange Agent in exchange therefor, the cash amount to which such holder is entitled pursuant to Section 1.6(b)
less the amount of cash deposited or to be deposited into the Escrow Fund on such Stockholder or Warrantholder’s behalf pursuant to
Section 1.8(b) hereof and Article VIII hereof, and the Company Stock Certificate or Company Warrant, as the case may be, so
surrendered shall be cancelled. In addition, holders of Company Stock Certificates or Company Warrants, as the case may be,
surrendered pursuant to the terms of the preceding sentence shall be entitled to receive from the Exchange Agent, as soon as
commercially practicable after such amounts become payable pursuant to the terms of Article II, the cash amount to which such
holder is entitled pursuant to Article II hereof, subject to the holdback of the Additional Escrow Amount pursuant to the terms of
Section 1.8(b) hereof. Until so surrendered, each Company Stock Certificate outstanding after the Effective Time will be deemed, for
all corporate purposes thereafter, to evidence only the right to receive the consideration provided for in this Article I. No portion of
the Merger Consideration will be paid to the holder of any unsurrendered Company Stock Certificate with respect to shares of
Company Capital Stock formerly represented thereby until the holder of record of such Company Stock Certificate shall surrender
such Company Stock Certificate and the Exchange Documents pursuant hereto.

           (d) Transfers of Ownership. If any cash amounts are to be disbursed pursuant to Section 1.6(b) hereof to a Person other than
the Person whose name is reflected on the Company Stock Certificate surrendered in exchange therefor, it will be a condition of the
issuance or delivery thereof that the certificate so surrendered will be properly endorsed and otherwise in proper form for transfer and
that the person requesting such exchange will have paid to Parent or any agent designated by it any transfer or other taxes required by
reason of the payment of any portion of the Merger Consideration in any name other than that of the registered holder of the
certificate surrendered, or established to the satisfaction of Parent or any agent designated by it that such tax has been paid or is not
payable.

           (e) Exchange Agent to Return Merger Consideration. At any time following the last day of the sixth month following the
Effective Time, Parent shall be entitled to require the Exchange Agent to deliver to Parent or its designated successor or assign all
cash amounts relating to the Initial Merger Consideration that have been deposited with the Exchange Agent and any and all interest
thereon or other income or proceeds thereof not disbursed to the holders of Company Stock Certificates pursuant to Section 1.8(c)
hereof. At any time following the last day of the sixth month following the date upon which Parent deposits the funds relating to a
Contingent Payment, if any, with the Exchange Agent (after such Contingent Payment becomes due and payable pursuant to
Article II), Parent shall be entitled to require the Exchange Agent to deliver to Parent or its designated successor or assign all cash
amounts relating to the Contingent Payment that have been deposited with the Exchange Agent and any and all interest thereon or
other income or proceeds thereof not disbursed to the holders of Company Stock Certificates pursuant to Section 1.8(c) hereof.
Following return to Parent of any portion of the Merger Consideration as provided in this Section 1.8(e), thereafter the holders of
Company Stock Certificates shall be entitled to look only to Parent (subject to the terms of Section 1.8(g) hereof) only as general
creditors thereof with respect to any and all cash amounts that may be payable to such holders of Company Stock Certificates
pursuant to Section 1.6(b) hereof upon the due surrender of such Company Stock Certificates and duly executed Exchange
Documents in the manner set forth in Section 1.8(c) hereof. No interest shall be payable for the cash amounts delivered to Parent
pursuant to the provisions of this Section 1.8(e) and which are subsequently delivered to the holders of Company Stock Certificates.




                                                                   -9-
          (f) Investment of Exchange Fund. The Exchange Agent shall invest the cash deposited by Parent into the Exchange Fund as
directed by Parent on a daily basis; provided, however, that no such investment or loss thereon shall affect the amounts payable to the
Stockholders, Warrantholders and Cash Bonus Plan pursuant to Section 1.6(b) hereof. Any interest and other income resulting from
such investment shall become a part of the Exchange Fund, and any amounts in excess of the amounts payable to the Stockholders
pursuant to Section 1.6(b) hereof shall promptly be paid to Parent. Any loss or other reduction resulting from such investment shall be
reimbursed by Parent such that the total cash in the Exchange Fund shall at all times be an amount equal to or greater than the Merger
Consideration then payable less amounts previously paid to holders of Company Stock Certificates pursuant to Section 1.6(b) or
deposited in the Escrow Fund pursuant to Section 1.8(b) and Article VIII hereof.

           (g) No Liability. Notwithstanding anything to the contrary in this Section 1.8, neither the Exchange Agent, the Surviving
Corporation, nor any party hereto shall be liable to a holder of shares of Company Capital Stock for any amount paid to a public
official as required by any applicable abandoned property, escheat or similar law.

     1.9 No Further Ownership Rights in Company Capital Stock. The cash amounts paid or payable in respect of the surrender for
exchange of shares of Company Capital Stock in accordance with the terms hereof shall be deemed to be full satisfaction of all rights
pertaining to such shares of Company Capital Stock, and there shall be no further registration of transfers on the records of the
Surviving Corporation of shares of Company Capital Stock which were outstanding immediately prior to the Effective Time. If, after
the Effective Time, Company Stock Certificates are presented to the Surviving Corporation for any reason, they shall be canceled and
exchanged as provided in this Article I.

     1.10 Lost, Stolen or Destroyed Certificates. In the event any Company Stock Certificates shall have been lost, stolen or
destroyed, the Exchange Agent shall issue in exchange for such lost, stolen or destroyed certificates, upon the making of an affidavit
of that fact by the holder thereof, such amount, if any, as may be required pursuant to Section 1.6(b) hereof; provided, however, that
Parent may, in its discretion and as a condition precedent to the issuance of such amount, require the Stockholder who is the owner of
such lost, stolen or destroyed certificates to either (a) deliver a bond in such amount as it may reasonably direct or (b) provide an
indemnification agreement in a form and substance acceptable to Parent, against any claim that may be made against Parent or the
Exchange Agent with respect to the certificates alleged to have been lost, stolen or destroyed.

     1.11 Taking of Necessary Action; Further Action. If at any time after the Effective Time, any further action is necessary or
desirable to carry out the purposes of this Agreement and to vest the Surviving Corporation with full right, title and possession to all
assets, property, rights, privileges, powers and franchises of the Company, Parent, Sub, and the officers and directors of the Company,
Parent and Sub are fully authorized in the name of their respective corporations or otherwise to take, and will take, all such lawful and
necessary action.


                                                              ARTICLE II

                                          CONTINGENT CONSIDERATION PROVISIONS

     2.1 General Provisions.
          (a) Contingent Payments Generally. The parties acknowledge and agree that the achievement by the Parent of certain
product launch, revenue and ad inventory milestone targets (as described in this Article II and the Schedules attached hereto) are
material factors in determining the valuation of the Company by Parent.




                                                                  -10-
          (b) Contingent Payments as Merger Consideration. The portions of the Contingent Payments payable to the Stockholders
pursuant to this Article II are intended to be treated for Tax purposes as additional consideration for the Company Capital Stock and
Company Warrants purchased by Parent in the Merger and shall be treated as such (subject to the requirement to treat a portion as
imputed interest) for all Tax purposes except to the extent reasonably determined by Parent in the event of a dispute with, or contrary
guidance or instruction is issued by, a taxing authority. Parent intends to treat the portions of the Contingent Payments payable to the
participants in the Cash Bonus Plan pursuant to this Article II as compensation income taxable at ordinary income rates, and to the
extent any participant in the Cash Bonus Plan received rights under the Cash Bonus Plan by virtue of being (or having been) an
employee of the Company, shall be subject to all employment-related withholding taxes. Notwithstanding anything to the contrary,
Parent makes no representations or warranties to the Company, Stockholders, Warrantholders or participants in the Cash Bonus Plan
regarding the Tax treatment of the transactions contemplated by this Agreement by any taxing authority, or any of the Tax
consequences to any Stockholder, Warrantholder or participant in the Cash Bonus Plan relating to the transactions contemplated by
this Agreement. Each of the Company, the Stockholders, the Warrantholders and the participants in the Cash Bonus Plan must rely
solely on its own tax advisors in connection with the transactions contemplated hereby.

           (c) Payment to, and Allocation among, Stockholders, Warrantholders and the Cash Bonus Plan. Any Contingent Payments
provided for in this Article II shall be allocated among the Stockholders, the Warrantholders and the Cash Bonus Plan in accordance
with the terms of the Agreement. Any reference herein to payment of Contingent Payments to the Stockholders, Warrantholders and
the Cash Bonus Plan provided for in this Article II shall be paid as follows: (i) in the case of payments to Stockholders and
Warrantholders, the aggregate amount allocable to the Stockholders and Warrantholders shall be paid to the Exchange Agent for
further distribution to the Stockholders and Warrantholders as soon as practicable thereafter, and (ii) in the case of payments to be
made to the Cash Bonus Plan, the aggregate amount allocable to the Cash Bonus Plan shall be paid to the participants in the Cash
Bonus Plan in accordance with the provisions of the Cash Bonus Plan.

           (d) Contingent Payment Rights Not Transferable. No Stockholder or Warrantholder may, directly or indirectly, sell,
exchange, transfer or otherwise dispose of his, her or its right to receive any portion of the Contingent Payments provided for herein,
other than transfers (i) by the laws of divorce, descent and distribution or succession, (ii) to the Stockholder’s spouse, ex-spouse,
domestic partner, lineal descendant or antecedent, brother or sister, the adopted child or adopted grandchild, or the spouse or domestic
partner of any child, adopted child, grandchild or adopted grandchild of Stockholder, or to a trust or trusts for the exclusive benefit of
the Stockholder or the above-mentioned members of the Stockholder’s family for valid estate planning purposes or (iii) to Affiliated
Persons, in each case conditioned upon the Stockholder Representative delivering to Parent prior written notice of such transfer a
reasonable time prior to the transfer being effected; provided that Parent, the Exchange Agent and the Escrow Agent shall not be
required to give effect to any transfer until such parties have received from the transferor and/or the Stockholder Representative all of
the documentation, instruments and information they may reasonably request in order to properly reflect such transfer. The notice of
transfer must include (in addition to any information requested by Parent, the Exchange Agent and the Escrow Agent) the name and
address of the transferee, taxpayer identification number of the transferee, and a revised Spreadsheet giving effect to the transfer. Any
transfer in violation of this Section 2.1(d) shall be null and void and need not be recognized by Parent. Transfers by participants in the
Cash Bonus Plan shall be permitted only to the extent permitted by the terms of the Cash Bonus Plan (if at all).

          (e) Payment Adjustment Fund. For each of calendar years 2006, 2007 and 2008, ten percent (10%) of each Revenue
Contingency Payment and Inventory Contingency Payment (rounded down to the nearest $0.01) relating to a Revenue Payment
Period or Inventory Payment Period, as applicable,




                                                                  -11-
ending on March 31, June 30 or September 30 of such year shall be deducted from such Revenue Contingency Payment or Inventory
Contingency Payment, and instead shall be deposited with the Escrow Agent (such deposits, together with interest accruing thereon
are referred to as the “Payment Adjustment Fund” for such year) to be held available to reimburse Parent for any Payment Overage
(as defined in Section 2.4(b)) relating to any Revenue Contingency Payment and/or Inventory Contingency Payment made in such
year.

          (f) Setoff Against Contingent Payments. Each Contingent Payment shall be subject to Parent’s right of setoff as and to the
extent provided in Article VIII of the Agreement.


      2.2 Definitions Applicable to this Article II.
           (a) Capitalized terms not defined in this Article II shall have the meanings ascribed to them in the Agreement.

          (b) The term “acquire” (and variants of such term) used with reference to [***] means to acquire the right to [***], as
applicable.

          (c) “Adjusted Listener Count” shall mean, for each Covered Unused Radio Spot, the product of (i) the Listener Count for
such Covered Unused Radio Spot, times (ii) the quotient obtained by dividing (A) the length (in seconds) of such Covered Unused
Radio Spot, by (B) the average length (in seconds) of all Covered Radio Advertisements broadcast during Covered Used Radio Spots
during the Inventory Payment Period in which the Covered Unused Radio Spot occurs.

           (d) “Affiliate” of any entity (or entities that are “Affiliated”) shall mean any other entity who either directly or indirectly
through one or more intermediaries is in control of, is controlled by, or is under common control with, such entity. For purposes of
this definition, “control” when used with respect to any entity means the power to direct the management and policies of such entity,
directly or indirectly, whether through the ownership of voting securities, by contract or otherwise.

            (e) “AudioAds Product” shall mean the products and services to be provided by Parent to (i) acquire and manage [***];
(ii) sell such advertising inventory to its network of advertisers; (iii) dynamically insert audio advertisements into such advertising
inventory; and (iv) manage the ad creation, ad campaign management, reporting, billing and payments related thereto.

          (f) “AudioAds Operating Group” shall mean the operating group (including development, sales, support, administrative
and other personnel) within Parent that has principal responsibility for (i) developing, launching and maintaining the AudioAds
Product, the Company System and the Broadcast Automation Product, (ii) the sales and marketing of the use of the AudioAds
Product, Company System and the Broadcast Automation Product and (iii) managing and developing relationships with advertisers,
advertising agencies, content producers and syndicators, broadcasters and other parties with whom Parent interacts in connection with
the AudioAds Product, the Company System and the Broadcast Automation Product.

           (g) “Barter Transaction” shall mean a transaction in which Parent acquires [***] property (tangible or intangible), services
or rights in exchange for Parent providing (or entering into an obligation to provide) non-monetary consideration (that is,
consideration other than the payment of cash or the obligation to pay cash), either alone or together with monetary consideration.

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                                                                   -12-
         (h) “Broadcast Automation Product” shall mean Parent’s programming automation solution and related services for
Covered Radio Media broadcasters.

          (i) “Company System” shall mean the system (which may comprise software and/or hardware) developed by the Company
(as such system may be modified, replaced or augmented from time to time by Parent following the Closing) that enables Parent to
dynamically insert audio advertisements into [***] as directed by servers controlled by Parent, over an Internet protocol network.

          (j) “Contingent Payment Report” shall mean a Revenue Contingency Report or an Inventory Contingency Report.

          (k) “Costs of Revenues” shall mean, with respect to a Revenue Payment Period, the following costs and expenses
recognized by Parent during such period in accordance with GAAP (as applied by Parent), resulting from payments made to, property
or services provided to or obligations owed to third parties in consideration for the following (subject to the provisions of
Section 2.7):
               (i) Parent acquiring Radio Spots;

               (ii) [***];

               (iii) [***];

               (iv) [***];

               (v) [***]; and

               (vi) [***].

               Such costs and expenses may include monetary and/or non-monetary consideration (including pursuant to a Barter
Transaction). Such costs and expenses include payments, transfers and obligations made to:
                    (1) The parties from whom Parent acquire the right to insert advertisements [***];

                    (2) The parties from whom Parent acquires [***]; and

                    (3) The parties from whom Parent acquires [***].

               In the case of a Barter Transactions in which Parent provides the Broadcast Automation Product, services based on
[***], the Cost of Revenues for [***] resulting from the bartered property shall be the third party costs incurred by Parent in
procuring and providing property and services required to provide such bartered property or services. In the case of any other Barter
Transactions, the Cost of Revenues related to such Barter Transactions shall be as determined by

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                                                                 -13-
the parties in good faith; provided that for any such other Barter Transaction with respect to which the parties have not agreed upon
treatment (an “Unagreed Barter Transaction”), no cost associated with such Barter Transaction will count toward or be included in
the definition of Cost of Revenues.

          (l) [***].

          (m) “Covered Inventory Amount” shall mean (subject to the provisions of Section 2.7), for an Inventory Payment Period,
the quotient obtained by dividing:
              (i) the sum of (1) the sum of the Listener Counts for all Covered Radio Advertisements inserted into Covered Radio
Spots broadcast during such Inventory Payment Period plus (2) the sum of the Adjusted Listener Counts for all Covered Unused
Radio Spots that occur during such Inventory Payment Period, by

               (ii) three.

        (n) “Covered Net Revenue” shall mean, for a Revenue Payment Period, the following, as determined in accordance with
GAAP as applied by Parent (subject to the provisions of Section 2.7):
               (i) the revenues recognized by Parent (which, for the avoidance of doubt, are calculated after giving effect to contra
revenue items including sales allowance) during such period from:
                       (1) Covered Radio Advertisements;

                       (2) [***];

                       (3) [***];

                       (4) [***];

                       (5) [***]; and

                       (6) [***];

          LESS, in each case

               (ii) the Cost of Revenues related to such revenues described above for such period;

               provided that, no revenue derived from any Unagreed Barter Transaction (including indirectly from the property or
services acquired in such Unagreed Barter Transaction), will count toward or be included in the definition of Covered Net Revenue

       (o) “Covered Radio Advertisement” shall mean an audio advertisement inserted into a Radio Spot by Parent using the
Company System.

          (p) [***].

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                                                                  -14-
          (q) “Covered Radio Media” shall mean [***].

          (r) [***].

          (s) “Covered Radio Spot” shall mean a Radio Spot (i) into which Parent is, pursuant to a written contract, entitled to insert
Covered Radio Advertisements using the Company System; (ii) which is recognized by the Company System as available for
advertisement insertion (by “tokenization” or otherwise) and (iii) into which the Company System has the capability of inserting
Covered Radio Advertisements; provided that, in the case of clause (i), the Contract has been entered into in compliance with Parent’s
policies and procedures for contract review, approval and execution, including Parent’s “Deal Review” process and signature
authority policy; provided further that the parties acknowledge that the Contracts listed on Schedule 2.2(s) have been approved by
Parent’s “Deal Review” process and signature authority policy.

         (t) “Covered Unused Radio Spot” shall mean a Covered Radio Spot that has occurred and during which no Covered Radio
Advertisements were broadcast.

        (u) “Covered Used Radio Spot” shall mean a Covered Radio Spot that has occurred and during which one or more Covered
Radio Advertisement was broadcast.

          (v) [***].

          (w) [***].

         (x) “Inventory Contingency Payment” shall mean, for an Inventory Payment Period, the payment amount calculated in
accordance with Section 2.3(d) or 2.3(e) below, as applicable.

         (y) “Inventory Payment Period” shall mean each of the following periods (inclusive of the beginning and ending dates of
each such period):
               January 1, 2006 through March 31, 2006

               April 1, 2006 through June 30, 2006

               July 1, 2006 through September 30, 2006

               October 1, 2006 through December 31, 2006

               January 1, 2007 through March 31, 2007

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                                                                 -15-
               April 1, 2007 through June 30, 2007

               July 1, 2007 through September 30, 2007

               October 1, 2007 through December 31, 2007

               January 1, 2008 through March 31, 2008

               April 1, 2008 through June 30, 2008

               July 1, 2008 through September 30, 2008

               October 1, 2008 through December 31, 2008

           (z) “Inventory Reference Amount” shall mean, (1) for an Inventory Payment Period ending on or before December 31,
2007, the amount set forth in the table entitled “2006-2007 Inventory Table” in Schedule 2.2(z)(i) directly to the right, in such table,
of the entry in the Covered Inventory Amount column that includes the Covered Inventory Amount achieved for such Inventory
Payment Period, and (2) for Inventory Payment Period ending after January 1, 2008, the amount set forth in the table entitled “2008
Inventory Table” in Schedule 2.2(z)(ii) directly to the right, in such table, of the entry in the Covered Inventory Amount column that
includes the Covered Inventory Amount achieved for such Inventory Payment Period.

         (aa) “Listener Count” shall, for a Covered Radio Spot, mean the measure of the number of listeners applicable to such
Covered Radio Spot, determined as follows:
               (i) For Covered Radio Advertisements and Covered Unused Radio Spots broadcast [***]:
                    (1) [***].

                    (2) [***].

               (ii) [***].

               (iii) The parties agree to use the most recently available published listener count data that is effective in the Company
System.

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                                                                  -16-
               (iv) The methodology described in this definition is intended to describe the current methodology used by the
Company to present audience measurement data to its advertisers for purposes of purchasing and determining pricing for Covered
Radio Spots. Upon request of one of the Parties from time to time, the Parties agree to discuss and consider in good faith whether the
methodologies defined herein remain valid, and if, in the exercise of their good faith judgment, they determine that they do not,
including if Arbitron ceases to provide data, then the Parties shall negotiate in good faith appropriate modifications to this Listener
Count definition.

          (bb) “Maximum Inventory Contingent Consideration” shall mean the maximum total amount of Inventory Contingency
Payments that may be earned pursuant to Sections 2.3(d) and 2.3(e) of this Article II below, which (i) for the period 2006 – 2007 is
equal to an aggregate of $90,000,000 and (ii) for the period 2008 is equal to an aggregate of $181,000,000.

         (cc) “Maximum Revenue Contingent Consideration” shall mean the maximum total amount of Revenue Contingency
Payments that may be earned pursuant to Sections 2.3(b) and 2.3(c) below, which (i) for the period 2006 – 2007 is equal to an
aggregate of $300,000,000 and (ii) for the period 2008 is equal to an aggregate of $540,000,000.

          (dd) “Parent” shall, for purposes of this Article II, mean Parent and/or its consolidated subsidiaries.

          (ee) “Party” and “Parties” shall mean, for purposes of this Article II, Parent and the Stockholder Representative.

          (ff) [***].

          (gg) [***].

        (hh) “Radio Spot” shall mean a contiguous segment of not less than 10 seconds of audio broadcasting airtime on Covered
Radio Media that may be filled with audio advertisements.

         (ii) “Revenue Contingency Payment” shall mean, for a Revenue Payment Period, the payment amount calculated in
accordance with Sections 2.3(b) or 2.3(c) below, as applicable.

          (jj) “Revenue Payment Period” means each of the following periods (inclusive of the beginning and ending dates of each
such period):
               January 1, 2006 through March 31, 2006

               January 1, 2006 through June 30, 2006

               January 1, 2006 through September 30, 2006

               January 1, 2006 through December 31, 2006

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                                                                  -17-
               April 1, 2006 through March 31, 2007

               July 1, 2006 through June 30. 2007

               October 1, 2006 through September 30, 2007

               January 1, 2007 through December 31, 2007

               January 1, 2008 through March 31, 2008

               January 1, 2008 through June 30, 2008

               January 1, 2008 through September 30, 2008

               January 1, 2008 through December 31, 2008

           (kk) “Revenue Reference Amount” shall mean, (1) for a Revenue Payment Period ending on or before December 31, 2007,
the amount set forth in the table entitled “2006-2007 Revenue Table” in Schedule 2.2(kk)(i) directly to the right, in such table, of the
entry in the Covered Net Revenues column which includes the Covered Net Revenue amount achieved for such Revenue Payment
Period, and (2) for a Revenue Payment Period ending after January 1, 2008, the amount set forth in the table entitled “2008 Revenue
Table” in Schedule 2.2(kk)(ii) directly to the right, in such table, of the entry in the Covered Net Revenues column which includes
the Covered Net Revenue amount achieved for such Revenue Payment Period.

          (ll) [***].

    2.3 Contingent Payments. The Stockholders, Warrantholders and Cash Bonus Plan shall be entitled to the following Contingent
Payments:
           (a) Product Launch. Parent shall pay to the Stockholders, Warrantholders and the Cash Bonus Plan (in accordance with the
provisions of Section 2.4) Twenty Five Million Dollars ($25,000,000) (the “Launch Contingent Payment”) in cash if and only if,
prior to the three (3) year anniversary of the Closing Date (“Launch Contingency Date”), Parent launches [***] (the “Launch
Milestone”); provided that any such product launch shall be subject to Parent’s product launch processes and procedures and shall be
subject to Parent’s determination of when the [***] is ready for launch (including Parent’s determination as to the necessary features,
performance, scalability, and security requirements for launch and Parent’s determination of whether or not any features described
above are to be included in the [***] at launch).

          (b) 2006-2007 Revenue Milestones. For each completed Revenue Payment Period ending on or before December 31, 2007,
Parent shall pay (in accordance with the provisions of Section 2.4) to the Stockholders, Warrantholders, and the Cash Bonus Plan (in
accordance with their respective Pro Rata Portions) cash in the aggregate equal to (i) for the first Revenue Payment Period during
such period, the Revenue Reference Amount for such Revenue Payment Period, and (ii) for each subsequent Revenue Payment Period
during such period, the amount, if any, by which (A) the Revenue Reference Amount for such Revenue Payment Period exceeds
(B) the highest Revenue Reference Amount achieved in any of the prior completed Revenue Payment Periods.

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                                                                  -18-
          (c) 2008 Revenue Milestones. For each completed Revenue Payment Period ending after January 1, 2008 and on or before
December 31, 2008, Parent shall pay (in accordance with the provisions of Section 2.4) to the Stockholders, Warrantholders and the
Cash Bonus Plan (in accordance with their respective Pro Rata Portions) cash in the aggregate equal to (i) for the first Revenue
Payment Period during such period, the Revenue Reference Amount for such Revenue Payment Period, and (ii) for each subsequent
Revenue Payment Period during such period, the amount, if any, by which (A) the Revenue Reference Amount for such Revenue
Payment Period exceeds (B) the highest Revenue Reference Amount achieved in any of the prior completed Revenue Payment
Periods ended after January 1, 2008.

          (d) 2006-2007 Inventory Milestones. For each completed Inventory Payment Period ending on or before December 31,
2007, Parent shall pay (in accordance with the provisions of Section 2.4) to the Stockholders, Warrantholders and Cash Bonus Plan
(in accordance with their respective Pro Rata Portions) cash in the aggregate equal to (i) for the first Inventory Payment Period during
such period, the Inventory Reference Amount for such Inventory Payment Period, and (ii) for each subsequent Inventory Payment
Period during such period, the amount, if any, by which (A) the Inventory Reference Amount for such Inventory Payment Period
exceeds (B) the highest Inventory Reference Amount achieved in any of the prior completed Inventory Payment Periods.

          (e) 2008 Inventory Milestones. For each completed Inventory Payment Period ending after January 1, 2008 and on or before
December 31, 2008, Parent shall pay (in accordance with the provisions of Section 2.4) to the Stockholders, Warrantholders and Cash
Bonus Plan (in accordance with their respective Pro Rata Portions) cash in the aggregate equal to (i) for the first Inventory Payment
Period during such period, the Inventory Reference Amount for such Inventory Payment Period, and (ii) for each subsequent
Inventory Payment Period during such period, the amount, if any, by which (A) the Inventory Reference Amount for such Inventory
Payment Period exceeds (B) the highest Inventory Reference Amount achieved in any of the prior completed Inventory Payment
Periods ended after January 1, 2008.

          (f) Calculation of Reference Amounts. For purposes of clarification, in no event, with respect to the 2006-2007 time period
and the 2008 time period, will Parent be required to pay an aggregate amount of Revenue Contingency Payments or Inventory
Contingency Payments that is in excess of the highest Revenue Reference Amount or Inventory Reference Amount, as applicable,
actually achieved in any of the completed Revenue Payment Periods or Inventory Payment Periods during such 2006-2007 time
period or 2008 time period, as applicable, subject in any event to Parent’s right to recover for indemnity claims and Payment
Overages. Any Launch Contingent Payment that is not earned as provided herein and any portion of the Maximum Inventory
Contingent Consideration and Maximum Revenue Contingent Consideration that are not earned as provided herein shall in each case
not be included in the Merger Consideration and shall not be paid to the Stockholders, Warrantholders or the Cash Bonus Plan.

         (g) Period from January 1, 2006 through Closing. For purposes of determining the Revenue Reference Amount and
Inventory Reference Amount for the first Revenue Reference Period and Inventory Reference Period of 2006, transactions occurring
between January 1, 2006 and the Closing will be counted (notwithstanding that they occurred prior to the Closing) to the extent that
they would have counted had they occurred after the Closing.


     2.4 Reports and Payment.
          (a) Launch Contingency Report. Upon the written request of the Stockholder Representative (provided that not more than
one such request shall be made each calendar quarter), Parent




                                                                  -19-
shall no later than fifteen (15) Business Days following receipt of such request, deliver to the Stockholder Representative a report
setting forth the Parent’s assessment of the progress towards the launch [***]. No later than thirty (30) days following achievement of
the Launch Milestone, Parent shall pay the Launch Contingent Payment to the Stockholders, the Warrantholders and the Cash Bonus
Plan.


          (b) Revenue Contingency Report; Payment; Overage Claim.
             (i) No later than sixty (60) days following the last day of each Revenue Payment Period (ninety (90) days in the case of
a Revenue Payment Period ending on December 31 of any year), Parent shall deliver to the Stockholder Representative and the
Escrow Agent a written report setting forth Parent’s good faith determination of the Covered Net Revenue and the Revenue Reference
Amount for such Revenue Payment Period, and the resulting Revenue Contingency Payment payable, if any, for such Revenue
Payment Period (the “Revenue Contingency Report”).

               (ii) No later than sixty (60) days following the last day of each Revenue Payment Period (ninety (90) days in the case
of a Revenue Payment Period ending on December 31 of any year), Parent shall pay to the Stockholders and to the Cash Bonus Plan
the amount of the Revenue Contingency Payment, subject to Sections 2.1(e) and 2.1(f).

                (iii) If Parent determines that it made one or more Revenue Contingency Payments in respect of Revenue Payment
Periods occurring during a calendar year that were in excess of the amounts that it should have paid, Parent may include in the
Revenue Contingency Report for the Revenue Payment Period ending December 31 of such calendar year a written report setting
forth Parent’s good faith determination of such excess payment, including the adjusted Covered Net Revenue(s) and the Revenue
Reference Amount(s) for the applicable Revenue Payment Period(s). Such an excess payment of a Revenue Contingency Payment, or
an excess payment of an Inventory Contingency Payment described in Section 2.4(c) below, is referred to herein as a “Payment
Overage.” If Parent fails to include in the Revenue Contingency Report for the Revenue Payment Period ending December 31 of a
calendar year a written report setting forth Parent’s good faith determination of any Payment Overage in respect of Revenue Payment
Periods occurring during such calendar year, Parent waives any right to object to the amount of any such Revenue Contingency
Payments, unless the Stockholder Representative submits to Parent and the Escrow Agent a Payment Dispute Report with respect any
such Revenue Contingency Payments.


          (c) Inventory Contingency Report; Payment; Overage Claim.
               (i) No later than sixty (60) days (ninety (90) days in the case of an Inventory Payment Period ending on December 31
of any year) following the last day of each Inventory Payment Period, Parent shall deliver to the Stockholder Representative and the
Escrow Agent a written report setting forth Parent’s good faith determination of the Covered Inventory Amount and the Inventory
Reference Amount for such Inventory Payment Period, and the Inventory Contingency Payment payable, if any, for such Inventory
Payment Period (the “Inventory Contingency Report”). The Inventory Contingency Report and the Revenue Contingency Report for
a period may be combined into a single report.

               (ii) No later than sixty (60) days following the last day of each Inventory Payment Period (ninety (90) days in the case
of an Inventory Payment Period ending on December 31 of any year), Parent shall pay to the Stockholders and the Cash Bonus Plan
the amount of the Inventory Contingency Payment, subject to Sections 2.1(e) and 2.1(f) of this Article II.

             (iii) If Parent determines in good faith that that it made one or more Inventory Contingency Payments in respect of
Inventory Payment Periods occurring during a calendar year that were in

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                                                                  -20-
excess of the amounts that it should have paid, Parent may include in the Inventory Contingency Report for the Inventory Payment
Period ending December 31 of such calendar year a written report setting forth Parent’s good faith determination of such excess
payment, including the adjusted Covered Inventory Amount(s) and the Inventory Reference Amount(s) for the applicable Inventory
Payment Period(s). If Parent fails to include in the Inventory Contingency Report for the Inventory Payment Period ending
December 31 of a calendar year a written report setting forth Parent’s good faith determination of any Payment Overage in respect of
Inventory Payment Periods occurring during such calendar year, Parent waives any right to object to the amount of any such Inventory
Contingency Payments, unless the Stockholder Representative submits to Parent and the Escrow Agent a Payment Dispute Report
with respect any such Inventory Contingency Payments.


     2.5 Stockholder Representative Review.
         (a) Upon the written request of the Stockholder Representative (a “Review Request”), Parent shall promptly deliver to the
Stockholder Representative a copy of all supporting work papers and accounting records reasonably requested by the Stockholder
Representative that were utilized in preparing the Contingent Payment Report relating to any Revenue Payment Period or Inventory
Payment Period; provided however that a Review Request must be made, if at all, no later than one hundred eighty (180) days
following the last day of the calendar year during which occurred the Revenue Payment Period or Inventory Payment Period to which
the Review Request relates. The review provided for in this Section 2.5(a) shall occur during ordinary business hours, and shall be at
the Stockholder Representative’s sole expense.

          (b) Information provided to the Stockholder Representative under the terms of this Article II (including the existence and
amounts of any Contingent Payments and the fact of any dispute relating to any Contingent Payment) shall be referred to as
“Confidential Information.” The Stockholder Representative shall, (i) except as required by law, keep all Confidential Information
confidential, shall not disclose or reveal any Confidential Information to any person other than its Representatives (as defined below)
who are actively and directly participating in Stockholder Representative’s review or dispute of the Contingent Payments provided for
herein and shall cause those persons to observe the terms of this provision; (ii) shall not use Confidential Information for any purpose
other than in connection with its review or dispute of the Contingent Payments as provided for herein. The Stockholders and
Warrantholders shall be responsible for any breach of the terms of this provision by them or their Representatives. “Representative”
shall mean, as to the Stockholder Representative, its agents and advisors (including, without limitation, financial advisors, attorneys
and accountants). Parent shall keep and retain complete and accurate records in sufficient detail to reasonably enable the Stockholder
Representative to complete the review described above.

          (c) Parent shall cause such records to be kept and retained in sufficient detail to satisfy Parent’s obligations under
Section 2.5(a). If any such information required to be delivered under Section 2.5(a) is maintained by Parent in electronic form,
Parent shall make such information available to the Stockholder Representative in electronic form.


     2.6 Disagreements.
         (a) If the Stockholder Representative concludes in good faith that a Revenue Contingency Report or Inventory Contingency
Report contains inaccuracies or that the calculations of the Contingent Payment or Payment Overage, as applicable, contained in a
Revenue Contingency Report or Inventory Contingency Report do not comply with the terms of this Agreement in any way, the
Stockholder Representative may notify Parent and Escrow Agent of its conclusions (such notice, a “Payment Dispute Report”). Any
Payment Dispute report delivered by the Stockholder Representative must be in writing,




                                                                  -21-
shall state in reasonable detail the basis for the conclusion and its calculation of the Contingent Payment due to the Stockholders,
Warrantholders and the Cash Bonus Plan and/or, if applicable, the Payment Overage due to Parent, and shall be delivered to Parent
and the Escrow Agent no later than one hundred eighty (180) days after the end of the calendar year during which occurred the
Revenue Payment Period(s) and Inventory Payment Period(s) that are the subject of the Payment Dispute Report (such period, the
“Dispute Period” for Contingency Periods during such calendar year). A Revenue Contingency Report or Inventory Contingency
Report shall be final, and shall be conclusive and binding upon the parties (including with respect to any Payment Overage included
therein), with respect to all of its contents if the Stockholder Representative does not timely deliver a Payment Dispute Report in
respect of such Revenue Contingency Report or Inventory Contingency as provided herein.

           (b) If the Stockholder Representative timely delivers a Payment Dispute Report in accordance with Section 2.6(a), the
dispute represented thereby shall be resolved in accordance with the provisions of Section 10.10 (subject to the provisions of
Section 2.6(d) below); provided, however, that the dispute resolution proceedings relating to all disputes regarding Revenue Payment
Periods and Inventory Payment Periods that occur during the same calendar year must be combined into a single negotiation,
mediation and/or arbitration process, as applicable; provided further that such dispute resolution proceedings shall not commence
until after the ninetieth (90th) day following the end of such calendar year.

           (c) If a dispute arises between the parties relating to an Launch Contingency Report, a Revenue Contingency Report or an
Inventory Contingency Report, the parties agree to engage in mediation, as described in Section 10.10(b), for no more than thirty
(30) days. If after the aforementioned thirty (30) day period, the dispute has not been resolved, such dispute will be submitted to an
arbitrator or arbitration panel chosen pursuant to Section 10.10(d); provided that, for purposes of disputes under this Article II, the
seventy-five (75) day period referenced in Section 10.10(f) shall instead be sixty (60) days, and the ninety (90) day period referenced
in Section 10.10(f) shall instead be sixty (60) days. The arbitrator(s) decision shall be final and binding on all parties and
non-appealable. A dispute as described above will be considered to be finally determined and conclusive upon the parties (a “Final
Determination”) under the following circumstances (1) an agreement among the Parent and Stockholder Representative is reached
pursuant to negotiations or mediation conducted pursuant to this Section 2.6(d) which is memorialized in a written settlement
agreement executed by both parties (a “Dispute Settlement Agreement”); or (2) a final decision from an arbitration proceeding
conducted pursuant to this Section 2.6(d) (a “Dispute Arbitration Decision”).

         (d) If the dispute resolution process of Section 10.10 results in Parent being required to (or agreeing to) pay additional
amounts to the Stockholders, Warrantholders and the Cash Bonus Plan, Parent shall within ten (10) Business Days of the Final
Determination pay such additional amount of Contingent Payment to the Stockholders, Warrantholders and the Cash Bonus Plan.

            (e) Escrow Recovery of Overage Amount. A Payment Overage asserted by Parent shall become final and binding upon the
parties if it is the subject of a Final Determination or if the Stockholder Representative does not timely object to such asserted
Payment Overage as provided in Section 2.6 above (such a final Payment Overage, a “Payable Overage”). A Payable Overage shall
be satisfied as follows: (1) first out of the Payment Adjustment Fund, (2) then (if amounts remain to be paid), at Parent’s election by
claim against the Escrow Fund and/or by offsetting such remaining Payment Overage against any future Contingent Payments. The
Escrow Agent shall be entitled to rely on a Dispute Settlement Agreement or a written Dispute Arbitration Decision, to make a
distribution to Parent out of the Escrow Fund or the Payment Adjustment Fund of a Payment Overage determined in the Dispute
Settlement Agreement or Dispute Decision. The Escrow Agent shall be entitled to rely on a Revenue Contingency Report or Inventory
Contingency Report with respect to which no Payment Dispute Report was timely delivered and that specifically identifies an asserted
Payment Overage, and make a distribution to Parent out of the Escrow Fund or the Payment Adjustment Fund of such Payment
Overage.




                                                                  -22-
          (f) Release of Payment Adjustment Fund to Stockholders, Warrantholders and the Cash Bonus Plan.
                (i) As soon as practicable following the one hundred eightieth (180th) day after the end of each of calendar year 2006,
2007 and 2008, to the extent that the Payment Adjustment Fund for each such year exceeds the aggregate amount of any Payment
Overages asserted by Parent for the Inventory Payment Periods and Revenue Payment Periods in such year, the Escrow Agent shall
distribute such excess amount to the Exchange Agent for payment to the Stockholders and Warrantholders, and to Parent for payment
to the Cash Bonus Plan, in each case in proportion to their respective Pro Rata Portions.

                (ii) For each of calendar years 2006, 2007 and 2008, in the case that Parent does not timely assert a Payment Overage
(as provided in Section 2.4) for any Revenue Payment Period or Inventory Payment Period occurring during such calendar year, the
Escrow Agent shall distribute any remaining amounts of the Payment Adjustment Fund applicable to such year to the Exchange Agent
for payment to the Stockholders and Warrantholders, and to Parent for payment to the Cash Bonus Plan, in each case in proportion to
their respective Pro Rata Portions, as soon as practicable after the day following the last day on which a Payment Overage relating to
any Revenue Payment Period or Inventory Payment Period occurring during such year could be timely asserted hereunder.

                (iii) For each of calendar years 2006, 2007 and 2008, in the case that any Payment Overages have been timely asserted
by Parent for any Revenue Payment Periods or Inventory Payment Periods occurring during any such calendar year, but no dispute
relating to any of the asserted Payment Overages for such year is timely raised by the Stockholder Representative, after payment of
such Payment Overages to Parent out of the Payment Adjustment Fund, the Escrow Agent shall distribute any remaining amounts of
the Payment Adjustment Fund applicable to such year to Parent as soon as practicable after the day following the last day on which
Stockholder Representative could have timely disputed any such Payment Overages.

                (iv) For each of calendar years 2006, 2007 and 2008, in the case that any Payment Overages have been timely asserted
by Parent for any Revenue Payment Periods or Inventory Payment Periods occurring during any such calendar year, and a dispute
relating to any such asserted Payment Overage is timely raised by the Stockholder Representative, on the day on which the Escrow
Agent receives written notice of the Final Determination of all such disputes relating to Payment Overages asserted with respect to
such year, after payment to Parent out of the applicable Payment Adjustment Fund of all Payment Overages to which Parent is entitled
pursuant to such Final Determinations, the Escrow Agent shall distribute any amount remaining in the Payment Adjustment Fund for
such calendar year to the Exchange Agent for payment to the Stockholders and Warrantholders, and to Parent for payment to the Cash
Bonus Plan (in each case in proportion to their respective Pro Rata Portions).

          (g) All negotiations pursuant to this Section 2.6 shall be treated as compromise and settlement negotiations for purposes of
the Federal Rules of Evidence and state rules of evidence.


      2.7 Exclusion of Excludable Contracts.
          (a) Acquisition Contract. An “Acquisition Contract” shall mean [***].

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                                                                 -23-
         (b) Excludable Contract. An “Excludable Contract” shall mean [***].

         (c) Blanket Authorization. A “Blanket Authorization” shall mean [***].

         (d) Deal Review. [***].

         (e) Excluded Contract. Each of the following agreements shall be an “Excluded Contract”:
              (i) [***]:
                   (1) An Excludable Contract with respect to which [***]; or

                   (2) An Excludable Contract with respect to which [***]; or

              (ii) [***]:
                   (1) An Excludable Contract with respect to which [***]; or

                   (2) An Excludable Contract with respect to which [***]; or

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                                                               -24-
               (iii) [***]:
                   (1) An Excludable Contract with respect to which the Parent has delivered an Excludable Contract Notice (defined
below) and the Stockholder Representative has delivered notice to Parent within five (5) business days thereafter requesting that such
Excludable Contract be treated as an Excluded Contract.

                    (2) Any Acquisition Contract providing for [***].

          (f) Notice to Stockholder Representative. If Parent proposes to enter into, or enters into, an Excludable Contract or a Blanket
Authorization, and [***], Parent shall give notice to the Stockholder Representative of such contract or blanket authorization (or
proposed contract or blanket authorization, as applicable) (each, a “Excludable Contract Notice” or “Blanket Authorization
Notice”).

        (g) [***]. Without limiting the foregoing, for purposes of Sections 2.7(e)(i)(2) and 2.7(e)(ii)(2), notice of any such
agreement or proposed agreement will be deemed given if [***].

           (h) Effect of Excluded Contracts. No revenue derived from any Excluded Contract (including indirectly from the
monetization of property or services acquired in such Excluded Contract) will count toward or be included in the definition of
Covered Net Revenue, and no third party cost arising out of such Excluded Contract will count toward or be included in the definition
of Cost of Revenues, in each case for any applicable Revenue Payment Period. In addition, no Listener Counts for Covered Radio
Advertisements, and no Adjusted Listener Counts for Covered Unused Radio Spots, in each case from any Radio Spots acquired
directly or indirectly through such Excluded Contract shall count toward or be included in the calculation of Covered Inventory
Amount for any applicable Inventory Payment Period.

           (i) Stockholder Representative Confidentiality. Notwithstanding anything to the contrary, Parent’s obligations hereunder
shall in no event be interpreted in a manner to require it to violate any confidentiality obligations applicable to it.

         (j) Requests for Confirmation. From time to time, at Parent’s request, Chad, Ryan or the Stockholder Representative, as the
case may be, will confirm in writing his understanding as to the list of agreements that are Excluded Contracts, and/or sign an
acknowledgement of the parties’ understanding with respect thereto.

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                                                                  -25-
          (k) Appointment. Each of the Stockholders and Warrantholders hereby appoints Chad and Ryan as its agent and
attorney-in-fact for and on behalf of the Stockholders to give and receive notices and communications, and to sign the confirmations
contemplated by this Section 2.7, but only to the extent Chad or Ryan, as the case may be, are still then employed by Parent. Any
action of Chad or Ryan permitted to be taken under this Section 2.7 shall be binding upon and effective against the Stockholders and
Warrantholders.


      2.8 [***] Control.
          (a) Subject to the other provisions of this Section 2.8, [***].

           (b) Notwithstanding anything herein to the contrary, the AudioAds Operating Group will be subject to Parent’s operating
      policies, processes and procedures, including:
               (i) All expenditures by the AudioAds Operating Group will be subject to Parent’s spending authority policy.

               (ii) All contracts entered into by the AudioAds Operating Group will be subject to Parent’s deal review and contracts
approval policies, processes an procedures (including Parent’s signature authority policy).

               (iii) All product and feature launches by the AudioAds Operating Group will be subject to Parent’s product and feature
launch policies, processes and procedures.

               (iv) All hiring and terminations by the AudioAds Operating Group will be subject to Parent’s hiring and human
resources policies, processes and procedures.

          (c) Upon Closing, Chad Steelberg will be the General Manager of the AudioAds Operating Group, reporting to [***].

          (d) [***].

          (e) [***].

          (f) [***], Parent shall have the ultimate power, right and discretion to control all aspects of its business and operations
(including decisions

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                                                                   -26-
regarding the features, functions and characteristics of any of its products, the technology on which its products and associated
software are based, whether and when to launch its products, how to price, market and distribute its products and the terms and
conditions of any agreement by which it will agree to be bound).

     2.9 No Guarantee of Employment. Nothing herein shall constitute a guarantee of employment or engagement of any employee or
contractor of the Company or Parent, and either of them may terminate any employee or contractor, with or without cause, at any time
and such termination shall not constitute a breach of this Agreement.

     2.10 No Other Representations, Warranties or Commitments. This Agreement contains the entire agreement with respect to
Parent’s and the Surviving Corporation’s obligations in connection with the achievement of any of the Lunch Milestone or inventory
or revenue targets that would result in the payment of any Contingent Payments hereunder. Other than the express representations of
Parent contained in Article IV, notwithstanding anything else (including any prior or contemporaneous communications) to the
contrary, for purposes of determining the parties’ rights under this Article II, Parent and the Surviving Corporation make no, and
none of the Company, any Stockholder, Warrantholder nor any participant in the Cash Bonus Plan are relying on any, representations,
warranties or covenants either with respect to the support to be provided in order to achieve the launch of [***] or the inventory or
revenue targets or as to the likelihood or feasibility of achieving the launch of the [***] or the inventory or revenue targets.

     2.11 Certain Transactions. Notwithstanding any other provision of this Article II, for purposes of determining the achievement
of the Covered Net Revenue and Covered Inventory thresholds that determine the payment of Contingent Payments pursuant to
Sections 2.3(b), 2.3(c), 2.3(d) and 2.3(e), unless prior notice is provided to Parent, there shall not be counted in such determination
any Covered Net Revenue or Covered Inventory Amount that results from a transaction involving (a) one or more Persons with which
a 1% or greater Stockholder directly or indirectly is an Affiliate; or (b) has an agreement or arrangement pursuant to which the
Stockholder, Warrantholder or participant in the Cash Bonus Plan agrees to share the economic benefit of any Contingent Payments
hereunder with such Persons in relation to such transaction and which in any way relates to Covered Radio Spots, Covered Radio
Advertisements, [***], Contingent Payments or the achievement of the thresholds relevant to Sections 2.3(b), 2.3(c), 2.3(d) and
2.3(e). Each Stockholder, Warrantholder and participant in the Cash Bonus Plan agrees to provide prompt written notice to Parent
prior to consummation of any transaction described in the preceding sentence. Following such notice, Parent agrees to evaluate all
such transactions in good faith with the same scrutiny that would apply to transactions which do not involve such conflicting interests.
To the Company’s Knowledge, no Stockholder, Warrantholder or participant in the Cash Bonus Plan is a party to any transaction
described in (b) above.


                                                             ARTICLE III

                                 REPRESENTATIONS AND WARRANTIES OF THE COMPANY

     The Company hereby represents and warrants to Parent and Sub, subject to such exceptions as are specifically disclosed in the
disclosure schedule (referencing the appropriate section and subsection numbers) supplied by the Company to Parent (the “Company
Disclosure Schedule”) and dated as of the date hereof, (A) on the date hereof and, (B) if the Closing occurs, as of the Closing Date
(except where a representation or warranty is made as of the date hereof or a specific date herein), as though made on the Closing
Date, as set forth below. Notwithstanding anything herein to the contrary, the representations and warranties contained in this
Article III are the only representations and warranties being made by the Company in this Agreement.

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                                                                  -27-
     3.1 Organization of the Company.
           (a) The Company is a corporation duly organized, validly existing and in good standing under the laws of the State of
Delaware. The Company has the corporate power to own its properties and to carry on its business as currently conducted and as
currently contemplated to be conducted. The Company is duly qualified or licensed to do business and in good standing as a foreign
corporation in each jurisdiction in which the character or location of its assets or properties (whether owned, leased or licensed) or the
nature of its business make such qualifications necessary. The Company has delivered a true and correct copy of its certificate of
incorporation, as amended to date (the “Certificate of Incorporation”) and bylaws, as amended to date, each in full force and effect
on the date hereof (collectively, the “Charter Documents”), to Parent. The Board of Directors of the Company has not approved or
proposed to the Stockholders any amendment to any of the Charter Documents.

          (b) Section 3.1(b) of the Company Disclosure Schedule lists the directors and officers of the Company as of the date hereof.

        (c) Section 3.1(c) of the Company Disclosure Schedule lists every state or foreign jurisdiction in which the Company has
Employees or facilities or otherwise conducts its business.


     3.2 Company Capital Structure.
          (a) The authorized capital stock of the Company consists of 6,675,987 shares of Series A Common Stock, of which
2,619,405 shares are issued and outstanding, 420,000 shares of Series B Common Stock, of which no shares are issued and
outstanding, 660,000 shares of Company Series A Preferred Stock, all of which shares are issued and outstanding, 966,797 shares of
Company Series B-1 Preferred Stock, all of which shares are issued and outstanding, and 1,216,982 shares of Company Series B-2
Preferred Stock, of which 1,169,810 shares are issued and outstanding. Each share of Company Preferred Stock is convertible on a
one-share for one-share basis into Company Common Stock. As of the date hereof, the capitalization of the Company is as set forth in
Section 3.2(a) of the Company Disclosure Schedule. Assuming the same total capitalization as on the date hereof, the total number of
shares of Company Capital Stock outstanding as of immediately prior to the Effective Time (assuming the conversion, exercise, or
exchange of all securities (including the Company Preferred Stock) convertible into, or exercisable or exchangeable for, shares of
Company Capital Stock and the exercise of all Company Options and Company Warrants) will be as set forth in Section 3.2(a) of the
Company Disclosure Schedule. The Company Capital Stock is held by the Persons with the domicile addresses and in the amounts set
forth in Section 3.2(a) of the Company Disclosure Schedule, which further sets forth for each such Person the number of shares held,
class and/or series of such shares and the number of the applicable Company Stock Certificates representing such shares. All
outstanding shares of Company Capital Stock are duly authorized, validly issued, fully paid and non-assessable and are not subject to
preemptive rights created by statute, the Charter Documents, or any agreement to which the Company is a party or by which it is
bound.

           (b) All outstanding shares of Company Capital Stock, Company Options and Company Warrants have been issued or
repurchased (in the case of shares that were outstanding and repurchased by the Company or any Stockholder) in compliance with all
applicable federal, state, foreign, or local statutes, laws, rules, or regulations, including federal and state securities laws, and were
issued, transferred and repurchased (in the case of shares that were outstanding and repurchased by the Company or any Stockholder)
in accordance with any right of first refusal or similar right or limitation Known to the Company, including those in the Charter
Documents. There are no outstanding shares of Company Capital Stock that constitute unvested restricted stock or that are otherwise
subject to a repurchase or redemption right. There are no declared or accrued but unpaid dividends with respect to any shares of
Company Capital Stock. Except as set forth in Section 3.2(a) of the Company Disclosure Schedule, the Company has no other capital
stock authorized, issued or outstanding.




                                                                   -28-
           (c) Except for the Plans, the Company has never adopted, sponsored or maintained any stock option plan or any other plan
or agreement providing for equity compensation to any person. The Company has reserved 600,000 shares of Company Common
Stock for issuance to employees and directors of, and consultants to, the Company upon the issuance of stock or the exercise of
options granted under the Plans, of which (i) 369,876 shares are issuable, as of the date hereof, upon the exercise of outstanding,
unexercised options granted under the Plans, (ii) no shares have been issued upon the exercise of options granted under the Plans as of
the date hereof, (iii) no shares have been issued in the form of restricted stock granted under the Plans, and (iv) 230,124 shares remain
available for future grant as of the date hereof. The Company Options that are outstanding immediately prior to the Effective Time
will be converted at the Effective Time by the administrator of the Plan into Bonus Units pursuant to the terms and conditions of the
Cash Bonus Plan at the Effective Time. Section 3.2(c) of the Company Disclosure Schedule sets forth for each outstanding Company
Option and Company Warrant, the name of the holder of such option or warrant, the number of shares of Company Capital Stock
issuable upon the exercise of such option or warrant, the exercise price of such option or warrant, the date of grant (in the case of
options), and the vesting schedule (in the case of options), including the extent vested to date and whether the vesting of such option is
subject to acceleration as a result of the transactions contemplated by this Agreement or any other events (including a description of
any such acceleration provisions). The terms of the Plans authorize the administrator of such Plans to amend the Plans, as required, to
effect the provisions set forth in Section 1.6(c) hereof with respect to each Company Option without the consent of any holder of any
Company Option granted under such Plans. True and complete copies of all agreements and instruments relating to or issued under the
Plans have been provided to Parent and such agreements and instruments have not been amended, modified or supplemented, and
there are no agreements to amend, modify or supplement such agreements or instruments from the forms thereof provided to Parent.

          (d) Except for the Cash Bonus Plan, the Company has never adopted, sponsored or maintained any plan that will require the
payment of any cash bonuses in connection with the transactions contemplated by this Agreement. The Bonus Units under the Cash
Bonus Plan are intended to be equivalent to the value of 600,000 shares of Company Common Stock which had been reserved for
issuance to employees and directors of, and consultants to, the Company. Exhibit A to the Cash Bonus Plan contains the names of the
participants in the Cash Bonus Plan, the number of Bonus Units each participant has been, or will be, granted under the Cash Bonus
Plan, and the vesting schedule with respect to each such participant.

           (e) As of the date hereof, no shares of Company Capital Stock are issuable upon the exercise of outstanding Company
Options that have not been issued under the Plans. Except as set forth in Sections 3.2(a) and 3.2(c) of the Company Disclosure
Schedule, as of the date hereof, no shares of Company Capital Stock are issuable upon the exercise of outstanding Company Warrants.
Except for the Company Options and Company Warrants, there are no options, warrants, calls, rights, convertible securities,
commitments or agreements of any character, written or oral, to which the Company is a party or by which the Company is bound
obligating the Company to issue, deliver, sell, repurchase or redeem, or cause to be issued, delivered, sold, repurchased or redeemed,
any shares of the capital stock of the Company or obligating the Company to grant, extend, accelerate the vesting of, change the price
of, otherwise amend or enter into any such option, warrant, call, right, commitment or agreement. There are no outstanding or
authorized stock appreciation, phantom stock, profit participation, or other similar rights with respect to the Company. Except as
contemplated hereby, neither the Company nor, to the Knowledge of the Company, any other Stockholder is a party to any voting
trusts, proxies, or other agreements or understandings with respect to the voting stock of the Company. Except as set forth in
Section 3.2(e) of the Company




                                                                  -29-
Disclosure Schedule, there are no agreements to which the Company is a party relating to the registration, sale or transfer (including
agreements relating to rights of first refusal, co-sale rights or “drag-along” rights) of any Company Capital Stock. As a result of the
Merger, Parent will be the sole record and beneficial holder of all issued and outstanding shares of Company Capital Stock and all
rights to acquire or receive any shares of Company Capital Stock, whether or not such shares of Company Capital Stock are
outstanding.

      3.3 Subsidiaries. Section 3.3(a) of the Company Disclosure Schedule lists each entity in which the Company owns any shares of
capital stock or any interest in, or controls, directly or indirectly, any other corporation, limited liability company, partnership,
association, joint venture or other business entity. Section 3.3(b) of the Company Disclosure Schedule lists each corporation, limited
liability company, partnership, association, joint venture or other business entity of which the Company owns, directly or indirectly,
more than 50% of the stock or other equity interest entitled to vote on the election of the members of the board of directors or similar
governing body (each, a “Subsidiary” and collectively, the “Subsidiaries”). Except for the Subsidiaries, the Company does not have
and has never had any subsidiaries or affiliated companies and does not otherwise own and has never otherwise owned any shares of
capital stock or any interest in, or control, directly or indirectly, any other corporation, limited liability company, partnership,
association, joint venture or other business entity. Each entity listed on Section 3.3(a) of the Company Disclosure Schedule that is no
longer in existence has been duly dissolved in accordance with its charter documents and the laws of the jurisdiction of its
incorporation or organization and there are no outstanding liabilities or obligations (outstanding, contingent or otherwise), including
taxes, with respect to any such entity. Each Subsidiary is a corporation or limited liability company duly organized, validly existing
and in good standing under the laws of the jurisdiction of its incorporation or organization. Each Subsidiary has the corporate power
to own its properties and to carry on its business as currently conducted and as currently contemplated to be conducted. Each
Subsidiary is duly qualified or licensed to do business and in good standing as a foreign corporation or company, as the case may be,
in each jurisdiction in which the character or location of its assets or properties (whether owned, leased or licensed) or the nature of its
business make such qualifications necessary. The Company has delivered a true and correct copy of each Subsidiary’s charter
documents and bylaws or articles of organization and operating agreement, as the case may be, each as amended to date and in full
force and effect on the date hereof, to Parent (the “Subsidiary Organizational Documents”). Section 3.3(c) of the Company
Disclosure Schedule lists the directors and officers or members, as the case may be, of each Subsidiary as of the date of this
Agreement. The operations now being conducted by each Subsidiary are not now and have never been conducted under any other
name. All of the outstanding shares of capital stock or membership interests, as the case may be, of each Subsidiary are owned of
record and beneficially by the Company. All outstanding shares of capital stock or membership interests, as the case may be, of each
Subsidiary are duly authorized, validly issued, fully paid and non-assessable and not subject to preemptive rights created by statute,
the Subsidiary Organizational Documents, or any agreement to which such Subsidiary is a party or by which it is bound, and have
been issued in compliance with all applicable legal requirements. There are no options, warrants, calls, rights, commitments or
agreements of any character, written or oral, to which each Subsidiary is a party or by which it is bound obligating the Subsidiary to
issue, deliver, sell, repurchase or redeem, or cause to be issued, sold, repurchased or redeemed, any shares of the capital stock or
membership interests, as the case may be, of each Subsidiary or obligating each Subsidiary to grant, extend, accelerate the vesting of,
change the price of, otherwise amend or enter into any such option, warrant, call right, commitment or agreement. There are no
outstanding or authorized stock appreciation, phantom stock, profit participation, or other similar rights with respect to any of the
Subsidiaries. Neither the Company nor any Subsidiary has agreed or is obligated to make any future investment in, or capital
contribution to, any Person.

    3.4 Authority. The Company has all requisite power and authority to enter into this Agreement and any Related Agreements to
which it is a party and to consummate the transactions contemplated hereby and




                                                                   -30-
thereby. The execution and delivery of this Agreement and any Related Agreements to which the Company is a party and the
consummation of the transactions contemplated hereby and thereby have been duly authorized by all necessary corporate action on the
part of the Company and no further action is required on the part of the Company to authorize this Agreement and any Related
Agreements to which it is a party and the transactions contemplated hereby and thereby, subject only to the approval of this
Agreement by the Stockholders. The vote required to approve this Agreement by the Stockholders is set forth in Section 3.4 of the
Company Disclosure Schedule (the “Requisite Stockholder Vote”). This Agreement and the Merger have been unanimously
approved by the Board of Directors of the Company. This Agreement and each of the Related Agreements to which the Company is a
party have been duly executed and delivered by the Company and assuming the due authorization, execution and delivery by the other
parties hereto and thereto and the due authorization and execution of the Written Consent, constitute the valid and binding obligations
of the Company and the Stockholders enforceable against them in accordance with their respective terms.

     3.5 No Conflict. The execution and delivery by the Company of this Agreement and any Related Agreement to which the
Company is a party, and the consummation of the transactions contemplated hereby and thereby, will not conflict with or result in any
violation of or default under (with or without notice or lapse of time, or both) or give rise to a right of termination, cancellation,
modification or acceleration of any obligation or loss of any benefit under (any such event, a “Conflict”) (i) any provision of the
Charter Documents or the Subsidiary Organizational Documents, (ii) any Material Contract or Contract that does not materially differ
in substance from the Standard Form Agreement to which the Company or any Subsidiary is a party or by which any of their
properties or assets (whether tangible or intangible) are bound, or (iii) any judgment, order, decree, statute, law, ordinance, rule or
regulation applicable to the Company, any Subsidiary or any of their properties or assets (whether tangible or intangible). Section 3.5
of the Company Disclosure Schedule sets forth all necessary consents, waivers and approvals of parties to any Material Contracts as
are required thereunder in connection with the Merger, or for any such Material Contract to remain in full force and effect without
limitation, modification or alteration after the Effective Time so as to preserve all rights of, and benefits to, the Company and the
Subsidiaries under such Material Contracts from and after the Effective Time. There are no consents, waivers or approvals from any
party to any Contract that does not materially differ in substance from the Standard Form Agreement that are necessary or required in
order for such Contract to remain in full force and effect without limitation, modification or alteration after the Effective Time.
Following the Effective Time, the Surviving Corporation and each of its subsidiaries will be permitted to exercise all of their rights
under the Material Contracts and Contracts that do not materially differ in substance from the Standard Form Agreement without the
payment of any additional amounts or consideration other than ongoing fees, royalties or payments which the Company or any
Subsidiary would otherwise be required to pay pursuant to the terms of such Material Contracts had the transactions contemplated by
this Agreement not occurred.

      3.6 Consents. No consent, notice, waiver, approval, order or authorization of, or registration, declaration or filing with any court,
administrative agency or commission or other federal, state, county, local or other foreign governmental authority, instrumentality,
agency or commission (each, a “Governmental Entity”) or a party to any Material Contract to which the Company or any Subsidiary
is a party (so as not to trigger any Conflict), is required by, or with respect to, the Company or any Subsidiary in connection with the
execution and delivery of this Agreement and any Related Agreement to which the Company is a party or the consummation of the
transactions contemplated hereby and thereby, except for (a) such consents, notices, waivers, approvals, orders, authorizations,
registrations, declarations and filings as may be required under applicable securities laws, (b) the filing of the Certificate of Merger
with the Secretary of State of the State of Delaware, (c) the adoption of this Agreement and approval of the transactions contemplated
by this Agreement by the Stockholders and (d) the filing of notification, and expiration or early termination of the waiting period
under, the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the “HSR Act”), as well as any required approval
under foreign antitrust laws, if applicable.




                                                                   -31-
      3.7 Company Financial Statements. Section 3.7 of the Company Disclosure Schedule sets forth the Company’s (a) unaudited
consolidated balance sheet as of December 31, 2004, and the related consolidated statements of income, cash flow and stockholders’
equity for the three (3) month period then ended (the “Year-End Financials”), and (b) unaudited consolidated balance sheet as of
November 30, 2005 (the “Balance Sheet Date”), and the related unaudited statements of income, cash flow and stockholders’ equity
for the eleven months then ended (the “Interim Financials”). The Year-End Financials and the Interim Financials (collectively
referred as the “Financials”) are true and correct in all material respects and have been prepared in accordance with GAAP applied on
a consistent basis throughout the periods indicated and consistent with each other (except that the Financials do not contain footnotes
and other presentation items that may be required by GAAP). The Financials present fairly in all material respects the Company’s
consolidated financial condition, operating results and cash flows as of the dates and during the periods indicated therein, subject in
the case of the Interim Financials to normal year-end adjustments, which are not material in amount or significance in any individual
case or in the aggregate. The Company’s unaudited consolidated balance sheet as of the Balance Sheet Date is referred to hereinafter
as the “Current Balance Sheet.”

     3.8 No Undisclosed Liabilities. Neither the Company nor any Subsidiary has any liability, indebtedness, obligation, expense,
claim, deficiency, guaranty or endorsement of any type, whether accrued, absolute, contingent, matured, unmatured or other, of a
nature required to be reflected in financial statements in accordance with GAAP, except for those which (a) have been reflected in the
Current Balance Sheet, (b) have arisen in the ordinary course of business consistent with past practices since the Balance Sheet Date
and prior to the date hereof or (c) have arisen since the date hereof and do not arise from a violation of Section 5.1 hereof.

     3.9 No Changes. Since the Balance Sheet Date, except as (i) expressly permitted hereunder, (ii) required hereby, (iii) set forth in
Section 3.9 of the Company Disclosure Schedule, or (iv) specifically consented to by Parent pursuant to Section 5.1 or Section 5.3
hereof, there has not been, occurred or arisen any:
          (a) transaction by the Company or any Subsidiary except in the ordinary course of business as conducted on that date and
consistent with past practices;

          (b) modifications, amendments or changes to the Charter Documents or the Subsidiary Organizational Documents except as
expressly contemplated by this Agreement;

           (c) payment, discharge, waiver or satisfaction by the Company or any Subsidiary, in any amount in excess of $15,000 in any
one case, or $50,000 in the aggregate, of any claim, liability, right or obligation (absolute, accrued, asserted or unasserted, contingent
or otherwise), other than payments, discharges or satisfactions in the ordinary course of business of liabilities reflected or reserved
against in the Current Balance Sheet;

          (d) destruction of, damage to, or loss (whether or not covered by insurance) of any material assets (whether tangible or
intangible) or material business of the Company or any Subsidiary or any loss of, or material adverse change in the Company’s or any
Subsidiary’s relationships with, any of their material customers;

          (e) employment dispute, including claims or matters raised by any individual, Governmental Entity, or any workers’
representative organization, bargaining unit or union regarding labor trouble or claim of wrongful discharge or other unlawful
employment or labor practice or action with respect to the Company or any Subsidiary;




                                                                  -32-
          (f) adoption or change in accounting policies or procedures (including any change in reserves for excess or obsolete
inventory, doubtful accounts or other reserves, or depreciation or amortization policies or rates) by the Company or any Subsidiary
other than as required by GAAP;

          (g) adoption of or change in any material election in respect of Taxes, adoption of or change in any accounting method in
respect of Taxes, agreement or settlement of any claim or assessment in respect of Taxes, or extension or waiver of the limitation
period applicable to any claim or assessment in respect of Taxes by the Company or any Subsidiary;

          (h) declaration, setting aside or payment of a dividend or other distribution (whether in cash, stock or property) in respect of
any Company Capital Stock or capital stock of any Subsidiary, or any split, combination or reclassification in respect of any shares of
Company Capital Stock or capital stock of any Subsidiary, or any issuance or authorization of any issuance of any other securities in
respect of, in lieu of or in substitution for shares of Company Capital Stock or capital stock of any Subsidiary, or any direct or indirect
repurchase, redemption, or other acquisition by the Company of any shares of Company Capital Stock or capital stock of any
Subsidiary (or options, warrants or other rights convertible into, exercisable or exchangeable therefor), except in accordance with the
agreements evidencing Company Options or Company Warrants;

          (i) termination or extension, or any material amendment, waiver or modification of the terms, of any Material Contract;

          (j) other than pursuant to Standard Form Agreements, sale, lease, sublease, license or other disposition of any of the material
assets (whether tangible or intangible) or material properties of the Company or any Subsidiary, including, but not limited to, the sale
of any accounts receivable of the Company or any Subsidiary, or any creation of any Lien in such material assets or material
properties;

          (k) loan by the Company or any Subsidiary to any Person, incurring by the Company or any Subsidiary of any indebtedness,
guaranteeing by the Company or any Subsidiary of any indebtedness, issuance or sale of any debt securities of the Company or any
Subsidiary or guaranteeing of any debt securities of others, except for (i) loans, advances or capital contributions to or investments in
wholly-owned Subsidiaries made in the ordinary course of business consistent with past practices, and (ii) advances to Employees for
travel and business expenses in the ordinary course of business consistent with past practices;

         (l) waiver or release of any material right or claim of the Company or any Subsidiary, including any write off, discount or
other compromise of any account receivable of the Company or any Subsidiary that exceeds $1,000 in any one case;

          (m) commencement, settlement, notice or, to the Knowledge of the Company, threat of any lawsuit or proceeding or other
investigation against the Company or any Subsidiary or their respective properties or affairs;

         (n) notice of any claim or potential claim of ownership by any Person other than the Company of the Company Intellectual
Property Rights or of infringement by the Company or any Subsidiary of any other Person’s Intellectual Property Rights;

           (o) issuance or sale, or contract to issue or sell, by the Company or any Subsidiary of any shares of Company Capital Stock
or capital stock of any Subsidiary, or securities convertible into, or exercisable or exchangeable for, shares of Company Capital Stock
or capital stock of any Subsidiary, or any securities, warrants, options or rights to purchase any of the foregoing, except for issuances
of (i) Company




                                                                   -33-
Capital Stock upon the exercise of Company Options granted under the Plans or Company Warrants in accordance with their terms
(each of which Company Options and Company Warrants are listed on Section 3.2(c) of the Company Disclosure Schedule) and
(ii) additional Company Options granted under the Plans;

           (p) (i) sale or license of any Company Intellectual Property or execution of any agreement with respect to the Company
Intellectual Property with any Person or with respect to the Intellectual Property Rights of any Person (other than licenses granted by
the Company pursuant to Standard Form Agreements), or (ii) purchase or license of any Intellectual Property Rights or execution of
any agreement with respect to the Intellectual Property Rights of any Person (other than licenses granted by the Company pursuant to
Standard Form Agreements), (iii) agreement with respect to the development of any Intellectual Property Rights with a third party, or
(iv) change in pricing or royalties set or charged by the Company or any Subsidiary to its customers or licensees or in pricing or
royalties set or charged by Persons who have licensed Intellectual Property Rights to the Company or any Subsidiary;

          (q) Material Adverse Effect with respect to the Company; or

           (r) agreement by the Company or any Subsidiary, or any officer or Employees on behalf of the Company or any Subsidiary,
to do any of the things described in the preceding clauses (a) through (q) of this Section 3.9 (other than negotiations with Parent and
its representatives regarding the transactions contemplated by this Agreement).


     3.10 Accounts Receivable.
         (a) The Company has made available to Parent a list of all accounts receivable of the Company and each Subsidiary as of
the Balance Sheet Date, together with an aging schedule indicating a range of days elapsed since invoice.

           (b) All of the accounts receivable of the Company and each Subsidiary (i) arose in the ordinary course of business, (ii) are
carried at values determined in accordance with GAAP consistently applied, (iii) are not subject to any valid setoff or counterclaim,
and (iv) do not represent obligations for goods sold on consignment, on approval or on a sale-or-return basis or subject to any other
repurchase or return arrangement. No person has any Lien on any accounts receivable of the Company or any Subsidiary, and no
written request or agreement for deduction or discount has been made with respect to any accounts receivable of the Company or any
Subsidiary.


     3.11 Tax Matters.
           (a) Definition of Taxes. For the purposes of this Agreement, the term “Tax” or, collectively, “Taxes” shall mean (i) any and
all U.S. federal, state, local and non-U.S. taxes, assessments and other governmental charges, duties, impositions and liabilities,
including taxes based upon or measured by gross receipts, income, profits, sales, use and occupation, and value added, ad valorem,
transfer, franchise, withholding, payroll, recapture, employment, excise and property taxes as well as public imposts, fees and social
security charges (including health, unemployment, workers’ compensation and pension insurance), together with all interest, penalties
and additions imposed with respect to such amounts, (ii) any liability for the payment of any amounts of the type described in
clause (i) of this Section 3.11(a) as a result of being a member of an affiliated, consolidated, combined or unitary group for any period
(including any arrangement for group or consortium relief or similar arrangement), and (iii) any liability for the payment of any
amounts of the type described in clauses (i) or (ii) of this Section 3.11(a) as a result of any express or implied obligation to indemnify
any other person or as a result of any obligation under any agreement or arrangement with any other person with respect to such
amounts and including any liability for taxes of a predecessor entity.




                                                                  -34-
          (b) Tax Returns and Audits.
                (i) The Company and each of its Subsidiaries has (a) prepared and timely filed all U.S. federal, and all material state,
local and non-U.S. returns, estimates, information statements and reports (“Returns”) (including as material Returns, without
limitation, income, sales and use and payroll tax returns) relating to Taxes of the Company or any of its Subsidiaries or their
respective operations, and such Returns are true and correct and have been completed in accordance with applicable law and
(b) timely paid all material Taxes it is required to pay.

                 (ii) The Company and each of its Subsidiaries has withheld from payments to their respective Employees and other
third parties, all U.S. federal, state and non-U.S. income Taxes and social security charges and other Taxes required to be withheld,
and have timely paid such Taxes over to the appropriate authorities.

               (iii) Neither the Company nor any of its Subsidiaries has been delinquent in the payment of any material Tax, nor is
there any Tax deficiency outstanding, assessed or proposed against the Company or any of its Subsidiaries, nor has the Company or
any of its Subsidiaries executed any waiver of any statute of limitations on or extending the period for the assessment or collection of
any Tax.

               (iv) No audit or other examination of any Return of the Company or any of its Subsidiaries is presently in progress, nor
has the Company or any of its Subsidiaries been notified in writing of any request for such an audit or other examination. No
adjustment relating to any Return filed by the Company or any of its Subsidiaries has been proposed formally or, to the Knowledge of
the Company, informally by any Tax authority to the Company or any of its Subsidiaries or any representative thereof. No claim has
ever been made by any authority in a jurisdiction where the Company or any its Subsidiaries does not file Tax Returns that the
Company or any of its Subsidiaries is or may be subject to taxation by that jurisdiction.

                (v) Neither the Company nor any of its Subsidiaries has material liabilities for unpaid Taxes which have not been
accrued or reserved on the Current Balance Sheet, whether asserted or unasserted, contingent or otherwise, and neither the Company
nor any of its Subsidiaries has incurred any liability for Taxes since the Balance Sheet Date other than in the ordinary course of
business.

                (vi) The Company has made available to Parent or its legal counsel, copies of all Returns for the Company and its
Subsidiaries filed for all periods since its inception.

                (vii) There are (and immediately following the Effective Time there will be) no Liens on the assets of the Company or
any of its Subsidiaries relating to or attributable to Taxes other than Liens for Taxes not yet due and payable. Neither the Company
nor any of its Subsidiaries has Knowledge of any basis for the assertion of any claim relating or attributable to Taxes which, if
adversely determined, would result in any Lien on the assets of the Company or any of its Subsidiaries.

                (viii) Neither the Company nor any of its Subsidiaries has (A) ever been a member of an affiliated group (within the
meaning of Code §1504(a)) filing a consolidated federal income Tax Return (other than a group the common parent of which was the
Company), (B) ever been a party to any Tax sharing, indemnification or allocation agreement, (C) any liability for the Taxes of any
person (other than the Company or any of its Subsidiaries), under Treasury Regulation § 1.1502-6 (or any similar provision of state,
local or non-U.S. law, including any arrangement for group or consortium relief or similar arrangement), as a transferee or successor,
by contract or agreement, or otherwise and (D) ever been a party to any joint venture, partnership or other arrangement that could be
treated as a partnership for Tax purposes.




                                                                   -35-
              (ix) Neither the Company nor any of its Subsidiaries has been, at any time, a “United States Real Property Holding
Corporation” within the meaning of Section 897(c)(2) of the Code.

               (x) Neither the Company nor any of its Subsidiaries has constituted either a “distributing corporation” or a “controlled
corporation” in a distribution of stock intended to qualify for tax-free treatment under Section 355 of the Code.

               (xi) Neither the Company nor any of its Subsidiaries has engaged in a reportable transaction under Treasury Regulation
Section 1.6011-4(b), including a transaction that is the same or substantially similar to one of the types of transactions that the Internal
Revenue Service has determined to be a Tax avoidance transaction and identified by notice, regulation, or other form of published
guidance as a listed transaction, as set forth in Treasury Regulation Section 1.6011-4(b)(2).

               (xii) Each of the Company and its Subsidiaries is and has at all times been resident for Tax purposes in its country of
incorporation or formation and is not and has not at any time been treated as resident in any other country for any Tax purpose
(including any arrangement for the avoidance of double taxation). Neither the Company nor any of its Subsidiaries is subject to Tax in
any country other than its country of incorporation or formation by virtue of having a permanent establishment or other place of
business or by virtue of having a source of income in that country. Neither the Company nor any of its Subsidiaries is liable for any
Tax as the agent of any other Person or business or constitutes a permanent establishment or other place of business of any other
Person, business or enterprise for any Tax purpose.

               (xiii) Each of the Company and its Subsidiaries is in full compliance with all terms and conditions of any Tax
exemption, Tax holiday or other Tax reduction agreement or order of a territorial or non-U.S. government and the consummation of
the transactions contemplated by this Agreement will not have any adverse effect on the continued validity and effectiveness of any
such Tax exemption, Tax holiday or other Tax reduction agreement or order.

               (xiv) Neither the Company nor any of its Subsidiaries will be required to include any income or gain or exclude any
deduction or loss from taxable income as a result of (A) any change in method of accounting under Section 481(c) of the Code,
(B) closing agreement under Section 7121 of the Code, (C) deferred intercompany gain or excess loss account under Treasury
Regulations under Section 1502 of the Code (or in the case of each of (A), (B) or (C), under any similar provision of applicable law),
(D) installment sale or open transaction disposition or (E) prepaid amount.

          (c) Executive Compensation Tax. There is no contract, agreement, plan or arrangement to which the Company or any
Subsidiary is a party, including the provisions of this Agreement, covering any Employee of the Company or any Subsidiary, which,
individually or collectively, could give rise to the payment of any amount that would not be deductible pursuant to Sections 280G or
404.

     3.12 Restrictions on Business Activities. There is no agreement (non-competition or otherwise), commitment, judgment,
injunction, order or decree to which the Company or any Subsidiary is a party or otherwise binding upon the Company or any
Subsidiary which has or may reasonably be expected to have the effect of prohibiting or impairing any business practice of the
Company or any Subsidiary, any acquisition of property (tangible or intangible) by the Company or any Subsidiary, the conduct of
business by the Company or any Subsidiary, or otherwise limiting the freedom of the Company or any Subsidiary to engage in any
line of business or to compete with any Person. Without limiting the generality of the foregoing, neither the Company nor any
Subsidiary has entered into any Contract under which the Company or any Subsidiary is




                                                                   -36-
restricted from selling, licensing, manufacturing or otherwise distributing any of its technology or products or from providing services
to customers or potential customers or any class of customers, in any geographic area, during any period of time, or in any segment of
the market.


     3.13 Title to Properties; Absence of Liens and Encumbrances; Condition of Equipment.
          (a) Neither the Company nor any Subsidiary owns any real property, nor has the Company or any Subsidiary ever owned
any real property.

          (b) Section 3.13(b) of the Company Disclosure Schedule identifies all real property currently leased, subleased or licensed
by or from the Company or any Subsidiary or otherwise used or occupied by the Company or any Subsidiary for the operation of its
business (the “Leased Real Property”), including any lease agreement, lease guarantee, sublease or other agreement for the leasing,
use or occupancy of the Leased Real Property to which the Company or any Subsidiary is a party or of which the Company or any
Subsidiary is a beneficiary, and all amendments and modifications thereof (collectively, the “Lease Agreements”). The Company has
provided Parent with correct and complete copies of the copies or originals of the Lease Agreements. To the Knowledge of the
Company, (i) all Lease Agreements are valid and effective in accordance with their respective terms, (ii) no rentals payable thereunder
by the Company or any of its Subsidiaries are past due and (iii) there is not any existing default or event of default thereunder (or
event which with notice or lapse of time, or both, would constitute a default by the Company or any of its Subsidiaries or any other
party to any Lease Agreement). Neither the Company nor any Subsidiary has received any notice of a default, alleged failure to
perform, or any offset or counterclaim with respect to any such Lease Agreement, which has not been fully remedied and withdrawn.
Assuming the receipt of consents relating to the Lease Agreements set forth in Section 3.5 of the Company Disclosure Schedule, the
Closing will not affect the enforceability against any person of any such Lease Agreement or the rights of the Company or the
Surviving Corporation or any of its Subsidiaries to the continued use and possession of the Leased Real Property for the conduct of
business as presently conducted.

           (c) The Company and each Subsidiary has good and valid title to, or, in the case of leased properties and assets, valid
leasehold interests in, all of their respective tangible properties and tangible assets, real, personal and mixed, used or held for use in
the conduct of the business of the Company and each Subsidiary as currently conducted free and clear of any Liens, except (i) Liens
for Taxes not yet due and payable, and (ii) such imperfections of title and encumbrances, if any, which do not materially adversely
affect the value of or materially interfere with the present use of the property subject thereto or affected thereby.

          (d) Section 3.13(d) of the Company Disclosure Schedule lists all items of equipment (the “Equipment”) owned or leased
by the Company and the Subsidiaries that have a book value of at least $5,000 as of the date hereof, and such Equipment is adequate
for the conduct of the business of the Company and the Subsidiaries as currently conducted and as currently contemplated to be
conducted.


     3.14 Intellectual Property.
          (a) Definitions. For all purposes of this Agreement, the following terms shall have the following respective meanings:

              “Company Intellectual Property” shall mean any and all Intellectual Property Rights that are owned or purported to
be owned by the Company or any Subsidiary.




                                                                    -37-
                “Intellectual Property Rights” shall mean worldwide (i) patents and patent applications, (ii) copyrights, copyright
registrations and applications for copyright registration, (iii) trade secrets, (iv) trademarks, trade names and service marks,
(v) divisions, continuations, renewals and reissuances of the foregoing (as applicable).

               “Products” shall mean all products and services developed as of the date hereof (including products and services of
which development is substantially completed as of the date hereof that are set forth in the milestones in Article II), distributed,
marketed, imported for resale, sold or licensed out by or on behalf of the Company or any Subsidiary in the ten year period preceding
the date hereof.

                “Registered Intellectual Property“ shall mean patents, trademark registrations, copyright registrations, and any
application for any of the foregoing.

               “Shrink-Wrap Code” means generally commercially available binary code (other than development tools and
development environments) where available for a cost of not more than $5,000 for a perpetual license for a single user or work station
(or $50,000 in the aggregate for all users and work stations).

                “Source Code” shall mean computer software in a form that is readily suitable for review and edit by trained
programmers, including related programmer comments embedded therein. For avoidance of doubt, Source Code excludes any
software that is wholly or substantially in binary form and any documentation or other information provided or used with such
software.

                “Technology” shall mean any or all of the following (i) computer programs, architecture, documentation,
(ii) inventions (whether or not patentable), discoveries, improvements, and technology, (iii) proprietary and confidential information,
trade secrets and know how, (iv) databases, data compilations and collections and technical data, (v) logos, trade names, trade dress,
trademarks and service marks, (vi) domain names, web addresses and sites, (vii) methods and processes and (viii) devices, prototypes,
and schematics.

           (b) Section 3.14(b)(i) of the Company Disclosure Schedule (i) lists all Registered Intellectual Property that is part of
Company Intellectual Property (the “Company Registered Intellectual Property”), all domain names registered in the Company’s
name and applications and registrations therefor and all material unregistered trademarks used by the Company with respect to its
Products and (ii) lists any proceedings or actions before any court or tribunal (including the United States Patent and Trademark
Office (the “PTO”) or equivalent authority anywhere in the world) to which Company or any Subsidiary is a party and in which
claims are raised relating to the validity, enforceability, scope, ownership or infringement of any of the Company Registered
Intellectual Property. Section 3.14(b)(ii) of the Disclosure Schedule lists all Products released on or before January 5, 2006, by name
and version number (other than any version of any Product first released by Scott Studios before October 1, 2004).

           (c) To the Company’s Knowledge, except as set forth in Section 3.14(c)(i) of the Company Disclosure Schedule, each item
of Company Registered Intellectual Property is valid and subsisting, other than any registered trademarks indicated on
Section 3.14(b)(i) of the Company Disclosure Schedule as no longer being used by the Company or any Subsidiaries. All necessary
registration, maintenance and renewal fees in connection with such Company Registered Intellectual Property that are or will be due
for payment on or before the Closing Date have been or will be timely paid and all necessary documents and certificates in connection
with such Company Registered Intellectual Property that are or will be due for filing on or before the Closing Date have been or will
be timely filed with the relevant patent, copyright, trademark or other authorities in the United States or foreign jurisdictions, as the
case may be, for the purposes of maintaining such Company Registered Intellectual Property. Section 3.14(c)(ii) of the




                                                                  -38-
Company Disclosure Schedule lists all actions that must be taken by the Company within 60 days of the Closing Date, including the
payment of any registration, maintenance or renewal fees or the filing of any documents, for the purposes of maintaining or renewing
any Company Registered Intellectual Property.

          (d) There are no agreements to which Company or any Subsidiary is a party that would restrict the ability of the Surviving
Corporation or the Parent to transfer or license Company Intellectual Property without restriction and without payment of any kind to
any third party immediately following the Closing, except to the extent of restrictions and payment or other obligations that bind the
Company immediately before the Closing pursuant to agreements set forth in Section 3.14(d) of the Company Disclosure Schedule.

           (e) The Company or a Subsidiary owns each item of Company Intellectual Property, including all Company Registered
Intellectual Property listed in Section 3.14(b)(i) of the Company Disclosure Schedule, free and clear of any liens, mortgages, security
interests or pledges, other than those set forth on Section 3.14(e) of the Company Disclosure Schedule.

          (f) Except for trade secrets that lost their status as trade secrets upon the release of a new product or service, upon the
issuance of a patent or publication of a patent application, or as a result of a good faith business decision to disclose such trade secret,
and except for trademarks, service marks, slogans or similar designations that the Company or a Subsidiary made a good faith
business decision to stop using, neither the Company nor any Subsidiary has (i) transferred ownership of, or granted any exclusive
license with respect to, any Intellectual Property Rights that are or, as of the time of such transfer or exclusive license, were material
to the Company, to any other person or, (ii) except as set forth in Section 3.14(b)(i) and Section 3.14(c)(i), permitted the Company’s
or any Subsidiary’s rights in any Company Intellectual Property that is or was at the time material to the Company to enter into the
public domain.

           (g) The Company and the Subsidiaries are the exclusive owners of all Company Intellectual Property. Other than
Intellectual Property Rights licensed to Company under (i) licenses for the public or open source technology listed in Section 3.14(t)
of the Company Disclosure Schedule, (ii) licenses listed in Section 3.14(h) of the Company Disclosure Schedule, (iii) agreements that
are not substantially focused on the license of Intellectual Property Rights, such as service, lease, sales or nondisclosure agreements in
which the license of Intellectual Property Rights is incidental to the primary purposes of such agreement, or (iv) licenses for Shrink-
Wrap Code, the Company Intellectual Property includes all of the Intellectual Property Rights that are used in or necessary to the
conduct of the Company’s business as currently conducted, and the Company possesses all Technology that is used in or necessary to
the conduct of the Company’s business as currently conducted.

          (h) Other than (i) licenses for the public or open source technology listed in Section 3.14(t) of the Company Disclosure
Schedule and (ii) licenses for Shrink-Wrap Code, Section 3.14(h) of the Company Disclosure Schedule sets forth all of the
agreements under which the Company or any Subsidiary receives a license from any Person of any Intellectual Property Rights of
such Person or a third party, other than agreements that are not substantially focused on the license of Intellectual Property Rights,
such as service, lease, sales or nondisclosure agreements in which the license of Intellectual Property Rights is incidental to the
primary purposes of such agreement. For purposes of clarification, any agreement under which Technology is licensed to the
Company or any Subsidiary is deemed to be a license of the Intellectual Property Rights implicitly licensed thereunder,
notwithstanding whether the term Intellectual Property Rights is used in such agreement.

          (i) Other than (x) non-disclosure agreements, (y) non-exclusive licenses and related agreements with respect thereto of the
Products to end-users (in each case, pursuant to written agreements




                                                                    -39-
that do not materially differ in substance from the Company’s standard form(s) including attachments and which is or are included in
Section 3.14(i) of the Company Disclosure Schedule (the “Standard Form Agreements”)), or (z) as specified in Section 3.14(i) of
the Company Disclosure Schedule, Section 3.14(i) of the Company Disclosure Schedule lists all contracts, licenses and agreements to
which the Company or any Subsidiary is a party under which the Company or any Subsidiary has granted rights under any Company
Intellectual Property to third parties (other than rights granted to contractors or vendors to use Company Intellectual Property for the
sole benefit of the Company or any Subsidiary). For purposes of clarification, any agreement under which Products or Technology are
licensed to third parties is deemed to be a license of the Intellectual Property Rights implicitly licensed thereunder notwithstanding
whether the term Intellectual Property Rights is used in such agreement.

          (j) Except as set forth in Section 3.14(j) of the Company Disclosure Schedule, no third party that has licensed Intellectual
Property Rights to the Company or any Subsidiary has retained sole ownership of or exclusive license rights under any Intellectual
Property Rights in any material improvements or derivative works made solely or jointly by the Company or any Subsidiary under
such license. For purposes of clarification, any agreement under which Technology is licensed to the Company or any Subsidiary is
deemed to be a license of the Intellectual Property Rights implicitly licensed thereunder notwithstanding whether the term Intellectual
Property Rights is used in such agreement.

          (k) Other than (i) the public or open source technology listed in Section 3.14(t) of the Company Disclosure Schedule and
(ii) agreements entered into by the Company or any Subsidiary substantially in the form of the Standard Form Agreements, and other
than as provided in any of the agreements listed in Section 3.14(i) of the Company Disclosure Schedule, and other than obligations
implied by law, Section 3.14(k) of the Company Disclosure Schedule lists all Contracts between the Company or any Subsidiary and
any other Person wherein or whereby the Company or any Subsidiary has agreed to indemnify such Person with respect to the
infringement or misappropriation of the Intellectual Property Rights of any third party.

         (l) To the Company’s Knowledge, none of the Contracts listed in Section 3.14(h) or Section 3.14(i) of the Company
Disclosure Schedule are subject to any material dispute regarding the scope of the rights under Intellectual Property Rights granted
under such Contract, or performance under such Contract including with respect to any payments to be made or received by the
Company or any Subsidiary thereunder.

           (m) The operation of the business of the Company and the Subsidiaries as it is currently conducted, including the design,
development, use, import, branding, advertising, promotion, marketing, manufacture and sale of any Product, and, to its Knowledge,
as contemplated to be conducted with respect to the radio business following the Merger as contemplated in Article II, does not
infringe or misappropriate any Intellectual Property Rights of any Person or violate any publicity or similar right of any Person under
the laws of any jurisdiction. Neither the Company nor any Subsidiary has received notice from any Person claiming that such
operation or any Product infringes or misappropriates any Intellectual Property Rights of any Person or violates any right of publicity
or similar right of any Person (nor, subject to Section 3.14(m) of the Company Disclosure Schedule, does the Company or any
Subsidiary have Knowledge of any facts that constitute a reasonable basis for any good-faith claim of such infringement or
misappropriation).

           (n) Except as set forth in Section 3.14(n) of the Company Disclosure Schedule, neither this Agreement nor the transactions
contemplated by this Agreement, including the assignment to Parent by operation of law or otherwise of any contracts or agreements
to which the Company or any Subsidiary is a party, will result, under any agreements to which the Company or any Subsidiary is a
party, in: (i) Parent,




                                                                  -40-
any of its subsidiaries or the Surviving Corporation granting to any third party any right to or with respect to any Intellectual Property
Rights owned by, or licensed to, any of them (other than rights granted by Company on or prior to the Closing Date under Intellectual
Property Rights owned or held by the Company as of the Closing Date that are obtained by Parent, any of its subsidiaries or the
Surviving Corporation as a result of this Agreement or the transactions contemplated by this Agreement, and other than Intellectual
Property Rights in updates, upgrades or new versions of Products that Parent, any of its subsidiaries or the Surviving Corporation is
obligated to provide to any third party under any agreement between Company and such third party that is assigned to or assumed by
Parent, any of its subsidiaries or the Surviving Corporation by operation of law or otherwise which agreement does not materially
differ in substance from the Company’s Standard Form Agreements included in Section 3.14(i) of the Company Disclosure
Schedule), (ii) Parent, any of its subsidiaries or the Surviving Corporation, being bound by, or subject to, any non-compete or other
material restriction on the operation or scope of their respective businesses, or (iii) Parent, any of its subsidiaries or the Surviving
Corporation being obligated to pay any royalties or license fees with respect to Intellectual Property Rights of any third party in
excess of those payable by Company in the absence of this Agreement or the transactions contemplated hereby under the same or
similar circumstances, or Parent, any of its subsidiaries or the Surviving Corporation being obligated to offer any discounts to any
third party in excess of those payable by, or required to be offered by, any of them, respectively, in the absence of this Agreement or
the transactions contemplated hereby, other than discounts that Company would have been required to offer in the absence of this
Agreement or the transactions contemplated hereby under such agreements under the same or similar circumstances.

          (o) To the Knowledge of the Company, no Person is infringing or misappropriating any Company Intellectual Property.

          (p) The Company and each Subsidiary has taken reasonable steps to protect the Company’s rights in confidential
information and trade secrets of the Company and the Subsidiaries or provided by any other person to the Company. Without limiting
the foregoing, except as provided in Section 3.14(p) of the Company Disclosure Schedule, (i) the Company and the Subsidiaries have,
and enforce, a policy requiring each current and former employee to execute proprietary information, confidentiality and assignment
agreements substantially in one of the Company’s standard forms for employees (a copy of each such form is attached as
Schedule 3.14(p)(i) hereto (the “Employee Proprietary Information Agreement”)), (ii) the Company and the Subsidiaries have,
and enforce, a policy requiring each current and former consultant or contractor who is involved in the development of Technology
for the Company to execute an agreement containing proprietary information, confidentiality and assignment provisions substantially
in the Company’s standard form for consultants or contractors (a copy of which is attached as Schedule 3.14(p)(ii) hereto (the
“Consultant Proprietary Information Agreement”)) and (iii) all current and former employees of the Company and each
Subsidiary and all current and former consultants and contractors of the Company and each Subsidiary involved in the development of
Technology for the Company (other than Technology licensed to the Company pursuant to agreements listed in Section 3.14(h) of the
Company Disclosure Schedule) have (or will as of the Closing have) executed an Employee Proprietary Information Agreement or a
Consultant Proprietary Information Agreement, as appropriate.

          (q) No Company Intellectual Property or Product is subject to any outstanding decree, order, judgment, settlement
agreement, or similar obligation binding on the Company or any Subsidiary that restricts in any manner the use, transfer or licensing
thereof by the Company and the Subsidiaries or that affects the validity, use or enforceability of such Company Intellectual Property
or Product.

         (r) No (i) Product, (ii) material authored by or for the Company that is published or distributed by the Company or any
Subsidiary (or, to the Company’s Knowledge, third party advertisements or other third party materials served, published or distributed
by the Company), or (iii) conduct or statement of the Company or any Subsidiary, violates any law or regulation.




                                                                   -41-
           (s) No government funding or facilities or resources of a university, college or other educational institution or research
center (i.e., an independent research institute conducting client-sponsored research and development) was used in the development of
Company Intellectual Property and (b) no Governmental Entity, university, college, or other educational institution has any claim or
right in or to Company Intellectual Property (except under any non-exclusive licenses and related agreements with respect thereto
granted to any such entities of the Products pursuant to written agreements that do not materially differ in substance from the
Company’s Standard Form Agreements included in Section 3.14(i) of the Company Disclosure Schedule).

           (t) Section 3.14(t) of the Company Disclosure Schedule lists all software or other material that is distributed as “open
source software” (also known as “free software”) or under a similar licensing or distribution model (including but not limited to the
GNU General Public License (GPL), GNU Lesser General Public License (LGPL), Mozilla Public License (MPL), BSD licenses, the
Artistic License, the Netscape Public License, the Sun Community Source License (SCSL), the Sun Industry Standards License
(SISL) and the Apache License) (collectively, “Open Source Materials”) used by the Company or any Subsidiary in any way, and
describes the manner in which such Open Source Materials were used (such description shall include, without limitation, whether the
Open Source Materials were distributed by the Company or any Subsidiary, and if they were so distributed, whether the Open Source
Materials were modified by the Company or any Subsidiary), other than (i) Open Source Material incorporated into any Shrink Wrap
Code, (ii) Open Source Materials used by Company solely as incorporated into any office equipment or other equipment or products
purchased or leased or otherwise obtained by Company from third parties, and (iii) Open Source Materials incorporated without
Company’s Knowledge into Technology licensed, leased, sold or otherwise transferred by any third party to the Company. Except
with respect to Open Source Materials incorporated without Company’s Knowledge into Technology licensed, sold or otherwise
transferred by any third party to the Company, and except as provided in Section 3.14(t) of the Company Disclosure Schedule, neither
the Company nor any Subsidiary has (i) incorporated Open Source Materials into, or combined Open Source Materials with, any
Product or Company Intellectual Property or used Open Source Materials to provide any Product; (ii) distributed Open Source
Materials in conjunction with or for use with any Product or Company Intellectual Property; or (iii) used Open Source Materials that
create, or purport to create, obligations for the Company or any Subsidiary with respect to Intellectual Property Rights or grant, or
purport to grant, to any third party, any rights or immunities under Intellectual Property Rights (including, but not limited to, using
any Open Source Materials that require, as a condition of use, modification and/or distribution of such Open Source Materials or that
other software incorporated into, derived from or distributed with such Open Source Materials be (x) disclosed or distributed in source
code form, (y) be licensed for the purpose of making derivative works, or (z) be redistributable at no charge or with any restriction on
the consideration charged therefor).

          (u) Except as provided in Section 3.14(u) of the Company Disclosure Schedule, neither the Company nor any Subsidiary
nor any other Person acting on any of their behalf has disclosed or agreed under any circumstance, to disclose to any Person, any
Source Code that is covered in substantial part by the Company Intellectual Property, except for disclosures to employees, contractors
or consultants under agreements that prohibit use or disclosure except in the performances of services to the Company or any
Subsidiary.

         (v) All Products (and all parts thereof) are free of any and any “back door,” “time bomb,” “Trojan horse,” “worm,” “drop
dead device,” “virus” or other software routines or hardware components that permit unauthorized access or the unauthorized
disablement or erasure of such Product (or all parts




                                                                 -42-
thereof) or data or other software of users (“Contaminants”), other than Contaminants of which Company has no Knowledge that
were introduced by software licensed to Company or any of its Subsidiaries from any third party or that were distributed by
Company’s Subsidiaries before such Subsidiaries were acquired by Company. Company endeavors to prevent the introduction of
Contaminants into Products from software licensed from third parties using the procedures specified in Section 3.14(v) of the
Company Disclosure Schedule.

        (w) Section 3.14(w) of the Company Disclosure Schedule sets forth Company’s current (as of January 5, 2006) list of
known bugs maintained by its development or quality control groups with respect to the Products.

         (x) The Company and the Subsidiaries have taken the steps and implemented the procedures specified in Section 3.14(x) of
the Company Disclosure Schedule to protect the information technology systems used in connection with the operation of the
Company and the Subsidiaries from Contaminants. The Company and the Subsidiaries have the disaster recovery and security plans,
procedures and facilities for the business specified in Section 3.14(x) of the Company Disclosure Schedule. To the Company’s
Knowledge, there have been no material unauthorized intrusions or breaches of the security of information technology systems.

           (y) Except as set forth in Section 3.14(y) of the Company Disclosure Schedule, the Company and the Subsidiaries have
complied with all applicable laws and its internal privacy policies relating to (i) the privacy of users of their products and services and
of all Internet websites owned, maintained or operated by the Company and the Subsidiaries and (ii) the collection, storage and
transfer of any personally identifiable information collected by the Company and the Subsidiaries or by third parties having authorized
access to the records of the Company and the Subsidiaries. Except as set forth in Section 3.14(y) of the Company Disclosure
Schedule, the execution, delivery and performance of this Agreement by the Company and any Subsidiary complies with all
applicable laws relating to privacy and with the Company’s and the Subsidiaries’ privacy policies. Copies of all current and prior
privacy policies of the Company and the Subsidiaries, including the privacy policies included in the Company’s and the Subsidiaries’
Internet websites, are attached to Section 3.14(y) of the Company Disclosure Schedule. Except as set forth in Section 3.14(y) of the
Company Disclosure Schedule, each such privacy policy and all materials distributed or marketed by the Company and the
Subsidiaries have at all times made all disclosures to users or customers required by applicable laws, and none of such disclosures
made or contained in any such privacy policy or in any such materials have been inaccurate, misleading or deceptive or in violation of
any applicable laws.

           (z) The Company and the Subsidiaries have taken the steps specified in Section 3.14(z) of the Company Disclosure
Schedule to protect the personally identifiable information in their possession against loss and against unauthorized access, use,
modification, disclosure or other misuse. To the Knowledge of the Company, there has been no unauthorized access to or other misuse
of that information.

          (aa) Notwithstanding anything herein, the representations and warranties contained in this Section 3.14 are the only
representations and warranties being made with respect to infringement of any Intellectual Property Rights of any third party or the
sufficiency of Intellectual Property Rights to the conduct of the business by the Company.


     3.15 Agreements, Contracts and Commitments.
          (a) Section 3.15(a) of the Company Disclosure Schedule (specifying the appropriate paragraph) sets forth a complete and
accurate list of all Contracts to which the Company or any Subsidiary is a party or by which the Company or any Subsidiary is
otherwise bound, as follows (each such Contract required to be disclosed in Section 3.15(a) of the Company Disclosure Schedule, a
“Material Contract” and collectively, the “Material Contracts”):
               (i) each employment, contractor or consulting Contract with an employee or individual consultant, contractor, or
salesperson, any Contract to grant any severance or termination pay (in cash or otherwise) to any employee, or any contractor,
consulting or sales Contract with a firm or other organization;




                                                                   -43-
                (ii) each Contract or plan, including any stock option plan, stock appreciation rights plan or stock purchase plan, any of
the benefits of which will be increased, or the vesting of benefits of which will be accelerated, by the occurrence of any of the
transactions contemplated by this Agreement or the value of any of the benefits of which will be calculated on the basis of any of the
transactions contemplated by this Agreement;

               (iii) each fidelity or surety bond or completion bond;

                (iv) each lease of personal property having a per year value in excess of $15,000 individually or $50,000 (not including
any leases listed in Section 3.15(a)(iv) of the Company Disclosure Schedule) in the aggregate;

               (v) each Contract of indemnification or guaranty;

              (vi) each Contract relating to capital expenditures and involving future payments in excess of $50,000 individually or
$100,000 in the aggregate;

               (vii) each Contract relating to the disposition or acquisition of assets or any interest in any business enterprise outside
the ordinary course of the Company’s business;

                (viii) each mortgage, indenture, guarantee, loan or credit agreement, security agreement or other Contract or instrument
relating to the borrowing of money or extension of credit;

               (ix) each purchase order or Contract for the purchase of materials involving annual payments of $15,000 individually
or $50,000 in the aggregate (excluding those purchase orders or Contracts set forth in Section 3.15(a)(ix) of the Company Disclosure
Schedule);

               (x) each dealer, distribution, joint marketing, strategic alliance or development Contract;

              (xi) each sales representative, original equipment manufacturer, manufacturing, value added, remarketer, reseller, or
independent software vendor, or other Contract for distribution of the products, technology or services of the Company or any
Subsidiary;

              (xii) each nondisclosure, confidentiality or similar Contract other than such Contracts with customers, employees and
prospective customers and employees;

               (xiii) each Contract required to be disclosed on Section 3.14(h) and 3.14(i) of the Company Disclosure Schedule;

              (xiv) each of the Company’s standard agreements pursuant to which the owners of the radio station(s) listed in
Section 3.15(a)(xv) of the Company Disclosure Schedule agree to give the Company certain blocks of advertisement time in
exchange for a percentage of revenue received (the “RevenueSuite Agreement”);




                                                                    -44-
               (xv) each Contract required to be disclosed on Section 3.14(u) of the Company Disclosure Schedule; and

              (xvi) each other Contract that involves $15,000 individually or $50,000 in the aggregate or more and is not cancelable
without penalty within 30 days.

          (b) Each Material Contract to which the Company or any Subsidiary is a party or any of its properties or assets (whether
tangible or intangible) is subject is a valid and binding agreement of the Company (or such Subsidiary, as applicable) enforceable
against each of the parties thereto in accordance with its terms, and is in full force and effect with respect to the Company (or such
Subsidiary, as applicable) and, to the Knowledge of the Company, any other party thereto.

          (c) The Company (or such Subsidiary, as applicable) is in compliance with and has not breached, violated or defaulted
under, or received notice that it has breached, violated or defaulted under, any of the terms or conditions of any such Material
Contract, nor to the Knowledge of the Company is any party obligated to the Company (or such Subsidiary, as applicable) pursuant to
any such Material Contract subject to any breach, violation or default thereunder, nor does the Company have Knowledge of any
event that with the lapse of time, giving of notice or both would constitute such a breach, violation or default by the Company (or such
Subsidiary, as applicable) or any such other party. True and complete copies of each Material Contract disclosed in the Company
Disclosure Schedule or required to be disclosed pursuant to Section 3.15 have been made available to Parent.

          (d) All outstanding indebtedness of the Company may be prepaid without penalty.

          (e) No more than an aggregate of ten percent (10%) of the Standard Form Agreements to which the Company or any
Subsidiary is a party or any of their respective properties or assets (whether tangible or intangible) are subject (i) are not enforceable
against each of the parties thereto in accordance with their terms; or (ii) are not in full force and effect with respect to the Company
(or such Subsidiary, as applicable) and, to the Knowledge of the Company, any other party thereto.


     3.16 Interested Party Transactions.
           (a) Except as set forth in Section 3.16(a) of the Company Disclosure Schedule, no officer, director, or Stockholder of the
Company or any Subsidiary (nor any ancestor, sibling, descendant or spouse of any of such Persons, or any trust, partnership or
corporation in which any of such Persons has or has had an interest), has or has had, directly or indirectly, (i) any interest in any entity
(other than the Company and the Subsidiaries) which furnished or sold, or furnishes or sells, services, products, technology or
Intellectual Property that the Company or any Subsidiary furnishes or sells, or proposes to furnish or sell, or (ii) any interest in any
entity (other than the Company and the Subsidiaries) that purchases from or sells or furnishes to the Company or any Subsidiary, any
goods or services, or (iii) other than as set forth in Section 3.15(a) of the Company Disclosure Schedule, any interest in, or is a party
to, any Contract to which the Company or any Subsidiary is a party; provided, however, that ownership of no more than one percent
(1%) of the outstanding voting stock of a publicly traded corporation shall not be deemed to be an “interest in any entity” for purposes
of this Section 3.16. To the Knowledge of the Company, there are no agreements, contracts, or commitments with regard to
contribution or indemnification between or among any of the Stockholders.




                                                                    -45-
           (b) All transactions pursuant to which any Interested Party has purchased any services, products, or technology from, or sold
or furnished any services, products or technology to, the Company or any Subsidiary that were entered into on or after the inception of
the Company have been on an arms-length basis on terms no less favorable to the Company than would be available from an
unaffiliated party.

     3.17 Company Authorizations. Each consent, license, permit, grant or other authorization (i) pursuant to which the Company or
any Subsidiary currently operates or holds any interest in any of its properties, or (ii) which is required for the operation of the
Company’s or any Subsidiary’s business as currently conducted or currently contemplated to be conducted or the holding of any such
interest (collectively, “Company Authorizations”) has been issued or granted to the Company (or such Subsidiary, as applicable).
The Company Authorizations are in full force and effect and constitute all Company Authorizations required to permit the Company
and each Subsidiary to operate or conduct its businesses or hold any interest in their respective properties or assets.

      3.18 Litigation. Except as set forth in Section 3.18 of the Company Disclosure Schedule, there is no action, suit, claim or
proceeding of any nature pending, or to the Knowledge of the Company, threatened, against the Company, any Subsidiary, their
properties (tangible or intangible) or any of their officers or directors (in such capacity). To the Knowledge of the Company, there is
no investigation pending or threatened, against the Company, any Subsidiary, any of their properties (tangible or intangible) or any of
their officers or directors by or before any Governmental Entity.

     3.19 Minute Books. The minutes of the Company and the Subsidiaries delivered to counsel for Parent contain complete and
accurate records of all material actions taken, and summaries of all meetings held, by the Stockholders and the Board of Directors of
the Company and each Subsidiary (and any committees thereof) since the time of incorporation of the Company or such Subsidiary, as
the case may be. At the Closing, the minute books of the Company and the Subsidiaries will be in the possession of the Company.


     3.20 Environmental Matters.
          (a) Hazardous Material. Neither the Company nor any Subsidiary has: (i) operated any underground storage tanks at any
property that the Company or any Subsidiary has at any time owned, operated, occupied or leased, or (ii) released any amount of any
substance that has been designated by any Governmental Entity or by applicable federal, state or local law to be radioactive, toxic,
hazardous or otherwise a danger to health, reproduction or the environment, including PCBs, asbestos, petroleum, and urea-
formaldehyde and all substances listed as hazardous substances pursuant to the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, as amended, or defined as a hazardous waste pursuant to the United States Resource
Conservation and Recovery Act of 1976, as amended, and the regulations promulgated pursuant to said laws (a “Hazardous
Material”), but excluding office and janitorial supplies properly and safely maintained. No Hazardous Materials are present in, on or
under any property, including the land and the improvements, ground water and surface water thereof, that the Company or any
Subsidiary has at any time owned, operated, occupied or leased.

            (b) Hazardous Materials Activities. Neither the Company nor any Subsidiary has transported, stored, used, manufactured,
disposed of, released or exposed their employees or others to Hazardous Materials in violation of any law or in a manner that would
result in liability to the Company or any Subsidiary, nor has the Company or any Subsidiary disposed of, transported, sold, or
manufactured any product containing a Hazardous Material (any or all of the foregoing being collectively referred to herein as
“Hazardous Materials Activities”) in violation of any rule, regulation, treaty or statute promulgated by any Governmental Entity to
prohibit, regulate or control Hazardous Materials or any Hazardous Material Activity.




                                                                 -46-
          (c) Permits. The Company and the Subsidiaries currently hold all environmental approvals, permits, licenses, clearances and
consents (the “Environmental Permits”) necessary for the conduct of their Hazardous Material Activities and other businesses of the
Company and the Subsidiaries as such activities and businesses are currently being conducted and as currently contemplated to be
conducted.

          (d) Environmental Liabilities. No action, proceeding, revocation proceeding, amendment procedure, writ, injunction or
claim is pending, or to the Knowledge of the Company, threatened, concerning any Environmental Permit, Hazardous Material or any
Hazardous Materials Activity of the Company or any Subsidiary. The Company has no Knowledge of any fact or circumstance which
could result in any environmental litigation or liability which could reasonably be expected to impose upon the Company or any
Subsidiary any environmental liability.

          (e) Reports and Records. The Company has delivered to Parent all records in the Company’s and each of its Subsidiary’s
possession concerning the Hazardous Materials Activities of the Company and the Subsidiaries relating to its business and all
environmental audits and environmental assessments of any Leased Real Property conducted at the request of, or otherwise in the
possession of the Company. The Company and the Subsidiaries have complied with all environmental disclosure obligations imposed
by applicable law with respect to this transaction.

           (f) Notwithstanding anything to the contrary herein, the representations and warranties contained in this Section 3.20 are the
only representations and warranties being made with respect to any environmental health or safety matter, including natural resources,
related to the Company or its Subsidiaries.

     3.21 Brokers’ and Finders’ Fees. Neither the Company nor any Subsidiary has incurred, nor will it incur, directly or indirectly,
any liability for brokerage or finders’ fees or agents’ commissions, fees related to investment banking or similar advisory services or
any similar charges in connection with this Agreement or any transaction contemplated hereby, nor will Parent or the Surviving
Corporation incur, directly or indirectly, any such liability based on arrangements made by or on behalf of the Company or any
Subsidiary.


     3.22 Employee Benefit Plans and Compensation.
          (a) Definitions. For all purposes of this Agreement, the following terms shall have the following respective meanings:
               “COBRA” shall mean the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended.

               “Company Employee Plan” shall mean any material plan, program, policy, practice, contract, agreement or other
arrangement providing for compensation, severance, termination pay, deferred compensation, performance awards, stock or stock-
related awards, welfare benefits, fringe benefits or other employee benefits or remuneration of any kind, whether written, unwritten or
otherwise, funded or unfunded, including each “employee benefit plan,” within the meaning of Section 3(3) of ERISA which is or has
been maintained, contributed to, or required to be contributed to, by the Company or any ERISA Affiliate for the benefit of any
Employee, or with respect to which the Company or any ERISA Affiliate has or may have any liability or obligation and any
International Employee Plan.

               “DOL” shall mean the United States Department of Labor.




                                                                  -47-
             “Employee” shall mean any current or former employee, consultant, independent contractor or director of the
Company or any ERISA Affiliate.

               “Employee Agreement” shall mean each management, employment, severance, separation, consulting, contractor,
relocation, repatriation, expatriation, loan, visa, work permit or other agreement, or contract (including, any offer letter or any
agreement providing for acceleration of Company Options) between the Company or any ERISA Affiliate and any Employee.

               “ERISA” shall mean the Employee Retirement Income Security Act of 1974, as amended.

              “ERISA Affiliate” shall mean any other current or former Person or entity under common control with the Company
within the meaning of Section 414(b), (c), (m) or (o) of the Code, and the regulations issued thereunder.

               “FMLA” shall mean the Family Medical Leave Act of 1993, as amended.

               “HIPAA” shall mean the Health Insurance Portability and Accountability Act of 1996, as amended.

               “International Employee Plan” shall mean each Company Employee Plan or Employee Agreement that has been
adopted or maintained by the Company or any ERISA Affiliate, whether formally or informally, or with respect to which the
Company or any ERISA Affiliate will or may have any liability, for the benefit of Employees who perform services outside the
United States.

               “IRS” shall mean the United States Internal Revenue Service.

               “PBGC” shall mean the United States Pension Benefit Guaranty Corporation.

             “Pension Plan” shall mean each Company Employee Plan that is an “employee pension benefit plan,” within the
meaning of Section 3(2) of ERISA.

               “WARN” shall mean the Worker Adjustment and Retraining Notification Act.

          (b) Schedule. Section 3.22(b)(1) of the Company Disclosure Schedule contains an accurate and complete list of each
Company Employee Plan and each Employee Agreement. Neither the Company nor any ERISA Affiliate has made any legally
binding commitment to establish any new Company Employee Plan or Employee Agreement, to modify any Company Employee Plan
or Employee Agreement (except to the extent required by law or to conform any such Company Employee Plan or Employee
Agreement to the requirements of any applicable law, in each case as previously disclosed to Parent in writing, or as required by this
Agreement), or to enter into any Company Employee Plan or Employee Agreement. Section 3.22(b)(2) of the Company Disclosure
Schedule sets forth a table setting forth the name and salary of each employee of the Company and each Subsidiary as of the date
hereof. To the Knowledge of the Company, no Key Employee currently intends to terminate his or her employment.
Section 3.22(b)(3) of the Company Disclosure Schedule contains an accurate and complete list of all Persons that have had in the past
12 months a consulting or advisory relationship with the Company and each Subsidiary.

         (c) Documents. The Company has provided to Parent (i) correct and complete copies of all documents embodying each
Company Employee Plan and each Employee Agreement including all amendments thereto and all related trust documents, (ii) the
three most recent annual reports (Form




                                                                 -48-
Series 5500 and all schedules and financial statements attached thereto), if any, required under ERISA or the Code in connection with
each Company Employee Plan, (iii) if the Company Employee Plan is funded, the most recent annual and periodic accounting of
Company Employee Plan assets, (iv) the most recent summary plan description together with the summary(ies) of material
modifications thereto, if any, required under ERISA with respect to each Company Employee Plan, (v) all material written agreements
and contracts relating to each Company Employee Plan, including administrative service agreements and group insurance contracts,
(vi) correspondence within the past three years to or from any governmental agency relating to any Company Employee Plan, (vii) all
model COBRA forms and related notices, (viii) all policies pertaining to fiduciary liability insurance covering the fiduciaries for each
Company Employee Plan, (ix) all discrimination tests for each Company Employee Plan since inception, (x) all registration
statements, annual reports (Form 11-K and all attachments thereto) and prospectuses prepared in connection with each Company
Employee Plan and (xi) the most recent IRS determination or opinion letter issued with respect to each Company Employee Plan.

           (d) Employee Plan Compliance. The Company and each Subsidiary has performed all obligations required to be performed
by it under, is not in default or violation of, and the Company has no Knowledge of any default or violation by any other party to, any
Company Employee Plan, and each Company Employee Plan has been established and maintained in accordance with its terms and in
compliance in all material respects with all applicable laws, statutes, orders, rules and regulations, including ERISA or the Code. Any
Company Employee Plan intended to be qualified under Section 401(a) of the Code has obtained a favorable determination letter (or
opinion letter, if applicable) as to its qualified status under the Code. No “prohibited transaction,” within the meaning of Section 4975
of the Code or Sections 406 and 407 of ERISA, and not otherwise exempt under Section 408 of ERISA, has occurred with respect to
any Company Employee Plan. There are no actions, suits or claims pending or, to the Knowledge of the Company, threatened (other
than routine claims for benefits) against any Company Employee Plan or against the assets of any Company Employee Plan. Each
Company Employee Plan can be amended, terminated or otherwise discontinued after the Effective Time in accordance with its terms,
without liability to Parent, the Company or any ERISA Affiliate (other than ordinary administration expenses and contributions
relating to services performed before such amendment, termination or discontinuance). There are no audits, inquiries or proceedings
pending or, to the Knowledge of the Company or any officers of any ERISA Affiliates, threatened by the IRS, DOL, or any other
Governmental Entity with respect to any Company Employee Plan. Neither the Company nor any ERISA Affiliate is subject to any
penalty or Tax with respect to any Company Employee Plan under Section 502(i) of ERISA or Sections 4975 through 4980 of the
Code. The Company has timely made all contributions and other payments required by and due under the terms of each Company
Employee Plan. Each “nonqualified deferred compensation plan” (as defined in Section 409A(d)(1) of the Code) has been operated
since January 1, 2005 in good faith compliance with Section 409A of the Code and IRS Notice 2005-1. No nonqualified deferred
compensation plan has been “materially modified” (within the meaning of IRS Notice 2005-1) at any time after October 3, 2004.

           (e) No Pension Plan. Neither the Company nor any ERISA Affiliate has ever maintained, established, sponsored,
participated in, or contributed to, any Pension Plan subject to Part 3 of Subtitle B of Title I of ERISA, Title IV of ERISA or
Section 412 of the Code.

           (f) No Self-Insured Plan. Neither the Company nor any ERISA Affiliate has ever maintained, established, sponsored,
participated in or contributed to any self-insured plan that provides medical, dental or any other similar employee benefits to
employees (including any such plan pursuant to which a stop-loss policy or contract applies).




                                                                  -49-
           (g) Collectively Bargained, Multiemployer and Multiple-Employer Plan. At no time has the Company or any ERISA
Affiliate contributed to or been obligated to contribute to any multiemployer plan (as defined in Section 3(37) of ERISA). Neither the
Company nor any ERISA Affiliate has at any time ever maintained, established, sponsored, participated in or contributed to any
multiple employer plan or to any plan described in Section 413 of the Code.

          (h) No Post-Employment Obligations. No Company Employee Plan or Employee Agreement provides, or reflects or
represents any liability to provide, post-termination or retiree life insurance, health or other employee welfare benefits to any Person
for any reason, except as may be required by COBRA or other applicable statute, and neither the Company nor any Subsidiary has
ever represented, promised or contracted (whether in oral or written form) to any Employee (either individually or to Employees as a
group) or any other Person that such Employee(s) or other Person would be provided with life insurance, health or other employee
welfare benefits, except to the extent required by statute.

          (i) COBRA; FMLA; HIPAA. The Company and each ERISA Affiliate has, prior to the Effective Time, complied in all
material respects with COBRA, FMLA, HIPAA, the Women’s Health and Cancer Rights Act of 1998, the Newborns’ and Mothers’
Health Protection Act of 1996, and any similar provisions of state law applicable to its Employees.

           (j) Effect of Transaction. Neither the execution and delivery of this Agreement nor the consummation of the transactions
contemplated hereby or any termination of employment or service in connection therewith will (i) result in any payment (including
severance, golden parachute, bonus or otherwise), becoming due to any Employee, (ii) result in any forgiveness of indebtedness,
(iii) materially increase any benefits otherwise payable by the Company or any Subsidiary or (iv) result in the acceleration of the time
of payment or vesting of any such benefits except as required under Section 411(d)(3) of the Code.

          (k) Parachute Payments. There is no agreement, plan, arrangement or other contract covering any Employee that, considered
individually or considered collectively with any other such agreements, plans, arrangements or other contracts, will, or could
reasonably be expected to, give rise directly or indirectly to the payment of any amount that would be characterized as a “parachute
payment” within the meaning of Section 280G(b)(2) of the Code. There is no agreement, plan, arrangement or other contract by which
the Company is bound to compensate any Employee for excise taxes paid pursuant to Section 4999 of the Code. Section 3.22(k) of
the Company Disclosure Schedule lists all persons whom the Company reasonably believes are “disqualified individuals” (within the
meaning of Section 280G of the Code and the regulations promulgated thereunder) as determined as of the date hereof.

           (l) Employment Matters. The Company and each Subsidiary is in compliance in all material respects with all applicable
foreign, federal, state and local laws, rules and regulations respecting employment, employment practices, terms and conditions of
employment, employee safety and health and wages and hours, and in each case, with respect to Employees: (i) has withheld and
reported all amounts required by law or by agreement to be withheld and reported with respect to wages, salaries and other payments
to Employees, (ii) is not liable for any arrears of wages, severance pay or any Taxes or any penalty for failure to comply with any of
the foregoing, and (iii) is not liable for any payment to any trust or other fund governed by or maintained by or on behalf of any
governmental authority, with respect to unemployment compensation benefits, social security or other benefits or obligations for
Employees (other than routine payments to be made in the normal course of business and consistent with past practice). There are no
actions, suits, claims or administrative matters pending or, to the Company’s Knowledge, threatened against the Company, any
Subsidiary or any of their Employees relating to any Employee, Employee Agreement or Company Employee Plan. There are no
pending or, to the Company’s Knowledge, threatened




                                                                  -50-
claims or actions against Company, any Subsidiary or any Company or Subsidiary trustee under any worker’s compensation policy or
long-term disability policy. The services provided by each of the Company’s and their ERISA Affiliates’ Employees is terminable at
the will of the Company and its ERISA Affiliates and any such termination would result in no liability to the Company or any ERISA
Affiliate. Section 3.22(l) of the Company Disclosure Schedule lists all liabilities of the Company to any Employee that result from the
termination by the Company or Parent of such Employee’s employment or provision of services, a change of control of the Company,
or a combination thereof. To the Knowledge of the Company, neither the Company nor any ERISA Affiliate has direct or indirect
liability with respect to any misclassification of any Person as an independent contractor rather than as an employee, or with respect to
any employee leased from another employer.

           (m) Labor. No work stoppage or labor strike against the Company or any Subsidiary is pending or, to the Knowledge of the
Company, threatened. The Company has no Knowledge of any activities or proceedings of any labor union to organize any
Employees. There are no actions, suits, claims, labor disputes or grievances pending or threatened or reasonably anticipated relating to
any labor matters involving any Employee, including charges of unfair labor practices. Neither the Company nor any Subsidiary has
engaged in any unfair labor practices within the meaning of the National Labor Relations Act. Neither the Company nor any
Subsidiary presently, nor have they in the past been, a party to, or bound by, any collective bargaining agreement or union contract
with respect to Employees and no collective bargaining agreement is being negotiated by the Company or any Subsidiary. Within the
past year, the Company has not incurred any liability or obligation under WARN or any similar state or local law that remains
unsatisfied, and no terminations prior to the Closing Date shall result in unsatisfied liability or obligation under WARN or any similar
state or local law.

          (n) No Interference or Conflict. To the Knowledge of the Company, no stockholder, director, officer, Employee or
consultant of the Company or any Subsidiary is obligated under any contract or agreement, subject to any judgment, decree, or order
of any court or administrative agency that would interfere with such person’s efforts to promote the interests of the Company or any
Subsidiary or that would interfere with the Company’s or any Subsidiary’s business. Neither the execution nor delivery of this
Agreement, nor the carrying on of the Company’s or any Subsidiary’s business as presently conducted or proposed to be conducted
nor any activity of such officers, directors, Employees or consultants in connection with the carrying on of the Company’s or any
Subsidiary’s business or businesses as presently conducted or currently proposed to be conducted will, to the Knowledge of the
Company, conflict with or result in a breach of the terms, conditions, or provisions of, or constitute a default under, any contract or
agreement under which any of such officers, directors, Employees, or consultants is now bound.

          (o) International Employee Plan. Neither the Company nor any ERISA Affiliate currently or has it ever had the obligation to
maintain, establish, sponsor, participate in, be bound by or contribute to any International Employee Plan.

           (p) Employee Compensation, Status and Performance Matters. Section 3.22(p) of the Company Disclosure Schedule
contains a complete and accurate list of the employees of the Company as of the date hereof and shows with respect to each such
employee (i) the employee’s name, position held, all remuneration payable and other benefits provided or which the Company is
bound to provide (whether at present or in the future) to each such employee, or any person connected with any such person, and
includes, if any, particulars of all profit sharing, incentive and bonus arrangements to which the Company is a party, whether legally
binding or not, (ii) the date of hire, (iii) vacation eligibility for the current calendar year, (iv) leave status (including type of leave,
expected return date for non-disability related leaves and expiration dates for disability leaves), (v) visa status, and (vi) the name of
any union, collective bargaining agreement or other similar labor agreement covering such employee.




                                                                     -51-
      3.23 Insurance. Section 3.23 of the Company Disclosure Schedule contains a complete and accurate list of all insurance policies
and fidelity bonds covering the assets, business, equipment, properties, operations, employees, officers and directors of the Company
and each Subsidiary. There is no claim by the Company or any Subsidiary pending under any of such policies or bonds as to which
coverage has been questioned, denied or disputed by the underwriters of such policies or bonds. All premiums due and payable under
all such policies and bonds have been paid, and the Company, the Subsidiaries and their affiliates are otherwise in material
compliance with the terms of such policies and bonds (or other policies and bonds providing substantially similar insurance coverage).
The Company has no Knowledge of threatened termination of, or premium increase with respect to, any of such policies.

     3.24 Compliance with Laws. Except as disclosed in Section 3.24 of the Company Disclosure Schedule, the Company and each
Subsidiary has complied in all material respects with, is not in violation in any material respect of, and has not received any notices of
violation with respect to, any foreign, federal, state or local statute, law or regulation.

     3.25 Export Control Laws. Except as disclosed in Section 3.25 of the Company Disclosure Schedule, the Company and each
Subsidiary has at all times conducted its export transactions in material compliance with (i) all applicable U.S. export and reexport
controls, including the United States Export Administration Act and Regulations and Foreign Assets Control Regulations and (ii) all
other applicable import/export controls in other countries in which the Company conducts business. Without limiting the foregoing:
           (a) Except as disclosed in Section 3.25(a) of the Company Disclosure Schedule, the Company and each Subsidiary has
obtained all material export licenses, license exceptions and other consents, notices, waivers, approvals, orders, authorizations,
registrations, declarations and filings with any Governmental Entity required for (i) the export and reexport of products, services,
software and technologies and (ii) releases of technologies and software to foreign nationals located in the United States and abroad
(“Export Approvals”);

          (b) The Company and each Subsidiary is in material compliance with the terms of all applicable Export Approvals;

          (c) There are no pending or, to the Knowledge of the Company, threatened claims against the Company or any Subsidiary
     with respect to such Export Approvals; and

         (d) No Export Approvals for the transfer of export licenses to Parent or the Surviving Corporation are required, or such
     Export Approvals can be obtained expeditiously without material cost.


     3.26 Customers and Suppliers.
          (a) Section 3.26(a) of the Company Disclosure Schedule lists each Person (other than the Company or its Subsidiaries) that
has purchased or licensed either broadcast automation system Products from or on behalf of the Company or any Subsidiary or has
entered into a RevenueSuite Agreement with the Company or any Subsidiary (the “Customers”), and (ii) for each Customer, the
Product so purchased or licensed, indicating (A) which of such Customers have purchased or licensed the Company’s (or its
Subsidiaries’) broadcast programming automation systems (each such Customer, a “Programming Automation Customer”) and
identifying, for each Programming Automation Customer, the names of the radio station(s) (including call letters) that use such
broadcast programming automation system (each such radio station, a “Covered Radio Station”) and the aggregate number of such
Covered Radio Stations and (B) which of such Customers have entered into RevenueSuite Agreements (each such Customer, a
“RevenueSuite Customer”) and identifying the Covered Radio Stations that are parties to or are covered by each such RevenueSuite
Agreement.




                                                                   -52-
          (b) Section 3.26(b) of the Company Disclosure Schedule lists the 15 largest suppliers of the Company and its Subsidiaries
on the basis of cost of goods or services purchased for the 12-month period ending on the Current Balance Sheet Date.

           (c) To the Company’s Knowledge, the Covered Ratio Stations that are covered by the Programming Automation Customers
identified in Section 3.26(a) of the Company Disclosure Schedule represent approximately [***] of the total U.S. commercial radio
installations for which the Company has information on the use of radio automation software. Except as disclosed in Section 3.26(c)
of the Company Disclosure Schedule, RevenueSuite Customers representing no more than ten percent (10%) of the Covered Radio
Stations have (i) ceased or significantly reduced their business with the Company, or threatened to cease or significantly reduce their
business with the Company or (ii) to the Knowledge of the Company, been threatened with bankruptcy or insolvency.

          (d) Except as disclosed in Section 3.26(d) of the Company Disclosure Schedule, none of the suppliers listed in
Section 3.26(b) of the Company Disclosure Schedule has (i) ceased or reduced, in any material respect, its sales or provision of
services to the Company or any Subsidiary, (ii) to the Knowledge of the Company, threatened to cease or materially reduce such sales
or provision of services or (iii) to the Knowledge of the Company, been threatened with bankruptcy or insolvency.

     3.27 Complete Copies of Materials. Each document (or summaries of same) that has been made available to Parent or its counsel,
including all Contracts and other documents listed on the Company Disclosure Schedule, is true, correct and complete. The phrase
“made available to Parent” when used herein shall be deemed to mean that such information has been delivered to Parent in an
unrestricted and unredacted form in the online data room located at http://sp.dmarc.net/sites/google/default.aspx.


                                                             ARTICLE IV

                               REPRESENTATIONS AND WARRANTIES OF PARENT AND SUB

     Each of Parent and Sub hereby represents and warrants to the Company, subject to such exceptions as are specifically disclosed
in the disclosure schedule (referencing the appropriate section and subsection numbers) supplied by Parent to the Company (the
“Parent Disclosure Schedule”) and dated as of the date hereof, (A) on the date hereof and, (B) if the Closing occurs, as of the
Closing Date (except where a representation or warranty is made as of the date hereof or a specific date herein), as though made on
the Closing Date, as set forth below. Notwithstanding anything herein to the contrary, the representations and warranties contained in
this Article IV are the only representations and warranties being made by Parent and Sub in this Agreement.

    4.1 Organization. Parent is a corporation duly incorporated, validly existing and in good standing under the laws of the state of
Delaware, and Sub is a corporation duly incorporated, validly existing and in good standing under the laws of the state of Delaware.
Each of Parent and Sub has the corporate power to own its properties and to carry on its business as currently conducted and to
conduct the Business.

     4.2 Authority. Each of Parent and Sub has all requisite corporate power and authority to enter into this Agreement and any
Related Agreements to which it is a party and to consummate the transactions contemplated hereby and thereby. The execution and
delivery by each of Parent and Sub of this Agreement and any Related Agreements to which it is a party and the consummation of the
transactions contemplated hereby and thereby have been duly authorized by all necessary corporate action on the part of Parent and
Sub,

***   Certain information on this page has been omitted and filed separately with the Securities and Exchange Commission.
      Confidential treatment has been requested with respect to the omitted portions.




                                                                 -53-
and no further action is required on the part of Parent and Sub to authorize this Agreement and any Related Agreements to which it is
a party and the transactions contemplated hereby and thereby. This Agreement and any Related Agreements to which Parent and Sub
are parties have been duly executed and delivered by Parent and Sub and, assuming the due authorization, execution and delivery by
the other parties hereto and thereto constitute the valid and binding obligations of Parent and Sub, enforceable against each of Parent
and Sub in accordance with their terms.

     4.3 No Conflict. The execution and delivery by Parent and Sub of this Agreement and any Related Agreement to which Parent or
Sub is a party, and the consummation of the transactions contemplated hereby or thereby, will not result in or give rise to a Conflict
under (a) any provision of Parent’s certificate of incorporation, as amended to date, and bylaws, as amended to date (the “Parent
Charter Documents”) or (b) any judgment, order, decree, statute, law, ordinance, rule or regulation applicable to Parent or Sub or
any of their properties or assets (whether tangible or intangible). Neither the Parent Charter Documents nor any material Contract to
which Parent or Sub is a party or to which any of their properties or assets (whether tangible or intangible) are bound prohibits or
prevents the consummation of the Merger or Parent’s ability to conduct the Business.

      4.4 Consents. No consent, notice, waiver, approval, order or authorization of, or registration, declaration or filing with, any
Governmental Entity, or a party to any material Contract to which Parent or Sub is a party (so as not to trigger any Conflict) is
required by or with respect to Parent or Sub in connection with the execution and delivery of this Agreement and any Related
Agreements to which Parent or Sub is a party or Parent and Sub’s consummation of the Merger and the transactions contemplated
hereby and thereby, except for (a) such consents, notices, waivers, approvals, orders, authorizations, registrations, declarations and
filings as may be required under applicable securities laws, (b) the filing of the Certificate of Merger with the Secretary of State of the
State of Delaware and (c) the filing of notification, and expiration or early termination of the waiting period under, the HSR Act, as
well as any required approval under foreign antitrust laws, if applicable.

     4.5 Litigation. Except as set forth in Section 4.5 of the Parent Disclosure Schedule, (a) there is no action, suit, claim or
proceeding of any nature pending against Parent, Sub, their properties (tangible or intangible) or any of their officers or directors (in
such capacity), that would, either individually or in the aggregate, have a material adverse effect on the ability of Parent or Sub to
consummate the Merger and the transactions contemplated hereby or prohibit or prevent Parent from conducting the Business or (b) to
the Knowledge of Parent and Sub, there is no action, suit, claim or proceeding of any nature threatened against Parent, Sub, their
properties (tangible or intangible) or any of their officers or directors (in such capacity), that would, either individually or in the
aggregate, have a material adverse effect on the ability of Parent or Sub to consummate the Merger and the transactions contemplated
hereby. To the Knowledge of Parent or Sub, there is no investigation pending or threatened against Parent, Sub, their properties
(tangible or intangible) or any of their officers or directors (in such capacity) by or before any Governmental Entity, that would, either
individually or in the aggregate, prohibit or prevent (a) the consummation of the Merger or (b) Parent from conducting the Business.


                                                               ARTICLE V

                                           CONDUCT PRIOR TO THE EFFECTIVE TIME

      5.1 Conduct of Business of the Company and the Subsidiaries. During the period from the date of this Agreement and continuing
until the earlier of the termination of this Agreement or the Effective Time, the Company and each Subsidiary agree to use
commercially reasonable efforts to operate the business of the Company and each Subsidiary, except (i) as specifically disclosed in
Section 5.1 of the Company Disclosure




                                                                   -54-
Schedule, (ii) with the prior written consent of Parent or (iii) as specifically contemplated by this Agreement, in the ordinary course
consistent with past practices, to pay their respective debts and Taxes when due (subject to the right of Parent to review and approve
any Tax Returns in accordance with this Agreement), to pay or perform other obligations when due, and, to the extent consistent
therewith, to preserve intact their respective present business organizations, keep available the services of their respective present
officers and Employees, preserve their respective assets and technology and preserve their respective relationships with customers,
suppliers, distributors, licensors, licensees, and others having business dealings with them, all with the goal of preserving unimpaired
the goodwill and ongoing businesses of the Company and each Subsidiary at the Effective Time, except as specifically disclosed in
Section 5.1 of the Company Disclosure Schedule. Without limiting the generality of the foregoing, except (i) as expressly
contemplated by this Agreement, (ii) as expressly set forth in Section 5.1 of the Company Disclosure Schedule, or (iii) with the prior
written consent of Parent, neither the Company nor any of its Subsidiaries shall from and after the date of this Agreement:

       (a) other than in the ordinary course of business consistent with past practices, undertake any expenditure, transaction or
commitment exceeding $15,000 individually or $50,000 in the aggregate;

           (b) other than pursuant to Standard Form Agreements, sell, lease, license or otherwise dispose of any of their respective
properties or assets, including the sale of any accounts receivable, except properties or assets (whether tangible or intangible) which
are not Intellectual Property and only in the ordinary course of business and consistent with past practices; grant or otherwise create or
consent to the creation of any easement, covenant, restriction, assessment or charge affecting any owned property or leased property
or any part thereof; or convey, assign, sublease, license or otherwise transfer all or any portion of any owned property or leased
property or any interest or rights therein;

           (c) (i) other than pursuant to Standard Form Agreements, sell, license or transfer to any Person any Company Intellectual
Property Right or enter into any Contract with respect to any Company Intellectual Property with any Person or with respect to any
Intellectual Property Rights of any Person, (ii) buy or license any Intellectual Property Rights or enter into any Contract with respect
to the Intellectual Property Rights of any Person, or (iii) enter into any Contract with respect to the development of any Intellectual
Property Rights with a third party;

          (d) other than in the ordinary course of business consistent with past practices, propose or consent to change or change
pricing or royalties charged by the Company or any Subsidiary to customers or licensees, or the pricing or royalties set or charged by
persons who have licensed Intellectual Property Rights to the Company or an Subsidiary;

          (e) terminate or extend, or amend, waive, modify, or violate the terms of, any Material Contract disclosed on the Company
Disclosure Schedule (or agree to do so), or, other than Standard Form Agreements, enter into any Contract which would have been
required to have been disclosed in Section 3.15(a) of the Company Disclosure Schedule had such Contract been entered into prior to
the date hereof;

          (f) engage in or enter into any transaction or commitment, or relinquish any material right, outside the ordinary course of
business and consistent with past practice;

           (g) enter into or amend, waive or modify the terms of any Contract pursuant to which any other party is granted marketing,
distribution, development or similar rights of any type or scope with respect to any Products or technology of the Company or any
Subsidiary;




                                                                  -55-
         (h) other than as required by law, judicial order or decree, commence or settle any lawsuit, threat of any lawsuit or
proceeding or other investigation by or against the Company or any Subsidiary or relating to any of their businesses, properties or
assets;

           (i) declare, set aside, or pay any dividends on or make any other distributions (whether in cash, stock or property) in respect
of any Company Capital Stock or capital stock of any Subsidiary, or split, combine or reclassify any Company Capital Stock or capital
stock of any Subsidiary or issue or authorize the issuance of any other securities in respect of, in lieu of or in substitution for such
shares, or repurchase, redeem or otherwise acquire, directly or indirectly, any such shares (or options, warrants or other rights
exercisable therefor), except in accordance with the agreements evidencing Company Options or Company Warrants;

           (j) other than Company Capital Stock issued upon the exercise of Company Options granted under the Plans and Company
Warrants (to the extent disclosed in Section 3.2(c) of the Company Disclosure Schedule) in accordance with their terms, issue, grant,
deliver or sell or authorize or propose the issuance, grant, delivery or sale of, or purchase or propose the purchase of, any shares of
Company Capital Stock or capital stock of any Subsidiary or any securities convertible into, or subscriptions, rights, warrants or
options to acquire, or other agreements or commitments of any character obligating it to issue or purchase any such shares or other
convertible securities;

          (k) cause or permit any amendments to the Charter Documents or Subsidiary Organizational Documents;

          (l) acquire or agree to acquire by merging or consolidating with, or by purchasing any assets or equity securities of, or by
any other manner, any business or any corporation, partnership, association or other business organization or division thereof, or
otherwise acquire or agree to acquire any assets or equity securities which are material, individually or in the aggregate, to the
businesses of the Company or any Subsidiary;

           (m) enter into any agreement to purchase or sell any interest in real property, grant any security interest in any real property,
enter into any lease, sublease, license or other occupancy agreement with respect to any real property or alter, amend, modify or
terminate any of the terms of any Lease Agreements;

          (n) incur any indebtedness or guarantee any indebtedness or issue or sell any debt securities or guarantee any debt securities
or other obligations of others;

          (o) grant any loans to others or purchase debt securities of others or amend the terms of any outstanding loan agreement;

         (p) grant any severance or termination pay (in cash or otherwise) to any Employee, including any officer, except payments
made pursuant to standard written agreements outstanding on the date hereof and disclosed in the Company Disclosure Schedule;

          (q) adopt or amend any Company Employee Plan (including the Cash Bonus Plan), enter into any employment contract, pay
or agree to pay any special bonus or special remuneration to any director or Employee of the Company or any Subsidiary, or increase
or agree to increase the salaries, wage rates, or other compensation or benefits of any Employees, except payments made pursuant to
standard written agreements outstanding on the date hereof and disclosed in the Company Disclosure Schedule;




                                                                    -56-
          (r) take any action to accelerate (either partially or fully) the vesting or exercisability of any Company Options or the
vesting or of any Company Capital Stock;

          (s) revalue any of its assets (whether tangible or intangible), including without limitation writing off notes or accounts
receivable, settle, discount or compromise any accounts receivable, or reverse any reserves other than in the ordinary course of
business and consistent with past practice;

            (t) pay, discharge or satisfy, in an amount in excess of $15,000 in any one case, or $50,000 in the aggregate, any claim,
liability, loan or obligation (absolute, accrued, asserted or unasserted, contingent or otherwise), other than the payment, discharge or
satisfaction in the ordinary course of business of liabilities reflected or reserved against in the Current Balance Sheet;

           (u) make or change any material election in respect of Taxes, adopt or change any accounting method in respect of Taxes,
enter into any closing agreement, settle any claim or assessment in respect of Taxes, consent to any extension or waiver of the
limitation period applicable to any claim or assessment in respect of Taxes, or file any material Tax Return (including any amended
Tax Return), unless such Tax Return has been provided to Parent for review within a reasonable period prior to the due date for filing
and Parent has consented to such filing;

         (v) other than Standard Form Agreements, enter into any licensing, distribution, joint venture, strategic alliance or joint
marketing or any similar arrangement or agreement;

         (w) hire, offer to hire or terminate any Employees, or encourage any Employees to resign from the Company or any
Subsidiary;

          (x) adopt or change the accounting policies or procedures of the Company or any Subsidiary, including with respect to
reserves for doubtful accounts, or payment or collection policies or practices; or

          (y) take, commit or agree in writing or otherwise to take, any of the actions described in Sections 5.1(a) through
Section 5.1(x), inclusive, or any other action that would (i) prevent the Company or any Subsidiary from performing, or cause the
Company or any Subsidiary not to perform, its covenants hereunder in any material respect, or (ii) cause or result in any of its
representations and warranties contained herein being untrue or incorrect in any material respect (without giving effect to any
limitation as to “materiality” set forth therein).


     5.2 No Solicitation.
           (a) Until the earlier of (i) the Effective Time, or (ii) the date of termination of this Agreement pursuant to the provisions of
Section 9.1 hereof, neither the Company nor any of the Company’s affiliates shall (nor shall the Company permit any of its officers,
directors, employees, stockholders, agents, representatives or affiliates to), directly or indirectly, take any of the following actions
with any party other than Parent and its designees: (a) solicit, encourage, seek, entertain, support, assist, initiate or participate in any
inquiry, negotiations or discussions, or enter into any agreement, with respect to any offer or proposal to acquire all or any material
part of the business, properties or technologies of the Company or any of its Subsidiary, or any amount of the Company Capital Stock
or capital stock of any Subsidiary (whether or not outstanding), whether by merger, purchase of assets, purchase of Company Capital
Stock (except for the conversion of Preferred Stock as contemplated herein), tender offer, license or otherwise, or effect any such
transaction, (b) disclose any information not customarily disclosed to any Person concerning the business, technologies or properties
of the Company or any of its Subsidiaries, or afford to any Person access to their respective properties, technologies, books or records,
not customarily




                                                                   -57-
afforded such access, (c) assist or cooperate with any Person to make any proposal to purchase all or any part of the Company Capital
Stock or assets of the Company or any Subsidiary, or (d) enter into any agreement with any Person providing for the acquisition of the
Company or any Subsidiary (other than inventory in the ordinary course of business), whether by merger, purchase of assets, purchase
of Company Capital Stock (except for the conversion of Preferred Stock as contemplated herein), license, tender offer or otherwise. In
the event that the Company or any of the Company’s affiliates shall receive, prior to the Effective Time or the termination of this
Agreement in accordance with Section 9.1 hereof, any offer, proposal, or request, directly or indirectly, of the type referenced in
clause (a), (c) or (d) above, or any request for disclosure or access as referenced in clause (b) above, the Company shall immediately
(x) suspend any discussions with such offeror or party with regard to such offers, proposals, or requests and (y) notify Parent thereof,
including information as to the identity of the offeror or the party making any such offer or proposal and the specific terms of such
offer or proposal, as the case may be, and such other information related thereto as Parent may reasonably request.

          (b) The parties hereto agree that irreparable damage would occur in the event that the provisions of this Section 5.2 were not
performed in accordance with their specific terms or were otherwise breached. It is accordingly agreed by the parties hereto that
Parent shall be entitled to an immediate injunction or injunctions, without the necessity of proving the inadequacy of money damages
as a remedy and without the necessity of posting any bond or other security, to prevent breaches of the provisions of this Section 5.2
and to enforce specifically the terms and provisions hereof in any court of the United States or any state having jurisdiction, this being
in addition to any other remedy to which Parent may be entitled at law or in equity. Without limiting the foregoing, it is understood
that any violation of the restrictions set forth above by any officer, director, agent, representative or affiliate of the Company or any
Subsidiary shall be deemed to be a breach of this Agreement by the Company.

     5.3 Procedures for Requesting Parent Consent. If the Company desires to take an action which would be prohibited pursuant to
Section 5.1 hereof without the written consent of Parent, prior to taking such action, the Company shall request such written consent
by sending an e-mail or facsimile to each of the following individuals, each of whom shall use commercially reasonable efforts to
reply within five (5) Business Days to such request for written consent (it being understood that the written consent of only one such
individual shall be required prior to the Company taking such action):
               [***]

***   Certain information on this page has been omitted and filed separately with the Securities and Exchange Commission.
      Confidential treatment has been requested with respect to the omitted portions.




                                                                  -58-
                                                            ARTICLE VI

                                                   ADDITIONAL AGREEMENTS

     6.1 Company Stockholder Approval.
          (a) Immediately following the execution of this Agreement, the Company shall deliver to Parent a true, correct and complete
copy of the Written Consent, evidencing the adoption by the Requisite Stockholder Vote of the Merger, this Agreement and the
transactions contemplated hereby, including (i) the deposit of the Escrow Amounts into the Escrow Fund, (ii) the right of the
Indemnified Parties to setoff the amount of any Losses with respect to which the Indemnified Parties are entitled to indemnification
against any Contingent Payments that have not been paid as of the Claim Date and (iii) the appointment of the Stockholder
Representative as the agent and attorney-in-fact for the Stockholders, having the powers and rights to limited liability and
indemnification set forth herein. The Company shall have also obtained and delivered to Parent a Proxy and Securityholder
Agreement from each of the Stockholders listed on Schedule 6.1(a).

          (b) The Company shall promptly, but in no event later than 10 Business Days after the date hereof deliver notice to its
Stockholders who have not executed the Written Consent of the adoption by Written Consent of this Agreement, the Merger and the
transactions contemplated hereby, including each of the matters set forth in Section 6.1(a) hereof, pursuant to and in accordance with
the applicable provisions of Delaware Law and the Charter Documents.

           (c) The board of directors of the Company shall not withdraw, alter, modify, change or revoke (i) its recommendation to the
Stockholders to vote in favor of this Agreement, the Merger and the transactions contemplated hereby (the “Board
Recommendation”) nor (ii) its approval of this Agreement, the Merger and the transactions contemplated hereby; provided, however,
that the board of directors of the Company may change its Board Recommendation if the board of directors reasonably concludes in
good faith, after receipt of advice from outside legal counsel, that the failure of the board of directors to change such Board
Recommendation would result in a breach of its fiduciary obligations to the Stockholders of the Company under applicable law.

           (d) Immediately following the execution of this Agreement, the Company shall submit to the Stockholders for approval (in a
manner satisfactory to Parent) by such number of Stockholders as is required by the terms of Section 280G(b)(5)(B) of the Code, any
payments and/or benefits that Parent determines may separately or in the aggregate, constitute “parachute payments” (within the
meaning of Section 280G of the Code and the regulations promulgated thereunder), such that such payments and benefits shall not be
deemed to be “parachute payments” under Section 280G of the Code, and prior to the Effective Time the Company shall deliver to
Parent evidence satisfactory to Parent (i) that a Stockholder vote was solicited in conformance with Section 280G and the regulations
promulgated thereunder and the requisite Stockholder approval was obtained with respect to any payments and/or benefits that were
subject to the Stockholder vote (the “280G Approval”), or (ii) that the 280G Approval was not obtained and as a consequence, that
such “parachute payments” shall not be made or provided, pursuant to the waivers of those payments and/or benefits which were
executed by the affected individuals on the date of this Agreement.

     6.2 Access to Information. The Company shall afford Parent and its accountants, counsel and other representatives, reasonable
access during the period from the date hereof and prior to the Effective Time to (i) all of the properties, books, contracts,
commitments and records of the Company, including all design processes, methodologies and source code with respect to the
Company Intellectual Property, (ii) all other information concerning the business, properties and personnel (subject to restrictions
imposed by applicable law) of the Company and its Subsidiaries as Parent may reasonably request, and (iii) all Employees of the
Company and its Subsidiaries as identified by Parent. The Company agrees to provide to Parent and its accountants, counsel and other
representatives copies of internal financial statements (including Tax Returns and supporting documentation) promptly upon request.
No information or knowledge obtained in any investigation pursuant to this Section 6.2 or otherwise shall affect or be deemed to
modify any representation or warranty contained herein or the conditions to the obligations of the parties to consummate the Merger
in accordance with the terms and provisions hereof.




                                                                 -59-
     6.3 Confidentiality. Each of the parties hereto hereby agrees that the information obtained in any investigation pursuant to
Section 6.2 hereof, or pursuant to the negotiation and execution of this Agreement or the effectuation of the transactions contemplated
hereby, shall be governed by the terms of the Non-Disclosure Agreement. In this regard, the Company acknowledges that Parent’s
Class A Common Stock is publicly traded and that any information obtained during the course of its due diligence could be
considered to be material non-public information within the meaning of federal and state securities laws. Accordingly, the Company
acknowledges and agrees not to engage in any discussions, correspondence or transactions in Parent’s Class A Common Stock in
violation of applicable securities laws.

     6.4 Public Disclosure. Except as provided in Section 6.1, neither the Company nor any of its representatives shall issue any
statement or communication to any third party (other than to its agents that are bound by confidentiality restrictions and to
Stockholders and holders of Company Options and Bonus Units) regarding the subject matter of this Agreement or the transactions
contemplated hereby, including, if applicable, the termination of this Agreement and the reasons therefor, without the consent of
Parent. Until the earlier of (a) the Effective Time or (b) the date of termination of this Agreement pursuant to the provisions of
Section 9.1 hereof, Parent shall not issue any statement or communication to any third party (other than its agents that are bound by
confidentiality restrictions) regarding the subject matter of this Agreement or the transactions contemplated hereby, including, if
applicable, the termination of this Agreement and the reasons therefor, without the consent of the Company (which shall not be
unreasonably withheld or delayed), except that this restriction shall be subject to Parent’s obligation to comply with applicable
securities laws and the rules of The Nasdaq Stock Market.

      6.5 Reasonable Efforts. Subject to the terms and conditions provided in this Agreement, each of the parties hereto shall use
commercially reasonable efforts to take promptly, or cause to be taken promptly, all actions, and to do promptly, or cause to be done
promptly, all things necessary, proper or advisable under applicable laws and regulations to consummate and make effective the
transactions contemplated hereby, to cause all conditions to the obligations of the other parties hereto to effect the Merger to occur, to
obtain all necessary waivers, consents, approvals and other documents required to be delivered hereunder and to effect all necessary
registrations and filings and to remove any injunctions or other impediments or delays, legal or otherwise, in order to consummate and
make effective the transactions contemplated by this Agreement for the purpose of securing to the parties hereto the benefits
contemplated by this Agreement; provided, however, that no party shall be required to agree to (a) any license, sale or other
disposition or holding separate (through establishment of a trust or otherwise) of any shares of capital stock or of any business, assets
or properties of Parent, its subsidiaries or affiliates or of the Company, (b) the imposition of any limitation on the ability of Parent, its
subsidiaries or affiliates or the Company to conduct their respective businesses or own any capital stock or assets or to acquire, hold
or exercise full rights of ownership of their respective businesses and, in the case of Parent, the businesses of the Company, or (c) the
imposition of any impediment on Parent, its subsidiaries or affiliates or the Company under any statute, rule, regulation, executive
order, decree, order or other legal restraint governing competition, monopolies or restrictive trade practices (any such action described
in (a), (b) or (c), an “Action of Divestiture”). Nothing herein shall require any party to litigate with any Governmental Entity.

     6.6 Notification of Certain Matters. During the period from the date of this Agreement and continuing until the earlier of the
termination of this Agreement or the Effective Time, the Company or Parent, as the case may be, shall give prompt notice to the
others of the occurrence or non-occurrence of any event, the occurrence or non-occurrence of which is reasonably likely to cause
(a) any of their respective representations or warranties contained in this Agreement to be untrue or inaccurate at or prior to the




                                                                    -60-
Effective Time, (b) any failure of the Company or Parent, as the case may be, to comply with or satisfy any of their respective
covenants, conditions or agreements or (c) any of their respective conditions set forth in Section 7.2 or Section 7.3, as the case may
be, to become incapable of being satisfied; provided, however, that the delivery of any notice pursuant to this Section 6.6 shall not
limit or otherwise affect any remedies available to the party receiving such notice. No disclosure by the Company or Parent pursuant
to this Section 6.6 shall be deemed to amend or supplement their respective Disclosure Schedules or prevent or cure any
misrepresentation, breach of warranty or breach of covenant by such party.

     6.7 Additional Documents and Further Assurances. Each party hereto, at the request of another party hereto, shall execute and
deliver such other instruments and do and perform such other acts and things as may be reasonably necessary or desirable for
effecting completely the consummation of the Merger and the transactions contemplated hereby.

     6.8 Conversion of Preferred Stock. The Company shall use commercially reasonable efforts to cause each holder of Company
Preferred Stock to convert all shares of Company Preferred Stock held by such holder to shares of Company Common Stock in
accordance with the Company’s Certificate of Incorporation prior to the Effective Time.

      6.9 Treatment of Company Warrants. Subject to the review and approval of Parent (not to be unreasonably withheld), the
Company shall take all actions necessary to effect the provisions set forth in Section 1.6(c) under all Company Warrants and all
Company Warrant agreements, including without limitation any necessary amendments to any Company Warrants and the delivery of
all required notices under such Company Warrants.

     6.10 Amendment to Plans. Subject to the review and approval of Parent (not to be unreasonably withheld), the Company shall
take all actions necessary to effect the provisions set forth in Section 1.6(c) under all Plans, all Company Option agreements and any
other plan or arrangement of the Company (whether written or oral, formal or informal), including without limitation any necessary
amendments to any Plans and the delivery of all required notices under such Plans.

      6.11 Consents. At the request and direction of Parent, the Company shall use commercially reasonable efforts to obtain all
necessary consents, waivers and approvals of any parties to any Material Contract as are required thereunder in connection with the
Merger or for any such Material Contracts to remain in full force and effect, all of which are required to be listed in Section 3.5 of the
Company Disclosure Schedule, so as to preserve all rights of, and benefits to, the Company under such Material Contract from and
after the Effective Time. Such consents, waivers and approvals shall be in a form reasonably acceptable to Parent.

     6.12 Terminated Agreements. The Company shall use commercially reasonable efforts to cause each of the Contracts listed on
Schedule 7.2(k) hereto (the “Terminated Agreements”) to be terminated, effective as of and contingent upon the Closing, including
sending all required notices, such that each such Contract shall be of no further force or effect immediately following the Effective
Time. Upon the Closing, the Company shall have paid all amounts owed under the Terminated Agreements (as a result of the
termination of the Terminated Agreements or otherwise), and the Surviving Corporation will not incur any claim, liability or
obligation (absolute, accrued, asserted or unasserted, contingent or otherwise) under any Terminated Agreement following the Closing
Date. The Company shall be responsible for making any payments required to terminate the Terminated Agreements. In the event the
Merger does not close for any reason (other than pursuant to Sections 9.1(b) (if Parent is in breach) or 9.1(f)), Parent shall not have
any liability to the Company, the Stockholders or any other Person for any costs, claims, liabilities or damages resulting from the
Company seeking to obtain such terminations.




                                                                   -61-
     6.13 Modified Agreements. The Company shall use commercially reasonable efforts to modify each of the agreements listed on
Schedule 7.2(l) (the “Modified Agreements”) hereto in the manner set forth on Schedule 7.2(l) hereto effective as of and contingent
upon the Closing, so that the required modifications are in effect immediately following the Effective Time. The Company shall be
responsible for making any payments required in connection with the Modified Agreements.

     6.14 Notices. The Company shall send each of the notices set forth on Schedule 7.2(m) (the “Notices”) hereto promptly
following the date hereof. The Company shall be responsible for making any payments required in connection with the Notices.

      6.15 Proprietary Information and Inventions Assignment Agreement. The Company shall use commercially reasonable efforts to
cause each current employee of the Company and its Subsidiaries and each former employee of the Company and its Subsidiaries who
is listed on Schedule 7.2(n) hereto, to have entered into and executed, and each person who becomes an employee of the Company or
any Subsidiary after the date hereof and prior to the Closing shall be required by the Company to enter into and execute, an Employee
Proprietary Information Agreement with the Company and each of its Subsidiaries effective as of such employee’s first date of
employment or service. The Company shall use commercially reasonable efforts to cause each current consultant or contractor of the
Company and its Subsidiaries, and each former consultant or contractor of the Company and its Subsidiaries who is listed on
Schedule 7.2(n) hereto, to have entered into and executed, and each Person who becomes a consultant or contractor of the Company
or any Subsidiary after the date hereof and prior to the Closing shall be required by the Company to enter into and execute, a
Consultant Proprietary Information Agreement with the Company and each of its Subsidiaries effective as of such consultant or
contractor’s first date of service.


    6.16 New Employment Arrangements.
          (a) Parent may offer certain Employees, including the Key Employees, “at-will” employment by Parent and/or the Surviving
Corporation, to be effective as of the Closing Date, upon proof of a legal right to work in the United States. Such “at-will”
employment will: (i) be set forth in offer letters on Parent’s standard form (each, an “Offer Letter”), (ii) be subject to and in
compliance with Parent’s applicable policies and procedures, including employment background checks and the execution of Parent’s
employee proprietary information agreement, governing employment conduct and performance, (iii) have terms, including the
position and salary, which will be determined by Parent, (iv) include, if applicable, a waiver by the Employee of any future equity-
based compensation to which such Employee may otherwise have been entitled, (v) include, if applicable, a valid release by certain
Employees and (vi) supersede any prior express or implied employment agreements, arrangement or offer letter in effect prior to the
Closing Date.

        (b) Subsequent to the execution of this Agreement, the Company shall use commercially reasonable efforts to cause each
Key Employee to sign an Offer Letter and to cause such Offer Letter to remain in full force and effect through the Closing Date.

     6.17 Agreements and Documents Delivered at Signing. The Company shall use commercially reasonable efforts to cause each
agreement and document that was executed by any Person and delivered to Parent prior to or concurrent with the execution of this
Agreement, including the Non-Disclosure Agreement, each Securityholder Agreement and each Proxy, to remain in full force and
effect through the Closing Date.

    6.18 Non-Competition Agreements. The Company shall use commercially reasonable efforts to cause the individuals listed on
Schedule 7.2(p) to execute and deliver to Parent a Non-Competition Agreement in substantially the form attached hereto as
Exhibit G (the “Non-Competition Agreements”).




                                                                -62-
     6.19 Resignation of Officers and Directors. The Company shall cause each officer and director of the Company and its
Subsidiaries to execute a resignation letter in the form attached hereto as Exhibit H (the “Director and Officer Resignation
Letter”), effective as of the Effective Time.

    6.20 Releases of Officers. The Company shall cause each officer of the Company and its Subsidiaries to execute a release in the
form attached hereto Exhibit I (the “Officer Release Letter”), effective as of the Effective Time.

     6.21 Termination of 401(k) Plan. Effective as of no later than the day immediately preceding the Closing Date, each of the
Company and any ERISA Affiliate shall terminate any and all Company Employee Plans intended to include a Code Section 401(k)
arrangement (each, a “401(k) Plan”) (unless Parent provides written notice to the Company that such 401(k) plans shall not be
terminated). Unless Parent provides such written notice to the Company, no later than five Business Days prior to the Closing Date,
the Company shall provide Parent with evidence that such Company Employee Plan(s) have been terminated (effective as of no later
than the day immediately preceding the Closing Date) pursuant to resolutions of the Board of Directors of the Company, or such
ERISA Affiliate, as the case may be. The form and substance of such resolutions shall be subject to review and approval of Parent.
The Company also shall take such other actions in furtherance of terminating such Company Employee Plan(s) as Parent may
reasonably require. In the event that termination of a 401(k) Plan would reasonably be anticipated to trigger liquidation charges,
surrender charges or other fees then such charges and/or fees shall be included in Third Party Expenses and shall be the responsibility
of the Company, and the Company shall take such actions as are necessary to reasonably estimate the amount of such charges and/or
fees and provide such estimate in writing to Parent no later than 15 calendar days prior to the Closing Date.

      6.22 Expenses. Whether or not the Merger is consummated, all fees and expenses incurred in connection with the Merger
including all legal, accounting, financial advisory, consulting and all other fees and expenses of third parties incurred by a party in
connection with the negotiation and effectuation of the terms and conditions of this Agreement and the transactions contemplated
hereby, including, but not limited to, any payments made or anticipated to be made by the Company as a brokerage or finders’ fee,
agents’ commission or any similar charge (“Third Party Expenses”), shall be the obligation of the respective party incurring such
fees and expenses; provided, however, that, if the Merger is consummated, Parent shall pay up to a maximum of the Third Party
Expense Cap in reasonable and documented Third Party Expenses incurred by the Company in connection with the negotiation and
effectuation of the terms and conditions of this Agreement and the transactions contemplated hereby. The Company shall provide
Parent with a statement of its estimated Third Party Expenses showing detail of both the paid and unpaid Third Party Expenses
incurred by the Company as of the Closing Date not less than three Business Days prior to the Closing Date in form reasonably
satisfactory to Parent (the “Statement of Expenses”), and the Statement of Expenses shall be certified as true and correct in form
acceptable to Parent as of the Closing Date by the Company’s Chief Financial Officer. The Statement of Expenses will reflect all
Third Party Expenses incurred and expected to be incurred by the Company as a result of the negotiation and effectuation of this
Agreement and the transactions contemplated hereby (including any Third Party Expenses anticipated to be incurred after the
Closing). Any Third Party Expenses incurred by the Company that are not reflected on the Statement of Expenses, and thus not part of
the Third Party Expense Adjustment Amount (“Excess Third Party Expenses”), shall be paid out of the Escrow Amount and shall
not be subject to the Basket.

     6.23 Spreadsheet. The Company shall deliver three Business Days prior to the Closing Date to Parent and the Exchange Agent a
spreadsheet (the “Spreadsheet”) substantially in the form attached hereto as Schedule 6.23, which spreadsheet shall be certified as
complete and correct by the Chief Executive Officer and Chief Financial Officer of the Company as of the Closing and which shall
include, among other things, as of the Closing:
           (a) all Stockholders and their respective addresses, the number of shares of Company Capital Stock held by such
Stockholders (including the respective certificate numbers), the date of acquisition of such shares, such Stockholder’s Pro Rata
Portion, the amount of the Initial Merger Consideration to be paid to each Stockholder, the amount of the Launch Contingent Payment
that may be paid to each Stockholder to the extent that such Launch Contingent Payment may be paid, the amount of cash to be
deposited into the Escrow Fund on behalf of each Stockholder in respect of the Initial Escrow Amount and the Additional Escrow
Amount for the Launch Contingent Payment, if any, and such other information relevant thereto or which the Exchange Agent may
reasonably request;




                                                                 -63-
           (b) all Warrantholders and their respective addresses, the number of shares of Company Capital Stock underlying the
Company Warrants held by such Warrantholders (including the respective certificate numbers, if applicable), the date of acquisition
of such Company Warrants, such Warrantholder’s Pro Rata Portion, the amount of the Initial Merger Consideration to be paid to each
Warrantholder, the amount of the Launch Contingent Payment that may be paid to each Warrantholder to the extent that such Launch
Contingent Payment may be paid, the amount of cash to be deposited into the Escrow Fund on behalf of each Warrantholder in respect
of the Initial Escrow Amount and the Additional Escrow Amount for the Launch Contingent Payment, if any, and such other
information relevant thereto or which the Exchange Agent may reasonably request; and

          (c) all holders of Bonus Units and their respective addresses, the number of Bonus Units held by each holder (or to be held
by such holder immediately prior to the Effective Time), the grant dates of such Bonus Units, the vesting arrangement with respect to
such Bonus Units and indicating, the Pro Rata Portion attributed to the Cash Bonus Plan, the amount of the Initial Merger
Consideration to be paid or reserved for each holder of Bonus Units, the amount of the Launch Contingent Payment that may be
allocated to the Cash Bonus Plan to the extent that such Launch Contingent Payment may be paid, the amount of cash to be deposited
into the Escrow Fund on behalf of the Cash Bonus Pool in respect of the Initial Escrow Amount and the Additional Escrow Amount
for the Launch Contingent Payment, if any, and such other information relevant thereto or which the Exchange Agent may reasonably
request.

     6.24 Release of Liens. The Company shall file, or shall have filed, all agreements, instruments, certificates and other documents,
in form and substance reasonably satisfactory to Parent, that are necessary or appropriate to effect the release of all Liens set forth in
Schedule 7.2(u) hereto.

    6.25 FIRPTA Compliance. On the Closing Date, the Company shall deliver to Parent a statement (a “FIRPTA Compliance
Certificate”) in a form reasonably acceptable to Parent to the effect that no interest in the Company is a U.S. real property interest.

     6.26 Director and Officer Liability and Indemnification. For each person who is an officer of the Company or a member of the
Company’s Board of Directors immediately prior to the Effective Time (each, a “Company Indemnified Person”), Parent shall, and
shall cause the Surviving Corporation to, fulfill and honor the obligations of the Company pursuant to any indemnification provisions
under the Charter Documents as in effect on the date hereof or pursuant to the indemnification agreements listed in Section 6.26 of
the Company Disclosure Schedule for a period of not less than six (6) years following the Effective Time; provided, however, that the
obligations of Parent and the Surviving Corporation pursuant to this Section 6.26 (a) shall be subject to any limitation imposed by
applicable law, and (b) shall not be deemed to release any Company Indemnified Person or any affiliate of such Company
Indemnified Person who is also an officer or director of the Company from his, her or its indemnity obligations under Article VIII
hereof, nor shall such Company Indemnified Person or any affiliate of such Company Indemnified Person have any right of
contribution, indemnification or right of advancement from the Surviving Corporation or Parent with respect to any Loss claimed by
any of the Indemnified Parties against such Company Indemnified Person or any affiliate of such Company Indemnified Person in his,
her or its capacity as a Stockholder or Warrantholder pursuant to Article VIII hereof.




                                                                   -64-
                                                             ARTICLE VII

                                                  CONDITIONS TO THE MERGER

     7.1 Conditions to Obligations of Each Party to Effect the Merger. The respective obligations of the Company, Parent and Sub to
effect the Merger shall be subject to the satisfaction or waiver, at or prior to the Effective Time, of the following conditions:
           (a) No Order. No Governmental Entity shall have enacted, issued, promulgated, enforced or entered any statute, rule,
regulation, executive order, decree, injunction, order or other legal restraint (whether temporary, preliminary or permanent) which is
in effect and which has the effect of making the Merger illegal or otherwise prohibiting or preventing consummation of the Merger.

          (b) No Injunctions; Restraints; Illegality. No temporary restraining order, preliminary or permanent injunction or other order
issued by any court of competent jurisdiction or other legal restraint or prohibition preventing the consummation of the Merger shall
be in effect, nor shall any proceeding brought by a Governmental Entity seeking any of the foregoing be threatened or pending.

         (c) Regulatory Approvals/HSR Act. If applicable, all waiting periods under the HSR Act relating to the transactions
contemplated hereby will have expired or terminated early and all material foreign antitrust approvals required to be obtained prior to
the Merger in connection with the transactions contemplated hereby have been obtained.

      7.2 Conditions to Obligations of Parent and Sub. The obligations of Parent and Sub to effect the Merger shall be subject to the
satisfaction at or prior to the Effective Time of each of the following conditions, any of which may be waived, in writing, exclusively
by Parent and Sub:
           (a) Representations, Warranties and Covenants. (i) The representations and warranties of the Company in this Agreement
that are qualified by “materiality” (including “Material Adverse Effect”) or contain any other materiality exception or qualification
shall have been, or shall be (as the case may be), true and correct in all respects, and the representations and warranties of the
Company in this Agreement that are not so qualified shall have been, or shall be (as the case may be), true and correct in all material
respects, in each case as of the date hereof and as of the Closing Date (other than the representations and warranties of the Company
as of a specified date, which shall have been, or shall be (as the case may be), true and correct as of such date), and (ii) the Company
shall have performed and complied in all material respects with all covenants and obligations under this Agreement required to be
performed and complied with by such parties as of the Closing.

          (b) No Material Adverse Effect. There shall not have occurred any Material Adverse Effect with respect to the Company
since the Balance Sheet Date.

           (c) Stockholder Approval. Stockholders constituting the Closing Stockholder Consent shall have approved this Agreement,
the Certificate of Merger, the Merger, and the transactions contemplated hereby and thereby.

          (d) 280G Stockholder Approval. With respect to any payments and/or benefits that Parent determines may constitute
“parachute payments” under Section 280G of the Code with respect to any Employees, the Stockholders shall have (i) approved,
pursuant to the method provided for in the regulations




                                                                  -65-
promulgated under Section 280G of the Code, any such “parachute payments” or (ii) shall have voted upon and disapproved such
parachute payments, and, as a consequence, such “parachute payments” shall not be paid or provided for in any manner and Parent
and its subsidiaries shall not have any liabilities with respect to such “parachute payments.”

         (e) Board Approval. This Agreement, the Merger and the transactions contemplated hereby shall have been unanimously
approved by the Board of Directors of the Company, which approval shall not have been revoked.

           (f) Litigation. There shall be no action, suit, claim, order, injunction or proceeding of any nature pending, or overtly
threatened, against Parent or the Company, their respective properties or any of their respective officers, directors or subsidiaries
arising out of, or in any way connected with, the Merger or the other transactions contemplated by the terms of this Agreement
wherein an unfavorable judgment, decree or order would (i) prevent the performance of this Agreement or the consummation of any
of the transactions contemplated hereby, (ii) declare unlawful the transactions contemplated by this Agreement, (iii) cause such
transactions to be rescinded or (iv) otherwise seeking any of the results set forth in Section 7.1(a) hereof.

       (g) Conversion of Preferred Stock. Each share of Company Preferred Stock shall have been converted into shares of
Company Common Stock in accordance with the Company’s Certificate of Incorporation.

          (h) Treatment of Company Options. The Company shall have taken all necessary actions in accordance with Section 6.10
hereof to provide for the cancellation of all Company Options outstanding prior to the Effective Date in exchange for the Bonus Units
described in Section 1.6(c) hereof.

          (i) Exercise or Termination of Company Warrants. The Company shall have taken all necessary actions in accordance with
Section 6.9 hereof to provide for the conversion of all Company Warrants that are outstanding prior to the Effective Date for the
Merger Consideration described in Section 1.6(c) hereof, and each such Company Warrant shall have been either (i) converted by the
holder(s) of such Company Warrants in accordance with Section 1.6(c) or (ii) to the extent not converted, terminated or canceled as of
immediately prior to the Effective Time either pursuant to their own terms or pursuant to an agreement with the holder(s) thereof, and
the Company shall have delivered to Parent written evidence of such exercise, termination or cancellation.

           (j) Third Party Consents. The Company shall have delivered to Parent all necessary consents, waivers and approvals of
parties to any Material Contract set forth on Schedule 7.2(j) hereto as are required thereunder in connection with the Merger, or for
any such Contract to remain in full force and effect without limitation, modification or alteration after the Effective Time.

          (k) Termination of Agreements. The Company shall have terminated each of those agreements listed on Schedule 7.2(k)
hereto effective as of and contingent upon the Closing and, from and after the Closing, each such agreement shall be of no further
force or effect.

         (l) Modification of Agreements. The Company shall have modified those agreements listed on Schedule 7.2(l) hereto in the
manner set forth on Schedule 7.2(l) hereto effective as of and contingent upon the Closing.

          (m) Notices for Agreements. The Company shall have sent the notices set forth on Schedule 7.2(m) hereto.




                                                                 -66-
           (n) Proprietary Information and Inventions Assignment Agreement. The Company shall have provided evidence reasonably
satisfactory to Parent that as of the Closing each Person listed on Schedule 7.2(n) has entered into and executed an Employee
Proprietary Information Agreement or Consultant Proprietary Information Agreement, as applicable.

            (o) New Employment Arrangements. Each Key Employee (i) shall have entered into “at-will” employment arrangements
with Parent and/or the Surviving Corporation pursuant to their execution of an Offer Letter which shall be in full force and effect,
(ii) shall have agreed to be employees of Parent after the Closing, (iii) shall be employees of the Company immediately prior to the
Effective Time and (iv) shall not have notified (whether formally or informally) Parent or the Company of such employee’s intention
of leaving the employ of Parent or the Company following the Effective Time; provided, however, that, other than Chad Steelberg and
Ryan Steelberg, the aggregate amount of salary and bonus described in the Offer Letter provided by Parent to such Key Employee is
at least equal to such Key Employee’s salary with the Company as of the date hereof.

           (p) Non-Competition Agreements. Each of the individuals listed on Schedule 7.2(p) shall have executed and delivered to
Parent at the Closing a Non-Competition Agreement.

          (q) Resignation and Release of Officers and Directors. Parent shall have received a duly executed (i) Director and Officer
Resignation Letter from each of the officers and directors of the Company and its Subsidiaries and (ii) Officer Release Letter from
each of the officers of the Company and its Subsidiaries effective as of the Effective Time.

           (r) Termination of 401(k) Plans. Unless Parent has explicitly instructed otherwise pursuant to Section 6.21 hereof, Parent
shall have received from the Company evidence reasonably satisfactory to Parent that all 401(k) Plans have been terminated pursuant
to resolution of the Board of Directors of the Company or the ERISA Affiliate, as the case may be, (the form and substance of which
shall have been subject to review and approval of Parent), effective as of no later than the day immediately preceding the Closing
Date, and Parent shall have received from the Company evidence of the taking of any and all further actions as provided in
Section 6.21 hereof.

           (s) Statement of Expenses. Parent shall have received from the Company the Statement of Expenses pursuant to
Section 6.22 hereof three Business Days prior to the Closing Date, and such Statement of Expenses shall be certified as true and
correct in form acceptable to Parent as of the Closing Date by the Company’s Chief Financial Officer.

          (t) Spreadsheet. Parent and the Exchange Agent shall have received from the Company three Business Days prior to the
Closing Date the Spreadsheet pursuant to Section 6.23 hereof, which shall have been certified as of the Closing Date as complete and
correct by the Chief Executive Officer and the Chief Financial Officer of the Company.

          (u) Release of Liens. Parent shall have received from the Company a duly and validly executed copy of all agreements,
instruments, certificates and other documents, in form and substance reasonably satisfactory to Parent, that are necessary or
appropriate to evidence the release of all Liens set forth in Schedule 7.2(u) hereto.

         (v) Legal Opinion. Parent shall have received a legal opinion from legal counsel to the Company in the form attached hereto
as Exhibit J, and with respect to the capitalization of the Company, a legal opinion from Reed Smith LLP in the form attached hereto
as Exhibit K.




                                                                 -67-
         (w) Certificate of the Company. Parent shall have received a certificate from the Company, validly executed by the Chief
Executive Officer and Chief Financial Officer of the Company for and on the Company’s behalf, to the effect that, as of the Closing:
                (i) the representations and warranties of the Company in this Agreement that are qualified by “materiality” (including
“Material Adverse Effect”) or contain any other materiality exception or qualification shall have been, or shall be (as the case may
be), true and correct in all respects, and the representations and warranties of the Company in this Agreement that are not so qualified
shall have been, or shall be (as the case may be), true and correct in all material respects, in each case as of the date hereof and as of
the Closing Date (other than the representations and warranties of the Company as of a specified date, which shall have been, or shall
be (as the case may be), true and correct as of such date);

             (ii) the Company has performed and complied in all material respects with all covenants and obligations under this
Agreement required to be performed and complied with by the Company as of the Closing; and

                (iii) to the Company’s Knowledge, the conditions to the obligations of Parent and Sub set forth in this Section 7.2 have
been satisfied (unless otherwise waived in accordance with the terms hereof).

          (x) Certificate of Secretary of Company. Parent shall have received a certificate, validly executed by the Secretary of the
Company, certifying as to (i) the terms and effectiveness of the Charter Documents, (ii) the valid adoption of resolutions of the Board
of Directors of the Company (whereby the Merger and the transactions contemplated hereunder were unanimously approved by the
Board of Directors) and (iii) that the Stockholders constituting the Closing Stockholder Consent have adopted and approved the
Merger, this Agreement and the consummation of the transactions contemplated hereby.

           (y) Certificate of Good Standing. Parent shall have received a long-form certificate of good standing from the Secretary of
State of the State of Delaware which is dated within five (5) Business Days prior to Closing with respect to the Company. Parent shall
have received a Certificate of Status of Foreign Corporation of the Company issued by the Secretary of State of the State of California
dated within five (5) Business Days prior to the Closing.

          (z) FIRPTA Certificate. Parent shall have received a copy of the FIRPTA Compliance Certificate.

      7.3 Conditions to Obligations of the Company. The obligations of the Company to effect the Merger shall be subject to the
satisfaction at or prior to the Effective Time of each of the following conditions, any of which may be waived, in writing, exclusively
by the Company:
           (a) Representations, Warranties and Covenants. (i) the representations and warranties of Parent and Sub in this Agreement
that are qualified by “materiality” (including “Material Adverse Effect”) or contain any other materiality exception or qualification
shall have been, or shall be (as the case may be), true and correct in all respects, and the representations and warranties of Parent and
Sub in this Agreement that are not so qualified shall have been, or shall be (as the case may be), true and correct in all material
respects, in each case as of the date hereof and as of the Closing Date (other than the representations and warranties of Parent and Sub
as of a specified date, which shall have been, or shall be (as the case may be), true and correct as of such date), and (ii) each of Parent
and Sub shall have performed and complied in all material respects with all covenants and obligations under this Agreement required
to be performed and complied with by such parties as of the Closing.




                                                                   -68-
          (b) Litigation. There shall be no action, suit, claim, order, injunction or proceeding of any nature pending, or overtly
threatened, against Parent properties or any of its officers, directors or subsidiaries arising out of, or in any way connected with, the
Merger or the other transactions contemplated by the terms of this Agreement wherein an unfavorable judgment, decree or order
would prohibit or prevent (i) the consummation of the Merger or (ii) Parent from engaging in the Business.

          (c) Certificate of Parent. The Company shall have received a certificate from Parent validly executed by a Vice President of
Parent for and on its behalf to the effect that, as of the Closing:
                (i) the representations and warranties of Parent and Sub in this Agreement that are qualified by “materiality” (including
“Material Adverse Effect”) or contain any other materiality exception or qualification shall have been, or shall be (as the case may
be), true and correct in all respects, and the representations and warranties of Parent and Sub in this Agreement that are not so
qualified shall have been, or shall be (as the case may be), true and correct in all material respects, in each case as of the date hereof
and as of the Closing Date (other than the representations and warranties of Parent and Sub as of a specified date, which shall have
been, or shall be (as the case may be), true and correct as of such date);

             (ii) Parent and Sub have performed and complied in all material respects with all covenants and obligations under this
Agreement required to be performed and complied with by such parties as of the Closing; and

                (iii) to Parent’s Knowledge, the conditions to the obligations of the Company set forth in this Section 7.3 have been
satisfied (unless otherwise waived in accordance with the terms hereof).

          (d) Certificate of Good Standing. The Company shall have received a long-form certificate of good standing from the
Secretary of State of the State of Delaware which is dated within five (5) Business Days prior to Closing with respect to each of
Parent and Sub. The Company shall have received a Certificate of Status of Foreign Corporation of each of Parent and Sub issued by
the Secretary of State of the State of California dated within five (5) Business Days prior to the Closing.

          (e) Legal Opinion. The Stockholder Representative, on behalf of the Stockholders, shall have received a legal opinion from
legal counsel to Parent in the form attached hereto as Exhibit L.


                                                              ARTICLE VIII

                               SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ESCROW

      8.1 Survival of Representations and Warranties. The representations and warranties of the Company contained in this Agreement,
any Related Agreement to which the Company is a party or in the certificate delivered pursuant to Section 7.2(w) herein, shall survive
for a period of eighteen (18) months following the Closing Date (the date of expiration of such eighteen (18) month period, the
“Survival Date”); provided, however, that the representations and warranties of the Company contained in Section 3.5 (No Conflict),
Section 3.12 (Restrictions on Business Activities), Section 3.14 (Intellectual Property), Section 3.15 (Agreements, Contracts and
Commitments), Section 3.18 (Litigation), Section 3.24 (Compliance with Laws) hereof shall survive for a period of 36 months
following the Closing Date and the representations and warranties of the Company contained in Section 3.2 (Company Capital
Structure), Section 3.11 (Tax Matters), Section 3.22 (Employee Benefit Plans and Compensation) hereof shall survive until the
expiration of the applicable statute of limitations, respectively. The representations and warranties of Parent and Sub contained in this
Agreement or in any certificate delivered pursuant to this Agreement, shall survive for a period of 36 months following the Closing
Date. Notwithstanding the foregoing, claims for fraud with respect to a representation or warranty contained herein on the part of the
parties to this Agreement shall not expire.




                                                                    -69-
          8.2 Indemnification.
            (a) By virtue of the Merger, the Stockholders, Warrantholders and the holders of Bonus Units agree to severally and not
jointly (and in proportion to each Stockholder and Warrantholder’s Pro Rata Portion and, in the case of all the holders of Bonus Units
in the aggregate, the Cash Bonus Plan’s Pro Rata Portion) indemnify and hold harmless Parent and its officers, directors, affiliates,
employees, agents and representatives, including the Surviving Corporation (the “Indemnified Parties”), against all claims, losses,
liabilities, damages, deficiencies, diminution in value, costs, interest, awards, judgments, penalties and expenses, including attorneys’
and consultants’ fees and expenses and including any such expenses incurred in connection with investigating, defending against or
settling any of the foregoing (hereinafter individually a “Loss” and collectively “Losses”) incurred or sustained by the Indemnified
Parties, or any of them (including the Surviving Corporation), directly or indirectly, as a result of (the following, the “Indemnifiable
Matters”):
                 (i) any breach or inaccuracy of a representation or warranty of the Company contained in Article III of this Agreement
or in the certificate delivered by or on behalf of the Company pursuant to Section 7.2(w) of this Agreement;

               (ii) any failure by the Company prior to the Closing to perform or comply with any covenant applicable to any of them
contained in this Agreement;

               (iii) any Dissenting Share Payments;

               (iv) any Excess Third Party Expenses;

               (v) any of the matters disclosed on Schedule 8.2(a)(v) hereto; or

               (vi) any payment or consideration arising under any consents, notices, waivers or approvals of any party under any
Material Contract or for any such Material Contract to remain in full force or effect following the Effective Time or in connection
with the termination of any Terminated Agreements, in each case pursuant to Sections 6.11, 6.12 and 7.2 hereof.

                The Stockholders and Warrantholders (including any officer or director of the Company or any Subsidiary, in such
capacity prior to the Effective Time) shall not have any right of contribution, indemnification or right of advancement from the
Surviving Corporation or Parent with respect to any Loss incurred by an Indemnified Party.

          (b) For the purpose of determining the amount of the Loss resulting from a breach or inaccuracy of a representation or
warranty of the Company (but not for the purpose of determining the existence of such breach or inaccuracy), any “materiality” or
“Material Adverse Effect” qualifiers or words of similar import contained in such representation or warranty giving rise to the claim
of indemnity hereunder shall in each case be disregarded and without effect (as if such standard or qualification were deleted from
such representation or warranty).

         (c) In the case any Indemnified Party claims a diminution in value as part of a Loss, the parties hereto agree that the amount
of such Loss shall not be determined by applying a multiplier to revenues, income or other income statement item.




                                                                  -70-
         (d) Nothing in this Agreement shall limit the right of Parent, any other Indemnified Party or any other party thereto to
pursue remedies under any Related Agreement against the parties thereto.

          (e) In the case of a breach of any representation, warranty or covenant by Parent or Sub in this Agreement or the certificate
delivered by or on behalf of Parent and Sub pursuant to Section 7.3(c) of this Agreement, the Stockholder Representative, on behalf
of the Stockholders, shall have recourse to any available remedy under applicable law (including claims for breach of contract);
provided, however, that any dispute arising from any claim of breach of any such representation, warranty or covenant shall be
resolved in accordance with the provisions of Section 10.10 hereof.


          8.3 Maximum Payments; Remedy.
           (a) Except as set forth in Section 8.3(b) and Section 8.3(c) hereof, the maximum aggregate amount the Indemnified Parties
may recover pursuant to the indemnity set forth in this Article VIII hereof for Losses shall be limited to the lesser of (i) twenty
percent (20%) of the sum of (A) (1) the Merger Consideration actually paid to the Stockholders, (2) the Merger Consideration actually
paid to the Warrantholders and (3) the Merger Consideration contributed to the Cash Bonus Plan, plus (B) the Merger Consideration
earned but not yet paid (in each case, including the Escrow Amounts), as of the date that the Claim becomes a Payable Claim or
(ii) one hundred twenty-seven million dollars ($127,000,000).

          (b) Nothing in this Article VIII shall limit the liability of any Stockholder or Warrantholder or any other Person in respect
of Losses arising out of any fraud on the part of such Stockholder, Warrantholder or other Person with respect to a representation or
warranty, or willful breach on the part of any party hereto of any covenant contained in this Agreement or any certificates or other
instruments delivered pursuant to this Agreement, or willful breach by any party to any Related Agreement of any covenant contained
in such Related Agreement.

           (c) Nothing in this Article VIII shall limit the liability of Parent, the Company, the Stockholders or any other Person for
any breach of their respective representations, warranties or covenants contained in this Agreement, any Related Agreements or in any
certificates or other instruments delivered pursuant to this Agreement if the Merger does not close.

           (d) Notwithstanding anything to the contrary herein, the parties hereto agree and acknowledge that any Indemnified Party
may bring a claim for indemnification for any Loss under this Article VIII notwithstanding the fact that such Indemnified Party had
knowledge of the breach, event or circumstance giving rise to such Loss prior to the Closing or waived any condition to the Closing
related thereto.

          (e) Notwithstanding the foregoing, no Indemnified Party shall be entitled to indemnification for any Losses hereunder until
the aggregate amount of all Losses under all claims of all Indemnified Parties shall exceed Five Hundred Thousand Dollars
($500,000) (the “Basket”), at which time all Losses incurred shall be subject to indemnification hereunder in full including the
amount of the Basket; provided, however, that the provisions of this Section 8.3(e) shall not apply as a threshold to any and all claims
or payments made with respect to all Losses incurred pursuant to clauses (iii)-(vi) of Section 8.2(a), which shall be indemnified in full
without regard to the Basket.

           (f) Subject to Sections 8.3(b) and 8.3(c), the indemnification provisions of this Article VIII shall be the exclusive remedy
of the Indemnified Parties for the recovery of any Losses arising out of this Agreement, including the certificate delivered by or on
behalf of the Company pursuant to Section 7.2(w); provided, however, that nothing in this Agreement shall limit (i) the liability of
any party under any Related Agreements or (ii) Parent’s ability to seek injunctive relief for any breach of Sections 5.2, 6.3 and 6.4.




                                                                  -71-
          (g) No claim may be asserted by an Indemnified Party for breach of any representation, warranty or covenant contained
herein, unless a written notice of such claim is received by the Stockholder Representative pursuant to Section 8.4(a), on or prior to
the date on which the representation, warranty or covenant on which such claim is based ceases to survive as set forth in Section 8.1,
in which case such representation, warranty or covenant shall survive as to such claim until such claims has been finally resolved.

           (h) Except to the extent that the Losses resulted from fraud with respect to any representation or warranty or willful breach
of any covenant committed by any Person, claims by an Indemnified Party for Losses pursuant to this Agreement shall only be
satisfied (and, for the avoidance of doubt, claims by an Indemnified Party for Losses pursuant to this Agreement may not be satisfied
in any other way): (A) first, from the Escrow Fund, and (B) second, by setoff against any amounts owed to the Stockholders,
Warrantholders or Cash Bonus Plan under this Agreement (provided that Contingent Payments shall not be deemed owed, for this
purpose, unless the contingencies to such payments have been satisfied). Notwithstanding the immediately preceding sentence, claims
by an Indemnified Party for Losses pursuant to this Agreement resulting from fraud with respect to any representation or warranty or
willful breach of any covenant committed by any Person may be satisfied in full in any manner available to such Indemnified Party,
including claims on the Escrow Fund, setoff against any amounts owed to the Stockholders, Warrantholders or Cash Bonus Plan or
claims against the Person committing such fraud or willful breach directly.


     8.4 Claims for Indemnification; Resolution of Conflicts.
          (a) Claims for Indemnification.
                 (i) An Indemnified Party may seek recovery of Losses pursuant to this Article VIII by delivering to the Stockholder
Representative (and, in the case of recovery sought directly from one or more Stockholders or Warrantholders directly, delivering to
such Stockholder(s) or Warrantholder(s)) an Officer’s Certificate in respect of such claim. The date of such delivery of an Officer’s
Certificate is referred to herein as the “Claim Date” of such Officer’s Certificate (and the claims for indemnification contained
therein). For purposes hereof, “Officer’s Certificate” shall mean a certificate signed by any officer of Parent: (A) stating that an
Indemnified Party has paid, sustained, incurred, or accrued, or reasonably anticipates that it will have to pay, sustain, incur or accrue
Losses and (B) specifying in reasonable detail the individual items of Losses included in the amount so stated, the date each such item
was paid, sustained, incurred, or accrued, or the basis for such anticipated liability, and the nature of the Indemnifiable Matter to
which such item is related.

                (ii) In the event that an Indemnified Party pursues a claim directly against any Stockholder(s), Warrantholder(s) or any
other Person as permitted by Section 8.4(a)(i), subject to the provisions of Section 8.4(a)(iii), Section 8.4(b) and Section 10.10
hereof, each Person from whom indemnification is sought (an “Indemnifying Party”) shall promptly, and in no event later than 30
days after delivery of an Officer’s Certificate to each such Indemnifying Party, wire transfer to the Indemnified Party an amount of
cash equal to the amount of the Loss; provided, however, if such Stockholder(s) or Warrantholder(s) objects to the claim pursuant to
Section 8.4(a)(iii), the claim shall be resolved and the indemnification shall be performed, if required, pursuant to Section 8.4(b) and
Section 10.10 hereof.

              (iii) The Stockholder Representative (or, in the case of a claim directly against one or more Stockholder(s) or
Warrantholder(s), such Stockholder(s) or Warrantholder(s)) may object to a




                                                                  -72-
claim for indemnification set forth in an Officer’s Certificate by delivering to the Indemnified Party seeking indemnification (and, in
the case of a claim against the Escrow Fund, to the Escrow Agent) a written statement of objection to the claim made in the Officer’s
Certificate (an “Objection Notice”), provided, however, that, to be effective, such Objection Notice must (A) be delivered to the
Indemnified Party (and, in the case of a claim for recourse against the Escrow Fund, to the Escrow Agent) prior to midnight
(California time) on or prior to the Objection Deadline and (B) set forth in reasonable detail the nature of the objections to the claims
in respect of which the objection is made, which could include Parent’s failure to provide reasonable detail regarding the nature of the
Indemnifiable Matter.

      (iv) If the Stockholder Representative (or the Stockholder(s) or Warrantholder(s), in the event that indemnification is being
sought hereunder directly from such Stockholder(s) or Warrantholder(s)) does not object in writing within the 30-day period after
delivery by the Parent of the Officer’s Certificate, and if Parent shall have given a second notice to the Stockholder Representative (or
the Stockholder(s) or Warrantholder(s) in the event that indemnification is being sought hereunder directly from such Stockholder(s)
or Warrantholder(s)) of such failure to object and the Stockholder Representative (or such Indemnifying Party) shall not have objected
within thirty (30) days after receipt of such second notice (such date, the “Objection Deadline”), such failure to so object shall be an
irrevocable acknowledgment by the Stockholder Representative and the Stockholders or Warrantholders that the Indemnified Party is
entitled to the full amount of the claims for Losses set forth in such Officer’s Certificate (and such entitlement shall be conclusively
and irrefutably established) (any such claim, an “Unobjected Claim”).


          (b) Resolution of Conflicts.
               (i) In case the Stockholder Representative (or the Stockholder(s) or Warrantholder(s), in the event that indemnification
is being sought hereunder directly from such Stockholder(s) or Warrantholder(s)) timely delivers an Objection Notice in accordance
with Section 8.4(a)(iii) hereof, the dispute shall be resolved in accordance with the provisions of Section 10.10 hereof. If the
Stockholder Representative (or the objecting Stockholder(s) or Warrantholder(s)) and Parent reach an agreement with respect to such
dispute pursuant to Sections 10.10(a) or 10.10(b) or otherwise, a memorandum setting forth such agreement shall be prepared and
signed by both parties (a “Settlement Memorandum”) and, in the case of a claim against the Escrow Fund, shall be furnished to the
Escrow Agent and, in the case of a claim directly against the Stockholder(s) or Warrantholder(s), to the Stockholders or
Warrantholders (any claims covered by such an agreement, “Settled Claims”). The Escrow Agent shall be entitled to rely on any such
Settlement Memorandum and make distributions from the Escrow Fund in accordance with the terms thereof.

              (ii) The procedures described in Section 10.10 shall apply to any dispute among the Stockholders or Warrantholders
and the Indemnified Parties under this Article VIII hereof, whether relating to claims upon the Escrow Fund or to any other
indemnification obligations set forth in this Article VIII.

                (iii) If no agreement with respect to a dispute relating to indemnification obligations of this Article VIII can be
reached after good faith negotiation (and, if applicable, mediation) prior to 45 days after delivery of an Objection Notice with respect
to such claim, any party to such dispute may demand arbitration of the matter unless the amount of the Loss that is at issue is the
subject of a pending litigation with a third party, in which event arbitration shall not be commenced until such amount is ascertained,
or both parties agree to arbitration prior to such time, and in either such event the matter shall be settled by arbitration conducted
pursuant to Section 10.10. The decision of the arbitrator or a majority of the three arbitrators, as the case may be, under Section 10.10
as to the validity and amount of any claim in such Officer’s Certificate shall be final, binding, and conclusive upon the parties to this
Agreement and any other




                                                                  -73-
Stockholders or Warrantholders. Such decision shall be written and shall be supported by written findings of fact and conclusions
which shall set forth the award, judgment, decree or order awarded by the arbitrator(s) (a “Written Decision”), and the Escrow Agent
shall be entitled to rely on, and make distributions from the Escrow Fund in accordance with, the terms of such Written Decision.
Claims determined by arbitration are referred to as “Resolved Claims.” Within 30 days of a decision of the arbitrator(s) requiring
payment by one party to another, such party shall make the payment to such other party, including any distributions out of the Escrow
Fund, as applicable.


     8.5 Setoff for Losses.
           (a) By virtue of this Agreement and as partial security for the indemnity obligations provided for in Section 8.2 hereof and
subject to the limitations set forth in Section 8.3 and the other limitations and conditions in this Article VIII, the Indemnified Parties
shall have the right in the manner provided in this Section 8.5 to setoff the amount of any Losses with respect to which the
Indemnified Parties are entitled to indemnification hereunder against any Contingent Payments that have not been paid as of the
Claim Date.

        (b) At the time that any Contingent Payment is due and payable as provided herein (such a Contingent Payment, a “Payable
Contingent Payment”), such Payable Contingent Payment shall be reduced as follows:
                (i) Any Payable Contingent Payment shall, subject to the limitations set forth in Section 8.3 and the other limitations
and conditions of this Article VIII be irrevocably reduced by the amount of any Payable Claims (as defined below) that arise prior to
the payment of such Payable Contingent Payment, and any such setoff against a Payable Contingent Payment shall (to the extent of
such setoff) satisfy the indemnification obligation in respect of such Payable Claim. For the avoidance of doubt, in the event that a
Payable Claim cannot be satisfied by setoff pursuant to this Section 8.5 because of the limitation set forth in Section 8.3(a), the
unsatisfied portion of such Claim may be satisfied by setoff against any future Payable Contingent Payments to the extent that such
future Payable Contingent Payments enable the recovery of additional Losses within the limits of Section 8.3(a).

                (ii) Any Payable Contingent Payment shall be reduced as of the date such Payable Contingent Payment is made by the
amount of any Unresolved Claims (as defined below) pending resolution of any such Unresolved Claims, and any such amount shall
not be distributed to the Exchange Agent at such time (such amount, a “Contingent Payment Holdback”). Parent shall deposit such
Contingent Payment Holdback into an escrow fund with the Escrow Agent. If such Unresolved Claims become Payable Claims, such
claims shall, subject to Section 8.5(b)(i), be satisfied by setoff against the Contingent Payment Holdback. As soon as all Unresolved
Claims have been resolved and any such resolved claims that become Payable Claims have been setoff against the Contingent
Payment Holdback, Parent shall cause the Escrow Agent to deliver to the Exchange Agent for distribution the remaining portion of the
Contingent Payment Holdback, if any.

          (c) A “Payable Claim” shall mean a claim for indemnification of Losses, to the extent that such claim has not been satisfied
by cash payment, Escrow Fund distribution or setoff against a Contingent Payment, which is (i) a Resolved Claim, (ii) an Authorized
Claim (as defined in Section 8.6(d)), (iii) a Settled Claim, or (iv) an Unobjected Claim. An “Unresolved Claim” shall mean any
claim specified in any Officer’s Certificate, to the extent that such claim is not a Payable Claim and has not been satisfied by cash
payment, Escrow Fund distribution or setoff against a Contingent Payment.




                                                                   -74-
     8.6 Escrow Arrangements.
           (a) Escrow Fund. By virtue of this Agreement and as partial security for the indemnity obligations provided for in
Section 8.2 hereof, at the Effective Time, Parent will deposit with the Escrow Agent the Initial Escrow Amount and, if and when the
Launch Contingent Payment becomes due and payable, the Additional Escrow Amounts, without any act of the Stockholders (any and
all of such deposits to constitute an escrow fund to be governed by the terms set forth herein). The Escrow Amounts and any
Additional Escrow Amounts (plus any interest paid on such Escrow Amounts in accordance with Section 8.6(c)(ii) hereof)
(collectively, the “Escrow Fund”) shall be available to compensate the Indemnified Parties for any claims by such parties for any
Losses suffered or incurred by them and for which they are entitled to recovery under this Article VIII. The Escrow Agent may
execute this Agreement following the date hereof and prior to the Closing, and such later execution, if so executed after the date
hereof, shall not affect the binding nature of this Agreement as of the date hereof between the other signatories hereto.

           (b) Escrow Period; Distribution upon Termination of Escrow Periods. Subject to the following requirements, the Escrow
Fund shall be in existence immediately following the Effective Time and shall terminate at 5:00 p.m., local time at Parent’s corporate
headquarters in California, on the date 30 days following the Survival Date (the “Escrow Period”), and the Escrow Agent shall
distribute any remaining funds in the Escrow Account to the Stockholders, Warrantholders and Cash Bonus Plan following such
termination; provided, however, that the Escrow Fund shall not terminate with respect to any amount in respect of any Unresolved
Claims relating to facts and circumstances existing prior to the Survival Date, and any such amount shall not be distributed to the
Stockholders, Warrantholders and Cash Bonus Plan at such time (such amount, an “Escrow Distribution Holdback”). As soon as all
such claims have been resolved, the Escrow Agent shall deliver the remaining portion of the Escrow Fund, if any, not required to
satisfy such Unresolved Claims. Deliveries of the remaining Escrow Amounts out of the Escrow Fund to the Stockholders,
Warrantholders and the Cash Bonus Plan pursuant to this Section 8.6(b) shall be made in proportion to their respective Pro Rata
Portions of the remaining amounts in the Escrow Fund, with the amount delivered to each Stockholder, Warrantholder and the Cash
Bonus Plan rounded to the nearest cent ($0.01) (with amounts of $0.005 and above rounded up).


          (c) Protection of Escrow Fund.
                (i) The Escrow Agent shall hold and safeguard the Escrow Fund during the Escrow Period, shall treat such fund as a
trust fund in accordance with the terms of this Agreement and shall hold and dispose of the Escrow Fund only in accordance with the
terms of this Article VIII. The Escrow Agent shall hold and safeguard the Payment Adjustment Funds during the period beginning
upon Parent’s deposit of such funds with the Escrow Agent until such time as such funds are distributed in accordance with the terms
of Article II, shall treat such fund as a trust fund in accordance with the terms of this Agreement and shall hold and dispose of the
Payment Adjustment Funds only in accordance with the terms of Article VIII.

               (ii) The Escrow Amounts and the Payment Adjustment Funds shall be invested in U.S. Treasury bills with maturities of
not more than 30 days and any interest paid on such Escrow Amounts or Payment Adjustment Funds, as applicable, shall be added to
the Escrow Fund or Payment Adjustment Funds, as applicable, and become a part thereof. For any period of time before such U.S.
Treasury bills can be purchased by the Escrow Agent or after such bills mature, the Escrow Amounts and the Payment Adjustment
Funds, as applicable, shall be invested in a business money market account of the Escrow Agent (or another nationally recognized
banking institution) and any interest paid on such Escrow Amounts or Payment Adjustment Funds, as applicable, shall be added to the
Escrow Fund or Payment Adjustment Funds, as applicable, and become a part thereof and available for satisfaction of claims in the
case of the Escrow Amounts and Payment Overage claims in the case of the Payment Overage Funds. The parties hereto agree




                                                                 -75-
that Parent is the owner of any cash in the Escrow Fund and the Payment Adjustment Funds, and that all interest on or other taxable
income, if any, earned from the investment of such cash pursuant to this Agreement shall be treated for tax purposes as earned by
Parent. At the end of Parent’s taxable year, an amount equal to income earned from the investment of cash contained in the Escrow
Fund and the Payment Adjustment Funds, as applicable, shall be deemed distributed to the Stockholders and Warrantholders in
accordance with their percentage interests in the Escrow Fund and the Payment Adjustment Funds, as applicable, and then
recontributed by the Stockholders and Warrantholders to the Escrow Fund or the Payment Adjustment Funds, as applicable. The
deemed distribution represents interest for the deferral of payment of a portion of the Merger Consideration resulting from the escrow
arrangement. The Stockholders and Warrantholders shall be responsible for any Taxes due with respect to the deemed distribution.

           (d) Claims for Indemnification. Upon receipt by the Escrow Agent at any time on or before the last day of the Escrow
Period of an Officer’s Certificate, the Escrow Agent shall, subject to the provisions of Section 8.3(g) and Section 8.4(b) hereof,
deliver to Parent, as promptly as practicable, cash held in the Escrow Fund equal to the Losses claimed in the Officer’s Certificate;
provided, however, until the Objection Deadline relating to an Officer’s Certificate, the Escrow Agent shall make no delivery to
Parent of any Escrow Amounts pursuant to this Section 8.6(d) unless the Escrow Agent shall have received written authorization from
the Stockholder Representative to make such delivery (a claim with respect to which such an authorization has been delivered, an
“Authorized Claim”). Upon the Objection Deadline relating to an Officer’s Certificate, to the extent that no Objection Notice has
been timely delivered with respect to Losses claimed in such Officer’s Certificate, the Escrow Agent shall make delivery of cash from
the Escrow Fund equal to the amount of Losses claimed in the Officer’s Certificate.


          (e) Escrow Agent’s Duties.
                 (i) The Escrow Agent shall be obligated only for the performance of such duties as are specifically set forth herein, and
as set forth in any additional written escrow instructions which the Escrow Agent may receive after the date of this Agreement which
are signed by an officer of Parent and the Stockholder Representative, and may rely and shall be protected in relying or refraining
from acting on any instrument reasonably believed to be genuine and to have been signed or presented by the proper party or parties.
The Escrow Agent shall not be liable for any act done or omitted hereunder as Escrow Agent while acting in good faith and in the
exercise of reasonable judgment, and any act done or omitted pursuant to the advice of legal counsel shall be conclusive evidence of
such good faith.

               (ii) The Escrow Agent is hereby expressly authorized to disregard any and all warnings given by any of the parties
hereto or by any other person, excepting only orders or process of courts of law, and is hereby expressly authorized to comply with
and obey orders, judgments or decrees of any court. In case the Escrow Agent obeys or complies with any such order, judgment or
decree of any court, the Escrow Agent shall not be liable to any of the parties hereto or to any other person 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.

               (iii) The Escrow Agent shall not be liable in any respect on account of the identity, authority or rights of the parties
executing or delivering or purporting to execute or deliver this Agreement or any documents or papers deposited or called for
hereunder.

             (iv) The Escrow Agent shall not be liable for the expiration of any rights under any statute of limitations with respect to
this Agreement or any documents deposited with the Escrow Agent.

               (v) In performing any duties under this Agreement, the Escrow Agent shall not be liable to any party for damages,
losses or expenses, except for negligence or willful misconduct on the part




                                                                   -76-
of the Escrow Agent. The Escrow Agent shall not incur any such liability for (A) any act or failure to act made or omitted in good
faith, or (B) any action taken or omitted in reliance upon any instrument, including any written statement of affidavit provided for in
this Agreement that the Escrow Agent shall in good faith believe to be genuine, nor will the Escrow Agent be liable or responsible for
forgeries, fraud, impersonations, or determining the scope of any representative authority. In addition, the Escrow Agent may consult
with legal counsel in connection with performing the Escrow Agent’s duties under this Agreement and shall be fully protected in any
act taken, suffered, or permitted by him/her in good faith in accordance with the advice of counsel. The Escrow Agent is not
responsible for determining and verifying the authority of any person acting or purporting to act on behalf of any party to this
Agreement.

                (vi) If any controversy arises between the parties to this Agreement, or with any other party, concerning the subject
matter of this Agreement, its terms or conditions, the Escrow Agent will not be required to determine the controversy or to take any
action regarding it. The Escrow Agent may hold all documents and the Escrow Amounts or Payment Adjustment Funds, as applicable,
and may wait for settlement of any such controversy by final appropriate legal proceedings or other means as, in the Escrow Agent’s
discretion, may be required, despite what may be set forth elsewhere in this Agreement. In such event, the Escrow Agent will not be
liable for damages. Furthermore, the Escrow Agent may at its option, file an action of interpleader requiring the parties to answer and
litigate any claims and rights among themselves. The Escrow Agent is authorized to deposit with the clerk of the court all documents
and the Escrow Amounts held in escrow, except all costs, expenses, charges and reasonable attorney fees incurred by the Escrow
Agent due to the interpleader action and which the parties jointly and severally agree to pay. Upon initiating such action, the Escrow
Agent shall be fully released and discharged of and from all obligations and liability imposed by the terms of this Agreement.

                (vii) The parties and their respective successors and assigns agree jointly and severally to indemnify and hold Escrow
Agent harmless against any and all losses, claims, damages, liabilities and expenses, including reasonable costs of investigation,
counsel fees, including allocated costs of in-house counsel and disbursements that may be imposed on the Escrow Agent or incurred
by the Escrow Agent in connection with the performance of its duties under this Agreement, including but not limited to any litigation
arising from this Agreement or involving its subject matter, other than those arising out of the negligence or willful misconduct of the
Escrow Agent.

                 (viii) The Escrow Agent may resign at any time upon giving at least thirty (30) days written notice to the Parent and the
Stockholder Representative; provided, however, that no such resignation shall become effective until the appointment of a successor
escrow agent which shall be accomplished as follows: Parent and the Stockholder Representative shall use their best efforts to
mutually agree on a successor escrow agent within thirty (30) days after receiving such notice. If the parties fail to agree upon a
successor escrow agent within such time, the Escrow Agent shall have the right to appoint a successor escrow agent authorized to do
business in the State of California. The successor escrow agent shall execute and deliver an instrument accepting such appointment
and it shall, without further acts, be vested with all the estates, properties, rights, powers, and duties of the predecessor escrow agent
as if originally named as escrow agent. Upon appointment of a successor escrow agent, the Escrow Agent shall be discharged from
any further duties and liability under this Agreement.

           (f) Fees. All fees of the Escrow Agent for performance of its duties hereunder shall be paid by Parent in accordance with the
standard fee schedule of the Escrow Agent. It is understood that the fees and usual charges agreed upon for services of the Escrow
Agent shall be considered compensation for ordinary services as contemplated by this Agreement. In the event that the conditions of
this Agreement are not promptly fulfilled, or if the Escrow Agent renders any service not provided for in this Agreement, or if the
parties request a substantial modification of its terms, or if any controversy arises, or if the Escrow




                                                                  -77-
Agent is made a party to, or intervenes in, any litigation pertaining to the Escrow Fund, the Payment Adjustment Funds or their
subject matter, the Escrow Agent shall be reasonably compensated for such extraordinary services and reimbursed for all costs,
attorney’s fees, including allocated costs of in-house counsel, and expenses occasioned by such default, delay, controversy or
litigation.

          (g) Successor Escrow Agents. Any corporation into which the Escrow Agent in its individual capacity may be merged or
converted or with which it may be consolidated, or any corporation resulting from any merger, conversion or consolidation to which
the Escrow Agent in its individual capacity shall be a party, or any corporation to which substantially all the corporate trust business
of the Escrow Agent in its individual capacity may be transferred, shall be the Escrow Agent under this Escrow Agreement without
further act.

     8.7 Third-Party Claims. In the event Parent becomes aware of a third party claim (a “Third Party Claim”) which Parent
reasonably believes may result in a demand against the Escrow Fund or for other indemnification pursuant to this Article VIII, Parent
shall notify the Stockholder Representative (or, in the event indemnification is being sought hereunder directly from an Indemnifying
Party, such Indemnifying Party) of such claim, and the Stockholder Representative shall be entitled on behalf of the Stockholders and
Warrantholders (or, in the event indemnification is being sought hereunder directly from one or more Stockholder or Warrantholder,
such Stockholder(s) or Warrantholder(s) shall be entitled), at their expense, to participate in, but not to determine or conduct, the
defense of such Third Party Claim. Parent shall have the right in its sole discretion to conduct the defense of, and to settle, any such
claim; provided, however, that except with the consent of the Stockholder Representative (or, in the event indemnification is being
sought hereunder directly from one or more Stockholder or Warrantholder, such Stockholder(s) or Warrantholder(s)), no settlement of
any such Third Party Claim with third party claimants shall be determinative of (a) the amount of Losses relating to such matter or
(b) whether Parent is entitled to indemnification pursuant to this Article VIII. In the event that the Stockholder Representative has
consented to any such settlement, the Stockholders and Warrantholders shall have no power or authority to object under any provision
of this Article VIII to the amount of the Losses with respect to such settlement. If there is a Third Party Claim that, if adversely
determined would give rise to a right of recovery for Losses hereunder, then any amounts incurred or sustained by the Indemnified
Parties in defense of such Third Party Claim, regardless of the outcome of such claim, shall be deemed Losses hereunder.


8.8 Stockholder Representative.
           (a) Each of the Stockholders and Warrantholders hereby appoints Rick Dallas as its agent and attorney-in-fact as the
Stockholder Representative for and on behalf of the Stockholders and Warrantholders to give and receive notices and
communications, to authorize payment to Parent from the Escrow Fund or by setoff in satisfaction of claims by Parent, to object to
such payments, to agree to, negotiate, enter into settlements and compromises of, and demand arbitration and comply with orders of
courts and awards of arbitrators with respect to such claims, and with respect to other disputes that may arise under this Agreement
(including relating to any Contingent Payments), and to take all other actions that are either (i) necessary or appropriate in the
judgment of either of the Stockholder Representative for the accomplishment of the foregoing or (ii) specifically mandated by the
terms of this Agreement. Such agency may be changed by the Stockholders and Warrantholders from time to time upon not less than
thirty (30) days prior written notice to Parent; provided, however, that the Stockholder Representative may not be removed unless
holders of a two-thirds interest of the Escrow Fund agree to such removal and to the identity of the substituted agent. A vacancy in the
position of Stockholder Representative may be filled by the holders of a majority in interest of the Escrow Fund. No bond shall be
required of the Stockholder Representative, and the Stockholder Representative shall not receive any compensation for its services.
Notices or communications to or from the Stockholder Representative shall constitute notice to or from the Stockholders and
Warrantholders.




                                                                   -78-
           (b) The Stockholder Representative shall not be liable for any act done or omitted hereunder as Stockholder Representative
while acting in good faith and in the exercise of reasonable judgment. Stockholders and Warrantholders on whose behalf the Escrow
Amounts were contributed to the Escrow Fund shall indemnify the Stockholder Representative and hold the Stockholder
Representative harmless against any loss, liability or expense incurred without negligence or bad faith on the part of the Stockholder
Representative and arising out of or in connection with the acceptance or administration of the Stockholder Representative’s duties
hereunder, including the reasonable fees and expenses of any legal counsel retained by the Stockholder Representative (“Stockholder
Representative Expense”). Following the termination of the Escrow Period and the resolution of all pending claims made by the
Indemnified Parties for Losses, the Stockholder Representative shall have the right to recover the Stockholder Representative
Expenses from any remaining portion of the Escrow Fund prior to any distribution to the Stockholders, Warrantholders and the Cash
Bonus Plan, and prior to any such distribution, shall deliver to the Escrow Agent a certificate setting forth the Stockholder
Representative Expenses actually incurred. Upon receipt of such certificate, the Escrow Agent shall pay such Stockholder
Representative Expenses to the Stockholder Representative. Notwithstanding the foregoing, the Stockholder Representative’s right to
recover Stockholder Representative Expenses shall not prejudice Parent’s right to recover the full amount of indemnifiable Losses that
Parent is entitled to recover from the Escrow Fund. Additionally, the Stockholder Representative may setoff Stockholder
Representation Expenses against any Payable Contingent Payments which are not part of a Contingent Payment Holdback (until such
holdback is available to be released to the Stockholders, Warrantholders and the Cash Bonus Plan).

          (c) A decision, act, consent or instruction of the Stockholder Representative, including but not limited to an amendment,
extension or waiver of this Agreement pursuant to Section 9.3 and Section 9.4 hereof, shall constitute a decision of the Stockholders
and Warrantholders and shall be final, binding and conclusive upon the Stockholders and Warrantholders; and the Escrow Agent and
Parent may rely upon any such decision, act, consent or instruction of the Stockholder Representative as being the decision, act,
consent or instruction of the Stockholders and Warrantholders. The Escrow Agent and Parent are hereby relieved from any liability to
any person for any acts done by them in accordance with such decision, act, consent or instruction of the Stockholder Representative.


                                                              ARTICLE IX

                                           TERMINATION, AMENDMENT AND WAIVER

     9.1 Termination. Except as provided in Section 9.2 hereof, this Agreement may be terminated and the Merger abandoned at any
time prior to the Effective Time:
          (a) by mutual agreement of the Company and Parent;

           (b) by Parent or the Company if the Closing Date shall not have occurred by March 31, 2006, which date shall automatically
be extended to the four-month anniversary of the date of this Agreement if the Closing Date shall not have occurred as a result of a
failure to satisfy any of the conditions set forth in Section 7.1(a) Section 7.1(b) or Section 7.1(c); provided, however, that the right to
terminate this Agreement under this Section 9.1(b) shall not be available to any party whose action or failure to act has been a
principal cause of or resulted in the failure of the Merger to occur on or before such date and such action or failure to act constitutes
breach of this Agreement;




                                                                   -79-
           (c) by Parent or the Company if any Governmental Entity shall have enacted, issued, promulgated, enforced or entered any
statute, rule, regulation, executive order, decree, injunction, order or other legal restraint which is in effect and which has the effect of
making the Merger illegal.

          (d) by Parent or the Company if there shall be any action taken, or any statute, rule, regulation or order enacted,
promulgated or issued or deemed applicable to the Merger by any Governmental Entity, which would constitute an Action of
Divestiture;

           (e) by Parent if neither Parent nor Sub is in material breach of their obligations under this Agreement and there has been a
breach of any representation, warranty, covenant or agreement of the Company contained in this Agreement such that the conditions
set forth in Section 7.2(a) hereof would not be satisfied and such breach has not been cured within twenty (20) calendar days after
written notice thereof to the Company; provided, however, that no cure period shall be required for a breach which by its nature
cannot be cured; or

          (f) by the Company if the Company is not in material breach of its obligations under this Agreement, and there has been a
breach of any representation, warranty, covenant or agreement of Parent contained in this Agreement such that the conditions set forth
in Section 7.3(a) hereof would not be satisfied and such breach has not been cured within twenty (20) calendar days after written
notice thereof to Parent; provided, however, that no cure period shall be required for a breach which by its nature cannot be cured.

         (g) By Parent if the Written Consent is not delivered by the Requisite Stockholder Vote within eighteen (18) hours
following the exchange of signature pages by Parent, Sub, the Company and the Stockholder Representative.

      9.2 Effect of Termination. In the event of termination of this Agreement as provided in Section 9.1 hereof, this Agreement shall
forthwith become void and there shall be no liability or obligation on the part of Parent or the Company, or their respective officers,
directors or stockholders, if applicable; provided, however, that each party hereto and each other Person shall remain liable for its
breaches of this Agreement, Related Agreements or in any certificate or other instruments delivered pursuant to this Agreement prior
to its termination; and provided further, however, that the provisions of Sections 6.3, 6.4, 6.22 and 8.3(c) hereof, Article X hereof and
this Section 9.2 shall remain in full force and effect and survive any termination of this Agreement pursuant to the terms of this
Article IX.

     9.3 Amendment. This Agreement may be amended by the parties hereto at any time by execution of an instrument in writing
signed on behalf of the party against whom enforcement is sought; provided, however, that, following the Closing, the written consent
of the Stockholder Representative shall also be required to approve any amendment on behalf of the Company. For purposes of this
Section 9.3, the Stockholders and Warrantholders agree that any amendment of this Agreement as to which the Stockholder
Representative has given his written consent shall be binding upon and effective against the Stockholders and Warrantholders whether
or not they have signed such amendment.

     9.4 Extension; Waiver. At any time prior to the Closing, Parent, on the one hand, and the Company and the Stockholder
Representative, on the other hand, may, to the extent legally allowed, (a) extend the time for the performance of any of the obligations
of the other party hereto, (b) waive any inaccuracies in the representations and warranties made to such party contained herein or in
any document delivered pursuant hereto, and (c) waive compliance with any of the covenants, agreements or conditions for the benefit
of such party contained herein. Any agreement on the part of a party hereto to any such extension or waiver shall be valid only if set
forth in an instrument in writing signed on behalf of such party. For purposes of this Section 9.4, the Stockholders agree that any
extension or waiver signed by the Stockholder Representative shall be binding upon and effective against all Stockholders whether or
not they have signed such extension or waiver.




                                                                    -80-
                                                             ARTICLE X

                                                      GENERAL PROVISIONS

     10.1 Notices. All notices and other communications hereunder shall be in writing and shall be deemed given if delivered
personally or by commercial messenger or courier service, or mailed by registered or certified mail (return receipt requested) or sent
via facsimile (with acknowledgment of complete transmission) to the parties at the following addresses (or at such other address for a
party as shall be specified by like notice or, if specifically provided for elsewhere in this Agreement such as Section 5.3, by email);
provided, however, that notices sent by mail will not be deemed given until received:
          (a) if to Parent or Sub, to:

               Google Inc.
               1600 Amphitheatre Parkway
               Mountain View, California 94043
               Attention: General Counsel
               Facsimile No.:

               with a copy to:

               Wilson Sonsini Goodrich & Rosati
               Professional Corporation
               650 Page Mill Road
               Palo Alto, California 94304
               Attention: [***]
                          [***]
               Facsimile No.: [***]

          (b) if to the Company or the Stockholder Representative, to:

               [***]

               with a copy to:

               Gibson, Dunn & Crutcher LLP
               1801 California Street, Suite 4200
               Denver, Colorado 80202
               Attention: [***]
               Facsimile No.: [***]

***   Certain information on this page has been omitted and filed separately with the Securities and Exchange Commission.
      Confidential treatment has been requested with respect to the omitted portions.




                                                                 -81-
          (c) If to the Escrow Agent, to:

               U.S. Bank, National Association
               Corporate Trust Services
               One California Street, Suite 2100
               San Francisco, California 94111
               Attention: [***]
               Facsimile No.: [***]

     10.2 Interpretation. The words “include,” “includes” and “including” when used herein shall be deemed in each case to be
followed by the words “without limitation.” The table of contents and headings contained in this Agreement are for reference
purposes only and shall not affect in any way the meaning or interpretation of this Agreement.

     10.3 Counterparts. This Agreement may be executed in one or more counterparts, all of which shall be considered one and the
same agreement and shall become effective when one or more counterparts have been signed by each of the parties and delivered to
the other party, it being understood that all parties need not sign the same counterpart.

     10.4 Entire Agreement; Assignment. This Agreement, the Exhibits hereto, the Company Disclosure Schedule, the Parent
Disclosure Schedule and other Schedules hereto, the Non-Disclosure Agreement, and the documents and instruments and other
agreements among the parties hereto referenced herein: (a) constitute the entire agreement among the parties with respect to the
subject matter hereof and supersede all prior agreements and understandings both written and oral, among the parties with respect to
the subject matter hereof, (b) except as provided in Section 6.26, are not intended to confer upon any other person any rights or
remedies hereunder, and (c) shall not be assigned by operation of law or otherwise, except that Parent may assign its rights and
delegate its obligations hereunder to its affiliates as long as Parent remains ultimately liable for all of Parent’s obligations hereunder.
All Exhibits, the Company Disclosure Schedule, the Parent Disclosure Schedule and other Schedules attached hereto are hereby
incorporated by reference into, and made a part of, this Agreement. The disclosures contained in the Company Disclosure Schedule
and other Schedules hereto shall be deemed to relate to representations and warranties in any Section of the Agreement to which such
disclosures relate, either expressly or as is obvious on the face of such disclosures.

     10.5 Severability. In the event that any provision of this Agreement or the application thereof, becomes or is declared by a court
of competent jurisdiction to be illegal, void or unenforceable, the remainder of this Agreement will continue in full force and effect
and the application of such provision to other persons or circumstances will be interpreted so as reasonably to effect the intent of the
parties hereto. The parties further agree to replace such void or unenforceable provision of this Agreement with a valid and
enforceable provision that will achieve, to the extent possible, the economic, business and other purposes of such void or
unenforceable provision.

     10.6 Other Remedies. Except as set forth in Sections 8.3(f) through 8.3(g), any and all remedies herein expressly conferred upon
a party will be deemed cumulative with and not exclusive of any other remedy conferred hereby, or by law or equity upon such party,
and the exercise by a party of any one remedy will not preclude the exercise of any other remedy.

     10.7 Governing Law; Exclusive Jurisdiction. Except to the extent the Delaware General Corporation Law is applicable to the
Merger, this Agreement shall be governed by and construed in accordance with the laws of the State of California, regardless of the
laws that might otherwise govern under applicable principles of conflicts of laws thereof. Subject to Section 10.10 hereof, each of the
parties hereto irrevocably consents to the exclusive jurisdiction and venue of any court within Santa Clara County, State of California,
in connection with any matter based upon or arising out of this Agreement or the matters

***   Certain information on this page has been omitted and filed separately with the Securities and Exchange Commission.
      Confidential treatment has been requested with respect to the omitted portions.




                                                                   -82-
contemplated herein, agrees that process may be served upon them in any manner authorized by the laws of the State of California for
such persons and waives and covenants not to assert or plead any objection which they might otherwise have to such jurisdiction,
venue and such process. Subject to Section 10.10 hereof, each party agrees not to commence any legal proceedings related hereto
except in such courts.

    10.8 Rules of Construction. The parties hereto agree that they have been represented by counsel during the negotiation and
execution of this Agreement and, therefore, waive the application of any law, regulation, holding or rule of construction providing that
ambiguities in an agreement or other document will be construed against the party drafting such agreement or document.

     10.9 Legal Representation. In any dispute or proceeding arising under or in connection with this Agreement including, without
limitation, under Article VIII, the Stockholders shall have the right, at their election, to retain the firm of Gibson, Dunn & Crutcher
LLP to represent them in such matter, and Parent, for itself and for its successors and assigns and for the Indemnified Parties and their
respective successors and assigns, hereby irrevocably waives and consents to any such representation in any such matter. The Parent
acknowledges that the foregoing provision shall apply whether or not Gibson, Dunn & Crutcher LLP provides legal services to the
Stockholders or the Company after the Closing Date. Parent, for itself and its successors and assigns, and for the Indemnified Parties
and their respective successors and assigns, hereby irrevocably acknowledges and agrees that all communications among the
Stockholders and their counsel, including without limitation Gibson, Dunn & Crutcher LLP, made in connection with the negotiation,
preparation, execution, delivery and closing under, or any dispute or proceeding arising under or in connection with, this Agreement,
or any matter relating to any of the foregoing, are privileged communications among the Stockholders and such counsel, and neither
Parent, nor any Person purporting to act on behalf of or through Parent, will seek to obtain the same by any process.

     10.10 Resolution of Conflicts; Arbitration. Any claim or dispute arising out of or related to this Agreement, or the interpretation,
making, performance, breach or termination thereof, shall (except as specifically set forth in this Agreement) be resolved pursuant to
the procedures set forth below.

         (a) The parties to the dispute shall attempt in good faith to agree upon the respective rights of the parties with respect to
such dispute.

           (b) Either party may, but shall not be obligated to, initiate non-binding mediation of the dispute with the assistance of a
neutral arbitrator belonging to and under the rules of the CPR Institute for Dispute Resolution. The party requesting the mediation
shall arrange for mediation services, subject to the approval of the other party, which shall not be unreasonably withheld. Mediation
shall take place in Santa Clara County, California during reasonable business hours and upon reasonable advance notice. Mediation
may be scheduled to begin at any time, but with at least ten (10) business days’ written notice to all parties. If one party initiates
mediation, the parties (i) shall participate in the mediation in good faith and shall devote reasonable time and energy to the mediation
so as to promptly resolve the dispute or conclude that they cannot resolve the dispute and (ii) shall not pursue other remedies while
such mediation is proceeding, other than injunctive relief.

           (c) If no such agreement can be reached after good faith negotiation (and, if applicable, mediation) prior to 30 days after
commencement of such negotiation (and, if applicable, mediation) (or in the case of a dispute over a claim for indemnification under
Article VIII, prior to 30 days following delivery of an Objection Notice with respect to such claim) either party may demand
arbitration of the matter, and the matter shall be settled by binding arbitration pursuant to this Section 10.10 in the County of Santa
Clara, California in accordance with the then current Commercial Arbitration Rules of the American Arbitration Association.
Judgment upon the award rendered by the arbitrator(s) may be entered in any court having jurisdiction. The arbitrator(s) shall have the
authority to grant any equitable and legal remedies that would be available in any judicial proceeding instituted to resolve a dispute.




                                                                   -83-
           (d) Selection of Arbitrators. Such arbitration shall be conducted by a single arbitrator chosen by mutual agreement of the
parties. Alternatively, at the request of either party before the commencement of arbitration, the arbitration shall be conducted by three
independent arbitrators, none of whom shall have any competitive interests with any of the parties, in which case each party shall each
select one arbitrator, and the two arbitrators so selected shall select a third arbitrator. If the dispute concerns the determination of any
Contingent Payment described in Article II, the third arbitrator must be an independent accounting firm of national stature that is
neutral and has no competitive interests with Parent or the Stockholder Representative (including without limitation that such
accounting firm shall not have provided substantial services to Parent, the Stockholder Representative or any Stockholder within the
three (3) year period preceding the arbitration proceeding); provided, however, that if the dispute concerns the determination of the
Launch Contingent Payment, the third arbitrator shall (in addition to the other requirements of this Section 10.10(d)) have substantial
experience in the integration of management information systems; provided further, however, that if the dispute concerns the
determination of an Inventory Contingency Payment or a Revenue Contingency Payment, the third arbitrator shall (in addition to the
other requirements of this Section 10.10(d)) have substantial experience in the radio industry.

           (e) Discovery. In any arbitration under this Section 10.10, each party shall be limited to calling a total of five witnesses both
for purposes of deposition and the arbitration hearing, unless the arbitrator(s) determines that such a limitation would be unfair to one
or more of the parties; provided that the parties agree that the number of allowed witnesses shall be as few as possible and any
increase to a number in excess of five shall be strictly limited to such additional witnesses as is minimally necessary (as determined
by the arbitrator(s) to avoid such unfairness). Subject to the foregoing limitation on the number of witnesses, the arbitrator or
arbitrators, as the case may be, shall set a limited time period and establish procedures designed to reduce the cost and time for
discovery while allowing the parties an opportunity, adequate in the sole judgment of the arbitrator or majority of the three arbitrators,
as the case may be, to discover relevant information from the opposing parties about the subject matter of the dispute. The arbitrator,
or a majority of the three arbitrators, as the case may be, shall rule upon motions to compel or limit discovery and shall have the
authority to impose sanctions for discovery abuses, including attorneys’ fees and costs, to the same extent as a competent court of law
or equity, should the arbitrators or a majority of the three arbitrators, as the case may be, determine that discovery was sought without
substantial justification or that discovery was refused or objected to without substantial justification.

           (f) Decision. The decision of the arbitrator or a majority of the three arbitrators, as the case may be, as to the validity and
amount of any claim in such Officer’s Certificate shall be final, binding, and conclusive upon the parties to this Agreement. Such
decision shall be written and delivered to Parent, the Stockholder Representative and the Escrow Agent and shall be supported by
written findings of fact and conclusions which shall set forth the award, judgment, decree or order awarded by the arbitrator(s).
Within 30 days of a decision of the arbitrator(s) requiring payment by one party to another, such party shall make the payment to such
other party, including any distributions out of the Escrow Fund, as applicable. The parties agree to use all commercially reasonably
efforts to cause the arbitration hearing to be conducted within 75 days after the appointment of the mutually-selected arbitrator or the
last of the three arbitrators, as the case may be, and to use all reasonable efforts to cause the decision of the arbitrator(s) to be
furnished within 90 days after the appointment of the mutually-selected arbitrator or the last of the three arbitrators, as the case may
be.

          (g) Other Relief. The parties to the arbitration may apply to a court of competent jurisdiction for a temporary restraining
order, preliminary injunction or other interim or conservatory relief, as necessary, without breach of this arbitration provision and
without abridgement of the powers of the arbitrator(s).




                                                                    -84-
         (h) Costs and Expenses. The parties agree that each party shall pay its own costs and expenses (including counsel fees) of
any such arbitration, and each party waives its right to seek an order compelling the other party to pay its portion of its costs and
expenses (including counsel fees) for any arbitration; provided, however, that the arbitrator(s) may, in their discretion, determine to
compel a party to pay all or a portion of the costs and expenses (including counsel fees) of the other party(ies) if the arbitrator(s)
determine that such party has acted in bad faith with respect to the matters that are the subject of the arbitration.

                                              [remainder of page intentionally left blank]




                                                                   -85-
    IN WITNESS WHEREOF, Parent, Sub, the Company, the Escrow Agent and the Stockholder Representative have caused this
Agreement to be signed, all as of the date first written above.

                                                     GOOGLE INC.

                                                     By:/s/ David C. Drummond
                                                        David C. Drummond
                                                        Vice President, Corporate Development

                                                     DMARC BROADCASTING, INC.

                                                     By:/s/ Chad Steelberg
                                                        Chad Steelberg
                                                        Chief Executive Officer

                                                     By:/s/ Ryan Steelberg
                                                        Ryan Steelberg
                                                        President

                                                     ENUMCLAW, INC.

                                                     By:/s/ David C. Drummond
                                                        David C. Drummond
                                                        President

                                                     U.S. BANK, NATIONAL ASSOCIATION

                                                     By:/s/ Michael P. Susnow
                                                        Michael P. Susnow
                                                        Vice President

                                                     STOCKHOLDER REPRESENTATIVE

                                                     By:/s/ H. Richard Dallas
                                                        H. Richard Dallas

                           SIGNATURE PAGE TO AGREEMENT AND PLAN OF MERGER
                                                                                                          Exhibit 31.01

                            CERTIFICATION OF CHIEF EXECUTIVE OFFICER
                                           PURSUANT TO
                          SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Eric Schmidt, certify that:
     1. I have reviewed this quarterly report on Form 10-Q of Google Inc.;

      2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to
state a material fact necessary to make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by this report;

      3. Based on my knowledge, the financial statements, and other financial information included in this report,
fairly present in all material respects the financial condition, results of operations and cash flows of the registrant
as of, and for, the periods presented in this report;

     4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure
controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over
financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and we have:
          (a) Designed such disclosure controls and procedures, or caused such disclosure controls and
     procedures to be designed under our supervision, to ensure that material information relating to the
     registrant, including its consolidated subsidiaries, is made known to us by others within those entities,
     particularly during the period in which this report is being prepared;
          (b) Designed such internal control over financial reporting, or caused such internal control over
     financial reporting to be designed under our supervision, to provide reasonable assurance regarding the
     reliability of financial reporting and the preparation of financial statements for external purposes in
     accordance with generally accepted accounting principles;
           (c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in
     this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of
     the period covered by this report based on such evaluation; and
          (d) Disclosed in this report any change in the registrant’s internal control over financial reporting that
     occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of
     an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s
     internal control over financial reporting; and

     5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of
internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s
board of directors (or persons performing the equivalent functions):
          (a) All significant deficiencies and material weaknesses in the design or operation of internal control
     over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record,
     process, summarize and report financial information; and
          (b) Any fraud, whether or not material, that involves management or other employees who have a
     significant role in the registrant’s internal control over financial reporting.

Date: May 10, 2006

                                                                              /s/   ERIC SCHMIDT
                                                                                     Eric Schmidt
                                                                                Chief Executive Officer
                                                                                                        Exhibit 31.02

                           CERTIFICATION OF CHIEF FINANCIAL OFFICER
                                          PURSUANT TO
                         SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, George Reyes, certify that:
     1. I have reviewed this quarterly report on Form 10-Q of Google Inc.;

      2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to
state a material fact necessary to make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by this report;

      3. Based on my knowledge, the financial statements, and other financial information included in this report,
fairly present in all material respects the financial condition, results of operations and cash flows of the registrant
as of, and for, the periods presented in this report;

     4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure
controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over
financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and we have:
          (a) Designed such disclosure controls and procedures, or caused such disclosure controls and
     procedures to be designed under our supervision, to ensure that material information relating to the
     registrant, including its consolidated subsidiaries, is made known to us by others within those entities,
     particularly during the period in which this report is being prepared;
          (b) Designed such internal control over financial reporting, or caused such internal control over
     financial reporting to be designed under our supervision, to provide reasonable assurance regarding the
     reliability of financial reporting and the preparation of financial statements for external purposes in
     accordance with generally accepted accounting principles;
           (c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in
     this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of
     the period covered by this report based on such evaluation; and
          (d) Disclosed in this report any change in the registrant’s internal control over financial reporting that
     occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of
     an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s
     internal control over financial reporting; and

     5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of
internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s
board of directors (or persons performing the equivalent functions):
          (a) All significant deficiencies and material weaknesses in the design or operation of internal control
     over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record,
     process, summarize and report financial information; and
          (b) Any fraud, whether or not material, that involves management or other employees who have a
     significant role in the registrant’s internal control over financial reporting.

Date: May 10, 2006

                                                                             /s/   GEORGE REYES
                                                                                   George Reyes Chief
                                                                                    Financial Officer
                                                                                                           Exhibit 32.01

      CERTIFICATION OF CHIEF EXECUTIVE OFFICER AND CHIEF FINANCIAL OFFICER
                                   PURSUANT TO
                               18 U.S.C. SECTION 1350,
                             AS ADOPTED PURSUANT TO
                  SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

     I, Eric Schmidt, certify pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002, that the Quarterly Report of Google Inc. on Form 10-Q for the quarterly period
ended March 31, 2006, fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange
Act of 1934 and that information contained in such Form 10-Q fairly presents, in all material respects, the
financial condition and results of operations of Google Inc.


Date: May 10, 2006                                       By:               /s/     ERIC SCHMIDT
                                                         Name:                       Eric Schmidt
                                                         Title:                 Chief Executive Officer


     I, George Reyes, certify pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002, that the Quarterly Report of Google Inc. on Form 10-Q for the quarterly period
ended March 31, 2006, fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange
Act of 1934 and that information contained in such Form 10-Q fairly presents, in all material respects, the
financial condition and results of operations of Google Inc.


Date: May 10, 2006                                       By:              /s/      GEORGE REYES
                                                         Name:                       George Reyes
                                                         Title:                  Chief Financial Officer
                                                           May 10, 2006

VIA OVERNIGHT COURIER                                                        FOIA Confidential Treatment Requested
                                                                            Under 17 C.F.R. §§ 200.80(b)(4) and 230.406


Office of the Secretary
Securities and Exchange Commission
100 F Street, N.E.
Washington, D.C. 20549

    Re: Request for Confidential Treatment under Rule 24b-2 promulgated under the
        Securities Exchange Act of 1934 for Exhibit 10.23 to Google Inc.’s Quarterly
        Report on Form 10-Q for the quarterly period ended March 31, 2006


Ladies and Gentlemen:
    In connection with the filing on May 10, 2006 by Google Inc., a Delaware corporation (the “Company”), of its Quarterly Report
on Form 10-Q for the quarterly period ended March 31, 2006 (the “Report”) with the Securities and Exchange Commission (the
“Commission”), we respectfully submit on behalf of the Company this confidential treatment request pursuant to Rule 24b-2 of the
Securities Exchange Act of 1934, as amended (the “Exchange Act”).

      Enclosed is a copy of the Agreement and Plan of Merger, dated as of January 16, 2006, by and among the Company, Enumclaw,
Inc., dMarc Broadcasting, Inc. and certain other parties (the “Merger Agreement”), filed as Exhibit 10.23 to the Report. The portions
of the Merger Agreement that the Company desires to keep confidential are highlighted, bracketed and in bold font (collectively, the
“Confidential Portions”). We have also stamped “CONFIDENTIAL” each page of the Merger Agreement that contains Confidential
Portions.

    The Confidential Portions have been excluded from the Merger Agreement filed electronically with the Commission as
Exhibit 10.23 to the Report. For your convenience, we have also enclosed a copy of the Merger Agreement as filed with the
Commission via EDGAR.

     The Confidential Portions of the Merger Agreement for which confidential treatment is requested constitute confidential
commercial or financial information or trade secrets within the purview of 5 U.S.C. 552(b)(4) of the Freedom of Information Act (the
“FOIA”) (“Exemption 4”), as more fully described below. The Company hereby requests confidential treatment of such portions in
accordance with Rule 24b-2 of the Exchange Act, Exemption 4 and 17 C.F.R. § 200.80(b)(4). The Company submits the Merger
Agreement voluntarily for review by the Commission and advises that no determination has been made by the Commission, other
federal agencies or a court concerning confidential treatment of the Merger Agreement. In addition, please note that we have sent a
copy of this letter to the Commission’s Freedom of Information Act Officer.
Securities and Exchange Commission
May 10, 2006
Page 2

     In addition to the Confidential Portions, the Company also hereby requests confidential treatment of each of the following items
under Exemption 4 because disclosure of such information would defeat the effectiveness of any confidential treatment granted
hereunder:
     •   This transmittal letter and any subsequent letters regarding this request for confidential treatment.
     •   Any memoranda, notes, correspondence or other writings made by any member or employee of the Commission or by the
         Company or any representative on its behalf relating to the Merger Agreement, this transmittal letter or any of the foregoing
         documents or any conference or telephone calls with respect thereto.
     •   Any copies or extracts of any of the foregoing.

     This letter sets forth the basis for confidential treatment, certain background information regarding the Company and an item by
item analysis of the information for which the Company is requesting confidential treatment, including the term for which such
treatment is requested.


I. Basis of Confidential Treatment Request
     A. Statutory Provisions
          The Commission may grant confidential treatment under Rule 24b-2 if it determines that disclosure is not required to protect
investors and that disclosure would substantially damage the Company’s competitive position. Exemption 4, referred to in Rule 24b-2,
exempts from the broad public disclosure requirements of the FOIA “trade secrets and commercial or financial information obtained
from a person and privileged or confidential.” Exemption 4 is intended to protect both the interests of commercial entities that submit
proprietary information to the government and the interests of the government in receiving continued access to such data.


          1. Background to Exemption 4 of the FOIA
                Exemption 4 of the FOIA provides generally that the provisions of the FOIA requiring agencies to make information
available to the public do not apply to matters that are trade secrets and commercial or financial information obtained from a person
and privileged or confidential. See generally 5 U.S.C. § 552(b)(4).

               While the FOIA was intended to provide the general public with the means to better understand the processes of
government, the FOIA also contains safeguards to protect “important rights of privacy with respect to certain information in
Government files.” S. Rep. No. 89-813, at 3 (1965), quoted in National Parks and Conservation Ass’n v. Morton, 498 F.2d 765, 767
(D.C. Cir. 1974) (“National Parks I”). Consequently, Exemption 4 was specifically designed to forestall any use of the FOIA to obtain
information that would cause substantial harm to the competitive position of an individual or entity. Exemption 4 was designed both
(i) to encourage submitters to provide the government with commercial and financial

                                          CONFIDENTIAL TREATMENT REQUESTED
Securities and Exchange Commission
May 10, 2006
Page 3

information and to shield such submitters from the competitive disadvantages which would result from the publication of such
information, and (ii) to provide the government with assurances that the information supplied is reliable and to enable the government
to make “intelligent, well informed decisions.” National Parks I, 498 F.2d at 767-68. As explained by the Senate, the purpose of
Exemption 4 is to “protect the confidentiality of information which is obtained by the Government . . . but which would customarily
not be released to the public by the person from whom it was obtained.” S. Rep. No. 89-913 at 9, quoted in National Parks I, 498 F.2d
at 766. See also H.R. Rep. No. 89-1497, at 10 (1966), reprinted in 1966 U.S.C.C.A.N. 2418, 2427.

                Exemption 4 is an expression of long-standing federal policy that confidential business information must remain
confidential. This policy, which seeks to preclude the pirating and unauthorized disclosure of confidential commercial information, is
embodied in various provisions of federal law (i.e. 18 U.S.C. § 1905, 17 C.F.R. § 200.80(b)(4), 48 C.F.R §§ 24.201-24.203 and
48 C.F.R. § 15.508). Recognizing the importance of this policy, the Court of Appeals for the Fifth Circuit has unequivocally ruled that
Exemption 4 is to serve a dual purpose: “The purpose of Exemption 4 is two-fold – to protect the interests of individuals who disclose
confidential information to government agencies and to protect the Government as well.” Shermco Indus., Inc. v. Secretary of Air
Force, 613 F.2d 1314, 1317 (5th Cir. 1980). Thus, Exemption 4 must be viewed as “an express affirmation of a legislative policy
favoring confidentiality of private information furnished to government agencies, the disclosure of which might be harmful to private
interests.” Westinghouse Elec. Corp. v. Schlesinger, 542 F.2d 1190, 1211 (4th Cir. 1976), superseded by statute on other grounds as
stated in CNA, 830 F.2d at 1142 n.62 (as to Exemption 3). Exemption 4 “was manifestly intended to protect that private interest.” Id.
(emphasis added).


     B. Applicability of Exemption 4
          For Exemption 4 to apply, the following test must be satisfied: (1) the information for which an exemption is sought must be
a trade secret, or such information must be commercial or financial in character; (2) such information must be obtained from a person,
which includes a corporation; and (3) such information must be privileged or confidential. Nadler v. Federal Deposit Ins. Corp., 92
F.3d 93, 95 (2nd Cir. 1996); GC Micro Corp v. Defense Logistics Agency, 33 F.3d 1109, 1112 (9th Cir. 1994).

           The information contained in the Confidential Portions includes: (i) highly negotiated and sensitive terms, (ii) sensitive
methodology and strategies related to the Company’s business, (iii) sensitive information related to the Company’s current and future
plans for capital expenditures, infrastructure, product development, sales, marketing and pricing, (iv) sensitive information related to
new markets into which the Company is contemplating entering, (v) sensitive information related to the value the Company places on
commodities, products and services it must procure in the marketplace going forward in order to operate its business, and
(vi) sensitive information related to the metrics the Company uses to measure its success with new products and in new markets. The
Company seeks to protect this information, which has never been made available to the public, from disclosure because public
disclosure of this information would likely cause substantial harm to the Company’s competitive position for the reasons described in
Part III of this letter.

                                          CONFIDENTIAL TREATMENT REQUESTED
Securities and Exchange Commission
May 10, 2006
Page 4

          1. Commercial or Financial Information
               a. Definition of “Trade Secret”
                     For purposes of Exemption 4, a trade secret is a “secret, commercially valuable plan, formula, process, or device
that is used for the making, preparing, compounding, or processing of trade commodities and that can be said to be the end product of
either innovation or substantial effort.” Center for Auto Safety v. Nat’l Highway Traffic Safety Admin., 244 F.3d 144, 150-51 (D.C.
Cir. 2001), quoting Public Citizen Health Research Group v. Food and Drug Admin., 704 F.2d 1280, 1288 (D.C. Cir. 1983). This
definition requires that there be a direct relationship between the trade secret and the productive process. Public Citizen, 704 F.2d at
1288. Once information is determined to constitute a trade secret, the inquiry ends there and the information is exempt from the
requirements of public disclosure under the FOIA. Id. at 1283.

                       The Company respectfully submits that certain of the Confidential Portions fall squarely within the scope of the
Trade Secrets Act because they reflect information relating to “the trade secrets, processes, operations, style of work . . . or to
the . . . amount or source of any income, profits, losses, or expenditures of any person, firm, partnership, corporation, or
association . . . .” 18 U.S.C. § 1905. In addition, courts have held that the Trade Secrets Act “‘is at least coextensive’” with
Exemption 4 of the FOIA. McDonnell Douglas, 180 F.3d at 305 (citation omitted). Thus “when a person can show that information
falls within Exemption 4, the government is precluded from releasing it under the Trade Secrets Act.” Id. Accordingly, any decision
by the Commission to release the Confidential Portions, which fall within the purview of Exemption 4, pursuant to an exercise of
discretion would be “not in accordance with law” within the meaning of Section 10 of the Administrative Procedure Act,
5 U.S.C. § 706. See Chrysler Corp. v. Brown, 441 U.S. 281, 318 (1979).


               b. Definition of “Commercial or Financial Information”
                     The United States Court of Appeals for the District of Columbia has held that these terms should be given their
ordinary meaning and has specifically rejected the argument that the term “commercial” be confined to records that “reveal basic
commercial operations,” holding instead that records are commercial so long as the submitter has a “commercial interest” in them.
Public Citizen Health Research Group v. Food & Drug Admin., 704 F.2d 1280, 1290 (D.C. Cir. 1983). Examples of items generally
regarded as commercial or financial information include: business sales statistics, technical designs, license and royalty information,
customer and supplier lists, and information on financial condition. See Landfair v. United States Dep’t of the Army, 645 F. Supp. 325,
327 (D.C. Cir. 1986). Likewise, in Critical Mass Energy Project v. Nuclear Regulatory Comm’n, 644 F. Supp. 344, 346 (D.D.C.
1986), vacated on other grounds, 830 F.2d 278, 281 (D.C. Cir. 1987), the court held that “information is commercial if it relates to
commerce, or it has been compiled in pursuit of profit.” Prices and quantities are ordinarily understood to be “commercial” in nature,
since they directly affect profit. See Landfair, 645 F. Supp. at 327.

                    The Company respectfully submits that the Confidential Portions constitute confidential commercial or financial
information, as such terms are described above, and that their disclosure would likely result in substantial competitive injury to the
Company for the specific reasons set forth in Part III of this letter.

                                          CONFIDENTIAL TREATMENT REQUESTED
Securities and Exchange Commission
May 10, 2006
Page 5


         2. Provided by a Person

               Under the second requirement of Exemption 4, information for which confidential treatment is requested must be
provided to the Commission by a person. The Landfair court stated that the term “person” refers to a wide range of entities, including
corporations. 645 F. Supp. at 327. The Company, which is a corporation, is a person within the meaning of Exemption 4. Accordingly,
the second requirement of the test for the applicability of Exemption 4 has been satisfied with respect to the Confidential Portions
because such information has been provided to the Commission by the Company.


         3. Privileged or Confidential Information
               Commercial or financial information is considered “confidential” within the meaning of Exemption 4 where (i) it is not
customarily released to the public by the person from whom it was obtained, and (ii) requiring disclosure would likely impair the
government’s ability to obtain necessary information in the future or public disclosure would cause substantial harm to the
competitive position of the person from whom the information was obtained. S. Rep. No. 813, 89th Cong., 1st Sess. 9 (1965); see also
Burke Energy Corp. v. Dep’t of Energy, 583 F. Supp. 507 (1984); National Parks and Conservation Ass’n v. Morton, 498 F.2d 765
(1974). Evidence revealing actual competition and the likelihood of substantial competitive injury are sufficient to bring commercial
information within the realm of confidentiality. Public Citizen, 704 F.2d at 1291.

               The Company respectfully submits that the Confidential Portions should be considered “confidential” for the reasons
set forth below. In addition, because of concerns over possible competitive harm, the Company has not previously made public any of
the redacted material in the Merger Agreement. Accordingly, the third test under Exemption 4 has been satisfied with respect to the
Confidential Portions.


II. OVERVIEW
    A. Company Background and Competitive Landscape
           As discussed more fully in the Report, the Company is a global technology leader focused on improving the ways people
connect with information. The Company’s innovations in web search and advertising have made its web site a top Internet destination
and its brand one of the most recognized in the world. The Company maintains the largest, most comprehensive index of web sites
and other content, and it makes this information freely available to anyone with an Internet connection. The Company’s automated
search technology helps people obtain nearly instant access to relevant information from its vast online index.

         The Company generates revenue primarily by delivering relevant, cost-effective online advertising. Businesses use the
Company’s advertising products to promote their own products and services with targeted advertising, and the thousands of third-
party web sites that comprise the Company’s network

                                         CONFIDENTIAL TREATMENT REQUESTED
Securities and Exchange Commission
May 10, 2006
Page 6

use its advertising products to deliver relevant ads that generate revenue and enhance the user experience. In addition, the Company
has recently commenced efforts to broaden the type of targeted advertising it offers and the media in which it offers such advertising.
The acquisition of dMarc Broadcasting effectuated through the Merger Agreement comprises one step in the Company’s strategy to
offer targeted “offline” advertising.

           The Company faces formidable competition in every aspect of its business, and particularly from other companies that seek
to connect people with information and provide them with relevant advertising. The Company competes with Internet advertising
companies, particularly in the areas of pay-for-performance and keyword-targeted Internet advertising, as well as from companies that
offer traditional media advertising opportunities.

           The Company competes to attract and retain relationships with users, advertisers and web sites and other media companies.
The Company competes in this area principally on the basis of the return on investment realized by advertisers using its advertising
products. The Company also competes to attract and retain web sites and other media outlets as members of its network based on the
size and quality of its advertiser base, its ability to help its network members generate revenues from advertising and the terms of
agreements with its network members. In addition, the Company competes based on the quality of customer service, features and ease
of use of its products. While the Company believes that it competes favorably in these areas, the industry is evolving rapidly and is
becoming increasingly competitive, and larger, more established companies are increasingly focusing on businesses that directly
compete with the Company.


     B. The Merger Agreement
          On January 16, 2006, the Company entered into the Merger Agreement with Enumclaw, Inc., a Delaware corporation and
wholly-owned subsidiary of the Company (“Merger Sub”), dMarc Broadcasting, Inc., a Delaware corporation (“dMarc”), and
certain other parties. Under the terms of the Merger Agreement, the Company acquired all of the outstanding capital stock of dMarc
by means of a reverse triangular merger, pursuant to which Merger Sub merged with and into dMarc, with dMarc surviving as a
wholly-owned subsidiary of the Company (the “Merger”). The Company paid $102 million upon the closing of the Merger, which
occurred on February 17, 2006. In addition, subject to the satisfaction of certain terms and conditions described in the Merger
Agreement, the Company is obligated to make additional contingent cash payments from time to time if certain product integration,
net revenue and advertising inventory targets are met over the next three years. The maximum amount of potential contingent
consideration payable under the Merger Agreement is $1.136 billion over the next three years.


III. REASONS FOR REQUESTING CONFIDENTIAL TREATMENT
     A. Overview

           The Merger is important to the Company’s business because it represents one of its early and most significant steps toward
offering targeting advertising through traditional (or “offline”) media channels. The Confidential Portions were heavily negotiated,
strategic and unique terms that, if disclosed, would be likely to cause direct substantial commercial and competitive harm to the
Company for the reasons and in the manner described below.

                                         CONFIDENTIAL TREATMENT REQUESTED
Securities and Exchange Commission
May 10, 2006
Page 7

     B. Discussion
           The material for which confidential treatment has been requested is limited and is confined to certain information the
Company considers extremely proprietary in nature. Disclosure of certain information relating to capital expenditures, personnel,
operations, product development, sales, marketing, pricing, the possibility of entering new markets, the methodology by which the
Company values various commodities, products and services, and the inventory and revenue targets and other anticipated events that
are the basis for contingent consideration payments, could allow competitors to predict the details and timing of the Company’s future
plans and otherwise allow competitors to appropriate and use such information to the detriment of the Company’s competitive
position. In addition, disclosure of certain key financial terms, including valuation metrics, could disadvantage the Company in future
negotiations to acquire other companies.

           The Company does not believe that the Confidential Portions are material to the Company’s investors. By providing
investors with the redacted version of the Merger Agreement and the descriptions of the Merger Agreement in the Company’s filings
with the Commission, the Company believes that investors will have all of the material information they need to know about the
transaction, including the upfront purchase price, the types of various contingent payments the Company could pay in the future, the
maximum amount payable by the Company in each year, and all of the terms associated with the indemnification provisions provided
by dMarc to the Company. Accordingly, the Company respectfully submits that disclosure of the Confidential Portions to the
Company’s stockholders, prospective stockholders and the public at large is not necessary to assure the availability of adequate
information about the Company nor is disclosure necessary for the protection of stockholders, prospective stockholders and the
public. The only parties that would benefit from public disclosure of the Confidential Portions are the Company’s competitors and
prospective companies with whom the Company could enter into commercial arrangements for the purchase or sale of advertising or
advertising inventory or prospective companies who might enter into similar agreements with the Company in the future. Moreover,
disclosure of the Confidential Portions poses a significant competitive threat to the Company and may be detrimental to the interests
of its stockholders and prospective investors because third parties could use this information to gain an unfair advantage in negotiating
future agreements with the Company.

          The information for which the Company is requesting confidential treatment falls into the following categories:


          1. Pricing, Payment and Purchase Information
               Prices, purchase information, valuation metrics, contingent payment terms and related provisions (collectively, the
“Purchase Information”) are terms that fall within the plain meaning of “commercial or financial information” for purposes of
Exemption 4. Such terms are the result of intense negotiations and are heavily dependent on the business relationship of the parties, as
well as the specific terms of the transaction memorialized by the Merger Agreement. The Company may in the future acquire other
companies, and disclosure of certain Purchase Information would severely inhibit the Company’s ability to obtain more favorable
terms in future agreements. In addition, the Company’s industry is highly competitive. The Company faces formidable competition in
every aspect of its business, and particularly from other

                                          CONFIDENTIAL TREATMENT REQUESTED
Securities and Exchange Commission
May 10, 2006
Page 8

companies that seek to monetize user traffic through the delivery of targeted advertising. In addition, the Company and its competitors
frequently compete in the acquisition of the same target companies. Competitors could use certain Purchase Information as a
benchmark to undercut the Company in acquisition negotiations with target companies, which would adversely affect the Company’s
ability to negotiate favorable terms in future agreements.

                 Furthermore, the Company believes that disclosure of Purchase Information beyond the information contained in the
redacted version of the Merger Agreement is not necessary because detailed financial statements of the Company are already publicly
available in filings made with the Commission, along with detailed descriptions of the Company’s business model, revenue sources
and expenses. Disclosure of the Purchase Information would add little value to an investor’s understanding of the Company’s
business, yet such disclosure would likely cause substantial harm to the Company’s competitive position.


          2. Product Information
                The Merger Agreement discloses information concerning innovations and products and services currently being
developed or researched by the Company and the capital and other resources the Company intends to expend on the research,
development, maintenance, support, sales and marketing of such products and services. This information falls within the plain
meaning of “commercial or financial information,” and the disclosure of such information would result in substantial competitive
harm to the Company. The Company expends significant capital and resources to develop, research, maintain, support, sell and market
its innovations, and disclosure of such information would give the Company’s competitors insight into the strategic direction of its
business and would allow its competitors to estimate the Company’s methodology and ability to develop, maintain, support, market
and sell the technology referenced in the Merger Agreement. Disclosure of what innovations are under way or being considered at the
Company and the resources it intends to expend on such technology would enable competitors to pursue the same or similar products
or services, or might unfairly advantage counterparties with whom the Company is negotiating for the purchase of products, goods or
services, which, in each case, would threaten the Company’s ability to compete effectively in the market with respect to such
products. Consequently, disclosure could harm the Company in its negotiations with other providers, licensors and advertisers in
connection with its development of these innovations. Such information is confidential as it has not been previously disclosed and
because public disclosure of this information would result in substantial economic harm to the Company and its stockholders.

                Disclosure of this product and service information is unnecessary for the protection of investors because detailed
information regarding the Company’s current products is included in the Company’s public filings made with the Commission. The
Company believes the information in its public filings adequately provides investors with an understanding and appreciation of the
direction of the Company’s business without unnecessarily disclosing competitively sensitive information.


          3. Trade Secrets and Technical Information
               For purposes of Exemption 4, a trade secret is “a secret, commercially viable plan, formula, process or device that is
used for the making, preparing, compounding or processing of trade

                                         CONFIDENTIAL TREATMENT REQUESTED
Securities and Exchange Commission
May 10, 2006
Page 9

commodities and that can be said to be the end product of either innovation or substantial effort”. Anderson v. Dept of Health and
Human Servs., 907 F.2d 936, 944 (10th Cir. 1990) (quotations omitted); Public Citizen, 704 F.2d at 1288. This definition requires that
there be a direct relationship between the trade secret and the productive process. Anderson, 907 F.2d at 944. Once information is
determined to constitute a trade secret, the inquiry ends and the information is exempt from the requirements of public disclosure
under the FOIA. Public Citizen, 704 F.2d at 1283.

                Information relating to products in development in the Merger Agreement constitutes highly confidential,
commercially valuable information used by Company in the commercial development of its innovations and services. This
confidential information provides the Company an advantage over its competitors and thus falls squarely within the definition of a
trade secret and should not be disclosed to the public. Provisions relating to product targets and performance criteria reveal areas of
research interest and potential product development and resources that are dedicated to various of the Company’s projects or phases of
development. As such, they constitute a “commercially viable plan” because a competitor may determine the planned timing or
development and date of introduction of a product. Although certain aspects of development processes may be described in general
terms in public materials, the activities set forth in the Merger Agreement disclose technologies of interest to the Company more
specifically such that a competitor could deduce certain program characteristics including methodology and areas of product
development (which the Company believes in themselves are trade secrets and commercial information) from the scheduled activities.
For example, the Company firmly believes that a competitor with knowledge of the Company’s specific program objectives, research
and development strategy and technology goals would attempt to develop technologies using the same methodology and may
complete development tools based on these technologies at a faster pace or with more success than the Company through use of the
Company’s highly confidential trade secrets. Accordingly, the Company believes that certain portions of the Merger Agreement
discussed below should be afforded confidential treatment as trade secrets.


          4. Business Strategy and Prejudice to Future Negotiations
                 Certain terms and conditions contained in the Merger Agreement were intensely negotiated and their disclosure would
likely result in significant competitive harm to the Company. The Company is likely to enter into similar arrangements with other
parties in the future. The Company’s future negotiations with other companies for similar relationships could be significantly impaired
by disclosure of this confidential information. Competitors, armed with the knowledge of the terms the Company has agreed to in the
past, will be able to demand the same or better terms and undercut the Company in future negotiations. Accordingly, disclosure would
prevent the Company from obtaining the best possible deal for its stockholders.


IV. ITEMIZATION OF CONFIDENTIAL PORTIONS AND REASONS FOR CONFIDENTIAL TREATMENT
     The Company requests confidential treatment of information contained in the following portions of the Merger Agreement, as
highlighted in gray on the enclosed marked copy of the Merger Agreement:

                                         CONFIDENTIAL TREATMENT REQUESTED
Securities and Exchange Commission
May 10, 2006
Page 10

                                                            Description of                           Cross Reference to
Identification of Confidential Portion                       Information                             Relevant Discussion

  •   Index of Defined Terms, page V, 14th    Term describing specific measure            III.B.1. Purchase Information
      defined term                            relevant to contingent consideration        III.B.4. Business Strategy & Prejudice
                                              calculations under Merger Agreement

  •   Index of Defined Terms, page V,         Terms relating to specific internal         III.B.1. Purchase Information
      22nd and 23rd defined terms             process and contractual terms relevant to   III.B.3. Trade Secret
  •   Index of Defined Terms, page VI,        contingent consideration calculations
                                              under Merger Agreement                      III.B.4. Business Strategy & Prejudice
      39th and 40th defined terms
  •   Index of Defined Terms, page VII,
      25th defined term

                                          CONFIDENTIAL TREATMENT REQUESTED
Securities and Exchange Commission
May 10, 2006
Page 11

                                                                Description of                         Cross Reference to
Identification of Confidential Portion                           Information                           Relevant Discussion

•   Index of Defined Terms, page VI, 25th,,       Terms identifying certain products and    III.B.1. Purchase Information
    29th, 31st and 38th defined terms             services relevant to contingent           III.B.2. Product Information
•   Index of Defined Terms, page VIII, 1st        consideration calculations under Merger
    defined term                                  Agreement                                 III.B.3. Trade Secret
•   Index of Defined Terms, page IX, 14th                                                   III.B.4. Business Strategy &
    and 15th defined terms                                                                         Prejudice
•   §2.2(b) defined terms
•   §2.2(e) defined terms
•   §2.2(g) defined terms
•   §2.2(i) defined terms
•   §§2.2(k)(ii), (iii), (iv), (v) and (vi)
•   §§2.2(k)(vi)(1), (2) and (3) defined
    terms
•   §2.2(l)
•   §§2.2(n)(i)(2), (3), (4), (5) and (6)
•   §2.2(p)
•   §2.2(q)
•   §2.2(r)
•   §2.2(v)
•   §2.2(w)
•   §2.2(aa)(i)
•   §2.2(aa)(ii)
•   §2.2(ff)
•   §2.2(gg)
•   §2.2(ll)

•   §2.3(a)                                       Terms describing certain product launch   III.B.1. Purchase Information
•   §2.4(a)                                       information relevant to contingent        III.B.2. Product Information
                                                  consideration calculations under Merger
•   §2.10                                         Agreement                                 III.B.3. Trade Secret
•   §2.11                                                                                   III.B.4. Business Strategy &
                                                                                                   Prejudice

                                              CONFIDENTIAL TREATMENT REQUESTED
Securities and Exchange Commission
May 10, 2006
Page 12

                                                                Description of                            Cross Reference to
Identification of Confidential Portion                           Information                              Relevant Discussion

 •    §§2.7(a), (b), (c), (d), (e), (f) and (g)   Terms identifying certain products and      III.B.1. Purchase Information
                                                  services relevant to contingent             III.B.2. Product Information
                                                  consideration calculations under Merger
                                                  Agreement                                   III.B.3. Trade Secret
                                                                                              III.B.4. Business Strategy &
                                                                                                     Prejudice

 •    §3.26                                       Information concerning customer base        III.B.4. Business Strategy &
                                                  and market share                                   Prejudice

 •    §§2.8(a), (d), (e) and (f)                  Terms relating to support obligations of    III.B.1. Purchase Information
                                                  the Company relevant to contingent          III.B.2. Product Information
                                                  consideration
                                                                                              III.B.3. Trade Secret
                                                                                              III.B.4. Business Strategy &
                                                                                                     Prejudice

 •    §2.8(c)                                     Specific contact information for
 •    §5.3                                        individuals involved in transaction
 •    §10.1


V. Term of Confidential Treatment
     With respect to all of the Confidential Portions, confidential treatment is requested until January 16, 2009, which is the date three
(3) years following the date on which the Merger Agreement was executed and marks the end of the period for which contingent
payments are calculated. Disclosure of the Confidential Portions prior to such date could substantially harm the Company’s
competitive positions for the reasons described above. The Company reserves the right to seek an extension of confidential treatment
beyond such date if circumstances make such an extension necessary.


VI. ADDITIONAL INFORMATION
     A. No Previous Disclosure
         Because of concerns over possible competitive harm, the Company has not made public any of the redacted material in the
Merger Agreement. Copies of the Merger Agreement have been carefully safeguarded at the facilities of the Company. Attorneys,
accountants and other third parties who have reviewed the Merger Agreement in the course of performing services for the Company
have done so only under strict terms of confidentiality.

                                              CONFIDENTIAL TREATMENT REQUESTED
Securities and Exchange Commission
May 10, 2006
Page 13

     B. Disclosure to Other Government Agencies and Request for Notification of Further Disclosures
         The Company consents to the disclosure to government agencies, offices, or bodies, and to Congress of the provisions for
which confidentiality has been requested.

          The Company understands that in granting any order pursuant to delegated authority for confidential treatment relating to
these materials, the staff of the Commission does not undertake to furnish notice other than as required under the applicable rules and
regulations.


     C. Other Information
          The Company would be pleased to submit any other information that the Commission or the staff may require in support of
this request for confidential treatment.


     D. Notices and Orders
          All notices and orders related to this confidential treatment request should be sent to:
          Google Inc.
          Attention: General Counsel
          1600 Amphitheatre Parkway
          Mountain View, CA 94043
          Phone: (650) 253-4000
          Fax: (650) 649-1920
          with a copy to:
          Wilson Sonsini Goodrich & Rosati, Professional Corporation
          650 Page Mill Road
          Palo Alto, CA 94304
          Attention: Christian Montegut
          Phone: (650) 493-9300
          Fax: (650) 493-6811


VII. CONCLUSION
     The Company would like to stress the harm that would result from public disclosure of the information covered by this request
for confidential treatment. For the reasons set forth above, the Company believes that the information can justifiably be withheld from
the public both under Rule 24b-2 of the Exchange Agent and Exemption 4 for at least the period of time requested. Disclosure of the
Confidential Portions prior to such date could substantially harm the Company’s competitive positions for the reasons described
above. The Company believes the unredacted portions of the Merger Agreement should be sufficient to enable investors to make
sound investment decisions and that public access to such confidential information is not necessary for investor purposes.

                                          CONFIDENTIAL TREATMENT REQUESTED
Securities and Exchange Commission
May 10, 2006
Page 14

     In the event your determination regarding this application may be adverse to the Company as to any of the selected provisions
submitted for confidential treatment, the Company respectfully requests that you contact the undersigned as soon as possible in order
that we may arrange a conference or make additional submissions in support of this request for confidential treatment.

    Please confirm receipt of this letter and its enclosures by date stamping the enclosed copy of this letter and returning it to the
undersigned in the enclosed postage-paid envelope.

     Again, please do not hesitate to contact the undersigned at (650) 493-9300 if you have any questions regarding the foregoing.

                                                             Very truly yours,

                                                             WILSON SONSINI GOODRICH & ROSATI
                                                             Professional Corporation

                                                             /s/ Christian Montegut
                                                             Christian Montegut

Enclosures
cc: Freedom of Information Act Officer (without enclosures)
    David Drummond
    Matt Sucherman
    David Segre
    Jon Avina

                                          CONFIDENTIAL TREATMENT REQUESTED

				
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