S-1

As filed with the Securities and Exchange Commission on April 29, 2004

Registration No. 333-            

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM S-1

REGISTRATION STATEMENT

Under

The Securities Act of 1933

GOOGLE INC.

(Exact name of Registrant as specified in its charter)

Delaware	7375	77-0493581
(State or other jurisdiction of incorporation or organization)	(Primary Standard Industrial Classification Code Number)	(I.R.S. Employer Identification Number)

1600 Amphitheatre Parkway

Mountain View, CA 94043

(650) 623-4000

(Address, including zip code, and telephone number, including area code, of Registrant’s principal executive offices)

Eric Schmidt

Chief Executive Officer

Google Inc.

1600 Amphitheatre Parkway

Mountain View, CA 94043

(650) 623-4000

(Name, address, including zip code, and telephone number, including area code, of agent for service)

Copies to:

Larry W. Sonsini, Esq. David J. Segre, Esq. Wilson Sonsini Goodrich & Rosati, P.C. 650 Page Mill Road Palo Alto, California 94304-1050 (650) 493-9300 David C. Drummond, Esq. Jeffery L. Donovan, Esq. Anna Itoi, Esq. Google Inc. 1600 Amphitheatre Parkway Mountain View, CA 94043 (650) 623-4000 William H. Hinman, Jr., Esq. Simpson Thacher & Bartlett LLP 3330 Hillview Avenue Palo Alto, California 94304 (650) 251-5000

Approximate date of commencement of proposed sale to the public: As soon as practicable after the effective date of this Registration Statement.

If any of the securities being registered on this Form are being offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, as amended (the “Securities Act”), check the following box.  ¨

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

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

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

If delivery of the prospectus is expected to be made pursuant to Rule 434, check the following box.  ¨

CALCULATION OF REGISTRATION FEE

Title of Each Class of Securities to be Registered	Proposed Maximum Aggregate Offering Price (1)(2)		Amount of Registration Fee
Class A common stock, par value $0.001 per share	$	2,718,281,828	$	344,406.31

(1) Estimated solely for the purpose of computing the amount of the registration fee, in accordance with to Rule 457(o) promulgated under the Securities Act of 1933.

(2) Includes offering price of shares that the underwriters have the option to purchase to cover over-allotments, if any.

The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act or until the Registration Statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine.

The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and we are not soliciting any offer to buy these securities in any jurisdiction where the offer or sale is not permitted.

Prospectus (Subject to Completion)

Dated April 29, 2004

         Shares

Class A Common Stock

Google Inc. is offering                      shares of Class A common stock and the selling stockholders are offering                      shares of Class A common stock. We will not receive any proceeds from the sale of shares by the selling stockholders. This is our initial public offering and no public market currently exists for our shares. We anticipate that the initial public offering price will be between $         and $         per share.

Following this offering, we will have two classes of authorized common stock, Class A common stock and Class B common stock. The rights of the holders of Class A common stock and Class B common stock are identical, except with respect to voting and conversion. Each share of Class A common stock is entitled to one vote per share. Each share of Class B common stock is entitled to ten votes per share and is convertible at any time into one share of Class A common stock.

We expect to apply to list our Class A common stock on either the New York Stock Exchange or the Nasdaq National Market under the symbol “        .”

Investing in our Class A common stock involves risks. See “ Risk Factors” beginning on page 4.

Price $         A Share

	Price to Public	Underwriting Discounts and Commissions	Proceeds to Google	Proceeds to Selling Stockholders
Per Share	$	$	$	$
Total	$	$	$	$

Google has granted the underwriters the right to purchase up to an additional                      shares to cover over-allotments.

The price to the public and allocation of shares will be determined primarily by an auction process. As part of this auction process, we are attempting to assess the market demand for our Class A common stock and to set the size and price to the public of this offering to meet that demand. Buyers hoping to capture profits shortly after our Class A common stock begins trading may be disappointed. The method for submitting bids and a more detailed description of this process are included in “Auction Process” beginning on page 25.

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

It is expected that the shares will be delivered to purchasers on or about         , 2004.

Morgan Stanley Credit Suisse First Boston

TABLE OF CONTENTS

	Page
Letter from the Founders	i
Prospectus Summary	1
The Offering	2
Risk Factors	4
Special Note Regarding Forward-Looking Statements	24
Auction Process	25
Use of Proceeds	31
Dividend Policy	31
Cash and Capitalization	32
Dilution	34
Selected Consolidated Financial Data	35
Management’s Discussion and Analysis of Financial Condition and Results of Operations	37

	Page
Business	57
Management	69
Certain Relationships and Related Party Transactions	82
Principal and Selling Stockholders	84
Description of Capital Stock	86
Rescission Offer	92
Shares Eligible for Future Sale	93
Underwriters	96
Notice to Canadian Residents	99
Legal Matters	100
Experts	100
Where You Can Find Additional Information	100
Index to Consolidated Financial Statements	F-1

You should rely only on the information contained in this prospectus. We have not authorized anyone to provide you with information that is different from that contained in this prospectus. We are offering to sell, and seeking offers to buy, shares of our Class A common stock only in jurisdictions where offers and sales are permitted. The information in this prospectus is complete and accurate only as of the date of the front cover regardless of the time of delivery of this prospectus or of any sale of shares. Except where the context requires otherwise, in this prospectus, the “Company,” “Google,” “we,” “us” and “our” refer to Google Inc., a Delaware corporation, and, where appropriate, its subsidiaries.

We have not undertaken any efforts to qualify this offering for offers to individual investors in any jurisdiction outside the U.S.; therefore, individual investors located outside the U.S. should not expect to be eligible to participate in this offering.

Until                     , 2004, 25 days after the date of this offering, all dealers that effect transactions in our shares, whether or not participating in this offering, may be required to deliver a prospectus. This is in addition to the dealers’ obligation to deliver a prospectus when acting as underwriters and with respect to their unsold allotments or subscriptions.

LETTER FROM THE FOUNDERS

“AN OWNER’S MANUAL” FOR GOOGLE’S SHAREHOLDERS¹

INTRODUCTION

Google is not a conventional company. We do not intend to become one. Throughout Google’s evolution as a privately held company, we have managed Google differently. We have also emphasized an atmosphere of creativity and challenge, which has helped us provide unbiased, accurate and free access to information for those who rely on us around the world.

Now the time has come for the company to move to public ownership. This change will bring important benefits for our employees, for our present and future shareholders, for our customers, and most of all for Google users. But the standard structure of public ownership may jeopardize the independence and focused objectivity that have been most important in Google’s past success and that we consider most fundamental for its future. Therefore, we have designed a corporate structure that will protect Google’s ability to innovate and retain its most distinctive characteristics. We are confident that, in the long run, this will bring Google and its shareholders, old and new, the greatest economic returns. We want to clearly explain our plans and the reasoning and values behind them. We are delighted you are considering an investment in Google and are reading this letter.

Sergey and I intend to write you a letter like this one every year in our annual report. We’ll take turns writing the letter so you’ll hear directly from each of us. We ask that you read this letter in conjunction with the rest of this prospectus.

SERVING END USERS

Sergey and I founded Google because we believed we could provide a great service to the world—instantly delivering relevant information on any topic. Serving our end users is at the heart of what we do and remains our number one priority.

Our goal is to develop services that improve the lives of as many people as possible—to do things that matter. We make our services as widely available as we can by supporting over 97 languages and by providing most services for free. Advertising is our principal source of revenue, and the ads we provide are relevant and useful rather than intrusive and annoying. We strive to provide users with great commercial information.

We are proud of the products we have built, and we hope that those we create in the future will have an even greater positive impact on the world.

LONG TERM FOCUS

As a private company, we have concentrated on the long term, and this has served us well. As a public company, we will do the same. In our opinion, outside pressures too often tempt companies to sacrifice long-term opportunities to meet quarterly market expectations. Sometimes this pressure has caused companies to manipulate financial results in order to “make their quarter.” In Warren Buffett’s words, “We won’t ‘smooth’ quarterly or annual results: If earnings figures are lumpy when they reach headquarters, they will be lumpy when they reach you.”

If opportunities arise that might cause us to sacrifice short term results but are in the best long term interest of our shareholders, we will take those opportunities. We will have the fortitude to do this. We would request that our shareholders take the long term view.

Many companies are under pressure to keep their earnings in line with analysts’ forecasts. Therefore, they often accept smaller, but predictable, earnings rather than larger and more unpredictable returns. Sergey and I feel this is harmful, and we intend to steer in the opposite direction.

¹ Much of this was inspired by Warren Buffett’s essays in his annual reports and his “An Owner’s Manual” to Berkshire Hathaway shareholders.

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Google has had adequate cash to fund our business and has generated additional cash through operations. This gives us the flexibility to weather costs, benefit from opportunities and optimize our long term earnings. For example, in our ads system we make many improvements that affect revenue in both directions. These are in areas like end user relevance and satisfaction, advertiser satisfaction, partner needs and targeting technology. We release improvements immediately rather than delaying them, even though delay might give “smoother” financial results. You have our commitment to execute quickly to achieve long term value rather than making the quarters more predictable.

We will make decisions on the business fundamentals, not accounting considerations, and always with the long term welfare of our company and shareholders in mind.

Although we may discuss long term trends in our business, we do not plan to give earnings guidance in the traditional sense. We are not able to predict our business within a narrow range for each quarter. We recognize that our duty is to advance our shareholders’ interests, and we believe that artificially creating short term target numbers serves our shareholders poorly. We would prefer not to be asked to make such predictions, and if asked we will respectfully decline. A management team distracted by a series of short term targets is as pointless as a dieter stepping on a scale every half hour.

RISK VS REWARD IN THE LONG RUN

Our business environment changes rapidly and needs long term investment. We will not hesitate to place major bets on promising new opportunities.

We will not shy away from high-risk, high-reward projects because of short term earnings pressure. Some of our past bets have gone extraordinarily well, and others have not. Because we recognize the pursuit of such projects as the key to our long term success, we will continue to seek them out. For example, we would fund projects that have a 10% chance of earning a billion dollars over the long term. Do not be surprised if we place smaller bets in areas that seem very speculative or even strange. As the ratio of reward to risk increases, we will accept projects further outside our normal areas, especially when the initial investment is small.

We encourage our employees, in addition to their regular projects, to spend 20% of their time working on what they think will most benefit Google. This empowers them to be more creative and innovative. Many of our significant advances have happened in this manner. For example, AdSense for content and Google News were both prototyped in “20% time.” Most risky projects fizzle, often teaching us something. Others succeed and become attractive businesses.

We may have quarter-to-quarter volatility as we realize losses on some new projects and gains on others. If we accept this, we can all maximize value in the long term. Even though we are excited about risky projects, we expect to devote the vast majority of our resources to our main businesses, especially since most people naturally gravitate toward incremental improvements.

EXECUTIVE ROLES

We run Google as a triumvirate. Sergey and I have worked closely together for the last eight years, five at Google. Eric, our CEO, joined Google three years ago. The three of us run the company collaboratively with Sergey and me as Presidents. The structure is unconventional, but we have worked successfully in this way.

To facilitate timely decisions, Eric, Sergey and I meet daily to update each other on the business and to focus our collaborative thinking on the most important and immediate issues. Decisions are often made by one of us, with the others being briefed later. This works because we have tremendous trust and respect for each other and we generally think alike. Because of our intense long term working relationship, we can often predict differences of opinion among the three of us. We know that when we disagree, the correct decision is far from obvious. For important decisions, we discuss the issue with the larger team. Eric, Sergey and I run the company without any significant internal conflict, but with healthy debate. As different topics come up, we often delegate decision-making responsibility to one of us.

ii

We hired Eric as a more experienced complement to Sergey and me to help us run the business. Eric was CTO of Sun Microsystems. He was also CEO of Novell and has a Ph.D. in computer science, a very unusual and important combination for Google given our scientific and technical culture. This partnership among the three of us has worked very well and we expect it to continue. The shared judgments and extra energy available from all three of us has significantly benefited Google.

Eric has the legal responsibilities of the CEO and focuses on management of our vice presidents and the sales organization. Sergey focuses on engineering and business deals. I focus on engineering and product management. All three of us devote considerable time to overall management of the company and other fluctuating needs. We are extremely fortunate to have talented management that has grown the company to where it is today—they operate the company and deserve the credit.

CORPORATE STRUCTURE

We are creating a corporate structure that is designed for stability over long time horizons. By investing in Google, you are placing an unusual long-term bet on the team, especially Sergey and me, and on our innovative approach.

We want Google to become an important and significant institution. That takes time, stability and independence. We bridge the media and technology industries, both of which have experienced considerable consolidation and attempted hostile takeovers.

In the transition to public ownership, we have set up a corporate structure that will make it harder for outside parties to take over or influence Google. This structure will also make it easier for our management team to follow the long term, innovative approach emphasized earlier. This structure, called a dual class voting structure, is described elsewhere in this prospectus.

The main effect of this structure is likely to leave our team, especially Sergey and me, with significant control over the company’s decisions and fate, as Google shares change hands. New investors will fully share in Google’s long term growth but will have less influence over its strategic decisions than they would at most public companies.

While this structure is unusual for technology companies, it is common in the media business and has had a profound importance there. The New York Times Company, the Washington Post Company and Dow Jones, the publisher of The Wall Street Journal, all have similar dual class ownership structures. Media observers frequently point out that dual class ownership has allowed these companies to concentrate on their core, long-term interest in serious news coverage, despite fluctuations in quarterly results. The Berkshire Hathaway company has applied the same structure, with similar beneficial effects. From the point of view of long-term success in advancing a company’s core values, the structure has clearly been an advantage.

Academic studies have shown that from a purely economic point of view, dual class structures have not harmed the share price of companies. The shares of each of our classes have identical economic rights and differ only as to voting rights.

Google has prospered as a private company. As a public company, we believe a dual class voting structure will enable us to retain many of the positive aspects of being private. We understand some investors do not favor dual class structures. We have considered this point of view carefully, and we have not made our decision lightly. We are convinced that everyone associated with Google—including new investors—will benefit from this structure.

To help us govern, we have recently expanded our Board of Directors to include three additional members. John Hennessy is the President of Stanford and has a Doctoral degree in computer science. Art Levinson is CEO of Genentech and has a Ph.D. in biochemistry. Paul Otellini is President and COO of Intel. We could not be more excited about the caliber and experience of these directors.

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We have a world class management team impassioned by Google’s mission and responsible for Google’s success. We believe the stability afforded by the dual-class structure will enable us to retain our unique culture and continue to attract and retain talented people who are Google’s life blood. Our colleagues will be able to trust that they themselves and their labors of hard work, love and creativity will be well cared for by a company focused on stability and the long term.

As an investor, you are placing a potentially risky long term bet on the team, especially Sergey and me. The two of us, Eric and the rest of the management team recognize that our individual and collective interests are deeply aligned with those of the new investors who choose to support Google. Sergey and I are committed to Google for the long term. The broader Google team has also demonstrated an extraordinary commitment to our long term success. With continued hard work and good fortune, this commitment will last and flourish.

When Sergey and I founded Google, we hoped, but did not expect, it would reach its current size and influence. Our intense and enduring interest was to objectively help people find information efficiently. We also believed that searching and organizing all the world’s information was an unusually important task that should be carried out by a company that is trustworthy and interested in the public good. We believe a well functioning society should have abundant, free and unbiased access to high quality information. Google therefore has a responsibility to the world. The dual-class structure helps ensure that this responsibility is met. We believe that fulfilling this responsibility will deliver increased value to our shareholders.

BECOMING A PUBLIC COMPANY

Google should go public soon.

We assumed when founding Google that if things went well, we would likely go public some day. But we were always open to staying private, and a number of developments reduced the pressure to change. We soon were generating cash, removing one important reason why many companies go public. Requirements for public companies became more significant in the wake of recent corporate scandals and the resulting passage of the Sarbanes-Oxley Act. We made business progress we were happy with. Our investors were patient and willing to stay with Google. We have been able to meet our business needs with our current level of cash.

A number of factors weighed on the other side of the debate. Our growth has reduced some of the advantages of private ownership. By law, certain private companies must report as if they were public companies. The deadline imposed by this requirement accelerated our decision. As a smaller private company, Google kept business information closely held, and we believe this helped us against competitors. But, as we grow larger, information becomes more widely known. As a public company, we will of course provide you with all information required by law, and we will also do our best to explain our actions. But we will not unnecessarily disclose all of our strengths, strategies and intentions. We have transferred significant ownership of Google to employees in return for their efforts in building the business. And, we benefited greatly by selling $26 million of stock to our early investors before we were profitable. Thus, employee and investor liquidity were significant factors.

We have demonstrated a proven business model and have designed a corporate structure that will make it easier to become a public company. A large, diverse, enthusiastic shareholder base will strengthen the company and benefit from our continued success. A larger cash balance will provide Google with flexibility and protection against adversity. All in all, going public now is the right decision.

IPO PRICING AND ALLOCATION

Informed investors willing to pay the IPO price should be able to buy as many shares as they want, within reason, in the IPO, as on the stock market.

It is important to us to have a fair process for our IPO that is inclusive of both small and large investors. It is also crucial that we achieve a good outcome for Google and its current shareholders. This has led us to pursue

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an auction-based IPO for our entire offering. Our goal is to have a share price that reflects a fair market valuation of Google and that moves rationally based on changes in our business and the stock market. (The auction process is discussed in more detail elsewhere in this prospectus.)

Many companies have suffered from unreasonable speculation, small initial share float, and boom-bust cycles that hurt them and their investors in the long run. We believe that an auction-based IPO will minimize these problems.

An auction is an unusual process for an IPO in the United States. Our experience with auction-based advertising systems has been surprisingly helpful in the auction design process for the IPO. As in the stock market, if people try to buy more stock than is available, the price will go up. And of course, the price will go down if there aren’t enough buyers. This is a simplification, but it captures the basic issues. Our goal is to have an efficient market price—a rational price set by informed buyers and sellers—for our shares at the IPO and afterward. Our goal is to achieve a relatively stable price in the days following the IPO and that buyers and sellers receive a fair price at the IPO.

We are working to create a sufficient supply of shares to meet investor demand at IPO time and after. We are encouraging current shareholders to consider selling some of their shares as part of the offering. These shares will supplement the shares the company sells to provide more supply for investors and hopefully provide a more stable fair price. Sergey and I, among others, are currently planning to sell a fraction of our shares in the IPO. The more shares current shareholders sell, the more likely it is that they believe the price is not unfairly low. The supply of shares available will likely have an effect on the clearing price of the auction. Since the number of shares being sold is likely to be larger at a high price and smaller at a lower price, investors will likely want to consider the scope of current shareholder participation in the IPO. We may communicate from time to time that we would be sellers rather than buyers.

We would like you to invest for the long term, and to do so only at or below what you determine to be a fair price. We encourage investors not to invest in Google at IPO or for some time after, if they believe the price is not sustainable over the long term.

We intend to take steps to help ensure shareholders are well informed. We encourage you to read this prospectus. We think that short term speculation without paying attention to price is likely to lose you money, especially with our auction structure.

GOOGLERS

Our employees, who have named themselves Googlers, are everything. Google is organized around the ability to attract and leverage the talent of exceptional technologists and business people. We have been lucky to recruit many creative, principled and hard working stars. We hope to recruit many more in the future. We will reward and treat them well.

We provide many unusual benefits for our employees, including meals free of charge, doctors and washing machines. We are careful to consider the long term advantages to the company of these benefits. Expect us to add benefits rather than pare them down over time. We believe it is easy to be penny wise and pound foolish with respect to benefits that can save employees considerable time and improve their health and productivity.

The significant employee ownership of Google has made us what we are today. Because of our employee talent, Google is doing exciting work in nearly every area of computer science. We are in a very competitive industry where the quality of our product is paramount. Talented people are attracted to Google because we empower them to change the world; Google has large computational resources and distribution that enables individuals to make a difference. Our main benefit is a workplace with important projects, where employees can contribute and grow. We are focused on providing an environment where talented, hard working people are rewarded for their contributions to Google and for making the world a better place.

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DON’T BE EVIL

Don’t be evil. We believe strongly that in the long term, we will be better served—as shareholders and in all other ways—by a company that does good things for the world even if we forgo some short term gains. This is an important aspect of our culture and is broadly shared within the company.

Google users trust our systems to help them with important decisions: medical, financial and many others. Our search results are the best we know how to produce. They are unbiased and objective, and we do not accept payment for them or for inclusion or more frequent updating. We also display advertising, which we work hard to make relevant, and we label it clearly. This is similar to a newspaper, where the advertisements are clear and the articles are not influenced by the advertisers’ payments. We believe it is important for everyone to have access to the best information and research, not only to the information people pay for you to see.

MAKING THE WORLD A BETTER PLACE

We aspire to make Google an institution that makes the world a better place. With our products, Google connects people and information all around the world for free. We are adding other powerful services such as Gmail that provides an efficient one gigabyte Gmail account for free. By releasing services for free, we hope to help bridge the digital divide. AdWords connects users and advertisers efficiently, helping both. AdSense helps fund a huge variety of online web sites and enables authors who could not otherwise publish. Last year we created Google Grants—a growing program in which hundreds of non-profits addressing issues, including the environment, poverty and human rights, receive free advertising. And now, we are in the process of establishing the Google Foundation. We intend to contribute significant resources to the foundation, including employee time and approximately 1% of Google’s equity and profits in some form. We hope someday this institution may eclipse Google itself in terms of overall world impact by ambitiously applying innovation and significant resources to the largest of the world’s problems.

SUMMARY AND CONCLUSION

Google is not a conventional company. Eric, Sergey and I intend to operate Google differently, applying the values it has developed as a private company to its future as a public company. Our mission and business description are available in the rest of the prospectus; we encourage you to carefully read this information. We will optimize for the long term rather than trying to produce smooth earnings for each quarter. We will support selected high-risk, high-reward projects and manage our portfolio of projects. We will run the company collaboratively with Eric, our CEO, as a team of three. We are conscious of our duty as fiduciaries for our shareholders, and we will fulfill those responsibilities. We will continue to attract creative, committed new employees, and we will welcome support from new shareholders. We will live up to our “don’t be evil” principle by keeping user trust and not accepting payment for search results. We have a dual-class structure that is biased toward stability and independence and that requires investors to bet on the team, especially Sergey and me.

In this letter we have explained our thinking on why Google is better off going public. We have talked about our IPO auction method and our desire for stability and access for all investors. We have discussed our goal to have investors who determine a rational price and invest for the long term only if they can buy at that price. Finally, we have discussed our desire to create an ideal working environment that will ultimately drive the success of Google by retaining and attracting talented Googlers.

We have tried hard to anticipate your questions. It will be difficult for us to respond to them given legal constraints during our offering process. We look forward to a long and hopefully prosperous relationship with you, our new investors. We wrote this letter to help you understand our company.

vi

We have a strong commitment to our users worldwide, their communities, the web sites in our network, our advertisers, our investors, and of course our employees. Sergey and I, and the team will do our best to make Google a long term success and the world a better place.

Larry Page	Sergey Brin

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PROSPECTUS SUMMARY

This summary highlights information contained elsewhere in this prospectus and does not contain all of the information you should consider in making your investment decision. You should read this summary together with the more detailed information, including our financial statements and the related notes, elsewhere in this prospectus. You should carefully consider, among other things, the matters discussed in “Risk Factors.”

Google Inc.

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. We maintain the world’s largest online index of web sites and other content, and we make this information freely available to anyone with an Internet connection. Our automated search technology helps people obtain nearly instant access to relevant information from our vast online index.

We generate revenue by delivering relevant, cost-effective online advertising. Businesses use our AdWords program to promote their products and services with targeted advertising. In addition, the thousands of third-party web sites that comprise our Google Network use our Google AdSense program to deliver relevant ads that generate revenue and enhance the user experience.

Our mission is to organize the world’s information and make it universally accessible and useful. We believe that the most effective, and ultimately the most profitable, way to accomplish our mission is to put the needs of our users first. We have found that offering a high-quality user experience leads to increased traffic and strong word-of-mouth promotion. Our dedication to putting users first is reflected in three key commitments we have made to our users:

• We will do our best to provide the most relevant and useful search results possible, independent of financial incentives. Our search results will be objective and we will not accept payment for inclusion or ranking in them.

• We will do our best to provide the most relevant and useful advertising. Whenever someone pays for something, we will make it clear to our users. Advertisements should not be an annoying interruption.

• We will never stop working to improve our user experience, our search technology and other important areas of information organization.

We believe that our user focus is the foundation of our success to date. We also believe that this focus is critical for the creation of long-term value. We do not intend to compromise our user focus for short-term economic gain.

Corporate Information

We were incorporated in California in September 1998. In August 2003, we reincorporated in Delaware. Our principal executive offices are located at 1600 Amphitheatre Parkway, Mountain View, California 94043, and our telephone number is (650) 623-4000. We maintain a number of web sites including www.google.com. The information on our web sites is not part of this prospectus.

Google^® is a registered trademark in the U.S. and several other countries. Our unregistered trademarks include: AdSense, AdWords, Blogger, Froogle, Gmail, I’m Feeling Lucky and PageRank. All other trademarks, trade names and service marks appearing in this prospectus are the property of their respective holders.

1

The Offering

Class A common stock offered:
By Google	Shares
By the selling stockholders	Shares
Total	Shares
Class A common stock to be outstanding after this offering	Shares
Class B common stock to be outstanding after this offering	Shares
Total common stock to be outstanding after this offering	Shares
Use of proceeds	We intend to use the net proceeds from this offering for general corporate purposes, including working capital and capital expenditures. We may also use a portion of the net proceeds to acquire businesses, technologies or other assets. We will not receive any of the proceeds from the sale of shares by the selling stockholders. See “Use of Proceeds” for additional information.
Proposed symbol

The number of shares of Class A and Class B common stock that will be outstanding after this offering is based on the number of shares outstanding at March 31, 2004 and excludes:

• shares of Class B common stock issuable upon the exercise of warrants outstanding at March 31, 2004, at a weighted average exercise price of $         per share.

• shares of Class A common stock issuable upon the exercise of options outstanding at March 31, 2004, at a weighted average exercise price of $         per share.

• shares of Class B common stock issuable upon the exercise of options outstanding at March 31, 2004, at a weighted average exercise price of $         per share.

• shares of common stock available for future issuance under our stock option plans at March 31, 2004.

Unless otherwise indicated, all information in this prospectus assumes that the underwriters do not exercise the over-allotment option to purchase          additional shares of Class A common stock in this offering and that all shares of our Class A Senior common stock and preferred stock are converted into Class B common stock and all shares of our common stock are converted into Class A common stock prior to this offering.

The Auction Process

The auction process being used for our initial public offering differs from methods that have been traditionally used in most other underwritten initial public offerings in the U.S. In particular, the initial public offering price and the allocation of shares will be determined primarily by an auction conducted by our underwriters on our behalf. For more information about the auction process see “Auction Process.”

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Summary Consolidated Financial Data

The following table summarizes financial data regarding our business and should be read together with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our consolidated financial statements and the related notes included elsewhere in this prospectus.

	Year Ended December 31,														Three Months Ended March 31,
	1999			2000			2001			2002			2003		2003			2004
	(in thousands, except per share data)
															(unaudited)
Consolidated Statements of Operations Data:
Net revenues	$	220		$	19,108		$	86,426		$	347,848		$	961,874	$	178,894		$	389,638
Costs and expenses:
Cost of revenues		908			6,081			14,228			39,850			121,794		17,471			53,413
Research and development		2,930			10,516			16,500			31,748			91,228		12,505			35,019
Sales and marketing		1,677			10,385			20,076			43,849			120,328		17,767			47,904
General and administrative		1,221			4,357			12,275			24,300			56,699		10,027			21,506
Stock-based compensation		—			2,506			12,383			21,635			229,361		36,418			76,473
Total costs and expenses		6,736			33,845			75,462			161,382			619,410		94,188			234,315
Income (loss) from operations		(6,516	)		(14,737	)		10,964			186,466			342,464		84,706			155,323
Interest income (expense) and other, net		440			47			(896	)		(1,551	)		4,190		(47	)		300
Income (loss) before income taxes		(6,076	)		(14,690	)		10,068			184,915			346,654		84,659			155,623
Provision for income taxes		—			—			3,083			85,259			241,006		58,859			91,650
Net income (loss)	$	(6,076	)	$	(14,690	)	$	6,985		$	99,656		$	105,648	$	25,800		$	63,973
Net income (loss) per share:
Basic	$	(0.14	)	$	(0.22	)	$	0.07		$	0.86		$	0.77	$	0.20		$	0.42
Diluted	$	(0.14	)	$	(0.22	)	$	0.04		$	0.45		$	0.41	$	0.10		$	0.24
Number of shares used in per share calculations:
Basic		42,445			67,032			94,523			115,242			137,697		127,339			151,084
Diluted		42,445			67,032			186,776			220,633			256,638		248,687			264,183

The following table presents a summary of our balance sheet data at March 31, 2004:

• On an actual basis.

• On a pro forma as adjusted basis to give effect to the conversion of all outstanding shares of our Class A Senior common stock and preferred stock into shares of Class B common stock and all outstanding shares of our common stock into shares of Class A common stock prior to the closing of this offering and to further give effect to the sale by us of shares of our Class A common stock at an assumed initial public offering price of $         per share, and the receipt of the net proceeds from this offering, after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us, as set forth under “Use of Proceeds” and “Cash and Capitalization.”

	At March 31, 2004
	Actual			Pro Forma as Adjusted
	(in thousands)
	(unaudited)
Consolidated Balance Sheet Data:
Cash, cash equivalents and short-term investments	$	454,888
Total assets		1,079,454
Total long-term liabilities		38,172
Redeemable convertible preferred stock warrant		13,871
Deferred stock-based compensation		(368,579	)
Total stockholders’ equity		727,780

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RISK FACTORS

An investment in Google involves significant risks. You should read these risk factors carefully before deciding whether to invest in our company. The following is a description of what we consider our key challenges and risks.

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 and Yahoo. Microsoft has announced plans to develop a new web search technology that may make web search a more integrated part of the Windows operating system. We expect that Microsoft will increasingly use its financial and engineering resources to compete with us. Yahoo has become an increasingly significant competitor, having acquired Overture Services, which offers Internet advertising solutions that compete with our AdWords and AdSense programs, as well as the Inktomi, AltaVista and AllTheWeb search engines. Since June 2000, Yahoo has used, to varying degrees, our web search technology on its web site to provide web search services to its users. We have notified Yahoo of our election to terminate our agreement, effective July 2004. This agreement with Yahoo accounted for less than 3% of our net revenues for the year ended December 31, 2003 and less than 3% for the three months ended March 31, 2004.

Both Microsoft and Yahoo have more employees than we do (in Microsoft’s case, currently more than 20 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. 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 products and services. If Microsoft or Yahoo are successful in providing similar or better web search results compared to ours or leverage their platforms 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 net revenues.

We face competition from other Internet companies, including web search 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. 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.

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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 growth rates to decline and anticipate downward pressure on our operating margin in the future.

We expect that in the future our revenue growth rate will decline and anticipate that there will be downward pressure on our operating margin. We believe our revenue growth rate will decline as a result of anticipated changes to our advertising program revenue mix, increasing competition and the inevitable decline in growth rates as our net revenues increase to higher levels. We believe our operating margin will decline as a result of increasing competition and increased expenditures for all aspects of our business as a percentage of our net revenues, including product development and sales and marketing expenses. We also expect that our operating margin may decline as a result of increases in the proportion of our net revenues generated from our Google Network members. The margin on revenue we generate from our Google Network members is generally 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 require a greater portion of the advertising fees.

Our operating results may fluctuate.

Our operating results may fluctuate as a result of a number of factors, many of which are outside of our control. The following factors may affect our operating results:

• Our ability to compete effectively.

• Our ability to continue to attract users to our web sites.

• The level of use of the Internet to find information.

• Our ability to attract advertisers to our AdWords program.

• Our ability to attract web sites to our AdSense program.

• The mix in our net 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.

• 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.

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• The success of our geographical and product expansion.

• Our ability to attract, motivate and retain top-quality employees.

• Foreign, federal, state or local government regulation that could impede our ability to post ads for various industries.

• Our ability to upgrade and develop our systems, infrastructure and products.

• New technologies or services that block the ads we deliver and user adoption of these technologies.

• The costs and results of litigation that we face.

• Our ability to protect our intellectual property rights.

• Our ability to forecast revenue from agreements under which we guarantee minimum payments.

• Our ability to manage click-through fraud and other activities that violate our terms of services.

• Our ability to successfully integrate and manage our acquisitions.

• 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 slows, we expect that the cyclicality and seasonality in our business may become more pronounced and may in the future cause our operating results to fluctuate.

For these reasons, comparing our operating results on a period-to-period basis may not be meaningful, and you should not rely on past results as an indication of future performance. Quarterly and annual expenses as a percentage of net revenues may be significantly different from historical or projected rates. Our operating results in future quarters may fall below expectations, which could cause our stock price to fall.

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 will use. 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, substantially similar or better than those generated by our search services. This may force us to compete on bases in addition to quality of search results 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 95% of our net revenues in 2003 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

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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 net revenues and business.

We rely on our Google Network members for a significant portion of our net revenues, and otherwise benefit from our association with them, and 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 net revenues generated from the fees advertisers pay us when users click on ads that we have delivered to our Google Network members’ web sites represented approximately 15% of our net revenues in 2003, and approximately 21% of our net revenues for the three months ended March 31, 2004, and we expect this percentage to increase in the future. We consider this network to be critical to the future growth of our net 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 net revenues would decline.

Our agreements with a few of the largest Google Network members account for a significant portion of net revenues derived from our AdSense program. In addition, 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 manage our growth, our business and operating results could be harmed.

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. 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.

• Enhancing systems of internal controls to ensure timely and accurate reporting of all of our operations.

• Documenting all of our information technology systems and our business processes for our ad systems and our billing systems.

• Improving our information technology infrastructure to maintain the effectiveness of our search systems.

If we fail to maintain an effective system of internal controls, we may not be able to accurately report our financial results or prevent fraud. As a result, current and potential stockholders could lose confidence in our financial reporting, which would harm our business and the trading price of our stock.

Effective internal controls are necessary for us to provide reliable financial reports and effectively prevent fraud. If we cannot provide reliable financial reports or prevent fraud, our brand and operating results could be harmed. We have in the past discovered, and may in the future discover, areas of our internal controls that need

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improvement. For example, during our 2002 audit, our external auditors brought to our attention a need to increase restrictions on employee access to our advertising system and automate more of our financial processes. The auditors identified these issues together as a “reportable condition,” which means that these were matters that in the auditors’ judgment could adversely affect our ability to record, process, summarize and report financial data consistent with the assertions of management in the financial statements. In 2003, we devoted significant resources to remediate and improve our internal controls. Although we believe that these efforts have strengthened our internal controls and addressed the concerns that gave rise to the “reportable condition” in 2002, we are continuing to work to improve our internal controls, including in the areas of access and security. We cannot be certain that these measures will ensure that we implement and maintain adequate controls over our financial processes and reporting in the future. Any failure to implement required new or improved controls, or difficulties encountered in their implementation, could harm our operating results or cause us to fail to meet our reporting obligations. Inferior internal controls could also cause investors to lose confidence in our reported financial information, which could have a negative effect on the trading price of our stock.

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 would be harmed.

We are in the process of transferring to a third-party service provider our worldwide billing, collection and credit evaluation functions. The third-party provider will also track, on an automated basis, our growing number of AdSense revenue share agreements. These functions are critical to our operations and involve sensitive interactions between us and our users, 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 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 provider may not perform to agreed upon service levels. Failure of the service provider to perform satisfactorily could result in customer dissatisfaction, disrupt our operations and adversely affect operating results. We will have significantly less control over the systems and processes than if we maintained and operated them ourselves, which increases our risk. 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 business and operating results would 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 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. To date, we have engaged in relatively little direct brand promotion activities. This enhances the risk that we may not successfully implement brand enhancement efforts in the future.

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 recently announced Gmail email service to match relevant ads to the content of email messages. Some people have also reacted negatively to the fact that our search technology can be used to help people find hateful or derogatory information on the web. Aspects of our future products may raise similar public concerns. Publicity regarding such concerns could harm

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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 excluding the content of documents in such formats.

An increasing 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 net 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, 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, this offering may create 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. 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 unauthorized use of our intellectual property could make it more expensive to do business and harm our operating results.

We seek to obtain patent protection for our innovations. It is possible, however, that some of these innovations may not be protectable. 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.

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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, 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 management resources and attention. In addition, many of our agreements with members of our Google Network require us to indemnify these members for 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 stop using technology found to be in violation of a third party’s rights. We may have to seek a license for the technology, which may not be available on reasonable terms and may significantly increase our operating expenses. The technology also may not be available for license to us at all. As a result, we may also be required to develop alternative non-infringing technology, which could require significant effort and expense. If we cannot license or develop technology 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. For example, Overture Services (now owned by Yahoo) has sued us, claiming that the Google AdWords program infringes certain claims of an Overture Services patent. It also claims that the patent relates to Overture Services’ own bid-for-ad placement business model and its pay-for-performance technologies. We are currently litigating this case. If Overture Services wins, it may significantly limit our ability to use the AdWords program, and we also may be required to pay damages.

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. A court in France has held us liable for allowing advertisers to select certain trademarked terms as keywords. We have appealed this decision. We were also sued in Germany on a similar matter where a court held that we are not liable for the actions of our advertisers prior to notification of trademark rights. We are litigating similar issues in other cases in the U.S., France and Germany.

In order to provide users with more useful ads, we have recently revised our trademark policy in the U.S. and Canada. Under our new policy, we no longer disable ads due to selection by our advertisers of trademarks as keyword triggers for the ads. As a result of this change in policy, we may be subject to more trademark infringement lawsuits. Defending these lawsuits could take 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.

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We have also been notified by third parties that they believe one of our products or services violates their copyrights. 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.

Expansion into international markets is important to our long-term success, and our inexperience in the operation of our business outside the U.S. increases the risk that our international expansion efforts will not be successful.

We opened our first office outside the U.S. in 2001 and have only limited experience with operations outside the U.S. Expansion into international markets requires management attention and resources. In addition, we face the following additional risks associated with our expansion outside the U.S.:

• Challenges caused by distance, language and cultural differences.

• Longer payment cycles in some countries.

• Credit risk and higher levels of payment fraud.

• Legal and regulatory restrictions.

• Currency exchange rate fluctuations.

• Foreign exchange controls that might prevent us from repatriating cash earned in countries outside the U.S.

• Political and economic instability and export restrictions.

• Potentially adverse tax consequences.

• Higher costs associated with doing business internationally.

These risks could harm our international expansion efforts, which would in turn harm our business and 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.

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 the Google experience.

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

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reinstall themselves and may circumvent other applications’ efforts to block or remove them. 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, our reputation may be harmed, and our communications with certain users could be impaired. This could result in a decline in user traffic and associated ad revenues, which would damage our business.

If we fail to detect click-through fraud, we could lose the confidence of our advertisers, thereby causing our business to suffer.

We are exposed to the risk of fraudulent clicks on our ads. We have regularly paid refunds related to fraudulent clicks and expect to do so in the future. If we are unable to stop this fraudulent activity, these refunds may increase. If we find new evidence of past fraudulent clicks we may have to issue refunds retroactively of amounts previously paid to our Google Network members. This would negatively affect our profitability, and these types of fraudulent activities could hurt our brand. If fraudulent clicks are not detected, the affected advertisers may experience a reduced return on their investment in our advertising programs because the fraudulent clicks will not lead to potential revenue for the advertisers. This could lead the advertisers to become dissatisfied with our advertising programs, which could lead to loss of advertisers and revenue.

We are susceptible to index spammers who could harm the integrity of our web search results.

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.

Our ability to offer our products and services may be affected by a variety of U.S. and foreign laws.

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

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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 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.

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, their initial grants are usually much larger than follow-on 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 grants to Eric, Larry or Sergey. Larry and Sergey are fully vested, and only a small portion of Eric’s stock is subject to future vesting.

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 or by future arrangements, such as through cash bonuses, may not be as effective as in the past. If we do not succeed in attracting excellent personnel or retaining or motivating existing personnel, we may be unable to grow effectively.

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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 of your investment.

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. 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 net 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.

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 2004, we expect to spend substantial amounts to purchase or lease data centers and equipment and to 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 going to be expensive and complex and could result in inefficiencies or operational failures. 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.

Problems with bandwidth providers, data centers or other third parties could harm us.

We rely on third-party vendors, including data center and bandwidth providers. Any disruption in the network access or co-location 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 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

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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.

System failures could harm our business.

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 system, 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. 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.

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.

If we account for employee stock options using the fair value method, it could significantly reduce our net income.

There has been ongoing public debate whether stock options granted to employees should be treated as a compensation expense and, if so, how to properly value such charges. On March 31, 2004, the Financial Accounting Standard Board (FASB) issued an Exposure Draft, Share-Based Payment: an amendment of FASB statements No. 123 and 95, which would require a company to recognize, as an expense, the fair value of stock options and other stock-based compensation to employees beginning in 2005 and subsequent reporting periods. If we elect or are required to record an expense for our stock-based compensation plans using the fair value method as described in the Exposure Draft, we could have significant and ongoing accounting charges. See Note 1 of Notes to Consolidated Financial Statements included in this prospectus for a more detailed presentation of accounting for stock-based compensation plans.

We have recognized cost of revenue, and may continue to recognize cost of revenue, in connection with minimum fee guarantee commitments with our Google Network members.

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

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Google Networks member for a pre-negotiated period of time, typically from three months to a year or more. If the fees we earn under an agreement are less than the fees we are obligated to pay to a Google Network member, we recognize cost of revenue to the extent of the difference. It is 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. 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 to the Google Network members. However, individual agreements have resulted in our recognition of cost of revenues as a result of our minimum fee guarantees. In 2003, we recognized an aggregate of approximately $22.5 million in cost of revenue related to those agreements. In the three-month period ending March 31, 2004, we recognized an aggregate of approximately $9.0 million in cost of revenue related to those agreements. At December 31, 2003, our aggregate outstanding minimum guarantee commitments totaled approximately $527.4 million. At March 31, 2004 our aggregate outstanding minimum guarantee commitments totaled approximately $544.8 million. These commitments expire between 2004 and 2007. We may recognize cost of revenues in the future in connection with these agreements, which could adversely affect our profitability.

We face risks associated with currency exchange rates fluctuations.

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 that could have a negative impact on our reported operating results. Hedging strategies we 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.

It has been and may continue to be expensive to obtain and maintain insurance.

We contract for insurance to cover 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 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. 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.

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 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.

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• 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.

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.

We have to keep up with rapid technological change to remain competitive.

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

Our business depends on the growth and maintenance of the Internet infrastructure.

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.

Shares issued, and option grants made, under our stock plans exceeded limitations in the federal and state securities laws.

Shares issued and options granted under our 1998 Stock Plan and our 2003 Stock Plan were not exempt from registration or qualification under federal and state securities laws and we did not obtain the required registrations or qualifications. Shares issued and options granted under our 2003 Stock Plan (No. 2) and our 2003 Stock Plan (No. 3) were not exempt from registration or qualification under federal securities laws and we did not obtain the required registrations or qualifications. As a result, we intend to make a rescission offer to the holders of these shares and options beginning approximately 30 days after the effective date of this registration statement. If this rescission is accepted, we could be required to make aggregate payments to the holders of these shares and options of up to $34 million plus statutory interest. Federal securities laws do not expressly provide

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that a rescission offer will terminate a purchaser’s right to rescind a sale of stock that was not registered as required. If any or all of the offerees reject the rescission offer, we may continue to be liable under federal and state securities laws for up to an aggregate amount of approximately $34 million plus statutory interest. See “Rescission Offer.”

Risks Related to the Auction Process for Our Offering

Our stock price could decline rapidly and significantly.

Our initial public offering price will be determined primarily by an auction process conducted on our behalf by our underwriters. We believe this auction process will provide information with respect to the market demand for our Class A common stock at the time of our initial public offering. However, we understand that this information may have no relation to market demand for our Class A common stock once trading begins. We intend to use the auction clearing price as the principal factor to determine the initial public offering price and therefore to set an initial public offering price that is near or equal to the clearing price. If we satisfy the demand for our shares at or near the clearing price for the auction, market demand for our shares when trading begins in the public market may be significantly limited compared to demand experienced in an initial public offering priced in a more traditional manner. This or other factors could cause the price of our shares to decline following our initial public offering.

The auction process for our public offering may result in a phenomenon known as the “winner’s curse,” and, as a result, investors may experience significant losses.

The auction process for our initial public offering may result in a phenomenon known as the “winner’s curse.” At the conclusion of the auction, bidders that receive allocations of shares in this offering (successful bidders) may infer that there is little incremental demand for our shares above or equal to the initial public offering price. As a result, successful bidders may conclude that they paid too much for our shares and could seek to immediately sell their shares to limit their losses should our stock price decline. In this situation, other investors that did not submit successful bids may wait for this selling to be completed, resulting in reduced demand for our Class A common stock in the public market and a significant decline in our stock price. Therefore, we caution investors that submitting successful bids and receiving allocations may be followed by a significant decline in the value of their investment in our Class A common stock shortly after our offering.

To the extent our auction process results in a lower level of participation by professional long-term investors and a higher level of participation by retail investors than is normal for initial public offerings, our stock price may decrease from the initial public offering price and be more volatile.

Successful bidders hoping to capture profits shortly after our Class A common stock begins trading may be disappointed.

As part of our auction process, we are attempting to assess the market demand for our Class A common stock and to set the size of the offering and the initial public offering price to meet that demand. During the bidding process, we and our managing underwriters will monitor the master order book to evaluate the demand that exists for our initial public offering. Based on this information, we and our managing underwriters may revise the price range for our initial public offering as described on the cover of this prospectus. In addition, we and the selling stockholders may decide to change the number of shares of Class A common stock offered through this prospectus. It is very likely that the number of shares offered by the selling stockholders will increase if the price range increases. In an auction process, this could result in a lower clearing price and increase the likelihood your bid may be successful if you do not reduce your bid price. This may also result in downward pressure on the offering price and the trading price of our stock in the public market once trading begins. Therefore, buyers hoping to capture profits shortly after our Class A common stock begins trading may be disappointed.

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Successful bidders may receive the full number of shares subject to their bids.

We and our underwriters have the ability to set a final initial public offering price that is below the auction clearing price. If we do this, the number of shares represented by successful bids is likely to exceed the number of shares offered by this prospectus. In this situation, we plan to use one of two methods to allocate our shares—pro rata allocation or maximum share allocation. With either method, our objective is to set an initial public offering price where successful bidders receive at least 80% of the shares that they bid for in the auction. Therefore, we caution investors against submitting a bid that does not accurately represent the number of shares of our Class A common stock that investors are willing and prepared to purchase.

Submitting a bid does not guarantee an allocation.

Our underwriters may require that bidders confirm their bids before the auction for our initial public offering closes. We and our underwriters may close the auction to bidding in as little as two hours after the notice of effectiveness of our registration statement has been provided to bidders. If a bidder is requested to confirm a bid and fails to do so before the auction is closed, that bid will be rejected and will not receive an allocation of shares even if the bid is at or above the initial public offering price.

The systems and procedures used to implement our auction and the results of our auction could harm our business and our brand.

Only a small number of initial public offerings have been accomplished using auction processes in the U.S. and other countries, and we expect our auction structure to face scalability and operational challenges. Our underwriters’ systems that manage the auction process could fail to operate as anticipated. This could require us to delay our initial public offering, potentially even after our underwriters have started taking bids, and harm our brand. Our underwriters must modify their internal systems and procedures to accommodate our auction process. This could increase the risk that our underwriters’ systems or procedures fail to operate as anticipated.

Many of our users may submit bids in our auction with the hope of becoming stockholders. If these users either do not receive share allocations in our offering or if our share price immediately declines after the offering, our brand could be tarnished and users and investors could become frustrated with us, potentially decreasing their use of our products and services. If this occurs, our business could suffer.

Risks Related to Our Offering

Our stock price may be volatile, and you may not be able to resell shares of our Class A common stock at or above the price you paid.

Prior to this offering, our common stock has not been traded in a public market. We cannot predict the extent to which a trading market will develop or how liquid that market might become. The initial public offering price may not be indicative of prices that will prevail in the trading market. The trading price of our Class A common stock following this offering is therefore likely to be highly volatile and could be subject to wide fluctuations in price 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.

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• Any major change in our board or management.

• Changes in governmental regulations or in the status of our regulatory approvals.

• Changes in earnings estimates or recommendations by securities analysts.

• 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. Such fluctuations may be even more pronounced in the trading market shortly following this offering. 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 addition, 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 may apply the proceeds of this offering to uses that do not improve our operating results or increase the value of your investment.

We intend to use the net proceeds from this offering for general corporate purposes, including working capital and capital expenditures. We may also use a portion of the net proceeds to acquire or invest in companies and technologies that we believe will complement our business. However, we do not have more specific plans for the net proceeds from this offering and will have broad discretion in how we use the net proceeds of this offering. These proceeds could be applied in ways that do not improve our operating results or increase the value of your investment.

Purchasers in this offering will experience immediate and substantial dilution in the book value of their investment.

The initial public offering price of our Class A common stock is substantially higher than the net tangible book value per share of our Class A common stock immediately after this offering. Therefore, if you purchase our Class A common stock in this offering, you will incur an immediate dilution of $         in net tangible book value per share from the price you paid, based on the initial offering price of $         per share. The exercise of outstanding options and warrants will result in further dilution. For a further description of the dilution that you will experience immediately after this offering, please see “Dilution.”

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.

We will incur increased costs as a result of being a public company.

As a public company, we will incur significant legal, accounting and other expenses that we did not incur as a private company. We will incur costs associated with our public company reporting requirements. We also anticipate that we will incur costs associated with recently adopted corporate governance requirements, including requirements under the Sarbanes-Oxley Act of 2002, as well as new rules implemented by the Securities and Exchange Commission and the NYSE and Nasdaq. We expect these rules and regulations to increase our legal and financial compliance costs and to make some activities more time-consuming and costly. We also expect these new rules and regulations may make it more difficult and more expensive for us to obtain director and officer liability insurance and we may be required to accept reduced policy limits and coverage or incur substantially higher costs to obtain the same or similar coverage. As a result, it may be more difficult for us to attract and retain qualified individuals to serve on our board of directors or as executive officers. We are

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currently evaluating and monitoring developments with respect to these new rules, and we cannot predict or estimate the amount of additional costs we may incur or the timing of such costs.

The concentration of our capital stock ownership with our founders, executive officers, employees, and our directors and their affiliates will limit your ability to influence corporate matters.

After our offering, our Class B common stock will have ten votes per share and our Class A common stock, which is the stock we are selling in this offering, will have one vote per share. We anticipate that our founders, executive officers, directors (and their affiliates) and employees will together own approximately     % of our Class B common stock, representing approximately     % of the voting power of our outstanding capital stock. In particular, following this offering, our two founders and our CEO, Larry, Sergey and Eric, will control approximately     % of our outstanding Class B common stock, representing approximately     % of the voting power of our outstanding capital stock. Larry, Sergey and Eric will 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 will limit 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, as amended and restated upon the closing of this offering, 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 will 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.

• 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 authorize 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.

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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. For a description of our capital stock, see “Description of Capital Stock.”

Future sales of shares by could cause our stock price to decline.

We cannot predict the effect, if any, that market sales of shares or the availability of shares for sale will have on the market price prevailing from time to time. Sales of our Class A common stock in the public market after the restrictions described in this prospectus lapse, or the perception that those sales may occur, could cause the trading price of our stock to decrease or to be lower than it might be in the absence of those sales or perceptions. Based on shares outstanding as of                  2004, upon completion of this offering, we will have outstanding                  shares of common stock, assuming no exercise of the underwriters’ over-allotment option. Of these shares, only the shares of Class A common stock sold in this offering will be freely tradable, without restriction, in the public market. We may, in our sole discretion, permit our officers, directors, employees and current stockholders who are subject to contractual lock-up agreements with us to sell shares prior to the expiration of their lock-up agreements.

After the selling restriction agreements pertaining to this offering expire, additional shares will be eligible for sale in the public market as follows:

Days After the Date of this Prospectus	Number of Shares Eligible for Sale in U.S. Public Market/ Percent of Outstanding Common Stock	Comment
At          days after the date of this prospectus and various times thereafter
At          days after the date of this prospectus and various times thereafter
At          days after the date of this prospectus and various times thereafter
At          days after the date of this prospectus and various dates thereafter

                 of these shares are held by directors, executive officers and other affiliates and will be subject to volume limitations under Rule 144 under the Securities Act and various vesting agreements. In addition, the                  shares issuable upon exercise of outstanding warrants and the                  shares issuable upon exercise of outstanding options and reserved for future issuance under our stock plans will become eligible for sale in the public market to the extent permitted by the provisions of various vesting agreements, the selling restriction agreements and Rules 144 and 701 under the Securities Act of 1933, as amended, or the Securities Act. If these additional shares are sold, or if it is perceived that they will be sold, in the public market, the trading price of our common stock could decline.

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In addition, we have agreed with our underwriters not to sell any shares of our common stock for a period of 180 days after the date of this prospectus. However, this agreement is subject to a number of exceptions, including an exception that allows us to issue an unlimited number of shares in connection with mergers and acquisition transactions, joint ventures or other strategic transactions. Morgan Stanley & Co. Incorporated and Credit Suisse First Boston LLC, on behalf of the underwriters, may release us from this lock-up arrangement without notice at any time. After the expiration of the 180-day period, there is no contractual restriction on our ability to issue additional shares. Any sales of common stock by us, or the perception that such sales could occur, could cause our stock price to decline.

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SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This prospectus includes forward-looking statements. All statements other than statements of historical facts contained in this prospectus, including statements regarding our future financial position, business strategy and plans and objectives of management for future operations, are forward-looking statements. The words “believe,” “may,” “will,” “estimate,” “continue,” “anticipate,” “intend,” “expect” and similar expressions are intended to identify forward-looking statements. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our financial condition, results of operations, business strategy, short term and long term business operations and objectives, and financial needs. In addition, a number of our “objectives,” “intentions,” “expectations” or “goals” described in “Auction Process” for qualification of bidders, the bidding process, the auction closing process, the pricing process and the allocation process are also forward-looking statements. These statements are based on current expectations or objectives of the auction process being used for our initial public offering that are inherently uncertain. These forward-looking statements are subject to a number of risks, uncertainties and assumptions, including those described in “Risk Factors.”

In light of these risks, uncertainties and assumptions, the forward-looking events and circumstances discussed in this prospectus may not occur and actual results could differ materially and adversely from those anticipated or implied in the forward-looking statements.

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AUCTION PROCESS

The auction process being used for our initial public offering differs from methods that have been traditionally used in most other underwritten initial public offerings in the United States. In particular, the initial public offering price and the allocation of shares will be determined primarily by an auction conducted by our underwriters on our behalf. We plan to conduct this auction in five stages—Qualification; Bidding; Auction Closing; Pricing; and Allocation. Please see the risks related to the auction process for our offering beginning on page 18.

The Qualification Process

Our objective is to conduct an auction in which you submit informed, rather than speculative, bids. Before you can submit a bid, you will be required to qualify by obtaining a unique bidder ID and by meeting an underwriter’s account eligibility and suitability requirements. Your unique bidder ID will be issued electronically only after you have accessed an electronic form of this prospectus, including the transcript of the presentation by our management team that will be contained in this prospectus, and only after you have provided identification information. You should:

• Read the prospectus, including all the risk factors described in our prospectus.

• Understand the risk factors describing the risks that are inherent in the auction process for our initial public offering, and, in particular, the possibility that our stock price may decline significantly below the initial public offering price.

• Understand that we may increase the size of our offering in response to investor demand.

• Understand that our current stockholders, including our founders and members of our management team, are selling, not buying, shares of Class A common stock as part of our initial public offering.

• Understand that we and our underwriters will reject bids that we believe are speculative or manipulative, and that if you submit a speculative or manipulative bid, you will not receive an allocation of stock in our initial public offering.

• Understand that          of our existing shares will be available for sale to the public beginning          days after our initial public offering.

When the preliminary prospectus becomes available, you will be able to obtain a unique bidder ID from a web site. You will not be able to obtain a unique bidder ID after our underwriters begin taking bids in the auction for our initial public offering.

We seek to enable all interested investors to have the opportunity to qualify to bid and, following qualification, place bids in the auction for our initial public offering. To help meet this objective, we expect to use an underwriter group that serves all segments of the investing public.

We caution you that our Class A common stock may not be a suitable investment for you even if you obtain a unique bidder ID. Even if you receive a unique bidder ID, you may not receive an allocation of shares in our offering.

We have not undertaken any efforts to qualify this offering for offers to individual investors in any jurisdiction outside the U.S. Therefore, individual investors located outside the U.S. should not expect to be eligible to participate in this offering.

The Bidding Process

Approximately          days after the date on the cover of this prospectus, all investors that have qualified to bid may submit bids indicating their interest in our offering through one of our underwriters. In connection with submitting a bid, you must provide the following information:

• The number of shares you are interested in purchasing.

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• The price per share you are willing to pay.

• Additional information to enable the underwriter to identify you, confirm your eligibility and suitability for participating in our initial public offering, and, if you submit a successful bid, consummate a sale of shares to you.

Bids may be within, above or below the estimated price range for our initial public offering on the cover of this prospectus. You may submit more than one bid. The minimum size of any bid is          shares.

To submit a bid, you should contact one of the following underwriters:

Morgan Stanley & Co. Incorporated

Credit Suisse First Boston LLC

Many of these underwriters have the ability to receive bids from their customers over the Internet, and all can receive bids from their customers by telephone or facsimile. To participate in the auction for our initial public offering, our underwriters will require that you agree to accept electronic delivery of this prospectus, any amended prospectus and the final prospectus. If you do not consent to electronic delivery, or subsequently revoke that consent, you will not be able to submit a bid or participate in our offering.

If you are interested in submitting a bid but do not currently have a brokerage account with any of the underwriters named above, you may contact one of these underwriters to inquire about opening an account and submitting a bid. You should be aware that, due to each underwriter’s requirements for new customer accounts, you may not be able to open an account with a particular underwriter. Even if you are a customer of one of our underwriters, and even if you have received a unique bidder ID, you may not be permitted to submit a bid due to legal requirements.

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Our underwriters will collect all bids, including the identity of the bidders, in a master order book that is also open to us. Our master order book will not be available for viewing by bidders.

We caution you against submitting speculative bids in the hope of receiving an allocation of our shares. You should consider all the information in this prospectus in determining whether to submit a bid, the number of shares you seek to purchase and the price per share you are willing to pay. Our underwriters, in consultation with us, will have the ability to reject speculative bids and bids that have the potential to manipulate or disrupt the bidding process. Speculative bids include bids that are substantially in excess of the high end of the price range printed on the cover of this prospectus. Manipulative bids include inappropriately large bids, or a series of bids that we and our underwriters consider disruptive to the auction process.

The shares offered by this prospectus may not be sold, nor may offers to buy be accepted, prior to the time that the registration statement filed with the SEC becomes effective. A bid received by any underwriter involves no obligation or commitment of any kind by the bidder prior to the closing of the auction and the acceptance of the bid by our underwriters and us. Therefore, you will always be able to withdraw your bid at any time before the closing of the auction and the acceptance of your bid.

As part of this auction process, we are attempting to assess the market demand for our Class A common stock and to set the size of the offering and the initial public offering price to meet that demand. Buyers hoping to capture profits shortly after our Class A common stock begins trading may be disappointed. During the bidding process, we and our underwriters will monitor the master order book to evaluate the demand that exists for our initial public offering. Based on this information and other factors, we and our underwriters may revise the public offering price range for our initial public offering as described on the cover of this prospectus. In addition, we and the selling stockholders may decide to change the number of shares of Class A common stock offered through this prospectus. It is very likely that the number of shares offered by the selling stockholders will increase if the price range increases. In an auction process, this could result in downward pressure on the price. You should be aware that we have the ability to make multiple such revisions up until closing of the auction and pricing of the offering.

The Auction Closing Process

Before we and our underwriters close the auction to bidding, we expect to ask the SEC to declare our registration statement effective. You will have the ability to modify or withdraw any bid until the auction is closed and successful bids are accepted. If you are requested to confirm your bid and fail to do so before the auction is closed to bidding, your bid will be rejected.

Before the registration statement is declared effective, we expect that our underwriters will give bidders an electronic notice indicating the proposed effective date. When the registration statement is declared effective, our underwriters will then provide bidders with an electronic notice of effectiveness. We and our underwriters may close the auction to bidding in as little as two hours after the notice of effectiveness has been given. If you do not withdraw your bid once notice of effectiveness has been given, our underwriters can accept your bid at any time following the closing of our auction. Once the auction has closed and the underwriters have accepted your bid, you will not be able to withdraw it. If your bid is accepted, our underwriters will provide you electronic notice of their acceptance of your bid. If the price for our shares set in the auction is at or below the price you bid and your bid is accepted, you will be obligated to purchase the shares allocated to you in the auction process, up to the total number of shares represented by your successful bid.

If the auction is not closed within 15 business days after the effective date of the registration statement, we will need to file an amended registration statement with the SEC. If this occurs, our underwriters will require all bidders to reconfirm their bids.

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The Pricing Process

We expect that the bidding process will reveal a clearing price for the shares of Class A common stock offered in our auction. The clearing price is the highest price at which all of the shares offered (including shares subject to the underwriters’ over-allotment option) may be sold to potential investors, based on bids in the master order book that have not been withdrawn or rejected at the time we and our underwriters close the bidding for our auction.

The initial public offering price will be determined by the underwriters and us after the auction closes. We intend to use the auction clearing price as the principal factor to determine the initial public offering price and, therefore, to set an initial public offering price that is near or equal to the clearing price. However, we and our underwriters have the ability to set an initial public offering price that is below the clearing price. The other factors we may consider in determining our initial public offering price include:

• Our goal of setting an initial public offering price that results in the trading price for our Class A common stock not moving significantly up or down relative to the market in the days following our offering.

• The prices bid by professional investors.

• Our assets, current or expected financial performance or book value.

• Other established criteria of value.

Our initial public offering price may not necessarily bear a direct relationship to any one of these factors.

You should understand that the trading price of our Class A common stock could vary significantly from the initial public offering price. Therefore, we encourage you to submit a bid in the auction process for our offering only if you are interested in investing for the long term and are willing to take the risk that our stock price could decline significantly.

The pricing of our initial public offering will occur shortly after we and our underwriters have closed the auction to new or revised bids. We will issue a press release to announce the initial public offering price. This information will also be included in the final prospectus that is delivered to the purchasers of Class A common stock in our offering.

The Allocation Process

Once we and our underwriters have determined the initial public offering price, our underwriters will begin the allocation process. All investors who have submitted and not withdrawn bids with a price per share that is equal to or greater than the initial public offering price will be eligible to receive an allocation of shares and a confirmation of their purchase in our offering. All shares will be sold at the initial public offering price. Bids with a price per share below the initial offering price will not be eligible to receive an allocation of shares. The allocation process will not give any preference to successful bids based on the extent to which the bid price per share exceeds the initial public offering price. Investors that do not submit bids in the auction will not be eligible for an allocation of shares in our offering.

One of our objectives is to establish an initial public offering price that is equal or nearly equal to the auction clearing price. If this occurs, all successful bidders will be offered share allocations that are equal or nearly equal to the number of shares represented by their successful bids. Therefore, we caution you against submitting a bid that does not accurately represent the number of shares of our Class A common stock that you are willing and prepared to purchase. We and our underwriters may determine that bids falling into this category are manipulative and may therefore reject these bids entirely.

In the event that the number of shares represented by successful bids exceeds the number of shares we and the selling stockholders are offering, our underwriters will need to allocate the offered shares across the

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successful bidder group. Our underwriters, in consultation with us, expect to use one of two methods to do so—pro rata allocation or maximum share allocation. With either method, our objective is to set an initial public offering price where successful bidders receive at least 80% of the shares that they bid for in the auction. We may increase the size of our offering or take other actions designed to accomplish this objective.

Pro Rata Allocation.    With pro rata allocation, successful bidders will receive share allocations on a pro rata basis based on the following rules:

• The pro rata allocation percentage will be determined by dividing the number of shares we and the selling stockholders are offering (including shares subject to the underwriters’ over-allotment option) by the number of shares represented by valid successful bids.

• Each bidder who has a successful bid will be allocated a number of shares equal to the pro rata allocation percentage multiplied by the number of shares represented by the successful bid, rounded to the nearest whole number of shares.

The following simplified, hypothetical example illustrates how pro rata allocation might work in practice:

Assumptions
Shares Offered	20,000
Total Shares Subject to Successful Bids	21,200
Pro Rata Allocation Percentage	94.34	%

Successful Bidder	Shares Represented by Successful Bid	Pro Rata Allocation
A	100	94
B	2,100	1,981
C	4,000	3,774
D	4,500	4,245
E	5,000	4,717
F	5,500	5,189
Totals	21,200	20,000

Maximum Share Allocation.    With maximum share allocation, successful bidders will receive share allocations based on an algorithm. Under this method, successful bidders with smaller bid sizes would receive share allocations for their entire bid amounts, while successful bidders with larger bid sizes would receive no more than a maximum share allocation to be determined using the following algorithm:

• The total of all share allocations must equal the total number of shares we and the selling stockholders are offering (including any shares subject to the over-allotment option).

• Each successful bidder will receive a share allocation equal to the lesser of the number of shares represented by their successful bid and the maximum share allocation.

• The maximum share allocation would be a number of shares that results in the full allocation of shares being offered.

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The following simplified, hypothetical example illustrates how maximum share allocation might work in practice:

Assumptions
Shares Offered	20,000
Total Shares Subject to Successful Bids	21,200
Maximum Share Allocation	4,650

Successful Bidder	Shares Represented by Successful Bid	Share Allocation
A	100	100
B	2,100	2,100
C	4,000	4,000
D	4,500	4,500
E	5,000	4,650
F	5,500	4,650
Totals	21,200	20,000

We and our underwriters may implement the maximum share allocation method on a tiered basis taking into account factors such as the size of the bid.

Following the allocation process, our underwriters will provide successful bidders with a final prospectus and confirmations that detail their purchases of shares of our Class A common stock and the purchase price. These confirmations and the final prospectus will be delivered electronically.

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USE OF PROCEEDS

We estimate that we will receive net proceeds of $             from our sale of the              shares of Class A common stock offered by us in this offering, based upon an assumed initial public offering price of $     per share, after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us. If the underwriters’ over-allotment option is exercised in full, we estimate that our net proceeds will be approximately $            . We will not receive any of the net proceeds from the sale of the shares by the selling stockholders.

We expect to use the net proceeds received by us from this offering for general corporate purposes, including:

• Sales and marketing expenses, research and development expenses and general and administrative expenses.

• Capital expenditures.

• Possible acquisitions of businesses, technologies or other assets.

Although we may use a portion of the net proceeds to acquire businesses, technologies or other assets, we have no current agreements or commitments with respect to any material acquisitions.

Pending such uses, we plan to invest the net proceeds in short-term, investment grade securities.

DIVIDEND POLICY

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.

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CASH AND CAPITALIZATION

The following table sets forth our cash, cash equivalents, short-term investments and capitalization at March 31, 2004, as follows:

• On an actual basis.

• On a pro forma basis to reflect the conversion of all of our Class A Senior common stock and preferred stock into an aggregate of 234,228,179 shares of Class B common stock and all of our common stock into an aggregate of 11,920,766 shares of Class A common stock, which will occur prior to the completion of the offering.

• On a pro forma as adjusted basis to give effect to receipt of the net proceeds from the sale by us in this offering of shares of Class A common stock at an assumed initial public offering price of $     per share, after deducting estimated underwriting discounts and commissions and estimated offering expenses.

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You should read this table in conjunction with “Selected Consolidated Financial Data,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our financial statements and related notes included elsewhere in this prospectus.

	At March 31, 2004
	Actual			Pro Forma			Pro Forma As Adjusted
	(in thousands, except par value)
				(unaudited)
Cash, cash equivalents and short-term investments	$	454,888		$	454,888		$
Long-term liabilities		38,172			38,172
Redeemable convertible preferred stock warrant		13,871			13,871
Stockholders’ equity:
Convertible preferred stock, $0.001 par value, issuable in series: 164,782 shares authorized, 71,662 shares issued and outstanding, actual; no shares authorized, issued and outstanding, pro forma and pro forma as adjusted		44,346			—
Class A Senior common stock, $0.001 par value, ten votes per share: 300,000 shares authorized, 162,566 issued and outstanding, actual; no shares authorized, issued and outstanding, pro forma and pro forma as adjusted		163			—
Common stock, $0.001 par value, one vote per share: 400,000 shares authorized, 11,921 issued and outstanding, actual; no shares authorized, issued and outstanding, pro forma and pro forma as adjusted		12			—
Class B common stock, $0.001 par value, ten votes per share: no shares authorized, issued and outstanding, actual;                  shares authorized, 234,228 shares issued and outstanding, pro forma and pro forma as adjusted		—			234
Class A common stock, $0.001 par value, one vote per share: no shares authorized, issued and outstanding, actual;                  shares authorized, 11,921 shares issued and outstanding, pro forma;                  shares authorized,                  shares issued and outstanding, pro forma as adjusted		—			12
Additional paid-in capital		801,701			845,976
Note receivable from officer/stockholder		(4,300	)		(4,300	)
Deferred stock-based compensation		(368,579	)		(368,579	)
Accumulated other comprehensive income		(888	)		(888	)
Retained earnings		255,325			255,325
Total stockholders’ equity		727,780			727,780
Total capitalization	$	779,823		$	779,823		$

The table above excludes the following shares:

•              shares of Class B common stock issuable upon the exercise of warrants outstanding at March 31, 2004, with a weighted average exercise price of $     per share.

•              shares of Class A common stock issuable upon the exercise of options outstanding at March 31, 2004, at a weighted average exercise price of $     per share.

•              shares of Class B common stock issuable upon the exercise of options outstanding at March 31, 2004, at a weighted average exercise price of $     per share.

•              shares of common stock available for future issuance under our stock option plans at March 31, 2004.

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DILUTION

If you invest in our Class A common stock, your interest will be diluted to the extent of the difference between the initial public offering price per share of our Class A common stock and the pro forma as adjusted net tangible book value per share of our Class A and Class B common stock immediately after this offering. Pro forma net tangible book value per share represents the amount of our total tangible assets less total liabilities, divided by the number of shares of Class A and Class B common stock outstanding at March 31, 2004 after giving effect to the conversion of all of our Class A Senior common stock and preferred stock into Class B common stock and the conversion of all of our common stock into Class A common stock, which will occur immediately prior to the completion of the offering.

Investors participating in this offering will incur immediate, substantial dilution. Our pro forma net tangible book value was $727.8 million, or $2.96 per share of Class A and Class B common stock at March 31, 2004. Assuming the sale by us of shares of Class A common stock offered in this offering at an initial public offering price of $             per share, and after deducting estimated underwriting discounts and commissions and estimated offering expenses, our pro forma as adjusted net tangible book value at March 31, 2004, would have been $             million, or $             per share of common stock. This represents an immediate increase in pro forma net tangible book value of $             per share of common stock to our existing stockholders and an immediate dilution of $             per share to the new investors purchasing shares in this offering. The following table illustrates this per share dilution:

Assumed initial public offering price per share of Class A common stock	$
Pro forma net tangible book value per share at March 31, 2004	$	2.96
Increase in pro forma net tangible book value per share attributable to this offering
Pro forma as adjusted net tangible book value per share after the offering
Dilution per share to new investors	$

The following table sets forth on a pro forma as adjusted basis, at March 31, 2004, the number of shares of Class A common stock purchased or to be purchased from us, the total consideration paid or to be paid and the average price per share paid or to be paid by existing holders of common stock, by holders of options and warrants outstanding at March 31, 2004, and by the new investors, before deducting estimated underwriting discounts and estimated offering expenses payable by us.

	Shares Purchased			Total Consideration			Average Price Per Share
	Number	Percent		Amount	Percent
Existing stockholders		%		$	%		$
New investors		%			%		$
Total		100.0	%	$	100.0	%

The discussion and tables above are based on the number of shares of common stock and preferred stock outstanding at March 31, 2004.

The discussion and tables above (except for the last table above) exclude the following shares:

•                  shares of Class B common stock issuable upon the exercise of warrants outstanding, at March 31, 2004, at a weighted average exercise price of $         per share.

•                  shares of Class A common stock issuable upon the exercise of options outstanding at March 31, 2004, at a weighted average exercise price of $         per share.

•                  shares of Class B common stock issuable upon the exercise of options outstanding at March 31, 2004, at a weighted average exercise price of $         per share.

•                  shares of common stock available for future issuance under our stock option plans at March 31, 2004.

To the extent outstanding options and warrants are exercised, new investors will experience further dilution.

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SELECTED CONSOLIDATED FINANCIAL DATA

You should read the following selected consolidated financial data in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our consolidated financial statements and the related notes appearing elsewhere in this prospectus.

The consolidated statements of operations data for the years ended December 31, 2001, 2002 and 2003, and the consolidated balance sheet data at December 31, 2002 and 2003, are derived from our audited consolidated financial statements appearing elsewhere in this prospectus. The consolidated statements of operations data for the years ended December 31, 1999 and December 31, 2000, and the consolidated balance sheet data at December 31, 1999, 2000 and 2001, are derived from our audited consolidated financial statements that are not included in this prospectus. The consolidated statements of operations data for the three months ended March 31, 2003 and 2004 and the consolidated balance sheet data at March 31, 2004 are derived from our unaudited consolidated financial statements included in this prospectus. The unaudited consolidated financial statements include, in the opinion of management, all adjustments that management considers necessary for the fair presentation of the financial information set forth in those statements. The historical results are not necessarily indicative of the results to be expected in any future period.

	Year Ended December 31,														Three Months Ended March 31,
	1999			2000			2001			2002			2003		2003			2004
	(in thousands, except per share data)
															(unaudited)
Consolidated Statements of Operations Data:
Net revenues	$	220		$	19,108		$	86,426		$	347,848		$	961,874	$	178,894		$	389,638
Costs and expenses:
Cost of revenues		908			6,081			14,228			39,850			121,794		17,471			53,413
Research and development		2,930			10,516			16,500			31,748			91,228		12,505			35,019
Sales and marketing		1,677			10,385			20,076			43,849			120,328		17,767			47,904
General and administrative		1,221			4,357			12,275			24,300			56,699		10,027			21,506
Stock-based compensation(1)		—			2,506			12,383			21,635			229,361		36,418			76,473
Total costs and expenses		6,736			33,845			75,462			161,382			619,410		94,188			234,315
Income (loss) from operations		(6,516	)		(14,737	)		10,964			186,466			342,464		84,706			155,323
Interest income (expense) and other, net		440			47			(896	)		(1,551	)		4,190		(47	)		300
Income (loss) before income taxes		(6,076	)		(14,690	)		10,068			184,915			346,654		84,659			155,623
Provision for income taxes		—			—			3,083			85,259			241,006		58,859			91,650
Net income (loss)	$	(6,076	)	$	(14,690	)	$	6,985		$	99,656		$	105,648	$	25,800		$	63,973
Net income (loss) per share(2):
Basic	$	(0.14	)	$	(0.22	)	$	0.07		$	0.86		$	0.77	$	0.20		$	0.42
Diluted	$	(0.14	)	$	(0.22	)	$	0.04		$	0.45		$	0.41	$	0.10		$	0.24
Number of shares used in per share calculations(2):
Basic		42,445			67,032			94,523			115,242			137,697		127,339			151,084
Diluted		42,445			67,032			186,776			220,633			256,638		248,687			264,183
(1)    Stock-based compensation, consisting of amortization of deferred stock-based compensation and the value of options issued to non-employees for services rendered, is allocated as follows:
	Year Ended December 31,														Three Months Ended March 31,
	1999			2000			2001			2002			2003		2003			2004
	(in thousands)
															(unaudited)
Cost of revenues	$	—		$	167		$	876		$	1,065		$	8,557	$	1,452		$	5,076
Research and development		—			1,573			4,440			8,746			138,377		19,423			46,265
Sales and marketing		—			514			1,667			4,934			44,607		7,618			14,146
General and administrative		—			252			5,400			6,890			37,820		7,925			10,986
	$	—		$	2,506		$	12,383		$	21,635		$	229,361	$	36,418		$	76,473

(2) See Note 1 of Notes to Consolidated Financial Statements included in this prospectus for information regarding the computation of per share amounts.

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	At December 31,														At March 31, 2004
	1999		2000			2001			2002			2003
	(in thousands)
Consolidated Balance Sheet Data:															(unaudited)
Cash, cash equivalents and short-term investments	$	20,038	$	19,101		$	33,589		$	146,331		$	334,718		$	454,888
Total assets		25,808		46,872			84,457			286,892			871,458			1,079,454
Total long-term liabilities		3,096		7,397			8,044			9,560			33,365			38,172
Redeemable convertible preferred stock warrant		—		—			—			13,871			13,871			13,871
Deferred stock-based compensation		—		(8,457	)		(15,833	)		(35,401	)		(369,668	)		(368,579	)
Total stockholders’ equity		20,009		27,234			50,152			173,953			588,770			727,780

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis of the financial condition and results of our operations should be read in conjunction with the consolidated financial statements and the notes to those statements included elsewhere in this prospectus. This discussion contains forward-looking statements reflecting our current expectations that involve risks and uncertainties. Actual results and the timing of events may differ materially from those contained in these forward-looking statements due to a number of factors, including those discussed in the section entitled “Risk Factors” and elsewhere in this prospectus.

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.

• 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.

We were incorporated in California in September 1998 and reincorporated in Delaware in August 2003. We began licensing our WebSearch product in the first quarter of 1999. We became profitable in 2001 following the launch of our Google AdWords program.

How We Generate Revenue

We derive most of our net 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, so that an advertiser pays us only when a user clicks on one of its ads. AdWords is also available through our direct sales force. Our AdWords agreements are generally terminable at any time by our advertisers. We recognize as revenue the fees charged advertisers each time a user clicks on one of the text-based ads that appear next to the search results on our web sites.

Effective January 1, 2004, we terminated the Premium Sponsorships program and now offer a single pricing structure to all of our advertisers based on the AdWords cost-per-click model. We do not expect that this change to one pricing structure will have a negative effect on our revenues because most of our advertisers switched to the AdWords cost-per-click model.

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Google AdSense is the program through which we distribute our advertisers’ text-based 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 our advertisers’ ads displayed on Google Network members’ web sites. In the past, 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 fees, net of the portion we pay our Google Network members, as revenue. 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.

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 of searches initiated at our web sites or our Google Network members’ web sites.

• The relevance and quality of advertisements displayed with search results on our web sites and of Google Network members’ web sites, or with the content on our Google Network members’ web sites.

• The total number of advertisements displayed on our web sites and on web sites of Google Network members.

• The rate at which people click on advertisements.

• The number of advertisers.

• The total and per click advertising spending budgets of an advertiser.

• Our minimum fee per click, which is currently $0.05.

• The advertisers’ return on investment from advertising campaigns on our web sites or on the web sites of our Google Network members compared to other forms of advertising.

Advertising revenues made up 77%, 92%, 95% and 96% of our net revenues in 2001, 2002, 2003 and in the three months ended March 31, 2004. We derive the balance of our net 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.

Trends in Our Business

Our business has grown rapidly since inception, and we anticipate that our business will continue to grow. This growth has been characterized by substantially increased net revenues. However, our net revenue growth rate has declined, and we expect that it will continue to decline as a result of anticipated changes to our advertising program revenue mix, increasing competition and the inevitable decline in growth rates as our net revenues increase to higher levels. In addition, steps we take to improve the relevance of the ads displayed, such as removing ads that generate low click-through rates, could negatively affect our near-term advertising revenues.

Although our operating margin was greater in the three months ended March 31, 2004 compared to the year ended December 31, 2003, we believe that our operating margin will decline in 2004 compared to 2003. We believe the decrease in operating margin will result from an increased portion of our net revenues being generated through our AdSense program, and from an anticipated increase in costs and expenses, other than stock-based compensation, as a percentage of net revenues in 2004 compared to 2003. The operating margin we

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realize on revenues generated from the web sites of our Google Network members through our AdSense program is significantly lower than that generated from paid clicks on our web sites. This lower operating margin arises because most of the advertiser fees from our AdSense agreements are shared with our Google Network members, leaving only a portion of these fees for us. The lower operating margin also results from the higher costs attributable to the additional sales and information systems infrastructure required to secure and manage our Google Network. We expect a greater percentage of our revenues in 2004 to come from our AdSense program. This anticipated decline to our operating margin is expected to be partially offset by a decrease in stock-based compensation as a percentage of net revenues in 2004 compared to 2003.

We have a large and diverse base of advertisers and Google Network members. No advertiser generated more than 3% of our net revenues in either 2001, 2002, 2003 or in the three months ended March 31, 2004. In addition, no Google Network member accounted for more than 5% of our net revenues in 2002, 2003 or in the three months ended March 31, 2004. We expect our base of advertisers and Google Network members to remain large and diverse for the foreseeable future.

We have experienced and expect to continue to experience substantial growth in our operations as we seek to expand our user, advertiser and Google Network members bases and continue to expand our presence in international markets. This growth has required the continued expansion of our human resources and substantial investments in property and equipment. Our full-time employee headcount has grown from 284 at December 31, 2001, to 682 at December 31, 2002, to 1,628 at December 31, 2003 and to 1,907 at March 31, 2004. In addition, 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 $13.1 million in 2001, to $37.2 million in 2002, to $176.8 million in 2003 and to $86.0 million in the three months ended March 31, 2004. We currently expect to spend at least $250 million on capital equipment, including information technology infrastructure, to manage our operations during 2004. In addition, we anticipate that the growth rate of our costs and expenses, other than stock-based compensation, may exceed the growth rate of our net revenues during 2004. Management of this growth will continue to require the devotion of significant employee and other resources. We may not be able to manage this growth effectively.

In early 2003, we decided to invest significant resources to begin the process of comprehensively documenting and analyzing our system of internal controls. We have identified areas of our internal controls requiring improvement, and we are in the process of designing enhanced processes and controls to address any issues identified through this review. Areas for improvement include streamlining our domestic and international billing processes, further limiting internal access to certain data systems and continuing to improve coordination across business functions. During our 2002 audit, our external auditors brought to our attention a need to increase restrictions on employee access to our advertising system and automate more of our financial processes. The auditors identified these issues together as a “reportable condition,” which means that these were matters that in the auditors’ judgment could adversely affect our ability to record, process, summarize and report financial data consistent with the assertions of management in our financial statements. In 2003, we devoted significant resources to remediate and improve our internal controls. Although we believe that these efforts have strengthened our internal controls and addressed the concerns that gave rise to the “reportable condition” in 2002, we are continuing to work to improve our internal controls, including in the areas of access and security. We plan to continue to invest the resources necessary to ensure the effectiveness of our internal controls and procedures, including in the areas of access and security.

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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 net revenues for the periods indicated:

							Three Months Ended
	Year Ended December 31,						December 31,		March 31,
	2001		2002		2003		2003		2003		2004
Consolidated Statements of Income Data:
Net revenues	100.0	%	100.0	%	100.0	%	100.0	%	100.0	%	100.0	%
Costs and expenses:
Cost of revenues	16.5		11.5		12.7		15.1		9.8		13.7
Research and development	19.1		9.1		9.5		9.2		7.0		9.0
Sales and marketing	23.2		12.6		12.5		13.4		9.9		12.3
General and administrative	14.2		7.0		5.9		6.6		5.6		5.5
Stock-based compensation	14.3		6.2		23.8		27.6		20.4		19.6
Total costs and expenses	87.3		46.4		64.4		71.9		52.7		60.1
Income from operations	12.7		53.6		35.6		28.1		47.3		39.9
Interest income (expense) and other, net	(1.0	)	(0.5	)	0.4		1.0		0.0		0.0
Income before income taxes	11.7		53.1		36.0		29.1		47.3		39.9
Provision for income taxes	3.6		24.5		25.1		20.2		32.9		23.5
Net income	8.1	%	28.6	%	10.9	%	8.9	%	14.4	%	16.4	%

Net Revenues

The following table presents our net revenues, by revenue source, and the period over period percentage change, for the periods presented:

	Year Ended December 31,								Three Months Ended
	2001		2002			2003			March 31, 2003		December 31, 2003			March 31, 2004
									(unaudited)
	(dollars in thousands)
Advertising revenues:
Google web sites	$	66,932	$	306,977		$	772,192		$	154,108	$	233,970		$	293,053
Google Network web sites		—		12,278			144,411			15,287		61,031			82,246
Total advertising revenues		66,932		319,255			916,603			169,395		295,001			375,299
Licensing and other revenues		19,494		28,593			45,271			9,499		12,996			14,339
Net revenues	$	86,426	$	347,848		$	961,874		$	178,894	$	307,997		$	389,638
Percentage/change compared to prior year period:			2001-2002			2002-2003					December 2003- March 2004			March 2003- March 2004
Advertising revenues:
Google web sites				359	%		152	%				25	%		90	%
Google Network web sites				—			1,076					35			438
Total advertising revenues				377			187					27			122
Licensing and other revenues				47			58					10			51
Net revenues				302	%		177	%				27	%		118	%

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

	Year Ended December 31,						Three Months Ended
							March 31, 2003		December 31, 2003		March 31, 2004
	2001		2002		2003
Advertising revenues:
Google web sites	77	%	88	%	80	%	86	%	76	%	75	%
Google Network web sites	—		4		15		9		20		21
Total advertising revenues	77		92		95		95		96		96
Google web sites as % of advertising revenues	100		96		84		91		79		78
Google Network web sites as % of advertising revenues	—		4		16		9		21		22
Licensing and other revenues	23	%	8	%	5	%	5	%	4	%	4	%

Growth in our net revenues from 2002 to 2003, and from the three months ended March 31, 2003 or December 31, 2003 to the three months ended March 31, 2004, resulted primarily from growth in advertising revenues from ads on our web sites and, to a lesser extent, growth in revenues from ads on our Google Network members’ web sites. The advertising revenue growth resulted primarily from increases in the total number of paid clicks and advertisements displayed through our programs, rather than from changes in the fees charged. Net revenue growth was driven to a lesser extent by our introduction late in the first quarter of 2003 of AdSense for content.

Growth in our net revenues from 2001 to 2002 resulted from growth in advertising revenues from ads on our web sites. The growth in advertising revenues resulted primarily from increases in the total number of paid clicks under our cost-per-click programs and the total number of advertisements displayed through our cost-per-displayed ad programs, rather than from changes in the fees charged. The revenue growth was driven in part by our introduction of our cost-per-click revenue model in the early part of 2002, which contributed to a significant increase in the number of our advertisers, and to a lesser extent, by our introduction of AdSense for search in the first quarter of 2002.

We believe the increases in net revenues described above were the result of the relevance and quality of both the search results and advertisements displayed, which resulted in more searches, advertisers and Google Network members, and ultimately more paid clicks.

Revenues by Geography

Domestic and international net revenues as a percentage of consolidated net revenues, determined based on the billing addresses of our advertisers, are set forth below.

	Year Ended December 31,						Three Months Ended March 31,
	2001		2002		2003		2003		2004
United States	86	%	79	%	74	%	74	%	70	%
International	14	%	21	%	26	%	26	%	30	%

The growth in international net revenues is the result of our efforts to provide search results to international users and deliver more ads from non-U.S. advertisers. We expect that international net revenues will continue to grow as a percentage of our total net revenues during 2004 and in future periods. While international revenues accounted for approximately 26% of our total net revenues in 2003 and 30% in the three months ended March 31, 2004, more than half of our user traffic came from outside the U.S. See Note 12 of Notes to Consolidated Financial Statements included as part of this prospectus for additional information about geographic areas.

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Costs and Expenses

Cost of Revenues.    Cost of revenues consists primarily of the expenses associated with the operation of our data centers, including depreciation, labor, energy and bandwidth costs. Cost of revenues also includes credit card and other transaction fees related to processing customer transactions. Typically, in situations where we pay a Google Network member more than the revenue we receive from our advertisers in connection with paid clicks on that Google Network member’s web site, we recognize the difference as cost of revenues. Due to intense competition for Google Network members and our limited ability to accurately forecast the number of paid clicks that will result, we expect that we will enter into AdSense agreements from time to time under which we will make payments to the Google Network member exceeding the revenue we recognize from the agreement. Cost of revenues also includes amortization of expenses related to purchased and licensed technologies.

Cost of revenues increased by $6.7 million to $53.4 million (or 13.7% of net revenues) in the three months ended March 31, 2004, from $46.7 million (or 15.1% of net revenues) in the three months ended December 31, 2003. This increase in dollars was primarily the result of depreciation of additional information technology assets purchased in the current and prior periods and additional data center costs required to manage more Internet traffic, advertising transactions and new products and services. There was an increase in data center costs of $7.7 million primarily resulting from purchases of additional information technology assets. In addition, there was an increase in credit card and other transaction processing fees of $2.1 million resulting from more advertiser fees generated through AdWords. The dollar increase in cost of revenues was partially offset by a decrease in cost of revenues of $3.2 million related to AdSense agreements under which we paid Google Network members more than the fees we received from our advertisers in connection with paid clicks on those members’ web sites.

Cost of revenues increased by $35.9 million to $53.4 million (or 13.7% of net revenues) in the three months ended March 31, 2004, from $17.5 million (or 9.8% of net revenues) in the three months ended March 31, 2003. This increase was primarily the result of depreciation of additional information technology assets purchased in the current and prior periods and additional data center costs required to manage more Internet traffic, advertising transactions and new products and services. There was an increase in data center costs of $18.1 million primarily resulting from the depreciation of additional information technology assets purchased in the current and prior periods. In addition, there was an increase in credit card and other transaction processing fees of $6.8 million resulting from more advertiser fees generated through AdWords. The dollar increase in cost of revenues was also driven by an increase of $8.6 million related to AdSense agreements under which we paid Google Network members more than the fees we received from our advertisers in connection with paid clicks on those members’ web sites. In addition, there was an increase in cost of revenues of $1.5 million related to amortization of developed technology resulting from acquisitions in 2003.

Cost of revenues increased by $81.9 million to $121.8 million (or 12.7% of net revenues) in 2003, from $39.9 million (or 11.5% of net revenues) in 2002. This increase was primarily the result of additional data center costs required to manage more Internet traffic, advertising transactions and new products and services. There was an increase in data center costs of $39.9 million primarily resulting from depreciation of additional information technology assets purchased in current and prior periods. In addition, there was an increase in credit card and other transaction processing fees of $15.7 million. The increase in cost of revenues was also driven by an increase of $19.7 million related to AdSense agreements under which we paid Google Network members more than the fees we received from our advertisers in connection with paid clicks on those Google Network members’ web sites. In addition, there was an increase in cost of revenues of $4.9 million related to amortization of developed technology resulting from acquisitions in 2003. The increase in cost of revenues as a percentage of net revenues was primarily the result of payments to Google Network members that exceeded advertising fees received from advertisers and amortization of developed technology.

Cost of revenues increased by $25.6 million to $39.9 million (or 11.5% of net revenues) in 2002, from $14.2 million (or 16.5% of net revenues) in 2001. This increase was primarily the result of additional data center costs required to manage more Internet traffic, advertising transactions and new products and services. There was an increase in data center costs of $15.3 million primarily resulting from depreciation of additional information

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technology assets purchased in current and prior periods. In addition, there was an increase in credit card and other transactional processing fees of $6.7 million. Also, $2.8 million of cost of revenues was recognized during 2002 related to AdSense agreements under which the value of the consideration we provided a Google Network member was more than the fees we received from our advertisers in connection with paid clicks on that Google Network member’s web site.

We expect cost of revenues to increase as a percentage of net revenues during 2004 primarily as a result of forecasted increases in our data center costs required to manage increased traffic, advertising transactions and new products and services. Also, increasingly competitive market conditions could result in more AdSense agreements under which payments to Google Network members exceed the fees we receive from advertisers.

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 $6.5 million to $35.0 million (or 9.0% of net revenues) in the three months ended March 31, 2004, from $28.5 million (or 9.2% of net revenues) in the three months ended December 31, 2003. This increase in dollars was primarily due to an increase in labor and facilities related costs of $4.8 million as a result of a 22% increase in research and development headcount.

Research and development expenses increased by $22.5 million to $35.0 million (or 9.0% of net revenues) in the three months ended March 31, 2004, from $12.5 million (or 7.0% of net revenues) in the three months ended March 31, 2003. This increase was primarily due to an increase in labor and facilities related costs of $15.9 million as a result of a 123% increase in research and development headcount.

Research and development expenses increased by $59.5 million to $91.2 million (or 9.5% of net revenues) in 2003, from $31.7 million (or 9.1% of net revenues) in 2002. This increase was primarily due to an increase in labor and facilities related costs of $34.3 million as a result of a 101% increase in research and development headcount. In addition, we recognized $11.6 million of in-process research and development expenses during 2003 as a result of an acquisition.

Research and development expenses increased by $15.2 million to $31.7 million (or 9.1% of net revenues) in 2002, from $16.5 million (or 19.1% of net revenues) in 2001. This increase was primarily due to an increase in labor and facilities related costs of $13.2 million, principally as a result of an 83% increase in research and development headcount.

We anticipate that research and development expenses will increase in dollar amount and may increase as a percentage of net revenues in 2004 and future periods.

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

Sales and marketing expenses increased $6.7 million to $47.9 million (or 12.3% of net revenues) in the three months ended March 31, 2004, from $41.2 million (or 13.4% of net revenues) in the three months ended December 31, 2003. This increase in dollars was primarily due to an increase in labor and facilities related costs of $4.9 million mostly as a result of a 14% increase in sales and marketing headcount. The increase in sales and marketing personnel was a result of our on-going efforts to secure new, and to provide support to our existing, advertisers and Google Network members, on a worldwide basis.

Sales and marketing expenses increased $30.1 million to $47.9 million (or 12.3% of net revenues) in the three months ended March 31, 2004, from $17.8 million (or 9.9% of net revenues) in the three months ended March 31, 2003. This increase was primarily due to an increase in labor and facilities related costs of

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$20.8 million mostly as a result of a 114% increase in sales and marketing headcount. In addition, advertising and promotional expenses increased $4.5 million and travel-related expenses increased $1.0 million. The increase in sales and marketing personnel and advertising, promotional and travel-related expenses was a result of our on-going efforts to secure new, and to provide support to our existing, advertisers and Google Network members, on a worldwide basis.

Sales and marketing expenses increased $76.5 million to $120.3 million (or 12.5% of net revenues) in 2003, from $43.8 million (or 12.6% of net revenues) in 2002. This increase was primarily due to an increase in labor and facilities related costs of $54.4 million mostly as a result of a 149% increase in sales and marketing headcount. In addition, advertising and promotional expenses increased $12.9 million and travel related expenses increased $3.2 million, primarily in the second half of 2003. The increase in sales and marketing personnel and advertising, promotional and travel-related expenses was a result of our on-going efforts to secure new, and to provide support to our existing, advertisers and Google Network members, on a worldwide basis. For instance, we have hired personnel to help our advertisers maximize their return on investment through the selection of appropriate keywords and have promoted the distribution of the Google Toolbar to Internet users in order to make our search services easier to access.

Sales and marketing expenses increased $23.7 million to $43.8 million (or 12.6% of net revenues) in 2002, from $20.1 million (or 23.2% of net revenues) in 2001. This increase was primarily due to increases in labor and facilities related costs of $19.5 million, primarily as a result of a 202% increase in headcount. Also, advertising and promotional expenses increased $1.7 million and travel related expenses increased $1.3 million.

We anticipate sales and marketing expenses will increase in dollar amount and may increase as a percentage of net revenues in 2004 and future periods as we continue to expand our business on a worldwide basis and endeavor to improve both the effectiveness of our advertisers’ campaigns and the support we provide to our advertisers and Google Network members.

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 and information technology consulting. To date, we have not experienced any significant amount of bad debts.

General and administrative expenses increased $1.2 million to $21.5 million (or 5.5% of net revenues) in the three months ended March 31, 2004, from $20.3 million (or 6.6% of net revenues) in the three months ended December 31, 2003. This increase in dollars was primarily due to an increase in labor and facilities related costs of $2.0 million, primarily as a result of a 20% increase in headcount, and an increase in professional services fees of $600,000. The additional personnel and professional services fees are the result of the growth of our business. These costs were offset by a decrease in bad debt expense of $1.0 million.

General and administrative expenses increased $11.5 million to $21.5 million (or 5.5% of net revenues) in the three months ended March 31, 2004, from $10.0 million (or 5.6% of net revenues) in the three months ended March 31, 2003. This increase was primarily due to an increase in labor and facilities related costs of $6.3 million, primarily as a result of a 102% increase in headcount, and an increase in professional services fees of $3.0 million. The additional personnel and professional services fees are the result of the growth of our business.

General and administrative expenses increased $32.4 million to $56.7 million (or 5.9% of net revenues) in 2003, from $24.3 million (or 7.0% of net revenues) in 2002. This increase was primarily due to an increase in labor and facilities related costs of $16.7 million, primarily as a result of a 194% increase in headcount, and an increase in professional services fees of $10.0 million, primarily in the second half of 2003. The additional personnel and professional services fees are the result of the growth of our business.

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General and administrative expenses increased $12.0 million to $24.3 million (or 7.0% of net revenues) in 2002, from $12.3 million (or 14.2% of net revenues) in 2001. Labor and facilities related costs increased $7.8 million primarily as a result of a 96% increase in headcount. Professional services fees increased $3.9 million as a 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 net revenues in 2004 and in future periods.

Stock-Based Compensation.    We have granted to our employees options to purchase our common stock at exercise prices equal to the fair market value of the underlying stock, as determined by our board of directors, on the date of option grant. For purposes of financial accounting, we have applied hindsight within each year to arrive at deemed values for the shares underlying our options. We recorded the difference between the exercise price of an option awarded to an employee and the deemed value of the underlying shares on the date of grant as deferred stock-based compensation. The determination of the deemed value of stock underlying options is discussed in detail below in “Critical Accounting Policies and Estimates—Stock-Based Compensation.” We recognize compensation expense as we amortize the deferred stock-based compensation amounts on an accelerated basis over the related vesting periods, generally four or five years. In addition, we have awarded options to non-employees to purchase our common stock. Stock-based compensation related to non-employees is measured on a fair-value basis using the Black-Scholes valuation model as the options are earned.

Stock-based compensation in the three months ended March 31, 2004 decreased $8.5 million to $76.5 million (or 19.6% of net revenues) from $85.0 million (or 27.6% of net revenues) in the three months ended December 31, 2003. The decrease was primarily driven by the recognition of $10.9 million of stock-based compensation related to the modification of terms of a former employee’s stock option agreement in the three months ended December 31, 2003 and a decrease in the level of stock option grants in the three months ended March 31, 2004. This decrease was partially offset by the larger differences between the exercise prices and the deemed values of the underlying stock on the dates of grant.

Stock-based compensation in the three months ended March 31, 2004 increased $40.1 million to $76.5 million (or 19.6% of net revenues) from $36.4 million (or 20.4% of net revenues) in the three months ended March 31, 2003. The increase was primarily driven by the larger differences between the exercise prices and the deemed values of the underlying common stock on the dates of grant, partially offset by a decrease in the level of stock option grants in recent periods.

Stock-based compensation increased $207.8 million to $229.4 million (or 23.8% of net revenues) in 2003 from $21.6 million (or 6.2% of net revenues) in 2002. The increase was primarily driven by the the larger differences between the exercise prices and the deemed values of the underlying common stock on the dates of grant and, to a lesser extent, an increase in the level of stock option grants in 2003. Stock-based compensation increased $9.2 million to $21.6 million (or 6.2% of net revenues) in 2002 from $12.4 million (or 14.3% of net revenues) in 2001. The increase was primarily driven by the larger differences between the exercise prices and the deemed values of the underlying common stock on the dates of grant, partially offset by a decrease in the level of stock option grants in 2002.

We currently expect stock-based compensation to be $204.8 million in 2004, $96.3 million in 2005, $47.5 million in 2006, $16.1 million in 2007, $3.5 million in 2008 and $1.5 million thereafter, related to the deferred stock-based compensation on the balance sheet at December 31, 2003. These amounts do not include stock-based compensation related to options granted to non-employees and any options granted to employees subsequent to January 1, 2004 at exercise prices less than the deemed value on the date of grant and any additional compensation expense that may be required as a result of any changes in the stock option accounting rules. These amounts also assume the continued employment throughout the referenced periods of the recipient of the options that gave rise to the deferred stock-based compensation.

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At December 31, 2003, there were 500,150 unvested options held by non-employees with a weighted average exercise price of $0.69, a weighted average 48-month remaining vesting period and a 4-year remaining expected life. The options generally vest on a monthly and ratable basis subsequent to December 31, 2003. Depending on the fair market value of these options on their vesting dates, which will depend in significant part on the then current trading price of our Class A common stock, the related charge could be significant during 2004 and subsequent periods.

Interest Income (Expense) and Other, Net

Interest income (expense) and other of $300,000 in the three months ended March 31, 2004 was primarily the result of $1.3 million of interest income and realized gains earned on cash, cash equivalents and short-term investments balances, partially offset by $700,000 of foreign exchange losses from net receivables denominated in currencies other than U.S. dollars as a result of generally weakening foreign currencies against the U.S. dollar during the three months ended March 31, 2004, and approximately $300,000 of interest expense incurred on equipment leases, including the amortization of the fair value of warrants issued to lenders in prior years.

Interest income (expense) and other netted to approximately zero in the three months ended March 31, 2003 as a result of approximately $500,000 of interest income earned on cash, cash equivalents and short-term investments balances offset by approximately $500,000 of interest expense incurred on equipment loans and leases, including the amortization of the fair value of warrants issued to lenders in prior years.

Interest income (expense) and other of $4.2 million in 2003 was primarily the result of $2.6 million of interest income earned on cash, cash equivalents and short-term investments balances, and $2.1 million of net foreign exchange gains from net receivables denominated in currencies other than U.S. dollars as a result of generally strengthening foreign currencies against the U.S. dollar throughout 2003. In addition, we recognized $1.4 million of other income in 2003. These income sources were partially offset by $1.9 million of interest expense incurred on equipment loans and leases, including the amortization of the fair value of warrants issued to lenders in prior years.

Interest income (expense) and other of $(900,000) and $(1.6) million in 2001 and 2002 was primarily the result of interest expense incurred on equipment loans and leases, including the amortization of the fair value of warrants issued to lenders, partially offset by interest income on cash, cash equivalents and short-term investments balances.

Provision for Income Taxes

Our provision for income taxes increased to $91.7 million or an effective tax rate of 59% in the three months ended March 31, 2004, from $58.9 million or an effective tax rate of 70% in the three months ended March 31, 2003 and $62.2 million or an effective tax rate of 70% in the three months ended December 31, 2003. Our provision for income taxes increased to $241.0 million or an effective tax rate of 70% during 2003, from $85.3 million or an effective tax rate of 46% during 2002, and from $3.1 million or an effective tax rate of 31% during 2001. The increases in provision for income taxes primarily resulted from increases in Federal and state income taxes, driven by higher taxable income year over year. Our effective tax rate is our provision for income taxes expressed as a percentage of our income before income taxes. Our effective tax rate is higher than the statutory rate because we include in our costs and expenses in arriving at income before income taxes significant non-cash expense related to stock-based compensation, which are recognized for financial reporting purposes, but are not deductible for income tax purposes. The increases in our effective tax rates over each of 2001, 2002 and 2003 were primarily the result of an increase in stock-based compensation amounts. We believe that, in 2004, our effective tax rate will benefit from an increase in the percentage of profits expected in jurisdictions with lower statutory tax rates than in the U.S. This decrease may be offset, in part, by continued stock-based compensation charges. The expected statutory rate is based on current tax law and is subject to change. In addition, once there is a public market for our stock, we may reduce our tax provision based on the benefits we

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expect to realize upon exercise of certain options outstanding. Any such reduction would lower our effective tax rate. A reconciliation of the federal statutory income tax rate to our effective tax rate is set forth in Note 11 of Notes to Consolidated Financial Statements included in this prospectus.

Quarterly Results of Operations

You should read the following tables presenting our quarterly results of operations in conjunction with the consolidated financial statements and related notes contained elsewhere in this prospectus. We have prepared the unaudited information on the same basis as our audited consolidated financial statements. You should also keep in mind, as you read the following tables, that our operating results for any quarter are not necessarily indicative of results for any future quarters or for a full year.

The following table presents our unaudited quarterly results of operations for the nine quarters ended March 31, 2004. This table includes all adjustments, consisting only of normal recurring adjustments, that we consider necessary for fair presentation of our financial position and operating results for the quarters presented. We believe that we experience increased levels of Internet traffic focused on commercial transactions in the fourth quarter and decreased levels of Internet traffic in the summer months. To date, these seasonal trends have been masked by the substantial quarter over quarter growth in our net revenues.

	Quarter Ended
	Mar 31, 2002			Jun 30, 2002			Sep 30, 2002			Dec 31, 2002			Mar 31, 2003			Jun 30, 2003		Sep 30, 2003		Dec 31, 2003		Mar 31, 2004
	(in thousands)
	(unaudited)
Consolidated Statements of Income Data:
Net revenues	$	41,874		$	66,908		$	102,534		$	136,532		$	178,894		$	217,380	$	257,603	$	307,997	$	389,638
Costs and expenses:
Cost of revenues		5,281			8,790			11,369			14,410			17,471			23,582		34,051		46,690		53,413
Research and development(1)		6,183			6,457			9,053			10,055			12,505			17,492		32,774		28,457		35,019
Sales and marketing		7,294			11,176			11,704			13,675			17,767			24,822		36,575		41,164		47,904
General and administrative		4,135			5,653			7,313			7,199			10,027			12,535		13,853		20,284		21,506
Stock-based compensation(2)		3,774			3,735			6,182			7,944			36,418			34,165		73,794		84,984		76,473
Total costs and expenses		26,667			35,811			45,621			53,283			94,188			112,596		191,047		221,579		234,315
Income from operations		15,207			31,097			56,913			83,249			84,706			104,784		66,556		86,418		155,323
Interest income, expense and other, net		(501	)		(310	)		(677	)		(63	)		(47	)		766		464		3,007		300
Income before income taxes		14,706			30,787			56,236			83,186			84,659			105,550		67,020		89,425		155,623
Provision for income taxes		6,780			14,194			25,929			38,356			58,859			73,382		46,594		62,171		91,650
Net income	$	7,926		$	16,593		$	30,307		$	44,830		$	25,800		$	32,168	$	20,426	$	27,254	$	63,973

(1) The results for the quarter ended September 30, 2003 includes $11.6 million of in-process research and development expense related to an acquisition.

(2) Stock-based compensation, consisting of amortization of deferred stock-based compensation and the fair value of options issued to non-employees for services rendered, is allocated in the table that follows. Stock-based compensation in any quarter is affected by the number of grants in the current and prior quarters, and the difference between the fair market values as determined by the board of directors on the date of grant and the deemed values used for financial accounting purposes. The use of the accelerated basis of amortization results in significantly greater stock-based compensation in the first year of vesting compared to subsequent years.

	Quarter Ended
	Mar 31, 2002		Jun 30, 2002		Sep 30, 2002		Dec 31, 2002		Mar 31, 2003		Jun 30, 2003		Sep 30, 2003		Dec 31, 2003		Mar 31, 2004
	(in thousands)
	(unaudited)
Cost of revenues	$	146	$	158	$	343	$	418	$	1,452	$	1,361	$	3,008	$	2,736	$	5,076
Research and development		1,242		1,415		2,802		3,287		19,423		18,814		43,878		56,262		46,265
Sales and marketing		473		827		1,528		2,106		7,618		7,093		15,819		14,077		14,146
General and administrative		1,913		1,335		1,509		2,133		7,925		6,897		11,089		11,909		10,986
	$	3,774	$	3,735	$	6,182	$	7,944	$	36,418	$	34,165	$	73,794	$	84,984	$	76,473

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The following table presents our unaudited quarterly results of operations as a percentage of net revenues for the nine quarters ended March 31, 2004.

	Quarter Ended
	Mar 31, 2002		Jun 30, 2002		Sep 30, 2002		Dec 31, 2002		Mar 31, 2003		Jun 30, 2003		Sep 30, 2003		Dec 31, 2003		Mar 31, 2004
As Percentage of Net Revenues:
Net revenues	100.0	%	100.0	%	100.0	%	100.0	%	100.0	%	100.0	%	100.0	%	100.0	%	100.0	%
Costs and expenses:
Cost of revenues	12.6		13.1		11.1		10.6		9.8		10.9		13.2		15.1		13.7
Research and development(1)	14.8		9.7		8.8		7.4		7.0		8.0		12.7		9.2		9.0
Sales and marketing	17.4		16.7		11.4		10.0		9.9		11.4		14.2		13.4		12.3
General and administrative	9.9		8.4		7.1		5.3		5.6		5.8		5.4		6.6		5.5
Stock-based compensation(2)	9.0		5.6		6.0		5.8		20.4		15.7		28.7		27.6		19.6
Total costs and expenses	63.7		53.5		44.4		39.1		52.7		51.8		74.2		71.9		60.1
Income from operations	36.3		46.5		55.6		60.9		47.3		48.2		25.8		28.1		39.9
Interest income, expense and other, net	(1.2	)	(0.5	)	(0.7	)	(0.0	)	(0.0	)	0.4		0.2		1.0		0.0
Income before income taxes	35.1		46.0		54.9		60.9		47.3		48.6		26.0		29.1		39.9
Net income	18.9	%	24.8	%	29.6	%	32.8	%	14.4	%	14.8	%	7.9	%	8.9	%	16.4	%

(1) The results for the quarter ended September 30, 2003 includes $11.6 million of in-process research and development expense related to an acquisition.

(2) Stock-based compensation, consisting of amortization of deferred stock-based compensation and the fair value of options issued to non-employees for services rendered, is allocated in the table that follows. Stock-based compensation in any quarter is affected by the number of grants in the current and prior quarters, and the difference between the fair market values as determined by the board of directors on the date of grant and the deemed values used for financial accounting purposes. The use of the accelerated basis of amortization results in significantly greater stock-based compensation in the first year of vesting compared to subsequent years.

	Quarter Ended
	Mar 31, 2002		Jun 30, 2002		Sep 30, 2002		Dec 31, 2002		Mar 31, 2003		Jun 30, 2003		Sep 30, 2003		Dec 31, 2003		Mar 31, 2004
Cost of revenues	0.3	%	0.2	%	0.3	%	0.3	%	0.8	%	0.6	%	1.2	%	0.9	%	1.3	%
Research and development	3.0		2.2		2.7		2.4		11.0		8.6		17.1		18.2		11.9
Sales and marketing	1.1		1.2		1.5		1.5		4.3		3.3		6.1		4.6		3.6
General and administrative	4.6		2.0		1.5		1.6		4.3		3.2		4.3		3.9		2.8
	9.0	%	5.6	%	6.0	%	5.8	%	20.4	%	15.7	%	28.7	%	27.6	%	19.6	%

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Liquidity and Capital Resources

In summary, our cash flows were:

	Year Ended December 31,									Three Months Ended March 31,
	2001			2002			2003			2003			2004
	(in thousands)
										(unaudited)
Net cash provided by operating activities	$	31,089		$	155,265		$	395,446		$	113,198		$	204,357
Net cash used in investing activities		(29,091	)		(109,717	)		(313,954	)		(59,491	)		(103,853	)
Net cash provided by (used in) financing activities		(2,439	)		(5,473	)		8,089			3,351			3,707

Since inception, we have financed our operations primarily through internally generated funds, private sales of preferred stock totaling $37.6 million and the use of our lines of credit with several financial institutions. At December 31, 2003, we had $334.7 million of cash, cash equivalents and short-term investments, compared to $146.3 million and $33.6 million at December 31, 2002 and 2001, respectively.

Our principal sources of liquidity are our cash, cash equivalents and short-term investments, as well as the cash flow that we generate from our operations. At December 31, 2003, we had unused letters of credit for approximately $12.2 million. We believe that our existing cash, cash equivalents, short-term investments 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 the extent necessary 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 primarily consists of net income adjusted for certain non-cash items including depreciation, amortization, 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, 2004 was $204.4 million and consisted of net income of $64.0 million, adjustments for non-cash items of $100.1 million and $40.3 million provided by working capital and other activities. Cash provided by operating activities in the three months ended March 31, 2003 was $113.2 million and consisted of net income of $25.8 million, adjustments for non-cash items of $47.1 million and $40.3 million provided by working capital and other activities. Cash provided by operating activities in 2003 was $395.4 million and consisted of net income of $105.6 million, adjustments for non-cash items of $296.0 million and $6.2 million used by working capital and other activities. Cash provided by operating activities in 2002 was $155.3 million and consisted of net income of $99.7 million, adjustments for non-cash items of $50.6 million and $5.0 million provided by working capital and other activities. Cash provided by operating activities in 2001 was $31.1 million and consisted of net income of $7.0 million, adjustments for non-cash items of $26.6 million and $2.5 million used by working capital and other activities. As we expand our business internationally, we may offer 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. We also expect that, once we are a public company, our cash-based compensation per employee will likely increase (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, 2004 of $103.9 million was attributable to capital expenditures of $86.0 million and net purchases of short-term investments of $17.8 million. Cash used in investing activities in the three months ended March 31, 2003 of $59.5 million was attributable to capital expenditures of $29.6 million and net purchases of short-term investments of $30.0 million. Capital expenditures are mainly for the purchase of information technology assets. Cash used in investing activities in 2003 of $314.0 million was attributable to capital expenditures of $176.8 million, net purchases of short-term

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investments of $97.2 million and net cash consideration used in acquisitions of $40.0 million. Cash used in investing activities in 2002 of $109.7 million was primarily attributable to net purchases of short-term investments of $72.6 million and capital expenditures of $37.2 million. Cash used in investing activities in 2001 of $29.1 million was primarily attributable to net purchases of short-term investments of $14.9 million and capital expenditures of $13.1 million. 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 currently expect to spend at least $250 million on capital equipment, including information technology infrastructure, to manage our operations during 2004.

Cash provided by financing activities in the three months ended March 31, 2004 of $3.7 million was due to proceeds from the issuance of common stock pursuant to stock option exercises of $4.9 million, net of repurchases, offset by repayment of capital lease obligations of $1.2 million. Cash provided by financing activities in the three months ended March 31, 2003 of $3.4 million was due to proceeds from the issuance of common stock pursuant to stock option exercises of $5.6 million, net of repurchases, offset by repayment of equipment loans and capital lease obligations of $2.2 million. Cash provided by financing activities in 2003 of $8.1 million was due to proceeds from the issuance of common stock pursuant to stock option exercises of $15.5 million, net of repurchases, offset by repayment of equipment loan and lease obligations of $7.4 million. Cash used in financing activities in 2002 of $5.5 million was due to repayment of equipment loan and capital lease obligations of $7.7 million, partially offset by proceeds from the issuance of common stock pursuant to stock option exercises of $2.3 million, net of repurchases. Cash used in financing activities in 2001 of $2.4 million was due to repayment of equipment loan and capital lease obligations of $4.5 million partially offset by proceeds from the issuance of convertible preferred stock of $1.0 million and the issuance of common stock pursuant to stock option exercises of $1.0 million, net of repurchases.

Contractual Obligations

Contractual obligations at December 31, 2003 are as follows:

	Payments due by period
	Total		Less than 12 months		13-48 months		49-60 months		More than 60 months
	(in millions)
	(unaudited)
Guaranteed minimum revenue share payments	$	527.4	$	205.1	$	322.3	$	—	$	—
Capital lease obligations		7.4		5.3		2.1		—		—
Operating lease obligations		146.7		7.4		50.9		18.8		69.6
Purchase obligations		11.9		8.8		3.1		—		—
Other long-term liabilities reflected on our balance sheet under GAAP		1.5		—		0.2		0.2		1.1
Total contractual obligations	$	694.9	$	226.6	$	378.6	$	19.0	$	70.7

Guaranteed Minimum Revenue Share Payments

In connection with our AdSense revenue share agreements, we are periodically required to make non-cancelable guaranteed minimum revenue share payments to a small number of our Google Network members over the term of the respective contracts. Under some of our contracts, these guaranteed payments can vary based on our Google Network members achieving defined performance terms, such as number of advertisements displayed or search queries. In some cases, certain guaranteed amounts will be adjusted downward if our Google Network members do not meet their performance terms and, in some cases, these amounts will be adjusted upward if they exceed their performance terms. Upward adjustments are capped at total advertiser fees generated under an AdSense agreement during the guarantee period. The amounts included in the table above assume that the historical upward performance adjustments with respect to each contract will continue, but do not make a

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similar assumption with respect to downward adjustments. We believe these amounts best represent a reasonable estimate of the future minimum guaranteed payments. Actual guaranteed payments may differ from the estimates presented above. To date, total advertiser fees generated under these AdSense agreements have exceeded the total guaranteed minimum revenue share payments. Five of our Google Network members account for approximately 70% of the total future guaranteed minimum revenue share payments and 10 of our Google Network members account for 91% of these payments. In 2003, we made $108.8 million of noncancellable minimum guaranteed revenue payments. We recognized cost of revenues of $8.8 million related to $32.1 million of these payments and we recognized net revenues of $40.8 million related to the arrangements under which we made the remaining $76.7 million of these payments. At March 31, 2004, our aggregate outstanding non-cancelable minimum guarantee commitments totaled $544.8 million.

In addition, in connection with some other AdSense agreements, we have agreed to make an aggregate of $51.9 million of minimum revenue share payments through 2006. This amount is not included in the above table since we generally have the right to cancel these agreements at any time. Because we sometimes cancel agreements that perform poorly, we do not expect to make all of these minimum revenue share payments. In 2003, we recognized $13.2 million of cost of revenues under these agreements.

Capital Lease Obligations

At December 31, 2003, we had capital lease obligations of $7.4 million (comprised of $6.6 million of principal and $800,000 of interest) related to several of our equipment leases. These amounts will come due under the terms of the arrangements at various dates through October 2005.

Operating Leases

During 2003, we entered into a nine-year sublease for our headquarters in Mountain View, California. According to the terms of the sublease, we will begin making payments in July 2005 and payments will increase at 3% per annum thereafter. We recognize rent expense on our operating leases on a straight-line basis as of the commencement of the lease. The lease terminates on December 31, 2012; however, we may exercise two five-year renewal options at our discretion. We have an option to purchase the property for approximately $172.4 million, which is exercisable in 2006.

In addition, we have entered into various other non-cancelable operating lease agreements for our offices and data centers throughout the U.S. and internationally with original lease periods expiring between 2004 and 2015. We recognize rent expense on our operating leases on a straight-line basis at the commencement of the lease. Certain of these leases have free or escalating rent payment provisions. We recognize rent expense under such leases on a straight-line basis. Total payments relating to leases having an initial or remaining non-cancelable term of less than one year are $2.3 million and are not included in the table above.

Subsequent to December 31, 2003, we entered into additional non-cancelable operating lease agreements with future minimum commitment payments as follows: $900,000 due in less than 12 months, $11.7 million due in 13-48 months, $6.6 million in 49-60 months and $10.6 million due in more than 60 months which are not included in the above table.

Purchase Obligations

Purchase obligations in the above table represent non-cancelable contractual obligations at December 31, 2003. In addition, we had $24.9 million of open purchase orders for which we have not received the related services or goods at December 31, 2003. This amount is not included in the above table since we have the right to cancel the purchase orders upon 10 days notice prior to the date of delivery. The majority of our purchase obligations are related to data center operations.

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Off-Balance Sheet Entities

At December 31, 2003 and 2002, we did not have any relationships with unconsolidated entities or financial partnerships, such as entities often referred to as structured finance or special purpose entities, which would have been established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes.

Critical Accounting Policies and Estimates

We prepare our 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. Our management has reviewed our critical accounting policies and estimates with our board of directors.

Revenue Recognition

Net Versus Gross Revenues

We recognize as revenue the fee an advertiser pays us when a user clicks on an ad that we have delivered to a Google Network member’s web site net of the portion we pay that Google Network member. This methodology is based on our determination that we are not the principal to transactions under our AdSense program. EITF 99-19, Reporting Revenue Gross as a Principal versus Net as an Agent, notes that indicators used to determine whether an entity is a principal or an agent to a transaction are subject to significant judgment. We believe the most meaningful indicator in making such a determination is that our Google Network members provide the access users have to ads we place on our Google Network members’ web sites. Our Google Network members also determine standards regarding the types of ads that may be displayed on their web sites. Furthermore, there are two other factors that indicate that we are not the principal in these transactions. First, we only keep a small portion of the advertiser fees generated under these AdSense agreements. Second, as a result of the presence of guaranteed minimum revenue share obligations, we have on occasion received less advertiser fees than the amounts we are required to pay our Google Network members. The alternative reporting position, reporting on a gross basis, would require us to include in both our revenues and cost of revenues the portion of the advertising fee we are obligated to pay to our Google Network members. If we had reported our revenues on a gross basis, our revenues and our cost of revenues would have been $91.7 million higher in 2002 and $504.0 million higher in 2003 and our operating margin would have been 11.1 percentage points lower in 2002 and 12.7 percentage points lower in 2003. There was no AdSense program prior to 2002.

Amortization of Guaranteed Minimum Revenue Share Payments

Certain AdSense agreements obligate us to make guaranteed minimum revenue share payments to Google Network members based on their achieving defined performance terms. Our guaranteed minimum provisions normally cover a period of three months or less, but there may be successive guarantee periods during the term of the agreement. Because we believe each period covered by a guaranteed minimum is a separate transaction or accounting unit, our policy is to recognize either net revenues or cost of revenues over the period covered by the guaranteed minimum, but not both. As a result, we amortize any guaranteed minimum prepayment (or accrete an amount payable to our Google Network member if the guaranteed minimum payment is due in arrears) equal to the related advertiser fees we receive until such time as we can determine it is probable that such fees over the

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remaining period covered by the guaranteed minimum will be greater than or less than the remaining guaranteed minimum amount. We recognize no net revenues or cost of revenues related to the guaranteed minimum provision until the time we make such a determination, no later than halfway through the period covered by the guaranteed minimum. Once we make such a determination, we thereafter recognize net revenues or cost of revenues equal to the amount by which the related advertiser fees are greater than or less than the pro rata amortization or accretion of the remaining guaranteed minimum amount. We occasionally revise such determinations. Thereafter, and to the extent advertiser fees are greater than or less than the pro rata amortization or accretion of the remaining guaranteed minimum amount, cost of revenue or net revenue amounts previously recognized are not restated. Instead, in the then current period we reduce cost of revenues or net revenues by the amount previously recognized and any remaining amount is recognized as net revenues or cost of revenues, respectively. We have not reduced any material cost of revenue or net revenue amounts previously recorded in any of the years presented.

Our determination of whether an AdSense agreement will be profitable over periods covered by guaranteed minimums or other relevant periods is based on assumptions of matters that are inherently uncertain, such as the number of forecasted paid clicks on our Google Network members’ web sites. Although to date our forecasts of specific AdSense agreements have been materially accurate, they may not be accurate in the future. It is possible that actual advertiser fees in the future will be different than forecasted such that cost of revenues or net revenues previously recognized would be reduced in the current period, which could distort our cost of revenue or net revenue trends.

We do not recognize in a current period the amount by which guaranteed minimums and other costs are expected to exceed related advertiser fees over the remaining term of an AdSense agreement. Instead, we recognize these costs in the periods in which they are incurred. However, if and at the time an AdSense agreement is terminated or abandoned, we will recognize a charge against net revenues and/or to cost of revenues to the full extent of our remaining obligations under the terms of the agreement. We have not terminated or abandoned any AdSense agreement that has resulted in a charge against earnings in any of the years presented.

If all guaranteed minimums and other costs related to all AdSense agreements were amortized on a pro rata basis from the commencement of each AdSense agreement, our net revenues would have been the same as reported in 2003 and $781,000 higher than reported in the three months ended March 31, 2004 and cost of revenues would have been $484,000 higher than reported in 2003 and the same as reported in the three months ended March 31, 2004. There was no difference between the recognition of net revenues and cost of revenues using either of these two methods during 2002. There were no guaranteed minimums during 2001 because we did not introduce AdSense until 2002.

Additional Payments to Google Network Members

Concurrent with the commencement of certain AdSense agreements we have purchased specific items from, or provided other consideration to, our Google Network members. According to EITF 01-9, Accounting for Consideration Given by a Vendor to a Customer, cash consideration given by a vendor to a customer is presumed to be a reduction of the selling price of the vendor’s product or service and, therefore, should be characterized as a reduction of revenues when recognized in the vendor’s income statement unless the vendor receives an identifiable benefit in exchange for the consideration and the vendor can reasonably estimate the value of the benefit identified. If we determine we will derive little or no benefit from a purchased item, or if we cannot estimate the item’s fair value, then the cost of the item is deemed to be part of the AdSense agreement and is amortized against net revenues or to cost of revenues, as the case may be. The cost of such an item, along with other cash payments or the value of other consideration such as warrants to purchase our stock, is amortized so that neither net revenues nor cost of revenues is recognized until we determine it is probable that the sum of the pro rated cost and any remaining unamortized guaranteed minimum amounts will be either greater or less than the related gross revenue. The cost is pro-rated over each of the periods covered by the guaranteed minimums or, if there are no guaranteed minimums, over periods not to exceed twelve months. After such a determination has

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been made, we amortize the pro rated cost such that only net revenues or cost of revenues is recognized over the remaining term covered by the guaranteed minimum or over a period of not more than twelve months.

The costs of items purchased from, or other consideration provided to, our Google Network members concurrent with the commencement of certain AdSense agreements that we have determined have no other value to us were $13.9 million, $19.8 million and $616,000 in 2002 and 2003, and in the three months ended March 31, 2004, and the related unamortized amounts were $4.6 million, $18.8 million and $17.9 million at December 31, 2002 and 2003 and March 31, 2004.

Stock-based Compensation

Accounting for Stock-Based Awards to Employees

We have granted to our employees options to purchase our common stock at exercise prices equal to the fair market value of the underlying stock, as determined by our board of directors, on the date of option grant. For purposes of financial accounting, we have applied hindsight to arrive at deemed values for the shares underlying our options. We record deferred stock-based compensation to the extent that the deemed value of the stock at the date of grant exceeds the exercise price of the option. The deemed values were determined based on a number of factors including input from advisors, our historical and forecasted operating results and cash flows, and comparisons to publicly-held companies. These valuations are inherently highly uncertain and subjective. If we had made different assumptions, our deferred stock-based compensation amount, our stock-based compensation expense, our net income, net income per share and recorded goodwill amounts could have been significantly different.

We recognize compensation expense as we amortize the deferred stock-based compensation amounts on an accelerated basis over the related vesting periods. The table below shows employee and non-employee stock-based compensation expense recognized during 2001, 2002 and 2003. In addition, the table presents the expected stock-based compensation expense for options granted to employees prior to January 1, 2004 for each of the next five years and thereafter, assuming no change in the stock option accounting rules and assuming all employees remain employed by us for their remaining vesting periods. These amounts are compared to the expense and expected expense we would have recognized had we amortized deferred stock-based compensation on a straight-line basis.

	Stock-based compensation expense Year Ended December 31,
	2001		2002		2003		2004		2005		2006		2007		2008		thereafter
	(in millions)
Accelerated basis	$	12.4	$	21.6	$	229.4	$	204.8	$	96.3	$	47.5	$	16.1	$	3.5	$	1.5
Straight-line basis	$	6.9	$	13.3	$	121.0	$	138.0	$	134.5	$	123.7	$	71.2	$	20.6	$	5.6

Note 1 of Notes to Consolidated Financial Statements included as part of this prospectus describes what the impact would have been had we expensed employee stock awards under the fair value method using the Black-Scholes option-pricing model.

Accounting for Stock-Based Awards to Non-employees

We measure the fair value of options to purchase our common stock granted to non-employees throughout the vesting period as they are earned, at which time we recognize a charge to stock-based compensation. The fair value is determined using the Black-Scholes option-pricing model, which considers the exercise price relative to the deemed value of the underlying stock, the expected stock price volatility, the risk-free interest rate and the dividend yield. As discussed above, the deemed value of the underlying stock was based on assumptions of matters that are inherently highly uncertain and subjective. As there has been no public market for our stock, our assumptions about stock-price volatility are based on the volatility rates of comparable publicly held companies. These rates may or may not reflect our stock-price volatility should we become a publicly held company. If we

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had made different assumptions about the deemed value of our stock or stock-price volatility, the related stock-based compensation expense and our net income and net income per share amounts could have been significantly different.

Effect of Recent Accounting Pronouncements

In November 2002, the EITF reached a consensus on Issue 00-21, Accounting for Multiple Element Revenue Arrangements, addressing how to account for arrangements that involve the delivery or performance of multiple products, services, and/or rights to use assets. Revenue arrangements with multiple deliverables are divided into separate units of accounting if the deliverables in the arrangement meet the following criteria: (1) the delivered item has value to the customer on a standalone basis; (2) there is objective and reliable evidence of the fair value of undelivered items; and (3) delivery of any undelivered item is probable. Arrangement consideration should be allocated among the separate units of accounting based on their relative fair values, with the amount allocated to the delivered item limited to the amount that is not contingent on the delivery of additional items or meeting other specified performance conditions. The guidance in Issue 00-21 is effective for revenue arrangements entered into in fiscal periods after June 15, 2003. The adoption of Issue 00-21 did not have an impact on our financial statements.

During November 2002, the FASB issued Interpretation No. 45, Guarantor’s Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness to Others, an interpretation of FASB Statements No. 5, 57 and 107 and a rescission of FASB Interpretation No. 34 (FIN 45). FIN 45 elaborates on the existing disclosure requirements for a guarantor in its interim and annual financial statements regarding its obligations under guarantees issued. It also clarifies that at the time a guarantee is issued, the guarantor must recognize an initial liability for the fair value of the obligations it assumes under the guarantee and must disclose that information in its financial statements. The initial recognition and measurement provisions apply on a prospective basis to guarantees of third party obligations issued or modified after December 31, 2002, and the disclosure requirements apply to such guarantees outstanding at December 31, 2002. The Company adopted the provisions of FIN 45 at January 1, 2003. The adoption of this Interpretation did not have an impact on our operating results. See further discussion regarding indemnifications in Note 7 to the Notes to the Consolidated Financial Statements included with this prospectus.

In January 2003, the FASB issued Interpretation No. 46, Consolidation of Variable Interest Entities. Interpretation No. 46 clarifies the application of Accounting Research Bulletin No. 51. This Interpretation requires variable interest entities to be consolidated if the equity investment at risk is not sufficient to permit an entity to finance its activities without support from other parties or the equity investors lack specified characteristics. We do not have any variable interest entities.

In May 2003, the FASB issued SFAS No. 150, Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity. SFAS No. 150 establishes standards for how a company classifies and measures certain financial instruments with characteristics of both liabilities and equity. It requires that an issuer classify certain financial instruments as a liability (or as an asset in some circumstances). SFAS No. 150 is effective for financial instruments entered into or modified after May 31, 2003, and otherwise is effective at the beginning of the first interim period beginning after June 15, 2003. The adoption of SFAS No. 150 did not have an impact on our financial statements.

Qualitative and Quantitative Disclosures about Market Risk

We are exposed to financial market risks, including changes in currency exchange rates, interest rates and marketable equity security prices.

Foreign Exchange Risk

Our exposure to foreign currency transaction gains and losses is the result of certain net receivables of the U.S. parent due from its subsidiaries and customers being denominated in currencies other than the U.S. dollar,

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primarily the British Pound, the Euro and the Japanese Yen. Our foreign subsidiaries conduct their businesses in local currency. We recognized a foreign currency transaction loss of $700,000 as a result of generally weakening foreign currencies against the U.S. dollar throughout the three months ended March 31, 2004. Also, we recognized a foreign currency transaction gain of $2.1 million as a result of generally strengthening foreign currencies against the U.S. dollar throughout 2003. Effective January 2004, we began to bill our international online sales through a foreign subsidiary, which will lower our exposure to foreign currency transaction gains and losses. In addition, 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. We also generate revenue in certain countries in Asia where there are limited forward currency exchange markets, thus making these exposures difficult to hedge. Currently, we have no foreign currency hedges in place.

Our exposure to foreign currency translation gains and losses arises from the translation of certain net assets of our subsidiaries to U.S. dollars during consolidation. During 2003, we recognized a foreign currency translation gain of $1.7 million as a result of greater aggregate net assets of our subsidiaries and stronger foreign currencies compared to the U.S. dollar at December 31, 2003 than at December 31, 2002.

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 $13.8 million and $4.5 million at March 31, 2004 and December 31, 2003.

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 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 investment securities of approximately $2.5 million and $1.9 million at March 31, 2004 and December 31, 2003.

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BUSINESS

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. We maintain the world’s largest online index of web sites and other content, and we make this information freely available to anyone with an Internet connection. Our automated search technology helps people obtain nearly instant access to relevant information from our vast online index.

We generate revenue by delivering relevant, cost-effective online advertising. Businesses use our AdWords program to promote their products and services with targeted advertising. In addition, the thousands of third-party web sites that comprise our Google Network use our Google AdSense program to deliver relevant ads that generate revenue and enhance the user experience.

Our Mission

Our mission is to organize the world’s information and make it universally accessible and useful. We believe that the most effective, and ultimately the most profitable, way to accomplish our mission is to put the needs of our users first. We have found that offering a high-quality user experience leads to increased traffic and strong word-of-mouth promotion. Our dedication to putting users first is reflected in three key commitments we have made to our users:

• We will do our best to provide the most relevant and useful search results possible, independent of financial incentives. Our search results will be objective and we will not accept payment for inclusion or ranking in them.

• We will do our best to provide the most relevant and useful advertising. If any element on a result page is influenced by payment to us, we will make it clear to our users. Advertisements should not be an annoying interruption.

• We will never stop working to improve our user experience, our search technology and other important areas of information organization.

We believe that our user focus is the foundation of our success to date. We also believe that this focus is critical for the creation of long-term value. We do not intend to compromise our user focus for short-term economic gain.

How We Provide Value to Users, Advertisers and Web Sites

Our Users

We serve our users by developing products that enable people to more quickly and easily find, create and organize information. We place a premium on products that matter to many people and have the potential to improve their lives, especially in areas in which our expertise enables us to excel.

Search is one such area. People use search frequently and the results are often of great importance to them. For example, people search for information on medical conditions, purchase decisions, technical questions, long-lost friends and other topics about which they care a great deal. Delivering quality search results requires significant computing power, advanced software and complex processes—areas in which we have expertise and a high level of focus.

Communication is another such area. People increasingly rely on the Internet to communicate with each other. Gmail, our new email service (still in test mode), offers a gigabyte of free storage for each user, along with email search capabilities and relevant advertising. Delivering an improved user experience in Gmail has similar in computing and software requirements.

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Some of the key benefits we offer to users include:

Relevant and Useful Information.    Our technologies sort through a vast and growing amount of information to deliver relevant and useful search results in response to user queries. This is an area of continual development for us. When we started the company five years ago, our web index contained approximately 30 million documents. We now index more than 4 billion web pages, or more than 100 times as much information. We are also constantly developing new functionality. Recent enhancements include personalization, which lets users specify interests to help our technology generate customized search results; and local search, which lets users look for web pages and businesses based on a certain geographic location. We also provide convenient links to specialized information, such as definitions, maps and travel information.

Objectivity.    We believe it is very important that the results users get from Google are produced with only their interests in mind. We do not accept money for search result ranking or inclusion. We do accept fees for advertising, but it does not influence how we generate our search results. The advertising is clearly marked and separated. This is similar to a newspaper, where the articles are independent of the advertising. Some of our competitors charge web sites for inclusion in their indices or for more frequent updating of pages. Inclusion and frequent updating in our index are open to all sites free of charge. We apply these principles to each of our products and services. We believe it is important for users to have access to the best available information and research, not just the information that someone pays for them to see.

Global Access.    We strive to provide Google to everyone in the world. Users from around the world visit our destination sites at Google.com and our 95 other international domains, such as Google.de, Google.fr, Google.co.uk, Google.co.jp and Google.ca. The Google interface is available in 97 languages. Through Google News, we offer an automated collection of frequently updated news stories tailored to 10 international audiences. We also offer automatic translation of content between various languages. We provide localized versions of Google in many developing countries. Although we do not currently recover our costs in these countries, we believe providing our products and services is an important social good and a valuable long-term business investment.

Ease of Use.    We have always believed that the most useful and powerful search technology hides its complexity from users and provides them with a simple, intuitive way to get the information they want. We have devoted significant efforts to create a streamlined and easy-to-use interface based on a clean search box set prominently on a page free of commercial clutter. We have also created many features that enhance the user experience. Our products present these features when we believe they will be most useful, rather than promoting them unnecessarily. For example, Google WebSearch offers maps when a search appears to be for a geographic location.

Pertinent, Useful Commercial Information.    The search for information online often involves an interest in commercial information—researching a purchase, comparing products and services or actively shopping. We help people find commercial information through our search services and by presenting ads that are relevant to the information people seek. To ensure we display only the most relevant commercial information, our technology automatically rewards ads that users prefer and removes ads that users do not find helpful. For example, among our search services, we offer Froogle, a search engine for finding products for sale online.

Our Advertisers

As more people spend additional time and money online, advertisers are increasingly turning to the Internet to market their products and services to consumers. For these advertisers, we offer Google AdWords, 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. The advertisers using AdWords range from small businesses targeting local customers to many of the world’s largest global enterprises.

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The AdWords program offers advertisers the following benefits:

Effective Return on Investment.    Many advertising dollars are wasted because they are spent delivering messages that are ignored or that reach too broad an audience. With Google AdWords, businesses can achieve greater cost-effectiveness with their marketing budgets for two reasons—AdWords shows ads only to people seeking information related to what the advertisers are selling, and advertisers pay us only when a user clicks on one of their ads. Because we offer a simple ad format, advertisers can avoid incurring significant design, copywriting or other production costs associated with creating ads. As a result, even small advertisers find AdWords cost-effective for connecting with potential customers. In addition, advertisers can easily create many different ads, increasing the likelihood that an ad is exactly suited to a user’s search. Users can find advertisements for exactly what they are seeking, and advertisers can find users who want exactly what they are offering. When the interests of users and advertisers align, both are well served.

Access to the Google Network.    We serve AdWords ads to the thousands of third-party web sites that make up the Google Network. As a result, advertisers that use our AdWords program can target users on our sites and on search and content sites across the web. This gives advertisers increased exposure to people who are likely to be interested in their offerings. The Google Network significantly enhances our ability to attract interested users.

Precise Campaign Control.    Google AdWords gives advertisers hands-on control over most elements of their ad campaigns. Advertisers can specify the relevant search or content topics for each of their ads. Advertisers can also manage expenditures by setting a maximum daily budget and determining how much they are willing to pay whenever a user clicks on an ad. Our online tracking tools and reports give advertisers timely updates on how well their campaigns are performing and enable them to make changes or refinements quickly. Advertisers can also target their campaigns by neighborhood, city, country, region or language.

Global Support.    We provide customer service to our advertiser base through our global support organization as well as through field sales offices in 11 countries. AdWords is available on a self-service basis with email support. Advertisers with more extensive needs and budgets can request strategic support services, which include an account team of experienced professionals to help them set up, manage and optimize their campaigns.

Web Sites

Nearly every web site in the world is indexed and made searchable by Google. Our users do searches and are directed to relevant web sites. Google provides a significant amount of traffic to web sites with which we have no business relationship. Many web sites are able to generate revenue from that traffic, but others have difficulty doing so. We are enthusiastic about helping sites make money and thereby facilitating the creation of better content to search. If there is better content on the web, people are likely to do more searches, and we expect that will be good for our business and for users. To address this opportunity, we created Google AdSense. Our Google AdSense program enables the web sites—large and small—that make up the Google Network to deliver AdWords ads that are relevant to the search results or content on their pages. We share most of the revenue generated from ads shown by a member of the Google Network with that member—creating an additional revenue stream for them. Web sites can also license our Google WebSearch product to offer the Google search experience to their users. The key benefits we offer to web sites in the Google Network include:

Access to Advertisers.    Many small web site companies do not have the time or resources to develop effective programs for generating revenue from online advertising. Even larger sites, with dedicated sales teams, may find it difficult to generate revenue from pages with specialized content. Google AdSense gives these web sites immediate access to our base of advertisers and their broad collection of ads. In addition to helping web sites in the Google Network generate revenue more effectively, the automated nature of AdSense enables them to generate revenue more efficiently.

Improved User Satisfaction.    In their quest for revenue, many Internet companies have cluttered their web sites with intrusive or untargeted advertising that may distract or confuse users and may undermine users’ ability

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to find the information they want. Some web sites have adopted practices we consider to be abusive, including pop-up ads or ads that take over web pages. We believe these tactics can cause dissatisfaction with Internet advertising and reduce use of the Internet overall. Our AdSense program extends our commitment to improving the overall web experience for users by enabling web sites to display AdWords ads in a fashion that we believe people find useful rather than disruptive.

Products and Services

Our product development philosophy is centered on rapid and continuous innovation, with frequent releases of test products that we seek to improve with every iteration. We often make products available early in their development stages by posting them on Google Labs, at test locations online or directly on Google.com. If our users find a product useful, we promote it to “beta” status for additional testing. Our beta testing periods often last a year or more. Once we are satisfied that a product is of high quality and utility, we remove the beta label and make it a core Google product. Our current principal products and services are described below.

Google.com

We are focused on building products and services that benefit our users and enable them to find relevant information quickly and easily. We offer, free of charge, all of the following services at Google.com and many of them at our international sites.

Google WebSearch.    In addition to providing easy access to more than 4 billion web pages, we have integrated special features into Google WebSearch to help people find exactly what they are looking for on the web. The Google.com search experience also includes:

• Advanced Search Functionality—enables users to construct more complex queries, for example by using Boolean logic or restricting results to languages, countries or web sites.

• Spell Checker—suggests alternate search terms when a search appears to contain misspellings or typing errors.

• Web Page Translation—automatically translates web pages published in French, German, Italian, Portuguese and Spanish into English, or vice versa.

• Stock Quotes—provides links to stock and mutual fund information.

• Street Maps—provides links to street maps and directions.

• Calculator—solves math problems involving basic arithmetic, complicated math or physical constants and converts between units of measure.

• Definitions—provides definitions for words or phrases based on content we have indexed.

• PhoneBook—provides U.S. street addresses and phone numbers for U.S. businesses and residences.

• Search by Number—enables people to conduct quick searches by entering FedEx, UPS and USPS package tracking numbers, vehicle ID numbers, product codes, telephone area codes, patent numbers, FAA airplane registration numbers and FCC equipment ID numbers.

• Travel Information—enables people to check the status of U.S. airline flights and see delays and weather conditions at U.S. airports.

• Cached Links—provides snapshots of web pages taken when the pages were indexed, enabling web users to view web pages that are no longer available.

Google Image Search.    Google Image Search is our searchable index of 880 million images found across the web. To extend the usefulness of Google Image Search, we offer advanced features, such as searching by image size, format and coloration and restricting searches to specific web sites or domains.

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Google News.    Google News gathers information from nearly 10,000 news sources worldwide and presents news stories in a searchable format within minutes of their publication on the web. The leading stories are presented as headlines on the Google News home page. These headlines are selected for display entirely by a computer algorithm, without regard to political viewpoint or ideology. Google News uses an automated process to pull together related headlines, which enables people to see many different viewpoints on the same story. Because topics are updated continuously throughout the day, people generally see new stories each time they check Google News. We currently provide our Google News service tailored to 10 international audiences.

Google Toolbar.    The Google Toolbar makes our search technology constantly and easily available as people browse the web. The Google Toolbar is available as a free, fast download and can improve people’s web experience through several innovative features, including:

• Pop-up Blocker—blocks pop-up advertising while people use the web.

• PageRank Indicator—displays Google’s ranking of any page on the web.

• AutoFill—completes web forms with information saved securely on a user’s own computer.

• Highlight—highlights search terms where they appear on a web page, with each term marked in a different color.

• Word Find—finds search terms wherever they appear on a web page.

Froogle.    Froogle enables people to easily find products for sale online. By focusing entirely on product search, Froogle applies the power of our search technology to a very specific task—locating stores that sell the items users seek and pointing them directly to the web sites where they can shop. Froogle users can sort results by price, specify a desired price range and view product photos. Froogle accepts data feeds directly from merchants to ensure that product information is up-to-date and accurate. Most online merchants are also automatically included in Froogle’s index of shopping sites. Because we do not charge merchants for inclusion in Froogle, our users can browse product categories or conduct product searches with confidence that the results we provide are relevant and unbiased. As with many of our products, Froogle displays relevant advertising separately from search results.

Google Groups.    Google Groups enables easy participation in Internet discussion groups by providing users with tools to search, read and browse these groups and to post messages of their own. Google Groups contains the entire archive of Usenet Internet discussion groups dating back to 1981—more than 845 million posted messages. The discussions in these groups cover a broad range of discourse and provide a comprehensive look at evolving viewpoints, debate and advice on many subjects.

Google Wireless.    Google Wireless offers people the ability to search and view both the “mobile web,” consisting of 5 million pages created specifically for wireless devices, and the entire Google index of more than 4 billion web pages. Google Wireless supports common mobile Internet standards, including WML, HDML and HTML, and i-mode and J-Sky compatible HTML mobile Internet standards. Google Wireless is available through many wireless and mobile phone services worldwide.

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Google Web Directory.    Google Web Directory enables people to browse and search through web sites that have been organized into categories. Our directory combines Google’s search technology with the categorization developed by the Open Directory Project and is available in 73 languages.

Google Local.    Google Local enables users to find relevant local information based on zip codes, cities or specific addresses. Google Local results include neighborhood business listings, addresses, phone numbers, maps and directions.

Google Answers.    Google Answers provides people with help finding information and answering questions. Users set a fee they are willing to pay and submit questions to the Google Answers service. One of more than 500 carefully screened freelance researchers responds, usually within 24 hours. Google Answers researchers are experienced web searchers with strong communication skills who often have expertise in various fields. An extensive collection of past responses is available to our users free of charge.

Google Catalogs.    With Google Catalogs, we provide access to the full content of more than 6,600 mail-order catalogs, many of which were previously unavailable online.

Google Print.    Google Print brings information online that had previously not been available to web searchers. Under this program, we have been experimenting with a number of publishers to host their content and rank their publications in our search results using the same technology we use to evaluate web sites. On Google Print pages, we provide links to book sellers that may offer the full versions of these publications for sale, and we show content-targeted ads that are served through the Google AdSense program.

Google Labs.    Google Labs is our playground for our engineers and for adventurous Google users. On Google Labs, we post product prototypes and solicit feedback on how the technology could be used or improved. Current Google Labs examples include:

• Google Personalized Search—provides customized search results based on an individual user’s interests.

• Google Deskbar—enables people to search with Google from the taskbar of their computer without launching a web browser.

• Voice Search—enables people to dial a phone number, tell our system what they are looking for and hear Google search results read to them by a computer.

• Froogle Wireless—gives people the ability to search for product information from their mobile phones and other wireless devices.

Blogger.    Blogger is a leading web-based publishing tool that gives people the ability to publish to the web instantly using weblogs, or “blogs.” Blogs are web pages usually made up of short, informal, frequently updated posts that are arranged chronologically. Blogs can facilitate communications among small groups or to a worldwide audience in a way that is simpler and easier to follow than traditional email or discussion forums.

Limited Availability Services.    Some of our product offerings are in their initial test phases and are currently available to limited audiences. Examples include Gmail, our free email service, and Orkut, an invitation-based online meeting place where people can socialize, make new acquaintances and find others who share their interests.

Google AdWords

Google AdWords is our global advertising program, which enables advertisers to present ads to people at the precise moment those people are looking for information related to what the advertiser has to offer. Advertisers use our automated tools, often with little or no assistance from us, to create text-based ads, bid on the keywords that will trigger the display of their ads and set daily spending budgets. AdWords features an

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automated, low-cost online signup process that enables advertisers to implement ad campaigns that can become live in 15 minutes or less. The total sign-up cost for becoming an AdWords advertiser is only $5.00.

Ads are ranked for display in AdWords based on a combination of the maximum cost per click (CPC) set by the advertiser and click-through rates and other factors used to determine the relevance of the ads. This favors the ads that are most relevant to users, improving the experience for both the person looking for information and the advertiser looking for interested customers. AdWords has many features that make it easy to set up and manage ad campaigns for maximum efficiency and effectiveness:

• Campaign management.    Advertisers can target multiple ads to a given keyword and easily track individual ad performance to see which ads are the most effective. The campaign management tools built into AdWords enable advertisers to quickly shift their budgets to ads that deliver the best results.

• Keyword targeting.    Businesses can deliver targeted ads based on specific search terms (keywords) entered by users or found in the content on a web page. We also offer tools that suggest synonyms and useful phrases to use as keywords or ad text. These suggestions can improve ad click-through rates and the likelihood of a user becoming a customer of the advertiser.

• Traffic estimator.    This tool estimates the number of searches and potential costs related to advertising on a particular keyword or set of keywords. These estimates can help advertisers optimize their campaigns.

• Budgeted delivery.    Advertisers can set daily budgets for their campaigns and control the timing for delivery of their ads.

• Performance reports.    We provide continuous, timely reporting of the effectiveness of each ad campaign.

• Multiple payment options.    We accept credit and debit cards and, for selected advertisers, we offer several options for credit terms and monthly invoicing. We accept payments in 48 currencies.

• AdWords discounter.    This feature gives advertisers the freedom to increase their maximum CPCs because it automatically adjusts pricing so that they never pay more than one cent over the next highest bid.

For larger advertisers, we offer additional services that help to maximize returns on their Internet marketing investments and improve their ability to run large, dynamic campaigns. These include:

• Creative maximization.    Our AdWords specialists help advertisers select relevant keywords and create more effective ads. This can improve advertisers’ ability to target customers and to increase the click-through rates and conversion rates for their ads.

• Vertical market experts.    Specialists with experience in particular industries offer guidance on how to most effectively target potential customers.

• Bulk posting.    We assist businesses in launching and managing large ad campaigns with hundreds or even thousands of targeted keywords.

• Dedicated client service representatives.    These staff members continuously look for ways to better structure their clients’ campaigns and to address the challenges large advertisers face.

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Google AdSense

Our Google AdSense program enables the web sites in our Google Network to serve targeted ads from our AdWords advertisers. Targeting can be based on search results or on web content. We share most of the revenue generated from ads shown by a member of the Google Network with that member. For network members, we offer:

Google AdSense for search.    For Internet companies with potentially large search audiences, we offer Google AdSense for search. Web sites use AdSense for search to generate additional revenue by serving relevant AdWords ads targeted to search results. Because we also offer to license our web search technology along with Google AdSense for search, companies without their own search service can offer Google WebSearch to improve the usefulness of their web sites for their users while increasing their revenue.

Google AdSense for content.    Google AdSense for content enables web sites to generate revenue from advertising by serving relevant AdWords ads targeted to web content. Our automated technology analyzes the meaning of web content and serves relevant advertising, usually in a fraction of a second. We believe that some of the best content on the web comes from web sites aiming to reach small but highly targeted audiences. AdSense for content can help these web sites offset some of their publishing costs. We believe this may help them continue to publish by tapping into the value of their content. There is no charge for web sites to participate in our AdSense for content program. Using our automated sign-up process, web sites can quickly display AdWords ads on their sites. We share the majority of the revenues generated from click-throughs on these ads with the Google Network members that display the ads. For web sites with more than 20 million page views per month, we provide customization services.

Google Search Appliance

We provide our search technology for use within enterprises through the Google Search Appliance (GSA). The GSA is a complete software and hardware solution that companies can easily implement to extend Google’s search performance to their internal or external information. The GSA can often be installed and launched in as little as one day. It leverages our search technology to identify the most relevant pages on intranet and public web sites, making it easy for people to find the information they need. The GSA offers several useful features, including automated spell-checking, cached pages, dynamic snippets, indented results and automatic conversion of Microsoft Office and PDF files to HTML. The GSA is available in three models: the GB-1001, for departments and mid-sized companies; the GB-5005, for dedicated, high-priority search services such as customer-facing web sites and company-wide intranet applications; and the GB-8008, for centralized deployments supporting global business units. List prices for our GSA models start at $32,000 for the GB-1001, $230,000 for the GB-5005 and $600,000 for the GB-8008.

Technology

We began as a technology company and have evolved into a software, technology, Internet, advertising and media company all rolled into one. We take technology innovation very seriously. We compete aggressively for talent, and our people drive our innovation, technology development and operations. We strive to hire the best computer scientists and engineers to help us solve very significant challenges across systems design, artificial intelligence, machine learning, data mining, networking, software engineering, testing, distributed systems, cluster design and other areas. We work hard to provide an environment where these talented people can have fulfilling jobs and produce technological innovations that have a positive affect on the world through daily use by millions of people. We employ technology whenever possible to increase the efficiency of our business and to improve the experience we offer our users.

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We provide our web search and targeted advertising technology using a large network of commodity computers running custom software developed in-house. Some elements of our technology include:

Web Search Technology

Our web search technology uses a combination of techniques to determine the importance of a web page independent of a particular search query and to determine the relevance of that page to a particular search query. We do not explain how we do ranking in great detail because some people try to manipulate our search results for their own gain, rather than in an attempt to provide high-quality information to users.

PageRank and Ranking Technology.    One element of our technology for ranking web pages is called PageRank. While we developed much of our ranking technology after the company was formed, PageRank was developed at Stanford University with the involvement of our founders, and was therefore published as research. Most of our current ranking technology is protected as trade-secret. PageRank is a query-independent technique for determining the importance of web pages by looking at the link structure of the web. PageRank treats a link from web page A to web page B as a “vote” by page A in favor of page B. The PageRank of a page is the sum of the PageRank of the pages that link to it. The PageRank of a web page also depends on the importance (or PageRank) of the other web pages casting the votes. Votes cast by important web pages with high PageRank weigh more heavily and are more influential in deciding the PageRank of pages on the web.

Text-Matching Techniques.    Our technology employs text-matching techniques that compare search queries with the content of web pages to help determine relevance. Our text-based scoring techniques do far more than count the number of times a search term appears on a web page. For example, our technology determines the proximity of individual search terms to each other on a given web page, and prioritizes results that have the search terms near each other. Many other aspects of a page’s content are factored into the equation, as is the content of pages that link to the page in question. By combining query independent measures such as PageRank with our text-matching techniques, we are able to deliver search results that are relevant to what people are trying to find.

Advertising Technology

Our advertising program serves millions of relevant, targeted ads each day based on search terms people enter or content they view on the web. The key elements of our advertising technology include:

Google AdWords Auction System.    We use the Google AdWords auction system to enable advertisers to automatically deliver relevant, targeted advertising. Every search query we process involves the automated execution of an auction, resulting in our advertising system often processing hundreds of millions of auctions per day. To determine whether an ad is relevant to a particular query, this system weighs an advertiser’s willingness to pay for prominence in the ad listings (the CPC) and interest from users in the ad as measured by the click-through rate and other factors. If an ad does not attract user clicks, it moves to a less prominent position on the page, even if the advertiser offers to pay a high amount. This prevents advertisers with irrelevant ads from “squatting” in top positions to gain exposure. Conversely, more relevant, well-targeted ads that are clicked on frequently move up in ranking, with no need for advertisers to increase their bids. Because we are paid only when users click on ads, the AdWords ranking system aligns our interests equally with those of our advertisers and our users. The more relevant and useful the ad, the better for our users, for our advertisers and for us.

The AdWords auction system also incorporates our AdWords discounter, which automatically lowers the amount advertisers actually pay to the minimum needed to maintain their ad position. Consider a situation where there are three advertisers—Pat, Betty and Joe—each bidding on the same keyword for ads that will be displayed on Google.com. These advertisers have ads with equal click-through rates and bid $1.00 per click, $0.60 per click and $0.50 per click, respectively. With our AdWords discounter, Pat would occupy the first ad position and pay only $0.61 per click, Betty would occupy the second ad position and pay only $0.51 per click, and Joe would occupy the third ad position and pay the minimum bid of $0.05 per click. The AdWords discounter saves money for advertisers by minimizing the price they pay per click, while relieving them of the need to constantly monitor

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and adjust their CPCs. Advertisers can experience greater discounts through the application of our smart pricing technology introduced in April 2004. This technology can reduce the price of clicks for ads served across the Google Network based on the expected value of the click to the advertiser.

AdSense Contextual Advertising Technology.    Our AdSense technology employs techniques that consider factors such as keyword analysis, word frequency, font size and the overall link structure of the web to analyze the content of individual web pages and to match ads to them almost instantaneously. With this ad targeting technology, we can automatically serve contextually relevant ads. For example, our technology can serve ads offering tickets to fans of a specific sports team on a news story about that team.

Large-Scale Systems Technology

Our business relies on our software and hardware infrastructure, which provides substantial computing resources at low cost. We currently use a combination of off-the-shelf and custom software running on clusters of commodity computers. Our considerable investment in developing this infrastructure has produced several key benefits. It simplifies the storage and processing of large amounts of data, eases the deployment and operation of large-scale global products and services and automates much of the administration of large-scale clusters of computers.

Although most of this infrastructure is not directly visible to our users, we believe it is important for providing a high-quality user experience. It enables significant improvements in the relevance of our search and advertising results by allowing us to apply superior search and retrieval algorithms that are computationally intensive. We believe the infrastructure also shortens our product development cycle and allows us to pursue innovation more cost effectively.

We constantly evaluate new hardware alternatives and software techniques to help further reduce our computational costs. This allows us to improve our existing products and services and to more easily develop, deploy and operate new global products and services.

Sales and Support

We have put significant effort into developing our sales and support infrastructure. We maintain 21 sales offices in 11 countries, and we deploy specialized sales teams across 18 vertical markets. We bring businesses into our advertising network through both online and direct sales channels. In all cases, we use technology and automation wherever possible to improve the experience for our advertisers and to grow our business cost-effectively. The vast majority of our advertisers use our automated online AdWords program to establish accounts, create ads, target users and launch and manage their advertising campaigns. Our direct advertising sales team focuses on attracting and supporting companies around the world with sizeable advertising budgets. Our AdSense program follows a similar model. Most of the web sites in the Google Network sign up for AdSense using an automated online process. Our direct sales force focuses on building AdSense relationships with leading Internet companies. Our global support organization concentrates on helping our advertisers and Google Network members get the most out of their relationships with us.

Marketing

We have always believed that building a trusted, highly-recognized brand begins with providing high-quality products and services that make a notable difference in people’s lives. Our user base has grown primarily by word-of-mouth, which can work very well for products that inspire a high level of user loyalty because users are likely to share their positive experiences with their friends and families. Our early marketing efforts focused on feeding this word-of-mouth momentum and used public relations efforts to accelerate it. Through these efforts and people’s increased usage of Google worldwide, we have been able to build our brand with relatively low marketing costs. Today, we use the quality of our own products and services as our most effective marketing tools, and word-of-mouth momentum continues to drive consumer awareness and user loyalty worldwide. We do

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not promote products before they are successful for our users, preferring to test them until they achieve broad acceptance. We also engage in targeted marketing efforts, such as those we deliver to our advertising clients, designed to inform potential advertisers, Google Network members and enterprises of the benefits they can achieve through Google.

Competition

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 and Yahoo.

We also 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. 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. In addition to Internet companies, we face competition from companies that offer traditional media advertising opportunities.

We compete to attract and retain relationships with users, advertisers and web sites. The bases on which we compete differ among the groups.

• Users.    We compete to attract and retain users of our search and communication products and services. Most of the products and services we offer to users are free, so we do not compete on price. Instead, we compete in this area on the basis of the relevance and usefulness of our search results and the features, availability and ease of use of our products and services.

• Advertisers.    We compete to attract and retain advertisers. We compete in this area principally on the basis of the return on investment realized by advertisers using our AdWords program. We also compete based on the quality of customer service, features and ease of use of AdWords.

• Web sites.    We compete to attract and retain web sites as members of our Google Network based on the size and quality of our advertiser base, our ability to help our Google Network members generate revenues from advertising on their web sites and the terms of agreements with our Google Network members.

We believe that we compete favorably on the factors described above. However, our industry is evolving rapidly and is becoming increasingly competitive. Larger, more established companies than us are increasingly focusing on search businesses that directly compete with us.

Intellectual Property

We rely on a combination of patent, trademark, copyright and trade secret laws in the U.S. and other jurisdictions as well as confidentiality procedures and contractual provisions to protect our proprietary technology and our brand. We also enter into confidentiality and invention assignment agreements with our employees and consultants and confidentiality agreements with other third parties, and we rigorously control access to proprietary technology.

Google is a registered trademark in the U.S. and several other countries. Our unregistered trademarks include: AdSense, AdWords, Blogger, Froogle, Gmail, I’m Feeling Lucky and PageRank.

The first version of the PageRank technology was created while Larry and Sergey attended Stanford University, which owns a patent to PageRank. We hold a perpetual license to this patent. In October 2003, we extended our exclusivity period to this patent through 2011, at which point our license is non-exclusive.

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Circumstances outside our control could pose a threat to our intellectual property rights. For example, effective intellectual property protection may not be available in every country in which our products and services are distributed. 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 unauthorized use of our intellectual property could make it more expensive to do business and harm our operating results.

Companies in the Internet, technology and media industries own large numbers of patents, copyrights and trademarks and frequently enter into litigation based on allegations of infringement or other violations of intellectual property rights. As we face increasing competition, the possibility of intellectual property claims against us grows. Our technologies may not be able to withstand any third-party claims or rights against their use.

Culture and Employees

We take great pride in our company culture and embrace it as one of our fundamental strengths. We remain steadfast in our commitment to constantly improve the technology we offer to our users and advertisers and to web sites in the Google Network. We have assembled what we believe is a highly talented group of employees. Our culture encourages the iteration of ideas to address complex technical challenges. In addition, we embrace individual thinking and creativity. As an example, we encourage our engineers to devote 20% of their time to work on independent projects. Many of our significant new products have come from these independent projects, including Google News, AdSense for content and Orkut.

Despite our rapid growth, we constantly seek to maintain a small-company feel that promotes interaction and the exchange of ideas among employees. We try to minimize corporate hierarchy to facilitate meaningful communication among employees at all levels and across departments, and we have developed software to help us in this effort. We believe that considering multiple viewpoints is critical to developing effective solutions, and we attempt to build consensus in making decisions. While teamwork is one of our core values, we also significantly reward individual accomplishments that contribute to our overall success. As we grow, we expect to continue to provide compensation structures that are more similar to those offered by start-ups than established companies. We will focus on very significant rewards for individuals and teams that build amazing things that provide significant value to us and our users.

At March 31, 2004, we had 1,907 employees, consisting of 596 in research and development, 961 in sales and marketing and 350 in general and administrative. All of Google’s employees are also shareholders, with significant collective employee ownership. As a result, many employees are highly motivated to make the company more successful.

Legal Proceedings

From time to tine, we may become a party to litigation and subject to claims incident to the ordinary course of business. Although the results of litigation and claims cannot be predicted with certainty, we believe that the final outcome of such matters will not have a material adverse effect on our business. Regardless of outcome, litigation can have an adverse impact on us because of defense costs, diversion of management resources and other factors.

In 2002, Overture Services (now owned by Yahoo) sued us, claiming that the Google AdWords program infringes certain claims of an Overture Services patent. It also claims that the patent relates to Overture Services’ own bid-for-ad placement business model and its pay-for-performance technologies. We believe that the lawsuit is without merit and we will continue to vigorously defend the lawsuit litigating this case. If Overture Services wins, it may significantly limit our ability to use the AdWords program, and we also may be required to pay damages.

Facilities

We lease approximately 506,000 square feet of space in our headquarters in Mountain View, California under a lease that expires in 2012. We also lease additional research and development, sales and support offices in Amsterdam, Atlanta, Bangalore, Boston, Chicago, Dallas, Denver, Detroit, Dublin, Hamburg, Hyderabad, London, Los Angeles, Madrid, Milan, Mountain View, New York, Paris, Santa Monica, Seattle, Sydney, Tokyo, Toronto and Zurich. We operate data centers in several domestic and international locations.

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MANAGEMENT

Executive Officers and Directors

Our executive officers and directors, and their ages and positions are as follows:

Name	Age	Position
Eric Schmidt	48	Chairman of the Executive Committee, Chief Executive Officer and Director
Sergey Brin	30	President of Technology, Assistant Secretary and Director
Larry Page	31	President of Products, Assistant Secretary and Director
Omid Kordestani	40	Senior Vice President of Worldwide Sales and Field Operations
Wayne Rosing	57	Vice President of Engineering
David C. Drummond	41	Vice President of Corporate Development, Secretary and General Counsel
George Reyes	49	Vice President and Chief Financial Officer
Jonathan J. Rosenberg	42	Vice President of Product Management
Shona L. Brown	38	Vice President of Business Operations
L. John Doerr	52	Director
John L. Hennessy	50	Director
Arthur D. Levinson	54	Director
Michael Moritz	49	Director
Paul S. Otellini	53	Director
K. Ram Shriram	47	Director

Eric Schmidt has served as our Chief Executive Officer since July 2001 and served as Chairman of our board of directors from March 2001 to April 2004. In April 2004, Eric was named Chairman of the Executive Committee of our board of directors. Prior to joining us, from April 1997 to November 2001, Eric served as Chairman of the board of Novell, a computer networking company, and, from April 1997 to July 2001, as the Chief Executive Officer of Novell. From 1983 until March 1997, Eric held various positions at Sun Microsystems, a supplier of network computing solutions, including Chief Technology Officer from February 1994 to March 1997 and President of Sun Technology Enterprises from February 1991 until February 1994. Eric is also a director of Siebel Systems. Eric has a Bachelor of Science degree in electrical engineering from Princeton University, and a Master’s degree and Ph.D. in computer science from the University of California, Berkeley.

Sergey Brin, one of our founders, has served as a member of our board of directors since our inception in September 1998 and as our President of Technology since July 2001. From September 1998 to July 2001, Sergey served as our President. Sergey holds a Master’s degree in computer science from Stanford University, a Bachelor of Science degree with high honors in mathematics and computer science from the University of Maryland at College Park and is currently on leave from the Ph.D. program in computer science at Stanford University.

Larry Page, one of our founders, has served as a member of our board of directors since our inception in September 1998 and as our President of Products since July 2001. From September 1998 to July 2001, Larry served as our Chief Executive Officer and from September 1998 to July 2002 as our Chief Financial Officer. Larry holds a Master’s degree in computer science from Stanford University and a Bachelor of Science degree in computer engineering from the University of Michigan and is currently on leave from the Ph.D. program in computer science at Stanford University.

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Omid Kordestani has served as our Senior Vice President of Worldwide Sales and Field Operations since May 1999. Prior to joining us, from 1995 to 1999, Omid served as Vice President of Business Development at Netscape, an Internet software and services company. Omid holds a Masters of Business Administration degree from Stanford University and a Bachelor of Science degree in electrical engineering from San Jose State University.

Wayne Rosing has served as our Vice President of Engineering since November 2000. From November 1996 to April 2000, Wayne served as Chief Technology Officer and Vice President of Engineering at Caere Corporation, an optical character recognition software company. From 1985 to 1994, Wayne served in various executive engineering positions at Sun Microsystems. From 1992 to 1994, Wayne headed the team that developed the technology base for Java as the president of FirstPerson, and, from 1990 through 1991, was President of Sun Microsystems Laboratories, both subsidiaries of Sun Microsystems. From 1985 to 1990, Wayne was a Vice President of Engineering at Sun Microsystems and, from 1980 to 1985, he was director of engineering for the Apple Computer Lisa and Apple II divisions. Prior to 1980, he held management positions at Digital Equipment Corporation and Data General.

David C. Drummond has served as our Vice President of Corporate Development, Secretary and General Counsel since February 2002. Prior to joining us, from July 1999 to February 2002, David served as Chief Financial Officer of SmartForce, an educational software applications company. Prior to that, David was a partner at the law firm of Wilson Sonsini Goodrich & Rosati, our outside counsel. David holds a J.D. from Stanford University and a Bachelor of Arts degree in history from Santa Clara University.

George Reyes has served as our Chief Financial Officer since July 2002. Prior to joining us, George served as Interim Chief Financial Officer for ONI Systems from February 2002 until June 2002. From April 1999 to September 2001, George served as Vice President, Treasurer of Sun Microsystems, and as Vice President, Corporate Controller of Sun Microsystems from April 1994 to April 1999. George is also a director of BEA Systems and Symantec. George holds a Masters of Business Administration degree from Santa Clara University and a Bachelor of Arts degree in accounting from the University of South Florida.

Jonathan J. Rosenberg has served as our Vice President of Product Management since February 2002. Prior to joining us, from October 2001 to February 2002, Jonathan served as Vice President of Software of palmOne. From March 1996 to November 2000, Jonathan held various executive positions at Excite@Home, an Internet media company, most recently as its Senior Vice President of Online Products and Services. Jonathan holds a Masters of Business Administration degree from the University of Chicago and a Bachelor of Arts degree with honors in economics from Claremont McKenna College.

Shona L. Brown has served as our Vice President of Business Operations since September 2003. Prior to joining us, from October 1995 to August 2003, Shona was at McKinsey & Company, a management consulting firm where she had been a partner since December 2000. Shona holds a Ph.D. and Post-Doctorate in industrial engineering and engineering management from Stanford University, a Masters of Arts degree from Oxford University (as a Rhodes Scholar), and a Bachelor of Science degree in computer systems engineering from Carleton University.

L. John Doerr has served as a member of our board of directors since May 1999. John has been a General Partner of Kleiner Perkins Caufield & Byers, a venture capital firm, since August 1980. John is also a director of Amazon.com, drugstore.com, Homestore.com, Intuit, palmOne and Sun Microsystems. John holds a Masters of Business Administration degree from Harvard Business School and a Masters of Science degree in electrical engineering and computer science and a Bachelor of Science degree in electrical engineering from Rice University.

John L. Hennessy has served as a member of our board of directors since April 2004. Since September 2000, John has served as the President of Stanford University. From 1994 to August 2000, John held various positions at Stanford, including Dean of the Stanford University School of Engineering and Chair of the Stanford

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University Department of Computer Science. John has been a member of the board of directors of Cisco Systems, a networking equipment company, since January 2002 and chairman of the board of directors of Atheros Communications, a wireless semiconductor company since May 1998. John holds a Master’s degree and Doctoral degree in computer science from the State University of New York, Stony Brook and a Bachelor of Science degree in electrical engineering from Villanova University.

Arthur D. Levinson has served as a member of our board of directors since April 2004. Since 1995, Art has served as a member of the board of directors of Genentech, a biotechnology company, and has served as its Chairman and Chief Executive Officer since September 1999. Prior to 1999 Art held various executive positions at Genentech, including Senior Vice President of R&D. Art has been a member of the board of directors of Apple Computer, a computer hardware and software company, since 2000. Art was a Postdoctoral Fellow in the Department of Microbiology at the University of California, San Francisco. Art holds a Ph.D. in biochemistry from Princeton University and a Bachelor of Science degree in molecular biology from the University of Washington.

Michael Moritz has served as a member of our board of directors since May 1999. Michael has been a General Partner of Sequoia Capital, a venture capital firm, since 1986. Michael has served as a member of the board of directors of Saba Software, a provider of human capital development and management solutions, since August 1998. Since July 1993, Michael has also served as a member of the board of directors of Flextronics International, a contract electronics manufacturer. Michael has also served as a member of the board of directors of RedEnvelope, an online retailer of upscale gifts, since July 1999 and as Chairman of the Board since April 2003. Michael holds a Masters of Arts degree from Christ Church, University of Oxford.

Paul S. Otellini has served as a member of our board of directors since April 2004. Paul has been a member of the board of directors of Intel, a semiconductor manufacturing company, and has served as its President and Chief Operating Officer since 2002. From 1974 to 2002, Paul held various positions at Intel, including Executive Vice President and General Manager of Intel Architecture Group and Executive Vice President and General Manager of Sales and Marketing Group. Paul holds a Master’s degree from the University of California at Berkeley and a Bachelor’s degree in economics from the University of San Francisco.

K. Ram Shriram has served as a member of our board of directors since September 1998. Since January 2000, Ram has served as managing partner of Sherpalo, an angel venture investment company. Prior to that, from August 1998 to September 1999, Ram served as Vice President of Business Development at Amazon.com, an Internet retail company. Prior to that, Ram served as Chief Executive Officer at Junglee, a provider of database technology, acquired by Amazon.com in 1998. Ram was an early member of the Netscape executive team. Ram holds a Bachelor of Science degree from the University of Madras, India.

Board of Directors

Our bylaws provide that the authorized size of our board of directors, which is currently nine (9) members, is to be determined from time to time by resolution of the board of directors. Our current directors were elected in the manner described in our certificate of incorporation. The holders of a majority of our preferred stock, voting as a single class, elected L. John Doerr and Michael Moritz to the board of directors, and the holders of a majority of our common stock, voting as a single class, elected Sergey Brin, Larry Page and K. Ram Shriram to the board of directors. John Hennessy, Arthur Levinson and Paul Otellini were appointed by the board of directors to fill vacancies created by the increase in the size of the board of directors. The remaining director, Eric Schmidt, was elected pursuant to a voting agreement that we entered into with certain holders of our common stock and holders of our preferred stock, which provides for the election of a joint director nominated by a majority of the preferred stock and by a majority of the common stock held by Sergey and Larry. Upon the closing of this offering, these board representation rights will terminate.

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Committees of the Board of Directors

Our board of directors has established four committees: the audit committee, the leadership development and compensation committee, the corporate governance and nominating committee and the executive committee.

Audit Committee

Our audit committee’s main function will be to oversee our accounting and financial reporting processes, internal systems of control, independent auditor relationships and the audits of our financial statements. This committee’s responsibilities will include the following:

• Selecting and hiring our independent auditors.

• Evaluating the qualifications, independence and performance of our independent auditors.

• Approving the audit and non-audit services to be performed by our independent auditors.

• Reviewing the design, implementation, adequacy and effectiveness of our internal controls and our critical accounting policies.

• Overseeing and monitoring the integrity of our financial statements and our compliance with legal and regulatory requirements as they relate to financial statements or accounting matters.

• Reviewing with management and our auditors any earnings announcements and other public announcements regarding our results of operations.

• Preparing the report that the SEC requires in our annual proxy statement.

Leadership Development and Compensation Committee

Our leadership development and compensation committee’s purpose will be to assist our board of directors in determining the development plans and compensation of our senior management, directors and employees and recommend these plans to our board. This committee’s responsibilities will include:

• Reviewing the employee wide compensation philosophy.

• Reviewing the budget and structure of our employee wide variable cash compensation plans.

• Reviewing the budget and structure of our employee wide equity based compensation plans.

• Reviewing and recommending compensation and benefit plans for our executive officers.

• Reviewing the terms of offer letters and employment agreements and arrangements with our officers.

• Setting performance goals for our officers and reviewing their performance against these goals.

• Periodically reviewing executive succession plans and executive education and development plans.

• Evaluating the competitiveness of our executive compensation plans.

• Preparing the report that the SEC requires in our annual proxy statement.

Corporate Governance and Nominating Committee

Our corporate governance and nominating committee’s purpose will be to assist our board by identifying individuals qualified to become members of our board of directors consistent with criteria set by our board and to develop our corporate governance principles. This committee’s responsibilities will include:

• Evaluating the composition, size and governance of our board of directors and its committees and make recommendations regarding future planning and the appointment of directors to our committees.

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• Establishing a policy for considering stockholder nominees for election to our board of directors.

• Recommending ways to enhance communications and relations with our stockholders.

• Evaluating and recommending candidates for election to our board of directors.

• Overseeing our board of directors performance and self-evaluation process and developing continuing education programs for our directors.

• Reviewing our corporate governance principles and providing recommendations to the board regarding possible changes.

• Reviewing and monitoring compliance with our code of ethics and our insider trading policy.

Executive Committee

The Executive Committee will serve as an administrative committee of the board that is available to facilitate the approval of certain corporate actions that do not require consideration by the full board.

Compensation Committee Interlocks and Insider Participation

None of the members of our compensation committee will be one of our officers or employees. None of our executive officers currently serves, or in the past year has served, as a member of the board of directors or compensation committee of any entity that has one or more executive officers serving on our board of directors or compensation committee.

Director Compensation

We do not currently compensate our directors in cash for their service as members of our board of directors. We do reimburse our directors for reasonable expenses in connection with attendance at board and committee meetings. Additionally, our directors are eligible to receive and have received stock options under our stock plans.

In April 2004, our newly elected directors, John, Art and Paul each received an option to purchase 65,000 shares of common stock subject to vesting over a term of five years and otherwise pursuant to the terms of our 2003 Stock Plan (No. 3).

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Executive Compensation

The following table sets forth information regarding the compensation that we paid to our Chief Executive Officer and each of our four other most highly compensated executive officers during the year ended December 31, 2003. We refer to these officers in this prospectus as the named executive officers.

Summary Compensation Table

	Annual Compensation					Long Term Compensation Awards	All Other Compensation
Name and Principal Position	Salary		Bonus(1)(2)			Securities Underlying Options
Eric Schmidt, Chief Executive Officer and Director	$	250,000	$	301,556		—	$	2,894	(3)
Sergey Brin, President of Technology and Director		150,000		206,556		—		14,440	(4)
Larry Page, President of Products and Director		150,000		206,556		—		11,327	(5)
Omid Kordestani, Senior Vice President of Worldwide Sales and Field Operations		175,000		394,456	(6)	—		2,704	(7)
Wayne Rosing, Vice President of Engineering		175,000		151,314		—		2,704	(8)

(1) We generally pay bonuses in the year following the year in which they were earned. Unless otherwise noted, bonus amounts presented represent employee performance bonuses and are reported for the year in which they were earned, though they may have been paid in the following year.

(2) Each of the bonuses presented include a holiday bonus in the amount of $1,556.

(3) Includes $2,200 contributed to Eric’s account under our 401(k) plan and $694 of insurance premiums paid for his benefit.

(4) Includes $14,008 of engineering patent awards and $432 of insurance premiums paid for Sergey’s benefit.

(5) Includes $10,895 of engineering patent awards and $432 of insurance premiums paid for Larry’s benefit.

(6) Includes $347,900 of sales commissions.

(7) Includes $2,200 contributed to Omid’s account under our 401(k) plan and $504 of insurance premiums paid for his benefit.

(8) Includes $2,200 contributed to Wayne’s account under our 401(k) plan and $504 of insurance premiums paid for his benefit.

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Stock Option Grants in Last Fiscal Year

The following table sets forth information regarding the granting of stock options to the named executive officers during 2003. The percentage of total options set forth below is based on an aggregate of 18,681,260 options granted to employees for the year ended December 31, 2003.

Option/SAR Grants in Last Fiscal Year

	Individual Grants
	Number of Shares Common Stock	Percentage of Total Options Granted to Employees in 2003		Exercise or Base Price Per Share		Expiration Date	Potential Realizable Value at Assumed Annual Rate of Stock Price Appreciation for Option Term
Name and Principal Position							5%	10%
Eric Schmidt Chief Executive Officer and Director	—	—			—	—	—	—
Sergey Brin President of Technology and Director	—	—			—	—	—	—
Larry Page President of Products and Director	—	—			—	—	—	—
Omid Kordestani Senior Vice President of Worldwide Sales and Field Operations	—	—			—	—	—	—
Wayne Rosing(1) Vice President of Engineering	128,000	0.7	%	$	5.00	7/18/13

(1) Shares subject to this option will begin vesting on November 23, 2004 and will vest as follows: (i) 15 percent on the one year anniversary of the vesting commencement date, (ii) 17.5 percent in the second year of vesting, (iii) 20 percent in the third year of vesting, (iv) 22.5 percent in the fourth year of vesting, and (v) 25 percent in the fifth year of vesting; provided that shares vesting in each of the years following the one year anniversary of Wayne’s vesting commencement date will vest in the respective amounts described above ratably at the end of each month of Wayne’s continued employment with us. Wayne’s option was granted at the fair market value of our Class B common stock as determined by our board of directors on the date of grant. Wayne’s option has a term of 10 years, subject to earlier termination in certain events related to the cessation of Wayne’s employment with us.

The amounts shown in the table above for Wayne as potential realizable value represent hypothetical gains that could be achieved for the respective options if exercised at the end of the option term. These amounts represent assumed rates of appreciation in the value of our common stock from the fair market value on the date of grant. Potential realizable values in the table above are calculated by:

• Multiplying the number of shares of our common stock subject to the option by the assumed initial public offering price per share of $        .

• Assuming that the aggregate stock value derived from that calculation compounds at the annual 5% or 10% rates shown in the table for the entire 10-year term of the option.

• Subtracting from that result the total option exercise price.

The 5% and 10% assumed rates of appreciation are suggested by the rules of the SEC and do not represent our estimate or projection of the future common stock price. Actual gains, if any, on stock option exercises will be dependent on the future performance of our common stock.

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Option Exercises in Last Fiscal Year and Fiscal Year-End Option Values

The following table provides option exercise information for the executive officer named in the summary compensation table. The table shows the number of shares acquired and the value realized upon exercise of stock options during 2003 and the exercisable and unexercisable options held at December 31, 2003. The “Value Realized” and the “Value of Unexercised In-the-Money Options” shown in the table represents an amount equal to the difference between an assumed initial public offering price of $                 per share and the option exercise price, multiplied by the number of shares acquired on exercise and the number of unexercised in-the-money options. These calculations do not take into account the effect of any taxes that may be applicable to the option exercises.

	Shares Acquired on Exercise	Value Realized		Number of Unexercised Options at Fiscal Year-End		Value of Unexercised In-the-Money Options at Fiscal Year-End
Name and Principal Position				Exercisable(1)	Unexercisable	Exercisable	Unexercisable
Eric Schmidt Chairman and Chief Executive Officer	—		—	—	—	—	—
Sergey Brin President of Technology and Director	—		—	—	—	—	—
Larry Page President of Products and Director	—		—	—	—	—	—
Omid Kordestani Senior Vice President of Worldwide Sales and Field Operations(2)	80,000	$	20,000	1,420,000	—		—
Wayne Rosing Vice President of Engineering(3)	—		—	148,000	—		—

(1) Stock options allow for the exercise of the options before they have vested. Upon exercise prior to vesting, the unvested shares that were exercised early may be repurchased by us at the original exercise price upon termination of an executive officer’s employment. Our repurchase right lapses over time over the vesting schedule of the option.

(2) Omid’s option was vested as to 669,666 shares Class B common stock and unvested as to 750,334 shares at December 31, 2003.

(3) Wayne’s option was vested as to 8,333 shares Class B common stock and unvested as to 139,667 shares at December 31, 2003.

Employee Benefit Plans

1998 Stock Plan, 2003 Stock Plan, 2003 Stock Plan (No. 2) and 2003 Stock Plan (No. 3)

Our 1998 Stock Plan was adopted by our board of directors in September 1998 and subsequently approved by our stockholders. At March 31, 2004, options to purchase a total of 6,623,731 shares of Class B common stock were outstanding under the 1998 Stock Plan at a weighted average exercise price of $0.29 per share.

Our 2003 Stock Plan was adopted by our board of directors in February 2003 and subsequently approved by our stockholders. At March 31, 2004, options to purchase a total of 2,979,933 shares of Class A common stock were outstanding under the 2003 Stock Plan at a weighted average exercise price of $1.28 per share.

Our 2003 Stock Plan (No. 2) was adopted by our board of directors in July 2003 and subsequently approved by our stockholders. At March 31, 2004, options to purchase a total of 3,770,078 shares of Class B common stock were outstanding under the 2003 Stock Plan (No. 2) at a weighted average exercise price of $5.39 per share.

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Our 2003 Stock Plan (No. 3) was adopted by our board of directors in July 2003 and subsequently approved by our stockholders. At March 31, 2004, options to purchase a total of 2,951,292 shares of Class A common stock were outstanding under the 2003 Stock Plan (No. 3) at a weighted average exercise price of $9.51 per share.

Our plans generally provide for the grant of options and stock purchase rights. Incentive stock options within the meaning of Section 422 of the Internal Revenue Code may be granted only to our employees or employees of our subsidiaries. Stock purchase rights may only be granted under the 1998 Stock Plan to our employees, officers, directors, consultants, independent contractors and advisors and those of any of our subsidiaries. Nonstatutory stock options may be granted to our employees, officers, directors, consultants, independent contractors and advisors and those of any of our subsidiaries. Consultants, independent contractors and advisors are only eligible to receive awards if they render bona fide services not in connection with the offer and sale of securities in a capital-raising transaction.

Our board of directors administers the plans. The administrator has the authority to determine the terms and conditions of the options and stock purchase rights granted under these plans, and may reduce the exercise price of an option to the then current fair market value of our common stock or institute a program whereby outstanding options are exchanged for options with a lower exercise price.

The maximum term of the options under these plans is ten years. The awards granted under these plans may not be transferred in any manner other than by will or by the laws of descent and distribution and may be exercised during the lifetime of the optionee only by the optionee.

These plans provide that in the event of our merger with or into another corporation, or a sale of substantially all of our assets, the successor corporation or its parent or subsidiary will assume or substitute each stock purchase right and option. If the outstanding stock purchase rights or options are not assumed or substituted, they will become fully vested and exercisable for a 15-day period from the date the administrator provides notice of such transaction and shall terminate at the end of such 15-day period.

Generally, in the event of our change in control, the successor corporation will assume each option or replace it with a cash incentive program that preserves the spread associated with the option. If the outstanding options are not assumed or substituted after a change in control, the options vesting will accelerate in full.

2000 Stock Plan

Our 2000 Stock Plan was adopted by our board of directors in November 2000 and subsequently approved by our stockholders. At March 31, 2004, options to purchase a total of              shares of Class B common stock were outstanding under the 2000 Stock Plan at a weighted average exercise price of $         per share. The terms of our 2000 Stock Plan are substantially the same as the terms described above, except that the 2000 Stock Plan does not shares in the collective authorized share pool applicable to the plans described above.

1999 Stock Option/Stock Issuance Plan

Our 1999 Stock Option/Stock Issuance Plan was assumed by us in connection with our acquisition of Applied Semantics, Inc. in April 2003. At March 31, 2004, options to purchase a total of              shares of Class B common stock were outstanding under the 1999 Stock Option/Stock Issuance Plan at a weighted average exercise price of $         per share. At March 31, 2004,              shares of Class A common stock remained available for future issuance under our 1999 Stock Option/Stock Issuance Plan.

2003 Equity Incentive Plan

Our 2003 Equity Incentive Plan was assumed by us in connection with our acquisition of Ignite Logic, Inc. in April 2004. At April 23, 2004, options to purchase a total of              shares of Class A common stock were

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outstanding under the 2003 Equity Incentive Plan at a weighted average exercise price of $28.86 per share. At April 23, 2004, no shares of Class B common stock remained available for future issuance under our 2003 Equity Incentive Plan.

2004 Stock Plan

Our board of directors adopted the 2004 Stock Plan in April 2004, and we expect our stockholders will approve the plan prior to the completion of this offering. The 2004 Stock Plan provides for the grant of incentive stock options, within the meaning of Section 422 of the Code, to our employees and nonstatutory stock options, restricted stock, stock appreciation rights, performance units, performance shares, restricted stock units and other stock based awards to our employees, directors, and consultants. No awards have yet been issued pursuant to the 2004 Stock Plan.

Number of Shares of Common Stock Available Under the 2004 Stock Plan.    A total of              shares of our Class A common stock were reserved for issuance pursuant to our 2004 Stock Plan. The number of shares reserved for issuance under the 2004 Stock Plan will be reduced by the number of shares subject to options that are granted after December 31, 2003 under the Company’s 1998 Stock Plan, 1999 Stock Option/Stock Issuance Plan, 2000 Stock Plan, 2003 Stock Plan, 2003 Stock Plan (No. 2) and 2003 Stock Plan (No. 3).

If an option, grant of restricted stock, stock appreciation right, performance unit, performance share, restricted stock unit or other stock based award (each, an “award”) expires or is terminated or canceled without having been exercised or settled in full, is forfeited back to or repurchased by the Company, the terminated portion of the award (or forfeited or repurchased shares subject to the award) will become available for future grant or sale under our plan (unless our plan has terminated). Shares are not deemed to be issued under the 2004 Stock Plan with respect to any portion of an award that is settled in cash. If the exercise or purchase price of an award is paid for through the tender of shares, or withholding obligations are met through the tender or withholding of shares, those shares tendered or withheld will again be available for issuance under the 2004 Stock Plan. However, shares that have actually been transferred to a financial institution or other person or entity selected by the plan administrator, will not be returned to the 2004 Stock Plan, will not be returned to our plan and will not be available for future distribution under our plan.

Administration of the 2004 Stock Plan.    Our board of directors, or one or more committees appointed by our board, will administer our 2004 Stock Plan. In the case of awards intended to qualify as “performance based compensation” within the meaning of Section 162(m) of the Internal Revenue Code of 1986, as amended, the committee will consist of two or more “outside directors” within the meaning of Section 162(m). The administrator has the power to determine the terms of the awards, including the exercise price (which may be changed by the administrator after the date of grant), the number of shares subject to each award, the exercisability of the awards and the form of consideration payable upon exercise. The administrator also has the power to implement an award exchange program, an award transfer program, whereby awards may be transferred to a financial institution or other person or entity selected by the plan administrator, and a program through which participants may reduce cash compensation payable in exchange for awards, and to create other stock based awards that are valued in whole or in part by reference to (or are otherwise based on) shares of our Class A Common Stock (or the cash equivalent of such shares).

Options.    A stock option is the right to purchase shares of our common stock at a fixed exercise price for a fixed period of time. The administrator will determine the exercise price of options granted under our 2004 Stock Plan, but with respect to nonstatutory stock options intended to qualify as “performance-based compensation” within the meaning of Section 162(m) of the Code and all incentive stock options, the exercise price generally must be at least equal to the fair market value of our common stock on the date of grant. After termination of one of our employees, directors or consultants, he or she may exercise his or her option for the period of time stated in the option agreement. If termination is due to death or disability, the option generally will remain exercisable for 12 months following such termination. In all other cases, the option generally will remain exercisable for three months. However, an option may never be exercised later than the expiration of its term. The term of an

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incentive stock option may not exceed ten years, except that with respect to any participant who owns 10% of the voting power of all classes of our outstanding capital stock, the term must not exceed five years and the exercise price must equal at least 110% of the fair market value on the date of grant. The administrator determines the term of all other options.

Restricted Stock.    Restricted stock awards are awards of shares of our common stock that vest in accordance with terms and conditions established by the administrator. The administrator may impose whatever conditions to vesting it determines to be appropriate. The administrator will determine the number of shares of restricted stock granted to any employee. The administrator determines the purchase price of any grants of restricted stock and, unless the administrator determines otherwise, shares that do not vest typically will be subject to forfeiture or to our right of repurchase, which we may exercise upon the voluntary or involuntary termination of the purchaser’s service with us for any reason including death or disability.

Stock Appreciation Rights.    A stock appreciation right is the right to receive the appreciation in the fair market value of our common stock between the exercise date and the date of grant, for that number of shares of our common stock with respect to which the stock appreciation right is exercised. We may pay the appreciation in either cash, in shares of our common stock with equivalent value, or in some combination, as determined by the administrator. The administrator determines the exercise price of stock appreciation rights, the vesting schedule and other terms and conditions of stock appreciation rights; however, stock appreciation rights expire under the same rules that apply to stock options.

Performance Shares and Performance Units.    Performance units and performance shares are awards that will result in a payment to a participant only if performance goals established by the administrator are achieved or the awards otherwise vest. The administrator will establish performance goals in its discretion, which, depending on the extent to which they are met, will determine the number and/or the value of performance units and performance shares to be paid out to participants. The performance goals may be based upon the achievement of company-wide, divisional or individual goals (including solely continued service), applicable securities laws or other basis determined by the administrator. Payment for performance units and performance shares may be made in cash or in shares of our common stock with equivalent value, or in some combination, as determined by the administrator. Performance units will have an initial dollar value established by the administrator prior to the grant date. Performance shares will have an initial value equal to the fair market value of our common stock on the grant date.

Restricted Stock Units.    Restricted stock units are awards of restricted stock, performance shares or performance units that are paid out in installments or on a deferred basis. The administrator determines the terms and conditions of restricted stock units.

Other Stock Based Awards.    The administrator has the authority to create awards under the 2004 Stock Plan in addition to those specifically described in the 2004 Stock Plan. These awards must be valued in whole or in part by reference to, or must otherwise be based on, the shares of our Class A common stock (or the cash equivalent of such shares).

Transferability of Awards.    Unless the administrator determines otherwise, our 2004 Stock Plan does not allow for the transfer of awards other than by will or by the laws of descent and distribution, and only the participant may exercise an award during his or her lifetime.

Adjustments upon Merger or Change in Control.    Our 2004 Stock Plan provides that in the event of a merger with or into another corporation or our “change in control,” including the sale of all or substantially all of our assets, the successor corporation will assume or substitute an equivalent award for each outstanding award. Unless determined otherwise by the administrator, any outstanding options or stock appreciation rights not assumed or substituted for will be fully vested and exercisable, including as to shares that would not otherwise have been vested and exercisable, for a period of up to 15 days from the date of notice to the optionee. The option or stock appreciation right will terminate at the end of such period. Unless determined otherwise by the

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administrator, any restricted stock, performance shares, performance units, restricted stock units or other stock based awards not assumed or substituted for will be fully vested as to all of the shares subject to the award, including shares which would not otherwise be vested. In the event an outside director is terminated immediately prior to or following a change in control, other than pursuant to a voluntary resignation, the awards he or she received under the 2004 Stock Plan will fully vest and become immediately exercisable.

Amendment and Termination of Our 2004 Stock Plan.    Our 2004 Stock Plan will automatically terminate in 2014, unless we terminate it sooner. In addition, our board of directors has the authority to amend, suspend or terminate our 2004 Stock Plan provided it does not adversely affect any award previously granted under our plan.

Employment Agreements and Change in Control Arrangements

Eric Schmidt Employment Agreement

We have entered into an employment agreement with Eric Schmidt, our chief executive officer. The agreement provides that Eric will receive a base salary of $250,000. Eric was also granted an option to purchase 14,331,708 shares of Class B common stock at an exercise price of $0.30 per share pursuant to this agreement and was permitted to purchase 426,892 shares of Series C preferred stock at a purchase price of $2.3425 per share. Eric may also earn a yearly performance bonus of up to 60% of his base salary if he meets the performance criteria set by our board of directors. If Eric is terminated without cause, he will receive 12 months’ base salary, six months’ accelerated vesting of any options and the greater of his performance bonus for the year of termination or for the prior year. If Eric resigns for good reason or if he is terminated without cause within 12 months after our change in control, then instead of the 6 months accelerated vesting of options, he will receive 12 months accelerated vesting of options. For purposes of this employment agreement, our change in control includes our merger or combination with or into a third party, the sale of all or substantially all our assets or a change in our board composition over a two-year period resulting in fewer than a majority of directors remaining as incumbent directors. For purposes of this employment agreement, a termination “without cause” means a termination for reasons other than an act of material dishonesty in performing his duties, a felony conviction or plea of no contest to a felony or gross misconduct. For purposes of this employment agreement, “good reason” means a material reduction in Eric’s base salary, performance bonus or in responsibilities or a relocation to more than 50 miles from our current facility.

In connection with his stock option exercise on September 28, 2001, we entered into a promissory note and security agreement with Eric. On April 28, 2004, Eric repaid the note in its entirety and the stock previously pledged as collateral was released from the security agreement. This arrangement is further described in “Certain Relationships and Related Party Transactions—Indebtedness of Management.”

Limitation on Liability and Indemnification Matters

Our certificate of incorporation contains provisions that limit the liability of our directors for monetary damages to the fullest extent permitted by Delaware law. Consequently, our directors will not be personally liable to us or our stockholders for monetary damages for any breach of fiduciary duties as directors, except liability for the following:

• Any breach of their duty of loyalty to our company or our stockholders.

• Acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law.

• Unlawful payments of dividends or unlawful stock repurchases or redemptions as provided in Section 174 of the Delaware General Corporation Law.

• Any transaction from which the director derived an improper personal benefit.

Our bylaws provide that we are required to indemnify our directors and officers and may indemnify our employees and other agents to the fullest extent permitted by Delaware law. Our bylaws also provide that we

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shall advance expenses incurred by a director or officer in advance of the final disposition of any action or proceeding, and permit us to secure insurance on behalf of any officer, director, employee or other agent for any liability arising out of his or her actions in that capacity, regardless of whether our bylaws would otherwise permit indemnification. We have entered and expect to continue to enter into agreements to indemnify our directors, executive officers and other employees as determined by the board of directors. These agreements provide for indemnification for related expenses including attorneys’ fees, judgments, fines and settlement amounts incurred by any of these individuals in any action or proceeding. We believe that these bylaw provisions and indemnification agreements are necessary to attract and retain qualified persons as directors and officers. We also maintain directors’ and officers’ liability insurance.

The limitation of liability and indemnification provisions in our certificate of incorporation and bylaws may discourage stockholders from bringing a lawsuit against our directors for breach of their fiduciary duty. They may also reduce the likelihood of derivative litigation against our directors and officers, even though an action, if successful, might benefit us and other stockholders. Furthermore, a stockholder’s investment may be adversely affected to the extent that we pay the costs of settlement and damage awards against directors and officers as required by these indemnification provisions. At present, there is no pending litigation or proceeding involving any of our directors, officers or employees regarding which indemnification is sought, and we are not aware of any threatened litigation that may result in claims for indemnification.

Insofar as the provisions of our certificate of incorporation or bylaws provide for indemnification of directors or officers for liabilities arising under the Securities Act, we have been informed that in the opinion of the Securities and Exchange Commission this indemnification is against public policy as expressed in the Securities Act and is therefore unenforceable.

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CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS

Since January 1, 2001, we have not been a party to, and we have no plans to be a party to, any transaction or series of similar transactions in which the amount involved exceeded or will exceed $60,000 and in which any current director, executive officer, holder of more than 5% of our capital stock, or entities affiliated with them, had or will have a material interest, other than as described above in the section captioned “Management” and in the transactions described below.

Investors Rights Agreement

We have entered into an agreement with the purchasers of our preferred stock, and certain holders of warrants to purchase our capital stock, including entities with which certain of our directors are affiliated, that provides for certain rights relating to the registration of their shares of Class B common stock issuable upon conversion of their preferred stock or other warrants. These rights will survive this offering and will terminate at such time as all holders’ securities can be sold within a six month period without compliance with the registration requirements of the Securities Act pursuant to Rule 144, but in any event no later than five-year anniversary of this offering. The directors, executive officers and holders of 5% of our capital stock that are parties to this agreement are Eric Schmidt, Sergey Brin, Larry Page, Omid Kordestani, David C. Drummond, L. John Doerr, Michael Moritz and Ram Shriram.

Indemnification Agreements

We have entered into an indemnification agreement with each of our directors and officers. The indemnification agreements and our certificate of incorporation and bylaws require us to indemnify our directors and officers to the fullest extent permitted by Delaware law.

Shares Issued to Insiders

The following table summarizes purchases of our stock since January 1, 2001 by our executive officers, directors and holders of more than 5% of our common stock other than compensatory arrangements.

Name	Date of Issuance	Type of Security	Number of Shares	Purchase Price
Eric Schmidt	7/13/01	Series C preferred stock	426,892	$	999,994.51

Each share of our preferred stock will be converted automatically into one share of our Class B common stock upon the closing of this offering.

Indebtedness of Management

In September 2001, in connection with the exercise of an option to purchase of 14,331,708 shares of our Class B common stock, Eric Schmidt, our chief executive officer, delivered to us a full recourse promissory note dated September 28, 2001 in the aggregate principal amount of approximately $4.3 million secured by shares of Class B common stock. Interest on the loan accrued at a rate of 7.38% per annum, compounded semi-annually. The loan was secured by a security interest in 14,331,708 shares of our Class B common stock. The largest aggregate amount of indebtedness outstanding pursuant to the note was approximately $5.2 million, which represented the full amount of principal and interest outstanding at April 28, 2004, the date the loan was repaid in full.

Corporate Use of Personal Aircraft

Eric Schmidt owns an interest in two jets that are managed and operated by Apex Aviation and which are made commercially available for lease to consumers. Eric allows certain of our executive officers to use these

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planes for time-critical business trips that cannot be accommodated by commercial airline services. In 2003, we used these planes for business-related travel services for certain of our executive officers and for which services we paid Apex market rates. Eric is entitled to receive a portion of the profits earned by Apex resulting from its management and operation of these planes. Eric has agreed to pay us any and all annual net profits distributed to him as a result of his ownership of an interest in the jets. In 2003, we paid Apex $278,119 and reimbursed Eric $20,214 for the use of these planes. The reimbursements to Eric related to business flights where Eric was billed directly by Apex for use of the planes. These payments were approved by our board of directors and, based upon a competitive analysis of comparable leased aircraft, our board of directors determined that the amounts billed for our use of the aircraft and pilots were at or below market rates for the charter of similar aircraft.

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PRINCIPAL AND SELLING STOCKHOLDERS

The following table sets forth certain information with respect to the beneficial ownership of our common stock at March 31, 2004, and as adjusted to reflect the sale of Class A common stock offered by us in this offering, for

• Each person who we know beneficially owns more than 5% of our common stock.

• Each of our directors.

• Each of our named executive officers.

• All of our directors and executive officers as a group.

• All selling stockholders.

Unless otherwise noted below, the address of each beneficial owner listed in the table is c/o Google Inc., 1600 Amphitheatre Parkway, Mountain View, California 94043.

We have determined beneficial ownership in accordance with the rules of the SEC. Except as indicated by the footnotes below, we believe, based on the information furnished to us, that the persons and entities named in the table below have sole voting and investment power with respect to all shares of Class B common stock that they beneficially own, subject to applicable community property laws.

Applicable percentage ownership is based on 11,920,766 shares of Class A common stock and 234,228,179 shares of Class B common stock outstanding on March 31, 2004, assuming the conversion of all outstanding shares of preferred stock and Class A Senior common stock into Class B common stock and the redesignation of all then outstanding shares of common stock (other than Class A Senior common stock) into shares of Class A common stock. For purposes of the table below, we have assumed that          shares of Class A common stock and          shares of Class B common stock will be outstanding upon completion of this offering. In computing the number of shares of common stock beneficially owned by a person and the percentage ownership of that person, we deemed outstanding shares of common stock subject to options or warrants held by that person that are currently exercisable or exercisable within 60 days of March 31, 2004. We did not deem these shares outstanding, however, for the purpose of computing the percentage ownership of any other person. Beneficial ownership representing less than 1% is denoted with an “*.”

At March 31, 2004, none of the beneficial owners listed below had any beneficial interest in any shares of Class A common stock and no holder of Class A common stock owns more than a five percent beneficial interest in common stock.

	Shares Beneficially Owned Prior to Offering		% Total Voting Power(1)	Shares Being Offered	Shares Beneficially Owned After Offering		% Total Voting Power(1)
	Common Stock				Common Stock
Name of Beneficial Owner	Shares	%			Shares	%
5% Stockholders
KPCB Holdings Inc.(2)	23,893,800
Sequoia Capital(3)	23,893,800
Executive Officers and Directors
Eric Schmidt	14,758,600
Sergey Brin	38,490,304
Larry Page	38,593,700
Omid Kordestani(4)	4,810,520
Wayne Rosing(5)	1,468,000
L. John Doerr(2)	23,893,800
John Hennessy(6)
Arthur Levinson(6)
Michael Moritz(3)	23,893,800
Paul Otellini(6)
K. Ram Shriram	5,324,660
Executive Officers and Directors as a group(7) (11 persons)	151,233,384

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(1) Percentage total voting power represents voting power with respect to all shares of our Class A and Class B common stock, as a single class. Each holder of Class B common stock shall be entitled to ten votes per share of Class B common stock and each holder of Class A common stock shall be entitled to one vote per share of Class A common stock held by our stockholders on all matters submitted to them for a vote. The Class A common stock and Class B common stock vote together as a single class on all matters submitted to a vote of our stockholders, except as may otherwise be required by law. The Class B common stock is convertible at any time by the holder into shares of Class A common stock on a share-for-share basis.

(2) Includes 23,893,800 shares held by KPCB Holdings, as Nominees. John disclaims beneficial ownership of the shares held by this fund except to the extent of his pecuniary interest in this fund. The address of KPCB Holdings, as Nominees, and John is 2750 Sand Hill Road, Menlo Park, California 94025.

(3) Includes 21,654,952 shares held by Sequoia Capital VIII; 1,433,624 shares held by Sequoia International Technology Partners VIII(Q); 477,872 shares held by CMS Partners LLC; 274,784 shares held by Sequoia International Technology Partners VIII; and 52,568 shares held by Sequoia 1997. Michael disclaims beneficial ownership of the shares held by these funds except to the extent of his pecuniary interest in these funds. The address of these funds and Michael is 3000 Sand Hill Road, Bldg 4, Suite 180, Menlo Park, California 94025.

(4) Includes 1,420,000 shares issuable upon exercise of options that are exercisable within 60 days of March 31, 2004. The option provides for exercise prior to vesting, and any unvested shares that are exercised will be subject to a lapsing repurchase right in our favor. 788,000 of the shares are vested and 632,000 of the shares are unvested.

(5) Includes 148,000 shares issuable upon exercise of options that are exercisable within 60 days of March 31, 2004. The option provides for exercise prior to vesting, and any unvested shares that are exercised will be subject to a lapsing repurchase right in our favor. 10,000 of the shares are vested and 138,000 of the shares are unvested.

(6) In April 2004, each of John, Art and Paul were granted options to purchase 65,000 shares that are exercisable within 60 days of the date of grant, none of which will then be vested. The option provides for exercise prior to vesting, and any unvested shares that are exercised will be subject to a lapsing repurchase right in our favor.

(7) Includes shares issuable upon exercise of options that are exercisable within 60 days of March 31, 2004, of which 798,000 shares will be vested and 770,000 shares will be unvested.

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DESCRIPTION OF CAPITAL STOCK

General

The following is a summary of the rights of our common stock and preferred stock and related provisions of our certificate of incorporation and bylaws, as they will be in effect upon the closing of this offering. For more detailed information, please see our certificate of incorporation, bylaws and amended and restated investor rights agreement, which are filed as exhibits to the registration statement of which this prospectus is a part.

Our certificate of incorporation provides that, upon the closing of the offering, we will have two classes of common stock: Class A common stock, which will have one vote per share, and Class B common stock, which will have ten votes per share. Any holder of Class B common stock may convert his or her shares at any time into shares of Class A common stock on a share-for-share basis. Otherwise the rights of the two classes of common stock will be identical. The rights of these classes of common stock are discussed in greater detail below.

Immediately following the closing of this offering, our authorized capital stock will consist of              shares, each with a par value of $0.001 per share, of which:

• shares are designated as Class A common stock.

• shares are designated as Class B common stock.

• shares are designated as preferred stock.

At March 31, 2004, we had outstanding 11,920,766 shares of Class A common stock and 234,228,179 shares of Class B common stock. This amount assumes the conversion upon the closing of this offering of all outstanding shares of our preferred stock, totaling 71,662,432 into Class B common stock, all outstanding shares of our Class A Senior common stock, totaling 162,565,747, with Class B common stock and the redesignation of all then-outstanding shares of our common stock (other than Class A Senior common stock), totaling 11,920,766, into Class A common stock. In addition, as of March 31, 2004, 16,576,312 shares of our common stock were subject to outstanding options, and 9,533,592 of our capital stock were subject to outstanding warrants. At March 31, 2004, 21,220,646 shares of our outstanding common stock were held by our employees and consultants. These shares are subject to a lapsing right of repurchase in our favor, under which we may repurchase these shares upon the termination of the holder’s employment or consulting relationship.

Common Stock

Voting Rights

Holders of our Class A and Class B common stock have identical rights, except that holders of our Class A common stock are entitled to one vote per share and holders of our Class B common stock are entitled to ten votes per share. Holders of shares of Class A common stock and Class B common stock will vote together as a single class on all matters (including the election of directors) submitted to a vote of stockholders, unless otherwise required by law. We have not provided for cumulative voting for the election of directors in our certificate of incorporation.

Dividends

Subject to preferences that may apply to any shares of preferred stock outstanding at the time, the holders of Class A common stock and Class B common stock shall be entitled to share equally in any dividends that our board of directors may determine to issue from time to time. In the event a dividend is paid in the form of shares of common stock or rights to acquire shares of common stock, the holders of Class A common stock shall receive Class A common stock, or rights to acquire Class A common stock, as the case may be, and the holders of Class B common stock shall receive Class B common stock, or rights to acquire Class B common stock, as the case may be.

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Liquidation Rights

Upon our liquidation, dissolution or winding-up, the holders of Class A common stock and Class B common stock shall be entitled to share equally all assets remaining after the payment of any liabilities and the liquidation preferences on any outstanding preferred stock.

Conversion

Our Class A common stock is not convertible into any other shares of our capital stock.

Each share of Class B common stock is convertible at any time at the option of the holder into one share of Class A common stock. In addition, each share of Class B common stock shall convert automatically into one share of Class A common stock upon any transfer, whether or not for value, except for certain transfers described in our certificate of incorporation, including the following:

• Transfers between Larry and Sergey, our founders.

• Transfers for tax and estate planning purposes, including to trusts, corporations and partnerships controlled by a holder of Class B common stock.

In addition, partnerships or limited liability companies that hold more than 5% of the total outstanding shares of Class B common stock as of the closing of the offering may distribute their Class B common stock to their respective partners or members (who may further distribute the Class B common stock to their respective partners or members) without triggering a conversion to Class A common stock. Such distributions must be conducted in accordance with the ownership interests of such partners or members and the terms of any agreements binding the partnership or limited liability company.

The death of any holder of Class B common stock who is a natural person will result in the conversion of his or her shares of Class B common stock to Class A common stock. However, either of our founders may transfer voting control of shares of Class B common stock to the other founder contingent or effective upon their death without triggering a conversion to Class A common stock, provided that the shares of Class B common stock so transferred shall convert to Class A common stock nine months after the death of the transferring founder.

Once transferred and converted into Class A common stock, the Class B common stock shall not be reissued. No class of common stock may be subdivided or combined unless the other class of common stock concurrently is subdivided or combined in the same proportion and in the same manner.

Preferred Stock

Upon the closing of this offering, each outstanding share of our preferred stock will be converted into one share of Class B common stock.

Following the closing of this offering, our board of directors will have the authority, without approval by the stockholders, to issue up to a total of              shares of preferred stock in one or more series. Our board of directors may establish the number of shares to be included in each such series and may fix the designations, preferences, powers and other rights of the shares of a series of preferred stock. Our board could authorize the issuance of preferred stock with voting or conversion rights that could dilute the voting power or rights of the holders of common stock. The issuance of preferred stock, while providing flexibility in connection with possible acquisitions and other corporate purposes, could, among other things, have the effect of delaying, deferring or preventing a change in control of Google and might harm the market price of our common stock. We have no current plans to issue any shares of preferred stock.

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Warrants

At March 31, 2004, we had outstanding warrants to purchase 9,533,592 shares of our common stock assuming automatic conversion of our preferred stock into common stock upon the closing of this offering at exercise prices ranging from $0.30 to $2.91.

Registration Rights

The holders of 71,644,432 shares of our common stock issuable upon the automatic conversion of our preferred stock and the holders of 8,159,328 shares of our common stock issuable upon exercise of warrants are entitled to rights with respect to the registration of their shares under the Securities Act. These registration rights are contained in our third amended and restated investors’ rights agreement and are described below. The registration rights under the investors’ rights agreement will expire five years following the completion of this offering, or, with respect to an individual holder, when such holder is able to sell all of its shares pursuant to Rule 144 under the Securities Act in any three month period.

Demand Registration Rights

At any time following six months after the closing of this offering, the holders of shares of common stock having demand registration rights under the investors’ rights agreement have the right to require that we register their common stock, provided such registration relates to not less than 40% in aggregate of our then outstanding shares of common stock having demand registration rights. We are only obligated to effect two registrations in response to these demand registration rights. We may postpone the filing of a registration statement for up to 90 days once in any 12-month period if our board of directors determines in good faith that the filing would be seriously detrimental to our stockholders or us. The underwriters of any underwritten offering have the right to limit the number of shares to be included in a registration statement filed in response to the exercise of these demand registration rights. We must pay all expenses, except for underwriters’ discounts and commissions, incurred in connection with these demand registration rights.

Piggyback Registration Rights

If we register any securities for public sale, the stockholders with piggyback registration rights under the investors’ rights agreement have the right to include their shares in the registration, subject to specified exceptions. The underwriters of any underwritten offering have the right to limit the number of shares registered by these stockholders due to marketing reasons, provided that the number of shares held by stockholders with piggyback registration rights may not be limited to less than 30% of the total number of shares to be included in the registration. We must pay all expenses, except for underwriters’ discounts and commissions, incurred in connection with these piggyback registration rights.

S-3 Registration Rights

If we are eligible to file a registration statement on Form S-3, the stockholders with S-3 registration rights under the investors’ rights agreement can request that we register their shares, provided that the total price of the shares of common stock offered to the public is at least $250,000. The holders of S-3 registration rights may only require us to file one Form S-3 registration statement in any 12-month period, and any holder of S-3 registration rights may not require us to file a registration statement on Form S-3 if we have already effected two registrations on Form S-3 at the request of such holder. We may postpone the filing of a Form S-3 registration statement for up to 90 days once in any 12-month period if our board of directors determines in good faith that the filing would be seriously detrimental to our stockholders or us. The holders of S-3 registration rights must pay all expenses associated with any registrations on Form S-3.

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Compliance with Exchange Governance Rules

Both the Nasdaq and the NYSE have adopted rules that provide that listed companies which are controlled by a single person or a group of persons are not required to comply with certain corporate governance rules and requirements of these exchanges. In particular, a “controlled company” may elect to be exempt from certain rules that require a majority of the board of directors of companies listed on the Nasdaq or NYSE to be independent, as defined by these rules, and which mandate independent director representation on certain committees of the board. In the event we are listed on either the Nasdaq or the NYSE, our charter provides that our stockholders will not be permitted to elect to rely upon these “controlled company” exemptions without first obtaining the prior approval of stockholders representing at least 66 ²/3% of the total voting power of our outstanding capital stock.

In the event we obtain this approval and elect to rely on the “controlled company” exemptions provided by the Nasdaq and the NYSE, our charter documents provide that for so long we continue to be listed on either of these exchanges, then the Board shall be constituted such that a majority of the directors on our board, and the members of our compensation committee and our corporate governance and nominating committee, must not be current employees of Google, and may not have been employees of Google for at least three years.

The provision in our certificate of incorporation that establish these requirements may be amended or repealed only with the unanimous consent of our board of directors and the consent of stockholders representing at least 66 ²/3% of the total voting power of our outstanding capital stock.

Separation of Office of Chairman and CEO

Our certificate of incorporation provides that the Chairman of our Board of Directors may not be an employee or officer of our company, and may not have been an employee or officer for the last three years, unless the appointment is approved by two-thirds of the members of our Board of Directors.

Anti-Takeover Effects of Delaware Law and Our Certificate of Incorporation and Bylaws

Certain provisions of Delaware law, our certificate of incorporation and our bylaws contain provisions that could have the effect of delaying, deferring or discouraging another party from acquiring control of us. In particular, our dual class common stock structure will concentrate ownership of our voting stock in the hands of our founders, board members, and employees. These provisions, which are summarized below, are expected to discourage coercive takeover practices and inadequate takeover bids. These provisions are also designed to encourage persons seeking to acquire control of us to first negotiate with our board of directors. We believe that the benefits of increased protection of our potential ability to negotiate with an unfriendly or unsolicited acquiror outweigh the disadvantages of discouraging a proposal to acquire us because negotiation of these proposals could result in an improvement of their terms.

Dual Class Structure

As discussed above, our Class B common stock has ten votes per share, while Class A common stock, which is the class of stock we are selling in this offering and which will be the only class of stock which is publicly traded, has one vote per share. After the offering,         % of our Class B common stock will be controlled by our founders, executive officers and employees, representing         % of the voting power of our outstanding capital stock. Because of our dual class structure, our founders, executives and employees will continue to be able to control all matters submitted to our stockholders for approval even if they come to own significantly less than 50% of the shares of our outstanding common stock. 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.

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Special Approval for Change in Control Transactions

In the event a person seeks to acquire us by means of a merger or consolidation transaction, a purchase of all or substantially all of our assets, or an issuance of stock which constitutes 2% or more of our outstanding shares at the time of issuance and which results in any person or group owning more than 50% of our outstanding voting power, then these types of acquisition transactions must be approved by our stockholders at an annual or special meeting. At this meeting, we must obtain the approval of stockholders representing the greater of:

• A majority of the voting power of our outstanding capital stock; and

• 60% of the voting power of the shares of capital stock present in person or represented by proxy at the stockholder meeting and entitled to vote.

Limits on Ability of Stockholders to Act by Written Consent

We have provided in our certificate of incorporation and bylaws that our stockholders may not act by written consent. This limit on the ability of our stockholders to act by written consent may lengthen the amount of time required to take stockholder actions. As a result, a holder controlling a majority of our capital stock would not be able to amend our bylaws or remove directors without holding a stockholders meeting.

Undesignated Preferred Stock

The ability to authorize 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. These and other provisions may have the effect of deferring hostile takeovers or delaying changes in control or management of our company.

Requirements for Advance Notification of Stockholder Nominations and Proposals

Our bylaws establish advance notice procedures with respect to stockholder proposals and the nomination of candidates for election as directors, other than nominations made by or at the direction of the board of directors or a committee of the board of directors. The bylaws do not give the board of directors the power to approve or disapprove stockholder nominations of candidates or proposals regarding business to be conducted at a special or annual meeting of the stockholders. However, our bylaws may have the effect of precluding the conduct of certain business at a meeting if the proper procedures are not followed. These provisions may also discourage or deter a potential acquiror from conducting a solicitation of proxies to elect the acquirer’s own slate of directors or otherwise attempting to obtain control of our company.

Delaware Anti-Takeover Statute

We will be subject to the provisions of Section 203 of the Delaware General Corporation Law regulating corporate takeovers. In general, Section 203 prohibits a publicly-held Delaware corporation from engaging under certain circumstances, in a business combination with an interested stockholder for a period of three years following the date the person became an interested stockholder unless:

• prior to the date of the transaction, the board of directors of the corporation approved either the business combination or the transaction which resulted in the stockholder becoming an interested stockholder;

• upon completion of the transaction that resulted in the stockholder becoming an interested stockholder, the stockholder owned at least 85% of the voting stock of the corporation outstanding at the time the transaction commenced, excluding for purposes of determining the number of shares outstanding (1) shares owned by persons who are directors and also officers and (2) shares owned by employee stock plans in which employee participants do not have the right to determine confidentially whether shares held subject to the plan will be tendered in a tender or exchange offer; or

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• on or subsequent to the date of the transaction, the business combination is approved by the board and authorized at an annual or special meeting of stockholders, and not by written consent, by the affirmative vote of at least 66 ²/3% of the outstanding voting stock which is not owned by the interested stockholder.

Generally, a business combination includes a merger, asset or stock sale, or other transaction resulting in a financial benefit to the interested stockholder. An interested stockholder is a person who, together with affiliates and associates, owns or, within three years prior to the determination of interested stockholder status, did own 15% or more of a corporation’s outstanding voting securities. We expect the existence of this provision to have an anti-takeover effect with respect to transactions our board of directors does not approve in advance. We also anticipate that Section 203 may also discourage attempts that might result in a premium over the market price for the shares of common stock held by stockholders.

The provisions of Delaware law, our certificate of incorporation and our bylaws could have the effect of discouraging others from attempting hostile takeovers and, as a consequence, they may also inhibit temporary fluctuations in the market price of our common stock that often result from actual or rumored hostile takeover attempts. These provisions may also have the effect of preventing changes in our management. It is possible that these provisions could make it more difficult to accomplish transactions that stockholders may otherwise deem to be in their best interests.

Transfer Agent and Registrar

The transfer agent and registrar for our common stock is                     .

Listing

We expect to apply to list our Class A common stock on either the Nasdaq or the NYSE. Our Class B common stock will not be listed on any stock market or exchange.

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RESCISSION OFFER

From September 2001 through March 2004, we issued options under our 1998 Stock Plan, 2003 Stock Plan, 2003 Stock Plan (No. 2) and 2003 Stock Plan (No. 3) to purchase 37,094,523 shares of our common stock. With respect to some of these options, we issued 23,393,925 shares of our common stock upon their exercise at exercise prices ranging from $0.30 to $20.00. Certain of these issuances were not exempt from the registration or qualification requirements under federal or state securities laws and we did not seek to register or qualify these shares or options under these laws. Further, we did not take any other actions to satisfy requirements of similar exemptions in other jurisdictions. Accordingly, the shares purchased pursuant to these options and the options we granted may have been in violation of federal and state securities laws, and may be subject to rescission. In order to address this issue, we intend to make a rescission offer to the holders of these shares and options soon after the effective date of this offering. If our rescission offer is accepted by all offerees, we could be required to make aggregate payments to holders of these shares and options up to approximately $34 million, including statutory interest.

Our anticipated federal rescission offer will cover an aggregate of approximately 22,924,228 shares of common stock issued and outstanding under our 1998 Stock Plan, 2003 Stock Plan, 2003 Stock Plan (No. 2) and 2003 Stock Plan (No. 3), and options outstanding thereunder to purchase 12,618,389 shares of common stock. We will offer to rescind such prior issuances at the price paid for the shares plus interest thereon at the statutory rate in accordance with applicable law from the date of purchase by the purchaser to the expiration of the rescission offer. Under the rescission offer, we would be required to make an aggregate payment of up to approximately $34.0 million, including interest, if all offerees accept the offer.

In addition, we were unable to rely on certain exemptions from the registration and qualification requirements of various states in which we granted options under, or otherwise issued securities subject to, our 1998 Stock Plan and 2003 Stock Plan. Our anticipated state rescission offer will cover an aggregate of approximately 21,543,699 shares of common stock issued and outstanding under our 1998 Stock Plan and 2003 Stock Plan, and options outstanding thereunder to purchase 5,835,656 shares of common stock. Under our rescission offer, we could be required to make an aggregate payment of up to approximately $11.4 million for such grants.

Our making this rescission offer may not terminate a purchaser’s right to rescind a sale of securities that was not registered under the Securities Act or otherwise exempt from registration. Accordingly, should the rescission offer be rejected by any or all offerees, we may continue to be contingently liable under the Securities Act for the purchase price of these shares up to an aggregate amount of approximately $34 million, including statutory interest.

We expect that we may use a portion of the proceeds from this offering to make payments, if any are required, to holders of any shares or options entitled to receive, and who accept, our rescission offer. At this time, however, we are not aware of any claims for rescission against us and we do not expect our aggregate exposure under federal and state securities laws to exceed $34 million.

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SHARES ELIGIBLE FOR FUTURE SALE

Prior to this offering, there has been no public market for our stock. We cannot predict the effect, if any, that market sales of shares or the availability of shares for sale will have on the market price prevailing from time to time. Sales of our Class A common stock in the public market after the restrictions lapse as described below, or the perception that those sales may occur, could cause the prevailing market price to decrease or to be lower than it might be in the absence of those sales or perceptions.

Sale of Restricted Shares

Upon completion of this offering, we will have outstanding          shares of common stock. The shares of Class A common stock being sold in this offering will be freely tradable, other than by any of our “affiliates” as defined in Rule 144(a) under the Securities Act, without restriction or registration under the Securities Act. All remaining shares were issued and sold by us in private transactions and are eligible for public sale if registered under the Securities Act or sold in accordance with Rule 144 or Rule 701 under the Securities Act. These remaining shares are “restricted securities” within the meaning of Rule 144 under the Securities Act.

As a result of the selling restrictions and the provisions of Rules 144, 144(k) and 701 described below, the restricted securities will be available for sale in the public market as follows:

Days After the Date of this Prospectus	Number of Shares Eligible for Sale in U.S. Public Market/ Percent of Outstanding Common Stock	Comment
On the date of this prospectus
At      days after the date of this prospectus and various times thereafter
At      days after the date of this prospectus and various times thereafter
At      days after the date of this prospectus and various times thereafter
At        days after the date of this prospectus and various dates thereafter

Selling Restriction Agreements

We have entered into an agreement with the parties to our Investors Rights Agreement, except for our executive officers, that provides that they will limit sales of any common stock owned by them following the date of this prospectus, as follows:     % of their shares become eligible for sale      days after the date of this prospectus;     % of their shares become eligible for sale      days after the date of this prospectus; and     % of their shares become eligible for sale      days after the date of this prospectus.

We have entered into agreements with the remaining holders of substantially all of our common stock, including our executive officers, which provide that they will limit sales of any common stock owned by them

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for 180 days following the date of this prospectus, except that they may sell a portion of their shares earlier, as follows:

•     % of their shares become eligible for sale during a First Trading Window that begins      days after the date of this prospectus (unless that day falls in the third month of a calendar quarter, in which case the First Trading Window begins on the third business day after the next public release of our quarterly financial results following the date of this prospectus) and that ends on the last day of the second month of the calendar quarter in which the First Trading Window begins.

•     % of their shares become eligible for sale during a Second Trading Window that begins on the third business day after the public release of quarterly financial results following the close of the First Trading Window and that ends on the last day of the second month of the calendar quarter in which the Second Trading Window begins.

• For any employee that is not eligible to be a selling stockholder but that holds common stock or options to purchase common stock that vest before the end of the First Trading Window,     % of that employee’s shares become eligible for sale during the First Trading Window at the later of their initial vesting date and the start of the First Trading Window.

• For any employee that is not eligible to sell during the First Trading Window but that holds common stock or options to purchase common stock that vest before the end of the Second Trading Window,     % of that employee’s shares become eligible for sale during the Second Trading Window at the later of their initial vesting date and the start of the Second Trading Window.

As these shares become available for sale and are sold into the market, the market price of our Class A common stock could decline. After a restricted person’s holding of common stock have been released from the restrictions on sale described above they will be available for sale to the public subject satisfaction of the requirements of Rule 144 or Rule 701, which are described below.

Lock-Up Arrangements

We have agreed with the underwriters that for a period of 180 days after the date of this prospectus, we will not sell any shares of our common stock, or securities convertible into shares of our common stock, without the prior written consent of Morgan Stanley & Co. Incorporated and Credit Suisse First Boston LLC. This agreement is subject to certain exceptions, including an exception allowing us to issue an unlimited number of shares in connection with mergers or acquisition transactions, joint ventures or other strategic corporate transactions. Morgan Stanley & Co. Incorporated and Credit Suisse First Boston LLC may release us from these lock-up arrangements at any time without notice.

Rule 144

In general, under Rule 144, as currently in effect, a person who owns shares that were acquired from us or an affiliate of us at least one year prior to the proposed sale is entitled to sell upon expiration of the selling restrictions described above, within any three-month period beginning 90 days after the date of this prospectus, a number of shares that does not exceed the greater of:

• 1% of the number of shares of common stock then outstanding, which will equal approximately                  shares immediately after this offering; or

• the average weekly trading volume of the common stock during the four calendar weeks preceding the filing of a notice on Form 144 with respect to such sale.

Sales under Rule 144 are also subject to certain manner of sale provisions and notice requirements and to the availability of current public information about us. Rule 144 also provides that our affiliates who sell shares of our common stock that are not restricted shares must nonetheless comply with the same restrictions applicable to restricted shares with the exception of the holding period requirement.

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Rule 144(k)

Under Rule 144(k), a person who is not deemed to have been one of our affiliates for purposes of the Securities Act at any time during the 90 days preceding a sale and who has beneficially owned the shares proposed to be sold for at least two years, including the holding period of any prior owner other than our affiliates, is entitled to sell such shares without complying with the manner of sale, public information, volume limitation or notice provisions of Rule 144. Therefore, unless otherwise restricted, “144(k) shares” may be sold immediately upon the completion of this offering.

Rule 701

In general, under Rule 701 as currently in effect, any of our employees, consultants or advisors who purchases shares from us in connection with a compensatory stock or option plan or other written agreement in a transaction that was completed in reliance on Rule 701 and complied with the requirements of Rule 701 is eligible to resell such shares 90 days after the effective date of this offering in reliance on Rule 144, but without compliance with certain restrictions, including the holding period, contained in Rule 144.

Stock Options

We intend to file a registration statement on Form S-8 under the Securities Act for shares of our common stock subject to options outstanding or reserved for issuance under our stock plans and shares of our common stock issued upon the exercise of options by employees. We expect to file this registration statement as soon as practicable after this offering. In addition, we intend to file a registration statement on Form S-8 or such other form as may be required under the Securities Act for the resale of shares of our common stock issued upon the exercise of options that were not granted under Rule 701. We expect to file this registration statement as soon as permitted under the Securities Act. However, none of the shares registered on Form S-8 will be eligible for resale until expiration of the selling restriction agreements to which they are subject.

Registration Rights

Upon completion of this offering, the holders of 79,803,760 shares of our common stock, assuming the exercise of outstanding warrants to purchase registrable securities, may demand that we register their shares under the Securities Act or, if we file another registration statement under the Securities Act, may elect to include their shares in such registration. If these shares are registered, they will be freely tradable without restriction under the Securities Act. For additional information, see “Description of Capital Stock—Registration Rights.”

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UNDERWRITERS

Under the terms and subject to the conditions contained in an underwriting agreement dated the date of this prospectus, the underwriters named below, for whom Morgan Stanley & Co. Incorporated and Credit Suisse First Boston LLC are acting as representatives, have severally agreed to purchase, and we and the selling stockholders have agreed to sell to them, the number of shares of Class A common stock indicated below:

Name	Number of Shares
Morgan Stanley & Co. Incorporated
Credit Suisse First Boston LLC
Total

The underwriters are offering the shares of Class A common stock subject to their acceptance of the shares from us and the selling stockholders and subject to prior sale. The underwriting agreement provides that the obligations of the several underwriters to pay for and accept delivery of the shares of Class A common stock offered by this prospectus are subject to the approval of certain legal matters by their counsel and to certain other conditions. The underwriters are obligated to take and pay for all of the shares of Class A common stock offered by this prospectus if any such shares are taken. However, the underwriters are not required to take or pay for the shares covered by the underwriters’ over-allotment option described below.

The underwriters initially propose to offer part of the shares of our Class A common stock directly to the public at the public offering price listed on the cover page of this prospectus. After the initial offering of the shares of our Class A common stock, the offering price and other selling terms may from time to time be varied by the representatives of the underwriters.

We have granted to the underwriters an option, exercisable for 30 days from the date of this prospectus, to purchase up to an aggregate of              additional shares of our Class A common stock at the public offering price listed on the cover page of this prospectus, less underwriters discounts and commissions. The underwriters may exercise this option solely for the purpose of covering over-allotments, if any, made in connection with the offering of the shares of Class A common stock offered by this prospectus. To the extent the option is exercised, each underwriter will become obligated, subject to certain conditions, to purchase about the same percentage of the additional shares of Class A common stock as the number listed next to the underwriter’s name in the

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preceding table bears to the total number of shares of Class A common stock listed next to the names of all underwriters in the preceding table.

If the underwriters’ option is exercised in full, the total price to the public of all the shares of Class A common stock sold would be $            , the total underwriting discounts and commissions would be $            , and the total proceeds to us would be $            . We will not receive any of the proceeds from the sale of the Class A common stock by the selling stockholders.

The following table shows the per share and total underwriting discounts and commissions to be paid by us and the selling stockholders in connection with this offering. These amounts are shown assuming both no exercise and full exercise of the underwriters’ over-allotment option.

	Per Share		Total
Underwriting discounts and commissions to be paid by	No Exercise	Full Exercise	No Exercise	Full Exercise
Google	$	$	$	$
Selling stockholders	$	$	$	$

The expenses of this offering, not including underwriting discounts and commissions, are estimated to be approximately $             million, which includes legal, accounting and printing costs and various other fees associated with registration and listing of our Class A common stock.

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

We expect to apply to list our Class A common stock on either the New York Stock Exchange or the Nasdaq National Market under the symbol “            .”

We have agreed that, without the prior written consent of Morgan Stanley & Co. Incorporated and Credit Suisse First Boston LLC on behalf of the underwriters, we will not, during the period ending 180 days after the date of this prospectus:

• Offer, pledge, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase, lend or otherwise transfer or dispose of directly or indirectly, any shares of Class A common stock or any securities convertible into or exercisable or exchangeable for such Class A common stock.

• Enter into any swap or other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of the Class A common stock.

whether any transaction described above is to be settled by delivery of such common stock or such other securities, in cash or otherwise. The restrictions described in this paragraph do not apply to:

• The sale of shares of Class A common stock to the underwriters.

• The issuance of shares of common stock or the grant of options to purchase shares of Class B common stock under our employee stock purchase plan and/or our equity incentive plan.

• The issuance by us of shares of common stock upon the exercise of an option or a warrant or the conversion of a security outstanding on the date of this prospectus of which the underwriters have been advised in writing or which is otherwise described in this prospectus.

• The issuance by us of shares of our common stock, or securities convertible into our common stock, in connection with mergers or acquisition transactions, joint ventures or other strategic corporate transactions.

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The 180-day restricted period described in the preceding paragraphs will be extended if:

• During the last 17 days of the 180-day restricted period we issue an earnings release or material news or a material event relating to our company occurs.

• Prior to the expiration of the 180-day restricted period, we announce that we will release earnings results during the 16-day period beginning on the last day of the 180-day period.

in which case the restrictions described in the preceding paragraph will continue to apply until the expiration of the 18-day period beginning on the issuance of the earnings release or the occurrence of the material news or material event.

In order to facilitate the offering of our Class A common stock, the underwriters may engage in transactions that stabilize, maintain or otherwise affect the price of the Class A common stock. Specifically, the underwriters may sell more shares than they are obligated to purchase under the underwriting agreement, creating a short position in our Class A common stock for their own account. A short sale is “covered” if the short position is no greater than the number of shares available for purchase by the underwriters under the over-allotment option. The underwriters can close out a covered short sale by exercising the over-allotment option or purchasing shares of Class A common stock in the open market. In determining the source of shares to close out a covered short sale, the underwriters will consider, among other things, the open market price of shares of Class A common stock compared to the price available under the over-allotment option. The underwriters may also sell shares of Class A common stock in excess of the over-allotment option, creating a naked short position. The underwriters must close out any naked short position by purchasing shares in the open market. A naked short position is more likely to be created if the underwriters are concerned that there may be downward pressure on the price of our Class A common stock in the open market after pricing that could adversely affect investors who purchase in the offering. As an additional means of facilitating the offering, the underwriters may bid for, and purchase, shares of our Class A common stock in the open market to stabilize the price of our Class A common stock. The underwriting syndicate may also reclaim selling concessions allowed to an underwriter or a dealer for distributing the Class A common stock in the offering, if the syndicate repurchases previously distributed Class A common stock to cover syndicate short positions or to stabilize the price of the Class A common stock. These activities may raise or maintain the market price of the Class A common stock above independent market levels. The underwriters are not required to engage in these activities, and may end any of these activities at any time.

A prospectus in electronic format, from which you can view a presentation by our management and obtain your unique bidder ID through embedded hyperlinks will be made available on a web site. You must obtain a unique bidder ID in order to participate in this offering. See “Auction Process” for an explanation of how to obtain a bidder ID. A prospectus in electronic format may also be made available on the web sites maintained by one or more of the other underwriters.

We, the selling stockholders and the underwriters have agreed to indemnify each other against certain liabilities, including liabilities under the Securities Act arising out of any untrue statement or alleged untrue statement or caused by any omission or alleged omission of a material fact required to be stated in this prospectus. Pursuant to an agreement with the underwriters, we will be reimbursed for some of our expenses incurred in the offering.

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NOTICE TO CANADIAN RESIDENTS

Resale Restrictions

The distribution of the Class A common stock in Canada is being made only on a private placement basis exempt from the requirement that we and the selling stockholders prepare and file a prospectus with the securities regulatory authorities in each province where trades of Class A common stock are made. Any resale of the Class A common stock in Canada must be made under applicable securities laws which will vary depending on the relevant jurisdiction, and which may require resales to be made under available statutory exemptions or under a discretionary exemption granted by the applicable Canadian securities regulatory authority. Purchasers are advised to seek legal advice prior to any resale of the Class A common stock.

Representations of Purchasers

By purchasing Class A common stock in Canada and accepting a purchase confirmation a purchaser is representing to us, the selling stockholders and the dealer from whom the purchase confirmation is received that:

• the purchaser is entitled under applicable provincial securities laws to purchase the Class A common stock without the benefit of a prospectus qualified under those securities laws,

• where required by law, that the purchaser is purchasing as principal and not as agent, and

• the purchaser has reviewed the text above under Resale Restrictions.

Rights of Action—Ontario Purchasers Only

Under Ontario securities legislation, a purchaser who purchases a security offered by this prospectus during the period of distribution will have a statutory right of action for damages, or while still the owner of the Class A common stock, for rescission against us and the selling stockholders in the event that this circular contains a misrepresentation. A purchaser will be deemed to have relied on the misrepresentation. The right of action for damages is exercisable not later than the earlier of 180 days from the date the purchaser first had knowledge of the facts giving rise to the cause of action and three years from the date on which payment is made for the Class A common stock. The right of action for rescission is exercisable not later than 180 days from the date on which payment is made for the Class A common stock. If a purchaser elects to exercise the right of action for rescission, the purchaser will have no right of action for damages against us or the selling stockholders. In no case will the amount recoverable in any action exceed the price at which the Class A common stock was offered to the purchaser and if the purchaser is shown to have purchased the securities with knowledge of the misrepresentation, we and the selling stockholders will have no liability. In the case of an action for damages, we and the selling stockholders will not be liable for all or any portion of the damages that are proven to not represent the depreciation in value of the Class A common stock as a result of the misrepresentation relied upon. These rights are in addition to, and without derogation from, any other rights or remedies available at law to an Ontario purchaser. The foregoing is a summary of the rights available to an Ontario purchaser. Ontario purchasers should refer to the complete text of the relevant statutory provisions.

Enforcement of Legal Rights

All of our directors and officers as well as the experts named herein and the selling stockholders may be located outside of Canada and, as a result, it may not be possible for Canadian purchasers to effect service of process within Canada upon us or those persons. All or a substantial portion of our assets and the assets of those persons may be located outside of Canada and, as a result, it may not be possible to satisfy a judgment against us or those persons in Canada or to enforce a judgment obtained in Canadian courts against us or those persons outside of Canada.

Taxation and Eligibility for Investment

Canadian purchasers of Class A common stock should consult their own legal and tax advisors with respect to the tax consequences of an investment in the Class A common stock in their particular circumstances and about the eligibility of the for investment by the purchaser under relevant Canadian legislation.

99

LEGAL MATTERS

The validity of the shares of Class A common stock offered hereby will be passed upon for us by Wilson Sonsini Goodrich & Rosati, Professional Corporation, Palo Alto, California. Certain legal matters in connection with this offering will be passed upon for the underwriters by Simpson Thacher & Bartlett LLP, Palo Alto, California. Certain members of, and investment partnerships comprised of members of, and persons associated with, Wilson Sonsini Goodrich & Rosati own an interest representing less than 0.1% of the shares our Class B common stock.

EXPERTS

Ernst & Young LLP, independent auditors, have audited our consolidated financial statements (and schedule) at December 31, 2002 and 2003, and for each of the three years in the period ended December 31, 2003, as set forth in their report. We’ve included our consolidated financial statements (and schedule) in the prospectus and elsewhere in the registration statement in reliance on Ernst & Young LLP’s report, given on their authority as experts in accounting and auditing.

WHERE YOU CAN FIND ADDITIONAL INFORMATION

We have filed with the SEC a registration statement on Form S-1 under the Securities Act with respect to the shares of common stock offered hereby. This prospectus, which constitutes a part of the registration statement, does not contain all of the information set forth in the registration statement or the exhibits and schedules filed therewith. For further information about us and the Class A common stock offered hereby, reference is made to the registration statement and the exhibits and schedules filed therewith. Statements contained in this prospectus regarding the contents of any contract or any other document that is filed as an exhibit to the registration statement are not necessarily complete, and each such statement is qualified in all respects by reference to the full text of such contract or other document filed as an exhibit to the registration statement. A copy of the registration statement and the exhibits and schedules filed therewith may be inspected without charge at the public reference room maintained by the SEC, located at 450 Fifth Street, N.W., Room 1200, Washington, D.C. 20549, and copies of all or any part of the registration statement may be obtained from such offices upon the payment of the fees prescribed by the SEC. Please call the SEC at 1-800-SEC-0330 for further information about the public reference room. The SEC also maintains an Internet web site that contains reports, proxy and information statements and other information regarding registrants that file electronically with the SEC. The address of the site is http://www.sec.gov.

Upon completion of this offering, we will become subject to the information and periodic reporting requirements of the Securities Exchange Act of 1934, and, in accordance therewith, will file periodic reports, proxy statements and other information with the SEC. Such periodic reports, proxy statements and other information will be available for inspection and copying at the public reference room and web site of the SEC referred to above.

Additionally, on April 29, 2004 we filed with the SEC a registration statement on Form 10 pursuant to Section 12(g) of the Exchange Act.

100

Google Inc.

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

Years ended December 31, 2001, 2002 and 2003

Contents

Report of Ernst & Young LLP, Independent Auditors	F-2
Financial Statements
Consolidated Balance Sheets	F-3
Consolidated Income Statements	F-4
Consolidated Statements of Redeemable Convertible Preferred Stock Warrant and Stockholders’ Equity	F-5
Consolidated Statements of Cash Flows	F-7
Notes to Consolidated Financial Statements	F-8

F-1

REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS

The Board of Directors and Stockholders

Google Inc.

We have audited the accompanying consolidated balance sheets of Google Inc. as of December 31, 2002 and 2003, and the related consolidated statements of income, redeemable convertible preferred stock warrant and stockholders’ equity and cash flows for each of the three years in the period ended December 31, 2003. Our audits also included the financial statement schedule listed at Item 16(b). These financial statements and schedule are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements and schedule based on our audits.

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

In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Google Inc. at December 31, 2002 and 2003, and the consolidated results of its operations and its cash flows for each of the three years in the period ended December 31, 2003, in conformity with accounting principles generally accepted in the United States. Also, in our opinion, the related consolidated financial statement schedule, when considered in relation to the basic financial statements taken as a whole, presents fairly in all material respects the information set forth therein.

ERNST & YOUNG LLP

April 20, 2004, except as to
Note 13 as to which the date
is                 , 2004

San Francisco, California

The foregoing report is in the form that will be signed upon the completion of the restatement of capital accounts described in Note 13 to the consolidated financial statements.

/s/    ERNST & YOUNG LLP

April 20, 2004

San Francisco, California

F-2

Google Inc.

CONSOLIDATED BALANCE SHEETS

(In thousands, except par value)

	December 31,						As of March 31, 2004
	2002			2003			Actual			Pro Forma
							(unaudited)
Assets
Current assets:
Cash and cash equivalents	$	57,752		$	148,995		$	251,354
Short-term investments		88,579			185,723			203,534
Accounts receivable, net of allowance of $2,297, $4,670 and $5,611		61,994			154,690			179,505
Deferred income taxes		12,646			22,105			15,714
Prepaid revenue share, expenses and other assets		10,825			48,721			53,279
Total current assets		231,796			560,234			703,386
Property and equipment, net		53,873			188,255			253,006
Goodwill		—			87,442			87,442
Intangible assets, net		96			18,114			18,755
Prepaid revenue share, expenses and other assets, non-current		1,127			17,413			16,865
Total assets	$	286,892		$	871,458		$	1,079,454
Liabilities, Redeemable Convertible Preferred Stock Warrant and Stockholders’ Equity
Current liabilities:
Accounts payable	$	9,394		$	46,175		$	37,781
Accrued compensation and benefits		14,528			33,522			23,862
Accrued expenses and other current liabilities		10,810			26,411			34,956
Accrued revenue share		13,100			88,672			99,179
Deferred revenue		11,345			15,346			15,680
Income taxes payable		25,981			20,705			83,785
Current portion of equipment leases		4,350			4,621			4,388
Total current liabilities		89,508			235,452			299,631
Long-term portion of equipment leases		6,512			1,988			1,017
Deferred revenue, long-term		1,901			5,014			5,551
Liability for stock options exercised early, long-term		567			6,341			7,993
Deferred income taxes		580			18,510			22,099
Other long-term liabilities		—			1,512			1,512
Commitments and contingencies
Redeemable convertible preferred stock warrant		13,871			13,871			13,871
Stockholders’ equity:
Convertible preferred stock, $0.001 par value, issuable in series: 166,896, 164,782 and 164,782 shares authorized at December 31, 2002 and 2003 and March 31, 2004, 70,432, 71,662 and 71,662 shares issued and outstanding at December 31, 2002 and 2003 and March 31, 2004, zero shares issued and outstanding pro forma; aggregate liquidation preference of $40,815 at March 31, 2004		44,346			44,346			44,346		$	—
Class A and Class B common stock, $0.001 par value: 700,000 shares authorized, 145,346, 160,866, and 163,538 shares issued and outstanding, excluding 3,281, 11,987, and 10,946 shares subject to repurchase (see Note 9) at December 31, 2002 and 2003 and March 31, 2004 and 235,200 shares outstanding pro forma		145			161			164			235
Additional paid-in capital		83,410			725,219			801,712			845,987
Note receivable from officer/stockholder		(4,300	)		(4,300	)		(4,300	)		(4,300	)
Deferred stock-based compensation		(35,401	)		(369,668	)		(368,579	)		(368,579	)
Accumulated other comprehensive income		49			1,660			(888	)		(888	)
Retained earnings		85,704			191,352			255,325			255,325
Total stockholders’ equity		173,953			588,770			727,780		$	727,780
Total liabilities, redeemable convertible preferred stock warrant and stockholders’ equity	$	286,892		$	871,458		$	1,079,454

See accompanying notes.

F-3

Google Inc.

CONSOLIDATED INCOME STATEMENTS

(In thousands, except per share amounts)

	Year Ended December 31,								Three Months Ended March 31,
	2001			2002			2003		2003			2004
									(unaudited)
Net revenues	$	86,426		$	347,848		$	961,874	$	178,894		$	389,638
Costs and expenses:
Cost of revenues		14,228			39,850			121,794		17,471			53,413
Research and development		16,500			31,748			91,228		12,505			35,019
Sales and marketing		20,076			43,849			120,328		17,767			47,904
General and administrative		12,275			24,300			56,699		10,027			21,506
Stock-based compensation(1)		12,383			21,635			229,361		36,418			76,473
Total costs and expenses		75,462			161,382			619,410		94,188			234,315
Income from operations		10,964			186,466			342,464		84,706			155,323
Interest income (expense) and other, net		(896	)		(1,551	)		4,190		(47	)		300
Income before income taxes		10,068			184,915			346,654		84,659			155,623
Provision for income taxes		3,083			85,259			241,006		58,859			91,650
Net income	$	6,985		$	99,656		$	105,648	$	25,800		$	63,973
Net income per share:
Basic	$	0.07		$	0.86		$	0.77	$	0.20		$	0.42
Diluted	$	0.04		$	0.45		$	0.41	$	0.10		$	0.24
Pro forma basic (unaudited)							$	0.51				$	0.29
Number of shares used in per share calculations Basic		94,523			115,242			137,697		127,339			151,084
Diluted		186,776			220,633			256,638		248,687			264,183
Pro forma basic (unaudited)								208,825					222,746
(1)    Stock-based compensation is allocated as follows (see Note 1):
	Year Ended December 31,								Three Months Ended March 31,
	2001			2002			2003		2003			2004
									(unaudited)
Cost of revenues	$	876		$	1,065		$	8,557	$	1,452		$	5,076
Research and development		4,440			8,746			138,377		19,423			46,265
Sales and marketing		1,667			4,934			44,607		7,618			14,146
General and administrative		5,400			6,890			37,820		7,925			10,986
	$	12,383		$	21,635		$	229,361	$	36,418		$	76,473

See accompanying notes.

F-4

Google Inc.

CONSOLIDATED STATEMENTS OF REDEEMABLE CONVERTIBLE PREFERRED STOCK WARRANT

AND STOCKHOLDERS’ EQUITY

	Redeemable Convertible Preferred Stock Warrant			Convertible Preferred Stock			Class A and Class B Common Stock			Addi- tional Paid-In Capital Amount			Notes Receiv- able from Officer/ Stock- holders			Deferred Stock- Based Compen- sation			Accumu- lated Other Compre- hensive Income		Retained Earnings (Accu- mulated Deficit)			Total Stock- holders’ Equity
	Shares	Amount		Shares	Amount		Shares	Amount
	(In thousands)
Balance at December 31, 2000	—	$	—	69,988	$	42,873	119,940	$	120	$	13,669		$	(34	)	$	(8,457	)	$	—	$	(20,937	)	$	27,234
Issuance of Series C convertible preferred stock	—		—	444		1,042	—		—		—			—			—			—		—			1,042
Issuance of Class B common stock upon exercise of stock options for cash and notes receivable, net of repurchases	—		—	—		—	17,312		17		5,271			(4,300	)		—			—		—			988
Payments of notes receivable from stockholders	—		—	—		—	—		—		—			34			—			—		—			34
Issuance of Class B common stock	—		—	—		—	132		—		114			—			—			—		—			114
Issuance of Series C convertible preferred stock warrants	—		—	—		232	—		—		—			—			—			—		—			232
Issuance of Class B common stock warrants	—		—	—		—	—		—		1,140			—			—			—		—			1,140
Value of options granted to non-employees	—		—	—		—	—		—		186			—			—			—		—			186
Deferred stock-based compensation related to options granted to employees	—		—	—		—	—		—		19,954			—			(19,954	)		—		—			—
Amortization of deferred stock-based compensation, net of reversals for terminated employees	—		—	—		—	—		—		(381	)		—			12,578			—		—			12,197
Net income and comprehensive income	—		—	—		—	—		—		—			—			—			—		6,985			6,985
Balance at December 31, 2001	—		—	70,432		44,147	137,384		137		39,953			(4,300	)		(15,833	)		—		(13,952	)		50,152
Issuance of Class B common stock upon exercise of stock options for cash, net of unvested stock options exercised early and repurchases	—		—	—		—	7,962		8		2,254			—			—			—		—			2,262
Issuance of Series C convertible preferred stock warrants	—		—	—		199	—		—		—			—			—			—		—			199
Issuance of Series D redeemable convertible preferred stock warrant	—		13,871	—		—	—		—		—			—			—			—		—			—
Value of options granted to non-employees	—		—	—		—	—		—		1,460			—			—			—		—			1,460
Deferred stock-based compensation related to options granted to employees	—		—	—		—	—		—		40,141			—			(40,141	)		—		—			—
Amortization of deferred stock-based compensation, net of reversals for terminated employees	—		—	—		—	—		—		(398	)		—			20,573			—		—			20,175
Comprehensive income:
Change in unrealized gain on available-for-sale investments	—		—	—		—	—		—		—			—			—			49		—			49
Net income	—		—	—		—	—		—		—			—			—			—		99,656			99,656
Total comprehensive income	—		—	—		—	—		—		—			—			—			—		—			99,705
Balance at December 31, 2002	—	$	13,871	70,432	$	44,346	145,346	$	145	$	83,410		$	(4,300	)	$	(35,401	)	$	49	$	85,704		$	173,953

See accompanying notes.

F-5

Google Inc.

CONSOLIDATED STATEMENTS OF REDEEMABLE CONVERTIBLE PREFERRED STOCK WARRANT

AND STOCKHOLDERS’ EQUITY—(Continued)

	Redeemable Convertible Preferred Stock Warrant			Convertible Preferred Stock			Class A and Class B Common Stock			Addi- tional Paid-In Capital Amount			Notes Receiv- able from Officer/ Stock- holders			Deferred Stock- Based Compen- sation			Accumu- lated Other Compre- hensive Income			Retained Earnings (Accu- mulated Deficit)		Total Stock- holders’ Equity
	Shares	Amount		Shares	Amount		Shares	Amount
	(In thousands)
Balance at December 31, 2002	—	$	13,871	70,432	$	44,346	145,346	$	145	$	83,410		$	(4,300	)	$	(35,401	)	$	49		$	85,704	$	173,953
Issuance of Class A and Class B common stock upon exercise of stock options for cash, net of unvested stock options exercised early and repurchases	—		—	—		—	9,896		10		3,710			—			—			—			—		3,720
Issuance of Series C convertible preferred stock	—		—	1,230		—	—		—		—			—			—			—			—		—
Vesting of shares exercised early (see Note 9)	—		—	—		—	3,078		3		934			—			—			—			—		937
Issuance of fully vested common stock and stock options in connection with acquisitions	—		—	—		—	2,265		3		72,674			—			—			—			—		72,677
Issuance of fully vested common stock and stock options in connection with licensed technology	—		—	—		—	46		—		863			—			—			—			—		863
Issuance of restricted shares to employees in connection with acquisitions	—		—	—		—	235		—		10,752			—			(10,752	)		—			—		—
Value of options granted to non-employees	—		—	—		—	—		—		15,816			—			—			—			—		15,816
Deferred stock-based compensation related to options granted to employees	—		—	—		—	—		—		540,673			—			(540,673	)		—			—		—
Amortization of deferred stock-based compensation, net of reversals for terminated employees	—		—	—		—	—		—		(3,613	)		—			217,158			—			—		213,545
Comprehensive income:
Change in unrealized gain on available-for-sale investments	—		—	—		—	—		—		—			—			—			(51	)		—		(51	)
Foreign currency translation adjustment	—		—	—		—	—		—		—			—			—			1,662			—		1,662
Net income	—		—	—		—	—		—		—			—			—			—			105,648		105,648
Total comprehensive income	—		—	—		—	—		—		—			—			—			—			—		107,259
Balance at December 31, 2003	—		13,871	71,662		44,346	160,866		161		725,219			(4,300	)		(369,668	)		1,660			191,352		588,770
Issuance of Class A common stock upon exercise of stock options for cash, net of unvested stock options exercised early and repurchases (unaudited)	—		—	—		—	2,066		2		928			—			—			—			—		930
Vesting of shares exercised early (see Note 9) (unaudited)	—		—	—		—	606		1		181			—			—			—			—		182
Value of options granted to non-employees (unaudited)	—		—	—		—	—		—		2,756			—			—			—			—		2,756
Deferred stock-based compensation related to options granted to employees (unaudited)	—		—	—		—	—		—		76,092			—			(76,092	)		—			—		—
Amortization of deferred stock-based compensation, net of reversals for terminated employees (unaudited)	—		—	—		—	—		—		(3,464	)		—			77,181			—			—		73,717
Comprehensive income:
Change in unrealized gain on available-for-sale investments (unaudited)	—		—	—		—	—		—		—			—			—			5			—		5
Foreign currency translation adjustment (unaudited)	—		—	—		—	—		—		—			—			—			(2,553	)		—		(2,553	)
Net income (unaudited)	—		—	—		—	—		—		—			—			—			—			63,973		63,973
Total comprehensive income (unaudited)	—		—	—		—	—		—		—			—			—			—			—		61,425
Balance at March 31, 2004 (unaudited)	—	$	13,871	71,662	$	44,346	163,538	$	164	$	801,712		$	(4,300	)	$	(368,579	)	$	(888	)	$	255,325	$	727,780

See accompanying notes.

F-6

Google Inc.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

	Year ended December 31,									Three months ended March 31,
	2001			2002			2003			2003			2004
										(unaudited)
Operating activities
Net income	$	6,985		$	99,656		$	105,648		$	25,800		$	63,973
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization of property and equipment		9,831			17,815			43,851			6,977			21,286
Amortization of warrants		4,157			10,953			4,864			3,522			31
Amortization of intangibles		194			215			6,334			195			2,359
In-process research and development		—			—			11,618			—			—
Stock-based compensation		12,383			21,635			229,361			36,418			76,473
Changes in assets and liabilities, net of effects of acquisitions:
Accounts receivable		(11,736	)		(43,877	)		(90,385	)		(17,817	)		(24,815	)
Deferred income taxes		(2,194	)		(9,872	)		19			(773	)		5,700
Prepaid revenue share, expenses and other assets		(22	)		(5,875	)		(58,914	)		(3,640	)		(7,041	)
Accounts payable		1,643			5,645			36,699			6,309			(8,393	)
Incomes taxes payable		4,592			21,389			(6,337	)		35,550			63,080
Accrued compensation and benefits		3,705			9,457			18,989			(2,608	)		(9,660	)
Accrued expenses and other liabilities		502			5,936			13,752			961			8,350
Accrued revenue share		—			13,100			72,967			19,953			12,143
Deferred revenue		1,049			9,088			6,980			2,351			871
Net cash provided by operating activities		31,089			155,265			395,446			113,198			204,357
Investing activities
Purchases of property and equipment		(13,060	)		(37,198	)		(176,801	)		(29,550	)		(86,037	)
Purchase of short-term investments		(26,389	)		(93,061	)		(316,599	)		(41,832	)		(190,401	)
Maturities and sales of short-term investments		11,460			20,443			219,404			11,869			172,585
Acquisition of businesses, net of cash acquired		—			—			(39,958	)		22			—
Change in other assets		(1,102	)		99			—			—			—
Net cash used in investing activities		(29,091	)		(109,717	)		(313,954	)		(59,491	)		(103,853	)
Financing activities
Proceeds from issuance of convertible preferred stock, net		1,042			—			—			—			—
Proceeds from exercise of stock options, net		988			2,262			15,477			5,590			4,911
Payments of notes receivable from stockholders		34			—			—			—			—
Payments of principal on capital leases and equipment loans		(4,503	)		(7,735	)		(7,388	)		(2,239	)		(1,204	)
Net cash provided by (used in) financing activities		(2,439	)		(5,473	)		8,089			3,351			3,707
Effect of exchange rate changes on cash and cash equivalents		—			—			1,662			(160	)		(1,852	)
Net increase (decrease) in cash and cash equivalents		(441	)		40,075			91,243			56,898			102,359
Cash and cash equivalents at beginning of year		18,118			17,677			57,752			57,752			148,995
Cash and cash equivalents at end of year	$	17,677		$	57,752		$	148,995		$	114,650		$	251,354
Supplemental disclosures of cash flow information
Property and equipment acquired under equipment leases	$	7,679		$	7,303		$	—
Cash paid for interest	$	1,677		$	2,285		$	1,739
Cash paid for taxes	$	685		$	73,763		$	247,422
Note receivable from officer/stockholder in exchange for common stock	$	4,300		$	—		$	—
Issuance of redeemable convertible preferred stock warrant in conjunction with revenue arrangement	$	—		$	13,871		$	—
Issuance of convertible preferred stock warrants in conjunction with capital lease arrangements	$	232		$	199		$	—
Issuance of common stock warrants in connection with recruitment fees	$	1,140		$	—		$	—
Acquisition related activities:
Cash paid for acquisitions (net of cash acquired)	$	—		$	—		$	40,001
Issuance of common stock in connection with acquisitions, net of deferred stock-based compensation	$	114		$	—		$	73,540

See accompanying notes.

F-7

Google Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Information as of March 31, 2004 and for the three months ended March 31, 2003 and 2004 is unaudited)

Note 1.    The Company and Summary of Significant Accounting Policies

Nature of Operations

Google Inc. (“Google” or the “Company”) was incorporated in California on September 1998. The Company re-incorporated in the State of Delaware in August 2003. The Company offers highly targeted advertising solutions, global Internet search solutions through its own destination Internet site and intranet solutions via an enterprise search appliance.

Basis of Consolidation

The consolidated financial statements include the accounts of Google and its wholly-owned subsidiaries. All intercompany balances and transactions have been eliminated. The Company has included the results of operations of acquired entities from the date of acquisition (see Note 4).

Unaudited Interim Financial Information

The accompanying unaudited interim consolidated balance sheet as of March 31, 2004, the consolidated statements of income and cash flows for the three months ended March 31, 2003 and 2004 and the consolidated statement of redeemable convertible preferred stock warrant and stockholders’ equity for the three months ended March 31, 2004 are unaudited. These unaudited interim consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States. In the opinion of the Company’s management, the unaudited interim consolidated financial statements have been prepared on the same basis as the audited consolidated financial statements and include all adjustments necessary for the fair presentation of the Company’s statement of financial position, results of operations and its cash flows for the three months ended March 31, 2003 and 2004. The results for the three months ended March 31, 2004 are not necessarily indicative of the results to be expected for the year ending December 31, 2004.

Use of Estimates

The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States requires management 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, the Company evaluates its estimates, including those related to revenue recognition, accounts receivable allowance, fair value of investments, fair value of acquired intangible assets and goodwill, useful lives of intangible assets and property and equipment, deemed value of common stock for the purpose of determining stock-based compensation (see below), and income taxes, among others. The Company bases its 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.

The Company’s board of directors determines the fair market value of the Company’s common stock in the absence of a public market for these shares. For purposes of financial accounting for employee stock-based compensation, management has applied hindsight within each year to arrive at deemed values for the shares underlying the options that are higher than the fair market values determined by the board. These deemed values were determined based on a number of factors, including input from advisors, the Company’s historical and forecasted operating results and cash flows, and comparisons to publicly-held companies. The deemed values were used to determine the amount of stock-based compensation recognized related to stock and stock option

F-8

Google Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(Information as of March 31, 2004 and for the three months ended March 31, 2003 and 2004 is unaudited)

grants to employees and non-employees, the amount of expense related to stock warrants issued to third-parties (see Note 9) and the purchase prices of the Company’s acquisitions (see Note 4).

Revenue Recognition

The following table presents the Company’s net revenues (in thousands):

	Year Ended December 31,						Three Months Ended March 31,
	2001		2002		2003		2003		2004
							(unaudited)
Advertising revenues:
Google web sites	$	66,932	$	306,977	$	772,192	$	154,108	$	293,053
Google Network web sites		—		12,278		144,411		15,287		82,246
Total advertising revenues		66,932		319,255		916,603		169,395		375,299
Licensing and other revenues		19,494		28,593		45,271		9,499		14,339
Net revenues	$	86,426	$	347,848	$	961,874	$	178,894	$	389,638

In the first quarter of 2000, the Company introduced its first advertising program through which it offered advertisers the ability to place text-based ads on Google web sites targeted to users’ search queries. Advertisers paid the Company based on the number of times their ads were displayed on users’ search results pages and the Company recognized revenue at the time these ads appeared. In the fourth quarter of 2000, the Company launched Google AdWords, an online self-service program that enables advertisers to place text-based ads on Google web sites. AdWords customers originally paid the Company based on the number of times their ads appeared on users’ search results pages. In the first quarter of 2002, the Company began offering AdWords exclusively on a cost-per-click basis, so that an advertiser pays the Company only when a user clicks on one of its ads. The Company recognizes 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. Effective January 1, 2004, the Company now offers a single pricing structure to all of its advertisers based on the AdWords cost-per-click model.

Google AdSense is the program through which the Company distributes its advertisers’ text-based ads for display on the web sites of the Google Network members. The Company recognizes as revenues the fees charged advertisers net of the portion shared with its Google Network members under its AdSense program. The Company’s net revenues and cost of revenues would both have been $91.7 million and $504.0 million and $69.7 million and $262.6 million higher in 2002 and 2003, and in the three months ended March 31, 2003 and 2004, if these AdSense agreements had been accounted for on a gross basis. There were no AdSense agreements in 2001.

Certain AdSense agreements obligate the Company to make guaranteed minimum revenue share payments to Google Network members, based on their achieving defined performance terms. The Company’s guaranteed minimum provisions normally cover a period of three months or less, but there may be successive guarantee periods during the term of the agreement. Because management believes each period covered by a guaranteed minimum is a separate transaction or accounting unit, the Company’s policy is to recognize either net revenues or cost of revenues over the period covered by the guaranteed minimum, but not both. As a result, the Company amortizes any guaranteed minimum prepayment (or accretes an amount payable to its Google Network member if the guaranteed minimum payment is due in arrears) equal to the related advertiser fees the Company receives

F-9

Google Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(Information as of March 31, 2004 and for the three months ended March 31, 2003 and 2004 is unaudited)

until such time as it can determine it is probable that such fees over the remaining period covered by the guaranteed minimum will be greater than or less than the remaining guaranteed minimum amount. The Company recognizes no net revenues or cost of revenues related to the guaranteed minimum provision until the time it makes such a determination, no later than halfway through the period covered by the guaranteed minimum. Once management makes such a determination, the Company thereafter recognizes net revenues or cost of revenues equal to the amount by which the related advertiser fees are greater than or less than the pro rata amortization or accretion of the remaining guaranteed minimum amount. Management occasionally revises such determinations. Thereafter, and to the extent advertiser fees are greater than or less than the pro rata amortization or accretion of the remaining guaranteed minimum amount, cost of revenue or net revenue amounts previously recognized are not restated. Instead, in the then current period the Company reduces cost of revenues or net revenues by the amount previously recognized and any remaining amount is recognized as net revenues or cost of revenues, respectively. The Company has not reduced any material cost of revenue or net revenue amounts previously recorded in any of the periods presented.

If and at the time an AdSense agreement is terminated or abandoned, the Company recognizes a charge against net revenues or to cost of revenues to the full extent of its remaining obligations under the terms of the agreement. The Company has not terminated or abandoned any AdSense agreements that have resulted in a material charge against earnings in any of the periods presented.

Concurrent with the commencement of certain AdSense agreements the Company has purchased specific items from, or provided other consideration to, its partners. According to Emerging Issues Task Force (“EITF”) Issue No. 01-9, Accounting for Consideration Given by a Vendor to a Customer, cash consideration given by a vendor to a customer is presumed to be a reduction of the selling price of the vendor’s product or service and, therefore, should be characterized as a reduction of revenues when recognized in the vendor’s income statement unless the vendor receives an identifiable benefit in exchange for the consideration and the vendor can reasonably estimate the fair value of the benefit identified. If management determines the Company will derive little or no benefit from a purchased item, or if it cannot estimate the item’s fair value, then the cost of the item is deemed to be part of the AdSense agreement and is amortized against net revenues or to cost of revenues, as the case may be. The cost of such an item, along with other cash payments or the value of other consideration such as warrants to purchase the Company’s stock, is amortized so that neither net revenues nor cost of revenues is recognized until management determines it is probable that the sum of the pro-rated cost and any remaining unamortized guaranteed minimum amounts will be either greater or less than the related advertiser fees. The cost is pro rated over each of the periods covered by the guaranteed minimums or, if there are no guaranteed minimums, over periods not to exceed twelve months. After such a determination has been made, the Company amortizes the pro rated cost such that only net revenues or cost of revenues is recognized over the remaining term covered by the guaranteed minimum or over a period of not more than twelve months.

The unamortized prepaid guaranteed minimum amounts were $1.8 million at both December 31, 2002 and 2003. In addition, the costs of items purchased from, or other consideration provided to, Google Network members concurrent with the commencement of certain AdSense agreements that management has determined have no other value to the Company were $13.9 million and $19.8 million in 2002 and 2003, and the related unamortized amounts were $4.6 million and $18.8 million at December 31, 2002 and 2003. These unamortized amounts are included in “prepaid revenue share, expenses and other assets” on the accompanying consolidated balance sheets.

The Company generates fees form 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

F-10

Google Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(Information as of March 31, 2004 and for the three months ended March 31, 2003 and 2004 is unaudited)

period during which these services will be provided. The Company’s policy is to recognize revenues from per-query search fees in the period queries are made and results are delivered.

The Company also generates fees from the sale and license of its Search Appliance, which includes hardware, software and 12 to 24 months of post-contract support. As 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 in accordance with Statement of Position 97-2, Software Revenue Recognition, as amended.

The Company provides search services pursuant to certain AdSense agreements. Management believes 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 web site partner and are recognized as revenues in the periods provided.

Deferred revenue is recorded when payments are received in advance of the Company’s performance in the underlying agreement, net of any amounts estimated to be paid to Google Network members which are recorded as “accrued revenue share” on the accompanying consolidated balance sheets.

Cost of Revenues

Cost of revenues consists primarily of the expenses associated with the operation of the Company’s data centers, including depreciation, labor, energy and bandwidth costs. Cost of revenues also includes credit card and other transaction fees relating to processing customer transactions and guaranteed minimums and other costs to the extent that they exceed fees received from advertisers under the related AdSense agreements.

Stock-based Compensation

Stock-based compensation as shown on the accompanying consolidated income statements consists of amortization of deferred stock-based compensation related to restricted shares and options to purchase Class A and Class B common stock to employees and the values of options to purchase such stock issued to non-employees.

As permitted by SFAS 123, Accounting for Stock-based Compensation, the Company accounts for employee stock-based compensation in accordance with Accounting Principles Board Opinion (“APB”) No. 25, Accounting for Stock Issued to Employees (“APB 25”), and related interpretations. Under APB 25, deferred compensation for options granted to employees is equal to its intrinsic value, determined as the difference between the exercise price and the deemed value of the underlying stock on the date of grant. For purposes of financial accounting for employee stock-based compensation, management has applied hindsight within each year to arrive at deemed values for the shares underlying the options. The Company has recorded deferred stock-based compensation equal to the difference between these deemed values and the exercise prices.

In connection with certain restricted share and stock option grants to employees, the Company recorded deferred stock-based compensation costs of $20.0 million, $40.1 million and $540.7 million in 2001, 2002 and 2003. Amortization of deferred stock-based compensation totaled $12.2 million, $20.2 million and $213.5 million in 2001, 2002 and 2003. The deferred stock-based compensation is being amortized using the accelerated vesting method, in accordance with Statement of Financial Accounting Standards (“SFAS”) No. 123, Accounting for Stock-based Compensation (“SFAS 123”), EITF 96-18, Accounting for Equity Instruments That Are Issued to Other Than Employees for Acquiring, or in connection with Selling, Goods or Services (“EITF 96-18”), and Financial Accounting Standards Board (“FASB”) Interpretation (“FIN”) No. 28, over the vesting

F-11

Google Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(Information as of March 31, 2004 and for the three months ended March 31, 2003 and 2004 is unaudited)

period of each respective restricted share and stock option, generally over four to five years. The remaining unamortized, deferred stock-based compensation for all restricted shares and stock option grants through December 31, 2003 assuming no change in the stock option accounting rules and assuming all employees remain employed at Google for their remaining vesting periods will be expensed as follows over each of the next five years and thereafter (in millions):

2004	$	204.8
2005		96.3
2006		47.5
2007		16.1
2008		3.5
Thereafter		1.5
	$	369.7

The Company accounts for stock awards issued to non-employees in accordance with the provisions of SFAS 123 and EITF 96-18. Under SFAS 123 and EITF 96-18, the Company uses the Black-Scholes method to measure the value of options granted to non-employees at each vesting date to determine the appropriate charge to stock-based compensation.

The Company recorded stock-based compensation expense of $186,000, $1.5 million, and $15.8 million for the value of stock options earned by non-employees in 2001, 2002 and 2003.

At December 31, 2003, there were 500,150 unvested options to purchase shares of Class B common stock held by non-employees with a weighted- average exercise price of $0.69 and a weighted-average 48 month remaining vesting period. These options will generally vest on a monthly and ratable basis subsequent to December 31, 2003.

Pro forma information regarding net income has been determined as if the Company had accounted for its employee stock options under the method prescribed by SFAS 123. The resulting effect on pro forma net income disclosed is not likely to be representative of the effects on net income on a pro forma basis in future years due to additional grants and years of vesting in subsequent years.

F-12

Google Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(Information as of March 31, 2004 and for the three months ended March 31, 2003 and 2004 is unaudited)

Had compensation cost for options granted under the option plans (see Note 9) been determined based on the fair value method prescribed by SFAS 123, the Company’s net income and net income per share would have been adjusted to the pro forma amounts below (in thousands):

	Year Ended December 31,								Three Months Ended March 31,
	2001			2002		2003			2003			2004
									(unaudited)
Net income, as reported	$	6,985		$	99,656	$	105,648		$	25,800		$	63,973
Add: Stock-based employee compensation expense included in reported net income		12,197			20,175		213,545			34,619			73,717
Deduct: Total stock-based employee compensation expense under the fair value based method for all awards		(14,648	)		22,390		(215,946	)		(34,943	)		(74,605	)
Net income, pro forma	$	4,534		$	97,441	$	103,247		$	25,476		$	63,085
Net income per share:
As reported—basic	$	0.07		$	0.86	$	0.77		$	0.20		$	0.42
Pro forma—basic	$	0.05		$	0.85	$	0.75		$	0.20		$	0.42
As reported—diluted	$	0.04		$	0.45	$	0.41		$	0.10		$	0.24
Pro forma—diluted	$	0.02		$	0.44	$	0.40		$	0.10		$	0.24

For purposes of the above pro forma calculation, the value of each option granted through March 31, 2004 was estimated on the date of grant using the Black-Scholes pricing model with the following weighted-average assumptions:

	Year Ended December 31,						Three Months Ended March 31,
	2001		2002		2003		2003		2004
							(unaudited)
Risk-free interest rate	4.38	%	3.34	%	2.11	%	2.05	%	2.20	%
Expected volatility	100	%	75	%	75	%	75	%	75	%
Expected life (in years)	4		3		3		3		3
Dividend yield	—		—		—		—		—

The weighted-average fair value of an option granted in 2001, 2002 and 2003, and in the three months ended March 31, 2003 and 2004, was $0.91, $2.79 and $29.12, and $14.16 and $67.06, using the Black-Scholes pricing model.

Stock Options Exercised Early

The Company typically allows employees to exercise options prior to vesting. In accordance with EITF 00-23, Issues Related to Accounting for Stock Compensation under APB Opinion No. 25 and FASB Interpretation No. 44, stock options granted or modified after March 21, 2002, which are subsequently exercised for cash prior to vesting are treated differently from prior grants and related exercises. The consideration received for an exercise of an option granted after the effective date of this guidance is considered to be a deposit of the exercise price and the related dollar amount is recorded as a liability. The shares and liability are only reclassified into equity on a ratable basis as the award vests. The Company has appropriately applied the guidance and recorded a liability on the consolidated balance sheets relating to 3,281,004, 11,987,482 and 10,945,942 of options granted subsequent to

F-13

Google Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(Information as of March 31, 2004 and for the three months ended March 31, 2003 and 2004 is unaudited)

March 21, 2002 that were exercised and are unvested at December 31, 2002 and 2003 and at March 31, 2004. Furthermore, these shares are not presented as outstanding on the accompanying consolidated statements of redeemable convertible preferred stock warrant and stockholders’ equity and consolidated balance sheets. Instead, these shares are disclosed as outstanding options in the footnotes to these financial statements.

Stock Split

In February and June 2003, the Company affected separate two-for-one stock splits. In addition, the Company affected other splits in prior years. All references to Class A and Class B common stock and preferred stock shares and per share amounts including options and warrants to purchase Class A and Class B common stock have been retroactively restated to reflect the stock split as if such split had taken place at the inception of the Company.

Net Income Per Share

The Company computes 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 Class A and Class B common shares outstanding during the period except that it does not include unvested Class A and Class B common shares subject to repurchase or cancellation. Diluted net income per share is computed using the weighted average number of Class A and Class B common shares and, if dilutive, potential Class A and Class B common shares outstanding during the period. Potential Class A and Class B common shares consist of the incremental Class A and Class B common shares issuable upon the exercise of stock options, warrants, unvested common shares subject to repurchase or cancellation and convertible preferred stock. The dilutive effect of outstanding stock options and warrants is reflected in diluted earnings per share by application of the treasury stock method. Convertible preferred stock is reflected on an if-converted basis.

F-14

Google Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(Information as of March 31, 2004 and for the three months ended March 31, 2003 and 2004 is unaudited)

The following table sets forth the computation of basic and diluted net income per share (in thousands, except per share amounts):

	Year Ended December 31,									Three Months Ended March 31,
	2001			2002			2003			2003			2004
										(unaudited)
Basic and diluted net income per share:
Numerator:
Net income	$	6,985		$	99,656		$	105,648		$	25,800		$	63,973
Denominator:
Weighted average Class A and Class B common shares outstanding		125,135			143,317			168,093			158,982			173,737
Less: Weighted average unvested Class A and Class B common shares subject to repurchase or cancellation		(30,612	)		(28,075	)		(30,396	)		(31,643	)		(22,653	)
Denominator for basic calculation		94,523			115,242			137,697			127,339			151,084
Effect of dilutive securities
Add: Stock options and warrants		4,824			17,072			21,302
Weighted average convertible preferred shares		70,432			70,432			71,027
Weighted average unvested Class A and Class B common shares subject to repurchase or cancellation		30,376			27,880			30,054
Denominator for diluted calculation
Net income per share, basic	$	0.07		$	0.86		$	0.77		$	0.20		$	0.42
Net income per share, diluted	$	0.03		$	0.43		$

Pro Forma Net Income Per Share (unaudited)

Pro forma basic and diluted net income per share have been computed to give effect to the conversion of convertible preferred stock into Class B common stock upon the closing of the Company’s initial public offering on an if-converted basis for the year ended December 31, 2003 and for the three months ended March 31, 2004.

F-15

Google Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(Information as of March 31, 2004 and for the three months ended March 31, 2003 and 2004 is unaudited)

The following table sets forth the computation of pro forma basic and diluted net income per share (in thousands, except per share amounts):

	Year Ended December 31, 2003			Three Months Ended March 31, 2004
	(unaudited)			(unaudited)
Numerator:
Net income	$	105,648		$	63,973
Denominator:
Weighted average Class A and Class B common shares outstanding		168,093			173,737
Less: Weighted average unvested Class A and Class B common shares subject to repurchase or cancellation		(30,396	)		(22,653	)
Add: Adjustments to reflect the weighted average effect of the assumed conversion of preferred stock from the date of issuance		71,128			71,662
Denominator for basic pro forma calculation		208,825			222,746
Pro forma net income per common share, basic	$	0.51		$	0.29

Certain Risks and Concentrations

The Company’s revenues are principally derived from online advertising, the market for which is highly competitive and rapidly changing. Significant changes in this industry or changes in customer buying behavior could adversely affect the Company’s operating results.

Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash equivalents, investments and accounts receivable. Cash equivalents consist of money market funds. Short term investments consist primarily of agency notes, market auction preferred securities, municipal auction rate receipts and municipal bonds held with five financial institutions. Accounts receivable are typically unsecured and are derived from revenues earned from customers primarily located in the U.S. In 2003 and in the three months ended March 31, 2004, the Company generated approximately 74% and 70% of its net revenues from customers based in the U.S. with the majority of customers outside of the U.S. located in Japan and Europe. Many of the Company’s Network members are in the Internet industry. To appropriately manage this risk, the Company performs ongoing evaluations of customer credit and limits the amount of credit extended, but generally no collateral is required. The Company maintains reserves for estimated credit losses and these losses have generally been within management’s expectations.

No customer accounted for greater than 10% of net revenues in 2001, 2002 and 2003 or in the three months ended March 31, 2003 and 2004.

F-16

Google Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(Information as of March 31, 2004 and for the three months ended March 31, 2003 and 2004 is unaudited)

Fair Value of Financial Instruments

The carrying amounts of the Company’s financial instruments, including cash and cash equivalents, short-term investments, accounts receivable, accounts payable and accrued liabilities, approximate fair value because of their short maturities. The carrying amounts of the Company’s equipment loans and capital leases approximate fair value of these obligations based upon management’s best estimates of interest rates that would be available for similar debt obligations at December 31, 2002 and 2003.

Cash and Cash Equivalents and Short-Term Investments

The Company invests its excess cash in money market funds and in highly liquid debt instruments of the U.S. government, its agencies and municipalities. All highly liquid investments with stated maturities of three months or less from date of purchase are classified as cash equivalents; highly liquid investments with stated maturities of greater than three months are classified as short-term investments.

Management determines the appropriate classification of its investments in debt and marketable equity securities at the time of purchase and reevaluates such designation at each balance sheet date. The Company’s debt and marketable equity securities have been classified and accounted for as available-for-sale. The Company does not intend to hold securities with stated maturities greater than twelve months until maturity. In response to changes in the availability of and the yield on alternative investments as well as liquidity requirements, the Company occasionally sells these securities prior to their stated maturities. These securities are carried at fair value, with the unrealized gains and losses, net of taxes, reported as a component of stockholders’ equity. Any realized gains or losses on the sale of short-term investments are determined on a specific identification method, and such gains and losses are reflected as a component of interest income or expense.

Accounts Receivable

Accounts receivable are recorded at the invoiced amount and are non-interest bearing. The Company maintains an allowance for doubtful accounts to reserve for potentially uncollectible receivables. Management reviews the accounts receivable by aging category to identify specific customers with known disputes or collectibility issues. In determining the amount of the reserve, management makes judgments about the creditworthiness of significant customers based on ongoing credit evaluations. The Company also maintains a sales allowance to reserve for potential credits issued to customers. The amount of the reserve is determined based on historical credits issued.

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. 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 lease-hold improvements. Depreciation for these assets commences once they are placed in service.

Long-Lived Assets Including Goodwill and Other Acquired Intangible Assets

The Company reviews property and equipment and certain identifiable intangibles, excluding goodwill, for impairment whenever events or changes in circumstances indicate the carrying amount of an asset may not be

F-17

Google Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(Information as of March 31, 2004 and for the three months ended March 31, 2003 and 2004 is unaudited)

recoverable. Recoverability of these assets is measured by comparison of its carrying amounts to future undiscounted cash flows the assets are expected to generate. If property and equipment and certain identifiable intangibles are considered to be impaired, the impairment to be recognized equals the amount by which the carrying value of the asset exceeds its fair market value. The Company has made no adjustments to its long-lived assets in any of the years presented.

The Company has adopted SFAS No. 142, Goodwill and Other Intangible Assets. SFAS No. 142 requires that goodwill and intangible assets with indefinite useful lives no longer be amortized, but instead be tested for impairment at least annually or sooner whenever events or changes in circumstances indicate that they may be impaired. The Company completed its first goodwill impairment test at November 30, 2003, and found no impairment. The test was based on the Company’s single operating segment and reporting unit structure.

SFAS No. 142 also requires that intangible assets with definite lives be amortized over their estimated useful lives and reviewed for impairment whenever events or changes in circumstances indicate an asset’s carrying value may not be recoverable in accordance with SFAS No. 144, Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of. The Company is currently amortizing its acquired intangible assets with definite lives over periods ranging from 2 to 3 years. The Company believes no events or changes in circumstances have occurred that would require an impairment test for these assets.

Income Taxes

The Company recognizes income taxes under the liability method. Deferred income taxes are recognized for differences between the financial reporting and tax bases of assets and liabilities at enacted statutory tax rates in effect for the years in which the differences are expected to reverse. The effect on deferred taxes of a change in tax rates is recognized in income in the period that includes the enactment date.

Foreign Currency

Generally, the functional currency of the Company’s international subsidiaries is the local currency. The financial statements of these subsidiaries are translated to U.S. dollars using month-end rates of exchange for assets and liabilities, and average rates of exchange for revenues, costs and expenses. Translation gains (losses) are deferred and recorded in accumulated other comprehensive income as a component of stockholders’ equity. The Company recorded $1.7 million of net translation gains in 2003. There was no translation gain or loss in 2001 and 2002. Net gains and losses resulting from foreign exchange transactions are included in the consolidated income statements. The Company recognized $2.1 million of net gains resulting from foreign exchange transactions in 2003. Net transaction gains and losses recognized during 2001 and 2002 were not material.

Advertising Expenses

The Company expenses advertising costs in the period in which they are incurred. For the years ended December 31, 2001, 2002 and 2003 advertising expenses totaled approximately $5.3 million, $7.0 million and $20.9 million, including $2.8 million and $1.4 million of warrant amortization expense in 2001 and 2002 and none in 2003.

Comprehensive Income

Comprehensive income is comprised of net income and other comprehensive income. Other comprehensive income includes unrealized gains and losses on foreign exchange and unrealized gains and losses on available-

F-18

Google Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(Information as of March 31, 2004 and for the three months ended March 31, 2003 and 2004 is unaudited)

for-sale investments. The differences between total comprehensive income and net income as disclosed on the consolidated statement of redeemable convertible preferred stock warrant and stockholders’ equity for 2001, 2002 and 2003 were insignificant.

Recent Accounting Pronouncements

In November 2002, the EITF reached a consensus on Issue 00-21, Accounting for Multiple Element Revenue Arrangements, addressing how to account for arrangements that involve the delivery or performance of multiple products, services, and/or rights to use assets. Revenue arrangements with multiple deliverables are divided into separate units of accounting if the deliverables in the arrangement meet the following criteria: (1) the delivered item has value to the customer on a standalone basis; (2) there is objective and reliable evidence of the fair value of undelivered items; and (3) delivery of any undelivered item is probable. Arrangement consideration should be allocated among the separate units of accounting based on their relative fair values, with the amount allocated to the delivered item being limited to the amount that is not contingent on the delivery of additional items or meeting other specified performance conditions. The guidance in Issue 00-21 is effective for revenue arrangements entered into in fiscal periods after June 15, 2003. The adoption of Issue 00-21 did not have an impact on the Company’s financial statements.

During November 2002, the FASB issued FIN 45, Guarantor’s Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness to Others, an interpretation of FASB Statements No. 5, 57 and 107 and a rescission of FASB Interpretation No. 34. FIN 45 elaborates on the existing disclosure requirements for a guarantor in its interim and annual financial statements regarding its obligations under guarantees issued. It also clarifies that at the time a guarantee is issued, the guarantor must recognize an initial liability for the fair value of the obligations it assumes under the guarantee and must disclose that information in its financial statements. The initial recognition and measurement provisions apply on a prospective basis to guarantees issued or modified after December 31, 2002, and the disclosure requirements apply to guarantees outstanding at December 31, 2002. The Company adopted the provisions of FIN 45 at January 1, 2003. The adoption of this Interpretation did not have an impact on the Company’s operating results. See further discussion regarding indemnifications in Note 7.

In January 2003, the FASB issued FIN 46, Consolidation of Variable Interest Entities. FIN 46 clarifies the application of Accounting Research Bulletin No. 51. This Interpretation requires variable interest entities to be consolidated if the equity investment at risk is not sufficient to permit an entity to finance its activities without support from other parties or the equity investors lack specified characteristics. The Company does not have any variable interest entities.

In May 2003, the FASB issued SFAS 150, Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity. SFAS 150 establishes standards for how a company classifies and measures certain financial instruments with characteristics of both liabilities and equity. It requires that an issuer classify certain financial instruments as a liability (or as an asset in some circumstances). SFAS No. 150 is effective for financial instruments entered into or modified after May 31, 2003, and otherwise is effective at the beginning of the first interim period beginning after June 15, 2003. The adoption of SFAS No. 150 did not have an impact on the Company’s financial statements.

F-19

Google Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(Information as of March 31, 2004 and for the three months ended March 31, 2003 and 2004 is unaudited)

Note 2.    Cash, Cash Equivalents and Short-term Investments

Cash, cash equivalents and short-term investments consist of the following (in thousands):

	As of December 31,				As of March 31, 2004
	2002		2003
					(unaudited)
Cash and cash equivalents	$	57,752	$	148,995	$	251,354
Short-term investments:
Municipal securities	$	86,979	$	166,538	$	179,975
Market auction preferred securities		1,600		8,000		10,000
U.S. government notes		—		11,185		13,559
Total short-term investments		88,579		185,723		203,534
Total cash, cash equivalents and short-term investments	$	146,331	$	334,718	$	454,888

The Company has not experienced any significant realized gains or losses on its investments in the periods presented. Gross unrealized gains and losses at December 31, 2002 and 2003 and at March 31, 2004 were not material.

The following table summarizes the estimated fair value of our securities held in short-term investments classified by the stated maturity date of the security (in thousands):

	As of December 31,				As of March 31, 2004
	2002		2003
					(unaudited)
Due within 1 year	$	17,744	$	29,381	$	23,727
Due within 1 year through 5 years		—		81,830		129,202
Due within 5 years through 10 years		—		11,382		3,463
Due after 10 years		70,835		63,130		47,142
Total	$	88,579	$	185,723	$	203,534

In addition, at December 31, 2002 and at both December 31, 2003 and March 31, 2004, the Company had $376,000 and $11.0 million of restricted cash and investment securities classified as other current assets which are included in “prepaid revenue share, expenses and other assets” in the accompanying consolidated balance sheets.

Note 3.    Interest Income (Expense) and Other

	Year Ended December 31,									Three Months Ended March 31,
	2001			2002			2003			2003			2004
	(in thousands)
										(unaudited)
Interest income	$	861		$	1,215		$	2,663		$	513		$	1,156
Interest expense		(1,758	)		(2,570	)		(1,931	)		(550	)		(286	)
Other		1			(196	)		3,458			(10	)		(570	)
Interest income (expense) and other, net	$	(896	)	$	(1,551	)	$	4,190		$	(47	)	$	300

F-20

Google Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(Information as of March 31, 2004 and for the three months ended March 31, 2003 and 2004 is unaudited)

Note 4.    Acquisitions

Applied Semantics, Inc.

In April 2003, the Company acquired all of the voting interests of Applied Semantics, Inc. (“ASI”) to strengthen its search and advertising programs, including content-targeted advertising programs. The transaction was accounted for as a business combination.

The total purchase price was $102.4 million and consisted of a cash payment of $41.5 million, including direct transaction costs of $400,000, and the issuance of 1,825,226 fully vested shares of the Company’s Class A common stock and 557,574 fully vested and unvested options to purchase the Company’s Class A common stock valued at $60.9 million. The intrinsic value of the unvested options to purchase 81,352 shares of Class A common stock on the date of acquisition was recorded as deferred stock-based compensation and is being amortized as compensation expense on an accelerated basis over the related vesting periods of three to 47 months contingent upon each individual’s continued employment with the Company.

The fair values of the assets and liabilities acquired, including intangible assets, were determined by management with input from an appraiser. The total purchase price was allocated as follows (in thousands):

Goodwill	$	84,192
Developed technology		16,600
Customer contracts and other		4,100
Net tangible assets acquired		3,612
Deferred tax asset		1,074
Deferred stock-based compensation		1,933
Deferred tax liabilities		(9,074	)
Total	$	102,437

Goodwill includes but is not limited to the synergistic value and potential competitive benefits that could be realized by the Company from the acquisition, any future products that may arise from ASI’s technology, as well as ASI’s skilled and specialized workforce. The goodwill amount is not deductible for tax purposes.

The developed technology and customer contracts and other have a weighted-average useful life of three and two years, and a combined weighted average life of 2.81 years.

Cash consideration of $900,000 may be paid over the next four years to certain former employees of ASI contingent upon their continued employment with the Company and will be recognized as expense as it is earned by the employees. As of December 31, 2003, the Company had paid approximately $300,000 of this amount.

F-21

Google Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(Information as of March 31, 2004 and for the three months ended March 31, 2003 and 2004 is unaudited)

The results of operations of ASI have been included in the Company’s consolidated income statements since the completion of the acquisition on April 23, 2003. The following unaudited pro forma information presents a summary of the results of operations of the Company assuming the acquisition of ASI occurred on January 1, 2002 (in thousands, except per share amounts):

	Year Ended December 31,
	2002		2003
	(unaudited)
Net revenues	$	354,035	$	964,693
Net income	$	94,749	$	105,072
Net income per share—basic:	$	0.81	$	0.76
Net income per share—diluted:	$	0.43	$	0.41

Other Acquisitions

During the year ended December 31, 2003 the Company acquired all of the voting interests of three other companies. Two of the companies were accounted for as business combinations. Because the third company was considered a development stage enterprise, the transaction was accounted for as an asset purchase 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 for the three acquisitions was $15.3 million and consisted of a cash payment of $1.5 million and the issuance of 440,000 fully vested shares of the Company’s Class A common stock valued at $13.8 million. The total purchase price was allocated as follows (in thousands):

Goodwill	$	3,250
Developed technology		3,651
Net liabilities assumed		(1,759	)
Deferred tax liabilities		(1,487	)
Purchased in-process research and development		11,618
Total	$	15,273

Purchased in-process research and development of $11.6 million was expensed upon acquisition because technological feasibility had not been established and no future alternative uses existed. That amount is included in research and development expenses on the accompanying consolidated income statement and is not deductible for tax purposes.

Goodwill includes but is not limited to the synergistic value and potential competitive benefits that could be realized by the Company from the acquisitions, any future products that may arise from the related technology, as well as the skilled and specialized workforce acquired. The goodwill amount is not deductible for tax purposes.

The developed technology has a weighted-average useful life of three years.

In addition in conjunction with the acquisitions, the Company issued 235,000 restricted shares of the Company’s Class A common stock valued at $10.8 million. The fair value of the restricted shares was recorded as deferred stock-based compensation and will be amortized to compensation expense on an accelerated basis over the related vesting periods of two to five years, contingent upon each individual’s continued employment with the Company.

F-22

Google Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(Information as of March 31, 2004 and for the three months ended March 31, 2003 and 2004 is unaudited)

Note 5.    Goodwill and Other Intangible Assets

The changes in the carrying amount of goodwill for the year ended December 31, 2003, are as follows (in thousands):

Balance as of January 1, 2003	$	—
Goodwill acquired during year		87,442
Balance as of December 31, 2003	$	87,442

Information regarding the Company’s acquisition-related intangible assets that are being amortized is as follows (in thousands):

	As of December 31, 2003
	Gross Carrying Amount		Accumulated Amortization		Net Carrying Value
Developed technology	$	20,917	$	5,514	$	15,403
Customer contracts and other		4,100		1,389		2,711
Total	$	25,017	$	6,903	$	18,114

Amortization expense of acquisition-related intangible assets for the year ended December 31, 2003 was $6.3 million.

Estimated amortization expense for acquisition-related intangible assets on the Company’s December 31, 2003 consolidated balance sheet for the fiscal years ending December 31, is as follows (in thousands):

2004	$	8,767
2005		7,423
2006		1,924
	$	18,114

Note 6.    Property and Equipment

Property and equipment consist of the following (in thousands):

	As of December 31,				As of March 31, 2004
	2002		2003
					(unaudited)
Information technology assets	$	78,764	$	204,417	$	258,751
Furniture and fixtures		1,835		6,803		9,103
Leasehold improvements		908		7,677		8,044
Construction in process		5,379		42,940		71,855
Total		86,886		261,837		347,753
Less accumulated depreciation and amortization		33,013		73,582		94,747
Property and equipment, net	$	53,873	$	188,255	$	253,006

F-23

Google Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(Information as of March 31, 2004 and for the three months ended March 31, 2003 and 2004 is unaudited)

Note 7.    Commitments and Contingencies

Capital Leases

In June 2001, the Company entered into a master equipment lease agreement with a financial institution. The agreement provided for an initial equipment lease line of credit not to exceed $5.0 million. In October 2001, the same financial institution provided for the syndication of another equipment lease line of credit not to exceed $10.0 million. At December 31, 2003, $15.0 million had been borrowed under these equipment lease lines of credit.

The equipment financed under the capital lease arrangement is included in property and equipment and the related amortization is included in depreciation and amortization expense. The cost of assets financed under the capital lease was $15.0 million at December 31, 2002 and 2003. The related amortization expense was $728,000, $3.4 million and $5.0 million during 2001, 2002 and 2003 and accumulated amortization was $4.1 million and $9.1 million at December 31, 2002 and 2003. The equipment leases have payment terms of 36 months.

The Company has issued warrants to purchase 179,956 shares of Series C convertible preferred stock in connection with its draw on the equipment lease lines (see Note 9).

Operating Leases

During 2003, the Company entered into a nine year sublease agreement for its headquarters in Mountain View, California. According to the terms of the sublease, the Company will begin making payments in July 2005 and payments will increase at 3% per annum thereafter. The Company recognizes rent expense under this arrangement on a straight line basis. The lease terminates on December 31, 2012, however, the Company may exercise two five year renewal options at its discretion. The Company has an option to purchase the property for approximately $172.4 million, which is exercisable in 2006. At December 31, 2003, the Company had not made a decision with respect to this purchase option. In connection with the lease, the Company has a letter of credit which requires it to maintain $9.0 million of cash and investment securities as collateral. This required collateral effectively expires in April 2004. As a result, it is classified as other current assets, which is included in “prepaid revenue share, expenses and other assets” on the accompanying consolidated balance sheets. At December 31, 2003, the Company was in compliance with its financial covenants under the lease.

In addition, the Company has entered into various non-cancelable operating lease agreements for its offices throughout the U.S. and for international subsidiaries with original lease periods expiring between 2004 and 2015. The Company is committed to pay a portion of the buildings’ operating expenses as determined under the agreements. Certain of these arrangements have free or escalating rent payment provisions. The Company recognizes rent expense under such arrangements on a straight line basis. Total payments relating to leases having an initial or remaining non-cancelable term less than one year are $2.3 million and are not included in the table below. Rent expense was $2.0 million, $3.7 million, and $8.9 million in 2001, 2002, and 2003.

F-24

Google Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(Information as of March 31, 2004 and for the three months ended March 31, 2003 and 2004 is unaudited)

At December 31, 2003, future payments under capital leases and minimum payments under non-cancelable operating leases with a remaining term greater than one-year are as follows over each of the next five years and thereafter (in thousands):

	Capital Leases		Operating Leases
2004	$	5,304	$	7,378
2005		2,080		13,596
2006		—		18,620
2007		—		18,774
2008		—		18,769
Thereafter		—		69,592
Total minimum payments required		7,384	$	146,729
Less amounts representing interest		775
Minimum future payments of principal		6,609
Current portion		4,621
Long-term portion	$	1,988

AdSense Agreements

In connection with our AdSense revenue share agreements, the Company is periodically required to make non-cancelable guaranteed minimum revenue share payments to a small number of its Google Network members over the term of the respective contracts. Under some of our contracts, these guaranteed payments can vary based on the Google Network members achieving defined performance terms, such as number of advertisements displayed or search queries. In some cases, certain guaranteed amounts will be adjusted downward if the Google Network members do not meet their performance terms and, in some cases, these amounts will be adjusted upward if they exceed their performance terms. In all but one of these AdSense agreements, if a Google Network member were unable to perform under the contract, such as being unable to provide search queries, as defined under the terms of that agreement, then the Company would not be obligated to make any non-cancelable guaranteed minimum revenue share payments to that member.

Under one AdSense agreement, through 2005 the Company is obligated to make $5.6 million of non-cancelable guaranteed minimum revenue share payments irrespective of whether or not the Google Network member achieves defined performance goals. The only circumstance in which the non-cancelable guaranteed minimum revenue share payments would not be due to this Google Network member would be material breach, as defined in the agreement.

Management believes future non-cancelable guaranteed minimum revenue share payments will be significantly greater than the contractual minimum of $5.6 million. To date, total advertiser fees generated under these AdSense agreements have exceeded the total guaranteed minimum revenue share payments. In 2003, the Company made $108.8 million of non-cancelable minimum guaranteed revenue payments.

Purchase Obligations

Additionally, the Company had $11.9 million of other non-cancelable contractual obligations and $24.9 million of open purchase orders for which we have not received the related services or goods at

F-25

Google Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(Information as of March 31, 2004 and for the three months ended March 31, 2003 and 2004 is unaudited)

December 31, 2003. The Company has the right to cancel these open purchase orders upon 10 days notice prior to the date of delivery. The majority of these purchase obligations are related to data center operations.

Letters of Credit

Associated with several leased facilities, the Company has unused letters of credit for $12.2 million and related compensating balances of $11.0 million as included in “prepaid revenue share, expenses and other assets” in the accompanying consolidated balance sheets. At December 31, 2003, the Company was in compliance with its financial covenants under the letters of credit.

Indemnifications

While the Company has various guarantees included in contracts in the normal course of business, primarily in the form of indemnities, these guarantees do not represent significant commitments or contingent liabilities of the indebtedness of others. Accordingly, the Company has not recorded a liability related to indemnification provisions.

Legal Matters

Overture Services (now owned by Yahoo) has sued the Company, claiming that the Google AdWords program infringes certain claims of Overture Services’ patent. It also claims that the patent relates to an Overture Services own bid-for-ad placement business model and its pay-for-performance technologies. The Company is currently litigating this case. If Overture Services wins, it may significantly limit the Company’s ability to use the AdWords program, and the Company also may be required to pay damages. While management currently believes that the lawsuit is without merit and that the amount of the ultimate liability, if any, with respect to this action will not materially affect the financial position, results of operations, or liquidity of the Company, the ultimate outcome of any litigation is uncertain. Were an unfavorable outcome to occur, the impact could be material to the Company.

Currently, there is no other significant litigation pending against the Company other than as disclosed in the paragraph above. From time to time, the Company may become a party to litigation and subject to claims incident to the ordinary course of the Company’s business. Although the results of litigation and claims cannot be predicted with certainty, the Company believes that the final outcome of such matters will not have a material adverse effect on the Company’s business, results of operations or financial condition. Regardless of outcome, litigation can have an adverse impact on the Company because of defense costs, diversion of management resources and other factors.

Note 8.    Redeemable Convertible Preferred Stock Warrant

As a part of an AdSense agreement entered into during 2002, the Company issued to the Google Network member fully vested warrants to purchase 7,437,452 shares of Series D convertible preferred stock. The warrants have an exercise price of $2.91 and a life of five years. These warrants expire in 2012.

The Company determined the fair value of the warrants to be $13.9 million. At December 31, 2003, the warrants have been fully amortized.

Under certain circumstances, the Company could be required to pay the holder of the warrant the lesser of (i) the fair value of the warrants (as calculated and defined in the warrant agreement using a Black-Scholes pricing model) and (ii) $5.82 per share for maximum payment of approximately $43.3 million.

F-26

Google Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(Information as of March 31, 2004 and for the three months ended March 31, 2003 and 2004 is unaudited)

As a result of the redemption feature of the warrant, the fair value of the warrants has been classified outside of stockholders’ equity. Currently, the circumstances necessary for this warrant to be redeemable are not probable and, therefore, the warrant has not been classified as a liability and the value has not been adjusted from the calculated amount. In the future, should a redemption event become probable, the warrant value would be reclassified as a liability and its value adjusted. Any adjustments in value would be recorded as a deemed dividend.

Note 9.    Stockholders’ Equity

Convertible Preferred Stock

Convertible preferred stock consists of the following (in thousands):

	As of December 31,
	2002		2003
	Shares Authorized	Shares Issued and Outstanding	Shares Authorized	Shares Issued and Outstanding	Aggregate Liquidation Preference
Series A	15,360	15,360	15,360	15,360	$	960
Series A-1	15,360	—	15,360	—		—
Series B	50,651	49,823	50,445	49,823		24,677
Series B-1	50,651	—	50,445	—		—
Series C	10,000	5,249	9,149	6,479		15,178
Series C-1	10,000	—	9,149	—		—
Series D	7,437	—	7,437	—		—
Series D-1	7,437	—	7,437	—		—
	166,896	70,432	164,782	71,662	$	40,815

Significant terms of the Series A, A-1, B, B-1, C, C-1, D and D-1 convertible preferred stock are as follows:

• Holders of Series A, Series B, Series C and Series D convertible preferred stock are entitled to noncumulative dividends of $0.00625, $0.0496, $0.2343 and $0.2910 per share, respectively, if and when declared by the board of directors in preference to holders of common stock. No dividends have been declared through December 31, 2003.

• In the event of liquidation, dissolution, or winding up of the Company, either voluntarily or involuntarily, stockholders will receive distributions of $0.0625 for each share of Series A or A-1 convertible preferred stock, $0.4953 for each share of Series B or B-1 convertible preferred stock, and $2.3425 for each share of Series C or C-1 convertible preferred stock, and $2.91 for each share of Series D or D-1 convertible preferred stock. All remaining assets will be shared on a prorata basis between the Class A and Class B common stockholders.

• Each share of the convertible preferred stock is convertible into one share of Class B common stock of the Company at the option of the holder and carries voting rights equivalent to the Class B common stock on a share-for-share basis. The conversion rate of the convertible preferred stock is subject to adjustment in the event of, among other things, stock splits and stock dividends. Each share of convertible preferred stock automatically converts into Class B common stock in the event of a public offering of the Company’s common stock in which the gross proceeds and the offering price per share exceed certain minimum amounts.

F-27

Google Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(Information as of March 31, 2004 and for the three months ended March 31, 2003 and 2004 is unaudited)

• The holders of Series A, B, C, and D convertible preferred stock are entitled to the right of first offer with respect to equity financings of the Company (which does not include an initial public offering of the Company’s stock). If the stockholders do not exercise this right in the event of an equity financing at a price per share less than the original respective issue price of Series A, B, C and D convertible preferred stock, then shares of Series A, B, C and D convertible preferred stock will be automatically converted into an equivalent number of shares of Series A-1, B-1, C-1, or D-1 convertible preferred stock, respectively.

Class A and Class B Common Stock

The Company’s Board of Directors has authorized two classes of common stock, Class A and Class B. The Company had authorized 400,000,000 and 300,000,000 shares and at December 31, 2003 there were 11,220,718 and 161,632,445 shares legally outstanding of Class A and Class B common stock. The rights of the holders of Class A and Class B common stock are identical, except with respect to voting. Each share of Class A common stock is entitled to one vote per share. Each share of Class B common stock is entitled to ten votes per share. Shares of Class B common stock may be converted at any time at the option of the stockholder and automatically convert upon sale or transfer to Class A common stock. See Note 13.

At December 31, 2003, there were 115,986,783 shares of Class A and Class B reserved for future issuance, as presented in the following table:

Outstanding convertible preferred stock	71,662,432
Outstanding options to purchase Class A and Class B common stock	17,363,122
Options to purchase Class A and Class B common stock available for grant	5,440,155
Warrants to purchase Class B common stock	1,294,308
Warrants to purchase convertible preferred stock	8,239,284
Unvested shares related to options granted and exercised subsequent to March 21, 2002 to purchase Class A and Class B common stock	11,987,482
Total Class A and Class B common stock reserved for future issuance	115,986,783

Stock Plans

The Company maintains the 1998 Stock Plan, the 2000 Stock Plan, the 2003 Stock Plan, the 2003 Stock Plan (No. 2) and the 2003 Stock Plan (No. 3) and plans assumed through acquisitions which are collectively referred to as the “Stock Plans.” Under the Company’s Stock Plans, incentive and nonqualified stock options or rights to purchase Class A and Class B common stock may be granted to eligible participants. Options must be priced to be at least 85% of the Class A or Class B common stock’s fair market value at the date of grant as determined by the board of directors (100% in the case of incentive stock options). Options are generally granted for a term of ten years. Initial 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. Additional options granted under the Stock Plans generally vest 20% after the first year of service and ratably each month over the remaining 48-month period. Typically, options may be exercised prior to vesting. Sales of stock under stock purchase rights are made pursuant to restricted stock purchase agreements. There are 24,205,579 shares of Class A and Class B common stock outstanding and subject to repurchase related to the Stock Plans at December 31, 2003. Of this total, 12,218,097 and 11,987,482 shares are related to options granted through and after March 21, 2002, in accordance with EITF 00-23, respectively.

F-28

Google Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(Information as of March 31, 2004 and for the three months ended March 31, 2003 and 2004 is unaudited)

The following table summarizes the activity under the Company’s Stock Plans:

	Options Outstanding
	Shares Available for Grant		Number of Shares		Weighted-Average Exercise Price
Balance at December 31, 2000	18,884,848		8,477,488		$	0.25
Additional options authorized	15,241,708		—			—
Options granted	(26,990,768	)	26,990,768		$	0.30
Options exercised	—		(17,754,728	)	$	0.30
Options canceled	898,000		(898,000	)	$	0.24
Options repurchased	443,740		—		$	0.06
Balance at December 31, 2001	8,477,528		16,815,528		$	0.28
Additional options authorized	14,400,000		—			—
Options granted	(14,980,716	)	14,980,716		$	0.30
Options exercised	—		(8,520,668	)	$	0.28
Options canceled	351,100		(351,100	)	$	0.30
Options repurchased	557,772		—		$	0.25
Balance at December 31, 2002	8,805,684		22,924,476		$	0.29
Additional options authorized	16,034,880		—			—
Options granted	(19,846,158	)	19,846,158		$	2.65
Options exercised	—		(13,145,075	)	$	0.54
Options canceled	274,955		(274,955	)	$	1.50
Options repurchased	170,794		—		$	0.29
Balance at December 31, 2003	5,440,155		29,350,604		$	2.47
Options granted (unaudited)	(1,005,120	)	1,005,120		$	16.28
Options exercised (unaudited)	—		(2,766,102	)	$	2.83
Options canceled (unaudited)	66,601		(66,601	)	$	2.57
Options repurchased (unaudited)	91,822		—		$	0.09
Balance at March 31, 2004 (unaudited)	4,593,458		27,523,021		$	3.27

The number of options outstanding at December 31, 2002 and 2003 and March 31, 2004 includes 3,281,004, 11,987,482 and 10,945,942 of options granted and exercised subsequent to March 21, 2002 that are unvested at December 31, 2002 and 2003 and March 31, 2004, in accordance with EITF 00-23, Issues related to the accounting for stock compensation under APB Opinion No. 25 and FASB Interpretation No. 44.

F-29

Google Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(Information as of March 31, 2004 and for the three months ended March 31, 2003 and 2004 is unaudited)

The following table summarizes additional information regarding outstanding and exercisable options at December 31, 2003:

		Options Outstanding						Options Exercisable
Range of Exercise Prices		Total Number of Shares	Unvested options granted and exercised subsequent to March 21, 2002	Number of Shares	Wtd. Avg. Remaining Life (Years)	Wtd. Avg. Exercise Price		Number of Shares	Wtd. Avg. Exercise Price
$	0.01–$  2.00	21,080,838	10,548,989	10,531,849	8.1	$	0.40	10,304,146	$	0.40
$	3.50–$  3.50	1,211,262	540,214	671,048	9.4	$	3.50	597,648	$	3.50
$	5.00–$  7.00	5,771,739	628,559	5,143,180	9.5	$	5.15	5,037,530	$	5.15
$	9.00–$  9.00	476,050	155,508	320,542	9.8	$	9.00	291,742	$	9.00
$	10.00–$10.00	810,715	114,212	696,503	9.9	$	10.00	664,203	$	10.00
$	0.01–$10.00	29,350,604	11,987,482	17,363,122	8.7	$	2.47	16,895,269	$	2.45

The number of options exercisable at December 31, 2001 and 2002 were 16,815,528 and 22,924,476.

The following table summarizes additional information regarding outstanding and exercisable options at March 31, 2004 (unaudited):

		Options Outstanding						Options Exercisable
Range of Exercise Prices		Total Number of Shares	Unvested options granted and exercised subsequent to March 21, 2002	Number of Shares	Wtd. Avg. Remaining Life (Years)	Wtd. Avg. Exercise Price		Number of Shares	Wtd. Avg. Exercise Price
$	0.01–$  2.00	18,272,609	9,010,008	9,262,601	7.9	$	0.40	9,074,469	$	0.40
$	3.50–$  3.50	1,210,012	616,900	593,112	9.1	$	3.50	519,712	$	3.50
$	5.00–$  7.00	5,765,289	745,631	5,019,658	9.3	$	5.14	4,916,375	$	5.14
$	9.00–$  9.00	469,300	186,058	283,242	9.5	$	9.00	254,442	$	9.00
$	10.00–$12.00	1,156,875	251,957	904,938	9.7	$	10.79	862,188	$	10.80
$	20.00–$20.00	648,940	136,175	512,765	10.0	$	20.00	491,115	$	20.00
$	0.01–$20.00	27,523,025	10,946,709	16,576,312	8.5	$	3.27	16,118,301	$	3.24

Note Receivable from Stockholder / Officer

In connection with the exercise of employee stock options, the Company has a $4.3 million loan receivable at December 31, 2003. This outstanding balance is for a loan that was made in 2001, to the Company’s Chief Executive Officer pursuant to a full recourse promissory note and stock pledge agreement. The note accrues interest at 7.38% compounded semi-annually and is repayable in full on September 28, 2005. See Note 13.

F-30

Google Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(Information as of March 31, 2004 and for the three months ended March 31, 2003 and 2004 is unaudited)

Warrants to Purchase Class B Common and Preferred Stock

	Shares Subject to Purchase at December 31, 2003	Weighted Average Exercise Price Per Share
Warrants Type
Class B Common	1,294,308	$	0.46
Series B Convertible Preferred	621,876	$	0.72
Series C Convertible Preferred	179,956	$	2.34
Series D Convertible Preferred	7,437,452	$	2.91
Total	9,533,592	$	2.42

No warrants outstanding at December 31, 2003 were exercised or canceled, and no warrants to purchase our stock were issued, in the three months ended March 31, 2004.

The Company determined the value of these warrants at the date of grant using the Black-Scholes option pricing model based on the estimated fair value of the underlying stock, a volatility rate of 100% or 75%, no dividends, a risk-free interest rate ranging from 4.93% to 6.84%, and an expected life of three to ten years which coincides with the maximum exercise periods of the warrants.

Class B Common

In 2001, the Company issued fully vested, nonforfeitable warrants to purchase 1,194,308 shares of Class B common stock at a price of $0.30 per share in connection with recruitment fees. The Company determined the value of the warrants to be $1.1 million. The entire fair value of the warrants was expensed during 2001 as general and administrative expense on the accompanying consolidated income statements. Also, in October 2000, the Company issued fully vested, nonforfeitable warrants to purchase 100,000 shares of Class B common stock at a price of $2.34 per share. The above warrants expire in 2006 and 2005.

Series B Preferred

In 1999, the Company issued fully vested, nonforfeitable warrants to purchase 403,840 shares of Series B convertible preferred stock in connection with an equipment line of credit. The warrants have an exercise price of $0.495. The Company determined the fair value of the warrants to be $157,000. In connection with additional drawdowns on the equipment line of credit during 2000, the Company issued 74,216 and 143,820 warrants to purchase Series B convertible preferred stock with an exercise price of $0.62 and $1.42, respectively. The Company determined the fair value of these warrants to be $28,000 and $269,000. The cost of the warrants was expensed as additional interest expense over the life of the loan arrangement. These warrants remain outstanding and expire in 2005.

Series C Preferred

In June 2000, the Company issued warrants to purchase shares of Series C convertible preferred stock to a customer in connection with a Branding and Promotion Agreement whereby the customer provided advertising to the Company over a two-year period. The warrants had an exercise price of $2.34 per share. The Company determined the fair value of the warrants to be $5.7 million. The entire fair value of the warrants was expensed ratably over the two years of the agreement as sales and marketing expense on the accompanying consolidated income statements. In June 2003, the warrant converted in accordance with its terms into 1,229,944 shares of Series C convertible preferred stock.

F-31

Google Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(Information as of March 31, 2004 and for the three months ended March 31, 2003 and 2004 is unaudited)

In 2001, the Company issued fully vested, nonforfeitable warrants to purchase 108,260 shares of Series C convertible preferred stock in connection with draw downs on the Company’s equipment lease lines of credit. The warrants have an exercise price of $2.345. The Company determined the fair value of the warrants to be $232,000. The cost of the warrants is being expensed as additional interest expense over the life of the lease arrangement. These warrants expire in 2011.

In 2002, the Company issued fully vested, nonforfeitable warrants to purchase 71,696 shares of Series C convertible preferred stock in connection with draw downs on the Company’s equipment lease lines of credit discussed in Note 7. The warrants have an exercise price of $2.345. The Company determined the fair value of the warrants to be $199,000. The cost of the warrants is being expensed as additional interest expense over the life of the lease arrangement. These warrants expire in 2012.

Series D Preferred

In 2002, the Company issued 7,437,452 redeemable warrants to purchase Series D convertible preferred stock to a customer in connection with a revenue-share agreement (see Note 8).

Note 10.    401(k) Plan

The Company has a 401(k) Savings Plan (the “401(k) Plan”) that qualifies as a deferred salary arrangement under Section 401(k) of the Internal Revenue Code. Under the 401(k) Plan, participating employees may elect to contribute up to 15% of their eligible compensation, subject to certain limitations. The Company matches employee contributions up to the lesser of 3.5% of the employee’s salary or $2,200. Employee and Company contributions are fully vested when contributed. The Company contributed approximately $329,000, $663,000 and $1.7 million during 2001, 2002 and 2003, respectively.

Note 11.    Income Taxes

Income from continuing operations before income taxes included income/(loss) from foreign operations of approximately $500,000 and $(6.5) million for 2002 and 2003. Pretax income from foreign operations was immaterial for 2001.

The provision for (benefit from) income taxes consisted of the following (in thousands):

	Year Ended December 31,
	2001			2002			2003
Current:
Federal	$	4,260		$	74,081		$	187,686
State		1,017			19,683			52,336
Foreign		—			1,367			965
Total		5,277			95,131			240,987
Deferred:
Federal		(1,782	)		(8,504	)		712
State		(412	)		(1,368	)		(693	)
Foreign		—			—			—
Total		(2,194	)		(9,872	)		19
Provision for income taxes	$	3,083		$	85,259		$	241,006

F-32

Google Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(Information as of March 31, 2004 and for the three months ended March 31, 2003 and 2004 is unaudited)

The reconciliation of federal statutory income tax rate to the Company’s effective income tax rate is as follows (in thousands):

	Year Ended December 31,
	2001			2002			2003
Expected provision at federal statutory rate, 35%	$	3,524		$	64,720		$	121,329
State taxes, net of federal benefit		393			11,905			33,568
Stock based compensation expense		4,334			7,572			79,764
Foreign rate differential		—			—			3,249
In-process research and development		—			—			4,066
Valuation allowance (utilized)/provided		(5,558	)		(461	)		—
Other individually immaterial items		390			1,523			(970	)
Provision for income taxes	$	3,083		$	85,259		$	241,006

Deferred Tax Assets

Deferred income taxes reflect the net effects of temporary differences between the carrying amounts of assets and liabilities for financing reporting purposes and the amounts used for income tax purposes. Significant components of the Company’s deferred tax assets and liabilities are as follows (in thousands):

	As of December 31,
	2002			2003
Deferred tax assets:
Net operating loss carryforwards	$	210		$	482
Deferred compensation		4,054			5,661
State taxes		6,216			15,947
Deferred revenue		834			775
Accruals and reserves not currently deductible		4,725			4,684
Tax credits		—			291
Other		42			28
Total deferred tax assets		16,081			27,868
Deferred tax liabilities:
Depreciation		(3,959	)		(15,778	)
Identified intangibles		—			(8,223	)
Other		(56	)		(272	)
Total deferred tax liabilities		(4,015	)		(24,273	)
Net deferred tax assets	$	12,066		$	3,595

The net valuation allowance decreased by approximately $5.6 million and $500,000 during the years ended December 31, 2001 and 2002 respectively.

At December 31, 2003, the Company had federal and state net operating loss carryforwards of approximately $604,000 and $5.3 million, respectively. As of December 31, 2003, the Company had federal credit carryforwards of approximately $291,000. The net operating loss and credit carryforwards will begin to expire in 2006, if not utilized.

F-33

Google Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(Information as of March 31, 2004 and for the three months ended March 31, 2003 and 2004 is unaudited)

Utilization of the net operating loss and credit carryforwards may be subject to substantial annual limitation due to the ownership change limitations provided by the Internal Revenue Code of 1986, as amended, and similar state provisions. The annual limitation may result in the expiration of net operating losses before utilization.

Note 12.    Information about Geographic Areas

The Company’s 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 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 plans for levels or components below the consolidated unit level. Accordingly, the Company considers itself to be in a single reporting segment and operating unit structure.

Net revenues by geography are based on the billing address of the advertiser. The following table sets forth revenues and long-lived assets by geographic area (in thousands):

	Year Ended December 31,						Three Months Ended March 31,
	2001		2002		2003		2003		2004
							(unaudited)
Net revenues:
United States	$	73,982	$	275,347	$	707,863	$	135,873	$	273,382
International		12,444		72,501		254,011		43,021		116,256
Total net revenues	$	86,426	$	347,848	$	961,874	$	178,894	$	389,638
	As of December 31,
	2001		2002		2003
Long-lived assets:
United States	$	28,217	$	55,008	$	267,348
International		—		87		43,876
Total long-lived assets	$	28,217	$	55,095	$	311,224

Note 13.    Subsequent Events (unaudited)

Initial Public Offering and 2004 Stock Plan

In April 2004, the Company’s board of directors approved the filing of a registration statement with the Securities and Exchange Commission for an initial public offering of the Company’s Class A common stock. In April 2004, the Company’s board of directors adopted the 2004 Stock Plan, and the Company expects its stockholders will approve the plan prior to the completion of this offering. The 2004 Stock Plan provides for the grant of incentive stock options to the Company’s employees and nonstatutory stock options, restricted stock, stock appreciation rights, performance units, performance shares, restricted stock units and other stock based awards to the Company’s employees, directors, and consultants. No awards have yet been issued pursuant to the 2004 Stock Plan.

F-34

Google Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(Information as of March 31, 2004 and for the three months ended March 31, 2003 and 2004 is unaudited)

Class A and Class B Common Stock

The Company’s certificate of incorporation provides that upon an initial public offering meeting certain criteria, the Company’s Class A Senior common stock, which has ten votes per share, would automatically convert into common stock, which has one vote per share. The Company’s Board of Directors has authorized an amendment to its certificate of incorporation to preserve the voting rights of its Class A Senior common stock at ten votes per share, and, as a result, these shares will no longer convert to common stock upon an initial public offering. In addition, shares of Class A Senior common stock may be converted at anytime at the option of the stockholder into common stock and automatically convert upon sale or transfer. Pursuant to this amendment each share of Class A Senior common stock was reclassified as one share of Class B common stock and each share of common stock was reclassified as Class A common stock. The Company expects our stockholders will approve these amendments prior to completion of this offering. These amendments have been reflected in the accompanying consolidated financial statements as if they had been made at the inception of the Company. See Note 9.

Shares issued and options granted under the Company’s 1998 Stock Plan and its 2003 Stock Plan were not exempt from registration or qualification under federal and state securities laws and the Company did not obtain the required registrations or qualifications. Shares issued and options granted under the Company’s 2003 Stock Plan (No. 2) and its 2003 Stock Plan (No. 3) were not exempt from registration or qualification under federal securities laws and the Company did not obtain the required registrations or qualifications. As a result, the Company intends to make a rescission offer to the holders of these shares and options beginning approximately 30 days after the effective date of this registration statement. If this rescission is accepted, the Company could be required to make aggregate payments to the holders of these shares and options of up to $34 million plus statutory interest. Federal securities laws do not expressly provide that a rescission offer will terminate a purchaser’s right to rescind a sale of stock that was not registered as required. If any or all of the offerees reject the rescission offer, the Company may continue to be liable under federal and state securities laws for up to an aggregate amount of approximately $34 million plus statutory interest. Management does not believe that this rescission offer will have a material effect on the Company’s results of operations, cash flows or financial position.

Note Receivable from Stockholder/Officer

In April 2004, the Company’s Chief Executive Officer fully repaid the principal and accrued interest due under a full recourse promissory note. See Note 9.

F-35

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

Item 13. Other Expenses of Issuance and Distribution.

The following table sets forth all expenses to be paid by the registrant, other than estimated underwriting discounts and commissions, in connection with this offering. All amounts shown are estimates except for the registration fee.

	Amount to be Paid
SEC registration fee	$	344,406.31
Printing and engraving		*
Legal fees and expenses		*
Accounting fees and expenses		*
Blue sky fees and expenses (including legal fees)		*
Transfer agent and registrar fees		*
Miscellaneous		*
Total	$	*

* To be completed by amendment.

Item 14. Indemnification of Officers and Directors.

Section 145 of the Delaware General Corporation Law authorizes a court to award, or a corporation’s board of directors to grant, indemnity to officers, directors and other corporate agents in terms sufficiently broad to permit such indemnification under certain circumstances and subject to certain limitations.

The registrant’s certificate of incorporation and bylaws provide that the registrant shall indemnify its directors and officers, and may indemnify its employees and agents, to the full extent permitted by Delaware law, including in circumstances in which indemnification is otherwise discretionary under Delaware law.

In addition, the registrant has entered into separate indemnification agreements with its directors, officers and certain employees which requires the registrant, among other things, to indemnify them against certain liabilities which may arise by reason of their status as directors, officers or certain other employees. The registrant also maintains director and officer liability insurance.

These indemnification provisions and the indemnification agreements entered into between the registrant and its officers and directors may be sufficiently broad to permit indemnification of the registrant’s officers and directors for liabilities (including reimbursement of expenses incurred) arising under the Securities Act.

The underwriting agreement filed as Exhibit 1.1 to this registration statement provides for indemnification by the underwriters of the registrant and its officers and directors for certain liabilities arising under the Securities Act, or otherwise.

II-1

Item 15. Recent Sales of Unregistered Securities.

The following sets forth information regarding securities sold by the registrant since January 1, 2001.

1. In January 2001, the registrant sold 9,000 shares of Series C preferred stock for cash consideration of $21,083 to an accredited investor.

2. In January 2001, the registrant issued 30,000 shares of Class B common stock in consideration for consulting services valued at $9,000.

3. Between February 2001 and February 2003, the registrant issued 446,000 shares of common stock as consideration for four acquisitions, with an aggregate value of $133,800.

4. In July 2001, the registrant sold 426,892 shares of Series C preferred stock for cash consideration of $999,995 to an accredited investor.

5. In April 2003, the registrant issued 1,945,226 shares of common stock as consideration for two acquisitions, with an aggregate value of $3,890,452.

6. In September 2003, the registrant issued 254,994 shares of common stock as consideration for an acquisition, with an aggregate value of $1,784,958.

7. Since January 2001, the registrant has issued to directors, officers, employees and consultants options to purchase 62,650,597 of shares common stock with per share exercise prices ranging from $0.30 to $35, and has issued 46,747,427 shares of common stock upon exercise of such options.

8. Since January 2001, we issued warrants to purchase shares of our capital stock to the following investors:

• From June 2001 through June 2002, we issued to accredited investors warrants to purchase an aggregate of 179,956 shares of Series C preferred stock for an aggregate exercise price of $421,547.

• In July 2001, we issued to an accredited investor a warrant to purchase 1,194,308 shares of Class B common stock for an aggregate exercise price of $358,292.

• In May 2002, we issued to an accredited investor a warrant to purchase 7,437,452 shares of Series D preferred stock for an aggregate exercise price of $21,642,985.

Except as noted below, the issuance of securities described above were deemed to be exempt from registration under the Securities Act in reliance on Section 4(2) of the Securities Act as transactions by an issuer not involving any public offering. The recipients of securities in each such transaction represented their intention to acquire the securities for investment only and not with a view to or for sale in connection with any distribution thereof and appropriate legends were affixed to the share certificates and other instruments issued in such transactions. The sale of these securities were made without general solicitation or advertising.

The issuances described in paragraph 8 above were not made pursuant to a registration statement under the Securities Act, nor were the offer and sale registered or qualified under any state securities laws. Additionally, these issuances include the issuance of 37,100,513 options and 23,019,323 shares that may not have been exempt from either registration under the Securities Act or qualification under state securities laws. Consequently, recipients of the options and purchasers of the shares for which registration or qualification may have been required may have the right under the Securities Act or state securities laws to rescind their purchases and they may be entitled to return these shares to us and receive back from us the full consideration paid for the shares, which aggregates approximately $[34 million] plus interest. We expect to commence a rescission offer to the

II-2

holders of these options and shares in connection with our initial public offering. There are no assurances that we will not be subject to penalties or fines relating to these issuances. We believe our anticipated rescission offer could provide us with additional meritorious defenses against any future claims relating to these shares.

Item 16. Exhibits and Financial Statement Schedules

(a) Exhibits. The following exhibits are included herein or incorporated herein by reference:

Exhibit Number	Exhibit Title
1.01*	Form of Underwriting Agreement
2.01	Merger Agreement and Plan of Reorganization by and among Google Technology Inc., Bermuda Acquisition Inc., Applied Semantics Inc. and other parties signatory hereto dated as of April 18, 2003
3.01	Amended and Restated Certificate of Incorporation of Registrant as filed August 27, 2003
3.01.1*	Form of Second Amended and Restated Certificate of Incorporation of Registrant, to be filed upon the closing of the offering
3.02	Bylaws of Registrant
3.02.1*	Form of Amended and Restated Bylaws of Registrant, to be effective upon the closing of the offering
4.01	Third Amended and Restated Investor Rights Agreement dated May 31, 2002
4.02*	Specimen Class A common stock certificate
4.03*	Specimen Class B common stock certificate
5.01*	Opinion of Wilson Sonsini Goodrich & Rosati, Professional Corporation
10.01	Form of Indemnification Agreement entered into between Registrant, its affiliates and its directors and officers
10.02	1998 Stock Plan, as amended, and form of stock option agreement
10.03	1999 Stock Option/Stock Incentive Plan, as amended, and form of stock option agreement
10.04	2000 Stock Plan, as amended, and form of stock option agreement
10.05	2003 Stock Plan, as amended, and form of stock option agreement
10.06	2003 Stock Plan (No. 2), and form of stock option agreement
10.07	2003 Stock Plan (No. 3), and form of stock option agreement
10.08	2004 Stock Plan
10.09	Google Technology Sublease Agreement dated July 9, 2003 by and between Silicon Graphics, Inc. and Registrant
10.09.1	Amendment No. 1 to Sublease dated November 18, 2003 by and between Silicon Graphics, Inc. and Registrant
10.09.2	Amendment No. 2 to Sublease dated December 17, 2003 by and between Silicon Graphics, Inc. and Registrant
10.09.3	Landlord-Subtenant Agreement dated July 9, 2003 by and among WXIII/Amphitheatre Realty, L.L.C., Silicon Graphics, Inc. and Registrant
10.09.4	Second Amendment to Commercial Lease dated July 9, 2003 by and among WXIII/Amphitheatre Realty, L.L.C., Silicon Graphics, Inc. and Registrant
10.09.5	Amendment to Commercial Lease dated April 19, 2001 by and among the Goldman Sachs Group, Inc., Silicon Graphics, Inc. and Silicon Graphics Real Estate, Inc.

II-3

Exhibit Number	Exhibit Title
10.09.6	Lease between the Goldman Sachs Group, Inc. and Silicon Graphics, Inc. dated December 29, 2000
10.09.7	Nondisturbance and Attornment Agreement between Registrant and WXIII/Amphitheatre Realty, L.L.C.
10.13*	Amended and Restated License Agreement dated October 13, 2003 by and between The Board of Trustees of the Leland Stanford Junior University and Registrant
10.14*	Employment Agreement dated March 14, 2001 by and between Eric Schmidt and Registrant
21.01	List of subsidiaries of Registrant
23.01	Consent of Ernst & Young LLP, independent auditors
23.02	Consent of Ernst & Young LLP, independent auditors
23.03*	Consent of Wilson Sonsini Goodrich & Rosati, Professional Corporation (included in Exhibit 5.01)
24.01	Power of Attorney (see page II-6 to this Form S-1)
99.1	Significant subsidiary financial statements of Applied Semantics, Inc.
99.3	Unaudited Pro Forma Combined Consolidated Financial Information

* To be filed by amendment.

† Confidential treatment has been requested for portions of this exhibit. These portions have been omitted from this Registration Statement and have been filed separately with the Securities and Exchange Commission.

(b) Financial Statement Schedules.

The following schedule required to be filed by Item 16(b) is contained on page      of this Report:

Schedule II—Valuation and Qualifying Accounts for each of the three years in the period ended December 31, 2003.

All other schedules have been omitted because they are either inapplicable or the required information has been given in the consolidated financial statements or the notes thereto.

Item 17. Undertakings.

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

Insofar as indemnification by the registrant for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of the registrant pursuant to the provisions described in Item 14 above or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act, and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer, or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.

II-4

The undersigned registrant hereby undertakes that:

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

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

II-5

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the registrant has duly caused this registration statement on Form S-1 to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Mountain View, County of Santa Clara, State of California, on the 29th day of April, 2004.

GOOGLE INC.
By:	/s/    ERIC E. SCHMIDT
	Eric E. Schmidt

POWER OF ATTORNEY

KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below hereby constitutes and appoints Eric E. Schmidt and George Reyes, and each of them acting individually, as his true and lawful attorneys-in-fact and agents, each with full power of substitution, for him in any and all capacities, to sign any and all amendments to this registration statement (including post-effective amendments or any abbreviated registration statement and any amendments thereto filed pursuant to Rule 462(b) increasing the number of securities for which registration is sought), and to file the same, with all exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, with full power of each to act alone, full power and authority to do and perform each and every act and thing requisite and necessary to be done in connection therewith, as fully for all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or his or their substitute or substitutes, may lawfully do or cause to be done by virtue hereof.

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

Signature	Title	Date
/s/    ERIC E. SCHMIDT         Eric E. Schmidt	Chairman of the Executive Committee and Chief Executive Officer (Principal Executive Officer)	April 29, 2004
/s/    GEORGE REYES         George Reyes	Chief Financial Officer (Principal Financial and Accounting Officer)	April 29, 2004
/s/    SERGEY BRIN         Sergey Brin	President of Technology, Assistant Secretary and Director	April 29, 2004
/s/    LARRY PAGE         Larry Page	President of Products, Assistant Secretary and Director	April 29, 2004
/s/    L. JOHN DOERR         L. John Doerr	Director	April 29, 2004
John L. Hennessy	Director
Arthur D. Levinson	Director

II-6

Signature	Title	Date
/s/    MICHAEL MORITZ         Michael Moritz	Director	April 29, 2004
Paul S. Otellini	Director
/s/    K. RAM SHRIRAM         K. Ram Shriram	Director	April 29, 2004

II-7

Schedule II—Valuation and Qualifying Accounts

Allowance for doubtful accounts and sales credits	Balance at Beginning of Year		Charged to Expenses/ against Revenue		Write-Offs Net of Recoveries			Balance at End of Year
	(in thousands)
Year ended December 31, 2001	$	437	$	2,065	$	(942	)	$	1,560
Year ended December 31, 2002	$	1,560	$	7,024	$	(6,287	)	$	2,297
Year ended December 31, 2003	$	2,297	$	6,106	$	(3,733	)	$	4,670

Note: Additions to the allowance for doubtful accounts are charged to expense. Additions to the allowance for sales credits are charged against revenues.

EXHIBIT INDEX

Exhibit Number	Exhibit Title
1.01*	Form of Underwriting Agreement
2.01	Merger Agreement and Plan of Reorganization by and among Google Technology Inc., Bermuda Acquisition Inc., Applied Semantics Inc. and other parties signatory hereto dated as of April 18, 2003
3.01	Amended and Restated Certificate of Incorporation of Registrant as filed August 27, 2003
3.01.1*	Form of Second Amended and Restated Certificate of Incorporation of Registrant, to be filed upon the closing of the offering
3.02	Bylaws of Registrant
3.02.1*	Form of Amended and Restated Bylaws of Registrant, to be effective upon the closing of the offering
4.01	Third Amended and Restated Investor Rights Agreement dated May 31, 2002
4.02*	Specimen Class A common stock certificate
4.03*	Specimen Class B common stock certificate
5.01*	Opinion of Wilson Sonsini Goodrich & Rosati, Professional Corporation
10.01	Form of Indemnification Agreement entered into between Registrant, its affiliates and its directors and officers
10.02	1998 Stock Plan, as amended, and form of stock option agreement
10.03	1999 Stock Option/Stock Incentive Plan, as amended, and form of stock option agreement
10.04	2000 Stock Plan, as amended, and form of stock option agreement
10.05	2003 Stock Plan, as amended, and form of stock option agreement
10.06	2003 Stock Plan (No. 2), and form of stock option agreement
10.07	2003 Stock Plan (No. 3), and form of stock option agreement
10.08	2004 Stock Plan
10.09	Google Technology Sublease Agreement dated July 9, 2003 by and between Silicon Graphics, Inc. and Registrant
10.09.1	Amendment No. 1 to Sublease dated November 18, 2003 by and between Silicon Graphics, Inc. and Registrant
10.09.2	Amendment No. 2 to Sublease dated December 17, 2003 by and between Silicon Graphics, Inc. and Registrant
10.09.3	Landlord-Subtenant Agreement dated July 9, 2003 by and among WXIII/Amphitheatre Realty, L.L.C., Silicon Graphics, Inc. and Registrant
10.09.4	Second Amendment to Commercial Lease dated July 9, 2003 by and among WXIII/Amphitheatre Realty, L.L.C., Silicon Graphics, Inc. and Registrant
10.09.5	Amendment to Commercial Lease dated April 19, 2001 by and among the Goldman Sachs Group, Inc., Silicon Graphics, Inc. and Silicon Graphics Real Estate, Inc.
10.09.6	Lease between the Goldman Sachs Group, Inc. and Silicon Graphics, Inc. dated December 29, 2000
10.09.7	Nondisturbance and Attornment Agreement between Registrant and WXIII/Amphitheatre Realty, L.L.C.
10.13*	Amended and Restated License Agreement dated October 13, 2003 by and between The Board of Trustees of the Leland Stanford Junior University and Registrant
10.14*	Employment Agreement dated March 14, 2001 by and between Eric Schmidt and Registrant
21.01	List of subsidiaries of Registrant

Exhibit Number	Exhibit Title
23.01	Consent of Ernst & Young LLP, independent auditors
23.02	Consent of Ernst & Young LLP, independent auditors
23.03*	Consent of Wilson Sonsini Goodrich & Rosati, Professional Corporation (included in Exhibit 5.01)
24.01	Power of Attorney (see page II-6 to this Form S-1)
99.1	Significant subsidiary financial statements of Applied Semantics, Inc.
99.3	Unaudited Pro Forma Combined Consolidated Financial Information

* To be filed by amendment.

† Confidential treatment has been requested for portions of this exhibit. These portions have been omitted from this Registration Statement and have been filed separately with the Securities and Exchange Commission.

EX-2.01

Exhibit 2.01

MERGER AGREEMENT AND PLAN OF REORGANIZATION

BY AND AMONG

GOOGLE TECHNOLOGY INC.,

BERMUDA ACQUISITION INC.,

APPLIED SEMANTICS, INC.

AND

THE OTHER PARTIES SIGNATORY HERETO

Dated as of April 18, 2003

TABLE OF CONTENTS

		Page
ARTICLE 1	THE MERGER	2
1.1	The Merger	2
1.2	Effective Time	2
1.3	Effect of the Merger on Constituent Corporations	2
1.4	Articles of Incorporation and Bylaws of Surviving Corporation	2
1.5	Directors and Officers of Surviving Corporation	3
1.6	Effect on Capital Stock	3
1.7	Fractional Shares	6
1.8	Escrow	6
1.9	Dissenting Shares	7
1.10	Exchange Procedures	8
1.11	Adjustments to Exchange Ratios	9
1.12	No Further Ownership Rights in Company Capital Stock	9
1.13	Lost, Stolen or Destroyed Certificates	9
1.14	Taking of Necessary Action; Further Action	9
1.15	Required Withholding	10
1.16	No Liability	10
ARTICLE 2	REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE INDEMNIFYING OFFICERS	10
2.1	Organization and Qualification	10
2.2	Authority Relative to this Agreement	11
2.3	Capital Stock	11
2.4	Subsidiaries	14
2.5	No Conflicts	14
2.6	Books and Records; Organizational Documents	14
2.7	Consents	15
2.8	Company Financials	15
2.9	No Undisclosed Liabilities	15
2.10	Absence of Changes	16
2.11	Taxes	19
2.12	Restrictions on Business Activities	21
2.13	Legal Proceedings	22
2.14	Compliance with Laws, Orders, Approvals and Contracts	22
2.15	Employee Matters and Benefit Plans	23
2.16	Title to Properties; Absence of Liens and Encumbrances; Condition of Equipment	27
2.17	Intellectual Property	28
2.18	Agreements, Contracts and Commitments	33

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TABLE OF CONTENTS

(Continued)

		Page
2.19	Insurance	34
2.20	Interested Party Transactions	35
2.21	Accounts Receivable	35
2.22	Governmental Authorizations and Permits	35
2.23	Brokers’ and Finders’ Fees; Third Party Expenses	35
2.24	Warranties; Indemnities	35
2.25	Information Statement	35
2.26	Termination Notice	36
2.27	Employment Arrangements	36
2.28	Disclosure	36
2.29	Closing Cash Statement	36
2.30	Overture AdSense Contract	36
ARTICLE 3	REPRESENTATIONS AND WARRANTIES OF PARENT AND SUB	37
3.1	Authority Relative to this Agreement	37
3.2	Organization and Qualification	37
3.3	No Conflict	37
3.4	Consents	38
3.5	Parent Capital Stock	38
3.6	Issuance of Parent Common Stock	39
3.7	Parent Financial Statements	39
3.8	Absence of Certain Changes	40
3.9	Dividends or Distributions	40
3.10	Registration Rights	40
3.11	Legal Proceedings	40
3.12	Employment Matters	40
3.13	Labor	40
3.14	Patents and Trademarks	40
3.15	Compliance with Other Instruments	41
3.16	Title to Property and Assets	41
3.17	Organizational Documents	41
3.18	Disclosure	41
3.19	Brokers	41
3.20	Tax Returns, Payments and Elections	41
3.21	Information Statement	42
ARTICLE 4	CONDUCT PRIOR TO THE EFFECTIVE TIME	42
4.1	Conduct of Business of the Company	42
4.2	No Solicitation	45

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TABLE OF CONTENTS

(Continued)

		Page
ARTICLE 5	ADDITIONAL AGREEMENTS	46
5.1	Shareholder Approval	46
5.2	Restricted Shares; Shareholders’ Representations Regarding Securities Law Matters; Lockup	48
5.3	[Reserved]	49
5.4	Access to Information	49
5.5	Confidentiality	49
5.6	Expenses; Severance Payments	49
5.7	Public Disclosure	50
5.8	Consents	50
5.9	FIRPTA Compliance	50
5.10	Reasonable Efforts	50
5.11	Notification of Certain Matters	51
5.12	Additional Documents and Further Assurances; Cooperation	51
5.13	Employee Matters	51
5.14	New Employment Arrangements	52
5.15	Non-Competition Agreements	52
5.16	Investor Representation Statement	52
5.17	Indemnification	52
5.18	Termination of Company Employee Plans	53
5.19	Closing Cash Statement	53
5.20	Assignment by Founders	53
5.21	Waiver of Participation and Anti-Dilution Rights	54
5.22	Conversion of Series A Preferred	54
5.23	Releases	54
5.24	Options	54
ARTICLE 6	CONDITIONS TO THE MERGER	54
6.1	Conditions to Obligations of Each Party to Effect the Merger	54
6.2	Additional Conditions to Obligations of the Company	55
6.3	Additional Conditions to the Obligations of Parent and Sub	55
ARTICLE 7	SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ESCROW	58
7.1	Survival of Representations, Warranties and Covenants	58
7.2	Indemnification	58
7.3	Escrow Arrangements	59
7.4	Resolution of Conflicts; Arbitration	63
7.5	Securityholder Agent of the Shareholders	64
7.6	Representative Escrow	64
7.7	Actions of the Securityholder Agent	65
7.8	Third-Party Claims	65

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TABLE OF CONTENTS

(Continued)

		Page
7.9	Escrow Agent’s Duties	66
7.10	Fees	68
7.11	Limitation of Remedies	68
7.12	Remedies Not Limited by Information and Investigation	69
ARTICLE 8	TERMINATION, AMENDMENT AND WAIVER	70
8.1	Termination	70
8.2	Effect of Termination	71
8.3	Amendment	71
8.4	Extension; Waiver	71
ARTICLE 9	MISCELLANEOUS PROVISIONS	71
9.1	Notices	71
9.2	Interpretation	73
9.3	Counterparts	74
9.4	Entire Agreement; Assignment	74
9.5	Severability	74
9.6	Other Remedies	74
9.7	Governing Law	74
9.8	Rules of Construction	74
9.9	Waiver of Jury Trial	74
9.10	Disclosure Schedule	75
9.11	Specific Performance	75
9.12	Waiver	75
ARTICLE 10	DEFINITIONS	75
10.1	Definitions	75

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EXECUTION COPY

MERGER AGREEMENT AND PLAN OF REORGANIZATION

This MERGER AGREEMENT AND PLAN OF REORGANIZATION is made and entered into as of April 18, 2003, by and among Google Technology Inc., a California corporation (“Parent”), Bermuda Acquisition Inc., a California corporation and wholly-owned subsidiary of Parent (“Sub”), Applied Semantics, Inc., a California corporation (the “Company”), Jordan Libit, Jason Liebman, Eytan Elbaz, Brad Stein, Gil Elbaz and Adam Weissman (together, the “Indemnifying Officers”) and, with respect to Article 7 and Article 9 only, Jordan Libit as Securityholder Agent, and U.S. Bank, National Association., as Escrow Agent. Capitalized terms used and not otherwise defined herein have the meanings given to them in Article 10.

RECITALS

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

B. Pursuant to the Merger, among other things, all of the issued and outstanding capital stock of the Company and all of the issued and outstanding options and warrants to purchase shares of capital stock of the Company shall be converted into the right to receive the consideration set forth herein (the “Merger Consideration”).

C. A portion of the Merger Consideration otherwise issuable by Parent in connection with the Merger shall be placed in escrow by Parent, the release of which amount shall be contingent upon certain events and conditions, all as set forth in Article 7 hereof.

D. As a material inducement to Parent to enter into this Agreement, certain employees of the Company are entering into Non-Competition Agreements substantially in the form attached hereto as Exhibit A (the “Non-Competition Agreements”), each of which shall become effective at the Effective Time.

E. As a further material inducement to Parent to enter into this Agreement, certain shareholders of the Company are entering into Voting Agreements with Parent in substantially the form attached hereto as Exhibit B (“Voting Agreements”) pursuant to which, among other things, such shareholders will agree to vote the shares of Company Capital Stock owned by them in favor of the Merger.

F. The Company, the Indemnifying Officers, Parent and Sub desire to make certain representations, warranties, covenants and other agreements in connection with the Merger.

NOW, THEREFORE, in consideration of the covenants, promises, representations and warranties set forth herein, and for other good and valuable consideration (the receipt and sufficiency of which are hereby acknowledged by the parties), intending to be legally bound hereby, the parties agree as follows:

ARTICLE 1

THE MERGER

1.1 The Merger. At the Effective Time, and upon the terms and subject to the conditions of this Agreement and the applicable provisions of California Law, Sub shall be merged with and into 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 in the Merger is sometimes referred to herein as the “Surviving Corporation.”

1.2 Effective Time. Unless this Agreement is earlier terminated pursuant to Section 8.1, the closing of the Merger (the “Closing”) will take place within two (2) days following satisfaction or waiver of the conditions set forth in Article 6 (excluding those conditions intended to be satisfied at the Closing), or such later time following satisfaction or waiver of such conditions as Parent determines in Parent’s discretion, provided that such later time shall occur no later than April 23, 2003, at the offices of Wilson Sonsini Goodrich & Rosati, Professional Corporation, 650 Page Mill Road, Palo Alto, California, unless another place or time is agreed to by Parent and the Company. The date upon which the Closing actually occurs is herein referred to as the “Closing Date.” On the Closing Date, the parties hereto shall cause the Merger to be consummated by filing an Agreement of Merger (or like instrument), in substantially the form attached hereto as Exhibit C (the “California Agreement of Merger”), with the Secretary of State of the State of California in accordance with the relevant provisions of California Law (the time of acceptance by the Secretary of State of the State of California of such filing, or such later time as may be agreed to by the parties and set forth in the California Agreement of Merger, being referred to herein as the “Effective Time”).

1.3 Effect of the Merger on Constituent Corporations. At the Effective Time, the effect of the Merger shall be as provided in this Agreement and the applicable provisions of California Law. Without limiting the generality of the foregoing, and subject thereto, at the Effective Time, the Surviving Corporation shall succeed to all rights, privileges, powers, franchises and property of Company and Sub, and shall be subject to all debts, duties and Liabilities of Company and Sub in the same manner as if the Surviving Corporation had itself incurred them.

1.4 Articles of Incorporation and Bylaws of Surviving Corporation.

(a) At the Effective Time, the Articles of Incorporation of the Company shall be amended and restated in their entirety so as to be identical to the Articles of Incorporation of Sub as in effect immediately prior to the Effective Time until thereafter amended in accordance with California Law and as provided in such Articles of Incorporation; provided, however, that at the Effective Time, Article I of the Articles of Incorporation of the Surviving Corporation shall be

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amended and restated in its entirety to read as follows: “The name of the corporation is “Applied Semantics, Inc.”

(b) 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 California Law and as provided in the Articles of Incorporation of the Surviving Corporation and such Bylaws.

1.5 Directors and Officers of Surviving Corporation. The directors of Sub immediately prior to the Effective Time shall be the directors of the Surviving Corporation, each to hold office in accordance with the Articles of Incorporation and Bylaws of the Surviving Corporation. The officers of Sub immediately prior to the Effective Time shall be the officers of the Surviving Corporation, each to hold office in accordance with the Bylaws of the Surviving Corporation.

1.6 Effect on Capital Stock. Upon the terms and subject to the conditions set forth in this Agreement, at the Effective Time, by virtue of the Merger and without any action on the part of Parent, Sub, the Company or any holder of Company Capital Stock, Company Options or Company Warrants, the following shall occur:

(a) Company Common Stock. Each share of Company Common Stock issued and outstanding immediately prior to the Effective Time and after giving effect to the assumed conversion described in Section 1.6(b)(i) (other than any Dissenting Shares (as defined in Section 1.9 and any shares canceled pursuant to Section 1.6(c)) shall be canceled and extinguished and automatically converted into the right to receive, upon the terms and subject to the conditions set forth below and throughout this Agreement (including Section 1.10), including, without limitation, the escrow provisions set forth in Article 7: (A) an amount of cash equal to the Cash Exchange Ratio, without any interest thereon, and (B) a fraction of a share of Parent Common Stock equal to the Stock Exchange Ratio.

(b) Preferred Stock.

(i) Company Series A Preferred Stock. Each share of Company Series A Preferred Stock outstanding immediately prior to the Effective Time will receive the consideration that the Company Common Stock issuable upon conversion thereof would receive under Section 1.6(a) as if such share of Company Series A Preferred Stock converted into Company Common Stock immediately prior to the Effective Time.

(ii) Company Series B Preferred Stock. Each share of Company Series B Preferred Stock issued outstanding immediately prior to the Effective Time will be converted automatically into the right to receive an amount of cash (without interest) equal to $8.28.

(c) Cancellation of Parent-Owned and Company-Owned Stock. Each share of Company Capital Stock owned by Parent, the Company or any direct or indirect wholly-owned subsidiary of Parent or the Company immediately prior to the Effective Time shall be automatically

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canceled and extinguished without any conversion thereof and without any further action on the part of Parent or the Company.

(d) Capital Stock of Sub. At the Effective Time, by virtue of the Merger and without any action on the part of any of the parties hereto, each share of capital 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 shares of capital stock of the Surviving Corporation.

(e) Company Options and Company Stock Plan; Treatment of Company Warrants. All Company Options outstanding immediately prior to the Effective Time, whether vested or unvested, together with the Company’s 1999 Stock Option/Stock Issuance Plan (the “Company Stock Plan”), shall be assumed by Parent in accordance with the provisions set forth below. Issuances of Parent Common Stock and payments of cash upon exercise of Assumed Company Options shall be subject to applicable withholding.

(i) Company Options. Each Company Option outstanding immediately prior to the Effective Time, whether vested or unvested, shall, in connection with the Merger be converted into an option (the “Assumed Company Option”) to acquire Parent Common Stock (the “Share Option Portion”) and cash (the “Cash Option Portion”), in accordance with the provisions set forth below. Each Assumed Company Option shall continue to have, and be subject to, the same terms and conditions as were applicable to the Company Option immediately prior to the Effective Time (including any repurchase rights or Vesting provisions), subject to the provisions set forth below. It is the intention of the parties that the Share Option Portion of the Assumed Company Options shall qualify following the Effective Time as incentive stock options as defined in Section 422 of the Code to the same extent that such Company Options qualified as incentive stock options immediately prior to the Effective Time, and the provisions of this Section 1.6(e) shall be applied in a manner consistent with this intent.

(1) Share Option Portion. The Share Option Portion of each Assumed Company Option shall (subject to the Vesting provisions thereof) be exercisable for that number of whole shares of Parent Common Stock equal to the product obtained by multiplying the number of shares of Company Common Stock that were issuable upon exercise of such Company Option immediately prior to the Effective Time by the Stock Exchange Ratio (rounded down to the nearest whole number of shares of Parent Common Stock) (the “Assumed Option Share Number”). The per share exercise price for each share of Parent Common Stock issuable upon exercise of such Assumed Company Option shall be equal to the product (rounded up to the nearest whole cent) of (1) the quotient obtained by dividing the exercise price per share of Company Common Stock at which such Company Option was exercisable immediately prior to the Effective Time by the Stock Exchange Ratio, multiplied by (2) the quotient obtained by dividing (a) the product of the Reference Value times the Aggregate Stock Consideration (such product, the “Aggregate Reference Value”), by (b) the sum of the Aggregate Remaining Cash Consideration and the Aggregate Reference Value (such sum, the “Aggregate Consideration”).

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(2) Cash Option Portion. The Cash Option Portion of each Assumed Company Option shall (subject to the Vesting provisions of the Assumed Company Option) be exercisable for that amount of cash equal to the product obtained by multiplying the number of shares of Company Common Stock that were issuable upon exercise of such Company Option immediately prior to the Effective Time by the Cash Exchange Ratio (rounded down to the nearest whole cent) (the “Assumed Option Cash Amount” of such Assumed Company Option). The exercise price per dollar of the Cash Option Portion of each Assumed Company Option shall be the quotient (rounded up to the nearest whole cent) obtained by dividing (1) the product of (a) the quotient obtained by dividing the exercise price per share of Company Common Stock at which such Company Option was exercisable immediately prior to the Effective Time by the Stock Exchange Ratio, multiplied by (b) the Assumed Option Share Number, multiplied by (c) the quotient obtained by dividing the Aggregate Remaining Cash Consideration by the Aggregate Consideration, by (2) the Assumed Option Cash Amount of such Assumed Company Option.

(3) Neither the Cash Option Portion nor the Share Option Portion of each unexpired and unexercised Assumed Company Option shall be exercisable independent of the other. The purchase of each share of Parent Common Stock upon exercise of the Share Option Portion of an Assumed Company Option shall be conditioned upon the holder thereof simultaneously exercising (and, accordingly, paying the applicable exercise price) a portion of the Cash Option Portion of the Assumed Company Option that is equal to the quotient obtained by dividing the Cash Exchange Ratio by the Stock Exchange Ratio (rounded up to the nearest whole cent). Similarly, the exercise of an Assumed Company Option for each dollar of the Cash Option Portion shall be conditioned upon the holder thereof simultaneously exercising the Assumed Company Option for an amount of shares of the Share Option Portion equal to the quotient obtained by dividing the Stock Exchange Ratio by the Cash Exchange Ratio (rounded down to the nearest whole share); provided that Assumed Company Options may not be exercised for partial shares of Parent Common Stock.

(4) Unless Parent shall otherwise consent in writing prior to the Effective Time, the Company shall take all actions necessary or advisable to cause all Company Options to remain unchanged except (A) for the conversion into options to purchase shares of Parent Common Stock and rights to receive cash, as provided in this Section 1.6(e), (B) for the effect of the escrow provisions of Section 7.3(c), and (C) that any acceleration of vesting, continuation of vesting after termination of employment or other special vesting (whether with the passage of time, upon the occurrence of certain events or otherwise) that might occur, result from or be related to the transactions contemplated by this Agreement and the Ancillary Agreements, except for the acceleration of vesting, continuation of vesting or other special vesting in effect as of the date hereof and which is set forth on Schedule 1.6(e)(i)(4), shall be prevented from occurring through the modification, in a manner acceptable to Parent, of the applicable Company Option (and any employment or other agreement providing for such acceleration) prior to the date of this Agreement. Prior to the Effective Time, Company shall take all action necessary to effect the transactions contemplated by this Section 1.6(e)(i) under the terms of the Company Stock Plan, all Company option agreements, and any other plan, agreement or arrangement of Company, including, the giving of any notice required by this Section 1.6(e)(i).

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(ii) Treatment of Company Warrants. The Company agrees to use commercially reasonable efforts to enter into agreements with the holders of Company Warrants providing for the exercise or cancellation of such Company Warrant, prior to, or contingent upon, the Closing. At the Effective Time, each Company Warrant, whether or not Vested, shall by virtue of the Merger be assumed by Parent. Each Company Warrant so assumed by Parent under this Agreement (an “Assumed Warrant”) will continue to have, and be subject to, the same terms and conditions as provided in the respective warrant agreement governing such Company Warrant immediately prior to the Effective Time of the Merger (including without limitation Vesting schedules and Vesting commencement dates), including that the number of shares of Parent Common Stock and Merger Cash purchasable upon exercise of each such Assumed Warrant, and exercise price per share of Parent Common Stock shall be as determined pursuant to the terms of such Company Warrant and as the shares underlying the warrant are treated under this Section 1.6.

(f) Maximum Amount of Merger Consideration. Notwithstanding any provision contained herein to the contrary, the maximum amount of cash and Parent Common Stock to be paid and issued (or payable or issuable upon exercise or conversion of Equity Equivalents) in exchange for the acquisition by Parent of all outstanding Company Capital Stock and Equity Equivalents of the Company shall be (i) a cash amount equal to the Aggregate Cash Consideration, and (ii) an amount of Parent Common Stock equal to the Aggregate Stock Consideration.

1.7 Fractional Shares. No fractional share of Parent Common Stock shall be issued or paid by virtue of the Merger. In lieu thereof, each holder of shares of Company Capital Stock that would otherwise be entitled to receive a fraction of a share of Parent Common Stock (after aggregating all fractional shares of Parent Common Stock to be received by such holder at such time) shall be entitled to receive the nearest whole number of shares of Parent Common Stock (with .5 being rounded up). In addition, no fraction of a cent of cash shall be paid by virtue of the Merger. The aggregate cash to be paid to each holder of shares of Company Capital Stock shall be rounded to the nearest whole cent (with .5 being rounded up).

1.8 Escrow.

(a) A portion of the Merger Consideration issuable pursuant to Section 1.6 hereof in respect of shares of Company Capital Stock issued and outstanding immediately prior to the Effective Time of the Merger (excluding Dissenting Shares) equal to the Escrow Stock Percentage in the case of Merger Stock and the Escrow Cash Percentage in the case of Merger Cash, will, without any act of any Company Shareholder, be deposited with the Escrow Agent (such deposited amount, the “Escrow Amount”), such deposit to constitute the Escrow Fund to be governed by the terms of Article 7 (such shares of Parent Common Stock and cash deposited in the Escrow Fund, the “Escrow Shares” and the “Escrow Cash,” respectively). The portion of the Escrow Shares and Escrow Cash, respectively, contributed by each Company Shareholder shall be based on the proportion that the Merger Cash and the Merger Stock to be issued to such Company Shareholder in respect of shares of Company Capital Stock held by such Company Shareholder immediately prior to the Effective Time of the Merger bears to the aggregate Merger Cash and Merger Stock to be issued in respect of all shares of Company Capital Stock issued and outstanding immediately prior to the Effective Time of

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the Merger (excluding Dissenting Shares). Set forth opposite each Company Shareholder’s name in Schedule 1.8 delivered prior to the Closing is a preliminary schedule showing the Escrow Shares and Escrow Cash to be contributed by each such Company Shareholder, subject to adjustment for Vesting of Company Options and other occurrences between the date of this Agreement and the Closing Date that affect allocation of Merger Consideration, and adjustment as a result of Dissenting Shares.

(b) With respect to Dissenting Shares, a portion of any amount deemed payable to such dissenting Company Shareholders pursuant to Chapter 13 of California Law equal to the Escrow Percentage shall, upon the conclusion of such process and to the extent consistent with California Law, be withheld by Parent and deposited with the Escrow Agent pursuant to the terms of this Section 1.8(c) (provided, however, that such amount be decreased proportionately if Escrow Shares and Escrow Cash have previously been released from the Escrow Fund to Company Shareholders pursuant to the terms hereof).

(c) As soon as practicable after the Effective Time of the Merger, and subject to and in accordance with the provisions of Article 7 hereof, Parent shall cause to be distributed to the Escrow Agent (i) a certificate or certificates representing the aggregate number of shares of Parent Common Stock included in the Escrow Shares, which shall be registered in the name of the Escrow Agent and (Y) a wire transfer in the amount of the aggregate amount of Escrow Cash. Such shares and cash deposited in the Escrow Fund shall be beneficially owned by the holders on whose behalf such shares and cash were deposited in the Escrow Fund. The Merger Consideration deposited in the Escrow Fund shall be available to compensate Parent as provided in Article 7.

1.9 Dissenting Shares.

(a) Notwithstanding any provision of this Agreement to the contrary, any shares of Company Capital Stock held by a holder that has demanded and perfected dissenters’ rights for such shares in accordance with California Law and who, as of the Effective Time, has not effectively withdrawn or lost such dissenters’ rights (“Dissenting Shares”) shall not be converted into or represent the right to receive the consideration set forth in Section 1.6, but the holder thereof shall only be entitled to such rights as are granted by California Law.

(b) Notwithstanding the provisions of Section 1.9(a), if any holder of shares of Company Capital Stock that demands, in accordance with Section 1301 of California Law, that the Company purchase such shares under California Law, shall effectively withdraw or lose (through failure to perfect or otherwise) such holder’s dissenters’ rights, then, as of the later of (i) the Effective Time or (ii) the occurrence of such event, such holder’s shares shall automatically be converted into and represent only the right to receive the consideration set forth in Section 1.6, (without interest) upon surrender to the Company of the certificate representing such shares in accordance with Section 1.10.

(c) The Company shall give Parent (i) prompt notice of its receipt of any written demands for purchase of any shares of Company Capital Stock, withdrawals of such demands, and any other instruments relating to the Merger served pursuant to California Law and (ii) the

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opportunity to participate in all negotiations and proceedings with respect to demands for purchase under California Law. The Company shall not, except with the prior written consent of Parent or as may be required under applicable law, voluntarily make any payment with respect to any demands for purchase of Company Capital Stock, or offer to settle or settle any such demands.

1.10 Exchange Procedures.

(a) Exchange Agent. The Transfer Agent of Parent shall serve as the exchange agent (the “Exchange Agent”) in the Merger.

(b) Parent Common Stock and Cash. As promptly as practicable after the Closing Date, Parent shall make available for exchange in accordance with this Article 1 the Merger Shares and Merger Cash issuable pursuant to Section 1.6 in exchange for outstanding shares of Company Capital Stock (less the Escrow Shares and Escrow Cash to be contributed to the Escrow Fund pursuant to Article 7).

(c) Exchange Procedures. As soon as reasonably practicable after the Effective Time, the Surviving Corporation shall cause to be mailed to each holder of record of a certificate or certificates which immediately prior to the Effective Time represented outstanding shares of Company Capital Stock (the “Certificates”), (i) a letter of transmittal in customary form, reasonably acceptable to Parent and Company (which shall specify that delivery shall be effected, and risk of loss and title to the Certificates shall pass, only upon delivery of the Certificates to the Exchange Agent), (ii) instructions for use in effecting the surrender of the Certificates in exchange for Merger Consideration, and (iii) unless earlier delivered to Parent, a certificate to be signed and delivered by each holder of Company Capital Stock in substantially the form attached hereto as Exhibit D (the “Shareholder Certificate”). Upon surrender of a Certificate for cancellation to Exchange Agent or to such other agent or agents as may be appointed by Parent together with such letter of transmittal and Shareholder Certificate (unless, in the case of the Shareholder Certificate, such Shareholder Certificate has previously been executed and delivered by the holder), duly completed and validly executed in accordance with the instructions thereto, the holder of such Certificate shall be entitled to receive in exchange therefore the Merger Consideration to which such holder is entitled pursuant to Section 1.6 (less the Escrow Shares and the Escrow Cash to be deposited in the Escrow Fund on such holder’s behalf pursuant to Article 7). Until surrendered, each outstanding Certificate that, prior to the Effective Time, represented shares of Company Capital Stock will be deemed from and after the Effective Time, for all corporate purposes other than the payment of dividends, to evidence only the right to receive the Merger Consideration pursuant to this Article 1.

(d) Distributions With Respect to Unexchanged Shares of Company Capital Stock. No dividends or other distributions with respect to Parent Common Stock that have a record date and distribution date after the Effective Time shall be paid to the holder of any unsurrendered Certificate with respect to the shares of Parent Common Stock represented thereby until the holder of record of such Certificate shall surrender such Certificate pursuant to the terms of this Section 1.10. Subject to applicable law, following surrender of any such Certificate, there shall be paid to the record holder of the certificates representing whole shares of Parent Common Stock issued in exchange therefor, without interest, at the time of such surrender, the amount of dividends or other distributions with a record date and distribution date after the Effective Time theretofore payable (but for the provisions of this Section 1.10(d)) with respect to such whole shares of Parent Common Stock.

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(e) Transfers of Ownership. If any certificate for shares of Parent Common Stock is to be issued pursuant to the Merger in a name other than that in which the Certificate surrendered in exchange therefor is registered, it will be a condition of the issuance thereof that the Certificate so surrendered 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 issuance of a certificate for shares of Parent Common Stock in any name other than that of the registered holder of the Certificate surrendered, or that it be established to the satisfaction of Parent or any such agent that such tax has been paid or is not payable.

1.11 Adjustments to Exchange Ratios. The exchange ratios referred to in Section 1.6 shall be adjusted to reflect appropriately the effect of any stock split, reverse stock split, stock dividend (including any dividend or distribution of securities convertible into Parent Common Stock), reorganization, recapitalization, reclassification or other like change with respect to Parent Common Stock occurring on or after the date hereof and prior to the Effective Time of the Merger.

1.12 No Further Ownership Rights in Company Capital Stock. Any and all Merger Consideration issued or paid in exchange of shares of Company Capital Stock in accordance with the terms hereof shall be deemed to have been issued in 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 Company of shares of Company Capital Stock that were outstanding immediately prior to the Effective Time. If, after the Effective Time, Certificates are presented to the Surviving Corporation for any reason, they shall be canceled and exchanged as provided in this Article 1.

1.13 Lost, Stolen or Destroyed Certificates. In the event any 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, the Merger Consideration and, if applicable, the dividends or distributions payable pursuant to Section 1.10(d) to which the holder of such shares of Company Capital Stock would be entitled under this Article 1; provided, however, that Parent may, in its discretion and as a condition precedent to the issuance thereof, require the owner of such lost, stolen or destroyed Certificates to provide an indemnity or deliver a bond in such sum as it may reasonably direct as indemnity against any claim that may be made against Parent with respect to the Certificates alleged to have been lost, stolen or destroyed.

1.14 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 or to vest the Surviving Corporation with full right and title to and possession of all assets, property, rights, privileges, powers and franchises of the Company, or to effect the assignment to the Surviving Corporation of any and all Company Intellectual Property created by a founder, employee or consultant of the Company, or to complete and prosecute all domestic and foreign patent filings related to such Company Intellectual Property, the officers and directors of the Surviving Corporation are fully authorized to take, and shall take, all such lawful and necessary or desirable action.

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1.15 Required Withholding. 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 to any holder or former holder of Company Capital Stock such amounts as may be required to be deducted or withheld therefrom under the Code or under any provision of state, local or foreign tax law or under any other 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.

1.16 No Liability. Notwithstanding anything to the contrary in this Article 1, neither the Parent, the Surviving Corporation, nor any party hereto shall be liable to a holder of shares of Parent Common Stock or Company Capital Stock for any amount properly paid to a public official pursuant to any applicable abandoned property, escheat or similar law.

ARTICLE 2

REPRESENTATIONS AND WARRANTIES OF THE COMPANY

AND THE INDEMNIFYING OFFICERS

Subject to such exceptions as are disclosed in the disclosure schedule (which is arranged in sections corresponding to the numbered sections contained in this Article 2 and is dated the date hereof) supplied by the Company to Parent (the “Company Disclosure Schedule”), the Company represents and warrants to Parent and Sub, and each Indemnifying Officer represents and warrants to their knowledge to Parent and Sub, as of the date hereof and as of the Closing Date (except where the representation and warranty is expressly made as of another date, in which case such representation or warranty is made only as of such other date), as follows:

2.1 Organization and Qualification.

(a) The Company is a corporation duly organized, validly existing and in good standing under the laws of the state of California, and has full corporate power and authority to conduct its business as now conducted and as currently proposed to be conducted and to own, use, license and lease its Assets and Properties. The Company is duly qualified, licensed or admitted to do business and is in good standing as a foreign corporation in each jurisdiction in which the ownership, use, licensing or leasing of its Assets and Properties, or the conduct or nature of its business, makes such qualification, licensing or admission necessary, except for such failures to be so duly qualified, licensed or admitted and in good standing as would not, individually or in the aggregate, have a Material Adverse Effect on the Company. Section 2.1(a) of the Company Disclosure Schedule sets forth each jurisdiction where the Company is so qualified, licensed or admitted to do business and separately lists each other jurisdiction in which the Company owns, uses, licenses or leases its Assets and Properties, conducts business or has employees or engages independent contractors. The Company is not in violation of any of the provisions of its articles of

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incorporation and bylaws. Section 2.1(a) of the Company Disclosure Schedule lists all of the directors and officers of the Company.

(b) Except as indicated in Section 2.1(b) of the Company Disclosure Schedule, the operations now being conducted by the Company are not now and have never been conducted by the Company under any other name.

2.2 Authority Relative to this Agreement.

(a) Subject only to the requisite approval and adoption of this Agreement and approval of the principal terms of the Merger by the shareholders of the Company as described in Section 2.2(b) below, the Company has full corporate power and authority to execute and deliver this Agreement and the other agreements of which forms are attached as exhibits hereto (the “Ancillary Agreements”) to which the Company is a party, to perform its obligations hereunder and thereunder and to consummate the transactions contemplated hereby and thereby. The Company’s board of directors has unanimously approved this Agreement and the Ancillary Agreements to which the Company is a party. Subject only to the requisite approval and adoption of this Agreement and approval of the principal terms of the Merger by the shareholders of the Company as described in Section 2.2(b) below, the execution and delivery by the Company of this Agreement and the Ancillary Agreements to which the Company is a party, the consummation by the Company of the transactions contemplated hereby and thereby, and the performance by the Company of its obligations hereunder and thereunder have been duly and validly authorized by all necessary action of the Company and no further action is required on the part of the Company to authorize this Agreement or the Ancillary Agreements to which the Company is a party or the consummation of the transactions contemplated hereby or thereby. This Agreement and the Ancillary Agreements to which the Company is a party have been or will be, as applicable, duly and validly executed and delivered by the Company and, assuming the due authorization, execution and delivery by the other parties hereto and thereto, each constitutes or will upon such due execution and delivery constitute, as applicable, a legal, valid and binding obligation of the Company enforceable against the Company in accordance with its respective terms, except as the enforceability thereof may be limited by bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium or other similar Laws relating to the enforcement of creditors’ rights generally and by general principles of equity.

(b) The vote required of the holders of Company Capital Stock (the “Company Shareholders”) to duly approve the principal terms of this Agreement and the Merger and to satisfy all shareholder approval requirements under California Law and the Company’s articles of incorporation and bylaws with respect to this Agreement and the transactions contemplated hereby (or otherwise required to effect the transactions contemplated hereby) is (i) approval of holders of a majority of Company Common Stock, voting together as a single class, (ii) approval of holders of a majority of Company Preferred Stock, voting together as a single class, and (iii) approval of holders of a majority of the Series B Preferred Stock, voting together as a single class.

2.3 Capital Stock.

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(a) The authorized capital stock of the Company consists only of 40,000,000 shares of Common Stock, $0.001 par value per share (the “Company Common Stock”), of which 10,204,160 shares of Common Stock are issued and outstanding as of the date hereof, and 10,000,000 shares of Preferred Stock, $0.001 par value per share (the “Company Preferred Stock”). The designation and status of the Company Preferred Stock is as follows: (i) 500,000 shares are designated as Series A-1 Preferred Stock (the “Series A-1 Preferred Stock”), all of which are issued and outstanding as of the date hereof, (ii) 100,000 shares are designated as Series A-2 Preferred Stock (the “Series A-2 Preferred Stock”), all of which are issued and outstanding as of the date hereof, (iii) 360,000 shares are designated as Series A-3 Preferred Stock (the “Series A-3 Preferred Stock”), 205,000 of which are issued and outstanding as of the date hereof, and (iv) 2,536,232 shares are designated as Series B Preferred Stock (the “Series B Preferred Stock”), 1,975,756 shares of which are issued and outstanding as of the date hereof. All of the issued and outstanding shares of Company Common Stock and Company Preferred Stock are duly authorized and validly issued, fully paid and nonassessable, and have been issued in compliance with all applicable federal, state and foreign securities Laws. Each share of Company Preferred Stock is convertible into two shares of Company Common Stock. There are no declared or accrued but unpaid dividends with respect to any shares of Company Capital Stock. None of the outstanding shares of Company Capital Stock were issued in violation of any preemptive rights, right of first refusal or similar rights, the articles of incorporation or bylaws of the Company or any agreement to which the Company is a party or by which it is bound. Except as set forth in Section 2.3(a) of the Company Disclosure Schedule, no shares of Company Common Stock or Company Preferred Stock are held in treasury or are authorized or reserved for issuance.

(b) The Company Capital Stock is held of record, as of the date of this Agreement, by those persons with the addresses of record (as provided by such holder to the Company) and in the amounts set forth on Section 2.3(b) of the Company Disclosure Schedule, which schedule also sets forth (i) the share certificate numbers held by each holder and (ii) whether any shares of Company Capital Stock held by such shareholder are Restricted, the Vesting schedule for any such Restricted shares, including the extent to which any such Vesting has occurred as of the date of this Agreement and whether (and to what extent) the Vesting will be accelerated by the transactions contemplated by this Agreement.

(c) Except as set forth in Section 2.3(c) of the Company Disclosure Schedule, there are no outstanding Company Options, Company Warrants or other Equity Equivalents of the Company, or shares of Company Restricted Stock or Contracts, including Restricted Stock Purchase Agreements, to which the Company is a party (written or oral) to issue any shares of capital stock, Equity Equivalents or any other security with respect to the Company. With respect to each Company Option, Company Warrant, Restricted Stock Purchase Agreement or share of Company Restricted Stock or any other Contract or arrangement (written or oral) pursuant to which the Company is obligated to issue capital stock, Equity Equivalents or any other security, Section 2.3(c) of the Company Disclosure Schedule sets forth the holder or counter party thereof, the number and type of securities issuable thereunder, and, if applicable, the exercise price therefor, the exercise period and Vesting schedule thereof (including a description of the circumstances under which such Vesting schedule can or will be accelerated). Except for the Company Stock Plan, the Company has

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never adopted or maintained any stock option plan or other plan providing for equity compensation of any person. The Company has reserved 6,001,662 shares of Company Common Stock for issuance to employees and directors of, and consultants to, the Company upon the exercise of Options granted under the Company Stock Plan, of which (i) 4,229,726 shares are issuable, as of the date hereof, upon the exercise of outstanding, unexercised options granted under the Company Stock Plan, (ii) 4,160 shares have been issued, as of the date hereof, upon the exercise of options granted under the Company Stock Plan, and (iii) 1,767,776 shares remain available, as of the date hereof, for issuance of additional options under the Company Stock Plan. All of the Company Options and Company Warrants were issued in compliance with all applicable federal, state and foreign securities Laws.

(d) There are no Contracts of any character, written or oral, to which the Company is a party or by which it is bound obligating the Company to repurchase or redeem, or cause to be repurchased or redeemed, any shares of Company Capital Stock, 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.

(e) Except as set forth in Section 2.3(e) of the Company Disclosure Schedule, there are no preemptive rights or agreements, arrangements or understandings to issue preemptive rights with respect to the issuance or sale of Company Capital Stock created by statute, the articles of incorporation or bylaws of the Company, or any agreement or other arrangement to which the Company is a party (written or oral) or by which it is bound and there are no agreements, arrangements or understandings to which the Company is a party (written or oral) pursuant to which the Company has the right to elect to satisfy any Liabilities by issuing Company Capital Stock or Equity Equivalents.

(f) The terms of the Company Stock Plan and the applicable stock option agreements related to the outstanding Company Options permit the assumption or substitution of options to purchase Parent Common Stock as provided in this Agreement, without the consent or approval of the holders of such securities, action by the shareholders of the Company or otherwise and, except as set forth in Section 2.3(b) of the Company Disclosure Schedule, without any acceleration of the exercise schedules or Vesting provisions in effect for such Company Options. True and complete copies of all agreements and instruments relating to or issued under the Company Stock Plan, and any other security, Contract or instrument required to be disclosed in Section 2.3(c) of the Company Disclosure Schedule, 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.

(g) Except for the Voting Agreements and as set forth in Section 2.3(g) of the Company Disclosure Schedule, the Company is not a party or subject to any agreement or understanding, and, to the Company’s knowledge, there is no agreement, arrangement or

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understanding between or among any Persons which affects, restricts or relates to voting or giving of written consents with respect to the Company Capital Stock, including any voting trust agreement or proxy. Except as set forth in Section 2.3(g) of the Company Disclosure Schedule, no debt securities of the Company are issued and outstanding.

(h) Except as set forth in Section 2.3(h) of the Company Disclosure Schedule, there are no registration rights or other Contracts to which the Company is a party or by which the Company is bound with respect to the registration under federal or state securities laws of any issuance or transfer of any equity security of any class of the Company.

2.4 Subsidiaries. The Company does not have any Subsidiaries and does not otherwise own any shares of capital stock or any interest in (or any interest convertible, exchangeable or exercisable for any such interest), or control, directly or indirectly, any other corporation, partnership, association, joint venture or other business entity. The Company has not agreed and is not obligated to make any future investment in or capital contribution to any Person.

2.5 No Conflicts. The execution and delivery by the Company of this Agreement and the Ancillary Agreements to which the Company is a party, and the consummation of the transactions contemplated hereby and thereby, will not (with or without notice or lapse of time, or both) conflict with or result in any violation of or default under or give rise to a right of termination, cancellation, modification or acceleration of any obligation or loss of any benefit (any such event, a “Conflict”) under (i) any provision of the articles of incorporation or bylaws of the Company, (ii) any Contract to which the Company or any of its properties or assets (including intangible assets), is subject (each, a “Company Contract,” and collectively, the “Company Contracts”), or (iii) any Legal Requirement applicable to the Company or any of its properties (tangible and intangible) or assets except, in the case of (ii) above, for such Conflicts as are not individually or in the aggregate material. Section 2.5 of the Company Disclosure Schedule lists all necessary consents, waivers and Approvals of parties to any Company Contract as are required thereunder in connection with the Merger, or for any such Company Contract to remain in full force and effect without limitation, modification or alteration after the Effective Time (“Third-Party Consents”). The Company has obtained, or will obtain prior to the Effective Time, all Third-Party Consents. Following the Effective Time, the Surviving Corporation will be permitted to exercise all of its rights under the Company Contracts without the payment of any additional amounts or consideration other than ongoing fees, royalties or payments which the Company would otherwise be required to pay pursuant to the terms of such Company Contracts had the transactions contemplated by this Agreement not occurred.

2.6 Books and Records; Organizational Documents.

(a) The books, records and accounts of the Company delivered to Parent for inspection are true, complete and correct in all material respects.

(b) The Company has devised and maintains a system of internal accounting controls sufficient to provide reasonable assurances that: (i) transactions are executed in accordance with management’s general or specific authorization; (ii) transactions are recorded as necessary (A) to permit preparation of financial statements in conformity with GAAP or any other criteria

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applicable to such statements, and (B) to maintain accountability for assets; and (iii) the amounts recorded for assets and liabilities on the books and records of the Company are in accordance with GAAP.

(c) The Company has delivered to Parent or its counsel for examination the following: (a) copies of the articles of incorporation and bylaws of the Company as currently in effect; (b) all written records of all proceedings, consents, actions, and meetings of the shareholders, board of directors and any committees thereof of the Company; (c) stock ledger and journal reflecting all stock issuances and transfers of the Company; and (d) all Permits from Governmental Authorities issued to the Company by, and filings by the Company with, any regulatory agency, and all applications for such permits, orders, and consents. The written records of all proceedings, consents, actions, and meetings of the shareholders, board of directors and any committees thereof of the Company made available to counsel for Parent are the only minutes of the Company and contain accurate summaries of all meetings or actions by written consent of the Board of Directors (or committees thereof) of the Company and its shareholders since the time of incorporation of the Company.

2.7 Consents. No consent, waiver, Approval, order or authorization of, or registration, declaration or filing with any Governmental Authority or any third party, including a party to any agreement with the Company (so as not to trigger any Conflict), is required by or with respect to the Company in connection with the execution and delivery of this Agreement and any Ancillary Agreement to which the Company is a party or the consummation of the transactions contemplated hereby and thereby, except for (i) such consents, waivers, Approvals, orders authorizations registrations, declarations and filings the lack of which, individually or in the aggregate, would not constitute a Material Adverse Effect and (ii) the filing of the California Agreement of Merger with the Secretary of State of the State of California.

2.8 Company Financials. Section 2.8(a) of the Company Disclosure Schedule sets forth the Company Financials. The Company Financials (including the notes thereto) have been prepared in accordance with GAAP applied on a consistent basis throughout the periods indicated therein and present fairly in all material respects the financial position and operating results of the Company as of the dates and during the periods indicated therein, subject, in the case of the Company Interim Financial Statements, to normal year-end adjustments, which adjustments will not be material in amount or significance and except that the Company Interim Financial Statements and the unaudited December 31, 2002 financial statements may not contain footnotes. The Company Financials are correct and complete in all material respects and except as set forth in Section 2.8 of the Company Disclosure Schedule, there has been no material change in any accounting policies, principles, methods or practices of the Company, including any change with respect to reserves (whether for bad debts, contingent liabilities or otherwise), since its inception. The Company’s unaudited consolidated balance sheet as of February 28, 2003 is referred to herein as the “Current Balance Sheet.”

2.9 No Undisclosed Liabilities. Except as reflected or reserved against in the Company Financials (including the notes thereto) or as disclosed in Section 2.9 of the Company Disclosure

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Schedule, there are no Liabilities of, relating to or affecting the Company or any of its Assets and Properties, other than Liabilities incurred (a) in the ordinary course of business consistent with past practice since the date of the Current Balance Sheet which, individually and in the aggregate, are not material to the business or condition of the Company or (b) in connection with and in accordance with the provisions of this Agreement.

2.10 Absence of Changes. Since December 31, 2002, except as set forth in Section 2.10 of the Company Disclosure Schedule:

(a) the Company has not entered into any Contract, commitment or transaction or incurred any Liabilities other than in the ordinary course of business consistent with past practice;

(b) the Company has not acquired an interest in or made any capital investment in, altered or entered into any Contract or other commitment to alter its interest in, any corporation, association, joint venture, partnership or business entity in which the Company directly or indirectly holds any interest;

(c) the Company has not entered into any strategic alliance, joint development or joint marketing Contract;

(d) there has not been any material amendment or other material modification (or agreement to do so) or violation of the terms of, any of the Contracts set forth or described in the Company Disclosure Schedule, except as described therein;

(e) the Company has not entered into any transaction with any officer, director, shareholder, Affiliate or Associate of the Company, other than pursuant to any Contract in effect as of the date of the Current Balance Sheet and disclosed to Parent and identified on the Company Disclosure Schedule.

(f) the Company has not entered into or amended any Contract pursuant to which any other Person is granted manufacturing, marketing, distribution, licensing or similar rights of any type or scope with respect to any products of the Company or Company Intellectual Property, other than any such Contracts and licenses (or amendments thereto) disclosed in the Company Disclosure Schedule;

(g) no Action or Proceeding has been commenced or, to the knowledge of the Company, threatened by or against the Company and no Action or Proceeding has been settled or compromised by the Company;

(h) the Company has not declared, set aside or paid any dividends on or made any other distributions (whether in cash, stock or property) in respect of any Company Capital Stock or Equity Equivalents, or effected or approved any split, combination or reclassification of any Company Capital Stock or Equity Equivalents, or issued or authorized the issuance of any other securities in respect of, in lieu of or in substitution for shares of Company Capital Stock or Equity Equivalents, or repurchased, redeemed or otherwise acquired, directly or indirectly, any shares of

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Company Capital Stock or Equity Equivalents, except for repurchases of Company Capital Stock pursuant to agreements with Company employees, officers, directors and consultants relating to repurchases at cost upon termination of service with the Company;

(i) except for the issuance of shares of Company Capital Stock upon exercise or conversion of options, warrants, or preferred stock listed in Section 2.3(c) of the Company Disclosure Schedule, (A) the Company has not issued, granted, delivered, sold or authorized or proposed to issue, grant, deliver or sell, or purchased or proposed to purchase, any shares of Company Capital Stock or Equity Equivalents, (B) the Company has not modified or amended the rights of any holder of any outstanding shares of Company Capital Stock or Equity Equivalents (including to reduce or alter the consideration to be paid to the Company upon the exercise of any outstanding options, warrants, stock purchase rights or other Equity Equivalents); and (C) the Company has not granted any options with an exercise price of less than the fair market value of the Company’s Common Stock on the date the option was granted.

(j) there has not been any amendment to the articles of incorporation or bylaws of the Company;

(k) there has not been any transfer (by way of a license or otherwise) to any Person of rights to any Intellectual Property other than non-exclusive licenses (to object code only) with the Company’s customers in the ordinary course of business consistent with past practice;

(l) the Company has not made or agreed to make any disposition or sale, license or lease of, or incurrence of any Lien in an amount exceeding $50,000 individually or $100,000 in the aggregate, on, any Assets and Properties, other than sales of products or services, or grants of nonexclusive licenses (to object code only) of products, to customers in the ordinary course of business consistent with past practice;

(m) the Company has not made or agreed to make any purchase of any Assets and Properties of any Person other than (i) acquisitions of inventory, or licenses of products, in the ordinary course of business consistent with past practice and (ii) other acquisitions in an amount not exceeding $50,000 in the case of any individual item or $100,000 in the aggregate;

(n) the Company has not made or agreed to make any capital expenditures or commitments for additions to property, plant or equipment constituting capital assets individually or in the aggregate in an amount exceeding $50,000;

(o) the Company has not made or agreed to make any write-off or write-down, or any determination to write off or write-down, or revalue, any of its Assets and Properties, or change any reserves or liabilities associated therewith in an amount exceeding $50,000;

(p) the Company has not made or agreed to make payment, discharge or satisfaction, in an amount in excess of $50,000 in any one case, or $100,000 in the aggregate, of any claim, Liability or obligation (whether absolute, accrued, asserted or unasserted, contingent or

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otherwise), other than the payment, discharge or satisfaction in the ordinary course of business of Liabilities reflected or reserved against in the Company Financials;

(q) the Company has not failed to pay or otherwise satisfy any Liabilities when due and payable, except such Liabilities which are being contested in good faith by appropriate means or procedures and which, individually and in the aggregate, are immaterial in amount;

(r) the Company has not created, incurred, assumed or guaranteed any Indebtedness in an aggregate amount exceeding $50,000, or issued or sold any debt securities, or extended or otherwise modified the terms of any Indebtedness;

(s) the Company has not granted or approved (i) any severance or termination pay to, (ii) any increase of greater than five percent (5%) in salary, rate of commissions, rate of consulting fees or any other compensation of, (iii) the payment of any consideration of any nature whatsoever (other than salary, commissions or consulting fees and customary benefits paid to any current or former officer, director, shareholder, employee or consultant) to, (iv) any loan or extension of credit to, or (v) any discretionary or stay bonus to, any director, current or former officer, employee, shareholder or consultant, except payments made pursuant to written Contracts outstanding on the date hereof, copies of which have been delivered to Parent and which are disclosed in Section 2.10(s) of the Company Disclosure Schedule;

(t) the Company has not adopted, entered into, amended, modified or terminated (partially or completely) any Employee Plan;

(u) there has been no filed claim or written notice to the Company of wrongful discharge or other unlawful labor practice or action with respect to the Company;

(v) the Company has not made or changed any material election in respect of Taxes, adopted or changed any accounting method in respect of Taxes, entered into any tax allocation agreement, Tax sharing agreement, Tax indemnity agreement or closing agreement, settlement or compromise of any claim or assessment in respect of Taxes, nor has it consented to any extension or waiver of the statute of limitations period applicable to any claim or assessment in respect of Taxes;

(w) the Company has not made any change in accounting policies, principles, methods, practices or procedures;

(x) the Company has not failed to renew any insurance policy; no insurance policy of the Company has been cancelled or materially amended; and the Company has given all notices and presented all claims (if any) under all such policies in a timely fashion;

(y) there has been no material amendment or non-renewal of any Approvals, and the Company has used commercially reasonable efforts to maintain such Approvals and has observed in all material respects all Laws and Orders applicable to the business or Assets and Properties of the Company;

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(z) the Company has used commercially reasonable efforts to prosecute applications for its Registered Intellectual Property Rights, and has submitted all required documents and fees during the prosecution thereof;

(aa) there has been no physical damage, destruction or other casualty loss (whether or not covered by insurance) affecting any of the real or personal property or equipment of the Company individually or in the aggregate in an amount exceeding $50,000, other than ordinary wear and tear;

(bb) no event or condition of any character has occurred that has had or is reasonably likely to have a Material Adverse Effect on the Company;

(cc) the Company has not waived or released any material right or claim of the Company, including any write-off or other compromise of any material account receivable of the Company;

(dd) the Company has not entered into any employment Contract, or modified the terms of any existing such Contract;

(ee) the Company has not suffered any adverse change or any threat of any adverse change in its relations with, or any loss or threat of loss of, any of its licensors, distributors, suppliers or other business partners except for such changes or losses and threatened changes or losses (assuming for this purpose that such threats are realized) as would not individually or in the aggregate have or be reasonably expected to have a Material Adverse Effect; and

(ff) the Company has not entered into or approved any contract, arrangement or understanding or acquiesced in respect of any arrangement or understanding, to do, engage in or cause or having the effect of any of the foregoing items described in the preceding clauses (a) through (ee) of this Section 2.10.

2.11 Taxes.

(a) Definition of Taxes. For the purposes of this Agreement, the term “Tax” or, collectively, “Taxes” shall mean (i) any and all federal, state, local and foreign 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 but not limited to 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 2.11(a) as a result of being a member of an affiliated, consolidated, combined or unitary group for any period, and (iii) any liability for the payment of any amounts of the type described in clauses (i) or (ii) of this Section 2.11(a) as a result of any express or implied obligation to indemnify any other person or as a result of any obligation under any

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agreement or arrangement with any other person with respect to such amounts and including any liability for taxes of a predecessor entity.

(b) Tax Returns and Audits.

(i) The Company has prepared and timely filed all required federal, state, local and foreign returns, estimates, information statements and reports (“Returns”) relating to any and all material Taxes concerning or attributable to the Company or its operations and such Returns are true and correct in all material respects and have been completed in accordance with applicable law.

(ii) The Company has timely paid all material Taxes it is required to pay and has timely paid or withheld with respect to its Employees all federal, state and foreign income taxes and social security charges and similar fees, Federal Insurance Contribution Act, Federal Unemployment Tax Act and other Taxes required to be paid or withheld.

(iii) The Company has not been delinquent in the payment of any Tax, nor is there any Tax deficiency outstanding, assessed or proposed against the Company, nor has the Company 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 is presently in progress, nor has the Company been notified of any request for such an audit or other examination.

(v) As of the date of the Current Balance Sheet, the Company did not have any Liabilities for unpaid Taxes which have not been accrued or reserved on the Current Balance Sheet, whether asserted or unasserted, contingent or otherwise, and the Company has not incurred any liability for Taxes since the date of the Current Balance Sheet other than in the ordinary course of business.

(vi) The Company has made available to Parent or its legal counsel, copies of all foreign, federal, state and local income and all state and local sales and use Returns for the Company filed for all periods since its inception.

(vii) There are (and immediately following the Effective Time there will be) no liens, pledges, charges, claims, restrictions on transfer, mortgages, security interests or other encumbrances of any sort (collectively, “Liens”) on the assets of the Company relating to or attributable to Taxes, other than Liens for Taxes not yet due and payable. The Company does not have 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.

(viii) The Company does not treat any of its assets as “tax-exempt use property,” within the meaning of Section 168(h) of the Code.

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(ix) The Company has not filed any consent agreement under Section 341(f) of the Code or agreed to have Section 341(f)(2) of the Code apply to any disposition of a subsection (f) asset (as defined in Section 341(f)(4) of the Code) owned by the Company.

(x) The Company has (a) never 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 Company), (b) never been a party to any Tax sharing, indemnification or allocation agreement, nor does the Company owe any amount under any such agreement (c) no liability for the Taxes of any person under Treas. Reg. § 1.1502-6 (or any similar provision of state, local or foreign law), as a transferee or successor, by contract, or otherwise and (d) never been a party to any joint venture, partnership or other agreement that could be treated as a partnership for Tax purposes.

(xi) The Company is not and has not been at any time, a “United States Real Property Holding Corporation” within the meaning of Section 897(c)(2) of the Code.

(xii) No adjustment relating to any Return filed by the Company has been proposed formally or, to the Knowledge of the Company, informally by any tax authority to the Company or any representative thereof.

(xiii) The Company has not 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 (x) in the two years prior to the date of this Agreement or (y) in a distribution which could otherwise constitute part of a “plan” or “series of related transactions” (within the meaning of Section 355(e) of the Code) in conjunction with the Merger.

(c) Executive Compensation Tax. There is no contract, agreement, plan or arrangement to which the Company is a party, including, without limitation, the provisions of this Agreement, covering any employee or former employee of the Company, which, individually or collectively, could give rise to the payment of any amount that would not be deductible pursuant to Sections 280G, 404 or 162(m) of the Code.

2.12 Restrictions on Business Activities. Except as set forth on Section 2.12 of the Company Disclosure Schedule, there is no Contract or Legal Requirement to which the Company is a party or otherwise binding upon the Company which has or may reasonably be expected to have the effect of prohibiting or impairing any business practice of the Company, any acquisition of property (tangible or intangible) by the Company, the conduct of business by the Company as currently conducted or proposed to be conducted or otherwise limiting the freedom of the Company to engage in any line of business or to compete with any person. Except as set forth on Section 2.12 of the Company Disclosure Schedule, without limiting the generality of the foregoing, the Company has not entered into any agreement under which the Company is restricted from selling, licensing 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, and the Company has not granted any “most favored party” terms in any Contract.

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2.13 Legal Proceedings.

(a) Except as set forth in Section 2.13 of the Company Disclosure Schedule:

(i) there are, and since the inception of the Company have been, no pending Actions or Proceedings against or relating to the Company, any of its Assets and Properties or any of the Company’s officers or directors in such capacities;

(ii) to the knowledge of the Company, there are, and since December 31, 2001 there have been, no Actions or Proceedings overtly threatened against or relating to the Company, any of its Assets and Properties or any of the Company’s officers or directors in such capacities;

(iii) there are no facts or circumstances known to the Company that would reasonably be expected to give rise to any Action or Proceeding against or relating to the Company, any of its Assets and Properties or any of the Company’s officers or directors in such capacities which Action or Proceeding would, if determined against the Company, result in material damages, costs or expenses;

(iv) the Company has no knowledge of facts or circumstances that constitute reasonable grounds to believe that any Governmental Authority intends to conduct an Action or Proceeding; and

(v) the Company has not received notice or otherwise has knowledge of any Orders outstanding or threatened against the Company.

(b) Prior to the execution of this Agreement, the Company has delivered to Parent all responses of counsel for the Company to auditors’ requests for information (together with any updates provided by such counsel) regarding Actions or Proceedings pending or threatened against, relating to or affecting the Company.

2.14 Compliance with Laws, Orders, Approvals and Contracts.

(a) The Company has not violated, and is not currently in default or violation under, any Legal Requirement or Approval applicable to the Company or any of its Assets and Properties, except for such defaults or violations which are not, individually or in the aggregate, material and the Company has no knowledge of any claim of violation, or of any actual violation, of any such Legal Requirement or Approval by the Company.

(b) The Company 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 Company Contract, nor is the Company aware of any event that would constitute such a breach, violation or default with the lapse of time, giving of notice or both, except for such breaches, violations and defaults (including breaches, violations and defaults that would arise upon lapse of time following, and/or notice of, such events) which are not, individually or in

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the aggregate, material. Each Company Contract is in full force and effect and the Company is not subject to any default thereunder. To the knowledge of the Company, no party obligated to the Company pursuant to any such Company Contract is subject to any default thereunder.

2.15 Employee Matters and Benefit Plans.

(a) Definitions. With the exception of the definition of “Affiliate” set forth in Section 2.15(a)(i) below (which definition shall apply only to this Section 2.15), for purposes of this Agreement, the following terms shall have the meanings set forth below:

(i) “Affiliate” shall mean any other 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;

(ii) COBRA” shall mean the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended;

(iii) “DOL” shall mean the United States Department of Labor;

(iv) “Employee” shall mean any current or former or retired employee, consultant or director of the Company or any Affiliate;

(v) “Employment Agreement” shall mean each management, employment, severance, consulting, relocation, repatriation, expatriation, visa, work permit or other agreement, contract or understanding between the Company or any Affiliate and any Employee;

(vi) “Employee Plan” shall mean any plan, program, policy, practice, contract, agreement or other arrangement providing for compensation, severance, termination pay, deferred compensation, performance awards, stock or stock-related awards, fringe benefits or other employee benefits or remuneration of any kind, whether written or unwritten or otherwise, funded or unfunded, including without limitation, 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 a company or any Affiliate of such company for the benefit of any Employee, or with respect to which the company or any Affiliate of the company has or may have any liability or obligation;

(vii) “ERISA” shall mean the Employee Retirement Income Security Act of 1974, as amended;

(viii) “FMLA” shall mean the Family Medical Leave Act of 1993, as amended;

(ix) “HIPAA” shall mean the Health Insurance Portability and Accountability Act of 1996, as amended;

(x) “IRS” shall mean the Internal Revenue Service;

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(xi) “Multiemployer Plan” shall mean any “Pension Plan” (as defined below) which is a “multiemployer plan,” as defined in Section 3(37) of ERISA;

(xii) “PBGC” shall mean the United States Pension Benefit Guaranty Corporation;

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

(b) Schedule. Section 2.15(b) of the Company Disclosure Schedule contains an accurate and complete list of each Employee Plan and each Employment Agreement. Neither the Company, nor any Affiliate has, any plan or commitment to establish any new Employee Plan or Employment Agreement, to modify any Employee Plan or Employment Agreement (except to the extent required by law or to conform any such Employee Plan or Employment Agreement to the requirements of any applicable law, or as required by this Agreement), or to adopt or enter into any Employee Plan or Employment Agreement. Section 2.15(b) of the Company Disclosure Schedule also sets forth a table setting forth the name and salary of each employee of the Company.

(c) Documents. The Company has provided to Parent correct and complete copies of: (i) all documents embodying each Employee Plan and each Employment Agreement including (without limitation) all amendments thereto and all related trust documents, administrative service agreements, group annuity contracts, group insurance contracts, and policies pertaining to fiduciary liability insurance covering the fiduciaries for each Plan; (ii) the most recent annual actuarial valuations, if any, prepared for each Employee Plan; (iii) the three (3) most recent annual reports (Form Series 5500 and all schedules and financial statements attached thereto), if any, required under ERISA or the Code in connection with each Employee Plan; (iv) if the Employee Plan is funded, the most recent annual and periodic accounting of Employee Plan assets; (v) the most recent summary plan description together with the summary(ies) of material modifications thereto, if any, required under ERISA with respect to each Employee Plan; (vi) all IRS determination, opinion, notification and advisory letters, and all applications and correspondence to or from the IRS or the DOL with respect to any such application or letter; (vii) all communications material to any Employee or Employees relating to any Employee Plan and any proposed Employee Plans, in each case, relating to any amendments, terminations, establishments, increases or decreases in benefits, acceleration of payments or vesting schedules or other events which would result in any material liability to the Company; (viii) all correspondence to or from any governmental agency relating to any Employee Plan; (ix) all COBRA forms and related notices (or such forms and notices as required under comparable law); (x) the three (3) most recent plan years discrimination tests for each Employee Plan; and (xi) all registration statements, annual reports (Form 11-K and all attachments thereto) and prospectuses prepared in connection with each Employee Plan.

(d) Employee Plan Compliance. Except as set forth on Section 2.15(d) of the Company Disclosure Schedule, the Company and its Affiliates have performed in all material respects all obligations required to be performed by it under, is not in default or violation of, and have no knowledge of any default or violation by any other party to each Employee Plan, and each Employee Plan has been established and maintained in all material respects in accordance with its

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terms and in compliance with all applicable laws, statutes, orders, rules and regulations, including but not limited to ERISA or the Code. Any Employee Plan intended to qualify under Section 401(a) of the Code and each trust intended to qualify under Section 501(a) of the Code has (i) either applied for, prior to the expiration of the requisite period under applicable Treasury Regulations or IRS pronouncements, or obtained a favorable determination, notification, advisory and/or opinion letter, as applicable, as to its qualified status from the IRS or still has a remaining period of time under applicable Treasury Regulations or IRS pronouncements in which to apply for such letter and to make any amendments necessary to obtain a favorable determination, and (ii) incorporates or has been amended to incorporate all provisions required to have been adopted to comply with the Tax Reform Act of 1986 and subsequent legislation. For each Company Employee Plan that is intended to be qualified under Section 401(a) of the Code there has been no event, condition or circumstance that has adversely affected or is likely to adversely affect such qualified status. To the knowledge of the Company, 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 (or any administrative class exemption issued thereunder), has occurred with respect to any Employee Plan. There are no actions, suits or claims pending, or, to the knowledge of the Company, threatened or reasonably anticipated (other than routine claims for benefits) against any Employee Plan or against the assets of any Employee Plan. Each Employee Plan can be amended, terminated or otherwise discontinued after the Effective Time, without liability to Parent, the Company or any of its Affiliates. There are no audits, inquiries or proceedings pending or, to the knowledge of the Company or any Affiliates, threatened by the IRS, the DOL or any other Governmental Authority with respect to any Employee Plan. Neither the Company nor any Affiliate is subject to any penalty or tax with respect to any Employee Plan under Section 502(i) of ERISA or Sections 4975 through 4980 of the Code. The Company and each Affiliate have timely made all contributions and other payments required by and due under the terms of each Employee Plan.

(e) Pension Plan. Neither the Company nor any Affiliate has ever maintained, established, sponsored, participated in, or contributed to, any Pension Plan which is subject to Title IV of ERISA or Section 412 of the Code.

(f) Collectively Bargained, Multiemployer and Multiple Employer Plans. At no time has the Company or any Affiliate contributed to or been obligated to contribute to any Multiemployer Plan. Neither the Company nor any 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 or 419 of the Code.

(g) No Post-Employment Obligations. Except as set forth in Section 2.15(g) of the Company Disclosure Schedule, no Employee Plan provides, or reflects or represents any liability to provide post-termination or retiree 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 Affiliate 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 post-termination or retiree welfare benefits, except to the extent required by statute.

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(h) Health Care Compliance. Neither the Company nor any Affiliate has, prior to the Effective Time and in any material respect, violated any of the health care continuation requirements of COBRA, the requirements of FMLA, the requirements of HIPAA, the requirements of the Women’s Health and Cancer Rights Act of 1998, the requirements of the Newborns’ and Mothers’ Health Protection Act of 1996, or any amendment to each such act, or any similar provisions of state law applicable to its Employees.

(i) Self-Insurance. Neither the Company nor any Affiliate has, at any time, sponsored, contributed to or maintained any self-insured, whether wholly or partially, Employee Plan.

(j) Past Acquisitions. Neither the Company nor any Affiliate is currently obligated to provide an Employee with any compensation or benefits pursuant to an agreement (e.g., an acquisition agreement) with a former employer of such Employee.

(k) Executive Loans. Neither the Company nor any Affiliate has violated Section 402 of Sarbanes-Oxley Act of 2002 and the execution of this Agreement and the consummation of the transactions contemplated hereby will not, to the knowledge of the Company, cause such a violation.

(l) Effect of Transaction.

(i) Except as set forth on Schedule 2.15(l) of the Company Disclosure Schedule, the execution of this Agreement and the consummation of the transactions contemplated hereby will not (either alone or upon the occurrence of any additional or subsequent events) constitute an event under any Employee Plan, Employment Agreement, trust or loan that will or may result in any payment (whether of severance pay or otherwise), acceleration, forgiveness of indebtedness, vesting, distribution, increase in benefits or obligation to fund benefits with respect to any Employee.

(ii) Except as set forth on Schedule 2.15(l) of the Company Disclosure Schedule, no payment or benefit which will or may be made by the Company or its ERISA Affiliates with respect to any Employee or any other “disqualified individual” (as defined in Code Section 280G and the regulations thereunder) will be characterized as a “parachute payment,” within the meaning of Section 280G(b)(2) of the Code.

(m) Employment Matters. The Company: (i) 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 and wages and hours, in each case, with respect to Employees; (ii) 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; (iii) is not liable for any arrears of wages or any taxes or any penalty for failure to comply with any of the foregoing; and (iv) 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

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(other than routine payments to be made in the normal course of business and consistent with past practice). There are no pending, threatened or reasonably anticipated claims or actions against the Company under any worker’s compensation policy or long-term disability policy. Neither the Company nor any Affiliate has direct or indirect liability with respect to any misclassification of any person as an independent contractor rather than as an employee.

(n) Labor. No work stoppage or labor strike against the Company or any Affiliate is pending, threatened or reasonably anticipated. The Company does not know of any activities or proceedings of any labor union to organize any Employees. Except as set forth in Section 2.15(n) of the Company Disclosure Schedule, there are no actions, suits, claims, labor disputes or grievances pending, or, to the knowledge of the Company, threatened or reasonably anticipated relating to any labor, safety or discrimination matters involving any Employee, including, without limitation, charges of unfair labor practices or discrimination complaints. The Company has not engaged in any unfair labor practices within the meaning of the National Labor Relations Act. Except as set forth in Section 2.15(n) of the Company Disclosure Schedule, the Company is not presently, nor has it been in the past, 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. Neither the Company nor any Affiliate has incurred any material liability or material obligation under the Worker Adjustment and Retraining Notification Act or any similar state or local law that remains unsatisfied.

2.16 Title to Properties; Absence of Liens and Encumbrances; Condition of Equipment.

(a) The Company does not own any real property, nor has the Company ever owned any real property. Section 2.16(a) of the Company Disclosure Schedule sets forth a list of all real property currently leased by the Company, the name of the lessor, the date of the lease and each amendment thereto and, with respect to any current lease, the aggregate annual rental payable under any such lease (and, with respect to any property subleased out by the Company, the name of the sublessee, the duration of the sublease and the aggregate annual rental payable to the Company). All such current leases are in full force and effect, are valid and effective in accordance with their respective terms, and there is not, under any of such leases, any existing default or event of default (or event which with notice or lapse of time, or both, would constitute a default), except for such defaults (including defaults that would arise upon lapse of time following, and/or notice of, such events) which are not, individually or in the aggregate, material.

(b) The Company has good and valid title to, or, in the case of leased properties and assets, valid leasehold interests in, all of its tangible properties and assets, real, personal and mixed, used or held for use in its business, free and clear of any Liens, except (i) as reflected in the Current Balance Sheet, and (ii) such imperfections of title and encumbrances, if any, which do not detract from the value or interfere with the present use of the property subject thereto or affected thereby. Section 2.16(b) of the Company Disclosure Schedule sets forth a list of all personal property currently leased by the Company, the name of the lessor, the date of the lease and each amendment thereto and, with respect to any current lease, the aggregate annual rental payable under any such lease (and, with respect to any property subleased out by the Company, the name of the

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sublessee, the duration of the sublease and the aggregate annual rental payable to the Company). All such current leases are in full force and effect, are valid and effective in accordance with their respective terms, and there is not, under any of such leases, any existing default or event of default (or event which with notice or lapse of time, or both, would constitute a default), except for such defaults (including defaults that would arise upon lapse of time following, and/or notice of, such events) which are not, individually or in the aggregate, material.

(c) All material items of equipment (the “Equipment”) owned or leased by the Company are (i) adequate for the conduct of the business of the Company, as applicable, as currently conducted and as currently contemplated to be conducted, and (ii) in good operating condition, regularly and properly maintained, subject to normal wear and tear.

2.17 Intellectual Property.

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

(i) “Intellectual Property” shall mean any or all of the following and all rights in, arising out of, or associated therewith: (i) all United States, international and foreign patents and applications therefor and all reissues, divisions, renewals, extensions, provisionals, continuations and continuations-in-part thereof (“Patents”); (ii) all inventions (whether patentable or not), invention disclosures, improvements; (iii) trade secrets, confidential or proprietary information, know how, technology, technical data and customer lists, and all documentation relating to any of the foregoing (“Trade Secrets”); (iv) all copyrights, copyrights registrations and applications therefor, and all other rights corresponding thereto throughout the world (“Copyrights”); (v) all domain names, universal resource locators (“URLs”) and other names and locators associated with the Internet; (vi) all industrial designs and any registrations and applications therefor throughout the world; (vii) all trade names, logos, common law trademarks and service marks, trademark and service mark registrations and applications therefor throughout the world; (viii) all databases and data collections and all rights therein throughout the world; (ix) all moral and economic rights of authors and inventors, however denominated, throughout the world, (x) all Software (defined below), and (xi) any similar or equivalent rights to any of the foregoing anywhere in the world.

(ii) “Company Intellectual Property” shall mean any Intellectual Property, including the Company Registered Intellectual Property (as defined below) that is owned by, or exclusively licensed to, the Company.

(iii) “Registered Intellectual Property Rights” shall mean all United States, international and foreign: (i) Patents, including applications therefor; (ii) registered trademarks, applications to register trademarks, including intent-to-use applications, or other registrations or applications related to trademarks; (iii) Copyright registrations and applications to register Copyrights; and (iv) any other Intellectual Property that is the subject of an application, certificate, filing, registration or other document issued by, filed with, or recorded by, any private, state, government or other public or quasi-public legal authority at any time

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(iv) “Software” means any and all computer software and code, including assemblers, applets, compilers, source code, object code, data (including image and sound data), design tools and user interfaces, in any form or format, however fixed. Software shall include source code listings and documentation.

(b) Section 2.17(b) of the Company Disclosure Schedule contains a complete and accurate list (by name and version number) of all products, Software or service offerings of the Company (collectively, “Company Products”) that have been sold or distributed commercially by the Company or which the Company intends to sell or distribute commercially in the future, including any products or service offerings under development.

(c) Section 2.17(c) of the Company Disclosure Schedule of the Disclosure Schedule lists all Registered Intellectual Property Rights owned by, filed in the name of, or applied for, by the Company (the “Company Registered Intellectual Property”) and lists any Actions or Proceedings before any court, tribunal (including the United States Patent and Trademark Office (the “PTO”) or equivalent authority anywhere in the world) in which any of the Company Registered Intellectual Property or Company Intellectual Property is the express subject of the Action or Proceeding and to which Company is a party and has been noticed or served or which is otherwise known to Company.

(d) Each item of Company Registered Intellectual Property is currently in compliance with all formal legal requirements (including payment of filing, examination and maintenance fees and proofs of use). All documents and certificates necessary to date in connection with such Company Registered Intellectual Property have been 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 perfecting, prosecuting and maintaining such Registered Intellectual Property. Except as set forth on Section 2.17(d) of the Company Disclosure Schedule, there are no actions that must be taken by the Company within sixty (60) days of the Closing Date, including the payment of any registration, maintenance or renewal fees or the filing of any responses to PTO office actions, documents, applications or certificates for the purposes of obtaining, maintaining, perfecting or preserving or renewing any Registered Intellectual Property Rights. Company has not claimed any status in the application for or registration of any Registered Intellectual Property Rights, including “small business status,” that would not be applicable to Parent.

(e) To the maximum extent provided for by, and in accordance with, applicable laws and regulations, the Company has recorded each assignment of a Patent assigned to the Company with the relevant governmental entity.

(f) Except as set forth on Section 2.17(f) of the Company Disclosure Schedule, and except for non-exclusive licenses granted to end-user customers in the ordinary course of business, all Company Intellectual Property that is wholly owned by Company will be fully transferable, alienable or licensable by Surviving Corporation and/or Parent without restriction and without payment of any kind to any third party.

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(g) The Company has no knowledge of any facts or circumstances that the Company knows would render any Company Intellectual Property invalid or unenforceable.

(h) Each item of Company Intellectual Property that is wholly owned by Company is free and clear of any liens or encumbrances, except as set forth on Section 2.17(h) of the Company Disclosure Schedule, and except for non-exclusive licenses granted to the Company’s customers in the ordinary course of business.

(i) Except as set forth on Section 2.17(i) of the Company Disclosure Schedule, the Company has not (i) transferred ownership of, or granted any exclusive license of or right to use, or authorized the retention of any exclusive rights to use or joint ownership of, any Intellectual Property that is or was material Company Intellectual Property, to any other person, or (ii) permitted Company’s rights in such material Intellectual Property to lapse or enter the public domain.

(j) Except as set forth on Section 2.17(j) of the Company Disclosure Schedule, all Company Intellectual Property that is owned by the Company and that is used in or necessary to the conduct of Company’s business as presently conducted or currently planned or contemplated to be conducted by the Company was written and created solely by either (i) employees of the Company acting within the scope of their employment who have assigned (to the maximum extent permitted under applicable law) their rights, including all Intellectual Property rights therein, to the Company or (ii) by third parties who have assigned (to the maximum extent permitted under applicable law) their rights, including all Intellectual Property rights therein, to the Company.

(k) Except as set forth on Schedule 2.17(k) of the Company Disclosure Schedule, to the extent that any Intellectual Property has been developed or created by a third party for Company and is incorporated into any of the Company Products, the Company has a written agreement with such third party with respect thereto and Company thereby either (i) has obtained ownership of, and is the exclusive owner of (with assignments sufficient to irrevocably transfer (to the maximum extent permitted by law) all rights in and to such Intellectual Property to the Company including, in the case of Patent and Copyright assignments, the right to seek past and future damages with respect thereto), or (ii) has obtained a perpetual, nonterminable license sufficient for the conduct of its business as currently conducted and as currently planned or contemplated to be conducted to all such third party’s Intellectual Property in, such work, material or invention by operation of law or by assignment, to the fullest extent it is legally possible to do so.

(l) Except as set forth on Section 2.17(l) of the Company Disclosure Schedule, the Company Intellectual Property constitutes all the material Intellectual Property that is used in, or any Intellectual Property that is necessary, to the conduct of the business of the Company as it currently is conducted and as it is currently planned or contemplated to be conducted by the Company, including, without limitation, the design, development, manufacture, use, import and sale of Company Products.

(m) Except as set forth on Section 2.17(m) of the Company Disclosure Schedule, no person who has licensed any material Intellectual Property to the Company has ownership rights or license rights to improvements made by or for the Company in such Intellectual Property.

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(n) Company has the right to use all Software development tools, library functions, compilers and all other third-party Software that are required to create, modify, compile, operate or support any Software that is material Company Intellectual Property or is incorporated into any Company Product. Without limiting the foregoing, except as set forth in Section 2.17(n) of the Company Disclosure Schedule, no open source or public library Software, including any version of any Software licensed pursuant to any GNU public license, was used in the development or modification of any Software that is Company Intellectual Property or is incorporated into any Company Product.

(o) No government funding, facilities of a university, college, other educational institution or research center or funding from third parties was used by Company in the development of any Company Intellectual Property. Except as set forth on Section 2.17(o) of the Company Disclosure Schedule, to Company’s knowledge, no current or former employee, consultant or independent contractor of Company, who was involved in, or who contributed to, the creation or development of any Company Intellectual Property, has performed services for the government, university, college, or other educational institution or research center during a period of time during which such employee, consultant or independent contractor was also performing services for Company.

(p) Except as set forth on Section 2.17(p) of the Company Disclosure Schedule, the operation of the business of the Company as it is currently conducted, or is currently planned or contemplated to be conducted by the Company, including but not limited to the design, development, use, import, branding, advertising, promotion, marketing, manufacture and distribution of Company Products does not infringe or misappropriate and will not infringe or misappropriate when conducted by Surviving Corporation following the Closing (but only to the extent Surviving Corporation conducts the operation of the business as it is currently conducted, or is currently planned or contemplated to be conducted by the Company), any Intellectual Property of any person, violate any right of any person (including any right to privacy or publicity), or constitute unfair competition or trade practices under the laws of any jurisdiction and the Company has not received notice from any person claiming that such operation or any act, product, technology or service (including products, technology or services currently under development) of the Company infringes or misappropriates any Intellectual Property of any person or constitutes unfair competition or trade practices under the laws of any jurisdiction.

(q) Except as set forth on Section 2.17(q) of the Company Disclosure Schedule, to Company’s knowledge, no Company Intellectual Property, Company Product or service of the Company is subject to any proceeding or outstanding decree, order, judgment or settlement agreement or stipulation that restricts in any manner the use, transfer or licensing thereof by the Company or may affect the validity, use or enforceability of such Company Intellectual Property.

(r) Other than inbound “shrink-wrap” and similar publicly-available commercial licenses, confidentiality/non-disclosure agreements, preprinted purchase order terms and conditions, and employee invention assignment agreements, Section 2.17(r)(i) of the Company Disclosure Schedule lists all contracts, licenses and agreements to which the Company is a party with respect to

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any Intellectual Property. All such contracts are in full force and effect. Except as set forth in Section 2.17(r)(ii) of the Company Disclosure Schedule, the Company is not in material breach of any of the foregoing contracts, licenses or agreements and, to the Company’s knowledge, no other party to any such contract, license or agreement is in material breach thereof. Except as set forth in Section 2.17(r)(ii) of the Company Disclosure Schedule, the consummation of the transactions contemplated by this Agreement will neither violate nor result in the breach, modification, cancellation, termination or suspension of such contracts, licenses and agreements. Except as set forth in Section 2.17(r)(ii) of the Company Disclosure Schedule, following the Closing Date, the Surviving Corporation will be permitted to exercise all of Company’s rights under such contracts, licenses and agreements to the same extent the Company would have been able to had the transactions contemplated by this Agreement not occurred and without the payment of any additional amounts or consideration other than ongoing fees, royalties or payments which Company would otherwise be required to pay.

(s) Section 2.17(s) of the Company Disclosure Schedule lists all material contracts, licenses and agreements between the Company and any other person wherein or whereby the Company has expressly agreed to, or assumed, any obligation or duty to warrant, indemnify, reimburse, hold harmless, guaranty or otherwise assume or incur any obligation or liability or provide a right of rescission with respect to the infringement or misappropriation by the Company or such other person of the Intellectual Property Rights of any person other than the Company.

(t) Except as set forth in Section 2.17(t) of the Company Disclosure Schedule, to the knowledge of the Company, there are no contracts, licenses or agreements between the Company and any other person with respect to Company Intellectual Property under which there is any material dispute regarding the scope of such agreement, or performance under such agreement, including with respect to any payments to be made or received by the Company thereunder.

(u) Except as set forth in Section 2.17(u) of the Company Disclosure Schedule, to the Company’s knowledge, no person is infringing or misappropriating any Company Intellectual Property.

(v) The Company has taken all steps that are reasonably required to protect the Company’s rights in confidential information and trade secrets of the Company or provided by any other person to the Company. Without limiting the foregoing, the Company has and enforces a policy requiring each employee and consultant of the Company to execute a proprietary rights and confidentiality agreement substantially in the form set forth in Exhibit E and all current and former employees and consultants of Company who have created or modified any of the Company Intellectual Property have executed such an agreement.

(w) Except as set forth on Section 2.17(w) of the Company Disclosure Schedule, neither this Agreement nor the transactions contemplated by this Agreement will trigger under any Contract to which Company is a party (i) either Parent’s or the Surviving Corporation’s granting to any third party any right to any Intellectual Property owned by, or licensed to, either of them which, in the case of Surviving Corporation, would not have been granted by the Company had the Closing not occurred, (ii) either the Parent’s or the Surviving Corporation’s being bound by, or subject to,

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any non-compete or other restriction on the operation or scope of their respective businesses which, in the case of Surviving Corporation, the Company would not have been bound by or subject to had the Closing not occurred, or (iii) either the Parent’s or the Surviving Corporation’s being obligated to pay any royalties or other amounts to any third party in excess of those payable by Company prior to the Closing under any Contract to which Company is a party.

2.18 Agreements, Contracts and Commitments.

(a) Section 2.18(a) of the Company Disclosure Schedule, lists all of the following to which the Company is a party or bound by:

(i) any employment or consulting contract with an employee or individual consultant or salesperson, or consulting or sales agreement, contract, or commitment with a firm or other organization (other than offer letters, employee invention assignment agreements and option agreements pursuant to the Company’s standard form previously provided to Parent; provided that there are no substantive modifications from such form; and provided, further, in the case of employee invention assignment agreements, that the employee has not excepted any inventions that are related to any Intellectual Property used in connection with Company Products);

(ii) any Contract or plan, including, without limitation, 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 any subsequent event 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) any fidelity or surety bond or completion bond;

(iv) any lease of personal property having a value in excess of $25,000 individually or $50,000 in the aggregate;

(v) any agreement, contract or commitment relating to capital expenditures and involving future payments in excess of $25,000 individually or $50,000 in the aggregate;

(vi) any agreement, contract or commitment with customers of the Company that individually accounts for five percent (5%) or more of the Company’s revenues;

(vii) any agreement, contract or commitment 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) any mortgages, indentures, guarantees, loans or credit agreements, security agreements or other agreements or instruments relating to the borrowing of money or extension of credit;

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(ix) any purchase order or contract for the purchase of materials or services involving single source suppliers, custom manufacturers or involving in excess of $25,000 individually or $50,000 in the aggregate;

(x) any construction contracts;

(xi) any dealer, distribution, joint marketing or development agreement;

(xii) any sales representative, original equipment manufacturer, value added, remarketer, distributor, reseller, or independent software vendor, or other agreement for distribution of the Company’s products, technology or services by a third party;

(xiii) any Contract of indemnification or any guaranty other than any Contract of indemnification entered into in connection with the sale, license, distribution and development of Intellectual Property and advertising in the ordinary course of business;

(xiv) any Contract currently in force to provide source code to any third party for any product or technology;

(xv) any material settlement agreement entered into prior to the date of this Agreement pursuant to which the Company has continuing obligations or rights;

(xvi) any Contract under which the consequences of a default or termination would reasonably be anticipated to have a Material Adverse Effect on the Company;

(xvii) any executory agreement under which the Company has advanced or loaned any amount to any of its directors, officers, and employees;

(xviii) any revenue or profit participation Contract which involves aggregate annual payments of more than $20,000; or

(xix) any other Contract that involves $25,000 individually or $50,000 in the aggregate or more and is not cancelable without penalty within thirty (30) days, and any other Contract that is not cancelable without penalty within six (6) months.

2.19 Insurance. Section 2.19 of the Company Disclosure Schedule lists all insurance policies and fidelity bonds covering the assets, business, equipment, properties, operations, employees, officers and directors of the Company or any Affiliate. There is no claim by the Company, or any Affiliate 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 and its 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 does not have any knowledge of threatened termination of, or premium increase with respect to, any of such policies.

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2.20 Interested Party Transactions. No officer, director or shareholder of the Company (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) an interest in any entity which furnished or sold, or furnishes or sells, services, products or technology that the Company furnishes or sells, or proposes to furnish or sell, or (ii) any interest in any entity that purchases from or sells or furnishes to the Company, any goods or services, or (iii) a beneficial interest in any Contract to which the Company 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 2.20.

2.21 Accounts Receivable. Except as set forth in Section 2.21 of the Company Disclosure Schedule, the accounts and notes receivable of the Company reflected on the Company Financials, and all accounts and notes receivable of the Company and arising subsequent to the date of the Current Balance Sheet, (a) arose from bona fide sales transactions in the ordinary course of business consistent with past practice, and are payable on ordinary trade terms, (b) are legal, valid and binding obligations of the respective debtors enforceable in accordance with their respective terms, (c) are current and collectible, (d) are not subject to any valid set-off or counterclaim, and (e) 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.

2.22 Governmental Authorizations and Permits. Each Approval (i) pursuant to which the Company currently operates or holds any interest in any of its properties, or (ii) which is required for, or material to, the operation of the Company’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. The Company Authorizations are in full force and effect and constitute all Company Authorizations required to permit the Company to operate or conduct its business or hold any interest in its properties or assets.

2.23 Brokers’ and Finders’ Fees; Third Party Expenses. The Company has not incurred, nor will it incur, directly or indirectly, any liability for brokerage or finders’ fees or agents’ commissions or any similar charges in connection with the Agreement or any transaction contemplated hereby. Section 2.23 of the Company Disclosure Schedule sets forth the Company’s current reasonable estimate of all Third Party Expenses expected to be incurred by the Company in connection with the negotiation and effectuation of the terms and conditions of this Agreement and the transactions contemplated hereby.

2.24 Warranties; Indemnities. Except for the warranties and indemnities contained in those Contracts and agreements set forth in the Company Disclosure Schedule and warranties implied by law, the Company has not given any warranties or indemnities relating to products or technology sold or services rendered by the Company.

2.25 Information Statement.

The information supplied by the Company for inclusion in the information statement to be sent to the shareholders of the Company in connection with the Company shareholders’

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consideration of the Merger (the “Company Shareholder Action”) (such information statement as amended or supplemented is referred to herein as the “Information Statement”) shall not, on the date the Information Statement is first mailed to the Company’s shareholders, at the time of the Company Shareholder Action or at the Effective Time, contain any statement which, at such time, is false or misleading with respect to any material fact, or omit to state any material fact necessary in order to make the statements made therein, in light of the circumstances under which they are made, not false or misleading, or omit to state any material fact necessary to correct any statement in any earlier communication with respect to the solicitation of proxies or written consents for the Company Shareholder Action which has become false or misleading.

2.26 Termination Notice. The Company delivered to Overture on April 10, 2003 the written notice of intent not to renew the GoTo Search Services Order entered into by and between Overture (formerly GoTo.com, Inc.) and the Company (formerly Oingo.com, Inc.), dated May 14, 2001 (the “Overture Search Agreement”) in such form and at such time as required to effectively cause nonrenewal of the Overture Search Agreement.

2.27 Employment Arrangements. Gil Elbaz and Adam Weissman shall have delivered executed offer letters, based on Parent’s standard form (each, an “Offer Letter”), which Offer Letters shall be effective as of the Closing Date. Such Offer Letters will have set forth “at-will” employment arrangements which will (i) be subject to and in compliance with Parent’s standard human resources policies and procedures, (ii) have terms, including the position, salary and responsibilities of such employee, which will be determined by Parent after consultation with the Company’s management, and (iii) supersede any prior employment agreements and other arrangements with such employee in effect prior to the Closing Date.

2.28 Disclosure. The representations and warranties of the Company contained in this Agreement, together with the Company Disclosure Schedule and any certificate furnished to Parent pursuant to any provision of this Agreement do not contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. The Company has delivered or made available true and complete copies of each document (or summaries of same) that has been requested in writing by Parent or its counsel. The Company has not failed to disclose to Parent any fact or circumstance that would reasonably be expected to have a Material Adverse Effect on the Company.

2.29 Closing Cash Statement. The Closing Cash Statement delivered by the Company pursuant to Section 5.18 will state the amount of the Company’s cash and cash equivalents (within the meanings of such terms under GAAP) on the Closing Date.

2.30 Overture AdSense Contract. The Company does not have any Contract with Overture or any of Overture’s Affiliates or Associates relating to the Company’s AdSense product.

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ARTICLE 3

REPRESENTATIONS AND WARRANTIES OF PARENT AND SUB

Parent and Sub hereby represent and warrant to the Company, subject to such exceptions as are disclosed with respect to this Article 3 in the disclosure schedule (the “Parent Disclosure Schedule”) delivered herewith and dated as of the date hereof, as follows:

3.1 Authority Relative to this Agreement. Each of Parent and Sub has full corporate power and authority to execute and deliver this Agreement and the Ancillary Agreements to which it is a party, to perform its obligations hereunder and thereunder and to consummate the transactions contemplated hereby and thereby. Parent’s Board of Directors has unanimously approved this Agreement and the Ancillary Agreements to which the Parent is a party. The execution and delivery by each of Parent and Sub of this Agreement and the Ancillary Agreements to which it is a party and, the consummation by Parent and Sub of the transactions contemplated hereby and thereby and the performance by each of Parent and Sub of their respective obligations hereunder and thereunder have been duly and validly authorized by all necessary corporate action on the part of Parent and Sub and no further action is required on the part of Parent and Sub to authorize this Agreement or the Ancillary Agreements to which it is a party or the consummation of the transactions contemplated hereby or thereby. This Agreement and the Ancillary Agreements have been or will be, as applicable, duly and validly executed and delivered by Parent and Sub and, assuming the due authorization, execution and delivery hereof by the Company and/or the other parties thereto, each constitutes or will constitute, as applicable, a legal, valid and binding obligation of each of Parent and Sub enforceable against Parent and Sub in accordance with its respective terms, except as the enforceability thereof may be limited by bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium or other similar Laws relating to the enforcement of creditors’ rights generally and by general principles of equity.

3.2 Organization and Qualification. Each of Parent and Sub is a corporation duly organized, validly existing and in good standing under the Laws of the State of California. Each of Parent and Sub has full corporate power and authority to conduct its business as presently conducted and to own, use, license and lease its Assets and Properties. Each of Parent and Sub is duly qualified, licensed or admitted to do business and is in good standing in each jurisdiction in which the ownership, use, licensing or leasing of its Assets and Properties, or the conduct or nature of its business, makes such qualification, licensing or admission necessary, except for such failures to be so duly qualified, licensed or admitted and in good standing as would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect on Parent.

3.3 No Conflict. The execution and delivery of this Agreement or any of the Ancillary Documents to which the Parent or Sub is a party do not, and, the consummation of the transactions contemplated hereby 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 Conflict under (i) any provision of the articles of incorporation, as amended, and bylaws of Parent or Sub, (ii) any mortgage, indenture, lease, contract or other agreement or instrument, permit, concession, franchise or license to which Parent or any of its respective properties or assets are subject or (iii) any Legal Requirement

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applicable to Parent or Sub or their respective properties or assets, except in each case where such Conflict will not have a Material Adverse Effect or will not affect the legality, validity or enforceability of this Agreement.

3.4 Consents. No consent, waiver, Approval, order or authorization of, or registration, declaration or filing with, any Governmental Authority, or any third party is required by or with respect to Parent or Sub in connection with the execution and delivery of this Agreement and any Ancillary Agreements to which Parent or Sub is a party or the consummation of the transactions contemplated hereby and thereby, except for (i) such consents, waivers, Approvals, orders, authorizations, registrations, declarations and filings as may be required under applicable securities laws, (ii) such consents, waivers, Approvals, orders, authorizations, registrations, declarations and filings which, if not obtained or made, would not, individually or in the aggregate, have a Material Adverse Effect, and (iii) the filing of the California Agreement of Merger with the Secretary of State of the State of California.

3.5 Parent Capital Stock. The authorized capital stock of Parent consists of 400,000,000 shares of Parent Common Stock, of which 3,356,918 shares are issued and outstanding as of the date hereof, 300,000,000 shares of Parent Class A Senior Common Stock, of which 80,359,844 shares are issued and outstanding as of the date hereof, and 164,781,656 shares of Preferred Stock, $0.001 par value per share (the “Parent Preferred Stock”). The designation and status of the Parent Preferred Stock is as follows: (i) 15,360,000 shares are designated as Series A Preferred Stock, of which 7,680,000 shares are issued and outstanding as of the date hereof, (ii) 50,444,772 shares are designated as Series B Preferred Stock, of which 24,911,448 shares are issued and outstanding as of the date hereof, (iii) 9,148,604 shares are designated as Series C Preferred Stock, of which 2,624,796 shares are issued and outstanding as of the date hereof, (iv) 7,437,452 shares are designated as Series D Preferred Stock, none of which are issued and outstanding as of the date hereof, (v) 15,360,000 shares are designated as Series A-1 Preferred Stock, none of which are issued and outstanding as of the date hereof, (vi) 50,444,772 shares are designated as Series B-1 Preferred Stock, none of which are issued and outstanding as of the date hereof, (vii) 9,148,604 shares are designated as Series C-1 Preferred Stock, none of which are issued and outstanding as of the date hereof, (viii) 7,437,452 shares are designated as Series D-1 Preferred Stock, none of which are issued and outstanding as of the date hereof. All of the issued and outstanding shares of Parent Common Stock, Parent Class A Senior Common Stock and Parent Preferred Stock are duly authorized and validly issued, fully paid and nonassessable and have been issued in compliance with all applicable federal, state and foreign securities Laws. Parent has reserved an aggregate of 39,475,175 shares of Parent Class A Senior Common Stock for issuance to current and future directors, employees and consultants of Parent pursuant to Parent’s 1998 Stock Plan, 4,147,600 of which shares are subject to outstanding options, 82,022 of which shares are available for future issuance under the 1998 Stock Plan and 6,525,563 of which shares are available for grant under the 1998 Stock Plan and the 2003 Stock Plan. Parent has reserved an aggregate of 9,780,854 shares of Parent Class A Senior Common Stock for issuance to current and future directors, employees and consultants of Parent pursuant to Parent’s 2000 Stock Plan, 110,000 of which shares are subject to outstanding options and 0 of which shares are available for future issuance. Parent has reserved an aggregate of 4,808,300 shares of Parent Common Stock for issuance to current and future directors, employees and consultants of Parent pursuant to Parent’s

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2003 Stock Plan, 1,600,482 of which shares are subject to outstanding options and 900 of which shares are available for future issuance. Other than as described above, in Section 3.5 of the Parent Disclosure Schedule, and in the Investor Rights Agreement, there are no outstanding rights, options, warrants, preemptive rights, redemption rights, rights of first refusal or similar rights for the purchase or acquisition from Parent of any securities of Parent. There have been, and currently are, no adjustments made or required to be made to the conversion prices set forth in the Parent’s articles of incorporation as currently in effect.

3.6 Issuance of Parent Common Stock. .The shares of Parent Common Stock to be issued pursuant to the Merger, when issued in accordance with the terms of this Agreement, will be duly authorized, validly issued, fully paid, and non-assessable and, except as set forth in Section 3.6 of the Parent Disclosure Schedule, will be free of liens, charges, encumbrances and restrictions on transfer other than restrictions on transfer under this Agreement or the Ancillary Agreements and applicable state and federal securities laws and will be, subject to the truth and accuracy of the representations made by the Company in Section 2.3 and by the Company Shareholders in the Shareholder Certificate, issued in compliance with applicable federal and state securities laws. The shares of Parent Common Stock to be issued pursuant to the Merger are not subject to any preemptive rights or rights of first refusal or other similar rights that have not been effectively waived. The Parent Common Stock issuable upon exercise of the Company Options assumed by Parent pursuant to this Agreement has been duly and validly reserved and, when issued in compliance with the provisions of such assumed instruments and the articles of incorporation, as amended, of Parent, will be validly issued, fully paid and nonassessable, and, except as set forth in Section 3.6 of the Parent Disclosure Schedule, will be free of liens, charges, encumbrances and restrictions on transfer other than restrictions on transfer under this Agreement and applicable state and federal securities laws.

3.7 Parent Financial Statements. Parent has delivered to the Company (a) the audited consolidated balance sheets of the Parent as of December 31, 2001 and 2002, and the related audited statements of operations, changes in holders’ equity and cash flows, respectively, for the fiscal years ended December 31, 2000, 2001 and 2002 (the “Parent Annual Financial Statements”) and (b) the unaudited consolidated balance sheet of Parent as of February 28, 2003, and the related unaudited statement of operations for the two month period ended on such date (the “Parent Interim Financial Statements” and, together with Parent Annual Financial Statements, the “Parent Financials”). The Parent Financials (including the notes to the Parent Annual Financial Statements) have been prepared in accordance with GAAP applied on a consistent basis throughout the periods indicated therein and present fairly in all material respects the financial position and operating results of Parent as of the dates and during the periods indicated therein, subject (1) to adjustments in compensation expense required by the Securities and Exchange Commission in connection with equity compensation, (2) to adjustments resulting from changes in accounting standards and emerging interpretive guidance relating to standards of financial accounting and reporting, and (3) in the case of the Parent Interim Financial Statements, to normal quarter-end and year-end adjustments, and except that the Parent Interim Financial Statements may not contain footnotes. The Parent’s unaudited consolidated balance sheet as of February 28, 2003 is referred to herein as the “Parent Current Balance Sheet.”

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3.8 Absence of Certain Changes. Since the date of the Parent Current Balance Sheet, Parent has operated its business in the ordinary course consistent with past practice, and since such date there has not occurred with respect to Parent: (a) any change, event or condition that has resulted in a Material Adverse Effect; (b) any amendment or change in its articles of incorporation or bylaws; (c) any material change in accounting methods or practices; (d) any declaration, setting aside or payment of a dividend on, or the making of any other distribution in respect of, the capital stock of Parent, or any split, combination or recapitalization of the capital stock of Parent or any direct or indirect redemption, purchase or other acquisition of any capital stock of Parent or any change in any rights, preferences, privileges or restrictions on any outstanding security of Parent.

3.9 Dividends or Distributions. Parent has not declared or paid any dividends or authorized or made any distribution upon or with respect to any class or series of its capital stock.

3.10 Registration Rights. Except as provided in the Investor Rights Agreement, Parent is presently not obligated and has not granted any rights to register under the Securities Act or to register or qualify under any state securities any of its presently outstanding securities or any of its securities that may subsequently be issued.

3.11 Legal Proceedings. Except as set forth in Section 3.11 of the Parent Disclosure Schedule there are, and since the date of the Parent Current Balance Sheet, have been, no material Actions or Proceedings pending or, to the knowledge of the Parent, threatened against, relating to or affecting the Parent or any of its Assets and Properties and Parent has not received notice or otherwise has knowledge of any Orders outstanding against the Parent.

3.12 Employment Matters. Parent 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 and wages and hours, in each case, with respect to employees of the Parent in the jurisdictions where such employees are located. There are no pending material claims or actions against the Parent under any worker’s compensation policy or long-term disability policy.

3.13 Labor. No work stoppage or labor strike against Parent is pending, threatened or reasonably anticipated. Except as set forth in Section 3.13 of the Parent Disclosure Schedule, there are no material actions, suits, claims, labor disputes or grievances pending, or to the knowledge of the Parent threatened, or reasonably anticipated relating to any labor, safety or discrimination matters involving any employee of the Parent, including, without limitation, charges of unfair labor practices or discrimination complaints.

3.14 Patents and Trademarks. To Parent’s knowledge, Parent owns, or has the right to use (or will be able to obtain the right to use on reasonable commercial terms), all patents, trademarks, service marks, trade names, copyrights, licenses, trade secrets or other proprietary rights necessary to its business as now conducted and as proposed to be conducted without conflicting with or infringing upon the right or claimed right of any person under or with respect to the forgoing, except as would not have a Material Adverse Effect on Parent.

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3.15 Compliance with Other Instruments. Parent is not in violation or default of any provision of its articles of incorporation or bylaws, each as amended and in effect on and as of the date hereof. Parent is not in violation or default of any material provision of any instrument, mortgage, deed of trust, loan, contract, commitment, judgment, decree, order or obligation to which it is a party or by which it or any of its properties or assets are bound which would, individually or in the aggregate, be reasonably likely to result in a Material Adverse Effect or of any provision of any federal, state or, to its knowledge, local statute, rule or governmental regulation which would, individually or in the aggregate, be reasonably likely to result in a Material Adverse Effect. The execution, delivery and performance of and compliance with this Agreement and the Ancillary Agreements to which the Parent is a party, and the exchange and delivery of the Merger Consideration will not result in any such violation, be in Conflict with or constitute, with or without the passage of time or giving of notice, a default under any such provision, require any consent or waiver under any such provision (other than any consents or waivers that have been obtained), or result in the creation of any mortgage, pledge, lien, encumbrance or charge upon any of the Assets and Properties of Parent pursuant to any such provision.

3.16 Title to Property and Assets. Parent owns its Assets and Property free and clear of all mortgages, liens, loans and encumbrances, except such encumbrances and liens which arise in the ordinary course of business and do not materially impair Parent’s ownership or use of such Assets and Property. With respect to the Assets and Property it leases, Parent is in compliance with such leases in all material respects and, to its knowledge, holds a valid leasehold interest free of any liens, claims or encumbrances.

3.17 Organizational Documents. Parent has delivered to the Company or its counsel true, correct and complete copies of Parent’s articles of incorporation and bylaws, as amended, and in effect through the Closing.

3.18 Disclosure. The representations and warranties of the Parent and Sub contained in this Agreement, together with the Parent Disclosure Schedule and any certificate furnished to Company pursuant to any provision of this Agreement do not contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. Parent has not failed to disclose to the Company any fact or circumstances that would reasonably be expected to have a Material Adverse Effect on Parent.

3.19 Brokers. Parent has not incurred, nor will it incur, directly or indirectly, any liability for brokerage or finders’ fees or agents’ commissions or any similar charges in connection with the Agreement or any transaction contemplated hereby.

3.20 Tax Returns, Payments and Elections. The provisions for Taxes of Parent as shown in the Parent Financials are adequate in all material respects for Taxes due or accrued as of the date hereof. Since the date of the Parent Interim Financial Statements, Parent has not incurred any material Taxes, assessments or governmental charges other than in the ordinary course of business and Parent has made adequate provisions on its books of account for all material Taxes, assessments and governmental charges with respect to its business, properties and operations for such period.

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3.21 Information Statement. The information supplied by Parent in writing for inclusion in the Information Statement shall not, on the date the Information Statement is first mailed to the Company’s shareholders, at the time of the Company Shareholder Action or at the Effective Time, contain any statement which, at such time, is false or misleading with respect to any material fact, or omit to state any material fact necessary in order to make the statements made therein, in light of the circumstances under which they are made, not false or misleading, or omit to state any material fact necessary to correct any statement based on information provided in writing by Parent for inclusion in any earlier communication with respect to the solicitation of proxies or written consents for the Company Shareholder Action which has become false or misleading.

ARTICLE 4

CONDUCT PRIOR TO THE EFFECTIVE TIME

4.1 Conduct of Business of the Company. During the period from the date of this Agreement and continuing until the earlier to occur of the termination of this Agreement pursuant to Article 8 hereof and the Effective Time, the Company agrees (unless the Company is required to take such action pursuant to this Agreement or Parent shall give its prior consent in writing), subject to the prohibitions set forth in this Section 4.1 and in Section 4.2, to carry on its business in the usual, regular and ordinary course consistent with past practice, to pay its Liabilities, Taxes and other obligations consistent with its past practices (and in any event when due), and, to the extent consistent with such business, to preserve intact its present business organization, keep available the services of its present officers and key employees and preserve its relationships with customers, suppliers, distributors, licensees, independent contractors and other Persons having business dealings with it, all with the express purpose and intent of preserving unimpaired its goodwill and ongoing businesses at the Effective Time. Except as expressly contemplated by this Agreement, the Company shall not, without the prior written consent of Parent, take or agree in writing or otherwise to take, any action that would result in the occurrence of any of the changes described in Section 2.10 or any other action that would make any of its representations or warranties contained in this Agreement untrue or incorrect in any material respect (individually or in the aggregate) or prevent the Company from performing or cause it not to perform its agreements and covenants hereunder or cause any condition to Parent’s closing obligations in Section 6.1 and Section 6.3 not to be satisfied. Without limiting the generality of the foregoing, during the period from the date of this Agreement until the earlier to occur of the termination of this Agreement pursuant to Article 8 hereof, or the Effective Time, the Company shall not, except as set forth in Section 4.1 of the Company Disclosure Schedule, cause or permit any of the following, without the prior written consent of Parent:

(a) Stock Option Plans: accelerate, amend or change the period of exercisability or vesting of Options or other rights granted under its stock plans or otherwise, authorize cash payments in exchange for any Options or other rights granted under any of such plans, grant any additional Options or waive any repurchase rights with respect to any Company Restricted Stock;

(b) Intellectual Property: (i) sell, license or transfer to any person or entity any rights to any Company Intellectual Property or enter into any Contract with respect to any Company

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Intellectual Property with any person or entity; provided, that on and after April 23, 2003, the Company may enter into non-exclusive licenses of Company Intellectual Property with licensees other than Overture (A) in the ordinary course of the Company’s business consistent with past practice and (B) outside of the ordinary course of the Company’s business consistent with past practice with the prior written consent of Parent, which consent shall not be unreasonably withheld or delayed), (ii) buy or license any Intellectual Property or enter into any agreement with respect to the Intellectual Property of any person or entity, other than with respect to off-the-shelf software pursuant to “shrink wrap” or “click wrap” license agreements, (iii) enter into any agreement with respect to the development of any Intellectual Property with a third party, or (iv) change pricing or royalties charged by the Company to its customers or licensees, or agree to any change in the pricing or royalties set or charged by persons who have licensed Intellectual Property to the Company;

(c) Technology Rights: enter into or amend any Contract, commitment or transaction pursuant to which any other party is granted marketing, distribution, development or other similar rights of any type or scope with respect to any of products or technology of the Company;

(d) Contracts: amend or otherwise modify (or agree to do so), or violate the terms of, any of the Contracts set forth or described in the Company Disclosure Schedule;

(e) Company Capital Stock: 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 split, combine or reclassify any Company Capital Stock or issue or authorize the issuance of any other securities in respect of, in lieu of or in substitution for shares of Company Capital Stock, or repurchase, redeem or otherwise acquire, directly or indirectly, any shares of Company Capital Stock (or options, warrants or other rights exercisable therefor);

(f) Issuances of Company Capital Stock: 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 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, except for issuances of Company Common Stock pursuant to exercises of Company Options or Company Warrants disclosed in Section 2.3(c) of the Company Disclosure Schedule and the conversion of the Company Preferred Stock disclosed in Section 2.3(a) of the Company Disclosure Schedule;

(g) Amendments to Articles: cause or permit any amendments to the Company’s articles of incorporation or bylaws;

(h) Dispositions: sell, lease, license or otherwise dispose of or encumber any Assets or Property of the Company, except for Assets or Property that are not Company Intellectual Property in the ordinary course of business consistent with past practice; provided, that on and after April 23, 2003, the Company may enter into non-exclusive licenses of Company Intellectual Property with licensees other than Overture (A) in the ordinary course of the Company’s business consistent with past practice and (B) outside of the ordinary course of the Company’s business

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consistent with past practice with the prior written consent of Parent, which consent shall not be unreasonably withheld or delayed;

(i) Indebtedness: incur any indebtedness for borrowed money or guarantee any such indebtedness, issue or sell any debt securities or options, warrants, calls or other rights to acquire any debt securities of Company or guarantee any debt securities of others, enter into any “keep well” or other agreement to maintain any financial statement condition, or enter into any arrangement having the economic effect of any of the foregoing other than in connection with the financing of ordinary course trade payables and capital equipment leases consistent with past practice;

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

(k) Payment of Obligations: pay, discharge or satisfy any claim or Liability arising other than in the ordinary course of business, other than the payment, discharge or satisfaction of Liabilities reflected or reserved against in the Company Financials or incurred since the date of the Current Balance Sheet in the ordinary course of business and reasonable expenses incurred in connection with the transactions contemplated by this Agreement;

(l) Expenditures: make any expenditures or enter into any commitment or transaction exceeding $25,000 individually or $50,000 in the aggregate;

(m) Insurance: reduce the amount of any insurance coverage provided by existing insurance policies;

(n) Employees: hire or terminate any Employees, or encourage any Employees to resign from the Company, other than Non-Continuing Employees;

(o) Severance Arrangements: grant or increase or modify in favor of any Employee any severance or termination pay to any Employee except payments made pursuant to standard written agreements or plans outstanding on the date hereof and disclosed in the Company Disclosure Schedule;

(p) Employee Contracts: enter into or amend any Contract with any officer, director or employee of the Company;

(q) Employee Plans: adopt or amend any Employee Plan, enter into any employment Contract, pay or agree to pay any special bonus or special remuneration to any director, officer or Employee, or increase the salaries, wage rates, or other compensation of its Employees except payments made pursuant to standard written agreements in place on the date hereof and disclosed in the Company Disclosure Schedule;

(r) Litigation: commence or settle any litigation (other than a lawsuit for breach of this Agreement);

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(s) Taxes: 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 or compromise any claim or assessment in respect of Taxes, or consent to any extension or waiver of the limitation period applicable to any claim or assessment in respect of Taxes;

(t) Acquisitions: 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 which are material, individually or in the aggregate, to the Company’s business;

(u) Revaluation: revalue any of its assets, including, without limitation, writing down the value of inventory or writing off notes or accounts receivable; or

(v) Other: take or agree in writing or otherwise to take, any of the actions described in Section 4.1(a) through Section 4.1(u) above, or any other action that would prevent the Company from performing, or cause the Company not to perform, its covenants and agreements hereunder.

4.2 No Solicitation. Until the earlier of (i) the Effective Time, or (ii) the date of termination of this Agreement pursuant to the provisions of Section 8.1 hereof, the Company shall not, nor shall the Company permit any of its directors, employees, shareholders, agents, representatives or Affiliates to (and the Company shall instruct them not to), directly or indirectly, take any of the following actions with any party other than Parent and its designees: (a) solicit, encourage, initiate or participate in any inquiry, negotiations or discussions with respect to any Acquisition Proposal (provided that this subsection (a) shall not, by its reference to the defined term “Acquisition Proposal”, and such term’s reference to subsection (i) of the defined term “Competing Transaction,” prohibit discussions and negotiations with existing or potential customers, other than Overture, regarding commercial services relationships in the ordinary course of business), (b) disclose any material non-public information to any Person concerning the Company’s business, technologies or properties, or afford to any Person or entity access to its properties, technologies, books or records, not customarily afforded to new non-strategic customers in the ordinary course of business, (c) assist or cooperate with any Person to make any Acquisition Proposal, (d) enter into any Contract with any Person other than de minimus Contracts in the ordinary course of business, or (e) effect any Competing Transaction; provided, however, that (d) and (e) shall not prohibit the Company from, on and after April 23, 2003, entering into non-exclusive licenses of Company Intellectual Property with licensees other than Overture (A) in the ordinary course of the Company’s business consistent with past practice and (B) outside of the ordinary course of the Company’s business consistent with past practice with the prior written consent of Parent, which consent shall not be unreasonably withheld or delayed). In the event that the Company or any of the Company’s Affiliates shall receive, prior to the earlier of the Effective Time or the termination of this Agreement pursuant to Article 8 hereof, any Acquisition Proposal, or request, directly or indirectly, of the type referenced in clause (a) or (c) above, or any request for disclosure or access pursuant to clause (b) above, the Company shall immediately notify Parent thereof, including information as to

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the identity of the offeror or the party making any such Acquisition Proposal and the specific terms of such Acquisition Proposal or request, as the case may be, and such other information related thereto as Parent may reasonably request. The parties hereto agree that irreparable damage would occur in the event that the provisions of this Section 4.2 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 seek an injunction or injunctions to prevent breaches of the provisions of this Section 4.2 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.

ARTICLE 5

ADDITIONAL AGREEMENTS

5.1 Shareholder Approval.

(a) The Company shall submit this Agreement, the California Agreement of Merger and the transactions contemplated hereby to its shareholders for approval and adoption as provided by California Law and the articles of incorporation and bylaws of the Company within five days of the date hereof. Such submission, and any proxy or consent in connection therewith, (i) shall include a solicitation of the approval of the holders of Company Common Stock, the Company Preferred Stock and the Series B Preferred Stock of the Company, each voting separately as a class and (ii) shall specify that adoption of this Agreement and approval of the Merger shall constitute approval by the Company Shareholders of: (A) the escrow and indemnification obligations of the Company Shareholders set forth in Article 7 hereof and the deposit of the Merger Consideration equal to the Escrow Amount into the Escrow Fund and (B) in favor of the appointment of Jordan Libit as Securityholder Agent, under and as defined in this Agreement. The Company shall use its commercially reasonable efforts to obtain the consent of the Company Shareholders sufficient to (i) approve the Merger, this Agreement and the transactions contemplated hereby, (ii) constitute a majority of the outstanding shares of Company Common Stock and Company Preferred Stock, voting together, (iii) constitute a majority of the outstanding shares of Company Common Stock, (iv) constitute at least a majority of the outstanding shares of Company Preferred Stock, (v) constitute at least a majority of the outstanding shares of Series B Preferred Stock of the Company and (vi) enable the Closing to occur as promptly as practicable. In addition, the Company shall (i) promptly submit for approval by the Company Shareholders by the requisite vote (and in a manner satisfactory to Parent) any payments of cash or stock contemplated by this Agreement that Parent determines may constitute “parachute payments” pursuant to Section 280G of the Code, such that all such payments resulting from the transactions contemplated hereby shall not be deemed to be “parachute payments” pursuant to Section 280G of the Code or shall be exempt from such treatment under such Section 280G, or (ii) deliver to Parent evidence satisfactory to Parent that a Company Shareholder vote was held in conformance with Section 280G and the regulations thereunder, or that such requisite Shareholder approval has not been obtained with respect to any payment of cash or stock that may be deemed to constitute a “parachute payment” within the meaning of Section 280G of the Code and, as a consequence, that such “parachute payment” shall not be made or provided. The Company shall deliver to Parent, concurrently with the execution of this Agreement, executed

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Voting Agreements from holders with beneficial ownership of at least (i) a majority of the outstanding shares of Company Preferred Stock, (ii) a majority of the outstanding shares of Series B Preferred Stock of the Company and (iii) 90% of the outstanding shares of Company Common Stock, each as of the date hereof.

(b) Each of Parent and the Company agrees to provide promptly to the other such information concerning its business and affairs as may be required or appropriate in the disclosure materials submitted to the Company Shareholders (the “Soliciting Materials”) and to cause its representatives to cooperate with the other’s representatives in the preparation of the Soliciting Materials. The Soliciting Materials submitted to the Company Shareholders shall be subject to the review and approval by Parent (and include information regarding the Company, the terms of the Merger and this Agreement and the recommendation of the Board of Directors of the Company in favor of the Merger and this Agreement, and the transactions contemplated hereby). The Company warrants that none of the information contained in any documents mailed or delivered to the Company Shareholders in connection with soliciting their consent to this Agreement or the Merger, including the Soliciting Materials, will contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they are made, not misleading. Notwithstanding the foregoing, the Company makes no representation or warranty with respect to any information supplied by Parent in writing specifically for inclusion or incorporation by reference in any of the Soliciting Materials. Parent warrants that none of the information supplied by Parent in writing for inclusion in any documents mailed or delivered to the Company Shareholders in connection with soliciting their consent to this Agreement and the Merger, including the Soliciting Materials, will contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they are made, not misleading. The Company shall promptly advise Parent, and Parent shall promptly advise the Company, in writing, if at any time prior to the Effective Time either the Company or Parent shall obtain knowledge of any facts that would make it necessary or appropriate to amend or supplement the Soliciting Materials in order to make the statements contained or incorporated by reference therein not misleading or to comply with applicable Law.

(c) The Company agrees to arrange for, at Parent’s expense (not to exceed $20,000), a Purchaser Representative who shall have such knowledge and experience in financial and business matters that the Purchaser Representative is capable of evaluating the merits and risks of an investment in the Parent Common Stock, and who shall otherwise satisfy the requirements of Rule 501(h) under the Securities Act, to act as “purchaser representative” within the meaning of Rule 501(h) under the Securities Act and as “professional advisor” (as such term is defined in Regulation 260.102.12(g) promulgated by the Commissioner of Corporations of the State of California under the California Corporate Securities Law of 1968, as amended (the “California Securities Act”), for certain of the Company Shareholders in connection with the Merger. The Purchaser Representative shall be available at reasonable times to meet with Company Shareholders to discuss with them the merits and risks of the investment in Parent Common Stock pursuant to the Merger.

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5.2 Restricted Shares; Shareholders’ Representations Regarding Securities Law Matters; Lockup.

(a) The parties hereto acknowledge and agree that the shares of Parent Common Stock issuable to the Company Shareholders pursuant to Section 1.6 hereof shall constitute “restricted securities” within the meaning of Rule 144 of the Securities Act and will be issued in a private placement transaction in compliance with Section 4(2) of the Securities Act and Regulation D promulgated thereunder. The certificates evidencing the shares of Parent Common Stock to be issued in the Merger shall bear appropriate legends to identify such privately placed shares as being “restricted securities” under the Securities Act, to comply with state and federal securities laws and, if applicable, to notice the restrictions on transfer of such shares.

(b) Each shareholder of the Company, by virtue of the Merger and the conversion into Parent Common Stock of the Company Capital Stock held by such shareholder, shall be bound by the following provisions:

(i) Such shareholder will not offer, sell, transfer or otherwise dispose of any shares of Parent Common Stock unless (A) such sale, transfer or other disposition is within the limitations of and in compliance with the Securities Act and the rules and regulations thereunder, including without limitation Rule 144 promulgated by the SEC under the Securities Act, and the shareholder furnishes Parent with reasonable proof of compliance with such Rule, (B) in the opinion of counsel, reasonably satisfactory to Parent and its counsel, some other exemption from registration under the Securities Act is available with respect to any such proposed sale, transfer, or other disposition of Parent Common Stock, or (C) the offer and sale of Parent Common Stock is registered under the Securities Act. Notwithstanding the foregoing, no such registration statement or opinion of counsel shall be necessary for the following transfers for no consideration (1) a transfer by a shareholder that is a partnership or limited liability company to a partner of such partnership or a member of such limited liability company or a retired partner of such partnership who retires after the date hereof or a retired member of such limited liability company who retires after the date hereof, or to the estate of any such partner, retired partner, member or retired member; (2) a transfer by a corporation to its subsidiaries or stock holders; or (3) the transfer by gift, will or intestate succession by any shareholder or any partner or member (current or retired) of a shareholder to his or her spouse or to the siblings, lineal descendants or ancestors of such shareholder, partner or member (current or retired) or his or her spouse, if the transferee agrees in writing to be subject to the terms hereof.

(ii) Provided that each officer and director of Parent who owns stock or options to purchase stock of Parent and all one-percent security holders and all other persons with registration rights also agrees to such restrictions, each Company Shareholder agrees that, if, in connection with the public offering of Parent’s securities, Parent or the underwriters managing the offering so request, the Company Shareholder shall not sell, make any short sale of, loan, grant any option for the purchase of, or otherwise dispose of any securities of Parent (other than those included in the registration) without the prior written consent of Parent or such underwriters, as the case may be, for (i) 180 days from the effective date of such registration in the case of Parent’s initial public

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offering and (ii) 90 days from the effective date of such registration in the case of any other public offering of the Parent’s securities. This Section 5.2(b)(iii) shall be binding on all transferees or assignees of Parent Common Stock issued to each Company Shareholder in the Merger. Common Stock issued to each Company Shareholder in the Merger.

5.3 [Reserved].

5.4 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 earlier of (a) the Effective Time and (b) the termination of this Agreement pursuant to Article 8 hereof, to (i) all of the Company’s properties, books, contracts, commitments and records, including the Company’s source code, (ii) all other information concerning the business, properties and personnel (subject to restrictions imposed by applicable law) of the Company as Parent may reasonably request, and (iii) all Employees of the Company 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 reasonable request. No information or knowledge obtained in any investigation pursuant to this Section 5.4 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.

5.5 Confidentiality. The parties acknowledge that Parent and the Company have previously executed a non-disclosure agreement dated February 28, 2003 (the “Confidentiality Agreement”), which Confidentiality Agreement shall continue in full force and effect in accordance with its terms.

5.6 Expenses; Severance Payments. Whether or not the Merger is consummated, all fees and expenses incurred in connection with the Merger including, without limitation, all legal, accounting, financial advisory, consulting and all other fees and expenses of third parties (“Third Party Expenses”) incurred by a party in connection with the negotiation and effectuation of the terms and conditions of this Agreement and the transactions contemplated hereby, shall be the obligation of the respective party incurring such fees and expenses, except with respect to Excess Legal Expenses which shall be governed by Section 7.2. The fees of Pillsbury Winthrop LLP, counsel to the Company, incurred in connection the negotiation and effectuation of the terms and conditions of this Agreement and the transactions contemplated hereby shall be paid by the Company at the Closing (which payment shall in no way be in derogation of the rights of Parent to recover Excess Legal Expenses pursuant to Section 7.2). The Company shall provide to Parent, at least one (1) business day prior to the Closing Date, with a statement of Third Party Expenses incurred by the Company in form reasonably satisfactory to the Parent (the “Statement of Expenses”). The Company shall also include in the Statement of Expenses an accounting of (A) all severance payments paid out to employees, consultants or directors of the Company during the period beginning on March 28, 2003 and ending immediately prior to the Effective Time, (B) all existing

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obligations entered into or otherwise agreed to by the Company or Company management with respect to severance arrangements with employees, consultants or directors of the Company, and (C) a good faith estimate by the Company of commissions owed by the Company to its employees, agents and consultants ((A), (B) and (C) collectively, the “Severance Payments and Obligations,” and (C) individually, the “Estimated Commissions”).

5.7 Public Disclosure. Neither the Company nor any officer, director, employee or agent of the Company (and the Company shall cause each of them to be aware of and comply with this prohibition) shall issue any statement or communication to any third party (other than their respective representatives or agents) 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 other party, which consent shall not be unreasonably withheld.

5.8 Consents. The Company shall use commercially reasonable efforts to obtain the consents, waivers and Approvals under any of the Contracts to which the Company is a party deemed appropriate or necessary by any party in connection with the Merger, including all consents, waivers and Approvals set forth in the Company Disclosure Schedule, so as to preserve all rights of, and benefits to, the Company thereunder from and after the Effective Time.

5.9 FIRPTA Compliance. On or prior to the Closing Date, the Company shall deliver to Parent a properly executed statement in a form reasonably acceptable to Parent for purposes of satisfying Parent’s obligations under Treasury Regulation Section 1.1445-2(c)(3).

5.10 Reasonable Efforts.

(a) 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, all actions, and to do promptly, or cause to be done, all things necessary, proper or advisable under applicable Legal Requirements to consummate and make effective the transactions contemplated hereby, to obtain all necessary waivers, consents and approvals 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, including, without limitation, the following: (a) the taking of all acts necessary to cause the conditions precedent set forth in Section 6.3 to be satisfied (other than obtaining consents, approvals or waivers which are governed by Section 5.7), (b) the defending of any suits, claims, actions, investigations or proceedings, whether judicial or administrative, challenging this Agreement or the consummation of the transactions contemplated hereby, including seeking to have any stay or temporary restraining order entered by any court or other Governmental Authority vacated or reversed and (c) the execution or delivery of any additional instruments necessary to consummate the transactions contemplated by, and to fully carry out the purposes of, this Agreement.

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(b) Subject to the terms and conditions provided in this Agreement, each of Parent, Sub and the Company will take all reasonable actions necessary to comply promptly with all legal requirements which may be imposed on such party with respect to the Merger and will promptly cooperate with and furnish information to any other party hereto in connection with any such requirements imposed upon such other party in connection with the Merger. Each party will take all reasonable actions to obtain (and will cooperate with the other parties in obtaining) any consent, authorization, order or approval of or any registration, declaration or filing with, or an exemption by, any Governmental Authority required to be obtained or made by such party or its subsidiaries in connection with the Merger or the taking of any action contemplated thereby or by this Agreement; provided, however, that Parent shall not be required to agree to any divestiture by Parent or the Company or any of Parent’s subsidiaries or affiliates of shares of capital stock or of any business, Assets or Property of Parent or its subsidiaries or affiliates or of the Company or its affiliates or the imposition of any material limitation on the ability of any of them to conduct their businesses or to own or exercise control of such assets, properties and stock.

5.11 Notification of Certain Matters. The Company shall give prompt notice to Parent, and Parent shall give prompt notice to the Company, of (a) the occurrence or non-occurrence of any event, the occurrence or non-occurrence of which is reasonably likely to cause any representation or warranty of the Company or Parent, respectively, contained in this Agreement to be untrue or inaccurate at or prior to the Effective Time, and (b) any failure of the Company or Parent, as the case may be, to comply with or satisfy any covenant, condition or agreement to be complied with or satisfied by it hereunder; provided, however, that the delivery of any notice pursuant to this Section 5.11 shall not limit or otherwise affect any remedies available to the Parent or the Company. No disclosure by the Company pursuant to this Section 5.11 shall be deemed to amend or supplement the Company Disclosure Schedule, or prevent or cure and misrepresentations, breach of warranty or breach of covenant. No disclosure by Parent pursuant to this Section 5.11 shall be deemed to amend or supplement Parent Disclosure Schedule, or prevent or cure and misrepresentations, breach of warranty or breach of covenant.

5.12 Additional Documents and Further Assurances; Cooperation. Each party hereto, at the reasonable request of the other party hereto, shall execute and deliver such other instruments and do and perform such other acts and things (including all action reasonably necessary to seek and obtain any and all consents, waivers and Approvals of any Governmental Authority or Person required in connection with the Merger) as may be necessary or desirable for effecting completely the consummation of the transactions contemplated by this Agreement. Each party agrees to use commercially reasonable efforts to cause the conditions set forth in Article 6 to be satisfied, where the satisfaction of such conditions depends on action or forbearance from action by such party, as soon as practicable following the date hereof.

5.13 Employee Matters. Each person who shall continue as an employee of the Surviving Corporation after the Effective Time shall, after the Effective Time, be an at-will employee of Parent or Surviving Corporation to the extent permitted by applicable Law (a “Continuing Employee”); provided that each employee employed in the United States shall provide proof of the right to work in the United States. Each Continuing Employee shall be eligible to receive benefits (such as

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medical benefits, bonuses and 401(k)) maintained for employees of Parent consistent with Parent’s employment policies. To the extent permitted by law and applicable tax qualification requirements and subject to any generally applicable break in service or similar rule, each Continuing Employee shall be given credit, for the purpose of any service requirements for participation eligibility, or vesting, for his or her period of continuous coverage under comparable Company benefit plans prior to the Effective Time to the extent permitted by Parent’s benefit programs and consistent with Parent’s employee benefit plans. No Continuing Employee, or any or his or her eligible dependents, who, at the Effective Time, are participating in a Company group health plan shall be excluded from Parent’s group plan, or limited in coverage thereunder, by reason of any waiting period restriction or preexisting condition limitation to the extent permitted by Parent’s employee benefit plans and the insurance carrier or provider. To the extent consistent with law and applicable tax qualification requirements, Parent shall use its commercially reasonable efforts to ensure that each Continuing Employee shall receive credit under the Parent group health plan in which the Continuing Employee participates (for the purpose of any annual out-of-pocket limitations) for any deductibles or co-payments that such individual has paid or has been charged with under any Company group health plan during the calendar year in effect at the Effective Time to the extent consistent with the applicable policies of the insurance carrier or other provider. In furtherance of the foregoing, the Company shall terminate all employment agreements and other arrangements with its employees effective as of the Effective Time. Notwithstanding any of the foregoing to the contrary, none of the provisions contained herein shall operate to duplicate any benefit provided to any employee of the Company or the funding of any such benefit. The Company shall obtain a written release of claims against the Company in the form attached hereto as Exhibit F from each of the terminated employees and all Indemnifying Officers as well as any other officers and directors of the Company as to all claims arising on or before the Closing Date.

5.14 New Employment Arrangements. On or before the date hereof, Gil Elbaz and Adam Weissman shall deliver executed offer letters, based on Parent’s standard form (each, an “Offer Letter”), which Offer Letters shall be effective as of the Closing Date. Such Offer Letters will set forth “at-will” employment arrangements which will (i) be subject to and in compliance with Parent’s standard human resources policies and procedures, (ii) have terms, including the position, salary and responsibilities of such employee, which will be determined by Parent after consultation with the Company’s management, and (iii) supersede any prior employment agreements and other arrangements with such employee in effect prior to the Closing Date.

5.15 Non-Competition Agreements. On or before the date hereof, Gil Elbaz and Adam Weissman shall deliver executed Non-Competition Agreements, each effective as of the Closing Date.

5.16 Investor Representation Statement. The Company shall use its reasonable best efforts to secure, prior to the Closing, from each shareholder of the Company, an executed Shareholder Certificate.

5.17 Indemnification. From and after the Effective Time and until that date which is six (6) years after the Effective Time, the Surviving Corporation shall, or, to the extent that Surviving

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Corporation is unable to Parent shall, fulfill and honor in all respects the indemnification obligations of the Company to its directors and officers pursuant to its articles of incorporation and bylaws as in effect as of March 28, 2003 and pursuant to any indemnification agreements entered into on or before March 28, 2003 and in effect as of immediately prior to the Effective Time between the Company and its officers and directors, listed in Section 5.17 of the Company Disclosure Schedule, and an executed copy of which has been delivered by the Company to the Parent; provided, however, that the obligations of Parent and the Surviving Corporation pursuant to this Section 5.17 (i) shall not apply to any action, suit, proceeding, complaint, claim or demand by Parent, whether such claim is brought pursuant to this Agreement, applicable law or otherwise, (ii) shall not apply to any liabilities that result from actions, events or circumstances that would constitute a breach by the Company of any of its representations, warranties or covenants in this Agreement, any Ancillary Agreement or any document or instrument delivered hereunder, and (iii) shall not be deemed to release any officer or director from his or her indemnity obligations under Article 7 hereof.

5.18 Termination of Company Employee Plans.

(a) Effective no later than the day immediately preceding the Effective Time, the Company and its Affiliates, as applicable, shall each terminate any and all group severance, separation or salary continuation plans, programs or arrangements and any and all plans intended to include a Code Section 401(k) arrangement (unless Parent provides written notice to the Company that such plans shall not be terminated) (collectively, “Company Employee Plans”). Unless Parent provides such written notice to the Company no later than three (3) Business Days prior to the Effective Time, the Company shall provide Parent with evidence that such Company Employee Plan(s) have been terminated (effective as of the day immediately preceding the Effective Time) pursuant to resolutions of the Company’s Board of Directors. The form and substance of such resolutions shall be subject to prior 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.

(b) In the event that the distribution or rollover of assets from the trust of the Company Employee Plan that is terminated is reasonably anticipated to trigger liquidation charges, surrender charges or other fees to be imposed upon the account of any participant or beneficiary of such terminated Company Employee Plan or upon the Company or plan sponsor, then 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 at least five (5) days prior to the Effective Time.

5.19 Closing Cash Statement. The Company shall prepare and deliver to Parent, at least one (1) Business Day prior to the Closing, a statement (the “Closing Cash Statement”), reasonably acceptable to Parent, which states the amount of cash and cash equivalents (within the meanings of such terms under GAAP) of the Company as of that date.

5.20 Assignment by Founders. The Company shall have entered into an intellectual property assignment agreement with each of Gil Elbaz and Adam Weissman in form reasonably satisfactory to Parent, which shall provide for the assignment to the Company by Gil Elbaz and Adam Weissman of all Intellectual Property developed by them before they became employees of

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the Company which relates to the current or proposed business of the Company or is used in connection with the Company Products.

5.21 Waiver of Participation and Anti-Dilution Rights. Parent shall exercise commercially reasonable efforts to take, or cause to be taken, all actions necessary to ensure that all existing shareholders of Parent have waived any and all participation rights and anti-dilution protection they may have which are applicable to the Merger or the transactions contemplated thereby.

5.22 Conversion of Series A Preferred. The Company shall exercise its commercially reasonable efforts to cause all outstanding shares of Company Series A Preferred Stock to convert into shares of Company Common Stock prior to the Closing pursuant to the terms of the Company’s Articles of Incorporation.

5.23 Releases. The Company shall exercise its commercially reasonable efforts to cause each of the individuals listed on Schedule 6.3(r) of the Company Disclosure Schedule, and any employee whose employment is terminated prior to the Closing Date to execute and deliver to the Company a release in the form attached hereto as Exhibit F.

5.24 Options. Conditioned on the occurrence of the Closing and on the acceptance of all employment offers that Parent will be granting to employees of the Company at the Closing, Parent agrees that, at the next Board of Directors action pursuant to which Parent grants options, Parent will grant up to an aggregate of 248,000 options to employees of the Company; provided that the portion of such options allocated for grant to any individual employee of the Company will not be reallocated to other employees if such employee does not accept Parent’s employment offer.

ARTICLE 6

CONDITIONS TO THE MERGER

6.1 Conditions to Obligations of Each Party to Effect the Merger. The respective obligations of the Company and Parent to effect the Merger shall be subject to the satisfaction at or prior to the Closing of the following conditions:

(a) No Order. No Governmental Authority shall have enacted, issued, promulgated, enforced or entered any statute, rule, regulation, executive order, decree, injunction or other order (whether temporary, preliminary or permanent) which is in effect and which has the effect of making the Merger illegal or otherwise prohibiting consummation of the Merger.

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

(c) Company Shareholder Approval. Company Shareholders holding at least a sufficient number of shares of Company Capital Stock as required under the Company’s articles of

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incorporation and California Law shall have approved this Agreement, the California Agreement of Merger, the Merger and the transactions contemplated hereby and thereby, in each case without regard to any proxies granted or voting agreements entered into by such parties prior to the Closing Date.

6.2 Additional Conditions to Obligations of the Company. The obligations of the Company to consummate the Merger and the transactions contemplated by this Agreement shall be subject to the satisfaction at or prior to the Closing of each of the following conditions, any of which may be waived, in writing, exclusively by the Company:

(a) Representations and Warranties. The representations and warranties of Parent and Sub contained in this Agreement that are qualified by “materiality” or “material adverse change” or contain other materiality exceptions or qualifications shall be accurate in all respects, and the representations and warranties of Parent and Sub contained in this Agreement that are not so qualified shall be accurate in all material respects, in each case as of the date of this Agreement and as of the Closing Date (other than representations and warranties which by their express terms are made solely as of a specified earlier date, which shall be accurate to such extent as of such specified earlier date). Company shall have received a certificate to such effect signed on behalf of Parent by a duly authorized officer of Parent.

(b) Performance. Each of Parent and Sub shall have performed and complied in all material respects with each agreement, covenant and obligation required by this Agreement to be so performed or complied with by it at or before the Closing. Company shall have received a certificate to such effect signed on behalf of Parent by a duly authorized officer of Parent.

(c) Legal Opinion. The Company shall have received a legal opinion from Wilson Sonsini Goodrich & Rosati, a Professional Corporation, counsel to Parent, as to the matters set forth in Exhibit G.

(d) Anti-Dilution and Participation Waivers. Any participation rights and anti-dilution protection benefiting Parent’s shareholders that are applicable to or triggered by the Merger shall have been effectively waived.

6.3 Additional Conditions to the Obligations of Parent and Sub. The obligations of Parent and Sub to consummate the Merger and the transaction contemplated by this Agreement shall be subject to the satisfaction at or prior to the Closing of each of the following conditions, any of which may be waived, in writing, exclusively by Parent:

(a) Representations and Warranties. The representations and warranties of the Company contained in this Agreement that are qualified by “materiality” or “material adverse change” or contain other materiality exceptions or qualifications shall be accurate in all respects, and the representations and warranties of the Company contained in this Agreement that are not so qualified shall be accurate in all material respects, in each case as of the date of this Agreement and as of the Closing Date (other than representations and warranties which by their express terms are made solely as of a specified earlier date, which shall be accurate to such extent as of such specified

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earlier date). Parent shall have received a certificate to such effect signed on behalf of Company by a duly authorized officer of Company.

(b) Company Shareholder Approval.

(i) Shareholders of the Company holding at least ninety percent (90%) of the Company Capital Stock shall have approved this Agreement, the California Agreement of Merger, the Merger and the transactions contemplated hereby and thereby, in each case without regard to any proxies granted or voting agreements entered into by such parties prior to the Closing Date.

(ii) Any agreements, contracts or arrangements that may result, separately or in the aggregate, in the payment of any amount or the provision of any benefit that would not be deductible by reason of Section 280G of the Code shall have been approved by such number of shareholders of Company as is required by the terms of Section 280G(b)(5)(B) of the Code in order for such payments and benefits not to be deemed parachute payments under Section 280G of the Code, with such approval to be obtained in a manner which satisfies all applicable requirements of such Section 280G(b)(5)(B) of the Code and the proposed Treasury Regulations thereunder, including Q&A-7 of Section 1.280G-1 of such proposed regulations, or, in the absence of such shareholder approval, none of those payments or benefits shall be paid or provided, pursuant to the waivers of those payments and benefits to be executed by the affected individuals in form and substance reasonable satisfactory to Parent.

(c) Performance. Company shall have performed and complied in all material respects with each agreement, covenant and obligation required by this Agreement to be so performed or complied with by it at or before the Closing. Parent shall have received a certificate to such effect signed on behalf of Company by a duly authorized officer of Company.

(d) [Reserved].

(e) Non-Competition Agreements. Each of Gil Elbaz and Adam Weissman shall have executed and delivered to Parent a Non-Competition Agreement and such Non-Competition Agreement shall be in full force and effect.

(f) Governmental Approval. Approvals from any Governmental Authority (if any) deemed reasonably appropriate or necessary by Parent shall have been timely obtained.

(g) Litigation. There shall be no action, suit, claim, or proceeding of any nature pending, or overtly threatened, against Parent or the Company, their respective Assets and Properties or any of their respective officers or directors arising out of, or in any way connected with, the Merger or the other transactions contemplated by the terms of this Agreement.

(h) Legal Opinion. Parent shall have received a legal opinion from Pillsbury Winthrop, legal counsel to the Company, as to the matters set forth in Exhibit H.

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(i) Voting Agreements. Company Shareholders representing 90% of the outstanding voting capital stock of the Company (on an as-converted to common stock basis) shall have executed and delivered to Parent a Company Voting Agreement, and no breach of any Company Voting Agreement shall have occurred or be continuing.

(j) Conversion of Company Preferred Stock. All outstanding shares of Company Series A Preferred Stock shall have been fully converted into shares of Company Common Stock pursuant to the articles of incorporation of the Company and applicable provisions of California Law.

(k) Termination of Agreements. The Company shall have terminated each of those agreements listed on Schedule 6.3(k) to this Agreement and each such agreement shall be of no further force or effect.

(l) [Reserved].

(m) Resignation of Directors. Parent shall have received a written resignation from each of the directors of the Company effective as of the Effective Time.

(n) Certificate of Good Standing. Parent shall have received a certificate of good standing of the Company from the Secretary of State of the State of California dated within a reasonable period prior to Closing.

(o) No Material Adverse Change. There shall not have occurred any event, series of events or condition of any character that, individually or in the aggregate, has had or is reasonably likely to have a Material Adverse Effect on Company since the date of this Agreement.

(p) New Employment Arrangements. Gil Elbaz and Adam Weissman shall have accepted offers of employment with Parent pursuant to the terms of their respective Offer Letters, which Offer Letters shall be effective as of the Effective Time, and neither Gil Elbaz nor Adam Weissman shall have terminated, purported to terminate or threatened to terminate their respective Offer Letters and shall be employees of the Company upon the Effective Time.

(q) Limitation on Dissent. Holders of no more than 10.0% of the outstanding shares of Company Capital Stock (on an as converted to common stock basis) shall neither have exercised, nor shall they have any continued right to exercise, appraisal, dissenters’ or similar rights under applicable law with respect to their shares in connection with the Merger.

(r) Releases. Each of the individuals listed on Schedule 6.3(r) of the Company Disclosure Schedule shall have executed and delivered to the Company a release in the form attached hereto as Exhibit F.

(s) Purchaser Representative. Each Company Shareholder that is not an “accredited investor” (as defined in Regulation 501 under the Securities Act) shall have acknowledged in writing the identity of their “purchaser representative” within the meaning of

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Regulation 501(h) under the Securities Act (the “Purchaser Representative”) and their reliance on such Purchaser Representative to satisfy the requirements of Regulation 506(b)(2)(ii) under the Securities Act.

(t) Exercise or Termination of Company Warrants. All Company Warrants shall have been fully exercised or the holders thereof shall have agreed to the termination or cancellation of such warrants as of the Effective Time, and the Company shall have delivered to Parent written evidence of such exercise, termination or cancellation.

ARTICLE 7

SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ESCROW

7.1 Survival of Representations, Warranties and Covenants. The representations and warranties of the Company and the Indemnifying Officers contained in this Agreement, or in any certificate or other instrument delivered pursuant to this Agreement, shall survive the Merger and continue until 5:00 p.m., California time, on the date which is the one year anniversary of the Closing Date (the “Expiration Date”); provided, however, that (i) the representations and warranties of the Company set forth in Sections 2.3, 2.8 and 2.11 of this Agreement shall survive until the expiration of the applicable statutes of limitation, and (ii) only the relevant specific representations and warranties of the Company contained in this Agreement, or in any certificate or other instrument delivered pursuant to this Agreement, shall not terminate with respect to any claims specified in any Officer’s Certificate (as defined in Section 7.3(e)) delivered to the Shareholder Representative prior to the Expiration Date until such claims are finally resolved pursuant to the terms of this Article 7, and (iii) in the case of any knowing, intentional or fraudulent breaches of the representations and warranties of the Company contained in this Agreement, or in any certificate or other instrument delivered pursuant to this Agreement (each a “Fraudulent Breach” and collectively “Fraudulent Breaches”), the representations and/or warranties that are the subject of such knowing, intentional or fraudulent breaches shall not terminate until the expiration of the applicable statute of limitations. The representations and warranties of Parent and Sub contained in this Agreement, or in any certificate or other instrument delivered pursuant to this Agreement, shall terminate at the Closing.

7.2 Indemnification. The Company Shareholders, the Indemnifying Officers and holders of Vested Assumed Options (the “Indemnifying Parties”) severally and not jointly (and in proportion to the deemed value of the Merger Consideration issued to such Company Shareholders pursuant to Section 1.6 and issuable to holders of Vested Assumed Options upon exercise of the portions of such options Vested as of immediately following the Effective Time; provided that for purposes of determining this allocation, Merger Stock shall have a deemed value of the Reference Value), shall indemnify and hold Parent and its officers, directors, employees, agents and affiliates, including the Surviving Corporation, (the “Indemnified Parties”) harmless against all claims, losses, liabilities, damages, deficiencies, costs and expenses, including reasonable attorneys’ fees and expenses and reasonable expenses of investigation and defense (hereinafter individually a “Loss” and collectively “Losses”) incurred, directly or indirectly, by any of the Indemnified Parties, as a direct or indirect a result of (i) any inaccuracy or breach of any representation or warranty of the Company or the Indemnifying Officers contained herein, (ii) any failure by the Company to perform or comply with

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any covenant contained herein that is required to be performed or complied with by the Company prior to the Closing; (iii) the incurrence by the Company of third party legal expenses in connection with the transactions contemplated in this Agreement in excess of $200,000 or which are in excess of Company’s outside legal counsel’s regular standard rates without a premium for the transaction (“Excess Legal Expenses”); (iv) any amount with respect to which the Company’s obligations to pay commissions earned as of the Closing Date are greater than the Estimated Commissions reflected on the Statement of Expenses; and (v) any amount with respect to which the Company’s actual cash and cash equivalents at Closing are less than the amount reflected on the Closing Cash Statement. Notwithstanding the foregoing, with respect only to clauses (i) (other than claims relating to the representations and warranties of the Company set forth in Sections 2.3, 2.8 and 2.11 of this Agreement) and (ii) of this Section 7.2, there shall be no right to indemnification unless and until Officer’s Certificates identifying aggregate Losses in excess of $300,000 (the “Deductible Amount”) have been delivered to the Securityholder Agent, in which event Parent shall be entitled to recover only such Losses which in the aggregate exceed the Deductible Amount. No Company Shareholder shall have any right of contribution from Parent or Company with respect to any Loss claimed by Parent. Except with respect to Fraudulent Breaches, following the Closing, the indemnification provisions of this Section 7.2 (and the related escrow and other provisions and limitations contained in this Article 7) shall be the exclusive remedy of the Indemnified Parties for the matters described in this Section 7.2. The parties further agree that in the case of claims for indemnification related to disputes regarding the AdSense product of the Company, (A) if the dispute relates solely to the AdSense product, then the Indemnified Parties shall be entitled to be indemnified by the Indemnifying Parties with respect to the expenses of such dispute, and (B) if the dispute relates to the AdSense product of the Company in addition to one or more other matters not directly related to the AdSense product, then the Indemnified Parties shall be entitled to be indemnified by the Indemnifying Parties with respect to the portion of the expenses of such dispute related to the AdSense product only if there is a determination in such dispute that the Indemnifying Parties (or any of them) or the Company prior to the Closing are culpable or liable for damages, and in such case the Indemnifying Parties will be liable for indemnification with respect to the pro rata portion of the of the expenses of such dispute relating to the AdSense product (pro rata based on the portion of the damages that relate to the AdSense product), and the Indemnifying Parties will also be be liable for indemnification with respect to expenses relating to claims that are otherwise subject to indemnification hereunder.

7.3 Escrow Arrangements.

(a) Escrow Fund. As soon as practicable after the Effective Time, by virtue of this Agreement and as partial security for indemnity obligations provided for in Section 7.2 hereof, Parent will deposit with U.S. Bank, National Association (or other institution acceptable to Parent and the Securityholder Agent (as defined in Section 7.5 below)), as Escrow Agent (the “Escrow Agent”), (i) a certificate or certificates (in such denominations as may be requested by the Escrow Agent) representing the Escrow Shares, which certificate(s) shall be registered in the name of the Escrow Agent and (ii) by check or wire transfer, the Escrow Cash to be deposited in the Escrow Fund, as determined pursuant to Section 1.8 and such deposit, together with any accrued interest thereof, shall constitute an escrow fund (the “Escrow Fund”) to be governed by the terms set forth

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herein. 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 Period. The Escrow Fund shall be in existence immediately following the Effective Time and shall terminate at 5:00 p.m., California time, on the Expiration Date (the “Escrow Period”); provided that the Escrow Period shall not terminate with respect to such amount (or some portion thereof) as is necessary in the reasonable judgment of Parent, subject to the objection of the Securityholder Agent and the subsequent arbitration of the matter in the manner provided in Section 7.4 hereof, to satisfy any unsatisfied claims reasonably described in any Officer’s Certificate delivered to the Escrow Agent prior to termination of such Escrow Period (such an extension of the Escrow Period, a “Pending Claim Extension”); and, provided, further, that on the Expiration Date the Escrow Agent shall distribute to the Escrow Contributors (and in the case of Vested Assumed Options, such options shall be released from the provisions of Section 7.3(c)) the portion of the Escrow Fund that is not necessary (as determined in the preceding proviso) to satisfy such unsatisfied claims. As soon as all such unsatisfied claims, if any, have been resolved, the Escrow Agent shall deliver to the Escrow Contributors the remaining portion of the Escrow Fund (and in the case of Vested Assumed Options, such options shall be released from the provisions of Section 7.3(c)), together with any accrued interest thereon. Deliveries of portions of the Escrow Fund, together with any accrued interest thereon, to the Escrow Contributors pursuant to this Section 7.3(b) shall be made in proportion to their respective original contributions to the Escrow Fund (including contributions pursuant to Section 1.8 as well as Section 7.3(c)) and the allocations of such distributions between Escrow Shares and Escrow Cash shall be in the same proportions as the original contributions were so allocated. Fractional shares shall be dealt with in the same manner as set forth in Section 1.7.

(c) Contribution from Assumed Options.

(i) A portion of the Merger Shares and Merger Cash issuable upon exercise of each Vested Assumed Option equal to the Option Escrow Share Amount and the Option Escrow Cash Amount, respectively, will as of the Effective Time be deemed to be included in the Escrow Fund pursuant to the provisions of this Section 7.3(c), and the holder of such Vested Assumed Option shall be an Escrow Contributor. The Option Escrow Shares and Option Escrow Cash will be deemed to be included in the Escrow Fund for the purposes of (A) determination of the amount of the Escrow Fund held in the Escrow Fund beyond the Expiration Date pursuant to Section 7.3(b), if any, and the allocation of such heldback amount among Escrow Contributors, and (B) the calculation of any distribution out of the Escrow Fund in satisfaction of a claim pursuant to Section 7.3(e), and the allocation of that distribution amount among Escrow Contributors. Notwithstanding the foregoing, Option Escrow Shares and Option Escrow Cash will not be deemed to be included in the Escrow Fund for purposes of allocating interest on Escrow Cash, and distributions related thereto, pursuant to Section 7.3(d)(ii), except to the extent Option Escrow Cash issued upon exercise of such Option is deposited into the Escrow Fund pursuant to Section 7.3(c)(ii), and then only to the extent of interest earned on such deposited cash after the date of such deposit.

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(ii) Upon exercise of a Vested Assumed Option following the Closing and prior to the end of the Escrow Period (as extended by any Pending Claim Extension), if immediately prior to such exercise the Option Escrow Share Amount and the Option Escrow Cash Amount are greater than zero, a percentage of the shares of Parent Common Stock issued and cash paid upon such exercise equal to the Escrow Percentage, but not more than such Option Escrow Share Amount and Option Escrow Cash Amount, shall on behalf of the option holder be deposited with the Escrow Agent and shall be part of the Escrow Fund.

(iii) In the event that a distribution is to be made out of the Escrow Fund pursuant to Section 7.3(e), Option Escrow Shares and Option Escrow Cash shall be treated as Escrow Shares and Escrow Cash for purposes of calculating the allocation of the distribution out of the Escrow Fund among the Escrow Contributors. The portion of the claim amount allocable to the Option Escrow Cash Amount and the Option Escrow Share Amount of a Vested Assumed Option is referred to herein as the “Allocable Claim Amount” of such option. Immediately upon distribution of Escrow Shares and Escrow Cash out of the Escrow Fund pursuant to Section 7.3(e), the option shall no longer be exercisable as to that portion of the option equal to the Allocable Claim Amount.

(d) 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 not as the Property of the Parent and shall hold and dispose of the Escrow Fund only in accordance with the terms hereof.

(ii) At the direction in writing of the Securityholder Agent, the Escrow Cash will be invested in money market funds or government securities. In the absence of written instructions from the Securityholder Agent, Escrow Agent is authorized to invest funds in a money market account at U.S. Bank, National Association. All income earned on the cash in the Escrow Fund shall become part of and be held as an additional portion of the Escrow Fund. For tax reporting and withholding purposes, all income earned on the cash in the Escrow Fund shall be treated as income earned by Parent. The Escrow Agent shall have no duty to confirm or verify the accuracy or correctness of the amount of any Escrow Shares and Escrow Cash deposited with it hereunder.

(iii) Any shares of Parent Common Stock, other equity securities or any cash dividends issued or distributed by Parent after the Effective Time (including shares issued upon a stock split) (“New Common Shares”) in respect of Parent Common Stock in the Escrow Fund that have not been released from the Escrow Fund shall be added to the Escrow Fund and become a part thereof. New Common Shares issued in respect of shares of Parent Common Stock that have been released from the Escrow Fund shall not be added to the Escrow Fund but shall be distributed to the record holders thereof.

(e) Claims Upon Escrow Fund. Upon receipt by the Escrow Agent at any time on or before 5:00 p.m. Palo Alto, California time on the last day of the Escrow Period of a certificate signed in good faith by any officer of Parent (an “Officer’s Certificate”): (A) stating that Parent has

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paid or properly accrued or reasonably anticipated that it will have to pay or accrue Losses that are indemnifiable under Section 7.2, and (B) specifying in reasonable detail the individual items of Losses included in the amount so stated, the date each such item was paid or properly accrued or reasonably anticipated that it will have to pay or accrue and the nature of the misrepresentation, breach of warranty or covenant or other item to which such item is related (including the relevant section number of the Agreement) and the facts underlying such claim, the Escrow Agent shall, subject to the provisions of Section 7.3(f) hereof, deliver to Parent out of the Escrow Fund, as promptly as practicable, Escrow Shares and Escrow Cash held in the Escrow Fund in satisfaction of such claim. Distributions out of the Escrow Fund in satisfaction of any claim pursuant to this Section 7.3(e) shall be subject to the following provisions and limitations:

(i) The dollar amount of distributions shall be allocated between Escrow Cash and Escrow Shares as follows: (X) the Escrow Cash distribution shall be the product of 0.3515986 times the claim amount, and (Y) the Escrow Shares distribution shall be the product of 0.0399016 times the claim amount, and such distribution shall, for purposes of determining the satisfaction of the Indemnified Parties’ rights under this Article 7, be deemed to be a distribution with respect to 100% of the amount of the claim.

(ii) Distributions shall, as applicable pursuant to Section 7.2, be subject to the Deductible Amount.

(iii) Distributions of Escrow Cash and Escrow Shares shall be allocated among Escrow Contributors pro rata based on their respective original contributions to the Escrow Fund of Escrow Cash and Escrow Shares.

(iv) Allocation of distributions shall take into account deemed contributions to the Escrow Fund pursuant to Section 7.3(c) and 7.6.

(v) Parent Common Stock shall be deemed to have a value per share equal to the Reference Value (as adjusted for stock splits, stock dividends and the like with respect to such shares) for purposes of determining the amount of Escrow Shares to be distributed out of the Escrow Fund pursuant to Section 7.3(e).

(f) Objections to Claims. At the time of delivery of any Officer’s Certificate to the Escrow Agent, a duplicate copy of such certificate shall be delivered to the Securityholder Agent (as defined in Section 7.5) and for a period of thirty (30) days after such delivery, the Escrow Agent shall make no delivery to Parent of any cash or Parent Common Stock pursuant to Section 7.3(e) hereof unless the Escrow Agent shall have received written authorization from the Securityholder Agent to make such delivery. After the expiration of such thirty (30) day period, the Escrow Agent shall make delivery of cash and shares of Parent Common Stock from the Escrow Fund in accordance with Section 7.3(e) hereof, provided that no such payment or delivery may be made if the Securityholder Agent shall object in a written statement to the claim made in the Officer’s Certificate, and such statement shall have been delivered to the Escrow Agent prior to the expiration of such thirty (30) day period.

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7.4 Resolution of Conflicts; Arbitration.

(a) In case the Securityholder Agent shall so object in writing to any claim or claims made in any Officer’s Certificate, the Securityholder Agent and Parent shall attempt in good faith to agree upon the rights of the respective parties with respect to each of such claims. If the Securityholder Agent and Parent should so agree, a memorandum setting forth such agreement shall be prepared and signed by both parties and shall be furnished to the Escrow Agent. The Escrow Agent shall be entitled to rely on any such memorandum and distribute cash and shares of Parent Common Stock from the Escrow Fund in accordance with the terms thereof.

(b) If no such agreement can be reached after good faith negotiation for a period of thirty (30) days, either Parent or the Securityholder Agent may demand arbitration of the matter unless the amount of the damage or loss is at issue in pending Action or Proceeding with a third party, in which event arbitration shall not be commenced until such amount is ascertained or both parties agree to arbitration; and in either such event the matter shall be settled by arbitration conducted by one arbitrator with experience in the area of corporate transactions involving technology companies. Parent and the Securityholder Agent shall mutually agree upon an arbitrator (which shall be independent), provided, that if Parent and Securityholder Agent cannot agree upon an arbitrator within ten (10) Business Days then such arbitrator shall be determined in accordance with the JAMS Rules (as defined below). The arbitrator 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, to discover relevant information from the opposing parties about the subject matter of the dispute. The arbitrator shall rule upon motions to compel or limit discovery and shall have the authority to impose sanctions, including attorneys fees and costs, to the extent as a court of competent law or equity, should the arbitrator determine that discovery was sought without substantial justification or that discovery was refused or objected to without substantial justification. The decision of the arbitrator as to the validity and amount of any claim in such Officer’s Certificate shall be binding and conclusive upon the parties to this Agreement, and notwithstanding anything in Section 7.3(e) hereof, the Escrow Agent shall be entitled to act in accordance with such decision and make or withhold payments out of the Escrow Fund in accordance therewith. Such decision shall be written and shall be supported by written findings of fact and conclusions that shall set forth the award, judgment, decree or order awarded by the arbitrator(s).

(c) Judgment upon any award rendered by the arbitrator(s) may be entered in any court having jurisdiction. Any such arbitration shall be held in San Mateo or Santa Clara Counties, California under the Comprehensive Arbitration Rules and Procedures then in effect of the Judicial Arbitration and Mediation Services, Inc. (the “JAMS Rules”). For purposes of this Section 7.4(c), in any arbitration hereunder in which any claim or the amount thereof stated in the Officer’s Certificate is at issue, Parent shall be deemed to be the Non-Prevailing Party in the event that the arbitrators award Parent less than the sum of one-half (1/2) of the disputed amount plus any amounts not in dispute; otherwise, the shareholders of the Company as represented by the Securityholder Agent shall be deemed to be the Non-Prevailing Party. The Non-Prevailing Party to an arbitration shall pay its own expenses, the fees of each arbitrator, the administrative costs of the arbitration, and the

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expenses, including without limitation, reasonable attorneys’ fees and costs, incurred by the other party to the arbitration.

7.5 Securityholder Agent of the Shareholders.

(a) By virtue of the Company Shareholders’ adoption of this Agreement and approval of the Merger, and without further act of any Company Shareholder, the Company Shareholders shall be deemed to have appointed Jordan Libit as agent and attorney-in-fact (the “Securityholder Agent”) for each Company Shareholder (except such shareholders, if any, holding Dissenting Shares), for and on behalf of the Company Shareholders, to give and receive notices and communications, to authorize delivery to the Indemnified Parties of cash and Parent Common Stock from the Escrow Fund in satisfaction of claims by the Indemnified Parties, to object to such deliveries, 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 to take all actions necessary or appropriate in the judgment of the Securityholder Agent for the accomplishment of the foregoing. Such agency may be changed by the Company Shareholders from time to time upon not less than thirty (30) days prior written notice to Parent; provided that the Securityholder Agent 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. Any vacancy in the position of Securityholder Agent may be filled by approval of the holders of a majority in interest of the Escrow Fund. No bond shall be required of the Securityholder Agent. Notices or communications to or from the Securityholder Agent shall constitute notice to or from each of the Company Shareholders.

(b) The Securityholder Agent shall not be liable for any act done or omitted hereunder as the Securityholder Agent while acting in good faith and in the exercise of reasonable judgment. The Company Shareholders on whose behalf the Escrow Amount was contributed to the Escrow Fund shall severally and not jointly indemnify the Securityholder Agent and hold the Securityholder Agent harmless against any loss, liability or expense incurred without negligence or bad faith on the part of the Securityholder Agent and arising out of or in connection with the acceptance or administration of the Securityholder Agent’s duties hereunder, including the reasonable fees and expenses of any legal counsel retained by the Shareholder Representative.

(c) The Securityholder Agent shall have reasonable access to information about the Company and the reasonable assistance of the Company’s officers and employees for purposes of performing the Securityholder Agent’s duties and exercising its rights hereunder.

7.6 Representative Escrow.

(a) At the Effective Time, by virtue of this Agreement and as partial security for indemnity obligations provided for in Section 7.2 and Section 7.5(b) hereof, Parent will subtract $150,000 in cash from the Escrow Amount (the “Representative Escrow Amount”) and deposit such cash amount with the Escrow Agent, such deposit, together with any accrued interest thereof, to constitute an escrow fund (the “Representative Escrow Fund”) to be governed by the terms set forth herein (provided that such amount shall be deemed to be part of the Escrow Fund for purposes of calculations and allocations relating to the Escrow Fund). At the direction in writing of the

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Securityholder Agent, the Representative Escrow Amount will be invested in money market funds or government securities. In the absence of written instructions from the Securityholder Agent, Escrow Agent is authorized to invest funds in a money market account at U.S. Bank, National Association. All income earned on the cash in the Representative Escrow Fund shall become part of and be held as an additional portion of the Representative Escrow Fund. For tax reporting and withholding purposes, all income earned on the cash in the Representative Escrow Fund shall be treated as income earned by Parent. The Escrow Agent shall have no duty to confirm or verify the accuracy or correctness of the amount of any Escrow Shares and Escrow Cash deposited with it hereunder.

(b) All reasonable fees of the Securityholder Agent and all reasonable costs, attorney’s fees, and expenses incurred by the Securityholder Agent in connection with the performance of its duties hereunder shall be paid out of the Representative Escrow Fund, upon presentation by the Securityholder Agent to the Escrow Agent of an accounting of such fees, costs and expenses, which accounting is subject to Parent’s reasonable agreement, provided, however, that no such claim for fees, costs and expenses shall be paid until the later of the Expiration Date or the end of the last Pending Claim Extensions, if any, to terminate; and provided, further, that in the event the Escrow Agent has received Officer’s Certificate(s) from Indemnified Parties with respect to Losses that exceed the Escrow Amount, the Escrow Agent shall, subject to the provisions of Section 7.3(e) hereof, deliver to Parent out of the Representative Escrow Fund, as promptly as practicable, cash held in the Representative Escrow Fund in an amount equal to such Losses (if such Losses are greater than the amount of cash in the Representative Escrow Fund then the Escrow Agent shall deliver to Parent the entire cash amount in the Representative Escrow Fund); and, provided, further, that, in the case of Pending Claim Extensions, on the Expiration Date the Escrow Agent shall distribute to the Escrow Contributors (and in the case of Vested Assumed Options, such options shall be released from the provisions of Section 7.3(c)) the portion of the Representative Escrow Fund that is not necessary (as determined in the preceding proviso) to satisfy such unsatisfied claims

7.7 Actions of the Securityholder Agent. A decision, act, consent or instruction of the Securityholder Agent with respect to the matters contemplated by Article 7 hereof shall constitute a decision of all the Indemnifying Parties for whom a portion of the Merger Consideration otherwise payable to them is deposited in the Escrow Fund and shall be final, binding and conclusive upon each of such Indemnifying Party, and the Escrow Agent and Parent may rely upon any such decision, act, consent or instruction of a Securityholder Agent as being the decision, act, consent or instruction of each such Indemnifying Party. 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 Securityholder Agent.

7.8 Third-Party Claims.

(a) In the event Parent becomes aware of a third-party claim which Parent reasonably believes may result in a demand against the Escrow Fund, Parent shall as promptly as practicable notify the Securityholder Agent of such claim; provided, however, that the failure of Parent to promptly provide such notice shall not affect the right of Parent to indemnification

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hereunder, except to the extent such failure is materially prejudicial to the rights of the Company Shareholders under such claim. The Securityholder Agent, as representative for the Company Shareholders, shall be entitled, at the expense of the Company Shareholders payable by the Company Shareholders out of the Representative Escrow Fund (subject to Section 7.6(b)), to participate in any defense of such claim. Parent shall have the right in its sole discretion to settle any such claim; provided, however, that except with the consent of the Securityholder Agent, no settlement of any such claim with third-party claimants shall alone be determinative of the amount of any claim against the Escrow Fund, provided, that any dispute over the amount of such claim shall be resolved pursuant to Section 7.4. In the event that the Securityholder Agent has consented to any such settlement and acknowledged that the claim is a valid claim against the Escrow Fund, the Securityholder Agent shall have no power or authority to object under any provision of this Article 7 to the amount of any claim by Parent against the Escrow Fund with respect to such settlement.

7.9 Escrow Agent’s Duties.

(a) 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 Securityholder Agent, 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 counsel shall be conclusive evidence of such good faith.

(b) The Escrow Agent is hereby expressly authorized to comply with and obey orders, judgments or decrees of any court of law and arbitrators decisions, notwithstanding any notices, warnings or other communications from any party or any other person to the contrary. In case the Escrow Agent obeys or complies with any such order, judgment or decree of any court or arbitrator decision, 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, decree or arbitrator decision being subsequently reversed, modified, annulled, set aside, vacated or found to have been entered without jurisdiction.

(c) 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.

(d) 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.

(e) In performing any duties under the Agreement, the Escrow Agent shall not be liable to any party for damages, losses, or expenses, except for gross negligence or willful misconduct on the part of the Escrow Agent. The Escrow Agent shall not incur any such liability for

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(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 or 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 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.

(f) If any controversy arises between the parties to this Agreement, or with any other Person, concerning the subject matter of this Agreement or 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 Merger Consideration 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 shall 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 cash and shares of Parent Common Stock held in escrow, except all costs, expenses, charges and reasonable attorney fees incurred by the Escrow Agent due to the interpleader action and which Parent agrees 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.

(g) Parent shall indemnify and hold Escrow Agent harmless against any and all losses, claims, damages, liabilities, and expenses, including reasonable costs of investigation, counsel fees, 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.

(h) The Escrow Agent may resign at any time upon giving at least thirty (30) days written notice to Parent and the Securityholder Agent; 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 Securityholder Agent shall use their commercially reasonable efforts to mutually agree on a successor escrow agent within thirty (30) days after receiving such notice. If Parent and the Securityholder Agent 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. The Escrow Agent shall thereupon be discharged from any further duties and liability under this Agreement.

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7.10 Fees. All fees of the Escrow Agent for performance of its duties hereunder shall be paid by Parent. 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 Agent is made a party to, or intervenes in, any Action or Proceeding pertaining to this escrow or its subject matter, the Escrow Agent shall be reasonably compensated for such extraordinary services and reimbursed for all costs, attorney’s fees, and expenses occasioned by such default, delay, controversy or litigation.

7.11 Limitation of Remedies.

(a) Except as provided in Section 7.11(b) and (c), the Escrow Fund shall be the exclusive right and remedy of Parent and the other Indemnified Parties for claims pursuant to Section 7.2.

(b) Notwithstanding the limitation set forth in Section 7.11(a), Jordan Libit, Jason Liebman, Eytan Elbaz, Brad Stein, Gil Elbaz and Adam Weismann (the “Indemnifying Officers”) shall, after the end of the Escrow Period, indemnify Parent and the other Indemnified Parties pursuant to Section 7.2 for Losses incurred by them directly or indirectly resulting from any inaccuracy or breach of any of the representations and warranties of the Company set forth in Sections 2.3, 2.8 and 2.11 hereof; provided, however, that the sum of (i) the aggregate liability of the Indemnifying Officers as a result of their allocable share of claims made and satisfied by distributions out of the Escrow Fund pursuant to Section 7.3(e) plus (ii) the liability of the Indemnifying Officers pursuant to this Section 7.11(b) for indemnification claims made after the end of the Escrow Period, shall not exceed the aggregate value of the Indemnifying Officers’ contributions to the Escrow Fund (valuing each Escrow Share contributed by the Indemnifying Officers at the Reference Value for this purpose, as adjusted for stock splits, stock dividends and the like with respect to such shares); provided, however, that the Indemnifying Officers may satisfy claims pursuant to this Section 7.11(b) by tendering cash or shares of Parent Common Stock (which shall be deemed to have a value per share equal to the Reference Value, as adjusted for stock splits, stock dividends and the like with respect to such shares), at the option of such Indemnifying Officers. The liability of the Indemnifying Officers after the end of the Escrow Period pursuant to this Section 7.11(b) shall be several and not joint and shall be pro rata as among them based on the Indemnifying Officers’ respective original contributions to the Escrow Fund (including any Option Escrow Cash Amounts and Option Escrow Share Amounts).

(c) Notwithstanding the limitations set forth in Sections 7.11(a) and 7.11(b), the Indemnifying Officers shall indemnify Parent and the other Indemnified Parties pursuant to Section 7.2 for Losses incurred by them directly or indirectly resulting from any Fraudulent Breach regardless of the timing and amount of the claims relating thereto; provided, that such indemnification obligation shall terminate with respect to any such claim on the termination of the applicable statute of limitations relating to such claim; and, provided, further, that the Indemnifying

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Officers’ aggregate liability for claims for indemnification in respect of Fraudulent Breaches (including liability as a result of the Indemnifying Officer’s allocable shares of distributions out of the Escrow Fund in respect of such claims as well as the Indemnifying Officers’ liability outside of the Escrow Fund pursuant to this Section 7.11(c)) shall not (except as expressly provided below) exceed the aggregate value of the Aggregate Cash Consideration and the Aggregate Stock Consideration received by the Indemnifying Officers pursuant to the Merger (assuming for this purpose that all Company Options, Company Warrants and Equity Equivalents held by the Indemnifying Officers have been exercised or converted into Company Common Stock prior to the Effective Time, and ascribing to each Merger Share a value equal to the Reference Value, as adjusted for stock splits, stock dividends and the like with respect to such shares), less taxes actually paid by the Indemnifying Officers in respect of their receipt of the Merger Consideration; provided, further, that the Indemnifying Officers may satisfy claims pursuant to this Section 7.11(c) by tendering cash or shares of Parent Common Stock (which shall be deemed to have a value per share equal to the Reference Value, as adjusted for stock splits, stock dividends and the like with respect to such shares). The liability of the Indemnifying Officers outside of the Escrow Fund pursuant to this Section 7.11(c) for Fraudulent Breaches shall be several and not joint and shall be pro rata as among them based on the Indemnifying Officers’ respective original contributions to the Escrow Fund (including any Option Escrow Cash Amounts and Option Escrow Share Amounts); provided, however that in the event that an Indemnifying Officer cannot, with commercially reasonable diligence, be located by Parent for proceedings under this Article 7, such pro rata liability shall be pro rata as among the Indemnifying Officers who can be so located. The foregoing provisions of this Section 7 notwithstanding, nothing in this Article 7 shall limit the liability of an Indemnifying Officer in respect of a Fraudulent Breach if such Indemnifying Officer has actual knowledge (without applying the constructive knowledge principles set forth in the definition of “knowledge” in Article 10) of such Fraudulent Breach.

(d) The Indemnifying Officers, by adopting this Agreement and approving the Merger, acknowledge and agree that they are severally and not jointly liable for indemnification outside of the Escrow Fund pursuant to Sections 7.2 and this Section 7.11.

7.12 Remedies Not Limited by Information and Investigation. The representations, warranties, covenants and obligations of the Company, and the rights and remedies that may be exercised by the Indemnified Parties pursuant to Article 7 hereof, shall not be limited or otherwise affected by or as a result of any information furnished to, or any investigation made by or knowledge of, any of the Indemnified Parties (unless such information is provided in the Company Disclosure Schedule with respect to representations and warranties made as of the date of this Agreement; provided that to the extent such information listed on the Company Disclosure Schedule is expressly noted as being disclosed for informational purposes only, it shall not modify the applicable representation or warranty).

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ARTICLE 8

TERMINATION, AMENDMENT AND WAIVER

8.1 Termination. Except as provided in Section 8.2, this Agreement may be terminated and the Merger abandoned at any time prior to the Effective Time:

(a) by mutual written agreement of the Company and Parent;

(b) by Parent or the Company by written notice if: (i) there shall be a final nonappealable order of a federal or state court in effect preventing consummation of the Merger; (ii) there shall be any statute, rule, regulation or order enacted, promulgated or issued or deemed applicable to the Merger by any Governmental Authority that would make consummation of the Merger illegal; or (iii) the Effective Time has not occurred before 5:00 p.m. California time on May 9, 2003 (the “Outside Date”); provided, however, that the right to terminate this Agreement under this Section 8.1(b)(iii) shall not be available to any party whose willful failure to fulfill any material obligation hereunder has been the cause of, or resulted in, the failure of the Effective Time to occur on or before the Outside Date, but in such case the other party must elect to either (A) terminate this Agreement by the Outside Date (in which case such other party will be entitled to recover damages from the breaching party for its breach of this Agreement (“Breach Damages”)) or (B) consummate the Merger by no later than two (2) Business Days after delivery of notice to the breaching party of the breaching party’s breach, in which case such non-breaching party may, to the extent permitted by Article 7, recover Breach Damages pursuant to a claim made pursuant to Article 7 of this Agreement.

(c) by Parent by written notice if there shall be any action taken, or any Law or Order enacted, promulgated or issued or deemed applicable to the Merger, by any Governmental Authority, which would: (i) prohibit Parent’s ownership or operation of all or any portion of the business of the Company, or (ii) compel Parent or Company to dispose of or hold separate all or any portion of the Assets and Properties of the Company or Parent as a result of the Merger;

(d) by Parent by written notice if it 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 the Company or any Indemnifying Officer contained in this Agreement such that the conditions set forth in Section 6.3(a) would not be satisfied and such breach has not been cured within ten 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

(e) by the Company by written notice 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 contained in this Agreement such that the conditions set forth in Section 6.2(a) would not be satisfied and such breach has not been cured within ten 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; or

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(f) by Parent, by written notice, if either Gil Elbaz or Adam Weissman cease to be employed by the Company.

8.2 Effect of Termination. In the event of a valid termination of this Agreement as provided in Section 8.1, 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 shareholders or Affiliates or Associates; provided, however, that each party shall remain liable for any breaches of this Agreement prior to its termination; and provided, further that, the provisions of Sections 5.5, 5.6 and 5.7, Articles 8 and 9 (including as provided in Section 8.1(b(iii)) and the applicable definitions set forth in Article 10 shall remain in full force and effect and survive any termination of this Agreement.

8.3 Amendment. Except as is otherwise required by applicable law after the shareholders of the Company approve the Merger and this Agreement, this Agreement may be amended by the parties hereto at any time by execution of an instrument in writing signed on behalf of each of the parties hereto; provided, however, that the consent of the Shareholder Agent and the Escrow Agent shall not be required in connection with any amendment to this Agreement that does not affect the rights and obligations of the Shareholder Agent or the Escrow Agent, as applicable.

8.4 Extension; Waiver. At any time prior to the Effective Time, Parent and the Company 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 agreements, covenants 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.

ARTICLE 9

MISCELLANEOUS PROVISIONS

9.1 Notices. All notices, requests and other communications hereunder must be in writing and will be deemed to have been duly given only if delivered personally against written receipt, by facsimile transmission against facsimile confirmation, by electronic mail or mailed by internationally recognized overnight courier prepaid, to the parties at the following addresses or facsimile numbers:

If to Parent to:

Google Technology Inc.

2400 Bayshore Parkway

Mountain View, California 94034

Attention: General Counsel (with a copy to, which shall not constitute notice, David Drummond and Jeff Donovan)

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Telephone No.: (650) 330-0100

Facsimile No.: (650) 618-1806

Email: ddrummond@google.com

            jdonovan@google.com

with a copy (which shall not constitute notice) to:

Wilson Sonsini Goodrich & Rosati

Professional Corporation

650 Page Mill Road

Palo Alto, California 94304

Attention: Christian Montegut, Esq.

Telephone No.: (650) 493-9300

Facsimile No.: (650) 493-6811

Email: cmontegut@wsgr.com

If to the Company to:

Applied Semantics, Inc.

2644 30th Street, 2nd Floor

Santa Monica, CA 90405

Attention: Jordan Libit

Telephone No.: (310) 460-4000

Facsimile No.: (310) 450-6686

Email: jlibit@appliedsemantics.com

with a copy (which shall not constitute notice) to:

Pillsbury Winthrop, LLP

2550 Hanover Street

Palo Alto, CA 94304

Attention: Jorge A. del Calvo, Esq. and

                 Bradley D. Kohn, Esq.

Telephone No.: (650) 233-4500

Facsimile No.: (650) 233-4545

Email: jorge@pillsburywinthrop.com

            bkohn@pillsburywinthrop.com

If to the Securityholder Agent:

Jordan Libit

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Applied Semantics, Inc.

2644 30th Street, 2nd Floor

Santa Monica, CA 90405

Telephone No.: (310) 460-4000

Facsimile No.: (310) 450-6686

Email: jlibit@appliedsemantics.com

with a copy (which shall not constitute notice) to:

Pillsbury Winthrop, LLP

2550 Hanover Street

Palo Alto, CA 94304

Attention: Jorge A. del Calvo, Esq. and

                 Bradley D. Kohn, Esq.

Telephone No.: (650) 233-4500

Facsimile No.: (650) 233-4545

Email: jorge@pillsburywinthrop.com

            bkohn@pillsburywinthrop.com

If to the Escrow Agent:

U.S. Bank, National Association

One California Street, Suite 2550

San Francisco, CA 94111

Attention: Ann Gadsby

Telephone No.: (415) 273-4532

Facsimile No.: (415) 273-4591

All such notices, requests and other communications will (a) if delivered personally to the address as provided in this Section 9.1, be deemed given upon delivery, (b) if delivered by facsimile transmission to the facsimile number as provided for in this Section 9.1, be deemed given upon facsimile confirmation, (c) if delivered by overnight courier to the address as provided in this Section 9.1, be deemed given on the earlier of the first Business Day following the date sent by such overnight courier or upon receipt and (d) if by electronic mail, when directed to an electronic mail address provided for in this Section 9.1, be deemed given upon delivery (in each case regardless of whether such notice, request or other communication is received by any other Person to whom a copy of such notice is to be delivered pursuant to this Section 9.1). Any party from time to time may change its address, facsimile number, email address or other information for the purpose of notices to that party by giving notice specifying such change to the other party hereto.

9.2 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.

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9.3 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.

9.4 Entire Agreement; Assignment. This Agreement, the Exhibits hereto, the Company Disclosure Schedule, the Parent Disclosure Schedule and the documents and instruments and other agreements among the parties hereto referenced herein: (i) 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, (ii) are not intended to confer upon any other person any rights or remedies hereunder, and (iii) 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.

9.5 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.

9.6 Other Remedies. 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.

9.7 Governing Law. 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. 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 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.

9.8 Rules of Construction. The parties hereto agree that they have been represented by counsel during the negotiation and execution of this Agreement and, therefor, 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.

9.9 Waiver of Jury Trial. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY AND ANY ACTION,

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PROCEEDING OR COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT, OR OTHERWISE) ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE ACTIONS OF ANY PARTY HERETO IN NEGOTIATION, ADMINISTRATION, PERFORMANCE OR ENFORCEMENT HEREOF.

9.10 Disclosure Schedule. In the event of any inconsistency between the statements in the body of this Agreement and those in the Disclosure Schedule (other than an exception expressly set forth as such in the Disclosure Schedule with respect to a specifically identified representation or warranty), the statements in the body of this Agreement will control.

9.11 Specific Performance. The parties hereto agree that irreparable damage would occur in the event that any of the provisions of this Agreement were not performed in accordance with their specific terms or were otherwise breached. Except where this Agreement specifically provides for arbitration, it is agreed that the parties shall be entitled to an injunction or injunctions to prevent breaches of this Agreement 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 they are entitled at law or in equity.

9.12 Waiver. Any term or condition of this Agreement may be waived at any time by the party that is entitled to the benefit thereof, but no such waiver shall be effective unless set forth in a written instrument duly executed by or on behalf of the party waiving such term or condition. No waiver by any party of any term or condition of this Agreement, in any one or more instances, shall be deemed to be or construed as a waiver of the same or any other term or condition of this Agreement on any future occasion. The fact that Parent may waive a condition under Section 6.3 shall not constitute a waiver by Parent of any other right or remedy hereunder or preclude the Parent from exercising any remedy hereunder.

ARTICLE 10

DEFINITIONS

10.1 Definitions. As used in this Agreement, the following defined terms shall have the meanings indicated below:

“Acquisition Proposal” means any offer, proposal, inquiry or expression of interest relating to a Competing Transaction.

“Action or Proceeding” means any action, suit, complaint, petition, investigation, proceeding, arbitration, litigation, investigation, audit or other proceeding, whether civil or criminal, in law or in equity, or before any arbitrator or Governmental Authority.

“Affiliate” means (except for the purposes of Section 2.14), as applied to any Person, (a) any other Person directly or indirectly controlling, controlled by or under common control with, that Person, or (b) as to a corporation, each director and officer thereof, and as to a partnership, each general partner thereof, and as to a limited liability company, each managing member or similarly

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authorized person thereof (including officers), and as to any other entity, each Person exercising similar authority to those of a director or officer of a corporation.

“Aggregate Cash Consideration” means an amount of cash equal to the sum of (a) $40,000,000, and (b) the Consideration Adjustment Amount.

“Aggregate Common Number” means the aggregate number of shares of Company Common Stock outstanding immediately prior to the Effective Time (including all shares of Company Common Stock issued or issuable upon exercise, conversion or exchange in full of all unvested and vested Company Options, Company Warrants or other Equity Equivalents (other than shares of Company Series B Preferred Stock that are not converted into Company Common Stock prior to the Effective Time)) that are not exercised, converted, exchanged or expired as of the Effective Time); provided, however, that unvested Company Options that will never vest pursuant to their terms as of and after the Effective Time and are held by Company employees that are not Continuing Employees shall not be included in the Aggregate Common Number.

“Aggregate Remaining Cash Consideration” means an amount of cash equal to the difference of (A) the Aggregate Cash Consideration, minus (B) the Series B Amount.

“Aggregate Stock Consideration” means an amount of shares of Parent Common Stock equal to (a) One Million, Two Hundred and Fifty Thousand (1,250,000) minus (b) the quotient obtained by dividing (x) the Consideration Adjustment Amount by (y) 34.25.

“Agreement” means this Merger Agreement and Plan of Reorganization, including (unless the context otherwise requires) the Exhibits and the Disclosure Schedules and the certificates and instruments delivered in connection herewith, or incorporated by reference, as the same may be amended or supplemented from time to time in accordance with the terms hereof.

“Ancillary Agreements” has the meaning given to it in Section 2.2.

“Approval” means any approval, authorization, consent, permit, qualification or registration, or waiver of any of the foregoing, required to be obtained from or made with, or any notice, statement or other communication required to be filed with or delivered to, any Governmental Authority or any other Person.

“Assets and Properties” of any Person means all assets and properties of every kind, nature, character and description (whether real, personal or mixed, whether tangible or intangible, whether absolute, accrued, contingent, fixed or otherwise and wherever situated), including the goodwill related thereto, operated, owned, licensed or leased by such Person, including cash, cash equivalents, investment assets, accounts and notes receivable, chattel paper, documents, instruments, general intangibles, real estate, equipment, inventory, goods and Intellectual Property.

“Associate” means, with respect to any Person, any corporation or other business organization of which such Person is an officer or partner or is the beneficial owner, directly or indirectly, of ten percent (10%) or more of any class of equity securities, any trust or estate in which

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such Person has a substantial beneficial interest or as to which such Person serves as a trustee or in a similar capacity and any relative or spouse of such Person, or any relative of such spouse, who has the same home as such Person.

“Business Day” means a day other than Saturday, Sunday or any day on which banks located in the State of California are authorized or obligated to close.

“California Agreement of Merger” has the meaning given to it in Section 1.2.

“California Law” means the California Corporations Code and all amendments and additions thereto.

“Cash Exchange Ratio” means quotient obtained by dividing (a) the Aggregate Remaining Cash Consideration by (b) the Aggregate Common Number.

“Closing” means the closing of the transactions contemplated by Section 1.2.

“Closing Cash Statement” has the meaning given to it in Section 5.18.

“Closing Date” has the meaning given to it in Section 1.2.

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

“Company” has the meaning given to it in the forepart of this Agreement.

“Company Year-End Financial Statements” means (i) the unaudited consolidated balance sheet of the Company as of the fiscal year ended December 31, 2002, and the related unaudited statement of income, changes in holders’ equity and cash flows for the period ended December 31, 2002 and (ii) the audited consolidated balance sheet of the Company as of the fiscal year ended December 31, 2001 and the fiscal year ended December 31, 2000, and the related audited statement of income, changes in holders’ equity and cash flows for the periods ended December 31, 2001 and December 31, 2000, in each case, together with the notes thereto and the unqualified report of the Company’s independent accountants with respect thereto.

“Company Capital Stock” means the Company Common Stock and the Company Preferred Stock.

“Company Common Number” means the number of shares of Company Common Stock outstanding immediately prior to the Effective Time (and following any conversion or exercise of any convertible or exercisable security for Company Common Stock immediately prior to the Effective Time), plus the number of shares of Company Common Stock issuable upon conversion of shares of Company Series A Preferred Stock outstanding immediately prior to the Effective Time.

“Company Common Stock” has the meaning given to it in Section 2.3(a).

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“Company Disclosure Schedule” means the schedules delivered to Parent by or on behalf of the Company, containing all lists, descriptions, exceptions and other information and materials as are required to be included therein in connection with the representations and warranties made by the Company in Article 2 or otherwise.

“Company Financials” means the Company Year-End Financial Statements and the Company Interim Financial Statements.

“Company Interim Financial Statements” means the unaudited consolidated balance sheet of the Company as of February 28, 2003, and the related unaudited statement of operations and statement of cash flows for the three month period ended on such date.

“Company Option(s)” means any Option to purchase Company Capital Stock, excluding the Company Preferred Stock and the Company Warrants.

“Company Preferred Stock” has the meaning given to it in Section 2.3(a).

“Company Restricted Stock” means shares of Company Capital Stock that are subject to a repurchase option in favor of the Company.

“Company Series A Preferred Stock” means the Series A Preferred Stock, par value $0.001 per share of the Company.

“Company Series B Preferred Stock” means the Series B Preferred Stock, par value $0.001 per share of the Company.

“Company Shareholders” means the holders of Company Capital Stock.

“Company Shareholder Action” has the meaning given to it in Section 2.26.

“Company Stock Plan” has the meaning given to it in Section 1.6(e).

“Company Warrants” means any and all warrants to purchase Company Capital Stock, including the warrants listed in Section 2.3 of the Company Disclosure Schedule.

“Competing Transaction” means (i) any merger or consolidation, any sale, transfer (including without limitation the granting of any Lien) or license of assets of the Company, or similar transactions involving the Company, (ii) any sales or issuances by the Company of any Company Capital Stock, Company debt, or options, warrants or other rights with respect thereto (including, without limitation, in a financing transaction or by way of a tender offer or an exchange offer), other than issuances of Company Capital Stock upon exercise of options and warrants or conversion of Company Preferred Stock outstanding as of the date of this Agreement and disclosed in this Agreement or the Company Disclosure Schedule, (iii) any partnership, joint venture, strategic relationship or other material transaction with a third party outside the Company’s ordinary course of

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business consistent with past practice, or (iv) any Contract or transaction with Overture and any of its officers, directors, agents, representatives, subsidiaries and Affiliates.

“Conflict” has the meaning given to it in Section 2.5.

“Consideration Adjustment Amount” means the amount of cash and cash equivalents (as defined under GAAP) held by the Company as of the Effective Time as indicated on the Closing Cash Statement less each of the following: (a) all Third Party Expenses and any amounts paid to the Purchaser Representative, as reflected in the Statement of Expenses and (b) the aggregate Severance Payments and Obligations as reflected in the Statement of Expenses delivered pursuant to Section 5.5.

“Contract” means any written, oral or other agreement, contract, subcontract, lease, binding understanding, promise, instrument, note, option, warranty, purchase order, license, sublicense, insurance policy, benefit plan, commitment or undertaking of any nature, as of the date hereof or as may hereafter be in effect.

“Disclosure Schedules” means the Company Disclosure Schedule and the Parent Disclosure Schedule.

“Dissenting Shares” has the meaning given to it in Section 1.8(a).

“Effective Time” has the meaning given to it in Section 1.2.

“Employee” has the meaning given to it in Section 2.14(a).

“Employee Plan” has the meaning given to it in Section 2.14(a).

“Equity Equivalents” means securities (including Options to purchase any shares of Company Capital Stock), which, by their terms, are or may be exercisable, convertible or exchangeable for or into common stock, preferred stock or other securities.

“Escrow Agent” means U.S. Bank, National Association (or other institution acceptable to Parent and the Securityholder Agent).

“Escrow Amount” has the meaning given to it in Section 1.8.

“Escrow Contributors” means Company Shareholders and holders of Vested Assumed Options.

“Escrow Fund” has the meaning given to it in Section 7.3(a).

“Escrow Cash Percentage” means the quotient obtained by dividing (A) the product of (1) 0.10 times (2) the Aggregate Cash Consideration by (B) the sum of (1) the Series B Amount, plus (2) the product of the Company Common Number times the Cash Exchange Ratio, plus (3) the Vested Assumed Option Number times the Cash Exchange Ratio.

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“Escrow Stock Percentage” means the quotient obtained by dividing (A) the product of (1) 0.10 times (2) the Aggregate Stock Consideration, by (B) the sum of (1) the product of the Company Common Number times the Stock Exchange Ratio, plus (2) the Vested Assumed Option Number times the Stock Exchange Ratio.

“Escrow Period” has the meaning given to it in Section 7.3(b).

“Excess Legal Expenses” has the meaning given to it in Section 7.2.

“Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations of the SEC thereunder.

“Expiration Date” has the meaning given to it in Section 7.1.

“GAAP” means generally accepted accounting principles in the United States, as in effect from time to time.

“Governmental Authority” means any court, tribunal, arbitrator, authority, agency, bureau, board, commission, department, official or other instrumentality of the United States, any foreign country or any domestic or foreign state, county, city or other political subdivision, or including any stock exchange, quotation service and the National Association of Securities Dealers.

“Indebtedness” of any Person means all obligations of such Person (a) for borrowed money, (b) evidenced by notes, bonds, debentures or similar instruments, (c) for the deferred purchase price of goods or services (other than trade payables or accruals incurred in the ordinary course of business), (d) under capital leases, or (e) in the nature of guarantees of the obligations described in clauses (a) through (d) above of any other Person.

“Indemnifying Officers” has the meaning given to it in Section 7.11(b).

“Investor Rights Agreement” means that certain Third Amended and Restated Investor Rights Agreement dated as of May 2002 by and between the Parent and those other parties who are signatories thereto.

“IRS” means the United States Internal Revenue Service or any successor entity.

“Knowledge”, the phrases “to the knowledge of”, “to the best knowledge of”, “known to” and “knows” means (A) in the case of the Company or Parent, the actual knowledge of the Company’s or Parent’s, as the case may be, officers, directors and other managers, provided that such persons shall be deemed to have knowledge of such facts, circumstances and other information that such persons would reasonably be expected to discover in the course of conducting such person’s duties, including if such persons had made due and diligent inquiry of those employees of the Company or Parent, as the case may be, whom such officers, directors and managers reasonably believe would have actual knowledge of the matters represented, and (B) in the case of an officer, director or manager of Company or Parent, the actual knowledge such officer, director or other

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manager, provided that such person shall be deemed to have knowledge of such facts, circumstances and other information that such person would reasonably be expected to discover in the course of conducting such person’s duties, including if such persons had made due and diligent inquiry of those employees of the Company or Parent, as the case may be, whom such officer, director or manager reasonably believes would have actual knowledge of the matters represented.

“Legal Requirement” or “Legal Requirements” means any law, statute, Order, decree, consent decree, judgment, rule, regulation, ordinance or other pronouncement having the effect of law whether in the United States, any foreign country, or any domestic or foreign state, county, city or other political subdivision or of any Governmental Authority.

“Liabilities” means all Indebtedness, obligations and other liabilities of a Person, whether absolute, accrued, contingent (or based upon any contingency), known or unknown, fixed or otherwise, or whether due or to become due.

“Liens” means any mortgage, pledge, assessment, security interest, lease, lien, easement, license, covenant, condition, restriction, adverse claim, levy, charge, option, equity, adverse claim or restriction or other encumbrance of any kind, or any conditional sale Contract, title retention Contract or other Contract to give any of the foregoing, except for any restrictions on transfer generally arising under any applicable federal or state securities law, other than Permitted Liens.

“Material Adverse Effect” with respect to Company or the Parent, means any change, event or effect that is materially adverse to the business, assets (including intangible assets), condition (financial or otherwise), results of operations, or capitalization of such entity and its subsidiaries (if any), taken as a whole; provided, however, that changes in worldwide economic conditions that affect such Person (or the markets in which such Person competes) in a manner not disproportionate to the manner in which such conditions affect other companies in the industries or markets in which such Person competes shall not constitute a “Material Adverse Effect.”

“Merger” has the meaning given to it in Recital A to this Agreement.

“Merger Consideration” has the meaning given to it in Recital B.

“Merger Cash” means the cash issued in exchange for outstanding shares of Company Capital Stock pursuant to Section 1.6 and payable upon exercise of Assumed Company Options and assumed Company Warrants.

“Merger Shares” means the shares of Parent Common Stock issued in exchange for outstanding shares of Company Capital Stock pursuant to Section 1.6 and issuable upon exercise of Assumed Company Options and assumed Company Warrants.

“Non-Competition Agreement” has the meaning given to it in Recital D to this Agreement.

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“Non-Continuing Employee” means Jordan Libit, Brad Stein, Audrey Hacker and Chris Daniels.

“Officer’s Certificate” has the meaning given to it in Section 7.2(e)(i).

“Option” with respect to any Person means any security, right, subscription, warrant, option, “phantom” stock right or other Contract (other than the Company Preferred Stock) that gives the right to (a) purchase or otherwise receive or be issued any shares of capital stock or other equity interests of such Person or any security of any kind convertible into or exchangeable or exercisable for any shares of capital stock or other equity interests of such Person or (b) receive any benefits or rights similar to any rights enjoyed by or accruing to the holder of shares of capital stock or other equity interests of such Person, including any rights to participate in the equity, income or election of directors or officers of such Person.

“Option Escrow Share Amount” means, as of a particular time, the portion of the shares of Parent Common Stock issuable upon exercise of such Vested Assumed Option determined by multiplying (A) the number of shares of Parent Common Stock issuable upon exercise of the Vested portion of such Vested Assumed Option as of immediately following the Effective Time, times (B) the Escrow Percentage; reduced by: (1) any such shares that have been deposited into the Escrow Fund upon exercise of the Vested Assumed Option pursuant to Section 7.3(c)(ii) and (2) any portion of such amount with respect to which the Vested Assumed Option ceases to be exercisable pursuant to Section 7.3(c)(iii).

“Option Escrow Cash Amount” means, as of a particular time, the portion of the cash payable upon exercise of such Vested Assumed Option determined by multiplying (A) the amount of cash issuable upon exercise of the Vested portion of such Vested Assumed Option as of immediately following the Effective Time, times (B) the Escrow Percentage; reduced by: (1) any such cash amount that is deposited into the Escrow Fund upon exercise of the Vested Assumed Option pursuant to Section 7.3(c)(ii) and (2) any portion of such amount with respect to which the Vested Assumed Option ceases to be exercisable pursuant to Section 7.3(c)(iii).

“Option Escrow Shares” means the Merger Shares issuable upon exercise of a Vested Assumed Option which shares are treated as being included in the Escrow Fund pursuant to Section 7.3.

“Option Escrow Cash” means the Merger Cash payable upon exercise of a Vested Assumed Option which cash is treated as being included in the Escrow Fund pursuant to Section 7.3.

“Order” means any writ, judgment, decree, injunction or similar order of any Governmental Authority (in each such case whether preliminary or final).

“Overture” means Overture Services, Inc. and any of its Affiliates, Associates and Subsidiaries.

“Parent Financials” has the meaning ascribed to it in Section 3.8.

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“Parent” has the meaning ascribed to it in the forepart of this Agreement.

“Parent Common Stock” means the shares of the common stock, par value, $0.001 per share, of the Parent.

“Parent Disclosure Schedule” has the meaning ascribed to it in the forepart of Article 3.

“Permit” means any license, permit, franchise or authorization.

“Permitted Liens” means any of the following to the extent they arise in the ordinary course of business of the Person whose property is subject to the Lien: (a) any mechanic’s liens, landlord’s liens and liens to secure importation/custom duties in connection with the importation of goods; (b) any liens for Taxes, assessments, judgments and similar charges not yet due and payable or which are being contested in good faith and for which any required reserves have been established; and (c) purchase money liens and liens securing rental payments under capital lease arrangements of the Company.

“Person” means any natural person, corporation, general partnership, limited partnership, limited liability company or partnership, proprietorship, other business organization, trust, union, association or Governmental Authority.

“Proposed to be conducted”, the phrase “currently proposed to be conducted” or “currently planned or contemplated to be conducted” means, (A) with respect to the business of the Company, the commercialization, pursuant to the current plans of the Company, of (1) the AdSense product and the Company’s Intellectual Property related thereto and any other Intellectual Property of the Company related to content targeted advertising, and (2) any existing software tools, and software tools currently under development, for use by the Company internally relating to automated development of the Company’s ontology and for use both by the Company internally and the Company’s customers relating to accounting and analysis of advertising services, Internet user behavior and performance metrics related to any of the Company’s existing products including, without limitation, AdSense; and (B) with respect to the business of Parent, the operation of the business of Parent in the manner in which Parent’s management currently plans or proposes to operate such business over the next twelve month period.

“Purchaser Representative” has the meaning given to it by Section 6.3(s).

“Reference Value” means four (4).

“Representative Escrow Amount” has the meaning given to it in Section 7.6(a).

“Restricted” means, with respect to outstanding shares of Company Capital Stock or Merger Consideration, that such shares or Merger Consideration are subject to a right of repurchase, forfeiture or divestment in favor of either the party that issued such shares or paid or issued such Merger Consideration, or both.

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“Restricted Stock Purchase Agreement” means a restricted stock purchase agreement in pursuant to which the Company has sold Company Restricted Stock, or any other agreement pursuant to which the Company is granted the right to repurchase Company Restricted Stock.

“SEC” means the Securities and Exchange Commission or any successor entity.

“Securities Act” means the Securities Act of 1933, as amended, and the rules and regulations promulgated by the SEC thereunder.

“Securityholder Agent” has the meaning given to it in Section 7.3(g)(i).

“Series B Amount” means the amount equal to the product of (x) the Total Outstanding Series B Shares, multiplied by (y) 8.28.

“Severance Payments and Obligations” has the meaning given to it in Section 5.5.

“Shareholders Certificate” has the meaning given to it be Section 1.9(c).

“Soliciting Materials” has the meaning given to it in Section 5.1(b).

“Statement of Expenses” has the meaning given to it in Section 5.6.

“Stock Exchange Ratio” means the quotient obtained by dividing (a) the Aggregate Stock Consideration, by (b) the Aggregate Common Number.

“Sub” has the meaning given to it in the forepart of this Agreement.

“Subsidiary” or “Subsidiaries” means any Person or Persons in which the Company or Parent, as the context requires, directly or indirectly through Subsidiaries or otherwise, beneficially owns at least fifty percent (50%) of either the equity interest in, or the voting control of, such Person, whether or not existing on the date hereof.

“Surviving Corporation” has the meaning given to it in Section 1.1.

“Tax” has the meaning given to it by Section 2.10(a).

“Total Outstanding Series B Shares” means the aggregate number of shares of Company Series B Preferred Stock (including any rights convertible into, or exercisable or exchangeable for, shares of Company Series B Preferred Stock on an as-converted, exercised, or exchanged basis) issued and outstanding immediately prior to the Effective Time.

“Unrestricted” means, with respect to Company Capital Stock or Merger Consideration, such Company Capital Stock or Merger Consideration that is not Restricted.

“Vest” or “Vesting” means (a) with respect to an Option, such Option becoming vested and exercisable, and (b) with respect to shares of Parent Common Stock that are Restricted,

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such shares becoming released from the applicable risk of forfeiture or divestment or repurchase right; and “Vested” (a) with respect to Options, refers to the maximum number of shares which may then be issued upon exercise of such Option (and which upon such issuance will not be Restricted), and (b) with respect to shares of Parent Common Stock that are Restricted, refers to the number of shares which are released from the applicable risk of forfeiture or divestment or repurchase right.

“Vested Assumed Option” means only that portion of an Assumed Option that is Vested immediately following the Effective Time.

“Vested Assumed Option Number” means the aggregate number of shares of Company Common Stock issuable upon exercise of all Vested Assumed Options as of immediately following the Effective Time.

“Voting Agreement” has the meaning given to it in Recital E to this Agreement.

[SIGNATURE PAGE FOLLOWS]

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IN WITNESS WHEREOF, Parent, Sub, the Company and the Indemnifying Officers, and with respect to Article 7 and Article 9 only, the Securityholder Agent and the Escrow Agent, have caused this Agreement to be signed by their duly authorized representatives, all as of the date first written above.

APPLIED SEMANTICS, INC.		GOOGLE TECHNOLOGY INC.
By:	/s/    Jordan Libit	By:	/s/    Eric Schmidt
	Jordan Libit		Eric Schmidt
	President and Chief Executive Officer		Chief Executive Officer
BERMUDA ACQUISITION INC.
By:	/s/    David Drummond
	David Drummond
	President and Chief Executive Officer
U.S. BANK, NATIONAL ASSOCIATION, AS ESCROW AGENT		SECURITYHOLDER AGENT
By:	/s/    Ann Gadsby	By:	/s/    Jordan Libit
	Ann Gadsby		Jordan Libit
	Vice President
THE INDEMNIFYING OFFICERS:
By:	/s/    Jordan Libit	By:	/s/    Jason Liebman
	Jordan Libit		Jason Liebman
By:	/s/    Eytan Elbaz	By:	/s/    Brad Stein
	Eytan Elbaz		Brad Stein
By:	/s/    Adam Weissman	By:	/s/    Gil Elbaz
	Adam Weissman		Gil Elbaz

EX-3.01

Exhibit 3.01

AMENDED AND RESTATED

CERTIFICATE OF INCORPORATION OF

GOOGLE INC.

Google Inc., a corporation organized and existing under the laws of the State of Delaware (the “Corporation”), certifies that:

A. The name of the Corporation is Google Inc. The Corporation’s original Certificate of Incorporation was filed with the Secretary of State of the State of Delaware on October 22, 2002.

B. This Amended and Restated Certificate of Incorporation was duly adopted in accordance with Sections 242 and 245 of the General Corporation Law of the State of Delaware, and restates, integrates and further amends the provisions of the Corporation’s Certificate of Incorporation.

C. The text of the Certificate of Incorporation is amended and restated to read as set forth in Exhibit A attached hereto.

IN WITNESS WHEREOF, Google Inc. has caused this Amended and Restated Certificate of Incorporation to be signed by David C. Drummond, a duly authorized officer of the Corporation, on August 27, 2003.

/s/ David C. Drummond

David C. Drummond,

Vice President and Secretary

EXHIBIT A

ARTICLE I

The name of the Corporation is Google Inc.

ARTICLE II

The purpose of this Corporation is to engage in any lawful act or activity for which corporations may be organized under the General Corporation Law of Delaware.

The address of the Corporation’s registered office in the State of Delaware is 2711 Centerville Road, Suite 400, Wilmington, DE 19808, County of New Castle. The name of the registered agent at such address is Corporation Service Company.

ARTICLE III

This Corporation is authorized to issue three classes of shares of stock, which shall be designated, respectively, “Common Stock,” “Class A Senior Common Stock” and “Preferred Stock.” The total number of shares that the Corporation is authorized to issue is 864,781,656 shares. The number of shares of Common Stock authorized is 400,000,000 shares, $0.001 par value per share. The number of shares of Class A Senior Common Stock authorized is 300,000,000 shares, $0.001 par value per share. The number of shares of Preferred Stock authorized is 164,781,656 shares, $0.001 par value per share, 15,360,000 of which are designated as Series A Preferred Stock (“Series A Preferred”), 15,360,000 of which are designated as Series A-1 Preferred Stock (“Series A-1 Preferred), 50,444,772 of which are designated as Series B Preferred Stock (“Series B Preferred”), 50,444,772 of which are designated as Series B-1 Preferred Stock (“Series B-1 Preferred”), 9,148,604 of which are designated as Series C Preferred Stock (“Series C Preferred”), 9,148,604 of which are designated as Series C-1 Preferred Stock (“Series C-1 Preferred”), 7,437,452 of which are designated as Series D Preferred Stock (“Series D Preferred”) and 7,437,452 of which are designated as Series D-1 Preferred Stock (“Series D-1 Preferred”).

ARTICLE IV

The rights, privileges, preferences and restrictions of the Preferred Stock are as follows:

1.    Dividends.

(a)    Preference Dividends. The holders of Preferred Stock shall be entitled to receive dividends, out of any assets legally available therefor, prior and in preference to any declaration or payment of any dividend (payable other than in Class A Senior Common Stock or Common Stock or other securities and rights convertible into or entitling the holder thereof to

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receive, directly or indirectly, additional shares of Class A Senior Common Stock or Common Stock of the Corporation) on Class A Senior Common Stock and Common Stock of the Corporation, at the rate of $0.00625 per share per annum for the Series A and Series A-1 Preferred, $0.049525 per share per annum for the Series B and Series B-1 Preferred, $0.23425 per share per annum for the Series C and Series C-1 Preferred and $0.291 per share per annum for the Series D and Series D-1 Preferred, as adjusted for any stock split, stock dividend, combination or other recapitalization (each a “Recapitalization”) or, if greater (as determined on a per annum basis and on an as converted basis for the Preferred Stock), an amount equal to that paid on any other outstanding shares of the Corporation.

(b)    Dividends Noncumulative. Dividends on shares of Common Stock, Class A Senior Common Stock and Preferred Stock under this Section 1 shall be payable when, as and if declared by the Board of Directors of the Corporation, and shall not be cumulative, and no right shall accrue to holders of Common Stock, Class A Senior Common Stock or Preferred Stock under this Section 1 by reason of the fact that dividends on said shares are not declared in any prior period.

2.    Liquidation Preference. In the event of any liquidation, dissolution or winding up of the Corporation, either voluntary or involuntary (a “Liquidation Event”), distributions to the stockholders of the Corporation shall be made in the following manner:

(a)    The holders of the Preferred Stock shall be entitled to receive, prior and in preference to any distribution of any of the assets or surplus funds of the Corporation to the holders of the Class A Senior Common Stock and Common Stock by reason of their ownership of such stock, an amount equal to $0.0625 for each share of Series A or Series A-1 Preferred then held by them, an amount equal to $0.49525 for each share of Series B or Series B-1 Preferred then held by them, an amount equal to $2.3425 for each share of Series C or Series C-1 Preferred then held by them and an amount equal to $2.91 for each share of Series D or Series D-1 Preferred then held by them (as adjusted for any Recapitalization with respect to such Preferred Stock) plus declared and unpaid dividends, if any, on such share. If upon the occurrence of a Liquidation Event, the assets and funds of the Corporation available for distribution among the holders of the Preferred Stock shall be insufficient to permit the payment to such holders of the full preferential amounts, then the entire assets and funds of the Corporation legally available for distribution to the stockholders shall be distributed among the holders of the Preferred Stock in proportion to the full preferential amount each such holder would otherwise be entitled to receive pursuant to this Section 2(a).

(b)    Upon the occurrence of a Liquidation Event, and after payment of the full preferential amounts to the holders of the Preferred Stock in accordance with Section 2(a) of this Article IV, all remaining assets of the Corporation available for distribution shall be distributed among the holders of shares of Class A Senior Common Stock and Common Stock pro rata based on the number of shares of Class A Senior Common Stock and Common Stock then held by them.

(c)    For purposes of Section 2 of this Article IV, a merger or reorganization of the Corporation with or into any other corporation in which the Corporation’s stockholders immediately prior to such transaction own immediately following such transaction less than a majority of the voting power of the equity securities of the surviving corporation (other than a merger or reorganization effected exclusively for the purpose of changing the domicile of the Corporation), or

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the sale of all or substantially all of the assets of the Corporation shall be treated as a Liquidation Event.

(i)    Valuation of Consideration. In the event of a Liquidation Event as described in Section 2(c) of this Article IV, if the consideration received by the Corporation is other than cash, its value will be deemed its fair market value. Any securities shall be valued as follows:

(A)    Securities not subject to investment letter or other similar restrictions on free marketability:

(1)    If traded on a securities exchange or The Nasdaq Stock Market, the value shall be deemed to be the average of the closing prices of the securities on such exchange over the thirty-day period ending three (3) days prior to the closing;

(2)    If actively traded over-the-counter, the value shall be deemed to be the average of the closing bid or sale prices (whichever is applicable) over the thirty-day period ending three (3) days prior to the closing; and

(3)    If there is no active public market, the value shall be the fair market value thereof, as mutually determined by the Corporation and the holders of at least a majority of the voting power of all then outstanding shares of Preferred Stock.

(B)    The method of valuation of securities subject to investment letter or other restrictions on free marketability (other than restrictions arising solely by virtue of a stockholder’s status as an affiliate or former affiliate) shall be to make an appropriate discount from the market value determined as above in Section 2(c)(i)(A) of this Article IV to reflect the approximate fair market value thereof, as mutually determined by the Corporation and the holders of at least a majority of the voting power of all then outstanding shares of Preferred Stock.

(ii)    Notice of Transaction. The Corporation shall give each holder of record of Preferred Stock written notice of such impending transaction not later than ten (10) days prior to the stockholders’ meeting called to approve such transaction, or ten (10) days prior to the closing of such transaction, whichever is earlier, and shall also notify such holders in writing of the final approval of such transaction. The first of such notices shall describe the material terms and conditions of the impending transaction and the provisions of Section 2 of this Article IV, and the Corporation shall thereafter give such holders prompt notice of any material changes. The transaction shall in no event take place sooner than ten (10) days after the Corporation has given the first notice provided for herein or sooner than ten (10) days after the Corporation has given notice of any material changes provided for herein; provided, however, that such periods may be shortened upon the written consent of the holders of Preferred Stock that are entitled to such notice rights or similar notice rights and that represent at least a majority of the voting power of all then outstanding shares of such Preferred Stock.

(iii)    Effect of Noncompliance. In the event the requirements of Section 2(c) of this Article IV are not complied with, the Corporation shall forthwith either cause the closing of the transaction to be postponed until such time as the requirements of Section 2(c) of this

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Article IV have been complied with, or cancel such transaction, in which event the rights, preferences and privileges of the holders of the Preferred Stock shall revert to and be the same as such rights, preferences and privileges existing immediately prior to the date of the first notice referred to in Section 2(c)(ii) of this Article IV.

(d)    So long as Section 2115 of the California General Corporation Law purports to make the provisions of Sections 502 and 503 of the California Corporations Code applicable to the Corporation, such provisions shall not apply for purposes of distributions made by the Corporation in connection with the repurchase at cost of shares of Class A Senior Common Stock and Common Stock issued to or held by officers, directors or employees of, or consultants to, the Corporation or its subsidiaries upon termination of their employment or services pursuant to agreements (whether now existing or hereafter entered into) providing for the right of said repurchase between the Corporation and such persons.

3.    Voting Rights; Board of Directors.

(a)    General. Except as otherwise required by law and except as set forth in Section 5 of this Article IV, each holder of Preferred Stock shall be entitled to such number of votes for the shares of Preferred Stock held by such holder on the record date fixed for such meeting, or on the effective date of such written consent as follows: prior to the occurrence of the Class A Senior Common Conversion Event (as defined in Section 3(b) of Article V), such shares of Preferred Stock shall be entitled to the number of votes equal to the whole number of shares of Class A Senior Common Stock into which such shares of Preferred Stock are then convertible times ten (10); immediately following the Class A Senior Common Conversion Event, such shares of Preferred Stock shall be entitled to the number of votes equal to the whole number of shares of Common Stock into which shares of Preferred Stock are then convertible. The holder of each share of Preferred Stock shall be entitled to notice of any stockholders’ meeting in accordance with the bylaws of the Corporation and any other matter submitted to the vote of stockholders and shall be entitled to vote, together with the holders of Class A Senior Common Stock and the holders of Common Stock, with respect to any question upon which holders of Class A Senior Common Stock and the holders of Common Stock have the right to vote, except (i) those matters required by law to be submitted to a separate class vote and (ii) the election of the Common Directors as set forth in Section 3(b) of this Article IV.

(b)    Election of Directors. The holders of the Preferred Stock, voting as a single class, shall be entitled to elect two (2) directors (the “Preferred Directors”), and the holders of the Class A Senior Common Stock and the holders of the Common Stock, voting as a single class, shall be entitled to elect three directors (the “Common Directors”). The remaining director shall be elected mutually by holders of the Preferred Stock, the holders of the Class A Senior Common Stock and the holders of the Common Stock voting together as a single class and on an as-converted basis (the “Joint Director”).

4.    Conversion. The holders of the Preferred Stock shall have conversion rights as set forth in this Section 4 (the “Conversion Rights”). The shares of Preferred Stock shall be convertible into shares of Common Stock or shares of Class A Senior Common Stock, as set forth in this Section 4. Initially, the Preferred Stock shall be convertible into shares of Class A Senior Common

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Stock. Immediately following a Class A Senior Common Conversion Event (as defined in Section 3(b) of Article V), the Preferred Stock shall be convertible, instead, into shares of Common Stock.

(a)    Right to Convert. Each share of Preferred Stock shall be convertible, at the option of the holder thereof, at any time after the date of issuance of such share at the office of the Corporation or any transfer agent for such stock. Each share of Series A or Series A-1 Preferred shall be convertible into the number of fully paid and nonassessable shares of Class A Senior Common Stock or Common Stock, as the case may be, which results from dividing the per share Series A Conversion Value (as hereinafter defined) by the Series A Conversion Price (as hereinafter defined) per share in effect at the time of conversion. Each share of Series B or Series B-1 Preferred shall be convertible into the number of fully paid and nonassessable shares of Class A Senior Common Stock or Common Stock, as the case may be, which results from dividing the per share Series B Conversion Value (as hereinafter defined) by the Series B Conversion Price (as hereinafter defined) per share in effect at the time of conversion. Each share of Series C or Series C-1 Preferred shall be convertible into the number of fully paid and nonassessable shares of Class A Senior Common Stock or Common Stock, as the case may be, which results from dividing the per share Series C Conversion Value (as hereinafter defined) by the Series C Conversion Price (as hereinafter defined) per share in effect at the time of conversion. Each share of Series D or Series D-1 Preferred shall be convertible into the number of fully paid and nonassessable shares of Class A Senior Common Stock or Common Stock, as the case may be, which results from dividing the per share Series D Conversion Value (as hereinafter defined) by the Series D Conversion Price (as hereinafter defined) per share in effect at the time of conversion. The per share price as of the date of the filing of this Amended and Restated Certificate of Incorporation at which shares of Class A Senior Common Stock or Common Stock shall be deliverable upon conversion of the Series A or Series A-1 Preferred (the “Conversion Price” for each of the Series A and Series A-1 Preferred) shall be $0.0625, and the per share conversion value attributable to the Series A or Series A-1 Preferred shall be $0.0625 (the “Conversion Value” for each of the Series A and Series A-1 Preferred). The per share price as of the date of the filing of this Amended and Restated Certificate of Incorporation at which shares of Class A Senior Common Stock or Common Stock, as the case may be, shall be deliverable upon conversion of the Series B or Series B-1 Preferred (the “Conversion Price” for each of the Series B and Series B-1 Preferred) shall be $0.49525, and the per share conversion value attributable to the Series B or Series B-1 Preferred shall be $0.49525 (the “Conversion Value” for each of the Series B and Series B-1 Preferred). The per share price as of the date of the filing of this Amended and Restated Certificate of Incorporation at which shares of Class A Senior Common Stock or Common Stock, as the case may be, shall be deliverable upon conversion of the Series C or Series C-1 Preferred (the “Conversion Price” for each of the Series C and Series C-1 Preferred) shall be $2.3425 and the per share conversion value attributable to the Series C or Series C-1 Preferred shall be $2.3425 (the “Conversion Value” for each of the Series C and Series C-1 Preferred). The per share price as of the date of the filing of this Amended and Restated Certificate of Incorporation at which shares of Class A Senior Common Stock or Common Stock, as the case may be, shall be deliverable upon conversion of the Series D or Series D-1 Preferred (the “Conversion Price” for the Series D and Series D-1 Preferred) shall be $2.91 and the per share conversion value attributable to the Series D or Series D-1 Preferred shall be $2.91 (the “Conversion Value” for the Series D and Series D-1 Preferred). The Conversion Price for each of the Series A, Series A-1, Series B, Series B-1, Series C, Series C-1, Series D and Series D-1 Preferred shall be subject to adjustment from time

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to time as provided below. The number of shares of Class A Senior Common Stock or Common Stock into which a share of a series of Preferred Stock is convertible is hereinafter referred to as the “Conversion Rate” for such share.

(b)    Automatic Conversion. Each share of Preferred Stock shall automatically be converted into shares of Common Stock at its then effective Conversion Rate immediately prior to the closing of the sale of Common Stock of the Corporation in an underwritten public offering pursuant to an effective registration statement under the Securities Act of 1933, as amended, covering the offering and sale of Common Stock for the account of the Corporation to the public (an “IPO”) at a price per share (prior to underwriter commissions and offering expenses) of not less than $2.3425 (appropriately adjusted for Recapitalizations) and at an aggregate offering price to the public of not less than $15,000,000. In the event of the automatic conversion of the Preferred Stock upon a public offering as described above, the person(s) entitled to receive the Common Stock issuable upon such conversion of Preferred Stock shall not be deemed to have converted such Preferred Stock until immediately prior to the closing of the IPO. Each share of Preferred Stock also shall be automatically converted into shares of Class A Senior Common Stock or Common Stock, as the case may be, at its then effective Conversion Rate upon the affirmative vote of the holders of at least a majority of the shares of Preferred Stock.

(c)    Mechanics of Conversion. Before any holder of Preferred Stock shall be entitled to convert the same into shares of Class A Senior Common Stock or Common Stock and receive certificates therefor, he shall surrender the certificate or certificates therefor, duly endorsed, at the office of the Corporation or of any transfer agent for the Preferred Stock and shall give written notice to the Corporation at such office that such holder elects to convert the same; provided, however, that in the event of an automatic conversion pursuant to Section 4(b) of this Article IV, the outstanding shares of Preferred Stock so converted shall be converted automatically without any further action by the holders of such shares whether or not the certificates representing such shares are surrendered to the Corporation or its transfer agent, and provided further that the Corporation shall not be obligated to issue certificates evidencing the shares of Class A Senior Common Stock or Common Stock, as the case may be, issuable upon such automatic conversion unless the certificates evidencing such shares of Preferred Stock are either delivered to the Corporation or its transfer agent as provided above, or the holder notifies the Corporation or its transfer agent that such certificates have been lost, stolen or destroyed and executes an agreement satisfactory to the Corporation to indemnify the Corporation from any loss incurred by it in connection with such certificates. The Corporation shall, as soon as practicable after such delivery, or such agreement and indemnification in the case of a lost certificate, issue and deliver at such office to such holder of Preferred Stock, a certificate or certificates for the number of shares of Class A Senior Common Stock or Common Stock, as the case may be, to which the holder shall be entitled as aforesaid and a check payable to the holder in the amount of any cash amounts payable as the result of a conversion into fractional shares of Class A Senior Common Stock or Common Stock, as the case may be, as set forth in Section 4(j) of this Article IV. Such conversion shall be deemed to have been made immediately prior to the close of business on the date of such surrender of the shares of Preferred Stock to be converted, or in the case of automatic conversion as provided in Section 4(b) of this Article IV, such conversion shall be deemed to occur as set forth in Section 4(b) of this Article IV, and the person or persons entitled to receive the shares of Class A Senior Common Stock or Common Stock, as the

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case may be, issuable upon such conversion shall be treated for all purposes as the record holder or holders of such shares of Class A Senior Common Stock or Common Stock on such date.

(d)    Reserved.

(e)    Adjustments to Conversion Prices With Respect to Certain Diluting Issuances. The Conversion Prices of the Preferred Stock shall be subject to adjustment from time to time as follows:

(i)    Special Definitions. For purposes of Section 4(e) of this Article IV, the following definitions apply:

(A)    “Options” shall mean rights, options or warrants to subscribe for, purchase or otherwise acquire either Class A Senior Common Stock, Common Stock or Convertible Securities (defined below).

(B)    “Original Issue Date” for each series of Preferred Stock shall mean the date on which shares of such series are first issued.

(C)    “Convertible Securities” shall mean any evidences of indebtedness, shares or other securities convertible into or exchangeable for Class A Senior Common Stock, Common Stock, or for securities convertible into or exchangeable for such securities.

(D)    “Additional Shares of Common Stock” shall mean all shares of Class A Senior Common Stock and Common Stock issued (or, pursuant to Section 4(e)(iii) of this Article IV, deemed to be issued) by the Corporation after the filing of this Amended and Restated Certificate of Incorporation, other than:

(1)    shares of Class A Senior Common Stock or Common Stock issued or issuable to officers, directors, consultants or employees of the Corporation pursuant to stock option or stock purchase plans or agreements on terms approved by the disinterested Board of Directors of the Corporation (not to exceed 14,391,326 shares plus the number of shares repurchased by the Corporation from employees or consultants of the Corporation upon termination of employment or association pursuant to the terms of restrictive stock purchase agreements providing for the repurchase of such shares entered into with such employees or consultants); provided, however, that shares of Class A Senior Common Stock and Common Stock issued or deemed to be issued that are excepted from the definition of Additional Shares of Common Stock pursuant to one or more of the other subsections of Section 4(e)(i)(D) of this Article IV shall not be counted against the foregoing numerical limitation;

(2)    as a dividend or distribution on the Preferred Stock if such dividend or distribution is distributed to the holders of Preferred Stock ratably based on the number of shares of Class A Senior Common Stock or Common Stock issuable upon conversion of the Preferred Stock at the Conversion Rate in effect on the record date for such dividend or distribution;

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(3)    by reason of a stock split, reverse stock split, stock dividend or other adjustment covered by Section 4(f) of this Article IV;

(4)    Options or Convertible Securities issued to financial institutions or lessors in connection with commercial credit arrangements, equipment financings or similar transactions approved by the Board of Directors of the Corporation;

(5)    by reason of a reorganization, reclassification, exchange, substitution or other adjustment covered by Section 4(g) of this Article IV;

(6)    shares of Class A Senior Common Stock or Common Stock issued or issuable upon conversion of the Preferred Stock;

(7)    shares of Common Stock, Class A Senior Common Stock or Preferred Stock issued or issuable upon the conversion or exercise of Options outstanding as of the date hereof;

(8)    shares of Class A Senior Common Stock or Common Stock issued or issuable to officers, directors, consultants or employees of the Corporation pursuant to stock options outstanding as of the date of the filing of this Amended and Restated Certificate of Incorporation; or

(9)    those which are otherwise excluded by the affirmative vote or written consent of the holders of a majority of the shares of Preferred Stock then outstanding.

(ii)    No Adjustment for Conversion Price. Any provision herein to the contrary notwithstanding, no adjustment to the Conversion Price applicable to any series of Preferred Stock shall be made in respect of the issuance of Additional Shares of Common Stock if the consideration per share (determined pursuant to Section 4(e)(v) of this Article IV) for an Additional Share of Common Stock issued or deemed to be issued by the Corporation is equal to or greater than the Conversion Price in effect for such series on the date of, and immediately prior to, such issue.

(iii)    Deemed Issuance of Additional Shares of Common Stock. In the event the Corporation at any time or from time to time after the Original Issue Date shall issue any Options or Convertible Securities or shall fix a record date for the determination of holders of any class of securities then entitled to receive any such Options or Convertible Securities, then the maximum number of shares (as set forth in the instrument relating thereto without regard to any provisions contained therein designed to protect against dilution) of Class A Senior Common Stock or Common Stock issuable upon the exercise of such Options or, in the case of Convertible Securities and Options therefor, the conversion or exchange of such Convertible Securities, shall be deemed to be Additional Shares of Common Stock issued as of the time of such issue or, in case such a record date shall have been fixed, as of the close of business on such record date, provided that in any such case in which Additional Shares of Common Stock are deemed to be issued:

(A)    no further adjustment in any Conversion Price shall be made upon the subsequent issue of the Options or Convertible Securities or shares of Class A Senior

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Common Stock or Common Stock upon the exercise of such Options or conversion or exchange of such Convertible Securities;

(B)    if such Options or Convertible Securities by their terms provide, with the passage of time or otherwise, for any increase or decrease in the consideration payable to the Corporation, or decrease or increase in the number of shares of Class A Senior Common Stock or Common Stock issuable, upon the exercise, conversion or exchange thereof, the Conversion Price computed upon the original issue thereof (or upon the occurrence of a record date with respect thereto), and any subsequent adjustments based thereon, shall, upon any such increase or decrease becoming effective, be recomputed to reflect such increase or decrease insofar as it affects such Options or the rights of conversion or exchange under such Convertible Securities (provided, however, that no such adjustment of any Conversion Price shall affect Class A Senior Common Stock or Common Stock previously issued upon conversion of the Preferred Stock, if any);

(C)    upon the expiration of any such Options or any rights of conversion or exchange under such Convertible Securities which shall not have been exercised, the Conversion Price computed upon the original issue thereof (or upon the occurrence of a record date with respect thereto), and any subsequent adjustments based thereon, shall, upon such expiration, be recomputed as if:

(1)    in the case of Convertible Securities or Options, the only Additional Shares of Common Stock issued were the shares of Class A Senior Common Stock or Common Stock, if any, actually issued upon the exercise of such Options or the Conversion or exchange of such Convertible Securities and the consideration received therefor was the consideration actually received by the Corporation for the issue of all such Options, whether or not exercised, plus the consideration actually received by the Corporation upon such exercise, or for the issue of all such Convertible Securities which were actually converted or exchanged, plus the additional consideration, if any, actually received by the Corporation upon such conversion or exchange; and

(2)    in the case of Options for Convertible Securities, only the Convertible Securities, if any, actually issued upon the exercise thereof were issued at the time of issue of such Options, and the consideration received by the Corporation for the Additional Shares of Common Stock deemed to have been then issued was the consideration actually received by the Corporation for the issue of all such Options, whether or not exercised, plus the consideration deemed to have been received by the Corporation (determined pursuant to Section 4(e)(v) of this Article IV) upon the issue of the Convertible Securities with respect to which such Options were actually exercised;

(D)    no readjustment pursuant to clause (B) or (C) above shall have the effect of increasing any Conversion Price to an amount which exceeds the lower of (a) the Conversion Price on the original adjustment date, or (b) the Conversion Price that would have resulted from any issuance of Additional Shares of Common Stock between the original adjustment date and such readjustment date.

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(iv)    Adjustment of Conversion Price Upon Issuance of Additional Shares of Common Stock.

(A)    In the event the Corporation, at any time after the date of the filing of this Amended and Restated Certificate of Incorporation, shall issue Additional Shares of Common Stock (including Additional Shares of Common Stock deemed to be issued pursuant to Section 4(e)(iii) of this Article IV) without consideration or for consideration per share less than the Conversion Price of the Series A, Series B, Series C or Series D Preferred Stock, as applicable, in effect on the date of and immediately prior to such issue, then and in such event, the Conversion Price of such Series A, Series B, Series C or Series D Preferred Stock, as applicable, shall be reduced, concurrently with such issue, to the Conversion Price (calculated to the nearest one-hundredth of a cent) determined by dividing (X) an amount equal to the sum of (1) the product derived by multiplying the Conversion Price in effect immediately prior to such issue or sale times the number of shares of Common Stock Outstanding (as defined below) immediately prior to such issue or sale, plus (2) the consideration, if any, received by the Corporation upon such issue or sale, by (Y) an amount equal to the sum of (1) the number of shares of Common Stock Outstanding immediately prior to such issue or sale, plus (2) the number of shares of Additional Shares of Common Stock issued or deemed to have been issued in such issue and sale. For the purposes of the calculations set forth in this Section 4(e)(iv), the number of shares of Common Stock Outstanding at any time shall be equal to the number of shares of Class A Senior Common Stock and Common Stock outstanding at such time plus the number of shares of Class A Senior Common Stock and Common Stock issuable upon the exercise and/or conversion of all Options and Convertible Securities then outstanding.

(B)    From and after such time as any share of Series A-1 Preferred is issued and outstanding, the Conversion Price for the Series A-1 Preferred shall be the Series A Conversion Price in effect immediately prior to such issuance and shall not thereafter be subject to adjustment pursuant to Section 4(e)(iv)(A) of this Article IV. From and after such time as any share of Series B-1 Preferred is issued and outstanding, the Conversion Price for the Series B-1 Preferred shall be the Series B Conversion Price in effect immediately prior to such issuance and shall not thereafter be subject to adjustment pursuant to Section 4(e)(iv)(A) of this Article IV. From and after such time as any share of Series C-1 Preferred is issued and outstanding, the Conversion Price for the Series C-1 Preferred shall be the Series C Conversion Price in effect immediately prior to such issuance and shall not thereafter be subject to adjustment pursuant to Section 4(e)(iv)(A) of this Article IV. From and after such time as any share of Series D-1 Preferred is issued and outstanding, the Conversion Price for the Series D-1 Preferred shall be the Series D Conversion Price in effect immediately prior to such issuance and shall not thereafter be subject to adjustment pursuant to Section 4(e)(iv)(A) of this Article IV.

(v)    Determination of Consideration for Options and Convertible Securities. The consideration per share received by the Corporation for Additional Shares of Common Stock deemed to have been issued pursuant to Section 4(e)(iii) of this Article IV, relating to Options and Convertible Securities shall be determined by dividing:

(A)    the total amount, if any, received or receivable by the Corporation as consideration for the issue of such Options or Convertible Securities, plus the

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minimum aggregate amount of additional consideration (as set forth in the instruments relating thereto, without regard to any provision contained therein designed to protect against dilution, but excluding any cash received on account of accrued interest or accrued dividends) payable to the Corporation upon the exercise of such Options or the conversion or exchange of such Convertible Securities, or in the case of Options for Convertible Securities, the exercise of such Options for Convertible Securities and the conversion or exchange of such Convertible Securities by

(B)    the maximum number of shares of Class A Senior Common Stock and Common Stock (as set forth in the instruments relating thereto, without regard to any provision contained therein designed to protect against the dilution) issuable upon the exercise of such Options or conversion or exchange of such Convertible Securities.

If the consideration is not cash or such instrument does not specify the value of the additional consideration such consideration shall be deemed to be the fair value thereof as determined by the Board of Directors irrespective of any accounting treatment.

(f)    Adjustments for Subdivisions, Combinations or Consolidation of Class A Senior Common Stock and Common Stock. In the event the outstanding shares of Class A Senior Common Stock and Common Stock shall be subdivided (by stock split, stock dividend, stock combination, reclassification or otherwise) at any time after the filing of this Amended and Restated Certificate of Incorporation into a greater number of shares of Class A Senior Common Stock and Common Stock, the Conversion Price for each series of Preferred Stock then in effect shall, concurrently with the effectiveness of such subdivision, be proportionately decreased. In the event the outstanding shares of Class A Senior Common Stock and Common Stock shall be combined or consolidated, by reclassification or otherwise, into a lesser number of shares of Class A Senior Common Stock and Common Stock, the Conversion Price for each series of Preferred Stock then in effect shall, concurrently with the effectiveness of such combination or consolidation, be proportionately increased. In no event shall the outstanding shares of Common Stock be subdivided, combined or consolidated without a corresponding and proportionate subdivision, combination or consolidation of the Class A Senior Common Stock. Similarly, in no event shall the outstanding shares of Class A Senior Common Stock be subdivided, combined or consolidated without a corresponding and proportionate subdivision, combination or consolidation of the Common Stock.

(g)    Adjustments for Reorganization, Reclassification, Exchange and Substitution. If the shares of Class A Senior Common Stock and Common Stock issuable upon conversion of any shares of Preferred Stock shall be changed into the same or a different number of shares of any other class or classes of stock or other securities or property, whether by reorganization, reclassification or otherwise (other than a subdivision or combination of shares provided for in Section 4(f) of this Article IV), the Conversion Price for each series then in effect shall, concurrently with the effectiveness of such reorganization or reclassification, be proportionately adjusted such that the shares of Preferred Stock shall be convertible into, in lieu of the number of shares of Class A Senior Common Stock or Common Stock which the holders thereof would otherwise have been entitled to receive upon such conversion, a number of shares of such other class or classes of stock or other securities or property equivalent to the number of shares of Class A Senior Common Stock or Common Stock, as the case may be, that would have been issuable to the holders of Preferred Stock if their shares of Preferred Stock had been converted immediately before such change; and, in any

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such case, appropriate adjustment (as determined by the Board of Directors) shall be made in the application of the provisions herein set forth with respect to the rights and interest thereafter of the holders of Preferred Stock, to the end that the provisions set forth herein (including the provisions with respect to changes in and other adjustments of the applicable Conversion Price) shall thereafter be applicable, as nearly as reasonably may be, in relation to any shares of stock or other property thereafter deliverable upon the conversion of the Preferred Stock. In no event shall the outstanding shares of Common Stock be changed, whether by reorganization, reclassification, exchange, substitution or otherwise, into shares of any other class or classes of stock or other securities or property without a corresponding and proportionate change relating to the Class A Senior Common Stock. Similarly, in no event shall the outstanding shares of Class A Senior Common Stock be changed, whether by reorganization, reclassification, exchange, substitution or otherwise, into shares of any other class or classes of stock or other securities or property without a corresponding and proportionate change relating to the Common Stock.

(h)    Other Distributions. In the event the Corporation shall declare a distribution payable in securities of other persons, evidences of indebtedness issued by the Corporation or other persons, assets (excluding cash dividends) or options or rights not referred to in Section 4(f) of this Article IV, then, in each such case for the purpose of this Section 4(h), the holders of Preferred Stock shall be entitled to a proportionate share of any such distribution as though they were the holders of the number of shares of Class A Senior Common Stock or Common Stock of the Corporation into which their shares of Preferred Stock are convertible as of the record date fixed for the determination of the holders of Class A Senior Common Stock or Common Stock, as the case may be, of the Corporation entitled to receive such distribution.

(i)    No Impairment. The Corporation will not through any reorganization, recapitalization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms to be observed or performed hereunder by the Corporation, but will at all times in good faith assist in the carrying out of all the provisions of Section 4 of this Article IV and in the taking of all such action as may be necessary or appropriate in order to protect the Conversion Rights of the holders of Preferred Stock against impairment. This provision shall not restrict the Corporation’s right to amend its Certificate of Incorporation with the requisite stockholder consent.

(j)    No Fractional Shares and Certificate as to Adjustments. No fractional shares of Class A Senior Common Stock or Common Stock shall be issued upon conversion of Preferred Stock. In lieu of any fractional shares to which the holder would otherwise be entitled, the Corporation shall pay cash equal to such fraction multiplied by the then fair market value of a share of Class A Senior Common Stock or Common Stock, as the case may be, as determined by the Board of Directors. For such purpose, all shares of Preferred Stock held by each holder of Preferred Stock shall be aggregated, and any resulting fractional share of Class A Senior Common Stock or Common Stock shall be paid in cash. If such conversion of Preferred Stock shall be into shares of Common Stock and such holder of Preferred Stock also holds shares of Class A Senior Common Stock to be converted into Common Stock, then all shares of Preferred Stock and Class A Senior Common Stock held shall be aggregated on an as-converted basis for the purpose of determining the number and value of fractional shares for which cash shall be paid. Upon the occurrence of each adjustment or readjustment of the Conversion Price for any series of Preferred Stock pursuant to

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Section 4 of this Article IV, the Corporation at its expense shall promptly compute such adjustment or readjustment in accordance with the terms hereof and prepare and furnish to each holder of Preferred Stock a certificate setting forth such adjustment or readjustment and showing in detail the facts upon which such adjustment or readjustment is based. The Corporation shall, upon written request at any time of any holder of Preferred Stock, furnish or cause to be furnished to such holder a like certificate setting forth (i) all such adjustments and readjustments, (ii) the Conversion Price for such series at the time in effect, and (iii) the number of shares of Class A Senior Common Stock or Common Stock and the amount, if any, of other property which at the time would be received upon the conversion of such holder’s shares of Preferred Stock.

(k)    Notices of Record Date. In the event of any taking by the Corporation of a record of the holders of any class of securities for the purpose of determining the holders thereof who are entitled to receive any dividend (other than a cash dividend) or other distribution, any right to subscribe for, purchase or otherwise acquire any shares of stock of any class or any other securities or property, or to receive any other right, the Corporation shall mail to each holder of Preferred Stock, at least ten (10) days prior to the date specified therein, a notice specifying the date on which any such record is to be taken for the purpose of such dividend, distribution or right, and the amount and character of such dividend, distribution or right.

(l)    Reservation of Common Stock Issuable Upon Conversion. The Corporation shall at all times reserve and keep available out of its authorized but unissued shares of Class A Senior Common Stock and Common Stock solely for the purpose of effecting the conversion of the shares of Preferred Stock such number of its shares of Class A Senior Common Stock and Common Stock as shall from time to time be sufficient to effect the conversion of all outstanding shares of Preferred Stock; and if at any time the number of authorized but unissued shares of Class A Senior Common Stock or Common Stock shall not be sufficient to effect the conversion of all then outstanding shares of Preferred Stock, the Corporation will take such corporate action as may, in the opinion of its counsel, be necessary to increase its authorized but unissued shares of Class A Senior Common Stock and Common Stock to such number of shares as shall be sufficient for such purpose.

(m)    Notices. Any notice required by the provisions of Section 4 of this Article IV to be given to the holders of shares of Preferred Stock shall be deemed given three (3) days after deposit in the United States mail, postage prepaid, and addressed to each holder of record at his address appearing on the books of the Corporation.

5.    Protective Covenants.

(a)    In addition to any other rights provided by law, the Corporation shall not, without first obtaining the affirmative vote or written consent of the holders of not less than a majority of the outstanding shares of Preferred Stock, voting separately as a class:

(i)    amend or repeal any provision of, or add any provision to, the Corporation’s Certificate of Incorporation or Bylaws if such action would materially or adversely alter or change the preferences, rights, privileges or powers of, or the restrictions provided for the benefit of the Preferred Stock, or increase or decrease the number of shares of Preferred Stock authorized hereby;

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(ii)    authorize or issue or obligate itself to issue, shares of any class or series of stock having any preference or priority as to voting, dividends or upon liquidation which are superior to any such preference or priority of the Preferred Stock;

(iii)    authorize or issue shares of stock of any class or series of any bonds, debentures, notes or other obligations convertible into or exchangeable for, or having option rights to purchase, any shares of stock of this Corporation having any preference or priority as to voting, dividends or upon liquidation which are superior to any such preference or priority of the Preferred Stock;

(iv)    reclassify any class or series of any Class A Senior Common Stock or Common Stock into shares having any preference or priority as to voting, dividends or upon liquidation which are superior to any such preference or priority any series of Preferred Stock;

(v)    effect a transaction described in Section 2(c) of this Article IV; or

(vi)    increase or decrease (other than by redemption or conversion) the total number of authorized shares of Series A, Series A-1, Series B, Series B-1, Series C, Series C-1, Series D or Series D-1 Preferred Stock.

6.    Status of Converted Stock. In the event any shares of Preferred Stock shall be converted pursuant to Section 4 of this Article IV, the shares so converted shall be cancelled and shall not be issuable by the Corporation. The Certificate of Incorporation of the Corporation shall be appropriately amended to effect the corresponding reduction in the Corporation’s authorized capital stock.

7.    Special Mandatory Conversion

(a)    If, at any time following the Original Issue Date of the Series C Preferred, (i) each and every holder of Series A, Series B, Series C and Series D Preferred Stock has a Right of First Offer with respect to an equity financing by the Corporation (the “Equity Financing”), (ii) the Corporation has complied with its obligations with respect to the Right of First Offer relating to the Equity Financing, and (iii) any holder of shares of Series A, Series B, Series C or Series D Preferred Stock or any holder of securities convertible or exercisable for shares of Series D Preferred Stock does not by exercise of such holder’s Right of First Offer acquire the amount of securities offered in such Equity Financing to which such holder is entitled pursuant to the Right of First Offer, then, effective immediately prior to the consummation of such Equity Financing, (A) if the Equity Financing was at a price per share less than the original issue price for the Series A Preferred Stock (as adjusted for Recapitalizations), then all of such holder’s shares of Series A Preferred Stock shall automatically and without further action on the part of such holder be converted into an equivalent number of shares of Series A-1 Preferred Stock, (B) if the Equity Financing was at a price per share less than the original issue price for the Series B Preferred Stock (as adjusted for Recapitalizations), then all of such holder’s shares of Series B Preferred Stock shall automatically and without further action on the part of such holder be converted into an equivalent number of shares of Series B-1 Preferred Stock, (C) if the Equity Financing was at a price per share less than the original issue price for the Series C Preferred Stock (as adjusted for Recapitalizations), then all such holder’s shares of

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Series C Preferred Stock shall automatically and without further action on the part of such holder be converted into an equivalent number of shares of Series C-1 Preferred Stock, and (D) if the Equity Financing was at a price per share less than the original issue price for the Series D Preferred Stock (and, in the case securities convertible or exercisable for shares of Series D Preferred Stock were issued prior to the first issuance of any shares of Series D Preferred Stock, a price per share less than the original conversion or exercise price of the first such convertible or exercisable securities issued) (as adjusted for Recapitalizations), then all such holder’s shares of Series D Preferred Stock shall automatically and without further action on the part of such holder be converted into an equivalent number of shares of Series D-1 Preferred Stock (and with respect to securities convertible or exercisable for shares of Series D Preferred Stock, all of such holder’s securities convertible or exercisable for Series D Preferred Stock shall become convertible or exercisable into shares of Series D-1 Preferred Stock pursuant to their terms); provided, however, that no such conversion shall occur in connection with a particular Equity Financing if, pursuant to the written request of the Corporation, the Right of First Offer with respect to such Equity Financing is waived with respect to every holder of Series A, Series B, Series C and Series D Preferred Stock and securities convertible or exercisable for shares of Series D Preferred Stock. Upon conversion pursuant to this Section 7, the shares of Series A, Series B, Series C or Series D Preferred Stock so converted shall be canceled and not subject to reissuance. The “Agreement” means that certain Second Amended and Restated Co-Sale, Right of First Refusal and Right of First Offer Agreement among the Corporation, the holders of the Series A, Series B, Series C and Series D Preferred Stock, the holder of securities convertible or exercisable for shares of Series D Preferred Stock and certain founders of the Corporation, as such agreement may from time to time be amended. A “Right of First Offer” means the right to participate in a sale and issuance of equity securities (or securities convertible into or exercisable for equity securities of the Corporation) of the Corporation on a pro rata basis (according to Preferred Stock stockholdings and/or holdings of shares issuable upon exercise of warrants to purchase Series D Preferred); provided that, if a stockholder has a pro rata right to participate in an Equity Financing that calculates the pro rata right based on shares of Preferred Stock and/or shares issuable upon exercise of warrants to purchase Series D Preferred as well as shares of additional securities, options and/or rights held by the stockholder (such additional securities, options and/or rights, the “Additional Securities”) such stockholder shall, be deemed to have a Right of First Offer because the stockholder has a right to participate based on shares of Preferred Stock and/or shares issuable upon exercise of warrants to purchase Series D Preferred held (notwithstanding that such stockholder has a right to participate based on the Additional Securities held), and, for purposes of this Section 7(a), the Right of First Offer shall mean that level of participation that is determined based on the shares of Preferred Stock and/or shares issuable upon exercise of warrants to purchase Series D Preferred that such stockholder holds.

(b)    The holder of any shares of Series A, Series B, Series C or Series D Preferred Stock or securities convertible or exercisable for shares of Series D Preferred Stock converted pursuant to this Section 7 shall deliver to the Corporation during regular business hours at the office of any transfer agent of the Corporation for such series of Preferred Stock, or at such other place as may be designated by the Corporation, the certificate or certificates representing the shares or securities so converted, duly endorsed or assigned in blank or to the Corporation. As promptly thereafter as is practicable, the Corporation shall issue and deliver to such holder, at the place designated by such holder, a certificate or certificates for the number of full shares of the Series A-1, Series B-1, Series C-1 or Series D-1 Preferred Stock or securities convertible or exercisable for

16

shares of Series D-1 Preferred Stock to which such holder is entitled. The person in whose name the certificate for such shares of Series A-1, Series B-1, Series C-1 or Series D-1 Preferred Stock or securities convertible or exercisable for shares of Series D Preferred Stock is to be issued shall be deemed to have become a stockholder or securityholder, as the case may be, on the effective date of the conversion of the Series A, Series B, Series C or Series D Preferred Stock or securities convertible or exercisable for shares of Series D Preferred Stock, unless the transfer books of the Corporation are closed on that date, in which case such person shall be deemed to have become a stockholder of record on the next succeeding date on which the transfer books are open.

(c)    In the event that any shares of Series A-1, Series B-1, Series C-1 or Series D-1 Preferred Stock or securities convertible or exercisable for shares of Series D-1 Preferred Stock are issued, concurrently with such issuance, the Corporation shall use its best efforts to take all such action as may be required, including amending its Certificate of Incorporation, (i) to cancel all authorized shares of such series that remain unissued after such issuance, (ii) to create and reserve with respect to each series a new series of Preferred Stock equal in number to the number of shares of such series so canceled and designated Series A-2 Preferred Stock (to the extent the canceled shares are shares of Series A-1 Preferred Stock), Series B-2 Preferred Stock (to the extent the canceled shares are shares of Series B-1 Preferred Stock), Series C-2 Preferred Stock (to the extent the canceled shares are shares of Series C-1 Preferred Stock) or Series D-2 Preferred Stock (to the extent the canceled shares are shares of Series D-1 Preferred Stock), with the same designations, powers, preferences and rights and be subject to the same qualifications, limitations and restrictions identical as are then applicable to the Series A Preferred Stock (with respect to the Series A-2 Preferred Stock), the Series B Preferred Stock (with respect to the Series B-2 Preferred Stock), the Series C Preferred Stock (with respect to the Series C-2 Preferred Stock) and the Series D Preferred Stock (with respect to the Series D-2 Preferred Stock), except that (A) the conversion price for shares of Series A-2 once initially issued shall be the Conversion Price for Series A Preferred Stock in effect immediately prior to such issuance and shall not after such issuance be subject to adjustment under Section 4(e)(iv)(A) of this Article IV, (B) the conversion price for shares of Series B-2 once initially issued shall be the Conversion Price for Series B Preferred Stock in effect immediately prior to such issuance and shall not after such issuance be subject to adjustment under Section 4(e)(iv)(A) of this Article IV, (C) the conversion price for shares of Series C-2 once initially issued shall be the Conversion Price for the Series C Preferred Stock in effect immediately prior to such issuance and shall not after such issuance be subject to adjustment under Section 4(e)(iv)(A) of this Article IV and (D) the conversion price for shares of Series D-2 once initially issued shall be the Conversion Price for the Series D Preferred Stock in effect immediately prior to such issuance and shall not after such issuance be subject to adjustment under Section 4(e)(iv)(A) of this Article IV, and (iii) to amend the provisions of this Section 7 to provide that any subsequent special mandatory conversion pursuant hereto will be into shares of Series A-2, Series B-2, Series C-2 or Series D-2 Preferred Stock rather than Series A-1, Series B-1, Series C-1 of Series D-2 Preferred Stock. The Corporation shall take the same actions with respect to the Series A-2, Series B-2, Series C-2 and Series D-2 Preferred Stock and each series of Preferred Stock subsequently authorized pursuant to this Section 7 upon initial issuance of shares of the last such series to be so authorized.

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ARTICLE V

The rights, privileges, preferences and restrictions of the Class A Senior Common Stock are as follows:

1.    Dividend Rights. Subject to the prior rights of holder of all classes of stock at the time outstanding having prior rights as to dividends, the holders of the Class A Senior Common Stock shall be entitled to receive, on a pari passu basis with the holders of the Common Stock, when and as declared by the Board of Directors, out of any assets of the Corporation legally available therefore, such dividends as may be declared from time to time by the Board of Directors.

2.    Liquidation Rights. Upon the liquidation, dissolution or winding up of the Corporation, the assets of the Corporation shall be distributed as provided above in Section 2 of Article IV.

3.    Conversion Rights. The holders of the Class A Senior Common Stock shall have Conversion Rights as follows:

(a)    Right to Convert. Each share of Class A Senior Common Stock shall be convertible, at the option of the holder thereof, at the office of the Corporation or any transfer agent; provided, however, that the such conversion right shall not become exercisable until immediately prior to a vote of the Corporation’s stockholders requiring approval of the holders of the Corporation’s securities on a class by class basis (the “Trigger Event”). Upon such a conversion, each share of Class A Senior Common Stock shall be convertible into one share of fully paid and nonassessable share of Common Stock.

(b)    Automatic Conversion. Each share of Class A Senior Stock shall automatically be converted into one share of Common Stock immediately prior to the closing of an IPO at a price per share (prior to underwriter commissions and offering expenses) of not less than $2.3425 (appropriately adjusted for Recapitalizations) and at an aggregate offering price to the public of not less than $15,000,000. In the event of the automatic conversion of the Class A Senior Common Stock upon a public offering as described above, the person(s) entitled to receive the Common Stock issuable upon such conversion of Class A Senior Common Stock shall not be deemed to have converted such Class A Senior Common Stock until immediately prior to the closing of the IPO. Each share of Class A Senior Common Stock also shall be automatically converted into one share of Common Stock upon the affirmative vote of the holders of at least a majority of the shares of Class A Senior Common Stock. The occurrence of an automatic conversion event as described in this Section 3(b) shall be referred to herein as a “Class A Senior Common Conversion Event.”

(c)    Mechanics of Conversion. Before any holder of Class A Senior Common Stock shall be entitled to convert the same into shares of Common Stock and receive certificates therefor, he shall surrender the certificate or certificates therefor, duly endorsed, at the office of the Corporation or of any transfer agent for the Class A Senior Common Stock and shall give written notice to the Corporation at such office that such holder elects to convert the same; provided,

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however, that in the event of an automatic conversion pursuant to Section 3(b) of this Article V, the outstanding shares of Class A Senior Common Stock so converted shall be converted automatically without any further action by the holders of such shares whether or not the certificates representing such shares are surrendered to the Corporation or its transfer agent, and provided further that the Corporation shall not be obligated to issue certificates evidencing the shares of Common Stock issuable upon such automatic conversion unless the certificates evidencing such shares of Class A Senior Common Stock are either delivered to the Corporation or its transfer agent as provided above, or the holder notifies the Corporation or its transfer agent that such certificates have been lost, stolen or destroyed and executes an agreement satisfactory to the Corporation to indemnify the Corporation from any loss incurred by it in connection with such certificates. The Corporation shall, as soon as practicable after such delivery, or such agreement and indemnification in the case of a lost certificate, issue and deliver at such office to such holder of Class A Senior Common Stock, a certificate or certificates for the number of shares of Common Stock to which the holder shall be entitled as aforesaid and a check payable to the holder in the amount of any cash amounts payable as the result of a conversion into fractional shares of Common Stock as set forth in Section 3(d) of this Article V. Such conversion shall be deemed to have been made immediately prior to the close of business on the date of such surrender of the shares of Class A Senior Common Stock to be converted, or in the case of automatic conversion as provided in Section 3(b) of this Article V, such conversion shall be deemed to occur as set forth in Section 3(b) of this Article V, and the person or persons entitled to receive the shares of Common Stock issuable upon such conversion shall be treated for all purposes as the record holder or holders of such shares of Common Stock on such date.

(d)    No Fractional Shares and Certificate as to Adjustments. No fractional shares of Common Stock shall be issued upon conversion of Class A Senior Common Stock. In lieu of any fractional shares to which the holder would otherwise be entitled, the Corporation shall pay cash equal to such fraction multiplied by the then fair market value of a share of Common Stock as determined by the Board of Directors. For such purpose, all shares of Class A Senior Common Stock held by each holder of Class A Senior Common Stock shall be aggregated, and any resulting fractional share of Common Stock shall be paid in cash. If such conversion of Class Senior Common Stock shall be into shares of Common Stock and such holder of Class A Senior Common Stock also holds shares of Preferred Stock to be converted into shares of Common Stock, then all shares of Preferred Stock and Class A Senior Common Stock held shall be aggregated on an as-converted basis for the purpose of determining the number and value of fractional shares for which cash shall be paid.

(e)    Reservation of Common Stock Issuable Upon Conversion. The Corporation shall at all times reserve and keep available out of its authorized but unissued shares of Common Stock solely for the purpose of effecting the conversion of the shares of Class A Senior Common Stock such number of its shares of Common Stock as shall from time to time be sufficient to effect the conversion of all outstanding shares of Class A Senior Common Stock; and if at any time the number of authorized but unissued shares of Common Stock shall not be sufficient to effect the conversion of all then outstanding shares of Class A Senior Common Stock, the Corporation will take such corporate action as may, in the opinion of its counsel, be necessary to increase its authorized but unissued shares of Common Stock to such number of shares as shall be sufficient for such purpose.

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4.    Redemption. The Class A Senior Common Stock is not redeemable.

5.    Voting Rights. Each holder of shares of Class A Senior Common Stock shall be entitled to the number of votes equal to the whole number of shares of Common Stock into which such shares of Class A Senior Common Stock held by such holder are then convertible times ten (10). The holders of Class A Senior Common Stock shall be entitled to notice of any stockholders’ meeting in accordance with the bylaws of the Corporation and any other matter submitted to the vote of stockholders and shall vote with the holders of Common Stock together as one class on all matters to which they are entitled to vote except as to those matters required by law to be submitted to a separate class vote.

ARTICLE VI

The rights, privileges, preferences and restrictions of the Common Stock are as follows:

1.    Dividend Rights. Subject to the prior rights of holder of all classes of stock at the time outstanding having prior rights as to dividends, the holders of the Common Stock shall be entitled to receive, on a pari passu basis with the holders of the Class A Senior Common Stock, when and as declared by the Board of Directors, out of any assets of the Corporation legally available therefore, such dividends as may be declared from time to time by the Board of Directors.

2.    Liquidation Rights. Upon the liquidation, dissolution or winding up of the Corporation, the assets of the Corporation shall be distributed as provided above in Section 2 of Article IV.

3.    Redemption. The Common Stock is not redeemable.

4.    Voting Rights. Each holder of shares of Common Stock shall be entitled to one vote per share for each share of Common Stock held by such holder. The holders of Common Stock shall be entitled to notice of any stockholders’ meeting in accordance with the bylaws of the Corporation and any other matter submitted to the vote of stockholders and shall vote with the holders of Class A Senior Common Stock together as one class on all matters to which they are entitled to vote except as to those matters required by law to be submitted to a separate class vote.

ARTICLE VII

So long as Section 2115 of the California General Corporation Law purports to make Section 708 subdivisions (a), (b) and (c) of the California General Corporation Law applicable to the Corporation, the Corporation’s stockholders shall have the right to cumulate their votes in connection with the election of directors as provided by Section 708 subdivisions (a), (b) and (c) of the California General Corporation Law.

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ARTICLE VIII

The Corporation is to have perpetual existence.

ARTICLE IX

Elections of directors need not be by written ballot unless a stockholder demands election by written ballot at the meeting and before voting begins or unless the Bylaws of the Corporation shall so provide.

ARTICLE X

The number of directors that constitute the Board of Directors of the Corporation shall be designated as set forth in the Bylaws of the Corporation.

ARTICLE XI

In furtherance and not in limitation of the powers conferred by statute, subject to the provisions of this Amended and Restated Certificate of Incorporation, the Board of Directors of the Corporation is expressly authorized to make, alter, amend or repeal the Bylaws of the Corporation.

ARTICLE XII

1.    To the fullest extent permitted by the Delaware General Corporation Law as the same exists or as may hereafter be amended, a director of the Corporation shall not be personally liable to the Corporation or its stockholders for monetary damages for a breach of fiduciary duty as a director.

2.    The Corporation may indemnify to the fullest extent permitted by law any person made or threatened to be made a party to an action or proceeding, whether criminal, civil, administrative or investigative, by reason of the fact that he, his testator or intestate is or was a director, officer or employee of the Corporation or any predecessor of the Corporation or serves or served at any other enterprise as a director, officer or employee at the request of the Corporation or any predecessor to the Corporation.

3.    Neither any amendment nor repeal of this Article XII, nor the adoption of any provision of this Corporation’s Certificate of Incorporation inconsistent with this Article XII, shall eliminate or reduce the effect of this Article XII, in respect of any matter occurring, or any action or

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proceeding accruing or arising or that, but for this Article XII, would accrue or arise, prior to such amendment, repeal or adoption of an inconsistent provision.

ARTICLE XIII

Meetings of stockholders may be held within or without the State of Delaware, as the Bylaws may provide. The books of the Corporation may be kept (subject to any provision contained in the statutes) outside of the State of Delaware at such place or places as may be designated from time to time by the Board of Directors or in the Bylaws of the Corporation.

* * * * *

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EX-3.02

Exhibit 3.02

BYLAWS OF

GOOGLE INC.

(initially adopted on October 22, 2002)

TABLE OF CONTENTS

		Page
ARTICLE I — CORPORATE OFFICES		1
1.1	REGISTERED OFFICE	1
1.2	OTHER OFFICES	1
ARTICLE II — MEETINGS OF STOCKHOLDERS		1
2.1	PLACE OF MEETINGS	1
2.2	ANNUAL MEETING	1
2.3	SPECIAL MEETING	1
2.4	NOTICE OF STOCKHOLDERS’ MEETINGS	2
2.5	MANNER OF GIVING NOTICE; AFFIDAVIT OF NOTICE	2
2.6	QUORUM	2
2.7	ADJOURNED MEETING; NOTICE	3
2.8	CONDUCT OF BUSINESS	3
2.9	VOTING	3
2.10	STOCKHOLDER ACTION BY WRITTEN CONSENT WITHOUT A MEETING	3
2.11	RECORD DATE FOR STOCKHOLDER NOTICE; VOTING; GIVING CONSENTS	4
2.12	PROXIES	4
2.13	LIST OF STOCKHOLDERS ENTITLED TO VOTE	4
ARTICLE III — DIRECTORS		5
3.1	POWERS	5
3.2	NUMBER OF DIRECTORS	5
3.3	ELECTION, QUALIFICATION AND TERM OF OFFICE OF DIRECTORS	5
3.4	RESIGNATION AND VACANCIES	6
3.5	PLACE OF MEETINGS; MEETINGS BY TELEPHONE	7
3.6	REGULAR MEETINGS	7
3.7	SPECIAL MEETINGS; NOTICE	7
3.8	QUORUM	8
3.9	BOARD ACTION BY WRITTEN CONSENT WITHOUT A MEETING	8
3.10	FEES AND COMPENSATION OF DIRECTORS	8
3.11	APPROVAL OF LOANS TO OFFICERS	8
3.12	REMOVAL OF DIRECTORS	8
ARTICLE IV — COMMITTEES		9
4.1	COMMITTEES OF DIRECTORS	9
4.2	COMMITTEE MINUTES	9
4.3	MEETINGS AND ACTION OF COMMITTEES	9
ARTICLE V — OFFICERS		10
5.1	OFFICERS	10
5.2	APPOINTMENT OF OFFICERS	10
5.3	SUBORDINATE OFFICERS	10
5.4	REMOVAL AND RESIGNATION OF OFFICERS	10

-i-

TABLE OF CONTENTS

(continued)

		Page
5.5	VACANCIES IN OFFICES	11
5.6	CHAIRPERSON OF THE BOARD	11
5.7	CHIEF EXECUTIVE OFFICER	11
5.8	PRESIDENT	11
5.9	VICE PRESIDENTS	11
5.10	SECRETARY	11
5.11	CHIEF FINANCIAL OFFICER	12
5.12	TREASURER	12
5.13	ASSISTANT SECRETARY	13
5.14	ASSISTANT TREASURER	13
5.15	REPRESENTATION OF SHARES OF OTHER CORPORATIONS	13
5.16	AUTHORITY AND DUTIES OF OFFICERS	13
ARTICLE VI — RECORDS AND REPORTS		13
6.1	MAINTENANCE AND INSPECTION OF RECORDS	13
6.2	INSPECTION BY DIRECTORS	14
ARTICLE VII — GENERAL MATTERS		14
7.1	CHECKS	14
7.2	EXECUTION OF CORPORATE CONTRACTS AND INSTRUMENTS	14
7.3	STOCK CERTIFICATES; PARTLY PAID SHARES	14
7.4	SPECIAL DESIGNATION ON CERTIFICATES	15
7.5	LOST CERTIFICATES	15
7.6	CONSTRUCTION; DEFINITIONS	15
7.7	DIVIDENDS	16
7.8	FISCAL YEAR	16
7.9	SEAL	16
7.10	TRANSFER OF STOCK	16
7.11	STOCK TRANSFER AGREEMENTS	16
7.12	REGISTERED STOCKHOLDERS	16
7.13	WAIVER OF NOTICE	17
ARTICLE VIII — NOTICE BY ELECTRONIC TRANSMISSION		17
8.1	NOTICE BY ELECTRONIC TRANSMISSION	17
8.2	DEFINITION OF ELECTRONIC TRANSMISSION	18
8.3	INAPPLICABILITY	18
ARTICLE IX — INDEMNIFICATION		18
9.1	INDEMNIFICATION OF DIRECTORS AND OFFICERS	18
9.2	INDEMNIFICATION OF OTHERS	18
9.3	PREPAYMENT OF EXPENSES	18
9.4	DETERMINATION; CLAIM	19
9.5	NON-EXCLUSIVITY OF RIGHTS	19

-ii-

TABLE OF CONTENTS

(continued)

		Page
9.6	INSURANCE	19
9.7	OTHER INDEMNIFICATION	19
9.8	AMENDMENT OR REPEAL	19
ARTICLE X — AMENDMENTS		19

-iii-

BYLAWS OF GOOGLE INC.

ARTICLE I—CORPORATE OFFICES

1.1    REGISTERED OFFICE.

The registered office of Google Inc. shall be fixed in the corporation’s certificate of incorporation, as the same may be amended from time to time.

1.2    OTHER OFFICES.

The corporation’s Board of Directors (the “Board”) may at any time establish other offices at any place or places where the corporation is qualified to do business.

ARTICLE II—MEETINGS OF STOCKHOLDERS

2.1    PLACE OF MEETINGS.

Meetings of stockholders shall be held at any place, within or outside the State of Delaware, designated by the Board. The Board may, in its sole discretion, determine that a meeting of stockholders shall not be held at any place, but may instead be held solely by means of remote communication as authorized by Section 211(a)(2) of the Delaware General Corporation Law (the “DGCL”). In the absence of any such designation or determination, stockholders’ meetings shall be held at the corporation’s principal executive office.

2.2    ANNUAL MEETING.

The annual meeting of stockholders shall be held each year. The Board shall designate the date and time of the annual meeting. In the absence of such designation the annual meeting of stockholders shall be held on the second Tuesday of May of each year at 10:00 a.m. However, if such day falls on a legal holiday, then the meeting shall be held at the same time and place on the next succeeding business day. At the annual meeting, directors shall be elected and any other proper business may be transacted.

2.3    SPECIAL MEETING.

A special meeting of the stockholders may be called at any time by the Board, chairperson of the Board, chief executive officer or president (in the absence of a chief executive officer) or by one or more stockholders holding shares in the aggregate entitled to cast not less than ten percent (10%) of the votes at that meeting.

At any time or times that the corporation is subject to Section 2115(b) of the California General Corporation Law (“CGCL”), stockholders holding five percent (5%) or more of the outstanding shares shall have the right to call a special meeting of stockholders as set forth in Section 3.4 herein.

If any person(s) other than the Board calls a special meeting, the request shall:

(i)    be in writing;

(ii)    specify the time of such meeting and the general nature of the business proposed to be transacted; and

(iii)    be delivered personally or sent by registered mail or by facsimile transmission to the chairperson of the Board, the chief executive officer, a president (in the absence of a chief executive officer) or the secretary of the corporation.

The officer(s) receiving the request shall cause notice to be promptly given to the stockholders entitled to vote at such meeting, in accordance with the provisions of Sections 2.4 and 2.5 of these bylaws, that a meeting will be held at the time requested by the person or persons calling the meeting. No business may be transacted at such special meeting other than the business specified in such notice to stockholders. Nothing contained in this paragraph of this Section 2.3 shall be construed as limiting, fixing, or affecting the time when a meeting of stockholders called by action of the Board may be held.

2.4    NOTICE OF STOCKHOLDERS’ MEETINGS.

All notices of meetings of stockholders shall be sent or otherwise given in accordance with either Section 2.5 or Section 8.1 of these bylaws not less than ten (10) nor more than sixty (60) days before the date of the meeting to each stockholder entitled to vote at such meeting. The notice shall specify the place, if any, date and hour of the meeting, the means of remote communication, if any, by which stockholders and proxy holders may be deemed to be present in person and vote at such meeting, and, in the case of a special meeting, the purpose or purposes for which the meeting is called.

2.5    MANNER OF GIVING NOTICE; AFFIDAVIT OF NOTICE.

Notice of any meeting of stockholders shall be given:

(i)    if mailed, when deposited in the United States mail, postage prepaid, directed to the stockholder at his or her address as it appears on the corporation’s records; or

(ii)    if electronically transmitted as provided in Section 8.1 of these bylaws.

An affidavit of the secretary or an assistant secretary of the corporation or of the transfer agent or any other agent of the corporation that the notice has been given by mail or by a form of electronic transmission, as applicable, shall, in the absence of fraud, be prima facie evidence of the facts stated therein.

2.6    QUORUM.

The holders of a majority of the stock issued and outstanding and entitled to vote, present in person or represented by proxy, shall constitute a quorum for the transaction of business at all meetings of the stockholders. If, however, such quorum is not present or represented at any meeting of the stockholders, then either (i) the chairperson of the meeting, or (ii) the stockholders entitled to vote at the meeting, present in person or represented by proxy, shall have power to adjourn the meeting from time to time, without notice other than announcement at

2

the meeting, until a quorum is present or represented. At such adjourned meeting at which a quorum is present or represented, any business may be transacted that might have been transacted at the meeting as originally noticed.

2.7    ADJOURNED MEETING; NOTICE.

When a meeting is adjourned to another time or place, unless these bylaws otherwise require, notice need not be given of the adjourned meeting if the time, place if any thereof, and the means of remote communications if any by which stockholders and proxy holders may be deemed to be present in person and vote at such adjourned meeting are announced at the meeting at which the adjournment is taken. At the continuation of the adjourned meeting, the corporation may transact any business which might have been transacted at the original meeting. If the adjournment is for more than thirty (30) days, or if after the adjournment a new record date is fixed for the adjourned meeting, a notice of the adjourned meeting shall be given to each stockholder of record entitled to vote at the meeting.

2.8    CONDUCT OF BUSINESS.

The chairperson of any meeting of stockholders shall determine the order of business and the procedure at the meeting, including such regulation of the manner of voting and the conduct of business.

2.9    VOTING.

The stockholders entitled to vote at any meeting of stockholders shall be determined in accordance with the provisions of Section 2.11 of these bylaws, subject to Section 217 (relating to voting rights of fiduciaries, pledgors and joint owners of stock) and Section 218 (relating to voting trusts and other voting agreements) of the DGCL.

Except as may be otherwise provided in the certificate of incorporation or these bylaws, each stockholder shall be entitled to one vote for each share of capital stock held by such stockholder.

2.10    STOCKHOLDER ACTION BY WRITTEN CONSENT WITHOUT A MEETING.

Unless otherwise provided in the certificate of incorporation, any action required by the DGCL to be taken at any annual or special meeting of stockholders of a corporation, or any action which may be taken at any annual or special meeting of such stockholders, may be taken without a meeting, without prior notice, and without a vote, if a consent or consents in writing, setting forth the action so taken, shall be signed by the holders of outstanding stock having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted.

Prompt notice of the taking of the corporate action without a meeting by less than unanimous written consent shall be given to those stockholders who have not consented in writing and who, if the action had been taken at a meeting, would have been entitled to notice of the meeting if the record date for such meeting had been the date that written consents signed by a sufficient number of holders to take the action were delivered to the corporation as provided in Section 228 of the DGCL. In the event that the action which is consented to is such as would have required the filing of a certificate under any provision of the DGCL, if such action had been voted on by stockholders at a meeting thereof, the certificate filed under such provision shall state, in lieu of any statement required by such provision concerning any vote of stockholders, that written consent has been given in accordance with Section 228 of the DGCL.

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2.11    RECORD DATE FOR STOCKHOLDER NOTICE; VOTING; GIVING CONSENTS.

In order that the corporation may determine the stockholders entitled to notice of or to vote at any meeting of stockholders or any adjournment thereof, or entitled to receive payment of any dividend or other distribution or allotment of any rights, or entitled to exercise any rights in respect of any change, conversion or exchange of stock or for the purpose of any other lawful action, the Board may fix, in advance, a record date, which record date shall not precede the date on which the resolution fixing the record date is adopted and which shall not be more than sixty (60) nor less than ten (10) days before the date of such meeting, nor more than sixty (60) days prior to any other such action.

If the Board does not so fix a record date:

(i)    The record date for determining stockholders entitled to notice of or to vote at a meeting of stockholders shall be at the close of business on the day next preceding the day on which notice is given, or, if notice is waived, at the close of business on the day next preceding the day on which the meeting is held.

(ii)    The record date for determining stockholders entitled to express consent to corporate action in writing without a meeting, when no prior action by the Board is necessary, shall be the day on which the first written consent is expressed.

(iii)    The record date for determining stockholders for any other purpose shall be at the close of business on the day on which the Board adopts the resolution relating thereto.

A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting; provided, however, that the Board may fix a new record date for the adjourned meeting.

2.12    PROXIES.

Each stockholder entitled to vote at a meeting of stockholders or to express consent or dissent to corporate action in writing without a meeting may authorize another person or persons to act for such stockholder by proxy authorized by an instrument in writing or by a transmission permitted by law filed in accordance with the procedure established for the meeting, but no such proxy shall be voted or acted upon after three years from its date, unless the proxy provides for a longer period. The revocability of a proxy that states on its face that it is irrevocable shall be governed by the provisions of Section 212 of the DGCL.

2.13    LIST OF STOCKHOLDERS ENTITLED TO VOTE.

The officer who has charge of the stock ledger of the corporation shall prepare and make, at least (ten) 10 days before every meeting of stockholders, a complete list of the stockholders entitled to vote at the meeting, arranged in alphabetical order, and showing the address of each stockholder and the number of shares registered in the name of each stockholder. The corporation shall not be required to include electronic mail addresses or other electronic contact information on such list. Such list shall be open to the examination of any stockholder, for any purpose germane to the meeting for a period of at least ten (10) days prior to the meeting: (i) on a reasonably accessible electronic network, provided that the information required to gain access to such list is provided with the notice of the meeting, or (ii) during ordinary business hours, at the corporation’s principal executive office. In the event that the corporation determines to make the list available on an electronic network, the corporation may

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take reasonable steps to ensure that such information is available only to stockholders of the corporation. If the meeting is to be held at a place, then the list shall be produced and kept at the time and place of the meeting during the whole time thereof, and may be inspected by any stockholder who is present. If the meeting is to be held solely by means of remote communication, then the list shall also be open to the examination of any stockholder during the whole time of the meeting on a reasonably accessible electronic network, and the information required to access such list shall be provided with the notice of the meeting. Such list shall presumptively determine the identity of the stockholders entitled to vote at the meeting and the number of shares held by each of them.

ARTICLE III—DIRECTORS

3.1    POWERS.

Subject to the provisions of the DGCL and any limitations in the certificate of incorporation or these bylaws relating to action required to be approved by the stockholders or by the outstanding shares, the business and affairs of the corporation shall be managed and all corporate powers shall be exercised by or under the direction of the Board.

3.2    NUMBER OF DIRECTORS.

The authorized number of directors shall be determined from time to time by resolution of the Board, provided the Board shall consist of at least one member. No reduction of the authorized number of directors shall have the effect of removing any director before that director’s term of office expires.

3.3    ELECTION, QUALIFICATION AND TERM OF OFFICE OF DIRECTORS.

Except as provided in Section 3.4 of these bylaws, directors shall be elected at each annual meeting of stockholders to hold office until the next annual meeting. Directors need not be stockholders unless so required by the certificate of incorporation or these bylaws. The certificate of incorporation or these bylaws may prescribe other qualifications for directors. Each director, including a director elected to fill a vacancy, shall hold office until such director’s successor is elected and qualified or until such director’s earlier death, resignation or removal.

All elections of directors shall be by written ballot, unless otherwise provided in the certificate of incorporation; if authorized by the Board, such requirement of a written ballot shall be satisfied by a ballot submitted by electronic transmission, provided that any such electronic transmission must be either set forth or be submitted with information from which it can be determined that the electronic transmission authorized by the stockholder or proxy holder.

No person entitled to vote at an election for directors may cumulate votes to which such person is entitled, unless, at the time of such election, the corporation is subject to Section 2115(b) of the CGCL. During such time or times that the corporation is subject to Section 2115(b) of the CGCL, every stockholder entitled to vote at an election for directors may cumulate such stockholder’s votes and give one candidate a number of votes equal to the number of directors to be elected multiplied by the number of votes to which such stockholder’s shares are otherwise entitled, or distribute the stockholder’s votes on the same principle among as many candidates as such stockholder thinks fit. No stockholder, however, shall be entitled to so cumulate such stockholder’s votes unless:

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(i)    the names of such candidate or candidates have been placed in nomination prior to the voting; and

(ii)    the stockholder has given notice at the meeting, prior to the voting, of such stockholder’s intention to cumulate such stockholder’s votes.

If any stockholder has given proper notice to cumulate votes, all stockholders may cumulate their votes for any candidates who have been properly placed in nomination. Under cumulative voting, the candidates receiving the highest number of votes, up to the number of directors to be elected, are elected.

3.4    RESIGNATION AND VACANCIES.

Any director may resign at any time upon notice given in writing or by electronic transmission to the corporation. When one or more directors so resigns and the resignation is effective at a future date, a majority of the directors then in office, including those who have so resigned, shall have power to fill such vacancy or vacancies, the vote thereon to take effect when such resignation or resignations shall become effective, and each director so chosen shall hold office as provided in this section in the filling of other vacancies.

Unless otherwise provided in the certificate of incorporation or these bylaws:

(i)    Vacancies and newly created directorships resulting from any increase in the authorized number of directors elected by all of the stockholders having the right to vote as a single class may be filled by a majority of the directors then in office, although less than a quorum, or by a sole remaining director.

(ii)    Whenever the holders of any class or classes of stock or series thereof are entitled to elect one or more directors by the provisions of the certificate of incorporation, vacancies and newly created directorships of such class or classes or series may be filled by a majority of the directors elected by such class or classes or series thereof then in office, or by a sole remaining director so elected.

If at any time, by reason of death or resignation or other cause, the corporation should have no directors in office, then any officer or any stockholder or an executor, administrator, trustee or guardian of a stockholder, or other fiduciary entrusted with like responsibility for the person or estate of a stockholder, may call a special meeting of stockholders in accordance with the provisions of the certificate of incorporation or these bylaws, or may apply to the Court of Chancery for a decree summarily ordering an election as provided in Section 211 of the DGCL.

If, at the time of filling any vacancy or any newly created directorship, the directors then in office constitute less than a majority of the whole Board (as constituted immediately prior to any such increase), then the Court of Chancery may, upon application of any stockholder or stockholders holding at least ten percent (10%) of the total number of the shares at the time outstanding having the right to vote for such directors, summarily order an election to be held to fill any such vacancies or newly created directorships, or to replace the directors chosen by the directors then in office as aforesaid, which election shall be governed by the provisions of Section 211 of the DGCL as far as applicable.

At any time or times that the corporation is subject to Section 2115(b) of the CGCL, if, after the filling of any vacancy, the directors then in office who have been elected by stockholders shall constitute less than a majority of the directors then in office, then:

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(i)    any holder or holders of an aggregate of five percent (5%) or more of the total number of shares at the time outstanding having the right to vote for those directors may call a special meeting of stockholders; or

(ii)    the Superior Court of the proper county shall, upon application of such stockholder or stockholders, summarily order a special meeting of the stockholders;

to elect the entire board of directors, all in accordance with Section 305(c) of the CGCL. The term of office of any director shall terminate upon that election of such director’s successor.

3.5    PLACE OF MEETINGS; MEETINGS BY TELEPHONE.

The Board may hold meetings, both regular and special, either within or outside the State of Delaware.

Unless otherwise restricted by the certificate of incorporation or these bylaws, members of the Board, or any committee designated by the Board, may participate in a meeting of the Board, or any committee, by means of conference telephone or other communications equipment by means of which all persons participating in the meeting can hear each other, and such participation in a meeting shall constitute presence in person at the meeting.

3.6    REGULAR MEETINGS.

Regular meetings of the Board may be held without notice at such time and at such place as shall from time to time be determined by the Board.

3.7    SPECIAL MEETINGS; NOTICE.

Special meetings of the Board for any purpose or purposes may be called at any time by the chairperson of the Board, the chief executive officer, a president, the secretary or any two directors.

Notice of the time and place of special meetings shall be:

(i)    delivered personally by hand, by courier or by telephone;

(ii)    sent by United States first-class mail, postage prepaid;

(iii)    sent by facsimile; or

(iv)    sent by electronic mail,

directed to each director at that director’s address, telephone number, facsimile number or electronic mail address, as the case may be, as shown on the corporation’s records.

If the notice is (i) delivered personally by hand, by courier or by telephone, (ii) sent by facsimile or (iii) sent by electronic mail, it shall be delivered or sent at least twenty-four (24) hours before the time of the holding of the meeting. If the notice is sent by United States mail, it shall be deposited in the United States mail at least four days before the time of the holding of the meeting. Any oral notice may be communicated to the director. The notice need not specify the place of the meeting (if the meeting is to be held at the corporation’s principal executive office) nor the purpose of the meeting.

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3.8    QUORUM.

At all meetings of the Board, a majority of the authorized number of directors shall constitute a quorum for the transaction of business. The vote of a majority of the directors present at any meeting at which a quorum is present shall be the act of the Board, except as may be otherwise specifically provided by statute, the certificate of incorporation or these bylaws. If a quorum is not present at any meeting of the Board, then the directors present thereat may adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum is present.

A meeting at which a quorum is initially present may continue to transact business notwithstanding the withdrawal of directors, if any action taken is approved by at least a majority of the required quorum for that meeting.

3.9    BOARD ACTION BY WRITTEN CONSENT WITHOUT A MEETING.

Unless otherwise restricted by the certificate of incorporation or these bylaws, any action required or permitted to be taken at any meeting of the Board, or of any committee thereof, may be taken without a meeting if all members of the Board or committee, as the case may be, consent thereto in writing or by electronic transmission and the writing or writings or electronic transmission or transmissions are filed with the minutes of proceedings of the Board or committee. Such filing shall be in paper form if the minutes are maintained in paper form and shall be in electronic form if the minutes are maintained in electronic form.

3.10    FEES AND COMPENSATION OF DIRECTORS.

Unless otherwise restricted by the certificate of incorporation or these bylaws, the Board shall have the authority to fix the compensation of directors.

3.11    APPROVAL OF LOANS TO OFFICERS.

The corporation may lend money to, or guarantee any obligation of, or otherwise assist any officer or other employee of the corporation or of its subsidiary, including any officer or employee who is a director of the corporation or its subsidiary, whenever, in the judgment of the Board, such loan, guaranty or assistance may reasonably be expected to benefit the corporation. The loan, guaranty or other assistance may be with or without interest and may be unsecured, or secured in such manner as the Board shall approve, including, without limitation, a pledge of shares of stock of the corporation.

3.12    REMOVAL OF DIRECTORS.

Unless otherwise restricted by statute (and assuming the corporation is not subject to Section 2115 of the CGCL), the certificate of incorporation or these bylaws, any director or the entire Board may be removed, with or without cause, by the holders of a majority of the shares then entitled to vote at an election of directors.

During such time or times that the corporation is subject to Section 2115(b) of the CGCL, the Board or any individual director may be removed from office at any time without cause by the affirmative vote of the holders of at least a majority of the outstanding shares entitled to vote on such removal; provided, however, that unless the entire Board is removed, no individual director may be removed when the votes cast against such director’s removal, or not consenting in writing to such removal, would be sufficient to elect that director if voted cumulatively at an election which the same total number of votes were cast (or, if such action is taken by written

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consent, all shares entitled to vote were voted) and the entire number of directors authorized at the time of such director’s most recent election were then being elected.

No reduction of the authorized number of directors shall have the effect of removing any director prior to the expiration of such director’s term of office.

ARTICLE IV—COMMITTEES

4.1    COMMITTEES OF DIRECTORS.

The Board may designate one or more committees, each committee to consist of one or more of the directors of the corporation. The Board may designate one or more directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of the committee. In the absence or disqualification of a member of a committee, the member or members thereof present at any meeting and not disqualified from voting, whether or not such member or members constitute a quorum, may unanimously appoint another member of the Board to act at the meeting in the place of any such absent or disqualified member. Any such committee, to the extent provided in the resolution of the Board or in these bylaws, shall have and may exercise all the powers and authority of the Board in the management of the business and affairs of the corporation, and may authorize the seal of the corporation to be affixed to all papers that may require it; but no such committee shall have the power or authority to (i) approve or adopt, or recommend to the stockholders, any action or matter expressly required by the DGCL to be submitted to stockholders for approval, or (ii) adopt, amend or repeal any bylaw of the corporation,

4.2    COMMITTEE MINUTES.

Each committee shall keep regular minutes of its meetings and report the same to the Board when required.

4.3    MEETINGS AND ACTION OF COMMITTEES.

Meetings and actions of committees shall be governed by, and held and taken in accordance with, the provisions of:

(i)    Section 3.5 (place of meetings and meetings by telephone);

(ii)    Section 3.6 (regular meetings);

(iii)    Section 3.7 (special meetings and notice);

(iv)    Section 3.8 (quorum);

(v)    Section 3.9 (action without a meeting); and

(vi)    Section 7.13 (waiver of notice);

with such changes in the context of those bylaws as are necessary to substitute the committee and its members for the Board and its members.

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Notwithstanding the foregoing:

(i)    the time of regular meetings of committees may be determined either by resolution of the Board or by resolution of the committee;

(ii)    special meetings of committees may also be called by resolution of the Board; and

(iii)    notice of special meetings of committees shall also be given to all alternate members, who shall have the right to attend all meetings of the committee. The Board may adopt rules for the government of any committee not inconsistent with the provisions of these bylaws.

ARTICLE V—OFFICERS

5.1    OFFICERS.

The officers of the corporation shall be a Chief Executive Officer and a secretary. The corporation may also have, at the discretion of the Board, a chairperson of the Board, a vice chairperson of the Board, one or more presidents, a chief financial officer, a treasurer, one or more vice presidents, one or more assistant vice presidents, one or more assistant treasurers, one or more assistant secretaries, and any such other officers as may be appointed in accordance with the provisions of these bylaws. Any number of offices may be held by the same person.

5.2    APPOINTMENT OF OFFICERS.

The Board shall appoint the officers of the corporation, except such officers as may be appointed in accordance with the provisions of Sections 5.3 and 5.5 of these bylaws, subject to the rights, if any, of an officer under any contract of employment.

5.3    SUBORDINATE OFFICERS.

The Board may appoint, or empower the chief executive officer or, in the absence of a chief executive officer, one or more presidents, to appoint, such other officers and agents as the business of the corporation may require. Each of such officers and agents shall hold office for such period, have such authority, and perform such duties as are provided in these bylaws or as the Board may from time to time determine.

5.4    REMOVAL AND RESIGNATION OF OFFICERS.

Subject to the rights, if any, of an officer under any contract of employment, any officer may be removed, either with or without cause, by an affirmative vote of the majority of the Board at any regular or special meeting of the Board or, except in the case of an officer chosen by the Board, by any officer upon whom such power of removal may be conferred by the Board.

Any officer may resign at any time by giving written notice to the corporation. Any resignation shall take effect at the date of the receipt of that notice or at any later time specified in that notice. Unless otherwise specified in the notice of resignation, the acceptance of the resignation shall not be necessary to make it effective. Any resignation is without prejudice to the rights, if any, of the corporation under any contract to which the officer is a party.

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5.5    VACANCIES IN OFFICES.

Any vacancy occurring in any office of the corporation shall be filled by the Board or as provided in Section 5.2.

5.6    CHAIRPERSON OF THE BOARD.

The chairperson of the Board, if such an officer be elected, shall, if present, preside at meetings of the Board and exercise and perform such other powers and duties as may from time to time be assigned to him by the Board or as may be prescribed by these bylaws. If there is no chief executive officer or president, then the chairperson of the Board shall also be the chief executive officer of the corporation and shall have the powers and duties prescribed in Section 5.7 of these bylaws.

5.7    CHIEF EXECUTIVE OFFICER.

Subject to such supervisory powers, if any, as the Board may give to the chairperson of the Board, the chief executive officer, if any, shall, subject to the control of the Board, have general supervision, direction, and control of the business and affairs of the corporation and shall report directly to the Board. All other officers, officials, employees and agents shall report directly or indirectly to the chief executive officer. The chief executive officer shall see that all orders and resolutions of the Board are carried into effect. The chief executive officer shall serve as chairperson of and preside at all meetings of the stockholders. In the absence of a chairperson of the Board, the chief executive officer shall preside at all meetings of the Board.

5.8    PRESIDENT.

In the absence or disability of the chief executive officer, a president shall perform all the duties of the chief executive officer. When acting as the chief executive officer, a president shall have all the powers of, and be subject to all the restrictions upon, the chief executive officer. A president shall have such other powers and perform such other duties as from time to time may be prescribed for him by the Board, these bylaws, the chief executive officer or the chairperson of the Board.

5.9    VICE PRESIDENTS.

In the absence or disability of any president, the vice presidents, if any, in order of their rank as fixed by the Board or, if not ranked, a vice president designated by the Board, shall perform all the duties of a president. When acting as a president, the appropriate vice president shall have all the powers of, and be subject to all the restrictions upon, that president. The vice presidents shall have such other powers and perform such other duties as from time to time may be prescribed for them respectively by the Board, these bylaws, the chairperson of the Board, the chief executive officer or, in the absence of a chief executive officer, one of more of the presidents.

5.10    SECRETARY.

The secretary shall keep or cause to be kept, at the principal executive office of the corporation or such other place as the Board may direct, a book of minutes of all meetings and actions of directors, committees of directors, and stockholders. The minutes shall show:

(i)    the time and place of each meeting;

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(ii)    whether regular or special (and, if special, how authorized and the notice given);

(iii)    the names of those present at directors’ meetings or committee meetings;

(iv)    the number of shares present or represented at stockholders’ meetings;

(v)    and the proceedings thereof.

The secretary shall keep, or cause to be kept, at the principal executive office of the corporation or at the office of the corporation’s transfer agent or registrar, as determined by resolution of the Board, a share register, or a duplicate share register showing:

(i)    the names of all stockholders and their addresses;

(ii)    the number and classes of shares held by each:

(iii)    the number and date of certificates evidencing such shares; and

(iv)    the number and date of cancellation of every certificate surrendered for cancellation.

The secretary shall give, or cause to be given, notice of all meetings of the stockholders and of the Board required to be given by law or by these bylaws. The secretary shall keep the seal of the corporation, if one be adopted, in safe custody and shall have such other powers and perform such other duties as may be prescribed by the Board or by these bylaws.

5.11    CHIEF FINANCIAL OFFICER.

The chief financial officer shall keep and maintain, or cause to be kept and maintained, adequate and correct books and records of accounts of the properties and business transactions of the corporation, including accounts of its assets, liabilities, receipts, disbursements, gains, losses, capital retained earnings, and shares. The books of account shall at all reasonable times be open to inspection by any director.

The chief financial officer shall deposit all moneys and other valuables in the name and to the credit of the corporation with such depositories as the Board may designate. The chief financial officer shall disburse the funds of the corporation as may be ordered by the Board, shall render to the chief executive officer or, in the absence of a chief executive officer, any president and directors, whenever they request it, an account of all his or her transactions as chief financial officer and of the financial condition of the corporation, and shall have other powers and perform such other duties as may be prescribed by the Board or these bylaws.

The chief financial officer may be the treasurer of the corporation.

5.12    TREASURER

The treasurer shall keep and maintain, or cause to be kept and maintained, adequate and correct books and records of accounts of the properties and business transactions of the corporation, including accounts of its assets, liabilities, receipts, disbursements, gains, losses, capital retained earnings, and shares. The books of account shall at all reasonable times be open to inspection by any director.

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The treasurer shall deposit all moneys and other valuables in the name and to the credit of the corporation with such depositories as the Board may designate. The treasurer shall disburse the funds of the corporation as may be ordered by the Board, shall render to the chief executive officer or, in the absence of a chief executive officer, one or more of the presidents and directors, whenever they request it, an account of all his or her transactions as treasurer and of the financial condition of the corporation, and shall have other powers and perform such other duties as may be prescribed by the Board or these bylaws.

5.13    ASSISTANT SECRETARY.

The assistant secretary, or, if there is more than one, the assistant secretaries in the order determined by the stockholders or Board (or if there be no such determination, then in the order of their election) shall, in the absence of the secretary or in the event of the secretary’s inability or refusal to act, perform the duties and exercise the powers of the secretary and shall perform such other duties and have such other powers as may be prescribed by the Board or these bylaws.

5.14    ASSISTANT TREASURER.

The assistant treasurer, or, if there is more than one, the assistant treasurers, in the order determined by the stockholders or Board (or if there be no such determination, then in the order of their election), shall, in the absence of the chief financial officer or in the event of the chief financial officer’s inability or refusal to act, perform the duties and exercise the powers of the chief financial officer and shall perform such other duties and have such other powers as may be prescribed by the Board or these bylaws.

5.15    REPRESENTATION OF SHARES OF OTHER CORPORATIONS.

The chairperson of the Board, any president, any vice president, the treasurer, the secretary or assistant secretary of this corporation, or any other person authorized by the Board or a president or a vice president, is authorized to vote, represent, and exercise on behalf of this corporation all rights incident to any and all shares of any other corporation or corporations standing in the name of this corporation. The authority granted herein may be exercised either by such person directly or by any other person authorized to do so by proxy or power of attorney duly executed by such person having the authority.

5.16    AUTHORITY AND DUTIES OF OFFICERS.

In addition to the foregoing authority and duties, all officers of the corporation shall respectively have such authority and perform such duties in the management of the business of the corporation as may be designated from time to time by the Board or the stockholders.

ARTICLE VI—RECORDS AND REPORTS

6.1    MAINTENANCE AND INSPECTION OF RECORDS.

The corporation shall, either at its principal executive office or at such place or places as designated by the Board, keep a record of its stockholders listing their names and addresses and the number and class of shares held by each stockholder, a copy of these bylaws as amended to date, accounting books, and other records.

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Any stockholder of record, in person or by attorney or other agent, shall, upon written demand under oath stating the purpose thereof, have the right during the usual hours for business to inspect for any proper purpose the corporation’s stock ledger, a list of its stockholders, and its other books and records and to make copies or extracts therefrom. A proper purpose shall mean a purpose reasonably related to such person’s interest as a stockholder. In every instance where an attorney or other agent is the person who seeks the right to inspection, the demand under oath shall be accompanied by a power of attorney or such other writing that authorizes the attorney or other agent so to act on behalf of the stockholder. The demand under oath shall be directed to the corporation at its registered office in Delaware or at its principal executive office.

6.2    INSPECTION BY DIRECTORS.

Any director shall have the right to examine the corporation’s stock ledger, a list of its stockholders, and its other books and records for a purpose reasonably related to his or her position as a director. The Court of Chancery is hereby vested with the exclusive jurisdiction to determine whether a director is entitled to the inspection sought. The Court may summarily order the corporation to permit the director to inspect any and all books and records, the stock ledger, and the stock list and to make copies or extracts therefrom. The Court may, in its discretion, prescribe any limitations or conditions with reference to the inspection, or award such other and further relief as the Court may deem just and proper.

ARTICLE VII—GENERAL MATTERS

7.1    CHECKS.

From time to time, the Board shall determine by resolution which person or persons may sign or endorse all checks, drafts, other orders for payment of money, notes or other evidences of indebtedness that are issued in the name of or payable to the corporation, and only the persons so authorized shall sign or endorse those instruments.

7.2    EXECUTION OF CORPORATE CONTRACTS AND INSTRUMENTS.

The Board, except as otherwise provided in these bylaws, may authorize any officer or officers, or agent or agents, to enter into any contract or execute any instrument in the name of and on behalf of the corporation; such authority may be general or confined to specific instances. Unless so authorized or ratified by the Board or within the agency power of an officer, no officer, agent or employee shall have any power or authority to bind the corporation by any contract or engagement or to pledge its credit or to render it liable for any purpose or for any amount.

7.3    STOCK CERTIFICATES; PARTLY PAID SHARES.

The shares of the corporation shall be represented by certificates, provided that the Board may provide by resolution or resolutions that some or all of any or all classes or series of its stock shall be uncertificated shares. Any such resolution shall not apply to shares represented by a certificate until such certificate is surrendered to the corporation. Notwithstanding the adoption of such a resolution by the Board, every holder of stock represented by certificates and upon request every holder of uncertificated shares shall be entitled to have a certificate signed by, or in the name of the corporation by the chairperson or vice-chairperson of the Board, or a president or vice-president, and by the treasurer or an assistant treasurer, or the secretary or an assistant secretary of such

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corporation representing the number of shares registered in certificate form. Any or all of the signatures on the certificate may be a facsimile. In case any officer, transfer agent or registrar who has signed or whose facsimile signature has been placed upon a certificate has ceased to be such officer, transfer agent or registrar before such certificate is issued, it may be issued by the corporation with the same effect as if he were such officer, transfer agent or registrar at the date of issue.

The corporation may issue the whole or any part of its shares as partly paid and subject to call for the remainder of the consideration to be paid therefor. Upon the face or back of each stock certificate issued to represent any such partly paid shares, upon the books and records of the corporation in the case of uncertificated partly paid shares, the total amount of the consideration to be paid therefor and the amount paid thereon shall be stated. Upon the declaration of any dividend on fully paid shares, the corporation shall declare a dividend upon partly paid shares of the same class, but only upon the basis of the percentage of the consideration actually paid thereon.

7.4    SPECIAL DESIGNATION ON CERTIFICATES.

If the corporation is authorized to issue more than one class of stock or more than one series of any class, then the powers, the designations, the preferences, and the relative, participating, optional or other special rights of each class of stock or series thereof and the qualifications, limitations or restrictions of such preferences and/or rights shall be set forth in full or summarized on the face or back of the certificate that the corporation shall issue to represent such class or series of stock; provided, however, that, except as otherwise provided in Section 202 of the DGCL, in lieu of the foregoing requirements there may be set forth on the face or back of the certificate that the corporation shall issue to represent such class or series of stock a statement that the corporation will furnish without charge to each stockholder who so requests the powers, the designations, the preferences, and the relative, participating, optional or other special rights of each class of stock or series thereof and the qualifications, limitations or restrictions of such preferences and/or rights.

7.5    LOST CERTIFICATES.

Except as provided in this Section 7.5, no new certificates for shares shall be issued to replace a previously issued certificate unless the latter is surrendered to the corporation and cancelled at the same time. The corporation may issue a new certificate of stock or uncertificated shares in the place of any certificate theretofore issued by it, alleged to have been lost, stolen or destroyed, and the corporation may require the owner of the lost, stolen or destroyed certificate, or such owner’s legal representative, to give the corporation a bond sufficient to indemnify it against any claim that may be made against it on account of the alleged loss, theft or destruction of any such certificate or the issuance of such new certificate or uncertificated shares.

7.6    CONSTRUCTION; DEFINITIONS.

Unless the context requires otherwise, the general provisions, rules of construction, and definitions in the DGCL shall govern the construction of these bylaws. Without limiting the generality of this provision, the singular number includes the plural, the plural number includes the singular, and the term “person” includes both a corporation and a natural person.

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7.7    DIVIDENDS.

The Board, subject to any restrictions contained in either (i) the DGCL, or (ii) the certificate of incorporation, may declare and pay dividends upon the shares of its capital stock. Dividends may be paid in cash, in property, or in shares of the corporation’s capital stock.

The Board may set apart out of any of the funds of the corporation available for dividends a reserve or reserves for any proper purpose and may abolish any such reserve. Such purposes shall include but not be limited to equalizing dividends, repairing or maintaining any property of the corporation, and meeting contingencies.

7.8    FISCAL YEAR.

The fiscal year of the corporation shall be fixed by resolution of the Board and may be changed by the Board.

7.9    SEAL.

The corporation may adopt a corporate seal, which shall be adopted and which may be altered by the Board. The corporation may use the corporate seal by causing it or a facsimile thereof to be impressed or affixed or in any other manner reproduced.

7.10    TRANSFER OF STOCK.

Upon surrender to the corporation or the transfer agent of the corporation of a certificate for shares duly endorsed or accompanied by proper evidence of succession, assignation or authority to transfer, it shall be the duty of the corporation to issue a new certificate to the person entitled thereto, cancel the old certificate, and record the transaction in its books.

7.11    STOCK TRANSFER AGREEMENTS.

The corporation shall have power to enter into and perform any agreement with any number of stockholders of any one or more classes of stock of the corporation to restrict the transfer of shares of stock of the corporation of any one or more classes owned by such stockholders in any manner not prohibited by the DGCL.

7.12    REGISTERED STOCKHOLDERS.

The corporation:

(i)    shall be entitled to recognize the exclusive right of a person registered on its books as the owner of shares to receive dividends and to vote as such owner;

(ii)    shall be entitled to hold liable for calls and assessments the person registered on its books as the owner of shares; and

(iii)    shall not be bound to recognize any equitable or other claim to or interest in such share or shares on the part of another person, whether or not it shall have express or other notice thereof, except as otherwise provided by the laws of Delaware.

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7.13    WAIVER OF NOTICE.

Whenever notice is required to be given under any provision of the DGCL, the certificate of incorporation or these bylaws, a written waiver, signed by the person entitled to notice, or a waiver by electronic transmission by the person entitled to notice, whether before or after the time of the event for which notice is to be given, shall be deemed equivalent to notice. Attendance of a person at a meeting shall constitute a waiver of notice of such meeting, except when the person attends a meeting for the express purpose of objecting at the beginning of the meeting, to the transaction of any business because the meeting is not lawfully called or convened. Neither the business to be transacted at, nor the purpose of, any regular or special meeting of the stockholders need be specified in any written waiver of notice or any waiver by electronic transmission unless so required by the certificate of incorporation or these bylaws.

ARTICLE VIII—NOTICE BY ELECTRONIC TRANSMISSION

8.1    NOTICE BY ELECTRONIC TRANSMISSION.

Without limiting the manner by which notice otherwise may be given effectively to stockholders pursuant to the DGCL, the certificate of incorporation or these bylaws, any notice to stockholders given by the corporation under any provision of the DGCL, the certificate of incorporation or these bylaws shall be effective if given by a form of electronic transmission consented to by the stockholder to whom the notice is given. Any such consent shall be revocable by the stockholder by written notice to the corporation. Any such consent shall be deemed revoked if:

(i)    the corporation is unable to deliver by electronic transmission two consecutive notices given by the corporation in accordance with such consent; and

(ii)    such inability becomes known to the secretary or an assistant secretary of the corporation or to the transfer agent, or other person responsible for the giving of notice.

However, the inadvertent failure to treat such inability as a revocation shall not invalidate any meeting or other action.

Any notice given pursuant to the preceding paragraph shall be deemed given:

(i)    if by facsimile telecommunication, when directed to a number at which the stockholder has consented to receive notice;

(ii)    if by electronic mail, when directed to an electronic mail address at which the stockholder has consented to receive notice;

(iii)    if by a posting on an electronic network together with separate notice to the stockholder of such specific posting, upon the later of (A) such posting and (B) the giving of such separate notice; and

(iv)    if by any other form of electronic transmission, when directed to the stockholder.

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An affidavit of the secretary or an assistant secretary or of the transfer agent or other agent of the corporation that the notice has been given by a form of electronic transmission shall, in the absence of fraud, be prima facie evidence of the facts stated therein.

8.2    DEFINITION OF ELECTRONIC TRANSMISSION.

An “electronic transmission” means any form of communication, not directly involving the physical transmission of paper, that creates a record that may be retained, retrieved, and reviewed by a recipient thereof, and that may be directly reproduced in paper form by such a recipient through an automated process.

8.3    INAPPLICABILITY.

Notice by a form of electronic transmission shall not apply to Sections 164, 296, 311, 312 or 324 of the DGCL.

ARTICLE IX—INDEMNIFICATION

9.1    INDEMNIFICATION OF DIRECTORS AND OFFICERS.

The corporation shall indemnify and hold harmless, to the fullest extent permitted by applicable law as it presently exists or may hereafter be amended, any director or officer of the corporation who was or is made or is threatened to be made a party or is otherwise involved in any action, suit or proceeding, whether civil, criminal, administrative or investigative (a “proceeding”) by reason of the fact that he or she, or a person for whom he or she is the legal representative, is or was a director, officer, employee or agent of the corporation or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation or of a partnership, joint venture, trust, enterprise or non-profit entity, including service with respect to employee benefit plans, against all liability and loss suffered and expenses reasonably incurred by such person in connection with any such action, suit, or proceeding. The corporation shall be required to indemnify a person in connection with a proceeding initiated by such person only if the proceeding was authorized by the Board of the corporation.

9.2    INDEMNIFICATION OF OTHERS.

The corporation shall have the power to indemnify and hold harmless, to the fullest extent permitted by applicable law as it presently exists or may hereafter be amended, any employee or agent of the corporation who was or is made or is threatened to be made a party or is otherwise involved in any action, suit or proceeding by reason of the fact that he or she, or a person for whom he or she is the legal representative, is or was an employee or agent of the corporation or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation or of a partnership, joint venture, trust, enterprise or non-profit entity, including service with respect to employee benefit plans, against all liability and loss suffered and expenses reasonably incurred by such person in connection with any such action, suit, or proceeding.

9.3    PREPAYMENT OF EXPENSES.

The corporation shall pay the expenses incurred by any officer or director of the corporation, and may pay the expenses incurred by any employee or agent of the corporation, in defending any proceeding in advance of its final disposition; provided, however, that the payment of expenses incurred by a person in advance of the final disposition of the proceeding shall be made only upon receipt of an undertaking by the person to repay all

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amounts advanced if it should be ultimately determined that the person is not entitled to be indemnified under this Article 9 or otherwise.

9.4    DETERMINATION; CLAIM.

If a claim for indemnification or payment of expenses under this Article 9 is not paid in full within sixty days after a written claim therefor has been received by the corporation the claimant may file suit to recover the unpaid amount of such claim and, if successful in whole or in part, shall be entitled to be paid the expense of prosecuting such claim. In any such action the corporation shall have the burden of proving that the claimant was not entitled to the requested indemnification or payment of expenses under applicable law.

9.5    NON-EXCLUSIVITY OF RIGHTS.

The rights conferred on any person by this Article 9 shall not be exclusive of any other rights which such person may have or hereafter acquire under any statute, provision of the certificate of incorporation, these bylaws, agreement, vote of stockholders or disinterested directors or otherwise.

9.6    INSURANCE.

The corporation may purchase and maintain insurance on behalf of any person who is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against any liability asserted against him or her and incurred by him or her in any such capacity, or arising out of his or her status as such, whether or not the corporation would have the power to indemnify him or her against such liability under the provisions of the General Corporation Law of Delaware.

9.7    OTHER INDEMNIFICATION.

The corporation’s obligation, if any, to indemnify any person who was or is serving at its request as a director, officer, employee or agent of another corporation, partnership, joint venture, trust, enterprise or non-profit entity shall be reduced by any amount such person may collect as indemnification from such other corporation, partnership, joint venture, trust, enterprise or non-profit enterprise.

9.8    AMENDMENT OR REPEAL.

Any repeal or modification of the foregoing provisions of this Article 9 shall not adversely affect any right or protection hereunder of any person in respect of any act or omission occurring prior to the time of such repeal or modification.”

ARTICLE X—AMENDMENTS

These bylaws may be adopted, amended or repealed by the stockholders entitled to vote. However, the corporation may, in its certificate of incorporation, confer the power to adopt, amend or repeal bylaws upon the directors. The fact that such power has been so conferred upon the directors shall not divest the stockholders of the power, nor limit their power to adopt, amend or repeal bylaws.

* * * * *

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GOOGLE INC.

a Delaware corporation

CERTIFICATE OF ADOPTION OF BYLAWS

The undersigned hereby certifies that he or she is the duly elected, qualified, and acting Secretary or Assistant Secretary of Google Inc, a Delaware corporation and that the foregoing bylaws, comprising nineteen (19) pages, were adopted as the corporation’s bylaws on October 22, 2002 by the corporation’s board of directors.

IN WITNESS WHEREOF, the undersigned has hereunto set his or her hand this 22nd day of October, 2002.

/s/    DAVID C. DRUMMOND

David C. Drummond

Secretary

EX-4.01

Exhibit 4.01

GOOGLE INC.

THIRD AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT

May 31, 2002

TABLE OF CONTENTS

		Page
SECTION 1	Definitions	2
SECTION 2	Information Rights	3
2.1	Financial Information	3
2.2	Inspection Rights	4
2.3	Qualified Small Business Stock Status	4
2.4	Assignment of Rights	5
2.5	Termination	5
SECTION 3	Registration Rights	5
3.1	Requested Registration	5
3.2	Company Registration	7
3.3	Registration on Form S-3	8
3.4	Limitations on Subsequent Registration Rights	9
3.5	Expenses of Registration	9
3.6	Registration Procedures	9
3.7	Indemnification	11
3.8	Information by Holder	13
3.9	Rule 144 Reporting	13
3.10	Transfer of Registration Rights	13
3.11	Termination	14
3.12	Lockup Agreement	14
SECTION 4	Miscellaneous Covenants	14
4.1	Proprietary Information Agreement	14
4.2	Termination	14
SECTION 5	Legends	14
5.1	Legends	14
SECTION 6	Miscellaneous	15
6.1	Governing Law	15
6.2	Entire Agreement; Amendment	15
6.3	Aggregation	15
6.4	Notices, etc	16
6.5	Severability	16
6.6	Counterparts	16

GOOGLE INC.

THIRD AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT

This Third Amended and Restated Investor Rights Agreement (the “Agreement”) is made as of May 31, 2002 by and among Google Inc., a California corporation (the “Company”), the persons listed on the Schedule of Investors attached hereto as Exhibit A (collectively the “Investors” and individually an “Investor”) and America Online, Inc., a Delaware corporation (the “Series D Warrant Holder”).

RECITALS

A. The Company is a party to that certain Second Amended and Restated Investor Rights Agreement dated as of September 6, 2000, as subsequently amended (the “Prior Agreement”) by and among the Company, the holder of a warrant to purchase Common Stock of the Company (the “Common Warrant Holder”); certain holders of the Company’s Series A Preferred Stock (the “Series A Parties”); certain holders of the Company’s Series B Preferred Stock and certain holders of the Company’s warrants to purchase Series B Preferred Stock (the “Series B Parties”); and certain holders of the Company Series C Preferred Stock and certain holders of the Company’s warrants to purchase Series C Preferred Stock (the “Series C Parties”).

B. The Company is selling a warrant to purchase shares of its Series D Preferred Stock pursuant to that certain Series D Preferred Stock Warrant dated as of June 3, 2002 (the “Series D Warrant”) to the Series D Warrant Holder, which Series D Warrant provides, among other things, that the Company and the Investors shall have entered into this Agreement in order that the Investors be afforded certain registration and information rights with respect to the Preferred Stock.

C. In further consideration of the Company’s sale and the Series D Warrant Holder’s purchase of the Series D Warrant, the several parties hereto wish to grant to the Series D Warrant Holder the several rights set forth herein and to observe the several obligations set forth herein.

E. The Company, the Common Warrant Holder, the Series A Parties, the Series B Parties and the Series C Parties desire to amend and restate the Prior Agreement to include the Series D Warrant Holder as a party hereto, and the Series D Warrant Holder desires to execute this Agreement so as to become a party to the Prior Agreement, as amended and restated hereby.

F. As set forth in Section 6.7 below, upon the execution of this Agreement by (i) the Company and (ii) a majority in interest of the Common Warrant Holder, the Series A Parties, the Series B Parties and the Series C Parties, voting together, the Prior Agreement is amended and restated in its entirety.

For good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties agree as follows:

SECTION 1

Definitions

As used in this Agreement, the following terms shall have the following respective meanings:

1.1 “ARE Common Shares” shall mean those shares of Company Common Stock issued or issuable upon the exercise of a warrant held by Alexandria Real Estate Equities, L.P. (“ARE”).

1.2 “Commission” shall mean the Securities and Exchange Commission or any other U. S. federal agency at the time administering the Securities Act.

1.3 “Common Stock” shall mean shares of the Company’s Common Stock, no par value.

1.4 “Exchange Act” shall mean the Securities Exchange Act of 1934, as amended.

1.5 “Heller Financial Common Shares” shall mean those shares of Company Common Stock issued or issuable upon conversion of shares of Series C Preferred Stock as may be issued to Heller Financial Leasing, Inc., a Delaware corporation (“Heller”) upon exercise of those certain warrants issued to Heller dated June 28, 2001, August 1, 2001, December 27, 2001 and March 29, 2002 (or any shares of Company Common Stock issued upon exercise of such warrants).

1.6 “Holder or Holders” shall mean each of the Investors listed on Exhibit A (and their transferees as permitted by Section 3.10) holding Registrable Securities.

1.7 “Initiating Holders” shall mean Holders who in the aggregate hold greater than forty percent (40%) of the Registrable Securities. ”Other Holders” shall mean holders of Company securities, other than the Holders, proposing to distribute their securities pursuant to a registration under Section 3 of this Agreement.

1.8 “Registrable Securities” shall mean (i) the Series D Warrant Holder Common Shares; (ii) the Heller Financial Common Shares; provided, however, that the Heller Financial Common Shares shall be excluded from the definition of Registrable Securities for the purposes of Sections 1.7, 3.1 and 3.3; (iii) the ARE Common Shares; (iv) shares of Common Stock issued or issuable pursuant to the conversion of the Company’s Series A Preferred Stock, Series B Preferred Stock, and Series C Preferred Stock, including shares of any series of Preferred Stock of the Company issued upon the exercise of any outstanding warrant or other security exercisable for shares of Preferred Stock, if the issuance of such security was approved by the Company’s Board of Directors; provided, however, that any such shares relating to the Heller Financial Warrant shall be excluded from the definition of Registrable Securities for the purposes of Sections 1.7, 3.1 and 3.3; (v) any Common Stock issued as (or issuable upon the conversion or exercise of any warrant, right or other security which is issued as) a dividend or other distribution with respect to, or in exchange for or in replacement of, such Series A Preferred Stock, Series B Preferred Stock, Series C Preferred

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Stock, the Series D Warrant Holder Common Shares, the Heller Financial Common Shares and the ARE Common Shares, excluding in all cases, however, any Registrable Securities that have been sold to or through a broker or dealer or underwriter in a public distribution or a public securities transaction or which have been sold in a private transaction in which the transferor’s rights under this Agreement are not assigned, and provided in all cases that such shares relating to the Heller Financial Warrant shall be excluded from the definition of Registrable Securities for the purposes of Sections 1.7, 3.1 and 3.3.

1.9 The terms “register,” “registered” and “registration” refer to a registration effected by preparing and filing a registration statement in compliance with the Securities Act, and the declaration or ordering of the effectiveness of such registration statement. ”Registration Expenses” shall mean all expenses, except as otherwise stated below, incurred by the Company in complying with Sections 3.1, 3.2 and 3.3 hereof, including, without limitation, all registration, qualification and filing fees, printing expenses, escrow fees, fees and disbursements of counsel for the Company (and fees and disbursements of one special counsel for Holders, if any), accounting fees, blue sky fees and the expense of any special audits incident to or required by any such registration (but excluding the compensation of regular employees of the Company which shall be paid in any event by the Company).

1.10 “Securities Act” shall mean the Securities Act of 1933, as amended, or any similar United States federal statute and the rules and regulations of the Commission thereunder, all as the same shall be in effect at the time.

1.11 “Selling Expenses” shall mean all underwriting discounts, selling commissions and stock transfer taxes applicable to the securities registered by the Holders.

1.12 “Series D Warrant Holder Common Shares” shall mean those shares of Company Common Stock issued or issuable upon conversion of shares of Series D Preferred Stock as have been issued to Series D Warrant Holder upon exercise of the Series D Warrant (or any Company Common Stock issued upon exercise of the Series D Warrant).

SECTION 2

Information Rights

2.1 Financial Information. The Company will provide each Investor the following reports for so long as the Investor is a holder of not less than 500,000 shares of Registrable Securities (as equitably adjusted for any stock splits, stock dividends, combinations or recapitalizations occurring after the date hereof) (each, a “Recapitalization”)), including for purposes of this Section 2 any such Registrable Securities which have been transferred to a constituent partner of an Investor:

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(a) As soon as practicable after the end of each fiscal year, and in any event within one hundred twenty (120) days thereafter, audited balance sheets of the Company as of the end of such fiscal year, and audited statements of income, shareholders’ equity and cash flows of the Company for such year, prepared and certified by an independent public accounting firm of nationally recognized standing.

(b) As soon as practicable after the end of each month and fiscal quarter, and in any event within thirty (30) days and forty-five (45) days, respectively, thereafter, a balance sheet of the Company as of the end of each such period, statements of income, statements of changes in financial condition, a statement of cash flow of the Company and a statement of shareholders’ equity for such period and for the current fiscal year to date, and setting forth in each case in comparative form the figures for corresponding periods in the previous fiscal year, and setting forth in comparative form the budgeted figures, prepared in accordance with generally accepted accounting principles (other than for accompanying notes), applied on a consistent basis, subject to changes resulting from normal year-end adjustments, all in reasonable detail and signed by the principal financial or accounting officer of the Company.

(c) As soon as practicable, but in any event thirty (30) days prior to the end of each fiscal year, a budget and business plan for the next fiscal year, prepared on a monthly basis, an updated list of all shareholders of the Company that includes the name of each shareholder and the number and class of shares held by each shareholder, and, as soon as prepared, any other budgets or revised budgets prepared by the Company. and

(d) Such other information relating to the financial condition, business, prospects or corporate affairs of the Company as the Investor or any assignee of the Investor may from time to time reasonably request, provided, however, that the Company shall not be obligated to provide information which it deems in good faith to be proprietary.

2.2 Inspection Rights. The Company shall permit each Investor holding not less than 500,000 shares of Registrable Securities (as equitably adjusted for Recapitalizations), at such Investor’s expense, to visit and inspect the Company’s properties, to examine its books of account and records and to discuss the Company’s affairs, finances and accounts with its officers, all at such reasonable times as may be requested by such Investor; provided, however, that the Company shall not be obligated pursuant to this Section 2.2 to provide access to any information which it reasonably considers to be a trade secret or similar confidential information.

2.3 Qualified Small Business Stock Status. In the event that the Company proposes to take an action or engage in a transaction that would reasonably be expected to result in the shares of the Company’s Series A, Series B or Series C Preferred Stock no longer being “qualified small business stock” within the meaning of Section 1202(c) of the Internal Revenue Code of 1986, as amended (the “Code”), the Company shall notify the Investors and consult in good faith to devise a mutually agreeable and reasonable alternative course of action or transaction structure that would preserve such status. In addition, the Company shall submit to the Investors and to the Internal Revenue Service any reports that may be required under Section 1202(d)(1)(C) of the Code and any related Treasury Regulations. In addition, within ten (10) days after any Investor has delivered to the Company a written request therefor, the Company shall deliver to such Investor a written statement informing the Investor whether, in the Company’s good faith judgment after a reasonable

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investigation, such Investor’s interest in the Company constitutes “qualified small business stock” as defined in Section 1202(c) of the Code. The Company’s obligation to furnish a written statement pursuant to this Section 2.3 shall continue notwithstanding the fact that a class of the Company’s stock may be traded on an established securities market.

2.4 Assignment of Rights. The rights granted pursuant to Section 2.1, 2.2 and 2.3 may be assigned or otherwise conveyed by an Investor to a constituent partner or affiliate of an Investor or to a transferee who acquires at least 500,000 shares of Registrable Securities (as equitably adjusted for Recapitalizations). Notwithstanding the foregoing, the rights granted pursuant to Section 2.1, 2.2 and 2.3 may not be assigned or otherwise conveyed to a competitor of the Company, as reasonably determined by the Board of Directors of the Company excluding any director with an interest in such transferee. The transferor shall provide the Company with written notice of any assignment or conveyance of the rights granted pursuant to Section 2.1, 2.2 and 2.3.

2.5 Termination. The provisions of Sections 2.1, 2.2 and 4, including information rights and miscellaneous covenants, shall terminate upon the closing of a firmly underwritten public offering for any securities of the Company.

SECTION 3

Registration Rights

3.1 Requested Registration.

(a) Request for Registration. In case the Company shall receive from Initiating Holders a written request that the Company effect any registration, qualification or compliance with respect to not less than forty percent (40%) of the Registrable Securities then outstanding the Company will:

(i) promptly give written notice of the proposed registration, qualification or compliance to all other Holders; and

(ii) as soon as practicable, use its best efforts to effect such registration, qualification or compliance (including, without limitation, appropriate qualification under applicable blue sky or other state securities laws and appropriate compliance with applicable regulations issued under the Securities Act and any other governmental requirements or regulations) as may be so requested and as would permit or facilitate the sale and distribution of all or such portion of such Registrable Securities as are specified in such request, together with all or such portion of the Registrable Securities of any Holder or Holders joining in such request as are specified in a written request received by the Company within twenty (20) days after receipt of such written notice from the Company;

Provided, however, that the Company shall not be obligated to take any action to effect any such registration, qualification or compliance pursuant to this Section 3.1:

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(A) In any particular jurisdiction in which the Company would be required to execute a general consent to service of process in effecting such registration, qualification or compliance unless the Company is already subject to service in such jurisdiction and except as may be required by the Securities Act;

(B) Prior to the earlier to occur of (i) six (6) months after the effective date of the Company’s first registered public offering of its Common Stock or (ii) May 26, 2003;

(C) During the period starting with the date sixty (60) days prior to the Company’s estimated date of filing of, and ending on the date six (6) months immediately following the effective date of, any registration statement pertaining to securities of the Company sold by the Company (other than a registration of securities in a Rule 145 transaction or with respect to an employee benefit plan), provided that the Company is actively employing in good faith all reasonable efforts to cause such registration statement to become effective;

(D) After the Company has effected two (2) registrations pursuant to this Section 3.1, and such registrations have been declared or ordered effective, provided that all Registrable Securities requested to be included in each such registration(s) were in fact included in the registration;

(E) If the Company shall furnish to such Holders a certificate signed by the President of the Company stating that in the good faith judgment of the Board of Directors it would be seriously detrimental to the Company or its shareholders for a registration statement to be filed in the near future, then the Company’s obligation to use its best efforts to register, qualify or comply under this Section 4 shall be deferred for a period not to exceed ninety (90) days from the date of receipt of written request from the Initiating Holders, provided, however, that the Company shall not utilize this right more than once in any twelve (12) month period; or

Subject to the foregoing clauses (A) through (E), the Company shall file a registration statement covering the Registrable Securities so requested to be registered as soon as practicable, after receipt of the request or requests of the Initiating Holders.

(b) Underwriting. In the event that a registration pursuant to Section 3.1 is for a registered public offering involving an underwriting, the Initiating Holders will so advise the Company as part of the written request given by such Initiating Holders pursuant to Section 3.1(a), and the Company shall in turn advise the Holders as part of the notice given pursuant to Section 3.1(a)(i). In such event, the right of any Holder to registration pursuant to Section 3.1 shall be conditioned upon such Holder’s participation in the underwriting arrangements required by this Section 3.1, and the inclusion of such Holder’s Registrable Securities in the underwriting to the extent requested shall be limited to the extent provided herein.

The Company shall (together with all Holders proposing to distribute their securities through such underwriting and the Other Holders, if any) enter into an underwriting agreement in customary form with the managing underwriter(s) selected for such underwriting by the majority in interest of the Initiating Holders, but subject to the reasonable approval of the Company. Notwithstanding any other provision of this Section 3.1, if the managing underwriter advises the

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Initiating Holders in writing that marketing factors require a limitation of the number of shares to be underwritten, then the Company shall so advise all Holders and Other Holders, and the number of shares that may be included in the registration and underwriting shall be allocated first among all Holders in proportion, as nearly as practicable, to the respective amounts of Registrable Securities held by such Holders at the time of filing the registration statement and second among the Other Holders in proportion to the number of shares proposed to be included in such registration by such Other Holders. No shares proposed to be included in such registration by any of the Other Holders shall be included in such registration unless all shares requested to be included by the Initiating Holders are included in such registration. No Registrable Securities or other securities excluded from the underwriting by reason of the underwriter’s marketing limitation shall be included in such registration. To facilitate the allocation of shares in accordance with the above provisions, the Company or the underwriters may round the number of shares allocated to any holder to the nearest one hundred (100) shares.

If any Holder of Registrable Securities or Other Holder disapproves of the terms of the underwriting, such person may elect to withdraw therefrom by written notice to the Company, the managing underwriter and the Initiating Holders. The Registrable Securities and/or other securities so withdrawn shall also be withdrawn from registration.

3.2 Company Registration.

(a) Notice of Registration. If at any time or from time to time the Company shall determine to register any of its securities, either for its own account or the account of a security holder or holders, other than (i) a registration relating solely to employee benefit plans or (ii) a registration relating solely to a Commission Rule 145 transaction, the Company will:

(i) promptly give to each Holder written notice thereof; and

(ii) include in such registration (and any related qualification under blue sky laws or other compliance), and in any underwriting involved therein, all the Registrable Securities specified in a written request or requests made, within twenty (20) days after receipt of such written notice from the Company, by any Holder.

(b) Underwriting. If the registration of which the Company gives notice is for a registered public offering involving an underwriting, the Company shall so advise the Holders as a part of the written notice given pursuant to Section 3.2(a)(i). In such event the right of any Holder to registration pursuant to Section 3.2 shall be conditioned upon such Holder’s participation in such underwriting and the inclusion of Registrable Securities in the underwriting to the extent provided herein. All Holders proposing to distribute their securities through such underwriting shall, together with the Company and the Other Holders, if any, enter into an underwriting agreement in customary form with the managing underwriter selected for such underwriting by the Company. Notwithstanding any other provision of this Section 3.2, if the managing underwriter determines that marketing factors require a limitation of the number of shares to be underwritten, the managing underwriter may limit the number of shares of Registrable Securities to be included in such registration without requiring any limitation in the number of shares to be registered on behalf of the Company, provided that if such underwriting is other than an initial public offering the number of shares of Registrable Securities to be included in such registration shall not be limited to less than

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thirty percent (30%) of the total number of shares to be included in such registration. The Company shall so advise all Holders and Other Holders and the number of shares that may be included in the registration and underwriting by all Holders and Other Holders shall be allocated among them, as nearly as practicable, first, to the Company (or, if applicable, to the holders for whose account the Company is registering the securities), second, among the Holders of Registrable Securities in proportion to the respective amounts of Registrable Securities held by such Holders at the time of filing of the registration statement, and, third, among the Other Holders in proportion to the number of shares proposed to be included in such registration by such Other Holders. No shares proposed to be included in such registration by any of the Other Holders shall be included in such registration unless all shares requested to be included by the Holders are included in such registration. To facilitate the allocation of shares in accordance with the above provisions, the Company may round the number of shares allocated to any Holder or Other Holder to the nearest one hundred (100) shares. If any Holder or Other Holder disapproves of the terms of any such underwriting, such holder may elect to withdraw therefrom by written notice to the Company and the managing underwriter. Any securities excluded or withdrawn from such underwriting shall be withdrawn from such registration.

(c) Right to Terminate Registration. The Company shall have the right to terminate or withdraw any registration initiated by it under this Section 3.2 prior to the effectiveness of such registration whether or not any Holder has elected to include Registrable Securities in such registration.

3.3 Registration on Form S-3.

(a) Request for Registration. If any Holder or Holders request that the Company file a registration statement on Form S-3 under the Securities Act (or any successor form to Form S-3) for a public offering of shares of the Registrable Securities the reasonably anticipated aggregate price to the public of which would exceed $250,000 (before deducting the underwriters’ discounts and commissions), and the Company is a registrant entitled to use Form S-3 to register the Registrable Securities for such an offering, the Company shall use its best efforts to cause such Registrable Securities to be registered for the offering on such form and to cause such Registrable Securities to be qualified in such jurisdictions as the Holder or Holders may reasonably request. The substantive provisions of Section 3.1(b) shall be applicable to each registration initiated under this Section 3.3.

(b) Limitations. Notwithstanding the foregoing, the Company shall not be obligated to take any action pursuant to this Section 3.3: (i) in any particular jurisdiction in which the Company would be required to execute a general consent to service of process in effecting such registration, qualification or compliance unless the Company is already subject to service in such jurisdiction and except as may be required by the Securities Act; (ii) during the period starting with the date sixty (60) days prior to the Company’s estimated date of filing of, and ending on the date six (6) months immediately following, the effective date of any registration statement pertaining to securities of the Company (other than a registration of securities in a Rule 145 transaction or with respect to an employee benefit plan), provided that the Company is actively employing in good faith all reasonable efforts to cause such registration statement to become effective; (iii) if the Company shall furnish to such Holder a certificate signed by the President of the Company stating that in the good faith judgment of the Board of Directors it would be seriously detrimental to the Company or

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the Investors as a whole for registration statements to be filed in the near future, then the Company’s obligation to use its best efforts to file a registration statement shall be deferred for a period not to exceed ninety (90) days from the receipt of the request to file such registration by such Holder, provided, however, that the Company shall not utilize this right more than once in any twelve (12) month period; or (iv) for any particular Holder, after the Company has effected two (2) registrations pursuant to this Section 3.3, and such registrations have been declared or ordered effective.

3.4 Limitations on Subsequent Registration Rights. From and after the date hereof, the Company will not, without the prior written consent of holders of a majority of the voting power of the then outstanding Registrable Securities, enter into any agreement with any holder or prospective holder of any securities of the Company which grants such holder or prospective holder of (a) to include such securities in any registration filed under Section 3.1 or 3.2 hereof, unless under the terms of such agreement, such holder or prospective holder may include such securities in any such registration only to the extent that the inclusion of his securities will not reduce the amount of the Registrable Securities of the Holders which is included or (b) to make a demand registration which could result in such registration statement being declared effective prior to the earlier of either of the dates set forth in subsection 3.1(a)(ii)(B) or within one hundred twenty (120) days of the effective date of any registration effected pursuant to Section 3.2.

3.5 Expenses of Registration.

(a) Registration Expenses. The Company shall bear all Registration Expenses incurred in connection with all registrations pursuant to Section 3.1 and Section 3.2. The Holders of the Registrable Securities shall bear all Registration Expenses in connection with all registrations pursuant to Section 3.3.

(b) Selling Expenses. Unless otherwise stated in Section 3.5(a), all Selling Expenses and Registration Expenses relating to securities registered on behalf of the Holders shall be borne by the Holders pro rata on the basis of the number of shares so registered.

3.6 Registration Procedures. In the case of each registration, qualification or compliance effected by the Company pursuant to this Agreement, the Company will:

(a) keep each Holder advised in writing as to the initiation of each registration, qualification and compliance and as to the completion thereof;

(b) as soon as practicable, prepare and file with the Commission a registration statement with respect to such securities and use its best efforts to cause such registration statement to become and remain effective until the earlier of (i) one hundred twenty (120) days or (ii) the distribution described in the Registration Statement has been completed; provided, however, that (i) such 120-day period shall be extended for a period of time equal to the period the Holder refrains from selling any securities included in such registration at the request of the managing underwriter; and (ii) in the case of any registration of Registrable Securities on Form S-3 which are intended to be offered on a continuous or delayed basis, such 120-day period shall be extended, if necessary, to keep the registration statement effective until all such Registrable Securities are sold, provided that Rule 415, or any successor rule under the Securities Act, permits an offering on a continuous or delayed basis, and, provided further, that applicable rules under the Securities Act governing the

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obligation to file a post-effective amendment permit, in lieu of filing a post-effective amendment which (I) includes any prospectus required by Section 10(a)(3) of the Securities Act or (II) reflects facts or events representing a material or fundamental change in the information set forth in the registration statement, the incorporation by reference of information required to be included in (I) and (II) above to be contained in periodic reports filed pursuant to Section 13 or 15(d) of the Exchange Act in the registration statement;

(c) furnish to the Holders participating in such registration and to the underwriters of the securities being registered such reasonable number of copies of the registration statement, preliminary prospectus, final prospectus and such other documents as such underwriters may reasonably request in order to facilitate the public offering of such securities;

(d) prepare and file with the Commission such amendments and supplements to such registration statement and the prospectus used in connection with such registration statement as may be necessary to comply with the provisions of the Securities Act with respect to the disposition of all securities covered by such registration statement;

(e) in the event of an underwritten public offering, enter into and perform its obligations under an underwriting agreement, in usual and customary form, with the managing underwriter of such offering. Each Holder participating in such underwriting shall also enter into and perform its obligations under such an agreement;

(f) use its best efforts to register and qualify the securities covered by such registration statement under such other securities or Blue Sky laws of such jurisdictions as shall be reasonably requested by the Holders, provided that the Company shall not be required in connection therewith or as a condition thereto to qualify to do business or to file a general consent to service of process in any such states or jurisdictions;

(g) cause all such Registrable Securities registered pursuant hereunder to be listed on each securities exchange on which similar securities issued by the Company are then listed;

(h) use its best efforts to furnish, at the request of any Holder requesting registration of Registrable Securities pursuant to this Section 3, on the date that such Registrable Securities are delivered to the underwriters for sale in connection with a registration pursuant to this Section 3, if such securities are being sold through underwriters, or, if such securities are not being sold through underwriters, on the date that the registration statement with respect to such securities becomes effective, (i) an opinion, dated such date, of the counsel representing the Company for the purposes of such registration, in form and substance as is customarily given to underwriters in an underwritten public offering, addressed to the underwriters, if any, and to the Holders requesting registration of Registrable Securities and (ii) a letter dated such date, from the independent certified public accountants of the Company, in form and substance as is customarily given by independent certified public accountants to underwriters in an underwritten public offering, addressed to the underwriters, if any, and to the Holders requesting registration of Registrable Securities;

(i) notify each Holder of Registrable Securities covered by such registration statement at any time when a prospectus relating thereto is required to be delivered under the Securities Act of the happening of any event as a result of which the prospectus included in such

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registration statement, as then in effect, includes an untrue statement of material fact or omits to state a material fact required to be stated therein or necessary to make the statements made therein not misleading in the light of the circumstances then existing; and

(j) provide a transfer agent and registrar for all Registrable Securities registered pursuant hereunder and a CUSIP number for all such Registrable Securities, in each case not later than the effective date of such registration.

3.7 Indemnification.

(a) By Company. The Company will indemnify each Holder, each of its officers and directors and partners, and each person controlling such Holder within the meaning of Section 15 of the Securities Act, with respect to which registration, qualification or compliance has been effected pursuant to this Agreement, and each underwriter, if any, and each person who controls any underwriter within the meaning of Section 15 of the Securities Act and each Investor and its officers, directors and partners and each person controlling such Investor within the meaning of Section 15 of the Securities Act, against all expenses, claims, losses, damages or liabilities, joint or several, (or actions in respect thereof), including any of the foregoing incurred in settlement of any litigation, commenced or threatened, arising out of or based on any untrue statement (or alleged untrue statement) of a material fact contained in any registration statement, prospectus, offering circular or other document, or any amendment or supplement thereto, incident to any such registration, qualification or compliance, or based on any omission (or alleged omission) to state therein a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances in which they were made, not misleading, or any violation by the Company of the Securities Act, the Exchange Act or any state or federal securities law, or any rule or regulation promulgated under such Acts or law applicable to the Company in connection with any such registration, qualification or compliance, and the Company will reimburse each such Holder, each of its officers, directors and partners, and each person controlling such Holder, each such underwriter and each person who controls any such underwriter, each Investor, each of its officers, directors and partners and each person controlling such Investor, for any legal and any other expenses reasonably incurred in connection with investigating, preparing or defending any such claim, loss, damage, liability or action, provided that the Company will not be liable in any such case to the extent that any such claim, loss, damage, liability or expense arises out of or is based on any untrue statement or omission or alleged untrue statement or omission, made in reliance upon and in conformity with written information regarding a Holder furnished to the Company by an instrument duly executed by such Holder, controlling person, underwriter or Investor and stated to be specifically for use therein. If the Holders and Investors are represented by counsel other than counsel for the Company, the Company will not be obligated under this Section 3.7(a) to reimburse legal fees and expenses of more than one separate counsel for all Holders and Investors.

(b) By Holders. Each Holder will, if Registrable Securities held by such Holder are included in the securities as to which such registration, qualification or compliance is being effected, indemnify the Company, each of its directors, each of its officers, each underwriter, if any, of the Company’s securities covered by such a registration statement, each person who controls the Company or such underwriter within the meaning of Section 15 of the Securities Act, and each other such Holder, each of its officers and directors and each person controlling such Holder within the meaning of Section 15 of the Securities Act, against all claims, losses, damages and liabilities (or actions in respect thereof) arising out of or based on any untrue statement (or

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alleged untrue statement) of a material fact contained in any such registration statement, prospectus, offering circular or other document, or any omission (or alleged omission) to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, and will reimburse the Company, such Holders, such directors, officers, persons, underwriters or control persons for any legal or any other expenses reasonably incurred in connection with investigating or defending any such claim, loss, damage, liability or action, in each case to the extent, but only to the extent, that such untrue statement (or alleged untrue statement) or omission (or alleged omission) is made in such registration statement, prospectus, offering circular or other document in reliance upon and in conformity with written information regarding a Holder furnished to the Company by an instrument duly executed by such Holder and stated to be specifically for use therein. Notwithstanding the foregoing, the liability of each Holder under this subsection (b) shall be limited in an amount equal to the public offering price of the shares sold by such Holder, unless such liability arises out of or is based on willful misconduct by such Holder.

(c) Procedures. Each party entitled to indemnification under this Section 3.7 (the “Indemnified Party”) shall give notice to the party required to provide indemnification (the “Indemnifying Party”) promptly after such Indemnified Party has actual knowledge of any claim as to which indemnity may be sought, and shall permit the Indemnifying Party to assume the defense of any such claim or any litigation resulting therefrom, provided that counsel for the Indemnifying Party, who shall conduct the defense of such claim or litigation, shall be approved by the Indemnified Party (whose approval shall not unreasonably be withheld), and the Indemnified Party may participate in such defense at such party’s expense, and provided further that the failure of any Indemnified Party to give notice as provided herein shall not relieve the Indemnifying Party of its obligations under this Agreement unless the failure to give such notice is materially prejudicial to an Indemnifying Party’s ability to defend such action and provided further, that the Indemnifying Party shall not assume the defense for matters as to which there is a conflict of interest or separate and different defenses. No Indemnifying Party, in the defense of any such claim or litigation, shall, except with the consent of each Indemnified Party, consent to entry of any judgment or enter into any settlement which does not include as an unconditional term thereof the giving by the claimant or plaintiff to such Indemnified Party of a release from all liability in respect to such claim or litigation.

(d) Contribution. If the indemnification provided for in this Section 3.7 is held by a court of competent jurisdiction to be unavailable to an Indemnified Party with respect to any loss, liability, claim, damage, or expense referred to therein, then the indemnifying party, in lieu of indemnifying such indemnified party hereunder, shall contribute to the amount paid or payable by such indemnified party as a result of such loss, liability, claim, damage, or expense in such proportion as is appropriate to reflect the relative fault of the indemnifying party on the one hand and of the indemnified party on the other in connection with the statements or omissions that resulted in such loss, liability, claim, damage, or expense as well as any other relevant equitable considerations, provided that in no event shall any contribution by a Holder under this Section 3.7(d) exceed the public offering price of shares sold by such Holder, except in the case of willful misconduct by such Holder. The relative fault of the indemnifying party and of the indemnified party shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission to state a material fact relates to information supplied by the

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indemnifying party or by the indemnified party and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission.

(e) Controlling Agreement. Notwithstanding the foregoing, to the extent that the provisions on indemnification and contribution contained in the underwriting agreement entered into in connection with the underwritten public offering are in conflict with the foregoing provisions of this Section 3.7, the provisions in the underwriting agreement shall control.

3.8 Information by Holder. The Holder or Holders of Registrable Securities included in any registration shall furnish to the Company such information regarding such Holder or Holders, the Registrable Securities held by them and the distribution proposed by them as the Company may request in writing and only as shall be necessary to enable the Company to comply with the provisions hereof in connection with any registration, qualification or compliance referred to in this Agreement.

3.9 Rule 144 Reporting. With a view to making available the benefits of certain rules and regulations of the Commission which may at any time permit the sale of the Registrable Securities to the public without registration, after such time as a public market exists for the Common Stock of the Company, the Company agrees to use its best efforts to:

(a) Make and keep public information available, as those terms are understood and defined in Rule 144 under the Securities Act, at all times after the effective date that the Company becomes subject to the reporting requirements of the Securities Act or the Securities Exchange Act of 1934, as amended and for so long as the Company remains subject to the periodic reporting requirements under Section 13 or 15(d) of the Exchange Act.

(b) Use its best efforts to file with the Commission in a timely manner all reports and other documents required of the Company under the Securities Act and the Exchange Act (at any time after it has become subject to such reporting requirements).

(c) Furnish to any Holder forthwith upon request a written statement by the Company as to its compliance with the reporting requirements of Rule 144 (at any time after 90 days after the effective date of the first registration statement filed by the Company for an offering of its securities to the general public), and of the Securities Act and the Securities Exchange Act of 1934 (at any time after it has become subject to such reporting requirements), a copy of the most recent annual or quarterly report of the Company, and such other reports and documents of the Company and other information in as such Holder may reasonably request in availing itself of any rule or regulation of the Commission allowing such Holder to sell any such securities without registration.

3.10 Transfer of Registration Rights. The rights to cause the Company to register securities granted Holders under Sections 3.1, 3.2 and 3.3 may be assigned in connection with any transfer or assignment by a Holder of Registrable Securities provided that: (i) such transfer may otherwise be effected in accordance with applicable securities laws, (ii) such transfer is effected in compliance with the restrictions on transfer contained in this Agreement and in any other agreement between the Company and the Holder, and (iii) such assignee or transferee is a constituent partner or affiliate of an Investor or purchases (I) at least 500,000 shares of Registrable Securities (as equitably adjusted for Recapitalizations) or (II) all shares of Registrable Securities held by an Investor if transferred to a single entity. No transfer or assignment will divest a Holder or any subsequent owner of such rights and powers unless all Registrable Securities are transferred or assigned.

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3.11 Termination. The rights granted pursuant to this Section 3 shall terminate as to any Holder at the later of (i) five years after the Company’s initial public offering or (ii) after the effective date of the Company’s first registered public offering of its stock, at such time as such Holder may sell under Rule 144, or a successor rule, in a three month period all Registrable Securities then held by such Holder.

3.12 Lockup Agreement. Provided that each officer and director of the Company who owns stock or options to purchase stock of the Company and all one-percent security holders and all other persons with registration rights (whether or not pursuant to this Agreement) also agrees to such restrictions, each Holder agrees that, if, in connection with the public offering of the Company’s securities, the Company or the underwriters managing the offering so request, the Holder shall not sell, make any short sale of, loan, grant any option for the purchase of, or otherwise dispose of any Registrable Securities (other than those included in the registration) without the prior written consent of the Company or such underwriters, as the case may be, for (i) 180 days from the effective date of such registration in the case of the Company’s initial public offering and (ii) 90 days from the effective date of such registration in the case of any other public offering of the Company’s securities. This Section 3.12 shall be binding on all transferees or assignees of Registrable Securities, whether or not such persons are entitled to registration rights pursuant to Section 3.10.

SECTION 4

Miscellaneous Covenants

4.1 Proprietary Information Agreement. Unless otherwise determined by Board of Directors, the Company shall require all future officers, directors and employees of, and consultants to, the Company and its subsidiaries, if any, to execute a proprietary information agreement providing for the protection of the Company’s proprietary or confidential information and the assignment of intellectual property rights to the Company.

4.2 Termination. The provisions of this Section 4 shall terminate in accordance with the provisions of Section 2.5.

SECTION 5

Legends

5.1 Legends. Each Investor understands that the share certificates evidencing any Registrable Securities shall be endorsed with the following legends (in addition to any legends required under applicable state securities laws):

(a) “THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH,

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THE SALE OR DISTRIBUTION THEREOF. NO SUCH SALE OR DISPOSITION MAY BE EFFECTED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR AN OPINION OF COUNSEL SATISFACTORY TO THE CORPORATION THAT SUCH REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT OF 1933.”

(b) “THE SALE, TRANSFER OR ASSIGNMENT OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO THE TERMS OF AN AGREEMENT BETWEEN THE COMPANY AND THE REGISTERED HOLDER OR HIS PREDECESSOR IN INTEREST. COPIES OF SUCH AGREEMENT MAY BE OBTAINED BY WRITTEN REQUEST MADE BY THE HOLDER OF RECORD OF THIS CERTIFICATE TO THE SECRETARY OF THE COMPANY.”

(c) Any legend required to be placed thereon by the California Commissioner of Corporations or any other applicable state securities laws.

SECTION 6

Miscellaneous

6.1 Governing Law. This Agreement shall be governed in all respects by the laws of the State of California as applied to contracts made and to be fully performed entirely within that state between residents of that state. All disputes arising out of this Agreement shall be subject to the exclusive jurisdiction and venue of the California state courts of Santa Clara County, California, (or, if there is exclusive federal jurisdiction, the United States District Court for the Northern District of California) and the parties consent to the personal and exclusive jurisdiction and venue of these courts.

6.2 Entire Agreement; Amendment. This Agreement constitutes the full and entire understanding and agreement between the parties with regard to the subjects hereof and thereof. This Agreement or any term hereof may be amended, waived, discharged or terminated by a written instrument signed by the Company and the Investors or transferees of such Investors holding a majority of the Registrable Securities (including shares of Series A, Series B and Series C Preferred Stock and shares issuable upon exercise of warrants to purchase shares of the Company) then outstanding; provided, however, that if any amendment or waiver shall affect any Investor materially differently and adversely than other Investors, then such amendment or waiver shall require the consent of the Investor(s) so materially differently and adversely affected. Any amendment or waiver effected in accordance with this paragraph shall be binding upon each party to the Agreement, whether or not such party has signed such amendment or waiver, each future holder of all such Registrable Securities, and the Company.

6.3 Aggregation. For the purposes of determining the number of shares of Registrable Securities held or acquired by affiliated entities or persons or by a transferee or assignee, the holdings of transferees and assignees of a partnership who are partners or retired partners of such partnership (including spouses and ancestors, lineal descendants and siblings of such partners or spouses who acquire Registrable Securities by gift, will or intestate succession) shall be aggregated

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together and with the partnership; provided that, all assignees and transferees who would not qualify individually for assignment of registration rights shall have a single attorney-in-fact for the purpose of exercising any rights, receiving notices or taking any action under Sections 2 and 3.

6.4 Notices, etc. All notices and other communications required or permitted hereunder shall be deemed given if in writing and mailed by registered or certified mail, postage prepaid, or otherwise delivered by hand or by messenger, addressed (a) if to an Investor, at such address as such Investor shall have furnished to the Company in writing, or (b) if to any other holder of any Registrable Securities, at such address as such holder shall have furnished the Company in writing, or, until any such holder so furnishes an address to the Company, then to and at the address of the last holder of such Registrable Securities who has so furnished an address to the Company, or (c) if to the Company, at the address of its principal offices and addressed to the attention of the Corporate Secretary and with a copy to Wilson Sonsini Goodrich & Rosati, Professional Corporation, 650 Page Mill Road, Palo Alto, California 94304-1050, Attention: Chris F. Fennell, Esq. or at such other address as the Company shall have furnished to the Investors.

6.5 Severability. In the event that any provision of this Agreement becomes or is declared by a court of competent jurisdiction to be illegal, unenforceable or void, this Agreement shall continue in full force and effect without said provision; provided that no such severability shall be effective if it materially changes the economic benefit of this Agreement to any party.

6.6 Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be enforceable against the parties actually executing such counterparts, and all of which together shall constitute one instrument.

6.7 Termination of Prior Agreement.

Upon execution of this Agreement by (i) the Company and (ii) a majority in interest of the Series A Parties and the Series B Parties, voting together, the Prior Agreement is amended and restated in its entirety as set forth herein.

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EXHIBIT A

SCHEDULE OF INVESTORS

Series A Investors

Andreas Bechtolsheim

Jeff Bezos

David Cheriton

Ram Shriram

Stanford University

Series B Investors

KPCB Holdings Inc. as Nominee

Sequoia Capital VIII

Sequoia International Technology Partners VIII (Q)

CMS Partners LLC

Andreas Bechtolsheim

Sequoia International Technology Partners VIII

Ram Shriram

David Cheriton

Jeff Bezos

Sequoia 1997

WS Investment 99A

Larry W. Sonsini

David C. Drummond

Angel Investors L.P.

Omid Kordestani

Michael James Homer Trust, DTD 6/3/98

Ron and Gayle Conway as Trustees of the Conway Family Trust Dated 9/25/96

Roger J. Ebert and Chaz Ebert

Venture Lending & Leasing II, Inc.

Series C Investors

Yahoo! Inc.

Angel Investors II, L.P.

Angel (Q) Investors II, L.P.

Bobby Yazdani

Larry W. Sonsini

Chris F. Fennell

Suzanne Y. Bell

WS Investment Company 2000B

Rackable Systems, Inc.

Eric Schmidt

Common Stock Warrant Holder

Alexandria Real Estate Equities, L.P. (“ARE”)

IN WITNESS WHEREOF, the undersigned has executed this Agreement as of the date set forth above.

“INVESTORS”		“COMPANY”
		GOOGLE INC., a California corporation
By:		By:	/s/    David C. Drummond
	(Signature)
Name:
	(Print name)
Title:
Address:

EX-10.01

Exhibit 10.01

INDEMNIFICATION AGREEMENT

THIS AGREEMENT is entered into, effective as DATE of by and between Google Inc., a Delaware corporation (the “Company”), and INDEMNITEE (“Indemnitee”).

WHEREAS, it is essential to the Company to retain and attract as directors and officers the most capable persons available;

WHEREAS, Indemnitee is a director and/or officer of the Company;

WHEREAS, both the Company and Indemnitee recognize the increased risk of litigation and other claims currently being asserted against directors and officers of corporations;

WHEREAS, the Certificate of Incorporation and Bylaws of the Company require the Company to indemnify and advance expenses to its directors and officers to the fullest extent permitted under Delaware law, and the Indemnitee has been serving and continues to serve as a director and/or officer of the Company in part in reliance on the Company’s Certificate of Incorporation and Bylaws; and

WHEREAS, in recognition of Indemnitee’s need for (i) substantial protection against personal liability based on Indemnitee’s reliance on the aforesaid Certificate of Incorporation and Bylaws, (ii) specific contractual assurance that the protection promised by the Certificate of Incorporation and Bylaws will be available to Indemnitee (regardless of, among other things, any amendment to or revocation of the Certificate of Incorporation and Bylaws or any change in the composition of the Company’s Board of Directors or acquisition transaction relating to the Company), and (iii) an inducement to provide effective services to the Company as a director and/or officer, the Company wishes to provide in this Agreement for the indemnification of and the advancing of expenses to Indemnitee to the fullest extent (whether partial or complete) permitted under Delaware law and as set forth in this Agreement, and, to the extent insurance is maintained, to provide for the continued coverage of Indemnitee under the Company’s directors’ and officers’ liability insurance policies.

NOW, THEREFORE, in consideration of the above premises and of Indemnitee continuing to serve the Company directly or, at its request, with another enterprise, and intending to be legally bound hereby, the parties agree as follows:

1.    Certain Definitions:

(a)    Board: the Board of Directors of the Company.

(b)    Affiliate: any corporation or other person or entity that directly, or indirectly through one or more intermediaries, controls or is controlled by, or is under common control with, the person specified.

(c)    Change in Control: shall be deemed to have occurred if (i) any “person” (as such term is used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) (other than a trustee or other fiduciary holding securities under

1

an employee benefit plan of the Company or a corporation owned directly or indirectly by the stockholders of the Company in substantially the same proportions as their ownership of stock of the Company, and other than any person holding shares of the Company on the date that the Company first registers under the Act or any transferee of such individual if such transferee is a spouse or lineal descendant of the transferee or a trust for the benefit of the individual, his spouse or lineal descendants), is or becomes the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company representing 30% or more of the total voting power represented by the Company’s then outstanding Voting Securities, or (ii) during any period of two consecutive years, individuals who at the beginning of such period constitute the Board and any new director whose election by the Board or nomination for election by the Company’s stockholders was approved by a vote of at least two-thirds (2/3) of the directors then still in office who either were directors at the beginning of the period or whose election or nomination for election was previously so approved, cease for any reason to constitute a majority of the Board, or (iii) the stockholders of the Company approve a merger or consolidation of the Company with any other corporation, other than a merger or consolidation that would result in the Voting Securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into Voting Securities of the surviving entity) at least 80% of the total voting power represented by the Voting Securities of the Company or such surviving entity outstanding immediately after such merger or consolidation, or (iv) the stockholders of the Company approve a plan of complete liquidation of the Company or an agreement for the sale or disposition by the Company (in one transaction or a series of transactions) of all or substantially all of the Company’s assets.

(d)    Expenses: any expense, liability, or loss, including attorneys’ fees, judgments, fines, ERISA excise taxes and penalties, amounts paid or to be paid in settlement, any interest, assessments, or other charges imposed thereon, any federal, state, local, or foreign taxes imposed as a result of the actual or deemed receipt of any payments under this Agreement, and all other costs and obligations, paid or incurred in connection with investigating, defending, being a witness in, participating in (including on appeal), or preparing for any of the foregoing in, any Proceeding relating to any Indemnifiable Event.

(e)    Indemnifiable Event: any event or occurrence that takes place either prior to or after the execution of this Agreement, related to the fact that Indemnitee is or was a director or officer of the Company, or while a director or officer is or was serving at the request of the Company as a director, officer, employee, trustee, agent, or fiduciary of another foreign or domestic corporation, partnership, joint venture, employee benefit plan, trust, or other enterprise, or was a director, officer, employee, or agent of a foreign or domestic corporation that was a predecessor corporation of the Company or of another enterprise at the request of such predecessor corporation, or related to anything done or not done by Indemnitee in any such capacity, whether or not the basis of the Proceeding is alleged action in an official capacity as a director, officer, employee, or agent or in any other capacity while serving as a director, officer, employee, or agent of the Company, as described above.

(f)    Independent Counsel: the person or body appointed in connection with Section 3.

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(g)    Proceeding: any threatened, pending, or completed action, suit, or proceeding or any alternative dispute resolution mechanism (including an action by or in the right of the Company), or any inquiry, hearing, or investigation, whether conducted by the Company or any other party, that Indemnitee in good faith believes might lead to the institution of any such action, suit, or proceeding, whether civil, criminal, administrative, investigative, or other.

(h)    Reviewing Party: the person or body appointed in accordance with Section 3.

(i)    Voting Securities: any securities of the Company that vote generally in the election of directors.

2.    Agreement to Indemnify.

(a)    General Agreement. In the event Indemnitee was, is, or becomes a party to or witness or other participant in, or is threatened to be made a party to or witness or other participant in, a Proceeding by reason of (or arising in part out of) an Indemnifiable Event, the Company shall indemnify Indemnitee from and against any and all Expenses to the fullest extent permitted by law, as the same exists or may hereafter be amended or interpreted (but in the case of any such amendment or interpretation, only to the extent that such amendment or interpretation permits the Company to provide broader indemnification rights than were permitted prior thereto). The parties hereto intend that this Agreement shall provide for indemnification in excess of that expressly permitted by statute, including, without limitation, any indemnification provided by the Company’s Certificate of Incorporation, its Bylaws, vote of its shareholders or disinterested directors, or applicable law.

(b)    Initiation of Proceeding. Notwithstanding anything in this Agreement to the contrary, Indemnitee shall not be entitled to indemnification pursuant to this Agreement in connection with any Proceeding initiated by Indemnitee against the Company or any director or officer of the Company unless (i) the Company has joined in or the Board has consented to the initiation of such Proceeding; (ii) the Proceeding is one to enforce indemnification rights under Section 5; or (iii) the Proceeding is instituted after a Change in Control (other than a Change in Control approved by a majority of the directors on the Board who were directors immediately prior to such Change in Control) and Independent Counsel has approved its initiation.

(c)    Expense Advances. If so requested by Indemnitee, the Company shall advance (within ten business days of such request) any and all Expenses to Indemnitee (an “Expense Advance”); provided that, (i) such an Expense Advance shall be made only upon delivery to the Company of an undertaking by or on behalf of the Indemnitee to repay the amount thereof if it is ultimately determined that Indemnitee is not entitled to be indemnified by the Company, and (ii) if and to the extent that the Reviewing Party determines that Indemnitee would not be permitted to be so indemnified under applicable law, the Company shall be entitled to be reimbursed by Indemnitee (who hereby agrees to reimburse the Company) for all such amounts theretofore paid. If Indemnitee has commenced or commences legal proceedings in a court of competent jurisdiction to secure a determination that Indemnitee should be indemnified under applicable law, as provided in

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Section 4, any determination made by the Reviewing Party that Indemnitee would not be permitted to be indemnified under applicable law shall not be binding, and Indemnitee shall not be required to reimburse the Company for any Expense Advance until a final judicial determination is made with respect thereto (as to which all rights of appeal therefrom have been exhausted or have lapsed). Indemnitee’s obligation to reimburse the Company for Expense Advances shall be unsecured and no interest shall be charged thereon.

(d)    Mandatory Indemnification. Notwithstanding any other provision of this Agreement, to the extent that Indemnitee has been successful on the merits or otherwise in defense of any Proceeding relating in whole or in part to an Indemnifiable Event or in defense of any issue or matter therein, Indemnitee shall be indemnified against all Expenses incurred in connection therewith.

(e)    Partial Indemnification. If Indemnitee is entitled under any provision of this Agreement to indemnification by the Company for some or a portion of Expenses, but not, however, for the total amount thereof, the Company shall nevertheless indemnify Indemnitee for the portion thereof to which Indemnitee is entitled.

(f)    Prohibited Indemnification. No indemnification pursuant to this Agreement shall be paid by the Company on account of any Proceeding in which judgment is rendered against Indemnitee for an accounting of profits made from the purchase or sale by Indemnitee of securities of the Company pursuant to the provisions of Section 16(b) of the Securities Exchange Act of 1934, as amended, or similar provisions of any federal, state, or local laws.

3.    Reviewing Party. Prior to any Change in Control, the Reviewing Party shall be any appropriate person or body consisting of a member or members of the Board or any other person or body appointed by the Board who is not a party to the particular Proceeding with respect to which Indemnitee is seeking indemnification; after a Change in Control, the Independent Counsel referred to below shall become the Reviewing Party. With respect to all matters arising after a Change in Control (other than a Change in Control approved by a majority of the directors on the Board who were directors immediately prior to such Change in Control) concerning the rights of Indemnitee to indemnity payments and Expense Advances under this Agreement or any other agreement or under applicable law or the Company’s Certificate of Incorporation or Bylaws now or hereafter in effect relating to indemnification for Indemnifiable Events, the Company shall seek legal advice only from Independent Counsel selected by Indemnitee and approved by the Company (which approval shall not be unreasonably withheld), and who has not otherwise performed services for the Company or the Indemnitee (other than in connection with indemnification matters) within the last five years. The Independent Counsel shall not include any person who, under the applicable standards of professional conduct then prevailing, would have a conflict of interest in representing either the Company or Indemnitee in an action to determine Indemnitee’s rights under this Agreement. Such counsel, among other things, shall render its written opinion to the Company and Indemnitee as to whether and to what extent the Indemnitee should be permitted to be indemnified under applicable law. The Company agrees to pay the reasonable fees of the Independent Counsel and to indemnify fully such counsel against any and all expenses (including attorneys’ fees), claims, liabilities, loss, and

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damages arising out of or relating to this Agreement or the engagement of Independent Counsel pursuant hereto.

4.    Indemnification Process and Appeal.

(a)    Indemnification Payment. Indemnitee shall be entitled to indemnification of Expenses, and shall receive payment thereof, from the Company in accordance with this Agreement as soon as practicable after Indemnitee has made written demand on the Company for indemnification, unless the Reviewing Party has given a written opinion to the Company that Indemnitee is not entitled to indemnification under applicable law.

(b)    Suit to Enforce Rights. Regardless of any action by the Reviewing Party, if Indemnitee has not received full indemnification within thirty days after making a demand in accordance with Section 4(a), Indemnitee shall have the right to enforce its indemnification rights under this Agreement by commencing litigation in any court in the State of California or the State of Delaware having subject matter jurisdiction thereof seeking an initial determination by the court or challenging any determination by the Reviewing Party or any aspect thereof. The Company hereby consents to service of process and to appear in any such proceeding. Any determination by the Reviewing Party not challenged by the Indemnitee shall be binding on the Company and Indemnitee. The remedy provided for in this Section 4 shall be in addition to any other remedies available to Indemnitee at law or in equity.

(c)    Defense to Indemnification, Burden of Proof, and Presumptions. It shall be a defense to any action brought by Indemnitee against the Company to enforce this Agreement (other than an action brought to enforce a claim for Expenses incurred in defending a Proceeding in advance of its final disposition where the required undertaking has been tendered to the Company) that it is not permissible under applicable law for the Company to indemnify Indemnitee for the amount claimed. In connection with any such action or any determination by the Reviewing Party or otherwise as to whether Indemnitee is entitled to be indemnified hereunder, the burden of proving such a defense or determination shall be on the Company. Neither the failure of the Reviewing Party or the Company (including its Board, independent legal counsel, or its stockholders) to have made a determination prior to the commencement of such action by Indemnitee that indemnification of the claimant is proper under the circumstances because Indemnitee has met the standard of conduct set forth in applicable law, nor an actual determination by the Reviewing Party or Company (including its Board, independent legal counsel, or its stockholders) that the Indemnitee had not met such applicable standard of conduct, shall be a defense to the action or create a presumption that the Indemnitee has not met the applicable standard of conduct. For purposes of this Agreement, the termination of any claim, action, suit, or proceeding, by judgment, order, settlement (whether with or without court approval), conviction, or upon a plea of nolo contendere, or its equivalent, shall not create a presumption that Indemnitee did not meet any particular standard of conduct or have any particular belief or that a court has determined that indemnification is not permitted by applicable law.

5.    Indemnification for Expenses Incurred in Enforcing Rights. The Company shall indemnify Indemnitee against any and all Expenses that are incurred by Indemnitee in connection with any action brought by Indemnitee for

(i)    indemnification or advance payment of Expenses by the Company

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under this Agreement or any other agreement or under applicable law or the Company’s Certificate of Incorporation or Bylaws now or hereafter in effect relating to indemnification for Indemnifiable Events, and/or

(ii)    recovery under directors’ and officers’ liability insurance policies maintained by the Company, but only in the event that Indemnitee ultimately is determined to be entitled to such indemnification or insurance recovery, as the case may be. In addition, the Company shall, if so requested by Indemnitee, advance the foregoing Expenses to Indemnitee, subject to and in accordance with Section 2(c).

6.    Notification and Defense of Proceeding.

(a)    Notice. Promptly after receipt by Indemnitee of notice of the commencement of any Proceeding, Indemnitee shall, if a claim in respect thereof is to be made against the Company under this Agreement, notify the Company of the commencement thereof; but the omission so to notify the Company will not relieve the Company from any liability that it may have to Indemnitee, except as provided in Section 6(c).

(b)    Defense. With respect to any Proceeding as to which Indemnitee notifies the Company of the commencement thereof, the Company will be entitled to participate in the Proceeding at its own expense and except as otherwise provided below, to the extent the Company so wishes, it may assume the defense thereof with counsel reasonably satisfactory to Indemnitee. After notice from the Company to Indemnitee of its election to assume the defense of any Proceeding, the Company shall not be liable to Indemnitee under this Agreement or otherwise for any Expenses subsequently incurred by Indemnitee in connection with the defense of such Proceeding other than reasonable costs of investigation or as otherwise provided below. Indemnitee shall have the right to employ legal counsel in such Proceeding, but all Expenses related thereto incurred after notice from the Company of its assumption of the defense shall be at Indemnitee’s expense unless: (i) the employment of legal counsel by Indemnitee has been authorized by the Company, (ii) Indemnitee has reasonably determined that there may be a conflict of interest between Indemnitee and the Company in the defense of the Proceeding, (iii) after a Change in Control (other than a Change in Control approved by a majority of the directors on the Board who were directors immediately prior to such Change in Control), the employment of counsel by Indemnitee has been approved by the Independent Counsel, or (iv) the Company shall not in fact have employed counsel to assume the defense of such Proceeding, in each of which cases all Expenses of the Proceeding shall be borne by the Company. The Company shall not be entitled to assume the defense of any Proceeding brought by or on behalf of the Company or as to which Indemnitee shall have made the determination provided for in (ii), (iii) and (iv) above.

(c)    Settlement of Claims. The Company shall not be liable to indemnify Indemnitee under this Agreement or otherwise for any amounts paid in settlement of any Proceeding effected without the Company’s written consent, such consent not to be unreasonably withheld; provided, however, that if a Change in Control has occurred (other than a Change in Control approved by a majority of the directors on the Board who were directors immediately prior to such Change in Control), the Company shall be liable for indemnification of Indemnitee for amounts paid in settlement if the Independent Counsel has approved the

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settlement. The Company shall not settle any Proceeding in any manner that would impose any penalty or limitation on Indemnitee without Indemnitee’s written consent. The Company shall not be liable to indemnify the Indemnitee under this Agreement with regard to any judicial award if the Company was not given a reasonable and timely opportunity, at its expense, to participate in the defense of such action; the Company’s liability hereunder shall not be excused if participation in the Proceeding by the Company was barred by this Agreement.

7.    Establishment of Trust. In the event of a Change in Control (other than a Change in Control approved by a majority of the directors on the Board who were directors immediately prior to such Change in Control) the Company shall, upon written request by Indemnitee, create a Trust for the benefit of the Indemnitee and from time to time upon written request of Indemnitee shall fund the Trust in an amount sufficient to satisfy any and all Expenses reasonably anticipated at the time of each such request to be incurred in connection with investigating, preparing for, participating in, and/or defending any Proceeding relating to an Indemnifiable Event. The amount or amounts to be deposited in the Trust pursuant to the foregoing funding obligation shall be determined by the Independent Counsel. The terms of the Trust shall provide that (i) the Trust shall not be revoked or the principal thereof invaded without the written consent of the Indemnitee, (ii) the Trustee shall advance, within ten business days of a request by the Indemnitee, any and all Expenses to the Indemnitee (and the Indemnitee hereby agrees to reimburse the Trust under the same circumstances for which the Indemnitee would be required to reimburse the Company under Section 2(c) of this Agreement), (iii) the Trust shall continue to be funded by the Company in accordance with the funding obligation set forth above, (iv) the Trustee shall promptly pay to the Indemnitee all amounts for which the Indemnitee shall be entitled to indemnification pursuant to this Agreement or otherwise, and (v) all unexpended funds in the Trust shall revert to the Company upon a final determination by the Independent Counsel or a court of competent jurisdiction, as the case may be, that the Indemnitee has been fully indemnified under the terms of this Agreement. The Trustee shall be chosen by the Indemnitee. Nothing in this Section 7 shall relieve the Company of any of its obligations under this Agreement. All income earned on the assets held in the Trust shall be reported as income by the Company for federal, state, local, and foreign tax purposes. The Company shall pay all costs of establishing and maintaining the Trust and shall indemnify the Trustee against any and all expenses (including attorneys’ fees), claims, liabilities, loss, and damages arising out of or relating to this Agreement or the establishment and maintenance of the Trust.

8.    Non-Exclusivity. The rights of Indemnitee hereunder shall be in addition to any other rights Indemnitee may have under the Company’s Certificate of Incorporation, Bylaws, applicable law, or otherwise; provided, however, that this Agreement shall supersede any prior indemnification agreement between the Company and the Indemnitee. To the extent that a change in applicable law (whether by statute or judicial decision) permits greater indemnification than would be afforded currently under the Company’s Certificate of Incorporation, Bylaws, applicable law, or this Agreement, it is the intent of the parties that Indemnitee enjoy by this Agreement the greater benefits so afforded by such change.

9.    Liability Insurance. To the extent the Company maintains an insurance policy or policies providing general and/or directors’ and officers’ liability insurance, Indemnitee shall be covered by such policy or policies, in accordance with its or their terms, to the maximum extent of the coverage available for any Company director or officer.

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10.    Period of Limitations. No legal action shall be brought and no cause of action shall be asserted by or on behalf of the Company or any Affiliate of the Company against Indemnitee, Indemnitee’s spouse, heirs, executors, or personal or legal representatives after the expiration of two years from the date of accrual of such cause of action, or such longer period as may be required by state law under the circumstances. Any claim or cause of action of the Company or its Affiliate shall be extinguished and deemed released unless asserted by the timely filing and notice of a legal action within such period; provided, however, that if any shorter period of limitations is otherwise applicable to any such cause of action, the shorter period shall govern.

11.    Amendment of this Agreement. No supplement, modification, or amendment of this Agreement shall be binding unless executed in writing by both of the parties hereto. No waiver of any of the provisions of this Agreement shall be binding unless in the form of a writing signed by the party against whom enforcement of the waiver is sought, and no such waiver shall operate as a waiver of any other provisions hereof (whether or not similar), nor shall such waiver constitute a continuing waiver. Except as specifically provided herein, no failure to exercise or any delay in exercising any right or remedy hereunder shall constitute a waiver thereof.

12.    Subrogation. In the event of payment under this Agreement, the Company shall be subrogated to the extent of such payment to all of the rights of recovery of Indemnitee, who shall execute all papers required and shall do everything that may be necessary to secure such rights, including the execution of such documents necessary to enable the Company effectively to bring suit to enforce such rights.

13.    No Duplication of Payments. The Company shall not be liable under this Agreement to make any payment in connection with any claim made against Indemnitee to the extent Indemnitee has otherwise received payment (under any insurance policy, Bylaw, or otherwise) of the amounts otherwise indemnifiable hereunder.

14.    Binding Effect. This Agreement shall be binding upon and inure to the benefit of and be enforceable by the parties hereto and their respective successors (including any direct or indirect successor by purchase, merger, consolidation, or otherwise to all or substantially all of the business and/or assets of the Company), assigns, spouses, heirs, and personal and legal representatives. The Company shall require and cause any successor (whether direct or indirect by purchase, merger, consolidation, or otherwise) to all, substantially all, or a substantial part, of the business and/or assets of the Company, by written agreement in form and substance satisfactory to Indemnitee, expressly to assume and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform if no such succession had taken place. The indemnification provided under this Agreement shall continue as to Indemnitee for any action taken or not taken while serving in an indemnified capacity pertaining to an Indemnifiable Event even though he may have ceased to serve in such capacity at the time of any Proceeding.

15.    Severability. If any provision (or portion thereof) of this Agreement shall be held by a court of competent jurisdiction to be invalid, void, or otherwise unenforceable, the remaining provisions shall remain enforceable to the fullest extent permitted by law.

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Furthermore, to the fullest extent possible, the provisions of this Agreement (including, without limitation, each portion of this Agreement containing any provision held to be invalid, void, or otherwise unenforceable, that is not itself invalid, void, or unenforceable) shall be construed so as to give effect to the intent manifested by the provision held invalid, void, or unenforceable.

16.    Governing Law. This Agreement shall be governed by and construed and enforced in accordance with the laws of the State of Delaware applicable to contracts made and to be performed in such State without giving effect to its principles of conflicts of laws.

17.    Notices. All notices, demands, and other communications required or permitted hereunder shall be made in writing and shall be deemed to have been duly given if delivered by hand, against receipt, or mailed, postage prepaid, certified or registered mail, return receipt requested, and addressed to the Company at:

Google Inc.

2400 Bayshore Parkway

Mountain View, California 94043

Attention: Chief Executive Officer

and to Indemnitee at:

INDEMNITEE NAME

ADDRESS 1

ADDRESS 2

Notice of change of address shall be effective only when given in accordance with this Section. All notices complying with this Section shall be deemed to have been received on the date of hand delivery or on the third business day after mailing.

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

IN WITNESS WHEREOF, the parties hereto have duly executed and delivered this Agreement as of the day specified above.

GOOGLE INC., a Delaware corporation
By:
	Eric Schmidt, Chief Executive Officer

INDEMNITEE

INDEMNITEE

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EX-10.02

Exhibit 10.02

GOOGLE INC.

1998 STOCK PLAN

As Amended on June 18, 2003

1.     Purposes of the Plan. The purposes of this Stock Plan are to attract and retain the best available personnel for positions of substantial responsibility, to provide additional incentive to Employees, Directors and Consultants and to promote the success of the Company’s business. Options granted under the Plan may be Incentive Stock Options or Nonstatutory Stock Options, as determined by the Administrator at the time of grant. Stock Purchase Rights may also be granted under the Plan.

2.    Definitions. As used herein, the following definitions shall apply:

(a) “Administrator” means the Board or any of its Committees as shall be administering the Plan in accordance with Section 4 hereof.

(b) “Applicable Laws” means the requirements relating to the administration of stock option plans under U.S. state corporate laws, U.S. federal and state securities laws, the Code, any stock exchange or quotation system on which the Class A Senior Common Stock is listed or quoted and the applicable laws of any other country or jurisdiction where Options or Stock Purchase Rights are granted under the Plan.

(c) “Board” means the Board of Directors of the Company.

(d) “Code” means the Internal Revenue Code of 1986, as amended.

(e) “Committee” means a committee of Directors appointed by the Board in accordance with Section 4 hereof.

(f) “Class A Senior Common Stock” means the Class A Senior Common Stock of the Company.

(g) “Company” means Google Technology Inc., a California corporation until the consummation of the reincorporation of Google Technology Inc. into the State of Delaware, at which time “Company” shall mean Google Inc., a Delaware corporation.

(h) “Consultant” means any person who is engaged by the Company or any Parent or Subsidiary to render consulting or advisory services to such entity.

(i) “Director” means a member of the Board of Directors of the Company.

(j) “Disability” means total and permanent disability as defined in Section 22(e)(3) of the Code.

(k) “Employee” means any person, including Officers and Directors, employed by the Company or any Parent or Subsidiary of the Company. A Service Provider shall not cease to be an Employee in the case of (i) any leave of absence approved by the Company or (ii) transfers between locations of the Company or between the Company, its Parent, any Subsidiary, or any successor. For purposes of Incentive Stock Options, no such leave may exceed ninety days, unless reemployment upon expiration of such leave is guaranteed by statute or contract. If reemployment upon expiration of a leave of absence approved by the Company is not so guaranteed, on the 181st day of such leave any Incentive Stock Option held by the Optionee shall cease to be treated as an Incentive Stock Option and shall be treated for tax purposes as a Nonstatutory Stock Option. Neither service as a Director nor payment of a director’s fee by the Company shall be sufficient to constitute “employment” by the Company.

(l) “Exchange Act” means the Securities Exchange Act of 1934, as amended.

(m) “Fair Market Value” means, as of any date, the value of Class A Senior Common Stock determined as follows:

(i) If the Class A Senior Common Stock is listed on any established stock exchange or a national market system, including without limitation the Nasdaq National Market or The Nasdaq SmallCap Market of The Nasdaq Stock Market, its Fair Market Value shall be the closing sales price for such stock (or the closing bid, if no sales were reported) as quoted on such exchange or system for the last market trading day prior to the time of determination, as reported in The Wall Street Journal or such other source as the Administrator deems reliable;

(ii) If the Class A Senior Common Stock is regularly quoted by a recognized securities dealer but selling prices are not reported, its Fair Market Value shall be the mean between the high bid and low asked prices for the Class A Senior Common Stock on the last market trading day prior to the day of determination; or

(iii) In the absence of an established market for the Class A Senior Common Stock, the Fair Market Value thereof shall be determined in good faith by the Administrator.

(n) “Incentive Stock Option” means an Option intended to qualify as an incentive stock option within the meaning of Section 422 of the Code.

(o) “Nonstatutory Stock Option” means an Option not intended to qualify as an Incentive Stock Option.

(p) “Officer” means a person who is an officer of the Company within the meaning of Section 16 of the Exchange Act and the rules and regulations promulgated thereunder.

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(q)    “Option” means a stock option granted pursuant to the Plan.

(r)    “Option Agreement” means a written or electronic agreement between the Company and an Optionee evidencing the terms and conditions of an individual Option grant. The Option Agreement is subject to the terms and conditions of the Plan.

(s)    “Option Exchange Program” means a program whereby outstanding Options are exchanged for Options with a lower exercise price.

(t)    “Optioned Stock” means the Class A Senior Common Stock subject to an Option or a Stock Purchase Right.

(u)    “Optionee” means the holder of an outstanding Option or Stock Purchase Right granted under the Plan.

(v)    “Parent” means a “parent corporation,” whether now or hereafter existing, as defined in Section 424(e) of the Code.

(w)    “Plan” means the Google Technology Inc. 1998 Stock Plan, which shall become the Google Inc. 1998 Stock Plan upon the closing of a reincorporation of Google Technology Inc. into the State of Delaware that includes the corresponding name change to Google Inc.

(x)    “Restricted Stock” means shares of Class A Senior Common Stock acquired pursuant to a grant of a Stock Purchase Right under Section 11 below.

(y)    “Service Provider” means an Employee, Director or Consultant.

(z)    “Share” means a share of the Class A Senior Common Stock, as adjusted in accordance with Section 12 below.

(aa)    “Stock Purchase Right” means a right to purchase Class A Senior Common Stock pursuant to Section 11 below.

(bb)    “Subsidiary” means a “subsidiary corporation,” whether now or hereafter existing, as defined in Section 424(f) of the Code.

3.    Stock Subject to the Plan. Subject to the provisions of Section 12 of the Plan, the maximum aggregate number of Shares that may be subject to option and sold under the Plan is 12,388,116, minus those shares of Class A Senior Common Stock or shares of Common Stock that, after June 18, 2003, are issued or made subject to outstanding options under the Company’s 2003 Stock Plan (the “2003 Plan (No. 1)”), the Company’s 2003 Stock Plan (No. 2) (the “2003 Plan (No. 2)”) or the Company’s 2003 Stock Plan (No. 3) (the “2003 Plan (No. 3)”); provided, that those shares of Class A Senior Common Stock or Common Stock of the Company returned to the 2003 Plan (No. 1), 2003 Plan (No.2) and the 2003 Plan (No. 3) as a result of termination of options or repurchase of shares issued (at any time) under those plans shall be added to the authorized number

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of Shares that may be subject to option and sold under this Plan. In no event shall the number of Shares issued pursuant to Incentive Stock Options under this Plan exceed the number indicated in this Section 3. The Shares may be authorized but unissued or reacquired shares of Class A Senior Common Stock.

If an Option or Stock Purchase Right expires or becomes unexercisable without having been exercised in full, or is surrendered pursuant to an Option Exchange Program, the unpurchased Shares which were subject thereto shall become available for future grant or sale under the Plan (unless the Plan has terminated). However, Shares that have actually been issued under the Plan, upon exercise of either an Option or Stock Purchase Right, shall not be returned to the Plan and shall not become available for future distribution under the Plan, except that if Shares of Restricted Stock are repurchased by the Company at their original purchase price, such Shares shall become available for future grant under the Plan.

4.    Administration of the Plan.

(a)    Administrator. The Plan shall be administered by the Board or a Committee appointed by the Board, which Committee shall be constituted to comply with Applicable Laws.

(b)    Powers of the Administrator. Subject to the provisions of the Plan and, in the case of a Committee, the specific duties delegated by the Board to such Committee, and subject to the approval of any relevant authorities, the Administrator shall have the authority in its discretion:

(i)    to determine the Fair Market Value;

(ii)    to select the Service Providers to whom Options and Stock Purchase Rights may from time to time be granted hereunder;

(iii)    to determine the number of Shares to be covered by each such award granted hereunder;

(iv)    to approve forms of agreement for use under the Plan;

(v)    to determine the terms and conditions, of any Option or Stock Purchase Right granted hereunder. Such terms and conditions include, but are not limited to, the exercise price, the time or times when Options or Stock Purchase Rights may be exercised (which may be based on performance criteria), any vesting acceleration or waiver of forfeiture restrictions, and any restriction or limitation regarding any Option or Stock Purchase Right or the Class A Senior Common Stock relating thereto, based in each case on such factors as the Administrator, in its sole discretion, shall determine;

(vi)    to determine whether and under what circumstances an Option may be settled in cash under subsection 9(e) instead of Class A Senior Common Stock;

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(vii)    to reduce the exercise price of any Option to the then current Fair Market Value if the Fair Market Value of the Class A Senior Common Stock covered by such Option has declined since the date the Option was granted;

(viii)    to initiate an Option Exchange Program;

(ix)    to prescribe, amend and rescind rules and regulations relating to the Plan, including rules and regulations relating to sub-plans established for the purpose of qualifying for preferred tax treatment under foreign tax laws;

(x)    to allow Optionees to satisfy withholding tax obligations by electing to have the Company withhold from the Shares to be issued upon exercise of an Option or Stock Purchase Right that number of Shares having a Fair Market Value equal to the amount required to be withheld. The Fair Market Value of the Shares to be withheld shall be determined on the date that the amount of tax to be withheld is to be determined. All elections by Optionees to have Shares withheld for this purpose shall be made in such form and under such conditions as the Administrator may deem necessary or advisable; and

(xi)    to construe and interpret the terms of the Plan and awards granted pursuant to the Plan.

(c)    Effect of Administrator’s Decision. All decisions, determinations and interpretations of the Administrator shall be final and binding on all Optionees.

5.    Eligibility.

(a)    Nonstatutory Stock Options and Stock Purchase Rights may be granted to Service Providers. Incentive Stock Options may be granted only to Employees.

(b)    Each Option shall be designated in the Option Agreement as either an Incentive Stock Option or a Nonstatutory Stock Option. However, notwithstanding such designation, to the extent that the aggregate Fair Market Value of the Shares with respect to which Incentive Stock Options are exercisable for the first time by the Optionee during any calendar year (under all plans of the Company and any Parent or Subsidiary) exceeds $100,000, such Options shall be treated as Nonstatutory Stock Options. For purposes of this Section 5(b), Incentive Stock Options shall be taken into account in the order in which they were granted. The Fair Market Value of the Shares shall be determined as of the time the Option with respect to such Shares is granted.

(c)    Neither the Plan nor any Option or Stock Purchase Right shall confer upon any Optionee any right with respect to continuing the Optionee’s relationship as a Service Provider with the Company, nor shall it interfere in any way with his or her right or the Company’s right to terminate such relationship at any time, with or without cause.

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6.    Term of Plan. The Plan shall become effective upon its adoption by the Board. It shall continue in effect for a term of ten (10) years unless sooner terminated under Section 14 of the Plan.

7.    Term of Option. The term of each Option shall be stated in the Option Agreement; provided, however, that the term shall be no more than ten (10) years from the date of grant thereof. In the case of an Incentive Stock Option granted to an Optionee who, at the time the Option is granted, owns stock representing more than ten percent (10%) of the voting power of all classes of stock of the Company or any Parent or Subsidiary, the term of the Option shall be five (5) years from the date of grant or such shorter term as may be provided in the Option Agreement.

8.    Option Exercise Price and Consideration.

(a)    The per share exercise price for the Shares to be issued upon exercise of an Option shall be such price as is determined by the Administrator, but shall be subject to the following:

(i)    In the case of an Incentive Stock Option

(A)    granted to an Employee who, at the time of grant of such Option, owns stock representing more than ten percent (10%) of the voting power of all classes of stock of the Company or any Parent or Subsidiary, the exercise price shall be no less than 110% of the Fair Market Value per Share on the date of grant.

(B)    granted to any other Employee, the per Share exercise price shall be no less than 100% of the Fair Market Value per Share on the date of grant.

(ii)    In the case of a Nonstatutory Stock Option

(A)    granted to a Service Provider who, at the time of grant of such Option, owns stock representing more than ten percent (10%) of the voting power of all classes of stock of the Company or any Parent or Subsidiary, the exercise price shall be no less than 110% of the Fair Market Value per Share on the date of grant.

(B)    granted to any other Service Provider, the per Share exercise price shall be no less than 85% of the Fair Market Value per Share on the date of grant.

(iii)    Notwithstanding the foregoing, Options may be granted with a per Share exercise price other than as required above pursuant to a merger or other corporate transaction.

(b)    The consideration to be paid for the Shares to be issued upon exercise of an Option, including the method of payment, shall be determined by the Administrator (and, in the case of an Incentive Stock Option, shall be determined at the time of grant). Such consideration may consist of (1) cash, (2) check, (3) promissory note, (4) other Shares which (x) in the case of Shares acquired upon exercise of an Option, have been owned by the Optionee for more than six months on

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the date of surrender, and (y) have a Fair Market Value on the date of surrender equal to the aggregate exercise price of the Shares as to which such Option shall be exercised, (5) consideration received by the Company under a cashless exercise program implemented by the Company in connection with the Plan, or (6) any combination of the foregoing methods of payment. In making its determination as to the type of consideration to accept, the Administrator shall consider if acceptance of such consideration may be reasonably expected to benefit the Company.

9. Exercise of Option.

(a) Procedure for Exercise; Rights as a Shareholder. Any Option granted hereunder shall be exercisable according to the terms hereof at such times and under such conditions as determined by the Administrator and set forth in the Option Agreement. Except in the case of Options granted to Officers, Directors and Consultants, Options shall become exercisable at a rate of no less than 20% per year over five (5) years from the date the Options are granted. Unless the Administrator provides otherwise, vesting of Options granted hereunder to Officers and Directors shall be tolled during any unpaid leave of absence. An Option may not be exercised for a fraction of a Share.

An Option shall be deemed exercised when the Company receives: (i) written or electronic notice of exercise (in accordance with the Option Agreement) from the person entitled to exercise the Option, and (ii) full payment for the Shares with respect to which the Option is exercised. Full payment may consist of any consideration and method of payment authorized by the Administrator and permitted by the Option Agreement and the Plan. Shares issued upon exercise of an Option shall be issued in the name of the Optionee or, if requested by the Optionee, in the name of the Optionee and his or her spouse. Until the Shares are issued (as evidenced by the appropriate entry on the books of the Company or of a duly authorized transfer agent of the Company), no right to vote or receive dividends or any other rights as a shareholder shall exist with respect to the Shares, notwithstanding the exercise of the Option. The Company shall issue (or cause to be issued) such Shares promptly after the Option is exercised. No adjustment will be made for a dividend or other right for which the record date is prior to the date the Shares are issued, except as provided in Section 12 of the Plan.

Exercise of an Option in any manner shall result in a decrease in the number of Shares thereafter available, both for purposes of the Plan and for sale under the Option, by the number of Shares as to which the Option is exercised.

(b) Termination of Relationship as a Service Provider. If an Optionee ceases to be a Service Provider, such Optionee may exercise his or her Option within such period of time as is specified in the Option Agreement (of at least thirty (30) days) to the extent that the Option is vested on the date of termination (but in no event later than the expiration of the term of the Option as set forth in the Option Agreement). In the absence of a specified time in the Option Agreement, the Option shall remain exercisable for three (3) months following the Optionee’s termination. If, on the date of termination, the Optionee is not vested as to his or her entire Option, the Shares covered by the unvested portion of the Option shall revert to the Plan. If, after termination, the Optionee does

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not exercise his or her Option within the time specified by the Administrator, the Option shall terminate, and the Shares covered by such Option shall revert to the Plan.

(c) Disability of Optionee. If an Optionee ceases to be a Service Provider as a result of the Optionee’s Disability, the Optionee may exercise his or her Option within such period of time as is specified in the Option Agreement (of at least six (6) months) to the extent the Option is vested on the date of termination (but in no event later than the expiration of the term of such Option as set forth in the Option Agreement). In the absence of a specified time in the Option Agreement, the Option shall remain exercisable for twelve (12) months following the Optionee’s termination. If, on the date of termination, the Optionee is not vested as to his or her entire Option, the Shares covered by the unvested portion of the Option shall revert to the Plan. If, after termination, the Optionee does not exercise his or her Option within the time specified herein, the Option shall terminate, and the Shares covered by such Option shall revert to the Plan.

(d) Death of Optionee. If an Optionee dies while a Service Provider, the Option may be exercised within such period of time as is specified in the Option Agreement (of at least six (6) months) to the extent that the Option is vested on the date of death (but in no event later than the expiration of the term of such Option as set forth in the Option Agreement) by the Optionee’s estate or by a person who acquires the right to exercise the Option by bequest or inheritance. In the absence of a specified time in the Option Agreement, the Option shall remain exercisable for twelve (12) months following the Optionee’s termination. If, at the time of death, the Optionee is not vested as to the entire Option, the Shares covered by the unvested portion of the Option shall immediately revert to the Plan. If the Option is not so exercised within the time specified herein, the Option shall terminate, and the Shares covered by such Option shall revert to the Plan.

(e) Buyout Provisions. The Administrator may at any time offer to buy out for a payment in cash or Shares, an Option previously granted, based on such terms and conditions as the Administrator shall establish and communicate to the Optionee at the time that such offer is made.

10. Non-Transferability of Options and Stock Purchase Rights. The Options and Stock Purchase Rights may not be sold, pledged, assigned, hypothecated, transferred, or disposed of in any manner other than by will or by the laws of descent or distribution and may be exercised, during the lifetime of the Optionee, only by the Optionee.

11. Stock Purchase Rights.

(a) Rights to Purchase. Stock Purchase Rights may be issued either alone, in addition to, or in tandem with other awards granted under the Plan and/or cash awards made outside of the Plan. After the Administrator determines that it will offer Stock Purchase Rights under the Plan, it shall advise the offeree in writing or electronically of the terms, conditions and restrictions related to the offer, including the number of Shares that such person shall be entitled to purchase, the price to be paid, and the time within which such person must accept such offer. The terms of the offer shall comply in all respects with Section 260.140.42 of Title 10 of the California Code of Regulations. The offer shall be accepted by execution of a Restricted Stock purchase agreement in the form determined by the Administrator.

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(b) Repurchase Option. Unless the Administrator determines otherwise, the Restricted Stock purchase agreement shall grant the Company a repurchase option exercisable upon the voluntary or involuntary termination of the purchaser’s service with the Company for any reason (including death or disability). The purchase price for Shares repurchased pursuant to the Restricted Stock purchase agreement shall be the original price paid by the purchaser and may be paid by cancellation of any indebtedness of the purchaser to the Company. The repurchase option shall lapse at such rate as the Administrator may determine. Except with respect to Shares purchased by Officers, Directors and Consultants, the repurchase option shall in no case lapse at a rate of less than 20% per year over five (5) years from the date of purchase.

(c) Other Provisions. The Restricted Stock purchase agreement shall contain such other terms, provisions and conditions not inconsistent with the Plan as may be determined by the Administrator in its sole discretion.

(d) Rights as a Shareholder. Once the Stock Purchase Right is exercised, the purchaser shall have rights equivalent to those of a shareholder and shall be a shareholder when his or her purchase is entered upon the records of the duly authorized transfer agent of the Company. No adjustment shall be made for a dividend or other right for which the record date is prior to the date the Stock Purchase Right is exercised, except as provided in Section 12 of the Plan.

12. Adjustments Upon Changes in Capitalization, Merger or Asset Sale.

(a) Changes in Capitalization. Subject to any required action by the shareholders of the Company, the number of shares of Class A Senior Common Stock covered by each outstanding Option or Stock Purchase Right, and the number of shares of Class A Senior Common Stock which have been authorized for issuance under the Plan but as to which no Options or Stock Purchase Rights have yet been granted or which have been returned to the Plan upon cancellation or expiration of an Option or Stock Purchase Right, as well as the price per share of Class A Senior Common Stock covered by each such outstanding Option or Stock Purchase Right, shall be proportionately adjusted for any increase or decrease in the number of issued shares of Class A Senior Common Stock resulting from a stock split, reverse stock split, stock dividend, combination or reclassification of the Class A Senior Common Stock, or any other increase or decrease in the number of issued shares of Class A Senior Common Stock effected without receipt of consideration by the Company. The conversion of any convertible securities of the Company shall not be deemed to have been “effected without receipt of consideration.” Such adjustment shall be made by the Board, whose determination in that respect shall be final, binding and conclusive. Except as expressly provided herein, no issuance by the Company of shares of stock of any class, or securities convertible into shares of stock of any class, shall affect, and no adjustment by reason thereof shall be made with respect to, the number or price of shares of Class A Senior Common Stock subject to an Option or Stock Purchase Right.

(b) Dissolution or Liquidation. In the event of the proposed dissolution or liquidation of the Company, the Administrator shall notify each Optionee as soon as practicable prior to the effective date of such proposed transaction. The Administrator in its discretion may provide

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for an Optionee to have the right to exercise his or her Option or Stock Purchase Right until fifteen (15) days prior to such transaction as to all of the Optioned Stock covered thereby, including Shares as to which the Option or Stock Purchase Right would not otherwise be exercisable. In addition, the Administrator may provide that any Company repurchase option applicable to any Shares purchased upon exercise of an Option or Stock Purchase Right shall lapse as to all such Shares, provided the proposed dissolution or liquidation takes place at the time and in the manner contemplated. To the extent it has not been previously exercised, an Option or Stock Purchase Right will terminate immediately prior to the consummation of such proposed action.

(c) Merger or Change in Control. In the event of a merger of the Company with or into another corporation, or a Change in Control, each outstanding Option and Stock Purchase Right shall be assumed or an equivalent option substituted by the successor corporation or a Parent or Subsidiary of the successor corporation. In the event that the successor corporation in a merger or Change in Control refuses to assume or substitute for the Option or Stock Purchase Right, then the Optionee shall fully vest in and have the right to exercise the Option or Stock Purchase Right as to all of the Optioned Stock, including Shares as to which it would not otherwise be vested or exercisable. If an Option or Stock Purchase Right becomes fully vested and exercisable in lieu of assumption or substitution in the event of a merger or Change in Control, the Administrator shall notify the Optionee in writing or electronically that this Option or Stock Purchase Right shall be fully exercisable for a period of fifteen (15) days from the date of such notice, and the Option or Stock Purchase Right shall terminate upon expiration of such period. For the purposes of this paragraph, the Option or Stock Purchase Right shall be considered assumed if, following the merger or Change in Control, the option or right confers the right to purchase or receive, for each Share of Optioned Stock subject to the Option or Stock Purchase Right immediately prior to the merger or Change in Control, the consideration (whether stock, cash, or other securities or property) received in the merger or Change in Control by holders of Class A Senior Common Stock for each Share held on the effective date of the transaction (and if holders were offered a choice of consideration, the type of consideration chosen by the holders of a majority of the outstanding Shares); provided, however, that if such consideration received in the merger or Change in Control is not solely common stock of the successor corporation or its Parent, the Administrator may, with the consent of the successor corporation, provide for the consideration to be received upon the exercise of the Option or Stock Purchase Right, for each Share of Optioned Stock subject to the Option or Stock Purchase Right, to be solely common stock of the successor corporation or its Parent equal in fair market value to the per share consideration received by holders of Class A Senior Common Stock in the merger or Change in Control.

“Change in Control” means the occurrence of any of the following events:

(i) If (a) any “person” (as such term is used in Sections 13(d) and 14(d) of the Exchange Act) becomes the “beneficial owner” (as defined in Rule 13d-3 of the Exchange Act), directly or indirectly, of securities of the Company representing fifty percent (50%) or more of the total voting power represented by the Company’s then outstanding voting securities and (b) within three (3) years from the date of such acquisition, the following occurs: the consummation of a

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merger or consolidation of the Company with or into the holder or an affiliate thereof of such beneficial ownership of securities of the Company; or

(ii) The consummation of the sale or disposition by the Company of all or substantially all of the Company’s assets; or

(iii) The consummation of a merger or consolidation of the Company with any other corporation, other than a merger or consolidation which would result in the voting securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity or its parent) at least fifty percent (50%) of the total voting power represented by the voting securities of the Company or such surviving entity or its parent outstanding immediately after such merger or consolidation.

For the purposes of this Section 12(c), “affiliate” shall mean, with respect to any specified person, any other person that directly or indirectly, through one or more intermediaries, controls, is controlled by, or is under common control with, such specified person (“control,” “controlled by” and “under common control with” shall mean the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a person, whether through ownership of voting securities, by contract or credit arrangement, as trustee or executor, or otherwise).

13. Time of Granting Options and Stock Purchase Rights. The date of grant of an Option or Stock Purchase Right shall, for all purposes, be the date on which the Administrator makes the determination granting such Option or Stock Purchase Right, or such other date as is determined by the Administrator. Notice of the determination shall be given to each Service Provider to whom an Option or Stock Purchase Right is so granted within a reasonable time after the date of such grant.

14. Amendment and Termination of the Plan.

(a) Amendment and Termination. The Board may at any time amend, alter, suspend or terminate the Plan.

(b) Shareholder Approval. The Board shall obtain shareholder approval of any Plan amendment to the extent necessary and desirable to comply with Applicable Laws.

(c) Effect of Amendment or Termination. No amendment, alteration, suspension or termination of the Plan shall impair the rights of any Optionee, unless mutually agreed otherwise between the Optionee and the Administrator, which agreement must be in writing and signed by the Optionee and the Company. Termination of the Plan shall not affect the Administrator’s ability to exercise the powers granted to it hereunder with respect to Options granted under the Plan prior to the date of such termination.

15. Conditions Upon Issuance of Shares.

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(a) Legal Compliance. Shares shall not be issued pursuant to the exercise of an Option unless the exercise of such Option and the issuance and delivery of such Shares shall comply with Applicable Laws and shall be further subject to the approval of counsel for the Company with respect to such compliance.

(b) Investment Representations. As a condition to the exercise of an Option, the Administrator may require the person exercising such Option to represent and warrant at the time of any such exercise that the Shares are being purchased only for investment and without any present intention to sell or distribute such Shares if, in the opinion of counsel for the Company, such a representation is required.

16. Inability to Obtain Authority. The inability of the Company to obtain authority from any regulatory body having jurisdiction, which authority is deemed by the Company’s counsel to be necessary to the lawful issuance and sale of any Shares hereunder, shall relieve the Company of any liability in respect of the failure to issue or sell such Shares as to which such requisite authority shall not have been obtained.

17. Reservation of Shares. The Company, during the term of this Plan, shall at all times reserve and keep available such number of Shares as shall be sufficient to satisfy the requirements of the Plan.

18. Shareholder Approval. The Plan shall be subject to approval by the shareholders of the Company within twelve (12) months after the date the Plan is adopted. Such shareholder approval shall be obtained in the degree and manner required under Applicable Laws.

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EXHIBIT A

STOCK OPTION CASH EXERCISE

Letter of Authorization

To:                                                                                                                                                                                         (the “Company”)

(Your Company’s Name)

From:                                                                                                               Exercise Date:                                                                                                              

              (Last Name)                     (First Name)                         (M.I.)

Pursuant to the provisions of the Google Inc. 1998 Stock Plan (the “Plan”), Certificate of Stock Option Grant and Option Agreement under which the following stock option(s) was/were granted, I hereby elect to exercise the following stock option(s) granted to me by the Company (as defined in the Plan) to purchase shares of Company Class A Senior Common Stock (the “Shares”):

Grant Exercise Information:

1	2	3	4	5	6	7
Grant Number	Grant Date	Grant Type	Grant Price	# of Shares to	Amount Due	Amount Due
		(Check One)	Per Share	Exercise	For Stock	for Taxes*
(if applicable)
		¨ ISO   ¨ INQ
		¨ ISO   ¨ INQ
		¨ ISO   ¨ INQ
		¨ ISO   ¨ INQ
		¨ ISO   ¨ INQ
			Totals	(A)	(B)	(C)

Method Of Payment: ¨ Check

***If check not enclosed, please indicate

method of payment                                                                                                               Total Due  for Exercise (B+C): $                                      

*Note: If you are exercising a Non-Qualified (NQ) stock option, please contact

AST STOCKPLAN, Inc. at (888) 980-6456 or (212) 615-8709 to complete this information.

The exact spelling of the name(s) under which I will take title to the Shares is:

I desire to take title to the Shares as follows:

[    ] Individual, as separate property

[    ] Husband and wife, as community property

[    ] Joint Tenants

[    ] Other; please specify:

TO COMPLETE YOUR STOCK OPTION EXERCISE, YOU MUST DO THE FOLLOWING:

1. Review the Terms and Conditions of Stock Option Exercise attached as Exhibit 1 to this document.

2. If are purchasing shares which have not yet become vested, review and execute one copy of the Assignment Separate from Certificate attached as Exhibit 2 to this document.

3. If you are purchasing shares which have not yet become vested and you desire to elect pursuant to Section 83 (b) of the Code to be taxed currently as described in your Option Agreement, review and execute, and have your spouse, if any, review and execute, the Election under Section 83 (b) attached as Exhibit 3 to this document.

4. Review and complete the terms of purchase on the following page.

Terms of Purchase:

By signing this Stock Option Cash Exercise Letter of Authorization (this “Authorization”), I hereby represent and warrant to the Company that I have read and agree to (i) all of the Terms and Conditions of Stock Option Exercise attached hereto as Exhibit 1 and (ii) all of the terms and conditions of the Option Agreement (including Exhibits).

I am hereby delivering to the Company: (i) this fully completed and executed Authorization, (ii) if applicable, one copy of the Assignment Separate from Certificate attached hereto as Exhibit 2 fully executed by myself, (iii) if applicable, an Election under Section 83 (b) attached hereto as Exhibit 3 fully executed by myself and my spouse, if any, and (iv) the full purchase price for the Shares.

This constitutes my irrevocable authorization for AST STOCKPLAN, INC. (on behalf of the Company) to request, and for my broker to provide, a statement of any shares of the Company’s Class A Senior Common Stock that I am holding, or have transferred as permitted by the Company’s applicable Stock Option Plan(s), which were originally acquired upon exercise of an option granted to me pursuant to the Company’s Stock Option Plan(s).

I understand that, if I am an officer or director of the Company, I may be subject to additional requirements under Federal securities regulations which pertain to this type of transaction.

X Signature	Address for Certificate Delivery following release from escrow:
Social Security Number
Work Number                                                         Home Phone
Email Address

Please mail completed original with attached exhibits to:

Attn: Google Inc. 2400 Bayshore Parkway Mountain View, CA 94043

You can call AST StockPlan, Inc., Client Services Dept. Mon – Thurs: 9:00 am- 7:00 pm, and Friday: 9:00 am – 6:00 pm ET.

Phone: (888) 980-6456 or (212) 615-8709 Fax: (212) 615-7511.

List of Exhibits:

Exhibit 1: Terms and Conditions of Stock Option Exercise

Exhibit 2: Assignment Separate from Certificate

Exhibit 3: Election under Section 83 (b)

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Exhibit 1

Terms and Conditions of Stock Option Exercise

1. Exercise. The Optionee (the “Optionee”) identified on the Stock Option Cash Exercise Letter of Authorization (the “Authorization”) to which these Terms and Conditions of Stock Option Exercise (these “Terms and Conditions”) are attached has elected to exercise the option (the “Option”) to purchase shares of Class A Senior Common Stock of the Company (as defined in the Google Inc. 1998 Stock Plan) identified on the Authorization, and thereby purchase from the Company that number of shares of the Company’s Class A Senior Common Stock identified on the Authorization (the “Shares”) at the applicable exercise price per share set forth in the Option Agreement (the “Exercise Price”), and subject to the terms and conditions of: (i) the 1998 Stock Plan (the “Plan”), (ii) the Stock Option Agreement (including all exhibits thereto and the Certificate of Stock Option Grant (the “Certificate”)) pursuant to which the Company granted the Option to Optionee (the “Option Agreement”), and (iii) the Authorization, including these Terms and Conditions. Unless otherwise defined herein, the terms defined in the Plan shall have the same defined meanings in these Terms and Conditions.

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

(a) Representations of Optionee. Optionee acknowledges that Optionee has received, read and understood the Plan and the Option Agreement (including the Certificate and all of the exhibits, which are part of the Option Agreement) and agrees to abide by and be bound by their terms and conditions. Optionee understands that Optionee may suffer adverse tax consequences as a result of Optionee’s purchase or disposition of the Shares. Optionee represents that Optionee has consulted with any tax consultants Optionee deems advisable in connection with the purchase or disposition of the Shares and that Optionee is not relying on the Company for any tax advice. Optionee understands and agrees that the Company shall cause the legends set forth in the Option Agreement or legends substantially equivalent thereto, to be placed upon any certificate(s) evidencing ownership of the Shares together with any other legends that may be required by the Company or by state or federal securities laws.

(b) Investment Representations. In the event that the Shares have not been registered under the Securities Act of 1933, as amended (the “Securities Act”), at the time of exercise, then in connection with the purchase of the Shares, the Optionee represents to the Company the following:

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

(ii) Optionee acknowledges and understands that the Shares constitute “restricted securities” under the Securities Act and have not been registered under the Securities Act

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

(iii) Optionee is familiar with the provisions of Rule 701 and Rule 144, each promulgated under the Securities Act, which, in substance, permit limited public resale of “restricted securities” acquired, directly or indirectly from the issuer thereof, in a non-public offering subject to the satisfaction of certain conditions. Rule 701 provides that if the issuer qualifies under Rule 701 at the time of the grant of the Option to the Optionee, the exercise will be exempt from registration under the Securities Act. In the event the Company becomes subject to the reporting requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, ninety (90) days thereafter (or such longer period as any market stand-off agreement may require) the Shares exempt under Rule 701 may be resold, subject to the satisfaction of certain of the conditions specified by Rule 144, including: (1) the resale being made through a broker in an unsolicited “broker’s transaction” or in transactions directly with a market maker (as said term is defined under the Securities Exchange Act of 1934); and, in the case of an affiliate, (2) the availability of certain public information about the Company, (3) the amount of Shares being sold during any three month period not exceeding the limitations specified in Rule 144(e), and (4) the timely filing of a Form 144, if applicable.

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

(iv) Optionee further understands that in the event all of the applicable requirements of Rule 701 or 144 are not satisfied, registration under the Securities Act, compliance with Regulation A, or some other registration exemption will be required; and that, notwithstanding the fact that Rules 144 and 701 are not exclusive, the Staff of the Securities and Exchange Commission has expressed its opinion that persons proposing to sell private placement Shares other than in a registered offering and otherwise than pursuant to Rules 144 or 701 will have a substantial burden of proof in establishing that an exemption from registration is available for such offers or

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sales, and that such persons and their respective brokers who participate in such transactions do so at their own risk. Optionee understands that no assurances can be given that any such other registration exemption will be available in such event.

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

(d) Terms of Restricted Stock Purchase and Joint Escrow Instructions. In the event that Optionee has elected to purchase Shares which have not yet become vested under the vesting schedule set forth in the Option Agreement (“Unvested Shares”), the Terms of Restricted Stock Purchase set forth in Exhibit B-1 of the Option Agreement shall govern the rights and obligations of the Optionee and the Company with respect to the Unvested Shares acquired upon such exercise. The Terms of Restricted Stock Purchase provide that, among other things, if the Optionee’s status as a Service Provider is terminated for any reason, including for cause, death or Disability, the Company shall have the right and option to purchase from Optionee, or Optionee’s personal representative, as the case may be, all of the Shares that have not vested as of the date of such termination at the price paid by the Optionee for such Shares (the “Repurchase Option”). The Terms of Restricted Stock Purchase and the related Joint Escrow Instructions set forth in Exhibit B-3 to the Option Agreement also provide that Unvested Shares so purchased shall be held in escrow until the Company exercises its Repurchase Option or until such Unvested Shares vest. In the event Optionee has chosen to exercise the Option as to Unvested Shares, by accepting the terms of the Option Agreement at the time of grant and by executing this Authorization, Optionee agrees to be bound by the Terms of Restricted Stock Purchase and related Joint Escrow Instructions, including the Repurchase Option and escrow provisions thereof.

(e) Successors and Assigns. The Company may assign any of its rights under this Authorization to single or multiple assignees, and the terms and conditions of this Authorization shall inure to the benefit of the successors and assigns of the Company. Subject to the restrictions on transfer herein set forth, the terms and conditions of this Authorization shall be binding upon Optionee and his or her heirs, executors, administrators, successors and assigns.

(f) Interpretation. Any dispute regarding the interpretation of this Authorization shall be submitted by Optionee or by the Company forthwith to the Administrator which shall review such dispute at its next regular meeting. The resolution of such a dispute by the Administrator shall be final and binding on all parties.

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(g) Governing Law; Severability. This Authorization is governed by the internal substantive laws, but not the choice of law rules, of California.

(h) Entire Agreement. The Plan and Option Agreement (including the Certificate and all exhibits, which are parts of the Option Agreement) are incorporated herein by reference. This Authorization, the Plan, the Terms of Restricted Stock Purchase, the Certificate, the Option Agreement and the Joint Escrow Instructions constitute the entire agreement of the parties with respect to the subject matter hereof and supersede in their entirety all prior undertakings and agreements of the Company and Optionee with respect to the subject matter hereof, and may not be modified adversely to the Optionee’s interest except by means of a writing signed by the Company and Optionee.

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EXHIBIT B-1

TERMS OF RESTRICTED STOCK PURCHASE

In the event that Optionee elects to purchase shares of Class A Senior Common Stock which have not become vested under the vesting schedule set forth in the Option Agreement (“Unvested Shares”), pursuant to the Option Agreement and the Stock Option Cash Exercise Letter of Authorization, as a condition to Optionee’s election to exercise the Option, Optionee has agreed to these Terms of Restricted Stock Purchase which set forth the rights and obligations of the Optionee and the Company with respect to Unvested Shares acquired upon exercise of the Option. Unless otherwise defined herein, the terms defined in the 1998 Stock Plan shall have the same defined meanings in these Terms of Restricted Stock Purchase.

3. Repurchase Option.

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

(ii) Upon the occurrence of such termination, the Company may exercise its Repurchase Option by delivering personally or by registered mail, to Optionee (or his transferee or legal representative, as the case may be) with a copy to the escrow agent described in Section 2 below, a notice in writing indicating the Company’s intention to exercise the Repurchase Option AND, at the Company’s option, (i) by delivering to the Optionee (or the Optionee’s transferee or legal representative) a check in the amount of the aggregate repurchase price, or (ii) by the Company canceling an amount of the Optionee’s indebtedness to the Company equal to the aggregate repurchase price, or (iii) by a combination of (i) and (ii) so that the combined payment and cancellation of indebtedness equals such aggregate repurchase price. Upon delivery of such notice and payment of the aggregate repurchase price in any of the ways described above, the Company shall become the legal and beneficial owner of the Unvested Shares being repurchased and the rights and interests therein or relating thereto, and the Company shall have the right to retain and transfer to its own name the number of Unvested Shares being repurchased by the Company.

(iii) Whenever the Company shall have the right to repurchase Unvested Shares hereunder, the Company may designate and assign one or more employees, officers, directors or shareholders of the Company or other persons or organizations to exercise all or a part of the Company’s Repurchase Option under this Agreement and purchase all or a part of such Unvested Shares.

(iv) At its option, the Company may elect to make payment for the Unvested Shares to a bank selected by the Company. The Company shall avail itself of this option

by a notice in writing to Optionee stating the name and address of the bank, date of closing, and waiving the closing at the Company’s office.

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

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

(i) Transferability of the Shares; Escrow.

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

(ii) To insure the availability for delivery of Optionee’s Unvested Shares upon repurchase by the Company pursuant to the Repurchase Option under Section 1, Optionee hereby appoints the Secretary, or any other person designated by the Company as escrow agent, as its attorney-in-fact to sell, assign and transfer unto the Company, such Unvested Shares, if any, repurchased by the Company pursuant to the Repurchase Option and shall, upon exercise of the Option, deliver and deposit with the Secretary of the Company, or such other person designated by the Company, the share certificates representing the Unvested Shares, together with the stock assignment duly endorsed in blank, the form of which is set forth in Exhibit B-2 hereto. The Unvested Shares and stock assignment shall be held by the secretary in escrow, pursuant to the Joint Escrow Instructions of the Company and Optionee set forth in Exhibit B-3 hereto, until the Company exercises its Repurchase Option, until such Unvested Shares are vested, or until such time as these Terms of Restricted Stock Purchase are no longer in effect. Upon vesting of the Unvested Shares, the escrow agent shall promptly deliver to the Optionee the certificate or certificates representing such Shares in the escrow agent’s possession belonging to the Optionee, and the escrow agent shall be discharged of all further obligations hereunder; provided, however, that the escrow agent shall nevertheless retain such certificate or certificates as escrow agent if so required pursuant to other restrictions imposed pursuant to the Option Agreement or these Terms of Restricted Stock Purchase.

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

(iv) Transfer or sale of the Shares is subject to restrictions on transfer imposed by any applicable state and federal securities laws. Any transferee shall hold such Shares subject to all the provisions hereof and the Authorization executed by the Optionee with respect to any Unvested Shares purchased by Optionee and shall acknowledge the same by signing an acknowledgement in a form acceptable to the Company.

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(j) Ownership, Voting Rights, Duties. These Terms of Restricted Stock Purchase shall not affect in any way the ownership, voting rights or other rights or duties of Optionee, except as specifically provided herein.

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

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

(l) Adjustment for Stock Split. All references herein to the number of Shares and the purchase price of the Shares shall be appropriately adjusted to reflect any stock split, stock dividend or other change in the Shares which may be made by the Company pursuant to Section 12 of the Plan after the date of exercise.

(m) Notices. Notices required hereunder shall be given in person or by registered mail to the address of Optionee shown on the records of the Company, and to the Company at its principal executive offices.

(n) Survival of Terms. These Terms of Restricted Stock Purchase shall apply to and bind Optionee and the Company and their respective permitted assignees and transferees, heirs, legatees, executors, administrators and legal successors.

(o) Section 83(b) Election. Optionee hereby acknowledges that he or she has been informed that, with respect to the exercise of an Option for Unvested Shares, an election (the “Election”) may be filed by the Optionee with the Internal Revenue Service, within 30 days of the purchase of the exercised Shares, electing pursuant to Section 83(b) of the Code to be taxed currently on any difference between the purchase price of the exercised Shares and their Fair Market Value on the date of purchase. In the case of a Nonstatutory Stock Option, this will result in a recognition of taxable income to the Optionee on the date of exercise, measured by the excess, if any, of the Fair Market Value of the exercised Shares, at the time the Option is exercised over the purchase price for the exercised Shares. Absent such an Election, taxable income will be measured and recognized by Optionee at the time or times on which the Company’s Repurchase Option lapses. In the case of an Incentive Stock Option, such an Election will result in a recognition of income to the Optionee for alternative minimum tax purposes on the date of exercise, measured by the excess, if any, of the Fair Market Value of the exercised Shares, at the time the option is exercised, over the purchase price for the exercised Shares. Absent such an Election, alternative minimum taxable income will be measured and recognized by Optionee at the time or times on which the Company’s Repurchase Option lapses. Optionee is strongly encouraged to seek the advice of his or her own tax consultants in connection with the purchase of the Shares and the advisability of filing of the Election under Section 83(b) of the Code. A form of Election under Section 83(b) is set forth in Exhibit B-4 hereto for reference.

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

(p) Representations. Optionee has reviewed with his or her own tax advisors the federal, state, local and foreign tax consequences of this investment and the transactions contemplated by these Terms of Restricted Stock Purchase. Optionee is relying solely on such advisors and not on any statements or representations of the Company or any of its agents. Optionee understands that he or she (and not the Company) shall be responsible for his or her own tax liability that may arise as a result of this investment or the transactions contemplated by this Agreement.

(q) Governing Law. These Terms of Restricted Stock Purchase shall be governed by the internal substantive laws, but not the choice of law rules, of California.

(r) Acknowledgement. Optionee represents that he or she has read these Terms of Restricted Stock Purchase and is familiar with its terms and provisions. Optionee hereby agrees to accept as binding, conclusive and final all decisions or interpretations of the Board upon any questions arising under these Terms of Restricted Stock Purchase.

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EXHIBIT B-2

ASSIGNMENT SEPARATE FROM CERTIFICATE

FOR VALUE RECEIVED I,                         , hereby sell, assign and transfer unto the Company (as defined in the Google Inc. 1998 Stock Plan) (                            ) shares of the Class A Senior Common Stock of the Company standing in my name of the books of said corporation represented by Certificate No.              herewith and do hereby irrevocably constitute and appoint to transfer the said stock on the books of the within named corporation with full power of substitution in the premises.

This Stock Assignment may be used only in accordance with the Option Agreement and Terms of Restricted Stock Purchase between the Company and the undersigned dated                                              ,             .

Dated:                                                      ,                                                                   Signature:                                                          

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

EXHIBIT B-3

JOINT ESCROW INSTRUCTIONS

As escrow agent (the “Escrow Agent”) for both the Company (as defined in the Google Inc. 1998 Stock Plan), and the Optionee under the Stock Option Agreement to which these Instructions are attached (the “Optionee”), the Corporate Secretary of the Company (the “Secretary”) is hereby authorized and directed to hold the documents delivered to him or her pursuant to the Terms of Restricted Stock Purchase (“Terms of Restricted Stock Purchase”) between the Company and the Optionee (the “Escrow”), in accordance with the following instructions:

4. In the event the Company and/or any assignee of the Company (referred to collectively for convenience herein as the “Company”) exercises the Company’s Repurchase Option (as defined in the Terms of Restricted Stock Purchase), the Company shall give to Optionee and the Secretary a written notice specifying the number of shares of stock to be purchased, the purchase price and the time for a closing hereunder at the principal office of the Company. Optionee and the Company hereby irrevocably authorize and direct the Secretary to close the transaction contemplated by such notice in accordance with the terms of said notice.

(s) At the closing, the Secretary is directed (a) to date the stock assignments necessary for the transfer in question, (b) to fill in the number of shares being transferred, and (c) to deliver same, together with the certificate evidencing the shares of stock to be transferred, to the Company or its assignee, against the simultaneous delivery to the Secretary of the purchase price (by cash, a check, cancellation of indebtedness or some combination thereof) for the number of shares of stock being purchased pursuant to the exercise of the Company’s Repurchase Option.

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

(u) Upon written request of the Optionee, but no more than once per calendar year, unless the Company’s Repurchase Option has been exercised, the Secretary will deliver to Optionee a certificate or certificates representing so many shares of stock as are not then subject to the Company’s Repurchase Option. Within 120 days after cessation of Optionee’s status as a Service

Provider, the Secretary will deliver to Optionee a certificate or certificates representing the aggregate number of shares held or issued pursuant to the Terms of Restricted Stock Purchase and not purchased by the Company or its assignees pursuant to its right to exercise the Company’s Repurchase Option.

(v) If at the time of termination of this escrow the Secretary should have in his or her possession any documents, securities or other property belonging to Optionee, the Secretary shall deliver all of the same to Optionee and shall be discharged of all further obligations hereunder.

(w)The Secretary’s duties hereunder may be altered, amended, modified or revoked only by a writing signed by all of the parties hereto.

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

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

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

(aa) The Secretary shall not be liable for the outlawing of any rights under the Statute of Limitations with respect to these Joint Escrow Instructions or any documents deposited with the Secretary.

(bb) The Secretary shall be entitled to employ such legal counsel and other experts as he or she may deem necessary to advise in connection with the obligations hereunder, may rely upon the advice of such counsel, and may pay such counsel reasonable compensation therefor.

(cc) The Secretary’s responsibilities as Escrow Agent hereunder shall terminate if he or she shall cease to be an officer or agent of the Company or if he or she shall resign by written notice to each party. In the event of any such termination, the Company shall appoint a successor Escrow Agent.

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(dd) If the Secretary reasonably requires other or further instruments in connection with these Joint Escrow Instructions or obligations in respect hereto, the necessary parties hereto shall join in furnishing such instruments.

(ee) It is understood and agreed that should any dispute arise with respect to the delivery and/or ownership or right of possession of the securities held hereunder, the Secretary is authorized and directed to retain in his or her possession without liability to anyone all or any part of said securities until such disputes shall have been settled either by mutual written agreement of the parties concerned or by a final order, decree or judgment of a court of competent jurisdiction after the time for appeal has expired and no appeal has been perfected, but shall be under no duty whatsoever to institute or defend any such proceedings.

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

COMPANY:	Google Inc.
	2400 Bayshore Parkway
	Mountain View, CA 94043
OPTIONEE:	To the address on file with the Company
ESCROW AGENT:	Google Inc.
	2400 Bayshore Parkway
	Mountain View, CA 94043-1103
	Attn: Corporate Secretary

(gg) The Secretary becomes a party hereto only for the purpose of said Joint Escrow Instructions; the Secretary does not become a party to the Option Agreement.

(hh) These Joint Escrow Instructions shall be binding upon and inure to the benefit of the parties hereto, and their respective successors and permitted assigns.

(ii) These Joint Escrow Instructions shall be governed by, and construed and enforced in accordance with, the laws of the State of California.

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EXHIBIT B-4

ELECTION UNDER SECTION 83(b)

OF THE INTERNAL REVENUE CODE OF 1986

The undersigned taxpayer hereby elects, pursuant to Sections 55 and 83(b) of the Internal Revenue Code of 1986, as amended, to include in taxpayer’s gross income or alternative minimum taxable income, as the case may be, for the current taxable year the amount of any compensation taxable to taxpayer in connection with taxpayer’s receipt of the property described below:

1. The name, address, taxpayer identification number and taxable year of the undersigned are as follows:

	Taxpayer	Spouse
NAME:
ADDRESS:
IDENTIFICATION NO.:
TAXABLE YEAR:

2. The property with respect to which the election is made is described as follows:                                            shares (the “Shares”) of the Class A Senior Common Stock of Google Technology Inc. (the “Company”).

3. The date on which the property was transferred is:                            

4. The property is subject to the following restrictions:

The Shares may not be transferred and are subject to forfeiture under the terms of an agreement between the taxpayer and the Company. These restrictions lapse upon the satisfaction of certain conditions contained in such agreement.

5. The fair market value at the time of transfer, determined without regard to any restriction other than a restriction which by its terms will never lapse, of such property is:                  per share.

6. The amount (if any) paid for such property is:

$                                                 .

The undersigned has submitted a copy of this statement to the person for whom the services were performed in connection with the undersigned’s receipt of the above-described property. The transferee of such property is the person performing the services in connection with the transfer of said property.

The undersigned understands that the foregoing election may not be revoked except with the consent of the Commissioner.

Dated:                                                                       ,
	Taxpayer

The undersigned spouse of taxpayer joins in this election.

Dated:                                                                       ,
	Taxpayer

EX-10.03

Exhibit 10.03

APPLIED SEMANTICS, INC.

1999 STOCK OPTION/STOCK ISSUANCE PLAN

ARTICLE ONE

GENERAL PROVISIONS

I.    PURPOSE OF THE PLAN

This 1999 Stock Option/Stock Issuance Plan is intended to promote the interests of Applied Semantics, Inc. (previously, “Oingo, Inc.”), a California corporation, by providing eligible persons in the Corporation’s employ or service with the opportunity to acquire a proprietary interest, or otherwise increase their proprietary interest, in the Corporation as an incentive for them to continue in such employ or service.

Capitalized terms herein shall have the meanings assigned to such terms in the attached Appendix.

II.    STRUCTURE OF THE PLAN

A.    The Plan shall be divided into two (2) separate equity programs:

(i)    the Option Grant Program under which eligible persons may, at the discretion of the Plan Administrator, be granted options to purchase shares of Common Stock, and

(ii)    the Stock Issuance Program under which eligible persons may, at the discretion of the Plan Administrator, be issued shares of Common Stock directly, either through the immediate purchase of such shares or as a bonus for services rendered the Corporation (or any Parent or Subsidiary).

B.    The provisions of Articles One and Four shall apply to both equity programs under the Plan and shall accordingly govern the interests of all persons under the Plan.

III.    ADMINISTRATION OF THE PLAN

A.    The Plan shall be administered by the Board. However, any or all administrative functions otherwise exercisable by the Board may be delegated to the Committee. Members of the Committee shall serve for such period of time as the Board may determine and shall be subject to removal by the Board at any time. The Board may also at any time terminate the functions of the Committee and reassume all powers and authority previously delegated to the Committee.

B.    The Plan Administrator shall have full power and authority (subject to the provisions of the Plan) to establish such rules and regulations as it may deem appropriate for proper

administration of the Plan and to make such determinations under, and issue such interpretations of, the Plan and any outstanding options or stock issuances thereunder as it may deem necessary or advisable. Decisions of the Plan Administrator shall be final and binding on all parties who have an interest in the Plan or any option grant or stock issuance thereunder.

IV.    ELIGIBILITY

A.    The persons eligible to participate in the Plan are as follows:

(i)    Employees,

(ii)    non-employee members of the Board or the non-employee members of the board of directors of any Parent or Subsidiary, and

(iii)    consultants and other independent advisors who provide services to the Corporation (or any Parent or Subsidiary).

B.    The Plan Administrator shall have full authority to determine, (i) with respect to the grants made under the Option Grant Program, which eligible persons are to receive such grants, the time or times when those grants are to be made, the number of shares to be covered by each such grant, the status of the granted option as either an Incentive Option or a Non-Statutory Option, the time or times when each option is to become exercisable, the vesting schedule (if any) applicable to the option shares and the maximum term for which the option is to remain outstanding, and (ii) with respect to stock issuances made under the Stock Issuance Program, which eligible persons are to receive such issuances, the time or times when those issuances are to be made, the number of shares to be issued to each Participant, the vesting schedule (if any) applicable to the issued shares and the consideration to be paid by the Participant for such shares.

C.    The Plan Administrator shall have the absolute discretion either to grant options in accordance with the Option Grant Program or to effect stock issuances in accordance with the Stock Issuance Program.

V.    STOCK SUBJECT TO THE PLAN

A.    The stock issuable under the Plan shall be shares of authorized but unissued or reacquired Common Stock. The maximum number of shares of Common Stock which may be issued over the term of the Plan shall not exceed 6,001,662 shares (taking into account the Corporation’s 2-for-1 stock split on February 15, 2001).

B.    Shares of Common Stock subject to outstanding options shall be available for subsequent issuance under the Plan to the extent (i) the options expire or terminate for any reason prior to exercise in full or (ii) the options are cancelled in accordance with the cancellation-regrant provisions of Article Two. Unvested shares issued under the Plan and subsequently repurchased by the Corporation, at the option exercise or direct issue price paid per share, pursuant to the Corporation’s repurchase rights under the Plan shall be added back to the number of shares of Common Stock reserved for issuance under the Plan and shall accordingly be available for reissuance through one or more subsequent option grants or direct stock issuances under the Plan.

C.    Should any change be made to the Common Stock by reason of any stock split, stock dividend, recapitalization, combination of shares, exchange of shares or other change affecting the

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outstanding Common Stock as a class without the Corporation’s receipt of consideration, appropriate adjustments shall be made to (i) the maximum number and/or class of securities issuable under the Plan and (ii) the number and/or class of securities and the exercise price per share in effect under each outstanding option in order to prevent the dilution or enlargement of benefits thereunder. The adjustments determined by the Plan Administrator shall be final, binding and conclusive. In no event shall any such adjustments be made in connection with the conversion of one or more outstanding shares of the Corporation’s preferred stock into shares of Common Stock.

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ARTICLE TWO

OPTION GRANT PROGRAM

I.    OPTION TERMS

Each option shall be evidenced by one or more documents in the form approved by the Plan Administrator; provided, however, that each such document shall comply with the terms specified below. Each document evidencing an Incentive Option shall, in addition, be subject to the provisions of the Plan applicable to such options.

A.    Exercise Price.

1.    The exercise price per share shall be fixed by the Plan Administrator in accordance with the following provisions:

(i)    The exercise price per share shall not be less than eighty-five percent (85%) of the Fair Market Value per share of Common Stock on the option grant date.

(ii)    If the person to whom the option is granted is a 10% Stockholder, then the exercise price per share shall not be less than one hundred ten percent (110%) of the Fair Market Value per share of Common Stock on the option grant date.

2.    The exercise price shall become immediately due upon exercise of the option and shall, subject to the provisions of Section I of Article Four and the documents evidencing the option, be payable in cash or check made payable to the Corporation. Should the Common Stock be registered under Section 12 of the 1934 Act at the time the option is exercised, then the exercise price may also be paid as follows:

(i)    in shares of Common Stock held for the requisite period necessary to avoid a charge to the Corporation’s earnings for financial reporting purposes and valued at Fair Market Value on the Exercise Date, or

(ii)    to the extent the option is exercised for vested shares, through a special sale and remittance procedure pursuant to which the Optionee shall concurrently provide irrevocable instructions (A) to a Corporation-designated brokerage firm to effect the immediate sale of the purchased shares and remit to the Corporation, out of the sale proceeds available on the settlement date, sufficient funds to cover the aggregate exercise price payable for the purchased shares plus all applicable Federal, state and local income and employment taxes required to be withheld by the Corporation by reason of such exercise and (B) to the Corporation to deliver the certificates for the purchased shares directly to such brokerage firm in order to complete the sale.

Except to the extent such sale and remittance procedure is utilized, payment of the exercise price for the purchased shares must be made on the Exercise Date.

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B.    Exercise and Term of Options. Each option shall be exercisable at such time or times, during such period and for such number of shares as shall be determined by the Plan Administrator and set forth in the documents evidencing the option grant. However, no option shall have a term in excess of ten (10) years measured from the option grant date.

C.    Effect of Termination of Service.

1.    The following provisions shall govern the exercise of any options held by the Optionee at the time of cessation of Service or death:

(i)    Should the Optionee cease to remain in Service for any reason other than death, Disability or Misconduct, then the Optionee shall have a period of three (3) months following the date of such cessation of Service during which to exercise each outstanding option held by such Optionee.

(ii)    Should Optionee’s Service terminate by reason of Disability, then the Optionee shall have a period of twelve (12) months following the date of such cessation of Service during which to exercise each outstanding option held by such Optionee.

(iii)    If the Optionee dies while holding an outstanding option, then the personal representative of his or her estate or the person or persons to whom the option is transferred pursuant to the Optionee’s will or the laws of inheritance or the Optionee’s designated beneficiary or beneficiaries of that option shall have a twelve (12)-month period following the date of the Optionee’s death to exercise such option.

(iv)    Under no circumstances, however, shall any such option be exercisable after the specified expiration of the option term.

(v)    During the applicable post-Service exercise period, the option may not be exercised in the aggregate for more than the number of vested shares for which the option is exercisable on the date of the Optionee’s cessation of Service. Upon the expiration of the applicable exercise period or (if earlier) upon the expiration of the option term, the option shall terminate and cease to be outstanding for any vested shares for which the option has not been exercised. However, the option shall, immediately upon the Optionee’s cessation of Service, terminate and cease to be outstanding with respect to any and all option shares for which the option is not otherwise at the time exercisable or in which the Optionee is not otherwise at that time vested.

(vi)    Should Optionee’s Service be terminated for Misconduct or should Optionee otherwise engage in Misconduct while holding one or more outstanding options under the Plan, then all those options shall terminate immediately and cease to remain outstanding.

2.    The Plan Administrator shall have the discretion, exercisable either at the time an option is granted or at any time while the option remains outstanding, to:

(i)    extend the period of time for which the option is to remain exercisable following Optionee’s cessation of Service or death from the limited period otherwise in effect for that option to such greater period of time as the Plan

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Administrator shall deem appropriate, but in no event beyond the expiration of the option term, and/or

(ii)    permit the option to be exercised, during the applicable post-Service exercise period, not only with respect to the number of vested shares of Common Stock for which such option is exercisable at the time of the Optionee’s cessation of Service but also with respect to one or more additional installments in which the Optionee would have vested under the option had the Optionee continued in Service.

D.    Stockholder Rights. The holder of an option shall have no stockholder rights with respect to the shares subject to the option until such person shall have exercised the option, paid the exercise price and become the recordholder of the purchased shares.

E.    Unvested Shares. The Plan Administrator shall have the discretion to grant options which are exercisable for unvested shares of Common Stock. Should the Optionee cease Service while holding such unvested shares, the Corporation shall have the right to repurchase, at the exercise price paid per share, any or all of those unvested shares. The terms upon which such repurchase right shall be exercisable (including the period and procedure for exercise and the appropriate vesting schedule for the purchased shares) shall be established by the Plan Administrator and set forth in the document evidencing such repurchase right. The Plan Administrator may not impose a vesting schedule upon any option grant or the shares of Common Stock subject to that option which is more restrictive than twenty percent (20%) per year vesting, with the initial vesting to occur not later than one (1) year after the option grant date. However, such limitation shall not be applicable to any option grants made to individuals who are officers of the Corporation, non-employee Board members or independent consultants.

F.    First Refusal Rights. Until such time as the Common Stock is first registered under Section 12 of the 1934 Act, the Corporation shall have the right of first refusal with respect to any proposed disposition by the Optionee (or any successor in interest) of any shares of Common Stock issued under the Plan. Such right of first refusal shall be exercisable in accordance with the terms established by the Plan Administrator and set forth in the document evidencing such right.

G.    Limited Transferability of Options. An Incentive Stock Option shall be exercisable only by the Optionee during his or her lifetime and shall not be assignable or transferable other than by will or by the laws of inheritance following the Optionee’s death. A Non-Statutory Option may be assigned in whole or in part during the Optionee’s lifetime to one or more members of the Optionee’s family or to a trust established exclusively for one or more such family members or to Optionee’s former spouse, to the extent such assignment is in connection with the Optionee’s estate plan or pursuant to a domestic relations order. The assigned portion may only be exercised by the person or persons who acquire a proprietary interest in the Non-Statutory Option pursuant to the assignment. The terms applicable to the assigned portion shall be the same as those in effect for the option immediately prior to such assignment and shall be set forth in such documents issued to the assignee as the Plan Administrator may deem appropriate. Notwithstanding the foregoing, the Optionee may also designate one or more persons as the beneficiary or beneficiaries of his or her outstanding options under the Plan, and those options shall, in accordance with such designation, automatically be transferred to such beneficiary or beneficiaries upon the Optionee’s death while holding those options. Such beneficiary or beneficiaries shall take the transferred options subject to all the terms and conditions of the applicable agreement evidencing each such transferred option, including (without limitation) the limited time period during which the option may be exercised following the Optionee’s death.

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II.    INCENTIVE OPTIONS

The terms specified below shall be applicable to all Incentive Options. Except as modified by the provisions of this Section II, all the provisions of Articles One, Two and Four shall be applicable to Incentive Options. Options which are specifically designated as Non-Statutory Options shall not be subject to the terms of this Section II.

A.    Eligibility. Incentive Options may only be granted to Employees.

B.    Exercise Price. The exercise price per share shall not be less than one hundred percent (100%) of the Fair Market Value per share of Common Stock on the option grant date.

C.    Dollar Limitation. The aggregate Fair Market Value of the shares of Common Stock (determined as of the respective date or dates of grant) for which one or more options granted to any Employee under the Plan (or any other option plan of the Corporation or any Parent or Subsidiary) may for the first time become exercisable as Incentive Options during any one (1) calendar year shall not exceed the sum of One Hundred Thousand Dollars ($100,000). To the extent the Employee holds two (2) or more such options which become exercisable for the first time in the same calendar year, the foregoing limitation on the exercisability of such options as Incentive Options shall be applied on the basis of the order in which such options are granted.

D.    10% Stockholder. If any Employee to whom an Incentive Option is granted is a 10% Stockholder, then the option term shall not exceed five (5) years measured from the option grant date.

III.    CORPORATE TRANSACTION

A.    The shares subject to each option outstanding under the Plan at the time of a Corporate Transaction shall automatically vest in full so that each such option shall, immediately prior to the effective date of the Corporate Transaction, become exercisable for all of the shares of Common Stock at the time subject to that option and may be exercised for any or all of those shares as fully-vested shares of Common Stock. However, the shares subject to an outstanding option shall not vest on such an accelerated basis if and to the extent: (i) such option is assumed by the successor corporation (or parent thereof) in the Corporate Transaction and any repurchase rights of the Corporation with respect to the unvested option shares are concurrently assigned to such successor corporation (or parent thereof) or (ii) such option is to be replaced with a cash incentive program of the successor corporation which preserves the spread existing on the unvested option shares at the time of the Corporate Transaction and provides for subsequent payout in accordance with the same vesting schedule applicable to those unvested option shares or (iii) the acceleration of such option is subject to other limitations imposed by the Plan Administrator at the time of the option grant.

B.    All outstanding repurchase rights shall also terminate automatically, and the shares of Common Stock subject to those terminated rights shall immediately vest in full, in the event of any Corporate Transaction, except to the extent: (i) those repurchase rights are assigned to the successor corporation (or parent thereof) in connection with such Corporate Transaction or (ii) such accelerated

vesting is precluded by other limitations imposed by the Plan Administrator at the time the repurchase right is issued.

C.    Immediately following the consummation of the Corporate Transaction, all outstanding options shall terminate and cease to be outstanding, except to the extent assumed by the successor corporation (or parent thereof).

D.    Each option which is assumed in connection with a Corporate Transaction shall be appropriately adjusted, immediately after such Corporate Transaction, to apply to the number and class of securities which would have been issuable to the Optionee in consummation of such Corporate Transaction, had the option been exercised immediately prior to such Corporate Transaction. Appropriate adjustments shall also be made to (i) the number and class of securities available for issuance under the Plan following the consummation of such Corporate Transaction and (ii) the exercise price payable per share under each outstanding option, provided the aggregate exercise price payable for such securities shall remain the same. To the extent the actual holders of the Corporation’s outstanding Common Stock receive cash consideration for their Common Stock in consummation of the Corporate Transaction, the successor corporation may, in connection with the assumption of the outstanding options under this Plan, substitute one or more shares of its own common stock with a fair market value equivalent to the cash consideration paid per share of Common Stock in such Corporate Transaction.

E.    The Plan Administrator shall have the discretion, exercisable either at the time the option is granted or at any time while the option remains outstanding, to structure one or more options so that those options shall automatically accelerate and vest in full (and any repurchase rights of the Corporation with respect to the unvested shares subject to those options shall immediately terminate) upon the occurrence of a Corporate Transaction, whether or not those options are to be assumed in the Corporate Transaction.

F.    The Plan Administrator shall also have full power and authority, exercisable either at the time the option is granted or at any time while the option remains outstanding, to structure such option so that the shares subject to that option will automatically vest on an accelerated basis should the Optionee’s Service terminate by reason of an Involuntary Termination within a designated period (not to exceed eighteen (18) months) following the effective date of any Corporate Transaction in which the option is assumed and the repurchase rights applicable to those shares do not otherwise terminate. Any option so accelerated shall remain exercisable for the fully-vested option shares until the expiration or sooner termination of the option term. In addition, the Plan Administrator may provide that one or more of the Corporation’s outstanding repurchase rights with respect to shares held by the Optionee at the time of such Involuntary Termination shall immediately terminate on an accelerated basis, and the shares subject to those terminated rights shall accordingly vest at that time.

G.    The portion of any Incentive Option accelerated in connection with a Corporate Transaction shall remain exercisable as an Incentive Option only to the extent the applicable One Hundred Thousand Dollar limitation is not exceeded. To the extent such dollar limitation is exceeded, the accelerated portion of such option shall be exercisable as a Non-Statutory Option under the Federal tax laws.

H.    The grant of options under the Plan shall in no way affect the right of the Corporation to adjust, reclassify, reorganize or otherwise change its capital or business structure or to merge, consolidate, dissolve, liquidate or sell or transfer all or any part of its business or assets.

IV.    CANCELLATION AND REGRANT OF OPTIONS

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The Plan Administrator shall have the authority to effect, at any time and from time to time, with the consent of the affected option holders, the cancellation of any or all outstanding options under the Plan and to grant in substitution therefor new options covering the same or different number of shares of Common Stock but with an exercise price per share based on the Fair Market Value per share of Common Stock on the new option grant date.

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ARTICLE THREE

STOCK ISSUANCE PROGRAM

I.    STOCK ISSUANCE TERMS

Shares of Common Stock may be issued under the Stock Issuance Program through direct and immediate issuances without any intervening option grants. Each such stock issuance shall be evidenced by a Stock Issuance Agreement which complies with the terms specified below.

A.    Purchase Price.

1.    The purchase price per share shall be fixed by the Plan Administrator but shall not be less than eighty-five percent (85%) of the Fair Market Value per share of Common Stock on the issue date. However, the purchase price per share of Common Stock issued to a 10% Stockholder shall not be less than one hundred and ten percent (110%) of such Fair Market Value.

2.    Subject to the provisions of Section I of Article Four, shares of Common Stock may be issued under the Stock Issuance Program for any of the following items of consideration which the Plan Administrator may deem appropriate in each individual instance:

(i)    cash or check made payable to the Corporation, or

(ii)    past services rendered to the Corporation (or any Parent or Subsidiary).

B.    Vesting Provisions.

1.    Shares of Common Stock issued under the Stock Issuance Program may, in the discretion of the Plan Administrator, be fully and immediately vested upon issuance or may vest in one or more installments over the Participant’s period of Service or upon attainment of specified performance objectives. However, the Plan Administrator may not impose a vesting schedule upon any stock issuance effected under the Stock Issuance Program which is more restrictive than twenty percent (20%) per year vesting, with initial vesting to occur not later than one (1) year after the issuance date. Such limitation shall not apply to any Common Stock issuances made to the officers of the Corporation, non-employee Board members or independent consultants.

2.    Any new, substituted or additional securities or other property (including money paid other than as a regular cash dividend) which the Participant may have the right to receive with respect to the Participant’s unvested shares of Common Stock by reason of any stock dividend, stock split, recapitalization, combination of shares, exchange of shares or other change affecting the outstanding Common Stock as a class without the Corporation’s receipt of consideration shall be issued subject to (i) the same vesting requirements applicable to the Participant’s unvested shares of Common Stock and (ii) such escrow arrangements as the Plan Administrator shall deem appropriate.

3.    The Participant shall have full stockholder rights with respect to any shares of Common Stock issued to the Participant under the Stock Issuance Program, whether or not the Participant’s interest in those shares is vested. Accordingly, the Participant shall have the right to vote such shares and to receive any regular cash dividends paid on such shares.

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4.    Should the Participant cease to remain in Service while holding one or more unvested shares of Common Stock issued under the Stock Issuance Program or should the performance objectives not be attained with respect to one or more such unvested shares of Common Stock, then those shares shall be immediately surrendered to the Corporation for cancellation, and the Participant shall have no further stockholder rights with respect to those shares. To the extent the surrendered shares were previously issued to the Participant for consideration paid in cash or cash equivalent (including the Participant’s purchase-money indebtedness), the Corporation shall repay to the Participant the cash consideration paid for the surrendered shares and shall cancel the unpaid principal balance of any outstanding purchase-money note of the Participant attributable to such surrendered shares.

5.    The Plan Administrator may in its discretion waive the surrender and cancellation of one or more unvested shares of Common Stock (or other assets attributable thereto) which would otherwise occur upon the non-completion of the vesting schedule applicable to those shares. Such waiver shall result in the immediate vesting of the Participant’s interest in the shares of Common Stock as to which the waiver applies. Such waiver may be effected at any time, whether before or after the Participant’s cessation of Service or the attainment or non-attainment of the applicable performance objectives.

6.    First Refusal Rights. Until such time as the Common Stock is first registered under Section 12 of the 1934 Act, the Corporation shall have the right of first refusal with respect to any proposed disposition by the Participant (or any successor in interest) of any shares of Common Stock issued under the Stock Issuance Program. Such right of first refusal shall be exercisable in accordance with the terms established by the Plan Administrator and set forth in the document evidencing such right.

II.    CORPORATE TRANSACTION

A.    Upon the occurrence of a Corporate Transaction, all outstanding repurchase rights under the Stock Issuance Program shall terminate automatically, and the shares of Common Stock subject to those terminated rights shall immediately vest in full, except to the extent: (i) those repurchase rights are assigned to the successor corporation (or parent thereof) in connection with such Corporate Transaction or (ii) such accelerated vesting is precluded by other limitations imposed by the Plan Administrator at the time the repurchase right is issued.

B.    The Plan Administrator shall have the discretionary authority, exercisable either at the time the unvested shares are issued or any time while the Corporation’s repurchase rights with respect to those shares remain outstanding, to provide that those rights shall automatically terminate on an accelerated basis, and the shares of Common Stock subject to those terminated rights shall immediately vest, in the event the Participant’s Service should subsequently terminate by reason of an Involuntary Termination within a designated period (not to exceed eighteen (18) months) following the effective date of any Corporate Transaction in which those repurchase rights are assigned to the successor corporation (or parent thereof).

III.    SHARE ESCROW/LEGENDS

Unvested shares may, in the Plan Administrator’s discretion, be held in escrow by the Corporation until the Participant’s interest in such shares vests or may be issued directly to the Participant with restrictive legends on the certificates evidencing those unvested shares.

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ARTICLE FOUR

MISCELLANEOUS

I.    FINANCING

The Plan Administrator may permit any Optionee or Participant to pay the option exercise price under the Option Grant Program or the purchase price for shares issued under the Stock Issuance Program by delivering a full-recourse, interest bearing promissory note payable in one or more installments and secured by the purchased shares. However, any promissory note delivered by a consultant must be secured by collateral in addition to the purchased shares of Common Stock. In no event may the maximum credit available to the Optionee or Participant exceed the sum of (i) the aggregate option exercise price or purchase price payable for the purchased shares plus (ii) any Federal, state and local income and employment tax liability incurred by the Optionee or the Participant in connection with the option exercise or share purchase.

II.    EFFECTIVE DATE AND TERM OF PLAN

A.    The Plan shall become effective when adopted by the Board, but no option granted under the Plan may be exercised, and no shares shall be issued under the Plan, until the Plan is approved by the Corporation’s stockholders. If such stockholder approval is not obtained within twelve (12) months after the date of the Board’s adoption of the Plan, then all options previously granted under the Plan shall terminate and cease to be outstanding, and no further options shall be granted and no shares shall be issued under the Plan. Subject to such limitation, the Plan Administrator may grant options and issue shares under the Plan at any time after the effective date of the Plan and before the date fixed herein for termination of the Plan.

B.    The Plan shall terminate upon the earliest of (i) the expiration of the ten (10)-year period measured from the date the Plan is adopted by the Board, (ii) the date on which all shares available for issuance under the Plan shall have been issued as vested shares or (iii) the termination of all outstanding options in connection with a Corporate Transaction. All options and unvested stock issuances outstanding at the time of a clause (i) termination event shall continue to have full force and effect in accordance with the provisions of the documents evidencing those options or issuances.

III.    AMENDMENT OF THE PLAN

A.    The Board shall have complete and exclusive power and authority to amend or modify the Plan in any or all respects. However, no such amendment or modification shall adversely affect the rights and obligations with respect to options or unvested stock issuances at the time outstanding under the Plan unless the Optionee or the Participant consents to such amendment or modification. In addition, certain amendments may require stockholder approval pursuant to applicable laws and regulations.

B.    Options may be granted under the Option Grant Program and shares may be issued under the Stock Issuance Program which are in each instance in excess of the number of shares of Common Stock then available for issuance under the Plan, provided any excess shares actually issued under those programs shall be held in escrow until there is obtained stockholder approval of an amendment sufficiently increasing the number of shares of Common Stock available for issuance under the Plan. If such stockholder approval is not obtained within twelve (12) months after the date the first

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such excess grants or issuances are made, then (i) any unexercised options granted on the basis of such excess shares shall terminate and cease to be outstanding and (ii) the Corporation shall promptly refund to the Optionees and the Participants the exercise or purchase price paid for any excess shares issued under the Plan and held in escrow, together with interest (at the applicable Short Term Federal Rate) for the period the shares were held in escrow, and such shares shall thereupon be automatically cancelled and cease to be outstanding.

IV.    USE OF PROCEEDS

Any cash proceeds received by the Corporation from the sale of shares of Common Stock under the Plan shall be used for general corporate purposes.

V.    WITHHOLDING

The Corporation’s obligation to deliver shares of Common Stock upon the exercise of any options granted under the Plan or upon the issuance or vesting of any shares issued under the Plan shall be subject to the satisfaction of all applicable Federal, state and local income and employment tax withholding requirements.

VI.    REGULATORY APPROVALS

The implementation of the Plan, the granting of any options under the Plan and the issuance of any shares of Common Stock (i) upon the exercise of any option or (ii) under the Stock Issuance Program shall be subject to the Corporation’s procurement of all approvals and permits required by regulatory authorities having jurisdiction over the Plan, the options granted under it and the shares of Common Stock issued pursuant to it.

VII.    NO EMPLOYMENT OR SERVICE RIGHTS

Nothing in the Plan shall confer upon the Optionee or the Participant any right to continue in Service for any period of specific duration or interfere with or otherwise restrict in any way the rights of the Corporation (or any Parent or Subsidiary employing or retaining such person) or of the Optionee or the Participant, which rights are hereby expressly reserved by each, to terminate such person’s Service at any time for any reason, with or without cause.

VIII.    FINANCIAL REPORTS

The Corporation shall deliver a balance sheet and an income statement at least annually to each individual holding an outstanding option under the Plan, unless such individual is a key Employee whose duties in connection with the Corporation (or any Parent or Subsidiary) assure such individual access to equivalent information.

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APPENDIX

The following definitions shall be in effect under the Plan:

A.    Board shall mean the Corporation’s Board of Directors.

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

C.    Committee shall mean a committee of two (2) or more Board members appointed by the Board to exercise one or more administrative functions under the Plan.

D.    Common Stock shall mean the Corporation’s common stock.

E.    Corporate Transaction shall mean either of the following stockholder-approved transactions to which the Corporation is a party:

(i)    a merger or consolidation in which securities possessing more than fifty percent (50%) of the total combined voting power of the Corporation’s outstanding securities are transferred to a person or persons different from the persons holding those securities immediately prior to such transaction, or

(ii)    the sale, transfer or other disposition of all or substantially all of the Corporation’s assets in complete liquidation or dissolution of the Corporation.

F.    Corporation shall mean Applied Semantics, Inc. (previously, “Oingo, Inc.”), a California corporation, and any successor corporation to all or substantially all of the assets or voting stock of Applied Semantics, Inc. which shall by appropriate action adopt the Plan.

G.    Disability shall mean the inability of the Optionee or the Participant to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment and shall be determined by the Plan Administrator on the basis of such medical evidence as the Plan Administrator deems warranted under the circumstances.

H.    Employee shall mean an individual who is in the employ of the Corporation (or any Parent or Subsidiary), subject to the control and direction of the employer entity as to both the work to be performed and the manner and method of performance.

I.    Exercise Date shall mean the date on which the Corporation shall have received written notice of the option exercise.

J.    Fair Market Value per share of Common Stock on any relevant date shall be determined in accordance with the following provisions:

(i)    If the Common Stock is at the time traded on the Nasdaq National Market, then the Fair Market Value shall be the closing selling price per share of

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Common Stock on the date in question, as such price is reported by the National Association of Securities Dealers on the Nasdaq National Market. If there is no closing selling price for the Common Stock on the date in question, then the Fair Market Value shall be the closing selling price on the last preceding date for which such quotation exists.

(ii)    If the Common Stock is at the time listed on any Stock Exchange, then the Fair Market Value shall be the closing selling price per share of Common Stock on the date in question on the Stock Exchange determined by the Plan Administrator to be the primary market for the Common Stock, as such price is officially quoted in the composite tape of transactions on such exchange. If there is no closing selling price for the Common Stock on the date in question, then the Fair Market Value shall be the closing selling price on the last preceding date for which such quotation exists.

(iii)    If the Common Stock is at the time neither listed on any Stock Exchange nor traded on the Nasdaq National Market, then the Fair Market Value shall be determined by the Plan Administrator after taking into account such factors as the Plan Administrator shall deem appropriate.

K.    Incentive Option shall mean an option which satisfies the requirements of Code Section 422.

L.    Involuntary Termination shall mean the termination of the Service of any individual which occurs by reason of:

(i)    such individual’s involuntary dismissal or discharge by the Corporation for reasons other than Misconduct, or

(ii)    such individual’s voluntary resignation following (A) a change in his or her position with the Corporation which materially reduces his or her duties and responsibilities or the level of management to which he or she reports, (B) a reduction in his or her level of compensation (including base salary, fringe benefits and target bonus under any corporate-performance based bonus or incentive programs) by more than fifteen percent (15%) or (C) a relocation of such individual’s place of employment by more than fifty (50) miles, provided and only if such change, reduction or relocation is effected without the individual’s consent.

M.    Misconduct shall mean the commission of any act of fraud, embezzlement or dishonesty by the Optionee or Participant, any unauthorized use or disclosure by such person of confidential information or trade secrets of the Corporation (or any Parent or Subsidiary), or any other intentional misconduct by such person adversely affecting the business or affairs of the Corporation (or any Parent or Subsidiary) in a material manner. The foregoing definition shall not be deemed to be inclusive of all the acts or omissions which the Corporation (or any Parent or Subsidiary) may consider as grounds for the dismissal or discharge of any Optionee, Participant or other person in the Service of the Corporation (or any Parent or Subsidiary).

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N.    1934 Act shall mean the Securities Exchange Act of 1934, as amended.

O.    Non-Statutory Option shall mean an option not intended to satisfy the requirements of Code Section 422.

P.    Option Grant Program shall mean the option grant program in effect under the Plan.

Q.    Optionee shall mean any person to whom an option is granted under the Plan.

R.    Parent shall mean any corporation (other than the Corporation) in an unbroken chain of corporations ending with the Corporation, provided each corporation in the unbroken chain (other than the Corporation) owns, at the time of the determination, stock possessing fifty percent (50%) or more of the total combined voting power of all classes of stock in one of the other corporations in such chain.

S.    Participant shall mean any person who is issued shares of Common Stock under the Stock Issuance Program.

T.    Plan shall mean the Corporation’s 1999 Stock Option/Stock Issuance Plan, as set forth in this document.

U.    Plan Administrator shall mean either the Board or the Committee acting in its capacity as administrator of the Plan.

V.    Service shall mean the provision of services to the Corporation (or any Parent or Subsidiary) by a person in the capacity of an Employee, a non-employee member of the board of directors or a consultant or independent advisor, except to the extent otherwise specifically provided in the documents evidencing the option grant.

W.    Stock Exchange shall mean either the American Stock Exchange or the New York Stock Exchange.

X.    Stock Issuance Agreement shall mean the agreement entered into by the Corporation and the Participant at the time of issuance of shares of Common Stock under the Stock Issuance Program.

Y.    Stock Issuance Program shall mean the stock issuance program in effect under the Plan.

Z.    Subsidiary shall mean any corporation (other than the Corporation) in an unbroken chain of corporations beginning with the Corporation, provided each corporation (other than the last corporation) in the unbroken chain owns, at the time of the determination, stock possessing fifty percent (50%) or more of the total combined voting power of all classes of stock in one of the other corporations in such chain.

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AA.    10% Stockholder shall mean the owner of stock (as determined under Code Section 424(d)) possessing more than ten percent (10%) of the total combined voting power of all classes of stock of the Corporation (or any Parent or Subsidiary).

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Schedule A

APPLIED SEMANTICS, INC.

STOCK OPTION AGREEMENT

RECITALS

A.    The Board has adopted the Plan for the purpose of retaining the services of selected Employees, non-employee members of the Board or the board of directors of any Parent or Subsidiary and consultants and other independent advisors in the service of the Corporation (or any Parent or Subsidiary).

B.    Optionee is to render valuable services to the Corporation (or a Parent or Subsidiary), and this Agreement is executed pursuant to, and is intended to carry out the purposes of, the Plan in connection with the Corporation’s grant of an option to Optionee.

C.    All capitalized terms in this Agreement shall have the meaning assigned to them in the attached Appendix.

NOW, THEREFORE, it is hereby agreed as follows:

1.    Grant of Option. The Corporation hereby grants to Optionee, as of the Grant Date, an option to purchase up to the number of Option Shares specified in the Grant Notice. The Option Shares shall be purchasable from time to time during the option term specified in Paragraph 2 at the Exercise Price.

2.    Option Term. This option shall have a term of ten (10) years measured from the Grant Date and shall accordingly expire at the close of business on the Expiration Date, unless sooner terminated in accordance with Paragraph 5 or 6.

3.    Limited Transferability.

(a)    This option shall be neither transferable nor assignable by Optionee other than by will or the laws of inheritance following Optionee’s death and may be exercised, during Optionee’s lifetime, only by Optionee. However, Optionee may designate one or more persons as the beneficiary or beneficiaries of this option, and this option shall, in accordance with such designation, automatically be transferred to such beneficiary or beneficiaries upon the Optionee’s death while holding this option. Such beneficiary or beneficiaries shall take the transferred option subject to all the terms and conditions of this Agreement, including (without limitation) the limited time period during which this option may, pursuant to Paragraph 5, be exercised following Optionee’s death.

(b)    If this option is designated a Non-Statutory Option in the Grant Notice, then this option may be assigned in whole or in part during Optionee’s lifetime to one or more members of Optionee’s family or to a trust established for the exclusive benefit of one or more such family members or to Optionee’s former spouse, to the extent such assignment is in connection with the Optionee’s estate plan or pursuant to a domestic relations order. The assigned portion shall be exercisable

only by the person or persons who acquire a proprietary interest in the option pursuant to such assignment. The terms applicable to the assigned portion shall be the same as those in effect for this option immediately prior to such assignment.

4.    Dates of Exercise. This option shall become exercisable for the Option Shares in one or more installments as specified in the Grant Notice. As the option becomes exercisable for such installments, those installments shall accumulate, and the option shall remain exercisable for the accumulated installments until the Expiration Date or sooner termination of the option term under Paragraph 5 or 6.

5.    Cessation of Service. The option term specified in Paragraph 2 shall terminate (and this option shall cease to be outstanding) prior to the Expiration Date should any of the following provisions become applicable:

(a)    Should Optionee cease to remain in Service for any reason (other than death, Disability or Misconduct) while holding this option, then Optionee shall have a period of three (3) months (commencing with the date of such cessation of Service) during which to exercise this option, but in no event shall this option be exercisable at any time after the Expiration Date.

(b)    Should Optionee die while holding this option, then the personal representative of Optionee’s estate or the person or persons to whom the option is transferred pursuant to Optionee’s will or the laws of inheritance shall have the right to exercise this option. However, if Optionee has designated one or more beneficiaries of this option, then those persons shall have the exclusive right to exercise this option following Optionee’s death. Any such right to exercise this option shall lapse, and this option shall cease to be outstanding, upon the earlier of (i) the expiration of the twelve (12)-month period measured from the date of Optionee’s death or (ii) the Expiration Date.

(c)    Should Optionee cease Service by reason of Disability while holding this option, then Optionee shall have a period of twelve (12) months (commencing with the date of such cessation of Service) during which to exercise this option. In no event shall this option be exercisable at any time after the Expiration Date.

Note: Exercise of this option on a date later than three (3) months following cessation of Service due to Disability will result in loss of favorable Incentive Option treatment, unless such Disability constitutes Permanent Disability. In the event that Incentive Option treatment is not available, this option will be taxed as a Non-Statutory Option upon exercise.

(d)    During the limited period of post-Service exercisability, this option may not be exercised in the aggregate for more than the number of Option Shares in which Optionee is, at the time of Optionee’s cessation of Service, vested pursuant to the Vesting Schedule specified in the Grant Notice or the special vesting acceleration provisions of Paragraph 6. Upon the expiration of such limited exercise period or (if earlier) upon the Expiration Date, this option shall terminate and cease to be outstanding for any vested Option Shares for which the option has not been exercised. To the extent Optionee is not vested in one or more Option Shares at the time of Optionee’s

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cessation of Service, this option shall immediately terminate and cease to be outstanding with respect to those shares.

(e)    Should Optionee’s Service be terminated for Misconduct or should Optionee otherwise engage in Misconduct while this option is outstanding, then this option shall terminate immediately and cease to remain outstanding.

6.    Accelerated Vesting.

(a)    In the event of any Corporate Transaction, the Option Shares at the time subject to this option but not otherwise vested shall automatically vest in full so that this option shall, immediately prior to the effective date of the Corporate Transaction, become exercisable for all of the Option Shares as fully-vested shares and may be exercised for any or all of those Option Shares as vested shares. However, the Option Shares shall not vest on such an accelerated basis if and to the extent: (i) this option is assumed by the successor corporation (or parent thereof) in the Corporate Transaction and the Corporation’s repurchase rights with respect to the unvested Option Shares are assigned to such successor corporation (or parent thereof) or (ii) this option is to be replaced with a cash incentive program of the successor corporation which preserves the spread existing on the unvested Option Shares at the time of the Corporate Transaction (the excess of the Fair Market Value of those Option Shares over the Exercise Price payable for such shares) and provides for subsequent payout in accordance with the same Vesting Schedule applicable to those unvested Option Shares as set forth in the Grant Notice.

(b)    Immediately following the Corporate Transaction, this option shall terminate and cease to be outstanding, except to the extent assumed by the successor corporation (or parent thereof) in connection with the Corporate Transaction.

(c)    If this option is assumed in connection with a Corporate Transaction, then this option shall be appropriately adjusted, immediately after such Corporate Transaction, to apply to the number and class of securities which would have been issuable to Optionee in consummation of such Corporate Transaction had the option been exercised immediately prior to such Corporate Transaction, and appropriate adjustments shall also be made to the Exercise Price, provided the aggregate Exercise Price shall remain the same. To the extent the actual holders of the Corporation’s outstanding Common Stock receive cash consideration for their Common Stock in consummation of the Corporate Transaction, the successor corporation may, in connection with the assumption of this option, substitute one or more shares of its own common stock with a fair market value equivalent to the cash consideration paid per share of Common Stock in such Corporate Transaction.

(d)    This Agreement shall not in any way affect the right of the Corporation to adjust, reclassify, reorganize or otherwise change its capital or business structure or to merge, consolidate, dissolve, liquidate or sell or transfer all or any part of its business or assets.

7.    Adjustment in Option Shares. Should any change be made to the Common Stock by reason of any stock split, stock dividend, recapitalization, combination of shares, exchange of shares or other change affecting the outstanding Common Stock as a class without the Corporation’s receipt of consideration, appropriate adjustments shall be made to (i) the total number

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and/or class of securities subject to this option and (ii) the Exercise Price in order to reflect such change and thereby preclude a dilution or enlargement of benefits hereunder.

8.    Stockholder Rights. The holder of this option shall not have any stockholder rights with respect to the Option Shares until such person shall have exercised the option, paid the Exercise Price and become the record holder of the purchased shares.

9.    Manner of Exercising Option.

(a)    In order to exercise this option with respect to all or any part of the Option Shares for which this option is at the time exercisable, Optionee (or any other person or persons exercising the option) must take the following actions:

(i)     Execute and deliver to the Corporation a Purchase Agreement for the Option Shares for which the option is exercised.

(ii)     Pay the aggregate Exercise Price for the purchased shares in one or more of the following forms:

(A)     cash or check made payable to the Corporation; or

(B)     a promissory note payable to the Corporation, but only to the extent authorized by the Plan Administrator in accordance with Paragraph 14.

Should the Common Stock be registered under Section 12 of the 1934 Act at the time the option is exercised, then the Exercise Price may also be paid as follows:

(C)     in shares of Common Stock held by Optionee (or any other person or persons exercising the option) for the requisite period necessary to avoid a charge to the Corporation’s earnings for financial reporting purposes and valued at Fair Market Value on the Exercise Date; or

(D)     to the extent the option is exercised for vested Option Shares, through a special sale and remittance procedure pursuant to which Optionee (or any other person or persons exercising the option) shall concurrently provide irrevocable instructions (a) to a Corporation-designated brokerage firm to effect the immediate sale of the purchased shares and remit to the Corporation, out of the sale proceeds available on the settlement date, sufficient funds to cover the aggregate Exercise Price payable for the purchased shares plus all applicable Federal, state and local income and employment taxes required to be withheld by the Corporation by reason of such exercise and (b) to the

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Corporation to deliver the certificates for the purchased shares directly to such brokerage firm in order to complete the sale.

Except to the extent the sale and remittance procedure is utilized in connection with the option exercise, payment of the Exercise Price must accompany the Purchase Agreement delivered to the Corporation in connection with the option exercise.

(iii)    Furnish to the Corporation appropriate documentation that the person or persons exercising the option (if other than Optionee) have the right to exercise this option.

(iv)    Execute and deliver to the Corporation such written representations as may be requested by the Corporation in order for it to comply with the applicable requirements of Federal and state securities laws.

(v)    Make appropriate arrangements with the Corporation (or Parent or Subsidiary employing or retaining Optionee) for the satisfaction of all Federal, state and local income and employment tax withholding requirements applicable to the option exercise.

(b)    As soon as practical after the Exercise Date, the Corporation shall issue to or on behalf of Optionee (or any other person or persons exercising this option) a certificate for the purchased Option Shares, with the appropriate legends affixed thereto.

(c)    In no event may this option be exercised for any fractional shares.

10.    REPURCHASE RIGHTS. ALL OPTION SHARES ACQUIRED UPON THE EXERCISE OF THIS OPTION SHALL BE SUBJECT TO CERTAIN RIGHTS OF THE CORPORATION AND ITS ASSIGNS TO REPURCHASE THOSE SHARES IN ACCORDANCE WITH THE TERMS SPECIFIED IN THE PURCHASE AGREEMENT.

11.    Compliance with Laws and Regulations.

(a)    The exercise of this option and the issuance of the Option Shares upon such exercise shall be subject to compliance by the Corporation and Optionee with all applicable requirements of law relating thereto and with all applicable regulations of any stock exchange (or the Nasdaq National Market, if applicable) on which the Common Stock may be listed for trading at the time of such exercise and issuance.

(b)    The inability of the Corporation to obtain approval from any regulatory body having authority deemed by the Corporation to be necessary to the lawful issuance and sale of any Common Stock pursuant to this option shall relieve the Corporation of any liability with respect to the non-issuance or sale of the Common Stock as to which such approval shall not have been obtained. The Corporation, however, shall use its best efforts to obtain all such approvals.

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12.    Successors and Assigns. Except to the extent otherwise provided in Paragraphs 3 and 6, the provisions of this Agreement shall inure to the benefit of, and be binding upon, the Corporation and its successors and assigns and Optionee, Optionee’s assigns and the legal representatives, heirs and legatees of Optionee’s estate.

13.    Notices. Any notice required to be given or delivered to the Corporation under the terms of this Agreement shall be in writing and addressed to the Corporation at its principal corporate offices. Any notice required to be given or delivered to Optionee shall be in writing and addressed to Optionee at the address indicated below Optionee’s signature line on the Grant Notice. All notices shall be deemed effective upon personal delivery or upon deposit in the U.S. mail, postage prepaid and properly addressed to the party to be notified.

14.    Financing. The Plan Administrator may, in its absolute discretion and without any obligation to do so, permit Optionee to pay the Exercise Price for the purchased Option Shares by delivering a full-recourse, interest-bearing promissory note secured by those Option Shares. The payment schedule in effect for any such promissory note shall be established by the Plan Administrator in its sole discretion.

15.    Construction. This Agreement and the option evidenced hereby are made and granted pursuant to the Plan and are in all respects limited by and subject to the terms of the Plan. All decisions of the Plan Administrator with respect to any question or issue arising under the Plan or this Agreement shall be conclusive and binding on all persons having an interest in this option.

16.    Governing Law. The interpretation, performance and enforcement of this Agreement shall be governed by the laws of the State of California without resort to that State’s conflict-of-laws rules.

17.    Stockholder Approval. If the Option Shares covered by this Agreement exceed, as of the Grant Date, the number of shares of Common Stock which may be issued under the Plan as last approved by the stockholders, then this option shall be void with respect to such excess shares, unless stockholder approval of an amendment sufficiently increasing the number of shares of Common Stock issuable under the Plan is obtained in accordance with the provisions of the Plan.

18.    Additional Terms Applicable to an Incentive Option. In the event this option is designated an Incentive Option in the Grant Notice, the following terms and conditions shall also apply to the grant:

(a)    This option shall cease to qualify for favorable tax treatment as an Incentive Option if (and to the extent) this option is exercised for one or more Option Shares: (i) more than three (3) months after the date Optionee ceases to be an Employee for any reason other than death or Permanent Disability or (ii) more than twelve (12) months after the date Optionee ceases to be an Employee by reason of Permanent Disability.

(b)    This option shall not become exercisable in the calendar year in which granted if (and to the extent) the aggregate Fair Market Value (determined at the Grant Date) of the Common Stock for which this option would otherwise first become exercisable in such calendar year would, when added to the aggregate value (determined as of the respective date or dates of grant) of the

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Common Stock and any other securities for which one or more other Incentive Options granted to Optionee prior to the Grant Date (whether under the Plan or any other option plan of the Corporation or any Parent or Subsidiary) first become exercisable during the same calendar year, exceed One Hundred Thousand Dollars ($100,000) in the aggregate. To the extent the exercisability of this option is deferred by reason of the foregoing limitation, the deferred portion shall become exercisable in the first calendar year or years thereafter in which the One Hundred Thousand Dollar ($100,000) limitation of this Paragraph 18(b) would not be contravened, but such deferral shall in all events end immediately prior to the effective date of a Corporate Transaction in which this option is not to be assumed, whereupon the option shall become immediately exercisable as a Non-Statutory Option for the deferred portion of the Option Shares.

(c)    Should Optionee hold, in addition to this option, one or more other options to purchase Common Stock which become exercisable for the first time in the same calendar year as this option, then the foregoing limitations on the exercisability of such options as Incentive Options shall be applied on the basis of the order in which such options are granted.

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APPENDIX

The following definitions shall be in effect under the Agreement:

A.    Agreement shall mean this Stock Option Agreement.

B.    Board shall mean the Corporation’s Board of Directors.

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

D.    Common Stock shall mean the Corporation’s common stock.

E.    Corporate Transaction shall mean either of the following stockholder-approved transactions to which the Corporation is a party:

(i)    a merger or consolidation in which securities possessing more than fifty percent (50%) of the total combined voting power of the Corporation’s outstanding securities are transferred to a person or persons different from the persons holding those securities immediately prior to such transaction, or

(ii)    the sale, transfer or other disposition of all or substantially all of the Corporation’s assets in complete liquidation or dissolution of the Corporation.

F.    Corporation shall mean Applied Semantics, Inc., a California corporation, and any successor corporation to all or substantially all of the assets or voting stock of Applied Semantics, Inc. which shall be appropriate action assume this option.

G.    Disability shall mean the inability of Optionee to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment and shall be determined by the Plan Administrator on the basis of such medical evidence as the Plan Administrator deems warranted under the circumstances. Disability shall be deemed to constitute Permanent Disability in the event that such Disability is expected to result in death or has lasted or can be expected to last for a continuous period of twelve (12) months or more.

H.    Employee shall mean an individual who is in the employ of the Corporation (or any Parent or Subsidiary), subject to the control and direction of the employer entity as to both the work to be performed and the manner and method of performance.

I.    Exercise Date shall mean the date on which the option shall have been exercised in accordance with Paragraph 9 of the Agreement.

J.    Exercise Price shall mean the exercise price payable per Option Share as specified in the Grant Notice.

K.    Expiration Date shall mean the date on which the option expires as specified in the Grant Notice.

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L.    Fair Market Value per share of Common Stock on any relevant date shall be determined in accordance with the following provisions:

(i)    If the Common Stock is at the time traded on the Nasdaq National Market, then the Fair Market Value shall be the closing selling price per share of Common Stock on the date in question, as the price is reported by the National Association of Securities Dealers on the Nasdaq National Market. If there is no closing selling price for the Common Stock on the date in question, then the Fair Market Value shall be the closing selling price on the last preceding date for which such quotation exists.

(ii)    If the Common Stock is at the time listed on any Stock Exchange, then the Fair Market Value shall be the closing selling price per share of Common Stock on the date in question on the Stock Exchange determined by the Plan Administrator to be the primary market for the Common Stock, as such price is officially quoted in the composite tape of transactions on such exchange. If there is no closing selling price for the Common Stock on the date in question, then the Fair Market Value shall be the closing selling price on the last preceding date for which such quotation exists.

(iii)    If the Common Stock is at the time neither listed on any Stock Exchange nor traded on the Nasdaq National Market, then the Fair Market Value shall be determined by the Plan Administrator after taking into account such factors as the Plan Administrator shall deem appropriate.

M.    Grant Date shall mean the date of grant of the option as specified in the Grant Notice.

N.    Grant Notice shall mean the Notice of Grant of Stock Option accompanying the Agreement, pursuant to which Optionee has been informed of the basic terms of the option evidenced hereby.

O.    Incentive Option shall mean an option which satisfies the requirements of Code Section 422.

P.    Misconduct shall mean the commission of any act of fraud, embezzlement or dishonesty by Optionee, any unauthorized use or disclosure by Optionee of confidential information or trade secrets of the Corporation (or any Parent or Subsidiary), or any other intentional misconduct by Optionee adversely affecting the business or affairs of the Corporation (or any Parent or Subsidiary) in a material manner. The foregoing definition shall not be deemed to be inclusive of all the acts or omissions which the Corporation (or any Parent or Subsidiary) may consider as grounds for the dismissal or discharge of Optionee or any other individual in the Service of the Corporation (or any Parent or Subsidiary).

Q.    1934 Act shall mean the Securities Exchange Act of 1934, as amended.

R.    Non-Statutory Option shall mean an option not intended to satisfy the requirements of Code Section 422.

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S.    Option Shares shall mean the number of shares of Common Stock subject to the option.

T.    Optionee shall mean the person to whom the option is granted as specified in the Grant Notice.

U.    Parent shall mean any corporation (other than the Corporation) in an unbroken chain of corporations ending with the Corporation, provided each corporation in the unbroken chain (other than the Corporation) owns, at the time of the determination, stock possessing fifty percent (50%) or more of the total combined voting power of all classes of stock in one of the other corporations in such chain.

V.    Plan shall mean the Corporation’s 1999 Stock Option/Stock Issuance Plan.

W.    Plan Administrator shall mean either the Board or a committee of the Board acting in its capacity as administrator of the Plan.

X.    Purchase Agreement shall mean the stock purchase agreement in substantially the form of Exhibit B to the Grant Notice.

Y.    Service shall mean the Optionee’s performance of services for the Corporation (or any Parent or Subsidiary) in the capacity of an Employee, a non-employee member of the board of directors or an independent consultant.

Z.    Stock Exchange shall mean the American Stock Exchange or the New York Stock Exchange.

AA.    Subsidiary shall mean any corporation (other than the Corporation) in an unbroken chain of corporations beginning with the Corporation, provided each corporation (other than the last corporation) in the unbroken chain owns, at the time of the determination, stock possessing fifty percent (50%) or more of the total combined voting power of all classes of stock in one of the other corporations in such chain.

BB.    Vesting Schedule shall mean the vesting schedule specified in the Grant Notice pursuant to which the Optionee is to vest in the Option Shares in a series of installments over his or her period of Service.

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ADDENDUM

TO

STOCK OPTION AGREEMENT

The following provisions are hereby incorporated into, and are hereby made a part of, that certain Stock Option Agreement (the “Option Agreement”) by and between Applied Semantics, Inc. (the “Corporation”) and                      (“Optionee”) evidencing the stock option (the “Option”) granted on this date to Optionee under the terms of the Corporation’s 1999 Stock Option/Stock Issuance Plan, and such provisions shall be effective immediately. All capitalized terms in this Addendum, to the extent not otherwise defined herein, shall have the meanings assigned to them in the Option Agreement.

INVOLUNTARY TERMINATION FOLLOWING

CORPORATE TRANSACTION

1.    If the Option is to be assumed by the successor corporation (or the parent thereof) in connection with a Corporate Transaction, then none of the Option Shares shall, in accordance with Paragraph 6 of the Option Agreement, vest on an accelerated basis upon the occurrence of that Corporate Transaction, and Optionee shall accordingly continue, over his or her period of Service following the Corporate Transaction, to vest in the Option Shares in one or more installments in accordance with the provisions of the Option Agreement. However, upon an Involuntary Termination of Optionee’s Service within twelve (12) months following such Corporate Transaction, Optionee shall, upon such Involuntary Termination, be automatically entitled to accelerated vesting such that the number of shares Optionee shall be vested in shall be equal to the greater of (a) the number of Option Shares Optionee would have been vested in had his or her Service been twice the actual amount of Service or (b) 25% of the Option Shares. Upon such acceleration, the Option Shares subject to the Option at the time of such Involuntary Termination may be exercised as vested shares for any additional Option Shares which become vested as a result of such accelerated vested. The Option shall remain so exercisable until the earlier of (i) the Expiration Date or (ii) the expiration of the three (3) month period measured from the date of the Involuntary Termination.

2.    For purposes of this Addendum, an Involuntary Termination shall mean the termination of Optionee’s Service by reason of:

(i)    Optionee’s involuntary dismissal or discharge by the Corporation for reasons other than for Misconduct, or

(ii)    Optionee’s voluntary resignation following (A) a change in Optionee’s position with the Corporation (or Parent or Subsidiary employing Optionee) which materially reduces Optionee’s duties and responsibilities or the level of management to which he or she reports, (B) a reduction in Optionee’s level of compensation (including base salary, fringe benefits and target bonus under any corporate-performance based incentive programs) by more than fifteen percent (15%) or (C) a relocation of Optionee’s place of employment by more than fifty (50) miles,

provided and only if such change, reduction or relocation is effected by the Corporation without Optionee’s consent.

3.    The provisions of Paragraph 1 of this Addendum shall govern the period for which the Option is to remain exercisable following the Involuntary Termination of Optionee’s Service within twelve (12) months after the Corporate Transaction and shall supersede any provisions to the contrary in Paragraph 5 of the Option Agreement. The provisions of this Addendum shall also supersede any provisions to the contrary in Paragraph 18 of the Option Agreement concerning the deferred exercisability of the Option.

IN WITNESS WHEREOF, Applied Semantics, Inc. has caused this Addendum to be executed by its duly-authorized officer as of the Effective Date specified below.

APPLIED SEMANTICS, INC.

By:

Title:

EFFECTIVE DATE:                      ,                 

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Schedule B

APPLIED SEMANTICS, INC.

NOTICE OF GRANT OF STOCK OPTION

Notice is hereby given of the following option grant (the “Option”) to purchase shares of the Common Stock of Applied Semantics, Inc. (the “Corporation”):

Optionee:
Grant Date:
Vesting Commencement Date:
Exercise Price:	$                                                      per share
Number of Option Shares:	shares of Common Stock
Expiration Date:
Type of Option:	Incentive Stock Option
	Non-Statutory Stock Option
Date Exercisable:	Immediately Exercisable

Vesting Schedule: The Option Shares shall initially be unvested and subject to repurchase by the Corporation at the Exercise Price paid per share. Optionee shall acquire a vested interest in, and the Corporation’s repurchase right shall accordingly lapse with respect to, (i) twenty-five percent (25%) of the Option Shares upon Optionee’s completion of one (1) year of Service measured from the Vesting Commencement Date and (ii) the balance of the Option Shares in a series of thirty-six (36) successive equal monthly installments upon Optionee’s completion of each additional month of Service over the thirty-six (36)-month period measured from the first anniversary of the Vesting Commencement Date. In no event shall any additional Option Shares vest after Optionee’s cessation of Service.

Optionee understands and agrees that the Option is granted subject to and in accordance with the terms of the Applied Semantics, Inc. 1999 Stock Option/Stock Issuance Plan (the “Plan”). Optionee further agrees to be bound by the terms of the Plan and the terms of the Option as set forth in the Stock Option Agreement attached hereto as Exhibit A.

Optionee understands that any Option Shares purchased under the Option will be subject to the terms set forth in the Stock Purchase Agreement attached hereto as Exhibit B. Optionee hereby acknowledges receipt of a copy of the Plan in the form attached hereto as Exhibit C.

REPURCHASE RIGHTS. OPTIONEE HEREBY AGREES THAT ALL OPTION SHARES ACQUIRED UPON THE EXERCISE OF THE OPTION SHALL BE SUBJECT TO CERTAIN REPURCHASE RIGHTS AND RIGHTS OF FIRST REFUSAL EXERCISABLE BY THE CORPORATION AND ITS ASSIGNS. THE TERMS OF SUCH RIGHTS ARE SPECIFIED IN THE ATTACHED STOCK PURCHASE AGREEMENT.

At Will Employment. Nothing in this Notice or in the attached Stock Option Agreement or Plan shall confer upon Optionee any right to continue in Service for any period of specific duration or interfere with or otherwise restrict in any way the rights of the Corporation (or any Parent or Subsidiary employing or retaining Optionee) or of Optionee, which rights are hereby expressly reserved by each, to terminate Optionee’s Service at any time for any reason, with or without cause.

Definitions. All capitalized terms in this Notice shall have the meaning assigned to them in this Notice or in the attached Stock Option Agreement.

DATED:                         ,                 

APPLIED SEMANTICS, INC.
By:
Title:
	OPTIONEE
Address:

Attachments:

Exhibit A – Stock Option Agreement and Addendum to Stock Option Agreement

Exhibit B – Stock Purchase Agreement and Addendum to Stock Purchase Agreement

Exhibit C – 1999 Stock Option/Stock Issuance Plan

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EXHIBIT A

STOCK OPTION AGREEMENT

and

ADDENDUM TO STOCK OPTION AGREEMENT

EXHIBIT B

STOCK PURCHASE AGREEMENT

and

ADDENDUM TO STOCK PURCHASE AGREEMENT

EXHIBIT C

1999 STOCK OPTION/STOCK ISSUANCE PLAN

Schedule C

APPLIED SEMANTICS, INC.

STOCK ISSUANCE AGREEMENT

AGREEMENT made as of this              day of                             ,         by and between Applied Semantics, Inc., a California corporation, and                             , Participant in the Corporation’s 1999 Stock Option/Stock Issuance Plan.

All capitalized terms in this Agreement shall have the meaning assigned to them in this Agreement or in the attached Appendix.

A.    PURCHASE OF SHARES

1.    Purchase. Participant hereby purchases                              shares of Common Stock (the “Purchased Shares”) pursuant to the provisions of the Stock Issuance Program at the purchase price of $                     per share (the “Purchase Price”).

2.    Payment. Concurrently with the delivery of this Agreement to the Corporation, Participant shall pay the Purchase Price for the Purchased Shares in cash or cash equivalent and shall deliver a duly-executed blank Assignment Separate from Certificate (in the form attached hereto as Exhibit I) with respect to the Purchased Shares.

3.    Stockholder Rights. Until such time as the Corporation exercises the Repurchase Right or the First Refusal Right, Participant (or any successor in interest) shall have all stockholder rights (including voting, dividend and liquidation rights) with respect to the Purchased Shares, subject, however, to the transfer restrictions of Articles B and C.

B.    SECURITIES LAW COMPLIANCE

1.    Restricted Securities. The Purchased Shares have not been registered under the 1933 Act and are being issued to Participant in reliance upon the exemption from such registration provided by SEC Rule 701 for stock issuances under compensatory benefit plans such as the Plan. Participant hereby confirms that Participant has been informed that the Purchased Shares are restricted securities under the 1933 Act and may not be resold or transferred unless the Purchased Shares are first registered under the Federal securities laws or unless an exemption from such registration is available. Accordingly, Participant hereby acknowledges that Participant is prepared to hold the Purchased Shares for an indefinite period and that Participant is aware that SEC Rule 144 issued under the 1933 Act which exempts certain resales of unrestricted securities is not presently available to exempt the resale of the Purchased Shares from the registration requirements of the 1933 Act.

2.    Disposition of Purchased Shares. Participant shall make no disposition of the Purchased Shares (other than a Permitted Transfer) unless and until there is compliance with all of the following requirements:

(i)     Participant shall have provided the Corporation with a written summary of the terms and conditions of the proposed disposition.

(ii)    Participant shall have complied with all requirements of this Agreement applicable to the disposition of the Purchased Shares.

(iii)    Participant shall have provided the Corporation with written assurances, in form and substance satisfactory to the Corporation, that (a) the proposed disposition does not require registration of the Purchased Shares under the 1933 Act or (b) all appropriate action necessary for compliance with the registration requirements of the 1933 Act or any exemption from registration available under the 1933 Act (including Rule 144) has been taken.

The Corporation shall not be required (i) to transfer on its books any Purchased Shares which have been sold or transferred in violation of the provisions of this Agreement or (ii) to treat as the owner of the Purchased Shares, or otherwise to accord voting, dividend or liquidation rights to, any transferee to whom the Purchased Shares have been transferred in contravention of this Agreement.

3.    Restrictive Legends. The stock certificates for the Purchased Shares shall be endorsed with one or more of the following restrictive legends:

“The shares represented by this certificate have not been registered under the Securities Act of 1933. The shares may not be sold or offered for sale in the absence of (a) an effective registration statement for the shares under such Act, (b) a “no action” letter of the Securities and Exchange Commission with respect to such sale or offer or (c) satisfactory assurances to the Corporation that registration under such Act is not required with respect to such sale or offer.”

“The shares represented by this certificate are subject to certain repurchase rights and rights of first refusal granted to the Corporation and accordingly may not be sold, assigned, transferred, encumbered, or in any manner disposed of except in conformity with the terms of a written agreement dated                     ,             , between the Corporation and the registered holder of the shares (or the predecessor in interest to the shares). A copy of such agreement is maintained at the Corporation’s principal corporate offices.”

C.    TRANSFER RESTRICTIONS

1.    Restriction on Transfer. Except for any Permitted Transfer, Participant shall not transfer, assign, encumber or otherwise dispose of any of the Purchased Shares which are subject to the Repurchase Right. In addition, Purchased Shares which are released from the Repurchase Right shall not be transferred, assigned, encumbered or otherwise disposed of in contravention of the First Refusal Right or the Market Stand-Off.

2.    Transferee Obligations. Each person (other than the Corporation) to whom the Purchased Shares are transferred by means of a Permitted Transfer must, as a condition precedent to the validity of such transfer, acknowledge in writing to the Corporation that such person is bound by the provisions of this Agreement and that the transferred shares are subject to (i) the Repurchase Right, (ii) the First Refusal Right and (iii) the Market Stand-Off, to the same extent such shares would be so subject if retained by Participant.

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3.    Market Stand-Off.

(a)    In connection with any underwritten public offering by the Corporation of its equity securities pursuant to an effective registration statement filed under the 1933 Act, including the Corporation’s initial public offering, Owner shall not sell, make any short sale of, loan, hypothecate, pledge, grant any option for the purchase of, or otherwise dispose or transfer for value or otherwise agree to engage in any of the foregoing transactions with respect to, any Purchased Shares without the prior written consent of the Corporation or its underwriters. Such restriction (the “Market Stand-Off”) shall be in effect for such period of time from and after the effective date of the final prospectus for the offering as may be requested by the Corporation or such underwriters. In no event, however, shall such period exceed one hundred eighty (180) days, and the Market Stand-Off shall in no event be applicable to any underwritten public offering effected more than two (2) years after the effective date of the Corporation’s initial public offering.

(b)    Owner shall be subject to the Market Stand-Off provided and only if the officers and directors of the Corporation are also subject to similar restrictions.

(c)    Any new, substituted or additional securities which are by reason of any Recapitalization or Reorganization distributed with respect to the Purchased Shares shall be immediately subject to the Market Stand-Off, to the same extent the Purchased Shares are at such time covered by such provisions.

(d)    In order to enforce the Market Stand-Off, the Corporation may impose stop-transfer instructions with respect to the Purchased Shares until the end of the applicable stand-off period.

D.    REPURCHASE RIGHT

1.    Grant. The Corporation is hereby granted the right (the “Repurchase Right”), exercisable at any time during the sixty (60)-day period following the date Participant ceases for any reason to remain in Service, to repurchase at the Purchase Price any or all of the Purchased Shares in which Participant is not, at the time of his or her cessation of Service, vested in accordance with the provisions of the Vesting Schedule set forth in Paragraph D.3 or the special vesting acceleration provisions of Paragraph D.5 (such shares to be hereinafter referred to as the “Unvested Shares”).

2.    Exercise of the Repurchase Right. The Repurchase Right shall be exercisable by written notice delivered to each Owner of the Unvested Shares prior to the expiration of the sixty (60)-day exercise period. The notice shall indicate the number of Unvested Shares to be repurchased and the date on which the repurchase is to be effected, such date to be not more than thirty (30) days after the date of such notice. The certificates representing the Unvested Shares to be repurchased shall be delivered to the Corporation on the closing date specified for the repurchase. Concurrently with the receipt of such stock certificates, the Corporation shall pay to Owner, in cash or cash equivalents (including the cancellation of any purchase-money indebtedness), an amount equal to the Purchase Price previously paid for the Unvested Shares which are to be repurchased from Owner.

3.    Termination of the Repurchase Right. The Repurchase Right shall terminate with respect to any Unvested Shares for which it is not timely exercised under Paragraph D.2. In

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addition, the Repurchase Right shall terminate and cease to be exercisable with respect to any and all Purchased Shares in which Participant vests in accordance with the following Vesting Schedule:

(i)    Participant shall vest in twenty-five percent (25%) of the Purchased Shares, and the Repurchase Right shall concurrently lapse with respect to those Purchased Shares, upon Participant’s completion of one (1) year of Service measured from                     ,             .

(ii)    Participant shall vest in the remaining seventy-five percent (75%) of the Purchased Shares, and the Repurchase Right shall concurrently lapse with respect to those Purchased Shares, in a series of thirty-six (36) successive equal monthly installments upon Participant’s completion of each additional month of Service over the thirty-six (36)-month period measured from the date on which the first twenty-five percent (25%) of the Purchased Shares vests hereunder.

All Purchased Shares as to which the Repurchase Right lapses shall, however, remain subject to (i) the First Refusal Right and (ii) the Market Stand-Off.

4.    Recapitalization. Any new, substituted or additional securities or other property (including cash paid other than as a regular cash dividend) which is by reason of any Recapitalization distributed with respect to the Purchased Shares shall be immediately subject to the Repurchase Right and any escrow requirements hereunder, but only to the extent the Purchased Shares are at the time covered by such right or escrow requirements. Appropriate adjustments to reflect such distribution shall be made to the number and/or class of Purchased Shares subject to this Agreement and to the price per share to be paid upon the exercise of the Repurchase Right in order to reflect the effect of any such Recapitalization upon the Corporation’s capital structure; provided, however, that the aggregate purchase price shall remain the same.

5.    Corporate Transaction.

(a)    The Repurchase Right shall automatically terminate in its entirety, and all the Purchased Shares shall vest in full, immediately prior to the consummation of any Corporate Transaction, except to the extent the Repurchase Right is to be assigned to the successor entity in such Corporate Transaction.

(b)    To the extent the Repurchase Right remains in effect following a Corporate Transaction, such right shall apply to any new securities or other property (including any cash payments) received in exchange for the Purchased Shares in consummation of the Corporate Transaction, but only to the extent the Purchased Shares are at the time covered by such right. Appropriate adjustments shall be made to the price per share payable upon exercise of the Repurchase Right to reflect the effect of the Corporate Transaction upon the Corporation’s capital structure; provided, however, that the aggregate purchase price shall remain the same. The new securities or other property (including any cash payments) issued or distributed with respect to the Purchased Shares in consummation of the Corporate Transaction shall be immediately deposited in escrow with the Corporation (or the successor entity) and shall not be released from escrow until Participant vests in such securities or other property in accordance with the same Vesting Schedule in effect for the Purchased Shares.

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E.    RIGHT OF FIRST REFUSAL

1.    Grant. The Corporation is hereby granted the right of first refusal (the “First Refusal Right”), exercisable in connection with any proposed transfer of the Purchased Shares in which Participant has vested in accordance with the provisions of Article D. For purposes of this Article E, the term “transfer” shall include any sale, assignment, pledge, encumbrance or other disposition of the Purchased Shares intended to be made by Owner, but shall not include any Permitted Transfer.

2.    Notice of Intended Disposition. In the event any Owner of Purchased Shares in which Participant has vested desires to accept a bona fide third-party offer for the transfer of any or all of such shares (the Purchased Shares subject to such offer to be hereinafter referred to as the “Target Shares”), Owner shall promptly (i) deliver to the Corporation written notice (the “Disposition Notice”) of the terms of the offer, including the purchase price and the identity of the third-party offeror, and (ii) provide satisfactory proof that the disposition of the Target Shares to such third-party offeror would not be in contravention of the provisions set forth in Articles B and C.

3.    Exercise of the First Refusal Right. The Corporation shall, for a period of twenty-five (25) days following receipt of the Disposition Notice, have the right to repurchase any or all of the Target Shares subject to the Disposition Notice upon the same terms as those specified therein or upon such other terms (not materially different from those specified in the Disposition Notice) to which Owner consents. Such right shall be exercisable by delivery of written notice (the “Exercise Notice”) to Owner prior to the expiration of the twenty-five (25)-day exercise period. If such right is exercised with respect to all the Target Shares, then the Corporation shall effect the repurchase of such shares, including payment of the purchase price, not more than five (5) business days after delivery of the Exercise Notice; and at such time the certificates representing the Target Shares shall be delivered to the Corporation.

Should the purchase price specified in the Disposition Notice be payable in property other than cash or evidences of indebtedness, the Corporation shall have the right to pay the purchase price in the form of cash equal in amount to the value of such property. If Owner and the Corporation cannot agree on such cash value within ten (10) days after the Corporation’s receipt of the Disposition Notice, the valuation shall be made by an appraiser of recognized standing selected by Owner and the Corporation or, if they cannot agree on an appraiser within twenty (20) days after the Corporation’s receipt of the Disposition Notice, each shall select an appraiser of recognized standing and the two (2) appraisers shall designate a third appraiser of recognized standing, whose appraisal shall be determinative of such value. The cost of such appraisal shall be shared equally by Owner and the Corporation. The closing shall then be held on the later of (i) the fifth (5th) business day following delivery of the Exercise Notice or (ii) the fifth (5th) business day after such valuation shall have been made.

4.    Non-Exercise of the First Refusal Right. In the event the Exercise Notice is not given to Owner prior to the expiration of the twenty-five (25)-day exercise period, Owner shall have a period of thirty (30) days thereafter in which to sell or otherwise dispose of the Target Shares to the third-party offeror identified in the Disposition Notice upon terms (including the purchase price) no more favorable to such third-party offeror than those specified in the Disposition Notice; provided, however, that any such sale or disposition must not be effected in contravention of the provisions of Articles B and C. The third-party offeror shall acquire the Target Shares subject to the First Refusal Right and the provisions and restrictions of Article B and Paragraph C.3, and any subsequent disposition of the acquired

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shares must be effected in compliance with the terms and conditions of such First Refusal Right and the provisions and restrictions of Article B and Paragraph C.3. In the event Owner does not effect such sale or disposition of the Target Shares within the specified thirty (30)-day period, the First Refusal Right shall continue to be applicable to any subsequent disposition of the Target Shares by Owner until such right lapses.

5.    Partial Exercise of the First Refusal Right. In the event the Corporation makes a timely exercise of the First Refusal Right with respect to a portion, but not all, of the Target Shares specified in the Disposition Notice, Owner shall have the option, exercisable by written notice to the Corporation delivered within five (5) business days after Owner’s receipt of the Exercise Notice, to effect the sale of the Target Shares pursuant to either of the following alternatives:

(i)    sale or other disposition of all the Target Shares to the third-party offeror identified in the Disposition Notice, but in full compliance with the requirements of Paragraph E.4, as if the Corporation did not exercise the First Refusal Right; or

(ii)    sale to the Corporation of the portion of the Target Shares which the Corporation has elected to purchase, such sale to be effected in substantial conformity with the provisions of Paragraph E.3. The First Refusal Right shall continue to be applicable to any subsequent disposition of the remaining Target Shares until such right lapses.

Owner’s failure to deliver timely notification to the Corporation shall be deemed to be an election by Owner to sell the Target Shares pursuant to alternative (i) above.

6.    Recapitalization/Reorganization.

(a)    Any new, substituted or additional securities or other property which is by reason of any Recapitalization distributed with respect to the Purchased Shares shall be immediately subject to the First Refusal Right, but only to the extent the Purchased Shares are at the time covered by such right.

(b)    In the event of a Reorganization, the First Refusal Right shall remain in full force and effect and shall apply to the new capital stock or other property received in exchange for the Purchased Shares in consummation of the Reorganization, but only to the extent the Purchased Shares are at the time covered by such right.

7.    Lapse. The First Refusal Right shall lapse upon the earliest to occur of (i) the first date on which shares of the Common Stock are held of record by more than five hundred (500) persons, (ii) a determination made by the Board that a public market exists for the outstanding shares of Common Stock or (iii) a firm commitment underwritten public offering, pursuant to an effective registration statement under the 1933 Act, covering the offer and sale of the Common Stock in the aggregate amount of at least twenty million dollars ($20,000,000). However, the Market Stand-Off shall continue to remain in full force and effect following the lapse of the First Refusal Right.

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F.    SPECIAL TAX ELECTION

1.    Section 83(b) Election. Under Code Section 83, the excess of the Fair Market Value of the Purchased Shares on the date any forfeiture restrictions applicable to such shares lapse over the Purchase Price paid for those shares will be reportable as ordinary income on the lapse date. For this purpose, the term “forfeiture restrictions” includes the right of the Corporation to repurchase the Purchased Shares pursuant to the Repurchase Right. Participant may elect under Code Section 83(b) to be taxed at the time the Purchased Shares are acquired, rather than when and as such Purchased Shares cease to be subject to such forfeiture restrictions. Such election must be filed with the Internal Revenue Service within thirty (30) days after the date of this Agreement. Even if the Fair Market Value of the Purchased Shares on the date of this Agreement equals the Purchase Price paid (and thus no tax is payable), the election must be made to avoid adverse tax consequences in the future.

THE FORM FOR MAKING THIS ELECTION IS ATTACHED AS EXHIBIT II HERETO. PARTICIPANT UNDERSTANDS THAT FAILURE TO MAKE THIS FILING WITHIN THE APPLICABLE THIRTY (30)-DAY PERIOD WILL RESULT IN THE RECOGNITION OF ORDINARY INCOME AS THE FORFEITURE RESTRICTIONS LAPSE.

2.    FILING RESPONSIBILITY. PARTICIPANT ACKNOWLEDGES THAT IT IS PARTICIPANT’S SOLE RESPONSIBILITY, AND NOT THE CORPORATION’S, TO FILE A TIMELY ELECTION UNDER CODE SECTION 83(b), EVEN IF PARTICIPANT REQUESTS THE CORPORATION OR ITS REPRESENTATIVES TO MAKE THIS FILING ON HIS OR HER BEHALF.

G.    GENERAL PROVISIONS

1.    Assignment. The Corporation may assign the Repurchase Right and/or the First Refusal Right to any person or entity selected by the Board, including (without limitation) one or more stockholders of the Corporation.

2.    At Will Employment. Nothing in this Agreement or in the Plan shall confer upon Participant any right to continue in Service for any period of specific duration or interfere with or otherwise restrict in any way the rights of the Corporation (or any Parent or Subsidiary employing or retaining Participant) or of Participant, which rights are hereby expressly reserved by each, to terminate Participant’s Service at any time for any reason, with or without cause.

3.    Notices. Any notice required to be given under this Agreement shall be in writing and shall be deemed effective upon personal delivery or upon deposit in the U.S. mail, registered or certified, postage prepaid and properly addressed to the party entitled to such notice at the address indicated below such party’s signature line on this Agreement or at such other address as such party may designate by ten (10) days advance written notice under this paragraph to all other parties to this Agreement.

4.    No Waiver. The failure of the Corporation in any instance to exercise the Repurchase Right or the First Refusal Right shall not constitute a waiver of any other repurchase rights and/or rights of first refusal that may subsequently arise under the provisions of this Agreement or any

other agreement between the Corporation and Participant. No waiver of any breach or condition of this Agreement shall be deemed to be a waiver of any other or subsequent breach or condition, whether of like or different nature.

5.    Cancellation of Shares. If the Corporation shall make available, at the time and place and in the amount and form provided in this Agreement, the consideration for the Purchased Shares to be repurchased in accordance with the provisions of this Agreement, then from and after such time, the person from whom such shares are to be repurchased shall no longer have any rights as a holder of such shares (other than the right to receive payment of such consideration in accordance with this Agreement). Such shares shall be deemed purchased in accordance with the applicable provisions hereof, and the Corporation shall be deemed the owner and holder of such shares, whether or not the certificates therefor have been delivered as required by this Agreement.

H.    MISCELLANEOUS PROVISIONS

1.    Governing Law. This Agreement shall be governed by, and construed in accordance with, the laws of the State of California without resort to that State’s conflict-of-laws rules.

2.    Participant Undertaking. Participant hereby agrees to take whatever additional action and execute whatever additional documents the Corporation may deem necessary or advisable in order to carry out or effect one or more of the obligations or restrictions imposed on either Participant or the Purchased Shares pursuant to the provisions of this Agreement.

3.    Agreement is Entire Contract. This Agreement constitutes the entire contract between the parties hereto with regard to the subject matter hereof. This Agreement is made pursuant to the provisions of the Plan and shall in all respects be construed in conformity with the terms of the Plan.

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

5.    Successors and Assigns. The provisions of this Agreement shall inure to the benefit of, and be binding upon, the Corporation and its successors and assigns and upon Participant, Participant’s assigns and the legal representatives, heirs and legatees of Participant’s estate, whether or not any such person shall have become a party to this Agreement and have agreed in writing to join herein and be bound by the terms hereof.

IN WITNESS WHEREOF, the parties have executed this Agreement on the day and year first indicated above.

APPLIED SEMANTICS, INC.
By:
Title:
Address:
	PARTICIPANT
Address:

SPOUSAL ACKNOWLEDGMENT

The undersigned spouse of Participant has read and hereby approves the foregoing Stock Issuance Agreement. In consideration of the Corporation’s granting Participant the right to acquire the Purchased Shares in accordance with the terms of such Agreement, the undersigned hereby agrees to be irrevocably bound by all the terms of such Agreement, including (without limitation) the right of the Corporation (or its assigns) to purchase any Purchased Shares in which Participant is not vested at the time of his or her cessation of Service.

	PARTICIPANT’S SPOUSE
Address:

EXHIBIT I

ASSIGNMENT SEPARATE FROM CERTIFICATE

FOR VALUE RECEIVED                      hereby sell(s), assign(s) and transfer(s) unto Applied Semantics, Inc. (the “Corporation”),                          (            ) shares of the Common Stock of the Corporation standing in his or her name on the books of the Corporation represented by Certificate No.                              herewith and do(es) hereby irrevocably constitute and appoint                              Attorney to transfer the said stock on the books of the Corporation with full power of substitution in the premises.

Dated:                     

Signature                                                       

Instruction: Please do not fill in any blanks other than the signature line. Please sign exactly as you would like your name to appear on the issued stock certificate. The purpose of this assignment is to enable the Corporation to exercise the Repurchase Right without requiring additional signatures on the part of Participant.

EXHIBIT II

SECTION 83(b) TAX ELECTION

SECTION 83(b) TAX ELECTION

This statement is being made under Section 83(b) of the Internal Revenue Code, pursuant to Treas. Reg. Section 1.83-2.

(1) The taxpayer who performed the services is:

Name:

Address:

Taxpayer Ident. No.:

(2) The property with respect to which the election is being made is                  shares of the common stock of Applied Semantics, Inc.

(3) The property was issued on                 ,             .

(4) The taxable year in which the election is being made is the calendar year             .

(5) The property is subject to a repurchase right pursuant to which the issuer has the right to acquire the property at the original purchase price if for any reason taxpayer’s service with the issuer terminates. The issuer’s repurchase right will lapse in a series of annual and monthly installments over a four (4)-year period ending on                 , 200    .

(6) The fair market value at the time of transfer (determined without regard to any restriction other than a restriction which by its terms will never lapse) is $             per share.

(7) The amount paid for such property is $              per share.

(8) A copy of this statement was furnished to Applied Semantics, Inc. for whom taxpayer rendered the services underlying the transfer of property.

(9) This statement is executed on                 ,             .

Spouse (if any) Taxpayer

This election must be filed with the Internal Revenue Service Center with which taxpayer files his or her Federal income tax returns and must be made within thirty (30) days after the execution date of the Stock Issuance Agreement. This filing should be made by registered or certified mail, return receipt requested. Participant must retain two (2) copies of the completed form for filing with his or her Federal and state tax returns for the current tax year and an additional copy for his or her records.

EXHIBIT III

1999 STOCK OPTION/STOCK ISSUANCE PLAN

APPENDIX

The following definitions shall be in effect under the Agreement:

A.    Agreement shall mean this Stock Issuance Agreement.

B.    Board shall mean the Corporation’s Board of Directors.

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

D.    Common Stock shall mean the Corporation’s common stock.

E.    Corporate Transaction shall mean either of the following stockholder-approved transactions:

(i)    a merger or consolidation in which securities possessing more than fifty percent (50%) of the total combined voting power of the Corporation’s outstanding securities are transferred to a person or persons different from the persons holding those securities immediately prior to such transaction, or

(ii)    the sale, transfer or other disposition of all or substantially all of the Corporation’s assets in complete liquidation or dissolution of the Corporation.

F.    Corporation shall mean Applied Semantics, Inc., a California corporation, and any successor corporation to all or substantially all of the assets or voting stock of Applied Semantics, Inc. which shall by appropriate action adopt the Plan.

G.    Disposition Notice shall have the meaning assigned to such term in Paragraph E.2.

H.    Exercise Notice shall have the meaning assigned to such term in Paragraph E.3.

I.    Fair Market Value of a share of Common Stock on any relevant date, prior to the initial public offering of the Common Stock, shall be determined by the Plan Administrator after taking into account such factors as it shall deem appropriate.

J.    First Refusal Right shall have the meaning assigned to such term in Article E.

K.    Market Stand-Off shall mean the market stand-off restriction specified in Paragraph C.4.

L.    1933 Act shall mean the Securities Act of 1933, as amended.

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M.    Owner shall mean Participant and all subsequent holders of the Purchased Shares who derive their chain of ownership through a Permitted Transfer from Participant.

N.    Parent shall mean any corporation (other than the Corporation) in an unbroken chain of corporations ending with the Corporation, provided each corporation in the unbroken chain (other than the Corporation) owns, at the time of the determination, stock possessing fifty percent (50%) or more of the total combined voting power of all classes of stock in one of the other corporations in such chain.

O.    Participant shall mean the person to whom shares are issued under the Stock Issuance Program.

P.    Permitted Transfer shall mean (i) a gratuitous transfer of the Purchased Shares, provided and only if Participant obtains the Corporation’s prior written consent to such transfer, (ii) a transfer of title to the Purchased Shares effected pursuant to Participant’s will or the laws of inheritance following Participant’s death or (iii) a transfer to the Corporation in pledge as security for any purchase-money indebtedness incurred by Participant in connection with the acquisition of the Purchased Shares.

Q.    Plan shall mean the Corporation’s 1999 Stock Option/Stock Issuance Plan attached hereto as Exhibit III.

R.    Plan Administrator shall mean either the Board or a committee of the Board acting in its capacity as administrator of the Plan.

S.    Purchase Price shall have the meaning assigned to such term in Paragraph A.1.

T.    Purchased Shares shall have the meaning assigned to such term in Paragraph A.1.

U.    Recapitalization shall mean any stock split, stock dividend, recapitalization, combination of shares, exchange of shares or other change affecting the Corporation’s outstanding Common Stock as a class without the Corporation’s receipt of consideration.

V.    Reorganization shall mean any of the following transactions:

(i)    a merger or consolidation in which the Corporation is not the surviving entity,

(ii)    a sale, transfer or other disposition of all or substantially all of the Corporation’s assets,

(iii)    a reverse merger in which the Corporation is the surviving entity but in which the Corporation’s outstanding voting securities are transferred in whole or in part to a person or persons different from the persons holding those securities immediately prior to the merger, or

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(iv)    any transaction effected primarily to change the state in which the Corporation is incorporated or to create a holding company structure.

W.    Repurchase Right shall mean the right granted to the Corporation in accordance with Article D.

X.    SEC shall mean the Securities and Exchange Commission.

Y.    Service shall mean the Participant’s performance of services for the Corporation (or any Parent or Subsidiary) in the capacity of an employee, subject to the control and direction of the employer entity as to both the work to be performed and the manner and method of performance, a non-employee member of the board of directors or an independent consultant.

Z.    Stock Issuance Program shall mean the Stock Issuance Program under the Plan.

AA.    Subsidiary shall mean any corporation (other than the Corporation) in an unbroken chain of corporations beginning with the Corporation, provided each corporation (other than the last corporation) in the unbroken chain owns, at the time of the determination, stock possessing fifty percent (50%) or more of the total combined voting power of all classes of stock in one of the other corporations in such chain.

BB.    Target Shares shall have the meaning assigned to such term in Paragraph E.2.

CC.    Vesting Schedule shall mean the vesting schedule specified in Paragraph D.3 pursuant to which Participant is to vest in the Purchased Shares in a series of installments over the Participant’s period of Service.

DD.    Unvested Shares shall have the meaning assigned to such term in Paragraph D.1.

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ADDENDUM

TO

STOCK ISSUANCE AGREEMENT

The following provisions are hereby incorporated into, and are hereby made a part of, that certain Stock Issuance Agreement (the “Issuance Agreement”) by and between Applied Semantics, Inc. (the “Corporation”) and                                          (“Participant”) evidencing the shares of Common Stock purchased on this date by Participant under the Corporation’s 1999 Stock Option/Stock Issuance Plan, and such provisions shall be effective immediately. All capitalized terms in this Addendum, to the extent not otherwise defined herein, shall have the meanings assigned to such terms in the Issuance Agreement.

INVOLUNTARY TERMINATION FOLLOWING

CORPORATE TRANSACTION

1.     To the extent the Repurchase Right is assigned to the successor corporation (or parent thereof) in connection with a Corporate Transaction, no accelerated vesting of the Purchased Shares shall occur upon such Corporate Transaction, and the Repurchase Right shall continue to remain in full force and effect in accordance with the provisions of the Issuance Agreement. Participant shall, over his or her period of Service following the Corporate Transaction, continue to vest in the Purchased Shares in one or more installments in accordance with the provisions of the Issuance Agreement. However, upon an Involuntary Termination of Participant’s Service within eighteen (18) months following the Corporate Transaction, the Repurchase Right shall terminate automatically, and all the Purchased Shares shall immediately vest in full at that time. Any unvested escrow account maintained on Participant’s behalf pursuant to Paragraph D.5 of the Issuance Agreement shall also vest at the time of such Involuntary Termination and shall be paid to Participant promptly thereafter.

2.     For purposes of this Addendum, the following definitions shall be in effect:

An Involuntary Termination shall mean the termination of Participant’s Service by reason of:

(a)     Participant’s involuntary dismissal or discharge by the Corporation for reasons other than for Misconduct, or

(b)     Participant’s voluntary resignation following (A) a change in his or her position with the Corporation (or Parent or Subsidiary employing Participant) which materially reduces his or her duties and responsibilities or the level of management to which he or she reports, (B) a reduction in Participant’s level of compensation (including base salary, fringe benefits and target bonus under any corporate-performance based incentive programs) by more than fifteen percent (15%) or (C) a relocation of Participant’s place of employment by more than fifty (50) miles, provided and only if such change, reduction or relocation is effected by the Corporation without Participant’s consent.

Misconduct shall include the termination of Participant’s Service by reason or Participant’s commission of any act of fraud, embezzlement or dishonesty, any unauthorized use or disclosure by Participant of confidential information or trade secrets of the Corporation (or any Parent or Subsidiary), or any other intentional misconduct by Participant adversely affecting the business or affairs of the Corporation (or any Parent or Subsidiary) in a material manner. The foregoing definition shall not be deemed to be inclusive of all the acts or omissions which the Corporation (or any Parent or Subsidiary) may consider as grounds for the dismissal or discharge of the Participant or any other individual in the Service of the Corporation (or any Parent or Subsidiary).

IN WITNESS WHEREOF, Applied Semantics, Inc. has caused this Addendum to be executed by its duly-authorized officer as of the Effective Date specified below.

APPLIED SEMANTICS, INC.

By:

Title:

EFFECTIVE DATE:                     ,             

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Schedule D

APPLIED SEMANTICS, INC.

STOCK PURCHASE AGREEMENT

AGREEMENT made this              day of                         ,              by and between Applied Semantics, Inc., a California corporation, and                     , Optionee under the Corporation’s 1999 Stock Option/Stock Issuance Plan.

All capitalized terms in this Agreement shall have the meaning assigned to them in this Agreement or in the attached Appendix.

A.     EXERCISE OF OPTION

1.     Exercise. Optionee hereby purchases              shares of Common Stock (the “Purchased Shares”) pursuant to that certain option (the “Option”) granted Optionee on                     ,              (the “Grant Date”) to purchase up to              shares of Common Stock (the “Option Shares”) under the Plan at the exercise price of $             per share (the “Exercise Price”).

2.     Payment. Concurrently with the delivery of this Agreement to the Corporation, Optionee shall pay the Exercise Price for the Purchased Shares in accordance with the provisions of the Option Agreement and shall deliver whatever additional documents may be required by the Option Agreement as a condition for exercise, together with a duly-executed blank Assignment Separate from Certificate (in the form attached hereto as Exhibit I) with respect to the Purchased Shares.

3.     Stockholder Rights. Until such time as the Corporation exercises the Repurchase Right or the First Refusal Right, Optionee (or any successor in interest) shall have all the rights of a stockholder (including voting, dividend and liquidation rights) with respect to the Purchased Shares, subject, however, to the transfer restrictions of Articles B and C.

B.     SECURITIES LAW COMPLIANCE

1.     Restricted Securities. The Purchased Shares have not been registered under the 1933 Act and are being issued to Optionee in reliance upon the exemption from such registration provided by SEC Rule 701 for stock issuances under compensatory benefit plans such as the Plan. Optionee hereby confirms that Optionee has been informed that the Purchased Shares are restricted securities under the 1933 Act and may not be resold or transferred unless the Purchased Shares are first registered under the Federal securities laws or unless an exemption from such registration is available. Accordingly, Optionee hereby acknowledges that Optionee is prepared to hold the Purchased Shares for an indefinite period and that Optionee is aware that SEC Rule 144 issued under the 1933 Act which exempts certain resales of unrestricted securities is not presently available to exempt the resale of the Purchased Shares from the registration requirements of the 1933 Act.

2.     Restrictions on Disposition of Purchased Shares. Optionee shall make no disposition of the Purchased Shares (other than a Permitted Transfer) unless and until there is compliance with all of the following requirements:

(i)     Optionee shall have provided the Corporation with a written summary of the terms and conditions of the proposed disposition.

(ii)     Optionee shall have complied with all requirements of this Agreement applicable to the disposition of the Purchased Shares.

(iii)     Optionee shall have provided the Corporation with written assurances, in form and substance satisfactory to the Corporation, that (a) the proposed disposition does not require registration of the Purchased Shares under the 1933 Act or (b) all appropriate action necessary for compliance with the registration requirements of the 1933 Act or any exemption from registration available under the 1933 Act (including Rule 144) has been taken.

The Corporation shall not be required (i) to transfer on its books any Purchased Shares which have been sold or transferred in violation of the provisions of this Agreement or (ii) to treat as the owner of the Purchased Shares, or otherwise to accord voting, dividend or liquidation rights to, any transferee to whom the Purchased Shares have been transferred in contravention of this Agreement.

3.     Restrictive Legends. The stock certificates for the Purchased Shares shall be endorsed with one or more of the following restrictive legends:

“The shares represented by this certificate have not been registered under the Securities Act of 1933. The shares may not be sold or offered for sale in the absence of (a) an effective registration statement for the shares under such Act, (b) a “no action” letter of the Securities and Exchange Commission with respect to such sale or offer or (c) satisfactory assurances to the Corporation that registration under such Act is not required with respect to such sale or offer.”

“The shares represented by this certificate are subject to certain repurchase rights and rights of first refusal granted to the Corporation and accordingly may not be sold, assigned, transferred, encumbered, or in any manner disposed of except in conformity with the terms of a written agreement dated                     ,              between the Corporation and the registered holder of the shares (or the predecessor in interest to the shares). A copy of such agreement is maintained at the Corporation’s principal corporate offices.”

C.     TRANSFER RESTRICTIONS

1.     Restriction on Transfer. Except for any Permitted Transfer, Optionee shall not transfer, assign, encumber or otherwise dispose of any of the Purchased Shares which are subject to the Repurchase Right. In addition, Purchased Shares which are released from the Repurchase Right shall not be transferred, assigned, encumbered or otherwise disposed of in contravention of the First Refusal Right or the Market Stand-Off.

2.     Transferee Obligations. Each person (other than the Corporation) to whom the Purchased Shares are transferred by means of a Permitted Transfer must, as a condition precedent to the validity of such transfer, acknowledge in writing to the Corporation that such person is bound by the

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provisions of this Agreement and that the transferred shares are subject to (i) the Repurchase Right, (ii) the First Refusal Right and (iii) the Market Stand-Off, to the same extent such shares would be so subject if retained by Optionee.

3.     Market Stand-Off.

(a)     In connection with any underwritten public offering by the Corporation of its equity securities pursuant to an effective registration statement filed under the 1933 Act, including the Corporation’s initial public offering, Owner shall not sell, make any short sale of, loan, hypothecate, pledge, grant any option for the purchase of, or otherwise dispose or transfer for value or otherwise agree to engage in any of the foregoing transactions with respect to, any Purchased Shares without the prior written consent of the Corporation or its underwriters. Such restriction (the “Market Stand-Off”) shall be in effect for such period of time from and after the effective date of the final prospectus for the offering as may be requested by the Corporation or such underwriters. In no event, however, shall such period exceed one hundred eighty (180) days, and the Market Stand-Off shall in no event be applicable to any underwritten public offering effected more than two (2) years after the effective date of the Corporation’s initial public offering.

(b)     Owner shall be subject to the Market Stand-Off provided and only if the officers and directors of the Corporation are also subject to similar restrictions.

(c)     Any new, substituted or additional securities which are by reason of any Recapitalization or Reorganization distributed with respect to the Purchased Shares shall be immediately subject to the Market Stand-Off, to the same extent the Purchased Shares are at such time covered by such provisions.

(d)     In order to enforce the Market Stand-Off, the Corporation may impose stop-transfer instructions with respect to the Purchased Shares until the end of the applicable stand-off period.

D.     REPURCHASE RIGHT

1.     Grant. The Corporation is hereby granted the right (the “Repurchase Right”), exercisable at any time during the sixty (60)-day period following the date Optionee ceases for any reason to remain in Service or (if later) during the sixty (60)-day period following the execution date of this Agreement, to repurchase at the Exercise Price any or all of the Purchased Shares in which Optionee is not, at the time of his or her cessation of Service, vested in accordance with the Vesting Schedule applicable to those shares or the special vesting acceleration provisions of Paragraph D.6 of this Agreement (such shares to be hereinafter referred to as the “Unvested Shares”).

2.     Exercise of the Repurchase Right. The Repurchase Right shall be exercisable by written notice delivered to each Owner of the Unvested Shares prior to the expiration of the sixty (60)-day exercise period. The notice shall indicate the number of Unvested Shares to be repurchased and the date on which the repurchase is to be effected, such date to be not more than thirty (30) days after the date of such notice. The certificates representing the Unvested Shares to be repurchased shall be delivered to the Corporation on the closing date specified for the repurchase. Concurrently with the receipt of such stock certificates, the Corporation shall pay to Owner, in cash or cash equivalents (including the

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cancellation of any purchase-money indebtedness), an amount equal to the Exercise Price previously paid for the Unvested Shares which are to be repurchased from Owner.

3.     Termination of the Repurchase Right. The Repurchase Right shall terminate with respect to any Unvested Shares for which it is not timely exercised under Paragraph D.2. In addition, the Repurchase Right shall terminate and cease to be exercisable with respect to any and all Purchased Shares in which Optionee vests in accordance with the Vesting Schedule. All Purchased Shares as to which the Repurchase Right lapses shall, however, remain subject to (i) the First Refusal Right and (ii) the Market Stand-Off.

4.     Aggregate Vesting Limitation. If the Option is exercised in more than one increment so that Optionee is a party to one or more other Stock Purchase Agreements (the “Prior Purchase Agreements”) which are executed prior to the date of this Agreement, then the total number of Purchased Shares as to which Optionee shall be deemed to have a fully-vested interest under this Agreement and all Prior Purchase Agreements shall not exceed in the aggregate the number of Purchased Shares in which Optionee would otherwise at the time be vested, in accordance with the Vesting Schedule, had all the Purchased Shares (including those acquired under the Prior Purchase Agreements) been acquired exclusively under this Agreement.

5.     Recapitalization. Any new, substituted or additional securities or other property (including cash paid other than as a regular cash dividend) which is by reason of any Recapitalization distributed with respect to the Purchased Shares shall be immediately subject to the Repurchase Right and any escrow requirements hereunder, but only to the extent the Purchased Shares are at the time covered by such right or escrow requirements. Appropriate adjustments to reflect such distribution shall be made to the number and/or class of Purchased Shares subject to this Agreement and to the price per share to be paid upon the exercise of the Repurchase Right in order to reflect the effect of any such Recapitalization upon the Corporation’s capital structure; provided, however, that the aggregate purchase price shall remain the same.

6.     Corporate Transaction.

(a)     The Repurchase Right shall automatically terminate in its entirety, and all the Purchased Shares shall vest in full, immediately prior to the consummation of any Corporate Transaction, except to the extent the Repurchase Right is to be assigned to the successor entity in such Corporate Transaction.

(b)     To the extent the Repurchase Right remains in effect following a Corporate Transaction, such right shall apply to any new securities or other property (including any cash payments) received in exchange for the Purchased Shares in consummation of the Corporate Transaction, but only to the extent the Purchased Shares are at the time covered by such right. Appropriate adjustments shall be made to the price per share payable upon exercise of the Repurchase Right to reflect the effect of the Corporate Transaction upon the Corporation’s capital structure; provided, however, that the aggregate purchase price shall remain the same. The new securities or other property (including any cash payments) issued or distributed with respect to the Purchased Shares in consummation of the Corporate Transaction shall be immediately deposited in escrow with the Corporation (or the successor entity) and shall not be released from escrow until Optionee vests in such securities or other property in accordance with the same Vesting Schedule in effect for the Purchased Shares.

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E.     RIGHT OF FIRST REFUSAL

1.     Grant. The Corporation is hereby granted the right of first refusal (the “First Refusal Right”), exercisable in connection with any proposed transfer of the Purchased Shares in which Optionee has vested in accordance with the provisions of Article D. For purposes of this Article E, the term “transfer” shall include any sale, assignment, pledge, encumbrance or other disposition of the Purchased Shares intended to be made by Owner, but shall not include any Permitted Transfer.

2.     Notice of Intended Disposition. In the event any Owner of Purchased Shares in which Optionee has vested desires to accept a bona fide third-party offer for the transfer of any or all of such shares (the Purchased Shares subject to such offer to be hereinafter referred to as the “Target Shares”), Owner shall promptly (i) deliver to the Corporation written notice (the “Disposition Notice”) of the terms of the offer, including the purchase price and the identity of the third-party offeror, and (ii) provide satisfactory proof that the disposition of the Target Shares to such third-party offeror would not be in contravention of the provisions set forth in Articles B and C.

3.     Exercise of the First Refusal Right. The Corporation shall, for a period of twenty-five (25) days following receipt of the Disposition Notice, have the right to repurchase any or all of the Target Shares subject to the Disposition Notice upon the same terms as those specified therein or upon such other terms (not materially different from those specified in the Disposition Notice) to which Owner consents. Such right shall be exercisable by delivery of written notice (the “Exercise Notice”) to Owner prior to the expiration of the twenty-five (25)-day exercise period. If such right is exercised with respect to all the Target Shares, then the Corporation shall effect the repurchase of such shares, including payment of the purchase price, not more than five (5) business days after delivery of the Exercise Notice; and at such time the certificates representing the Target Shares shall be delivered to the Corporation.

Should the purchase price specified in the Disposition Notice be payable in property other than cash or evidences of indebtedness, the Corporation shall have the right to pay the purchase price in the form of cash equal in amount to the value of such property. If Owner and the Corporation cannot agree on such cash value within ten (10) days after the Corporation’s receipt of the Disposition Notice, the valuation shall be made by an appraiser of recognized standing selected by Owner and the Corporation or, if they cannot agree on an appraiser within twenty (20) days after the Corporation’s receipt of the Disposition Notice, each shall select an appraiser of recognized standing and the two (2) appraisers shall designate a third appraiser of recognized standing, whose appraisal shall be determinative of such value. The cost of such appraisal shall be shared equally by Owner and the Corporation. The closing shall then be held on the later of (i) the fifth (5th) business day following delivery of the Exercise Notice or (ii) the fifth (5th) business day after such valuation shall have been made.

4.     Non-Exercise of the First Refusal Right. In the event the Exercise Notice is not given to Owner prior to the expiration of the twenty-five (25)-day exercise period, Owner shall have a period of thirty (30) days thereafter in which to sell or otherwise dispose of the Target Shares to the third-party offeror identified in the Disposition Notice upon terms (including the purchase price) no more favorable to such third-party offeror than those specified in the Disposition Notice; provided, however, that any such sale or disposition must not be effected in contravention of the provisions of Articles B and C. The third-party offeror shall acquire the Target Shares subject to the First Refusal Right and the provisions and restrictions of Article B and Paragraph C.3, and any subsequent disposition of the acquired shares must be effected in compliance with the terms and conditions of such First Refusal Right and the

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provisions and restrictions of Article B and Paragraph C.3. In the event Owner does not effect such sale or disposition of the Target Shares within the specified thirty (30)-day period, the First Refusal Right shall continue to be applicable to any subsequent disposition of the Target Shares by Owner until such right lapses.

5     Partial Exercise of the First Refusal Right. In the event the Corporation makes a timely exercise of the First Refusal Right with respect to a portion, but not all, of the Target Shares specified in the Disposition Notice, Owner shall have the option, exercisable by written notice to the Corporation delivered within five (5) business days after Owner’s receipt of the Exercise Notice, to effect the sale of the Target Shares pursuant to either of the following alternatives:

(i)     sale or other disposition of all the Target Shares to the third-party offeror identified in the Disposition Notice, but in full compliance with the requirements of Paragraph E.4, as if the Corporation did not exercise the First Refusal Right; or

(ii)     sale to the Corporation of the portion of the Target Shares which the Corporation has elected to purchase, such sale to be effected in substantial conformity with the provisions of Paragraph E.3. The First Refusal Right shall continue to be applicable to any subsequent disposition of the remaining Target Shares until such right lapses.

Owner’s failure to deliver timely notification to the Corporation shall be deemed to be an election by Owner to sell the Target Shares pursuant to alternative (i) above.

6.     Recapitalization/Reorganization.

(a)     Any new, substituted or additional securities or other property which is by reason of any Recapitalization distributed with respect to the Purchased Shares shall be immediately subject to the First Refusal Right, but only to the extent the Purchased Shares are at the time covered by such right.

(b)     In the event of a Reorganization, the First Refusal Right shall remain in full force and effect and shall apply to the new capital stock or other property received in exchange for the Purchased Shares in consummation of the Reorganization, but only to the extent the Purchased Shares are at the time covered by such right.

7.     Lapse. The First Refusal Right shall lapse upon the earliest to occur of (i) the first date on which shares of the Common Stock are held of record by more than five hundred (500) persons, (ii) a determination made by the Board that a public market exists for the outstanding shares of Common Stock or (iii) a firm commitment underwritten public offering, pursuant to an effective registration statement under the 1933 Act, covering the offer and sale of the Common Stock in the aggregate amount of at least twenty million dollars ($20,000,000). However, the Market Stand-Off shall continue to remain in full force and effect following the lapse of the First Refusal Right.

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F.     SPECIAL TAX ELECTION

The acquisition of the Purchased Shares may result in adverse tax consequences which may be avoided or mitigated by filing an election under Code Section 83(b). Such election must be filed within thirty (30) days after the date of this Agreement. A description of the tax consequences applicable to the acquisition of the Purchased Shares and the form for making the Code Section 83(b) election are set forth in Exhibit II. OPTIONEE SHOULD CONSULT WITH HIS OR HER TAX ADVISOR TO DETERMINE THE TAX CONSEQUENCES OF ACQUIRING THE PURCHASED SHARES AND THE ADVANTAGES AND DISADVANTAGES OF FILING THE CODE SECTION 83(b) ELECTION. OPTIONEE ACKNOWLEDGES THAT IT IS OPTIONEE’S SOLE RESPONSIBILITY, AND NOT THE CORPORATION’S, TO FILE A TIMELY ELECTION UNDER CODE SECTION 83(b), EVEN IF OPTIONEE REQUESTS THE CORPORATION OR ITS REPRESENTATIVES TO MAKE THIS FILING ON HIS OR HER BEHALF.

G.     GENERAL PROVISIONS

1.     Assignment. The Corporation may assign the Repurchase Right and/or the First Refusal Right to any person or entity selected by the Board, including (without limitation) one or more stockholders of the Corporation.

2.     At Will Employment. Nothing in this Agreement or in the Plan shall confer upon Optionee any right to continue in Service for any period of specific duration or interfere with or otherwise restrict in any way the rights of the Corporation (or any Parent or Subsidiary employing or retaining Optionee) or of Optionee, which rights are hereby expressly reserved by each, to terminate Optionee’s Service at any time for any reason, with or without cause.

3.     Notices. Any notice required to be given under this Agreement shall be in writing and shall be deemed effective upon personal delivery or upon deposit in the U.S. mail, registered or certified, postage prepaid and properly addressed to the party entitled to such notice at the address indicated below such party’s signature line on this Agreement or at such other address as such party may designate by ten (10) days advance written notice under this paragraph to all other parties to this Agreement.

4.     No Waiver. The failure of the Corporation in any instance to exercise the Repurchase Right or the First Refusal Right shall not constitute a waiver of any other repurchase rights and/or rights of first refusal that may subsequently arise under the provisions of this Agreement or any other agreement between the Corporation and Optionee. No waiver of any breach or condition of this Agreement shall be deemed to be a waiver of any other or subsequent breach or condition, whether of like or different nature.

5.     Cancellation of Shares. If the Corporation shall make available, at the time and place and in the amount and form provided in this Agreement, the consideration for the Purchased Shares to be repurchased in accordance with the provisions of this Agreement, then from and after such time, the person from whom such shares are to be repurchased shall no longer have any rights as a holder of such shares (other than the right to receive payment of such consideration in accordance with this Agreement). Such shares shall be deemed purchased in accordance with the applicable provisions hereof, and the

Corporation shall be deemed the owner and holder of such shares, whether or not the certificates therefor have been delivered as required by this Agreement.

H.     MISCELLANEOUS PROVISIONS

1.     Optionee Undertaking. Optionee hereby agrees to take whatever additional action and execute whatever additional documents the Corporation may deem necessary or advisable in order to carry out or effect one or more of the obligations or restrictions imposed on either Optionee or the Purchased Shares pursuant to the provisions of this Agreement.

2.     Agreement is Entire Contract. This Agreement constitutes the entire contract between the parties hereto with regard to the subject matter hereof. This Agreement is made pursuant to the provisions of the Plan and shall in all respects be construed in conformity with the terms of the Plan.

3.     Governing Law. This Agreement shall be governed by, and construed in accordance with, the laws of the State of California without resort to that State’s conflict-of-laws rules.

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

5.     Successors and Assigns. The provisions of this Agreement shall inure to the benefit of, and be binding upon, the Corporation and its successors and assigns and upon Optionee, Optionee’s permitted assigns and the legal representatives, heirs and legatees of Optionee’s estate, whether or not any such person shall have become a party to this Agreement and have agreed in writing to join herein and be bound by the terms hereof.

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IN WITNESS WHEREOF, the parties have executed this Agreement on the day and year first indicated above.

APPLIED SEMANTICS, INC.
By:
Title:
Address:
	OPTIONEE
Address:

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SPOUSAL ACKNOWLEDGMENT

The undersigned spouse of Optionee has read and hereby approves the foregoing Stock Purchase Agreement. In consideration of the Corporation’s granting Optionee the right to acquire the Purchased Shares in accordance with the terms of such Agreement, the undersigned hereby agrees to be irrevocably bound by all the terms of such Agreement, including (without limitation) the right of the Corporation (or its assigns) to purchase any Purchased Shares in which Optionee is not vested at time of his or her cessation of Service.

OPTIONEE’S SPOUSE

Address:

EXHIBIT I

ASSIGNMENT SEPARATE FROM CERTIFICATE

FOR VALUE RECEIVED                          hereby sell(s), assign(s) and transfer(s) unto Applied Semantics, Inc. (the “Corporation”),                          (                    ) shares of the Common Stock of the Corporation standing in his or her name on the books of the Corporation represented by Certificate No.                          herewith and do(es) hereby irrevocably constitute and appoint                          Attorney to transfer the said stock on the books of the Corporation with full power of substitution in the premises.

Dated:                         

Signature                                                                                  

Instruction: Please do not fill in any blanks other than the signature line. Please sign exactly as you would like your name to appear on the issued stock certificate. The purpose of this assignment is to enable the Corporation to exercise the Repurchase Right without requiring additional signatures on the part of Optionee.

EXHIBIT II

FEDERAL INCOME TAX CONSEQUENCES AND

SECTION 83(b) TAX ELECTION

I.    Federal Income Tax Consequences and Section 83(b) Election For Exercise of Non-Statutory Option. If the Purchased Shares are acquired pursuant to the exercise of a Non-Statutory Option, as specified in the Grant Notice, then under Code Section 83, the excess of the Fair Market Value of the Purchased Shares on the date any forfeiture restrictions applicable to such shares lapse over the Exercise Price paid for those shares will be reportable as ordinary income on the lapse date. For this purpose, the term “forfeiture restrictions” includes the right of the Corporation to repurchase the Purchased Shares pursuant to the Repurchase Right. However, Optionee may elect under Code Section 83(b) to be taxed at the time the Purchased Shares are acquired, rather than when and as such Purchased Shares cease to be subject to such forfeiture restrictions. Such election must be filed with the Internal Revenue Service within thirty (30) days after the date of the Agreement. Even if the Fair Market Value of the Purchased Shares on the date of the Agreement equals the Exercise Price paid (and thus no tax is payable), the election must be made to avoid adverse tax consequences in the future. The form for making this election is attached as part of this exhibit. FAILURE TO MAKE THIS FILING WITHIN THE APPLICABLE THIRTY (30)-DAY PERIOD WILL RESULT IN THE RECOGNITION OF ORDINARY INCOME BY OPTIONEE AS THE FORFEITURE RESTRICTIONS LAPSE.

II.    Federal Income Tax Consequences and Conditional Section 83(b) Election For Exercise of Incentive Option. If the Purchased Shares are acquired pursuant to the exercise of an Incentive Option, as specified in the Grant Notice, then the following tax principles shall be applicable to the Purchased Shares:

(i)    For regular tax purposes, no taxable income will be recognized at the time the Option is exercised.

(ii)    The excess of (a) the Fair Market Value of the Purchased Shares on the date the Option is exercised or (if later) on the date any forfeiture restrictions applicable to the Purchased Shares lapse over (b) the Exercise Price paid for the Purchased Shares will be includible in Optionee’s taxable income for alternative minimum tax purposes.

(iii)    If Optionee makes a disqualifying disposition of the Purchased Shares, then Optionee will recognize ordinary income in the year of such disposition equal in amount to the excess of (a) the Fair Market Value of the Purchased Shares on the date the Option is exercised or (if later) on the date any forfeiture restrictions applicable to the Purchased Shares lapse over (b) the Exercise Price paid for the Purchased Shares. Any additional gain recognized upon the disqualifying disposition will be either short-term or long-term capital gain depending upon the period for which the Purchased Shares are held prior to the disposition.

(iv)    For purposes of the foregoing, the term “forfeiture restrictions” will include the right of the Corporation to repurchase the Purchased Shares pursuant to

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the Repurchase Right. The term “disqualifying disposition” means any sale or other disposition¹ of the Purchased Shares within two (2) years after the Grant Date or within one (1) year after the exercise date of the Option.

(v)    In the absence of final Treasury Regulations relating to Incentive Options, it is not certain whether Optionee may, in connection with the exercise of the Option for any Purchased Shares at the time subject to forfeiture restrictions, file a protective election under Code Section 83(b) which would limit Optionee’s ordinary income upon a disqualifying disposition to the excess of the Fair Market Value of the Purchased Shares on the date the Option is exercised over the Exercise Price paid for the Purchased Shares. Accordingly, such election if properly filed will only be allowed to the extent the final Treasury Regulations permit such a protective election.

(vi)    The Code Section 83(b) election will be effective in limiting the Optionee’s alternative minimum taxable income to the excess of the Fair Market Value of the Purchased Shares at the time the Option is exercised over the Exercise Price paid for those shares.

Page 2 of the attached form for making the election should be filed with any election made in connection with the exercise of an Incentive Option.

¹ Generally, a disposition of shares purchased under an Incentive Option includes any transfer of legal title, including a transfer by sale, exchange or gift, but does not include a transfer to the Optionee’s spouse, a transfer into joint ownership with right of survivorship if Optionee remains one of the joint owners, a pledge, a transfer by bequest or inheritance or certain tax free exchanges permitted under the Code.

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SECTION 83(b) ELECTION

This statement is being made under Section 83(b) of the Internal Revenue Code, pursuant to Treas. Reg. Section 1.83-2.

(1) The taxpayer who performed the services is:

Name:

Address:

Taxpayer Ident. No.:

(2) The property with respect to which the election is being made is                  shares of the common stock of Applied Semantics, Inc.

(3) The property was issued on                 ,             .

(4) The taxable year in which the election is being made is the calendar year             .

(5) The property is subject to a repurchase right pursuant to which the issuer has the right to acquire the property at the original purchase price if for any reason taxpayer’s service with the issuer terminates. The issuer’s repurchase right will lapse in a series of annual and monthly installments over a four (4)-year period ending on                 , 200    .

(6) The fair market value at the time of transfer (determined without regard to any restriction other than a restriction which by its terms will never lapse) is $                per share.

(7) The amount paid for such property is $                 per share.

(8) A copy of this statement was furnished to Applied Semantics, Inc. for whom taxpayer rendered the services underlying the transfer of property.

(9) This statement is executed on                 ,             .

Spouse (if any) Taxpayer

This election must be filed with the Internal Revenue Service Center with which taxpayer files his or her Federal income tax returns and must be made within thirty (30) days after the execution date of the Stock Purchase Agreement. This filing should be made by registered or certified mail, return receipt requested. Optionee must retain two (2) copies of the completed form for filing with his or her Federal and state tax returns for the current tax year and an additional copy for his or her records.

The property described in the above Section 83(b) election is comprised of shares of common stock acquired pursuant to the exercise of an incentive stock option under Section 422 of the Internal Revenue Code (the “Code”). Accordingly, it is the intent of the Taxpayer to utilize this election to achieve the following tax results:

1.    One purpose of this election is to have the alternative minimum taxable income attributable to the purchased shares measured by the amount by which the fair market value of such shares at the time of their transfer to the Taxpayer exceeds the purchase price paid for the shares. In the absence of this election, such alternative minimum taxable income would be measured by the spread between the fair market value of the purchased shares and the purchase price which exists on the various lapse dates in effect for the forfeiture restrictions applicable to such shares.

2.    Section 421(a)(1) of the Code expressly excludes from income any excess of the fair market value of the purchased shares over the amount paid for such shares. Accordingly, this election is also intended to be effective in the event there is a “disqualifying disposition” of the shares, within the meaning of Section 421(b) of the Code, which would otherwise render the provisions of Section 83(a) of the Code applicable at that time. Consequently, the Taxpayer hereby elects to have the amount of disqualifying disposition income measured by the excess of the fair market value of the purchased shares on the date of transfer to the Taxpayer over the amount paid for such shares. Since Section 421(a) presently applies to the shares which are the subject of this Section 83(b) election, no taxable income is actually recognized for regular tax purposes at this time, and no income taxes are payable, by the Taxpayer as a result of this election. The foregoing election is to be effective to the full extent permitted under the Code.

THIS PAGE 2 IS TO BE ATTACHED TO ANY SECTION 83(b) ELECTION FILED IN CONNECTION WITH THE EXERCISE OF AN INCENTIVE STOCK OPTION UNDER THE FEDERAL TAX LAWS.

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APPENDIX

The following definitions shall be in effect under the Agreement:

A.    Agreement shall mean this Stock Purchase Agreement.

B.    Board shall mean the Corporation’s Board of Directors.

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

D.    Common Stock shall mean the Corporation’s common stock.

E.    Corporate Transaction shall mean either of the following stockholder-approved transactions:

(i)    a merger or consolidation in which securities possessing more than fifty percent (50%) of the total combined voting power of the Corporation’s outstanding securities are transferred to a person or persons different from the persons holding those securities immediately prior to such transaction, or

(ii)    the sale, transfer or other disposition of all or substantially all of the Corporation’s assets in complete liquidation or dissolution of the Corporation.

F.    Corporation shall mean Applied Semantics, Inc., a California corporation, and any successor corporation to all or substantially all of the assets or voting stock of Applied Semantics, Inc. which shall by appropriate action adopt the Plan.

G.    Disposition Notice shall have the meaning assigned to such term in Paragraph E.2.

H.    Exercise Price shall have the meaning assigned to such term in Paragraph A.1.

I.    Fair Market Value of a share of Common Stock on any relevant date, prior to the initial public offering of the Common Stock, shall be determined by the Plan Administrator after taking into account such factors as it shall deem appropriate.

J.    First Refusal Right shall mean the right granted to the Corporation in accordance with Article E.

K.    Grant Date shall have the meaning assigned to such term in Paragraph A.1.

L.    Grant Notice shall mean the Notice of Grant of Stock Option pursuant to which Optionee has been informed of the basic terms of the Option.

M.    Incentive Option shall mean an option which satisfies the requirements of Code Section 422.

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N.    Market Stand-Off shall mean the market stand-off restriction specified in Paragraph C.3.

O.    1933 Act shall mean the Securities Act of 1933, as amended.

P.    1934 Act shall mean the Securities Exchange Act of 1934, as amended.

Q.    Non-Statutory Option shall mean an option not intended to satisfy the requirements of Code Section 422.

R.    Option shall have the meaning assigned to such term in Paragraph A.1.

S.    Option Agreement shall mean all agreements and other documents evidencing the Option.

T.    Optionee shall mean the person to whom the Option is granted under the Plan.

U.    Owner shall mean Optionee and all subsequent holders of the Purchased Shares who derive their chain of ownership through a Permitted Transfer from Optionee.

V.    Parent shall mean any corporation (other than the Corporation) in an unbroken chain of corporations ending with the Corporation, provided each corporation in the unbroken chain (other than the Corporation) owns, at the time of the determination, stock possessing fifty percent (50%) or more of the total combined voting power of all classes of stock in one of the other corporations in such chain.

W.    Permitted Transfer shall mean (i) a gratuitous transfer of the Purchased Shares, provided and only if Optionee obtains the Corporation’s prior written consent to such transfer, (ii) a transfer of title to the Purchased Shares effected pursuant to Optionee’s will or the laws of inheritance following Optionee’s death or (iii) a transfer to the Corporation in pledge as security for any purchase-money indebtedness incurred by Optionee in connection with the acquisition of the Purchased Shares.

X.    Plan shall mean the Corporation’s 1999 Stock Option/Stock Issuance Plan.

Y.    Plan Administrator shall mean either the Board or a committee of the Board acting in its capacity as administrator of the Plan.

Z.    Prior Purchase Agreement shall have the meaning assigned to such term in Paragraph D.4.

AA.    Purchased Shares shall have the meaning assigned to such term in Paragraph A.1.

BB.    Recapitalization shall mean any stock split, stock dividend, recapitalization, combination of shares, exchange of shares or other change affecting the Corporation’s outstanding Common Stock as a class without the Corporation’s receipt of consideration.

CC.    Reorganization shall mean any of the following transactions:

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(i)    a merger or consolidation in which the Corporation is not the surviving entity,

(ii)    a sale, transfer or other disposition of all or substantially all of the Corporation’s assets,

(iii)    a reverse merger in which the Corporation is the surviving entity but in which the Corporation’s outstanding voting securities are transferred in whole or in part to a person or persons different from the persons holding those securities immediately prior to the merger, or

(iv)    any transaction effected primarily to change the state in which the Corporation is incorporated or to create a holding company structure.

DD.    Repurchase Right shall mean the right granted to the Corporation in accordance with Article D.

EE.    SEC shall mean the Securities and Exchange Commission.

FF.    Service shall mean the Optionee’s performance of services for the Corporation (or any Parent or Subsidiary) in the capacity of an employee, subject to the control and direction of the employer entity as to both the work to be performed and the manner and method of performance, a non-employee member of the board of directors or an independent consultant.

GG.    Subsidiary shall mean any corporation (other than the Corporation) in an unbroken chain of corporations beginning with the Corporation, provided each corporation (other than the last corporation) in the unbroken chain owns, at the time of the determination, stock possessing fifty percent (50%) or more of the total combined voting power of all classes of stock in one of the other corporations in such chain.

HH.    Target Shares shall have the meaning assigned to such term in Paragraph E.2.

II.    Vesting Schedule shall mean the vesting schedule specified in the Grant Notice pursuant to which the Optionee is to vest in the Option Shares in a series of installments over his or her period of Service.

JJ.    Unvested Shares shall have the meaning assigned to such term in Paragraph D.1.

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ADDENDUM

TO

STOCK PURCHASE AGREEMENT

The following provisions are hereby incorporated into, and are hereby made a part of, that certain Stock Purchase Agreement (the “Purchase Agreement”) by and between Applied Semantics, Inc. (the “Corporation”) and                  (“Optionee”) evidencing the shares of Common Stock purchased on such date by Optionee pursuant to the option granted to him or her under the Corporation’s 1999 Stock Option/Stock Issuance Plan, and such provisions shall be effective immediately. All capitalized terms in this Addendum, to the extent not otherwise defined herein, shall have the meanings assigned to them in the Purchase Agreement.

INVOLUNTARY TERMINATION FOLLOWING

CORPORATE TRANSACTION

1.    To the extent the Repurchase Right is assigned to the successor corporation (or the parent thereof) in connection with a Corporate Transaction, no accelerated vesting of the Purchased Shares shall occur upon such Corporate Transaction and the Repurchase Right shall continue to remain in full force and effect in accordance with the provisions of the Purchase Agreement. Optionee shall, over his or her period of Service following the Corporate Transaction, continue to vest in the Purchased Shares in one or more installments in accordance with the Purchase Agreement. However, upon an Involuntary Termination of Optionee’s Service within twelve (12) months following such Corporate Transaction, the Repurchase Right shall automatically lapse with respect to, and Optionee shall automatically acquire a vested interest in, such number of Purchased Shares such that after such accelerated vesting, Optionee shall be vested in the greater of (a) the number of Purchased Shares Optionee would have been vested in had his or her Service been twice the actual amount of Service or (b) 25% of the Purchased Shares.

2.    For purposes of this Addendum, an Involuntary Termination shall mean the termination of Optionee’s Service by reason of:

(i)    Optionee’s involuntary dismissal or discharge by the Corporation for reasons other than for Misconduct, or

(ii)    Optionee’s voluntary resignation following (A) a change in Optionee’s position with the Corporation (or Parent or Subsidiary employing Optionee) which materially reduces Optionee’s duties and responsibilities or the level of management to which he or she reports, (B) a reduction in Optionee’s level of compensation (including base salary, fringe benefits and target bonus under any corporate-performance based incentive programs) by more than fifteen percent (15%) or (C) a relocation of Optionee’s place of employment by more than fifty (50) miles, provided and only if such change, reduction or relocation is effected by the Corporation without Optionee’s consent.

IN WITNESS WHEREOF, Applied Semantics, Inc. has caused this Addendum to be executed by its duly-authorized officer as of the Effective Date specified below.

APPLIED SEMANTICS, INC.

By:

Title:

EFFECTIVE DATE:                 ,             

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EX-10.04

Exhibit 10.04

GOOGLE INC.

2000 STOCK PLAN

As amended on February 14, 2003

1.    Purposes of the Plan. The purposes of this Stock Plan are to attract and retain the best available personnel for positions of substantial responsibility, to provide additional incentive to Employees, Directors and Consultants and to promote the success of the Company’s business. Options granted under the Plan may be Incentive Stock Options or Nonstatutory Stock Options, as determined by the Administrator at the time of grant.

2.    Definitions. As used herein, the following definitions shall apply:

(a)    “Administrator” means the Board or any of its Committees as shall be administering the Plan in accordance with Section 4 hereof.

(b)    “Applicable Laws” means the requirements relating to the administration of stock option plans under U.S. state corporate laws, U.S. federal and state securities laws, the Code, any stock exchange or quotation system on which the Class A Senior Common Stock is listed or quoted and the applicable laws of any other country or jurisdiction where Options are granted under the Plan.

(c)    “Board” means the Board of Directors of the Company.

(d)    “Change in Control” means the occurrence of any of the following events:

(i)    If (a) any “person” (as such term is used in Sections 13(d) and 14(d) of the Exchange Act) becomes the “beneficial owner” (as defined in Rule 13d-3 of the Exchange Act), directly or indirectly, of securities of the Company representing fifty percent (50%) or more of the total voting power represented by the Company’s then outstanding voting securities and (b) within three (3) years from the date of such acquisition, the following occurs: the consummation of a merger or consolidation of the Company with or into the holder or an affiliate thereof of such beneficial ownership of securities of the Company; or

(ii)    The consummation of the sale or disposition by the Company of all or substantially all of the Company’s assets; or

(iii)    The consummation of a merger or consolidation of the Company with any other corporation, other than a merger or consolidation which would result in the voting securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity or its parent) at least fifty percent (50%) of the total voting power represented by the voting securities of the Company or such surviving entity or its parent outstanding immediately after such merger or consolidation.

For the purposes of this Section 2(d), “affiliate” shall mean, with respect to any specified person, any other person that directly or indirectly, through one or more intermediaries, controls, is controlled by, or is under common control with, such specified person (“control,” “controlled by” and “under common control with” shall mean the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a person, whether through ownership of voting securities, by contract or credit arrangement, as trustee or executor, or otherwise).

(e)    “Code” means the Internal Revenue Code of 1986, as amended.

(f)    “Committee” means a committee of Directors appointed by the Board in accordance with Section 4 hereof.

(g)    “Class A Senior Common Stock” means the Class A Senior Common Stock of the Company.

(h)    “Company” means Google Technology Inc., a California corporation, until the consummation of the reincorporation of Google Technology Inc. into the State of Delaware, at which time “Company” shall mean Google Inc., a Delaware corporation.

(i)    “Consultant” means any natural person or entity that is engaged by the Company or any Parent or Subsidiary to render consulting or advisory services to the Company or any Parent or Subsidiary.

(j)    “Director” means a member of the Board.

(k)    “Disability” means total and permanent disability as defined in Section 22(e)(3) of the Code.

(l)    “Employee” means any person, including officers and Directors, employed by the Company or any Parent or Subsidiary of the Company. A Service Provider shall not cease to be an Employee in the case of (i) any leave of absence approved by the Company or (ii) transfers between locations of the Company or between the Company, its Parent, any Subsidiary, or any successor. For purposes of Incentive Stock Options, no such leave may exceed ninety (90) days, unless reemployment upon expiration of such leave is guaranteed by statute or contract. If reemployment upon expiration of a leave of absence approved by the Company is not so guaranteed, then three (3) months following the 90^th day of such leave, any Incentive Stock Option held by the Optionee shall cease to be treated as an Incentive Stock Option and shall be treated for tax purposes as a Nonstatutory Stock Option. Neither service as a Director nor payment of a director’s fee by the Company shall be sufficient to constitute “employment” by the Company.

(m)    “Exchange Act” means the Securities Exchange Act of 1934, as amended.

(n)    “Fair Market Value” means, as of any date, the value of Class A Senior Common Stock determined as follows:

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(i)    If the Class A Senior Common Stock is listed on any established stock exchange or a national market system, including without limitation the Nasdaq National Market or The Nasdaq SmallCap Market of The Nasdaq Stock Market, its Fair Market Value shall be the closing sales price for such stock (or the closing bid, if no sales were reported) as quoted on such exchange or system on the day of determination, as reported in The Wall Street Journal or such other source as the Administrator deems reliable;

(ii)    If the Class A Senior Common Stock is regularly quoted by a recognized securities dealer but selling prices are not reported, its Fair Market Value shall be the mean between the high bid and low asked prices for the Class A Senior Common Stock on the day of determination; or

(iii)    In the absence of an established market for the Class A Senior Common Stock, the Fair Market Value thereof shall be determined in good faith by the Administrator.

(o)    “Incentive Stock Option” means an Option intended to qualify as an incentive stock option within the meaning of Section 422 of the Code.

(p)    “Nonstatutory Stock Option” means an Option not intended to qualify as an Incentive Stock Option.

(q)    “Option” means a stock option granted pursuant to the Plan.

(r)    “Option Agreement” means a written or electronic agreement between the Company and an Optionee evidencing the terms and conditions of an individual Option grant. The Option Agreement is subject to the terms and conditions of the Plan.

(s)    “Optioned Stock” means the Class A Senior Common Stock subject to an Option.

(t)    “Optionee” means the holder of an outstanding Option granted under the Plan.

(u)    “Parent” means a “parent corporation,” whether now or hereafter existing, as defined in Section 424(e) of the Code.

(v)    “Plan” means the Google Technology Inc. 2000 Stock Plan, which shall become the Google Inc. 2000 Stock plan upon the closing of a reincorporation of Google Technology Inc. into the State of Delaware that includes the corresponding name change to Google Inc.

(w)    “Service Provider” means an Employee, Director or Consultant.

(x)    “Share” means a share of the Class A Senior Common Stock, as adjusted in accordance with Section 12 below.

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(y)    “Subsidiary” means a “subsidiary corporation,” whether now or hereafter existing, as defined in Section 424(f) of the Code.

3.    Stock Subject to the Plan. Subject to the provisions of Section 12 of the Plan, the maximum aggregate number of Shares that may be subject to option and sold under the Plan is 9,780,854 Shares (following the effectiveness of a two-for-one forward stock split of the Company’s capital stock effected February 21, 2003 (the “Stock Split”)). In no event shall the number of Shares issued pursuant to Incentive Stock Options under this Plan exceed the number indicated in this Section 3. The Shares may be authorized but unissued or reacquired Class A Senior Common Stock.

If an Option expires or becomes unexercisable without having been exercised in full, the unpurchased Shares which were subject thereto shall become available for future grant or sale under the Plan (unless the Plan has terminated). However, Shares that have actually been issued under the Plan, upon exercise of an Option, shall not be returned to the Plan and shall not become available for future distribution under the Plan, except that if Shares of restricted stock issued pursuant to an Option are repurchased by the Company at their original purchase price, such Shares shall become available for future grant under the Plan.

4.    Administration of the Plan.

(a)    Administrator. The Plan shall be administered by the Board or a Committee appointed by the Board, which Committee shall be constituted to comply with Applicable Laws.

(b)    Powers of the Administrator. Subject to the provisions of the Plan and, in the case of a Committee, the specific duties delegated by the Board to such Committee, and subject to the approval of any relevant authorities, the Administrator shall have the authority in its discretion:

(i)    to determine the Fair Market Value;

(ii)    to select the Service Providers to whom Options may from time to time be granted hereunder;

(iii)    to determine the number of Shares to be covered by each such Option granted hereunder;

(iv)    to approve forms of agreement for use under the Plan;

(v)    to determine the terms and conditions of any Option granted hereunder. Such terms and conditions include, but are not limited to, the exercise price, the time or times when Options may be exercised (which may be based on performance criteria), any vesting acceleration or waiver of forfeiture restrictions, and any restriction or limitation regarding any Option or the Class A Senior Common Stock relating thereto, based in each case on such factors as the Administrator, in its sole discretion, shall determine;

(vi)    to prescribe, amend and rescind rules and regulations relating to the Plan, including rules and regulations relating to sub-plans established for the purpose of satisfying applicable foreign laws;

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(vii)    to allow Optionees to satisfy withholding tax obligations by electing to have the Company withhold from the Shares to be issued upon exercise of an Option that number of Shares having a Fair Market Value equal to the minimum amount required to be withheld. The Fair Market Value of the Shares to be withheld shall be determined on the date that the amount of tax to be withheld is to be determined. All elections by Optionees to have Shares withheld for this purpose shall be made in such form and under such conditions as the Administrator may deem necessary or advisable; and

(viii)    to construe and interpret the terms of the Plan and Options granted pursuant to the Plan.

(c)    Effect of Administrator’s Decision. All decisions, determinations and interpretations of the Administrator shall be final and binding on all Optionees.

5.    Eligibility. Nonstatutory Stock Options may be granted to Service Providers. Incentive Stock Options may be granted only to Employees.

6.    Limitations.

(a)    Incentive Stock Option Limit. Each Option shall be designated in the Option Agreement as either an Incentive Stock Option or a Nonstatutory Stock Option. However, notwithstanding such designation, to the extent that the aggregate Fair Market Value of the Shares with respect to which Incentive Stock Options are exercisable for the first time by the Optionee during any calendar year (under all plans of the Company and any Parent or Subsidiary) exceeds $100,000, such Options shall be treated as Nonstatutory Stock Options. For purposes of this Section 6(a), Incentive Stock Options shall be taken into account in the order in which they were granted. The Fair Market Value of the Shares shall be determined as of the time the Option with respect to such Shares is granted.

(b)    At-Will Employment. Neither the Plan nor any Option shall confer upon any Optionee any right with respect to continuing the Optionee’s relationship as a Service Provider with the Company, nor shall it interfere in any way with his or her right or the Company’s right to terminate such relationship at any time, with or without cause, and with or without notice.

7.    Term of Plan. The Plan shall become effective upon its adoption by the Board. It shall continue in effect for a term of ten (10) years unless sooner terminated under Section 14 of the Plan.

8.    Term of Option. The term of each Option shall be stated in the Option Agreement; provided, however, that the term shall be no more than ten (10) years from the date of grant thereof. In the case of an Incentive Stock Option granted to an Optionee who, at the time the Option is granted, owns stock representing more than ten percent (10%) of the voting power of all classes of stock of the Company or any Parent or Subsidiary, the term of the Option shall be five (5) years from the date of grant or such shorter term as may be provided in the Option Agreement.

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9.    Option Exercise Price and Consideration.

(a)    Exercise Price. The per share exercise price for the Shares to be issued upon exercise of an Option shall be such price as is determined by the Administrator, but shall be subject to the following:

(i)    In the case of an Incentive Stock Option

(A)    granted to an Employee who, at the time of grant of such Option, owns stock representing more than ten percent (10%) of the voting power of all classes of stock of the Company or any Parent or Subsidiary, the exercise price shall be no less than 110% of the Fair Market Value per Share on the date of grant.

(B)    granted to any other Employee, the per Share exercise price shall be no less than 100% of the Fair Market Value per Share on the date of grant.

(ii)    In the case of a Nonstatutory Stock Option, the per Share exercise price shall be determined by the Administrator.

(iii)    Notwithstanding the foregoing, Options may be granted with a per Share exercise price other than as required above pursuant to a merger or other corporate transaction.

(b)    Forms of Consideration. The consideration to be paid for the Shares to be issued upon exercise of an Option, including the method of payment, shall be determined by the Administrator (and, in the case of an Incentive Stock Option, shall be determined at the time of grant). Such consideration may consist of (1) cash, (2) check, (3) promissory note, (4) other Shares, provided Shares acquired from the Company, either directly or indirectly, (x) have been owned by the Optionee for more than six months on the date of surrender, and (y) have a Fair Market Value on the date of surrender equal to the aggregate exercise price of the Shares as to which such Option shall be exercised, (5) consideration received by the Company under a cashless exercise program implemented by the Company in connection with the Plan, or (6) any combination of the foregoing methods of payment. In making its determination as to the type of consideration to accept, the Administrator shall consider if acceptance of such consideration may be reasonably expected to benefit the Company. Notwithstanding the foregoing, the Administrator may permit an Optionee to exercise his or her Option by delivery of a full-recourse promissory note secured by the purchased Shares. The terms of such promissory note shall be determined by the Administrator in its sole discretion.

10.    Exercise of Option.

(a)    Procedure for Exercise; Rights as a Shareholder. Any Option granted hereunder shall be exercisable according to the terms hereof at such times and under such conditions as determined by the Administrator and set forth in the Option Agreement. Unless the Administrator provides otherwise, vesting of Options granted hereunder shall be suspended during any unpaid leave of absence. An Option may not be exercised for a fraction of a Share.

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An Option shall be deemed exercised when the Company receives: (i) written or electronic notice of exercise (in accordance with the Option Agreement) from the person entitled to exercise the Option, and (ii) full payment for the Shares with respect to which the Option is exercised. Full payment may consist of any consideration and method of payment authorized by the Administrator and permitted by the Option Agreement and the Plan. Shares issued upon exercise of an Option shall be issued in the name of the Optionee or, if requested by the Optionee, in the name of the Optionee and his or her spouse. Until the Shares are issued (as evidenced by the appropriate entry on the books of the Company or of a duly authorized transfer agent of the Company), no right to vote or receive dividends or any other rights as a shareholder shall exist with respect to the Shares, notwithstanding the exercise of the Option. The Company shall issue (or cause to be issued) such Shares promptly after the Option is exercised. No adjustment will be made for a dividend or other right for which the record date is prior to the date the Shares are issued, except as provided in Section 12 of the Plan.

Exercise of an Option in any manner shall result in a decrease in the number of Shares thereafter available, both for purposes of the Plan and for sale under the Option, by the number of Shares as to which the Option is exercised.

(b)    Termination of Relationship as a Service Provider. If an Optionee ceases to be a Service Provider, such Optionee may exercise his or her Option within such period of time as is specified in the Option Agreement to the extent that the Option is vested on the date of termination (but in no event later than the expiration of the term of the Option as set forth in the Option Agreement). In the absence of a specified time in the Option Agreement, the Option shall remain exercisable for three (3) months following the Optionee’s termination. If, on the date of termination, the Optionee is not vested as to his or her entire Option, the Shares covered by the unvested portion of the Option shall revert to the Plan. If, after termination, the Optionee does not exercise his or her Option within the time specified by the Administrator, the Option shall terminate, and the Shares covered by such Option shall revert to the Plan.

(c)    Disability of Optionee. If an Optionee ceases to be a Service Provider as a result of the Optionee’s Disability, the Optionee may exercise his or her Option within such period of time as is specified in the Option Agreement (of at least six (6) months) to the extent the Option is vested on the date of termination (but in no event later than the expiration of the term of such Option as set forth in the Option Agreement). In the absence of a specified time in the Option Agreement, the Option shall remain exercisable for twelve (12) months following the Optionee’s termination. If, on the date of termination, the Optionee is not vested as to his or her entire Option, the Shares covered by the unvested portion of the Option shall revert to the Plan. If, after termination, the Optionee does not exercise his or her Option within the time specified herein, the Option shall terminate, and the Shares covered by such Option shall revert to the Plan.

(d)    Death of Optionee. If an Optionee dies while a Service Provider, the Option may be exercised within such period of time as is specified in the Option Agreement (of at least six (6) months) to the extent that the Option is vested on the date of death (but in no event later than the expiration of the term of such Option as set forth in the Option Agreement) by the Optionee’s estate or by a person who acquires the right to exercise the Option by bequest or inheritance. In the absence of a specified time in the Option Agreement, the Option shall remain exercisable for twelve

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(12) months following the Optionee’s termination. If, at the time of death, the Optionee is not vested as to his or her entire Option, the Shares covered by the unvested portion of the Option shall immediately revert to the Plan. If the Option is not so exercised within the time specified herein, the Option shall terminate, and the Shares covered by such Option shall revert to the Plan.

(a)    Buyout Provisions. The Administrator may at any time offer to buy out for a payment in cash or Shares, an Option previously granted, based on such terms and conditions as the Administrator shall establish and communicate to the Optionee at the time that such offer is made.

11.    Non-Transferability of Options. The Options may not be sold, pledged, assigned, hypothecated, transferred, or disposed of in any manner other than by will or the laws of descent and distribution, and may be exercised during the lifetime of the Optionee, only by the Optionee.

12.    Adjustments Upon Changes in Capitalization, Merger or Change in Control.

(a)    Changes in Capitalization. Subject to any required action by the shareholders of the Company, the number and type of Shares which have been authorized for issuance under the Plan but as to which no Options have yet been granted or which have been returned to the Plan upon cancellation or expiration of an Option, and the number and type of Shares covered by each outstanding Option, as well as the price per Share covered by each such outstanding Option, shall be proportionately adjusted for any increase or decrease in the number or type of issued Shares resulting from a stock split, reverse stock split, stock dividend, combination or reclassification of the Class A Senior Common Stock, or any other increase or decrease in the number of issued shares of Class A Senior Common Stock effected without receipt of consideration by the Company. The conversion of any convertible securities of the Company shall not be deemed to have been “effected without receipt of consideration.” Such adjustment shall be made by the Board, whose determination in that respect shall be final, binding and conclusive. Except as expressly provided herein, no issuance by the Company of shares of stock of any class, or securities convertible into shares of stock of any class, shall affect, and no adjustment by reason thereof shall be made with respect to, the number, type or price of Shares subject to an Option.

(b)    Dissolution or Liquidation. In the event of the proposed dissolution or liquidation of the Company, the Administrator shall notify each Optionee as soon as practicable prior to the effective date of such proposed transaction. The Administrator in its discretion may provide for an Optionee to have the right to exercise his or her Option until fifteen (15) days prior to such transaction as to all of the Optioned Stock covered thereby, including Shares as to which the Option would not otherwise be exercisable. In addition, the Administrator may provide that any Company repurchase option applicable to any Shares purchased upon exercise of an Option shall lapse as to all such Shares, provided the proposed dissolution or liquidation takes place at the time and in the manner contemplated. To the extent it has not been previously exercised, an Option will terminate immediately prior to the consummation of such proposed action.

(c)    Merger or Change in Control. In the event of a merger of the Company with or into another corporation, or a Change in Control, each outstanding Option shall be assumed or an equivalent option substituted by the successor corporation or a Parent or Subsidiary of the successor corporation. Notwithstanding the foregoing and anything contrary in the Plan, to the extent the successor corporation in a merger or Change in Control refuses to assume or substitute for this

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Option, then the Optionee shall fully vest in and have the right to exercise this Option as to all of the Optioned Stock, including Shares as to which it would not otherwise be vested or exercisable. If this Option becomes fully vested and exercisable in lieu of assumption or substitution in the event of a merger or Change in Control, the Administrator shall notify the Optionee in writing or electronically that this Option shall be fully exercisable for a period of fifteen (15) days from the date of such notice, and this Option shall terminate upon the expiration of such period. For the purposes of this paragraph, the Option shall be considered assumed if, following the merger or Change in Control, the Option confers the right to purchase or receive, for each Share of Optioned Stock subject to the Option immediately prior to the merger or Change in Control, the consideration (whether stock, cash, or other securities or property) received in the merger or Change in Control by holders of Class A Senior Common Stock for each Share held on the effective date of the transaction (and if holders were offered a choice of consideration, the type of consideration chosen by the holders of a majority of the outstanding Shares); provided, however, that if such consideration received in the merger or Change in Control is not solely common stock of the successor corporation or its Parent, the Administrator may, with the consent of the successor corporation, provide for the consideration to be received upon the exercise of the Option, for each Share of Optioned Stock subject to the Option, to be solely common stock of the successor corporation or its Parent equal in fair market value to the per share consideration received by holders of Class A Senior Common Stock in the merger or Change in Control.

13.    Time of Granting Options. The date of grant of an Option shall, for all purposes, be the date on which the Administrator makes the determination granting such Option, or such later date as is determined by the Administrator. Notice of the determination shall be given to each Service Provider to whom an Option is so granted within a reasonable time after the date of such grant.

14.    Amendment and Termination of the Plan.

(a)    Amendment and Termination. The Board may at any time amend, alter, suspend or terminate the Plan.

(b)    Shareholder Approval. The Board shall obtain shareholder approval of any Plan amendment to the extent necessary and desirable to comply with Applicable Laws.

(c)    Effect of Amendment or Termination. No amendment, alteration, suspension or termination of the Plan shall impair the rights of any Optionee, unless mutually agreed otherwise between the Optionee and the Administrator, which agreement must be in writing and signed by the Optionee and the Company. Termination of the Plan shall not affect the Administrator’s ability to exercise the powers granted to it hereunder with respect to Options granted under the Plan prior to the date of such termination.

15.    Conditions Upon Issuance of Shares.

(a)    Legal Compliance. Shares shall not be issued pursuant to the exercise of an Option unless the exercise of such Option and the issuance and delivery of such Shares shall comply with Applicable Laws and shall be further subject to the approval of counsel for the Company with respect to such compliance.

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(b)    Investment Representations. As a condition to the exercise of an Option, the Administrator may require the person exercising such Option to represent and warrant at the time of any such exercise that the Shares are being purchased only for investment and without any present intention to sell or distribute such Shares if, in the opinion of counsel for the Company, such a representation is required.

16.    Inability to Obtain Authority. The inability of the Company to obtain authority from any regulatory body having jurisdiction, which authority is deemed by the Company’s counsel to be necessary to the lawful issuance and sale of any Shares hereunder, shall relieve the Company of any liability in respect of the failure to issue or sell such Shares as to which such requisite authority shall not have been obtained.

17.    Reservation of Shares. The Company, during the term of this Plan, shall at all times reserve and keep available such number of Shares as shall be sufficient to satisfy the requirements of the Plan.

18.    Shareholder Approval. The Plan shall be subject to approval by the shareholders of the Company within twelve (12) months after the date the Plan is adopted. Such shareholder approval shall be obtained in the degree and manner required under Applicable Laws.

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GOOGLE INC.

2000 STOCK PLAN

STOCK OPTION AGREEMENT — EARLY EXERCISE

Unless otherwise defined herein, the terms defined in the 2000 Stock Plan shall have the same defined meanings in this Stock Option Agreement.

I. NOTICE OF STOCK OPTION GRANT

________________________________

________________________________

________________________________

The undersigned Optionee has been granted an Option to purchase Common Stock of the Company, subject to the terms and conditions of the Plan and this Option Agreement, as follows:

Grant Number	_________________________________
Date of Grant	_________________________________
Vesting Commencement Date	_________________________________
Exercise Price per Share	$________________________________
Total Number of Shares Granted	_________________________________
Total Exercise Price	$________________________________
Type of Option:	___ Incentive Stock Option
	___ Nonstatutory Stock Option
Term/Expiration Date:	_________________________________

Vesting Schedule:

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

25% of the Shares subject to the Option shall vest twelve months after the Vesting Commencement Date, and 1/48 of the Shares subject to the Option shall vest each month thereafter, subject to Optionee’s continuing to be a Service Provider on such dates.

Termination Period:

This Option shall be exercisable for three months after Optionee ceases to be a Service Provider. Upon Optionee’s death or Disability, this Option shall be exercisable for one year after Optionee ceases to be Service Provider. In no event may Optionee exercise this Option after the Term/Expiration Date as provided above.

II. AGREEMENT

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

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

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

(a) Right to Exercise.

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

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

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

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

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

3. Optionee’s Representations. In the event the Shares have not been registered under the Securities Act of 1933, as amended, at the time this Option is exercised, the Optionee shall, if required by the Company, concurrently with the exercise of all or any portion of this Option, deliver to the Company his or her Investment Representation Statement in the form attached hereto as Exhibit B.

4. Lock-Up Period. Optionee hereby agrees that Optionee shall not offer, pledge, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase, lend, or otherwise transfer or dispose of, directly or indirectly, any Common Stock (or other securities) of the Company or enter into any swap, hedging or other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of any Common Stock (or other securities) of the Company held by Optionee (other than those included in the registration) for a period specified by the representative of the underwriters of Common Stock (or other securities) of the Company not to exceed one hundred eighty (180) days following the effective date of a registration statement of the Company filed under the Securities Act.

Optionee agrees to execute and deliver such other agreements as may be reasonably requested by the Company or the underwriter which are consistent with the foregoing or which are necessary to give further effect thereto. In addition, if requested by the Company or the representative of the underwriters of Common Stock (or other securities) of the Company, Optionee shall provide, within ten (10) days of such request, such information as may be required by the Company or such representative in connection with the completion of any public offering of the Company’s securities pursuant to a registration statement filed under the Securities Act. The obligations described in this Section shall not apply to a registration relating solely to employee benefit plans on Form S-1 or Form S-8 or similar forms that may be promulgated in the future, or a registration relating solely to a Commission Rule 145 transaction on Form S-4 or similar forms that may be promulgated in the future. The Company may impose stop-transfer instructions with respect to the shares of Common Stock (or other securities) subject to the foregoing restriction until the end of said one hundred eighty (180) day period. Optionee agrees that any transferee of any Option shall be bound by this Section.

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

(a) cash;

(b) check;

(c) consideration received by the Company under a formal cashless exercise program adopted by the Company in connection with the Plan;

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(d) surrender of other Shares which, (i) in the case of Shares acquired from the Company, either directly or indirectly, have been owned by the Optionee for more than six (6) months on the date of surrender, and (ii) have a Fair Market Value on the date of surrender equal to the aggregate Exercise Price of the Exercised Shares; or

(e) delivery of Optionee’s promissory note (the “Note”) in the form attached hereto as Exhibit D, in the amount of the aggregate Exercise Price of the Exercised Shares together with the execution and delivery by Optioneee of the Security Agreement attached hereto as Exhibit E. The Note shall bear interest at a market rate sufficient to avoid the Company incurring any financial accounting compensation expense with respect to the Option, and shall be secured by a pledge of the Shares purchased by the Note pursuant to the Security Agreement.

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

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

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

9. Tax Obligations.

(a) Withholding Taxes. Optionee agrees to make appropriate arrangements with the Company (or the Parent or Subsidiary employing or retaining Optionee) for the satisfaction of all Federal, state, local and foreign income and employment tax withholding requirements applicable to the Option exercise. Optionee acknowledges and agrees that the Company may refuse to honor the exercise and refuse to deliver the Shares if such withholding amounts are not delivered at the time of exercise.

(b) Notice of Disqualifying Disposition of ISO Shares. If the Option granted to Optionee herein is an ISO, and if Optionee sells or otherwise disposes of any of the Shares acquired pursuant to the ISO on or before the later of (1) the date two years after the Date of Grant, and (2) the date one year after the date of exercise, the Optionee shall immediately notify the Company in writing of such disposition. Optionee agrees that Optionee may be subject to income tax withholding by the Company on the compensation income recognized by the Optionee.

10. Entire Agreement; Governing Law. The Plan, the Offer Letter and this Stock Option Agreement are incorporated herein by reference. The Plan, the Offer Letter, the Restricted Stock Purchase Agreement, the Investment Representation Statement and this Stock Option Agreement

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constitute the entire agreement of the parties with respect to the subject matter hereof and supersede in their entirety all prior undertakings and agreements of the Company and Optionee with respect to the subject matter hereof, and may not be modified adversely to the Optionee’s interest except by means of a writing signed by the Company and Optionee. This Agreement is governed by the internal substantive laws but not the choice of law rules of California.

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

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

OPTIONEE	GOOGLE INC.
_____________________________________________________ Signature	_____________________________________________________ By
_____________________________________________________ Print Name	_____________________________________________________ Title
_____________________________________________________ _____________________________________________________ Residence Address

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EXHIBIT A

2000 STOCK PLAN

EXERCISE NOTICE

Google Inc.

2400 Bayshore Parkway

Mountain View, CA 94043

Attention: President

1. Exercise of Option. Effective as of today,             ,             , the undersigned (“Optionee”) hereby elects to exercise Optionee’s option (the “Option”) to purchase              shares of the Common Stock (the “Shares”) of Google Inc. (the “Company”) under and pursuant to the 2000 Stock Plan (the “Plan”) and the Stock Option Agreement dated              (the “Option Agreement”).

2. Delivery of Payment. Purchaser herewith delivers to the Company the full purchase price of the Shares, as set forth in the Option Agreement, and any and all withholding taxes due in connection with the exercise of the Option.

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

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

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

(a) Notice of Proposed Transfer. The Holder of the Shares shall deliver to the Company a written notice (the “Notice”) stating: (i) the Holder’s bona fide intention to sell or otherwise transfer such Shares; (ii) the name of each proposed purchaser or other transferee (“Proposed Transferee”); (iii) the number of Shares to be transferred to each Proposed Transferee;

and (iv) the bona fide cash price or other consideration for which the Holder proposes to transfer the Shares (the “Offered Price”), and the Holder shall offer the Shares at the Offered Price to the Company or its assignee(s).

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

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

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

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

(f) Exception for Certain Family Transfers. Anything to the contrary contained in this Section notwithstanding, the transfer of any or all of the Shares during the Optionee’s lifetime or on the Optionee’s death by will or intestacy to the Optionee’s immediate family or a trust for the benefit of the Optionee’s immediate family shall be exempt from the provisions of this Section. “Immediate Family” as used herein shall mean spouse or spousal equivalent (as defined below), lineal descendant or antecedent, father, mother, brother or sister. As used herein, a person is deemed to be a spousal equivalent provided the following circumstances are true: (i) irrespective of whether or not the Optionee and the spousal equivalent are the same sex, they are the sole spousal equivalent of the other for the last twelve (12) months, (ii) they intend to remain so indefinitely, (iii) neither are married to anyone else, (iv) both are at least eighteen (18) years of age and are or were mentally competent at the commencement of the domestic partnereship to consent to contract, (v) they are not related by blood to a degree of closeness that would prohibit legal marriage in the state in which they legally

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reside, (vi) they are jointly responsible for each other’s common welfare and financial obligations, and (vii) they have resided together in the same residence for the last twelve (12) months and intend to do so indefinitely. In such case, the transferee or other recipient shall receive and hold the Shares so transferred subject to the provisions of this Section, and there shall be no further transfer of such Shares except in accordance with the terms of this Section.

(g) Termination of Right of First Refusal. The Right of First Refusal shall terminate as to any Shares upon the earlier of (i) first sale of Common Stock of the Company to the general public, or (ii) a Change in Control in which the successor corporation has equity securities that are publicly traded.

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

7. Restrictive Legends and Stop-Transfer Orders.

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

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

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

(b) Stop-Transfer Notices. Optionee agrees that, in order to ensure compliance with the restrictions referred to herein, the Company may issue appropriate “stop transfer”

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instructions to its transfer agent, if any, and that, if the Company transfers its own securities, it may make appropriate notations to the same effect in its own records.

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

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

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

10. Governing Law; Severability. This Exercise Notice is governed by the internal substantive laws, but not the choice of law rules, of California.

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

Submitted by:	Accepted by:
OPTIONEE	GOOGLE INC.
_____________________________________________________ Signature	_____________________________________________________ By
_____________________________________________________ Print Name	_____________________________________________________ Its
Address:	Address:
_____________________________________________________ _____________________________________________________ _____________________________________________________	2400 Bayshore Parkway Mountain View, CA 94043
	_____________________________________________________ Date Received

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EXHIBIT B

INVESTMENT REPRESENTATION STATEMENT

OPTIONEE	:	___________________________
COMPANY	:	GOOGLE INC.
SECURITY	:	COMMON STOCK
AMOUNT	:	___________________________
DATE	:	___________________________

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

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

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

Optionee is familiar with the provisions of Rule 144, promulgated under the Securities Act, which, in substance, permit limited public resale of “restricted securities” acquired, directly or indirectly from the issuer thereof, in a non-public offering subject to the satisfaction of certain conditions. Rule 144 requires the resale to occur not less than one year after the later of the date the Securities were sold by the Company or the date the Securities were sold by an affiliate of the Company, within the meaning of Rule 144; and, in the case of acquisition of the Securities by an

affiliate, or by a non-affiliate who subsequently holds the Securities less than two years, the satisfaction of certain of the conditions specified by Rule 144, including: (1) the resale being made through a broker in an unsolicited “broker’s transaction” or in transactions directly with a market maker (as said term is defined under the Securities Exchange Act of 1934), (2) the availability of certain public information about the Company, (3) the amount of Securities being sold during any three month period not exceeding the limitations specified in Rule 144(e), and (4) the timely filing of a Form 144, if applicable.

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

Signature of Optionee:

__________________________________________

Date: ______________________________________

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EXHIBIT C-1

GOOGLE INC.

2000 STOCK PLAN

RESTRICTED STOCK PURCHASE AGREEMENT

THIS AGREEMENT is made between              (the “Purchaser”) and Google Inc. (the “Company”) or it’s assignees of rights hereunder as of             ,             .

Unless otherwise defined herein, the terms defined in the 2000 Stock Plan shall have the same defined meanings in this Agreement.

RECITALS

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

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

1. Repurchase Option.

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

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

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

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

(e) The Repurchase Option shall terminate in accordance with the vesting schedule contained in Optionee’s Option Agreement. The Company will not have the right to repurchase any shares that become vested under the terms of the Option Agreement and/or offer letter between the Company and the Optionee.

2. Transferability of the Shares; Escrow.

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

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

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

(d) Transfer or sale of the Shares is subject to restrictions on transfer imposed by any applicable state and federal securities laws. Any transferee shall hold such Shares subject to all the provisions hereof and the Exercise Notice executed by the Purchaser with respect to any

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Unvested Shares purchased by Purchaser and shall acknowledge the same by signing a copy of this Agreement.

3. Ownership, Voting Rights, Duties. This Agreement shall not affect in any way the ownership, voting rights or other rights or duties of Purchaser, except as specifically provided herein.

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

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

5. Adjustment for Stock Split. All references to the number of Shares and the purchase price of the Shares in this Agreement shall be appropriately adjusted to reflect any stock split, stock dividend or other change in the Shares which may be made by the Company pursuant to Section 12 of the Plan after the date of this Agreement.

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

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

8. Section 83(b) Election. Purchaser hereby acknowledges that he or she has been informed that, with respect to the exercise of an Option for Unvested Shares, an election (the “Election”) may be filed by the Purchaser with the Internal Revenue Service, within thirty (30) days of the purchase of the exercised Shares, electing pursuant to Section 83(b) of the Code to be taxed currently on any difference between the purchase price of the exercised Shares and their Fair Market Value on the date of purchase. In the case of a Nonstatutory Stock Option, this will result in a recognition of taxable income to the Purchaser on the date of exercise, measured by the excess, if any, of the Fair Market Value of the exercised Shares, at the time the Option is exercised over the purchase price for the exercised Shares. Absent such an Election, taxable income will be measured and recognized by Purchaser at the time or times on which the Company’s Repurchase Option lapses. In the case of an Incentive Stock Option, such an Election will result in a recognition of income to the Purchaser for alternative minimum tax purposes on the date of exercise, measured by the excess, if any, of the Fair Market Value of the exercised Shares, at the time the option is exercised, over the purchase price for the exercised Shares. Absent such an Election, alternative minimum taxable income will be measured and recognized by Purchaser at the time or times on which the Company’s Repurchase Option lapses. Purchaser is strongly encouraged to seek the advice of his or her own tax

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consultants in connection with the purchase of the Shares and the advisability of filing of the Election under Section 83(b) of the Code. A form of Election under Section 83(b) is attached hereto as Exhibit C-4 for reference.

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

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

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

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

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

OPTIONEE	GOOGLE INC.
_____________________________________________________ Signature	_____________________________________________________ By
_____________________________________________________ Print Name	_____________________________________________________ Title
_____________________________________________________ _____________________________________________________ Residence Address
Dated: __________________________________,_____________

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EXHIBIT C-2

ASSIGNMENT SEPARATE FROM CERTIFICATE

FOR VALUE RECEIVED I,                 , hereby sell, assign and transfer unto Google Inc.                      (            ) shares of the Common Stock of Google Inc. standing in my name of the books of said corporation represented by Certificate No.          herewith and do hereby irrevocably constitute and appoint                      to transfer the said stock on the books of the within named corporation with full power of substitution in the premises.

This Stock Assignment may be used only in accordance with the Restricted Stock Purchase Agreement between Google Inc. and the undersigned dated                     ,         .

Dated: ___________________________,____ Signature: ___________________________________________

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

EXHIBIT C-3

JOINT ESCROW INSTRUCTIONS

Date:                     ,         

Wilson Sonsini Goodrich & Rosati

650 Page Mill Road

Palo Alto, CA 94304-1050

Attention: Corporate Secretary

Dear Sir/Madam:

As Escrow Agent for both Google Inc. (the “Company”), and the undersigned purchaser of stock of the Company (the “Purchaser”), you are hereby authorized and directed to hold the documents delivered to you pursuant to the terms of that certain Restricted Stock Purchase Agreement (the “Agreement”) between the Company and the undersigned, in accordance with the following instructions:

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

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

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

4. Upon written request of the Purchaser, but no more than once per calendar quarter, unless the Company’s repurchase option has been exercised, you will deliver to Purchaser a certificate

or certificates representing so many shares of stock as are not then subject to the Company’s repurchase option. Within 120 days after cessation of Purchaser’s continuous employment by or services to the Company, or any parent or subsidiary of the Company, you will deliver to Purchaser a certificate or certificates representing the aggregate number of shares held or issued pursuant to the Agreement and not purchased by the Company or its assignees pursuant to exercise of the Company’s repurchase option.

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

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

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

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

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

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

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

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

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

14. It is understood and agreed that should any dispute arise with respect to the delivery and/or ownership or right of possession of the securities held by you hereunder, you are authorized and directed to retain in your possession without liability to anyone all or any part of said securities until such disputes shall have been settled either by mutual written agreement of the parties concerned or by a final order, decree or judgment of a court of competent jurisdiction after the time for appeal has expired and no appeal has been perfected, but you shall be under no duty whatsoever to institute or defend any such proceedings.

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

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

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

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

PURCHASER	GOOGLE INC.
_____________________________________________________ Signature	_____________________________________________________ By
_____________________________________________________ Print Name	_____________________________________________________ Title
_____________________________________________________ _____________________________________________________ Residence Address
ESCROW AGENT
_____________________________________________________ Corporate Secretary
Dated: __________________________________,_____________

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EXHIBIT C-4

ELECTION UNDER SECTION 83(b)

OF THE INTERNAL REVENUE CODE OF 1986

The undersigned taxpayer hereby elects, pursuant to Sections 55 and 83(b) of the Internal Revenue Code of 1986, as amended, to include in taxpayer’s gross income or alternative minimum taxable income, as the case may be, for the current taxable year the amount of any compensation taxable to taxpayer in connection with taxpayer’s receipt of the property described below:

1. The name, address, taxpayer identification number and taxable year of the undersigned are as follows:

	TAXPAYER	SPOUSE
NAME:	__________________________________	__________________________________
ADDRESS:	__________________________________	__________________________________
IDENTIFICATION NUMBER:	__________________________________	__________________________________
TAXABLE YEAR:	__________________________________	__________________________________

2. The property with respect to which the election is made is described as follows:              shares (the “Shares”) of the Common Stock of Google Inc. (the “Company”).

3. The date on which the property was transferred is:             ,            .

4. The property is subject to the following restrictions:

The Shares may not be transferred and are subject to forfeiture under the terms of an agreement between the taxpayer and the Company. These restrictions lapse upon the satisfaction of certain conditions contained in such agreement.

5. The fair market value at the time of transfer, determined without regard to any restriction other than a restriction which by its terms will never lapse, of such property is: $ per share.

6. The amount (if any) paid for such property is: $ (per share).

The undersigned has submitted a copy of this statement to the person for whom the services were performed in connection with the undersigned’s receipt of the above-described property. The transferee of such property is the person performing the services in connection with the transfer of said property.

The undersigned understands that the foregoing election may not be revoked except with the consent of the Commissioner.

Dated: ____________________________________, _______	______________________________________________________
	Taxpayer

The undersigned spouse of taxpayer joins in this election.

Dated: ____________________________________, _______	______________________________________________________
	Spouse of Taxpayer

EX-10.05

Exhibit 10.05

GOOGLE INC.

2003 STOCK PLAN

As amended June 18, 2003

1. Purposes of the Plan. The purposes of this Plan are to attract and retain the best available personnel for positions of substantial responsibility, to provide additional incentive to Employees, Directors and Consultants and to promote the success of the Company’s business. Options granted under the Plan may be Incentive Stock Options or Nonstatutory Stock Options, as determined by the Administrator at the time of grant. Stock Purchase Rights may also be granted under the Plan.

2. Definitions. As used herein, the following definitions shall apply:

(a) “Administrator” means the Board or any Committee that shall administer the Plan in accordance with Section 4 hereof.

(b) “Applicable Laws” means the requirements relating to the administration of stock option plans under U.S. state corporate laws, U.S. federal and state securities laws, the Code, any stock exchange or quotation system on which the Common Stock is listed or quoted and the applicable laws of any other country or jurisdiction where Options or Stock Purchase Rights are granted under the Plan.

(c) “Board” means the Board of Directors of the Company.

(d) “Change in Control” means the occurrence of any of the following events:

(i) If (a) any “person” (as such term is used in Sections 13(d) and 14(d) of the Exchange Act) becomes the “beneficial owner” (as defined in Rule 13d-3 of the Exchange Act), directly or indirectly, of securities of the Company representing fifty percent (50%) or more of the total voting power represented by the Company’s then outstanding voting securities and (b) within three (3) years from the date of such acquisition, the following occurs: the consummation of a merger or consolidation of the Company with or into the holder or an affiliate thereof of such beneficial ownership of securities of the Company; or

(ii) The consummation of the sale or disposition by the Company of all or substantially all of the Company’s assets; or

(iii) The consummation of a merger or consolidation of the Company with any other corporation, other than a merger or consolidation which would result in the voting securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity or its parent) at least fifty percent (50%) of the total voting power represented by the voting securities of the Company or such surviving entity or its parent outstanding immediately after such merger or consolidation.

For the purposes of this Section 2(d), “affiliate” shall mean, with respect to any specified person, any other person that directly or indirectly, through one or more intermediaries, controls, is controlled by, or is under common control with, such specified person (“control,” “controlled by” and “under common control with” shall mean the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a person, whether through ownership of voting securities, by contract or credit arrangement, as trustee or executor, or otherwise).

(e) “Code” means the Internal Revenue Code of 1986, as amended.

(f) “Committee” means a committee of Directors or of other individuals satisfying Applicable Laws appointed by the Board in accordance with Section 4 hereof.

(g) “Common Stock” means the Common Stock of the Company.

(h) “Company” means Google Technology Inc., a California corporation until the consummation of the reincorporation of Google Technology Inc. into the State of Delaware, at which time “Company” shall mean Google Inc., a Delaware corporation.

(i) “Consultant” means any person who is engaged by the Company or any Parent or Subsidiary to render consulting or advisory services to such entity.

(j) “Director” means a member of the Board.

(k) “Disability” means total and permanent disability as defined in Section 22(e)(3) of the Code.

(l) “Employee” means any person, including officers and Directors, employed by the Company or any Parent or Subsidiary of the Company. Neither service as a Director nor payment of a director’s fee by the Company shall be sufficient to constitute “employment” by the Company.

(m) “Exchange Act” means the Securities Exchange Act of 1934, as amended.

(n) “Fair Market Value” means, as of any date, the value of Common Stock determined as follows:

(i) If the Common Stock is listed on any established stock exchange or a national market system, including without limitation the Nasdaq National Market or The Nasdaq SmallCap Market of The Nasdaq Stock Market, its Fair Market Value shall be the closing sales price for such stock (or the closing bid, if no sales were reported) as quoted on such exchange or system on the day of determination, as reported in The Wall Street Journal or such other source as the Administrator deems reliable;

(ii) If the Common Stock is regularly quoted by a recognized securities dealer but selling prices are not reported, its Fair Market Value shall be the mean between the high bid and low asked prices for the Common Stock on the day of determination; or

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(iii) In the absence of an established market for the Common Stock, the Fair Market Value thereof shall be determined in good faith by the Administrator.

(o) “Incentive Stock Option” means an Option intended to qualify as an incentive stock option within the meaning of Section 422 of the Code.

(p) “Nonstatutory Stock Option” means an Option not intended to qualify as an Incentive Stock Option.

(q) “Option” means a stock option granted pursuant to the Plan.

(r) “Option Agreement” means a written or electronic agreement between the Company and an Optionee evidencing the terms and conditions of an individual Option grant. The Option Agreement is subject to the terms and conditions of the Plan.

(s) “Optioned Stock” means the Common Stock subject to an Option or a Stock Purchase Right.

(t) “Optionee” means the holder of an outstanding Option or Stock Purchase Right granted under the Plan.

(u) “Parent” means a “parent corporation,” whether now or hereafter existing, as defined in Section 424(e) of the Code.

(v) “Plan” shall mean the Google Technology Inc. 2003 Stock Plan, which shall become the Google Inc. 2003 Stock Plan upon the closing of a reincorporation of Google Technology Inc. into the State of Delaware that includes the corresponding name change to Google Inc.

(w) “Restricted Stock” means Shares issued pursuant to a Stock Purchase Right or Shares of restricted stock issued pursuant to an Option.

(x) “Restricted Stock Purchase Agreement” means a written agreement between the Company and the Optionee evidencing the terms and restrictions applying to Shares purchased under a Stock Purchase Right. The Restricted Stock Purchase Agreement is subject to the terms and conditions of the Plan and the notice of grant.

(y) “Securities Act” means the Securities Act of 1933, as amended.

(z) “Service Provider” means an Employee, Director or Consultant.

(aa) “Share” means a share of the Common Stock, as adjusted in accordance with Section 12 below.

(bb) “Stock Purchase Right” means a right to purchase Common Stock pursuant to Section 11 below.

(cc) “Subsidiary” means a “subsidiary corporation,” whether now or hereafter existing, as defined in Section 424(f) of the Code.

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3. Stock Subject to the Plan. Subject to the provisions of Section 12 of the Plan, the maximum aggregate number of Shares that may be subject to option and sold under the Plan is 12,388,116, minus those shares of Class A Senior Common Stock or shares of Common Stock that, after June 18, 2003, are issued or made subject to outstanding options under the Company’s 1998 Stock Plan (the “1998 Plan”), the Company’s 2003 Stock Plan (No. 2) (the “2003 Plan (No. 2)”) or the Company’s 2003 Stock Plan (No. 3) (the “2003 Plan (No. 3)”); provided, that those shares of Class A Senior Common Stock or Common Stock of the Company returned to the 1998 Plan, the 2003 Plan (No. 2) and the 2003 Plan (No. 3) as a result of termination of options or repurchase of shares issued (at any time) under those plans shall be added to the authorized number of Shares that may be subject to option and sold under this Plan. In no event shall the number of Shares issued pursuant to Incentive Stock Options under this Plan exceed the number indicated in this Section 3. The Shares may be authorized but unissued or reacquired shares of Class A Senior Common Stock.

If an Option or Stock Purchase Right expires or becomes unexercisable without having been exercised in full, the unpurchased Shares that were subject thereto shall become available for future grant or sale under the Plan (unless the Plan has terminated). However, Shares that have actually been issued under the Plan, upon exercise of either an Option or Stock Purchase Right, shall not be returned to the Plan and shall not become available for future distribution under the Plan, except that if unvested Shares of Restricted Stock are repurchased by the Company at their original purchase price, such Shares shall become available for future grant under the Plan.

4. Administration of the Plan.

(a) Administrator. The Plan shall be administered by the Board or a Committee appointed by the Board, which Committee shall be constituted to comply with Applicable Laws.

(b) Powers of the Administrator. Subject to the provisions of the Plan and, in the case of a Committee, the specific duties delegated by the Board to such Committee, and subject to the approval of any relevant authorities, the Administrator shall have the authority in its discretion:

(i) to determine the Fair Market Value;

(ii) to select the Service Providers to whom Options and Stock Purchase Rights may from time to time be granted hereunder;

(iii) to determine the number of Shares to be covered by each such award granted hereunder;

(iv) to approve forms of agreement for use under the Plan;

(v) to determine the terms and conditions of any Option or Stock Purchase Right granted hereunder. Such terms and conditions include, but are not limited to, the exercise price, the time or times when Options or Stock Purchase Rights may be exercised (which may be based on performance criteria), any vesting acceleration or waiver of forfeiture restrictions, and any restriction or limitation regarding any Option or Stock Purchase Right or the Common Stock relating thereto, based in each case on such factors as the Administrator, in its sole discretion, shall determine;

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(vi) to prescribe, amend and rescind rules and regulations relating to the Plan, including rules and regulations relating to sub-plans established for the purpose of satisfying applicable foreign laws;

(vii) to allow Optionees to satisfy withholding tax obligations by electing to have the Company withhold from the Shares to be issued upon exercise of an Option or Stock Purchase Right that number of Shares having a Fair Market Value equal to the minimum amount required to be withheld. The Fair Market Value of the Shares to be withheld shall be determined on the date that the amount of tax to be withheld is to be determined. All elections by Optionees to have Shares withheld for this purpose shall be made in such form and under such conditions as the Administrator may deem necessary or advisable; and

(viii) to construe and interpret the terms of the Plan and Options granted pursuant to the Plan.

(c) Effect of Administrator’s Decision. All decisions, determinations and interpretations of the Administrator shall be final and binding on all Optionees.

5. Eligibility. Nonstatutory Stock Options and Stock Purchase Rights may be granted to Service Providers. Incentive Stock Options may be granted only to Employees.

6. Limitations.

(a) Incentive Stock Option Limit. Each Option shall be designated in the Option Agreement as either an Incentive Stock Option or a Nonstatutory Stock Option. However, notwithstanding such designation, to the extent that the aggregate Fair Market Value of the Shares with respect to which Incentive Stock Options are exercisable for the first time by the Optionee during any calendar year (under all plans of the Company and any Parent or Subsidiary) exceeds $100,000, such Options shall be treated as Nonstatutory Stock Options. For purposes of this Section 6(a), Incentive Stock Options shall be taken into account in the order in which they were granted. The Fair Market Value of the Shares shall be determined as of the time the Option with respect to such Shares is granted.

(b) At-Will Employment. Neither the Plan nor any Option or Stock Purchase Right shall confer upon any Optionee any right with respect to continuing the Optionee’s relationship as a Service Provider with the Company, nor shall it interfere in any way with his or her right or the Company’s right to terminate such relationship at any time, with or without cause, and with or without notice.

7. Term of Plan. Subject to shareholder approval in accordance with Section 19, the Plan shall become effective upon its adoption by the Board. Unless sooner terminated under Section 15, it shall continue in effect for a term of ten (10) years from the later of (i) the effective date of the Plan, or (ii) the earlier of the most recent board or shareholder approval of an increase in the number of Shares reserved for issuance under the Plan.

8. Term of Option. The term of each Option shall be stated in the Option Agreement; provided, however, that the term shall be no more than ten (10) years from the date of grant thereof. In the case of an Incentive Stock Option granted to an Optionee who, at the time the Option is

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granted, owns stock representing more than ten percent (10%) of the voting power of all classes of stock of the Company or any Parent or Subsidiary, the term of the Option shall be five (5) years from the date of grant or such shorter term as may be provided in the Option Agreement.

9. Option Exercise Price and Consideration.

(a)    Exercise Price. The per share exercise price for the Shares to be issued upon exercise of an Option shall be such price as is determined by the Administrator, but shall be subject to the following:

(i) In the case of an Incentive Stock Option

(A) granted to an Employee who, at the time of grant of such Option, owns stock representing more than ten percent (10%) of the voting power of all classes of stock of the Company or any Parent or Subsidiary, the exercise price shall be no less than 110% of the Fair Market Value per Share on the date of grant.

(B) granted to any other Employee, the per Share exercise price shall be no less than 100% of the Fair Market Value per Share on the date of grant.

(ii) In the case of a Nonstatutory Stock Option

(A) granted to a Service Provider who, at the time of grant of such Option, owns stock representing more than ten percent (10%) of the voting power of all classes of stock of the Company or any Parent or Subsidiary, the exercise price shall be no less than 110% of the Fair Market Value per Share on the date of grant.

(B) granted to any other Service Provider, the per Share exercise price shall be no less than 85% of the Fair Market Value per Share on the date of grant.

(iii) Notwithstanding the foregoing, Options may be granted with a per Share exercise price other than as required above pursuant to a merger or other corporate transaction.

(b) Forms of Consideration. The consideration to be paid for the Shares to be issued upon exercise of an Option, including the method of payment, shall be determined by the Administrator (and, in the case of an Incentive Stock Option, shall be determined at the time of grant). Such consideration may consist of, without limitation, (1) cash, (2) check, (3) promissory note, (4) other Shares, provided Shares acquired directly from the Company (x) have been owned by the Optionee for more than six months on the date of surrender, and (y) have a Fair Market Value on the date of surrender equal to the aggregate exercise price of the Shares as to which such Option shall be exercised, (5) consideration received by the Company under a cashless exercise program implemented by the Company in connection with the Plan, or (6) any combination of the foregoing methods of payment. In making its determination as to the type of consideration to accept, the Administrator shall consider if acceptance of such consideration may be reasonably expected to benefit the Company.

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10. Exercise of Option.

(a) Procedure for Exercise; Rights as a Shareholder. Any Option granted hereunder shall be exercisable according to the terms hereof at such times and under such conditions as determined by the Administrator and set forth in the Option Agreement. An Option may not be exercised for a fraction of a Share. Except in the case of Options granted to officers, Directors and Consultants, Options shall become exercisable at a rate of no less than 20% per year over five (5) years from the date the Options are granted.

An Option shall be deemed exercised when the Company receives (i) written or electronic notice of exercise (in accordance with the Option Agreement) from the person entitled to exercise the Option, and (ii) full payment for the Shares with respect to which the Option is exercised. Full payment may consist of any consideration and method of payment authorized by the Administrator and permitted by the Option Agreement and the Plan. Shares issued upon exercise of an Option shall be issued in the name of the Optionee or, if requested by the Optionee, in the name of the Optionee and his or her spouse. Until the Shares are issued (as evidenced by the appropriate entry on the books of the Company or of a duly authorized transfer agent of the Company), no right to vote or receive dividends or any other rights as a shareholder shall exist with respect to the Shares, notwithstanding the exercise of the Option. The Company shall issue (or cause to be issued) such Shares promptly after the Option is exercised. No adjustment will be made for a dividend or other right for which the record date is prior to the date the Shares are issued, except as provided in Section 13 of the Plan.

Exercise of an Option in any manner shall result in a decrease in the number of Shares thereafter available, both for purposes of the Plan and for sale under the Option, by the number of Shares as to which the Option is exercised.

(b) Termination of Relationship as a Service Provider. If an Optionee ceases to be a Service Provider, such Optionee may exercise his or her Option within thirty (30) days of termination, or such longer period of time as specified in the Option Agreement, to the extent that the Option is vested on the date of termination (but in no event later than the expiration of the term of the Option as set forth in the Option Agreement). If, on the date of termination, the Optionee is not vested as to his or her entire Option, the Shares covered by the unvested portion of the Option shall revert to the Plan. If, after termination, the Optionee does not exercise his or her Option within the time specified by the Administrator, the Option shall terminate, and the Shares covered by such Option shall revert to the Plan.

(c) Disability of Optionee. If an Optionee ceases to be a Service Provider as a result of the Optionee’s Disability, the Optionee may exercise his or her Option within six (6) months of termination, or such longer period of time as specified in the Option Agreement, to the extent the Option is vested on the date of termination (but in no event later than the expiration of the term of such Option as set forth in the Option Agreement). If, on the date of termination, the Optionee is not vested as to his or her entire Option, the Shares covered by the unvested portion of the Option shall revert to the Plan. If, after termination, the Optionee does not exercise his or her Option within the time specified herein, the Option shall terminate, and the Shares covered by such Option shall revert to the Plan.

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(d) Death of Optionee. If an Optionee dies while a Service Provider, the Option may be exercised within six (6) months following Optionee’s death, or such longer period of time as specified in the Option Agreement, to the extent that the Option is vested on the date of death (but in no event later than the expiration of the term of such Option as set forth in the Option Agreement) by the Optionee’s designated beneficiary, provided such beneficiary has been designated prior to Optionee’s death in a form acceptable to the Administrator. If no such beneficiary has been designated by the Optionee, then such Option may be exercised by the personal representative of the Optionee’s estate or by the person(s) to whom the Option is transferred pursuant to the Optionee’s will or in accordance with the laws of descent and distribution. If, at the time of death, the Optionee is not vested as to his or her entire Option, the Shares covered by the unvested portion of the Option shall immediately revert to the Plan. If the Option is not so exercised within the time specified herein, the Option shall terminate, and the Shares covered by such Option shall revert to the Plan.

(e) Leaves of Absence.

(i) Unless the Administrator provides otherwise, vesting of Options granted hereunder to officers and Directors shall be suspended during any unpaid leave of absence.

(ii) A Service Provider shall not cease to be an Employee in the case of (A) any leave of absence approved by the Company or (B) transfers between locations of the Company or between the Company, its Parent, any Subsidiary, or any successor.

(iii) For purposes of Incentive Stock Options, no such leave may exceed ninety (90) days, unless reemployment upon expiration of such leave is guaranteed by statute or contract. If reemployment upon expiration of a leave of absence approved by the Company is not so guaranteed, then three (3) months following the 91st day of such leave, any Incentive Stock Option held by the Optionee shall cease to be treated as an Incentive Stock Option and shall be treated for tax purposes as a Nonstatutory Stock Option.

11. Stock Purchase Rights.

(a) Rights to Purchase. Stock Purchase Rights may be issued either alone, in addition to, or in tandem with other awards granted under the Plan and/or cash awards made outside of the Plan. After the Administrator determines that it will offer Stock Purchase Rights under the Plan, it shall advise the offeree in writing or electronically of the terms, conditions and restrictions related to the offer, including the number of Shares that such person shall be entitled to purchase, the price to be paid, and the time within which such person must accept such offer. The terms of the offer shall comply in all respects with Section 260.140.42 of Title 10 of the California Code of Regulations. The offer shall be accepted by execution of a Restricted Stock Purchase Agreement in the form determined by the Administrator.

(b) Repurchase Option. Unless the Administrator determines otherwise, the Restricted Stock Purchase Agreement shall grant the Company a repurchase option exercisable within 90 days of the voluntary or involuntary termination of the purchaser’s service with the Company for any reason (including death or disability). The purchase price for Shares repurchased pursuant to the Restricted Stock Purchase Agreement shall be the original price paid by the purchaser and may be paid by cancellation of any indebtedness of the purchaser to the Company. The repurchase option shall lapse at such rate as the Administrator may determine; provided,

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however that except in the case of a Stock Purchase Right granted to an officer, Director or Consultant, the repurchase option shall lapse at a rate of no less than 20% per year over five (5) years from the date such Stock Purchase Right is granted.

(c) Other Provisions. The Restricted Stock Purchase Agreement shall contain such other terms, provisions and conditions not inconsistent with the Plan as may be determined by the Administrator in its sole discretion.

(d) Rights as a Shareholder. Once the Stock Purchase Right is exercised, the purchaser shall have rights equivalent to those of a shareholder and shall be a shareholder when his or her purchase is entered upon the records of the duly authorized transfer agent of the Company. No adjustment shall be made for a dividend or other right for which the record date is prior to the date the Stock Purchase Right is exercised, except as provided in Section 13 of the Plan.

12. Limited Transferability of Options and Stock Purchase Rights. Unless determined otherwise by the Administrator, Options and Stock Purchase Rights may not be sold, pledged, assigned, hypothecated, transferred, or disposed of in any manner other than by will or the laws of descent and distribution, and may be exercised during the lifetime of the Optionee only by the Optionee. If the Administrator in its sole discretion makes an Option or Stock Purchase Right transferable, such Option or Stock Purchase Right may only be transferred (i) by will, (ii) by the laws of descent and distribution, or (iii) to family members (within the meaning of Rule 701 of the Securities Act) through gifts or domestic relations orders, as permitted by Rule 701 of the Securities Act.

13. Adjustments; Dissolution or Liquidation; Merger or Change in Control.

(a) Adjustments. In the event that any dividend or other distribution (whether in the form of cash, Shares, other securities, or other property), recapitalization, stock split, reverse stock split, reorganization, merger, consolidation, split-up, spin-off, combination, repurchase, or exchange of Shares or other securities of the Company, or other change in the corporate structure of the Company affecting the Shares occurs, the Administrator, in order to prevent diminution or enlargement of the benefits or potential benefits intended to be made available under the Plan, may (in its sole discretion) adjust the number and class of Shares that may be delivered under the Plan and/or the number, class, and price of Shares covered by each outstanding Option or Stock Purchase Right; provided, however, that the Administrator shall make such adjustments to the extent required by Section 25102(o) of the California Corporations Code.

(b) Dissolution or Liquidation. In the event of the proposed dissolution or liquidation of the Company, the Administrator shall notify each Optionee as soon as practicable prior to the effective date of such proposed transaction. To the extent it has not been previously exercised, an Option or Stock Purchase Right will terminate immediately prior to the consummation of such proposed action.

(c) Merger or Change in Control. In the event of a merger of the Company with or into another corporation, or a Change in Control, each outstanding Option and Stock Purchase Right shall be assumed or an equivalent option substituted by the successor corporation or a Parent or Subsidiary of the successor corporation. In the event that the successor corporation in a merger or Change in Control refuses to assume or substitute for the Option or Stock Purchase Right, then the

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Optionee shall fully vest in and have the right to exercise the Option or Stock Purchase Right as to all of the Optioned Stock, including Shares as to which it would not otherwise be vested or exercisable. If an Option or Stock Purchase Right becomes fully vested and exercisable in lieu of assumption or substitution in the event of a merger or Change in Control, the Administrator shall notify the Optionee in writing or electronically that this Option or Stock Purchase Right shall be fully exercisable for a period of fifteen (15) days from the date of such notice, and the Option or Stock Purchase Right shall terminate upon expiration of such period. For the purposes of this paragraph, the Option or Stock Purchase Right shall be considered assumed if, following the merger or Change in Control, the option or right confers the right to purchase or receive, for each Share of Optioned Stock subject to the Option or Stock Purchase Right immediately prior to the merger or Change in Control, the consideration (whether stock, cash, or other securities or property) received in the merger or Change in Control by holders of Common Stock for each Share held on the effective date of the transaction (and if holders were offered a choice of consideration, the type of consideration chosen by the holders of a majority of the outstanding Shares); provided, however, that if such consideration received in the merger or Change in Control is not solely common stock of the successor corporation or its Parent, the Administrator may, with the consent of the successor corporation, provide for the consideration to be received upon the exercise of the Option or Stock Purchase Right, for each Share of Optioned Stock subject to the Option or Stock Purchase Right, to be solely common stock of the successor corporation or its Parent equal in fair market value to the per share consideration received by holders of Common Stock in the merger or Change in Control.

14. Time of Granting Options and Stock Purchase Rights. The date of grant of an Option or Stock Purchase Right shall, for all purposes, be the date on which the Administrator makes the determination granting such Option or Stock Purchase Right, or such later date as is determined by the Administrator. Notice of the determination shall be given to each Service Provider to whom an Option or Stock Purchase Right is so granted within a reasonable time after the date of such grant.

15. Amendment and Termination of the Plan.

(a) Amendment and Termination. The Board may at any time amend, alter, suspend or terminate the Plan.

(b) Shareholder Approval. The Board shall obtain shareholder approval of any Plan amendment to the extent necessary and desirable to comply with Applicable Laws.

(c) Effect of Amendment or Termination. No amendment, alteration, suspension or termination of the Plan shall impair the rights of any Optionee, unless mutually agreed otherwise between the Optionee and the Administrator, which agreement must be in writing and signed by the Optionee and the Company. Termination of the Plan shall not affect the Administrator’s ability to exercise the powers granted to it hereunder with respect to Options granted under the Plan prior to the date of such termination.

16. Conditions Upon Issuance of Shares.

(a) Legal Compliance. Shares shall not be issued pursuant to the exercise of an Option unless the exercise of such Option and the issuance and delivery of such Shares shall comply with Applicable Laws and shall be further subject to the approval of counsel for the Company with respect to such compliance.

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(b) Investment Representations. As a condition to the exercise of an Option, the Administrator may require the person exercising such Option to represent and warrant at the time of any such exercise that the Shares are being purchased only for investment and without any present intention to sell or distribute such Shares if, in the opinion of counsel for the Company, such a representation is required.

17. Inability to Obtain Authority. The inability of the Company to obtain authority from any regulatory body having jurisdiction, which authority is deemed by the Company’s counsel to be necessary to the lawful issuance and sale of any Shares hereunder, shall relieve the Company of any liability in respect of the failure to issue or sell such Shares as to which such requisite authority shall not have been obtained.

18. Reservation of Shares. The Company, during the term of this Plan, shall at all times reserve and keep available such number of Shares as shall be sufficient to satisfy the requirements of the Plan.

19. Shareholder Approval. The Plan shall be subject to approval by the shareholders of the Company within twelve (12) months after the date the Plan is adopted. Such shareholder approval shall be obtained in the degree and manner required under Applicable Laws.

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EXHIBIT A

STOCK OPTION CASH EXERCISE

Letter of Authorization

To:                                                                                                                                                                         the (“Company”)                                             

(Your Company’s Name)

From:                                                                                               Exercise Date:                                                                                                                          

              (Last Name)                 (First Name)        ( M.I.)

Pursuant to the provisions of the Google Inc. 2003 Stock Plan (the “Plan”), Certificate of Stock Option Grant and Option Agreement under which the following stock option(s) was/were granted, I hereby elect to exercise the following stock option(s) granted to me by the Company (as defined in the Plan) to purchase shares of Company Common Stock (the “Shares”):

Grant Exercise Information:

1	2	3	4	5	6	7
Grant Number	Grant Date	Grant Type	Grant Price	# of Shares to	Amount Due	Amount Due
		(Check One)	Per Share	Exercise	For Stock	for Taxes*
(if applicable)
		¨ ISO   ¨ INQ
		¨ ISO   ¨ INQ
		¨ ISO   ¨ INQ
		¨ ISO   ¨ INQ
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			Totals	(A)	(B)	(C)

Method Of Payment: ¨ Check

***If check not enclosed, please indicate

method of payment                                                                Total Due for Exercise (B+C): $                                                                                         

*Note: If you are exercising a Non-Qualified (NQ) stock option, please contact

AST STOCKPLAN, Inc. at (888) 980-6456 or (212) 615-8709 to complete this information.

The exact spelling of the name(s) under which I will take title to the Shares is:

I desire to take title to the Shares as follows:

[    ] Individual, as separate property

[    ] Husband and wife, as community property

[    ] Joint Tenants

[    ] Other; please specify:

TO COMPLETE YOUR STOCK OPTION EXERCISE, YOU MUST DO THE FOLLOWING:

1. Review the Terms and Conditions of Stock Option Exercise attached as Exhibit 1 to this document.

2. If are purchasing shares which have not yet become vested, review and execute one copy of the Assignment Separate from Certificate attached as Exhibit 2 to this document.

3. If you are purchasing shares which have not yet become vested and you desire to elect pursuant to Section 83 (b) of the Code to be taxed currently as described in your Option Agreement, review and execute, and have your spouse, if any, review and execute, the Election under Section 83 (b) attached as Exhibit 3 to this document.

4. Review and complete the terms of purchase on the following page.

Terms of Purchase:

By signing this Stock Option Cash Exercise Letter of Authorization (this “Authorization”), I hereby represent and warrant to the Company that I have read and agree to (i) all of the Terms and Conditions of Stock Option Exercise attached hereto as Exhibit 1 and (ii) all of the terms and conditions of the Option Agreement (including Exhibits).

I am hereby delivering to the Company: (i) this fully completed and executed Authorization, (ii) if applicable, one copy of the Assignment Separate from Certificate attached hereto as Exhibit 2 fully executed by myself, (iii) if applicable, an Election under Section 83 (b) attached hereto as Exhibit 3 fully executed by myself and my spouse, if any, and (iv) the full purchase price for the Shares.

This constitutes my irrevocable authorization for AST STOCKPLAN, INC. (on behalf of the Company) to request, and for my broker to provide, a statement of any shares of the Company’s Common Stock that I am holding, or have transferred as permitted by the Company’s applicable Stock Option Plan(s), which were originally acquired upon exercise of an option granted to me pursuant to the Company’s Stock Option Plan(s).

I understand that, if I am an officer or director of the Company, I may be subject to additional requirements under Federal securities regulations which pertain to this type of transaction.

X Signature	Address for Certificate Delivery following release from escrow:
Social Security Number
Work Number                                                         Home Phone
Email Address

Please mail completed original with attached exhibits to:

Attn: Google Inc., 2400 Bayshore Parkway Mountain View, CA 94043

You can call AST StockPlan, Inc., Client Services Dept. Mon – Thurs: 9:00 am- 7:00 pm, and Friday: 9:00 am – 6:00 pm ET.

Phone: (888) 980-6456 or (212) 615-8709 Fax: (212) 615-7511.

List of Exhibits:

Exhibit 1: Terms and Conditions of Stock Option Exercise

Exhibit 2: Assignment Separate from Certificate

Exhibit 3: Election under Section 83 (b)

Exhibit 1

Terms and Conditions of Stock Option Exercise

1. Exercise. The Optionee (the “Optionee”) identified on the Stock Option Cash Exercise Letter of Authorization (the “Authorization”) to which these Terms and Conditions of Stock Option Exercise (these “Terms and Conditions”) are attached has elected to exercise the option (the “Option”) to purchase shares of Common Stock of the Company (as defined in the Google Inc. 2003 Stock Plan) identified on the Authorization, and thereby purchase from the Company that number of shares of the Company’s Common Stock identified on the Authorization (the “Shares”) at the applicable exercise price per share set forth in the Option Agreement (the “Exercise Price”), and subject to the terms and conditions of: (i) the 2003 Stock Plan (the “Plan”), (ii) the Stock Option Agreement (including all exhibits thereto and the Certificate of Stock Option Grant (the “Certificate”)) pursuant to which the Company granted the Option to Optionee (the “Option Agreement”), and (iii) the Authorization, including these Terms and Conditions. Unless otherwise defined herein, the terms defined in the Plan shall have the same defined meanings in these Terms and Conditions.

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

(a) Representations of Optionee. Optionee acknowledges that Optionee has received, read and understood the Plan and the Option Agreement (including the Certificate and all of the exhibits, which are part of the Option Agreement) and agrees to abide by and be bound by their terms and conditions. Optionee understands that Optionee may suffer adverse tax consequences as a result of Optionee’s purchase or disposition of the Shares. Optionee represents that Optionee has consulted with any tax consultants Optionee deems advisable in connection with the purchase or disposition of the Shares and that Optionee is not relying on the Company for any tax advice. Optionee understands and agrees that the Company shall cause the legends set forth in the Option Agreement or legends substantially equivalent thereto, to be placed upon any certificate(s) evidencing ownership of the Shares together with any other legends that may be required by the Company or by state or federal securities laws.

(b) Investment Representations. In the event that the Shares have not been registered under the Securities Act of 1933, as amended (the “Securities Act”), at the time of exercise, then in connection with the purchase of the Shares, the Optionee represents to the Company the following:

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

(ii) Optionee acknowledges and understands that the Shares constitute “restricted securities” under the Securities Act and have not been registered under the Securities Act

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

(iii) Optionee is familiar with the provisions of Rule 701 and Rule 144, each promulgated under the Securities Act, which, in substance, permit limited public resale of “restricted securities” acquired, directly or indirectly from the issuer thereof, in a non-public offering subject to the satisfaction of certain conditions. Rule 701 provides that if the issuer qualifies under Rule 701 at the time of the grant of the Option to the Optionee, the exercise will be exempt from registration under the Securities Act. In the event the Company becomes subject to the reporting requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, ninety (90) days thereafter (or such longer period as any market stand-off agreement may require) the Shares exempt under Rule 701 may be resold, subject to the satisfaction of certain of the conditions specified by Rule 144, including: (1) the resale being made through a broker in an unsolicited “broker’s transaction” or in transactions directly with a market maker (as said term is defined under the Securities Exchange Act of 1934); and, in the case of an affiliate, (2) the availability of certain public information about the Company, (3) the amount of Shares being sold during any three month period not exceeding the limitations specified in Rule 144(e), and (4) the timely filing of a Form 144, if applicable.

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

(iv) Optionee further understands that in the event all of the applicable requirements of Rule 701 or 144 are not satisfied, registration under the Securities Act, compliance with Regulation A, or some other registration exemption will be required; and that, notwithstanding the fact that Rules 144 and 701 are not exclusive, the Staff of the Securities and Exchange Commission has expressed its opinion that persons proposing to sell private placement Shares other than in a registered offering and otherwise than pursuant to Rules 144 or 701 will have a substantial burden of proof in establishing that an exemption from registration is available for such offers or

sales, and that such persons and their respective brokers who participate in such transactions do so at their own risk. Optionee understands that no assurances can be given that any such other registration exemption will be available in such event.

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

(d) Terms of Restricted Stock Purchase and Joint Escrow Instructions. In the event that Optionee has elected to purchase Shares which have not yet become vested under the vesting schedule set forth in the Option Agreement (“Unvested Shares”), the Terms of Restricted Stock Purchase set forth in Exhibit B-1 of the Option Agreement shall govern the rights and obligations of the Optionee and the Company with respect to the Unvested Shares acquired upon such exercise. The Terms of Restricted Stock Purchase provide that, among other things, if the Optionee’s status as a Service Provider is terminated for any reason, including for cause, death or Disability, the Company shall have the right and option to purchase from Optionee, or Optionee’s personal representative, as the case may be, all of the Shares that have not vested as of the date of such termination at the price paid by the Optionee for such Shares (the “Repurchase Option”). The Terms of Restricted Stock Purchase and the related Joint Escrow Instructions set forth in Exhibit B-3 to the Option Agreement also provide that Unvested Shares so purchased shall be held in escrow until the Company exercises its Repurchase Option or until such Unvested Shares vest. In the event Optionee has chosen to exercise the Option as to Unvested Shares, by accepting the terms of the Option Agreement at the time of grant and by executing this Authorization, Optionee agrees to be bound by the Terms of Restricted Stock Purchase and related Joint Escrow Instructions, including the Repurchase Option and escrow provisions thereof.

(e) Successors and Assigns. The Company may assign any of its rights under this Authorization to single or multiple assignees, and the terms and conditions of this Authorization shall inure to the benefit of the successors and assigns of the Company. Subject to the restrictions on transfer herein set forth, the terms and conditions of this Authorization shall be binding upon Optionee and his or her heirs, executors, administrators, successors and assigns.

(f) Interpretation. Any dispute regarding the interpretation of this Authorization shall be submitted by Optionee or by the Company forthwith to the Administrator which shall review such dispute at its next regular meeting. The resolution of such a dispute by the Administrator shall be final and binding on all parties.

(g) Governing Law; Severability. This Authorization is governed by the internal substantive laws, but not the choice of law rules, of California.

(h) Entire Agreement. The Plan and Option Agreement (including the Certificate and all exhibits, which are parts of the Option Agreement) are incorporated herein by reference. This Authorization, the Plan, the Terms of Restricted Stock Purchase, the Certificate, the Option Agreement and the Joint Escrow Instructions constitute the entire agreement of the parties with respect to the subject matter hereof and supersede in their entirety all prior undertakings and agreements of the Company and Optionee with respect to the subject matter hereof, and may not be modified adversely to the Optionee’s interest except by means of a writing signed by the Company and Optionee.

EXHIBIT B-1

TERMS OF RESTRICTED STOCK PURCHASE

In the event that Optionee elects to purchase shares of Common Stock which have not become vested under the vesting schedule set forth in the Option Agreement (“Unvested Shares”), pursuant to the Option Agreement and the Stock Option Cash Exercise Letter of Authorization, as a condition to Optionee’s election to exercise the Option, Optionee has agreed to these Terms of Restricted Stock Purchase which set forth the rights and obligations of the Optionee and the Company with respect to Unvested Shares acquired upon exercise of the Option. Unless otherwise defined herein, the terms defined in the 2003 Stock Plan shall have the same defined meanings in these Terms of Restricted Stock Purchase.

3. Repurchase Option.

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

(ii) Upon the occurrence of such termination, the Company may exercise its Repurchase Option by delivering personally or by registered mail, to Optionee (or his transferee or legal representative, as the case may be) with a copy to the escrow agent described in Section 2 below, a notice in writing indicating the Company’s intention to exercise the Repurchase Option AND, at the Company’s option, (i) by delivering to the Optionee (or the Optionee’s transferee or legal representative) a check in the amount of the aggregate repurchase price, or (ii) by the Company canceling an amount of the Optionee’s indebtedness to the Company equal to the aggregate repurchase price, or (iii) by a combination of (i) and (ii) so that the combined payment and cancellation of indebtedness equals such aggregate repurchase price. Upon delivery of such notice and payment of the aggregate repurchase price in any of the ways described above, the Company shall become the legal and beneficial owner of the Unvested Shares being repurchased and the rights and interests therein or relating thereto, and the Company shall have the right to retain and transfer to its own name the number of Unvested Shares being repurchased by the Company.

(iii) Whenever the Company shall have the right to repurchase Unvested Shares hereunder, the Company may designate and assign one or more employees, officers, directors or shareholders of the Company or other persons or organizations to exercise all or a part of the Company’s Repurchase Option under this Agreement and purchase all or a part of such Unvested Shares.

(iv) At its option, the Company may elect to make payment for the Unvested Shares to a bank selected by the Company. The Company shall avail itself of this option

by a notice in writing to Optionee stating the name and address of the bank, date of closing, and waiving the closing at the Company’s office.

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

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

(i) Transferability of the Shares; Escrow.

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

(ii) To insure the availability for delivery of Optionee’s Unvested Shares upon repurchase by the Company pursuant to the Repurchase Option under Section 1, Optionee hereby appoints the Secretary, or any other person designated by the Company as escrow agent, as its attorney-in-fact to sell, assign and transfer unto the Company, such Unvested Shares, if any, repurchased by the Company pursuant to the Repurchase Option and shall, upon exercise of the Option, deliver and deposit with the Secretary of the Company, or such other person designated by the Company, the share certificates representing the Unvested Shares, together with the stock assignment duly endorsed in blank, the form of which is set forth in Exhibit B-2 hereto. The Unvested Shares and stock assignment shall be held by the secretary in escrow, pursuant to the Joint Escrow Instructions of the Company and Optionee set forth in Exhibit B-3 hereto, until the Company exercises its Repurchase Option, until such Unvested Shares are vested, or until such time as these Terms of Restricted Stock Purchase are no longer in effect. Upon vesting of the Unvested Shares, the escrow agent shall promptly deliver to the Optionee the certificate or certificates representing such Shares in the escrow agent’s possession belonging to the Optionee, and the escrow agent shall be discharged of all further obligations hereunder; provided, however, that the escrow agent shall nevertheless retain such certificate or certificates as escrow agent if so required pursuant to other restrictions imposed pursuant to the Option Agreement or these Terms of Restricted Stock Purchase.

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

(iv) Transfer or sale of the Shares is subject to restrictions on transfer imposed by any applicable state and federal securities laws. Any transferee shall hold such Shares subject to all the provisions hereof and the Authorization executed by the Optionee with respect to any Unvested Shares purchased by Optionee and shall acknowledge the same by signing an acknowledgement in a form acceptable to the Company.

(j) Ownership, Voting Rights, Duties. These Terms of Restricted Stock Purchase shall not affect in any way the ownership, voting rights or other rights or duties of Optionee, except as specifically provided herein.

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

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

(l) Adjustment for Stock Split. All references herein to the number of Shares and the purchase price of the Shares shall be appropriately adjusted to reflect any stock split, stock dividend or other change in the Shares which may be made by the Company pursuant to Section 13 of the Plan after the date of exercise.

(m) Notices. Notices required hereunder shall be given in person or by registered mail to the address of Optionee shown on the records of the Company, and to the Company at its principal executive offices.

(n) Survival of Terms. These Terms of Restricted Stock Purchase shall apply to and bind Optionee and the Company and their respective permitted assignees and transferees, heirs, legatees, executors, administrators and legal successors.

(o) Section 83(b) Election. Optionee hereby acknowledges that he or she has been informed that, with respect to the exercise of an Option for Unvested Shares, an election (the “Election”) may be filed by the Optionee with the Internal Revenue Service, within 30 days of the purchase of the exercised Shares, electing pursuant to Section 83(b) of the Code to be taxed currently on any difference between the purchase price of the exercised Shares and their Fair Market Value on the date of purchase. In the case of a Nonstatutory Stock Option, this will result in a recognition of taxable income to the Optionee on the date of exercise, measured by the excess, if any, of the Fair Market Value of the exercised Shares, at the time the Option is exercised over the purchase price for the exercised Shares. Absent such an Election, taxable income will be measured and recognized by Optionee at the time or times on which the Company’s Repurchase Option lapses. In the case of an Incentive Stock Option, such an Election will result in a recognition of income to the Optionee for alternative minimum tax purposes on the date of exercise, measured by the excess, if any, of the Fair Market Value of the exercised Shares, at the time the option is exercised, over the purchase price for the exercised Shares. Absent such an Election, alternative minimum taxable income will be measured and recognized by Optionee at the time or times on which the Company’s Repurchase Option lapses. Optionee is strongly encouraged to seek the advice of his or her own tax consultants in connection with the purchase of the Shares and the advisability of filing of the Election under Section 83(b) of the Code. A form of Election under Section 83(b) is set forth in Exhibit B-4 hereto for reference.

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

(p) Representations. Optionee has reviewed with his or her own tax advisors the federal, state, local and foreign tax consequences of this investment and the transactions contemplated by these Terms of Restricted Stock Purchase. Optionee is relying solely on such advisors and not on any statements or representations of the Company or any of its agents. Optionee understands that he or she (and not the Company) shall be responsible for his or her own tax liability that may arise as a result of this investment or the transactions contemplated by this Agreement.

(q) Governing Law. These Terms of Restricted Stock Purchase shall be governed by the internal substantive laws, but not the choice of law rules, of California.

(r) Acknowledgement. Optionee represents that he or she has read these Terms of Restricted Stock Purchase and is familiar with its terms and provisions. Optionee hereby agrees to accept as binding, conclusive and final all decisions or interpretations of the Board upon any questions arising under these Terms of Restricted Stock Purchase.

EXHIBIT B-2

ASSIGNMENT SEPARATE FROM CERTIFICATE

FOR VALUE RECEIVED I,                                     , hereby sell, assign and transfer unto the Company (as defined in the Google Inc. 2003 Stock Plan) (                            ) shares of the Common Stock of the Company standing in my name of the books of said corporation represented by Certificate No.              herewith and do hereby irrevocably constitute and appoint to transfer the said stock on the books of the within named corporation with full power of substitution in the premises.

This Stock Assignment may be used only in accordance with the Option Agreement and Terms of Restricted Stock Purchase between the Company and the undersigned dated                                              ,             .

Dated:                                                      ,                                                                   Signature:                                                          

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

EXHIBIT B-3

JOINT ESCROW INSTRUCTIONS

As escrow agent (the “Escrow Agent”) for both the Company (as defined in the Google Inc. 2003 Stock Plan), and the Optionee under the Stock Option Agreement to which these Instructions are attached (the “Optionee”), the Corporate Secretary of the Company (the “Secretary”) is hereby authorized and directed to hold the documents delivered to him or her pursuant to the Terms of Restricted Stock Purchase (“Terms of Restricted Stock Purchase”) between the Company and the Optionee (the “Escrow”), in accordance with the following instructions:

4. In the event the Company and/or any assignee of the Company (referred to collectively for convenience herein as the “Company”) exercises the Company’s Repurchase Option (as defined in the Terms of Restricted Stock Purchase), the Company shall give to Optionee and the Secretary a written notice specifying the number of shares of stock to be purchased, the purchase price and the time for a closing hereunder at the principal office of the Company. Optionee and the Company hereby irrevocably authorize and direct the Secretary to close the transaction contemplated by such notice in accordance with the terms of said notice.

(s) At the closing, the Secretary is directed (a) to date the stock assignments necessary for the transfer in question, (b) to fill in the number of shares being transferred, and (c) to deliver same, together with the certificate evidencing the shares of stock to be transferred, to the Company or its assignee, against the simultaneous delivery to the Secretary of the purchase price (by cash, a check, cancellation of indebtedness or some combination thereof) for the number of shares of stock being purchased pursuant to the exercise of the Company’s Repurchase Option.

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

(u) Upon written request of the Optionee, but no more than once per calendar year, unless the Company’s Repurchase Option has been exercised, the Secretary will deliver to Optionee a certificate or certificates representing so many shares of stock as are not then subject to the Company’s Repurchase Option. Within 120 days after cessation of Optionee’s status as a Service

Provider, the Secretary will deliver to Optionee a certificate or certificates representing the aggregate number of shares held or issued pursuant to the Terms of Restricted Stock Purchase and not purchased by the Company or its assignees pursuant to its right to exercise the Company’s Repurchase Option.

(v) If at the time of termination of this escrow the Secretary should have in his or her possession any documents, securities or other property belonging to Optionee, the Secretary shall deliver all of the same to Optionee and shall be discharged of all further obligations hereunder.

(w) The Secretary’s duties hereunder may be altered, amended, modified or revoked only by a writing signed by all of the parties hereto.

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

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

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

(aa) The Secretary shall not be liable for the outlawing of any rights under the Statute of Limitations with respect to these Joint Escrow Instructions or any documents deposited with the Secretary.

(bb) The Secretary shall be entitled to employ such legal counsel and other experts as he or she may deem necessary to advise in connection with the obligations hereunder, may rely upon the advice of such counsel, and may pay such counsel reasonable compensation therefor.

(cc) The Secretary’s responsibilities as Escrow Agent hereunder shall terminate if he or she shall cease to be an officer or agent of the Company or if he or she shall resign by written notice to each party. In the event of any such termination, the Company shall appoint a successor Escrow Agent.

(dd) If the Secretary reasonably requires other or further instruments in connection with these Joint Escrow Instructions or obligations in respect hereto, the necessary parties hereto shall join in furnishing such instruments.

(ee) It is understood and agreed that should any dispute arise with respect to the delivery and/or ownership or right of possession of the securities held hereunder, the Secretary is authorized and directed to retain in his or her possession without liability to anyone all or any part of said securities until such disputes shall have been settled either by mutual written agreement of the parties concerned or by a final order, decree or judgment of a court of competent jurisdiction after the time for appeal has expired and no appeal has been perfected, but shall be under no duty whatsoever to institute or defend any such proceedings.

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

COMPANY:	Google Inc.
	2400 Bayshore Parkway
	Mountain View, CA 94043
OPTIONEE:	To the address on file with the Company
ESCROW AGENT:	Google Inc.
	2400 Bayshore Parkway
	Mountain View, CA 94043-1103
	Attn: Corporate Secretary

(gg) The Secretary becomes a party hereto only for the purpose of said Joint Escrow Instructions; the Secretary does not become a party to the Option Agreement.

(hh) These Joint Escrow Instructions shall be binding upon and inure to the benefit of the parties hereto, and their respective successors and permitted assigns.

(ii) These Joint Escrow Instructions shall be governed by, and construed and enforced in accordance with, the laws of the State of California.

EXHIBIT B-4

ELECTION UNDER SECTION 83(b)

OF THE INTERNAL REVENUE CODE OF 1986

The undersigned taxpayer hereby elects, pursuant to Sections 55 and 83(b) of the Internal Revenue Code of 1986, as amended, to include in taxpayer’s gross income or alternative minimum taxable income, as the case may be, for the current taxable year the amount of any compensation taxable to taxpayer in connection with taxpayer’s receipt of the property described below:

1. The name, address, taxpayer identification number and taxable year of the undersigned are as follows:

	Taxpayer	Spouse
NAME:
ADDRESS:
IDENTIFICATION NO.:
TAXABLE YEAR:

2. The property with respect to which the election is made is described as follows: shares                                            (the “Shares”) of the Common Stock of Google Technology Inc. (the “Company”).

3. The date on which the property was transferred is:                              

4. The property is subject to the following restrictions:

The Shares may not be transferred and are subject to forfeiture under the terms of an agreement between the taxpayer and the Company. These restrictions lapse upon the satisfaction of certain conditions contained in such agreement.

5. The fair market value at the time of transfer, determined without regard to any restriction other than a restriction which by its terms will never lapse, of such property is:              per share.

6. The amount (if any) paid for such property is:

$                                                 .

The undersigned has submitted a copy of this statement to the person for whom the services were performed in connection with the undersigned’s receipt of the above-described property. The transferee of such property is the person performing the services in connection with the transfer of said property.

The undersigned understands that the foregoing election may not be revoked except with the consent of the Commissioner.

Dated:                                                                       ,
	Taxpayer

The undersigned spouse of taxpayer joins in this election.

Dated:                                                                       ,
	Taxpayer

EX-10.06

Exhibit 10.06

GOOGLE INC.

2003 STOCK PLAN (No. 2)

1.    Purposes of the Plan. The purposes of this Plan are to attract and retain the best available personnel for positions of substantial responsibility, to provide additional incentive to Employees, Directors and Consultants and to promote the success of the Company’s business. Options granted under the Plan may be Incentive Stock Options or Nonstatutory Stock Options, as determined by the Administrator at the time of grant.

2.    Definitions. As used herein, the following definitions shall apply:

(a)    “Administrator” means the Board or any Committee that shall administer the Plan in accordance with Section 4 hereof.

(b)    “Applicable Laws” means the requirements relating to the administration of stock option plans under U.S. state corporate laws, U.S. federal and state securities laws, the Code, any stock exchange or quotation system on which the Class A Senior Common Stock is listed or quoted and the applicable laws of any other country or jurisdiction where Options are granted under the Plan.

(c)    “Board” means the Board of Directors of the Company.

(d)    “Change in Control” means the occurrence of any of the following events:

(i)    If (a) any “person” (as such term is used in Sections 13(d) and 14(d) of the Exchange Act) becomes the “beneficial owner” (as defined in Rule 13d-3 of the Exchange Act), directly or indirectly, of securities of the Company representing fifty percent (50%) or more of the total voting power represented by the Company’s then outstanding voting securities and (b) within three (3) years from the date of such acquisition, a merger or consolidation of the Company with or into the person (or an affiliate thereof) holding such beneficial ownership of securities of the Company is consummated; or

(ii)    The consummation of the sale or disposition by the Company of all or substantially all of the Company’s assets; or

(iii)    The consummation of a merger or consolidation of the Company with any other corporation, other than a merger or consolidation which would result in the voting securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity or its parent) at least fifty percent (50%) of the total voting power represented by the voting securities of the Company or such surviving entity or its parent outstanding immediately after such merger or consolidation.

For the purposes of this Section 2(d), “affiliate” shall mean, with respect to any specified person, any other person that directly or indirectly, through one or more intermediaries, controls, is controlled by, or is under common control with, such specified person (“control,” “controlled by” and

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“under common control with” shall mean the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a person, whether through ownership of voting securities, by contract or credit arrangement, as trustee or executor, or otherwise).

(e)    “Class A Senior Common Stock” means the Class A Senior Common Stock of the Company; provided, that (i) if all outstanding Class A Senior Common Stock of the Company is converted to Common Stock pursuant to the charter documents of the Company, then “Class A Senior Common Stock” shall mean Common Stock and (ii) in the event any shares of Class A Senior Common Stock issued under the Plan are converted into Common Stock then, with respect to such shares, “Class A Senior Common Stock” shall mean Common Stock.

(f)    “Code” means the Internal Revenue Code of 1986, as amended.

(g)    “Committee” means a committee of Directors or of other individuals satisfying Applicable Laws appointed by the Board in accordance with Section 4 hereof.

(h)    “Common Stock” means the Common Stock of the Company.

(i)    “Company” means Google Technology Inc., a California corporation until the consummation of the reincorporation of Google Technology Inc. into the State of Delaware, at which time “Company” shall mean Google Inc., a Delaware corporation.

(j)     “Consultant” means any person who is engaged by the Company or any Parent or Subsidiary to render consulting or advisory services to such entity.

(k)    “Director” means a member of the Board.

(l)    “Disability” means the inability of the Optionee, in the opinion of a qualified physician acceptable to the Company, to perform the major duties of the Optionee’s position with the Company because of the Optionee’s sickness or injury.

(m)    “Employee” means any person, including officers and Directors, employed by the Company or any Parent or Subsidiary of the Company. Neither service as a Director nor payment of a director’s fee by the Company shall be sufficient to constitute “employment” by the Company.

(n)     “Exchange Act” means the Securities Exchange Act of 1934, as amended.

(o)    “Fair Market Value” means, as of any date, the value of Class A Senior Common Stock determined as follows:

(i)    If the Class A Senior Common Stock is listed on any established stock exchange or a national market system, including without limitation the Nasdaq National Market or The Nasdaq SmallCap Market of The Nasdaq Stock Market, its Fair Market Value shall be the closing sales price for such stock (or the closing bid, if no sales were reported) as quoted on such exchange or system for the day of determination, as reported in The Wall Street Journal or such other source as the Administrator deems reliable;

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(ii)    If the Class A Senior Common Stock is regularly quoted by a recognized securities dealer but selling prices are not reported, its Fair Market Value shall be the mean between the high bid and low asked prices for the Class A Senior Common Stock on the day of determination; or

(iii)    In the absence of an established market for the Class A Senior Common Stock, the Fair Market Value thereof shall be determined in good faith by the Administrator.

(p)    “Incentive Stock Option” means an Option intended to qualify as an incentive stock option within the meaning of Section 422 of the Code.

(q)    “Nonstatutory Stock Option” means an Option not intended to qualify as an Incentive Stock Option.

(r)    “Option” means a stock option granted pursuant to the Plan.

(s)    “Option Agreement” means a written or electronic agreement between the Company and an Optionee evidencing the terms and conditions of an individual Option grant. The Option Agreement is subject to the terms and conditions of the Plan.

(t)    “Option Exchange Program” means a program whereby outstanding Options are exchanged for Options with a lower exercise price.

(u)    “Optioned Stock” means the Class A Senior Common Stock subject to an Option.

(v)    “Optionee” means the holder of an outstanding Option granted under the Plan.

(w)    “Parent” means a “parent corporation,” whether now or hereafter existing, as defined in Section 424(e) of the Code.

(x)    “Plan” shall mean the Google Technology Inc. 2003 Stock Plan (No. 2), which shall become the Google Inc. 2003 Stock Plan (No. 2) upon the closing of a reincorporation of Google Technology Inc. into the State of Delaware that includes the corresponding name change to Google Inc.

(y)    “Senior Employee” shall mean any Employee who holds a leadership or managerial position at the Company and has a title with the Company of, or responsibilities equivalent to, that of either (i) a director or (ii) a position senior to director.

(z)    “Service Provider” means an Employee, Director or Consultant.

(aa)    “Share” means a share of the Class A Senior Common Stock, as adjusted in accordance with Section 12 below.

(bb)    “Subsidiary” means a “subsidiary corporation,” whether now or hereafter existing, as defined in Section 424(f) of the Code.

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3.    Stock Subject to the Plan. Subject to the provisions of Section 12 of the Plan, the maximum aggregate number of Shares that may be subject to option and sold under the Plan is 12,388,116, minus those shares of Class A Senior Common Stock or shares of Common Stock that, after June 18, 2003, are issued or made subject to outstanding options under the Company’s 1998 Stock Plan (the “1998 Plan”), the Company’s 2003 Stock Plan (the “2003 Plan (No. 1)”) or the Company’s 2003 Stock Plan (No. 3) (the “2003 Plan (No. 3)”); provided, that those shares of Class A Senior Common Stock or Common Stock of the Company returned to the 1998 Plan, the 2003 Plan (No. 1) and the 2003 Plan (No. 3) as a result of termination of options or repurchase of shares issued (at any time) under those plans shall be added to the authorized number of Shares that may be subject to option and sold under this Plan. In no event shall the number of Shares issued pursuant to Incentive Stock Options under this Plan exceed the number indicated in this Section 3. The Shares may be authorized but unissued or reacquired shares of Class A Senior Common Stock.

If an Option expires or becomes unexercisable without having been exercised in full, or is surrendered pursuant to an Option Exchange Program, the unpurchased Shares that were subject thereto shall become available for future grant or sale under the Plan (unless the Plan has terminated). However, Shares that have actually been issued under the Plan, upon exercise of an Option, shall not be returned to the Plan and shall not become available for future distribution under the Plan, except that if unvested Shares of restricted stock are repurchased by the Company at their original purchase price, such Shares shall become available for future grant under the Plan.

4.    Administration of the Plan.

(a)    Administrator. The Plan shall be administered by the Board or a Committee appointed by the Board, which Committee shall be constituted to comply with Applicable Laws.

(b)    Powers of the Administrator. Subject to the provisions of the Plan and, in the case of a Committee, the specific duties delegated by the Board to such Committee, and subject to the approval of any relevant authorities, the Administrator shall have the authority in its discretion:

(i)       to determine the Fair Market Value;

(ii)      to select the Service Providers to whom Options may from time to time be granted hereunder;

(iii)     to determine the number of Shares to be covered by each such award granted hereunder;

(iv)     to approve forms of agreement for use under the Plan;

(v)      to determine the terms and conditions of any Option granted hereunder. Such terms and conditions include, but are not limited to, the exercise price, the time or times when Options may be exercised (which may be based on performance criteria), any vesting acceleration or waiver of forfeiture restrictions, and any restriction or limitation regarding any Option or the Class A

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Senior Common Stock relating thereto, based in each case on such factors as the Administrator, in its sole discretion, shall determine;

(vi)    to reduce the exercise price of any Option to the then current Fair Market Value if the Fair Market Value of the Class A Senior Common Stock covered by such Option has declined since the date the Option was granted;

(vii)    to initiate an Option Exchange Program;

(viii)    to prescribe, amend and rescind rules and regulations relating to the Plan, including rules and regulations relating to sub-plans established for the purpose of satisfying applicable foreign laws;

(ix)    to allow Optionees to satisfy withholding tax obligations by electing to have the Company withhold from the Shares to be issued upon exercise of an Option that number of Shares having a Fair Market Value equal to the minimum amount required to be withheld. The Fair Market Value of the Shares to be withheld shall be determined on the date that the amount of tax to be withheld is to be determined. All elections by Optionees to have Shares withheld for this purpose shall be made in such form and under such conditions as the Administrator may deem necessary or advisable; and

(x)    to construe and interpret the terms of the Plan and Options granted pursuant to the Plan.

(c)    Effect of Administrator’s Decision. All decisions, determinations and interpretations of the Administrator shall be final and binding on all Optionees.

5.    Eligibility. Nonstatutory Stock Options may be granted to Service Providers. Incentive Stock Options may be granted only to Employees.

6.    Limitations.

(a)    Incentive Stock Option Limit. Each Option shall be designated in the Option Agreement as either an Incentive Stock Option or a Nonstatutory Stock Option. However, notwithstanding such designation, to the extent that the aggregate Fair Market Value of the Shares with respect to which Incentive Stock Options are exercisable for the first time by the Optionee during any calendar year (under all plans of the Company and any Parent or Subsidiary) exceeds $100,000, such Options shall be treated as Nonstatutory Stock Options. For purposes of this Section, Incentive Stock Options shall be taken into account in the order in which they were granted. The Fair Market Value of the Shares shall be determined as of the time the Option with respect to such Shares is granted.

(b)    At-Will Employment. Neither the Plan nor any Option shall confer upon any Optionee any right with respect to continuing the Optionee’s relationship as a Service Provider with the Company, nor shall it interfere in any way with his or her right or the Company’s right to terminate such relationship at any time, with or without cause, and with or without notice.

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7.    Term of Plan. Subject to shareholder approval in accordance with Section 19, the Plan shall become effective upon its adoption by the Board. Unless sooner terminated under Section 15, it shall continue in effect for a term of ten (10) years from the later of (i) the effective date of the Plan, or (ii) the earlier of the most recent board or shareholder approval of an increase in the number of Shares reserved for issuance under the Plan.

8.     Term of Option. The term of each Option shall be stated in the Option Agreement; provided, however, that the term shall be no more than ten (10) years from the date of grant thereof. In the case of an Incentive Stock Option granted to an Optionee who, at the time the Option is granted, owns stock representing more than ten percent (10%) of the voting power of all classes of stock of the Company or any Parent or Subsidiary, the term of the Option shall be five (5) years from the date of grant or such shorter term as may be provided in the Option Agreement.

9.    Option Exercise Price and Consideration.

(a)    The per share exercise price for the Shares to be issued upon exercise of an Option shall be such price as is determined by the Administrator, but shall be subject to the following:

(i)    In the case of an Incentive Stock Option

(A)    granted to an Employee who, at the time of grant of such Option, owns stock representing more than ten percent (10%) of the voting power of all classes of stock of the Company or any Parent or Subsidiary, the exercise price shall be no less than 110% of the Fair Market Value per Share on the date of grant.

(B)    granted to any other Employee, the per Share exercise price shall be no less than 100% of the Fair Market Value per Share on the date of grant.

(ii)    In the case of a Nonstatutory Stock Option

(A)    granted to a Service Provider who, at the time of grant of such Option, owns stock representing more than ten percent (10%) of the voting power of all classes of stock of the Company or any Parent or Subsidiary, the exercise price shall be no less than 110% of the Fair Market Value per Share on the date of grant.

(B)    granted to any other Service Provider, the per Share exercise price shall be no less than 85% of the Fair Market Value per Share on the date of grant.

(b)    The consideration to be paid for the Shares to be issued upon exercise of an Option, including the method of payment, shall be determined by the Administrator (and, in the case of an Incentive Stock Option, shall be determined at the time of grant). Such consideration may consist, without limitation, of (1) cash, (2) check, (3) promissory note, (4) other Shares which (x) in the case of Shares acquired directly from the Company, have been owned by the Optionee for more than six months on the date of surrender, and (y) have a Fair Market Value on the date of surrender equal to the aggregate exercise price of the Shares as to which such Option shall be exercised, (5) consideration

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received by the Company under a cashless exercise program implemented by the Company in connection with the Plan, or (6) any combination of the foregoing methods of payment. In making its determination as to the type of consideration to accept, the Administrator shall consider if acceptance of such consideration may be reasonably expected to benefit the Company.

10.    Exercise of Option.

(a)    Procedure for Exercise; Rights as a Shareholder. Any Option granted hereunder shall be exercisable according to the terms hereof at such times and under such conditions as determined by the Administrator and set forth in the Option Agreement. Except in the case of Options granted to officers, Directors, Senior Employees and Consultants, Options shall become exercisable at a rate of no less than 20% per year over five (5) years from the date the Options are granted.

An Option shall be deemed exercised when the Company receives: (i) written or electronic notice of exercise (in accordance with the Option Agreement) from the person entitled to exercise the Option, and (ii) full payment for the Shares with respect to which the Option is exercised. Full payment may consist of any consideration and method of payment authorized by the Administrator and permitted by the Option Agreement and the Plan. Shares issued upon exercise of an Option shall be issued in the name of the Optionee or, if requested by the Optionee, in the name of the Optionee and his or her spouse. Until the Shares are issued (as evidenced by the appropriate entry on the books of the Company or of a duly authorized transfer agent of the Company), no right to vote or receive dividends or any other rights as a shareholder shall exist with respect to the Shares, notwithstanding the exercise of the Option. The Company shall issue (or cause to be issued) such Shares promptly after the Option is exercised. No adjustment will be made for a dividend or other right for which the record date is prior to the date the Shares are issued, except as provided in Section 12 of the Plan.

Exercise of an Option in any manner shall result in a decrease in the number of Shares thereafter available, both for purposes of the Plan and for sale under the Option, by the number of Shares as to which the Option is exercised.

(b)    Termination of Relationship as a Service Provider. If an Optionee ceases to be a Service Provider, such Optionee may exercise his or her Option within thirty (30) days of termination, or such longer period of time as specified in the Option Agreement, to the extent that the Option is vested on the date of termination (but in no event later than the expiration of the term of the Option as set forth in the Option Agreement). If, on the date of termination, the Optionee is not vested as to his or her entire Option, the Shares covered by the unvested portion of the Option shall revert to the Plan. If, after termination, the Optionee does not exercise his or her Option within the time specified by the Administrator, the Option shall terminate, and the Shares covered by such Option shall revert to the Plan.

(c)    Disability of Optionee. If an Optionee ceases to be a Service Provider as a result of the Optionee’s Disability, the Optionee may exercise his or her Option within six (6) months of termination, or such longer period of time as specified in the Option Agreement, to the extent the Option is vested on the date of termination (but in no event later than the expiration of the term of such Option as set forth in the Option Agreement). If, on the date of termination, the Optionee is not vested as to his or her entire Option, the Shares covered by the unvested portion of the Option shall revert to the Plan. If,

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after termination, the Optionee does not exercise his or her Option within the time specified herein, the Option shall terminate, and the Shares covered by such Option shall revert to the Plan.

(d)    Death of Optionee. If an Optionee dies while a Service Provider, the Option may be exercised within six (6) months following Optionee’s death, or such longer period of time as specified in the Option Agreement, to the extent that the Option is vested on the date of death (but in no event later than the expiration of the term of such Option as set forth in the Option Agreement) by the Optionee’s designated beneficiary, provided such beneficiary has been designated prior to Optionee’s death in a form acceptable to the Administrator. If no such beneficiary has been designated by the Optionee, then such Option may be exercised by the personal representative of the Optionee’s estate or by the person(s) to whom the Option is transferred pursuant to the Optionee’s will or in accordance with the laws of descent and distribution. If, at the time of death, the Optionee is not vested as to his or her entire Option, the Shares covered by the unvested portion of the Option shall immediately revert to the Plan. If the Option is not so exercised within the time specified herein, the Option shall terminate, and the Shares covered by such Option shall revert to the Plan.

(e)    Leaves of Absence.

(i)    Unless the Administrator provides otherwise, vesting of Options granted hereunder shall be suspended during any unpaid leave of absence.

(ii)    A Service Provider shall not cease to be an Employee in the case of (A) any leave of absence approved by the Company or (B) transfers between locations of the Company or between the Company, its Parent, any Subsidiary, or any successor.

(iii)    For purposes of Incentive Stock Options, no such leave may exceed ninety (90) days, unless reemployment upon expiration of such leave is guaranteed by statute or contract. If reemployment upon expiration of a leave of absence approved by the Company is not so guaranteed, then three (3) months following the 91st day of such leave, any Incentive Stock Option held by the Optionee shall cease to be treated as an Incentive Stock Option and shall be treated for tax purposes as a Nonstatutory Stock Option.

11.    Limited Transferability of Options. Unless determined otherwise by the Administrator, Options may not be sold, pledged, assigned, hypothecated, transferred, or disposed of in any manner other than by will or the laws of descent and distribution, and may be exercised during the lifetime of the Optionee, only by the Optionee. If the Administrator in its sole discretion makes an Option transferable, such Option may only be transferred (i) by will, (ii) by the laws of descent and distribution, or (iii) to family members (within the meaning of Rule 701 of the Securities Act) through gifts or domestic relations orders, as permitted by Rule 701 of the Securities Act.

12.    Adjustments Upon Changes in Capitalization, Merger or Asset Sale.

(a)    Changes in Capitalization. In the event that any dividend or other distribution (whether in the form of cash, Shares, other securities, or other property), recapitalization, stock split, reverse stock split, reorganization, merger, consolidation, split-up, spin-off, combination, repurchase, or

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exchange of Shares or other securities of the Company, or other change in the corporate structure of the Company affecting the Shares occurs, the Administrator, in order to prevent diminution or enlargement of the benefits or potential benefits intended to be made available under the Plan, may (in its sole discretion) adjust the number and class of Shares that may be delivered under the Plan and/or the number, class, and price of Shares covered by each outstanding Option; provided, however, that the Administrator shall make such adjustments to the extent required by Section 25102(o) of the California Corporations Code.

(b)    Dissolution or Liquidation. In the event of the proposed dissolution or liquidation of the Company, the Administrator shall notify each Optionee as soon as practicable prior to the effective date of such proposed transaction. To the extent it has not been previously exercised, an Option will terminate immediately prior to the consummation of such proposed action.

(c)    Merger or Change in Control. In the event of a merger of the Company with or into another corporation, or a Change in Control, each outstanding Option shall be assumed or an equivalent option substituted by the successor corporation or a Parent or Subsidiary of the successor corporation. In the event that the successor corporation in a merger or Change in Control refuses to assume or substitute for the Option, then the Optionee shall fully vest in and have the right to exercise the Option as to all of the Optioned Stock, including Shares as to which it would not otherwise be vested or exercisable. If an Option becomes fully vested and exercisable in lieu of assumption or substitution in the event of a merger or Change in Control, the Administrator shall notify the Optionee in writing or electronically that this Option shall be fully exercisable for a period of fifteen (15) days from the date of such notice, and the Option shall terminate upon expiration of such period. For the purposes of this paragraph, the Option shall be considered assumed if, following the merger or Change in Control, the option or right confers the right to purchase or receive, for each Share of Optioned Stock subject to the Option immediately prior to the merger or Change in Control, the consideration (whether stock, cash, or other securities or property) received in the merger or Change in Control by holders of Class A Senior Common Stock for each Share held on the effective date of the transaction (and if holders were offered a choice of consideration, the type of consideration chosen by the holders of a majority of the outstanding Shares); provided, however, that if such consideration received in the merger or Change in Control is not solely common stock of the successor corporation or its Parent, the Administrator may, with the consent of the successor corporation, provide for the consideration to be received upon the exercise of the Option for each Share of Optioned Stock subject to the Option, to be solely common stock of the successor corporation or its Parent equal in Fair Market Value to the per share consideration received by holders of Class A Senior Common Stock in the merger or Change in Control.

13.    Time of Granting Options. The date of grant of an Option shall, for all purposes, be the date on which the Administrator makes the determination granting such Option, or such later date as is determined by the Administrator. Notice of the determination shall be given to each Service Provider to whom an Option is so granted within a reasonable time after the date of such grant.

14.    Amendment and Termination of the Plan.

(a)    Amendment and Termination. The Board may at any time amend, alter, suspend or terminate the Plan.

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(b)     Shareholder Approval. The Board shall obtain shareholder approval of any Plan amendment to the extent necessary and desirable to comply with Applicable Laws.

(c)    Effect of Amendment or Termination. No amendment, alteration, suspension or termination of the Plan shall impair the rights of any Optionee, unless mutually agreed otherwise between the Optionee and the Administrator, which agreement must be in writing and signed by the Optionee and the Company. Termination of the Plan shall not affect the Administrator’s ability to exercise the powers granted to it hereunder with respect to Options granted under the Plan prior to the date of such termination.

15.    Conditions Upon Issuance of Shares.

(a)    Legal Compliance. Shares shall not be issued pursuant to the exercise of an Option unless the exercise of such Option and the issuance and delivery of such Shares shall comply with Applicable Laws and shall be further subject to the approval of counsel for the Company with respect to such compliance.

(b)    Investment Representations. As a condition to the exercise of an Option, the Administrator may require the person exercising such Option to represent and warrant at the time of any such exercise that the Shares are being purchased only for investment and without any present intention to sell or distribute such Shares if, in the opinion of counsel for the Company, such a representation is required.

16.    Inability to Obtain Authority. The inability of the Company to obtain authority from any regulatory body having jurisdiction, which authority is deemed by the Company’s counsel to be necessary to the lawful issuance and sale of any Shares hereunder, shall relieve the Company of any liability in respect of the failure to issue or sell such Shares as to which such requisite authority shall not have been obtained.

17.    Reservation of Shares. The Company, during the term of this Plan, shall at all times reserve and keep available such number of Shares as shall be sufficient to satisfy the requirements of the Plan.

18.    Shareholder Approval. The Plan shall be subject to approval by the shareholders of the Company within twelve (12) months after the date the Plan is adopted. Such shareholder approval shall be obtained in the degree and manner required under Applicable Laws.

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GOOGLE INC.

2003 STOCK PLAN (NO. 2)

STOCK OPTION AGREEMENT—EARLY EXERCISE

Unless otherwise defined herein, the terms defined in the 2003 Stock Plan (No. 2) (the “Plan”) shall have the same defined meanings in this Stock Option Agreement (the “Option Agreement”).

1.    Grant of Option. The Administrator of the Company hereby grants to the Optionee (the “Optionee”) named in the Certificate of Stock Option Grant on the Citigroup StockPlan Web site (the “Certificate”), an option (the “Option”) to purchase the number of Shares set forth in the Certificate, at the exercise price per Share set forth in the Certificate (the “Exercise Price”), and subject to the terms and conditions of the Plan, which is incorporated herein by reference. Subject to Section 14 of the Plan, in the event of a conflict between the terms and conditions of the Plan and this Option Agreement, the terms and conditions of the Plan shall prevail. The Certificate is incorporated herein by reference and is a part of this Option Agreement.

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

2.    Exercise of Option. This Option shall be exercisable during its term in accordance with the provisions of Section 10 of the Plan as follows:

(a)    Right to Exercise.

(i)    Subject to subsections 2(a)(ii), 2(a)(iii) and 2(a)(iv) below, this Option shall be exercisable cumulatively according to the vesting schedule set forth in the Certificate, subject to the Optionee’s continuing as a Service Provider on such dates. Alternatively and subject to subsections 2(a)(ii), 2(a)(iii) and 2(a)(iv) below, at the election of the Optionee, this Option may be exercised in whole or in part at any time as to Shares which have not yet vested.

(ii)    If the Optionee chooses to exercise this Option as to Shares which have not yet vested (“Unvested Shares”), the Terms of Restricted Stock Purchase set forth in Exhibit B-1 hereto shall govern the rights and obligations of the Optionee and the Company with respect to the Unvested Shares acquired upon such exercise of the Option. The Terms of Restricted Stock Purchase provide that, among other things, if the Optionee’s status as a Service Provider is terminated for any reason, including for cause, death or Disability, the Company shall have the right and option to purchase from Optionee, or Optionee’s personal representative, as the case may be, all of the shares that have not vested as of the date of such termination at the price paid by the Optionee for such shares (the “Repurchase Option”). The Terms of Restricted Stock Purchase and the related Joint Escrow Instructions set forth in Exhibit B-3 hereto also provide that Unvested Shares so purchased shall be held in escrow until the Company exercises its Repurchase Option or until such Unvested Shares vest. By accepting the terms of this Option Agreement, Optionee agrees to be bound by the Terms of Restricted Stock Purchase and related Joint Escrow Instructions, including the Repurchase Option

and escrow provisions thereof, in the event Optionee chooses to exercise this Option as to Shares which have not yet vested. In addition, by executing a Stock Option Cash Exercise Letter of Authorization, the Optionee shall agree to be bound by the Terms of Restricted Stock Purchase and related Joint Escrow Instructions.

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

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

(b)    Method of Exercise. This Option shall be exercisable by delivery of a Stock Option Cash Exercise Letter of Authorization (the “Authorization”) in the form as set forth in Exhibit A hereto which shall state the election to exercise the Option, the number of Shares with respect to which the Option is being exercised, and such other representations and agreements as may be required by the Company. The Authorization shall be accompanied by payment of the aggregate Exercise Price as to all exercised Shares. This Option shall be deemed to be exercised upon receipt by the Company of such fully executed Authorization accompanied by the aggregate Exercise Price.

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

3.    Optionee’s Representations. In the event the Shares have not been registered under the Securities Act of 1933, as amended, at the time this Option is exercised, the Optionee shall, if required by the Company, concurrently with the exercise of all or any portion of this Option, make to the Company certain representations and warranties as set forth in the Authorization.

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

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

(a) cash;

(b) check;

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(c)    consideration received by the Company under a formal cashless exercise program adopted by the Company in connection with the Plan; or

(d)    surrender of other Shares which, (i) in the case of Shares acquired upon exercise of an option, have been owned by the Optionee for more than six (6) months on the date of surrender, and (ii) have a Fair Market Value on the date of surrender equal to the aggregate Exercise Price of the exercised Shares.

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

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

8.    Term of Option. This Option may be exercised only within the term set out in the Certificate, and may be exercised during such term only in accordance with the Plan and the terms of this Option Agreement.

9.    Rights as Shareholder. Until the issuance of the Shares (as evidenced by the appropriate entry on the books of the Company or of a duly authorized transfer agent of the Company), no right to vote or receive dividends or any other rights as a shareholder shall exist with respect to the optioned stock, notwithstanding the exercise of the Option. The Shares shall be issued to the Optionee as soon as practicable after the Option is exercised. No adjustment shall be made for a dividend or other right for which the record date is prior to the date of issuance except as provided in Section 10(a) of the Plan.

10.    Restrictive Legends and Stop-Transfer Orders.

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

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

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

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OFFICE OF THE ISSUER. SUCH TRANSFER RESTRICTIONS AND RIGHT OF FIRST REFUSAL ARE BINDING ON TRANSFEREES OF THESE SHARES.

IT IS UNLAWFUL TO CONSUMMATE A SALE OR TRANSFER OF THIS SECURITY, OR ANY INTEREST THEREIN, OR TO RECEIVE ANY CONSIDERATION THEREFOR, WITHOUT THE PRIOR WRITTEN CONSENT OF THE COMMISSIONER OF CORPORATIONS OF THE STATE OF CALIFORNIA, EXCEPT AS PERMITTED IN THE COMMISSIONER’S RULES.

(b)    Stop-Transfer Notices. Optionee agrees that, in order to ensure compliance with the restrictions referred to herein, the Company may issue appropriate “stop transfer” instructions to its transfer agent, if any, and that, if the Company transfers its own Shares, it may make appropriate notations to the same effect in its own records.

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

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

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

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

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

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

(e)    Holder’s Right to Transfer. If all of the Shares proposed in the Notice to be transferred to a given Proposed Transferee are not purchased by the Company and/or its assignee(s) as provided in this

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

(f)    Exception for Certain Family Transfers. Anything to the contrary contained in this Section notwithstanding, the transfer of any or all of the Shares during the Optionee’s lifetime or on the Optionee’s death by will or intestacy to the Optionee’s immediate family or a trust for the benefit of the Optionee’s immediate family shall be exempt from the provisions of this Section. “Immediate Family” as used herein shall mean spouse or spousal equivalent (as defined below), lineal descendant or antecedent, father, mother, brother or sister. As used herein, a person is deemed to be a spousal equivalent provided the following circumstances are true: (i) irrespective of whether or not the Optionee and the spousal equivalent are the same sex, they are the sole spousal equivalent of the other for the last twelve (12) months, (ii) they intend to remain so indefinitely, (iii) neither are married to anyone else, (iv) both are at least 18 years of age and is and were mentally competent at the commencement of the domestic partnership to consent to contract, (v) they are not related by blood to a degree of closeness that which would prohibit legal marriage in the state in which they legally reside, (vi) they are jointly responsible for each other’s common welfare and financial obligations, and (vii) they reside together in the same residence for the last twelve (12) months and intend to do so indefinitely. In such case, the transferee or other recipient shall receive and hold the Shares so transferred subject to the provisions of this Section, and there shall be no further transfer of such Shares except in accordance with the terms of this Section.

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

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

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

(b)    Exercise of ISO. If this Option qualifies as an ISO, there will be no regular federal income tax liability upon the exercise of the Option, although the excess, if any, of the Fair Market Value of

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the exercised Shares on the date of exercise over the Exercise Price will be treated as an adjustment to the alternative minimum tax for federal tax purposes and may subject the Optionee to the alternative minimum tax in the year of exercise.

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

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

(e)    Withholding Taxes. Optionee agrees to make appropriate arrangements with the Company (or any parent or subsidiary of the Company employing or retaining Optionee) for the satisfaction of all Federal, state, local and foreign income and employment tax withholding requirements applicable to the Option exercise. Optionee acknowledges and agrees that the Company may refuse to honor the exercise and refuse to deliver the Shares if such withholding amounts are not delivered at the time of exercise.

(f)    Section 83(b) Election for Unvested Shares Purchased Pursuant to Options. With respect to the exercise of an Option for unvested Shares, an election (the “Election”) may be filed by the Optionee with the Internal Revenue Service, within 30 days of the purchase of the Shares, electing pursuant to Section 83(b) of the Code to be taxed currently on any difference between the purchase price of the Shares and their Fair Market Value on the date of purchase. In the case of an NSO, this will result in a recognition of taxable income to the Optionee on the date of exercise, measured by the excess, if any, of the Fair Market Value of the exercised Shares, at the time the Option is exercised over the purchase price for the exercised Shares. Absent such an election, taxable income will be measured and recognized by Optionee at the time or times on which the Company’s Repurchase Option lapses. In the case of an ISO, such an election will result in a recognition of income to the Optionee for alternative minimum tax purposes on the date of exercise, measured by the excess, if any, of the Fair Market Value of the exercised Shares, at the time the Option is exercised, over the purchase price for the exercised Shares. Absent such an election, alternative minimum taxable income will be measured and recognized by Optionee at the time or times on which the Company’s Repurchase Option lapses. Optionee is strongly encouraged to seek the advice of his or her own tax consultants in connection with the purchase of the Shares and the advisability of filing of the Election under Section 83(b) of the Code. A form of Election under Section 83(b) is set forth as Exhibit B-4 hereto for reference. A form of Election is also available on the Citigroup StockPlan Website.

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

13.    Entire Agreement; Governing Law. The Plan is incorporated herein by reference. The Plan and this Option Agreement (including the Certificate and all of the exhibits, which are parts of this Agreement) constitute the entire agreement of the parties with respect to the subject matter hereof and supersede in their entirety all prior undertakings and agreements of the Company and Optionee with respect to the subject matter hereof, and may not be modified adversely to the Optionee’s interest except by means of a writing signed by the Company and Optionee. This Option Agreement is governed by the internal substantive laws but not the choice of law rules of California.

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

15.    Acknowledgement. By accepting this Option, Optionee acknowledges receipt of a copy of the Plan and represents that he or she is familiar with the terms and provisions thereof, and accepts this Option subject to all of the terms and provisions thereof. Further, Optionee acknowledges that Optionee has reviewed the Plan and this Option Agreement (including the Certificate and all of the exhibits, which are parts of this Agreement) in their entirety, has had an opportunity to obtain the advice of counsel prior accepting this Option and fully understands all provisions of the Option. Further, Optionee agrees to accept as binding, conclusive and final all decisions or interpretations of the Administrator upon any questions arising under the Plan or this Option. Optionee further agrees to notify the Company upon any change in his or her residence address.

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EXHIBIT A

STOCK OPTION CASH EXERCISE

Letter of Authorization

To:                                                                                                                                                                          (the “Company”)                

(Your Company’s Name)

From:                                                                                                               Exercise Date:                                                                                                              

              (Last Name)                 (First Name)                         M.I.)

Pursuant to the provisions of the Google Inc. 2003 Stock Plan (No. 2) (the “Plan”), Certificate of Stock Option Grant and Option Agreement under which the following stock option(s) was/were granted, I hereby elect to exercise the following stock option(s) granted to me by the Company (as defined in the Plan) to purchase shares of Company Class A Senior Common Stock (the “Shares”):

Grant Exercise Information:

1	2	3	4	5	6	7
Grant Number	Grant Date	Grant Type	Grant Price	# of Shares to	Amount Due	Amount Due
		(Check One)	Per Share	Exercise	For Stock	for Taxes*
(if applicable
		¨ ISO   ¨ INQ
		¨ ISO   ¨ INQ
		¨ ISO   ¨ INQ
		¨ ISO   ¨ INQ
		¨ ISO   ¨ INQ
			Totals	(A)	(B)	(C)

Method Of Payment: ¨ Check

***If check not enclosed, please indicate:

Method of Payment                                                                                                               Total Due  for Exercise (B+C): $                                     

*Note: If you are exercising a Non-Qualified (NQ) stock option, please contact:

CITIGROUP STOCKPLAN SERVICES at (888) 980-6456 or (212) 659-2200 to complete this information.

TO COMPLETE YOUR STOCK OPTION EXERCISE, YOU MUST DO THE FOLLOWING:

1. Review the Terms and Conditions of Stock Option Exercise attached as Exhibit B to this document.

2. If are purchasing shares which have not yet become vested, review and execute one copy of the Assignment Separate from Certificate attached as Exhibit B-2 to this document.

3. If you are purchasing shares which have not yet become vested and you desire to elect pursuant to Section 83 (b) of the Code to be taxed currently as described in your Option Agreement, review and execute, and have your spouse, if any, review and execute, the Election under Section 83 (b) attached as Exhibit B-4 to this document.

4. Review and complete the terms of purchase on the following page.

Terms of Purchase:

By signing this Stock Option Cash Exercise Letter of Authorization (this “Authorization”), I hereby represent and warrant to the Company that I have read and agree to (i) all of the Terms and Conditions of Stock Option Exercise attached hereto as Exhibit B and (ii) all of the terms and conditions of the Option Agreement (including exhibits).

I am hereby delivering to the Company: (i) this fully completed and executed Authorization, (ii) if applicable, one copy of the

Assignment Separate from Certificate attached hereto as Exhibit B-2 fully executed by myself, (iii) if applicable, an Election under Section 83 (b) attached hereto as Exhibit B-4 fully executed by myself and my spouse, if any, and (iv) the full purchase price for the Shares.

This constitutes my irrevocable authorization for CITIGROUP STOCKPLAN SERVICES (on behalf of the Company) to request, and for my broker to provide, a statement of any shares of the Company’s Class A Senior Common Stock that I am holding, or have transferred as permitted by the Company’s applicable Stock Option Plan(s), which were originally acquired upon exercise of an option granted to me pursuant to the Company’s Stock Option Plan(s).

I understand that, if I am an officer or director of the Company, I may be subject to additional requirements under Federal securities regulations which pertain to this type of transaction.

X Signature	Address for Certificate Delivery following release from escrow:
Social Security Number
Work Number                                                         Home Phone
Email Address

Please mail completed original with attached exhibits to:

Attn: Google Inc. 2400 Bayshore Parkway Mountain View, CA 94043

You can call Citigroup Stockplan Services – Client Services Dept. Mon-Thurs: 9:00 am-7:00 pm, and Friday: 9:00 am-6:00 pm ET.

Phone: (888) 980-6456 or (212) 659-2200 Fax: (212) 659-2319.

List of Exhibits:

Exhibit B: Terms and Conditions of Stock Option Exercise (including Attachment 1 thereto regarding additional restrictions on transferability of the Shares)

Exhibit B-1: Terms of Restricted Stock Purchase

Exhibit B-2: Assignment Separate from Certificate

Exhibit B-3: Joint Escrow Instructions

Exhibit B-4: Election under Section 83(b)

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EXHIBIT B

TERMS AND CONDITIONS OF STOCK OPTION EXERCISE

1.    Exercise. The Optionee (the “Optionee”) identified on the Stock Option Cash Exercise Letter of Authorization (the “Authorization”) to which these Terms and Conditions of Stock Option Exercise (these “Terms and Conditions”) are attached has elected to exercise the option (the “Option”) to purchase shares of Class A Senior Common Stock of the Company (as defined in the Google Inc. 2003 Stock Plan (No. 2)) identified on the Authorization, and thereby purchase from the Company that number of shares of the Company’s Class A Senior Common Stock identified on the Authorization (the “Shares”) at the applicable exercise price per share set forth in the Option Agreement (the “Exercise Price”), and subject to the terms and conditions of: (i) the 2003 Stock Plan (No. 2) (the “Plan”), (ii) the Stock Option Agreement (including all exhibits thereto and the Certificate of Stock Option Grant (the “Certificate”)) pursuant to which the Company granted the Option to Optionee (the “Option Agreement”), and (iii) the Authorization, including these Terms and Conditions. Unless otherwise defined herein, the terms defined in the Plan shall have the same defined meanings in these Terms and Conditions.

2.    Delivery of Payment. Purchaser herewith delivers to the Company the full purchase price of the Shares, as set forth in the Option Agreement and any and all withholding taxes due in connection with the exercise of the Option.

3.    Representations of Optionee. Optionee acknowledges that Optionee has received, read and understood the Plan and the Option Agreement (including the Certificate and all of the exhibits, which are part of the Option Agreement) and agrees to abide by and be bound by their terms and conditions. Optionee understands that Optionee may suffer adverse tax consequences as a result of Optionee’s purchase or disposition of the Shares. Optionee represents that Optionee has consulted with any tax consultants Optionee deems advisable in connection with the purchase or disposition of the Shares and that Optionee is not relying on the Company for any tax advice. Optionee understands and agrees that the Company shall cause the legends set forth in the Option Agreement or legends substantially equivalent thereto, to be placed upon any certificate(s) evidencing ownership of the Shares together with any other legends that may be required by the Company or by state or federal securities laws.

4.    Investment Representations. In the event that the Shares have not been registered under the Securities Act of 1933, as amended (the “Securities Act”), at the time of exercise, then in connection with the purchase of the Shares, the Optionee represents to the Company the following:

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

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

(c)    Optionee is familiar with the provisions of Rule 701 and Rule 144, each promulgated under the Securities Act, which, in substance, permit limited public resale of “restricted securities” acquired, directly or indirectly from the issuer thereof, in a non-public offering subject to the satisfaction of certain conditions. Rule 701 provides that if the issuer qualifies under Rule 701 at the time of the grant of the Option to the Optionee, the exercise will be exempt from registration under the Securities Act. In the event the Company becomes subject to the reporting requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, ninety (90) days thereafter (or such longer period as any market stand-off agreement may require) the Shares exempt under Rule 701 may be resold, subject to the satisfaction of certain of the conditions specified by Rule 144, including: (1) the resale being made through a broker in an unsolicited “broker’s transaction” or in transactions directly with a market maker (as said term is defined under the Securities Exchange Act of 1934); and, in the case of an affiliate, (2) the availability of certain public information about the Company, (3) the amount of Shares being sold during any three month period not exceeding the limitations specified in Rule 144(e), and (4) the timely filing of a Form 144, if applicable.

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

(d)    Optionee further understands that in the event all of the applicable requirements of Rule 701 or 144 are not satisfied, registration under the Securities Act, compliance with Regulation A, or some other registration exemption will be required; and that, notwithstanding the fact that Rules 144 and 701 are not exclusive, the Staff of the Securities and Exchange Commission has expressed its opinion that persons proposing to sell private placement Shares other than in a registered offering and otherwise than pursuant to Rules 144 or 701 will have a substantial

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burden of proof in establishing that an exemption from registration is available for such offers or sales, and that such persons and their respective brokers who participate in such transactions do so at their own risk. Optionee understands that no assurances can be given that any such other registration exemption will be available in such event.

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

6.    Terms of Restricted Stock Purchase and Joint Escrow Instructions. In the event that Optionee has elected to purchase Shares which have not yet become vested under the vesting schedule set forth in the Option Agreement (“Unvested Shares”), the Terms of Restricted Stock Purchase set forth in Exhibit B-1 of the Option Agreement shall govern the rights and obligations of the Optionee and the Company with respect to the Unvested Shares acquired upon such exercise. The Terms of Restricted Stock Purchase provide that, among other things, if the Optionee’s status as a Service Provider is terminated for any reason, including for cause, death or Disability, the Company shall have the right and option to purchase from Optionee, or Optionee’s personal representative, as the case may be, all of the Shares that have not vested as of the date of such termination at the price paid by the Optionee for such Shares (the “Repurchase Option”). The Terms of Restricted Stock Purchase and the related Joint Escrow Instructions set forth in Exhibit B-3 to the Option Agreement also provide that Unvested Shares so purchased shall be held in escrow until the Company exercises its Repurchase Option or until such Unvested Shares vest. In the event Optionee has chosen to exercise the Option as to Unvested Shares, by accepting the terms of the Option Agreement at the time of grant and by executing this Authorization, Optionee agrees to be bound by the Terms of Restricted Stock Purchase and related Joint Escrow Instructions, including the Repurchase Option and escrow provisions thereof.

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

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

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9.    Governing Law; Severability. This Authorization is governed by the internal substantive laws, but not the choice of law rules, of California.

10.    Entire Agreement. The Plan and Option Agreement (including the Certificate and all exhibits, which are parts of the Option Agreement) are incorporated herein by reference. This Authorization, the Plan, the Terms of Restricted Stock Purchase, the Certificate, the Option Agreement and the Joint Escrow Instructions constitute the entire agreement of the parties with respect to the subject matter hereof and supersede in their entirety all prior undertakings and agreements of the Company and Optionee with respect to the subject matter hereof, and may not be modified adversely to the Optionee’s interest except by means of a writing signed by the Company and Optionee.

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ATTACHMENT 1

STATE OF CALIFORNIA—CALIFORNIA ADMINISTRATIVE CODE

Title 10. Investment—Chapter 3. Commissioner of Corporations

260.141.11: Restriction on Transfer.

(a)    The issuer of any security upon which a restriction on transfer has been imposed pursuant to Sections 260.141.10 or 260.534 shall cause a copy of this section to be delivered to each issuee or transferee of such security at the time the certificate evidencing the security is delivered to the issuee or transferee.

(b)    It is unlawful for the holder of any such security to consummate a sale or transfer of such security, or any interest therein, without the prior written consent of the Commissioner (until this condition is removed pursuant to Section 260.141.12 of these rules), except:

(1)    to the issuer;

(2)    pursuant to the order or process of any court;

(3)    to any person described in Subdivision (i) of Section 25102 of the Code or Section 260.105.14 of these rules;

(4)    to the transferor’s ancestors, descendants or spouse, or any custodian or trustee for the account of the transferor or the transferor’s ancestors, descendants, or spouse; or to a transferee by a trustee or custodian for the account of the transferee or the transferee’s ancestors, descendants or spouse;

(5)    to holders of securities of the same class of the same issuer;

(6)    by way of gift or donation inter vivos or on death;

(7)    by or through a broker-dealer licensed under the Code (either acting as such or as a finder) to a resident of a foreign state, territory or country who is neither domiciled in this state to the knowledge of the broker-dealer, nor actually present in this state if the sale of such securities is not in violation of any securities law of the foreign state, territory or country concerned;

(8)    to a broker-dealer licensed under the Code in a principal transaction, or as an underwriter or member of an underwriting syndicate or selling group;

(9)    if the interest sold or transferred is a pledge or other lien given by the purchaser to the seller upon a sale of the security for which the Commissioner’s written consent is obtained or under this rule not required;

(10)    by way of a sale qualified under Sections 25111, 25112, 25113 or 25121 of the Code, of the securities to be transferred, provided that no order under Section 25140 or subdivision (a) of Section 25143 is in effect with respect to such qualification;

(11)    by a corporation to a wholly owned subsidiary of such corporation, or by a wholly owned subsidiary of a corporation to such corporation;

(12)    by way of an exchange qualified under Section 25111, 25112 or 25113 of the Code, provided that no order under Section 25140 or subdivision (a) of Section 25143 is in effect with respect to such qualification;

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(13)    between residents of foreign states, territories or countries who are neither domiciled nor actually present in this state;

(14)    to the State Controller pursuant to the Unclaimed Property Law or to the administrator of the unclaimed property law of another state; or

(15)    by the State Controller pursuant to the Unclaimed Property Law or by the administrator of the unclaimed property law of another state if, in either such case, such person (i) discloses to potential purchasers at the sale that transfer of the securities is restricted under this rule, (ii) delivers to each purchaser a copy of this rule, and (iii) advises the Commissioner of the name of each purchaser;

(16)    by a trustee to a successor trustee when such transfer does not involve a change in the beneficial ownership of the securities;

(17)    by way of an offer and sale of outstanding securities in an issuer transaction that is subject to the qualification requirement of Section 25110 of the Code but exempt from that qualification requirement by subdivision (f) of Section 25102; provided that any such transfer is on the condition that any certificate evidencing the security issued to such transferee shall contain the legend required by this section.

(c)    The certificates representing all such securities subject to such a restriction on transfer, whether upon initial issuance or upon any transfer thereof, shall bear on their face a legend, prominently stamped or printed thereon in capital letters of not less than 10-point size, reading as follows:

“IT IS UNLAWFUL TO CONSUMMATE A SALE OR TRANSFER OF THIS SECURITY, OR ANY INTEREST THEREIN, OR TO RECEIVE ANY CONSIDERATION THEREFOR, WITHOUT THE PRIOR WRITTEN CONSENT OF THE COMMISSIONER OF CORPORATIONS OF THE STATE OF CALIFORNIA, EXCEPT AS PERMITTED IN THE COMMISSIONER’S RULES.”

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EXHIBIT B-1

TERMS OF RESTRICTED STOCK PURCHASE

In the event that Optionee elects to purchase shares of Class A Senior Common Stock which have not become vested under the vesting schedule set forth in the Option Agreement (“Unvested Shares”), pursuant to the Option Agreement and the Stock Option Cash Exercise Letter of Authorization, as a condition to Optionee’s election to exercise the Option, Optionee has agreed to these Terms of Restricted Stock Purchase which set forth the rights and obligations of the Optionee and the Company with respect to Unvested Shares acquired upon exercise of the Option. Unless otherwise defined herein, the terms defined in the 2003 Stock Plan (No. 2) shall have the same defined meanings in these Terms of Restricted Stock Purchase.

1.    Repurchase Option.

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

(b) Upon the occurrence of such termination, the Company may exercise its Repurchase Option by delivering personally or by registered mail, to Optionee (or his transferee or legal representative, as the case may be) with a copy to the escrow agent described in Section 2 below, a notice in writing indicating the Company’s intention to exercise the Repurchase Option AND, at the Company’s option, (i) by delivering to the Optionee (or the Optionee’s transferee or legal representative) a check in the amount of the aggregate repurchase price, or (ii) by the Company canceling an amount of the Optionee’s indebtedness to the Company equal to the aggregate repurchase price, or (iii) by a combination of (i) and (ii) so that the combined payment and cancellation of indebtedness equals such aggregate repurchase price. Upon delivery of such notice and payment of the aggregate repurchase price in any of the ways described above, the Company shall become the legal and beneficial owner of the Unvested Shares being repurchased and the rights and interests therein or relating thereto, and the Company shall have the right to retain and transfer to its own name the number of Unvested Shares being repurchased by the Company.

(c) Whenever the Company shall have the right to repurchase Unvested Shares hereunder, the Company may designate and assign one or more employees, officers, directors or shareholders of the Company or other persons or organizations to exercise all or a part of the Company’s Repurchase Option under this Agreement and purchase all or a part of such Unvested Shares.

(d) At its option, the Company may elect to make payment for the Unvested Shares to a bank selected by the Company. The Company shall avail itself of this option by a notice

in writing to Optionee stating the name and address of the bank, date of closing, and waiving the closing at the Company’s office.

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

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

2.    Transferability of the Shares; Escrow.

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

(b)    To insure the availability for delivery of Optionee’s Unvested Shares upon repurchase by the Company pursuant to the Repurchase Option under Section 1, Optionee hereby appoints the Secretary, or any other person designated by the Company as escrow agent, as its attorney-in-fact to sell, assign and transfer unto the Company, such Unvested Shares, if any, repurchased by the Company pursuant to the Repurchase Option and shall, upon exercise of the Option, deliver and deposit with the Secretary of the Company, or such other person designated by the Company, the share certificates representing the Unvested Shares, together with the stock assignment duly endorsed in blank, the form of which is set forth in Exhibit B-2 hereto. The Unvested Shares and stock assignment shall be held by the secretary in escrow, pursuant to the Joint Escrow Instructions of the Company and Optionee set forth in Exhibit B-3 hereto, until the Company exercises its Repurchase Option, until such Unvested Shares are vested, or until such time as these Terms of Restricted Stock Purchase are no longer in effect. Upon vesting of the Unvested Shares, the escrow agent shall promptly deliver to the Optionee the certificate or certificates representing such Shares in the escrow agent’s possession belonging to the Optionee, and the escrow agent shall be discharged of all further obligations hereunder; provided, however, that the escrow agent shall nevertheless retain such certificate or certificates as escrow agent if so required pursuant to other restrictions imposed pursuant to the Option Agreement or these Terms of Restricted Stock Purchase.

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

(d)    Transfer or sale of the Shares is subject to restrictions on transfer imposed by any applicable state and federal securities laws. Any transferee shall hold such Shares subject to all the provisions hereof and the Authorization executed by the Optionee with respect to any Unvested Shares purchased by Optionee and shall acknowledge the same by signing an acknowledgement in a form acceptable to the Company.

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3.    Ownership, Voting Rights, Duties. These Terms of Restricted Stock Purchase shall not affect in any way the ownership, voting rights or other rights or duties of Optionee, except as specifically provided herein.

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

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

5.    Adjustment for Stock Split. All references herein to the number of Shares and the purchase price of the Shares shall be appropriately adjusted to reflect any stock split, stock dividend or other change in the Shares which may be made by the Company pursuant to Section 13 of the Plan after the date of exercise.

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

7.    Survival of Terms. These Terms of Restricted Stock Purchase shall apply to and bind Optionee and the Company and their respective permitted assignees and transferees, heirs, legatees, executors, administrators and legal successors.

8.    Section 83(b) Election. Optionee hereby acknowledges that he or she has been informed that, with respect to the exercise of an Option for Unvested Shares, an election (the “Election”) may be filed by the Optionee with the Internal Revenue Service, within 30 days of the purchase of the exercised Shares, electing pursuant to Section 83(b) of the Code to be taxed currently on any difference between the purchase price of the exercised Shares and their Fair Market Value on the date of purchase. In the case of a Nonstatutory Stock Option, this will result in a recognition of taxable income to the Optionee on the date of exercise, measured by the excess, if any, of the Fair Market Value of the exercised Shares, at the time the Option is exercised over the purchase price for the exercised Shares. Absent such an Election, taxable income will be measured and recognized by Optionee at the time or times on which the Company’s Repurchase Option lapses. In the case of an Incentive Stock Option, such an Election will result in a recognition of income to the Optionee for alternative minimum tax purposes on the date of exercise, measured by the excess, if any, of the Fair Market Value of the exercised Shares, at the time the option is exercised, over the purchase price for the exercised Shares. Absent such an Election, alternative minimum taxable income will be measured and recognized by Optionee at the time or times on which the Company’s Repurchase Option lapses. Optionee is strongly encouraged to seek the advice of his or her own tax consultants in connection with the purchase of the Shares and the advisability of filing of the Election under Section 83(b) of the Code. A form of Election under Section 83(b) is set forth in Exhibit B-4 hereto for reference.

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

9.    Representations. Optionee has reviewed with his or her own tax advisors the federal, state, local and foreign tax consequences of this investment and the transactions contemplated by these Terms of Restricted Stock Purchase. Optionee is relying solely on such advisors and not on any statements or representations of the Company or any of its agents. Optionee understands that he or she (and not the Company) shall be responsible for his or her own tax liability that may arise as a result of this investment or the transactions contemplated by this Agreement.

10.    Governing Law. These Terms of Restricted Stock Purchase shall be governed by the internal substantive laws, but not the choice of law rules, of California.

11.    Acknowledgement. Optionee represents that he or she has read these Terms of Restricted Stock Purchase and is familiar with its terms and provisions. Optionee hereby agrees to accept as binding, conclusive and final all decisions or interpretations of the Board upon any questions arising under these Terms of Restricted Stock Purchase.

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EXHIBIT B-2

ASSIGNMENT SEPARATE FROM CERTIFICATE

FOR VALUE RECEIVED I,                         , hereby sell, assign and transfer unto the Company (as defined in the Google Inc. 2003 Stock Plan (No. 2)) (                            ) shares of the Class A Senior Common Stock of the Company standing in my name of the books of said corporation represented by Certificate No.              herewith and do hereby irrevocably constitute and appoint to                              transfer the said stock on the books of the within named corporation with full power of substitution in the premises.

This Stock Assignment may be used only in accordance with the Option Agreement and Terms of Restricted Stock Purchase between the Company and the undersigned dated                                              ,             .

Dated:                                                      ,                                                                   Signature:                                                          

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

EXHIBIT B-3

JOINT ESCROW INSTRUCTIONS

As escrow agent (the “Escrow Agent”) for both the Company (as defined in the Google Inc. 2003 Stock Plan (No. 2)), and the Optionee under the Stock Option Agreement to which these Instructions are attached (the “Optionee”), the Corporate Secretary of the Company (the “Secretary”) is hereby authorized and directed to hold the documents delivered to him or her pursuant to the Terms of Restricted Stock Purchase (“Terms of Restricted Stock Purchase”) between the Company and the Optionee (the “Escrow”), in accordance with the following instructions:

1.    In the event the Company and/or any assignee of the Company (referred to collectively for convenience herein as the “Company”) exercises the Company’s Repurchase Option (as defined in the Terms of Restricted Stock Purchase), the Company shall give to Optionee and the Secretary a written notice specifying the number of shares of stock to be purchased, the purchase price and the time for a closing hereunder at the principal office of the Company. Optionee and the Company hereby irrevocably authorize and direct the Secretary to close the transaction contemplated by such notice in accordance with the terms of said notice.

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

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

4.    Upon written request of the Optionee, but no more than once per calendar year, unless the Company’s Repurchase Option has been exercised, the Secretary will deliver to Optionee a certificate or certificates representing so many shares of stock as are not then subject to the Company’s Repurchase Option. Within 120 days after cessation of Optionee’s status as a Service

Provider, the Secretary will deliver to Optionee a certificate or certificates representing the aggregate number of shares held or issued pursuant to the Terms of Restricted Stock Purchase and not purchased by the Company or its assignees pursuant to its right to exercise the Company’s Repurchase Option.

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

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

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

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

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

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

11.    The Secretary shall be entitled to employ such legal counsel and other experts as he or she may deem necessary to advise in connection with the obligations hereunder, may rely upon the advice of such counsel, and may pay such counsel reasonable compensation therefor.

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

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

14.    It is understood and agreed that should any dispute arise with respect to the delivery and/or ownership or right of possession of the securities held hereunder, the Secretary is authorized and directed to retain in his or her possession without liability to anyone all or any part of said securities until such disputes shall have been settled either by mutual written agreement of the parties concerned or by a final order, decree or judgment of a court of competent jurisdiction after the time for appeal has expired and no appeal has been perfected, but shall be under no duty whatsoever to institute or defend any such proceedings.

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

COMPANY:	Google Inc. 2400 Bayshore Parkway Mountain View, CA 94043
OPTIONEE:	To the address on file with the Company
ESCROW AGENT:	Google Inc. 2400 Bayshore Parkway Mountain View, CA 94043-1103 Attn: Corporate Secretary

16.    The Secretary becomes a party hereto only for the purpose of said Joint Escrow Instructions; the Secretary does not become a party to the Option Agreement.

17.    These Joint Escrow Instructions shall be binding upon and inure to the benefit of the parties hereto, and their respective successors and permitted assigns.

18.    These Joint Escrow Instructions shall be governed by, and construed and enforced in accordance with, the laws of the State of California.

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EXHIBIT B-4

ELECTION UNDER SECTION 83(b)

OF THE INTERNAL REVENUE CODE OF 1986

The undersigned taxpayer hereby elects, pursuant to Sections 55 and 83(b) of the Internal Revenue Code of 1986, as amended, to include in taxpayer’s gross income or alternative minimum taxable income, as the case may be, for the current taxable year the amount of any compensation taxable to taxpayer in connection with taxpayer’s receipt of the property described below:

1. The name, address, taxpayer identification number and taxable year of the undersigned are as follows:

	Taxpayer	Spouse
	__________________________________	__________________________________
NAME:		__________________________________
ADDRESS:		__________________________________
	__________________________________	__________________________________
IDENTIFICATION NO.:	__________________________________	__________________________________
TAXABLE YEAR:	________________

2. The property with respect to which the election is made is described as follows:              shares (the “Shares”) of the Class A Senior Common Stock of Google Technology Inc. (the “Company”).

3. The date on which the property was transferred is:                

4. The property is subject to the following restrictions:

The Shares may not be transferred and are subject to forfeiture under the terms of an agreement between the taxpayer and the Company. These restrictions lapse upon the satisfaction of certain conditions contained in such agreement.

5. The fair market value at the time of transfer, determined without regard to any restriction other than a restriction which by its terms will never lapse, of such property is:                  per share.

6. The amount (if any) paid for such property is: $                .

The undersigned has submitted a copy of this statement to the person for whom the services were performed in connection with the undersigned’s receipt of the above-described property. The transferee of such property is the person performing the services in connection with the transfer of said property.

The undersigned understands that the foregoing election may not be revoked except with the consent of the Commissioner.

Dated: ___________________, _______	______________________________________
	Taxpayer

The undersigned spouse of taxpayer joins in this election.

Dated: ___________________, ______	______________________________________
	Taxpayer

EX-10.07

Exhibit 10.07

GOOGLE INC.

2003 STOCK PLAN (No. 3)

1.    Purposes of the Plan. The purposes of this Plan are to attract and retain the best available personnel for positions of substantial responsibility, to provide additional incentive to Employees, Directors and Consultants and to promote the success of the Company’s business. Options granted under the Plan may be Incentive Stock Options or Nonstatutory Stock Options, as determined by the Administrator at the time of grant.

2.    Definitions. As used herein, the following definitions shall apply:

(a)    “Administrator” means the Board or any Committee that shall administer the Plan in accordance with Section 4 hereof.

(b)    “Applicable Laws” means the requirements relating to the administration of stock option plans under U.S. state corporate laws, U.S. federal and state securities laws, the Code, any stock exchange or quotation system on which the Common Stock is listed or quoted and the applicable laws of any other country or jurisdiction where Options are granted under the Plan.

(c)    “Board” means the Board of Directors of the Company.

(d)    “Change in Control” means the occurrence of any of the following events:

(i)    If (a) any “person” (as such term is used in Sections 13(d) and 14(d) of the Exchange Act) becomes the “beneficial owner” (as defined in Rule 13d-3 of the Exchange Act), directly or indirectly, of securities of the Company representing fifty percent (50%) or more of the total voting power represented by the Company’s then outstanding voting securities and (b) within three (3) years from the date of such acquisition, a merger or consolidation of the Company with or into the person (or an affiliate thereof) holding such beneficial ownership of securities of the Company is consummated; or

(ii)    The consummation of the sale or disposition by the Company of all or substantially all of the Company’s assets; or

(iii)    The consummation of a merger or consolidation of the Company with any other corporation, other than a merger or consolidation which would result in the voting securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity or its parent) at least fifty percent (50%) of the total voting power represented by the voting securities of the Company or such surviving entity or its parent outstanding immediately after such merger or consolidation.

For the purposes of this Section 2(d), “affiliate” shall mean, with respect to any specified person, any other person that directly or indirectly, through one or more intermediaries, controls, is controlled by, or is under common control with, such specified person (“control,” “controlled by” and

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“under common control with” shall mean the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a person, whether through ownership of voting securities, by contract or credit arrangement, as trustee or executor, or otherwise).

(e)    “Class A Senior Common Stock” means the Class A Senior Common Stock of the Company; provided, that (i) if all outstanding Class A Senior Common Stock of the Company is converted to Common Stock pursuant to the charter documents of the Company, then “Class A Senior Common Stock” shall mean Common Stock and (ii) in the event any shares of Class A Senior Common Stock issued under the Plan are converted into Common Stock then, with respect to such shares, “Class A Senior Common Stock” shall mean Common Stock.

(f)    “Code” means the Internal Revenue Code of 1986, as amended.

(g)    “Committee” means a committee of Directors or of other individuals satisfying Applicable Laws appointed by the Board in accordance with Section 4 hereof.

(h)    “Common Stock” means the Common Stock of the Company.

(i)    “Company” means Google Technology Inc., a California corporation until the consummation of the reincorporation of Google Technology Inc. into the State of Delaware, at which time “Company” shall mean Google Inc., a Delaware corporation.

(j)    “Consultant” means any person who is engaged by the Company or any Parent or Subsidiary to render consulting or advisory services to such entity.

(k)    “Director” means a member of the Board.

(l)    “Disability” means the inability of the Optionee, in the opinion of a qualified physician acceptable to the Company, to perform the major duties of the Optionee’s position with the Company because of the Optionee’s sickness or injury.

(m)    “Employee” means any person, including officers and Directors, employed by the Company or any Parent or Subsidiary of the Company. Neither service as a Director nor payment of a director’s fee by the Company shall be sufficient to constitute “employment” by the Company.

(n)    “Exchange Act” means the Securities Exchange Act of 1934, as amended.

(o)    “Fair Market Value” means, as of any date, the value of Common Stock determined as follows:

(i)    If the Common Stock is listed on any established stock exchange or a national market system, including without limitation the Nasdaq National Market or The Nasdaq SmallCap Market of The Nasdaq Stock Market, its Fair Market Value shall be the closing sales price for such stock (or the closing bid, if no sales were reported) as quoted on such exchange or system for the day of determination, as reported in The Wall Street Journal or such other source as the Administrator deems reliable;

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(ii)     If the Common Stock is regularly quoted by a recognized securities dealer but selling prices are not reported, its Fair Market Value shall be the mean between the high bid and low asked prices for the Common Stock on the day of determination; or

(iii)    In the absence of an established market for the Common Stock, the Fair Market Value thereof shall be determined in good faith by the Administrator.

(p)    “Incentive Stock Option” means an Option intended to qualify as an incentive stock option within the meaning of Section 422 of the Code.

(q)    “Nonstatutory Stock Option” means an Option not intended to qualify as an Incentive Stock Option.

(r)    “Option” means a stock option granted pursuant to the Plan.

(s)    “Option Agreement” means a written or electronic agreement between the Company and an Optionee evidencing the terms and conditions of an individual Option grant. The Option Agreement is subject to the terms and conditions of the Plan.

(t)    “Option Exchange Program” means a program whereby outstanding Options are exchanged for Options with a lower exercise price.

(u)    “Optioned Stock” means the Common Stock subject to an Option.

(v)    “Optionee” means the holder of an outstanding Option granted under the Plan.

(w)    “Parent” means a “parent corporation,” whether now or hereafter existing, as defined in Section 424(e) of the Code.

(x)    “Plan” shall mean the Google Technology Inc. 2003 Stock Plan (No. 3), which shall become the Google Inc. 2003 Stock Plan (No. 3) upon the closing of a reincorporation of Google Technology Inc. into the State of Delaware that includes the corresponding name change to Google Inc.

(y)    “Senior Employee” shall mean any Employee who holds a leadership or managerial position at the Company and has a title with the Company of, or responsibilities equivalent to, that of either (i) a director or (ii) a position senior to director.

(z)    “Service Provider” means an Employee, Director or Consultant.

(aa)    “Share” means a share of the Common Stock, as adjusted in accordance with Section 12 below.

(bb)    “Subsidiary” means a “subsidiary corporation,” whether now or hereafter existing, as defined in Section 424(f) of the Code.

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3.    Stock Subject to the Plan. Subject to the provisions of Section 12 of the Plan, the maximum aggregate number of Shares that may be subject to option and sold under the Plan is 12,388,116, minus those shares of Class A Senior Common Stock or shares of Common Stock that, after June 18, 2003, are issued or made subject to outstanding options under the Company’s 1998 Stock Plan (the “1998 Plan”), the Company’s 2003 Stock Plan (the “2003 Plan (No. 1)”) or the Company’s 2003 Stock Plan (No. 2) (the “2003 Plan (No. 2)”); provided, that those shares of Class A Senior Common Stock or Common Stock of the Company returned to the 1998 Plan, the 2003 Plan (No. 1) and the 2003 Plan (No. 2) as a result of termination of options or repurchase of shares issued (at any time) under those plans shall be added to the authorized number of Shares that may be subject to option and sold under this Plan. In no event shall the number of Shares issued pursuant to Incentive Stock Options under this Plan exceed the number indicated in this Section 3. The Shares may be authorized but unissued or reacquired shares of Common Stock.

If an Option expires or becomes unexercisable without having been exercised in full, or is surrendered pursuant to an Option Exchange Program, the unpurchased Shares that were subject thereto shall become available for future grant or sale under the Plan (unless the Plan has terminated). However, Shares that have actually been issued under the Plan, upon exercise of an Option, shall not be returned to the Plan and shall not become available for future distribution under the Plan, except that if unvested Shares of restricted stock are repurchased by the Company at their original purchase price, such Shares shall become available for future grant under the Plan.

4.    Administration of the Plan.

(a)    Administrator. The Plan shall be administered by the Board or a Committee appointed by the Board, which Committee shall be constituted to comply with Applicable Laws.

(b)    Powers of the Administrator. Subject to the provisions of the Plan and, in the case of a Committee, the specific duties delegated by the Board to such Committee, and subject to the approval of any relevant authorities, the Administrator shall have the authority in its discretion:

(i)    to determine the Fair Market Value;

(ii)    to select the Service Providers to whom Options may from time to time be granted hereunder;

(iii)    to determine the number of Shares to be covered by each such award granted hereunder;

(iv)    to approve forms of agreement for use under the Plan;

(v)    to determine the terms and conditions of any Option granted hereunder. Such terms and conditions include, but are not limited to, the exercise price, the time or times when Options may be exercised (which may be based on performance criteria), any vesting acceleration or waiver of forfeiture restrictions, and any restriction or limitation regarding any Option or the Common

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Stock relating thereto, based in each case on such factors as the Administrator, in its sole discretion, shall determine;

(vi) to reduce the exercise price of any Option to the then current Fair Market Value if the Fair Market Value of the Common Stock covered by such Option has declined since the date the Option was granted;

(vii) to initiate an Option Exchange Program;

(viii) to prescribe, amend and rescind rules and regulations relating to the Plan, including rules and regulations relating to sub-plans established for the purpose of satisfying applicable foreign laws;

(ix) to allow Optionees to satisfy withholding tax obligations by electing to have the Company withhold from the Shares to be issued upon exercise of an Option that number of Shares having a Fair Market Value equal to the minimum amount required to be withheld. The Fair Market Value of the Shares to be withheld shall be determined on the date that the amount of tax to be withheld is to be determined. All elections by Optionees to have Shares withheld for this purpose shall be made in such form and under such conditions as the Administrator may deem necessary or advisable; and

(x) to construe and interpret the terms of the Plan and Options granted pursuant to the Plan.

(c) Effect of Administrator’s Decision. All decisions, determinations and interpretations of the Administrator shall be final and binding on all Optionees.

5.    Eligibility. Nonstatutory Stock Options may be granted to Service Providers. Incentive Stock Options may be granted only to Employees.

6.    Limitations.

(a)    Incentive Stock Option Limit. Each Option shall be designated in the Option Agreement as either an Incentive Stock Option or a Nonstatutory Stock Option. However, notwithstanding such designation, to the extent that the aggregate Fair Market Value of the Shares with respect to which Incentive Stock Options are exercisable for the first time by the Optionee during any calendar year (under all plans of the Company and any Parent or Subsidiary) exceeds $100,000, such Options shall be treated as Nonstatutory Stock Options. For purposes of this Section, Incentive Stock Options shall be taken into account in the order in which they were granted. The Fair Market Value of the Shares shall be determined as of the time the Option with respect to such Shares is granted.

(b)    At-Will Employment. Neither the Plan nor any Option shall confer upon any Optionee any right with respect to continuing the Optionee’s relationship as a Service Provider with the Company, nor shall it interfere in any way with his or her right or the Company’s right to terminate such relationship at any time, with or without cause, and with or without notice.

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7.    Term of Plan. Subject to shareholder approval in accordance with Section 19, the Plan shall become effective upon its adoption by the Board. Unless sooner terminated under Section 15, it shall continue in effect for a term of ten (10) years from the later of (i) the effective date of the Plan, or (ii) the earlier of the most recent board or shareholder approval of an increase in the number of Shares reserved for issuance under the Plan.

8.    Term of Option. The term of each Option shall be stated in the Option Agreement; provided, however, that the term shall be no more than ten (10) years from the date of grant thereof. In the case of an Incentive Stock Option granted to an Optionee who, at the time the Option is granted, owns stock representing more than ten percent (10%) of the voting power of all classes of stock of the Company or any Parent or Subsidiary, the term of the Option shall be five (5) years from the date of grant or such shorter term as may be provided in the Option Agreement.

9.    Option Exercise Price and Consideration.

(a)    The per share exercise price for the Shares to be issued upon exercise of an Option shall be such price as is determined by the Administrator, but shall be subject to the following:

(i)    In the case of an Incentive Stock Option

(A)    granted to an Employee who, at the time of grant of such Option, owns stock representing more than ten percent (10%) of the voting power of all classes of stock of the Company or any Parent or Subsidiary, the exercise price shall be no less than 110% of the Fair Market Value per Share on the date of grant.

(B)    granted to any other Employee, the per Share exercise price shall be no less than 100% of the Fair Market Value per Share on the date of grant.

(ii)    In the case of a Nonstatutory Stock Option

(A)    granted to a Service Provider who, at the time of grant of such Option, owns stock representing more than ten percent (10%) of the voting power of all classes of stock of the Company or any Parent or Subsidiary, the exercise price shall be no less than 110% of the Fair Market Value per Share on the date of grant.

(B)    granted to any other Service Provider, the per Share exercise price shall be no less than 85% of the Fair Market Value per Share on the date of grant.

(b)    The consideration to be paid for the Shares to be issued upon exercise of an Option, including the method of payment, shall be determined by the Administrator (and, in the case of an Incentive Stock Option, shall be determined at the time of grant). Such consideration may consist, without limitation, of (1) cash, (2) check, (3) promissory note, (4) other Shares which (x) in the case of Shares acquired directly from the Company, have been owned by the Optionee for more than six months on the date of surrender, and (y) have a Fair Market Value on the date of surrender equal to the aggregate exercise price of the Shares as to which such Option shall be exercised, (5) consideration

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received by the Company under a cashless exercise program implemented by the Company in connection with the Plan, or (6) any combination of the foregoing methods of payment. In making its determination as to the type of consideration to accept, the Administrator shall consider if acceptance of such consideration may be reasonably expected to benefit the Company.

10.    Exercise of Option.

(a)    Procedure for Exercise; Rights as a Shareholder. Any Option granted hereunder shall be exercisable according to the terms hereof at such times and under such conditions as determined by the Administrator and set forth in the Option Agreement. Except in the case of Options granted to officers, Directors, Senior Employees and Consultants, Options shall become exercisable at a rate of no less than 20% per year over five (5) years from the date the Options are granted.

An Option shall be deemed exercised when the Company receives: (i) written or electronic notice of exercise (in accordance with the Option Agreement) from the person entitled to exercise the Option, and (ii) full payment for the Shares with respect to which the Option is exercised. Full payment may consist of any consideration and method of payment authorized by the Administrator and permitted by the Option Agreement and the Plan. Shares issued upon exercise of an Option shall be issued in the name of the Optionee or, if requested by the Optionee, in the name of the Optionee and his or her spouse. Until the Shares are issued (as evidenced by the appropriate entry on the books of the Company or of a duly authorized transfer agent of the Company), no right to vote or receive dividends or any other rights as a shareholder shall exist with respect to the Shares, notwithstanding the exercise of the Option. The Company shall issue (or cause to be issued) such Shares promptly after the Option is exercised. No adjustment will be made for a dividend or other right for which the record date is prior to the date the Shares are issued, except as provided in Section 12 of the Plan.

Exercise of an Option in any manner shall result in a decrease in the number of Shares thereafter available, both for purposes of the Plan and for sale under the Option, by the number of Shares as to which the Option is exercised.

(b)    Termination of Relationship as a Service Provider. If an Optionee ceases to be a Service Provider, such Optionee may exercise his or her Option within thirty (30) days of termination, or such longer period of time as specified in the Option Agreement, to the extent that the Option is vested on the date of termination (but in no event later than the expiration of the term of the Option as set forth in the Option Agreement). If, on the date of termination, the Optionee is not vested as to his or her entire Option, the Shares covered by the unvested portion of the Option shall revert to the Plan. If, after termination, the Optionee does not exercise his or her Option within the time specified by the Administrator, the Option shall terminate, and the Shares covered by such Option shall revert to the Plan.

(c)    Disability of Optionee. If an Optionee ceases to be a Service Provider as a result of the Optionee’s Disability, the Optionee may exercise his or her Option within six (6) months of termination, or such longer period of time as specified in the Option Agreement, to the extent the Option is vested on the date of termination (but in no event later than the expiration of the term of such Option as set forth in the Option Agreement). If, on the date of termination, the Optionee is not vested as to his or her entire Option, the Shares covered by the unvested portion of the Option shall revert to the Plan. If,

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after termination, the Optionee does not exercise his or her Option within the time specified herein, the Option shall terminate, and the Shares covered by such Option shall revert to the Plan.

(d)    Death of Optionee. If an Optionee dies while a Service Provider, the Option may be exercised within six (6) months following Optionee’s death, or such longer period of time as specified in the Option Agreement, to the extent that the Option is vested on the date of death (but in no event later than the expiration of the term of such Option as set forth in the Option Agreement) by the Optionee’s designated beneficiary, provided such beneficiary has been designated prior to Optionee’s death in a form acceptable to the Administrator. If no such beneficiary has been designated by the Optionee, then such Option may be exercised by the personal representative of the Optionee’s estate or by the person(s) to whom the Option is transferred pursuant to the Optionee’s will or in accordance with the laws of descent and distribution. If, at the time of death, the Optionee is not vested as to his or her entire Option, the Shares covered by the unvested portion of the Option shall immediately revert to the Plan. If the Option is not so exercised within the time specified herein, the Option shall terminate, and the Shares covered by such Option shall revert to the Plan.

(e)    Leaves of Absence.

(i)    Unless the Administrator provides otherwise, vesting of Options granted hereunder shall be suspended during any unpaid leave of absence.

(ii)    A Service Provider shall not cease to be an Employee in the case of (A) any leave of absence approved by the Company or (B) transfers between locations of the Company or between the Company, its Parent, any Subsidiary, or any successor.

(iii)    For purposes of Incentive Stock Options, no such leave may exceed ninety (90) days, unless reemployment upon expiration of such leave is guaranteed by statute or contract. If reemployment upon expiration of a leave of absence approved by the Company is not so guaranteed, then three (3) months following the 91st day of such leave, any Incentive Stock Option held by the Optionee shall cease to be treated as an Incentive Stock Option and shall be treated for tax purposes as a Nonstatutory Stock Option.

11.    Limited Transferability of Options. Unless determined otherwise by the Administrator, Options may not be sold, pledged, assigned, hypothecated, transferred, or disposed of in any manner other than by will or the laws of descent and distribution, and may be exercised during the lifetime of the Optionee, only by the Optionee. If the Administrator in its sole discretion makes an Option transferable, such Option may only be transferred (i) by will, (ii) by the laws of descent and distribution, or (iii) to family members (within the meaning of Rule 701 of the Securities Act) through gifts or domestic relations orders, as permitted by Rule 701 of the Securities Act.

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12.    Adjustments Upon Changes in Capitalization, Merger or Asset Sale.

(a)    Changes in Capitalization. In the event that any dividend or other distribution (whether in the form of cash, Shares, other securities, or other property), recapitalization, stock split, reverse stock split, reorganization, merger, consolidation, split-up, spin-off, combination, repurchase, or exchange of Shares or other securities of the Company, or other change in the corporate structure of the Company affecting the Shares occurs, the Administrator, in order to prevent diminution or enlargement of the benefits or potential benefits intended to be made available under the Plan, may (in its sole discretion) adjust the number and class of Shares that may be delivered under the Plan and/or the number, class, and price of Shares covered by each outstanding Option; provided, however, that the Administrator shall make such adjustments to the extent required by Section 25102(o) of the California Corporations Code.

(b)    Dissolution or Liquidation. In the event of the proposed dissolution or liquidation of the Company, the Administrator shall notify each Optionee as soon as practicable prior to the effective date of such proposed transaction. To the extent it has not been previously exercised, an Option will terminate immediately prior to the consummation of such proposed action.

(c)    Merger or Change in Control. In the event of a merger of the Company with or into another corporation, or a Change in Control, each outstanding Option shall be assumed or an equivalent option substituted by the successor corporation or a Parent or Subsidiary of the successor corporation. In the event that the successor corporation in a merger or Change in Control refuses to assume or substitute for the Option, then the Optionee shall fully vest in and have the right to exercise the Option as to all of the Optioned Stock, including Shares as to which it would not otherwise be vested or exercisable. If an Option becomes fully vested and exercisable in lieu of assumption or substitution in the event of a merger or Change in Control, the Administrator shall notify the Optionee in writing or electronically that this Option shall be fully exercisable for a period of fifteen (15) days from the date of such notice, and the Option shall terminate upon expiration of such period. For the purposes of this paragraph, the Option shall be considered assumed if, following the merger or Change in Control, the option or right confers the right to purchase or receive, for each Share of Optioned Stock subject to the Option immediately prior to the merger or Change in Control, the consideration (whether stock, cash, or other securities or property) received in the merger or Change in Control by holders of Common Stock for each Share held on the effective date of the transaction (and if holders were offered a choice of consideration, the type of consideration chosen by the holders of a majority of the outstanding Shares); provided, however, that if such consideration received in the merger or Change in Control is not solely common stock of the successor corporation or its Parent, the Administrator may, with the consent of the successor corporation, provide for the consideration to be received upon the exercise of the Option, for each Share of Optioned Stock subject to the Option, to be solely common stock of the successor corporation or its Parent equal in Fair Market Value to the per share consideration received by holders of Common Stock in the merger or Change in Control.

13.    Time of Granting Options. The date of grant of an Option shall, for all purposes, be the date on which the Administrator makes the determination granting such Option, or such later date as is determined by the Administrator. Notice of the determination shall be given to each Service Provider to whom an Option is so granted within a reasonable time after the date of such grant.

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14.    Amendment and Termination of the Plan.

(a)    Amendment and Termination. The Board may at any time amend, alter, suspend or terminate the Plan.

(b)    Shareholder Approval. The Board shall obtain shareholder approval of any Plan amendment to the extent necessary and desirable to comply with Applicable Laws.

(c)    Effect of Amendment or Termination. No amendment, alteration, suspension or termination of the Plan shall impair the rights of any Optionee, unless mutually agreed otherwise between the Optionee and the Administrator, which agreement must be in writing and signed by the Optionee and the Company. Termination of the Plan shall not affect the Administrator’s ability to exercise the powers granted to it hereunder with respect to Options granted under the Plan prior to the date of such termination.

15.    Conditions Upon Issuance of Shares.

(a)    Legal Compliance. Shares shall not be issued pursuant to the exercise of an Option unless the exercise of such Option and the issuance and delivery of such Shares shall comply with Applicable Laws and shall be further subject to the approval of counsel for the Company with respect to such compliance.

(b)    Investment Representations. As a condition to the exercise of an Option, the Administrator may require the person exercising such Option to represent and warrant at the time of any such exercise that the Shares are being purchased only for investment and without any present intention to sell or distribute such Shares if, in the opinion of counsel for the Company, such a representation is required.

16.    Inability to Obtain Authority. The inability of the Company to obtain authority from any regulatory body having jurisdiction, which authority is deemed by the Company’s counsel to be necessary to the lawful issuance and sale of any Shares hereunder, shall relieve the Company of any liability in respect of the failure to issue or sell such Shares as to which such requisite authority shall not have been obtained.

17.    Reservation of Shares. The Company, during the term of this Plan, shall at all times reserve and keep available such number of Shares as shall be sufficient to satisfy the requirements of the Plan.

18.    Shareholder Approval. The Plan shall be subject to approval by the shareholders of the Company within twelve (12) months after the date the Plan is adopted. Such shareholder approval shall be obtained in the degree and manner required under Applicable Laws.

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GOOGLE INC.

2003 STOCK PLAN (NO. 3)

STOCK OPTION AGREEMENT — EARLY EXERCISE

Unless otherwise defined herein, the terms defined in the 2003 Stock Plan (No. 3) (the “Plan”) shall have the same defined meanings in this Stock Option Agreement (the “Option Agreement”).

1.    Grant of Option. The Administrator of the Company hereby grants to the Optionee (the “Optionee”) named in the Certificate of Stock Option Grant on the Citigroup StockPlan Web site (the “Certificate”), an option (the “Option”) to purchase the number of Shares set forth in the Certificate, at the exercise price per Share set forth in the Certificate (the “Exercise Price”), and subject to the terms and conditions of the Plan, which is incorporated herein by reference. Subject to Section 14 of the Plan, in the event of a conflict between the terms and conditions of the Plan and this Option Agreement, the terms and conditions of the Plan shall prevail. The Certificate is incorporated herein by reference and is a part of this Option Agreement.

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

2.    Exercise of Option. This Option shall be exercisable during its term in accordance with the provisions of Section 10 of the Plan as follows:

(a)    Right to Exercise.

(i)    Subject to subsections 2(a)(ii), 2(a)(iii) and 2(a)(iv) below, this Option shall be exercisable cumulatively according to the vesting schedule set forth in the Certificate, subject to the Optionee’s continuing as a Service Provider on such dates. Alternatively and subject to subsections 2(a)(ii), 2(a)(iii) and 2(a)(iv) below, at the election of the Optionee, this Option may be exercised in whole or in part at any time as to Shares which have not yet vested.

(ii)    If the Optionee chooses to exercise this Option as to Shares which have not yet vested (“Unvested Shares”), the Terms of Restricted Stock Purchase set forth in Exhibit B-1 hereto shall govern the rights and obligations of the Optionee and the Company with respect to the Unvested Shares acquired upon such exercise of the Option. The Terms of Restricted Stock Purchase provide that, among other things, if the Optionee’s status as a Service Provider is terminated for any reason, including for cause, death or Disability, the Company shall have the right and option to purchase from Optionee, or Optionee’s personal representative, as the case may be, all of the shares that have not vested as of the date of such termination at the price paid by the Optionee for such shares (the “Repurchase Option”). The Terms of Restricted Stock Purchase and the related Joint Escrow Instructions set forth in Exhibit B-3 hereto also provide that Unvested Shares so purchased shall be held in escrow until the Company exercises its Repurchase Option or until such Unvested Shares vest. By accepting the terms of this Option Agreement, Optionee agrees to be bound by the Terms of Restricted Stock Purchase and related Joint Escrow Instructions, including the Repurchase Option

and escrow provisions thereof, in the event Optionee chooses to exercise this Option as to Shares which have not yet vested. In addition, by executing a Stock Option Cash Exercise Letter of Authorization, the Optionee shall agree to be bound by the Terms of Restricted Stock Purchase and related Joint Escrow Instructions.

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

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

(b)    Method of Exercise. This Option shall be exercisable by delivery of a Stock Option Cash Exercise Letter of Authorization (the “Authorization”) in the form as set forth in Exhibit A hereto which shall state the election to exercise the Option, the number of Shares with respect to which the Option is being exercised, and such other representations and agreements as may be required by the Company. The Authorization shall be accompanied by payment of the aggregate Exercise Price as to all exercised Shares. This Option shall be deemed to be exercised upon receipt by the Company of such fully executed Authorization accompanied by the aggregate Exercise Price.

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

3.    Optionee’s Representations. In the event the Shares have not been registered under the Securities Act of 1933, as amended, at the time this Option is exercised, the Optionee shall, if required by the Company, concurrently with the exercise of all or any portion of this Option, make to the Company certain representations and warranties as set forth in the Authorization.

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

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

(a)    cash;

(b)    check;

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(c)    consideration received by the Company under a formal cashless exercise program adopted by the Company in connection with the Plan; or

(d)    surrender of other Shares which, (i) in the case of Shares acquired upon exercise of an option, have been owned by the Optionee for more than six (6) months on the date of surrender, and (ii) have a Fair Market Value on the date of surrender equal to the aggregate Exercise Price of the exercised Shares.

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

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

8.    Term of Option. This Option may be exercised only within the term set out in the Certificate, and may be exercised during such term only in accordance with the Plan and the terms of this Option Agreement.

9.    Rights as Shareholder. Until the issuance of the Shares (as evidenced by the appropriate entry on the books of the Company or of a duly authorized transfer agent of the Company), no right to vote or receive dividends or any other rights as a shareholder shall exist with respect to the optioned stock, notwithstanding the exercise of the Option. The Shares shall be issued to the Optionee as soon as practicable after the Option is exercised. No adjustment shall be made for a dividend or other right for which the record date is prior to the date of issuance except as provided in Section 10(a) of the Plan.

10.    Restrictive Legends and Stop-Transfer Orders.

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

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

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

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OFFICE OF THE ISSUER. SUCH TRANSFER RESTRICTIONS AND RIGHT OF FIRST REFUSAL ARE BINDING ON TRANSFEREES OF THESE SHARES.

IT IS UNLAWFUL TO CONSUMMATE A SALE OR TRANSFER OF THIS SECURITY, OR ANY INTEREST THEREIN, OR TO RECEIVE ANY CONSIDERATION THEREFOR, WITHOUT THE PRIOR WRITTEN CONSENT OF THE COMMISSIONER OF CORPORATIONS OF THE STATE OF CALIFORNIA, EXCEPT AS PERMITTED IN THE COMMISSIONER’S RULES.

(b)    Stop-Transfer Notices. Optionee agrees that, in order to ensure compliance with the restrictions referred to herein, the Company may issue appropriate “stop transfer” instructions to its transfer agent, if any, and that, if the Company transfers its own Shares, it may make appropriate notations to the same effect in its own records.

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

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

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

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

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

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

(e)    Holder’s Right to Transfer. If all of the Shares proposed in the Notice to be transferred to a given Proposed Transferee are not purchased by the Company and/or its assignee(s) as provided in this

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

(f)    Exception for Certain Family Transfers. Anything to the contrary contained in this Section notwithstanding, the transfer of any or all of the Shares during the Optionee’s lifetime or on the Optionee’s death by will or intestacy to the Optionee’s immediate family or a trust for the benefit of the Optionee’s immediate family shall be exempt from the provisions of this Section. “Immediate Family” as used herein shall mean spouse or spousal equivalent (as defined below), lineal descendant or antecedent, father, mother, brother or sister. As used herein, a person is deemed to be a spousal equivalent provided the following circumstances are true: (i) irrespective of whether or not the Optionee and the spousal equivalent are the same sex, they are the sole spousal equivalent of the other for the last twelve (12) months, (ii) they intend to remain so indefinitely, (iii) neither are married to anyone else, (iv) both are at least 18 years of age and is and were mentally competent at the commencement of the domestic partnership to consent to contract, (v) they are not related by blood to a degree of closeness that which would prohibit legal marriage in the state in which they legally reside, (vi) they are jointly responsible for each other’s common welfare and financial obligations, and (vii) they reside together in the same residence for the last twelve (12) months and intend to do so indefinitely. In such case, the transferee or other recipient shall receive and hold the Shares so transferred subject to the provisions of this Section, and there shall be no further transfer of such Shares except in accordance with the terms of this Section.

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

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

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

(b)    Exercise of ISO. If this Option qualifies as an ISO, there will be no regular federal income tax liability upon the exercise of the Option, although the excess, if any, of the Fair Market Value of

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the exercised Shares on the date of exercise over the Exercise Price will be treated as an adjustment to the alternative minimum tax for federal tax purposes and may subject the Optionee to the alternative minimum tax in the year of exercise.

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

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

(e)    Withholding Taxes. Optionee agrees to make appropriate arrangements with the Company (or any parent or subsidiary of the Company employing or retaining Optionee) for the satisfaction of all Federal, state, local and foreign income and employment tax withholding requirements applicable to the Option exercise. Optionee acknowledges and agrees that the Company may refuse to honor the exercise and refuse to deliver the Shares if such withholding amounts are not delivered at the time of exercise.

(f)    Section 83(b) Election for Unvested Shares Purchased Pursuant to Options. With respect to the exercise of an Option for unvested Shares, an election (the “Election”) may be filed by the Optionee with the Internal Revenue Service, within 30 days of the purchase of the Shares, electing pursuant to Section 83(b) of the Code to be taxed currently on any difference between the purchase price of the Shares and their Fair Market Value on the date of purchase. In the case of an NSO, this will result in a recognition of taxable income to the Optionee on the date of exercise, measured by the excess, if any, of the Fair Market Value of the exercised Shares, at the time the Option is exercised over the purchase price for the exercised Shares. Absent such an election, taxable income will be measured and recognized by Optionee at the time or times on which the Company’s Repurchase Option lapses. In the case of an ISO, such an election will result in a recognition of income to the Optionee for alternative minimum tax purposes on the date of exercise, measured by the excess, if any, of the Fair Market Value of the exercised Shares, at the time the Option is exercised, over the purchase price for the exercised Shares. Absent such an election, alternative minimum taxable income will be measured and recognized by Optionee at the time or times on which the Company’s Repurchase Option lapses. Optionee is strongly encouraged to seek the advice of his or her own tax consultants in connection with the purchase of the Shares and the advisability of filing of the Election under Section 83(b) of the Code. A form of Election under Section 83(b) is set forth as Exhibit B-4 hereto for reference. A form of Election is also available on the Citigroup StockPlan Website.

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

13.    Entire Agreement; Governing Law. The Plan is incorporated herein by reference. The Plan and this Option Agreement (including the Certificate and all of the exhibits, which are parts of this Agreement) constitute the entire agreement of the parties with respect to the subject matter hereof and supersede in their entirety all prior undertakings and agreements of the Company and Optionee with respect to the subject matter hereof, and may not be modified adversely to the Optionee’s interest except by means of a writing signed by the Company and Optionee. This Option Agreement is governed by the internal substantive laws but not the choice of law rules of California.

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

15.    Acknowledgement. By accepting this Option, Optionee acknowledges receipt of a copy of the Plan and represents that he or she is familiar with the terms and provisions thereof, and accepts this Option subject to all of the terms and provisions thereof. Further, Optionee acknowledges that Optionee has reviewed the Plan and this Option Agreement (including the Certificate and all of the exhibits, which are parts of this Agreement) in their entirety, has had an opportunity to obtain the advice of counsel prior accepting this Option and fully understands all provisions of the Option. Further, Optionee agrees to accept as binding, conclusive and final all decisions or interpretations of the Administrator upon any questions arising under the Plan or this Option. Optionee further agrees to notify the Company upon any change in his or her residence address.

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EXHIBIT A

STOCK OPTION CASH EXERCISE

Letter of Authorization

To:                                                                                                                                                                                    the “Company”)                                     

(Your Company’s Name)

From:                                                                                                     Exercise Date:                                                                                                                     

            (Last Name)                    (First Name)                    (M.I.)

Pursuant to the provisions of the Google Inc. 2003 Stock Plan (No. 3) (the “Plan”), Certificate of Stock Option Grant and Option Agreement under which the following stock option(s) was/were granted, I hereby elect to exercise the following stock option(s) granted to me by the Company (as defined in the Plan) to purchase shares of Company Common Stock (the “Shares”):

Grant Exercise Information:

1	2	3	4	5	6	7
Grant Number	Grant Date	Grant Type	Grant Price	# of Shares to	Amount Due	Amount Due
		(Check One)	Per Share	Exercise	For Stock	for Taxes*
(if applicable
		¨ ISO   ¨ INQ
		¨ ISO   ¨ INQ
		¨ ISO   ¨ INQ
		¨ ISO   ¨ INQ
		¨ ISO   ¨ INQ
			Totals	(A)	(B)	(C)

Method Of Payment: ¨ Check

***If check not enclosed, please indicate:

Method of Payment                                                                                                              Total Due for  Exercise (B+C): $                                      

*Note: If you are exercising a Non-Qualified (NQ) stock option, please contact:

CITIGROUP STOCKPLAN SERVICES at (888) 980-6456 or (212) 659-2200 to complete this information.

TO COMPLETE YOUR STOCK OPTION EXERCISE, YOU MUST DO THE FOLLOWING:

1. Review the Terms and Conditions of Stock Option Exercise attached as Exhibit B to this document.

2. If are purchasing shares which have not yet become vested, review and execute one copy of the Assignment Separate from Certificate attached as Exhibit B-2 to this document.

3. If you are purchasing shares which have not yet become vested and you desire to elect pursuant to Section 83 (b) of the Code to be taxed currently as described in your Option Agreement, review and execute, and have your spouse, if any, review and execute, the Election under Section 83 (b) attached as Exhibit B-4 to this document.

4. Review and complete the terms of purchase on the following page.

Terms of Purchase:

By signing this Stock Option Cash Exercise Letter of Authorization (this “Authorization”), I hereby represent and warrant to the Company that I have read and agree to (i) all of the Terms and Conditions of Stock Option Exercise attached hereto as Exhibit B and (ii) all of the terms and conditions of the Option Agreement (including exhibits).

I am hereby delivering to the Company: (i) this fully completed and executed Authorization, (ii) if applicable, one copy of the

Assignment Separate from Certificate attached hereto as Exhibit B-2 fully executed by myself, (iii) if applicable, an Election under Section 83 (b) attached hereto as Exhibit B-4 fully executed by myself and my spouse, if any, and (iv) the full purchase price for the Shares.

This constitutes my irrevocable authorization for CITIGROUP STOCKPLAN SERVICES (on behalf of the Company) to request, and for my broker to provide, a statement of any shares of the Company’s Common Stock that I am holding, or have transferred as permitted by the Company’s applicable Stock Option Plan(s), which were originally acquired upon exercise of an option granted to me pursuant to the Company’s Stock Option Plan(s).

I understand that, if I am an officer or director of the Company, I may be subject to additional requirements under Federal securities regulations which pertain to this type of transaction.

X Signature	Address for Certificate Delivery following release from escrow:
Social Security Number
Work Number                                                         Home Phone
Email Address

Please mail completed original with attached exhibits to:

Attn: Google Inc. 2400 Bayshore Parkway Mountain View, CA 94043

You can call Citigroup Stockplan Services – Client Services Dept. Mon – Thurs: 9:00 am- 7:00 pm, and Friday: 9:00 am – 6:00 pm ET.

Phone: (888) 980-6456 or (212) 659-2200 Fax: (212) 659-2319.

List of Exhibits:

Exhibit B: Terms and Conditions of Stock Option Exercise (including Attachment 1 thereto regarding additional restrictions on transferability of the Shares)

Exhibit B-1: Terms of Restricted Stock Purchase

Exhibit B-2: Assignment Separate from Certificate

Exhibit B-3: Joint Escrow Instructions

Exhibit B-4: Election under Section 83(b)

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EXHIBIT B

TERMS AND CONDITIONS OF STOCK OPTION EXERCISE

1.    Exercise. The Optionee (the “Optionee”) identified on the Stock Option Cash Exercise Letter of Authorization (the “Authorization”) to which these Terms and Conditions of Stock Option Exercise (these “Terms and Conditions”) are attached has elected to exercise the option (the “Option”) to purchase shares of Common Stock of the Company (as defined in the Google Inc. 2003 Stock Plan (No. 3)) identified on the Authorization, and thereby purchase from the Company that number of shares of the Company’s Common Stock identified on the Authorization (the “Shares”) at the applicable exercise price per share set forth in the Option Agreement (the “Exercise Price”), and subject to the terms and conditions of: (i) the 2003 Stock Plan (No. 3) (the “Plan”), (ii) the Stock Option Agreement (including all exhibits thereto and the Certificate of Stock Option Grant (the “Certificate”)) pursuant to which the Company granted the Option to Optionee (the “Option Agreement”), and (iii) the Authorization, including these Terms and Conditions. Unless otherwise defined herein, the terms defined in the Plan shall have the same defined meanings in these Terms and Conditions.

2.    Delivery of Payment. Purchaser herewith delivers to the Company the full purchase price of the Shares, as set forth in the Option Agreement and any and all withholding taxes due in connection with the exercise of the Option.

3.    Representations of Optionee. Optionee acknowledges that Optionee has received, read and understood the Plan and the Option Agreement (including the Certificate and all of the exhibits, which are part of the Option Agreement) and agrees to abide by and be bound by their terms and conditions. Optionee understands that Optionee may suffer adverse tax consequences as a result of Optionee’s purchase or disposition of the Shares. Optionee represents that Optionee has consulted with any tax consultants Optionee deems advisable in connection with the purchase or disposition of the Shares and that Optionee is not relying on the Company for any tax advice. Optionee understands and agrees that the Company shall cause the legends set forth in the Option Agreement or legends substantially equivalent thereto, to be placed upon any certificate(s) evidencing ownership of the Shares together with any other legends that may be required by the Company or by state or federal securities laws.

4.    Investment Representations. In the event that the Shares have not been registered under the Securities Act of 1933, as amended (the “Securities Act”), at the time of exercise, then in connection with the purchase of the Shares, the Optionee represents to the Company the following:

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

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

(c)    Optionee is familiar with the provisions of Rule 701 and Rule 144, each promulgated under the Securities Act, which, in substance, permit limited public resale of “restricted securities” acquired, directly or indirectly from the issuer thereof, in a non-public offering subject to the satisfaction of certain conditions. Rule 701 provides that if the issuer qualifies under Rule 701 at the time of the grant of the Option to the Optionee, the exercise will be exempt from registration under the Securities Act. In the event the Company becomes subject to the reporting requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, ninety (90) days thereafter (or such longer period as any market stand-off agreement may require) the Shares exempt under Rule 701 may be resold, subject to the satisfaction of certain of the conditions specified by Rule 144, including: (1) the resale being made through a broker in an unsolicited “broker’s transaction” or in transactions directly with a market maker (as said term is defined under the Securities Exchange Act of 1934); and, in the case of an affiliate, (2) the availability of certain public information about the Company, (3) the amount of Shares being sold during any three month period not exceeding the limitations specified in Rule 144(e), and (4) the timely filing of a Form 144, if applicable.

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

(d)    Optionee further understands that in the event all of the applicable requirements of Rule 701 or 144 are not satisfied, registration under the Securities Act, compliance with Regulation A, or some other registration exemption will be required; and that, notwithstanding the fact that Rules 144 and 701 are not exclusive, the Staff of the Securities and Exchange Commission has expressed its opinion that persons proposing to sell private placement Shares other than in a registered offering and otherwise than pursuant to Rules 144 or 701 will have a substantial

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burden of proof in establishing that an exemption from registration is available for such offers or sales, and that such persons and their respective brokers who participate in such transactions do so at their own risk. Optionee understands that no assurances can be given that any such other registration exemption will be available in such event.

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

6.    Terms of Restricted Stock Purchase and Joint Escrow Instructions. In the event that Optionee has elected to purchase Shares which have not yet become vested under the vesting schedule set forth in the Option Agreement (“Unvested Shares”), the Terms of Restricted Stock Purchase set forth in Exhibit B-1 of the Option Agreement shall govern the rights and obligations of the Optionee and the Company with respect to the Unvested Shares acquired upon such exercise. The Terms of Restricted Stock Purchase provide that, among other things, if the Optionee’s status as a Service Provider is terminated for any reason, including for cause, death or Disability, the Company shall have the right and option to purchase from Optionee, or Optionee’s personal representative, as the case may be, all of the Shares that have not vested as of the date of such termination at the price paid by the Optionee for such Shares (the “Repurchase Option”). The Terms of Restricted Stock Purchase and the related Joint Escrow Instructions set forth in Exhibit B-3 to the Option Agreement also provide that Unvested Shares so purchased shall be held in escrow until the Company exercises its Repurchase Option or until such Unvested Shares vest. In the event Optionee has chosen to exercise the Option as to Unvested Shares, by accepting the terms of the Option Agreement at the time of grant and by executing this Authorization, Optionee agrees to be bound by the Terms of Restricted Stock Purchase and related Joint Escrow Instructions, including the Repurchase Option and escrow provisions thereof.

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

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

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9.    Governing Law; Severability. This Authorization is governed by the internal substantive laws, but not the choice of law rules, of California.

10.    Entire Agreement. The Plan and Option Agreement (including the Certificate and all exhibits, which are parts of the Option Agreement) are incorporated herein by reference. This Authorization, the Plan, the Terms of Restricted Stock Purchase, the Certificate, the Option Agreement and the Joint Escrow Instructions constitute the entire agreement of the parties with respect to the subject matter hereof and supersede in their entirety all prior undertakings and agreements of the Company and Optionee with respect to the subject matter hereof, and may not be modified adversely to the Optionee’s interest except by means of a writing signed by the Company and Optionee.

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ATTACHMENT 1

STATE OF CALIFORNIA—CALIFORNIA ADMINISTRATIVE CODE

Title 10. Investment—Chapter 3. Commissioner of Corporations

260.141.11: Restriction on Transfer.

(a)    The issuer of any security upon which a restriction on transfer has been imposed pursuant to Sections 260.141.10 or 260.534 shall cause a copy of this section to be delivered to each issuee or transferee of such security at the time the certificate evidencing the security is delivered to the issuee or transferee.

(b)    It is unlawful for the holder of any such security to consummate a sale or transfer of such security, or any interest therein, without the prior written consent of the Commissioner (until this condition is removed pursuant to Section 260.141.12 of these rules), except:

(1)    to the issuer;

(2)    pursuant to the order or process of any court;

(3)    to any person described in Subdivision (i) of Section 25102 of the Code or Section 260.105.14 of these rules;

(4)    to the transferor’s ancestors, descendants or spouse, or any custodian or trustee for the account of the transferor or the transferor’s ancestors, descendants, or spouse; or to a transferee by a trustee or custodian for the account of the transferee or the transferee’s ancestors, descendants or spouse;

(5)    to holders of securities of the same class of the same issuer;

(6)    by way of gift or donation inter vivos or on death;

(7)    by or through a broker-dealer licensed under the Code (either acting as such or as a finder) to a resident of a foreign state, territory or country who is neither domiciled in this state to the knowledge of the broker-dealer, nor actually present in this state if the sale of such securities is not in violation of any securities law of the foreign state, territory or country concerned;

(8)    to a broker-dealer licensed under the Code in a principal transaction, or as an underwriter or member of an underwriting syndicate or selling group;

(9)    if the interest sold or transferred is a pledge or other lien given by the purchaser to the seller upon a sale of the security for which the Commissioner’s written consent is obtained or under this rule not required;

(10)    by way of a sale qualified under Sections 25111, 25112, 25113 or 25121 of the Code, of the securities to be transferred, provided that no order under Section 25140 or subdivision (a) of Section 25143 is in effect with respect to such qualification;

(11)    by a corporation to a wholly owned subsidiary of such corporation, or by a wholly owned subsidiary of a corporation to such corporation;

(12)    by way of an exchange qualified under Section 25111, 25112 or 25113 of the Code, provided that no order under Section 25140 or subdivision (a) of Section 25143 is in effect with respect to such qualification;

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(13)    between residents of foreign states, territories or countries who are neither domiciled nor actually present in this state;

(14)    to the State Controller pursuant to the Unclaimed Property Law or to the administrator of the unclaimed property law of another state; or

(15)    by the State Controller pursuant to the Unclaimed Property Law or by the administrator of the unclaimed property law of another state if, in either such case, such person (i) discloses to potential purchasers at the sale that transfer of the securities is restricted under this rule, (ii) delivers to each purchaser a copy of this rule, and (iii) advises the Commissioner of the name of each purchaser;

(16)    by a trustee to a successor trustee when such transfer does not involve a change in the beneficial ownership of the securities;

(17)    by way of an offer and sale of outstanding securities in an issuer transaction that is subject to the qualification requirement of Section 25110 of the Code but exempt from that qualification requirement by subdivision (f) of Section 25102; provided that any such transfer is on the condition that any certificate evidencing the security issued to such transferee shall contain the legend required by this section.

(c)    The certificates representing all such securities subject to such a restriction on transfer, whether upon initial issuance or upon any transfer thereof, shall bear on their face a legend, prominently stamped or printed thereon in capital letters of not less than 10-point size, reading as follows:

“IT IS UNLAWFUL TO CONSUMMATE A SALE OR TRANSFER OF THIS SECURITY, OR ANY INTEREST THEREIN, OR TO RECEIVE ANY CONSIDERATION THEREFOR, WITHOUT THE PRIOR WRITTEN CONSENT OF THE COMMISSIONER OF CORPORATIONS OF THE STATE OF CALIFORNIA, EXCEPT AS PERMITTED IN THE COMMISSIONER’S RULES.”

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EXHIBIT B-1

TERMS OF RESTRICTED STOCK PURCHASE

In the event that Optionee elects to purchase shares of Common Stock which have not become vested under the vesting schedule set forth in the Option Agreement (“Unvested Shares”), pursuant to the Option Agreement and the Stock Option Cash Exercise Letter of Authorization, as a condition to Optionee’s election to exercise the Option, Optionee has agreed to these Terms of Restricted Stock Purchase which set forth the rights and obligations of the Optionee and the Company with respect to Unvested Shares acquired upon exercise of the Option. Unless otherwise defined herein, the terms defined in the 2003 Stock Plan (No. 3) shall have the same defined meanings in these Terms of Restricted Stock Purchase.

1.    Repurchase Option.

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

(b)    Upon the occurrence of such termination, the Company may exercise its Repurchase Option by delivering personally or by registered mail, to Optionee (or his transferee or legal representative, as the case may be) with a copy to the escrow agent described in Section 2 below, a notice in writing indicating the Company’s intention to exercise the Repurchase Option AND, at the Company’s option, (i) by delivering to the Optionee (or the Optionee’s transferee or legal representative) a check in the amount of the aggregate repurchase price, or (ii) by the Company canceling an amount of the Optionee’s indebtedness to the Company equal to the aggregate repurchase price, or (iii) by a combination of (i) and (ii) so that the combined payment and cancellation of indebtedness equals such aggregate repurchase price. Upon delivery of such notice and payment of the aggregate repurchase price in any of the ways described above, the Company shall become the legal and beneficial owner of the Unvested Shares being repurchased and the rights and interests therein or relating thereto, and the Company shall have the right to retain and transfer to its own name the number of Unvested Shares being repurchased by the Company.

(c)    Whenever the Company shall have the right to repurchase Unvested Shares hereunder, the Company may designate and assign one or more employees, officers, directors or shareholders of the Company or other persons or organizations to exercise all or a part of the Company’s Repurchase Option under this Agreement and purchase all or a part of such Unvested Shares.

(d)    At its option, the Company may elect to make payment for the Unvested Shares to a bank selected by the Company. The Company shall avail itself of this option by a notice

in writing to Optionee stating the name and address of the bank, date of closing, and waiving the closing at the Company’s office.

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

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

2.    Transferability of the Shares; Escrow.

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

(b)    To insure the availability for delivery of Optionee’s Unvested Shares upon repurchase by the Company pursuant to the Repurchase Option under Section 1, Optionee hereby appoints the Secretary, or any other person designated by the Company as escrow agent, as its attorney-in-fact to sell, assign and transfer unto the Company, such Unvested Shares, if any, repurchased by the Company pursuant to the Repurchase Option and shall, upon exercise of the Option, deliver and deposit with the Secretary of the Company, or such other person designated by the Company, the share certificates representing the Unvested Shares, together with the stock assignment duly endorsed in blank, the form of which is set forth in Exhibit B-2 hereto. The Unvested Shares and stock assignment shall be held by the secretary in escrow, pursuant to the Joint Escrow Instructions of the Company and Optionee set forth in Exhibit B-3 hereto, until the Company exercises its Repurchase Option, until such Unvested Shares are vested, or until such time as these Terms of Restricted Stock Purchase are no longer in effect. Upon vesting of the Unvested Shares, the escrow agent shall promptly deliver to the Optionee the certificate or certificates representing such Shares in the escrow agent’s possession belonging to the Optionee, and the escrow agent shall be discharged of all further obligations hereunder; provided, however, that the escrow agent shall nevertheless retain such certificate or certificates as escrow agent if so required pursuant to other restrictions imposed pursuant to the Option Agreement or these Terms of Restricted Stock Purchase.

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

(d)    Transfer or sale of the Shares is subject to restrictions on transfer imposed by any applicable state and federal securities laws. Any transferee shall hold such Shares subject to all the provisions hereof and the Authorization executed by the Optionee with respect to any Unvested Shares purchased by Optionee and shall acknowledge the same by signing an acknowledgement in a form acceptable to the Company.

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3.    Ownership, Voting Rights, Duties. These Terms of Restricted Stock Purchase shall not affect in any way the ownership, voting rights or other rights or duties of Optionee, except as specifically provided herein.

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

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

5.    Adjustment for Stock Split. All references herein to the number of Shares and the purchase price of the Shares shall be appropriately adjusted to reflect any stock split, stock dividend or other change in the Shares which may be made by the Company pursuant to Section 13 of the Plan after the date of exercise.

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

7.    Survival of Terms. These Terms of Restricted Stock Purchase shall apply to and bind Optionee and the Company and their respective permitted assignees and transferees, heirs, legatees, executors, administrators and legal successors.

8.    Section 83(b) Election. Optionee hereby acknowledges that he or she has been informed that, with respect to the exercise of an Option for Unvested Shares, an election (the “Election”) may be filed by the Optionee with the Internal Revenue Service, within 30 days of the purchase of the exercised Shares, electing pursuant to Section 83(b) of the Code to be taxed currently on any difference between the purchase price of the exercised Shares and their Fair Market Value on the date of purchase. In the case of a Nonstatutory Stock Option, this will result in a recognition of taxable income to the Optionee on the date of exercise, measured by the excess, if any, of the Fair Market Value of the exercised Shares, at the time the Option is exercised over the purchase price for the exercised Shares. Absent such an Election, taxable income will be measured and recognized by Optionee at the time or times on which the Company’s Repurchase Option lapses. In the case of an Incentive Stock Option, such an Election will result in a recognition of income to the Optionee for alternative minimum tax purposes on the date of exercise, measured by the excess, if any, of the Fair Market Value of the exercised Shares, at the time the option is exercised, over the purchase price for the exercised Shares. Absent such an Election, alternative minimum taxable income will be measured and recognized by Optionee at the time or times on which the Company’s Repurchase Option lapses. Optionee is strongly encouraged to seek the advice of his or her own tax consultants in connection with the purchase of the Shares and the advisability of filing of the Election under Section 83(b) of the Code. A form of Election under Section 83(b) is set forth in Exhibit B-4 hereto for reference.

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

9.    Representations. Optionee has reviewed with his or her own tax advisors the federal, state, local and foreign tax consequences of this investment and the transactions contemplated by these Terms of Restricted Stock Purchase. Optionee is relying solely on such advisors and not on any statements or representations of the Company or any of its agents. Optionee understands that he or she (and not the Company) shall be responsible for his or her own tax liability that may arise as a result of this investment or the transactions contemplated by this Agreement.

10.    Governing Law. These Terms of Restricted Stock Purchase shall be governed by the internal substantive laws, but not the choice of law rules, of California.

11.    Acknowledgement. Optionee represents that he or she has read these Terms of Restricted Stock Purchase and is familiar with its terms and provisions. Optionee hereby agrees to accept as binding, conclusive and final all decisions or interpretations of the Board upon any questions arising under these Terms of Restricted Stock Purchase.

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EXHIBIT B-2

ASSIGNMENT SEPARATE FROM CERTIFICATE

FOR VALUE RECEIVED I,                     , hereby sell, assign and transfer unto the Company (as defined in the Google Inc. 2003 Stock Plan (No. 3)) (                    ) shares of the Common Stock of the Company standing in my name of the books of said corporation represented by Certificate No.                      herewith and do hereby irrevocably constitute and appoint                      to transfer the said stock on the books of the within named corporation with full power of substitution in the premises.

This Stock Assignment may be used only in accordance with the Option Agreement and Terms of Restricted Stock Purchase between the Company and the undersigned dated                     ,             .

Dated:                                                      ,                                                                   Signature:                                                          

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

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EXHIBIT B-3

JOINT ESCROW INSTRUCTIONS

As escrow agent (the “Escrow Agent”) for both the Company (as defined in the Google Inc. 2003 Stock Plan (No. 3)), and the Optionee under the Stock Option Agreement to which these Instructions are attached (the “Optionee”), the Corporate Secretary of the Company (the “Secretary”) is hereby authorized and directed to hold the documents delivered to him or her pursuant to the Terms of Restricted Stock Purchase (“Terms of Restricted Stock Purchase”) between the Company and the Optionee (the “Escrow”), in accordance with the following instructions:

1.    In the event the Company and/or any assignee of the Company (referred to collectively for convenience herein as the “Company”) exercises the Company’s Repurchase Option (as defined in the Terms of Restricted Stock Purchase), the Company shall give to Optionee and the Secretary a written notice specifying the number of shares of stock to be purchased, the purchase price and the time for a closing hereunder at the principal office of the Company. Optionee and the Company hereby irrevocably authorize and direct the Secretary to close the transaction contemplated by such notice in accordance with the terms of said notice.

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

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

4.    Upon written request of the Optionee, but no more than once per calendar year, unless the Company’s Repurchase Option has been exercised, the Secretary will deliver to Optionee a certificate or certificates representing so many shares of stock as are not then subject to the Company’s Repurchase Option. Within 120 days after cessation of Optionee’s status as a Service

Provider, the Secretary will deliver to Optionee a certificate or certificates representing the aggregate number of shares held or issued pursuant to the Terms of Restricted Stock Purchase and not purchased by the Company or its assignees pursuant to its right to exercise the Company’s Repurchase Option.

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

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

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

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

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

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

11.    The Secretary shall be entitled to employ such legal counsel and other experts as he or she may deem necessary to advise in connection with the obligations hereunder, may rely upon the advice of such counsel, and may pay such counsel reasonable compensation therefor.

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

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

14.    It is understood and agreed that should any dispute arise with respect to the delivery and/or ownership or right of possession of the securities held hereunder, the Secretary is authorized and directed to retain in his or her possession without liability to anyone all or any part of said securities until such disputes shall have been settled either by mutual written agreement of the parties concerned or by a final order, decree or judgment of a court of competent jurisdiction after the time for appeal has expired and no appeal has been perfected, but shall be under no duty whatsoever to institute or defend any such proceedings.

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

COMPANY:	Google Inc.
	2400 Bayshore Parkway
	Mountain View, CA 94043
OPTIONEE:	To the address on file with the Company
ESCROW AGENT:	Google Inc.
	2400 Bayshore Parkway
	Mountain View, CA 94043-1103
	Attn: Corporate Secretary

16.    The Secretary becomes a party hereto only for the purpose of said Joint Escrow Instructions; the Secretary does not become a party to the Option Agreement.

17.    These Joint Escrow Instructions shall be binding upon and inure to the benefit of the parties hereto, and their respective successors and permitted assigns.

18.    These Joint Escrow Instructions shall be governed by, and construed and enforced in accordance with, the laws of the State of California.

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EXHIBIT B-4

ELECTION UNDER SECTION 83(b)

OF THE INTERNAL REVENUE CODE OF 1986

The undersigned taxpayer hereby elects, pursuant to Sections 55 and 83(b) of the Internal Revenue Code of 1986, as amended, to include in taxpayer’s gross income or alternative minimum taxable income, as the case may be, for the current taxable year the amount of any compensation taxable to taxpayer in connection with taxpayer’s receipt of the property described below:

1. The name, address, taxpayer identification number and taxable year of the undersigned are as follows:

	Taxpayer	Spouse
NAME:
ADDRESS:
IDENTIFICATION NO.:
TAXABLE YEAR:

2. The property with respect to which the election is made is described as follows:                                      shares (the “Shares”) of the Common Stock of Google Technology Inc. (the “Company”).

3. The date on which the property was transferred is:                         

4. The property is subject to the following restrictions:

The Shares may not be transferred and are subject to forfeiture under the terms of an agreement between the taxpayer and the Company. These restrictions lapse upon the satisfaction of certain conditions contained in such agreement.

5. The fair market value at the time of transfer, determined without regard to any restriction other than a restriction which by its terms will never lapse, of such property is:                  per share.

6. The amount (if any) paid for such property is: $                                        .

The undersigned has submitted a copy of this statement to the person for whom the services were performed in connection with the undersigned’s receipt of the above-described property. The transferee of such property is the person performing the services in connection with the transfer of said property.

The undersigned understands that the foregoing election may not be revoked except with the consent of the Commissioner.

Dated:                                                                       ,
	Taxpayer

The undersigned spouse of taxpayer joins in this election.

Dated:                                                                       ,
	Taxpayer

EX-10.08

Exhibit 10.08

GOOGLE INC.

2004 STOCK PLAN

1. Purposes of the Plan. The purposes of this Plan are:

• to attract and retain the best available personnel for positions of substantial responsibility,

• to provide additional incentive to Employees, Directors and Consultants, and

• to promote the success of the Company’s business.

The Plan permits the grant of Incentive Stock Options, Nonstatutory Stock Options, Restricted Stock, Stock Appreciation Rights, Restricted Stock Units, Performance Units, Performance Shares and Other Stock Based Awards.

2. Definitions. As used herein, the following definitions will apply:

(a) “Administrator” means the Board or any of its Committees as will be administering the Plan, in accordance with Section 4 of the Plan.

(b) “Applicable Laws” means the requirements relating to the administration of equity-based awards or equity compensation plans under U.S. state corporate laws, U.S. federal and state securities laws, the Code, any stock exchange or quotation system on which the Common Stock is listed or quoted and the applicable laws of any foreign country or jurisdiction where Awards are, or will be, granted under the Plan.

(c) “Award” means, individually or collectively, a grant under the Plan of Options, SARs, Restricted Stock, Restricted Stock Units, Performance Units, Performance Shares or Other Stock Based Awards.

(d) “Award Agreement” means the written or electronic agreement setting forth the terms and provisions applicable to each Award granted under the Plan. The Award Agreement is subject to the terms and conditions of the Plan.

(e) “Award Transfer Program” means any program instituted by the Administrator which would permit Participants the opportunity to transfer any outstanding Awards to a financial institution or other person or entity selected by the Administrator.

(f) “Awarded Stock” means the Common Stock subject to an Award.

(g) “Board” means the Board of Directors of the Company.

(h) “Change in Control” means the occurrence of any of the following events:

(i) Any “person” (as such term is used in Sections 13(d) and 14(d) of the Exchange Act) becomes the “beneficial owner” (as defined in Rule 13d-3 of the Exchange Act), directly or indirectly, of securities of the Company representing fifty percent (50%) or more of the total voting power represented by the Company’s then outstanding voting securities and within three (3) years from the date of such acquisition, a merger or consolidation of the Company with or into the person (or affiliate thereof) holding such beneficial ownership of securities of the Company is consummated; or

(ii) The consummation of the sale or disposition by the Company of all or substantially all of the Company’s assets;

(iii) A change in the composition of the Board occurring within a two-year period, as a result of which fewer than a majority of the directors are Incumbent Directors. “Incumbent Directors” means directors who either (A) are Directors as of the effective date of the Plan, or (B) are elected, or nominated for election, to the Board with the affirmative votes of at least a majority of the Incumbent Directors at the time of such election or nomination (but will not include an individual whose election or nomination is in connection with an actual or threatened proxy contest relating to the election of directors to the Company); or

(iv) The consummation of a merger or consolidation of the Company with any other corporation, other than a merger or consolidation which would result in the voting securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity or its parent) at least fifty percent (50%) of the total voting power represented by the voting securities of the Company or such surviving entity or its parent outstanding immediately after such merger or consolidation.

For purposes of this Section, “affiliate” will mean, with respect to any specified person, any other person that directly or indirectly, through one or more intermediaries, controls, is controlled by, or is under common control with, such specified person (“control,” “controlled by” and “under common control with” will mean the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a person, whether through ownership of voting securities, by contact or credit arrangement, as trustee or executor, or otherwise).

(i) “Code” means the Internal Revenue Code of 1986, as amended. Any reference to a section of the Code herein will be a reference to any successor or amended section of the Code.

(j) “Committee” means a committee of Directors or other individuals satisfying Applicable Laws appointed by the Board in accordance with Section 4 of the Plan.

(k) “Common Stock” means the Class A Common Stock of the Company, or in the case of Performance Units and certain Other Stock Based Awards, the cash equivalent thereof.

(l) “Company” means Google Inc., a Delaware corporation, or any successor thereto.

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(m) “Consultant” means any person, including an advisor, engaged by the Company or a Parent or Subsidiary to render services to such entity.

(n) “Restricted Stock Unit” means an Award that the Administrator permits to be paid in installments or on a deferred basis pursuant to Sections 4 and 11 of the Plan.

(o) “Director” means a member of the Board.

(p) “Disability” means total and permanent disability as defined in Section 22(e)(3) of the Code, provided that in the case of Awards other than Incentive Stock Options, the Administrator in its discretion may determine whether a permanent and total disability exists in accordance with uniform and non-discriminatory standards adopted by the Administrator from time to time.

(q) “Dividend Equivalent” means a credit, made at the discretion of the Administrator, to the account of a Participant in an amount equal to the cash dividends paid on one Share for each Share represented by an Award held by such Participant.

(r) “Employee” means any person, including Officers and Directors, employed by the Company or any Parent or Subsidiary of the Company. Neither service as a Director nor payment of a director’s fee by the Company will be sufficient to constitute “employment” by the Company.

(s) “Exchange Act” means the Securities Exchange Act of 1934, as amended.

(t) “Exchange Program” means a program under which (i) outstanding Awards are surrendered or cancelled in exchange for Awards of the same type (which may have lower exercise prices and different terms), Awards of a different type, and/or cash, and/or (ii) the exercise price of an outstanding Award is reduced. The terms and conditions of any Exchange Program will be determined by the Administrator in its sole discretion.

(u) “Fair Market Value” means, as of any date and unless the Administrator determines otherwise, the value of Common Stock determined as follows:

(i) If the Common Stock is listed on any established stock exchange or a national market system, including without limitation the Nasdaq National Market or The Nasdaq SmallCap Market of The Nasdaq Stock Market, its Fair Market Value will be the closing sales price for such stock (or the closing bid, if no sales were reported) as quoted on such exchange or system for the day of determination, as reported in The Wall Street Journal or such other source as the Administrator deems reliable;

(ii) If the Common Stock is regularly quoted by a recognized securities dealer but selling prices are not reported, the Fair Market Value of a Share of Common Stock will be the mean between the high bid and low asked prices for the Common Stock for the day of determination, as reported in The Wall Street Journal or such other source as the Administrator deems reliable; or

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(iii) In the absence of an established market for the Common Stock, the Fair Market Value will be determined in good faith by the Administrator.

(iv) Notwithstanding the preceding, for federal, state, and local income tax reporting purposes and for such other purposes as the Administrator deems appropriate, the Fair Market Value shall be determined by the Administrator in accordance with uniform and nondiscriminatory standards adopted by it from time to time.

(v) “Fiscal Year” means the fiscal year of the Company.

(w) “Incentive Stock Option” means an Option intended to qualify as an incentive stock option within the meaning of Section 422 of the Code and the regulations promulgated thereunder.

(x) “Nonstatutory Stock Option” means an Option that by its terms does not qualify or is not intended to qualify as an Incentive Stock Option.

(y) “Officer” means a person who is an officer of the Company within the meaning of Section 16 of the Exchange Act and the rules and regulations promulgated thereunder.

(z) “Option” means a stock option granted pursuant to the Plan.

(aa) “Other Stock Based Awards” means any other awards not specifically described in the Plan that are valued in whole or in part by reference to, or are otherwise based on, Shares and are created by the Administrator pursuant to Section 12.

(bb) “Outside Director” means a Director who is not an Employee.

(cc) “Parent” means a “parent corporation,” whether now or hereafter existing, as defined in Section 424(e) of the Code.

(dd) “Participant” means the holder of an outstanding Award granted under the Plan.

(ee) “Performance Share” means an Award granted to a Service Provider pursuant to Section 10 of the Plan.

(ff) “Performance Unit” means an Award granted to a Service Provider pursuant to Section 10 of the Plan.

(gg) “Period of Restriction” means the period during which the transfer of Shares of Restricted Stock are subject to restrictions and therefore, the Shares are subject to a substantial risk of forfeiture. Such restrictions may be based on the passage of time, the achievement of target levels of performance, or the occurrence of other events as determined by the Administrator.

(hh) “Plan” means this 2004 Stock Plan.

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(ii) “Restricted Stock” means shares of Common Stock issued pursuant to a Restricted Stock award under Section 8, Section 11 or Section 12 of the Plan or issued pursuant to the early exercise of an Option.

(jj) “Rule 16b-3” means Rule 16b-3 of the Exchange Act or any successor to Rule 16b-3, as in effect when discretion is being exercised with respect to the Plan.

(kk) “Section 16(b)“ means Section 16(b) of the Exchange Act.

(ll) “Service Provider” means an Employee, Director or Consultant.

(mm) “Share” means a share of the Common Stock, as adjusted in accordance with Section 15 of the Plan.

(nn) “Stock Appreciation Right” or “SAR” means an Award, granted alone or in connection with an Option, that pursuant to Section 9 of the Plan is designated as a SAR.

(oo) “Subsidiary” means a “subsidiary corporation”, whether now or hereafter existing, as defined in Section 424(f) of the Code.

(pp) “Unvested Awards” shall mean Options or Restricted Stock that (i) were granted to an individual in connection with such individual’s position as a Service Provider and (ii) are still subject to vesting or lapsing of Company repurchase rights or similar restrictions.

3. Stock Subject to the Plan.

(a) Stock Subject to the Plan. Subject to the provisions of Section 15 of the Plan, the maximum aggregate number of Shares that may be issued under the Plan is 9,499,500, minus those shares subject to Options that are granted after December 31, 2003 under the Company’s 1998 Stock Plan, 1999 Stock Option/Stock Issuance Plan, 2000 Stock Plan, 2003 Stock Plan, 2003 Stock Plan (No. 2) and 2003 Stock Plan (No. 3). The Shares may be authorized, but unissued, or reacquired Common Stock. Shares shall not be deemed to have been issued pursuant to the Plan with respect to any portion of an Award that is settled in cash. Upon payment in Shares pursuant to the exercise of an Award, the number of Shares available for issuance under the Plan shall be reduced only by the number of Shares actually issued in such payment. If a Participant pays the exercise price (or purchase price, if applicable) of an Award through the tender of Shares, or if Shares are tendered or withheld to satisfy any Company withholding obligations, the number of Shares so tendered or withheld shall again be available for issuance pursuant to future Awards under the Plan. Notwithstanding anything in the Plan, or any Award Agreement to the contrary, Shares attributable to Awards transferred under any Award Transfer Program shall not be again available for grant under the Plan.

(b) Lapsed Awards. If any outstanding Award expires or is terminated or canceled without having been exercised or settled in full, or if Shares acquired pursuant to an Award subject to forfeiture or repurchase are forfeited or repurchased by the Company, the Shares allocable to the terminated portion of such Award or such forfeited or repurchased Shares shall again be available for grant under the Plan.

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4. Administration of the Plan.

(a) Procedure.

(i) Multiple Administrative Bodies. Different Committees with respect to different groups of Service Providers may administer the Plan.

(ii) Section 162(m). To the extent that the Administrator determines it to be desirable and necessary to qualify Awards granted hereunder as “performance-based compensation” within the meaning of Section 162(m) of the Code, the Plan will be administered by a Committee of two or more “outside directors” within the meaning of Section 162(m) of the Code.

(iii) Rule 16b-3. To the extent desirable to qualify transactions hereunder as exempt under Rule 16b-3, the transactions contemplated hereunder will be structured to satisfy the requirements for exemption under Rule 16b-3.

(iv) Other Administration. Other than as provided above, the Plan will be administered by (A) the Board or (B) a Committee, which committee will be constituted to satisfy Applicable Laws.

(v) Delegation of Authority for Day-to-Day Administration. Except to the extent prohibited by Applicable Law, the Administrator may delegate to one or more individuals the day-to-day administration of the Plan and any of the functions assigned to it in this Plan. Such delegation may be revoked at any time.

(b) Powers of the Administrator. Subject to the provisions of the Plan, and in the case of a Committee, subject to the specific duties delegated by the Board to such Committee, the Administrator will have the authority, in its discretion:

(i) to determine the Fair Market Value;

(ii) to select the Service Providers to whom Awards may be granted hereunder;

(iii) to determine the number of Shares to be covered by each Award granted hereunder;

(iv) to approve forms of agreement for use under the Plan;

(v) to determine the terms and conditions, not inconsistent with the terms of the Plan, of any Award granted hereunder. Such terms and conditions include, but are not limited to, the exercise price, the time or times when Awards may be exercised (which may be based on performance criteria), any vesting acceleration or waiver of forfeiture or repurchase restrictions, and any restriction or limitation regarding any Award or the Shares relating thereto, based in each case on such factors as the Administrator, in its sole discretion, will determine;

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(vi) to reduce the exercise price of any Award to the then current Fair Market Value if the Fair Market Value of the Common Stock covered by such Award shall have declined since the date the Award was granted;

(vii) to institute an Exchange Program;

(viii) to construe and interpret the terms of the Plan and Awards granted pursuant to the Plan;

(ix) to prescribe, amend and rescind rules and regulations relating to the Plan, including rules and regulations relating to sub-plans established for the purpose of satisfying applicable foreign laws and/or qualifying for preferred tax treatment under applicable foreign tax laws;

(x) to modify or amend each Award (subject to Section 18(c) of the Plan), including the discretionary authority to extend the post-termination exercisability period of Awards longer than is otherwise provided for in the Plan;

(xi) to allow Participants to satisfy withholding tax obligations by electing to have the Company withhold from the Shares or cash to be issued upon exercise or vesting of an Award that number of Shares or cash having a Fair Market Value equal to the minimum amount required to be withheld. The Fair Market Value of any Shares to be withheld will be determined on the date that the amount of tax to be withheld is to be determined. All elections by a Participant to have Shares or cash withheld for this purpose will be made in such form and under such conditions as the Administrator may deem necessary or advisable;

(xii) to authorize any person to execute on behalf of the Company any instrument required to effect the grant of an Award previously granted by the Administrator;

(xiii) to allow a Participant to defer the receipt of the payment of cash or the delivery of Shares that would otherwise be due to such Participant under an Award;

(xiv) to implement an Award Transfer Program;

(xv) to determine whether Awards will be settled in Shares, cash or in any combination thereof;

(xvi) to determine whether Awards will be adjusted for Dividend Equivalents;

(xvii) to create Other Stock Based Awards for issuance under the Plan;

(xviii) to establish a program whereby Service Providers designated by the Administrator can reduce compensation otherwise payable in cash in exchange for Awards under the Plan;

(xix) to impose such restrictions, conditions or limitations as it determines appropriate as to the timing and manner of any resales by a Participant or other subsequent transfers

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by the Participant of any Shares issued as a result of or under an Award, including without limitation, (A) restrictions under an insider trading policy, and (B) restrictions as to the use of a specified brokerage firm for such resales or other transfers; and

(xx) to make all other determinations deemed necessary or advisable for administering the Plan.

(c) Effect of Administrator’s Decision. The Administrator’s decisions, determinations and interpretations will be final and binding on all Participants and any other holders of Awards.

5. Eligibility. Nonstatutory Stock Options, Restricted Stock, Stock Appreciation Rights, Performance Units, Performance Shares, Restricted Stock Units and Other Stock Based Awards may be granted to Service Providers. Incentive Stock Options may be granted only to Employees.

6. Limitations.

(a) ISO $100,000 Rule. Each Option will be designated in the Award Agreement as either an Incentive Stock Option or a Nonstatutory Stock Option. However, notwithstanding such designation, to the extent that the aggregate Fair Market Value of the Shares with respect to which Incentive Stock Options are exercisable for the first time by the Participant during any calendar year (under all plans of the Company and any Parent or Subsidiary) exceeds $100,000, such Options will be treated as Nonstatutory Stock Options. For purposes of this Section 6(a), Incentive Stock Options will be taken into account in the order in which they were granted. The Fair Market Value of the Shares will be determined as of the time the Option with respect to such Shares is granted.

(b) No Rights as a Service Provider. Neither the Plan nor any Award shall confer upon a Participant any right with respect to continuing his or her relationship as a Service Provider, nor shall they interfere in any way with the right of the Participant or the right of the Company or its Parent or Subsidiaries to terminate such relationship at any time, with or without cause.

7. Stock Options.

(a) Term of Option. The term of each Option will be stated in the Award Agreement. In the case of an Incentive Stock Option, the term will be ten (10) years from the date of grant or such shorter term as may be provided in the Award Agreement. Moreover, in the case of an Incentive Stock Option granted to a Participant who, at the time the Incentive Stock Option is granted, owns stock representing more than ten percent (10%) of the total combined voting power of all classes of stock of the Company or any Parent or Subsidiary, the term of the Incentive Stock Option will be five (5) years from the date of grant or such shorter term as may be provided in the Award Agreement.

(b) Option Exercise Price and Consideration.

(i) Exercise Price. The per Share exercise price for the Shares to be issued pursuant to exercise of an Option will be determined by the Administrator, subject to the following:

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(1) In the case of an Incentive Stock Option

(A) granted to an Employee who, at the time the Incentive Stock Option is granted, owns stock representing more than ten percent (10%) of the voting power of all classes of stock of the Company or any Parent or Subsidiary, the per Share exercise price will be no less than 110% of the Fair Market Value per Share on the date of grant.

(B) granted to any Employee other than an Employee described in paragraph (A) immediately above, the per Share exercise price will be no less than 100% of the Fair Market Value per Share on the date of grant.

(2) In the case of a Nonstatutory Stock Option, the per Share exercise price will be determined by the Administrator. In the case of a Nonstatutory Stock Option intended to qualify as “performance-based compensation” within the meaning of Section 162(m) of the Code, the per Share exercise price will be no less than 100% of the Fair Market Value per Share on the date of grant.

(3) Notwithstanding the foregoing, Incentive Stock Options may be granted with a per Share exercise price of less than 100% of the Fair Market Value per Share on the date of grant pursuant to a merger or other corporate transaction.

(ii) Waiting Period and Exercise Dates. At the time an Option is granted, the Administrator will fix the period within which the Option may be exercised and will determine any conditions that must be satisfied before the Option may be exercised.

(c) Form of Consideration. The Administrator will determine the acceptable form of consideration for exercising an Option, including the method of payment. In the case of an Incentive Stock Option, the Administrator will determine the acceptable form of consideration at the time of grant. Such consideration to the extent permitted by Applicable Laws may consist entirely of:

(i) cash;

(ii) check;

(iii) promissory note;

(iv) other Shares which meet the conditions established by the Administrator to avoid adverse accounting consequences (as determined by the Administrator);

(v) consideration received by the Company under a cashless exercise program implemented by the Company in connection with the Plan;

(vi) a reduction in the amount of any Company liability to the Participant, including any liability attributable to the Participant’s participation in any Company-sponsored deferred compensation program or arrangement;

(vii) any combination of the foregoing methods of payment; or

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(viii) such other consideration and method of payment for the issuance of Shares to the extent permitted by Applicable Laws.

(d) Exercise of Option.

(i) Procedure for Exercise; Rights as a Stockholder. Any Option granted hereunder will be exercisable according to the terms of the Plan and at such times and under such conditions as determined by the Administrator and set forth in the Award Agreement. An Option may not be exercised for a fraction of a Share.

An Option will be deemed exercised when the Company receives: (x) written or electronic notice of exercise (in accordance with the Award Agreement) from the person entitled to exercise the Option, and (y) full payment for the Shares with respect to which the Option is exercised. Full payment may consist of any consideration and method of payment authorized by the Administrator and permitted by the Award Agreement and the Plan. Shares issued upon exercise of an Option will be issued in the name of the Participant or, if requested by the Participant, in the name of the Participant and his or her spouse. Until the Shares are issued (as evidenced by the appropriate entry on the books of the Company or of a duly authorized transfer agent of the Company), no right to vote or receive dividends or any other rights as a stockholder will exist with respect to the Awarded Stock, notwithstanding the exercise of the Option. The Company will issue (or cause to be issued) such Shares promptly after the Option is exercised. No adjustment will be made for a dividend or other right for which the record date is prior to the date the Shares are issued, except as provided in Section 15 of the Plan or the applicable Award Agreement.

Exercising an Option in any manner will decrease the number of Shares thereafter available for sale under the Option, by the number of Shares as to which the Option is exercised.

(ii) Termination of Relationship as a Service Provider. If a Participant ceases to be a Service Provider, other than upon the Participant’s death or Disability, the Participant may exercise his or her Option within such period of time as is specified in the Award Agreement to the extent that the Option is vested on the date of termination (but in no event later than the expiration of the term of such Option as set forth in the Award Agreement). In the absence of a specified time in the Award Agreement, the Option will remain exercisable for three (3) months following the Participant’s termination. Unless otherwise provided by the Administrator, if on the date of termination the Participant is not vested as to his or her entire Option, the Shares covered by the unvested portion of the Option will revert to the Plan on the date one (1) month following the Participant’s termination. If after termination the Participant does not exercise his or her Option within the time specified by the Administrator, the Option will terminate, and the Shares covered by such Option will revert to the Plan.

(iii) Disability of Participant. If a Participant ceases to be a Service Provider as a result of the Participant’s Disability, the Participant may exercise his or her Option within such period of time as is specified in the Award Agreement to the extent the Option is vested on the date of termination (but in no event later than the expiration of the term of such Option as set forth in the Award Agreement). In the absence of a specified time in the Award Agreement, the Option will remain exercisable for twelve (12) months following the Participant’s termination.

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Unless otherwise provided by the Administrator, if on the date of termination the Participant is not vested as to his or her entire Option, the Shares covered by the unvested portion of the Option will revert to the Plan on the date one (1) month following the Participant’s termination. If after termination the Participant does not exercise his or her Option within the time specified herein, the Option will terminate, and the Shares covered by such Option will revert to the Plan.

(iv) Death of Participant. If a Participant dies while a Service Provider, the Option may be exercised following the Participant’s death within such period of time as is specified in the Award Agreement to the extent that the Option is vested on the date of death (but in no event may the option be exercised later than the expiration of the term of such Option as set forth in the Award Agreement), by the Participant’s designated beneficiary, provided such beneficiary has been designated prior to Participant’s death in a form acceptable to the Administrator. If no such beneficiary has been designated by the Participant, then such Option may be exercised by the personal representative of the Participant’s estate or by the person(s) to whom the Option is transferred pursuant to the Participant’s will or in accordance with the laws of descent and distribution. In the absence of a specified time in the Award Agreement, the Option will remain exercisable for twelve (12) months following Participant’s death. Unless otherwise provided by the Administrator, if at the time of death Participant is not vested as to his or her entire Option, the Shares covered by the unvested portion of the Option will immediately revert to the Plan on the date one (1) month following the Participant’s death. If the Option is not so exercised within the time specified herein, the Option will terminate, and the Shares covered by such Option will revert to the Plan.

(e) Buyout Provisions. The Administrator may at any time offer to buy out for a payment in cash or Shares an Option previously granted based on such terms and conditions as the Administrator shall establish and communicate to the Participant at the time that such offer is made.

8. Restricted Stock.

(a) Grant of Restricted Stock. Subject to the terms and provisions of the Plan, the Administrator, at any time and from time to time, may grant Shares of Restricted Stock to Service Providers in such amounts as the Administrator, in its sole discretion, will determine.

(b) Restricted Stock Agreement. Each Award of Restricted Stock will be evidenced by an Award Agreement that will specify the Period of Restriction, the number of Shares granted, and such other terms and conditions as the Administrator, in its sole discretion, will determine. Unless the Administrator determines otherwise, Shares of Restricted Stock will be held by the Company as escrow agent until the restrictions on such Shares have lapsed.

(c) Transferability. Except as provided in this Section 8, Shares of Restricted Stock may not be sold, transferred, pledged, assigned, or otherwise alienated or hypothecated until the end of the applicable Period of Restriction.

(d) Other Restrictions. The Administrator, in its sole discretion, may impose such other restrictions on Shares of Restricted Stock as it may deem advisable or appropriate.

(e) Removal of Restrictions. Except as otherwise provided in this Section 8, Shares of Restricted Stock covered by each Restricted Stock grant made under the Plan will be

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released from escrow as soon as practicable after the last day of the Period of Restriction. The Administrator, in its discretion, may accelerate the time at which any restrictions will lapse or be removed.

(f) Voting Rights. During the Period of Restriction, Service Providers holding Shares of Restricted Stock granted hereunder may exercise full voting rights with respect to those Shares, unless the Administrator determines otherwise.

(g) Dividends and Other Distributions. During the Period of Restriction, Service Providers holding Shares of Restricted Stock will be entitled to receive all dividends and other distributions paid with respect to such Shares unless otherwise provided in the Award Agreement. If any such dividends or distributions are paid in Shares, the Shares will be subject to the same restrictions on transferability and forfeitability as the Shares of Restricted Stock with respect to which they were paid.

(h) Return of Restricted Stock to Company. On the date set forth in the Award Agreement, the Restricted Stock for which restrictions have not lapsed will revert to the Company and again will become available for grant under the Plan.

9. Stock Appreciation Rights.

(a) Grant of SARs. Subject to the terms and conditions of the Plan, a SAR may be granted to Service Providers at any time and from time to time as will be determined by the Administrator, in its sole discretion.

(b) Number of Shares. The Administrator will have complete discretion to determine the number of SARs granted to any Service Provider.

(c) Exercise Price and Other Terms. The Administrator, subject to the provisions of the Plan, will have complete discretion to determine the terms and conditions of SARs granted under the Plan.

(d) Exercise of SARs. SARs will be exercisable on such terms and conditions as the Administrator, in its sole discretion, will determine.

(e) SAR Agreement. Each SAR grant will be evidenced by an Award Agreement that will specify the exercise price, the term of the SAR, the conditions of exercise, and such other terms and conditions as the Administrator, in its sole discretion, will determine.

(f) Expiration of SARs. An SAR granted under the Plan will expire upon the date determined by the Administrator, in its sole discretion, and set forth in the Award Agreement. Notwithstanding the foregoing, the rules of Sections 7(d)(ii), 7(d)(iii) and 7(d)(iv) also will apply to SARs.

(g) Payment of SAR Amount. Upon exercise of an SAR, a Participant will be entitled to receive payment from the Company in an amount determined by multiplying:

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(i) The difference between the Fair Market Value of a Share on the date of exercise over the exercise price; times

(ii) The number of Shares with respect to which the SAR is exercised.

At the discretion of the Administrator, the payment upon SAR exercise may be in cash, in Shares of equivalent value, or in some combination thereof.

(h) Buyout Provisions. The Administrator may at any time offer to buy out for a payment in cash or Shares a Stock Appreciation Right previously granted based on such terms and conditions as the Administrator shall establish and communicate to the Participant at the time that such offer is made.

10. Performance Units and Performance Shares.

(a) Grant of Performance Units/Shares. Subject to the terms and conditions of the Plan, Performance Units and Performance Shares may be granted to Service Providers at any time and from time to time, as will be determined by the Administrator, in its sole discretion. The Administrator will have complete discretion in determining the number of Performance Units and Performance Shares granted to each Participant.

(b) Value of Performance Units/Shares. Each Performance Unit will have an initial value that is established by the Administrator on or before the date of grant. Each Performance Share will have an initial value equal to the Fair Market Value of a Share on the date of grant.

(c) Performance Objectives and Other Terms. The Administrator will set performance objectives in its discretion which, depending on the extent to which they are met, will determine the number or value of Performance Units/Shares that will be paid out to the Service Providers. The time period during which the performance objectives must be met will be called the “Performance Period.” Each Award of Performance Units/Shares will be evidenced by an Award Agreement that will specify the Performance Period, and such other terms and conditions as the Administrator, in its sole discretion, will determine. The Administrator may set performance objectives based upon the achievement of Company-wide, divisional, or individual goals, applicable federal or state securities laws, or any other basis determined by the Administrator in its discretion.

(d) Earning of Performance Units/Shares. After the applicable Performance Period has ended, the holder of Performance Units/Shares will be entitled to receive a payout of the number of Performance Units/Shares earned by the Participant over the Performance Period, to be determined as a function of the extent to which the corresponding performance objectives have been achieved. After the grant of a Performance Unit/Share, the Administrator, in its sole discretion, may reduce or waive any performance objectives for such Performance Unit/Share.

(e) Form and Timing of Payment of Performance Units/Shares. Payment of earned Performance Units/Shares will be made as soon after the expiration of the applicable Performance Period at the time determined by the Administrator. The Administrator, in its sole discretion, may pay earned Performance Units/Shares in the form of cash, in Shares (which have an

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aggregate Fair Market Value equal to the value of the earned Performance Units/Shares at the close of the applicable Performance Period) or in a combination thereof.

(f) Cancellation of Performance Units/Shares. On the date set forth in the Award Agreement, all unearned or unvested Performance Units/Shares will be forfeited to the Company, and again will be available for grant under the Plan.

11. Restricted Stock Units. Restricted Stock Units shall consist of a Restricted Stock, Performance Share or Performance Unit Award that the Administrator, in its sole discretion permits to be paid out in installments or on a deferred basis, in accordance with rules and procedures established by the Administrator.

12. Other Stock Based Awards. Other Stock Based Awards may be granted either alone, in addition to, or in tandem with, other Awards granted under the Plan and/or cash awards made outside of the Plan. The Administrator shall have authority to determine the Service Providers to whom and the time or times at which Other Stock Based Awards shall be made, the amount of such Other Stock Based Awards, and all other conditions of the Other Stock Based Awards including any dividend and/or voting rights.

13. Leaves of Absence. Unless the Administrator provides otherwise, vesting of Awards granted hereunder will be suspended during any unpaid leave of absence and will resume on the date the Participant returns to work on a regular schedule as determined by the Company; provided, however, that no vesting credit will be awarded for the time vesting has been suspended during such leave of absence. A Service Provider will not cease to be an Employee in the case of (i) any leave of absence approved by the Company or (ii) transfers between locations of the Company or between the Company, its Parent, or any Subsidiary. For purposes of Incentive Stock Options, no such leave may exceed ninety (90) days, unless reemployment upon expiration of such leave is guaranteed by statute or contract. If reemployment upon expiration of a leave of absence approved by the Company is not so guaranteed, then three months following the 91^st day of such leave any Incentive Stock Option held by the Participant will cease to be treated as an Incentive Stock Option and will be treated for tax purposes as a Nonstatutory Stock Option.

14. Non-Transferability of Awards. Unless determined otherwise by the Administrator, an Award may not be sold, pledged, assigned, hypothecated, transferred, or disposed of in any manner other than by will or by the laws of descent or distribution and may be exercised, during the lifetime of the Participant, only by the Participant. If the Administrator makes an Award transferable, such Award will contain such additional terms and conditions as the Administrator deems appropriate.

15. Adjustments; Dissolution or Liquidation; Merger or Change in Control.

(a) Adjustments. In the event that any dividend or other distribution (whether in the form of cash, Shares, other securities, or other property), recapitalization, stock split, reverse stock split, reorganization, merger, consolidation, split-up, spin-off, combination, repurchase, or exchange of Shares or other securities of the Company, or other change in the corporate structure of the Company affecting the Shares occurs such that an adjustment is determined by the Administrator (in its sole discretion) to be appropriate in order to prevent dilution or enlargement of the benefits or

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potential benefits intended to be made available under the Plan, then the Administrator shall, in such manner as it may deem equitable, adjust the number and class of Shares which may be delivered under the Plan, and the number, class, and price of Shares subject to outstanding Awards. Notwithstanding the preceding, the number of Shares subject to any Award always shall be a whole number.

(b) Dissolution or Liquidation. In the event of the proposed dissolution or liquidation of the Company, the Administrator will notify each Participant as soon as practicable prior to the effective date of such proposed transaction. The Administrator in its discretion may provide for a Participant to have the right to exercise his or her Award, to the extent applicable, until ten (10) days prior to such transaction as to all of the Awarded Stock covered thereby, including Shares as to which the Award would not otherwise be exercisable. In addition, the Administrator may provide that any Company repurchase option or forfeiture rights applicable to any Award shall lapse 100%, and that any Award vesting shall accelerate 100%, provided the proposed dissolution or liquidation takes place at the time and in the manner contemplated. To the extent it has not been previously exercised or vested, an Award will terminate immediately prior to the consummation of such proposed action.

(c) Merger or Change in Control.

(i) Stock Options and SARS. In the event of a merger or Change in Control, each outstanding Option and SAR shall be assumed or an equivalent option or SAR substituted by the successor corporation or a Parent or Subsidiary of the successor corporation. With respect to Options and SARs granted to an Outside Director that are assumed or substituted for, if immediately prior to or after the merger or Change in Control the Participant’s status as a Director or a director of the successor corporation, as applicable, is terminated other than upon a voluntary resignation by the Participant, then the Participant shall fully vest in and have the right to exercise such Options and SARs as to all of the Awarded Stock, including Shares as to which it would not otherwise be vested or exercisable. Unless determined otherwise by the Administrator, in the event that the successor corporation refuses to assume or substitute for the Option or SAR, the Participant shall fully vest in and have the right to exercise the Option or SAR as to all of the Awarded Stock, including Shares as to which it would not otherwise be vested or exercisable. If an Option or SAR is not assumed or substituted in the event of a merger or Change in Control, the Administrator shall notify the Participant in writing or electronically that the Option or SAR shall be exercisable, to the extent vested, for a period of up to fifteen (15) days from the date of such notice, and the Option or SAR shall terminate upon the expiration of such period. For the purposes of this paragraph, the Option or SAR shall be considered assumed if, following the merger or Change in Control, the option or stock appreciation right confers the right to purchase or receive, for each Share of Awarded Stock subject to the Option or SAR immediately prior to the merger or Change in Control, the consideration (whether stock, cash, or other securities or property) received in the merger or Change in Control by holders of Common Stock for each Share held on the effective date of the transaction (and if holders were offered a choice of consideration, the type of consideration chosen by the holders of a majority of the outstanding Shares); provided, however, that if such consideration received in the merger or Change in Control is not solely common stock of the successor corporation or its Parent, the Administrator may, with the consent of the successor corporation, provide for the consideration to be received upon the exercise of the Option or SAR, for each Share of Awarded Stock subject to the Option or SAR, to be solely common stock of the successor corporation or its

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Parent equal in fair market value to the per share consideration received by holders of Common Stock in the merger or Change in Control. Notwithstanding anything herein to the contrary, an Award that vests, is earned or paid-out upon the satisfaction of one or more performance goals will not be considered assumed if the Company or its successor modifies any of such performance goals without the Participant’s consent; provided, however, a modification to such performance goals only to reflect the successor corporation’s post-merger or post-Change in Control corporate structure will not be deemed to invalidate an otherwise valid Award assumption.

(ii) Restricted Stock, Performance Shares, Performance Units, Restricted Stock Units and Other Stock Based Awards. In the event of a merger or Change in Control, each outstanding Restricted Stock, Performance Share, Performance Unit, Other Stock Based Award and Restricted Stock Unit awards shall be assumed or an equivalent Restricted Stock, Performance Share, Performance Unit, Other Stock Based Award and Restricted Stock Unit award substituted by the successor corporation or a Parent or Subsidiary of the successor corporation. With respect to Awards granted to an Outside Director that are assumed or substituted for, if immediately prior to or after the merger or Change in Control the Participant’s status as a Director or a director of the successor corporation, as applicable, is terminated other than upon a voluntary resignation by the Participant, then the Participant shall fully vest in such Awards, including Shares as to which it would not otherwise be vested. Unless determined otherwise by the Administrator, in the event that the successor corporation refuses to assume or substitute for the Restricted Stock, Performance Share, Performance Unit, Other Stock Based Award or Restricted Stock Unit award, the Participant shall fully vest in the Restricted Stock, Performance Share, Performance Unit, Other Stock Based Award or Restricted Stock Unit including as to Shares which would not otherwise be vested. For the purposes of this paragraph, a Restricted Stock, Performance Share, Performance Unit, Other Stock Based Award and Restricted Stock Unit award shall be considered assumed if, following the merger or Change in Control, the award confers the right to purchase or receive, for each Share subject to the Award immediately prior to the merger or Change in Control, the consideration (whether stock, cash, or other securities or property) received in the merger or Change in Control by holders of Common Stock for each Share held on the effective date of the transaction (and if holders were offered a choice of consideration, the type of consideration chosen by the holders of a majority of the outstanding Shares); provided, however, that if such consideration received in the merger or Change in Control is not solely common stock of the successor corporation or its Parent, the Administrator may, with the consent of the successor corporation, provide for the consideration to be received, for each Share and each unit/right to acquire a Share subject to the Award, to be solely common stock of the successor corporation or its Parent equal in fair market value to the per share consideration received by holders of Common Stock in the merger or Change in Control. Notwithstanding anything herein to the contrary, an Award that vests, is earned or paid-out upon the satisfaction of one or more performance goals will not be considered assumed if the Company or its successor modifies any of such performance goals without the Participant’s consent; provided, however, a modification to such performance goals only to reflect the successor corporation’s post-merger or post-Change in Control corporate structure will not be deemed to invalidate an otherwise valid Award assumption.

16. Date of Grant. The date of grant of an Award will be, for all purposes, the date on which the Administrator makes the determination granting such Award, or such other later date as is determined by the Administrator. Notice of the determination will be provided to each Participant within a reasonable time after the date of such grant.

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17. Term of Plan. Subject to Section 22 of the Plan, the Plan will become effective upon its adoption by the Board. It will continue in effect for a term of ten (10) years unless terminated earlier under Section 18 of the Plan.

18. Amendment and Termination of the Plan.

(a) Amendment and Termination. The Board may at any time amend, alter, suspend or terminate the Plan.

(b) Stockholder Approval. The Company will obtain stockholder approval of any Plan amendment to the extent necessary and desirable to comply with Applicable Laws.

(c) Effect of Amendment or Termination. Subject to Section 20 of the Plan, no amendment, alteration, suspension or termination of the Plan will impair the rights of any Participant, unless mutually agreed otherwise between the Participant and the Administrator, which agreement must be in writing and signed by the Participant and the Company. Termination of the Plan will not affect the Administrator’s ability to exercise the powers granted to it hereunder with respect to Awards granted under the Plan prior to the date of such termination.

19. Conditions Upon Issuance of Shares.

(a) Legal Compliance. Shares will not be issued pursuant to the exercise of an Award unless the exercise of such Award and the issuance and delivery of such Shares will comply with Applicable Laws and will be further subject to the approval of counsel for the Company with respect to such compliance.

(b) Investment Representations. As a condition to the exercise or receipt of an Award, the Company may require the person exercising or receiving such Award to represent and warrant at the time of any such exercise or receipt that the Shares are being purchased only for investment and without any present intention to sell or distribute such Shares if, in the opinion of counsel for the Company, such a representation is required.

20. Severability. Notwithstanding any contrary provision of the Plan or an Award to the contrary, if any one or more of the provisions (or any part thereof) of this Plan or the Awards shall be held invalid, illegal or unenforceable in any respect, such provision shall be modified so as to make it valid, legal and enforceable, and the validity, legality and enforceability of the remaining provisions (or any part thereof) of the Plan or Award, as applicable, shall not in any way be affected or impaired thereby.

21. Inability to Obtain Authority. The inability of the Company to obtain authority from any regulatory body having jurisdiction, which authority is deemed by the Company’s counsel to be necessary to the lawful issuance and sale of any Shares hereunder, will relieve the Company of any liability in respect of the failure to issue or sell such Shares as to which such requisite authority will not have been obtained.

22. Stockholder Approval. The Plan will be subject to approval by the stockholders of the Company within twelve (12) months after the date the Plan is adopted. Such stockholder approval will be obtained in the manner and to the degree required under Applicable Laws.

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EX-10.09

Exhibit 10.09

GOOGLE TECHNOLOGY INC.

SUBLEASE AGREEMENT

THIS SUBLEASE AGREEMENT (the “Sublease”) is entered into as of the 9th day of July, 2003, by and between the Sublandlord and Subtenant hereinafter named. Upon the terms and conditions hereinafter set forth, the Sublandlord and Subtenant agree as follows:

1.    DEFINITIONS AND BASIC PROVISIONS. The following definitions and basic provisions shall be used in conjunction with and limited by the reference thereto in the provisions of this Sublease:

A.	“Sublandlord”:	SILICON GRAPHICS, INC.,
		a Delaware corporation
B. 1.	Address of Sublandlord:	1400 Crittenden Lane
		Mountain View, CA 94043
		Attn: Michael L. Hirahara
		Telecopy: (650) 932-0504
B. 2.	Address of Sublandlord (for Rent):	United Properties
		3500 West 80th Street, Suite 200
		Minneapolis, Minnesota 55431
		Attn: Anne-Marie Cookson
		Phone: (952) 893-8890
		Fax: (952) 893-8280
		email: acookson@uproperties.com
C.	“Subtenant”:	GOOGLE TECHNOLOGY, INC.
		a California corporation
D.	Address of Subtenant:	Prior to Sublease Rent Commencement Date for Building 42 Sublease Premises:
		2400 Bayshore Parkway
		Mountain View, California 94043
		Attn: Director of Facilities
		With a copy to:
		2400 Bayshore Parkway
		Mountain View, California 94043
		Attn: Legal Department
		Following Sublease Rent Commencement Date
		for Building 42 Sublease Premises:
		1600 Amphitheatre Parkway
		Mountain View, California 94043
		Attn: Director of Facilities
		With a copy to:
		1600 Amphitheatre Parkway
		Mountain View, California 94043
		Attn: Legal Department

E.	“Master Landlord”:	WXIII/AMPHITHEATRE REALTY, L.L.C.
F.	Address of Master Landlord:	c/o WHITEHALL PARALLEL REAL ESTATE
		LIMITED PARTNERSHIP XIII
		c/o THE GOLDMAN SACHS GROUP, INC.
		100 Crescent Court
		Dallas, Texas 75201
		Attn: Aaron Wetherill
		Telecopy: (214) 855-6305

G.    “Sublease Premises”: Four buildings including 506,317 square feet of Rentable Area, as initially described in Exhibit “A” to the Master Lease and as more fully described in Exhibit A. The Sublease Premises consists of the following (each, a “Sublease Premises Portion”):

1.     “Building 40, Floor 1 Premises”: portion of the Sublease Premises comprising the first floor of building commonly known as Building 40, as shown on Exhibit A-1 attached hereto and containing 82,891 rentable square feet.

2.     “Building 40, Floor 2 Premises”: portion of the Sublease Premises comprising the second floor of building commonly known as Building 40, as shown on Exhibit A-2 attached hereto and containing 71,610 rentable square feet.

3.     “Building 41 Premises”: portion of the Sublease Premises commonly known as Building 41, as shown on Exhibit A-3 attached hereto and containing 98,912 rentable square feet.

4.     “Building 42 Premises”: portion of the Sublease Premises commonly known as Building 42, as shown on
Exhibit A-4, and containing 82,742 rentable square feet.

5.     “Building 43 East Premises”: portion of the Sublease Premises commonly known as Building 43 East, as shown on Exhibit A-5, and containing 85,081 rentable square feet.

6.    “Building 43 West Premises”: portion of the Sublease Premises commonly known as Building 43 West, as shown on Exhibit A-6, and containing 85,081 rentable square feet.

H.     “Sublease Commencement Date”: The Actual Delivery Date (defined below) for each Sublease Premises Portion delivered by Sublandlord to Subtenant.

I.    “Sublease Expiration Date”: December 31, 2012

J.     “Sublease Term”: A period commencing on the Sublease Commencement Date for the Building 42 Premises, and expiring on the Sublease Expiration Date. Notwithstanding the foregoing, if the Master Lease terminates prior to the Sublease Expiration Date by its terms and other than as a consequence of a Lease Termination (as defined in the WH-Google NDA), the Sublease Term shall simultaneously terminate effective on such termination date; the parties acknowledge that the WH-Google NDA provides that if the Master Lease terminates as a consequence of any such Lease Termination, the Sublease and the Sublease Term shall remain in effect pursuant to and in accordance with the terms and conditions of the WH-Google NDA.

K.     “Sublease Base Rent”: The Base Rent payable hereunder shall initially be payable at the rate of $1.75 per rentable square foot of the Sublease Premises per month, or $21.00 per rentable square foot of Sublease Premises per annum (which, upon the Sublease Rent Commencement Date of the last Sublease Premises Portion to be delivered by Sublandlord to Subtenant hereunder, equates to $10,632,657 per annum, payable in the amount of $886,054.75 per month), payable in the manner set forth in Paragraph 6 below. As described in Paragraph 6 below and in Exhibit D attached hereto, the Sublease Base Rent rate will escalate by three percent (3%) per annum as of (a) the date that is one (1) year after the date on which the Sublease Rent Commencement Date occurs for that Sublease Premises Portion which, when added to the rentable square

2

footage of those Sublease Premises Portions for which the Sublease Rent Commencement Date has previously occurred, shall cause the aggregate rentable square footage of the Sublease Premises Portion for which the Sublease Rent Commencement Date has occurred to exceed 225,000 rentable square feet (the “Initial Adjustment Date”), and (b) each anniversary of the Initial Adjustment Date thereafter (each, an “Adjustment Date”). Sublease Base Rent payable with respect to each Sublease Premises Portion shall, from and after the applicable Sublease Rent Commencement Date for such Sublease Premises Portion, initially consist of the following (assuming that the Sublease Rent Commencement Date with respect to all Sublease Premises Portions occurs prior to the Initial Adjustment Date):

1.     “Building 40, Floor 1 Sublease Base Rent”: $1,740,711 per annum, payable in the amount of $145,059.25 per month.

2.     “Building 40; Floor 2 Sublease Base Rent”: $1,503,810 per annum, payable in the amount of $125,317.50 per month.

3.     “Building 41 Sublease Base Rent”: $2,077,152 per annum, payable in the amount of $173,096 per month.

4.     “Building 42 Sublease Base Rent”: $1,737,582 per annum, payable in the amount of $144,798.50 per month.

5.     “Building 43 East Sublease Base Rent”: $1,786,701 per annum, payable in the amount of $148,891.75 per month.

6.     “Building 43 West Sublease Base Rent’: $1.786,701 per annum, payable in the amount of $148,891.75 per month.

L.     “Target Sublease Delivery Date’”: with respect to any Sublease Premises Portion, shall be the date by which Sublandlord expects, using reasonably diligent efforts, to deliver such Sublease Premises Portion to Subtenant in accordance with the provisions of this Sublease, and, expressed in chronological order with respect to each Sublease Premises Portion, are the following target dates:

1.     “Building 42 Sublease Premises”: August 1, 2003

2.     “Building 41 Sublease Premises”: December 15, 2003.

3.     “Building 43 West Sublease Premises”: December 31, 2003.

4.     “Building 40, Floor 1 Sublease Premises”: January 15, 2004.

5.     “Building 40, Floor 2 Sublease Premises”: March 1, 2004.

6.     “Building 43 East Sublease Premises”: September 1, 2004.

M.     “Actual Delivery Date”: with respect to any Sublease Premises Portion, shall be the actual date on which Sublandlord delivers such Sublease Premises Portion to Subtenant in accordance with the provisions of this Sublease.

N.     “Sublease Rent Commencement Date”: with respect to any Sublease Premises Portion, shall be the earlier of (x) the date on which Subtenant commences occupancy and use of such Sublease Premises Portion for the purpose of conducting Tenant’s business operations therein (as opposed to the construction of initial fit-up improvements) (the “Subtenant Actual Occupancy Date”), and (y) sixty (60) days following the Actual Delivery Date for such Sublease Premises Portion, subject to acceleration pursuant to Paragraph 2.D below.

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O.     “Subtenant’s Share”: The ratio (expressed as a percentage) that the rentable square footage of the Sublease Premises Portions for which, from time to time, the Rent Commencement Date has occurred bears to 506,317; it being understood that as the Sublease Premises are intended to be occupied by Subtenant in phases, Subtenant’s Share shall increase with each such phase (for example, upon the Building 42 Sublease Rent Commencement Date, Subtenant’s Share shall be 16.34%, assuming the next Sublease Premises Portion occupied by Subtenant is Building 43 East, then upon the Building 43 East Sublease Rent Commencement Date, Subtenant’s Share shall increase to 33.14%).

P.     “Letter of Credit”: A Letter of Credit (defined in Paragraph 7 below) in an amount (the “Required Amount”) determined as follows: (a) $9,000,000 during the period from the date such Letter of Credit is delivered pursuant to Paragraph 7 to the last day of the Net Rental Abatement Period (as defined in Paragraph 6.D below) (the “Initial Determination Date”), (b) beginning on the Initial Determination Date and on each anniversary thereof (together with the Initial Determination Date, each, a “Determination Date”) the amount of the Letter of Credit shall be reduced by $500,000 until the Letter of Credit amount equals $6,000,000, and (c) $6,000,000 thereafter during the remainder of the Sublease Term. If an Event of Default shall exist on any Determination Date then, the amount of the Letter of Credit shall not be so reduced and shall instead be reduced in accordance with the above schedule only on the next scheduled Determination Date upon which an Event of Default is not existing. The Required Amount of the Letter of Credit shall be subject to reduction as provided in the last sentence of Paragraph 2.C below.

Q.     “Master Lease”: Commercial Lease dated December 29, 2000, by and between Master Landlord, as landlord, and Sublandlord, as tenant, as amended by that certain Amendment dated April 18, 2001, and by the Second Amendment (defined below). A copy of the Master Lease is attached hereto as Exhibit B.

R.     “Ground Lease”: Ground Lease dated as of March 7, 1995, by and between the City of Mountain View, a municipal corporation, as landlord (the “Ground Lessor”), and Silicon Graphics Real Estate, Inc., as tenant (the “Original Ground Tenant”), a memorandum of which was recorded March 8, 1995, as instrument number 12826209 in the Original Records of Santa Clara County, California, as assigned by the Original Ground Tenant to The Goldman Sachs Group, Inc., a Delaware corporation (“GS”), by Assignment and Assumption of Ground Lease dated as of December 29, 2000, and recorded January 2, 2001, as instrument number 15514932, as further assigned by GS to Master Landlord by Assignment and Assumption of Ground Lease (Amphitheatre) dated as of May 22, 2001, and recorded June 6, 2001, as instrument number 15713398, and as amended by First Amendment to Ground Lease (Amphitheatre) dated as of May 22, 2001, among Ground Lessor, GS and the Master Landlord.

S.     “WH-Google NDA”: Nondisturbance and Attornment Agreement (Amphitheatre) dated as of the date hereof between Master Landlord and Subtenant.

T.     “Three-Party Agreement”: Landlord-Subtenant Agreement dated as of the date hereof between Master Landlord and Subtenant, and joined in by Sublandlord.

U.     “Second Amendment”: Second Amendment to Commercial Lease (Amphitheatre) dated as of the date hereof among Master Landlord, Sublandlord and Subtenant. The WH-Google NDA, the Three-Party Agreement and the Second Amendment are sometimes collectively referred to as the “VVH-Google Documents.”

V.     Each of the following terms are defined in the paragraph referred to for such term.

Term	Paragraph
Adjustment Date	3.B(iv)(d)
Advanced Delivery Days	2.C
Affiliated Party	9.D
Approved Users	9.E
Arbiter	19.E
Broker	30

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Cash Collateral Account	7.A
Casualty Event	2.C
Construction Allowance	5.D
DDA	4.P
Determination Date	1.P
Early Delivery Notice	2.C
Effective Date	5.A
Events of Default by Sublandlord	14
Events of Force Majeure	25
Good Working Order and Repair	19.A
Initial Determination Date	1.P
Issuing Bank	7.B
IT Area	22.B
Laws	4.G
Letter of Credit	7.B
Master Landlord Indemnitees	17.A
Non-Delivered Premises	2.B
Non-Renewal Notice	7.B
Operating Expenses	8.A
PCP	4.P
Permits	4.O
Permitted Transfer	9.D
Punch List	19.E
Punch List Item	19.E
Reimbursement Amount	5.B
Reincorporation	9.D
Sublandlord Indemnities	17.A
Sublandlord Reimbursement Amount	3.A
Sublandlord Representatives	17.A
Sublandlord’s Expense Statement	8.B
Sublease Additional Rent	5.C
Sublease Rent	6.C
Substantial Occupancy Date	3.B(iv)(i)
Subtenant Indemnities	17.B
Subtenant Representatives	17.B
Tenant’s Work	5.D
Termination Determination Date	2.B
Total Occupancy Date	3.B(iv)(f)

W.     Capitalized terms used but not defined herein have the same meanings herein as in the Master Lease. As used herein, unless otherwise specified, (i) singular words include the plural and plural words include the singular, (ii) words importing a gender include the other genders, (iii) the words “include” and “including”, and words of similar import, shall be deemed to be followed by the words “without limitation”, (iv) the words “hereto”, “herein”, “hereof” and “hereunder” and words of similar import, refer to this Sublease in its entirety, including the Incorporated Provisions (as hereinafter defined) of the Master Lease, (v) references to Paragraphs, Subparagraphs, Exhibits and Schedules are to the Paragraphs, Subparagraphs, Exhibits and Schedules of this Sublease, (vi) the Exhibits and Schedules hereto are incorporated herein by reference, and (vii) titles to Paragraphs, Subparagraphs, Exhibits and Schedules are for convenience only and shall not affect the interpretation of this Sublease. Any rule of interpretation to the effect that ambiguities are to be resolved against the drafting party or against a sublandlord or a subtenant shall not be employed in the interpretation of this Sublease.

2.     GRANTING CLAUSE.

A.     Generally. Sublandlord, in consideration of the covenants and agreements to be performed by Subtenant, and upon the terms and conditions hereinafter stated, does hereby lease, demise and let unto

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Subtenant, and Subtenant does hereby take from Sublandlord, the Sublease Premises, to have and to hold for the Sublease Term (unless sooner terminated as hereinafter provided).

B.     Phased Delivery. As of the date of this Sublease, the Sublease Premises are fully occupied by Sublandlord. The parties intend that, on or before the applicable Target Sublease Delivery Date for each Sublease Premises Portion, Sublandlord will vacate such Sublease Premises Portion and deliver the same to Subtenant in their “as is” condition, subject to Paragraphs 19.A and 19.B, provided, that Subtenant shall not have the right to refuse the delivery by Sublandlord of any Sublease Premises Portion based on any Building System or Structural Component failing to be in Good Working Order and Repair unless Subtenant’s use or occupancy of such Sublease Premises Portion is materially and adversely impacted thereby. Upon the Sublease Rent Commencement Date for each Sublease Premises Portion, Sublandlord and Subtenant will enter into a letter agreement in the form of Exhibit C attached hereto, memorializing the applicable Actual Delivery Date, and the Sublease Rent Commencement Date, the Sublease Base Rent payable with respect to the applicable Sublease Premises Portion, and also the increase in Subtenant’s Share resulting from the addition of such Sublease Premises Portion to the Sublease Premises; provided, however, that whether or not any such letter agreement shall be executed and delivered, the obligations of the parties under this Sublease shall continue unaffected.

C.     Late Delivery. Sublandlord shall use reasonably diligent efforts to so deliver each Sublease Premises Portion to Subtenant on or before the Target Sublease Delivery Date for such Sublease Premises Portion; provided, however, that, other than described in the next succeeding sentence, the failure to do so shall not give rise to any default on the part of Sublandlord or any right of Subtenant to terminate this Sublease, reject delivery of any Sublease Premises Portion or make any claim for losses or damages suffered by Subtenant as a result of such delay. Notwithstanding the foregoing, if Sublandlord shall fail to deliver any Sublease Premises Portion to Subtenant on or before the Target Sublease Delivery Date for such Sublease Premises Portion, and such failure continues for a period of ninety (90) days (or one hundred twenty (120) days if such failure is due to Events of Force Majeure or two hundred seventy (270) days if such failure is due to a Casualty Event), then Subtenant shall have the right, to be exercised within fifteen (15) days following the relevant Termination Determination Date (defined below) by written notice to Sublandlord, to irrevocably elect to terminate this Sublease as to either (x) such Sublease Premises Portion (but such termination shall not relieve Sublandlord of its obligation to deliver any as yet undelivered Sublease Premises Portions), or (y) at Subtenant’s option, the entire Sublease Premises, effective as of a date specified in Subtenant’s notice; provided, however, that such periods shall be one hundred twenty (120) (and one hundred eighty (180) days in the case of Events of Force Majeure and two hundred seventy (270) days in the case of Casualty Events), for the final Sublease Premises Portion to be delivered (either the ninetieth (90^th), the one hundred twentieth (120^th), the one hundred eightieth (180^th) or the two hundred seventieth (270^th) day, as applicable, being referred to as a “Termination Determination Date”); provided further, that no right of termination shall be triggered if Sublandlord has tendered possession of such Sublease Premises Portion to Subtenant and Subtenant fails to accept such tender solely due to a dispute as to the condition of such Sublease Premises Portion, such dispute to be settled in accordance with Paragraph 19.E of this Sublease. For the purpose of this Paragraph 2.C, “Casualty Event” means damage to, or destruction of, the Property by reason of fire or any other cause or event (other than the negligent act or omission of Sublandlord or Sublandlord Representatives) that renders the Property unsuitable for occupancy or the conduct of ordinary business or for Subtenant’s tenant improvements or otherwise causes the applicable Sublease Premises Portion to not be in Good Working Order and Repair. Upon a termination of this Sublease as to the entire Sublease Premises, Sublandlord shall return the Letter of Credit delivered to Sublandlord pursuant to Paragraph 7 of this Sublease; and in the event of a termination only as to the Sublease Premises Portion with respect to which an Actual Delivery Date has not occurred (the “Non-Delivered Premises”) but not a termination of this Sublease as a whole, Sublandlord shall return to Subtenant the Letter of Credit upon the delivery by Subtenant to Sublandlord of a replacement Letter of Credit in an amount reduced in the proportion that the rentable square footage of the Non-Delivered Premises bears to 506,317. Time shall be of the essence with respect to each of the time periods set forth in this Paragraph 2.C.

D.     Incentive for Early Delivery. The Actual Delivery Date for any Sublease Premises Portion shall not occur prior to the Target Sublease Delivery Date for such Sublease Premises Portion, except as provided in this Paragraph 2.D. Sublandlord shall have the right to provide notice (“Early Delivery Notice”) to Subtenant if Sublandlord is in a position to deliver any Sublease Premises Portion in advance of the Target

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Sublease Delivery Date for such Sublease Premises Portion. Any Early Delivery Notice shall indicate the date such Sublease Premises Portion will be ready for delivery. Subtenant shall have five (5) days from receipt of the Early Delivery Notice to indicate to Sublandlord its acceptance or rejection of such early delivery (and Subtenant’s failure to respond to Sublandlord within such five (5) day period shall be deemed a rejection by Subtenant of Sublandlord’s offer of early delivery of such Sublease Premises Portion). In the event Subtenant is willing to accept early delivery and the Actual Delivery Date for such Sublease Premises Portion occurs on the date indicated in the Early Delivery Notice, the Sublease Rent Commencement Date for such Sublease Premises Portion shall be the earlier of (x) the Subtenant Actual Occupancy Date far such Sublease Premises Portion, or (y) (i) sixty (60) days following the Actual Delivery Date for such Sublease Premises Portion minus (ii) the number of days that the Actual Delivery Date for such Sublease Premises Portion is in advance of the Target Sublease Delivery Date for such Sublease Premises Portion (such number of days being referred to as the “Advance Delivery Days”) (provided if the Advance Delivery Days exceeds sixty (60) days, the Sublease Rent Commencement Date for such Sublease Premises Portion shall be the Actual Delivery Date thereof).

3.    MASTER LEASE.

A.     This Sublease is made subject to all applicable terms and conditions of the Master Lease, which are incorporated into and made a part of this Sublease as if Sublandlord were Master Landlord and Subtenant were Tenant thereunder. Nothing contained in this Sublease shall be construed to (x) create privity of estate or privity of contract between Subtenant and Master Landlord or (y) constitute an undertaking or warranty by Sublandlord of performance by Master Landlord of its obligations under the Master Lease, and Sublandlord shall have no duty to pursue any remedies or actions against Master Landlord in connection therewith. Sublandlord acknowledges, however, that Master Landlord and Subtenant have entered into the WH-Google Documents and pursuant thereto Master Landlord has agreed to deal directly with Subtenant with respect to certain specified activities and matters such as aIterations, assignment and subletting and casualty and condemnation, and to recognize Subtenant’s rights hereunder under certain circumstances in the event of a termination of the Master Lease. To the extent that Master Landlord agrees to permit Subtenant to act or refrain from acting in a manner other than as required by the Master Lease, and Master Landlord has agreed to release Sublandlord from liability as a result of Subtenant being held to a standard that is more favorable to Subtenant than, or otherwise inconsistent with, the requirements of the Master Lease, Sublandlord agrees that Subtenant’s breach of the Incorporated Provisions (defined below) under such circumstances will not constitute a breach or default hereunder. Notwithstanding the foregoing, any failure by Subtenant to comply (giving effect to any relevant notice and cure periods) with the terms of the Master Lease, as incorporated herein, but as modified by any WH-Google Document, shall constitute an Event of Default under this Sublease. In the event that Sublandlord delivers a notice of default to Subtenant under this Sublease and Subtenant has not cured such default within the cure periods allowed under the Master Lease (or this Sublease), Sublandlord shall have the right, but not the obligation, to cure any such default if such default is cured by Sublandlord then Subtenant shall reimburse Sublandlord for amounts spent or incurred by Sublandlord in curing Subtenant’s default, within ten (10) days after notice and demand therefor from Sublandlord to Subtenant, together with interest and a late fee at the interest rate and late fee percentage specified in the Master Lease (the “Sublandlord Reimbursement Amount”). In the event Subtenant fails to pay Sublandlord the Sublandlord Reimbursement Amount as provided above, Sublandlord shall be entitled to draw on the Letter of Credit for such amount and Subtenant shall replenish the Letter of Credit to the applicable Required Amount, as required by Paragraph 7 of this Sublease.

B.     Except as otherwise provided herein, as between Sublandlord and Subtenant, all of the agreements, covenants, terms, conditions and provisions of the Master Lease (the “Incorporated Provisions”) are incorporated in this Sublease and are applicable under this Sublease as agreements, covenants, terms, conditions and provisions between Sublandlord and Subtenant; provided, however, that:

(i)     the following provisions of the Master Lease are not Incorporated Provisions, to wit: Sections 1.A, (Basic Lease Information), 3.2 (Renewal Option), 4.2 (Base Rent), 4.3 (Rent Adjustment), 4.4 (Additional Rent), 4.7 (Credit Enhancement), 5.1 (Operating Expenses), 5.2 (Payment of Operating Expenses), 5.3 (Proration), 6.2(c) (no termination of Ground Lease), last sentence of 8.1, 8.4 (Special Services), 15.5 (Short-term Subletting), 16.1(b)(ii), 16.1(i) (cross-default), 17.5 (Subordination to Landlord Mortgages), 18.2 (Sale of Property), 18.3 (No Personal Liabilities), 22 (Financial Statements), 26 (Notices), 30 (Brokers) and 32.8 (Relocation) of the Master Lease and Exhibits B and C to the Master Lease; and

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(ii)     for avoidance of doubt, the provisions of the Master Lease (other then those identified in clause (i) above are Incorporated Provisions; and

(iii)     as incorporated herein and applicable hereunder, the Incorporated Provisions are deemed changed as follows: (x) unless otherwise provided herein, references in the Incorporated Provisions to: (1) ”Lease” are deemed changed to refer to this “Sublease”, (2) ”Landlord” and “Landlord’s” are deemed changed to refer to “Sublandlord” and “Sublandlord’s”, respectively, (3) ”Tenant” and Tenant’s” are deemed changed to refer to “Subtenant” and “Subtenant’s”, respectively, (4) ”Premises” are deemed changed to refer to “Sublease Premises”, (5) ”Commencement Date” are deemed changed to refer to “Sublease Commencement Date” of the first Sublease Premises Portion to be delivered by Sublandlord or to a particular Sublease Premises Portion, as applicable, (6) ”Expiration Date” are deemed changed to refer to “Sublease Expiration Date”, (7) ”Rent” are deemed changed to refer to “Sublease Rent”, (8) ”Base Rent” are deemed changed to refer to “Sublease Base Rent”, (9) ”Additional Rent” are deemed changed to refer to “Sublease Additional Rent”, (10) ”Term” are deemed changed to refer to “Sublease Term”, and (11) ”Tenants Share” are deemed changed to “Subtenant’s Share” and (y) the phrases in the Incorporated Provisions (1) ”Landlord’s consent”, “Landlord’s approval”, and phrases of similar import (including “consent of Landlord” and “approval of Landlord”), are deemed changed to refer to “(A) Landlord’s consent pursuant to the Master Lease and (B) Sublandlord’s consent pursuant to this Sublease”, (2) ”notify Landlord” or “notice to Landlord” and phrases of similar import are deemed changed to refer to “notify the Master Landlord and the Sublandlord” and “notice to the Master Landlord and the Sublandlord” and the like, and (3) ”indemnify Landlord” or “hold Landlord harmless” and phrases of similar import are deemed changed to refer to “indemnify the Master Landlord and the Sublandlord” and “hold the Master Landlord and the Sublandlord harmless” and the like;

(iv)    as incorporated herein and applicable hereunder, the Incorporated Provisions are deemed changed as follows:

(a)     Exhibit B shall be replaced in full by Exhibit D hereto.

(b)     Except to the extent the Master Landlord has agreed in any VVH-Google Document (and has not revoked or repudiated such agreement) to specifically increase any period of time for giving notice (including the increased period of time for giving notice of default pursuant to Section 1.18 of the Second Amendment) or to provide notices directly to, and accept notices directly from, Subtenant, any period in the Incorporated Provisions for giving notice or making demand are deemed changed by adding 5 days if the notice is to be given by Subtenant and subtracting 5 days if the notice is to be given by Sublandlord, provided that if the applicable notice period is less than 10 days, the applicable 5 days in this clause shall instead be one half (1/2) of the applicable notice period.

(c)     Except to the extent the Master Landlord has agreed in any WH-Google Document (and has not revoked or repudiated such agreement) to specifically increase any period of time for performing or allowing time to perform (including the increased period of time allowed to cure a default pursuant to Section 1.18 of the Second Amendment) or to accept the performance of Subtenant in lieu of the performance of Sublandlord, any period in the Incorporated Provisions for performing or allowing time to perform are deemed changed by subtracting 5 days if the time is allowed to Subtenant and adding 5 days if the time is allowed to Sublandlord, provided that if the applicable time allowed is less than 10 days, the applicable 5 days in this clause shall instead be one half (1/2) of the applicable time allowed. Without limiting the generality of the foregoing, for purposes of incorporating Section 161(c), the period of one hundred twenty (120) days set forth therein shall be deemed ninety (90) days and Subtenant shall notify Sublandlord from time to time of the status of Subtenant’s cure efforts pursuant to such Section 16.1(c).

(d)     Section 4.3 shall be replaced in its entirety by: “Commencing on the Initial Adjustment Date, and on every anniversary of the Initial Adjustment Date

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thereafter (each, an “Adjustment Date”), the Sublease Base Rent shall be increased as stated on Exhibit D.”

(e)     For purposes of incorporating Section 2.3 of the Master Lease (“Parking”) herein, Sublandlord and Subtenant acknowledge that until such time as Subtenant occupies all of the Sublease Premises, the parking areas serving the Property shall be used both by Subtenant and by Sublandlord, and Sublandlord and Subtenant agree to mutually cooperate in good faith in the shared usage of such parking areas.

(f)     For purposes of incorporating Section 7.1 (Permitted Use) of the Master Lease herein, (1) the phrase “the uses specified and permitted in Article 1” shall be deleted and replaced with the phrase “general office, research and development and other legal uses ancillary thereto” and (2) from and after the Sublease Rent Commencement Date immediately following the Actual Delivery Date for that Sublease Premises Portion which when added to the rentable square footage of those Sublease Premises Portions for which the Actual Delivery Date has previously occurred, shall cause the aggregate rentable square footage of the Sublease Premises for which the Actual Delivery Date has occurred to constitute 100% of the Sublease Premises (the “Total Occupancy Date”), references to “Landlord” shall be deemed replaced with “Master Landlord”.

(g)     For purposes of incorporating Section 7.2 (Prohibited Uses) of the Master Lease herein, from and after the Total Occupancy Date, references to “Landlord” shall be deemed replaced with “Master Landlord”.

(h)     The first sentence of Section 8.1 (Landlord’s Obligations) shall apply only after the Total Occupancy Date.

(i)     In Section 8.2, Subtenant’s obligation to repair and maintain the Building Systems and Structural Components in any Building shall become effective only on the Sublease Rent Commencement Date immediately following Sublandlord’s delivery to Subtenant of all the rentable area in such Building; provided, however, that Subtenant shall be obligated to repair and maintain the cafe located in the Building 40, Floor 1 Premises from and after the Actual Delivery Date of the Building 40, Floor 1 Premises. Subtenant shall repair and maintain the Common Areas from and after the date on which the Sublease Rent Commencement Date occurs for that Sublease Premises Portion which, when added to the rentable square footage of those Sublease Premises Portions for which the Sublease Rent Commencement Date has previously occurred, shall cause the aggregate rentable square footage of the Sublease Premises Portions for which the Sublease Rent Commencement Date has occurred to exceed 400,000 rentable square feet (the “Substantial Occupancy Date”). From and after the Substantial Occupancy Date until such time as the Sublease Rent Commencement Dates shall have occurred for the remainder of the Sublease Premises, Sublandlord shall pay to Subtenant (x) Sublandlord’s proportionate share, based on the total rentable area of the Sublease Premises for which the Sublease Rent Commencement Date has yet to occur, of costs relating to Subtenant’s repair and maintenance of the Common Areas, and (y) any Operating Expenses incurred by Subtenant that are attributable or allocable to any rentable area of the Sublease Premises for which the Sublease Rent Commencement Date has not yet occurred.

(j)     Clause (a) of the penultimate sentence of Section 8.2 shall read as follows: “(a) at Subtenant’s cost and expense (except for capital improvements which are funded by Master Landlord and passed through to Sublandlord under the Master Lease and then to Subtenant under this Sublease)”.

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(k)     For purposes of incorporating Section 8.3, Subtenant shall be solely responsible for security of all Sublease Premises Portions fully occupied by Subtenant.

(l)     The phrase “Except as may be expressly set forth in this Sublease” shall be added at the beginning of Section 9 and again at the beginning of the fourth (4^th), fifth (5^th), sixth (6^th) and seventh (7^th) sentences of Section 9.

(m)     Incorporated Article 10 shall be subject to the WH-Google Documents. Specifically, subject to Paragraph 3.A, Sublandlord agrees that (1) Sublandlord shall be deemed to have consented to Alterations approved in writing by Master Landlord, (2) Sublandlord shall not require restoration of Alterations if Master Landlord has waived its right to do so, and (3) Sublandlord shall not require security for any Alteration restoration obligation to the extent Subtenant is providing such security directly to Master Landlord; and, from and after the Sublease Rent Commencement Date immediately following the Total Occupancy Date, references to “Landlord” shall be deemed replaced with “Master Landlord”.

(n)     The phase “Except as may be expressly set forth in this Sublease” shall be added to the third sentence of Section 13.2

(o)     Section 13.4 is incorporated herein subject to the indemnification clause in Paragraph 17.B below.

(p)     In the third sentence of Section 13.7, “Landlord” appearing therein shall be replaced with “Master Landlord”.

(q)     The phrase “and except for any Hazardous Materials resulting from the Environmental Activity by Sublandlord and Sublandlord’s Agents during Sublandlord’s occupancy of an Sublease Premises Portion” shall be added to the end of the first sentence of Section 13.8.

(r)     Clause (c) of Section 14.1 shall be deleted in its entirety and replaced with the following: “(c) the condition of the Premises, and any occurrence on the Premises from any cause whatsoever, except to the extent caused by (x) the gross negligence or willful misconduct of the Indemnified Parties or (y) any act or omission of Sublandlord prior to the Actual Delivery Date for the relevant Sublease Premises Portion; and”.

(s)     Article 15 is incorporated herein subject to Paragraph 9 below.

(t)     In Section 16.1(b)(i), “Section 4.7” appearing therein shall be replaced with the phrase “Paragraph 7 of this Sublease”.

(u)     in Section 16.6, the phrase “Leasehold Mortgagee or” shall be deleted and the reference to provisions of Article 18” shall be deemed replaced with a reference to “Sections 18.1 and 18.4”.

(v)     For purposes of incorporating Section 17.1 references in the first sentence of Section 17.1 to “Landlord” shall be deemed replaced with “Master Landlord” and at such time as the Substantial Occupancy Date shall have occurred, the references to “Landlord” in the penultimate sentence of Section 17.1 shall be deemed replaced with “Master Landlord”.

(w)     For purposes of incorporating Section 17.2, from and after the Total Occupancy Date, references to “Landlord” shall be deemed replaced with “Master

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Landlord;” provided, however, Sublandlord reserves the right to enter the Sublease Premises as provided in Section 17.2 if such access is necessary for Sublandlord to comply with its obligations under the Master Lease or this Sublease or to verify compliance by Subtenant with the terms of the Master Lease and this Sublease.

(x)     The reference to “Landlord” in Section 17.3 shall be deemed replaced with “Master Landlord”.

(y)     For purposes of incorporating Section 17.4 of the Master Lease, at such time as the Actual Delivery Date or Dates shall have occurred for 100% of any Building within the Sublease Premises, references to “Landlord” shall be deemed replaced with “Master Landlord” with respect to such Building.

(z)     Articles 19 and 20 of the Master Lease are incorporated herein as further modified by Paragraph 21 of this Sublease; and any reference to “Landlord” in connection with any right to terminate the “Lease” shall be deemed to refer to “Master Landlord” and the “Master Lease.”

(aa)     In Section 20.5, the phrase “voluntary sale by Landlord” shall be replaced with the phrase “voluntary sale by Master Landlord”.

(bb)     The reference to “Landlord” in the first sentence of Section 24.1 shall be deemed replaced with “Master Landlord”.

(cc)     For purposes of incorporating Section 24.2, until the Total Occupancy Date, Sublandlord’s approval of any signage shall not be unreasonably withheld, conditioned or delayed. After the Total Occupancy Date, references to “Landlord” in Section 24.2 shall be deemed replaced with “Master Landlord”.

(dd)     The phrase “Except as expressly provided in this Sublease,” shall be added at the beginning of Section 28.

(ee)     For purposes of incorporating Section 32.1, until such time as the Actual Delivery Date or Dates shall have occurred for 100% of any Building within the Sublease Premises, Sublandlord’s discretion with respect to installation of an antennae on a portion of the rooftop of such Building shall be reasonable, and its consent shall not be unreasonably withheld, conditioned or delayed. After the Total Occupancy Date, references to “Landlord” in Section 32.1 shall be deemed replaced with “Master Landlord”.

(ff)     For purposes of incorporating Section 32.2, from and after the Total Occupancy Date, references to “Landlord” shall be deemed replaced with “Master Landlord”.

(gg)     For purposes of incorporating Section 32.3, from and after the Total Occupancy Date, references to “Landlord” shall be deemed replaced with “Master Landlord”.

4.    REPRESENTATIONS AND WARRANTIES BY SUBLANDLORD. Sublandlord warrants and represents to Subtenant:

A.     No Modification of Master Lease. The Master Lease has not been amended or modified, except as provided herein.

B.     No Default Under Master Lease. No default or breach of any of the provisions of the Master Lease has occurred and is continuing and no notices of default have been sent or received by Sublandlord with

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respect to the Master Lease, nor to the present knowledge of Sublandlord has any event or condition occurred which, with the passing of time or the giving of notice, would result in an Event of Default by Sublandlord under the Master Lease.

C.     No Restoration Obligations. Other than described on Schedule 4.C to this Sublease, Sublandlord has not performed any Alterations within the Sublease Premises which Master Landlord has, pursuant to the provisions of Section 10.3 of the Master Lease, provided notice to Sublandlord that Sublandlord shall be required to remove such Alterations and restore the Sublease Premises at the expiration or sooner termination of the term of the Master Lease.

D.     Due Organization and Ownership. Sublandlord is a Delaware corporation duly formed, validly existing and in good standing under the laws of the State of Delaware and is qualified to do business in the State of California. Sublandlord has the authority to own and to operate its assets, to conduct its business as now conducted and to sublease the Sublease Premises under the terms and conditions of this Sublease.

E.     Full Right to Convey. There we no other parties in possession of the Sublease Premises (or any portion thereof), and no party has been granted any license, lease, profit or other right or interest relating to the use or possession of the Sublease Premises (or any part thereof).

F.     Valid, Binding, Enforceable. This Sublease and all documents to be executed by Sublandlord pursuant to this Sublease have been duly authorized, executed and delivered by Sublandlord, and constitute the legal, valid and binding obligations of Sublandlord, enforceable against Sublandlord in accordance with their respective terms subject to the effect of bankruptcy, insolvency, reorganization, moratorium and other laws and procedures affecting the enforcement of creditor’s rights or the collection of debtor’s obligations. Sublandlord’s execution, delivery and performance of this Sublease and the consummation of the transactions contemplated hereby, including, without limitation, the execution of all other documents necessary or desirable to consummate this transaction, will not (either alone, or with notice or the passage of time, or both) result in any material violation or material breach of any of the terms or conditions of, or constitute a material default under, any material agreement to which Sublandlord is a party.

G.     Compliance with Laws. To Sublandlord’s actual knowledge and except as set forth on Schedule 4.G to this Sublease, Sublandlord has not received any written notice that the Sublease Premises or Property are currently in violation of any (i) federal, state or local statutes, laws, rules, regulations, codes, ordinances, orders or stipulations relating to the use, occupancy, development or construction of the Property, including, without limitation, building codes, zoning ordinances, fire or safety codes, Environmental Laws, the Americans with Disabilities Act and life safety requirements (collectively, “Laws”), or (ii) any recorded covenants, conditions or restrictions or any material agreements affecting any portion of the Property, or (iii) any governmental permits or development approvals issued in connection with the development of the Property (whether or not recorded). Sublandlord has not received any notice regarding any pending or contemplated change in any Laws applicable to the Property or of any pending, threatened or contemplated judicial, administrative or governmental agency action which could in any way materially adversely affect the Property or its value or Subtenant’s intended use of the Property.

H.     No Litigation. Other than described on Schedule 4.H to this Sublease, there is no litigation pending or, to the best of Sublandlord’s knowledge, threatened or contemplated, nor is there any pending or, to the best of Sublandlord’s knowledge, threatened investigation or proceeding by any governmental agency against Sublandlord or the Sublease Premises or Property, which would materially adversely affect Sublandlord’s ability to perform its obligations under this Sublease, or which could in any way materially and adversely affect the Sublease Premises or Property or Subtenant’s intended use of the Sublease Premises or Property.

I.     Condemnation/Assessments. To the best of Sublandlord’s actual knowledge, there is no pending or threatened condemnation action seeking to condemn the Sublease Premises or Property (or any portion thereof), nor any pending or, to the best of Sublandlord’s actual knowledge, threatened proceedings to establish any assessments, assessment districts or other districts which could encumber, or have the authority to create or levy assessments or taxes against, the Sublease Premises or Property (or any portion thereof).

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J.     Additional Obligations. Other than as disclosed in writing by Sublandlord to Subtenant and except as set forth on Schedule 4.J to this Sublease, there are no third-party contracts or agreements of any kind or nature in connection with the operation of the Sublease Premises or Property that are not terminable on 30 days’ notice.

K.     Personal Property. All fixtures, equipment, chattels, machinery and other personal property that are not attached to the Sublease Premises but are needed for the use or operation of the Sublease Premises are owned by Sublandlord free and clear of all Liens other than Liens permitted by the Master Lease.

L.     Occupancy Agreements. Except for the Master Lease and the Ground Lease, there are no occupancy agreements affecting all or any portion of the Sublease Premises.

M.     Environmental Matters. Except for matters disclosed in any environmental reports delivered to Subtenant by Master Landlord (or any manager for or agent of Master Landlord) or by Sublandlord, to the best knowledge of Sublandlord, no Hazardous Material or underground storage tanks exist on the Sublease Premises (other than Permitted Substances, as defined in, and used in compliance with, the Master Lease), and the Sublease Premises are not in violation of any Environmental Laws or subject to any orders, decrees, injunctions or any other proceedings or requirements imposed by any governmental authority pursuant to any Environmental Laws.

N.     Property Condition. Except for matters disclosed on Schedule 4.N to this Sublease, to the best knowledge of Sublandlord, (i) all improvements on the Sublease Premises, as of the date of this Sublease, are, and, on the Actual Delivery Date for each Sublease Premises Portion, will be, in good repair, working order and condition, normal wear and tear excepted, (ii) all improvements on the Sublease Premises (including Structural Components and Building Systems), as of the date of this Sublease, are not, and, on the Actual Delivery Date for each Sublease Premises Portion, will not be, subject to material deferred maintenance, and (iii) subject to, and without relieving Sublandlord of its obligations under Paragraph 19 below, all Building Systems and Structural Components, as of the date of this Sublease, are, and, on the Actual Delivery Date for each Sublease Premises Portion, will be, in Good Working Order and Repair.

O.     Licenses. Sublandlord has obtained all material licenses, permits, certificates and similar items (“Permits”) necessary for the use and operation of the Sublease Premises. The uses being made of the Sublease Premises are in conformity in all material respects with the certificate of occupancy and other Permits for the Sublease Premises, and any other Legal Requirements and other recorded restrictions, covenants, or conditions affecting the Sublease Premises.

P.     Obligations as Developer. All construction work required to be performed by “Developer” pursuant to that certain Disposition and Development Agreement (the “DDA”) dated March 7, 1995 between the Ground Lessor and the Original Ground Tenant and other obligations of Developer under the Planned Community Permit (“PCP”) have been completed by Developer in accordance with the DDA, the PCP and the Ground Lease.

Q.     Representation of Continuing Disclosure. If, prior to the final Delivery Date, Sublandlord shall obtain any knowledge that any of the representations and warranties set forth in Paragraphs 4.A through 4.P inclusive, above, are no longer true and accurate in all material respects, Sublandlord shall promptly notify Subtenant of the applicable change in status or change in condition.

5.    EFFECTIVENESS OF SUBLEASE; NOTICE FROM MASTER LANDLORD.

A.     Effectiveness. This Sublease shall come into full force and effect upon the satisfaction or waiver (by Sublandlord as to (v), (vi) and (viii), Subtenant as to (ii) and (iv) and both Sublandlord and Subtenant as to (i) and (iii)) of the following: (i) the delivery of a written approval of the Second Amendment by the current holder of the loan made pursuant to that certain Loan Agreement, dated as of July 2, 2002, by and between Master Landlord and German American Capital Corporation, (ii) the delivery by such current holder of such loan to Subtenant of a nondisturbance and attornment agreement in form and substance reasonably satisfactory to Subtenant, (iii) the delivery of Master Landlord’s written consent in the form attached to this Sublease, (iv) the delivery by Master Landlord to Subtenant of the WH-Google NDA, in form and substance

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reasonably satisfactory to Subtenant, (v) the execution and delivery of the Commercial Lease for the property known as Crittenden C/D among WXIII/Crittenden Realty C, L.L.C., a Delaware limited liability company, WXIII/Crittenden Realty D, L.L.C., a Delaware limited liability company, and Sublandlord, (vi) the execution and delivery of the Amended and Restated Commercial Lease for the property known as Crittenden A between WXIII/Crittenden Realty A, L.L.C., a Delaware limited liability company, and Sublandlord, (vii) the delivery of a written approval of the Amended and Restated Commercial Lease for Crittenden A by the current holder of the loan made to the landlord under such lease pursuant to loans made on or about August 7, 2001, by and between such landlord and GMAC Commercial Mortgage Corporation, and (viii) the receipt by the parties of a letter from the Broker confirming and agreeing to Paragraph 30 of this Sublease (the latter of all such deliveries, the “Effective Date”). Upon the Effective Date, Sublandlord and Subtenant will enter into a letter agreement memorializing the applicable Target Sublease Delivery Dates, provided, however, that whether or not any such letter agreement shall be executed and delivered, the obligations of the parties under this Sublease shall continue unaffected. If the Effective Date shall have not occurred on or before July 31, 2003, then (1) this Sublease, (2) the WH-Google Documents (to the extent then executed and delivered) and (3) the lease and amended and restated lease described in Clauses (v) and (vi)), shall terminate except for such provisions as by their terms are intended to survive.

B.     Notice Under Master Lease. If, at any time during the Sublease Term, Sublandlord receives any notice or demand from Master Landlord under the Master Lease with respect to the Sublease Premises, Sublandlord shall promptly deliver a true and correct copy of same to Subtenant (unless it is clear from the notice that a simultaneous notice has been sent by Master Landlord to Subtenant). In the event that Sublandlord delivers or receives a notice of default under the Master Lease, Sublandlord agrees to deliver to Subtenant a copy of any such notice of default. The parties acknowledge that the WH-Google NDA provides that Subtenant shall have the right, but not the obligation, to cure any monetary default of Sublandlord described in any notice of default within ten (10) days after service of such notice of default on Subtenant. If such default is cured by Subtenant then Sublandlord shall reimburse Subtenant for such amounts, within ten (10) days after notice and demand therefor from Subtenant to Sublandlord, together with interest and a late fee at the interest rate and late fee percentage specified in the Master Lease (the “Reimbursement Amount”). In the event Sublandlord fails to pay Subtenant the Reimbursement Amount as provided above, Subtenant may offset such amount against the rent payable under this Sublease.

6.    RENT.

A.     Sublease Base Rent. Subtenant agrees to pay monthly installments of Sublease Base Rent at the address indicated in Subparagraph 1.B.2 above, or such other address as Sublandlord may from time to time notify Subtenant. Such monthly installments of Sublease Base Rent shall be payable on or before the first (1st) day of each calendar month (without demand) commencing as of the following dates, expressed in chronological order (based on Target Delivery Dates):

1. the building 42 Sublease Rent Commencement Date, with respect to the Building 42 Sublease Base Rent,

2. the Building 41 Sublease Rent Commencement Date, with respect to the Building 41 Sublease Base Rent,

3. the Building 43 West Sublease Rent Commencement Date, with respect to the Building 43 West Sublease Base Rent,

4. the Building 40, Floor 1 Sublease Rent Commencement Date, with respect to the Building 40, Floor 1 Sublease Base Rent,

5. the Building 40, Floor 2 Sublease Rent Commencement Date, with respect to the Building 40, Floor 2 Sublease Base Rent, and

6. the Building 43 East Sublease Rent Commencement Date, with respect to the Building 43 East Sublease Base Rent.

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Sublease Base Rent shall increase, as of the Initial Adjustment Date and each Adjustment Date thereafter, to the rate per rentable square foot per annum described in Exhibit D attached hereto. Sublease Base Rent for any fractional month at the time of the Sublease Rent Commencement Date for any Sublease Premises Portion or at the end of the Sublease Term shall be prorated based upon the actual number of days in such calendar month. The Rentable Area of the Sublease Premises and the Buildings shall be conclusively presumed to be as stated in Paragraph 1.G of this Sublease. Except as otherwise provided herein, additional rent shall include, without limitation, any and all charges, costs or expenses otherwise set forth in the Master Lease other than (w) Base Rent owing under the Master Lease, (x) Monthly Rent (as defined in the Ground Lease) together with any escalations thereof and/or interest or late fees thereon (such amounts described in clause (x) being payable by Sublandlord in accordance with the terms of the Master Lease), (y) any indemnity or similar payments by Sublandlord under the Master Lease or the Ground Lease as a consequence of its act or omission under the Master Lease that is not in turn attributable to any act or omission or Subtenant under this Sublease) and (z) any Operating Expenses in the form of management fees described in clause (xi) of Section 15.1(b) of the Master Lease to the extent not payable by Subtenant pursuant to Paragraph 8.A(iv) of this Sublease.

B.     Exclusions from Subtenant’s Obligations. Notwithstanding any other provision of this Sublease to the contrary, Subtenant shall have no obligation for (i) any amount due or liability incurred by Sublandlord under the Master Lease that relates to any portion of the Sublease Premises prior to the Sublease Rent Commencement Date for such portion of the Sublease Premises, or (ii) any amounts described in clauses (w), (x), (y) and (z) of Paragraph 6.A of this Sublease.

C.     Sublease Additional Rent. All sums due from Subtenant to Sublandlord or to any third party under the terms of this Sublease shall be additional rent (“Sublease Additional Rent”), including, without limitation, the charges for Operating Expenses (described in Paragraph 8 of this Sublease) and all sums incurred by Master Landlord or Sublandlord doe to Subtenant’s failure to perform its obligations under this Sublease, together with interest and late fees thereon. All Sublease Additional Rent of the type described in Paragraph 8 which is payable to Sublandlord shall be paid at the time and place that Sublease Base Rent is paid. Sublandlord will have the same remedies for a default in the payment of any Sublease Additional Rent as for a default in the payment of Sublease Base Rent. Together, Sublease Base Rent and Sublease Additional Rent are sometimes referred to in this Sublease as “Sublease Rent”. There shall be no abatement of, deduction from, counterclaim or setoff against Sublease Rent except as otherwise specifically provided in this Sublease or the Master Lease.

D.     Construction Allowance; Sublease Base Rent & Abatement. Sublandlord agrees to provide to Subtenant, and Subtenant shall be entitled to receive, in connection with Subtenant’s initial build-out of the Sublease Premises (“Tenant’s Work”), an allowance in the aggregate amount of $15,473,048 (the “Construction Allowance”), which Construction Allowance shall be charged and taken as an offset against the Sublease Base Rent owing hereunder. The Construction Allowance shall represent Sublandlord’s sole and total contribution to Tenant’s Work. Subtenant may allocate the Construction Allowance among the various portions of the Sublease Premises as it may desire in its sole and absolute discretion. Notwithstanding anything to the contrary contained herein, whether or not Subtenant uses the Construction Allowance to pay for construction costs, Subtenant shall be entitled to an offset of the Sublease Base Rent until such time as Sublease Base Rent in an aggregate amount of the Construction Allowance would have otherwise been paid to Sublandlord. The “Net Rental Abatement Period” shall be the period commencing on the Sublease Rent Commencement Date for the Building 42 Premises and expiring on the rent payment date on which Sublease Base Rent shall have been abated in an amount equal to the Construction Allowance. From time to time during the construction of Tenant’s Work, Subtenant shall deliver to Sublandlord (with a copy to Master Landlord) executed mechanic’s lien releases from all of Subtenant’s contractors or other agents which shall comply with the appropriate provisions, as reasonably determined by Sublandlord, of California Civil Code Section 3262(d) and such other information regarding the construction of Tenant’s Work as may be reasonably requested by Sublandlord or Master Landlord.

E.     Terms of Payment. All Sublease Base Rent, Sublease Additional Rent and other amounts payable by Subtenant under this Sublease shall be paid in lawful money of the United States of America, without any deduction, setoff or abatement whatsoever, except an expressly provided in this Sublease.

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7.    SECURITY DEPOSIT.

A.     Generally. On or prior to the Sublease Commencement Date for the first Sublease Premises Portion for which an Actual Delivery Date shall have occurred (which is currently the Building 42 Premises). Subtenant shall deliver to Sublandlord (with a duplicate original to Master Landlord) a Letter of Credit (defined in Paragraph 7.B below) as security for the full and punctual performance by Subtenant of all of the terms of this Sublease. If Sublandlord (and/or Master Landlord) shall be entitled to draw the Letter of Credit in whole or in part pursuant to Paragraph 7 B or 7.D below, Sublandlord (and/on Master Landlord, as applicable) shall have the right, at its option, either to deposit the cash proceeds of any such draw upon the Letter of Credit into a cash collateral account (the “Cash Collateral Account”) established in Sublandlord’s (and/or Master Landlord’s) name end maintained by Sublandlord (and/or Master Landlord) or to apply the proceeds to the obligations of Subtenant due or to become due hereunder. The Cash Collateral Account shall be under the sole dominion and control of Sublandlord (and/or Master Landlord) and Sublandlord shall have the sole right to make withdrawals from the Cash Collateral Account and to exercise all rights with respect to the amounts deposited in the Cash Collateral Account.

B.     Letter of Credit Requirement. The initial letter of credit and any replacement letter of credit issued in accordance with Paragraph 7.A shall satisfy the requirements set forth in this Paragraph 7 (each, a “Letter of Credit”), Each Letter of Credit shall be a clean, irrevocable, non-documentary and unconditional letter of credit issued by and drawable upon any commercial bank, trust company, national banking association or savings and loan association with offices for banking and drawing purposes in the City of San Francisco or the City of New York (the “Issuing Bank”), which has outstanding, unsecured, uninsured and unguaranteed indebtedness, or shall have issued a letter of credit or other credit facility that constitutes the primary security for an outstanding indebtedness (which is otherwise uninsured and unguaranteed), that is then rated, without regard to qualification of such rating by symbols such as “+” or “-” numerical notation, “A’ or better by Moody’s Investment Service or “A” or better by Standard & Poor’s Ratings Service or “A” or better by Fitch’s Rating Service (and is not on credit-watch or similar credit review with negative implication), and has combined capital, surplus and undivided profits of not less than $1,000,000,000. Each Letter of Credit shall (i) name Sublandlord as beneficiary and Master Landlord as co-beneficiary, (ii) be in the amount of the Required Amount, (iii) have a term of not less than one (1) year, (iv) permit multiple drawings, (v) be fully transferable (including by way of collateral assignment) by Sublandlord (as to Sublandlord’s rights) and Master Landlord (as to Master Landlord’s rights) without payment by any beneficiary of any fees or charges, (vi) otherwise be in form and content satisfactory to Sublandlord and Master Landlord in their reasonable discretion and, (vii) be drawable by Master Landlord only as described in Paragraph 7.D, expressly provide that it need not be produced as a condition to a drawing thereunder, be issued in duplicate original to Master Landlord, and require as a condition to such drawing that an officer’s certificate of the Master Landlord as to the occurrence of the circumstances described in Paragraph 7.D be included with the draw request. If upon the transfer of any Letter of Credit, any fees or charges shall be imposed, then such fees or charges shall be payable solely by Subtenant and the Letter of Credit shall so specify. Regardless of the initial expiration date of any Letter of Credit, each Letter of Credit shall expressly provide that (unless notice of non-renewal is delivered in accordance with the following sentence) it shall be deemed automatically renewed, without amendment, for consecutive periods after such expiration date of one year each during the Sublease Term through the date that is at least one hundred eighty (180) days after the Sublease Expiration Date. If the Issuing Bank desires not to renew a Letter of Credit, it shall deliver a notice (the “Non-Renewal Notice”) to Sublandlord by certified mail, return receipt requested, not less than sixty (60) days prior to the then-current expiration date of the Letter of Credit, stating that the Issuing Bank has elected not to renew the Letter of Credit. In such event or if (a) for any other reason the Letter of Credit would expire by its terms in sixty (60) days or less from such date or (b) the Issuing Bank is downgraded so that it no longer satisfies the rating requirements set forth in this Paragraph 7, Sublandlord shall have the right, at its option, either (x) to draw the full amount of the Letter of Credit, by sight draft on the Issuing Bank, and thereafter hold the proceeds in the Cash Collateral Account and apply them pursuant to the terms of this Paragraph 7, or (y) to require Subtenant to procure, or Sublandlord to procure on Subtenant’s behalf at Subtenant’s cost and utilizing if necessary the cash proceeds so drawn, a replacement Letter of Credit that satisfies the requirements of this Paragraph 7; provided that Sublandlord shall provide Subtenant with notice of any such event at least on (10) business days before exercising such rights and Subtenant may, within ten (10) business days after such notice is provided, deliver a replacement Letter of Credit that satisfies the requirements of this Paragraph 7, and provided further that such notice shall not be required in the event Sublandlord determines in good faith that the delay caused by providing such notice presents a risk that

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Sublandlord will not be able to exercise its rights to draw upon the Letter of Credit following much delay. Each Letter Credit shall be governed by the International Standby Practices-ISP98 or Uniform Standard Practices -500 or any standard set of practices replacing ISP98 or USP-500.

Sublandlord and Subtenant acknowledge and agrees that Subtenant’s lender, Citibank, N.A. (“Citibank”), is currently reviewing this Paragraph 7 but has not yet confirmed that it will issue a Letter of Credit in the form prescribed herein. Sublandlord agrees that it will consider in good faith any modifications to this Paragraph 7 reasonably requested by Subtenant as a result of the requirements or constraints of Citibank (or of any other lender meeting the requirements set forth above) and the parties will execute and deliver a modification to this Sublease to evidence any such changes, provided that such Letter of Credit complies with the basic requirements set forth in clauses (i)—(v) and (vii) of this Paragraph 7.B and otherwise provides Sublandlord and Master Landlord with substantially the same rights and remedies as are provided by the terms of this Paragraph 7.

C.     Restoration of Required Amount. Within five (5) business days following any draw under the Letter of Credit or such shorter period as may be required under the Subtenant’s reimbursement agreement with the Issuing Bank, Subtenant shall reimburse the Issuing Bank for each such draw in an amount sufficient to insure that the face value of the Letter of Credit is an amount at least equal to the Required Amount and will cause the Issuing Bank to provide written notice to Sublandlord if such reimbursement is not timely made. In the event Subtenant fails to timely reimburse Issuing Bank or increase the face amount of the Letter of Credit required, such failure shall constitute an Event of Default hereunder, and, in addition to all other rights and remedies available to Sublandlord for Subtenant’s default, Sublandlord shall have the right to draw the full amount of the Letter of Credit, by sight draft on the Issuing Bank, and shall thereafter hold in the Cash Collateral Account or apply the cash proceeds of the Letter of Credit pursuant to the terms of this Paragraph 7.

D.     Terms Upon Which Sublandlord is Entitled to Draw Upon Letter of Credit. In addition to the draw of the Letter of Credit permitted pursuant to Paragraph 7.B above, if an Event of Default occurs under this Sublease, Sublandlord may draw either the default amount or the full amount of the Letter of Credit, by sight draft on the Issuing Bank, and thereupon receive all or a portion of the face amount of the Letter of Credit, and use, apply or retain the whole or any part of such proceeds, as the case may be, to the extent required for the payment of any Sublease Base Rent, Sublease Additional Rent or other amounts due or to become due hereunder or for any reasonable sum which Sublandlord may expend or may be required to expend by reason of Subtenant’s default in respect of any of the terms of this Sublease, including any damages or deficiency in the re-letting of the Sublease Premises, whether accruing before or after summary proceedings or other re-entry by Sublandlord. In the case of every such use, application or retention, Subtenant shall, within five (5) business days following any such use, application or retention or such shorter period as may be required under the Subtenant’s reimbursement agreement with the Issuing Bank, cause the face value of the Letter of Credit to be restored to the Required Amount, and Subtenant shall cause the Issuing Bank to acknowledge to Sublandlord that such restoration of the Required Amount occurred in a timely manner. In the event the Sublandlord draws upon the Letter Credit as provided in this Paragraph 7 and retains excess proceeds of such draw in the Cash Collateral Account, Subtenant shall only be required to cause the face value of the Letter of Credit to be restored to an amount equal to the Required Amount less the amount of excess proceeds which Sublandlord has deposited in the Cash Collateral Account. In the event Sublandlord withdraws funds in the Cash Collateral Account for amounts secured by the Letter of Credit as set forth in this Paragraph 7, Subtenant shall within five (5) business days following Sublandlord’s notice to Subtenant of such withdrawal, cause the face value of the Letter of Credit to be increased by the amount of funds withdrawn from the Cash Collateral Account. The Letter of Credit shall be terminated within one hundred eighty (180) days after the termination of this Sublease and delivery of exclusive possession of the Sublease Premises to Sublandlord or Master Landlord, as the case may be. Master Landlord shall be entitled to draw on the Letter of Credit or withdraw sums from the Cash Collateral Account in lieu of Sublandlord (or otherwise exercise remedies with respect to the Cash Collateral Account) only at such time that Master Landlord is required by the terms of the WH-Google NDA to recognize Subtenant upon a Lease Termination (as defined in the WH-Google NDA) (including as a result of a rejection by Sublandlord of the Master Lease pursuant to Section 365 of the Bankruptcy Code); at such time, Master Landlord shall have (to the exclusion of Sublandlord) all of the rights of Sublandlord hereunder in respect of the Letter of Credit and Cash Collateral Account.

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E.     Transfer of Letter of Credit. In the event of a release by the Master Landlord of all liability of Sublandlord under the Master Lease and the Master Landlords agreement to assume Sublandlord’s obligation to return the Letter of Credit or Cash Collateral, Sublandlord shall have the right to transfer the Letter of Credit or Cash Collateral to the Master Landlord and on such transfer, Sublandlord shall ipso facto be released by Subtenant from all liability for the return of the Letter of Credit or Cash Collateral; and Subtenant agrees to look solely to the Master Landlord for the return of said Letter of Credit or Cash Collateral. Subtenant shall promptly execute such documents reasonably requested by Sublandlord as may be necessary to accomplish any such transfer or assignment of the Letter of Credit or Cash Collateral. Subtenant shall not assign or encumber or attempt to assign or encumber the Letter of Credit or Cash Collateral and neither Sublandlord nor its successors or assigns shall be bound by any such assignment, encumbrance or attempted assignment or encumbrance.

F.     Substitution of Letter of Credit. From time to time, Subtenant may substitute the letter of credit then in effect with a substitute letter of credit meeting the requirements of this Paragraph 7 and otherwise in substantially the form of the letter of credit then in effect. A duplicate original of such substitute letter of credit shall be delivered to Master Landlord.

G.     Beneficiary. Master Landlord is hereby acknowledged to be a third-party beneficiary of the agreements contained in this Paragraph 7.

H.     Subtenant’s Obligation to Sublandlord in respect of the Letter of Credit. Subtenant agrees and acknowledges that if its Letter of Credit (as contemplated in this Paragraph 7) expires at any time without the proceeds being drawn gown and deposited in the Cash Collateral Account, Subtenant shall be obligated to deliver a new Letter of Credit to Sublandlord complying with the terms of Paragraph 7 of thus Sublease.

8.     OPERATING EXPENSES.

A.     Definitions. For purposes of this Paragraph 8, the following terms shall have the meanings described below:

“Operating Expenses” means the total costs and expenses paid or incurred by Sublandlord in connection with the ownership, management, operation, maintenance, repair and replacement of the Sublease Premises and the Common Area, including, without limitation, all Operating Expenses (as defined in Section 5.1 of the Master Lease), provided, that:

(i)     Monthly Rent (as defined in the Ground Lease) (including escalations) due during the Sublease Term to the City of Mountain View from Sublandlord, as subtenant under the Ground Lease, as the same may be amended from time to time, shall not be “Operating Expenses” for the purpose of this Paragraph 8 (and Sublandlord expressly covenants to timely pay such Monthly Rent in accordance with the terms of the Master Lease), provided that amounts (other than Monthly Rent) payable under the Ground Lease, including regularly occurring expenses (such as real estate taxes), shall be included in Operating Expenses (provided indemnity or similar amounts payable by Sublandlord under the Ground Lease as a consequence of an act or omission of Sublandlord that is not in turn attributable to any act or omission of Subtenant under this Sublease shall not be included in Operating Expenses);

(ii)     clause (ix) of Section 5.1(b) of the Master Lease shall be deemed to include insurance maintained by Master Landlord and Sublandlord;

(iii)     clauses (x), (xii), (xiv), (xviii) and (xix) of Section 5.1(b) of the Master Lease shall be deemed to include, prior to the Total Occupancy Date, the reasonable costs and expenses of Sublandlord as well as Master Landlord: and

(iv)    the reference to “Base Rent” in clause (xi) of Section 5.1(b) of the Master Lease shall be deemed to refer to “Sublease Base Rent” for the purpose of calculating Operating Expenses payable by Subtenant.

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Attached as Exhibit E is a schedule of the Operating Expenses contemplated by clause (iii) above for illustration purposes only.

In addition to the exclusions set forth above, Operating Expenses shall not include any cost or charge excluded from “Operating Expenses” pursuant to the Master Lease or any costs to (i) cure any breach by Sublandlord of the Master Lease or this Sublease or (ii) bring the Premises into the condition required pursuant to Paragraph 19 below.

B.     Procedure. Commencing on the applicable Sublease Rent Commencement Date for each Sublease Premises Portion, Subtenant shall pay to Sublandlord as Sublease Additional Rent one twelfth (1/12) of Subtenant’s Share of Operating Expenses paid or incurred by Master Landlord or Sublandlord for each calendar year or portion thereof during the Sublease Term, in advance, on or before the first day of each month in an amount estimated by Sublandlord (or Master Landlord) as stated in a written notice to Subtenant. Prior to the first Sublease Rent Commencement Date for the Sublease Premises, Sublandlord shall deliver to Subtenant a copy of statements it has received from Master Landlord or its agent, supplemented, as necessary, with Sublandlord’s estimate of the amounts described in Paragraph 8(A)(iii) above that will become payable hereunder during the remainder of the calendar year 2003 with respect to the Building 42 Premises, the Building 41 Premises, and the Building 43 West Premises; similarly, Prior to December 31, 2003, Sublandlord will deliver to Subtenant a copy of statements it has received from Master Landlord or its agent, supplemented, as necessary, with Sublandlord’s estimate of the amounts described in Paragraph 8(A)(iii) above payable hereunder with respect to each Sublease Premises Portion. Each such estimate shall be in the form and contain the detail required by the Master Lease and with respect to the amounts described in Paragraph (A)(iii) above, set forth in reasonable detail the line item components (and major sub-components) of such Operating Expenses. In addition, prior to the Substantial Occupancy Date, Subtenant shall pay Sublandlord for any Operating Expenses in the nature of utility expense, including, without limitation, HVAC, electricity, water and sewer charges, on a pro rata basis determined by the total rentable square footage in the possession of Subtenant for which a Sublease Rent Commencement Date has occurred. Sublandlord may by written notice to Subtenant revise such estimates from time to time, setting forth in each such notice, in reasonable detail, the bass for any such revision, and Subtenant shall thereafter make payments on the basis of such revised estimates. With reasonable promptness after the expiration of each calendar year, Sublandlord will furnish Subtenant with a copy of the Master Landlord’s statement of Operating Expenses as supplemented by a statement (“Sublandlord’s Expense Statement’”) setting forth in reasonable detail the actual Operating Expenses for such year and Subtenant’s Share. If Subtenant’s Share of the actual Operating Expenses for such year exceeds the estimated Operating Expenses paid by Subtenant for such year, Subtenant shall pay to Sublandlord (whether or not this Sublease has terminated) the difference between the amount of estimated Operating Expenses paid by Subtenant and Subtenant’s Share of the actual Operating Expenses within fifteen (15) days after the receipt of Sublandlord’s Expense Statement. If the total amount paid by Subtenant for any year exceeds Subtenant’s Share of the actual Operating Expenses for that year, the excess shall be credited against the next installments of Sublease Base Rent due from Subtenant to Sublandlord, or, ig after the Termination Date, the excess shall first be credited against any unpaid Sublease Base Rent or Sublease Additional Rent due and remaining any excess shall be refunded to Subtenant concurrently with the furnishing of Sublandlord’s Expense Statement. From and after the Substantial Occupancy Date until the Sublease Rent Commencement Date immediately following the Total Occupancy Date Sublandlord shall pay to Subtenant (x) its proportionate share, based on the total rentable square footage for which the Sublease Rent Commencement Date has yet to occur, of costs relating to Subtenants repair and maintenance of the Common Areas and (y) any operating expenses incurred by Subtenant but attributable to rentable square footage with respect to which the Sublease Rent Commencement Date has not yet occurred.

C.     Proration for Partial Years. If the Sublease Rent Commencement Date for any Sublease Premises Portion or the termination date of this Sublease occurs on a date other than the first or last day, respectively, of a calendar year, Subtenant’s Share of Operating Expenses for the year in which any such Sublease Rent Commencement Date or the termination date of this Sublease occurs shall be prorated based on a 365-day year.

9.     EXCESS RENT. In the event Master Landlord and Sublandlord approve (or are deemed to have approved, either because no approval is required or because Master Landlord or Sublandlord failed to timely respond to a request for approval) a proposed sublease or assignment of the Sublease Premises by

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Subtenant, or if a sublease or assignment is permitted by operation of law, and Subtenant enters into a sublease or assignment with the proposed transferee, fifty percent (50%) of the Excess Rent received by Subtenant shall be paid to Sublandlord as and when received by Subtenant; provided that “Excess Rent” shall not be deemed to exist as a result of any of the transactions described in Section 15.7 of the Master Lease unless such transaction was entered into for the purpose of avoiding the obligation of this Paragraph 9.

10.    SUBTENANT’S INSURANCE OBLIGATIONS. Subtenant shall, at its sole cost and expense, obtain and maintain insurance policies as required under the Master Lease with respect to any Sublease Premises Portion upon the Actual Delivery Date for such Sublease Premises Portion. Subtenant shall deliver to Sublandlord a certificate evidencing such coverages, and naming Sublandlord and Master Landlord as additional insureds, as their respective interest may appear, Sublandlord shall, at its sole cost and expense, obtain and maintain insurance policies required to be maintained by Sublandlord under the Master Lease with respect to any Sublease Premises Portion for which an Actual Delivery Date has not occurred; and Sublandlord shall deliver to Subtenant a certificate of insurance naming Master Landlord and Subtenant as additional insureds, as their interests may appear. The insurance policies of Sublandlord and Subtenant described herein shall provide for no cancellation or material adverse alteration without 30 days’ prior written notice to Sublandlord and Subtenant (as applicable) and the parties’ respective property insurance policies shall provide for the waivers of subrogation referred to in Paragraph 11.

11.    WAIVER OF SUBROGATION. Notwithstanding any other provision of this Sublease to the contrary, Subtenant and Sublandlord waive all rights to recover against each other for any loss or damage to their respective tangible personal or real property (whether owned or leased) from any cause covered by insurance maintained by each of them, including their respective deductibles or self-insured retentions. Subtenant and Sublandlord will cause their respective insurers to issue appropriate waivers of subrogation rights endorsements to all property insurance policies maintained by each parry. Each of Sublandlord and Subtenant will evidence such waiver of subrogation as described in Paragraph 10.

12.    SUBTENANT’S DEFAULT. The events that constitute Events of Default by Subtenant are set forth in the incorporated Section 16.1 of the Master Lease, as incorporated herein by reference and modified as provided in Paragraph 3 above.

13.    SUBLANDLORD’S REMEDIES. The remedies available to Sublandlord in the case of an Event of Default by Subtenant are set forth in the incorporated Section 16.2 of the Master Lease, as incorporated herein by reference and modified as provided in Paragraph 3 above. Pursuit of any of the remedies stated herein by Sublandlord after an Event of Default by Subtenant shall not preclude pursuit of any other remedies provided in this Sublease or applicable law or equity, nor shall pursuit of any remedy constitute a forfeiture or waiver of any payment due to Sublandlord. No waiver by Sublandlord of any violation or breach of any provision of this Sublease shall be deemed or construed to constitute a waiver of any other violation or breach any provision herein contained. Forbearance by Sublandlord to enforce one or more of the remedies herein provided after an event of default by Subtenant shall not be deemed or construed to constitute a waiver of any other violation or default.

14.    SUBLANDLORD’S DEFAULT. “Events of Default by Sublandlord” under this Sublease shall be (i) if Sublandlord shall fail in any material respect to comply with any material provision of this Sublease, and Sublandlord shall not cure such failure within fifteen (15) days after written notice thereof to Sublandlord; provided, however, that if the default cannot reasonably be cured within such fifteen (15) day period, Sublandlord shall not be in default of this Sublease if Sublandlord commences to cure the default within the fifteen (15) day period and thereafter diligently, continuously and in good faith continues to cure the default: or (ii) if Sublandlord shall fail in any material respect to comply with any material provision of the Master Lease in its capacity as tenant thereunder (provided such obligation is not passed through to Subtenant by the terms and conditions of this Sublease and such failure is not due to Subtenant’s failure to fulfill such obligation), and Sublandlord shall not commence and cure such failure as required by the terms of the Master Lease; or (iii) an Event of Default on the part of Sublandlord shall occur under the Master Lease arising from an obligation that is not passed through to Subtenant by the terms and conditions of this Sublease; or (iv) if any representation or warranty on the part of Sublandlord hereunder shall be determined to have been false in a material and adverse respect when made.

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15.    REMEDIES OF SUBTENANT. Upon the occurrence of any Event of Default by Sublandlord, Subtenant shall have the option to pursue any one or more of the following remedies as well as any other remedy available to Subtenant at law or in equity for such Event of Default by Sublandlord, to wit: (a) subject to the terms and provisions of the Master Lease, Subtenant may perform the obligation in default; or (b) Subtenant may bring suit against Sublandlord for actual (but not consequential, special or indirect) damages (including reasonable attorneys’ fees) which Subtenant may incur as a result of the Event of Default by Sublandlord. Pursuit of any of the remedies stated above by Subtenant after an Event of Default by Sublandlord shall not preclude pursuit of any other remedies provided in this Sublease on applicable law or equity, nor shall pursuit of any remedy constitute a forfeiture or waiver of any payment due by Sublandlord to Subtenant or by Subtenant to Sublandlord. No waiver by Subtenant of any violation or breach of any provision of this Sublease shall be deemed or construed to constitute a waiver of any other violation or breach any provision herein contained. Forbearance by Subtenant to enforce one or more of the remedies herein provided upon an Event of Default by Sublandlord shall not be deemed or construed to constitute a waiver of any other violation or default.

16.    NO CONSEQUENTIAL OR PUNITIVE DAMAGES. Notwithstanding anything herein to the contrary, each of Sublandlord and Subtenant hereby waives the right to collect against the other party any consequential, special or indirect or punitive damages in respect of any breach or default under this Sublease.

17.    INDEMNIFICATION.

A.     Subtenant’s Indemnification. Subtenant shall indemnify, defend and hold each Sublandlord Indemnitee (hereinafter defined) and Master Landlord Indemnitee (hereinafter defined) harmless from and against any and all losses, damages, liabilities, responsibilities, claims or costs (including reasonably attorneys’ fees and expenses) but expressly excluding any consequential and punitive damages (collectively, “Claims”) arising from (i) any activity, work or thing done, permitted or suffered by Subtenant or Subtenant’s Representatives in or about the Sublease Premises, any Building or the Property (other than to the extent such Claims arise from the acts or negligent omissions of such Sublandlord Indemnitee or such Master Landlord Indemnitee (as applicable) from and after the applicable Actual Delivery Date for each Sublease Premises Portion and thereafter during the Sublease Term; (ii) any breach or default in the performance of any obligation to be performed by Subtenant under the terms of this Sublease; (iii) any act, neglect, fault or omission by Subtenant or Subtenant’s Representatives in or about the Sublease Premises, any Building or the Property from and after the applicable Actual Delivery Date for each Sublease Premises Portion and thereafter during the Sublease Term; or (iv) any breach or default under the Master Lease or the Ground Lease caused by any act or omission of Subtenant or Subtenant’s Representatives (other than to the extent such Claims arise from the acts or negligent omissions of such Sublandlord Indemnitee or such Master Landlord Indemnitee (as applicable). This Paragraph 17.A is subject to incorporated Section 14.5 of the Master Lease and Paragraph 11 of this Sublease. This indemnification shall survive the expiration or earlier termination of this Sublease. “Master Landlord Idemnitees” shall mean Master Landlord and its owners, and their respective directors, officers and employees. “Sublandlord Indemnitees” shall mean Sublandlord and its directors, officers and employees. “Sublandlord Representatives” shall mean Sublandlord, its sublessees (excluding Subtenant and anyone holding by through or under Subtenant), licensees, contractors and their respective directors, officers, employees, agents and representatives. Master Landlord is hereby acknowledged to be a third-party beneficiary of the agreements contained in this Paragraph 17.A.

B.     Sublandlord’s Indemnification. Sublandlord shall indemnify, defend and hold Subtenant Indemnitees (hereinafter defined) harmless from and against any and all Claims arising from (i) any activity, work or thing done, permitted or suffered by Sublandlord or Sublandlord’s Representatives in or about the Sublease Premises, any Building or the Property (other than to the extent such Claims arise from the acts or omissions of such Subtenant Indemnitee. Subtenant, or any of the Subtenant Representatives) from and after the applicable Actual Delivery Date for each Sublease Premises Portion and thereafter during the Sublease Term; (ii) any breach or default in the performance of any obligation to be performed by Sublandlord under the terms of this Sublease; (iii) any act, neglect, fault or omission by Sublandlord or Sublandlord’s Representatives in or about the Sublease Premises, any Building or the Property from and after the applicable Actual Delivery Date for each Sublease Premises Portion and thereafter during the Sublease Term; (iv) any breach or default under the Master Lease or the Ground Lease (to the extent not the responsibility of Subtenant to perform under the terms of this Sublease) caused by any act or omission of Sublandlord or Sublandlord’s Representatives

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(other than to the extent such Claims arise from (A) the acts or omissions of such Subtenant Indemnitee, Subtenant, or any of the Subtenant Representatives or (B) a breach or default resulting from Subtenant’s breach or default under this Sublease) during the Sublease Term; or (v) Environmental Activity in or about the Property by Sublandlord or Sublandlord’s Agents, the failure of Sublandlord or Sublandlord’s Agents to comply with any Environmental Law with respect to Sublandlord’s Environmental Activity in or about the Property or Sublandlord’s failure to remove Sublandlord’s Hazardous Materials from the Property as required under the Master Lease. In case any action or proceeding shall be brought against any Subtenant Indemnitees by reason of any such claim, Sublandlord, upon receipt of notice of any such claim, shall defend the same at Sublandlord’s expense. This Subparagraph is subject to incorporated Section 14.5 of the Master Lease and Paragraph 11 of this Sublease. This indemnification shall survive the expiration or earlier termination of this Sublease. “Subtenant Indemnitees” shall mean Subtenant and its directors, officers and employees. “Subtenant Representatives” shall mean Subtenant, its sublessees (including anyone holding by through or under Subtenant), licensees, contractors and their respective directors, officers, employees, agents and representatives.

C.     Exculpation. Except to the extent otherwise provided in Paragraph 17.B or elsewhere in this Sublease, Subtenant agrees that none of Sublandlord, any Sublandlord Indemnitees, Master Landlord or any Master Landlord Indemnitees shall at any time or to any extent whatsoever be liable, responsible or in any way accountable for any loss, liability, injury, death or damage to persons or property which at any time may be suffered or sustained by Subtenant or by any person(s) whomsoever who may at any time be using, occupying or visiting the Sublease Premises or any other portion of the Property, including, but not limited to, any acts, errors or omissions of any other tenants or occupants of the Property (excluding Sublandlord and Sublandlord Representatives). Except as expressly provided herein, Subtenant shall not, in any event or circumstance, be permitted to offset or otherwise credit against any payments of Sublease Rent required herein for matters for which Sublandlord or Master Landlord may be liable hereunder. None of Sublandlord, any Sublandlord Indemnitees, Master Landlord or any Master Landlord Indemnitees shall be liable for any interference with light, or air, for any latent defect in the Sublease Premises or any Building or for any loss or damage to Subtenants Property that may arise on account of or in any way be connected with the repair, maintenance, performance or condition of the Building Systems and Structural Components, except to the extent of damage resulting from (i) the negligence or willful misconduct of Sublandlord, Sublandlord’s Representatives or Master Landlord during the Sublease Term or (ii) the breach by Sublandlord or Sublandlord’s Representatives of any material representation or warranty contained herein when made regarding the condition of the Building Systems and Structural Components or (iii) the failure, prior to the applicable Sublease Commencement Date for any Sublease Premises Portion, beyond any applicable notice and cure period, by Sublandlord or Sublandlord’s Representatives to maintain the Building Systems and Structural Components in such Sublease Premises Portion in accordance with and as required by Section 8.2 of the Master Lease.

18.    BUILDING COMPLIANCE. Except as otherwise specified herein with regard to repairs and alterations, from and after delivery of any Sublease Premises Portion to Subtenant, Subtenant will be solely responsible for the compliance of such Sublease Premises Portion with Legal Requirements.

19.    PREPARATION FOR OCCUPANCY.

A.     Generally. Subtenant shall accept each Sublease Premises Portion in their “as is” condition as of the Sublease Commencement Date for such Sublease Premises Portion, provided that Sublandlord shall deliver each such Sublease Premises Portion with all Building Systems and Structural Components are in Good Working Order and Repair. As used herein, “Good Working Order and Repair” shall mean that the Building Systems and Structural Components have been maintained in accordance with the requirements of the Master Lease. Sublandlord shall deliver each Sublease Premises Portion free and clear of any liens which Sublandlord is required under the Master Lease to remove. In addition, except for work specifically contemplated herein, Sublandlord shall not perform any construction (other than as required under the Master Lease or in the nature of and repair and maintenance) in the Sublease Premises without the prior written consent of Subtenant.

B.     Preliminary Inspection. Prior to the date of mutual execution and delivery of this Sublease, Subtenant has had the Building Systems and Structural Components inspected by a consultant acceptable to Sublandlord in order to discover any necessary maintenance, or other necessary corrective work required in

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order to bring the Building Systems and Structural Components into Good Working Order and Repair. A schedule of work items determined, as a result of such inspection, to be necessary in order to put the Building Systems and Structural Components into Good Working Order and Repair is attached hereto as Schedule 19.B to this Sublease. Sublandlord, at Sublandlord’s sole cost and expense (not to be charged to Subtenant as an Operating Expense), as soon as reasonably possible but in any event prior to the applicable Actual Delivery Date for each Sublease Premises Portion, will cause such items of maintenance, repair and replacement, if any, to be performed with respect to the Building Systems and Structural Components serving such Sublease Premises Portion, to Subtenant’s reasonable satisfaction and will deliver to Subtenant all records end close-out reports associated with the performance of such work. The parties hereby agree that acceptance of delivery of the affected Sublease Premises Portion shall be deemed acceptance by Subtenant of such repair item, except to the extent the parties agree to add such repair item to the Punch List in which case the provisions of Paragraph 19.E shall apply.

C.     Sublandlord’s Cooperation with Subtenant’s Due Diligence. During the period commencing on the date of this Sublease through and including the Sublease Rent Commencement Date for the first Sublease Premises Portion for which an Actual Delivery Date shall have occurred (the “Diligence Period’), the following provisions shall be applicable:

(i)     to the extent in Sublandlord’s possession and subject to the receipt of any consent or direction required of Master Landlord (to the extent any diligence materials are the property of the Master Landlord), Sublandlord shall make available to Subtenant (or Subtenant’s consultants, architects or engineers) for Subtenant’s review and inspection, (A) all architectural and engineering plans and drawings, including any current “as built” plans, regarding the initial construction of the Buildings and other improvements located on the Property, (B) with respect to the Building Systems and Structural Components, any and all of the following: all manufacturer’s operating manuals and warranties, and any maintenance and repair records, (C) any records of repairs or maintenance performed with respect to the Building Systems and Structural Components and (D) all environmental studies reports, provided, in each case, Subtenant shall pay promptly on demand for all duplication expenses connected therewith; and

(ii)     Sublandlord shall make available to Subtenant (and to Subtenant’s consultants, architects and engineers), at reasonable times, upon reasonable notice and for a reasonable period of time, Sublandlord’s employees, agents, contractors, architects or engineers engaged in the operation, maintenance, and repair of the Property. The parties agree that Subtenant requires reasonable access to certain information and resources in Sublandlord’s possession regarding the use, operation, maintenance, and repair and condition of the Property, as described above, in contemplation of assuming such responsibilities as of the Substantial Occupancy Date. At all times from and after the Substantial Occupancy Date, (x) Subtenant shall maintain the same records in a manner consistent with the above requirements and (y) Sublandlord shall have no further obligation to maintain records in the manner prescribed above, provided that Sublandlord shall reasonably cooperate with Subtenant in providing the information necessary for Subtenant to comply with its obligations set forth in clause (x).

D.     Sublandlord’s Continuing Maintenance of Property. From and after the date of this Sublease until, with respect to each Sublease Premises Portion, the Sublease Rent Commencement Date for such Sublease Premises Portion, Sublandlord will continue to maintain and repair such Sublease Premises Portion in accordance with the terms and conditions of the Master Lease and otherwise in a manner consistent with Sublandlord’s prior maintenance and operation. In addition, from and after the date of this Sublease until the Substantial Occupancy Date, Sublandlord will continue to maintain and repair the Common Areas.

E.     Punchlist. The parties acknowledge that the performance of the inspection described in Paragraph 19.B above may not uncover all items of repair, replacement or maintenance which may be necessary in order to place the Building Systems and Structural Components in Good Working Order and Repair, and that the need for certain items of required repair, replacement or maintenance may not be evident until Subtenant has occupied a particular Sublease Premises Portion. Accordingly, within sixty (60) days following the Actual Delivery Date for each Sublease Premises Portion, Subtenant will have the right to submit to Sublandlord (with a copy to Master Landlord) a detailed schedule of punch list items discovered by Subtenant in such Sublease Premises Portion which reasonably constitute the failure of any Building System or Structural Component in or serving such Sublease Premises Portion to be in Good Working Order and Repair

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(a “Punch List”, and each item listed on the Punch List being a “Punch List Item”); provided, that the Punch List shall not contain (x) any item of repair or maintenance arising from ordinary wear and tear (as compared to repairs necessitated by a failure to maintain as required by the Master Lease) or (y) any item made necessary by Subtenant’s use of, construction activities in, damage to or move into the applicable Sublease Premises Portion. Upon delivery of the Punch List, Sublandlord will, with reasonable diligence and at Sublandlord’s sole cost and expense (not to be included as an Operating Expense), complete all Punch List Items. In the event of a dispute between the parties as to (x) whether a particular Building System or Structural Component is not in Good Condition and Repair and should therefore be included on the Punch List or (y) whether any Punch List Item has been resolved so as to cause such item to be in Good Working Order and Repair, the parties hereby agree to negotiate in good faith in a diligent effort to reach agreement with respect to the matter in question. However, if within five (5) business days after notice from one party to the other of any disagreement regarding any matter described in clauses (x) and (y), the parties have not reached agreement, either party may, by written notice to the other, cause the matter to be submitted for resolution to an engineering consultant reasonably acceptable to both parties (and failing such agreement as to a mutually acceptable consultant, the property manager for the Master Landlord) (the “Arbiter”), in such event, the Arbiter shall submit its decision to the parties in writing within ten (10) business days of submission. The Arbiter’s determination shall be final and binding upon the parties. Any fee of the Arbiter shall be shared equally by the parties.

F.     Limitation on Sublandlord’s Obligations. Except as expressly set forth herein, any obligation to remove any Alteration or any other fixtures, equipment, furnishings or improvements at the expiration of the term of the Master Lease shall be the obligation of Subtenant, provided that at the expiration of the term of the Master Lease, Sublandlord shall remove the Alterations described in Schedule 4.C to this Sublease and restore the Sublease Premises as required under the terms of the Master Lease, unless such removal and restoration shall have previously occurred in connection with improvements and alterations to the Sublease Premises by Subtenant. Sublandlord and Subtenant hereby agree that (x) Sublandlord shall have the right to require restoration of Alterations only if Master Landlord had such right under the Master Lease, provided that if Master Landlord waives such right to require Sublandlord or Subtenant to restore such Alteration, Sublandlord will not have the right to require such restoration and (y) Sublandlord shall not require security for any Alteration restoration obligation to the extent Subtenant is providing such security directly to Master Landlord (i.e. Subtenant’s providing such security to Master Landlord shall suffice). Except as expressly set forth herein, Sublandlord shall not have any obligation to furnish or perform any construction, work, labor or services in connection with Subtenant’s occupancy of the Sublease Premises, provided, however, Sublandlord shall have the obligation to repair any damage caused by its removal of property or equipment. In the event of a conflict in the terms of this Paragraph 19 and incorporated Section 9 of the Master Lease, this Paragraph 19 shall control as between Sublandlord and Subtenant.

G.     Transition. Within 15 days of the Actual Delivery Date of the Sublease Premises Portion triggering the Substantial Occupancy Date, Subtenant shall provide to Sublandlord a list of all third-party contracts or agreements relating to the maintenance and operation of the Sublease Premises, including any warranties associated with the Building Systems and Structural Components or Property (to the extent in Sublandlord’s possession), that Subtenant desires Sublandlord assign to Subtenant and Subtenant has agreed to assume. Sublandlord shall make reasonably diligent efforts to make available to Subtenant all documents and information necessary to prepare this list of contracts. From and after the Sublease Rent Commencement Date immediately following the Substantial Occupancy Date, Subtenant shall be responsible for the administration of the payment of all Operating Expenses, subject to reimbursement by Sublandlord as provided in Paragraph 8.B, and will be responsible for selecting and contracting with third-party providers relating to the maintenance and operation of the Sublease Premises and Common Areas. In addition, Sublandlord shall terminate as promptly as practicable all contracts or agreements relating to the maintenance and operation of the Sublease Premises which Subtenant has not requested to be assigned and assumed.

H.     Signage. Subtenant shall be obligated to remove at the expiration or earlier termination of the Sublease, all signage (other than signage required by Applicable Laws) installed during the Sublease Term by Subtenant unless (x) the Property is conveyed to Subtenant upon exercise of the purchase option(s) described in the Three-Party Agreement or (y) the Master Lease terminates and the Master Landlord does not require removal. Prior to the Actual Delivery Dates having occurred for 100% of the Sublease Premises, Sublandlord may continue to maintain its signage at the Property, provided Sublandlord shall remove from each Building its

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signage identifying Sublandlord as of the Actual Delivery Date of an entire Building or a Sublease Premises Portion such that an Actual Delivery Date shall have occurred for 100% of any Building.

20.    PERSONAL PROPERTY. Attached hereto as Schedule 20 is a complete list of all personal property currently in place in the Sublease Premises which shall remain in the Sublease Premises following the delivery of the Sublease Premises to Subtenant. All such personal property shall be delivered in an “as is” condition. From and after the date of this Sublease until, with respect to the personal property remaining in each Sublease Premises Portion, the Actual Delivery Date for such Sublease Premises Portion containing such personal property, Sublandlord will continue to maintain and repair in Good Working Order, allowing, however, for reasonable wear and tear, such personal property. Prior to the Actual Delivery Date for each Sublease Premises Portion, Subtenant shall have the right to confirm the existence of all personal property associated with the relevant Sublease Premises Portion and intended to be transferred with delivery of the Sublease Premises Portion, as listed on Schedule 20 hereto. Concurrent with the delivery of each Sublease Premises Portion, Sublandlord shall execute and deliver to Subtenant a bill of sale, in a form reasonably acceptable to Subtenant, transferring the personal property remaining in each Sublease Premises Portion free of any Liens. In the event this Sublease is terminated prior to the termination of the Master Lease and Sublandlord re-occupies the Sublease Premises, all personal property transferred to Subtenant pursuant to this Paragraph shall revert to Sublandlord. With respect to the removal of any personal property which is not intended to remain in each Sublease Premises Portion, Sublandlord shall use reasonably diligent efforts to minimize damage to the technology infrastructure consisting of the fiber and copper connections from the Building 43 West Premises to the other Sublease Premises Portions so as to enable Subtenant wherever reasonably feasible, to use such existing technology infrastructure with a minimum of repair work necessary.

21.    CASUALTY AND CONDEMNATION. Section 19 (Destruction) and Section 20 (Eminent Domain) of the Master Lease incorporated herein are further modified to provide that if by operation of either of those two sections the Master Lease is not terminated and continues in full force and effect, this Sublease shall not be terminated but shall also continue in full force and effect, except that until the Sublease Premises are restored in accordance with the applicable section of the Master Lease there shall be a proportionate abatement (effective as of the date of such casualty or condemnation) of the Sublease Base Rent and Sublease Additional Rent payable hereunder to the extent that all or any portion of the Sublease Premises are rendered Untenantable by reason of a Casualty; provided, however, that such abatement shall in no event exceed the abatement granted to Sublandlord under the Master Lease for the Sublease Premises and, provided, further, that no compensation or claim or reduction will be allowed or paid by Sublandlord by reason of inconvenience, annoyance or injury to Subtenant’s business arising from the necessity of effecting repairs to the Sublease Premises or any portion of any Building, whether such repairs are required by operation of the applicable section of the Master Lease or any other provision of the Master Lease. In the event that any such casualty or condemnation occurs during the Net Rental Abatement period or the Offset Abatement Period (defined in Paragraph 30 below), the Net Rental Abatement Period and/or the Offset Abatement Period, as the case may be, shall be suspended until such abatement as described herein shall have ended, at which point the Net Rental Abatement Period and/or the Offset Abatement Period, as applicable, will continue. From and after the Substantial Occupancy Date, Sublandlord shall have no obligation to rebuild or restore the Sublease Premises or any portion of the Building after a casualty or condemnation but shall remit to Subtenant for restoration purposes any insurance proceeds or condemnation award it receives from Master Landlord. Sublandlord shall have no obligation and shall not be liable to Subtenant for any damages or other compensation if Master Landlord exercises a termination right under the Master Lease in the event of a casualty or condemnation. In the event Sublandlord has the right to terminate the Master Lease, Sublandlord (x) shall not exercise such right without the express written consent of Subtenant, and (y) shall promptly exercise such right upon the written direction of Subtenant to do so. For the avoidance of doubt, if the Master Lease terminates pursuant to Section 19 (Destruction) or Section 20 (Eminent Domain) of the Master Lease, this Sublease will terminate simultaneously.

22.    INITIAL CONSTRUCTION IN AND COOPERATION REGARDING BUILDING 43.

A.     The parties’ intent is that Sublandlord will construct a barrier separating the Building 43 West Premises from the Building 43 East Premises, in order to separate Subtenant’s operations within the Building 43 West Premises from Sublandlord’s operations in the Building 43 East Premises, on or before the Actual Delivery Date for the Building 43 West Premises. Sublandlord and Subtenant agree to cooperate in good faith

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in the design and construction process for such barrier. Sublandlord and Subtenant further agree to cooperate and coordinate construction activities so as to prevent interruption of the business activities of Sublandlord, including without limitation (i) controlling noise during business hours, (ii) avoiding blocking stairwell and/or elevator access and (iii) preventing damage to electrical, mechanical and information technology infrastructure.

B.     The parties acknowledge that Sublandlord currently houses and maintains certain information technology and other connectivity equipment in the Building 43 West Sublease Premises in the location depicted on Schedule 22.B (the “IT Area”). Until the Total Occupancy Date, the demise by Sublandlord to Subtenant of the Sublease Premises shall be subject to the following:

(i)     the Sublease Premises shall exclude the IT Area;

(ii)     Sublandlord reserves a nonexclusive easement over and through the Sublease Premises in order to access the IT Area (but no other portion of the Sublease Premises) at all times and with no notice required; and

(iii)     no construction by Subtenant shall be conducted prior to January 31, 2004 in and around the MDF/Mpoe vault identified in Schedule 22.B, and, further all construction work conducted by Subtenant in and around the IT Area shall be coordinated with Sublandlord to prevent any interruption in Sublandlord’s systems, utilities and information technology network.

23.    NOTICES. All notices and demands which may or are to be required or permitted to be given in accordance with Section 26 of the Master Lease and this Sublease shall be addressed to Subtenant at the address indicated in Paragraph 1.D above or to Sublandlord at the address indicated in Paragraph 1.B above or to such other place as Subtenant or Sublandlord may from time to time designate in a written notice to the other party.

24.    AMENDMENTS. No agreement hereafter made shall be effective to change or modify this Sublease, in whole or in part, unless such agreement is in writing and signed by both parties hereto, nor shall any custom, practice or course of dealing between the parties in the administration of the terms hereof be construed to waive or lessen the right of any party to insist upon the performance by the other party in strict accordance with the terms of this Sublease. Sublandlord covenants to Subtenant that Sublandlord shall not agree to or enter into any (i) termination of the Master Lease or (ii) amendment or modification of the Master Lease that in any way (x) diminishes Subtenant’s rights hereunder, (y) increases Subtenant’s obligations hereunder, or (z) otherwise adversely impacts Subtenant, in Subtenant’s good faith determination, without prior notice to and written approval thereof by Subtenant, such approval not to be unreasonably withheld.

25.    FORCE MAJEURE. Neither Sublandlord nor Subtenant shall be deemed to be in breach of this Sublease by reason of failure to perform any of its obligations hereunder if, while and to the extent that such failure is due to acts of God, acts of the public enemy, acts of governmental authority, or any other circumstances for which it is not responsible and which are not within its control, including any failure or delay by Master Landlord in performing any of its obligations under the Master Lease (collectively “Events of Force Majeure”); provided that this provision shall not apply to (x) any failures by Subtenant to pay any Sublease Base Rent, Sublease Additional Rent or other charges based upon insufficient funds (as opposed to Events of Force Majeure which prevent the actual delivery of such funds) or to make any other money payments required by this Sublease or to Sublandlord in making reimbursements to Subtenant or refunding or paying any other money payments to Subtenant as required by this Sublease, (y) any failure by Sublandlord to make any payment required under the Master Lease or this Sublease (including, without limitation, Sublandlord’s obligation to pay amounts under the Ground Lease, as described in Subparagraph 8(i) above), based upon insufficient funds (as opposed to Events of Force Majeure which prevent the actual delivery of such funds) or (z) the delivery of Sublease Premises Portions as described in Paragraph 2.C (other than as described in such paragraph).

26.    ENTIRE AGREEMENT. It is expressly agreed by Sublandlord and Subtenant, as a material consideration for the execution of this Sublease, that there are and were no representations, understandings, stipulations, agreements or promises pertaining thereto not incorporated in writing herein.

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27.    BINDING EFFECT. The provisions of this Sublease shall be binding upon and inure to the benefit of Sublandlord and Subtenant, respectively, and to their respective heirs, personal representatives, successors and assigns, subject to any contrary provisions herein.

28.    AUTHORIZATION. Sublandlord and Subtenant are each authorized to enter into this Sublease, and a at the request of either party shall furnish upon demand a corporate resolution, proof of due authorization of partners or other appropriate documentation reasonably requested by either party evidencing such authorization.

29.    COOPERATION. Sublandlord and Subtenant acknowledge and agree that participation by Subtenant in any future negotiations with the Ground Lessor would provide additional value and therefore, Subtenant agrees to reasonably cooperate with Sublandlord and the Master Landlord upon request in any such negotiations with respect to the Ground Lease.

30.    BROKERS. Subtenant and Sublandlord warrant that they have had dealings with only Bailes & Associates (the “Broker”) and that they know of no other real estate broker or agent who is entitled to a commission in connection with this Sublease. A brokerage commission equal to $3,262,902 shall be paid by Sublandlord to the Broker as follows: (i) $2,756,585 shall be paid on the Actual Delivery Date of a Sublease Premises Portion such that Actual Delivery Dates shall have occurred for an aggregate of 225,000 rentable square feet or more, and (ii) $506,317 shall be paid on October 1, 2004. In the event that Sublandlord fails to pay such amounts as of the dates specified in the immediately preceding sentence, Subtenant shall have the right to pay all or any portion of such commissions; if Subtenant pays all or any portion of such commissions, Subtenant will notify Sublandlord of such payment on or about the date of such payment. Any amount so paid by Subtenant to Broker in accordance with the foregoing sentence shall bear interest from the date paid at the rate applicable to late payments of Sublease Rent under this Sublease (such payment and interest accruing therein being referred to as the “Offset Amount”). The Offset Amount shall be offset by the Sublease Base Rent due hereunder following the expiration of the Net Rental Abatement Period until such time as Subtenant is fully reimbursed for the Offset Amount (such period of time being referred to herein as the “Offset Abatement Period”). Each of Subtenant and Sublandlord shall indemnify, defend and hold the other harmless from and against all liabilities arising from any other claims of brokerage commissions or finder’s fees based on any dealings or contracts by Subtenant or Sublandlord, respectively, with brokers or agents other than the Broker.

31.    FINANCIAL STATEMENTS. Subtenant hereby agrees that it will deliver to Sublandlord copies of the financial statements it delivers to Master Landlord pursuant to Section 1.12(a) and the certificates referenced in Section 1.12(b) of the Second Amendment.

32.    COVENANTS REGARDING BANKRUPTCY.

A.     As used in this Sublease, the “Bankruptcy Code” shall mean 11 U.S.C. §§ 101 et seq., as modified and/or recodified from time to time.

B.     The rights of Subtenant under this Sublease attach to all of Sublandlord’s rights under Subsection 365(h) of the Bankruptcy Code in the event that Master Landlord files for bankruptcy, including without limitation, Sublandlord’s rights to remain in possession of the Sublease Premises. Sublandlord shall not, without Subtenants written consent (which may be given or withheld in its sole discretion), elect to treat the Master Lease as terminated under Subsection 365(h)(1) of the Bankruptcy Code. Any such election without such consent shall, at Subtenant’s option, be void.

C.     Sublandlord hereby irrevocably assigns to Subtenant all of its rights to damages arising from any rejection of the Master Lease by Master Landlord under the Bankruptcy Code. Sublandlord and Subtenant shall proceed jointly or in the name of Subtenant in respect of any claim or proceeding relating to any rejection of the Master Lease by Master Landlord, including, without limitation, the right to file and prosecute any proofs of claim, complaints, motions and other documents.

D.     If any legal proceeding is commenced with respect to the Master Lease in connection with any case under the Bankruptcy Code, Sublandlord and Subtenant shall cooperatively conduct any such proceeding with counsel agreed upon between the parties. Sublandlord shall immediately notify Subtenant upon learning

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of any filing by or against Master Landlord of a petition under the Bankruptcy Code. Sublandlord shall thereafter promptly deliver to Subtenant all notices, pleadings, and other documents received by Sublandlord in connection with any such proceeding.

33.    COUNTERPARTS. This Sublease may be executed in counterparts, each of which shall be deemed an original, and all of which together shall constitute one and the same instrument.

[signature page follows]

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IN WITNESS WHEREOF, this Sublease is executed as of the date first written above.

SUBLANDLORD:		SUBTENANT:
SILICON GRAPHICS, INC.		GOOGLE TECHNOLOGY INC.
By:	/s/ Michael L. Hirahara	By:	/s/ George Reyes
Printed Name:	Michael L. Hirahara	Printed Name:	George Reyes
Its:	Vice President, Facilities & Services	Its:	CFO
Dated:	July 9, 2003	Dated:	7/9/03

EX-10.09.1

Exhibit 10.09.1

AMENDMENT No. 1 TO SUBLEASE

AMENDMENT No. 1 to Sublease dated as of November 18, 2003 (this “Amendment”) by and between SILICON GRAPHICS, INC., a Delaware corporation, as Sublandlord, and GOOGLE INC., a Delaware corporation (successor to Google Technology Inc., a California corporation), as Subtenant.

WHEREAS, Sublandlord and Subtenant have entered into that certain Sublease dated as of July 9, 2003 (the “Sublease”) for premises located at 1600 Amphitheatre Parkway, Mountain View, California 94043;

WHEREAS, pursuant to Paragraph 2.D of the Sublease, Sublandlord has notified Subtenant that certain Sublease Premises Portions will become available earlier than initially targeted and Subtenant has agreed to accept early delivery of such Sublease Premises Portions;

WHEREAS, the parties have agreed that the Building 43 West Premises and the Building 43 East Premises will be modified as described herein; and

WHEREAS, the parties have agreed that certain Target Delivery Dates will be postponed.

NOW, THEREFORE, in accordance with the terms and conditions of the above-referenced Sublease, Sublandlord and Subtenant agree as follows (capitalized terms used but not defined herein shall have the meanings given to such terms in the Sublease):

1. Paragraph 1.G. of the Sublease is amended to read in full as follows:

“Sublease Premises”: Four buildings including 506,317 square feet of Rentable Area, as initially described in Exhibit “A” to the Master Lease and as more fully described in Exhibit A. The Sublease Premises consists of the following (each, a “Sublease Premises Portion”):

1. “Building 40, Floor 1 Premises”: portion of the Sublease Premises comprising the first floor of the building commonly known as Building 40, as shown on Exhibit A-1 attached hereto and containing 82,891 rentable square feet.

2. “Building 40, Floor 2 Premises”: portion of the Sublease Premises comprising the second floor of the building commonly known as Building 40, as shown on Exhibit A-2 attached hereto and containing 71,610 rentable square feet.

3. “Building 41 Premises”: portion of the Sublease Premises commonly known as Building 41, as shown on Exhibit A-3 attached hereto and containing 98,912 rentable square feet.

4. “Building 42 Premises”: portion of the Sublease Premises commonly known as Building 42, as shown on Exhibit A-4, and containing 82,742 rentable square feet.

5. “Building 43 East-1 Premises”: portion of the Sublease Premises comprising the first floor of the building commonly known as

Building 43 East, as shown on Exhibit A-5, and containing 39,693 rentable square feet.

6. “Building 43 West-1 Premises”: portion of the Sublease Premises comprising the first floor of the building commonly known as Building 43 West, as shown on Exhibit A-6, and containing 45,389 rentable square feet.

7. “Building 43 East-2 Premises”: portion of the Sublease Premises comprising the second floor of the building commonly known as Building 43 East, as shown on Exhibit A-7, and containing 42,540 rentable square feet.

8. “Building 43 West-2 Premises”: portion of the Sublease Premises comprising the second floor of the building commonly known as Building 43 West, as shown on Exhibit A-8, and containing 42,540 rentable square feet.

2. Clauses 5 and 6 of Paragraph 1.K of the Sublease shall be deemed replaced with the following Clauses 5, 6, 7 and 8:

5. “Building 43 East-1 Sublease Base Rent”: $833,553.00 per annum, payable in the amount of $69,462.75 per month.

6. “Building 43 West-1 Sublease Base Rent”: $953,169.00 per annum, payable in the amount of $79,430.75 per month.

7. “Building 43 East-2 Sublease Base Rent”: $893,340.00 per annum, payable in the amount of $74,445.00 per month.

8. “Building 43 West-2 Sublease Base Rent”: $893,340.00 per annum, payable in the amount of $74,445.00 per month.

3. Paragraph 1.L of the Sublease shall be amended to read in full as follows:

L. “Target Sublease Delivery Date”: with respect to any Sublease Premises Portion, shall be the date by which Sublandlord expects, using reasonably diligent efforts, to deliver such Sublease Premises Portion to Subtenant in accordance with the provisions of this Sublease, and, expressed in chronological order with respect to each Sublease Premises Portion, are the following target dates:

1. “Building 42 Premises”: August 1, 2003.

2. “Building 41 Premises”: December 15, 2003.

3. “Building 43 West-1 Premises”: December 31, 2003.

4. “Building 43 West-2 Premises”: December 31, 2003.

5. “Building 43 East-2 Premises”: September 1, 2004.

6. “Building 40, Floor 1 Premises”: January 23, 2004.

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7. “Building 40, Floor 2 Premises”: March 1, 2004.

8. “Building 43 East-1 Premises”: September 1, 2004.

4. Paragraph 1.N of the Sublease shall be amended to read in full as follows:

N. “Sublease Rent Commencement Date”: with respect to any Sublease Premises Portion, shall be the earlier of (x) the date on which Subtenant commences occupancy and use of such Sublease Premises Portion for the purpose of conducting Tenant’s business operations therein (as opposed to the construction of initial fit-up improvements) (the “Subtenant Actual Occupancy Date”), and (y) the sixtieth (60th) day following the Actual Delivery Date for such Sublease Premises Portion, subject to acceleration pursuant to Paragraph 2.D below, provided that pursuant to Paragraph 2.D of the Sublease, the parties have agreed that each of the following Sublease Premises Portions will be delivered earlier than the original Target Sublease Delivery Date for such Sublease Premises Portion, specifically: (A) the Building 41 Premises will be delivered on November 21, 2003, (B) the Building 43 West-1 Premises, the Building 43 West-2 Premises and the Building 43 East-2 Premises will be delivered on December 15, 2003, (C) the Building 40, Floor 2 Premises will be delivered on January 30, 2004, and (D) the Building 43 East-1 Premises will be delivered March 1, 2004. Thus, assuming the dates set forth in (A) through (D) are the Actual Delivery Dates for the related Sublease Premises Portion, the Sublease Rent Commencement Date would be the earlier of (x) the Subtenant Actual Occupancy Date and (y) (A) December 15, 2003 for the Building 43 East-2 Premises, (B) December 27, 2003 for the Building 41 Premises, (C) January 30, 2004 for the Building 43 West-1 Premises and the Building 43 West-2 Premises, (D) February 28, 2004 for the Building 40, Floor 2 Premises, and (E) March 1, 2004 for the Building 43 East-1 Premises.

5. Notwithstanding the Actual Delivery Date for the Building 43W-1 Premises, Subtenant hereby agrees that Sublandlord shall have exclusive use of the Lobby, the Halley Conference Room and the DaVinci Conference Room, located within the Building 43W-1 Premises, until December 22, 2003.

6. The second sentence of Paragraph 6.A of the Sublease is hereby amended to read in full as follows:

Such monthly installments of Sublease Base Rent shall be payable on or before the first (1st) day of each calendar month (without demand) commencing as of the following dates:

1. the Building 42 Sublease Rent Commencement Date, with respect to the Building 42 Sublease Base Rent,

2. the Building 41 Sublease Rent Commencement Date, with respect to the Building 41 Sublease Base Rent,

3. the Building 43 West-1 Sublease Rent Commencement Date, with respect to the Building 43 West-1 Sublease Base Rent,

4. the Building 43 West-2 Sublease Rent Commencement Date, with respect to the Building 43 West-2 Sublease Base Rent,

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5. the Building 40, Floor 1 Sublease Rent Commencement Date, with respect to the Building 40, Floor 1 Sublease Base Rent,

6. the Building 40, Floor 2 Sublease Rent Commencement Date, with respect to the Building 40, Floor 2 Sublease Base Rent,

7. the Building 43 East-1 Sublease Rent Commencement Date, with respect to the Building 43 East-1 Sublease Base Rent, and

8. the Building 43 East-2 Sublease Rent Commencement Date, with respect to the Building 43 East-2 Sublease Base Rent.

7. The second sentence of Paragraph 8.B of the Sublease is hereby amended to read in full as follows:

Prior to the first Sublease Rent Commencement Date for the Sublease Premises, Sublandlord shall deliver to Subtenant a copy of statements it has received from Master Landlord or its agent, supplemented, as necessary, with Sublandlord’s estimate of the amounts described in Paragraph 8(A)(iii) above that will become payable hereunder during the remainder of the calendar year 2003 with respect to the Building 42 Premises, the Building 41 Premises, the Building 43 West-1 Premises, the Building 43 West-2 Premises and the Building 43 East-2 Premises; similarly, prior to December 31, 2003, Sublandlord will deliver to Subtenant a copy of statements it has received from Master Landlord or its agent, supplemented, as necessary, with Sublandlord’s estimate of the amounts described in Paragraph 8(A)(iii) above payable hereunder with respect to each Sublease Premises Portion.

8. The first sentence of Paragraph 22.A of the Sublease is hereby amended to read in full as follows:

The parties’ intent is that in order to separate (x) the Building 43 West-1 Premises, the Building 43 West–2 Premises and the Building 43 East–2 Premises from (y) the Building 43 East-1 Premises, Sublandlord will construct a barrier on or before the Actual Delivery Date for the Building 43 West-1 Premises.

9. The first sentence of Paragraph 30 of the Sublease is amended and restated to read in full as follows:

30. BROKERS. Subtenant and Sublandlord warrant that they have had dealings with only Bailes & Associates (the “Broker”) and that they know of no other real estate broker or agent who is entitled to a commission in connection with this Sublease. A brokerage commission equal to $3,262,902 shall be paid by Sublandlord to the Broker as follows: (i) $2,756,585 shall be paid on the later of (x) December 31, 2003 and (y) the Actual Delivery Date of a Sublease Premises Portion such that Actual Delivery Dates shall have occurred for an aggregate of 225,000 rentable square feet or more, and (ii) $506,317 shall be paid on October 1, 2004.

10. Exhibits A-5 and A-6 to the Sublease are replaced in their entirety with Exhibits A-5, A-6, A-7 and A-8 attached hereto.

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11. This Amendment may be executed in counterparts, each of which shall be deemed an original, and all of which together shall constitute one and the same instrument.

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IN WITNESS WHEREOF, this Amendment is executed as of the date first written above.

SUBLANDLORD:		SUBTENANT:
SILICON GRAPHICS, INC.		GOOGLE INC. (successor to Google Technology Inc.)
By:	/s/    DEAN DROUGAS	By:	/s/    GEORGE REYES
Printed Name:	Dean Drougas	Printed Name:	George Reyes
Its:	Vice President, Facilities & Services	Its:	CFO
Dated:	December 17, 2003	Dated:	12/23/03

EX-10.09.2

Exhibit 10.09.2

AMENDMENT No. 2 TO SUBLEASE

AMENDMENT No. 2 to Sublease dated as of December 17, 2003 (this “Amendment”) by and between SILICON GRAPHICS, INC., a Delaware corporation, as Sublandlord, and GOOGLE INC., a Delaware corporation (successor to Google Technology Inc., a California corporation), as Subtenant.

WHEREAS, Sublandlord and Subtenant have entered into that certain Sublease dated as of July 9, 2003 (the “Original Sublease”), amended by Amendment No. 1 to Sublease dated as of November 18, 2003 (the “First Amendment”; the Original Sublease, as amended by the First Amendment, is referred to herein as the “Sublease”) for premises located at 1600 Amphitheatre Parkway, Mountain View, California 94043;

WHEREAS, the parties have agreed to certain changes relating to the use of the space in Building 43 housing the communications infrastructure;

NOW, THEREFORE, in accordance with the terms and conditions of the above-referenced Sublease, Sublandlord and Subtenant agree as follows (capitalized terms used but not defined herein shall have the meanings given to such terms in the Sublease):

1.    Paragraph 22 of the Original Sublease is amended to read in full as follows:

22. INITIAL CONSTRUCTION IN AND COOPERATION REGARDING BUILDING 43.

A.    Giving effect to the First Amendment, the new anticipated delivery dates for the Sublease Premises Portions in Building 43 are December 15, 2003 for the Building 43 West-1 Premises, the Building 43 West-2 Premises, and the Building 43 East-2 Premises, and March 1, 2004 for the Building 43 East-1 Premises. Thus, Sublandlord and Subtenant will be jointly occupying Building 43 between the Actual Delivery Date of the first Sublease Premises Portion located in Building 43 to be delivered and the Actual Delivery Date of the last Sublease Premises Portion located in Building 43 to be delivered.

B.    Each party agrees to cooperate and coordinate with the other party any construction activities in Building 43 so as to prevent interruption of the business activities of such other party, including without limitation (i) controlling noise during business hours, (ii) avoiding blocking stairwell and/or elevator access and (iii) preventing damage to electrical, mechanical and information technology infrastructure.

C.    The parties acknowledge that Sublandlord currently houses and maintains in Building 43 in the location depicted on Schedule 22.B (the “IT Area”) certain information technology and other connectivity equipment (including, without limitation, Sublandlord’s voice services, network services, outside plant fiber infrastructure, internal cabling infrastructure connecting the Building 40 Premises with the Building 43 East-1 Premises, and all fiber and copper physical connections) (collectively, “Sublandlord’s IT Equipment”). Until the Total Occupancy Date, the demise by Sublandlord to Subtenant of the Sublease Premises shall be subject to the following:

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(i) the Sublease Premises shall exclude the IT Area;

(ii) Sublandlord reserves a nonexclusive easement over and through the Sublease Premises in order to access the IT Area (but no other portion of the Sublease Premises) at all times and with no notice required; and

(iii) no construction by Subtenant shall be conducted prior to January 31, 2004 in and around the MDF/MPOE vault identified in Schedule 22.B, and, further all construction work conducted by Subtenant in and around the IT Area shall be approved by and coordinated with Sublandlord (Sublandlord’s approval shall not be unreasonably withheld, conditional or delayed) to prevent any interruption in Sublandlord’s systems, utilities and information technology network.

D.    Notwithstanding Paragraph 22.C(i) above, (i) Sublandlord hereby grants to Subtenant a nonexclusive license to use certain portions of the IT Area as [shall be designated in writing by Sublandlord] [described on Schedule 22.D hereto] (“Subtenant’s IT Area”) to house Subtenant’s equipment of the type described in the parenthetical appearing in Paragraph 22.C (collectively, “Subtenant’s IT Equipment”), (ii) Subtenant shall have unrestricted access (twenty-four hours a day, seven days a week) to the IT Area through the Total Occupancy Date in order to maintain, service and otherwise access Subtenant’s IT Equipment located in the Subtenant’s IT Area, and (iii) Sublandlord shall have unrestricted access (twenty-four hours a day, seven days a week) to the IT Area through the end of the Removal Period (defined in Paragraph 22.F below) in order to maintain, service, otherwise access and remove, in accordance with Paragraph 22.F, Sublandlord’s IT Equipment.

E.    In connection with the shared use of the IT Area by Sublandlord and Subtenant through the Total Occupancy Date, the Sublandlord and Subtenant agree from the date hereof through the Total Occupancy Date, as follows:

(i) Sublandlord and Subtenant shall share the environmental infrastructure (such as HVAC, power, lighting, and other building systems) (“IT Area Environmental Systems”) inside the IT Area. Neither Sublandlord nor Subtenant shall make any changes or upgrades to the IT Area Environmental Systems without prior written approval from the other party hereto;

(ii) Sublandlord and Subtenant each agree that it shall not perform or permit to be performed any construction that could reasonably be expected to impact the other’s IT Equipment and infrastructure. In addition, prior to commencing any construction work in the IT Area, each of Subtenant and Sublandlord agree to cooperate with each other in reaching a mutual written agreement to govern such construction;

(iii) Sublandlord agrees to continue to use the existing service and equipment provided by SBC. Sublandlord and

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Subtenant agree to share such existing SBC fiber, SBC equipment, existing cabling, fiber, and copper infrastructure inside the IT Area. Sublandlord agrees to control and support all fiber and copper infrastructure inside the IT Area for Subtenant;

(iv) Sublandlord shall continue to have the sole and exclusive right to run all fiber and copper physical connections inside the IT Area for both parties. Subtenant will provide Sublandlord at least 48 hours’ advance written notice of all fiber and copper physical connections it proposes to make;

(v) Neither Sublandlord nor Subtenant shall (or shall permit their contractors to) tap in or monitor the other’s communications traffic in any way or otherwise violate or breach the security systems the other has installed on their respective equipment; and

(vi) In the event either Sublandlord or Subtenant obtains knowledge that an emergency implicating health or safety issues has occurred, such party shall notify the other party hereto.

F.    Sublandlord may remove from the Sublease Premises, within sixty (60) days after the Total Occupancy Date (the “Removal Period”), all outside plant fiber, associated patch panels, and Sublandlord’s IT Equipment that terminates in the IT Area, including Sublandlord’s network and voice equipment. Any such property not so removed by the end of the Removal Period shall automatically and without further act become the property of Subtenant. Sublandlord shall repair any damage to Sublease Premises resulting from such removal.

2. This Amendment may be executed in counterparts, each of which shall be deemed an original, and all of which together shall constitute one and the same instrument.

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IN WITNESS WHEREOF, this Amendment is executed as of the date first written above.

SUBLANDLORD:		SUBTENANT:
SILICON GRAPHICS, INC.		GOOGLE INC. (successor to Google Technology Inc.)
By:	/s/    DEAN DROUGAS	By:	/s/    GEORGE REYES
Printed Name:	Dean Drougas	Printed Name:	George Reyes
Its:	Vice President, Facilities & Services	Its:	CFO
Dated:	December 17, 2003	Dated:	12/23/03

EX-10.09.3

Exhibit 10.09.3

LANDLORD-SUBTENANT AGREEMENT

(Amphitheatre)

THIS AGREEMENT (this “Agreement”) is made as of the 9th day of July, 2003, between WXIII/AMPHITHEATRE REALTY, L.L.C., a Delaware limited liability company (“Landlord”), and GOOGLE TECHNOLOGY INC., a California corporation (“Subtenant”), joined in (with respect to specified provisions) by SILICON GRAPHICS, INC., a Delaware corporation (“Tenant”).

WITNESSETH:

WHEREAS, The Goldman Sacks Group, Inc., a Delaware corporation (“GS”), and Tenant entered into that certain Commercial Lease (Amphitheatre), dated December 29, 2000, as amended by Amendment thereto, dated as of April 18, 2001, which was assigned by GS to Landlord by an Assignment and Assumption, dated as of May 22, 2001, for certain premises located at 1600 Amphitheatre Parkway, Mountain View, California (the “Premises”), said property being more particularly described in the said lease.

WHEREAS, concurrently herewith, Tenant and Subtenant are entering into that certain Sublease Agreement dated as of the date hereof (the “Sublease”), whereby Tenant will sublease to Subtenant, and Subtenant will sublease from Tenant, the Premises.

WHEREAS, concurrently herewith, Landlord, Tenant and Subtenant are entering into that certain Second Amendment to Commercial Lease (Amphitheatre), dated as of the date hereof (the “Second Amendment”, and the lease described in the first WHEREAS clause above, as amended as described in said WHEREAS clause and as amended by the Second Amendment, is hereinafter referred to as the “Amphitheatre Lease”). Capitalized terms used but not otherwise defined in this Agreement shall have the meanings assigned to them in the Amphitheatre Lease.

WHEREAS, concurrently herewith, Landlord and Subtenant are entering into that certain Nondisturbance and Attornment Agreement, dated as of the date hereof (the “Nondisturbance Agreement”).

WHEREAS, the parties intend by this Agreement to set forth their respective rights and obligations with respect to the Premises not otherwise contemplated in the Second Amendment or the Nondisturbance Agreement.

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

ARTICLE I

RIGHT OF FIRST OFFER

Section 1.1    Right of First Offer. (a) At any time and from time to time during the period commencing on the date hereof and continuing until the earlier of (i) such time as this Agreement is terminated in accordance with Section 3.2 below or otherwise and (ii) December 31, 2012 (such

period, the “Offer Period”), Landlord will not sell, transfer or otherwise dispose of the Interest (as such term is defined in Exhibit A hereto), or any portion thereof, unless it has first offered to sell the Interest, or such portion thereof, to Subtenant by written notice at an offer price to be set forth therein (the “Initial Offer Price”), which price will be established by Landlord in its sole discretion, together with the material terms and conditions of such proposed disposition by Landlord, including the proposed terms of closing of such disposition, such as the allocation of responsibility to pay closing and title costs (an “Offer”). The Offer shall indicate whether it is for the purchase of the entire Interest in the Premises or a portion thereof (the “Premises Offered”).

(b) Subtenant shall have thirty (30) days (the “Acceptance Period”) from the delivery of the Offer within which it may (i) deliver to Landlord a notice of its acceptance of the Offer (the “OP Response”) and (ii) pay to Landlord, by immediately available federal funds to an escrow account in the name of an escrow agent designated by Landlord (“Escrow Agent”), TWO MILLION DOLLARS ($2,000,000), which shall represent a deposit by Subtenant on account of the purchase pursuant to the Offer (the “OP Deposit”). The OP Response shall not be effective unless it is accompanied with the payment of the OP Deposit.

(c) If the OP Response is effectively and timely delivered, and the Ground Lessor Consent and Ground Lessor Release (each as defined below) shall have been delivered, Landlord shall convey title to the Premises Offered, and Subtenant shall accept and pay for the Premises Offered, at the Initial Offer Price and on the other terms and conditions set forth in the Offer. Time is of the essence of the performance of each of the parties’ respective obligations contained herein. In the event that the sale of the Premises Offered is not consummated solely because either the Ground Lessor Consent or Ground Lessor Release is not delivered (notwithstanding Subtenant’s compliance with Section 1.5), Landlord will promptly cause the Escrow Agent to return the OP Deposit, together with any interest accrued thereon, to Subtenant.

Section 1.2    Failure to Exercise. (a) If Subtenant (i) fails to deliver the OP Response to Landlord in an effective and timely manner (including payment of the OP Deposit) or (ii) expressly rejects the Offer within the Acceptance Period, then Landlord shall have the right, which shall continue until the first (1st) anniversary of the expiration of the Acceptance Period (said one year period referred to herein as the “First Conveyance Period”), to sell or otherwise dispose of the Premises Offered to any Person free and clear of any obligation to Subtenant pursuant to this Article I, so long as the purchase price to be paid in such sale is an amount equal to at least ninety percent (90%) of the Initial Offer Price and otherwise on terms that are in the aggregate not materially more favorable to the purchaser than those contained in the Offer.

(b) If the purchase price proposed to be paid by a third party for the Premises Offered during the First Conveyance Period is an amount less than ninety percent (90%) of the Initial Offer Price or is otherwise on terms that are in the aggregate materially more favorable to the purchaser than those contained in the Offer, then Landlord shall, by written notice to Subtenant, offer to sell the Premises Offered to Subtenant on the terms proposed with the third party (a “Second Offer”). Upon receipt of the Second Offer from Landlord, Subtenant shall have five (5) Business Days (the “Second Acceptance Period”) within which it may notify Landlord in writing of its acceptance of the Second Offer and its agreement to purchase the Premises Offered at the price and on the other

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terms set forth therein (the “Second OP Response”). The Second OP Response shall not be effective unless it is accompanied with the payment of the OP Deposit.

(c) If the Second OP Response is effectively and timely delivered, Landlord shall convey title to the Premises Offered, and Subtenant shall accept and pay for the Premises Offered, at the price and on the other terms and conditions set forth in the Second Offer.

(d) If Subtenant (i) fails to deliver the Second OP Response to Landlord in an effective and timely manner (including payment of the OP Deposit), or (ii) Subtenant expressly rejects the Second Offer within the Second Acceptance Period, Landlord shall have the right, which shall continue until the one hundred and eightieth (180th) day following the expiration of the Second Acceptance Period (such one hundred eighty (180) day period referred to herein as the “Second Conveyance Period”), to sell or dispose of the Premises Offered to any Person on substantially the same terms as were contained in the Second Offer.

(e) If, at the expiration of the First Conveyance Period (unless landlord delivered a Second Offer, in which case at the expiration of the Second Conveyance Period), Landlord shall have not sold or otherwise disposed of the Premises Offered on substantially the same terms as were contained in the Offer, or the Second Offer, as the case may be, Subtenant’s rights under Section 1.1 (subject to the limitations expressed herein) will be reinstated, and Landlord’s right to sell the Premises Offered shall be subject again to this Article I.

Section 1.3    Limitations on Right of First Offer. Subtenant’s rights under this Article I are subject to the terms of Article III.

Section 1.4    Default under Option Voids Right of First Offer. Subtenant’s rights under this Article I shall be void and of no further force and effect if Subtenant shall have exercised the Option as set forth in Article II below and shall have subsequently defaulted in its obligation to close pursuant thereto.

Section 1.5    Subtenant to Cooperate. Subtenant agrees that, at Landlord’s request, Subtenant shall cooperate with Landlord in Landlord’s attempt to obtain the Ground Lessor Consent and Ground Lessor Release.

ARTICLE II

PURCHASE OPTION

Section 2.1    Grant of Option. Landlord hereby grants to Subtenant an option (the “Option”) to acquire the Interest in accordance with and subject to the terms and conditions set forth herein, including this Article II and Articles III, IV and V and Exhibit A.

Section 2.2    Notice of Exercise. Subtenant may exercise the Option only by

(a) sending to Landlord written notice of Subtenant’s exercise (a “Notice of Exercise”) within the thirty (30) day period immediately prior to the earlier of (i) May 1, 2006 and (ii) the final day of the thirtieth (30th) month following the Sublease Commencement Date for the Building 42 Sublease Premises (as such terms are defined in the Sublease) (the “Option Period”)

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which notice, to be effective, must set forth the date (the “Option Closing Date”) for the conveyance of the Interest by Landlord to Subtenant (the “Option Closing”), which Option Closing Date shall be not less than thirty (30) nor more than forty-five (45) days after the date of service of the Notice of Exercise; provided, however, that each of Landlord and Subtenant will have the right to extend the closing date beyond the date set forth in the Notice of Exercise (but each party’s extension may not be for more than thirty (30) days in the aggregate), by delivering written notice of such extension to the other party, and

(b) paying to Landlord, in immediately available federal funds, TWO MILLION DOLLARS ($2,000,000), which shall represent a deposit by Subtenant on account of the purchase pursuant to the Option (the “Option Deposit”), and Landlord shall, within two (2) business days after the receipt of the Option Deposit, deliver such payment into an escrow which shall be established by Landlord with such title company any or other escrow agent as Landlord shall designate (with reasonably prompt notice thereafter to Subtenant).

Unless Subtenant shall deliver the Notice of Exercise together with the Option Deposit within the periods described in this Section 2.2, the Option shall become void and of no further force or effect. Time is of the essence of the performance of each of the parties’ respective obligations contained herein.

Section 2.3    Purchase Price. At the Option Closing, as a condition thereof, Subtenant shall pay Landlord, as the purchase price for the Interest, ONE HUNDRED AND SEVENTY MILLION DOLLARS ($170,000.000) (the “Option Price”), which shall be payable by immediately available federal funds. The parties will effect the Option Closing through the escrow contemplated in Section 2.2(b) hereof.

Section 2.4    Default under First Offer Voids Option. The Option shall be void and of no further force and effect if Subtenant shall have accepted an Offer or a Second Offer as set forth in Article I above and shall have subsequently defaulted in its obligation to close pursuant thereto.

ARTICLE III

LIMITATIONS ON OPTION AND TERMINATION

Section 3.1    Limitations on Option and Right of First Offer. (a) Subtenant’s rights under Articles I and II, and any title to be conveyed by Landlord thereunder, are and shall be subject and subordinate in all respects to each of the following:

(i)    that certain Ground Lease dated as of March 7, 1995, between the City of Mountain View, a municipal corporation, as landlord (the “Ground Lessor”), and Silicon Graphics Real Estate, Inc. (the “Original Ground Tenant”), a memorandum of which was recorded March 8, 1995 in the Original Records of Santa Clara County, as assigned by the Original Ground Tenant to GS by Assignment and Assumption of Ground Lease, dated as of December 29, 2000, which Assignment was recorded January 2, 2001, as assigned by GS to Landlord, by Assignment and Assumption of Ground Lease (Amphitheatre), dated as of May 22, 2001, and recorded June 6, 2001, as amended by First Amendment to Ground Lease (Amphitheatre) dated as of May 22, 2001 among Ground Lessor, GS and Landlord (collectively, the “Ground Lease”),

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(ii)    the Amphitheatre Lease,

(iii)    the Sublease,

(iv)    liens, encumbrances, defects or any other title matter or claims, if any, granted or permitted to be granted by Subtenant or Tenant, or any Person claiming by, through or under Subtenant or Tenant, or arising from any act or omission of Subtenant or Tenant, or any matter consented to by Subtenant or any agreement between Landlord and Subtenant, and any matter that does not materially and adversely affect the value of, or, as reasonably determined by Subtenant, Subtenant’s use of the Premises, and

(v)    the Permitted Exceptions (as defined below).

(b) Without limiting the effect of Section 3.l(a)(i), Subtenant’s rights under Articles I and II are subject to approval from the Ground Lessor and any Governmental Authority (as herein after defined) having jurisdiction over the Ground Lease whose approval is required under applicable law.

(c) Subtenant’s rights under Articles I and II shall be voidable, at the sole option of Landlord, if,

(i)    an Event of Default by Subtenant under the Sublease exists or Subtenant is in default in its obligations under Section 1.6(h)(iii) of the Second Amendment, (a) either at the time of exercise of the Option or at the time of the closing pursuant to said Option, in the case of Subtenant’s rights under Article II or (b) either at the time of acceptance of the Offer or Second Offer, as applicable, or at the time of the closing pursuant to such accepted Offer or Second Offer, as applicable, in the case of Subtenant’s rights under Article I, or

(ii)    (A) with respect to Subtenant’s rights under Article II:

(x) at any time prior to Option Closing Date, Subtenant shall have assigned its interest under the Sublease or

(y) as of the exercise of the Option or as of the Option Closing Date, more than 75% of the rentable area of the premises demised under the Sublease shall be subject to sub-sublease(s), and

(B) with respect to Subtenant’s rights under Article I,

(x) Subtenant shall have assigned its interest under the Sublease or

(y) as of the time that Landlord proposes to market its Interest (as evidenced by a notice from Landlord to Subtenant), more than 50% of the rentable area of the premises demised under the Sublease shall be subject to sub-sublease(s); in that event, Landlord shall not be required to comply with Article I for a period of one year following the giving of such

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notice and Landlord’s obligation to comply with Article I shall again be determined by reference to this clause (B), as well as the other provisions of this Agreement, at the end of such one-year period.

In determining the applicability of this clause (ii):

(w) an event or circumstance shall be characterized as an assignment by Subtenant if the same constitutes an assignment under the Amphitheatre Lease, as modified by the Second Amendment (subject, however, to clauses (x), (y) and (z) below);

(x) subleases to “Approved Users”, as defined in and to the extent permitted under the Second Amendment, shall not be considered as a sublease by Subtenant;

(y) neither (i) a sale of Subtenant’s stock pursuant to an initial public offering, as described in Section 1.8(c)(i) of the Second Amendment nor (ii) any of the transactions described in Section 1.8(c)(ii) of the Second Amendment shall be considered as an assignment or sublease by Subtenant;

(z) an assignment to a “Successor Entity as defined by and in accordance with the terms of Section 15.7(b) of the Amphitheatre Lease shall not be considered an assignment or sublease by Subtenant.

(d) Notwithstanding anything to the contrary herein, the provisions of Article I shall not apply to (i) any sale, assignment or conveyance of the Premises in foreclosure (or similar proceeding) of a mortgage or deed of trust or any assignment or conveyance in lieu of foreclosure thereof, and any such sale, assignment or conveyance shall extinguish all of Subtenant’s rights under Articles I and II, or (ii) any sale, assignment or conveyance of the Interest to a person or entity directly or indirectly controlling, controlled by or under direct or indirect common control with, or any general partner or managing member in, Landlord, provided that any such sale, assignment or conveyance shall not extinguish Subtenant’s rights under Articles I and II, which shall continue subject to the terms hereof.

Section 3.2    Termination of Rights Upon Third Party Sale. In the event that Landlord consummates the sale of the Premises Offered to a third party following Subtenant’s rejection or deemed rejection of an Offer or Second Offer, so long as Landlord has complied with the requirements hereof, Subtenant’s rights under Article I automatically shall terminate and be of no further force or effect. From time to time, at Landlord’s request, Subtenant will promptly execute, acknowledge and deliver to Landlord an instrument in recordable form confirming the status of Subtenant’s rights under Articles I and II, and, without limiting the foregoing, concurrently with any sale or circumstance described above in this Section 3.2, confirming the termination of Subtenant’s rights under Article I.

Section 3.3    Subordination. (a) This Agreement, and each of the rights created or granted herein, is subject and subordinate to each of the liens, security interests, mortgages, deeds of trust charges, claims, encumbrances, pledges or other similar encumbrances or financing arrangements that are Permitted Exceptions.

(b) “Permitted Exceptions” mean:

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(1) each of the title matters set form in the title insurance commitment for the Premises or the Premises Offered, as the case may be, attached to this Agreement as Exhibit B (the “Commitment”) and any additional liens or related title exceptions securing or relating to indebtedness incurred by Landlord after the date of the Commitment in connection with a refinancing or replacement of existing debt and in accordance with the terms of this Agreement; provided that, at the Option Closing, Landlord shall deliver to Subtenant the Interest free and clear of any lien in respect of indebtedness for borrowed money;

(2) the state of facts set forth in the land survey of the Premises or the Premises Offered, as the case may be, described in the Commitment or that an accurate survey as of the date hereof would disclose;

(3) all laws, regulations and ordinances including all environmental, building and zoning restrictions affecting the Premises Offered or the ownership, use or operation thereof adopted by any agency, bureau, commission, court, department, official, political subdivision, tribunal or other instrumentality of any government, whether federal, state or local, domestic or foreign (a “Governmental Authority”) having jurisdiction over the Premises Offered or the ownership, use or operation thereof, and all amendments or additions thereto now in effect or that may be in force and effect on the Closing Date;

(4) all unpaid personal property, real estate and excise taxes, and all water, sewer, utility, trash and other similar charges, in each case that are not yet due and payable as of the Closing Date but may become or give rise to a lien on all or any portion of the Premises Offered (it being understood that such items may be subject to apportionment at the Closing);

(5) each lease and other agreement for the present or future use or occupancy of any space at the Premises Offered;

(6) any liens, encumbrances or other defects or exceptions to title caused by Subtenant or Tenant or any of their respective affiliates, by any of their respective agents, employees or other representatives, or by Landlord or any of its affiliates or any of their respective agents, employees or other representatives at Subtenant’s prior written request.

Section 3.4    No Merger. The purchase of the Interests under either of the Option or the right of first offer shall not effect a merger of any of the estates of Landlord, Tenant or Subtenant with respect to the Premises.

ARTICLE IV

CLOSING UNDER THE OPTION

Section 4.1    Generally: Apportionments. (a) Except as may otherwise be expressly provided in this Article IV, this provisions of this Article IV shall apply exclusively to the Option Closing (and not to any closing as a result of a transaction between Landlord and Subtenant under Article I).

(b) In connection with a purchase by Subtenant pursuant to the Option, the following income and expenses shall be apportioned between Landlord and Subtenant in the manner customary

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in the city and state in which the Premises is located, as of 11:59 p.m. on the day preceding the Option Closing Date, and the parties agree to make the appropriate adjustment payment on the Option Closing Date to the extent the same may be applicable: real property taxes and assessments; personal property taxes; fuel oil; utility charges; water meter and sewer rents, rates and charges; levies; license and permit fees; parking revenues; license, permit and inspection fees; rents and any other amounts due from Tenant and any other tenants pursuant to leases (accrued and prepaid); and any other items which otherwise are customarily apportioned at real estate closings.

(c) If any of the amounts to be apportioned under Section 4.1(b) is not readily determinable as of the Option Closing Date, then, to the extent necessary, apportionments shall be based on the parties’ reasonable estimate thereof. Any errors or omissions in computing apportionments shall be corrected promptly after the same are discovered. Apportionments made on the basis of estimates shall be recalculated as soon as possible and any underpayment or overpayment by either Landlord or Subtenant shall be adjusted by suitable payment in cash as soon as possible thereafter. The obligations of this Section 4.1(c) shall survive the Option Closing.

Section 4.2    Payment of Expenses, Transfer Taxes etc. Except as otherwise provided in this Section 4.2 and any other provision hereof, each party shall be responsible for its own costs and expenses, including its own attorneys’ fees. If the Option Closing shall occur, Landlord shall pay the premiums in respect of CLTA leasehold title insurance coverage, and Subtenant shall pay the premiums for all other title insurance coverage (including endorsements) that Subtenant may request, as well as the cost of any survey it may obtain. Neither Landlord nor Subtenant shall be obligated to pay any fee or payment that may be required to obtain the Ground Lessor Consent or Ground Lessor Release, provided that Landlord and Subtenant, shall each pay 50 percent of any amounts payable to Ground Lessor in reimbursement of or compensation for Ground Lessor’s costs in considering the request to deliver the Ground Lessor Consent and Ground Lessor Release. Any transfer taxes owed by reason of the conveyance of the Interest pursuant to the Option shall be paid either by Landlord or Subtenant, or shared, in accordance with the prevailing custom in the city, county and state in which the Premises is located. Subject to the foregoing, Landlord and Subtenant shall take any and all actions necessary in order to comply with the provisions of transfer tax laws and regulations applicable to this Agreement or the conveyance of Interest, including the preparation, execution and filing of any and all affidavits and questionnaires required by any such law or regulation.

Section 4.3    Landlord’s Title and Other Matters. At the Option Closing, Landlord shall deliver to Subtenant an assignment (the “Assignment”), with covenant only against grantor’s acts, in recordable form conveying title to the Interest subject to those matters described in Sections 3.1 and 3.3 hereunder. The Premises shall be conveyed “AS IS”, “WHERE IS”, without any warranty, representation or recourse, expressed or implied, of any type whatsoever (except as aforesaid or as described below), all of which are hereby expressly disclaimed. At the Option Closing, Subtenant shall execute and deliver to Landlord a general release from any liabilities and obligations in respect of the Interest or the Premises arising from and after the date of the Option Closing (except to the extent that the liabilities or obligations arise out of a written agreement with Subtenant that expressly survives the Option Closing), whether arising under statute, law or equity, and Subtenant will expressly waive the benefits of Section 1542 of the California Civil Code (or any similar provision or principle of law).

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Section 4.4    Other Closing Payments and Deliveries. (a) At the Option Closing, Landlord shall (i) execute, deliver or cause to be delivered to Subtenant or its designee an affidavit of Landlord stating its U.S. taxpayer identification number and that it is a “United States person”, as defined by Section 7701(a)(30) of the Internal Revenue Code of 1986, as amended, and equivalent affidavits required under the law of the State of California, (ii) execute, deliver or cause to be delivered to Subtenant or its designee a certificate dated as of the Closing Date certifying that each of the representations and warranties of Landlord contained in this Agreement is true and correct in all material respects as if remade on and as of the Closing Date, (iii) deliver evidence reasonably satisfactory to Subtenant of the termination of service contracts entered into by Landlord with third parties in respect of the premises, except for such contracts that are terminable on less than thirty (30) days’ notice without any substantial termination payment, (iv) to the extent assignable to Subtenant under law and without undue burden or cost to the Landlord, execute and deliver an assignment to Subtenant of permits or licenses necessary for the use or operation of the Premises that are issued to or held by the Landlord, (v) to the extent assignable to Subtenant, execute and deliver an assignment to Subtenant of the letter of credit issued on behalf of Tenant to Landlord pursuant to the Amphitheatre Lease, subject to any prior drawings thereunder or other exercise of rights in respect thereof by Landlord, and (vi) deliver to Subtenant any letter any letter of credit issued on behalf of Subtenant and held by Landlord in respect of the Sublease, subject to any prior drawings thereunder or other exercise of rights in respect thereof by Landlord or Tenant.

(b) At the Option Closing, Subtenant (i) shall pay the Option Price as provided for in Section 2.3, adjusted in accordance herewith, (ii) shall order that the Option Deposit plus any interest accrued thereon be credited against the Option Price, and (iii) shall execute and deliver to Landlord a certificate dated as of the Closing Date certifying that each of the representations and warranties of Subtenant contained in this Agreement is true and correct in all material respects as if remade on and as of the Closing Date.

(c) At the Option Closing, Landlord and Subtenant, as applicable, shall take such actions and execute and deliver all such other documents or instruments as may be customary and commercially reasonable in order to consummate the transactions contemplated by this Agreement; provided that, neither party will be required to deliver any additional documents, agreements or instruments that increase, or could increase, in any material respect such party’s obligations or actual or potential liabilities in connection with the transfer contemplated herein.

Section 4.5    Conditions Precedent to the Obligation of Subtenant to Close. The obligation of Subtenant to consummate the Option Closing will be subject to the fulfillment, or the waiver by Subtenant, of each of the following conditions on or prior to the Option Closing Date (the date of any such consummation, the “Closing Date”):

(a) Landlord shall have delivered or caused to be delivered the documents and instruments that it is required to deliver pursuant to Sections 4.3 and 4.4.

(b) A nationally recognized title insurance company selected by Landlord and reasonably satisfactory to Subtenant shall be willing to issue, subject to receipt of the premiums therefor and recordation of the Assignment, an ALTA (or comparable) leasehold title insurance policy insuring the interest of Subtenant or its designee in the Premises subject only to the Permitted

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Exceptions and such other matters as are described in Sections 3.1 and 3.3, and any other liens or encumbrances identified to Subtenant prior to the date on which Subtenant delivered its Notice of Exercise, so long as Landlord did not cause such liens or encumbrances.

(c) All necessary transfer tax reports and related instruments required to be filed with any Governmental Authority in connection with the transfer of the Premises to the extent the same are to be completed by Landlord (subject to Subtenant’s performance of its obligations under Section 4.2).

(d) The representations and warranties of Landlord in Section 6.1 shall be true and correct in all material respects as of the Closing Date.

(e) Provided that the Amphitheatre Lease is still in effect, Tenant shall have delivered an estoppel certificate from the Tenant in respect of the Amphitheatre Lease in the form required to be delivered under the Amphitheatre Lease, provided that this condition shall be deemed satisfied so long as Tenant does not allege any material default on the part of Landlord under the Amphitheatre Lease; provided further, that in lieu of such estoppel certificate, Landlord shall have the right to deliver an indemnity in form and substance reasonably satisfactory to Subtenant from a sufficiently (in Subtenant’s reasonable discretion) creditworthy entity as to the absence of any such material default.

Section 4.6    Conditions Precedent to the Obligation of Landlord to Close. The obligation of Landlord to consummate the transactions contemplated herein is subject to fulfillment or waiver by Landlord of each of the following conditions on or prior to the Closing Date:

(a) Subtenant shall have delivered the Offer Price in the amount and form required herein and shall have otherwise executed and delivered the documents and instruments that it is required to deliver pursuant to Sections 4.3 and 4.4.

(b) All consents, waivers, approvals and authorizations necessary to enable Subtenant to consummate the transactions contemplated hereby shall have been obtained.

(c) The representations and warranties Subtenant in Article 6 shall be true and correct in all material respects as of the Closing Date.

(d) Ground Lessor shall have delivered to Landlord Ground Lessor’s irrevocable, unconditional written consent to Subtenant’s acquisition of the Interest (the “Ground Lessor Consent”) and release of GS, Landlord and its affiliates from liability or obligation under the Ground Lease and the Guaranties accruing from and after the closing date of the sale under Article I or II hereof (the “Ground Lessor Release”); as used herein, “Guaranties” shall mean, collectively, the (i) Guaranty, dated May 22, 2001, by GS, as guarantor in favor of Ground Lessor, and (ii) the Guaranty, dated May 22, 2001, by Whitehall Parallel Real Estate Limited Partnership XIII, a Delaware limited partnership, Whitehall Parallel Real Estate Limited Partnership XIV, a Delaware partnership, Whitehall Street Real Estate Limited Partnership XIII, a Delaware limited partnership, Whitehall Street Real Estate Limited Partnership XIV, a Delaware limited partnership, collectively, as guarantor, in favor of Ground Lessor.

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Section 4.7    Representations and Warranties. Each party agrees that, unless such party shall otherwise notify the other party prior to the Option Closing, the representations and warranties set forth in Article VI hereof shall also be true and correct in all material respects as of the Option Closing and that it shall not take any action that would cause any of its representations and warranties to be incorrect in any material respect as of the Option Closing.

ARTICLE V

RENEWAL OPTIONS IN FAVOR OF SUBTENANT

Section 5.1    Renewal Options. (a) Upon the expiration of the Amphitheatre Lease in accordance with its terms (or if the Amphitheatre Lease shall have been previously terminated by reason of Tenant’s default thereunder and the Sublease shall have become a direct lease between Landlord and Subtenant subject to and in accordance with the Nondisturbance Agreement, then upon the expiration of the Sublease Term, as defined in the Sublease, in accordance with its terms), Subtenant shall have the option (the “First Renewal Option”) to extend the Sublease Term for a period of five (5) years, commencing on January 1, 2013 and expiring on December 31, 2018 (the “First Renewal Term”) on the terms and conditions set forth in this Article V. Upon the exercise of the Renewal Option in respect of the First Renewal Term in accordance with the terms of this Article V and the commencement of the First Renewal Term, the Sublease shall become a direct lease between Landlord and Subtenant subject to and in accordance with the Nondisturbance Agreement (unless it shall have previously so become a direct lease in the manner described in the parenthetical of the first sentence of this Section 5.1(a)), and Tenant shall not be liable for the obligations of the Subtenant under the Sublease arising during the renewal terms.

(b) If Subtenant effectively exercised the First Renewal Option, Subtenant shall have a second option (the “Second Renewal Option” and, together with the First Renewal Option, the “Renewal Options”) to extend the Sublease Term for a period of five (5) years, commencing on January 1, 2019 and expiring on December 3l, 2024 (the “Second Renewal Term” and, together with the First Renewal Term, the “Renewal Terms”).

Section 5.2    Manner of Exercise. Each Renewal Term must be exercised, if at all, as to the entire Premises delivered by Tenant to Subtenant pursuant to the Sublease. Each Renewal Option must be exercised, if at all, by written notice from Subtenant to Landlord given not less than twelve (12) months prior to the expiration of the original Sublease Term (in the case of the First Renewal Term), and not less than twelve (12) months prior to the expiration of the First Renewal Term (in the case of the Second Renewal Term).

Section 5.3    Terms of Renewal. Each Renewal Term shall be upon the same terms and conditions as the original Sublease Term, except that the Renewal Options shall be limited as stated in this Article V to two (2) successive 5-year terms and except that the Base Rent applicable to the relevant Renewal Term shall be equal to the Prevailing Market Rent as of the commencement of that Renewal Term, as determined pursuant to Exhibit D.

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Section 5.4    Limitations on Renewal Rights. Subtenant’s rights under this Article V are subject to the following:

(a) Subtenant’s rights under Article V shall be void, at the sole option of Landlord, if an Event of Default by subtenant under the Sublease exists, either at the time of exercise of the Renewal Option or at the commencement of the Renewal Term in question.

(b) Subtenant’s rights under Section 5.1(b) shall be void, at the sole option of Landlord, if

(i) Subtenant shall have assigned its interest under the Sublease, or

(ii) either at the time of exercise of the Second Renewal Option or at the commencement of the Second Renewal Term, more than 75% of the rentable area of the premises demised under the Sublease shall be subject to sub-sublease(s), and the provisions of clauses (w) through (z) of Section 3.1(c)(ii) shall be utilized in determining the applicability of this clause (ii).

(c) Subtenant’s rights under this Article V are further subject and subordinate to the provisions of Article III.

(d) Subtenant’s rights under this Article V shall be void and of no further force and effect if Subtenant shall have exercised its right of first offer as set forth in Article I above or the Option as set forth in Article II above and in either case shall have subsequently defaulted in its obligation to close pursuant thereto.

Section 5.5    Tenant’s Relinquishment of its Renewal Rights. Tenant hereby relinquishes the renewal options set forth in Section 3.2 of the Lease, such that said Section 3.2 is deemed deleted from the Lease from and after the date hereof as if it were never included in the Lease. Tenant is executing this Agreement to acknowledge this Section 5.5.

ARTICLE VI

Section 6.1    Representations and Warranties. Each party hereby represents and warrants to the other as of the date hereof as follows:

(a) Authority, Binding Obligation, Etc. Subject to the matters described in Article III, (i) such party has the full right, power, capacity and authority to execute and deliver this Agreement and to perform its obligations under Articles II and IV, and (ii) this Agreement has been duly and validly executed and delivered by such party and constitutes its legal, valid and binding agreement, enforceable against such party in accordance with its terms, except as such enforcement may be limited by bankruptcy, conservatorship, receivership, insolvency, moratorium or similar laws affecting creditors’ rights generally, and to general principles of equity.

(b) Litigation. Except as disclosed on Schedule 1, such party is not a party to any pending litigation or proceeding by any Person against such party with respect to, or against or

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potentially affecting the performance of its obligations under this Agreement, nor has any such action been threatened against such party in writing.

(c) Insolvency. There are no attachments, executions or assignments for the benefit of creditors, or voluntary or involuntary proceedings in bankruptcy, or under any other debtor relief laws, contemplated by or pending or threatened against such party.

Section 6.2    Landlord Estoppel. Concurrently herewith, Landlord is executing and delivering an estoppel in substantially the form attached hereto as Exhibit C.

Section 6.3    Landlord Covenant. Landlord will use reasonable diligent efforts to cause Ground Lessor to deliver to Subtenant, as soon as reasonably possible following the date of this Agreement, a subordination, nondisturbance and attornment agreement in form and substance reasonably satisfactory to Subtenant, provided that neither Landlord nor Subtenant shall have any obligation to pay any fee or other payment that may be required to obtain such an agreement, except as provided in Section 7.8(b) below.

Section 6.4    Subtenant Recordation. At Subtenant’s request, Landlord will promptly execute, acknowledge and deliver to Subtenant the Memorandum of Recordation in the form attached hereto as Exhibit E.

ARTICLE VII

MISCELLANEOUS

Section 7.1    Effectiveness. This Agreement shall come into full force and effect upon (i) the delivery of a written approval of the Second Amendment by the current holder of the loan (“Lender”) made pursuant to that certain Loan Agreement, dated as of July 2, 2002 (the “Loan Agreement”), by and between Landlord and German American Capital Corporation pursuant to Sections 8.7 and 20.2.2 of the Loan Agreement and (ii) the delivery by Lender to Subtenant of a nondisturbance and attornment agreement in form and substance reasonably satisfactory to Subtenant (the latter of such two deliveries, the “Effective Date”). If the Effective Date shall have not occurred on or before July 31, 2003, then this Agreement, as well as the Second Amendment and the Sublease, shall terminate except for such provisions as by their terms are intended to survive.

Section 7.2    Termination. Upon the termination of the Sublease, including but not limited to by reason of Subtenant’s default thereunder, this Agreement and the rights and options granted hereby shall automatically terminate and be of no further force or effect. Concurrently with such termination, and any time subsequent thereto, Subtenant agrees that it will promptly execute, acknowledge and deliver to Landlord an instrument in recordable form confirming the termination of Subtenant’s rights hereunder.

Section 7.3    Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed an original, and all of which together shall constitute one and the same instrument.

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Section 7.4    Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of California applicable to contracts made and to be performed wholly within the State of California.

Section 7.5    Waiver of Jury Trial. Landlord and Subtenant each hereby voluntarily and knowingly waive and relinquish their right to a trial by jury in any action, proceeding or counterclaim brought by either against the other on any matter whatsoever arising out of or in any way connected with this Agreement, the relationship of Landlord with Subtenant, or Subtenant’s use or occupancy of the Premises, including any claim of injury or damage, and any emergency and other statutory remedy with respect thereto.

Section 7.6    Validity. If any provision of this Agreement or the application thereof to any person, entity or circumstances shall, to any extent, be invalid or unenforceable, the remainder of this Agreement, or the application of such provision to persons, entities or circumstances other than those as to which it is invalid or unenforceable, shall not be affected thereby, and each provision of this Agreement shall be valid and be enforced to the full extent permitted by law.

Section 7.7    Modifications. Neither this Agreement nor any term or provisions hereof may be changed, waived, discharged or terminated orally, and no breach thereof shall be waived, altered or modified, except by a written instrument signed by the parties hereto.

Section 7.8    Fees and Costs. (a) If either party hereto fails to perform any of its obligations under this Agreement, then the defaulting party shall pay any and all costs and expenses incurred by the other party on account of such default and/or in enforcing or establishing its rights hereunder, including, without limitation, court costs and reasonable attorneys’ fees and disbursements (but excluding any special, indirect or consequential damages). Any attorneys’ fees and other expenses incurred by either party in enforcing a judgment in its favor under this Agreement shall be recoverable in accordance with the immediately preceding sentence of this Section 7.7 separately from and in addition to any other amount included in such judgment, and such attorneys’ fees obligation is intended to be severable from the other provisions of this Agreement and to survive and not be merged into any such judgment.

(b) All costs incurred in connection with obtaining a subordination, nondisturbance and attornment agreement from Ground Lessor and any lender shall be borne as follows: (i) with regard to the Ground Lessor, all costs shall be split equally between Landlord and Subtenant; (ii) with regard to any lender, the costs shall be borne by the Landlord.

Section 7.9    Notices. Notices or other communications given or required to be given under this Lease shall be effective only if rendered or given in writing, sent by certified mail with a return receipt requested, or delivered in person or by reputable overnight courier (e.g., Federal Express, DHL, etc.) or by telecopier or facsimile (with confirmation by one of the other methods specified herein).

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If such notice shall be addressed to Landlord, the address of Landlord is:

WXIII/AMPHITHEATRE REALTY, L.L.C.

c/o Whitehall Street Real Estate Limited Partnership

85 Broad Street

New York, NY 10004

Attention: Chief Financial Officer

with a copy to:

ARCHON GROUP

100 Crescent Court

Dallas, TX 75201

Attention: Will Mundinger

LEGACY PARTNERS

4000 East 3rd Avenue

Foster City, CA 94404

Attention: Steve Dune and Darleen Barnes

SULLIVAN & CROMWELL LLP

125 Broad Street

New York, NY 10004

Attention: Arthur S. Adler

If such notice shall be addressed to Subtenant, the address of Subtenant is:

2400 Bayshore Parkway

Mountain View, CA 94043

Attention: Director of Facilities

with a copy to:

2400 Bayshore Parkway

Mountain View, CA 94043

Attention: Legal Department

and:

SHARTSIS, FRIESE AND GINSBURG LLP

One Maritime Plaza, Suite 1800

San Francisco, CA 94111

Attention: Jonathan M. Kennedy

Any such notice or other communication shall be deemed to have been rendered or given five (5) days after the date mailed, if sent by certified mail, or upon the date of delivery in person or by courier (unless such delivery date is a weekend or holiday, in which event notice shall be deemed given on the next succeeding business day), or when delivery is attempted but refused.

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

WXIII/AMPHITHEATRE REALTY, L.L.C. a Delaware limited liability company By: Whitehall Parallel Real Estate Limited Partnership XIII, its managing member By: WH Parallel Advisors, L.L.C. XIII, its general partner
	By:	/s/ Jerome S. Karr
		Name: Jerome S. Karr Title: Vice President
GOOLE TECHNOLOGY INC., a California corporation
By:	/s/ George Reyes
	Name: George Reyes Title: Chief Financial Officer

SILICON GRAPHICS, INC., a Delaware corporation,

solely for purposes of Sections 3.4, 5.5 and 6.1

By:	/s/ Michael L. Hirahara
	Name: Michael L. Hirahara Title: Vice President, Facilities and Service

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EX-10.09.4

Exhibit 10.09.4

SECOND AMENDMENT TO

COMMERCIAL LEASE (AMPHITHEATRE)

THIS SECOND AMENDMENT TO COMMERCIAL LEASE (AMPHITHEATRE) (this “Amendment”) is made as of the 9th day of July, 2003, by WXIII/AMPHITHEATRE REALTY, L.L.C., a Delaware limited liability company (“Landlord”), GOOGLE TECHNOLOGY INC., a California corporation (“Subtenant”) and SILICON GRAPHICS, INC., a Delaware corporation (“Tenant”).

W I T N E S S E T H:

WHEREAS, The Goldman Sachs Group, Inc., a Delaware corporation (“GS”), and Tenant, entered into that certain Commercial Lease, dated December 29, 2000, as amended as of April 18, 2001 (as so amended, the “Lease”), which was assigned by GS to Landlord by an Assignment and Assumption, dated as of May 22, 2001, for certain premises located at 1600 Amphitheatre Parkway, Mountain View, California (the “Premises”), said property being more particularly described in the Lease. Capitalized terms used but not otherwise defined in this Agreement shall have the meanings assigned to them in the Lease;

WHEREAS, concurrently herewith, Tenant and Subtenant are entering into that certain Sublease Agreement, dated as of the date hereof (the “Google Sublease”), whereby Tenant will sublease to Subtenant, and Subtenant will sublease from Tenant, the Premises;

WHEREAS, concurrently herewith, Landlord, Tenant and Subtenant are entering into that certain Landlord-Subtenant Agreement (Amphitheatre), dated as of the date hereof (the “Landlord-Subtenant Agreement”), and Landlord and Subtenant are entering into that certain Nondisturbance and Attornment Agreement, dated as of the date hereof (the “Nondisturbance Agreement”);

WHEREAS, in connection with the execution of the Google Sublease, Landlord is willing to modify certain terms of the Lease as the same would apply to Subtenant, and, in certain respects, to amend the Lease, in each case all as more particularly set forth herein;

NOW, THEREFORE, in consideration of the premises, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

Article I.

Amphitheatre Lease Amendments

        Subject to Article II hereof:

1.1. Parking. With respect to the seventh (7^th) sentence of Section 2.3 of the Lease, the following shall be added after the initial occurrence of the word “Tenant” therein: “or Subtenant, or Subtenant’s subtenants or assignees.”

1.2. Tenant’s Relinquishment of its Renewal Rights. Tenant hereby relinquishes the renewal options set forth in Section 3.2 of the Lease, such that said Section 3.2 is deemed deleted from the Lease from and after the date hereof as if it were never included in the Lease. At Landlord’s request, Tenant will promptly execute, acknowledge and deliver to Landlord an instrument in recordable form confirming such termination of Tenant’s renewal options in Section 3.2 of the Lease.

1.3. Operating Expenses.

(a) With respect to Section 5.2 of the Lease,

        (i) Landlord will, concurrently with its delivery to Tenant of any Landlord’s Expense Statement, deliver a duplicate of Landlord’s Expense Statement to Subtenant.

        (ii) Following the Substantial Occupancy Date (as defined in the Google Sublease), Subtenant may pay Operating Expenses directly to parties entitled thereto to the extent that Tenant is entitled to do so under the Lease.

        (b) With regard to Section 5.1(b)(xi) of the Lease, it is agreed that (i) as of the date hereof, 1.00% per annum of the annual Base Rent and Tenant’s Share of Operating Expenses payable under the Lease by Tenant to Landlord (and expressly excluding those Operating Expenses payable directly by Tenant to third parties) constitutes a “commercially reasonable rate” as contemplated in said Section 5.1(b)(xi) and (ii) the same shall not be subject to increase or decrease to reflect changing market conditions until after the first anniversary of the date hereof.

1.4. Ground Lease. Section 6.2(a) of the Lease is hereby deleted in its entirety and replaced with the following:

        “(a) Tenant, Subtenant and/or Subtenant’s subtenants or assignees shall, at Tenant’s sole cost and expense, throughout the Term, comply with, satisfy and cause the Premises to comply with and satisfy, each of the provisions of the Ground Lease within the period of time and in the manner required by the Ground

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Lease, excluding, however the following provisions of the Ground Lease: Article 1 (Definitions) (unless such definitions are used in the incorporated sections), Article 2 (Demise, Term and Surrender), Article 3 (Rent), Sections 4.4, 4.5.1, 4.5.3, 4.5.9.1, 4.5.9.2, and 4.5.9.3 of Article 4 (Use), Article 5 (Payment of Real Property Taxes and Facility Charges), Sections 6.1, 6.2, and 6.3 of Article 6 (Construction of Improvements and Mechanic’s Liens), Sections 7.l.1, 7.4 and 7.5 of Article 7 (Insurance and Indemnity), Article 9 (Condemnation), Article 10 (Default and Remedies), Article 11 (Assignment and Subletting), Article 12 (Transfer of Leased Premises by Landlord), Article 13 (Tenant Mortgages) and Article 14 (General Provisions, except to the extent relevant to the incorporated sections). Tenant shall not do, permit, suffer or refrain from doing anything which is Tenant’s obligation under this Lease to do, as a result of which there could be a default under the Ground Lease. Notwithstanding anything to the contrary contained in this Lease, in the event the time given to Landlord as tenant under the Ground Lease is shorter than the time given to Tenant by this Lease to perform or do the same act or thing, then Tenant shall perform or do said thing within the time specified in the Ground Lease.”

1.5. Prohibited Uses. With respect to the last sentence of Section 7.2 of the Lease (prohibiting firearms on the Premises), no explosives or firearms shall be brought into the Premises, except that firearms may be carried by personnel of security firms retained by Landlord, Tenant or Subtenant for the provision of security services to the Premises. Any security firm hired by Tenant will be a Tenant Agent and any security firm hired by Subtenant shall be a Subtenant Representative (as such term is defined in the Google Sublease) for purposes of indemnification obligations of Tenant and Subtenant under the Lease and the Google Sublease.

1.6. Alterations.

        (a) With respect to Article 10 of the Lease, Landlord and Tenant agree that Subtenant may make requests for consents or approvals or other submissions in respect of proposed Alterations directly to Landlord and, in such case, will concurrently with its delivery to Landlord, deliver a duplicate to Tenant. Landlord shall respond directly to Subtenant in connection with such requests or other submissions and, in such case, if such response is in writing, will concurrently with the delivery of such response to Subtenant, deliver a duplicate to Tenant. Any Alteration with respect to which Subtenant has procured Landlord’s approval shall not require the approval of Tenant.

        (b) In requesting Landlord’s approval for an Alteration (or at any time thereafter), Subtenant shall separately identify which Alterations it wishes Landlord to designate as Non-Severable Material Alterations for purposes of insuring the same under the property insurance for the Building to be procured by Landlord pursuant to the Lease; without affecting Landlord’s approval right pursuant to Section 1.6(c)(ii) hereof, Landlord shall have no responsibility to

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regard any Alteration as a Non-Severable Material Alteration or to so insure the same unless so proposed by Tenant or Subtenant (as applicable).

        (c) With respect to Section 10.1 of the Lease:

        (i) Landlord shall not unreasonably withhold its approval to any Alteration proposed to be made by Subtenant (or Subtenant’s subtenants or assignees) (regardless whether the same is a Material Alteration), and

        (ii) If Tenant or Subtenant proposes that Landlord designate a Material Alteration as a Non-Severable Material Alteration pursuant to Section 1.6(b) above, Landlord, in its reasonable discretion, will make its determination in respect of such proposal (and deliver to Tenant or Subtenant, as applicable, notice of such determination) concurrently with Landlord’s approval of the Material Alteration in question; if Landlord fails to timely make such determination, then the Alterations proposed by Tenant or Subtenant, as applicable, shall be deemed to be Non-Severable Material Alterations; if an Alteration is not designated (and not deemed to be designated) a Non-Severable Material Alteration, then Landlord shall nevertheless have the right at any time subsequent to so designate it, provided that, if Tenant’s or Subtenant’s property insurance policy is then covering such Non-Severable Material Alteration, then until the expiration of such policy, Operating Expenses shall be adjusted so as to exclude therefrom the cost of insuring such Non-Severable Material Alteration under Landlord’s property insurance policy.

        (d) With respect to Section 10.2(a) of the Lease, Landlord shall not unreasonably withhold its approval of plans and specifications for any Material Alteration, and the procedure set forth in said Section 10.2(a) for Landlord’s review and approval or deemed approval of Alterations shall apply to Material Alterations; provided that the 10 business day periods and 5 business day periods referred to therein shall in each instance be deemed to be, respectively, 20 business day periods and 10 business day periods in respect of Material Alterations.

        (e) With respect to Section 10.2(b) of the Lease, Alterations by Tenant or Subtenant shall not require either Tenant or Subtenant to provide Landlord with the letter of credit or other security prescribed in said 10.2(b), provided, upon the completion of the Alterations in accordance with Article 10 of the Lease, Landlord shall nevertheless be entitled to the items described in clauses (B)(x), (y) and (z) of the third sentence of said Section 10.2(b).

        (f) With respect to Section 10.2(c) of the Lease, Tenant’s obligation to procure the insurance coverage described therein may be satisfied, in the event of Alterations to be constructed by Subtenant, by Subtenant’s procurement of such coverage.

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        (g) With respect to Section 10.3 of the Lease:

        (i) Clause (ii) of Section 10.3(a) of the Lease is hereby amended and restated as follows: “(ii) Landlord reasonably determines that the Alteration in question is not consistent with or typical for general multi-tenanted office, technology, research and development facilities in the vicinity of the Premises (including, without limitation, by reason of where in the Premises the Alteration is to be located or the style or materials in which the Alteration is to be executed) or that the Alteration in question is unique to the occupant, such as signage identifying the occupant.” The sentence in the Lease following said clause (ii) is hereby deleted.

        (ii) The following are examples, but without limitation, of Alterations to the interior of the Building that the Landlord may require Tenant or Subtenant to restore pursuant to Section 10.3(a)(ii) of the Lease, as amended by Section 1.6(g)(i) above: (1) a theatre, (2) an oversized computer room with raised flooring (e.g., as of the date hereof, a computer room in excess of 300 square feet of Rentable Area), and (3) a “call center” with a capacity in excess of what is customary for typical office usage. The following are examples, but without limitation, of Alterations to the interior of the Building that Landlord may not require Subtenant to restore pursuant to Section 10.3(a)(ii) of the Lease, as amended by Section 1.6(g)(i) above: (w) the upgrade of existing facilities within the Building which have not previously been designated by Landlord for restoration if such upgrade does not materially change the character of the facilities in question, (x) the construction of individual offices that are of a type not materially inconsistent with the type of offices typically found in general multi-tenanted office, technology, research and development facilities in the vicinity of the Premises, (y) the installation of reasonably typical cubicles to house Subtenant’s employees, and (z) the construction of a reasonable quantity of conference or meeting rooms that are of a size reasonably consistent with the range of conference room sizes typically found in general multi-tenanted office, technology, research and development facilities in the vicinity of the Premises. Further, Landlord agrees that it shall not require Subtenant to restore pursuant to Section 10.3(a)(ii) of the Lease, as amended by Section 1.6(g)(i) above, Alterations to the exterior of the Building if the same is an upgrade or improvement upon existing exterior improvements consistent with the design and use of such existing exterior improvement (for example, an upgrade of the volleyball court) or is an improvement that is a typical amenity in multi-tenanted general office, technology, research and development facilities in the vicinity of the Premises.

        (iii) The dispute resolution procedure described in Section 10.3(b) of the Lease shall apply to all Alterations (as opposed to only Permitted Alterations).

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        (iv) Landlord acknowledges that, as of the date hereof, except as set forth in Exhibit A attached hereto, Tenant has not performed any Alterations which Landlord has, pursuant to the provisions of Section 10.3 of the Lease, required to be restored at the expiration or termination of the Lease.

        (v) Landlord agrees that if Subtenant restores the existing laboratory and research space identified on Exhibit A to standard multi-tenant office space, as determined in Landlord’s reasonable discretion, Landlord will return to Tenant the security deposited by Tenant in connection with its construction of such laboratory and research space (except to the extent that Landlord has the right to utilize such deposit in connection with other obligations owed to Landlord by Tenant).

        (vi) Regardless whether Landlord shall require Subtenant under Section 10.3(a) of the Lease to restore an Alteration made by Subtenant, Landlord agrees that it shall not require Tenant to effect such restoration of an Alteration approved by Landlord and made by Subtenant.

        (h) Further, with respect to Section 10.3(c) of the Lease:

        (i) Reference is hereby made to that certain letter agreement, dated as of the date hereof, between Landlord and Subtenant, which sets forth certain financial tests in respect to Subtenant’s financial condition (such letter agreement, the “Financial Tests Letter Agreement”).

        (ii) Landlord agrees, for the benefit of Subtenant, that so long as, but only for so long as, (x) Subtenant satisfies each of the financial tests set forth in the Financial Tests Letter Agreement, and (y) Subtenant complies with its obligations under Sections 1.12(a) and 1.12(b), Landlord will not require the deposit of security pursuant to Section 10.3(c) of the Lease to secure the obligation to restore Alterations undertaken by Subtenant.

        (iii) Within thirty (30) days after delivery of any financial statement or certificate to be delivered under Section 1.12(a) or 1.12(b) that shows that Subtenant is not satisfying each of the financial tests set forth in the Financial Tests Letter Agreement, or within fifteen (15) days after notice from Landlord to Subtenant of Subtenant’s default in its obligation under Sections 1.12(a) and 1.12(b) and Subtenant’s failure to cure such default within such fifteen (15) day period, Subtenant shall either (x) deliver to Landlord a letter of credit as required under Section 10.3(c)(i) of the Lease or (y) grant to Landlord a perfected, first priority security interest in a banking account that holds cash in the amount of security required under Section 10.3(c), pursuant to a security agreement in form and substance reasonably satisfactory to Landlord.

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1.7. Insurance.

        (a) With respect to the insurance coverage required to be maintained pursuant to Section 14.2(b) of the Lease, so long as Subtenant (or Tenant and Subtenant together) procures coverage in compliance with the requirements of Section 14.2(b) and Section 14.3 of the Lease, Tenant will not be required to maintain such insurance coverage.

        (b) The provisions of Section 14.5 of the Lease are deemed revised so that references therein to “the parties” shall be deemed to refer to Landlord, Tenant and Subtenant, and references to “Landlord and Tenant” shall be deemed to refer to “Landlord, Tenant and Subtenant.”

1.8. Assignment and Subletting.

        (a) With respect to Section 15.1 of the Lease:

        (i) Section 15.1 of the Lease shall be applicable to Subtenant, and references therein to Tenant shall also mean Subtenant, references therein to Lease shall also mean the Google Sublease and references therein to “Sublease” shall also mean a sub-sublease by Google.

        (ii) The phrase “which Landlord may withhold in its sole and absolute discretion” in the final sentence of Section 15.1 of the Lease is deleted and replaced with the phrase “which Landlord shall not unreasonably withhold.”

        (iii) Landlord and Tenant agree that, without the necessity of obtaining the further consent of Landlord or Tenant, Subtenant shall be permitted from time to time to permit its clients and/or venture partners (each, an “Approved User”) to temporarily occupy space concurrently with Subtenant within the Premises in order to make such Approved User more accessible to Subtenant, provided that the Approved Users shall not occupy, in the aggregate, more than fifteen percent (15%) of the rentable area of the Premises. Subtenant shall notify Landlord and Tenant of the name of each Approved User within 10 business days of such Approved User’s initial occupancy of space within the Premises, as well as the approximate square footage occupied by such Approved User and rent to be paid by such Approved User, and shall, on January 2 of each year, furnish Landlord and Tenant with a list of all Approved Users, square footage occupied by each and the rent payable by each. If any Approved User occupies any portion of the Premises as described herein, it is agreed that (i) the Approved User must comply with all provisions of this Amendment and the Google Sublease, and a default hereunder or thereunder by any Approved User shall be deemed a default by Subtenant under this Amendment and the Google Sublease; (ii) in no event shall any

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use or occupancy of any portion of the Premises by any Approved User release or relieve Subtenant from any of its obligations under this Amendment and the Google Sublease; and (iii) in no event shall the occupancy of any portion of the Premises by any Approved User be deemed to create a landlord/tenant relationship between landlord and such Approved User, and, in all instances, Subtenant shall be considered the sole tenant under this Amendment and the Google Sublease notwithstanding the occupancy of any portion of the Premises by an Approved User.

        (iv) Subtenant (failing which Tenant) shall perform the obligations and cure the defaults of any subtenant of Subtenant or any Person in the Premises claiming by, through or under Subtenant (including any Approved User).

        (b) Subject to the following terms, Sections 15.2, 15.3 and 15.4 of the Lease shall be applicable to Subtenant and the Google Sublease, and references therein to Tenant shall also mean Subtenant, references therein to Lease shall also mean the Google Sublease and references therein to “Sublease” shall also mean a sub-sublease by Google:

        (i) Subtenant may make requests for consents or approvals or other submissions directly to Landlord and, in such case, will concurrently with its delivery to Landlord, deliver a duplicate to Tenant. Landlord may respond directly to Subtenant in connection with such requests and, in such case, if a written response is required, will concurrently with its delivery to Subtenant, deliver a duplicate to Tenant. Tenant and Subtenant hereby agree as between themselves, with respect to any Assignment or Sublease proposed by Subtenant, Landlord’s determination to grant or withhold consent shall be binding upon Tenant and any consent granted or withheld by Tenant in contradiction thereof shall be invalid and without effect; provided, however, that any proposed Sublease or Assignment by Subtenant which would otherwise require the consent of Landlord in addition to the consent of Sublandlord (x) that results from a “Change in Control” or (y) with respect to which Landlord shall have consented but has waived a material requirement set forth in the Lease applicable to all Assignments and/or Subleases (as applicable), such as those set forth in Section 15.4(h), 15.6 and 15.8 of the Lease, shall nonetheless be subject to the consent (or deemed consent) of Tenant. The provisions of the foregoing sentence are intended to be and shall be construed as an agreement between Tenant and Subtenant and shall not impose any obligation on Landlord in favor of Tenant or Subtenant or permit any defense or offset or other right on the part of Tenant in respect of Landlord.

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        (ii) Tenant agrees to deliver simultaneously to Landlord and Subtenant any notice in which Tenant’s consent to a proposed Sublease or Assignment by Subtenant is granted or denied. If Tenant fails to respond to any request for consent to a proposed Assignment or Sublease (and to provide a concurrent copy to Landlord) within seven (7) business days following Subtenant’s delivery of such request, Subtenant shall have the right to provide Tenant with a second request for consent. Subtenant’s second request for consent must specifically state that Tenant’s failure to respond (and to concurrently deliver a copy of such response to Landlord) within a period of three (3) business days shall be deemed to be an approval of the second request for consent. If Tenant shall fail to so respond to such second notice (and to provide a concurrent copy of the Lease to Landlord) within such three (3) business day period the Assignment or Sublease for which Subtenant has requested consent shall be deemed to have been approved by Tenant.

        (iii) Subtenant shall not be obligated under Section 15.3 of the Lease to pay Excess Rents, it being agreed that the provision of Section 9 of the Sublease shall govern with respect to the amount of Excess Rent to be paid by Subtenant to Sublandlord under the Google Sublease. Further, for the avoidance of doubt, rent received from Approved Users shall be subject to Section 9 of the Google Sublease.

        (c) Subject to the following terms, Sections 15.7(a), 15.7(b), 15.8 and 15.9 of the Lease shall be applicable to Subtenant and the Google Sublease, and references therein to Tenant shall also mean Subtenant, references therein to Lease shall also mean the Google Sublease and references therein to “Sublease” shall also mean a sub-sublease by Google:

        (i) A Change in Control shall not be deemed to have occurred in respect of Subtenant by reason of the consummation of an initial public equity offering of Subtenant, provided that, following the consummation of an initial public offering of Subtenant, a Change in Control will be deemed to have occurred if there shall be (x) a transfer of the ultimate beneficial ownership of fifty percent (50%), or more of the equity interests in Subtenant or of any class of equity interests in Subtenant, including, without limitation, by the issuance of additional shares or other equity interests in Subtenant, (y) a transfer of the right to receive fifty percent (50%) or more of any category of distributions made by Subtenant, or (z) a transfer of the right to direct the management of Subtenant, by contract or otherwise.

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        (ii) Notwithstanding any of the provisions of Section 15.7(a) to the contrary, the consent of Landlord or Tenant shall not be required with respect to:

(y) an assignment of Subtenant’s interest under the Google Sublease if the sole purpose and effect of such assignment is to change Subtenant’s name and/or domicile, (e.g., a reincorporation in another jurisdiction) (such transaction being referred to herein as a “Reincorporation”); provided that Subtenant will provide notice of such Reincorporation to Landlord and Tenant within ten (10) days following the effective date of such Reincorporation; and

(z) if Subtenant is a Public Company, transfers of the capital stock of Subtenant on a national securities exchange, unless such transfers constitute a Change in Control effected through concerted actions (and are otherwise not permitted under Section 15.7(b) below with respect to an Assignment to a Successor Entity).

        (iii) The reference in Section 15.7(a) of the Lease to Section 15.5 shall be disregarded.

1.9. Landlord’s Reserved Rights — Use of Additional Areas.

        (a) Section 17.1 of the Lease is hereby deleted in its entirety and replaced with the following: “[Reserved.]”

        (b) Section 17.4 of the Lease is hereby deleted in its entirety and replaced with the following:

        “17.4 Use of Additional Areas. Subject to the provisions of Article 32, Landlord reserves the exclusive right to use any air space above the Buildings and the Property, the roof and exterior walls of the Buildings and the land beneath the Buildings; provided that such use shall not impede Tenant’s use of and access to the Premises other than to a de minimis extent.”

1.10. Destruction and Casualty — Termination Option.

        (a) Section 19.2 of the Lease is hereby deleted in its entirety and replaced with the following:

                “19.2 Termination Option. Landlord shall notify Tenant (with a copy to Subtenant) within sixty (60) days after the date of damage whether or not the requirements for repairs, reconstruction and restoration by Tenant

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described in Section 19.3 are met. If such requirements are not met, Landlord shall have the option, exercisable within sixty (60) days after the date of such damage either to: (a) notify Tenant of Landlord’s election to repair such damage, in which event this Lease shall continue in full force and effect (unless terminated by Tenant as provided below), or (b) notify Tenant, and the subtenant under the Google Sublease, of Landlord’s election to terminate this Lease as of the date of the damage. If such notice to terminate is given by Landlord, this Lease, and the Google Sublease (regardless of the Nondisturbance Agreement), shall terminate as of the date of such damage. If Landlord notifies Tenant of its intention to repair Casualty damages and Landlord reasonably estimates that such repairs cannot be completed within eighteen (18) months (plus any incremental time as may be required to restore any Non-Severable Material Alterations), Tenant shall have the right to terminate this Lease by delivering fifteen (15) days’ written notice to Landlord, in which event the Lease, and the Google Sublease (regardless of the Nondisturbance Agreement), shall terminate. If pursuant to the above terms of this Section 19.2, Landlord notifies Tenant of Landlord’s intention to repair Casualty damages and this Lease and the Google Sublease are not terminated pursuant to the above terms of this Section 19.2, then Landlord shall repair, reconstruct and restore the Premises, including Non-Severable Material Alterations but excluding other Alterations and Tenant’s Property, with reasonable diligence, to the extent of available insurance proceeds, so that the same shall be reasonably comparable in quality, value and utility to the Premises immediately prior to such Casualty damage.”

        (b) With respect to Section 19.2, Section 20.1 and Section 20.4 of the Lease, in the event Tenant has the right to terminate the Lease:

        (i) Tenant (x) shall not exercise such right without the express written consent of Subtenant, and (y) shall promptly exercise such right upon the written direction of Subtenant to do so.

        (ii) Subtenant may notify Landlord directly of its intent to exercise or refrain from exercising the right to terminate the Lease, and, in such case, will concurrently with its delivery to Landlord, deliver a duplicate to Tenant. Subtenant’s determination to exercise or refrain from exercising shall govern, and any determination notified to Landlord by Tenant in contradiction thereof shall be invalid and without effect.

1.11. Destruction — Tenant Obligations.

        (a) With respect to Section 19.1(c) of the Lease, (i) the reference to “Alterations” shall not be construed to include Alterations designated as Non-Severable Material Alterations in accordance with Section 1.6(c)(ii) hereof; and (ii) Landlord shall not be obligated to repair any damage thereto or to replace the same other than as specifically set forth in Section 19.2.

11

        (b) Section 19.3 of the Lease is hereby deleted in its entirety and replaced with the following:

                “19.3. Tenant Obligations. Subject to Section 19.2, if the Premises or the Buildings or any portion thereof are damaged by Casualty, Tenant shall, at Tenant’s sole cost and expense (subject to Landlord’s provision of proceeds from insurance it is required to maintain hereunder to the extent Landlord is required to make such proceeds available under Section 19.1), repair, reconstruct and restore the same promptly, with diligence and continuity and in accordance with the requirements of Section 8.2 and the requirements of Article 10 for Alterations; provided that (i) such repairs can be made under the laws and regulations of the federal, state and local governmental authorities having jurisdiction within twelve (12) months (plus any incremental time as may be required to restore any Non-Severable Material Alterations) after the date of such damage (or in the case of damage occurring during the last twelve (12) months of the Term, provided that such repairs can be made within ninety (90) days (plus any incremental time as may be required to restore any Non-Severable Material Alterations) after the date of such damage), (ii) such repairs are fully covered (except for any deductible) by the proceeds of insurance maintained by Landlord or Tenant, and (iii) the damage does not affect more than fifty percent (50%) of the assessed value of the Buildings. If Tenant is required to repair, reconstruct or restore the Premises after any damage or destruction, Tenant shall be responsible at its own expense for the repair and replacement of Tenant’s Property and any Alterations which Tenant elects to replace (provided that if any of such Alterations are designated as Non-Severable Material Alterations in accordance with Section 1.6(c)(ii) of the Second Amendment, then Landlord shall make available to Tenant property insurance proceeds received in respect thereof). Tenant hereby waives the provisions of any statute or law that may be in effect at the time of the occurrence of any such damage or destruction, under which a lease is automatically terminated or a tenant is given the right to terminate a lease upon such an occurrence.”

1.12. Financial Statements.

        (a) Subtenant hereby agrees that:

        (i) within forty-five (45) days after the end of each of Subtenant’s first three (3) fiscal quarters, Subtenant will deliver to Landlord and Tenant, Subtenant’s unaudited quarterly financial statements (balance sheet, profit & loss statement and cash flow statement),

        (ii) within forty-five (45) days after the end of each Subtenant’s fiscal year, Subtenant will deliver to Landlord and Tenant, Subtenant’s audited annual financial statements (balance sheet, profit & loss statement and cash flow statement), accompanied by the auditor’s report in respect of such statements.

12

        (b) Each delivery described in Section 1.12(a) shall be certified by the chief financial officer of Subtenant as reflecting the financial condition having been prepared in accordance with generally accepted accounting principles, together with a statement by such officer whether Subtenant has satisfied each of the financial tests set forth in the Financial Tests Letter Agreement and a schedule substantially in the form of Exhibit A thereto showing the computations used by Subtenant in determining whether Subtenant has satisfied such financial tests.

        (c) Subtenant hereby agrees that, on reasonable advance notice, during regular hours of operation and at any reasonable time from time to time, but in no event (absent an Event of Default under the Google Sublease) more than two times per fiscal year, Subtenant will make available to Landlord’s representatives the chief financial officer of the Subtenant for the purpose of discussing the financial statements delivered pursuant to this Section 1.12.

        (d) Each of Subtenant and Landlord agrees that information delivered to Landlord by Subtenant in accordance with the terms of this Section 1.12 shall be subject to the Confidentiality Agreement, dated as of July 9, 2003, between Landlord and Subtenant.

        (e) Each of Subtenant and Tenant agrees that information delivered to Tenant by Subtenant in accordance with the terms of this Section 1.12 shall be subject to the Confidentiality Agreement, dated as of July 9, 2003, between Tenant and Subtenant.

        (f) The provisions of this Section 1.12 shall be applicable both prior and subsequent to a Lease Termination (as defined in the Nondisturbance Agreement).

1.13. Estoppel Certificates. With respect to Article 23 of the Lease, Subtenant hereby agrees to deliver to Landlord, and Landlord hereby agrees to deliver to Subtenant, estoppel certificates similar to the certificates that Landlord has agreed to deliver to Tenant and Tenant has agreed to deliver to Landlord pursuant to Article 23 of the Lease.

1.14. Rules and Regulations. With respect to Section 24.1 of the Lease,

        (a) Landlord acknowledges that, as of the date of this Amendment, there do not exist any Rules and Regulations and agrees that any Rules and Regulations subsequently established by Landlord shall be reasonable.

        (b) With respect to the fourth (4^th) sentence of Section 24.1 of the Lease, the following shall be added after the initial occurrence of the word “Tenant” therein: “or Subtenant, or Subtenant’s subtenants or assignees.”

1.15. Notices. Landlord agrees to deliver to Subtenant, at Subtenant’s address for notices set forth below (or such other address as Subtenant

13

subsequently provides to Landlord) with a correct duplicate copy of any notice delivered by Landlord to Tenant regarding the status of (i) the Lease or (ii) the Premises or Property. Subtenant’s address for notices is as follows:

If such notice shall be addressed to Subtenant the address of Subtenant is:

2400 Bayshore Parkway

Mountain View, CA 94043

Attn: Director of Facilities

With a copy to:

2400 Bayshore Parkway

Mountain View, CA 94043

Attn: Legal Department

1.16. Signage. With respect to Section 24.2 of the Lease,

        (a) Subtenant may make requests for consents or approvals or other submissions directly to Landlord and, in such case, will concurrently with its delivery to Landlord, deliver a duplicate to Tenant. Landlord may, if a written response is required, respond directly to Subtenant in connection with such requests and, in such case, will concurrently with its delivery to Subtenant, deliver a duplicate to Tenant. Any sign with respect to which Subtenant has procured Landlord’s approval shall not require the approval of Tenant.

        (b) Landlord shall not require Tenant to remove, or restore the Premises as a result of the installation of, any sign approved by Landlord under Section 1.16(a) above.

        (c) Landlord shall not place or allow to be placed on the Premises or Property any signage identifying or otherwise advertising any direct competitor of Subtenant in such line(s) of business as constitute Subtenant’s primary line(s) of business as of the date of such proposed installation, other than any signs currently on the Premises.

1.17. Antenna and Roofspace. Article 32 is hereby amended as follows:

        (a) With respect to Section 32.1 of the Lease, Landlord agrees that, subject to all Legal Requirements, insurance requirements, the terms of the Lease and the conditions and limitations hereinafter stipulated, during the term of the Google Sublease, Subtenant, at its sole cost and expense, pursuant to the license granted to Tenant under said Section 32.1, may install in the Antenna Area (which shall be in the maximum amount of 70 percent of each rooftop), and thereafter maintain, repair, operate and replace therein, one or more satellite antennae (collectively, the “antennae”), provided that Subtenant shall comply with the size,

14

work, installation, legal and insurance requirements and with the payment obligations to be complied with pursuant to said Section 32.1, and shall obtain Landlord’s consent in respect of the antennae to the extent required pursuant to said Section 32.1, which consent shall not be unreasonably withheld, conditioned or delayed.

        (b) With respect to Section 32.10 of the Lease, subject to Section 32.1 of the Lease and Section 32.2 of the Lease, as modified herein, so long as Tenant, Subtenant, or their respective subtenants or assignees leases 100% of the Premises, Tenant shall have the exclusive right to install and use antennae on the roof of the Buildings.

        (c) Subtenant may make requests for consents or approvals or other submissions directly to Landlord and, in such case, will concurrently with its delivery to Landlord, deliver a duplicate to Tenant. Landlord may respond directly to Subtenant in connection with such requests and, if a written response is required, will concurrently with its delivery to Subtenant, deliver a duplicate to Tenant. Any antenna or roof usage with respect to which Subtenant has procured Landlord’s approval shall not require the approval of Tenant.

1.18. Default Notice.

        (a) Any period of ten (10) days or more provided for in the Lease for giving notice of default by Tenant to Landlord is hereby increased by five (5) days. Any period of less than ten (10) days provided for in the Lease for giving notice of default by Tenant to Landlord is hereby increased by one half (1/2) of such period, rounded up to the nearest whole day, if necessary.

        (b) Any period of ten (10) days or more provided for in the Lease following notice from Landlord to Tenant for Tenant to cure a default under the Lease, where such default is in respect of an obligation under the Lease that in turn is Subtenant’s obligation under the Google Sublease (such Lease default, a “Subtenant Default”), is hereby increased by five (5) days; provided that, with respect to a Subtenant Default described in Section 16.1(c) of the Lease, if Tenant shall have diligently and continuously prosecuted the cure of such Subtenant Default from and after the expiration of the cure period provided by Tenant to Subtenant under the Sublease, the additional five (5) days granted in this Section 1.18(b) above shall be increased to thirty (30) days. Any period of less than ten (10) days provided for in the Lease for Tenant’s cure of a Subtenant Default following notice from Landlord to Tenant for Tenant to cure a Subtenant Default is hereby increased by one half (1/2) of such period, rounded up to the nearest whole day, if necessary.

        (c) Notwithstanding Section 1.18(b), in no event will any cure period provided for under Section 1.18(b) extend beyond the second (2nd) business day prior to the day on which the event or circumstance in question

15

would result in a default under the Ground Lease that would permit the Ground Lessor to terminate the Ground Lease.

        (d) In the event that Landlord delivers a written notice of default under the Lease or this Amendment, Landlord shall concurrently deliver to Subtenant a duplicate notice.

1.19. Google Letter of Credit/Cash Collateral Account. Landlord is expressly made a third-party beneficiary of the terms of Section 7 of the Google Sublease. Landlord shall be entitled to draw on the “Letter of Credit” (as defined in the Google Sublease and hereinafter the “Google Letter of Credit”), as co-beneficiary thereunder, or on any amount in the Cash Collateral Account (as such term is defined in the Google Sublease) or to exercise any remedy under the documents creating the security interests referred to in the following sentence, in lieu of Tenant in the manner provided for in and subject to the Google Sublease. Tenant hereby grants and conveys to Landlord a first priority security interest in the Google Letter of Credit and Cash Collateral Account, and in all proceeds thereof from time to time, to secure Tenant’s performance of its obligations under the Lease and agrees that it shall take such further steps as may be necessary or appropriate so as to ensure the perfection and continued perfection, and first lien position, of such security interest in favor of Landlord, including in the Cash Collateral Account. Landlord shall be accorded all of the rights of a secured party under the Uniform Commercial Code as in effect in the State of California. At such time as Landlord, pursuant to Section 7.D. of the Google Sublease, is entitled to have (to the exclusion of Tenant) all of the rights of Tenant under the Google Sublease in respect of the Google Letter of Credit and Cash Collateral Account, Landlord shall have the right to have “Lender” (as defined in the Loan and Security Agreement, dated as of July 2, 2002, between WXIII/Amphitheatre Realty, L.L.C. and German American Capital Corporation) designated as co-beneficiary of such rights.

1.20. Contrary Directions. In any instance herein in which Subtenant and Tenant have agreed that Subtenant may make requests or give notices directly to Landlord, in the event Landlord receives contrary directions from Tenant and Subtenant, and Landlord is in good faith uncertain which of such directions should govern, Landlord shall have the right to await joint instructions from Tenant and Subtenant or a final order from a court of competent jurisdiction (or at Landlord’s election, the right to request such an order), and Tenant and Subtenant shall be jointly and severally liable to Landlord for all costs and expenses (including reasonable attorneys’ fees) incurred by Landlord in connection therewith.

1.21. Copies of Agreements; Etc. Each of Subtenant and Tenant agrees to deliver to Landlord a copy of the letter agreement referred to in Section 2.B. of the Google Sublease; the releases referred to in Section 6.D of the Sublease; and the punchlist referred to in Section 19.E of the Google Sublease. The delivery of the foregoing to Landlord is for informational purposes only and, except as may

16

result under the Nondisturbance Agreement if the Google Sublease becomes a direct lease between Landlord and Subtenant, shall in no way create any obligation or duty on the part of Landlord.

1.22. Tenant’s Obligations to Landlord in respect of the Google Sublease. Tenant agrees for the benefit of Landlord to perform and observe its obligations and duties owed to Subtenant under the Google Sublease, and Tenant agrees that it shall not amend or waive any material provision of, or terminate or accept the surrender of, the Google Sublease without the prior written consent of Landlord. Further, Tenant agrees that (i) its obligations to Landlord pursuant to the immediately preceding sentence shall be deemed, for purposes of Section 16.1 and the other applicable provisions of the Lease, to be an obligation owed by Tenant to Landlord under the Lease, (ii) any default in such obligations shall constitute a default under the Lease and (iii) any such default, after applicable notice and cure periods provided for in Section 16.1(c) of the Lease, shall be an “Event of Default” (as defined in the Lease).

1.23. Tenant’s Obligation to Landlord in respect of the Letter of Credit. Tenant agrees and acknowledges that if its Letter of Credit (as contemplated by Section 4.7 of the Lease) expires at any time without the proceeds being drawn down and deposited in the Cash Collateral Account (as such term is defined in the Lease), Tenant shall be obligated to deliver a new Letter of Credit to Landlord complying with the terms of Section 4.7 of the Lease.

1.24. NDA from Ground Lessor. All costs incurred in connection with obtaining a nondisturbance and attornment agreement from Ground Lessor on behalf of each of Tenant and Subtenant shall be split equally among Landlord, Tenant and Subtenant (i.e., each shall bear one-third (1/3) of the total costs).

1.25. Glossary. The following new definitions are added to the Glossary:

        “Google Sublease” shall mean that certain sublease agreement dated as of July 9, 2003, between Tenant and Google Technology Inc., a California corporation, as subtenant (“Subtenant”).”

        “Second Amendment” shall mean that certain Second Amendment to Commercial Lease (Amphitheatre), made as of the 9th day of July, 2003 by Landlord, Subtenant and Tenant.”

17

Article II.

Miscellaneous

2.1. Termination; Survival. The following provision(s) of this Amendment shall terminate and not survive the expiration or termination of the Google Sublease, whether such termination is the result of a default on the part of Subtenant or otherwise: Section 1.18; and the remaining sections of this Agreement, to the extent applicable by their terms, shall survive expiry or termination of the Google Sublease.

2.2. Effect of Amendment. Except as modified hereby, the terms and provisions of the Lease are hereby ratified and shall remain unchanged and in full force and effect.

2.3. Counterparts. This Amendment may be executed in counterparts, each of which shall be deemed an original, and all of which together shall constitute one and the same instrument.

2.4. Governing Law. This Amendment shall be governed by and construed in accordance with the laws of the State of California with respect to contracts executed and delivered, and to be performed wholly, within the State of California.

2.5. Modifications. Neither this Amendment nor any term or provisions hereof may be changed, waived, discharged or terminated orally, and no breach thereof shall be waived, altered or modified, except by a written instrument signed by the parties hereto.

2.6. Successors and Assigns. This Amendment shall be binding upon and inure to the benefit of the undersigned and their legal representatives, transferees, successors and assigns.

2.7. Brokers. Each party hereby acknowledges and agrees for the benefit of each other party the representations, warranties and agreements made by such party in the Google Sublease and the Landlord-Subtenant Agreement (as applicable) in respect of any brokers, finders or similar parties relating to the transactions contemplated in the Google Sublease, the Landlord-Subtenant Agreement and the other agreements being executed concurrently herewith and agrees to indemnify each other party for any misrepresentation or breach of warranty or agreement on the part of such party.

[Signature pages follow.]

18

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

WXIII/AMPHITHEATRE REALTY, L.L.C.,     a Delaware limited liability company
By:	Whitehall Parallel Real Estate Limited Partnership XIII, its managing member
	By: WH Parallel Advisors, L.L.C. XIII, its general partner

By:	/s/ Jerome S. Karr
	Name:    Jerome S. Karr Title:      Vice President

GOOGLE TECHNOLOGY INC., a California corporation
By:	/s/ George Reyes
	Name:    George Reyes Title:

SILICON GRAPHICS, INC., a Delaware corporation
By:	/s/ Michael L. Hirahara
	Name:    Michael L. Hirahara Title:      Vice President, Facilities & Services

19

EX-10.09.5

Exhibit 10.09.5

AMENDMENT

THIS AMENDMENT (this “Amendment”) is made as of the 19^th day of April, 2001 by THE GOLDMAN SACHS GROUP, INC, a Delaware corporation (“Landlord”), SILICON GRAPHICS, INC., a Delaware corporation (“Tenant”), and SILICON GRAPHICS REAL ESTATE, INC., a Delaware corporation (“Seller”).

W I T N E S S E T H:

WHEREAS, Tenant and Landlord entered into that certain Lease dated December 29, 2000 (the “Amphitheatre Lease”) for 1600 Amphitheatre Parkway, Mountain View, CA (the “Amphitheatre Property”);

WHEREAS, Seller and Landlord entered into that certain Agreement to Assign Ground Lease and Agreement to Lease dated as of December 29, 2000 (the “Amphitheatre Purchase Agreement”) for the Amphitheatre Property;

WHEREAS, Tenant and Landlord entered into that certain Lease dated December 29, 2000 (the “Crittenden A Lease”) for 1200 Crittenden Lane, Mountain View, CA (the “Crittenden A Property”);

WHEREAS, Seller and Landlord entered into that Agreement to Assign Ground Lease and Agreement to Lease dated as of December 29, 2000 (the “Crittenden A Purchase Agreement”) for the Crittenden A Property;

WHEREAS, Tenant and Landlord entered into that certain Lease dated December 29, 2000 (the “Crittenden B Lease”; together with the Amphitheatre Lease and the Crittenden A Lease, the “Leases”) for 1300 Crittenden Lane, Mountain View, CA (the “Crittenden B Property”);

WHEREAS, Seller and Landlord entered into that Agreement to Assign Ground Lease and Agreement to Lease dated as of December 29, 2000 (the “Crittenden B Purchase Agreement”; together with the Amphitheatre Purchase Agreement and the Crittenden A Purchase Agreement, the “Purchase Agreements”) for the Crittenden B Property;

WHEREAS, the parties hereto have agreed to enter into this Amendment as provided herein.

NOW, THEREFORE, in consideration of the premises, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

1. The date “February 15, 2001” appearing to Section 4.7(a) of the Leases and in Section 2.2(a)(ii) of the Purchase Agreements is hereby amended to the date of “February 27, 2001.”

2. The words “The City of San Francisco” appearing in the second sentence of Section 4.7(b) of the above-referenced Leases is hereby amended to the words “The City of San Francisco or the City of New York.”

3. Clause (vi) of the third sentence of Section 4.7(b) of each of the Leases is hereby amended to read in full as follows: “(vi) at Landlord’s request, name any Leasehold Mortgagee as a co-beneficiary, provided in the event of presentation of multiple sight drafts in respect of any amount, the issuer of the Letter of Credit shall honor the sight draft first received.

4. The following sentence shall be added after the third sentence of Section 4.7(b) of each of the Leases:

“Each Letter of Credit may provide that the effectiveness of such Letter of Credit is conditioned, in the case of the initial Letter of Credit, on the receipt by the issuer of such Letter of Credit of the sums retained by Landlord pursuant to Section 2.2(a)(ii) of the Purchase Agreement relating to the Property and, in the case of any substitute Letter of Credit, on the receipt by the substitute issuer of the Letter of Credit of any cash collateral provided by Tenant in favor of the predecessor Letter of Credit Issuer.

5. The following paragraph (g) shall be added to Section 4.7 of each of the Leases:

(g) From time to time, Tenant may substitute the letter of credit then in effect with a substitute letter of credit meeting the requirements of this Section 4.7 and otherwise in substantially the form of the letter of credit then in effect, provided that in such event, Landlord shall or shall cause the co-beneficiary to, instruct the issuer of the letter of credit then in effect to transfer any cash collateral provided by Tenant to such issuer to such substitute letter of credit issuer.

6. Except as modified hereby, the terms and conditions of the Lease and the Purchase Agreements remain unchanged and in full force and effect.

7. This Amendment may be executed in counterparts, each of which shall constitute an original and all of which together shall constitute the same instrument.

8. Unless otherwise specified, (i) singular words include the plural and plural words include the singular; and (ii) references to this each Lease and each Purchase Agreement include all amendments, supplements and other modifications thereof, in whole or in part.

9. Capitalized terms used herein but that are not defined herein have the meanings assigned to such terms in the Leases.

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

THE GOLDMAN SACHS GROUP, INC.,
By:	/s/    DAN NEIDICH
	Name    Dan Neidich Title      Managing Director

SILICON GRAPHICS, INC.
By:	/s/    MICHAEL L. HIRAHARA
	Name    Michael L. Hirahara Title      Vice President, Facilities & Services

SILICON GRAPHICS REAL ESTATE, INC.
By:	/s/    MICHAEL L. HIRAHARA
	Name    Michael L. Hirahara Title      Vice President, Facilities & Services

EX-10.09.6

Exhibit 10.09.6

LEASE

BETWEEN

THE GOLDMAN SACHS GROUP, INC.

(LANDLORD)

AND

SILICON GRAPHICS, INC.

(TENANT)

December 29, 2000

(AMPHITHEATRE)

TABLE OF CONTENTS

			Page
1.	A.	BASIC LEASE INFORMATION	1
	B.	GENERAL INTERPRETATIVE PROVISIONS	3
2.	PREMISES		5
	2.1	Premises	5
	2.2	Common Area	5
	2.3	Parking	5
3.	TERM		6
	3.1	Term	6
	3.2	Renewal Option	6
4.	RENT		6
	4.1	Net Lease—Net Rent	6
	4.2	Base Rent	7
	4.3	Rent Adjustment	7
	4.4	Additional Rent	7
	4.5	Late Payment	8
	4.6	Covenant	8
	4.7	Credit Enhancement	8
	4.8	Legal Requirements	12
5.	OPERATING EXPENSES		12
	5.1	Operating Expenses	12
	5.2	Payment of Operating Expenses	15
	5.3	Proration	16
	5.4	Normalization	16
	5.5	Other Buildings	16
	5.6	Utility Costs	16
	5.7	Taxes on Tenant’s Property and Business	16
6.	GROUND LEASE		16
	6.1	Ground Lease	16
	6.2	Compliance with Obligations; Conflicts	17

i

TABLE OF CONTENTS

(continued)

			Page
7.	USE OF PREMISES AND CONDUCT OF BUSINESS		18
	7.1	Permitted Use	18
	7.2	Prohibited Uses	18
	7.3	Food and Beverage	18
8.	REPAIRS AND MAINTENANCE		18
	8.1	Landlord’s Obligations	18
	8.2	Tenant’s Obligations	19
	8.3	Security	19
	8.4	Special Services	19
9.	ACCEPTANCE		20
10.	ALTERATIONS		20
	10.1	Alterations by Tenant	20
	10.2	Project Requirements	21
	10.3	Restoration Obligations	24
	10.4	Ownership of Improvements	27
	10.5	Tenant’s Personal Property	27
11.	LIENS		28
12.	COMPLIANCE WITH LAWS AND INSURANCE REQUIREMENTS		28
	12.1	Legal Requirements	28
	12.2	Insurance Requirements	29
13.	HAZARDOUS MATERIALS		30
	13.1	Definitions	30
	13.2	Environmental Release	31
	13.3	Use of Hazardous Materials	31
	13.4	Indemnity	32
	13.5	No Lien	32
	13.6	Investigation	32
	13.7	Notices	32
	13.8	Surrender	33
	13.9	Survival	33
14.	INDEMNITY; INSURANCE		33
	14.1	Indemnity	33

ii

TABLE OF CONTENTS

(continued)

			Page
	14.2	Insurance	34
	14.3	Policies	35
	14.4	Landlord’s Rights	35
	14.5	Waiver of Subrogation	35
	14.6	No Liability	36
15.	ASSIGNMENT AND SUBLETTING		36
	15.1	Consent Required	36
	15.2	Notice	36
	15.3	Terms of Approval	36
	15.4	Certain Conditions Applicable to All Sublettings and Assignments	37
	15.5	Short Term Subletting	38
	15.6	No Release	38
	15.7	Change in Control; Successor Entity	38
	15.8	Assumption of Obligations	39
	15.9	Insolvency or Bankruptcy	39
	15.10	Recovery of Premises	39
	15.11	Easements	40
16.	DEFAULT		40
	16.1	Event of Default	40
	16.2	Remedies	42
	16.3	Cumulative Remedies	43
	16.4	Waiver of Redemption by Tenant	43
	16.5	Landlord’s Right to Cure	44
	16.6	Landlord’s Default	44
	16.7	Survival	44
17.	LANDLORD’S RESERVED RIGHTS		45
	17.1	Control of Common Area	45
	17.2	Access	45
	17.3	Easements	46
	17.4	Use of Additional Areas	46
	17.5	Subordination	46

iii

TABLE OF CONTENTS

(continued)

			Page
18.	LIMITATION OF LANDLORD’S LIABILITY		48
	18.1	Limitation	48
	18.2	Sale of Property	48
	18.3	No Personal Liability	49
	18.4	Landlord’s Consent or Approval; Limitation on Damages	49
19.	DESTRUCTION		50
	19.1	Landlord’s Obligation	50
	19.2	Termination Option	51
	19.3	Tenant Obligations	51
	19.4	No Claim	52
	19.5	No Damages	52
20.	EMINENT DOMAIN		52
	20.1	Taking	52
	20.2	Award	52
	20.3	Partial Taking	53
	20.4	Temporary Taking	53
	20.5	Sale in Lieu of Condemnation	53
	20.6	Waiver	53
21.	SURRENDER		53
	21.1	Surrender	53
	21.2	Holding Over	54
	21.3	Quitclaim	54
22.	FINANCIAL STATEMENTS		54
23.	ESTOPPEL CERTIFICATES		54
24.	RULES AND REGULATIONS		55
	24.1	Rules and Regulations	55
	24.2	Signs	55
25.	INABILITY TO PERFORM		55
26.	NOTICES		56
27.	QUIET ENJOYMENT		56
28.	NO RENT ABATEMENT		56
29.	AUTHORITY		56

iv

TABLE OF CONTENTS

(continued)

			Page
30.	BROKERS		57
31.	BANKRUPTCY OR INSOLVENCY		57
	31.1	No Transfer	57
	31.2	Termination Right	57
	31.3	No Cause for Appointment	58
	31.4	Bankruptcy Filings	58
32.	ANTENNA AND ROOFTOP SPACE		60
	32.1	Antennae	60
	32.2	Non-Exclusive	60
	32.3	Access	60
	32.4	Compliance with Legal Requirements	61
	32.5	Tenant Expense	61
	32.6	Tenant’s Property	61
	32.7	No Interference	61
	32.8	Relocation	61
	32.9	Indemnification	62
33.	MISCELLANEOUS		62
	33.1	Entire Agreement	62
	33.2	No Waiver	62
	33.3	Modification	62
	33.4	Successors and Assigns	62
	33.5	Validity	63
	33.6	Jurisdiction	63
	33.7	Attorneys’ Fees	63
	33.8	Waiver of Jury Trial	63
	33.9	No Counterclaim by Tenant	63
	33.10	Light and Air	63
	33.11	Lease Memorandum	63
	33.12	Confidentiality	64
	33.13	Terms	64
	33.14	Review and Approval	64
	33.15	No Beneficiaries	64

v

TABLE OF CONTENTS

(continued)

		Page
33.16	Time of the Essence	64
33.17	Modification of Lease	64
33.18	Construction	65
33.19	Survival	65

vi

COMMERCIAL LEASE

(Amphitheatre)

THIS LEASE is entered into as of December 29, 2000 (the “Effective Date”), by and between The Goldman Sachs Group, Inc., a Delaware corporation (“Landlord”), and Silicon Graphics, Inc., a Delaware corporation (“SGI”).

1.    A. BASIC LEASE INFORMATION.    The following is a summary of basic lease information. Each item in this Article 1 incorporates all of the terms set forth in this Lease pertaining to such item and to the extent there is any conflict between the provisions of this Article 1 and any more specific provisions of this Lease, the more specific provisions shall control. Any capitalized term not defined in this Lease shall have the meaning set forth in the Glossary which appears at the end of this Lease.

Description of Premises:	Four (4) buildings including 506,317 square feet of Rentable Area, as more particularly described on Exhibit A-1.
Address of Premises:	1600 Amphitheatre Parkway Mountain View, California
Rentable Area of Buildings:	506,317 square feet of Rentable Area, located in four (4) separate buildings as further described on Exhibit A-1. [Exhibit to include Rentable Area per floor].
Term:	Twelve (12) years from the Commencement Date
Commencement Date:	December 29, 2000
Expiration Date:	December 31, 2012
Initial Base Rent:	$32.18 per sq. ft. of Rentable Area per annum
Base Rent Adjustments:	See attached schedule on Exhibit B
Tenant’s Share of Operating Expenses:	100%, subject to adjustment as provided herein
Use:	General office, research and development and other legal uses ancillary thereto
Credit Enhancement:	Letter of Credit in an amount equal to, as of any date, the sum of (a) Base Rent becoming due during the next eighteen (18) months of the Term after such date plus

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(b) the product of one and one-half (1 1/2) times the Additional Rent payable for the most recent full calendar year, as determined by Landlord and provided to Tenant on or before January 1, 2002 and as of each January 1 thereafter during the Term (it being agreed that until January 1, 2002, the amount identified in this clause (b) shall be $8,613,768). For the avoidance of doubt, the initial Letter of Credit face amount shall be equal to $33,256,234.

Addresses for Notice:

Landlord:	The Goldman Sachs Group, Inc.
	85 Broad Street
	New York, NY 10014
	Attention: Adam Brooks
	Telecopy: 212-357-5505
	The Goldman Sachs Group, Inc.
	100 Crescent Court
	Dallas, TX 75201
	Attention: Paul Milosevich
	Telecopy: 214-835-6605
with copies to:	Legacy Partners
	4000 East 3rd Avenue
	Foster City, CA 94404
	Attention: Steve Dunn and Darleen Barnes
	Telecopy: 650-571-2211
and	Sullivan & Cromwell
	125 Broad Street
	New York, NY 10014
	Attention: Anthony J. Colletta
	Telecopy: 212-558-3588
Tenant:	Silicon Graphics, Inc.
	1600 Amphitheatre Parkway
	Mountain View, CA 94043
	Attention: Real Estate
	Telecopy: 650-933-6262

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with copies to:	Silicon Graphics, Inc.
	1600 Amphitheatre Parkway
	Mountain View, CA 94043
	Attention: General Counsel
	Telecopy: 650-933-7096
and to:	Berliner Cohen
	10 Almaden Blvd., 11th Floor
	San Jose, CA 95113
	Attention: Kathy Siple
	Telecopy: 408-998-5388
Brokers:	Cushman & Wakefield
	(Tenant’s Broker),
	who shall be paid by Tenant

B.    GENERAL INTERPRETIVE PROVISIONS

(a     The terms “herein”, “hereto”, “hereunder” and all terms of similar import shall be deemed to refer to this Lease as a whole rather than to any Article, Section or Exhibit to this Lease.

(b)    Unless otherwise specified, references in this Lease to the “Section             ”, “Subsection             ” or “Article             ” shall be deemed to refer to the Section, Subsection or Article of this Lease bearing the number so specified. References in this Lease to “Exhibit             ” shall be deemed to refer to the Exhibit or Schedule of this Lease bearing the letter or number so specified.

(c)    Unless otherwise specified or unless inappropriate in any specific context, all references in this Lease to any singular noun shall be deemed equally applicable to the plural of such noun, and all references to the plural of any noun shall be deemed equally applicable to the singular of such noun.

(d)    Captions used for or in Sections, Articles, Schedules and Exhibits of this Lease are for convenience of reference only and shall not affect the construction of this Lease.

(e)    The term “mortgage” shall include a mortgage, deed of trust or similar instrument, and shall include any such instrument to a trustee to secure an issue of bonds, and the term “mortgagee” shall include the secured party thereunder, including, such a trustee.

(f)    The terms “include”, “including” and “such as” shall each be construed as if followed by the phrase “without being limited to”.

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(g)    The term “obligations of this Lease” and words of like import, shall mean the covenants to pay Base Rent and Additional Rent under this Lease and all of the other covenants and conditions contained in this Lease. Any provision in this Lease that one party or the other party or both shall do or not do or shall cause or permit or not cause or permit a particular act, condition or circumstance shall be deemed to mean that such party so covenants or both parties so covenant, as the case may be.

(h)    The term “Tenant’s obligations hereunder”, and words of like import, and the term “Landlord’s obligations hereunder”, and words of like import, shall mean the obligations, terms, covenants, provisions or conditions of this Lease which are to be performed or observed by Tenant, or by Landlord, as the case may be. Reference to “performance” of either party’s obligations under this Lease shall be construed as “performance and observance”.

(i)    Reference to Tenant being “in default hereunder”, or words of like import, shall mean that Tenant is in default in the performance of one or more of Tenant’s obligations hereunder, and reference to Tenant not being “in default hereunder” shall mean that Tenant is not in default in the performance of any of Tenant’s obligations.

(j)    The term “repair” shall be deemed to include restoration and replacement as may be necessary to achieve and/or maintain good working order and condition.

(k)    Reference to “termination of this Lease” includes expiration or earlier termination of the Term or cancellation of this Lease pursuant to any of the provisions of this Lease or of any Legal Requirement. Upon a termination of this Lease, the Term and estate granted by this Lease shall end at 11:59 p.m. of the date of termination as if such date were the Expiration Date and neither party shall have any further obligation or liability to the other after such termination (i) except as shall be expressly provided for in this Lease, or (ii) except for such obligations as by their nature or under the circumstances can only be, or by the express provisions of this Lease, may be, performed after such termination, and, in any event, unless expressly otherwise provided in this Lease, any liability for payment which shall have accrued to or with respect to any period ending at the time of termination shall survive the termination of this Lease.

(l)    The term “Tenant” shall mean Tenant herein named or any immediate or remote assignee of or other successor to the Tenant’s estate and interest under this Lease, provided that the foregoing shall not modify the provisions of Article 15.

(m)    Whenever this Lease provides that Tenant shall indemnify the Landlord, such provision shall be deemed to mean that Tenant shall indemnify, defend and hold harmless Landlord in accordance with Article 14.

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2.    PREMISES

2.1    Premises. Subject to the terms, covenants and conditions set forth in this Lease, Landlord hereby leases to Tenant and Tenant hereby leases from Landlord the premises (the “Premises”) consisting of the buildings shown on Exhibit A-1 and identified in Article 1 (the “Buildings”). The approximate total Rentable Area of the Premises and the Buildings are specified in Article 1. Together, the Buildings, any other buildings located in the vicinity of the Buildings on the land described on Exhibit A-2 and operated as a common project with the Buildings, and the Common Area for the joint operation of the Building and such other buildings, are referred to as the “Property”.

2.2    Common Area. Landlord hereby grants to Tenant and its employees, agents, contractors and invitees (collectively, “Tenant’s Agents”) a non-exclusive license in common with other tenants of the Property to use the Common Area during the Term. Tenant’s rights to the Common Area shall be subject to the Rules and Regulations described in Section 24.1 and to Landlord’s reserved rights described in Article 17.

2.3    Parking. Landlord hereby grants to Tenant and Tenant’s Agents a non-exclusive license in common with other tenants of the Property to use parking areas located on the Property for parking and for ingress to and egress from the Property. Tenant’s license shall not be assigned, sublet or otherwise transferred separately from the Premises. Tenant agrees that neither Tenant nor Tenant’s Agents shall use parking spaces in areas not designated for Tenant’s use. Landlord shall have the right, at Landlord’s sole discretion (but subject to any covenants or restrictions encumbering the Property), to specifically designate the location of Tenant’s parking spaces (if any) within the parking areas of the Common Area. Tenant’s parking spaces (if any) may be relocated by Landlord from time to time upon written notice. Tenant shall not, at any time, park, or permit the parking of the trucks or vehicles of Tenant or Tenant’s Agents in any portion of the Common Area not designated by Landlord for such use by Tenant. So long as Tenant leases 100% of the Premises leased by Tenant hereunder as of the Commencement Date, all parking areas located on the Property (if any) shall be available for Tenant’s use, provided that Landlord and its agents may also use the parking areas in connection with the performance of its obligations or exercise of its rights under this Lease. If at any time during the Term, the Premises leased by Tenant hereunder shall be less than 100% of the Premises leased by Tenant as of the Commencement Date, so that a portion of the Buildings shall be available to Landlord to lease to others, Tenant’s right to use parking shall be limited to Tenant’s Share of parking. Tenant shall not park nor permit to be parked any inoperative vehicles or store any materials or equipment on any portion of the parking area or other areas of the Common Area. Tenant agrees to assume responsibility for compliance by Tenant’s Agents with the parking provisions contained in this Section. Tenant hereby authorizes Landlord at Tenant’s expense to attach violation stickers or notices to such vehicles not parked in compliance with this Section and to tow away any such vehicles. In addition, a specific section of the parking area may be set aside by Landlord for visitor parking for the Property.

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3.    TERM

3.1    Term. The Premises are leased for a term (the “Term”) commencing on the Commencement Date and expiring on the Expiration Date. The Term shall end on the Expiration Date, or such earlier date on which this Lease terminates pursuant to its terms. The date upon which this Lease actually terminates, whether by expiration of the Term or in the event of default or surrender of the Premises is sometimes referred to in this Lease as the “Termination Date”.

3.2    Renewal Option. Tenant shall have two (2) options (the “Renewal Options”) to extend the Term for a period of five (5) years (each, a “Renewal Term”, and respectively the “First Renewal Term” and the “Second Renewal Term”). Each Renewal Term (i) must be exercised, if at all, as to the entire Premises subject to this Lease as of the Commencement Date (unless reduced pursuant to condemnation) and (ii) will be void if this Lease has previously expired or terminated with respect to any part of the Premises leased by Tenant hereunder as of the Commencement Date (other than as a result of condemnation), or if the Premises then leased by Tenant hereunder shall be less than 100% of the Premises as of the Commencement Date such that a portion of the Buildings shall be available to Landlord to lease to others. Each Renewal Option shall be void if an Event of Default by Tenant exists, either at the time of exercise of the applicable Renewal Option or the time of commencement of the applicable Renewal Term. Each Renewal Option must be exercised, if at all, by written notice from Tenant to Landlord given not less than twelve (12) months prior to the expiration of the Term (in the case of the First Renewal Term), and not less than twelve (12) months prior to the expiration of the First Renewal Term (in the case of the Second Renewal Term). For the avoidance of doubt, the Second Renewal Term shall be void unless the First Renewal Option shall be timely exercised by Tenant. Each Renewal Term shall be upon the same terms and conditions as the original Term, except that the Base Rent applicable to the relevant Renewal Term shall be equal to the greater of (i) Base Rent payable under this Lease for the full year immediately preceding the effectiveness of that Renewal Term or (ii) Prevailing Market Rent as of the commencement of that Renewal Term, as determined pursuant to Exhibit C. As a condition to the exercise and the effectiveness of the Renewal Option, Tenant shall be required to modify the Letter of Credit so that the Letter of Credit will have a face amount equal to the Required Amount and otherwise meet the requirements of Section 4.7 with respect to the Term as extended by Tenant’s exercise of the Renewal Option. The Renewal Option is personal to Tenant and shall be inapplicable and null and void if Tenant assigns its interest under this Lease (including an “Assignment” as defined in Section 15.1 but excluding short-term Subleases contemplated by Section 15.5).

4.    RENT

4.1    Net Lease—Net Rent. It is the purpose and intent of Landlord and Tenant that, except as expressly provided otherwise herein, this Lease shall be deemed and construed to be a so-called “triple net lease” and that the Base Rent and Additional Rent shall be absolutely

6

net to Landlord throughout the Term, so that this Lease shall yield, absolutely net to Landlord, the Base Rent and Additional Rent throughout the Term, free of any charges, assessments, impositions, Real Estate Taxes or deductions of any kind charged, assessed or imposed on or against the Premises and without abatement, deduction, deferment, reduction, defense, credit, set-off or counterclaim (except as may otherwise be expressly provided herein) whatsoever by Tenant, and Landlord shall not under any circumstances or conditions, whether now existing or hereafter arising, or whether beyond the present contemplation of the parties, be expected or required to pay any such charge, assessment, imposition, Real Estate Tax or deduction, or be under any obligation or liability hereunder except as expressly otherwise provided herein. It is agreed that except as expressly otherwise provided herein all costs, expenses and charges of every kind and nature whatsoever relating to the Premises, or the use, operation or maintenance thereof, which may arise or become due during the Term of this Lease, including, without limitation, those relating to the maintenance, preservation, care, repair and operation of the Premises (including, without limitation, all costs, expenses and charges for water, sewer, natural gas, electricity, telephone and any other utility used upon or furnished to the Premises) and all restorations, replacements, Alterations and additions in and to the Premises as herein provided shall be paid and/or performed by Tenant, at Tenant’s sole cost and expense, and Landlord shall be indemnified and saved harmless by Tenant from and against the same.

4.2    Base Rent. Commencing upon the Commencement Date, and thereafter during the Term, Base Rent will be payable in monthly installments in advance on or before the first day of each month at the rate of one-twelfth (1/12) of the annual Base Rent specified in Article 1. After the Letter of Credit is deposited hereunder, Landlord will, on or after the first day of each calendar month or the immediately preceding Business Day if the first day of a month is not a Business Day, draw upon the Letter of Credit each month for payment of monthly Base Rent then due. If Landlord notifies Tenant that Landlord does not intend or is unable to draw on the Letter of Credit, Tenant shall pay the Base Rent due to Landlord by wire transfer of immediately available funds, to Landlord’s account specified in writing to Tenant, without any prior notice or demand and without any deductions or setoff whatsoever, other than as expressly provided herein. If the Commencement Date occurs on a day other than the first day of a calendar month, or the Termination Date occurs on a day other than the last day of a calendar month, then the Base Rent for such fractional month will be prorated on the basis of the actual number of days in such month. The Rentable Area of the Premises and the Buildings shall be conclusively presumed to be as stated in Article 1, and shall not be subject to adjustment by either Landlord or Tenant during the Term, other than as described herein.

4.3    Rent Adjustment. Commencing on January 1, 2002 and every January 1 thereafter (each, an “Adjustment Date”), the Base Rent shall be increased as stated in Article 1.

4.4    Additional Rent. All sums due from Tenant to Landlord or to any third party under the terms of this Lease shall be additional rent (“Additional Rent”), including without limitation the charges for Base Rent and Operating Expenses (described in

7

Article 5) and all sums incurred by Landlord due to Tenant’s failure to perform its obligations under this Lease. In accordance with Section 5.1, so long as Tenant leases 100% of the Premises leased by Tenant hereunder as of the Commencement Date, Tenant shall pay directly to the person entitled thereto all Operating Expenses except those identified in clauses (i), (ii) and (ix) of Section 5.1(b), which Landlord shall pay directly and shall pass through to Tenant as Additional Rent payable in monthly installments in advance equal to one-twelfth (1/12) of the annual amount thereof. All Additional Rent which is payable to Landlord shall be paid at the time and place that Base Rent is paid. For the avoidance of doubt, Landlord will draw upon the Letter of Credit each month on the same day that Base Rent is drawn an amount equal to the Additional Rent then due, provided that if Landlord delivers the notice described in Section 4.2, Tenant shall pay the Additional Rent to Landlord in the same manner as Base Rent. Landlord will have the same remedies for a default in the payment of any Additional Rent as for a default in the payment of Base Rent. Together, Base Rent and Additional Rent are sometimes referred to in this Lease as “Rent”. There shall be no abatement of, deduction from, counterclaim or setoff against Rent except as otherwise specifically provided in this Lease.

4.5    Late Payment. Any unpaid Rent shall bear interest from the date due until paid at the lesser of (i) fifteen percent (15%) per annum or (ii) the maximum interest rate allowed by law (the “Interest Rate”). In addition, Tenant recognizes that late payment of any Rent will result in administrative expense to Landlord, the extent of which expense is difficult and economically impracticable to determine. Therefore, Tenant agrees that if Tenant fails to pay any Rent within five (5) days after its due date, an additional late charge of seven percent (7%) of the sums so overdue shall become immediately due and payable. Tenant agrees that the late payment charge is a reasonable estimate of the additional administrative costs and detriment that will be incurred by Landlord as a result of such failure by Tenant. In the event of nonpayment of interest or late charges on overdue Rent, Landlord shall have, in addition to all other rights and remedies, the rights and remedies provided in this Lease and by law for nonpayment of rent.

4.6    Covenant. Tenant covenants to pay (a) Rent when due and (b) observe and perform and not to suffer or permit any violation of Tenant’s obligations under this Lease.

4.7    Credit Enhancement

(a)    On or before February 15, 2001, Tenant shall deliver to Landlord a Letter of Credit as security for the full and punctual performance by Tenant of all of the terms of this Lease. If the Letter of Credit is not timely delivered, in accordance with Section 2.2(a) of the Purchase Agreement, Landlord will retain a portion of the Purchase Price (as defined in the Purchase Agreement), and Tenant shall have no further obligation to deliver the Letter of Credit. For so long as the Letter of Credit is in effect and sufficient funds thereunder shall be available for draw, Landlord shall be entitled to draw such Letter of Credit each month for payment of Base Rent and Additional Rent. In addition, if Landlord

8

shall be entitled to draw the Letter of Credit in whole or in part pursuant to the other provisions of this Lease, Landlord shall have the right, at its option, either to deposit the cash proceeds of any such draw upon the Letter of Credit into a cash collateral account (the “Cash Collateral Account”) established in Landlord’s name and maintained by Landlord or to apply the proceeds to the obligations of Tenant due or to become due hereunder. The Cash Collateral Account shall be under the sole dominion and control of Landlord and Landlord shall have the sole right to make withdrawals from the Cash Collateral Account and to exercise all rights with respect to the amounts deposited in the Cash Collateral Account.

(b)    The initial letter of credit and any replacement letter of credit issued to Landlord shall satisfy the requirements set forth in this Section 4.7 (each, a “Letter of Credit”). Each Letter of Credit shall be a clean, irrevocable, non-documentary and unconditional letter of credit issued by and drawable upon any commercial bank, trust company, national banking association or savings and loan association with offices for banking and drawing purposes in the City of San Francisco (the “Issuing Bank”), which has outstanding, unsecured, uninsured and unguaranteed indebtedness, or shall have issued a letter of credit or other credit facility that constitutes the primary security for an outstanding indebtedness (which is otherwise uninsured and unguaranteed), that is then rated, without regard to qualification of such rating by symbols such as “+” or “-” or numerical notation, “A” or better by Moody’s Investment Service and “A” or better by Standard & Poor’s Ratings Service (and is not on credit-watch or similar credit review with negative implication), and has combined capital, surplus and undivided profits of not less than $1,000,000,000. Each Letter of Credit shall (i) name Landlord as beneficiary, (ii) be in the amount of the Required Amount, (iii) have a term of not less than one (1) year, (iv) permit multiple drawings, (v) be fully transferable by Landlord without payment of any fees or charges, (vi) at Landlord’s request, name any Leasehold Mortgagee as a co-beneficiary and (vii) otherwise be in form and content satisfactory to Landlord in its sole discretion. If upon the transfer of any Letter of Credit, any fees or charges shall so be imposed, then such fees or charges shall be payable solely by Tenant and the Letter of Credit shall so specify. Regardless of the initial expiration date of any Letter of Credit, each Letter of Credit shall expressly provide that (unless notice of non-renewal is delivered in accordance with the following sentence) it shall be deemed automatically renewed, without amendment, for consecutive periods after such expiration date of one year each during the Term through the date that is at least one hundred eighty (180) days after the Expiration Date. If the Issuing Bank desires not to renew a Letter of Credit, it shall deliver a notice (the “Non-Renewal Notice”) to Landlord by certified mail, return receipt requested, not less than sixty (60) days prior to the then-current expiration date of the Letter of Credit, stating that the Issuing Bank has elected not to renew the Letter of Credit. In such event or if (a) for any other reason the Letter of Credit would expire by its terms in sixty (60) days or less from such date or (b) the Issuing Bank is downgraded so that it no longer satisfies the rating requirements set forth in this Section 4.7, Landlord shall have the right, at its option, either (x) to draw the full amount of the Letter of Credit, by sight draft on the Issuing Bank, and thereafter hold the proceeds in the Cash Collateral Account and apply them pursuant to the terms of this Article 4, or (y) to require Tenant to procure, or Landlord to procure on Tenant’s behalf at Tenant’s cost and

9

utilizing if necessary the cash proceeds so drawn, a replacement Letter of Credit that satisfies the requirements of this Section 4.7; provided that Landlord shall provide Tenant with notice of any such event at least ten (10) business days before exercising such rights and Tenant may, within ten (10) business days after such notice is provided, deliver a replacement Letter of Credit that satisfies the requirements of this Section 4.7, and provided further that such notice shall not be required in the event Landlord determines in good faith that the delay caused by providing such notice presents a risk that Landlord will not be able to exercise its rights to draw upon the Letter of Credit following such delay. Each Letter of Credit shall be governed by the International Standby Practices-ISP98 or any standard set of practices replacing ISP98. Each Letter of Credit shall be substantially in the form attached hereto as Exhibit D.

(c)    Within three (3) business days following any draw under the Letter of Credit or such shorter period as may be required under the Tenant’s reimbursement agreement with the Issuing Bank, Tenant shall reimburse the Issuing Bank for each such draw in an amount sufficient to insure that the face value of the Letter of Credit is an amount at least equal to the Required Amount and shall cause the Issuing Bank to provide written notice to Landlord if such reimbursement is not timely made. In addition, if the Base Rent or Additional Rent increases such that the Required Amount would increase, Tenant shall within five (5) business days after such increase cause the Letter of Credit to be modified so that it satisfies the requirements of this Section 4.7. In the event Tenant fails to timely reimburse the Letter of Credit bank or increase the face amount of the Letter of Credit as required, such failure shall constitute an Event of Default hereunder, and, in addition to all other rights and remedies available to Landlord for Tenant’s default, Landlord shall have the right to draw the full amount of the Letter of Credit, by sight draft on the Issuing Bank, and shall thereafter hold in the Cash Collateral Account or apply the cash proceeds of the Letter of Credit pursuant to the terms of this Article 4.

(d)    In addition to the foregoing, if an Event of Default occurs under this Lease, Landlord may draw the full amount of the Letter of Credit, by sight draft on the Issuing Bank, and thereupon receive all or a portion of the face amount of the Letter of Credit, and use, apply or retain the whole or any part of such proceeds, as the case may be, to the extent required for the payment of any Base Rent, Additional Rent or other amounts due or to become due hereunder or for any reasonable sum which Landlord may expend or may be required to expend by reason of Tenant’s default in respect of any of the terms of this Lease, including any damages or deficiency in the re-letting of the Premises, whether accruing before or after summary proceedings or other re-entry by Landlord. In the event Landlord obtains an arbitration award or judicial determination entitling Landlord to indemnification or monetary damages under the Purchase Agreements or the Ground Lease Assignments, Landlord may draw upon the full amount of the Letter of Credit, by sight draft on the Issuing Bank, and thereupon receive all or a portion of the face amount of the Letter of Credit, in an amount equal to the amount which Landlord is so entitled under the Purchase Agreements or Ground Lease Assignments. In the case of every such use, application or retention, Tenant shall, within three (3) business days following any such use, application or

10

retention or such shorter period as may be required under the Tenant’s reimbursement agreement with the Issuing Bank, cause the face value of the Letter of Credit to be restored to the Required Amount, and Tenant shall cause the Issuing Bank to acknowledge to Landlord that such restoration of the Required Amount occurred in a timely manner. Notwithstanding the foregoing, if Tenant is not in default under this Lease, during the last twelve (12) months of the Term (including any extension thereof pursuant to a Renewal Option exercised by Tenant), the amount of the Letter of Credit may be decreased to the sum of the amount of Base Rent payable over the last twelve (12) months of the Term plus the amount of Additional Rent payable for the most recent calendar year, provided that it shall be a condition to the exercise of any Renewal Option that Tenant cause a Letter of Credit to be issued in the full amount of the Required Amount (or, if Section 4.7(e) applies, the Reduced Amount). If Tenant shall fully and punctually comply with all of the terms of this Lease, the Letter of Credit shall be terminated, as applicable, within one hundred eighty (180) days after the termination of this Lease and delivery of exclusive possession of the Premises to Landlord.

(e)    In the event Tenant has outstanding, unsecured, uninsured and unguaranteed indebtedness that becomes rated, without regard to qualification of such rating by symbols such as “+” or “-” or numerical notation, “A” or better by Moody’s Investment Service and “A” or better by Standard & Poor’s Ratings Service (and is not on credit-watch, or similar credit review with negative implication), at Tenant’s request, if Tenant is not in default hereunder, Landlord will permit the face amount of the Letter of Credit to be reduced to an amount equal to the Reduced Amount. If Landlord agrees to reduce the Required Amount pursuant to this Subsection (e), Tenant shall not be permitted to let the face amount of the Letter of Credit be reduced during the last twelve (12) months of the Term pursuant to paragraph (f) above, it being understand[sic] that in no event shall the face amount of the Letter of Credit be less than the Reduced Amount. If at any time Tenant ceases to maintain the ratings specified in the first sentence of this Section 4.7(e), then the face amount of the Letter of Credit shall be increased to the Required Amount.

(f)    In the event of a transfer of the Buildings or the Property, Landlord shall have the right to transfer the Letter of Credit or Cash Collateral to the transferee and upon such transfer to such transferee, Landlord shall ipso facto be released by Tenant from all liability for the return of the Letter of Credit or Cash Collateral; provided the transferee agrees to assume Landlord’s obligation to return the Letter of Credit or Cash Collateral; and Tenant agrees to look solely to the new landlord for the return of said Letter of Credit or Cash Collateral; and it is agreed that the provisions hereof shall apply to every transfer or assignment made of the Letter of Credit or Cash Collateral to a new landlord. Tenant shall promptly execute such documents reasonably requested by Landlord as may be necessary to accomplish any such transfer or assignment of the Letter of Credit or Cash Collateral. Tenant shall not assign or encumber or attempt to assign or encumber the Letter of Credit or Cash Collateral and neither Landlord nor its successors or assigns shall be bound by any such assignment, encumbrance or attempted assignment or encumbrance. Upon ten (10) days prior written notice from Landlord, Tenant will cause any Letter of Credit to be

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modified so that it names any Leasehold Mortgagee as a co-beneficiary under the Letter of Credit.

4.8    Legal Requirements

If any of the Rent payable under the terms of this Lease shall be or become uncollectible, reduced or required to be refunded because of any Legal Requirement, Tenant shall enter into such agreements and take such other steps as Landlord may reasonably request and as may be legally permissible, to permit Landlord to collect the maximum rents which from time to time during the continuance of such legal rent restriction may be legally permissible. Upon the termination of such legal rent restriction, (a) the rents shall become and thereafter be payable in accordance with the amounts reserved herein for the periods following such termination and (b) Tenant shall pay to Landlord, to the maximum amount legally permissible, an amount equal to, (i) the rents which would have been paid pursuant to this Lease but for such legal restriction, less (ii) the rents and payments in lieu of rents paid by Tenant during the period such legal restriction was in effect.

5.    OPERATING EXPENSES

5.1    Operating Expenses. For purposes of this Article 5, the following terms shall have the meanings described below:

(a)    “Tenant’s Share” means 100% for the period commencing with the Commencement Date and ending on the date the Premises leased by Tenant hereunder shall be less than 100% of the Premises leased by Tenant hereunder as of the Commencement Date, so that a portion of the Buildings shall be available to Landlord to lease to others. In such event, Tenant’s Share shall be reduced to the proportionate share of the Rentable Area then leased by Tenant at the Buildings. The parties hereto acknowledge that Tenant’s Share is based upon an assumption that the entire Buildings contain a total of 482,950 square feet of Rentable Area, and the calculation of Tenant’s Share is based upon a fraction the denominator of which is 482,950.

(b)    “Operating Expenses” means the total costs and expenses paid or incurred in connection with the ownership, management, operation, maintenance, repair and replacement of the Buildings and the Common Area, including, without limitation, all costs of:

(i)    rent and other payments (including escalations) due to the City of Mountain View from Landlord, as tenant under that certain Ground Lease (the “Ground Lease”) dated March 7, 1995 with respect to the Property as the same may be amended from time to time;

(ii)    taxes, assessments and charges levied upon or with respect to the Property or any personal property of Landlord used in the operation of the Property, or on Landlord’s interest in the Property or such personal property (“Real Estate

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Taxes”). Real Estate Taxes shall include, without limitation, all general real property taxes and general and special assessments, charges, fees, or assessments for transit, housing, police, fire, or other governmental services or purported benefits to the Property or the occupants thereof, service payments in lieu of taxes that are now or hereafter levied or assessed against Landlord by the United States of America, the State of California or any political subdivision thereof, or any other political or public entity, and shall also include any other tax, assessment or fee, however described, that may be levied or assessed as a substitute for, or as an addition to, in whole or in part, any other Real Estate Taxes, whether or not now customary or in the contemplation of the parties as of the Commencement Date. Real Estate Taxes shall not include franchise, transfer, succession, gift, inheritance, gross receipts or capital stock taxes or income taxes measured by the net income of Landlord unless, due to a change in the method of taxation, any of such taxes is levied or assessed against Landlord as a substitute for, or as an addition to, in whole or in part, any other tax that would otherwise constitute a Real Estate Tax. Real Estate Taxes shall also include reasonable legal fees, costs, and disbursements incurred in connection with proceedings to contest, determine, or reduce Real Estate Taxes;

(iii)    repair, maintenance, replacement and supply of air conditioning, electricity, steam, water, heating, ventilating, mechanical, escalator and elevator systems, sanitary and storm drainage systems and all other utilities and mechanical systems which are commonly used by all Buildings tenants;

(iv)    landscaping and gardening;

(v)    repaving, repairing, maintaining and restriping of parking areas;

(vi)    repairs and maintenance to the Common Area, and all labor and material costs related thereto;

(vii)    security and fire protection to the Buildings (other than areas occupied by tenants);

(viii)    general maintenance, janitorial services, trash removal, cleaning and service contracts and the cost of all supplies, tools and equipment required in connection therewith;

(ix)    all insurance (including earthquake coverage) carried by Landlord on the Buildings, the Common Area and the Property, or in connection with the use or occupancy thereof, including fire and extended coverage, vandalism and malicious mischief, public liability and property damage, worker’s compensation insurance, rental income insurance and any other insurance commonly carried by prudent owners of comparable buildings;

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(x)    wages, salaries, payroll taxes and other labor costs and employee benefits for all persons engaged in the operation, management, maintenance and security of the Property and not otherwise on the general payroll of Landlord or an affiliate of Landlord or any property manager other than a person located on site at the Property based on the proportionate amount of time such person devotes to the management of the Property relative to other properties;

(xi)    management fees at commercially reasonable rates, provided that, so long as Tenant leases hereunder 100% of the Premises leased by Tenant hereunder as of the Commencement Date, Tenant shall have the right to approve the Property manager, such approval not to be unreasonably withheld or delayed, and Tenant hereby agrees that Legacy Property Management, L.P. is an acceptable manager;

(xii)    fees, charges and other costs of all independent contractors engaged by Landlord;

(xiii)    license, permit and inspection fees;

(xiv)    charges on or surcharges imposed by any governmental agencies on or with respect to transit or automobile usage or parking facilities;

(xv)    the cost of supplies, tools, machines and equipment used in operation and maintenance of the Common Area;

(xvi)    any Ordinary Capital Improvements; provided that the cost of any such Ordinary Capital Improvements shall be amortized over the useful life of the improvement in question, together with interest on the unamortized balance at the Interest Rate;

(xvii)    the cost of contesting the validity or applicability of any governmental enactments including taxes which may affect operating expenses;

(xviii)    audit and bookkeeping fees, and legal fees and expenses; and

(xix)    any other expenses of any kind whatsoever reasonably incurred in connection with the management, operation, maintenance, repair and replacement of the Buildings and the Common Area.

The parties acknowledge that, concurrently with the Commencement Date, Landlord acquired its interest in the Property from SGRE, an affiliate of Tenant and that, as a result, Landlord and Tenant agreed that Tenant shall pay Operating Expenses under this Lease that shall include all of the foregoing amounts incurred or accruing prior to the Commencement Date and not yet paid.

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Notwithstanding anything in the definition of Operating Expenses to the contrary, Operating Expenses shall not include the following, except to the extent specifically permitted by a specific exception to the following:

(A)    Costs actually reimbursed to Landlord by insurance proceeds for the repair of damage to the Buildings;

(B)    Marketing costs, including without limitation, leasing commissions, space planning costs, and other costs and expenses incurred in connection with lease, sublease and/or assignment negotiations and transactions with Tenant or present or prospective tenants of the Buildings;

(C)    Overhead and profit increment paid to Landlord or to subsidiaries or affiliates of Landlord for goods and/or services in or to the Buildings to the extent the same exceeds the costs of such goods and/or services generally available to unaffiliated third parties;

(D)    Costs of capital improvements that do not constitute Ordinary Capital Improvements unless Tenant shall request or approve any such capital improvement; and

(E)    Interest, principal, points and fees on debts or amortization on any mortgage or mortgages or any other debt instrument encumbering the Buildings or the Property.

5.2    Payment of Operating Expenses. Commencing on the Commencement Date, Tenant shall pay to Landlord as Additional Rent one twelfth (1/12) of Tenant’s Share of Operating Expenses paid or incurred by Landlord for each calendar year or portion thereof during the Term, in advance, on or before the first day of each month in an amount estimated by Landlord as stated in a written notice to Tenant. The parties acknowledge and agree that, so long as the Premises leased by Tenant hereunder shall be the Premises leased by Tenant hereunder as of the Commencement Date, Landlord shall pay items (i), (ii) and (ix) below directly which will then be passed through to Tenant as Operating Expenses and Tenant shall directly pay all other Operating Expenses, and Tenant will be responsible for Landlord’s obligations under Section 8.1. Landlord may by written notice to Tenant revise such estimates from time to time and Tenant shall thereafter make payments on the basis of such revised estimates. With reasonable promptness after the expiration of each calendar year, Landlord will furnish Tenant with a statement (“Landlord’s Expense Statement”) setting forth in reasonable detail the actual Operating Expenses for such year and Tenant’s Share. If Tenant’s Share of the actual Operating Expenses for such year exceeds the estimated Operating Expenses paid by Tenant for such year, Tenant shall pay to Landlord (whether or not this Lease has terminated) the difference between the amount of estimated Operating Expenses paid by Tenant and Tenant’s Share of the actual Operating Expenses within fifteen (15) days after the receipt of Landlord’s Expense Statement. If the total amount paid by Tenant for any year exceeds Tenant’s Share

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of the actual Operating Expenses for that year, the excess shall be credited against the next installments of Base Rent due from Tenant to Landlord, or, if after the Termination Date, the excess shall first be credited against any unpaid Base Rent or Additional Rent due and remaining any excess shall be refunded to Tenant concurrently with the furnishing of Landlord’s Expense Statement.

5.3    Proration. If either the Commencement Date or the Termination Date occurs on a date other than the first or last day, respectively, of a calendar year, Tenant’s Share of Operating Expenses for the year in which the Commencement Date or Termination Date occurs shall be prorated based on a 365-day year.

5.4    Normalization. For the purpose of determining Operating Expenses for any partial year, Operating Expenses shall be deemed to accrue uniformly during the entire calendar year. If any part of the Buildings is not fully leased during a calendar year, Operating Expenses shall be adjusted to add amounts and items of Operating Expenses which would normally have been incurred if the Buildings had been fully leased during such calendar year and Tenant’s Share of Operating Expenses (both for the purposes of the initial estimate and year-end reconciliation) shall be based on an assumed full leasing of the Buildings.

5.5    Other Buildings. In the event any facilities, services or utilities used in connection with the Buildings are provided from another building owned or operated by Landlord or vice versa, the costs incurred by Landlord in connection with the operation of the Buildings shall be allocated to Operating Expenses by Landlord on a reasonably equitable basis, subject to the terms of existing covenants and restrictions encumbering the Property.

5.6    Utility Costs. Tenant shall be solely responsible for and shall make all arrangements for all utilities and services exclusively furnished to or used at the Premises, including, without limitation, all water, gas, electricity, sewer service, waste pick-up and any other utilities, materials or services.

5.7    Taxes on Tenant’s Property and Business. At least ten (10) days prior to delinquency, Tenant shall pay all taxes levied or assessed by any local, state or federal authority upon the conduct of Tenant’s business in the Premises or upon Tenant’s Property (as defined in Section 10.4). Upon Landlord’s request, Tenant shall deliver satisfactory evidence of payment of all such taxes. If the assessed value of the Property is increased by the inclusion of a value placed upon Tenant’s Property, Tenant shall pay to Landlord, upon written demand, the taxes so levied against Landlord, or the portion of Landlord’s taxes resulting from said increase in assessment, as determined from time to time by Landlord.

6.    GROUND LEASE

6.1    Ground Lease. A copy of the Ground Lease is attached hereto as Exhibit C and the obligations of “Tenant” thereunder (which Tenant hereby agrees it will

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perform) (except only those excluded provisions identified in Section 6.2 of this Lease) are hereby incorporated herein by this reference. In addition, the Landlord shall have all of the rights and remedies granted to the “Landlord” under the Ground Lease, which rights and remedies are incorporated herein by this reference. In accordance with Section 17.5 of this Lease, this Lease is subordinate and subject to the Ground Lease, and Tenant agrees to be bound by and subject to the terms of the Ground Lease.

6.2    Compliance with Obligations; Conflicts. (a) Tenant shall, at Tenant’s sole cost and expense, throughout the Term, comply with, satisfy and cause the Premises to comply with and satisfy, each of the provisions of the Ground Lease, other than Articles 2 (Demise, Term and Surrender), 3 (Rent), 5 (Payment of Real Property Taxes and Facility Charges), 11 (Assignment and Subletting), 12 (Transfer of Leased Premises by Landlord), 13 (Tenant Mortgages) and Article 14 (General Provisions) thereof, within the period of time and in the manner required by the Ground Lease. Tenant shall not do, permit, suffer or refrain from doing anything which is Tenant’s obligation under this Lease to do, as a result of which there could be a default under the Ground Lease. Notwithstanding anything to the contrary contained in this Lease, (a) in the event the time given to Landlord as tenant under the Ground Lease is shorter than the time given to Tenant by this Lease to perform or do the same act or thing, then Tenant shall perform or do said thing within the time specified in the Ground Lease, (b) Landlord shall have only those obligations and duties expressly set forth herein (without regard to the incorporation by reference of the Ground Lease) and (c) except as to Landlord’s express obligations under this Lease, in the event of any conflict between the terms of this Lease and the Ground Lease, (x) Tenant shall be obligated to perform and comply with those provisions that are more onerous on Tenant and (x) Landlord shall have those rights and remedies that are more favorable to Landlord.

(b)    Tenant shall cooperate with Landlord in the event Landlord determines to exercise its right to subdivide the Property and the Ground Lease into separate “Parcel Leases” (as defined in the Ground Lease), and Tenant hereby consents to any such subdivision and will divide this Lease into separate leases to accommodate any such subdivision, and the parties hereto will enter into any necessary covenants or easements to insure Tenant will have access to the Premises.

(c)    So long as this Lease is in effect as to, and Tenant is currently occupying, more than 25% of the Buildings and no Event of Default has occurred, Landlord shall not, without Tenant’s prior consent, exercise any right to terminate the Ground Lease pursuant to the terms thereof. Tenant shall respond to any request for consent to such termination within five (5) business days following receipt thereof, and, if Tenant does not respond within such five (5) business day period, Tenant shall be deemed to have consented. If Landlord terminates the Ground Lease in accordance with the foregoing, this Lease shall terminate.

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7.     USE OF PREMISES AND CONDUCT OF BUSINESS

7.1    Permitted Use. (a) Tenant (and any permitted successor, assign or subtenant of Tenant, whether by Landlord’s consent or by operation of law) may use and occupy the Premises during the Term solely for the uses specified and permitted in Article 1 and for no other purpose without the prior written consent of Landlord, such consent to be granted or withheld in Landlord’s sole discretion. The foregoing statement shall not constitute a representation or guaranty by Landlord that such business may be conducted in the Premises or is lawful or permissible under any certificates of occupancy issued for the Premises or the Buildings, or is otherwise permitted by law. Tenant’s use of the Premises shall in all respects comply with all Legal Requirements.

(b)    If any governmental license or permit shall be required for the proper and lawful conduct of Tenant’s business in the Premises or any part thereof, then Tenant, at its expense, shall duly procure and thereafter maintain such license or permit and shall submit same to Landlord for inspection. Tenant shall at all times comply with the terms and conditions of such license and permit, but in no event shall failure to procure or maintain such license or permit affect Tenant’s obligations hereunder.

7.2    Prohibited Uses. Tenant shall not use the Premises or allow the Premises to be used for any illegal or immoral purpose, or so as to create waste, constitute a private or public nuisance, or disturb other occupants of the Property. Tenant shall not place any loads upon the floors, walls, or ceiling which endanger the structure, or place any harmful fluids or other materials in the drainage system of the Buildings, or overload existing electrical or other mechanical systems. Tenant shall not use any machinery or equipment which causes any substantial noise or vibration. No waste materials or refuse shall be dumped upon or permitted to remain upon any part of the Premises or outside of the Premises except in trash containers placed inside exterior enclosures designated by Landlord for that purpose or inside of the Premises where approved by Landlord. No materials, supplies, equipment, finished products or semi-finished products, raw materials or articles of any nature shall be stored upon or permitted to remain outside the Premises or on any portion of the Common Area unless otherwise approved by Landlord in its sole discretion. No loudspeaker or other device, system or apparatus which can be heard outside the Premises shall be used in or at the Premises without the prior written consent of Landlord. No explosives or firearms shall be brought into the Premises.

7.3    Food and Beverage. If Tenant engages in the cooking of food, beverages or baked goods which is not incidental to Tenant’s permitted use under Section 7.1, Tenant shall, at Tenant’s sole cost and expense, comply with all applicable Legal Requirements and insurance requirements.

8.    REPAIRS AND MAINTENANCE

8.1    Landlord’s Obligations. Except as specifically provided in this Lease, Landlord shall not be required to furnish any services, facilities or utilities to the

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Premises or to Tenant, and Tenant assumes full responsibility for obtaining and paying for all services, facilities and utilities to the Premises. Landlord will maintain casualty insurance as required by Section 7.2 of the Ground Lease, and in an amount not less than 100% of the full replacement cost of the Premises.

8.2    Tenant’s Obligations. Tenant assumes full responsibility for the maintenance, repair, replacement and restoration of the Premises and the Common Area. Tenant shall take good care of the Premises and the Common Area and keep the Premises and the Common Area in good working order and in a clean, safe and sanitary condition. Tenant will repair and maintain the Building Systems, the Common Areas, and the Structural Components in good working order and in a clean, safe and sanitary condition. The Premises and the Common Area shall continue throughout the Term to be in as good condition as at the Commencement Date, reasonable wear and tear excepted; and Tenant shall prevent waste. All repairs, replacements and restorations by Tenant shall be made and performed: (a) at Tenant’s cost and expense (except for capital improvements which shall be funded by Landlord and passed through to Tenant pursuant to Section 5.1(b)(xvi)), (b) by contractors or mechanics approved by Landlord, (c) so that same shall be comparable in quality, value and utility to the original work or installation, and (d) in accordance with Article 10 (if applicable), the Rules and Regulations, and all Legal Requirements. Tenant shall reimburse Landlord upon demand for any out-of-pocket expenses incurred by Landlord in connection with any repairs, replacements or restorations required to be made by Tenant, including, without limitation, any fees charged by Landlord’s contractors to review plans and specifications prepared by Tenant.

8.3    Security. Tenant shall be solely responsible for the security of the Premises and Tenant’s Agents while in or about the Premises. Any security services provided to the Property by Landlord shall be at Landlord’s sole discretion and Landlord shall not be liable to Tenant or Tenant’s Agents for any failure to provide security services or any loss, injury or damage suffered as a result of a failure to provide security services. If at any time during the Term, the Premises leased by Tenant hereunder shall be less than 100% of the Premises leased by Tenant hereunder as of the Commencement Date, so that a portion of the Buildings shall be available to Landlord to lease to others, Landlord shall be obligated to provide security for the Common Area.

8.4    Special Services. If Tenant requests any services from Landlord other than those for which Landlord is obligated under this Lease, Tenant shall make its request in writing and Landlord may elect in its sole discretion whether to provide the requested services. If Landlord provides any special services to Tenant, Landlord shall charge Tenant for such services at the prevailing rate being charged for such services by other property owners and property managers of comparable buildings in the area of the Property, and Tenant shall pay the cost of such services as Additional Rent within fifteen (15) business days after receipt of Landlord’s invoice.

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9.    ACCEPTANCE

The Premises as furnished by Landlord consist of the improvements as they exist as of the Commencement Date and Landlord shall have no obligation for construction work or improvements on or to the Premises. Prior to entering into this Lease, Tenant has made a thorough and independent examination of the Premises and all matters related to Tenant’s decision to enter into this Lease. Tenant is thoroughly familiar with all aspects of the Premises and is satisfied that they are in an acceptable condition and meet Tenant’s needs. Tenant does not rely on, and Landlord does not make, any express or implied representations or warranties as to any matters including, without limitation, (a) the physical condition of the Premises, the Buildings, the Structural Components, Building Systems, or the Common Area, (b) the existence, quality, adequacy or availability of utilities serving the Premises, (c) the use, habitability, merchantability, fitness or suitability of the Premises for Tenant’s intended use, (d) the likelihood of deriving business from Tenant’s location or the economic feasibility of Tenant’s business, (e) Hazardous Materials in the Premises, the Buildings, or on, in under or around the Property, (f) zoning, entitlements or any laws, ordinances or regulations which may apply to Tenant’s use of the Premises or business operations, or (g) any other matter relating to the Premises. Tenant has satisfied itself as to such suitability and other pertinent matters by Tenant’s own inquiries and tests into all matters relevant in determining whether to enter into this Lease. Tenant accepts the Premises in their existing “as-is” condition. Tenant shall, by entering into and occupying the Premises, be deemed to have accepted the Premises and to have acknowledged that the same are in good order, condition and repair.

10.    ALTERATIONS

10.1    Alterations by Tenant. Tenant shall make no improvements, changes or alterations in or to the Premises (“Alterations”) without Landlord’s prior approval. Landlord shall not unreasonably withhold approval to any Alteration that is not a Material Alteration. “Material Alteration” means an Alteration that (i) is not limited to the interior of the Premises or affects the exterior (including the appearance) of the Buildings or entry ways, (ii) is structural or affects the structural integrity of the Buildings or the structural integrity of the Structural Components, (iii) affects the usage or the proper functioning of the Building Systems (other than with respect to the Permitted Lab Work), (iv) requires the consent of any Leasehold Mortgagee or the Landlord under the Ground Lease or (v) requires a change to the Buildings’ certificates of occupancy. Notwithstanding the foregoing, Landlord’s consent shall not be required in the case of Alterations (“Permitted Alterations”) that are not Material Alterations and that do not exceed a total cost of Two Hundred Fifty Thousand Dollars ($250,000) (or Five Hundred Thousand Dollars ($500,000) in the case of Permitted Lab Work per project.

Any determination to be made pursuant to this Section 10.1 as to the cost or price of an Alteration shall be made on a “job-by-job basis” and all work that is part of the same Alteration or integrated or related, whether or not performed in phases or stages, shall be treated as a single Alteration for the purposes of such determination.

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10.2    Project Requirements. The following provisions of this Section 10.2 shall apply to all Alterations, whether or not requiring Landlord’s approval (unless otherwise noted):

(a)    Tenant, in connection with any Alteration, shall comply with any rules and regulations as may be from time to time established by Landlord and communicated in writing to Tenant. Tenant shall not proceed with any Alteration (other than Permitted Alterations) unless and until Landlord approves Tenant’s plans and specifications therefor. Any review or approval by Landlord of plans and specifications with respect to any Alteration is solely for Landlord’ benefit, and without any representation or warranty to Tenant with respect to the adequacy, correctness or efficiency thereof, its compliance with Legal Requirements or otherwise. Landlord shall, within ten (10) business days following receipt of Tenant’s plans and specifications for the performance of any Alteration that is not a Material Alteration (other than Permitted Alterations), advise Tenant of Landlord’s approval or disapproval of such plans and specifications for such an Alteration or any part thereof. If Landlord shall fail to approve or disapprove Tenant’s plans and specifications for such an Alteration or any part thereof within such ten (10) business day period, Tenant shall have the right to give a reminder notice to Landlord and if Landlord fails to approve or disapprove Tenant’s plans and specifications or any part thereof within such two (2) business days after receipt of such reminder notice, Landlord shall be deemed to have approved such plans and specifications for such an Alteration or the applicable part thereof. If Landlord shall disapprove such plans and specifications for such an Alteration (or any part thereof), Landlord shall set forth in reasonable detail its reasons for such disapproval in writing. Landlord shall advise Tenant within five (5) business days following receipt of Tenant’s revised plans and specifications, or portions thereof, of Landlord’s approval or disapproval of the revised plans and specifications or any portion thereof, and shall set forth in reasonable detail Landlord’s reasons for any such further disapproval in writing and in reasonable detail. If Landlord fails to approve or disapprove the revised plans and specifications for such an Alteration or any portion thereof within such five (5) business day period, Tenant shall have the right to give a reminder notice to Landlord and if Landlord fails to approve or disapprove Tenant’s plans and specifications for such an Alteration or any part thereof within two (2) business days after receipt of such reminder notice, Landlord shall be deemed to have approved the revised plans and specifications or such portions thereof. For the avoidance of doubt, Landlord’s approval of plans and specifications for any Material Alteration may be given or withheld in its sole discretion.

(b)    With respect to any Alterations expected to cost more than $100,000, Tenant shall furnish to Landlord one of the following (as selected by Tenant): (i) a cash deposit, (ii) a performance bond and a labor and materials payment bond (issued by a corporate surety licensed to do business in California reasonably satisfactory to Landlord) or (iii) an irrevocable, unconditional, negotiable letter of credit, issued by a bank and in a form satisfactory to Landlord; each to be equal to 125% of the cost of the Alteration, estimated as set forth above. Any such letter of credit shall be for one year and shall be renewed by Tenant each and every year until the Alteration in question is completed and shall be

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delivered to Landlord not less than 30 days prior to the expiration of the then current letter of credit, failing which Landlord may present the then current letter of credit for payment. Upon (A) the completion of the Alteration in accordance with the terms of this Article 10 and (B) the submission to Landlord of (x) proof evidencing the payment in full for said Alteration, (y) written unconditional lien waivers of mechanics’ liens and other liens on the Property from all contractors performing said Alteration and (z) all other submissions as may be, from time to time reasonably required by Landlord, the security deposited with Landlord (or the balance of the proceeds thereof, if Landlord has drawn on the same) shall be returned to Tenant. Upon Tenant’s failure properly to perform, complete and fully pay for any Alteration, as determined by Landlord, Landlord may, upon notice to Tenant, draw on the security deposited under this Section 10.2 to the extent Landlord deems necessary in connection with said Alteration, the restoration and/or protection of the Premises or the Property and the payment of any costs, damages or expenses resulting therefrom.

(c)    Before commencing the construction of any Alterations, Tenant shall procure or cause to be procured the insurance coverage described below and provide Landlord with certificates of such insurance in form reasonably satisfactory to Landlord. All such insurance shall comply with the following requirements of this Section and of Section 14.2.

(i)    During the course of construction, to the extent not covered by property insurance maintained by Tenant pursuant to Section 14.2, comprehensive “all risk” builder’s risk insurance, including vandalism and malicious mischief, excluding earthquake and flood, covering all improvements in place on the Premises, all materials and equipment stored at the site and furnished under contract, and all materials and equipment that are in the process of fabrication at the premises of any third party or that have been placed in transit to the Premises when such fabrication or transit is at the risk of, or when title to or an insurable interest in such materials or equipment has passed to, Tenant or its construction manager, contractors or subcontractors (excluding any contractors’, subcontractors’ and construction managers’ tools and equipment, and property owned by the employees of the construction manager, any contractor or any subcontractor), such insurance to be written on a completed value basis in an amount not less than the full estimated replacement value of Alterations.

(ii)    Commercial general liability insurance covering Tenant, Landlord and each construction manager, contractor and subcontractor engaged in any work on the Premises, which insurance may be effected by endorsement, if obtainable, on the policy required to be carried pursuant to Section 14.2, including insurance for completed operations, elevators, owner’s, construction manager’s and contractor’s protective liability, products completed operations for one (1) year after the date of acceptance of the work by Tenant, broad form blanket contractual liability, broad form property damage and full form personal injury (including but not limited to bodily injury), covering the performance of all work at or from the Premises by Tenant, its construction manager, contractors and subcontractors, and in a liability amount not less than the amount at the time

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carried by prudent owners of comparable construction projects, but in any event not less than Three Million Dollars ($3,000,000) combined single limit, which policy shall include thereunder for the mutual benefit of Landlord and Tenant, bodily injury liability and property damage liability, and automobile insurance on any non-owned, hired or leased automotive equipment used in the construction of any work.

(iii)    Workers’ Compensation Insurance approved by the State of California, in the amounts and coverages required under workers’ compensation, disability and similar employee benefit laws applicable to the Premises, and Employer’s Liability Insurance with limits not less than One Million Dollars ($1,000,000) or such higher amounts as may be required by law.

(d)    All construction and other work in connection with any Alterations shall be done at Tenant’s sole cost and expense and in a prudent and first class manner. Tenant shall construct the Alterations in accordance with all Legal Requirements, and with plans and specifications that are in accordance with the provisions of this Article 10 and all other provisions of this Lease.

(e)    Prior to the commencement of any construction, alteration, addition, improvements, repair or landscaping in excess of Fifty Thousand Dollars ($50,000), Landlord shall have the right to post in a conspicuous location on the Premises and to record in the public records a notice of Landlord’s nonresponsibility. Tenant covenants and agrees to give Landlord at least ten (10) days prior written notice (or concurrent notice in the event of an emergency repair required to protect human health or safety) of the commencement of any such construction, alteration, addition, improvement, repair or landscaping in order that Landlord shall have sufficient time to post such notice.

(f)    Tenant shall take all necessary safety precautions during any construction.

(g)    Tenant shall prepare and maintain (i) on a current basis during construction, annotated plans and specifications showing clearly all changes, revisions and substitutions during construction, and (ii) upon completion of construction, as-built drawings showing clearly all changes, revisions and substitutions during construction, including, without limitation, field changes and the final location of all mechanical equipment, utility lines, ducts, outlets, structural members, walls, partitions and other significant features. These as-built drawings and annotated plans and specifications shall be kept at the Premises and Tenant shall update them as often as necessary to keep them current. The as-built drawings and annotated plans and specifications shall be made available for copying and inspection by Landlord at all reasonable times, and are subject to Landlord’s approval as provided in subsection (a) above.

(h)    Upon completion of the construction of any Alterations in excess of Fifty Thousand Dollars ($50,000) during the Term, Tenant shall file for recordation, or cause to be filed for recordation, a notice of completion and shall deliver to

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Landlord evidence satisfactory to Landlord of payment of all costs, expenses, liabilities and Liens arising out of or in any way connected with such construction (except for Liens that are contested in the manner provided herein).

(i)    Tenant shall reimburse Landlord within five (5) days following demand for any out-of-pocket expenses incurred by Landlord in the review of any Alterations proposed to be made by Tenant, including fees charged by Landlord’s contractors or consultants to review plans and specifications, and such reimbursement obligation shall constitute Additional Rent hereunder.

(j)    Should any Liens be filed against any portion of the Property by reason of the acts or omissions of, or because of a claim against, Tenant or anyone claiming under or through Tenant, Tenant shall cause the same to be canceled or discharged of record by bond or otherwise within twenty (20) business days after notice from Landlord. If Tenant shall fail to cancel or discharge said lien or liens within said twenty (20) business day period, Landlord may cancel or discharge the same and, upon Landlord’s demand, Tenant shall reimburse Landlord for all costs incurred in canceling or discharging such liens, together with interest thereon at the Interest Rate from the date incurred by Landlord to the date of payment by Tenant, such reimbursement to be made within twenty (20) days after receipt by Tenant of a written statement from Landlord as to the amount of such costs. Tenant shall indemnify and hold Landlord harmless from and against all costs (including, without limitation, attorneys’ fees and disbursements and costs of suit), losses, liabilities or causes of action arising out of or relating to any Alteration, including, without limitation, any mechanics’ or other liens asserted in connection with such Alteration.

(k)    Tenant shall deliver to Landlord, within sixty (60) days after the completion of an Alteration costing in excess of $50,000, “as-built” drawings thereof. During the Term, Tenant shall keep records of Alterations costing in excess of $50,000 including plans and specifications, copies of contracts, invoices, evidence of payment and all other records customarily maintained in the real estate business relating to Alterations and the cost thereof and shall, within thirty (30) days after demand by Landlord, furnish to Landlord copies of such records.

(l)    All Alterations to and fixtures installed by Tenant in the Premises (other than Tenant’s Property) shall be fully paid for by Tenant in cash and not be subject to conditional bills of sale, chattel mortgages, or other title retention agreements.

10.3    Restoration Obligations. (a) Landlord shall have the right to require Tenant to restore the Premises or any portion or component thereof, including any Building System or any portion or component thereof, affected by any Alteration to its condition prior to the commencement of such Alteration, which restoration Tenant shall have the obligation to complete by no later than the Expiration Date provided that: (i) Landlord notifies Tenant that Landlord shall require restoration of an Alteration within thirty (30) days after receipt by Landlord of plans and specifications for such Alteration and in no event later than Landlord’s approval pursuant to Section 10.1; and (ii) solely with respect to any Permitted Alteration,

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Landlord reasonably determines that the failure to effect the restoration would lessen the value, utility or efficiency of the Premises as a multi-tenanted office and research and development building at the end of the Term of this Lease. For the avoidance of doubt clause (ii) and Section 10.3(b) shall not apply to any Alteration that is not a Permitted Alteration. All work performed in connection with Tenant’s restoration obligations shall constitute Alterations and shall be subject to the provisions of this Article 10 and all other provisions of this Lease which govern the performance of Alterations.

(b)    Within fifteen (15) days after receipt by Tenant of Landlord’s notification that Landlord shall require Tenant to restore any Permitted Alteration, Tenant shall notify Landlord as to whether Tenant accepts or rejects Landlord’s determination. Any failure by Tenant to so notify Landlord shall be deemed to be Tenant’s irreversible acceptance of the obligation to restore the applicable Alteration. Landlord and Tenant shall endeavor to resolve any dispute as to whether Tenant has an obligation to restore any Alteration within thirty (30) days after Tenant shall notify Landlord that Tenant has rejected Landlord’s determination. If Landlord and Tenant shall be unable to resolve any such dispute within such 30-day period, then at any time thereafter any party shall have the right to submit the matter to arbitration in accordance with Section 18.4; provided, however, that in no event shall Tenant be prohibited from performing the Alteration in question pending the resolution of such dispute if Tenant elects to proceed with the applicable Alteration in accordance with the provisions of this Article 10. The term “restore” or “restoration” as used in this Article 10 shall mean that Tenant shall repair, alter, restore, replace and rebuild the Premises, or portion or component thereof, including any Building System or portion or component thereof, affected by the applicable Alteration at least to the extent of the value and as nearly as reasonably practicable to the condition, quality and class existing immediately prior to the performance of the applicable Alteration (using materials, equipment and construction techniques which are common at the time of the performance of the restoration); provided, however, that if in Landlord’s reasonable judgment because of any circumstances relating to construction methods or materials which did not exist at the time of performance of the applicable Alteration or which no longer exist or are no longer legal or insurable or because of other Alterations made by Tenant or other changed circumstances restoration would not be reasonably practical with respect to the required restoration of the applicable Alteration, then Landlord shall have the right to require that the restoration be performed in such a manner specified by Landlord that does not conform to the conditions, quality or class of improvement existing immediately before the applicable Alteration. Any dispute regarding the performance of any required restoration of any Alteration which the parties shall be unable to resolve within fifteen (15) business days after one party shall have notified the other party that a bona fide dispute exists shall be resolved by arbitration in accordance with Section 18.4.

(c)    (i) Tenant shall be required to deposit security with Landlord to secure Tenant’s obligation to restore any Alteration in an amount sufficient to secure the restoration of the Alteration in a manner consistent with Section 10.2(b).

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(ii)    To the extent that Landlord shall be holding any such security, Landlord shall have the right from time-to-time to require Tenant to deposit additional security as it pertains to any and all Alterations made by Tenant which Tenant shall be obligated to restore under this Article 10, if Landlord shall reasonably establish that the security then held by Landlord with respect to any and all such Alterations will be inadequate for their intended purposes. Any dispute regarding the sufficiency of any security deposited with Landlord which the parties shall be unable to resolve within fifteen (15) days after one party shall have notified the other party that such a bona fide dispute exists and shall be resolved by arbitration in accordance with Section 18.4.

(iii)    To the extent that Landlord shall be holding any such security, Landlord shall be permitted to use such security to complete Tenant’s obligation to restore the Alteration with respect to which such security has been deposited by Tenant if Tenant shall default in Tenant’s obligation to restore the applicable Alteration. If at any time Landlord shall notify Tenant that Landlord or its consultants shall have concluded that there is a substantial likelihood that any Alteration that Tenant is obligated to restore or any Turnover Alteration will not be completed by the date by which it shall be required to be completed hereunder, then for the period of thirty (30) days following such notification by Landlord to Tenant, Landlord and Tenant and their respective architects and/or engineers shall endeavor to resolve the matter. If the parties shall be unable to resolve the matter, then at any time after the expiration of such thirty (30) day period, either party may submit the matter to arbitration under Section 18.4 hereof, with the sole question to be determined by such arbitration being whether or not there is a substantial likelihood that any such Alteration will not be completed by the date by which it shall be required to be completed hereunder. If the arbitration is determined in favor of Landlord, then Landlord shall have the right (but shall not be obligated) to use any security then on deposit with Landlord to complete the same. In the event that Landlord shall complete such Alteration for a cost that is less than the then available balance of any security deposited to secure Tenant’s obligation to perform the Alteration in question, then any excess unused portion of such security being held by Landlord after the restoration of the applicable Alteration with respect to which it was deposited with Landlord shall belong to and promptly be refunded by Landlord to Tenant.

(d)    Notwithstanding anything to the contrary contained in this Article 10 or elsewhere in this Lease, Tenant shall be obligated to surrender the Premises and the Buildings on the Expiration Date, in the condition and quality that the Premises and the Buildings (including, without limitation, the Building Systems) would have been in at the time of such surrender had Tenant complied with the terms of this Lease (any such Alteration required to be performed by Tenant to satisfy the foregoing requirement being herein referred to as a “Turnover Alteration”). During the period of one hundred and twenty days (120) days prior to the Expiration Date, Landlord shall notify Tenant, and Landlord and Tenant shall endeavor to agree upon any Turnover Alteration remaining to be performed by Tenant. If the parties shall be unable to resolve any dispute regarding whether Tenant has an obligation to perform any Turnover Alteration or regarding the manner in which the same shall be required to be performed within such one hundred and twenty (120) day period, then

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either party may submit the matter to arbitration in accordance with Section 18.4. All Turnover Alterations shall be performed in accordance with the provisions of this Article 10 and other portions of this Lease applicable to Alterations.

(e)    Notwithstanding anything to the contrary contained in this Article 10 or elsewhere in this Lease, Tenant shall not perform any Alteration which Tenant shall be obligated to restore under this Article 10 unless the restoration of such Alteration can be completed as and when required under Article 10.

(f)    Without limiting the generality of any other provision of this Lease, in the event that Tenant shall fail to restore any Alteration that it is obligated hereunder to restore or shall fail to perform any Turnover Alteration, and the failure to perform same shall interfere with the use and occupancy of the Premises or any portion thereof, then Tenant shall be liable to Landlord for failure to make such Turnover Alterations.

10.4    Ownership of Improvements. Except as provided in Section 10.5, all Alterations, and any other appurtenances, fixtures, improvements, equipment, additions and property permanently attached to or installed in the Premises at the commencement of or during the Term, shall at the end of the Term become Landlord’s property without compensation to Tenant, or be removed in accordance with this Section. Landlord shall notify Tenant in writing at the time of Landlord’s approval of the Alterations, as applicable, whether or not the proposed Alterations will be required to be removed by Tenant at the end of the Term. Tenant shall have no obligation to remove any Alterations that Landlord has not designated in writing for removal. Tenant shall repair or pay the cost of repairing any damage to the Premises or to the Buildings caused by the removal of Alterations. If Tenant fails to perform its repair obligations, without limiting any other right or remedy, Landlord may on five (5) business days prior written notice to Tenant perform such obligations at Tenant’s expense and Tenant shall promptly reimburse Landlord upon demand for all out-of-pocket costs and expenses incurred by Landlord in connection with such repair. In addition, any such reimbursement shall include a fifteen percent (15%) administrative fee to cover Landlord’s overhead in undertaking such repair. The reimbursement and administrative fee shall be Additional Rent. Tenant’s obligations under this Section shall survive the termination of this Lean.

10.5    Tenant’s Personal Property. All furniture, trade fixtures, furnishings, equipment and articles of movable personal property installed in the Premises by or for the account of Tenant (except for ceiling and related fixtures, HVAC equipment and floor coverings), and which can be removed without structural or other material damage to the Buildings (collectively, “Tenant’s Property”) shall be and remain the property of Tenant and may be removed by it at any time during the Term and Tenant may grant a Lien on such personal property. Tenant shall remove from the Premises all Tenant’s Property on or before the Termination Date, except such items as the parties have agreed pursuant to the provisions of this Lease or by separate agreement are to remain and to become the property of Landlord.

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Tenant shall repair or pay the cost of repairing any damage to the Premises or to the Buildings resulting from such removal, and the provisions of Section 10.4 above shall apply in the event Tenant fails to do so. Any items of Tenant’s Property which remain in the Premises after the Termination Date may, on five (5) business days prior written notice to Tenant, at the option of Landlord, be deemed abandoned and in such case may either be retained by Landlord as its property or be disposed of, without accountability, at Tenant’s expense in such manner as Landlord may see fit.

11.    LIENS

Tenant shall promptly pay, in cash, the cost of all Alterations, repairs, restorations or replacements made by or on behalf of Tenant. Tenant shall keep the Premises free from any Liens arising out of any work performed, material furnished or obligations incurred by or for Tenant. Tenant hereby indemnifies Landlord against liability for any and all Liens arising out of work performed, material furnish or obligations incurred by or for Tenant. If Tenant shall not, within ten (10) days following notice of the imposition of any such Lien, cause the Lien to be released of record by payment or posting of a proper bond, Landlord shall have, in addition to all other remedies provided in this Lease and by law, the right but not the obligation to cause any such Lien to be released by such means as it shall deem proper, including payment of the claim giving rise to such Lien. All such sums paid by Landlord and all expenses incurred by it in connection therewith (including, without limitation, reasonable counsel fees) shall be payable to Landlord by Tenant within five (5) days of Landlord’s demand with interest from the date incurred at the Interest Rate. Landlord shall have the right at all times to post and keep posted on the Premises any notices permitted or required by law or that Landlord shall deem proper for the protection of Landlord, the Premises, and the Buildings from Liens.

Landlord shall at its own cost and expense, take such action as may be necessary (by bonding or other appropriate action) to duly discharge and satisfy in full promptly any Lessor Lien, provided, however, Landlord need not discharge or satisfy any Lessor Lien being contested by Landlord in good faith and by appropriate proceedings so long as such proceedings do not involve any material danger of sale, forfeiture or loss of any part of Tenant’s leasehold interest in the Property. In addition, Landlord shall use commercially reasonable efforts to cause persons claiming by, through or under Landlord (excluding Tenant) to promptly discharge and satisfy in full any Lien against Tenant’s leasehold interest in the Property. “Lessor Liens” means Liens against the Property or the Ground Lease that result from (i) claims against the Landlord or (ii) Real Estate Taxes payable by Landlord which are not required to be paid by Tenant. For the avoidance of doubt, the foregoing shall not apply to any Leasehold Mortgage or Lien related thereto, any Prior Lease, any Lien in effect as of the Commencement Date or any other Lien permitted by the terms of this Lease.

12.    COMPLIANCE WITH LAWS AND INSURANCE REQUIREMENTS

12.1    Legal Requirements. Tenant, at Tenant’s cost and expense, shall comply with all Legal Requirements relating to its use or occupancy of the Premises or any

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Alterations and Landlord shall comply with all Legal Requirements applicable with respect to Landlord’s obligations under this Lease. Without limiting the foregoing, Tenant shall be solely responsible for compliance with and shall make or cause to be made all such improvements and alterations to the Premises (including, without limitation, removing barriers and providing alternative services) as shall be required to comply with all applicable building codes, laws and ordinances relating to public accommodations, including the Americans with Disabilities Act of 1990, 42 U.S.C. §§ 12111 et seq. (the “ADA”), and the ADA Accessibility Guidelines promulgated by the Architectural and Transportation Barriers Compliance Board, the public accommodations title of the Civil Rights Act of 1964, 42 U.S.C. §§ 2000a et. seq., the Architectural Barriers Act of 1968, 42 U.S.C. §§ 4151 et. seq., as amended, Title V of the Rehabilitation Act of 1973, 29 U.S.C. §§ 790 et. seq., the Minimum Guidelines and Requirements for Accessible Design, 36 C.F.R. Part 1190, the Uniform Federal Accessibility Standards, and applicable State law, as the same may be amended from time to time, or any similar or successor laws, ordinances and regulations, now or hereafter adopted. Tenant’s liability shall be primary and Tenant shall indemnify Landlord in accordance with Section 14.1 in the event of any failure or alleged failure of Tenant to comply with Legal Requirements. Any work or installations made or performed by or on behalf of Tenant or any person or entity claiming through or under Tenant pursuant to the provisions of this Section shall be made in conformity with and subject to the provisions of Article 9.

12.2    Insurance Requirements. (a) Tenant shall not do anything, or permit anything to be done, in or about the Premises that would: (i) invalidate or be in conflict with the provisions of or cause any increase in the applicable rates for any fire or other insurance policies covering the Buildings or any property located therein (unless Tenant pays for such increased costs), or (ii) result in a refusal by fire insurance companies of good standing to insure the Buildings or any such property in amounts reasonably satisfactory to Landlord (which amounts shall be comparable to the amounts required by comparable landlords of comparable buildings, (iii) subject Landlord to any liability or responsibility for injury to any person or property by reason of any business operation being conducted in the Premises or by Tenant or any one claiming under Tenant elsewhere on the Property, or (iv) result in the cancellation of or assertion of any defense by the insurer to any claim under any policy of insurance maintained by or for the benefit of Landlord. Tenant, at Tenant’s expense, shall comply with all rules, orders, regulations or requirements of the American Insurance Association (formerly the National Board of Fire Underwriters) and with any similar body that shall hereafter perform the function of such Association.

(b)    If, by reason of any act or omission on the part of Tenant which is inconsistent with the use permitted hereunder, whether or not Landlord has consented to the same, the rate of “all risk” or other type of insurance maintained by Landlord on the Property or the Buildings or other property of Landlord shall be higher than it otherwise would be, but for such act or omission, Tenant shall reimburse Landlord for that part of the premiums for such insurance paid by Landlord because of such act or omission on the part of Tenant, which sum shall be Additional Rent and payable within five (5) days of demand. If,

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due to the occupancy or abandonment of, or Tenant’s failure to occupy, the Premises as herein provided, any such insurance shall be canceled by the insurance carrier, then, in any of such events, Tenant hereby indemnifies Landlord against liability which would have been covered by such insurance. Landlord shall give Tenant notice of any such cancellation promptly after Landlord shall have received written notice thereof. Tenant shall also pay any increase in premiums on any rent insurance carried by Landlord for its protection against rent loss through fire or casualty if such increase shall result from any of the foregoing events.

13.    HAZARDOUS MATERIALS

13.1    Definitions. As used in this Lease, the following terms shall have the following meanings:

(a)    “Environmental Activity” means any use, storage, holding, release, emission, discharge, manufacturing, generation, processing, abatement, removal, disposition, handling, transportation, discharge or release of any Hazardous Materials from, into, on or under the Buildings, the Common Area or the Property.

(b)    “Environmental Laws” mean all Legal Requirements, now or hereafter in effect, relating to environmental conditions, industrial hygiene or Hazardous Materials on, under or about the Property, including without limitation the comprehensive environmental Response, Compensation and Liability Act of 1980, as amended, 42 U.S.C. Section 9601, et seq., the Hazardous Materials Transportation Act, 49 U.S.C. Section 1801, et seq., the Solid Waste Disposal Act, 42 U.S.C. Section 6901, et seq., the Clean Water Act, 33 U.S.C. Section 1251, et seq., the Clean Air Act, 42 U.S.C. Section 7401, et seq., the Toxic Substances Control Act, 15 U.S.C. Section 2601 through 2629, the Safe Drinking Water Act, 42 U.S.C. Sections 300f through 300j, and any similar state and local laws and ordinances and the regulations now or hereafter adopted and published and/or promulgated pursuant thereto.

(c)    “Hazardous Material” means any chemical, substance, medical or other waste or combination thereof which is or may be hazardous to the environment or human or animal health or safety due to its radioactivity, ignitability, corrosivity, reactivity, explosivity, toxicity, carcinogenicity, mutagenicity, phytotoxicity or other harmful or potentially harmful properties or effects. Hazardous Materials shall include, without limitation, petroleum hydrocarbons, including crude oil or any fraction thereof, asbestos, radon, polychlorinated biphenyls (PCBs), methane and all substances which now or in the future may be defined as “hazardous substances,” “hazardous wastes,” “extremely hazardous wastes,” “hazardous materials,” “toxic substances,” “infectious wastes,” “biohazardous wastes,” “medical wastes,” “radioactive wastes” or which are otherwise listed, defined or regulated in any manner pursuant to any Environmental Laws.

(d)    “Tenant’s Hazardous Materials” means any Hazardous Materials resulting from the Environmental Activity by Tenant or any of Tenant’s Agents.

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13.2    Environmental Release. Tenant represents to Landlord that Tenant is aware that detectable amounts of Hazardous Materials have come to be located on, beneath and/or in the vicinity of the Premises. Tenant has made such investigations and inquiries as it deems appropriate to ascertain the effects, if any, of such substances and contaminants on its operations and persons using the Buildings and the Common Area. Landlord makes no representation or warranty with regard to the environmental condition of the Buildings, the Common Area or the Property. Tenant hereby releases Landlord and Landlord’s officers, directors, trustees, agents and employees from any and all claims, demands, debts, liabilities, and causes of action of whatever kind or nature, whether known or unknown or suspected or unsuspected which Tenant or any of Tenant’s Agents may have, claim to have, or which may hereafter accrue against the released parties or any of them, arising out of or relating to or in any way connected with Hazardous Materials presently in, on or under, or now or hereafter emanating from or migrating onto the Buildings or the Property (except to the extent such emanation or migration is caused by Landlord or Landlord’s Agents). In connection with such release, Tenant hereby waives any and all rights conferred upon it by the provisions of Section 1542 of the California Civil Code, which reads as follows:

A general release does not extend to claims which the creditor does not know or suspect to exist in his favor at the time of executing the release, which if known by him must have materially affected his settlement with the debtor.

13.3    Use of Hazardous Materials. Tenant shall not cause or permit any Hazardous Materials to be used, stored, discharged, released or disposed of in the Premises or cause any Hazardous Materials to be used, stored, discharged, released or disposed of in, from, under or about, the Property, or any other land or improvements in the vicinity of the Property, excepting only the types and minor quantities of Hazardous Materials which are normally used in connection with Tenant’s permitted use, operation and maintenance of the Premises and then only in strict accordance with all Legal Requirements, including all Environmental Laws (“Permitted Substances”). Tenant shall, at its own expense, procure, maintain in effect and comply with all conditions of any and all permits, licenses, and other governmental and regulatory approvals required for Tenant’s use of Hazardous Materials at the Premises, including, without limitation, discharge of appropriately treated materials or wastes into or through any sanitary sewer serving the Buildings. Tenant shall in all respects handle, treat, deal with and manage any and all Tenant’s Hazardous Materials in total conformity with all Environmental Laws and prudent industry practices regarding management of such Hazardous Materials. Without limiting the foregoing, if any Tenant’s Hazardous Materials result in contamination of the Buildings, or any soil or groundwater in, under or about the Property in each case to the extent the presence of same amounts to a violation of any Legal Requirement or poses a threat to human health or safety, Tenant, at its expense, shall promptly take all actions necessary to return the Buildings and/or the Property, to the condition existing prior to the appearance of the Tenant’s Hazardous Material, subject to Landlord’s right to approve Tenant’s proposed remediation method. On or prior to the Termination Date, Tenant shall cause all Tenant’s Hazardous Materials in, on, under or about

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the Buildings to be removed in accordance with and in compliance with all Legal Requirements. Tenant shall promptly notify Landlord and obtain Landlord’s written approval before taking any remedial action in response to the presence of any Tenant’s Hazardous Materials or entering into any settlement agreement, consent decree or other compromise with respect to any claims relating to Tenant’s Hazardous Materials.

13.4    Indemnity. Tenant shall indemnify, defend (by counsel reasonably acceptable to Landlord), protect and hold Landlord and Landlord’s trustees, directors, officers, agents, shareholders, direct or indirect beneficial owners and employees, any Leasehold Mortgagees, any Prior Lessors, and their respective successors and assigns (collectively, “Landlord’s Agents”), free and harmless from and against any and all claims, liabilities, penalties, forfeitures, losses or expenses (including reasonable attorneys’ and consultants’ fees and oversight and response costs) to the extent arising from (a) Environmental Activity by Tenant or Tenant’s Agents; or (b) failure of Tenant or Tenant’s Agents to comply with any Environmental Law with respect to Tenant’s Environmental Activity; or (c) Tenant’s failure to remove Tenant’s Hazardous Materials as required in Section 13.3.

13.5    No Lien. Tenant shall not suffer any Lien to be recorded against the Buildings or the Property as a consequence of any Tenant’s Hazardous Materials, including any so called state, federal or local “super fund” Lien related to the remediation of any Tenant’s Hazardous Materials in or about the Buildings or the Property.

13.6    Investigation. In the event Hazardous Materials are discovered in or about the Buildings or the Property, and Landlord reasonably believes that such Hazardous Materials are Tenant’s Hazardous Materials, then Landlord shall have the right to appoint a consultant to conduct an investigation to determine the nature and extent of such Hazardous Materials, whether such Hazardous Materials are Tenant’s Hazardous Materials, and the corrective measures, if any, required to remove such Hazardous Materials. If such Hazardous Materials are determined to be Tenant’s Hazardous Materials, Tenant, at its expense, shall comply with all investigation, remediation or other actions required by any applicable governmental authority and reasonably approved by Landlord and shall promptly reimburse Landlord for all costs incurred by Landlord in connection with such investigation, along with a fifteen percent (15%) administrative fee to cover Landlord’s costs and overhead in undertaking or supervising such work. The reimbursement and administrative fee shall be Additional Rent.

13.7    Notices. Tenant shall notify Landlord of any inquiry, test, claim, investigation or enforcement proceeding by or against Tenant or the Premises or the Property known to Tenant within five (5) business days of obtaining knowledge thereof concerning any Hazardous Materials. Tenant shall immediately notify Landlord of any release or discharge of Hazardous Materials on, in under or about the Property. Tenant acknowledges that Landlord, as the owner of the Property, shall have the sole right at its election and at

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Tenant’s expense, to negotiate, defend, approve and appeal any action taken or order issued with regard to Tenant’s Hazardous Materials by any applicable governmental authority.

13.8    Surrender. Tenant shall surrender the Premises to Landlord, upon the expiration or earlier termination of the Lease, free of Tenant’s Hazardous Materials except for Permitted Substances and other Hazardous Materials the presence of which would not and could not reasonably be expected to result in a violation of any Legal Requirements or pose a threat to human health or safety. If Tenant fails to so surrender the Premises, Tenant shall indemnify and hold Landlord harmless from all losses, costs, claims, damages and liabilities resulting from Tenant’s failure to surrender the Premises as required by this Section 13.8, including, without limitation, (a) any claims or damages arising in connection with the condition of the Premises, and (b) damages occasioned by Landlord’s inability to relet the Premises or a reduction in the fair market and/or rental value of the Buildings or any portion thereof, by reason of the existence of any Tenant’s Hazardous Materials.

13.9    Survival. The provisions of this Article 13 shall survive the expiration or earlier termination of this Lease.

14.    INDEMNITY; INSURANCE

14.1    Indemnity. Tenant shall indemnify, protect, defend and save and hold Landlord, Landlord’s Agents (the “Indemnified Parties”) harmless from and against any and all losses, costs, liabilities, claims, judgments, liens, damages (including consequential damages) and expenses, including, without limitation, reasonable attorneys’ fees and costs, and reasonable investigation costs, incurred in connection with or arising from: (a) any default by Tenant in the observance or performance of any of the terms, covenants or conditions of this Lease on Tenant’s part to be observed or performed, including Tenants obligations under Article 6 with respect to the Ground Lease, (b) the use or occupancy or manner of use or occupancy of the Premises, the Buildings and the Property by Tenant and Tenant’s Agents or any person claiming under Tenant, (c) the condition of the Premises, and any occurrence on the Premises, the Buildings or the Property from any cause whatsoever, except to the extent caused by the gross negligence or willful misconduct of the Indemnified Parties, and (d) any acts or omissions or negligence of Tenant or of Tenant’s Agents, in, on or about the Premises, the Buildings or the Common Area. In case any action or proceeding be brought, made or initiated against the Indemnified Parties relating to any matter covered by Tenant’s indemnification obligations under this Section or under Section 13.4, Tenant, upon notice from the Landlord, shall at its sole cost and expense, resist or defend such claim, action or proceeding by counsel approved by the Indemnified Parties. Notwithstanding the foregoing, each of the Indemnified Parties may retain its own counsel to defend or assist in defending any claim, action or proceeding, and Tenant shall pay the reasonable fees and disbursements of such counsel. Tenant’s obligations under this Section shall survive the expiration or earlier termination of this Lease. Each of the Indemnified Parties is an intended third-party beneficiary of this Section 14.1 and shall be entitled to enforce the provisions hereof.

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14.2    Insurance. Tenant shall procure at its sole cost and expense and keep in effect during the Term:

(a)    commercial general liability insurance covering Tenant’s operations in the Premises and the use and occupancy of the Premises. Such insurance shall include broad form contractual liability insurance coverage insuring Tenant’s obligations under this Lease. Such coverage shall be written on an “occurrence” form and shall have a minimum combined single limit of liability of not less than Ten Million Dollars ($10,000,000). Tenant’s policy shall be written to apply to all bodily injury, property damage, personal injury and other covered loss (however occasioned) occurring during the policy term, with at least the following endorsements to the extent such endorsements are generally available: (i) deleting any employee exclusion on personal injury coverage, (ii) including employees as additional insureds, (iii) providing broad form property damage coverage and products completed operations coverage (where applicable), (iv) deleting any liquor liability exclusions, and (v) providing for coverage of owned and non-owned automobile liability, if applicable. Such insurance shall name Landlord and any Leasehold Mortgagee and Prior Lessor designated by Landlord as an additional insured, shall specifically include the liability assumed hereunder by Tenant, shall provide that it is primary insurance, shall provide for severability of interests, shall further provide that an act or omission of one of the named insureds which would void or otherwise reduce coverage shall not reduce or void the coverage as to any insured, shall afford coverage for claims based on acts, omissions, injury or damage which occurred or arose (or the onset of which occurred or arose) in whole or in part during the policy period, and shall provide that Landlord will receive thirty (30) days’ written notice from the insurer prior to any cancellation;

(b)    commercial property insurance, including sprinkler leakages, vandalism and malicious mischief and plate glass damage covering all the items specified as Tenant’s Property and all other property of every description including stock-in-trade, furniture, fittings, installations, alterations, additions, partitions and fixtures or anything in the nature of a leasehold improvement made or installed by or on behalf of the Tenant in an amount of not less than one hundred percent (100%) of the full replacement cost thereof as shall from time to time be determined by Tenant in form satisfactory to Landlord;

(c)    Worker’s Compensation Insurance in the amounts and coverages required under worker’s compensation, disability and similar employee benefit laws applicable to Tenant and/or the Premises from time to time, and Employer’s Liability Insurance, with limits of not less than one million dollars ($1,000,000) such higher amounts as may be required by law; and

(d)    any other form or forms of insurance as Landlord may reasonably require from time to time (other than insurance that Landlord is required to maintain) in amounts and for insurable risks (on commercially reasonable terms) against which a prudent tenant would protect itself to the extent landlords of comparable buildings in the vicinity of the Buildings require their tenants to carry such other form(s) of insurance.

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14.3    Policies. All policies of insurance provided for herein shall be issued by insurance companies with general policyholders’ rating of not less than A, as rated in the most current available “Best’s Insurance Reports,” and not prohibited from doing business in the State of California, and shall, with the exception of Workers Compensation Insurance, include as additional insureds Landlord, and such Leasehold Mortgagees and Prior Lessors as Landlord specifies from time to time. Such policies shall be for the mutual and joint benefit and protection of Landlord, Tenant and others specified by Landlord. Certificates of insurance shall be delivered to Landlord prior to the delivery of possession of the Premises to Tenant and thereafter within thirty (30) days prior to the expiration of the term of each such policy. All commercial general liability and property damage policies shall contain a provision that Landlord and any other additional insured, although named as additional insureds, shall nevertheless be entitled to recover under said policies for a covered loss occasioned by it, its servants, agents and employees, by reason of Tenant’s negligence. As often as any policy shall expire or terminate, renewal or additional policies shall be procured and maintained by Tenant in like manner and to like extent. All such policies of insurance shall provide that the company writing said policy will give to Landlord thirty (30) days notice in writing in advance of any cancellation. All commercial general liability, property damage and other casualty policies shall be written on an occurrence basis. Landlord’s coverage shall not be contributory. No policy shall have a deductible in excess of $200,000 for any one occurrence.

14.4    Landlord’s Rights. Should Tenant fail to take out and keep in force each insurance policy required under this Article 14, or should such insurance not be approved by Landlord and should the Tenant not rectify the situation within two (2) business days after written notice from Landlord to Tenant, Landlord shall have the right, without assuming any obligation in connection therewith, to purchase such insurance at the sole cost of Tenant, and all costs incurred by Landlord shall be payable within five (5) days of demand to Landlord by Tenant as Additional Rent and without prejudice to any other rights and remedies of Landlord under this Lease. In addition, at any time, Landlord may elect to insure all or any part of the Premises under its own policy or policies of insurance, and the cost of any such policies shall be an Operating Expense hereunder.

14.5    Waiver of Subrogation. Notwithstanding anything to the contrary in this Lease, the parties hereto release each other and their respective agents, employees, successor, assignees and subtenants from all liability for injury to any person or damage to any property that is caused by or results from a risk (i) which is actually insured against, to the extent of receipt of payment under such policy (unless the failure to receive payment under any such policy results from a failure of the insured party to comply with or observe the terms and conditions of the insurance policy covering such liability, in which event, such release shall not be so limited), (ii) which is required to be insured against under this Lease, or (iii) which would normally be covered by the standard form of “all risk-extended coverage” casualty insurance, without regard to the negligence or willful misconduct of the entity so released. Landlord and Tenant shall each obtain from their respective insurers under all policies of fire, theft, and other property insurance maintained by either of them at

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any time during the Term insuring or covering the Project or any portion thereof of its contents therein, a waiver of all rights of subrogation which the insurer of one party might otherwise, if at all, have against the other party, and Landlord and Tenant shall each indemnify the other against any loss or expense, including reasonable attorneys’ fees, resulting from the failure to obtain such waiver.

14.6    No Liability. No approval by Landlord of any Tenant insurer, or the terms or conditions of any policy, or any coverage or amount of insurance, or any deductible amount shall be construed as a representation by Landlord of the solvency of the insurer or the sufficiency of any policy or any coverage or amount of insurance or deductible and Tenant assumes full risk and responsibility for any inadequacy of insurance coverage or any failure of insurers.

15.    ASSIGNMENT AND SUBLETTING

15.1    Consent Required. Except as otherwise explicitly provided herein, Tenant shall not directly or indirectly, voluntarily or by operation of law, sell, assign, encumber, pledge or otherwise transfer or hypothecate all or any part of its interest in or rights with respect to the Premises or its leasehold estate (collectively, “Assignment”), or permit all or any portion of the Premises to be occupied by anyone other than itself or sublet all or any portion of the Premises (collectively, “Sublease”) without Landlord’s prior written consent, which Landlord may withhold in its sole and absolute discretion.

15.2    Notice. If Tenant desires to enter into a Sublease of the Premises or Assignment of this Lease, it shall give written notice (the “Transfer Notice”) to Landlord of its intention to do so, which notice shall contain (a) the name and address of the proposed assignee, subtenant or occupant (the “Transferee”), (b) the nature of the proposed Transferee’s business to be carried on in the Premises, (c) the terms and provisions of the proposed Assignment or Sublease, and (d) such financial information as Landlord may reasonably request concerning the proposed Transferee.

15.3    Terms of Approval. Landlord shall respond to Tenant’s request for approval within fifteen (l5) business days after receipt of the Transfer Notice, and if Landlord fails to respond within such fifteen (15) day period, Landlord shall be deemed to have disapproved such proposed Assignment or Sublease. If Landlord approves the proposed Assignment or Sublease, or if an Assignment or Sublease is permitted by operation of law, Tenant may, not later than thirty (30) days thereafter, enter into the Assignment or Sublease with the proposed Transferee upon the terms and conditions set forth in the Transfer Notice, and one hundred percent (100%) of the Excess Rent received by Tenant shall be paid to Landlord as and when received by Tenant. “Excess Rent” means the gross revenue received from the Transferee during the Sublease term or with respect to the Assignment, less (a) the gross revenue paid to Landlord by Tenant during the period of the Sublease term or during the Assignment; (b) any reasonably documented tenant improvement allowance or other economic concession (planning allowance, moving expenses, etc.), paid by Tenant to the Transferee or to a third party in connection with the transfer, (d) customary and reasonable

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external brokers’ commissions to the extent paid and documented; (e) reasonable attorneys’ fees; and (f) reasonable costs of advertising the space for Sublease or Assignment (collectively, “Transfer Costs”). Tenant shall not have to pay to Landlord any Excess Rent until Tenant has recovered its Transfer Costs.

15.4    Certain Conditions Applicable to All Sublettings and Assignments. Any assignment or subletting will also be subject to the following conditions:

(a)    At least thirty (30) days prior to the date on which such subletting or assignment shall become effective, Tenant shall furnish to Landlord all of the documents and information required under this Section 15.4 together with the Transfer Notice.

(b)    At both the time of Tenant’s furnishing to Landlord the information and documents required under this Section 15.4 and the time at which the subletting or assignment becomes effective, an Event of Default shall not have occurred.

(c)    If required, the consent of any Leasehold Mortgagee under such Leasehold Mortgage shall have been obtained and Tenant shall have paid to Landlord, or at Landlord’s election reimbursed Landlord for, any charges or payments which are the responsibility of Landlord under the Leasehold Mortgage in connection with such subletting or assignment.

(d)    Tenant shall furnish to Landlord a copy of the final executed copy of the Sublease or Assignment documents used in connection with the Sublease or Assignment at, and of each instrument delivered in connection therewith within five (5) business days after the execution and delivery thereof.

(e)    Such Sublease or Assignment shall be for the actual use and physical occupancy of the Premises, in the case of an Assignment, and the portion of the Premises sublet, in the case of a Sublease, by the assignee or subtenant, as applicable.

(f)    No assignee or subtenant shall be a person having, directly or indirectly, sovereign or diplomatic immunity or having immunity from (or otherwise not being subject to) the service of process in and the jurisdiction of the courts of California.

(g)    Following the proposed Assignment or Sublease, the assignee or subtenant shall use the Premises only for the specific use permitted under Article 7.

(h)    The instrument of Sublease or Assignment shall not purport to grant to the subtenant or assignee thereunder any rights greater than or inconsistent with those granted to Tenant under this Lease, including for this purpose any term in the instrument of assignment or sublease for which there is no corresponding term in this Lease resulting in such greater rights or inconsistency.

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(i)    In the case of any subletting, the term thereof (including any extension options) shall in all respects be consistent with Article 10 and shall not prevent Tenant from delivering vacant possession, free and clear of any subtenancies, of the Premises or the applicable portion thereof, on the Expiration Date.

15.5    Short Term Subletting. Notwithstanding the provisions of Section 15.1 to the contrary, with Landlord’s prior consent which consent shall not be unreasonably withheld or delayed, Tenant can enter into a Sublease of one floor or less of Rentable Area with one (i) or more sublessees (but all of such subleases shall cover, individually or collectively, not more than 80,000 square feet of Rentable Area in the aggregate at any given time) for a term of less than the lesser of (i) twenty-four (24) months or (ii) the remainder of the Term, provided that fifty percent (50%) of the Excess Rent received by Tenant shall be paid to Landlord as and when received by Tenant and Tenant shall be entitled to keep the remaining fifty percent (50%). If Landlord does not respond to Tenant’s written request to a proposed short term Sublease meeting the requirements set forth above, within ten (10) business days following receipt thereof, Landlord shall be deemed to have approved such short term Sublease.

15.6    No Release. No Sublease or Assignment by Tenant nor any consent by Landlord thereto shall relieve Tenant of any obligation to be performed by Tenant under this Lease. Any Sublease or Assignment that is not in compliance with this Article shall be null and void and, at the option of Landlord, shall constitute an Event of Default by Tenant under this Lease, and Landlord shall be entitled to pursue any right or remedy available to Landlord under the terms of this Lease or under the laws of the State of California. The acceptance of any Rent or other payments by Landlord from a proposed Transferee shall not constitute consent to such Sublease or Assignment by Landlord or a recognition of any Transferee, or a waiver by Landlord of any failure of Tenant or other Transferor to comply with this Article.

15.7    Change in Control; Successor Entity. (a) For the purposes of this Lease, any transfer of control of Tenant, by operation of law or otherwise, whether pursuant to one transaction or a series of transactions and whether at one time or over a period of time (a “Change in Control”), shall be deemed an Assignment and shall be subject to all of the provisions of this Article 15, including, without limitation, the requirement that Tenant obtain Landlord’s prior written consent thereto, except as provided in Section 15.5. For purposes of this Section 15.7, a transfer of control of Tenant shall be deemed to have occurred if there shall be any of the following: (i) a transfer of the ultimate beneficial ownership of fifty percent (50%) or more of the equity interests in Tenant or of any class of equity interests in Tenant, including, without limitation, by the issuance of additional shares or other equity interests in Tenant, (ii) a transfer of the right to receive fifty percent (50%) or more of any category of distributions made by Tenant, or (iii) a transfer of the right to direct the management of Tenant, by contract or otherwise. Notwithstanding the foregoing, (i) if Tenant is a Public Company, Landlord’s consent shall not be required with respect to transfers of the capital stock of such Tenant on a national securities exchange, unless such

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transfers constitute a Change of Control and (ii) Landlord’s consent shall not be required with respect to transfers to Successor Entities permitted in paragraph (b) below.

(b)     Tenant shall have the right, subject to Tenant’s complying with Section 15.4, upon not less than fifteen (15) days’ prior written notice to Landlord, to assign its entire interest in this Lease and the leasehold estate hereby created to a Successor Entity (as such term is hereinafter defined) of Tenant, provided that the Successor Entity shall not be entitled, either directly or indirectly, to diplomatic or sovereign immunity and shall be subject to the service of process in and the jurisdiction of the courts of the State of California. A “Successor Entity”, as used in this Section shall mean a corporation or other business entity (i) into which or with which Tenant, its corporate or other successors or permitted assigns, is merged or consolidated, in accordance with applicable statutory provisions for the merger or consolidation of a corporation or other business entity or (ii) which acquires all or substantially all of the Tenant’s assets, provided that by operation of law or by effective provisions contained in the instruments of merger or consolidation or acquisition, the liabilities of the entities participating in such merger or consolidation or acquisition are assumed by the corporation or other business entity surviving such merger or consolidation or acquisition, above, provided that, (x) immediately after giving effect to any such merger or consolidation or acquisition, as the case may be, the corporation or other business entity surviving such merger or acquisition shall have a Net Worth of not less than the Minimum Net Worth and (y) proof of such assets, capitalization and Net Worth, as evidenced by a statement from an Acceptable Accounting Firm, shall have been delivered to Landlord at least ten (10) days prior to the effective date of any such merger or consolidation, or acquisition and assumption, as the case may be.

15.8     Assumption of Obligations. Any Transferee shall, from and after the effective date of the Assignment, assume all obligations of Tenant under this Lease with respect to the transferred space and shall be and remain liable jointly and severally with Tenant for the payment of Base Rent and Additional Rent, and for the performance of all of the terms, covenants, conditions and agreements herein contained on Tenant’s part to be performed for the Term as it relates to the transferred space. No Assignment shall be binding on Landlord unless Tenant complies with the provisions of this Article 15 and delivers to Landlord a counterpart of the Assignment and an instrument that contains a covenant of assumption reasonably satisfactory in substance and form to Landlord, and consistent with the requirements of this Section.

15.9     Insolvency or Bankruptcy. In no event shall this Lease be assigned or assignable by operation of law or by voluntary or involuntary bankruptcy proceedings or otherwise and in no event shall this Lease or any rights or privileges hereunder be an asset of Tenant under any bankruptcy, insolvency, reorganization or other debtor relief proceedings.

15.10     Recovery of Premises. If Landlord shall recover or come into possession of the Premises before the date herein fixed for the termination of this Lease, Landlord shall have the right, at its option, to take over any and all Subleases of the Premises

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or any part thereof made by Tenant and to succeed to all the rights of said Subleases or such of them as it may elect to take over. Tenant hereby expressly assigns and transfers to Landlord such of the Subleases as Landlord may elect to take over at the time of such recovery of possession, such assignment and transfer not to be effective until the termination of this Lease or re-entry by Landlord hereunder or if Landlord shall otherwise succeed to Tenant’s interest in the Premises, at which time Tenant shall upon request of Landlord, execute acknowledge and deliver to Landlord such further assignments and transfers as may be necessary to vest in Landlord the then existing Subleases. Each subletting hereunder is subject to the condition and by its acceptance of and entry into a Sublease, each subtenant thereunder shall be deemed conclusively to have thereby agreed from and after the termination of this Lease or re-entry by Landlord hereunder or if Landlord shall otherwise succeed to Tenant’s interest in the Premises, that such subtenant shall waive any right to surrender possession or terminate the Sublease and, at Landlord’s election, such subtenant shall be bound to Landlord for the balance of the term of such Sublease and shall attorn to and recognize Landlord as its landlord under all of the then executory terms of such Sublease, except that Landlord shall not (i) be liable for any previous act, omission or negligence of Tenant under such Sublease, (ii) be subject to any counterclaim, defense or offset not expressly provided for in such Sublease, (iii) be bound by any previous modification or amendment of such Sublease or by any previous payment of more than one month’s rent and additional rent which shall be payable as provided in the Sublease, (iv) be obligated to repair the subleased space or the Buildings or any part thereof in the event of casualty or condemnation except as otherwise required herein, or (v) be obligated to perform any work in the subleased space beyond the requirements of this Lease.

15.11     Easements. Tenant shall not, without the prior written consent of Landlord (in Landlord’s sole and absolute discretion), impose any easements or similar encumbrances upon the Premises or any part thereof.

16.     DEFAULT

16.1     Event of Default. The occurrence of any of the following shall be an “Event of Default”:

(a)    Failure on the part of Tenant to pay any part of the Base Rent or Additional Rent, or any other sums of money that Tenant is required to pay under this Lease where such failure continues for a period of five (5) business days after written notice of default from Landlord to Tenant; provided, however, that Landlord shall not be required to provide such notice more than three (3) times during any twenty-four (24) month period during the Term with respect to non-payment of Base Rent or Additional Rent payable to Landlord, the third such non-payment constituting default without requirement of notice. Landlord’s notice to Tenant pursuant to this subsection shall be deemed to be the notice required under California Code of Civil Procedure Section 1161.

(b)    Failure (i) on the part of Tenant to comply with the obligations under Section 4.7 which failure, unless otherwise provided in Section 4.7, continues for a

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period of ten (10) days after written notice from Landlord or (ii) on the part of either or both of the SGI Parties to timely pay any amounts due and owing or otherwise perform under the indemnity provisions of the Purchase Agreements or the Ground Lease Assignments which failure continues for a period of ten (10) days after written notice from Landlord.

(c)     Failure of Tenant to perform any other covenant, condition or requirement of this Lease when such failure shall continue for a period of thirty (30) days; provided that if the nature of the default is such that more than thirty (30) days are reasonably required for its cure, then an Event of Default shall not be deemed to have occurred if Tenant shall commence such cure within said thirty (30) day period and thereafter diligently and continuously prosecute such cure to completion and shall complete such cure within one hundred twenty (120) days after such failure shall first occur. Landlord’s notice to Tenant pursuant to this subsection shall be deemed to be the notice required under California Code of Civil Procedure Section 1161.

(d)     The abandonment of the entire Premises by Tenant.

(e)     Tenant shall admit in writing its inability to pay its debts generally as they become due, file a petition in bankruptcy, insolvency, reorganization, dissolution or liquidation under any law or statute of any government or any subdivision thereof either now or hereafter in effect, make an assignment for the benefit of its creditors, consent to or acquiesce in the appointment of a receiver of itself or of the whole or any substantial part of the Premises.

(f)     A court of competent jurisdiction shall enter an order, judgment or decree appointing a receiver of Tenant or of the whole or any substantial part of the Premises and such order, judgment or decree shall not be vacated, set aside or stayed within thirty (30) days after the date of entry of such order, judgment, or decree, or a stay thereof shall be thereafter set aside.

(g)     A court of competent jurisdiction shall enter an order, judgment or decree approving a petition filed against Tenant under any bankruptcy, insolvency, reorganization, dissolution or liquidation law or statute of the federal or state government or any subdivision of either now or hereafter in effect, and such order, judgment or decree shall not be vacated, set aside or stayed within thirty (30) days from the date of entry of such order, judgment or decree, or a stay thereof shall be thereafter set aside.

(h)     The occurrence of (i) the acceleration of the obligations of Tenant under any Indebtedness or other obligations under which it is liable for more than $20,000,000 or (ii) the maturity of $20,000,000 or more of Indebtedness of Tenant by its terms which has not been paid or (iii) the entry of any judgment against Tenant for $20,000,000 or more which has not been vacated or appealed and stayed; provided that for the purposes of clauses (i) and (ii), the term indebtedness shall not include indebtedness for the deferred purchase price of property or services.

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(i)     The occurrence of an Event of Default under either of the Other Lasses.

16.2     Remedies. Upon the occurrence of an Event of Default, Landlord shall have the following rights and remedies:

(a)     The right to terminate this Lease upon written notice to Tenant, in which event Tenant shall immediately surrender possession of the Premises in accordance with Article 20.

(b)     The right to bring a summary action for possession of the Premises.

(c)     The rights and remedies described in California Civil Code Section 1951.2, including without limitation the right to recover from Tenant all Rent due through the date this Lease terminates (with interest at the Interest Rate until paid), plus the present worth of the Rent payable hereunder for the balance of the Term, plus any amount necessary to compensate Landlord for the detriment proximately caused by Tenant’s failure to perform its obligations under this Lease or which in the ordinary course of things would be likely to result therefrom which includes, without limitation, (i) the unamortized portion of any brokerage or real estate agent’s commissions paid in connection with the execution of this Lease, (ii) any direct costs or expenses incurred by Landlord in recovering possession of the Premises, maintaining or preserving the Premises after such default, (iii) preparing the Premises for reletting to a new tenant, (iv) any repairs or alterations to the Premises for such reletting, (v) leasing commissions, architect’s fees and any other costs necessary or appropriate either to relet the Premises or, if reasonably necessary in order to relet the Premises, to adapt them to another beneficial use by Landlord and (vi) such amounts in addition to or in lieu of the foregoing as may be permitted from time to time by Applicable Law to the extent that such payment would not result in a duplicative recovery.

(d)     The rights and remedies described in California Civil Code Section 1951.4 which allow Landlord to continue this Lease in effect and to enforce all of Landlord’s rights and remedies under this Lease, including the right to recover Base Rent, Additional Rent and other charges payable hereunder as they become due. Acts of maintenance or preservation, efforts to relet the Premises or the appointment of a receiver upon Landlord’s initiative to protect its interest under this Lease shall not constitute a termination of Tenant’s right to possession.

(e)     The right and power, as attorney-in-fact for Tenant, to sublet the Premises, to collect rents from all subtenants and to provide or arrange for the provision of all services and fulfill all obligations of Tenant under any permitted subleases. Landlord is hereby authorized on behalf of Tenant, but shall have absolutely no obligation, to provide such services and fulfill such obligations and to incur all such expenses and costs as Landlord deems necessary. Landlord is hereby authorized, but not obligated, to relet the Premises or any part thereof on behalf of Tenant, to incur such expenses as may be necessary to effect a

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relet and make said relet for such term or terms, upon such conditions and at such rental as Landlord in its reasonable discretion may deem proper. Tenant shall be liable immediately to Landlord for all costs and expenses Landlord incurs in reletting the Premises including, without limitation, brokers’ commissions, expenses of remodeling the Premises required by the reletting, and the cost of collecting rents and fulfilling the obligations of Tenant to any subtenant. If Landlord relets the Premises or any portion thereof, such reletting shall not relieve Tenant of any obligation hereunder, except that Landlord shall apply the rent or other proceeds actually collected by it as a result of such reletting against any amounts due from Tenant hereunder to the extent that such rent or other proceeds compensate Landlord for the nonperformance of any obligation of Tenant hereunder. Such payments by Tenant shall be due at such times as are provided elsewhere in this Lease, and Landlord need not wait until the termination of this Lease, by expiration of the Term or otherwise, to recover them by legal action or in any other manner. Landlord may execute any sublease made pursuant to this Section in its own name, and the tenant thereunder shall be under no obligation to see to the application by Landlord of any rent or other proceeds, nor shall Tenant have any right to collect any such rent or other proceeds. Landlord shall not by any reentry or other act be deemed to have accepted any surrender by Tenant of the Premises or Tenant’s interest therein, or be deemed to have otherwise terminated this Lease, or to have relieved Tenant of any obligation hereunder, unless Landlord shall have given Tenant express written notice of Landlord’s election to do so as set forth herein.

(f)     The right to enjoin, and any other remedy or right now or hereafter available to a Landlord against a defaulting tenant under the laws of the State of California or the equitable powers of its courts, and not otherwise specifically reserved herein.

(g)     If this Lease provides for a postponement of deferral of any Rent, or for commencement of payment of Rent to a date later than the Commencement Date, or for a period of “free” Rent or any other Rent concession (collectively, “Abated Rent”), the right upon an Event of Default to demand immediate payment of the value of the Abated Rent.

16.3     Cumulative Remedies. The various rights and remedies reserved to Landlord, including those not specifically described herein, shall, to the extent that the exercise of such right and/or remedy does not result in a duplicative recovery, be cumulative and shall be in addition to every other right or remedy provided for in this Lease or now or hereafter existing at law or in equity and the exercise of the rights or remedies provided for in this Lease or now or hereafter existing at law or in equity shall not preclude the simultaneous or later exercise by Landlord of any or all other rights and remedies.

16.4     Waiver of Redemption by Tenant. Tenant hereby waives any right to redeem, by order or judgment of any court or by any legal process or writ, Tenant’s right of occupancy of the Premises after any termination of this Lease.

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16.5     Landlord’s Right to Cure. If Tenant shall fail or neglect to do or perform any covenant or condition required under this Lease and such failure shall not be cured within any applicable grace period, Landlord may, without waiving such default, on five (5) business days notice to Tenant, but shall not be required to, make any payment payable by Tenant hereunder, discharge any lien, take out, pay for and maintain any insurance required hereunder, or do or perform or cause to be done or performed any such other act or thing (entering upon the Premises for such purposes, if Landlord shall so elect), and Landlord shall not be or be held liable or in any way responsible for any loss, disturbance, inconvenience, annoyance or damage resulting to Tenant on account thereof. Tenant shall repay to Landlord within five (5) business days following demand the entire out-of-pocket cost and expense incurred by Landlord in connection with the cure, including, without limitation, compensation to the agents, consultants and contractors of Landlord and reasonable attorneys’ fees and expenses. Landlord shall also impose a thirty percent (30%) administrative fee to compensate Landlord for the cost of performing on behalf of Tenant. Landlord may act upon shorter notice or no notice at all if necessary in Landlord’s reasonable judgment to meet an emergency situation to protect Landlord’s interest in the Premises. Landlord shall not be required to inquire into the correctness of the amount of validity or any tax or lien that may be paid by Landlord and Landlord shall be duly protected in paying the amount of any such tax or lien claimed and in such event Landlord also shall have the full authority, in Landlord’s sole judgment and discretion and without prior notice to or approval by Tenant, to settle or compromise any such lien or tax. Any act or thing done by Landlord pursuant to the provisions of this Section shall not be or be construed as a waiver of any such failure by Tenant, or as a waiver of any term, covenant, agreement or condition herein contained or of the performance thereof.

16.6     Landlord’s Default. Landlord shall be in default under this Lease if Landlord fails to perform obligations required of Landlord within thirty (30) days after written notice by Tenant to Landlord and to any Leasehold Mortgagee or Prior Lessor whose name and address shall have heretofore been furnished to Tenant in writing, specifying wherein Landlord has failed to perform such obligations; provided, however, that if the nature of Landlord’s obligations is such that more than thirty (30) day are required for performance, then Landlord shall not be in default if Landlord commences performance within such thirty (30) day period and thereafter diligently prosecutes the same to completion. Tenant shall be entitled to actual (but not consequential) damages in the event of an uncured default by Landlord, but the provisions of Article 18 shall apply to any Landlord default and Tenant shall not have the right to terminate this Lease as a result of a Landlord default.

16.7     Survival. The provisions of this Article 16 shall survive termination of this Lease.

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17.     LANDLORD’S RESERVED RIGHTS

17.1     Control of Common Area. Landlord reserves the right, at any time and from time to time, to make alterations, additions, repairs or improvements to all or any part of the Buildings (including the Structural Components and Building Systems), the Common Area and the Property; provided, however, that Landlord shall not materially and adversely affect Tenant’s use of the Premises or its rights of access and parking and not unreasonably interfere with Tenant’s business or properties. Landlord may make changes at any time and from time to time in the size, shape, location, use and extent of the Common Area, and no such change shall entitle Tenant to any abatement of rent or damages; provided, however, that Landlord shall not to materially and adversely affect Tenant’s use of the Premises or its rights of access and parking and not unreasonably interfere with Tenant’s business or properties. Except as otherwise provided herein, Landlord shall at all times during the Term have control of the Structural Components and the Common Area, and may at any time and from time to time during the Term restrain any use or occupancy of the Common Area except as authorized by the Rules and Regulations. Landlord may temporarily close any portion of the Common Area for repairs or alterations, to prevent a dedication or the accrual of prescriptive rights, or for any other reason deemed sufficient by Landlord; provided, however, that Landlord shall not to materially and adversely affect Tenant’s use of the Premises or its rights of access and parking and not unreasonably interfere with Tenant’s business or properties. Tenant’s rights in and to the Common Area shall at all times be subject to the rights of Landlord and Tenant shall keep the Common Area free and clear of any obstructions created or permitted by Tenant or resulting from Tenant’s operations.

17.2     Access. Landlord reserves (for itself and its agents, consultants, contractors and employees) the right to enter the Premises at all reasonable times and, except in cases of emergency, after giving Tenant reasonable notice, to inspect the Premises, to supply any service to be provided by Landlord hereunder, to show the Premises to prospective purchasers, mortgagees or tenants (during the last year of the Term), to post notices of nonresponsibility, and to alter, improve or repair the Premises and any portion of any of the Buildings, without abatement of Rent, and may for that purpose erect, use and maintain necessary structures in and through the Premises and the Buildings where reasonably required by the character of the work to be performed. Landlord will comply with legal access restrictions applicable to special security areas in the Premises. Landlord shall use reasonable efforts not to unreasonably interfere with Tenant’s use of the Premises. Tenant hereby waives any claim for damages for any injury or inconvenience to or interference with Tenant’s business, any loss of occupancy or quiet enjoyment of the Premises or any other loss occasioned thereby. All locks for all of the doors in, upon and about the Premises, excluding Tenant’s vaults and safes or special security areas (designated in advance in writing by Tenant) shall at all times be keyed to the Buildings master system and Landlord shall at all times have and retain a key with which to unlock all of said doors. Landlord shall have the right to use any and all means that Landlord may deem necessary or proper to open said doors in an emergency in order to obtain entry to any portion of the

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Premises, and any entry to the Premises or portions thereof obtained by Landlord by any of said means, or otherwise, shall not under any circumstances be construed or deemed to be a forcible or unlawful entry into, or a detainer of, the Premises, or an eviction, actual or constructive, of Tenant from the Premises or any portion thereof.

17.3     Easements. Subject to the term of covenants and restrictions encumbering the premises, Landlord reserves the right to grant or relocate all easements and rights of way which Landlord in its sole discretion may deem necessary or appropriate, provided that the grant or relocation of easements shall not materially and adversely affect Tenant’s use of the Premises or its rights of access and parking and not unreasonably interfere with Tenant’s business or properties. If any such grant or relocation will incur costs or expenses which are Operating Expenses hereunder, Landlord’s rights under this Section 17.3 shall be exercised in its reasonable discretion.

17.4     Use of Additional Areas. Subject to the provisions of Articles 33, Landlord reserves the exclusive right to use any air space above the Buildings and the Property, the roof and exterior walls of the Buildings and the land beneath the Buildings; provided that such use shall not materially impede Tenant’s use of and access to the Premises.

17.5     Subordination. (a) Leasehold Mortgages. Landlord shall have the right to enter into such Leasehold Mortgages as Landlord shall elect in its sole discretion. This Lease is and shall be subject and subordinate to each and any Leasehold Mortgage and to all advances under any Leasehold Mortgage referred to above, and any restatements, renewals, increases, supplements, modifications, consolidations, spreaders, replacements, substitutions, or extensions of any Leasehold Mortgage, provided that (i) the Leasehold Mortgagee thereunder shall have entered into an SNDA in favor of Tenant in such Leasehold Mortgagee’s customary form and (ii) the Leasehold Mortgage shall provide that, subject to compliance with procedures and conditions customary for construction loan disbursements (including obtaining lien waivers and title insurance endorsements), be made available to Landlord for purposes of a restoration to the extent that Landlord would under Section 19.3 be required to make such proceeds available to Tenant.

(b)     Prior Leases. Landlord shall have the right to enter into such Prior Leases and any modifications, amendments, supplements, replacements, extensions, renewals or substitutions thereto or thereof as Landlord shall elect in its sole discretion, provided the same does not result in the imposition on Tenant of any obligations that are materially more onerous than those imposed under this Lease or that otherwise materially adversely affect Tenant. This Lease is and shall be subject and subordinate to each and any Prior Lease provided that the Prior Lessor thereunder shall have entered into an SNDA in favor of Tenant, and to any modifications, amendments, supplements, replacements, extensions, renewals or substitutions thereto or thereof.

(c)     Attornment. Tenant agrees that this Lease shall not be terminable by Tenant by reason of any foreclosure of a Leasehold Mortgage or any other

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mortgage affecting the Premises, nor by reason of the institution of any suit, action, summary or other proceeding against Landlord or any foreclosure proceeding brought by the holder of any Leasehold Mortgage or other mortgage affecting the Premises to recover possession of the Premises by operation of law or otherwise or by reason of the termination of any Prior Lease and that the same shall not result in the cancellation or termination of this Lease by Tenant or of the obligations of Tenant hereunder. If at any time prior to the expiration of the Term, any Prior Lessor or Leasehold Mortgagee comes into possession of the Premises or a receiver shall be appointed for Landlord’s interest in the Premises, Tenant agrees, at the election and upon demand of any such Prior Lessor or Leasehold Mortgagee in possession, to attorn, from time to time, to any such Prior Lessor or Leasehold Mortgagee or any person acquiring the interest of Landlord as a result of any such Prior Lease termination or as a result of a foreclosure of a Leasehold Mortgage or the granting of a deed or assignment in lieu of foreclosure, upon the then executory terms and conditions of this Lease for the remainder of the Term. The provisions of this Section 17.5 shall inure to the benefit of any such successor Landlord, shall apply notwithstanding that, as a matter of law, this Lease may terminate upon the termination of a Prior Lease or foreclosure of a Leasehold Mortgage, and shall be self-operative upon any such demand, and no further instrument shall be required to give effect to said provisions. Tenant, however, upon demand of any such successor Landlord, shall execute, from time to time, instruments in confirmation of the forgoing provisions of this Section 17.5 reasonably satisfactory to any such successor Landlord and Tenant, acknowledging such attornment and setting forth in the terms and conditions of its tenancy. Nothing contained in this Section shall be construed to impair any right otherwise exercisable by any such successor Landlord.

(d)     Leasehold Mortgagee Cure Rights. In the event of any act or omission by Landlord which would give Tenant the right to terminate this Lease or to claim a partial or total eviction, pursuant to the terms of this Lease, if any, Tenant will not exercise any such right until (i) it has given written notice of such act or omission to the holder(s) of any Leasehold Mortgages to which this Lease shall be subordinate, whose name and address shall previously have been furnished to Tenant, by delivering such notice of such act or omission addressed to such holders at the last address so furnished, and (ii) in the case of any such act, omission or default that can be cured by the payment of money, until thirty (30) days shall have elapsed following the giving of such notice, or (ii) in the case of any other such act, omission or default, until a reasonable period for remedying such act, omission or default shall have elapsed following the giving of such notice and following the time when any such holder shall have become entitled under its Leasehold Mortgage to remedy the same, including such time as may be necessary to acquire possession of the Premises if possession is necessary to effect such cure, provided any such holder with reasonable diligence, shall (x) pursue such remedies as are available to it under its Leasehold Mortgage so as to be able to remedy the act, omission or default, and (y) thereafter shall have commenced and continued to remedy such act, omission or default or cause the same to be remedied; provided, however, that the agreements of Tenant contained in this Section 17.5 shall be subject to the terms of any SNDA between Tenant and any such holder(s).

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(e)     Amendments Requested by Leasehold Mortgagee. If, in connection with obtaining any financing or refinancing or any increases, restatements, renewals, supplements, modifications, consolidations, replacements, substitutions or extensions thereof, a prospective or existing Leasehold Mortgagee and/or holder of an interest in any loan secured by a Leasehold Mortgage, as the case may be, shall request amendments to or modifications of this Lease as a condition to the same, Tenant shall promptly execute such amendments or modifications upon demand as long as (i) the modifications do not affect the Rent or the Term or the Letter of Credit and (ii) such amendments or modifications do not otherwise materially increase Tenant’s obligations or materially diminish Tenant’s rights hereunder. In addition, Tenant shall deliver any financial statements or other information requested by Landlord (or any prospective or existing lender) in order to obtain such financing or refinancing, provided that Tenant shall not be required to disclose any non-public information relating to Tenant. Furthermore, Tenant, at Tenant’s expense, shall cause counsel reasonably acceptable to a prospective Leasehold Mortgagee to deliver legal opinions reasonably required by such prospective Leasehold Mortgagee relating to the due authorization, execution and delivery of this Lease and any amendments thereto, the validity and enforceability of such agreements, and other customary matters.

18.     LIMITATION OF LANDLORD’S LIABILITY

18.1     Limitation. Landlord shall not be responsible for or liable to Tenant and Tenant hereby releases Landlord, waives all claims against Landlord and assumes the risk for any injury, loss or damage to any person or property in or about the Premises, the Buildings or the Property by or from any cause whatsoever (other than Landlord’s gross negligence or willful misconduct) including, without limitation, (a) acts or omissions of persons occupying adjoining premises, (b) theft or vandalism, (c) burst, stopped or leaking water, gas, sewer or steam pipes, (d) loss of utility service, (e) accident, fire or casualty, (f) nuisance, and (g) work done by Landlord in the Property, the Buildings, the Common Area or the Premises; notwithstanding the foregoing, Landlord shall remain liable for compliance with its express obligations hereunder. Even if due to the gross negligence or willful misconduct of Landlord, Tenant hereby waives any claim for consequential damages in connection therewith. There shall be no abatement of Rent and no liability of Landlord by reason of any injury to or interference with Tenant’s business or inconvenience or annoyance to Tenant arising from the making of any repairs, alterations or improvements to any portion of the Buildings or to fixtures, appurtenances and equipment therein, other than such liability as may be imposed upon Landlord by law or for Landlord’s negligence or willful misconduct. No interference with Tenant’s operations in the Premises shall constitute a constructive or other eviction of Tenant. Tenant hereby waives and releases any right it may have to make repairs at Landlord’s expense under Sections 1941 and 1942 of the California Civil Code, or under any similar law, statute or ordinance now or hereafter in effect other than as expressly provided in this Lease.

18.2     Sale of Property. It is agreed that Landlord may at any time sell, assign or transfer its interest as landlord in and to this Lease, and may at any time sell, assign

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or transfer its interest in and to the Property. In the event of any transfer of Landlord’s interest in the Property, the transferor shall be automatically relieved of any and all of Landlord’s obligations and liabilities accruing from and after the date of such transfer; provided that the transferee assumes all of Landlord’s obligations under this Lease. Tenant hereby agrees to attorn to Landlord’s assignee, transferee, or purchaser from and after the date of notice to Tenant of such assignment, transfer or sale, in the same manner and with the same force and effect as though this Lease were made in the first instance by and between Tenant and the assignee, transferee or purchaser.

18.3    No Personal Liability. In the event of any default by Landlord hereunder, Tenant shall look only to Landlord’s interest in the Property and rents therefrom and any available insurance proceeds for the satisfaction of Tenant’s remedies, and no other property or assets of Landlord or any trustee, partner, member, officer or director thereof, disclosed or undisclosed, shall be subject to levy, execution or other enforcement procedure for the satisfaction of Tenant’s remedies under or with respect to this Lease.

18.4    Landlord’s Consent or Approval; Limitation on Damages. (a) In the event that Tenant shall claim or assert that Landlord has violated or failed to perform a covenant of Landlord not to unreasonably withhold, delay or condition Landlord’s consent or approval, or in any case where Landlord’s reasonableness in exercising its judgment is in issue, Tenant’s sole remedy shall be an action for specific performance, declaratory judgment or injunction, and in no event shall Tenant be entitled to any money damages for a breach of such covenant, and in no event shall Tenant claim or assert any claims for money damages in any action or by way of set-off, defense or counterclaim, and Tenant hereby specifically waives the right to any money damages, set-off, defense, counterclaim or other remedies; provided, however, that Tenant shall have the right to determine any dispute between Landlord and Tenant as to whether Landlord has violated or failed to perform a covenant of Landlord not unreasonably to withhold, delay or condition Landlord’s consent or where Landlord’s reasonableness in exercising its judgment is in issue, or any other dispute which by the express terms of this Lease provides that it shall be resolved by arbitration, in each case by arbitration in the County of Santa Clara, California in accordance with the provisions of this Section 18.4. Within ten (10) days next following the giving of any notice by Tenant to Landlord stating that it wishes such dispute to be so determined, Landlord and Tenant shall each give notice to each other setting forth the name and address of an arbitrator designated by the party giving notice. If either party shall fail to give notice of such designation within said ten (10) days, then the arbitrator chosen by the other side shall make the determination alone. The two arbitrators shall designate a third arbitrator. If the two arbitrators shall fail to agree upon the designation of a third arbitrator within five (5) days after the designation of the second arbitrator, then either party may apply to any court having jurisdiction, requesting the designation of such arbitrator. Notwithstanding the foregoing, in the event of disputes relating to less than $100,000, one (1) arbitrator shall be selected in accordance with the then prevailing Commercial Rules of the American Arbitration Association. All arbitrators shall be persons who shall have had at least ten (10) years experience arbitrating or mediating disputes relating to California office leases or who shall otherwise be approved by the

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parties, and shall not be financially or contractually related to Landlord or Tenant. The three arbitrators shall conduct such hearings as they deem appropriate, making their determination in writing and give notice to Landlord and Tenant; the concurrence of any two of said arbitrators shall be binding upon Landlord and Tenant. The sole question to be determined shall be whether or not Landlord has unreasonably withheld or delayed its consent or approval, and the sole remedy shall be the determination that such consent or approval must be granted. The determination in any arbitration held pursuant to this Section shall be final and binding upon Landlord and Tenant. Each party shall pay its own counsel fees and expenses, if any, in connection with any arbitration under this Section 18.4, including the expenses and fees of any arbitrator selected by it in accordance with provisions of this Section, and the parties shall share all other expenses and fees of any such arbitration, provided that the foregoing shall not prohibit the arbitrators from determining that the prevailing party shall be entitled to recover all costs and expenses from the non-prevailing party. The arbitrators shall be bound by the provisions of this Lease, and shall not add to, subtract from or otherwise modify such provisions.

(b)    In no event shall Tenant have the right to seek or recover from Landlord any consequential damages on account of any claim or matter arising out of or relating to this Lease of the Premises and Tenant hereby irrevocably waives any right which it might otherwise have to seek or receive any such consequential damages.

19.    DESTRUCTION

19.1    Landlord’s Obligation. (a) If the Premises or the Common Area or any portion thereof (whether or not the Premises are affected) are damaged by fire or other casualty (“Casualty”) and Tenant shall be restoring the same in accordance with Section 19.3, Landlord shall make available to Tenant any insurance proceeds payable on account of such Casualty at such time and in accordance with such procedures as are provided in any Leasehold Mortgage (or if there shall be no Leasehold Mortgage, in accordance with such procedures as Landlord shall reasonably determine are customary for leasehold mortgages) and in compliance with the Ground Lease, which proceeds shall be used by Tenant only to fulfill restoration obligations hereunder and for no other purpose.

(b)    If all or any part of the Premises shall be rendered Untenantable by reason of a Casualty, the Base Rent and the Additional Rent shall be abated in the proportion that the Untenantable area of the Premises bears to the total area of the Premises, for the period from the date of the Casualty to the earlier of (i) the date the Premises is no longer Untenantable (provided that, if the Premises would no longer have been Untenantable at an earlier date but for Tenant having failed diligently to prosecute repairs or restoration required of Tenant under this Lease, then the Premises shall be deemed to no longer be Untenantable on such earlier date and the abatement shall cease) or (ii) the date Tenant or any subtenant reoccupies any Untenantable portion of the Premises for the ordinary conduct of business (in which case the Base Rent and the Additional Rent allocable to such reoccupied portion shall be payable by Tenant from the date of such occupancy).

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Pending resolution of any dispute with respect to the period or amount of such abatement, Tenant shall pay Rent in accordance with Landlord’s determination. Notwithstanding the foregoing, if by reason of any act or omission by Tenant, any subtenant or any of their respective partners, directors, officers, servants, employees, agents or contractors, Landlord or any Leasehold Mortgagee shall be unable to collect all of the insurance proceeds (including, without limitation, rent insurance proceeds) applicable to the Casualty, then, without prejudice to any other remedies which may be available against Tenant, there shall be no abatement of Rent.

(c)    Landlord shall not be liable for any inconvenience or annoyance to Tenant or injury to the business of Tenant resulting in any way from such damage by Casualty or the repair thereof. Landlord shall not be obligated to carry insurance of any kind on Tenant’s Property or any Alterations or any other improvements made at Tenant’s sole cost and expense, and Landlord shall not be obligated to repair any damage thereto or replace the same.

19.2    Termination Option. Landlord shall notify Tenant within sixty (60) days after the date of damage whether or not the requirements for repairs, reconstruction and restoration by Tenant described in Section 19.3 are met. If such requirements are not met, Landlord shall have the option, exercisable within sixty (60) days after the date of such damage either to: (a) notify Tenant of Landlord’s election to repair such damage, in which event this Lease shall continue in full force and effect (unless terminated by Tenant as provided below), or (b) notify Tenant of Landlord’s election to terminate this Lease as of the date of the damage. If such notice to terminate is given by Landlord, this Lease shall terminate as of the date of such damage. If Landlord notifies Tenant of its intention to repair Casualty damages and Landlord reasonably estimates that such repairs cannot be completed within eighteen (18) months, Tenant shall have the right to terminate this Lease by delivering fifteen (15) days’ written notice to Landlord.

19.3    Tenant Obligations. Subject to Section 19.2, if the Premises or the Buildings or any portion thereof (whether or not the Premises are affected) are damaged by Casualty, Tenant shall, at Tenant’s sole cost and expense, repair, reconstruct and restore the same promptly, with diligence and continuity and in accordance with the requirements of Section 8.2 and the requirements of Article 10 for Alterations; provided that (i) such repairs can be made under the laws and regulations of the federal, state and local governmental authorities having jurisdiction within twelve (12) months after the date of such damage (or in the case of damage occurring during the last twelve (12) months of the Term, provided that such repairs can be made within ninety (90) days after the date of such damage), (ii) such repairs are fully covered (except for any deductible) by the proceeds of insurance maintained by Landlord or Tenant, and (iii) the damage does not affect more than fifty percent (50%) of the assessed value of the Buildings. If Tenant is required to repair, reconstruct or restore the Premises after any damage or destruction, Tenant shall be responsible at its own expense for the repair and replacement of Tenant’s Property and any Alterations which Tenant elects to replace. Tenant hereby waives the provisions of any statute or law that may be in effect at

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the time of the occurrence of any such damage or destruction, under which a lease is automatically terminated or a tenant is given the right to terminate a lease upon such an occurrence.

19.4    No Claim. Except as provided in Section 19.1, Tenant shall have no interest in or claim to any portion of the proceeds of any insurance or self-insurance maintained by Landlord.

19.5    No Damages. Tenant shall not be entitled to any damages by reason of any inconvenience or loss sustained by Tenant as a result of any repairs, reconstruction or restoration of any damage or destruction to the Premises under any of the provisions of this Article 19. Except as expressly provided in Section 19.1 or 19.4, there shall be no reduction, change or abatement of any rental or other charge payable by Tenant to Landlord hereunder, or in the method of computing, accounting for or paying the same. Each party hereby waives the provisions of Section 1932(2) and Section 1933(4) of the California Civil Code, or any other statute or law that may be in effect at the time of a casualty under which a lease is automatically terminated or a tenant is given the right to terminate a lease due to a casualty other than as provided in Section 19.1.

20.    EMINENT DOMAIN

20.1    Taking. If all or any part of the Premises shall be taken as a result of the exercise of the power of eminent domain or any transfer in lieu thereof, this Lease shall terminate as to the part so taken as of the date of taking or as of the date of final judgment, whichever is earlier, and, in the case of a material partial taking of the Premises, Landlord shall have the right to terminate this Lease as to the balance of the Premises by written notice to Tenant within thirty (30) days after such date. If any material part of the Common Area, the Buildings or the Property shall be taken as a result of the exercise of the power of eminent domain or any transfer in lieu thereof, whether or not the Premises are affected, Landlord shall have the right to terminate this Lease by written notice to Tenant within thirty (30) days of the date of taking. If there shall be a taking of the Property of such scope that the untaken part of the Property would in Tenant’s reasonable judgment be uneconomic to operate, then Tenant may terminate this Lease and the term and estate granted hereby by giving notice to Landlord within thirty (30) days after the date of taking of possession by the condemning authority.

20.2    Award. In the event of any taking, Landlord shall be entitled to any and all compensation, damages, income, rent, awards, or any interest therein whatsoever which may be paid or made in connection therewith, and Tenant shall assign to Landlord any right to compensation or damages for the condemnation of its leasehold interest; provided that Tenant may file a claim for (a) Tenant’s relocation expenses, (b) the taking of Tenant’s Property, and (c) the loss of Tenant’s goodwill.

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20.3    Partial Taking. In the event of a partial taking of the Premises which does not result in a termination of this Lease (other than with respect to the taken portion of the Premises), the Base Rent and Operating Expenses shall be adjusted as follows:

(a)    During the period between the date of the partial taking and the completion of any necessary repairs, reconstruction or restoration, Tenant shall be entitled to a reduction of Base Rent and Operating Expenses by a proportionate amount based on Rentable Area taken; and

(b)    Upon completion of said repairs, reconstruction or restoration, and thereafter throughout the remainder of the Term, the Base Rent and Operating Expenses shall be recalculated based on the remaining total number of square feet of Rentable Area of the Premises.

20.4    Temporary Taking. Notwithstanding any other provision of this Article, if a taking occurs with respect to all or any portion of the Premises for a period of twelve (12) months or less, this Lease shall remain unaffected thereby and Tenant shall continue to pay Base Rent and Additional Rent and to perform all of the terms, conditions and covenants of this Lease, provided that Tenant shall have the right to terminate this Lease if the taking continues beyond twelve (12) months. In the event of any such temporary taking, and if this Lease is not terminated, Tenant shall be entitled to receive that portion of any award which represents compensation for the use or occupancy of the Premises during the Term up to the total Base Rent and Additional Rent owing by Tenant for the period of the taking, and Landlord shall be entitled to receive the balance of any award.

20.5    Sale in Lieu of Condemnation. A voluntary sale by Landlord of all or any part of the Buildings or the Common Area to any public or quasi-public body, agency or person, corporate or otherwise, having the power of eminent domain, either under threat of condemnation or while condemnation proceedings are pending, shall be deemed to be a taking under the power of eminent domain for the purposes of this Article.

20.6    Waiver. Except as provided in this Article, each party hereto hereby waives and releases any right it may have under any Applicable Law to terminate this Lease as a result of a taking, including without limitation Sections 1265.120 and 1265.130 of the California Code of Civil Procedure, or any similar law, statute or ordinance now or hereafter in effect other than as expressly provided in this Lease.

21.    SURRENDER

21.1    Surrender. Upon the Termination Date, Tenant shall surrender the Premises to Landlord in good order and repair, reasonable wear and tear and damage by casualty excepted, free and clear of all letting and occupancies. Subject to Article 10, upon any termination of this Lease, all improvements, except for Tenant’s Property, shall automatically and without further act by Landlord or Tenant, become the property of

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Landlord, free and clear of any claim or interest therein by Tenant, and without payment therefore by Landlord.

21.2    Holding Over. Any holding over after the expiration of the Term with the consent of Landlord shall be construed to automatically extend the Term on a month-to-month basis at a Base Rent equal to the greater of (a) two (2) tunes the then-current Base Rent, and (b) one and one-half (1-1/2) times the prevailing rate at which Landlord is then offering space in buildings reasonably determined by Landlord to be comparable to the Buildings, in either case together with an amount estimated by Landlord as Tenant’s Share of Operating Expenses payable under this Lease, and shall otherwise be on the terms and conditions of this Lease to the extent applicable. Any holding over without Landlord’s consent shall entitle Landlord to exercise any or all of its remedies provided in Article 16, notwithstanding that Landlord may elect to accept one or more payments of Base Rent and Operating Expenses from Tenant.

21.3    Quitclaim. At the expiration or earlier termination of this Lease, Tenant shall execute, acknowledge and deliver to Landlord, within ten (10) days after written demand from Landlord to Tenant, any quitclaim deed or other document required by any reputable title company, licensed to operate in the State of California, to remove the cloud or encumbrance created by this Lease from the Property.

22.    FINANCIAL STATEMENTS

Tenant shall tender to Landlord within ten (10) business days after receipt of a written request any information reasonably requested by Landlord regarding the financial stability, credit worthiness or ability of Tenant to pay the Rent due under this Lease. Notwithstanding the foregoing, if the Tenant is a Public Company subject to the reporting requirements of the Securities Exchange Act of 1934 (the “Exchange Act”). Tenant shall, in lieu of the foregoing requirements, promptly deliver to Landlord all filings made by or on behalf of Tenant with the Securities Exchange Commission or with any securities exchange. Landlord shall be entitled to rely upon the information provided in determining whether or not to enter into this Lease or for the purpose of any financing or other transaction subsequently undertaken by Landlord. Tenant hereby represents and warrants to Landlord the following: (a) that all documents provided by Tenant to Landlord in connection with the negotiation of this Lease are true and correct copies of the originals, (b) Tenant has not withheld any information from Landlord that is material to Tenant’s credit worthiness, financial condition or ability to perform its obligations hereunder, (c) all information supplied by Tenant to Landlord is true, correct and accurate, and (d) no part of the information supplied by Tenant to Landlord contains any misleading or fraudulent statements.

23.    ESTOPPEL CERTIFICATES

Tenant, at any time and from time to time within five (5) business days after receipt of written notice from Landlord, shall execute, acknowledge and deliver to Landlord or to any party designated by Landlord, a certificate of Tenant stating: (a) that Tenant has

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accepted the Premises, (b) the Commencement Date and Expiration Date of this Lease, (c) that this Lease is unmodified and in full force and effect (or, if there have been modifications, that same is in full force and effect as modified and stating the modifications), (d) whether or not there are then existing any defenses against the enforcement of any of the obligations of Tenant under this Lease (and, if so, specifying same), (e) whether or not there are then existing any defaults by Landlord in the performance of its obligations under this Lease (and, if so, specifying same), (f) the dates, if any, to which the Base Rent and Operating Expenses have been paid, and (g) any other factual information relating to the rights and obligations under this Lease that may reasonably be required by any of such persons. Failure to deliver such certificate shall constitute an Event of Default. At the request of Tenant, Landlord shall execute, acknowledge and deliver to Tenant a certificate with similar types of information and in the time period set forth above. Failure by Tenant to execute, acknowledge and deliver such certificate within such five (5) business day period shall be conclusive evidence that this Lease is in full force and effect and has not been modified except as may be represented by the requesting party.

24.    RULES AND REGULATIONS

24.1    Rules and Regulations. Tenant shall faithfully observe and comply with any rules and regulations and all reasonable modifications thereof and additions thereto from time to time put into effect by Landlord (the “Rules and Regulations”). Landlord shall not enforce such Rules and Regulations in an unreasonable or discriminatory manner. In the event of any conflict between the terms of this Lease and the terms, covenants, agreements and conditions of the Rules and Regulations, this Lease shall control. Notwithstanding the foregoing, so long as Tenant leases 100% of the Premises leased by Tenant hereunder as of the Commencement Date, Landlord shall not impose any Rules and Regulations.

24.2    Signs. Without Landlord’s written consent, which may be given or withheld in Landlord’s sole discretion, Tenant shall not place or permit to be placed on the front of the Premises any sign, picture, advertisement, name, notice, marquee or awning; provided that upon Landlord’s reasonable approval, Tenant shall have the right to place a sign on or adjacent to the entrance doors to Tenant’s Premises identifying Tenant. Landlord hereby consents to the location, size and appearance of Tenant’s signage existing as of the Commencement Date. Landlord hereby reserves the exclusive right to the exterior side walls, rear walls and roof of the Premises.

25.    INABILITY TO PERFORM

If Landlord is unable to fulfill or is delayed in fulfilling any of Landlord’s obligations under this Lease, by reason of acts of God, strikes, lockouts, other labor disputes, inability to obtain utilities or materials or by any other reason beyond Landlord’s reasonable control, then no such inability or delay by Landlord shall constitute an actual or constructive eviction, in whole or in part, or entitle Tenant to any abatement or diminution of Base Rent or Additional Rent, or relieve Tenant from any of its obligations under this Lease, or impose any liability upon Landlord, or Landlord’s Agents by reason of inconvenience, annoyance,

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interruption, injury or loss to or interference with Tenant’s business or use and occupancy or quiet enjoyment of the Premises or any loss or damage occasioned thereby. If Tenant is unable to fulfill or is delayed in fulfilling any of Tenant’s obligations under this Lease (other than the payment of Rent), by reason of acts of God, strikes, lockouts, other labor disputes, inability to obtain utilities or materials or by any other reason beyond Tenant’s reasonable control, then such inability or delay by Tenant shall excuse the performance of Tenant for a period equal to the duration of such prevention, delay or stoppage. Tenant hereby waives and releases any right to terminate this Lease under Section 1932(l) of the California Civil Code, or any similar law, statute or ordinance now or hereafter in effect.

26.    NOTICES

Notices or other communications given or required to be given under this Lease shall be effective only if rendered or given in writing, sent by certified mail with a return receipt requested, or delivered in person or by reputable overnight courier (e.g., Federal Express, DHL, etc.) or by telecopier or facsimile (with confirmation by one of the other methods specified herein): (a) to Tenant (i) at the Premises and at the address specified in Article 1, or (ii) at the place where Tenant designates subsequent to Tenant’s vacating, deserting, abandoning or surrendering the Premises; or (b) to Landlord at Landlord’s address set forth in Article 1; or (c) to such other address as either Landlord or Tenant may designate as its new address for such purpose by notice given to the other in accordance with the provisions of this Article. Any such notice or other communication shall be deemed to have been rendered or given five (5) days after the date mailed, if sent by certified mail, or upon the date of delivery in person or by courier, or when delivery is attempted but refused.

27.    QUIET ENJOYMENT

Landlord covenants that so long as an Event of Default by Tenant is not in existence, upon paying the Base Rent and Additional Rent, Tenant shall peaceably and quietly enjoy the Premises, subject to the terms and provisions of this Lease.

28.    NO RENT ABATEMENT

No abatement, diminution or reduction of rent, charges or other compensation shall be claimed by or allowed to Tenant, or any persons claiming under Tenant, under any circumstances, whether for inconvenience, discomfort, interruption of business or otherwise, arising from the making of Alterations or repairs to any improvements now on or which may hereafter be erected on the Premises, by virtue or because of any present or future Legal Requirements or by virtue or arising from, and during, the restoration of the Premises after the destruction or damage thereof by Casualty or other cause or the taking or condemnation of the Premises (except as otherwise expressly provided for in Article 19 or 20) or arising from any other cause or reason.

29.    AUTHORITY

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If Tenant is a corporation or a partnership, Tenant represents and warrants as follows: Tenant is an entity as identified in Article 1, duly formed and validly existing and in good standing under the laws of the state of organization specified in Article 1 and qualified to do business in the State of California. Tenant has the power, legal capacity and authority to enter into and perform its obligations under this Lease and no approval or consent of any person is required in connection with the execution and performance hereof. The execution and performance of Tenant’s obligations under this Lease will not result in or constitute any default or event that would be, or with notice or the lapse of time would be, a default, breach or violation of the organizational instruments governing Tenant or any agreement or any order or decree of any court or other governmental authority to which Tenant is a party or to which it is subject. Tenant has taken all necessary action to authorize the execution, delivery and performance of this Lease and this Lease constitutes the legal, valid and binding obligation of Tenant subject to general principals of equity and to bankruptcy, insolvency, reorganization, moratorium, or other similar laws now or hereafter in effect affecting the rights of creditors generally. Upon Landlord’s request, Tenant shall provide Landlord with evidence reasonably satisfactory to Landlord confirming the foregoing representations and warranties.

30.    BROKERS

Tenant and Landlord warrant that they have had dealings with only the real estate brokers or agents listed in Article 1 in connection with the negotiation of this Lease and that they know of no other real estate broker or agent who is entitled to a commission in connection with this Lease. The brokerage commission earned in connection with this transaction shall be paid by Tenant, and Tenant shall indemnify, defend and hold Landlord harmless from and against all liabilities arising from any claims by or under the broker listed in Article 1. Tenant and Landlord shall indemnify, defend and hold the other harmless from and against all liabilities arising from any other claims of brokerage commissions or finder’s fees based on Tenant’s or Landlord’s dealings or contacts with brokers or agents other than those listed in Article 1.

31.    BANKRUPTCY OR INSOLVENCY

31.1    No Transfer. Neither Tenant’s interest in this Lease, nor any estate hereby created in Tenant nor any interest herein or therein, shall pass to any debtor-in-possession, trustee, or receiver or assignee for the benefit of creditors or otherwise by operation of law except as may specifically be provided pursuant to the Bankruptcy Code.

31.2    Termination Right. If (a) Tenant shall file a voluntary petition in bankruptcy or insolvency, or shall be adjudicated a bankrupt or insolvent, or shall file any petition or answer seeking any reorganization, arrangement, composition, readjustment, liquidation, dissolution or similar relief under the present or any future federal bankruptcy act or any other present or future applicable federal, state or other statute or law (foreign or domestic), or shall make an assignment for the benefit of creditors or shall seek or consent or acquiesce in the appointment of any trustee, receiver or liquidator of Tenant or of all or any

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part of Tenant’s Property; or (b) within sixty (60) days after the commencement of any proceeding against Tenant, whether by the filing of a petition or otherwise, seeking any reorganization, arrangement, composition, readjustment, liquidation, dissolution or similar relief under any present or future federal bankruptcy law or any other present or future applicable federal, state or other statute or law (foreign or domestic), such proceeding shall not have been dismissed, or if, within sixty (60) days after the appointment of any trustee, receiver or liquidator of Tenant or of all or any part of Tenant’s Property, without the consent or acquiescence of Tenant, such appointment shall not have been vacated or otherwise discharged, or if any execution or attachment shall be issued against Tenant or any of Tenant’s Property pursuant to which the Premises shall be taken or occupied or attempted to be taken or occupied; or (c) in a bankruptcy proceeding or a proceeding described in clause (a) or (b) above, the interest or estate created in Tenant hereby shall be taken in execution or by other process of law, or (d) any assignment shall be made of the property of Tenant for the benefit of creditors, then and in any such events, notwithstanding any automatic stay applicable in bankruptcy or any other law(s), Landlord may give to Tenant notice of intention to terminate this Lease to end the Term and the estate hereby granted at the expiration of three (3) days from the date of the giving of such notice, and, in the event such notice is given, this Lease and the Term and estate hereby granted (whether or not the Term shall have commenced) shall terminate upon the expiration of said three (3) days with the same effect as if that day were the Expiration Date, but Tenant shall remain liable for damages as provided in Article 16 and Tenant shall remain liable as herein provided.

31.3    No Cause for Appointment. Tenant shall not cause or give cause for the appointment of a trustee or receiver of the assets of Tenant and shall not make any assignment for the benefit of creditors, or become or be adjudicated insolvent. The allowance of any petition under any insolvency law except under the Bankruptcy Code or the appointment of a trustee or receiver of Tenant or of the assets of either of them, shall be conclusive evidence that Tenant caused, or gave cause therefor, unless such allowance of the petition, or the appointment of a trustee or receiver, is vacated within thirty (30) days after such allowance or appointment. Any act described in this Section 31.3 shall be deemed a material breach of Tenant’s obligations hereunder, and this Lease shall thereupon automatically terminate. Landlord does, in addition, reserve any and all other remedies provided in this Lease or in law.

31.4    Bankruptcy Filings. (a) Upon the filing of a petition by or against Tenant under any chapter of the Bankruptcy Code, Tenant, as debtor and as debtor in possession, and any trustee who may be appointed agree as follows: (i) to perform each and every obligation of Tenant under this Lease including, without limitation, the continuous and uninterrupted occupancy of the Premises as is required under Article 16 until such time as this Lease is either rejected or assumed by order of the United States Bankruptcy Court; (ii) to pay monthly in advance on the first day of each month as reasonable compensation for use and occupancy of the Premises an amount equal to all Rent and other charges otherwise due pursuant to this Lease; (iii) to reject or assume this Lease within sixty (60) days of the filing of such petition under Chapter 7 of the Bankruptcy Code or within one hundred twenty

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(120) days (or such shorter term as Landlord, in its sole discretion, may deem reasonable so long as notice of such period is given) of the filing of a petition under any other chapter of the Bankruptcy Code, Tenant hereby knowingly and voluntarily waiving any right to seek time additional to the minimum period set forth in 11 U.S.C. § 365(d)(4) or any similar statute to assume or reject this Lease and hereby acknowledging that there does not exist, nor could there exist, cause to seek such extension; (iv) to give Landlord at least forty-five (45) days prior written notice of any proceeding relating to any assumption of this Lease; (v) to give Landlord at least thirty (30) days’ prior written notice of any abandonment of the Premises; any such abandonment to be deemed a rejection of this Lease; (vi) to do all other things of benefit to Landlord otherwise required under the Bankruptcy Code; (vii) to be deemed to have rejected this Lease in the event of the failure to comply with any of the above; and (viii) to have consented to the entry of an order by an appropriate United State Bankruptcy Court providing all of the above, waiving notice and hearing of the entry of same.

(b)    No default of this Lease by Tenant, either prior to or subsequent to the filing of such a petition, shall be deemed to have been waived unless expressly done so in writing by Landlord.

(c)    Included within and in addition to any other conditions or obligations imposed upon Tenant, any Trustee, or any successor of Tenant as adequate assurance of future performance in the event of assumption and/or assignment pursuant to the Bankruptcy Code are the following: (i) the cure of any monetary defaults and the reimbursement of pecuniary loss within not more than thirty (30) days of assumption and/or assignment; (ii) the deposit of a Letter of Credit pursuant to the terms of this Lease; (iii) the use of the Premises as set forth herein is unchanged; (iv) the prior written consent of each Leasehold Mortgagee and Prior Lessor, and (v) no physical changes of any kind may be made to the Premises unless in compliance with the applicable provisions of this Lease. Tenant also expressly acknowledges and agrees that neither Tenant nor any successor in interest (including but not limited to a trustee in bankruptcy appointed to serve as trustee for Tenant) may assume or assign Tenant’s rights under this Lease pursuant to 11 U.S.C. § 365 (or any similar statute) unless, in addition to the provisions of 11 U.S.C. § 365(b)(3), each of the following conditions, which Landlord and Tenant acknowledge are commercially reasonable in the context of a bankruptcy proceeding, have been fully satisfied and Landlord has so acknowledged in writing that: (A) The assumption of the Lease will not breach any provision in any other lease, mortgage, financing agreement or other agreement by which Landlord is bound relating to the Buildings; (B) The assumption of the Lease will not disrupt, in Landlord’s judgment, the tenant mix of the Buildings which, in Landlord’s judgment, would be most beneficial to all of the tenants of the Buildings and would enhance the image, reputation, and profitability of the Buildings; (C) The assumption of the Lease will not result in alteration of the Premises or the making of physical changes of any kind to the Premises unless in compliance with the applicable provisions of this Lease.

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(d)    For purposes of this Section 31.4, the word ‘Tenant” shall mean any one or more persons primarily or secondarily liable for Tenant’s obligations under the Lease.

32.    ANTENNA AND ROOFTOP SPACE

32.1    Antennae. Landlord agrees that, subject to all Legal Requirements, insurance requirements, this Lease and the conditions and limitations hereinafter stipulated, during the Term, Tenant, at its sole cost and expense, shall have a non-exclusive license to install in a location on a portion of the rooftop of the Buildings to be designated by Landlord in its sole and absolute discretion (the “Antenna Area”) and thereafter maintain, repair, operate and replace one satellite antenna (the “antenna”) provided (i) the antenna shall not exceed 3 feet in height by 3 feet in length, by 3 feet in width or, if applicable, 3 feet in diameter; (ii) the size and dimensions of the antenna and any reasonably required support structures and associated maintenance access structures shall be subject to Landlord’s prior written consent in Landlord’s sole discretion; (iii) such antenna installation and position of such antenna and reasonably required support structures and associated maintenance access structures shall comply with all Legal Requirements; (iv) the installation of any electrical or communications lines (“Wiring”) and related equipment in connection with the installation and operation of the antenna, (including, without limitation, the location and the routing of all Wiring and related equipment in connection therewith) shall (A) be at Tenant’s sole cost and expense, (B) be subject to Landlord’s prior written consent, in Landlord’s sole discretion and in accordance with the provisions of Article 10 (and Landlord hereby consents to Tenant’s antennae existing as of the Commencement Date), and (C) comply with Legal Requirements and Insurance Requirements; and (v) the antenna, reasonably required support structures, maintenance access structures, Wiring and related equipment shall be installed, maintained and kept in repair by Tenant, at Tenant’s sole cost and expense. Tenant shall be responsible for the payments of any fees and taxes which may be imposed by any governmental agency in connection with the installation and use of such antenna. Landlord acknowledges that Landlord has consented to Tenant’s antennae existing as of the Commencement Date for purposes of this Section 32.1.

32.2    Non-Exclusive. The parties agree that Tenant’s use of the rooftop of the Buildings, is a non-exclusive use and Landlord may permit the use of any other portion of the roof to any other person, firm or corporation for any use including the installation of other antennas, rooftop equipment, wiring and support equipment provided the same do not unreasonably interfere with Tenant’s installations on the roof or reception or transmission of signals.

32.3    Access. For the purpose of installing, servicing or repairing the antennae, Wiring and related equipment. Tenant shall have access to the rooftop of the Buildings at all reasonable times upon reasonable advance notice, subject to Landlord’s reasonable safeguards for the security and protection of the Buildings, the Building Systems, Structural Components, and installations and equipment of other tenants or occupants of the

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Buildings as may be located on the roof of the Buildings. Landlord shall have the right, at Tenant’s expense, to assign a representative to be present during the duration of Tenant’s access to the rooftop.

32.4    Compliance with Legal Requirements. Without limiting Landlord’s obligations under this Lease, Tenant, at Tenant’s sole cost and expense, agrees to promptly and faithfully obey, observe and comply with all Legal Requirements, insurance requirements and this Lease in any manner affecting or relating to Tenant’s use of said roof, and the installation, repair, maintenance ad operation of the antenna, Wiring and related equipment erected or installed by Tenant pursuant to the provisions of this Article 33. Tenant, at Tenant’s sole cost and expense, shall secure and thereafter maintain all permits and licenses required for the installation and operation of the antenna, and any support structures and related equipment erected or installed by Tenant, including, without limitation, any approval, license or permit required from the Federal Communications Commission or otherwise pursuant to Legal Requirements. Landlord shall, at no cost to it, reasonably cooperate (which shall include executing and delivering all necessary and proper filings with governmental or quasi-governmental entities) with Tenant in obtaining such approvals, licenses and permits.

32.5    Tenant Expense. Tenant agrees that Tenant will pay for all electrical service required for Tenant’s use of the antennae, and related equipment erected or installed by Tenant and Tenant further agrees that such electric service shall feed off the supply of electrical energy furnished to the Premises as provided in this Lease.

32.6    Tenant’s Property. The antennae, support structures, Wiring and related equipment installed by Tenant, pursuant to the provisions of Article 33 shall be Tenant’s personal property, and, upon the expiration of the Term of this Lease, or upon its earlier termination in any manner, shall be removable by Tenant at Tenant’s sole cost and expense. Tenant, at Tenant’s sole cost and expense, shall promptly repair any and all damage to the rooftop of the Buildings and to any other part of the Buildings caused by or resulting from the installation, maintenance and repair, operation or removal of the antenna, support structures, Wiring and related equipment erected or installed by Tenant and restore said affected areas to their condition as existed prior to the installation of the antenna, and related equipment, ordinary wear and tear and casualty excepted.

32.7    No Interference. Tenant’s antennae, Wiring and related equipment shall not interfere with (i) Building Equipment or other installations located on the roof; (ii) other portions of the Buildings, (iii) other tenants in the Buildings, and/or (iv) the reception and transmission of communications signals by other tenants; provided that Tenant’s antennae existing as of the Commencement Date shall not have to be modified to comply with the foregoing.

32.8    Relocation. Landlord shall have the right at its sole and absolute discretion, upon not less than fifteen (15) days prior written notice to Tenant, to relocate the antenna (and all Wiring and other equipment related thereto), to any reasonably comparable

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space on the rooftop of the Buildings. Landlord shall reimburse Tenant for all actual, reasonable costs and expenses incurred by Tenant in connection with any such relocation.

32.9    Indemnification. Tenant hereby indemnifies Landlord against liability in connection with or arising from the installation, maintenance, use and operation of the antenna. The foregoing indemnification is in addition to, and not in lieu of, the obligations of Tenant under Section 13.4 or 14.1.

32.10    Exclusive. So long as Tenant leases 100% of the Premises leased as of the Commencement Date, Tenant shall have the exclusive right to install and use antennae on the roof of the Buildings.

33.    MISCELLANEOUS

33.1    Entire Agreement. This Lease, including the exhibits which are incorporated herein and made a part of this Lease, contains the entire agreement between the parties and all prior negotiations and agreements art merged herein. Tenant hereby acknowledges that neither Landlord nor Landlord’s Agents have made any representations or warranties with respect to the Premises, the Buildings, the Property, or this Lease except as expressly set forth herein, and no rights, easements or licenses are or shall be acquired by Tenant by implication or otherwise unless expressly set forth herein.

33.2    No Waiver. No failure by Landlord or Tenant to insist upon the strict performance of any obligation of Tenant or Landlord under this Lease or to exercise any right, power or remedy consequent upon a breach thereof, no acceptance of full or partial Base Rent or Additional Rent during the continuance of any such breach by Landlord, or payment of Base Rent or Additional Rent by Tenant to Landlord, and no acceptance of the keys to or possession of the Premises prior to the expiration of the Term by any employee or agent of Landlord shall constitute a waiver of any such breach or of such term, covenant or condition or operate as a surrender of this Lease. No waiver of any breach shall affect or alter this Lease, but each and every term, covenant and condition of this Lease shall continue in full force and effect with respect to any other then-existing or subsequent breach thereof. The consent of Landlord or Tenant given in any instance under the terms of this Lease shall not relieve Tenant or Landlord, as applicable, of any obligation to secure the consent of the other in any other or future instance under the terms of this Lease.

33.3    Modification. Neither this Lease nor any term or provisions hereof may be changed, waived, discharged or terminated orally, and no breach thereof shall be waived, altered or modified, except by a written instrument signed by the party against which the enforcement of the change, waiver, discharge or termination is sought.

33.4    Successors and Assigns. The terms, covenants and conditions contained in this Lease shall bind and inure to the benefit of Landlord and Tenant and, except as otherwise provided or limited herein, their respective personal representatives and successors and assigns.

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33.5    Validity. If any provision of this Lease or the application thereof to any person, entity or circumstance shall, to any extent, be invalid or unenforceable, the remainder of this Lease, or the application of such provision to persons, entities or circumstances other than those as to which it is invalid or unenforceable, shall not be affected thereby, and each provision of this Lease shall be valid and be enforced to the full extent permitted by law.

33.6    Jurisdiction. This Lease shall be construed and enforced in accordance with the laws of the State of California. Any action that in any way involves the rights, duties and obligations of the parties under this Lease may (and if against Landlord, shall) be brought in the courts of the State of California in the County of Santa Clara or the United States District Court for the Northern District of California, and the parties hereto hereby submit to the personal jurisdiction of said courts.

33.7    Attorneys’ Fees. In the event that either Landlord or Tenant fails to perform any of its obligations under this Lease or in the event a dispute arises concerning the meaning or interpretation of any provision of this Lease, the defaulting party or the party not prevailing in such dispute, as the case may be, shall pay any and all costs and expenses incurred by the other party in enforcing or establishing its rights hereunder, including, without limitation, court costs, costs of arbitration and reasonable attorneys’ fees. Should Landlord be named as a defendant in any suit brought against Tenant in connection with or arising out of Tenant’s occupancy hereunder Tenant shall pay to Landlord its costs and expenses incurred in such suit, including reasonable attorneys’ fees.

33.8    Waiver of Jury Trial. Landlord and Tenant each hereby voluntarily and knowingly waive and relinquish their right to a trial by jury in any action, proceeding or counterclaim brought by either against the other on any matter whatsoever arising out of or in any way connected with this Lease, the relationship of Landlord with Tenant, or Tenant’s use or occupancy of the Premises, including any claim of injury or damage, and any emergency and other statutory remedy with respect thereto.

33.9    No Counterclaim by Tenant. In the event Landlord commence any proceedings for nonpayment of rent or other charges payable by Tenant under this Lease, Tenant will not interpose any counterclaim of whatever nature or description in any such proceedings. This shall not, however, be construed as a waiver of the Tenant’s right to assert such claims in any separate action or actions brought by the Tenant.

33.10    Light and Air. Tenant covenants and agrees that no diminution of light, air or view by any structure that may hereafter be erected (whether or not by Landlord) shall entitle Tenant to any reduction of the Base Rent or Additional Rent under this Lease, result in any liability of Landlord to Tenant, or in any other way affect this Lease or Tenant’s obligations hereunder.

33.11    Lease Memorandum. Neither Landlord or Tenant shall record this Lease or a short form memorandum hereof without the consent of the other.

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33.12    Confidentiality. Except as required by law or regulation, the parties agree that neither of them shall make public the terms and conditions of this Lease or the fact that they have entered into this Lease without first obtaining the written permission from the other party; provided, however that either party can, without the other’s permission, share this Lease and information relating thereto with such party’s attorneys, accountants and other professional advisors and with existing or potential lenders or investors with respect to the Property, and provided that this Lease will be submitted to the City of Mountain View and may therefore be a public document.

33.13    Terms. The term “Premises” includes the space leased hereby and any improvements now or hereafter installed therein or attached thereto. The words “Landlord” and “Tenant” as used herein shall include the plural as well as the singular. If there is more than one Tenant or Landlord, the obligations under this Lease imposed on Tenant or Landlord shall be joint and several. The captions preceding the articles of this Lease have been inserted solely as a matter of convenience and such captions in no way define or limit the scope or intent of any provision of this Lease.

33.14    Review and Approval. The review, approval, inspection or examination by Landlord of any item to be reviewed, approved, inspected or examined by Landlord under the terms of this Lease or the exhibits attached hereto shall not constitute the assumption of any responsibility by Landlord for either the accuracy or sufficiency of any such item or the quality of suitability of such item for its intended use. Any such review, approval, inspection or examination by Landlord is for the sole purpose of protecting Landlord’s interests in the and under this Lease, and no third parties, including, without limitation, Tenant or any person or entity claiming through or under Tenant, or the contractors, agents, servants, employees, visitors or licensees of Tenant or any such person or entity, shall have any rights hereunder with respect to such review, approval, inspection or examination by Landlord.

33.15    No Beneficiaries. This Lease shall not confer or be deemed to confer upon any person or entity other than the parties hereto, any right or interest, including without limitation, any third party status or any right to enforce any provision of this Lease.

33.16    Time of the Essence. Time is of the essence in respect of all provisions of this Lease in which a definite time for performance is specified.

33.17    Modification of Lease. In the event of any ruling or threat by the Internal Revenue Service, or opinion of counsel, that all or part of the Rent paid or to be paid to Landlord under this Lease will be subject to the income tax on unrelated business taxable income, Tenant agrees to make reasonable modifications to this Lease to minimize such tax; provided that such modifications will not result in any increase in Rent, change the Term or impose any additional liability or obligation on Tenant or diminish Tenant’s rights hereby under. Landlord will pay all Tenant’s reasonable costs incurred in reviewing and negotiating any such lease modification, including reasonable attorneys’ and accountants’ fees.

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33.18    Construction. This Lease has been negotiated extensively by Landlord and Tenant with and upon the advice of their respective legal counsel, all of whom have participated in the drafting hereof. Consequently, Landlord and Tenant agree that no party shall be deemed to be the drafter of this Lease and in the event this Lease is ever construed by a court of law, such court shall not construe this Lease or any provision of this Lease against any party as the drafter of the Lease.

33.19    Survival. The obligations of this Lease shall survive the expiration of the Term to the extent necessary to implement any requirement for the performance of obligations or forbearance of an act by either party hereto which has not been completed prior to the termination of this Lease. Such survival shall be to the extent reasonably necessary to fulfill the intent thereof, or if specified, to the extent of such specification, as same is reasonably necessary to perform the obligations and/or forbearance of an act set forth in such term, covenant or condition. Notwithstanding the foregoing, in the event a specific term, covenant or condition is expressly provided for in such a clear fashion as to indicate that such performance of an obligation or forbearance of an act is no longer required, then the specific shall govern over this general provisions of this Lease.

IN WITNESS WHEREOF, Landlord and Tenant have executed this Lease as of the date first above written.

LANDLORD:		SGI:
THE GOLDMAN SACHS GROUP, INC.		SILICON GRAPHICS, INC.
By:	/s/ Dan Neidich	By:	/s/ James L. Morganson
Its:	Managing Director	Its:	Vice President, Facilities & Services

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GLOSSARY

DEFINITIONS

As used in this Lease, the following terms shall have the following meanings, applicable, as appropriate, to both the singular and plural form of the terms defined below:

“Acceptable Accounting Firm” means an independent certified public accounting firm which shall be one of the so-called “Big Five” accounting firms or its successor.

“Acceptable Accounting Principles” means generally accepted accounting principles consistently applied (i.e., GAAP).

“ADA” is defined in Section 12.1.

“Additional Rent” is defined in Section 4.4.

“Adjustment Date” is defined in Section 4.3.

“Alterations” is as defined in Section 10.1.

“Amphitheatre Ground Lease Assignment” means that certain Assignment and Assumption of Ground Lease dated of even date herewith between SGRE and Landlord with respect to the Amphitheater Property.

“Assignment” is defined in Section 15.1.

“Bankruptcy Code” means Title 11 of the United States Code, as amended.

“Base Rent” means the amount stated in Article 1, to be adjusted and payable in accordance with Article 4.

“Buildings” means the Buildings as described in Section 2.1 and including all Structural Components.

“Building Systems” means the mechanical, electrical, heating, ventilating, air conditioning, elevator, plumbing, sanitary, life-safety and related communications apparatus, Common Area lighting and other utility and service systems of the Premises and all components thereof; as the same shall exist from time to time, and all Alterations, renewals and replacements thereof, additions thereto and substitutions therefor, excluding, however, the sprinklers and the horizontal distribution systems within and servicing the Premises and by which mechanical, electrical, communications, and other utility and service systems are distributed from the base risers, feeders, panelboards, etc. for provision of such services (it being agreed, however, that any such horizontal distribution systems and sprinklers that service more than one floor of the Premises shall constitute Building Systems).

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“business days” means Monday through Friday, excluding Saturdays, Sundays and federal or state legal holidays.

“Cash Collateral” means the cash proceeds of any draw upon the Letter of Credit that are held in the Cash Collateral Account.

“Cash Collateral Account” is defined in Section 4.7.

“Common Area” means (i) the land upon which the Buildings and other improvements comprising the Premises are erected, (ii) all Structural Components and all staircases, landings and stairs (except for those stairways located within any portion of the Premises), (iii) all shafts, passageways and corridors, mechanical and other rooms, areas and spaces which are not part of any portion of the Premises, (iv) all pump rooms, refuse rooms, storage rooms, telephone rooms, gas meter and other utility rooms and electrical rooms and closets that are not part of any portion of the Premises, (v) the elevators (including their shafts, pits and machine rooms that are not part of any portion of the Premises), (vi) the entrances to the outer public lobbies, service entrances, loading docks, elevators lobbies and ground floor plaza that are not part of any portion of the Premises and (vii) all other parts of the Buildings, which are not part of the Premises.

“Change in Control” is defined in Section 15.7.

“Commencement Date” means the date specified in Article 1.

“Crittenden Ground Lease Assignment” means collectively those certain Assignments and Assumption of Ground Lease dated of even date herewith between SGRE and Landlord with respect to the Crittenden Property.

“Environmental Activity” is defined in Section 13.1(a).

“Environmental Laws” are defined in Section 13.1(b).

“Event of Default” is defined in Section 16.1.

“Excess Rent” is defined in Section 15.3.

“Expiration Date” means the date specified in Article 1.

“Goldman” means The Goldman Sachs Group, Inc.

“Ground Lease Assignments” means the Amphitheatre Ground Lease Assignment and the Crittenden Ground Lease Assignment.

“Hazardous Material” is defined in Section 13.1(c).

“Interest Rate” is defined in Section 4.5.

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“Indebtedness” means indebtedness for borrowed money (whether by loan or the issuance and sale of debt securities) or for the deferred purchase price of property or services or any other indebtedness which is evidenced by a note, bond, debenture or similar instrument.

“Landlord’s Agents” is defined in Section 13.4.

“Landlord’s Expense Statement” is defined in Section 5.2.

“Leasehold Mortgage” means any mortgage or deed of trust or security agreement or collateral assignment now or at any time encumbering all or any part of the Property or Landlord’s interest therein.

“Leasehold Mortgagee” means the holder of a Leasehold Mortgage.

“Legal Requirements” are defined in Section 12.1.

“Legal Requirement” means applicable laws, statutes, codes, ordinances, orders, rules, regulations, conditions of approval, and requirements, of all federal, state, county, municipal and other governmental authorities and the departments, commissions, boards, bureaus, instrumentalities, and officers thereof, and all administrative or judicial orders or decrees and all permits, licenses, approvals, and other entitlements issued by governmental entities, and rules of common law, relating to or affecting the Buildings or the use, operation or occupancy of the Premises, whether now existing or hereafter enacted.

“Lien” means any lien, mortgage, deed of trust, encumbrance, chattel mortgage, security agreement, or order for the payment of money filed against the Premises or the Property, whether or not enforceable as such.

“Minimum Net Worth” means a Net Worth of not less than $500,000,000.

“Net Worth” means, at the time in question, a net worth (exclusive of goodwill) determined in accordance with Acceptable Accounting Principles, and in order for Tenant to establish the Net Worth of Tenant, Tenant shall have provided Landlord with financial statements audited by an Acceptable Accounting Firm, which shall express its unqualified opinion thereon, and provided to Landlord.

“Operating Expenses” an defined in Section 5.1(b).

“Ordinary Capital Improvement” means any capital improvement which (i) is required to be made in order to cause the Buildings to comply with Legal Requirements, or (ii) is a replacement or repair of existing Structures, systems, improvements or equipments or (iii) is necessary to keep the Buildings in good repair and working order or (iv) will reduce the amount of repair or operating expenses and is approved by Tenant, such approval not to be unreasonably withheld or delayed.

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“Other Leases” means those certain Commercial Leases between Landlord and Tenant dated of even date herewith relating respectively to the Crittenden Property.

“Permitted Lab Work” means the building out of laboratory or research space which may affect the distribution of Building Systems within a single floor of the Premises.

“Premises” is defined in Section 2.1.

“Prevailing Market Rent” is defined in Exhibit C.

“Prior Lease” means any lease of the Property or any part thereof that is prior in estate to this Lease.

“Prior Lessor” means any lessor under a Prior Lease.

“Property” is defined in Section 2.1.

“Public Company” means an entity, the shares, units or other equity interest of which are traded on a recognized stock exchange or “over the counter market”.

“Purchase Agreements” means those three (3) certain Agreements to Assign Ground Lease and Agreement to Lease dated of even date herewith between the SGI Parties and one or more of and the Goldman Parties.

“Real Estate Taxes” are defined in Section 5.1(b).

“Reduced Amount” means an amount equal to the sum of Base Rent payable over the next twelve (12) months of the Term, plus the amount of Additional Rent payable for the most recent full calendar year, in an amount determined by Landlord and provided to Tenant on or before January 1, 2002, and as of each January 1 thereafter during the Term (it being agreed that until January 1, 2002, the amount identified in this clause shall be $8,613,768).

“Renewal Option” is defined in Section 3.2.

“Renewal Term” is defined in Section 3.2.

“Rent” means Base Rent, Additional Rent, and all other sums due from Tenant under this Lease.

“Rentable Area” means the enclosed areas of the Buildings measured to the inside face of the exterior wall or glassline, but excluding outside balconies, arcades, penetrations, covered entrances & docks, elevator and ventilation shafts and stairwells. Rentable Area shall include Tenant’s Share of all Common Area.

“Required Amount” means the sum of (a) Base Rent becoming due during the next eighteen (18) months of the Term plus (b) the

product of one and one-half (1.5) times the amount of

69

the Additional Rent payable for the most recent full calendar year, in an amount determined by Landlord and provided to Tenant on or before January 1, 2002, and as of each January 1 thereafter during the Term (it being agreed that until January 1, 2002, the product identified in this clause (b) shall be $12,920,652).

“Rules and Regulations” arc defined in Section 24.1.

“SGI” means Silicon Graphics, Inc.

“SGI Parties “means SGI and SGRE.

“SGRE” means Silicon Graphics Real Estate, Inc.

“SNDA” means a subordination, nondisturbance and attornment agreement or any other agreement, in each case relating to the Premises, pursuant to which a Leasehold Mortgagee or Prior Lessor grants Tenant the right not to be disturbed in its possession of the Premises provided and for so long as no Event of Default has occurred hereunder.

“Structural Components” means (i) the foundations, columns, girders, beams, supports, concrete slabs and other structural members of the Buildings, (ii) those portions of the exterior walls of the Buildings lying outside of a plane which is the interior face of the window glass of such walls and (c) all Building Systems.

“Sublease” is defined in Section 15.1.

“Successor Entity” is defined in Section 15.6(b).

“Tenant” means SGI or any permitted Successor Entity in accordance with Section 15.7

“Tenant’s Agents” is defined in Section 2.2.

“Tenant’s Hazardous Materials” is defined in Section 13.1(d).

“Tenant’s Property” is defined in Section 10.5.

“Tenant’s Share” is defined in Article 1.

“Term” is defined in Article 1 and Section 3.1.

“Termination Date” is defined in Section 3.1.

“Transfer Costs” is defined in Section 15.3.

“Transfer Notice” is defined in Section 15.2.

“Transferee” is defined in Section 15.2.

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“Turnover Alteration” is defined in Section 10.4.

“Untenantable” means that Tenant shall be unable to occupy, and shall not be occupying, the Premises or the applicable portion thereof for the ordinary conduct of Tenant’s business.

71

EX-10.09.7

Exhibit 10.09.7

RECORDING REQUESTED BY AND

WHEN RECORDED MAIL TO:

SHARTSIS, FRIESE & GINSBURG LLP

One Maritime Plaza, 18th Floor

San Francisco, California 94111

Attn: Jonathan M. Kennedy, Esq.

SPACE ABOVE THIS LINE FOR RECORDER’S USE

NONDISTURBANCE AND ATTORNMENT AGREEMENT

(Amphitheatre)

THIS NONDISTURBANCE AND ATTORNMENT AGREEMENT (“Agreement”) is made and entered into as of July 9, 2003, by and between WXIII/AMPHITHEATRE REALTY, L.L.C., a Delaware limited liability company (“Landlord”), and Google Technology Inc., a California corporation (“Subtenant”).

RECITALS

A. Pursuant to that certain Commercial Lease, dated December 29, 2000, between The Goldman Sachs Group, Inc., a Delaware corporation (“GS”), and Silicon Graphics, Inc., a Delaware corporation (“Tenant”), as assigned by GS to Landlord by Assignment and Assumption of Commercial Lease (Amphitheatre) dated as of May 22, 2001 (a memorandum of said lease having been recorded on January 2, 2001, as Instrument No. 15514933), and amended by that certain Amendment, dated April 18, 2001 and by that certain Second Amendment, dated as of July 9, 2003 (the “Second Amendment”, said lease, as amended as of the date hereof and hereafter, the “Amphitheatre Lease”), Landlord leases to Tenant certain premises at 1600 Amphitheatre Parkway, Mountain View, California, (the “Premises”), said Premises being more particularly described in the Amphitheatre Lease.

B. Pursuant to that certain Sublease dated the date hereof (the “Sublease”) (a memorandum of said Sublease being recorded on July             , 2003, as Instrument No.             ) Tenant subleases to Subtenant, and Subtenant subleases from Tenant, the Premises. Pursuant to the terms of the Sublease, Tenant is to deliver the Premises to Subtenant in phases over a period of time that is anticipated to extend from approximately August 1, 2003 (the target date for Tenant’s first delivery of space to Subtenant under the Sublease), through approximately September 1, 2004 (the target date for Tenant’s last delivery of space to Subtenant under the Sublease), as provided for in the Sublease.

C. The parties intend by this Agreement to set forth their respective rights and obligations with respect to the Sublease in the event of the termination of the Amphitheatre Lease as a consequence of or resulting from any default in the performance or observance of Tenant’s duties or obligations under the Amphitheatre Lease, any rejection of the Amphitheatre Lease in bankruptcy, or any voluntary termination of the Amphitheatre Lease agreed to between Landlord and Tenant, or

upon the expiration of the Amphitheatre Lease at the end of the term thereof, where Subtenant shall have effectively exercised the first renewal option granted to Subtenant under Article V of that certain Landlord-Subtenant Agreement, dated as of the date hereof (the “Landlord-Subtenant Agreement”), between Landlord and Subtenant and joined in by Tenant.

NOW, THEREFORE, THE PARTIES AGREE AS FOLLOWS:

1. Nondisturbance and Attornment. If (a) the Amphitheatre Lease shall be terminated as a consequence or result of any default in the performance or observance of Tenant’s duties or obligations under the Amphitheatre Lease, (b) the Amphitheatre Lease shall be rejected pursuant to Section 365 of the federal Bankruptcy Code, whether by Tenant, or any bankruptcy trustee, or otherwise, (c) there occurs any voluntary termination of the Amphitheatre Lease agreed to between Landlord and Tenant, or (d) upon the expiration of the Amphitheatre Lease at the end of the term thereof, Subtenant shall have exercised the first renewal option granted to Subtenant under Article V of the Landlord-Subtenant Agreement and the conditions for the effectiveness of such option set forth in the Landlord-Subtenant Agreement shall have been satisfied (any of the foregoing events described in clauses (a) through (d), a “Lease Termination”), then, subject to Section 3 below:

(i) provided Subtenant at the time of such Lease Termination is not in default under the terms of the Sublease beyond any applicable notice and cure periods provided for therein and is not in default in its obligations under Section 1.6(h)(iii) of the Second Amendment (Subtenant’s obligation to provide financial statements and in certain circumstances to provide Landlord with security for Subtenant’s restoration obligations), unless Landlord elects in its sole discretion to waive such default:

(A) as a result of such Lease Termination: Subtenant shall not be evicted from the Premises, the Sublease shall not be cut off or terminated, and Subtenant’s occupancy and possession of the Premises under the Sublease will not be affected or disturbed;

(B) the Sublease shall continue in full force and effect as a direct lease between Landlord and Subtenant upon all of the then-executory terms, conditions and covenants as are set forth in the Sublease and which shall be applicable after such attornment, but further modified as set forth in Exhibit A attached hereto and made a part hereof; and

(C) Subtenant shall not be named or joined as a party defendant (unless required by law) in any action, suit or proceeding which may be instituted or taken by Landlord to enforce the performance or observance by Tenant of the provisions of the Amphitheatre Lease and/or to recover damages from Tenant for any breach thereof; and

(ii) Subtenant shall attorn to Landlord and recognize Landlord as the lessor under the Sublease, affirm its obligations under the Sublease and (without limitation of the foregoing) make payments of sums due under the Sublease to Landlord.

The foregoing provisions shall be effective and self-operative without the need for any further instruments, provided that, upon the written request of either party, Landlord and Subtenant

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shall execute and deliver to each other such instruments and certificates as each party may reasonably request to evidence and confirm such nondisturbance and attornment.

2. New Lease. In the event of a Lease Termination, Landlord and Subtenant agree to execute a new lease of the Premises immediately following such Lease Termination pursuant to which Landlord shall lease the Premises to Subtenant, and Subtenant shall lease the Premises from Landlord, upon all of the then-executory terms, conditions and covenants as are set forth in the Sublease and which are applicable after such attornment but further modified as set forth in Exhibit A attached hereto and made a part hereof; provided, however, that such new lease shall incorporate and include any then-applicable terms and conditions contained in (i) the Landlord-Subtenant Agreement and (ii) the Second Amendment.

3. Limitations on Landlord’s Recognition of Sublease and Landlord’s Obligations Thereunder. Except as expressly provided in Section 3(a) and Section 4(b) below, but otherwise notwithstanding anything herein or in the Sublease, the Landlord-Subtenant Agreement or the Second Amendment to the contrary, in no event shall Landlord be bound by or be liable for:

(a) any acts, omissions or defaults of Tenant (which as used herein shall mean Tenant named herein and any successor thereto) under the Sublease, or be subject to any offsets or defenses which Subtenant might have had against Tenant (except as set forth in Section 4(b) below and except that the offset rights provided in Section 30 of the Sublease shall remain in effect and shall be enforceable by Subtenant against Landlord); provided that the foregoing shall not excuse Landlord from the performance of any obligations of the sublessor under the Sublease first arising following a Lease Termination;

(b) any letter of credit or other security provided pursuant to the Sublease unless and to the extent the same has been physically delivered and is available to Landlord; provided that if Subtenant shall have previously complied with its obligations under the Sublease with respect to the “Letter of Credit” and the Cash Collateral Account (as such terms are defined in the Sublease) and provided the same to Tenant, then Subtenant shall not be required to provide an additional letter of credit or security to Landlord under Section 7 of the Sublease except to the extent that Subtenant shall have received the same in return from Tenant or its representatives or Tenant shall have been reasonably assured that Tenant has relinquished any right to draw or otherwise utilize such letter of credit or security; provided further Subtenant shall execute and deliver such documents and take all other reasonable actions necessary or appropriate for the transfer from Tenant to Landlord of the Letter of Credit or Casks Collateral Account, and to designate Landlord as the beneficiary or account holder, respectively, thereof to the exclusion of Tenant;

(c) any rent or additional rent or other sums which Subtenant might have paid more than one (1) month in advance to any Tenant, and all such rent and other sums paid more than one (l) month in advance shall remain due and owing, notwithstanding such advance payment;

(d) any obligation to provide any services or perform any repairs, construction, maintenance, replacement or restoration provided for under the Sublease to be performed before the date that Landlord becomes the landlord of Subtenant under the Sublease in accordance with the terms hereof (subject to Section 4 below); and

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(e) any amendment, modification, surrender or other termination of the Sublease made in each case without the prior written consent of Landlord, except for any termination of the Sublease made in accordance with the Subtenant’s exercise of an express termination right provided for thereunder (subject, however, to Section 4 hereof).

4. Delivery of Premises. Notwithstanding, anything to the contrary set forth herein:

(a) If, at the time of any Lease Termination, Tenant has not yet delivered any portion(s) of the Premises to Subtenant,

(i) Landlord shall be responsible (subject to the limitations on liability of Landlord, as sublessor, provided for in the Sublease) for the delivery of any such undelivered portion(s) of the Premises in the condition and in accordance with time periods provided for in the Sublease, provided that any such time periods shall be extended one day for each day during which Landlord does not have actual possession of the undelivered portion of the Premises from Tenant;

(ii) if not then performed by Tenant, Landlord shall be responsible for the construction in Building 43 as specified in Section 22 of the Sublease; and

(iii) Subtenant shall retain all of the rights and remedies provided in the Sublease in connection with the late delivery or non-delivery of any portion(s) of the Premises, subject to the proviso set forth above in Section 4(a)(i).

(b) Subtenant shall be entitled to an abatement of the Sublease Base Rent (as provided for in Section 6.B of the Sublease) following a Lease Termination in an aggregate amount equal to (i) the Construction Allowance minus (ii) the amount of the abatement of Sublease Base Rent theretofore taken by Subtenant against the rental amounts owing under the Sublease, it being agreed by Subtenant that it shall utilize the rental abatement provided for under Section 6.B of the Sublease at the earliest time(s) permitted under the Sublease.

5. Covenant of Landlord. Landlord agrees that, except as may be agreed to by Subtenant, it will not enforce against Subtenant any amendment or modification of the Amphitheatre Lease made subsequent to the effective date hereof that (i) diminishes in any material respect Subtenant’s rights under the Sublease, or (ii) materially increases in any material respect Subtenant’s obligations under the Sublease.

6. Representations and Warranties. Landlord represents and warrants to Subtenant as to itself that this Agreement: (i) has been duly authorized, executed and delivered by Landlord; (ii) is a legal, valid and binding obligation of Landlord; and (iii) does not violate any provision of any agreement to which Landlord is a party or is bound or of any charter, articles, bylaws, agreements or laws affecting Landlord. Subtenant represents and warrants to Landlord that this Agreement (i) has been duly authorized, executed and delivered by Subtenant; (ii) is a legal, valid and binding obligation of Subtenant; and (iii) does not violate any provision of any agreement to which Subtenant is a party or is bound or of any charter, articles, bylaws, agreements or laws affecting Subtenant.

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7. Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the undersigned and their legal representatives, transferees, successors and assigns and all parties succeeding to the interest of Landlord in the Premises or Subtenant as to the Sublease (but the foregoing shall not be deemed to permit or to confer any benefit hereunder on any direct or remote transferee, successor or assign of, or other party succeeding to the interest of, Subtenant not permitted pursuant to the Second Amendment). In the event of any sale or other transfer of Landlord’s interest in the Premises, Landlord shall be and thereby is entirely freed and relieved of all covenants and obligations of the Landlord hereunder and shall not have any liability or responsibility under or pursuant to the terms of this Agreement relating to liabilities arising after the date Landlord ceases to have an interest in the Premises.

8. Notices. Any notice required or desired to be given pursuant to this Agreement shall be in writing with copies directed as indicated below and shall be personally delivered, or in lieu of personal delivery, by depositing same with a prepaid commercial overnight courier for next-day delivery, in which event such notice shall be deemed delivered on the next business day after deposit with the courier, or by United States registered or certified mail, return receipt requested, postage prepaid, with a signed receipt, in which event such notice shall be deemed delivered upon receipt.

If such notice shall be addressed to Landlord, the address of Landlord is:

WXIII/AMPHITHEATRE REALTY, L.L.C.

85 Broad Street

New York, NY 10004

Attention: Adam Brooks

with a copy to each of:

ARCHON GROUP

100 Crescent Court

Dallas, TX 75201

Attention: Will Mundinger

LEGACY PARTNERS

4000 East 3rd Avenue

Foster City, CA 94404

Attention: Steve Dunn and Darleen Barnes

SULLIVAN & CROMWELL LLP

85 Broad Street

New York, NY 10004

Attention: Arthur S. Adler, Esq.

If such notice shall be addressed to Subtenant, the address of Subtenant is:

2400 Bayshore Parkway

Mountain View, CA 94043

Attention: Director of Facilities

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with a copy to:

2400 Bayshore Parkway

Mountain View, CA 94043

Attention: Legal Department

and:

SHARTSIS, FRIESE AND GINSBURG LLP

One Maritime Plaza, Suite 1800

San Francisco, CA 94111

Attention: Jonathan M. Kennedy

Either Landlord or Subtenant may change its respective address by giving written notice to the other in accordance with the provisions of this paragraph.

9. Attorneys’ Fees. If any action at law or in equity, or any arbitration proceeding, shall be brought for or on account of any breach of or to enforce or interpret any of the terms, covenants, agreements or conditions of this Agreement, the prevailing party shall be entitled to recover from the other party such prevailing party’s costs incurred in such action or proceeding, including without limitation reasonable attorney’s fees.

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

11. Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of California applicable to contracts made and to be performed in the State of California.

12. Waiver of Jury Trial. Landlord and Subtenant each hereby voluntarily and knowingly waive and relinquish their right to a trial by jury in any action, proceeding or counterclaim brought by either against the other on any matter whatsoever arising out of or in any way connected with this Agreement, the relationship of Landlord with Subtenant, or Subtenant’s use or occupancy of the Premises, including any claim of injury or damage, and any emergency and other statutory remedy with respect thereto.

13. Invalidity. If any provision of this Agreement or the application thereof to any person, entity or circumstance shall, to any extent, be invalid or unenforceable, the remainder of this Agreement, or the application of such provision to persons, entities or circumstances other than those as to which it is invalid or unenforceable, shall not be affected thereby, and each provision of this Agreement shall be valid and be enforced to the full extent permitted by law.

14. Modification; Waiver. Neither this Agreement nor any term or provisions hereof may be changed, waived, discharged or terminated orally, and no breach thereof shall be waived, altered or modified, except by a written instrument signed by the parties hereto.

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15. Effectiveness. The effectiveness of this Agreement is subject to the same satisfaction or waiver of the same conditions precedent as are set forth in Section 7.1 of the Landlord-Subtenant Agreement, and a termination of the Landlord-Subtenant Agreement shall result in a simultaneous termination of this Agreement.

[Signature pages follow.]

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IN WITNESS WHEREOF, the parties hereto have caused there presents to be duly executed to be effective as of the day and year first above written.

LANDLORD:
WXIII/AMPHITHEATRE REALTY, L.L.C., a Delaware limited liability company
By:	Whitehall Parallel Real Estate Limited
	Partnership XIII, a Delaware, limited
	partnership
	By:	WH Parallel Advisors, L.L.C. XIII, a
		Delaware limited liability company
		By:	/s/    JEROME S. KARR
			Jerome S. Karr
		Its:	Vice President

SUBTENANT:
GOOGLE TECHNOLOGY INC., a California Corporation
By:	/s/    GEORGE REYES
Its:	CFO

EX-21.01

Exhibit 21.01

Google Inc.,

a Delaware corporation

List of wholly-owned subsidiaries

· Google Australia Pty Ltd

· Google Canada Corporation

· Google France SARL

· Google Germany GmbH

· Google Ireland Holdings Limited

· Google Ireland Limited

· Google Italy S.R.L

· Google Japan KK

· Google Korea, LLC

· Google Netherlands BV

· Google Netherlands Holdings BV

· Google Online Private India Limited

· Google Spain SL

· Google Switzerland GmbH

· Google UK Limited

· Google International LLC, a Delaware Limited Liability Company

· Google LLC, a Delaware Limited Liability Company

· Applied Semantics, Inc.

· Kaltix Corporation

· Neotonic Software Corporation

· Orkut.com LLC

EX-23.01

Exhibit 23.01

CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS

We consent to the reference to our firm under the caption “Experts” and to the use of our report dated April 20, 2004, except as to Note 13 as to which the date is     , 2004 in the Registration Statement (Form S-1 as filed on April 29, 2004) and related Prospectus of Google Inc. for the registration of shares of its common stock.

Ernst & Young LLP

San Francisco, California

The foregoing consent is in the form that will be signed upon the completion of the restatement of capital accounts described in Note 13 to the consolidated financial statements.

/s/    Ernst & Young LLP

San Francisco, California

April 29, 2004

EX-23.02

Exhibit 23.02

CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS

We consent to the use of our report dated June 20, 2003 with respect to the financial statements of Applied Semantics, Inc. included in the Registration Statement (Form S-1 as filed on April 29, 2004) and related Prospectus of Google Inc. for the registration of shares of its common stock.

/s/    Ernst & Young LLP

San Francisco, California

April 29, 2004

EX-99.1

Exhibit 99.1

APPLIED SEMANTICS, INC.

FINANCIAL STATEMENTS

Year ended December 31, 2002

Contents

Report of Ernst & Young LLP, Independent Auditors	1
Audited Financial Statements
Balance Sheet	2
Statement of Operations	3
Statement of Redeemable Convertible Preferred Stock and Net Capital Deficiency	4
Statement of Cash Flows	5
Notes to Financial Statements	6

Report of Ernst & Young LLP, Independent Auditors

The Board of Directors and Shareholders

Applied Semantics, Inc.

We have audited the accompanying balance sheet of Applied Semantics, Inc. as of December 31, 2002, and the related statements of operations, redeemable convertible preferred stock and net capital deficiency, and cash flows for the year then ended. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audit.

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

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Applied Semantics, Inc. at December 31, 2002, and the results of its operations and its cash flows for the year then ended, in conformity with accounting principles generally accepted in the United States.

/s/    Ernst & Young LLP

San Francisco, California

June 20, 2003

APPLIED SEMANTICS, INC.

Balance Sheet

(In thousands, except per share data)

	December 31, 2002
Assets
Current assets:
Cash and cash equivalents	$	1,953
Accounts receivable, net of allowance of $11		3,659
Prepaid expenses and other current assets		74
Total current assets		5,686
Property and equipment, net		526
Other assets		6
Total assets	$	6,218
Liabilities, redeemable convertible preferred stock, and net capital deficiency
Current liabilities:
Accounts payable	$	36
Accrued revenue share		2,278
Accrued commissions		196
Other accrued expenses		145
Deferred revenue		246
Income taxes payable		25
Current portion of equipment leases		28
Total current liabilities		2,954
Noncurrent portion of equipment leases		60
Commitments
Series B redeemable convertible preferred stock, par value $0.001 (liquidation preference of $5,453); 2,536 shares authorized; 1,976 issued and outstanding		5,394
Net capital deficiency:
Undesignated preferred stock, par value $0.001; 6,504 authorized; none outstanding
Series A-1 convertible preferred stock, par value $0.001; 500 shares authorized, issued, and outstanding (liquidation preference of $500)		500
Series A-2 convertible preferred stock, par value $0.001; 100 shares authorized, issued, and outstanding (liquidation preference of $125)		125
Series A-3 convertible preferred stock, par value $0.001; 360 shares authorized; 205 issued, and outstanding (liquidation preference of $410)		410
Common stock, par value $0.001; 40,000 shares authorized; 10,202 shares issued and outstanding		2,936
Deferred stock-based compensation		(413	)
Accumulated deficit		(5,748	)
Total net capital deficiency		(2,190	)
Total liabilities, redeemable convertible preferred stock, and net capital deficiency	$	6,218

See accompanying notes.

2

APPLIED SEMANTICS, INC.

Statement of Operations

(In thousands)

	Year ended December 31, 2002
Net revenues	$	6,187
Costs and expenses:
Cost of revenues		566
Research and development expenses		1,711
Selling and marketing expense		1,483
General and administrative expenses(1)		2,361
Total costs and expenses		6,121
Income from operations		66
Interest income		8
Interest expense and other		(5	)
Income before income taxes		69
Provision for income taxes		25
Net income	$	44

⁽¹⁾ Includes stock-based compensation expense of $1,029 consisting of amortization of deferred stock-based compensation and the fair value of options and warrants issued to nonemployees for services rendered.

See accompanying notes.

3

APPLIED SEMANTICS, INC.

Statement of Redeemable Convertible Preferred Stock and Net Capital Deficiency

(In thousands)

	Redeemable Convertible Preferred Stock Series B			Convertible Preferred Stock
				Series A-1			Series A-2			Series A-3			Common Stock			Deferred Stock-Based Compensation			Accumulated Deficit			Net Capital Deficiency
	Shares	Amount		Shares	Amount		Shares	Amount		Shares	Amount		Shares	Amount
Balance at December 31, 2001	1,976	$	5,394	500	$	500	100	$	125	205	$	410	10,202	$	2,450	$	(956	)	$	(5,792	)	$	(3,263	)
Fair value of options granted to nonemployees	–		–	–		–	–		–	–		–	–		26		–			–			26
Deferred stock-based compensation	–		–	–		–	–		–	–		–	–		460		(460	)		–			–
Amortization of deferred stock-based compensation	–		–	–		–	–		–	–		–	–		–		1,003			–			1,003
Net income and comprehensive income	–		–	–		–	–		–	–		–	–		–		–			44			44
Balance at December 31, 2002	1,976	$	5,394	500	$	500	100	$	125	205	$	410	10,202	$	2,936	$	(413	)	$	(5,748	)	$	(2,190	)

See accompanying notes.

4

APPLIED SEMANTICS, INC.

Statement of Cash Flows

(In thousands)

	Year ended December 31, 2002
Operating activities
Net income	$	44
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		496
Loss on disposal of property and equipment		5
Stock-based compensation		1,029
Changes in assets and liabilities:
Accounts receivable		(2,694	)
Prepaid expenses and other current assets		(21	)
Accounts payable		12
Accrued revenue share		1,929
Other accrued expenses		224
Deferred revenue		209
Income taxes payable		25
Net cash provided by operating activities		1,258
Investing activities
Purchases of property and equipment		(151	)
Decrease in other assets		37
Net cash used in investing activities		(114	)
Financing activities
Payments of principal on equipment leases		(22	)
Net cash used in financing activities		(22	)
Net increase in cash and cash equivalents		1,122
Cash and cash equivalents at beginning of year		831
Cash and cash equivalents at end of year	$	1,953
Supplemental disclosures of cash flow information
Property and equipment acquired under capital leases	$	108
Cash paid for interest	$	2

See accompanying notes.

5

Applied Semantics, Inc.

Notes to Financial Statements

December 31, 2002

1. Summary of the Company and Significant Accounting Policies

Nature of Operations

Applied Semantics, Inc. (the “Company”), a California corporation, formerly known as Oingo, Inc., is a developer and provider of software technology solutions that enable businesses, their customers, and their employees to create value by better organizing, managing, and retrieving unstructured information in enterprise, Web-enabled, and e-commerce environments. The Company’s solutions are based on its CIRCA Technology, which understands, organizes, and extracts knowledge from unstructured content in a way that mimics human thought and language, allowing for more effective information retrieval. Focusing on specific markets, the Company has introduced products through each of its business units: Naming Solutions (DomainAppraise, DomainPark, DomainSense, Error Page Assistant) and Enterprise Solutions (Auto-Categorizer, Metadata Creator, and Page Summarizer).

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management 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.

6

1. Summary of the Company and Significant Accounting Policies (continued)

Revenue Recognition

The Company primarily derives its revenue from revenue share agreements for application services. These are three-way revenue share arrangements wherein the Company receives advertising content from one of its content providers, and then subsequently distributes that content to a third party’s (“Partner”) Web sites. Revenue is generated when end users click-through to the content providers’ advertisements listed on the Partner’s Web sites. The revenues earned by the Company from its customers under these types of arrangements are reported net of the payment due to partners. The Company’s gross revenues and cost of revenues would have been $6.4 million higher for the year ended December 31, 2002, if these transactions had been accounted for on a gross basis. Amounts due to partners under these revenue share arrangements are reported as accrued revenue share in the accompanying balance sheet. The Company also has revenue from licensing agreements. Revenues from the licensing agreements are recognized on a straight-line basis over the term of the related contracts. These amounts, however, have not been a significant revenue stream to date. Any set-up and support fees are also recognized on a straight-line basis over the service period.

Deferred revenue is recorded when payments are received in advance of the Company’s performance in the underlying agreement.

Cost of Revenues

Cost of revenues consists primarily of the expenses associated with the operation of the Company’s server networks, including depreciation of hardware, amortization of capitalized computer software for internal use, datacenter expenses, and royalties related to a patent license agreement.

Cash and Cash Equivalents

Cash and cash equivalents include all highly liquid investments having an original maturity of three months or less.

7

1. Summary of the Company and Significant Accounting Policies (continued)

Certain Risks and Concentrations

Certain financial instruments potentially subject the Company to concentrations of credit risk. These financial instruments consist primarily of cash and cash equivalents and accounts receivable. The Company places its cash and cash equivalents with high-credit quality financial institutions and has not experienced losses with respect to these items. Cash equivalents consist of cash on deposit with a bank and money market deposits. As of December 31, 2002, two customers represented approximately 64% and 19% of accounts receivable. For the year ended December 31, 2002, two customers represented approximately 53% and 16% of total revenues. The Company regularly evaluates its customers’ ability to satisfy credit obligations and maintains an allowance for potential credit losses, when deemed necessary. Credit and losses incurred to date have not been significant.

Property and Equipment

Property and equipment are stated at cost. Depreciation is computed using the straight-line method over the estimated useful lives of the related assets, which range from three to seven years. Leasehold improvements are amortized on a straight-line basis over the shorter of the lease term or estimated useful life of the asset. Equipment under capital leases is amortized over the shorter of the estimated useful life or the related lease term.

Long-Lived Assets

The Company assesses the impairment of long-lived assets whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. An impairment loss would be recognized when estimated future cash flows expected to result from the use of the asset and its eventual disposition are less than its carrying amount.

8

1. Summary of the Company and Significant Accounting Policies (continued)

Fair Value of Financial Instruments

The carrying amounts of the Company’s financial instruments, including cash and cash equivalents, accounts receivable, accounts payable, and accrued liabilities approximate fair value because of their short maturities. The carrying amounts of the Company’s equipment leases approximate fair value of these obligations based upon management’s best estimates of interest rates that would be available for similar debt obligations at December 31, 2002.

Income Taxes

The Company recognizes income taxes under the liability method. Deferred income taxes are recognized for differences between the financial statements and tax bases of assets and liabilities at enacted statutory tax rates in effect for the years in which the differences are expected to reverse. In addition, valuation allowances are established when necessary to reduce deferred taxes to the amounts expected to be realized.

Stock-Based Compensation

As permitted by the Financial Accounting Standards Board (“FASB”) Statement of Financial Accounting Standards No. 123, Accounting for Stock-Based Compensation (“FAS 123”), as amended, the Company accounts for employee stock-based compensation using the intrinsic-value method in accordance with Accounting Principles Board Opinion No. 25, Accounting for Stock Issued to Employees (“APB 25”), and related interpretations. Under APB 25, when the exercise price of the Company’s employee stock options equals the market price of the underlying stock on the date of the grant, no compensation expense is recognized. Deferred compensation for options granted to employees is determined as the difference between the deemed fair value of the Company’s stock on the date options were granted and the exercise price.

Pro forma information regarding net income (loss) has been determined as if the Company had accounted for its employee stock options under the fair-value method prescribed by FAS 123. The resulting effect on pro forma net income (loss) disclosed is not likely to be representative of the effects of income (loss) on a pro forma basis in future years due to additional grants and vesting in subsequent years.

9

1. Summary of the Company and Significant Accounting Policies (continued)

Stock-Based Compensation (continued)

Had compensation cost for options granted under the Company’s option plan been determined based on the fair value at the grant dates for the awards under a method prescribed by FAS 123, the Company’s net income (loss) would have been adjusted to the pro forma amounts below (in thousands):

	Year ended December 31, 2002
Net income, as reported	$	44
Add: Stock-based employee compensation expense included in reported net income, net of related tax effects		1,003
Deduct: Total stock-based employee compensation expense under the fair-value-based method for all rewards, net of related tax effects		(1,120	)
Net income (loss), pro forma	$	(73	)

1.    The fair value of each option granted was estimated on the date of grant using the minimum-value method with the following weighted-average assumptions:

	Year ended December 31, 2002
Risk-free interest rate	4.65	%
Expected life (in years)	5
Dividend yield	—

The weighted-average deemed fair market value of an option granted during 2002 was $0.36.

10

1. Summary of the Company and Significant Accounting Policies (continued)

The Company accounts for stock awards issued to nonemployees in accordance with the provisions of FAS 123 and Emerging Issues Task Force (“EITF”) Issue No. 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 FAS 123 and EITF 96-18, stock awards to nonemployees are accounted for at their fair value using the Black-Scholes method. The fair value of options granted to nonemployees is periodically remeasured as the underlying options vest.

Advertising Expenses

The Company expenses advertising costs in the period in which they are incurred. For the year ended December 31, 2002, advertising expenses totaled approximately $5,000.

Comprehensive Income

Comprehensive income generally represents all changes in net capital deficiency except those resulting from investments or contributions by shareholders. To date, the Company’s comprehensive income has equaled its net income.

Reclassifications

Certain prior-period amounts have been reclassified to conform to the current-period presentation.

11

1. Summary of the Company and Significant Accounting Policies (continued)

Recent Accounting Pronouncements

In November 2002, the EITF reached a consensus on Issue 00-21, Accounting for Multiple Element Revenue Arrangements, addressing how to account for arrangements that involve the delivery or performance of multiple products, services, and/or rights to use assets. Revenue arrangements with multiple deliverables are divided into separate units of accounting if the deliverables in the arrangement meet the following criteria: (1) the delivered item has value to the customer on a stand-alone basis; (2) there is objective and reliable evidence of the fair value of undelivered items; and (3) delivery of any undelivered item is probable. Arrangement consideration should be allocated among the separate units of accounting based on their relative fair values, with the amount allocated to the delivered item being limited to the amount that is not contingent on the delivery of additional items or meeting other specified performance conditions. The final consensus will be applicable to agreements entered into in fiscal periods beginning after June 15, 2003, with early adoption permitted. The Company is evaluating the impact of this consensus on its financial position and operating results.

In November 2002, the FASB issued Interpretation No. 45 (or “FIN 45”), Guarantor’s Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others — an interpretation of FASB Statements No. 5, 57, and 107 and rescission of FASB Interpretation No. 34. FIN 45 elaborates on the existing disclosure requirements for most guarantees, including residual value guarantees issued in conjunction with operating lease agreements. It also clarifies that at the time a company issues a guarantee, the company must recognize an initial liability for the fair value of the obligation it assumes under that guarantee and must disclose that information in its interim and annual financial statements. The disclosure requirements are effective for interim periods or fiscal years ending after December 15, 2002, and have been adopted. The initial recognition and measurement provisions apply on a prospective basis to guarantees issued or modified after December 31, 2002. The Company is evaluating the impact of this interpretation on the Company’s financial position and operating results.

12

1. Summary of the Company and Significant Accounting Policies (continued)

Recent Accounting Pronouncements (continued)

In December 2002, the FASB issued FAS No. 148, Accounting for Stock-Based Compensation — Transition and Disclosure (“FAS 148”). This statement amends FAS 123 to provide alternative methods of transition for a voluntary change to the fair-value-based method of accounting for stock-based employee compensation. While FAS 148 does not amend FAS 123 to require companies to account for employee stock options using the fair-value method, the disclosure provisions of FAS 148 are applicable to all companies with stock-based employee compensation, regardless of whether they account for that compensation using the fair-value method of FAS 123 or the intrinsic-value method of APB 25. Since the Company accounts for stock-based compensation under APB 25 and has no current plans to switch to FAS 123, the impact of FAS 148 will be limited to the reporting of the effects on net income (loss) if the Company accounted for stock-based compensation under FAS 123. FAS 148 is effective for fiscal years ending after December 15, 2002, and the disclosure provisions have been reflected in these financial statements.

2. Commitments

Operating Lease

The Company leases its office space under an operating lease that expired in January 2003. Rent expense under this operating lease amounted to approximately $157,000 during 2002 and was recognized on a straight-line basis over the term of the lease. The Company entered into another operating lease for a new facility in December 2002 that began in February 2003 and expires in May 2006.

Capitalized Leases

The Company leases certain equipment, which is accounted for as capital leases. The gross assets under capital lease at December 31, 2002, were $114,000, with accumulated depreciation of $21,000. The Company has recorded $12,000 of depreciation expense for leased assets during 2002, which is included in the accompanying statement of operations.

13

2. Commitments (continued)

Capitalized Leases (continued)

Future minimum lease payments as of December 31, 2002, under capital and noncancelable operating leases are as follows (in thousands):

	Capital Leases		Operating Lease
2003	$	38	$	256
2004		43		281
2005		26		286
2006		—		121
Total minimum payments required		107	$	944
Less amounts representing interest		19
Minimum future payments of principal		88
Current portion		28
Noncurrent portion	$	60

3. Property and Equipment

Property and equipment consist of the following (in thousands):

	December 31, 2002
Computers and equipment	$	1,049
Computer software for internal use		567
Furniture and fixtures		24
Leasehold improvements		15
		1,655
Accumulated depreciation and amortization		(1,129	)
Property and equipment, net	$	526

14

4. Redeemable Convertible Preferred Stock

In August 2000, the Company issued 1,976,756 shares of Series B redeemable convertible preferred stock (the “Series B shares”) for $2.76 per share and net proceeds of approximately $5.4 million. The declaration of dividends rests in the sole discretion of the Company’s Board of Directors. The right to dividends is not cumulative. Each Series B share has a liquidation preference of $2.76 per share. Each Series B share may be converted at any time, at the holder’s option, into a share of common stock at a conversion price of $2.76 per share. Such shares shall automatically convert into common stock immediately prior to the closing of an underwritten public offering, as defined. The holders of the Series B shares are entitled to vote on all matters and are entitled to the number of votes equal to the number of full common shares into which such holders’ series of preferred shares could be converted. The Series B shares are redeemable at the option of at least 20% of the holders if a qualified initial public offering, as defined, has not occurred five years subsequent to the Series B purchase date. Each Series B share is redeemable at a redemption price equal to the original Series B issue price plus any declared and unpaid dividends.

5. Net Capital Deficiency

Convertible Preferred Stock

In May 2000, the Company issued 500,000, 100,000, and 205,000 shares of Series A-l, A-2, and A-3 convertible preferred stock, respectively (collectively, the “Series A shares”) in exchange for 1,610,000 shares of common stock representing a 1-for-2 ratio. The value of each Series A share is equal to the price originally paid for the share of common stock for which it was exchanged. The price per share was $1.00, $1.25, and $2.00 for a Series A-l, A-2, and A-3 share, respectively. The declaration of dividends rests in the sole discretion of the Company’s Board of Directors, and the right to dividends is not cumulative. Each Series A share has a liquidation preference equal to the original issue price per share, as defined above, plus any declared and unpaid dividends. Each Series A share may be converted at any time, at the holder’s option, into a share of common stock at a conversion price equal to the original issue price of the Series A share. Such shares shall automatically convert into common stock immediately prior to the closing of a firm commitment underwritten public offering, as defined. The holders of the Series A shares are entitled to vote on all matters and are entitled to the number of votes equal to the number of full common shares into which such holders’ Series of preferred shares could be converted.

15

5. Net Capital Deficiency (continued)

Founders Stock

Concurrent with the issuance of the Series B shares, the Company entered into Stock Restriction Agreements with the two founders of the Company. Pursuant to the terms of these agreements, all 10,200,000 common shares owned by the founders of the Company became restricted and subject to a right of repurchase by the Company at a per share amount equal to the original per share issuance price applicable to each share being repurchased. Such right of repurchase shall be exercisable only during the 60-day period following the date of the shareholder’s termination. This right of repurchase shall lapse, with respect to the shares, over 48 equal monthly installments measured from January 1, 1999. The Company’s management determined that at December 31, 2000, the Stock Restriction Agreements were compensatory. As of the date of execution of the Stock Restriction Agreements, 6,162,500 shares of common stock with a value of $2.3 million were subject to repurchase upon termination of the shareholders. Accordingly, the Company recorded deferred stock compensation in this amount, which was amortized to stock compensation expense, as the repurchase right lapses. Amortization for the year ended December 31, 2002, resulted in stock compensation charges of $956,000. As of December 31, 2002, no shares were subject to the restriction.

Additionally, on August 7, 2000, the Company and the purchasers of the Series B shares (the “Investors”) entered into Right of First Refusal and Co-sale Agreements (the “Agreements”) with the two founders of the Company. The Agreements state that should the founders propose to sell to a third party any shares held by them, the Company will have the first right to purchase such shares at the price and on the terms offered by the third party. If the Company does not exercise such right within the specified period of time, then the Investors will have the right to purchase all or a portion of such shares at the same price and terms offered by the third party. Should neither the Company nor the Investors purchase all the shares through their right of first refusal, then each Investor shall have the right to participate in the proposed sale (the “Co-Sale”). The Investor may sell up to that number of common and/or preferred shares equal to the product of the number of shares under the Co-Sale agreement and the Investor’s proportionate share of equity holdings. The rights under these Agreements expire on the earlier to occur of (i) the point in time at which the Investor no longer owns shares of the Company, (ii) the closing of a public offering, as defined, (iii) a sale of a majority of the Company shares, as defined, or (iv) 15 years.

16

5. Net Capital Deficiency (continued)

1999 Stock Plan

Under the Company’s 1999 Stock Option/Stock Issuance Plan (the “1999 Stock Plan”), incentive stock options and nonqualified options, as well as other stock-based awards, may be granted to employees, directors, and consultants. All awards have a maximum term of 10 years. Options are granted at exercise prices that approximated the fair value of the common stock and generally vest over four years or as specifically defined by the stock option agreement. All options granted through December 31, 2002, are immediately exercisable into restricted shares of common stock. Any shares issued upon the exercise of options are subject to a right of repurchase by the Company at the original exercise price, which right generally lapses over a four-year period. As of December 31, 2002, none of the options granted, subject to this repurchase right, had been exercised.

The following table summarizes the activity under the Company’s 1999 Stock Plan (shares in thousands):

			Options Outstanding
	Shares Available for Grant		Number of Shares		Weighted- Average Exercise Price
Balance at December 31, 2001	3,180		2,820		$	0.25
Options granted	(1,423	)	1,423		$	0.38
Options canceled	597		(597	)	$	0.35
Balance at December 31, 2002	2,354		3,646		$	0.28

17

5. Net Capital Deficiency (continued)

1999 Stock Plan (continued)

The following table summarizes additional information regarding outstanding and exercisable options as of December 31, 2002 (shares in thousands):

Options Outstanding and Exercisable
Exercise Price	Number Outstanding	Weighted-Average Remaining Contractual Life
		(In years)
$0.15	1,706	7.44
$0.38	1,940	9.08
	3,646	8.83

Stock-Based Compensation

In 2002, the Company recorded deferred stock-based compensation cost totaling $460,000 in connection with stock option grants to employees. These amounts are being amortized over the vesting period of the related options using the straight-line vesting method. The amount represents the difference between the exercise price and the deemed fair value of the Company’s common stock on the date the stock options were granted. Amortization of deferred stock-based compensation totaled $47,000 during 2002.

Options Granted to Nonemployees

The Company has granted options to nonemployees in exchange for services. These options have a vesting period of 36 months. The Company granted options under the 1999 Stock Plan to nonemployees to purchase 60,000 shares of common stock in 2001. No options were granted to nonemployees during 2002. The Company determined the value of the options granted to nonemployees using the Black-Scholes option pricing model using the following assumptions: 131% volatility, no dividends, risk-free interest rate of 3.83%, and an expected life of 10 years. For the year ended December 31, 2002, the Company recognized approximately $26,000 of stock-based compensation expense related to the fair value of options granted to nonemployees.

18

5. Net Capital Deficiency (continued)

Warrants

In January 2001, the Company issued fully vested nonforfeitable warrants to purchase 36,142 shares of common stock at a purchase price of $0.38 per share in connection with recruitment fees. The Company determined the value of the warrants at the date of grant using the Black-Scholes option pricing model to be approximately $11,000 using the following assumptions: 119% volatility, 0% dividend yield, risk-free interest rate of 4.88%, and a contractual life of five years. The entire fair value of the warrants was expensed as stock-based compensation within general and administrative expenses during 2001, as it related to past services rendered. As of December 31, 2002, the warrants remain outstanding and unexercised.

In 2000, in conjunction with a convertible financing arrangement, the Company issued fully vested nonforfeitable warrants to purchase 12,655 shares of Series A-3 convertible preferred stock at a purchase price of $2.00 per share. These warrants, with a contractual life of three years, remain outstanding and unexercised at December 31, 2002. The Company determined the value of the warrants using the Black-Scholes option pricing model to be approximately $18,000 using the following assumptions: 116% volatility, no dividends, risk-free interest rate of 5.13%, and an expected life of three years.

Reserved Shares

Common stock reserved for future issuance was as follows at December 31, 2002 (in thousands):

Warrants	49
1999 Stock Plan	6,000
Conversion of preferred stock	2,781
Total common stock reserved for future issuance	8,830

19

6. 401(k) Plan

The Company has a 401(k) Savings Plan (the “401(k) Plan”) that qualifies as a deferred salary arrangement under Section 401(k) of the Internal Revenue Code. Under the 401(k) Plan, participating employees may elect to contribute up to 15% of their eligible compensation, subject to certain limitations. The Company did not make any contributions for 2002.

7. Income Taxes

The provision for income taxes consisted of the following (in thousands):

	Year ended December 31, 2002
Current:
Federal	$	—
State		25
Total		25
Deferred:
Federal		—
State		—
Total		—
Provision for income taxes	$	25

20

7. Income Taxes (continued)

The reconciliation of the federal statutory income tax rate to the Company’s effective income tax rate is as follows (in thousands):

	Year ended December 31, 2002
Expected provision at federal statutory rate	$	24
State taxes, net of federal benefit		25
Stock-based compensation expense		325
Valuation allowance		(351	)
Other individually immaterial items		2
Provision for income taxes	$	25

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

	December 31, 2002
Deferred tax assets:
Net operating loss carryforwards	$	1,277
Research and development credit carryforwards		83
Deferred compensation		37
State taxes		9
Accruals and reserves not currently deductible		30
Depreciation		14
Total deferred tax assets		1,450
Valuation allowance		(1,450	)
Net deferred tax assets	$	—

21

7. Income Taxes (continued)

The net valuation allowance decreased by approximately $503,000 during the year ended December 31, 2002.

As of December 31, 2002, the Company had federal and state net operating loss carryforwards of approximately $3.0 million and $4.1 million, respectively. The Company also had federal research and development credit carryforwards of approximately $83,000. The net operating loss and credit carryforwards will begin to expire in 2020 if not utilized.

Utilization of the net operating loss carryforwards may be subject to substantial annual limitation due to the ownership change limitations provided by the Internal Revenue Code of 1986, as amended, and similar state provisions. The annual limitation may result in the expiration of net operating losses before utilization.

8. Subsequent Event

In April 2003, all of the outstanding shares of the Company were purchased by Google Technology, Inc. (“Google”). The Company was acquired for approximately 1.2 million shares of Google common stock and $41.5 million in cash.

22

EX-99.3

Exhibit 99.3

UNAUDITED PRO FORMA COMBINED CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS

The following unaudited pro forma combined condensed consolidated statement of operations has been prepared to give effect to the acquisition of Applied Semantics, Inc. (ASI) by Google Inc. (Google) using the purchase method of accounting, and the assumptions and adjustments described in the accompanying notes to the unaudited pro forma combined condensed consolidated income statement. This unaudited pro forma statement of operations was prepared as if the acquisition had been completed at January 1, 2003 by combining the respective historical statements of operations for both Google and ASI; the latter of which are presented in Exhibit 99.1 included elsewhere in this filing.

The unaudited pro forma combined condensed consolidated statement of operations is presented for illustrative purposes only and is not necessarily indicative of the results of operations that would have actually been reported had the acquisition occurred on January 1, 2003, nor are they necessarily indicative of future results of operations. The pro forma combined condensed consolidated statement of operations includes pro forma adjustments. The pro forma adjustments are based upon available information and certain assumptions that we believe are reasonable under the circumstances. The acquisition was accounted for under the purchase method of accounting. The allocation of the purchase price was based upon the estimated fair value of the acquired assets and liabilities in accordance with Statement of Financial Accounting Standard (SFAS) No. 141, Business Combinations.

UNAUDITED PRO FORMA COMBINED CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS

	Year Ended December 31, 2003 (in thousands, except per share amounts)
	Google		ASI			Pro forma Adjustments				Pro forma Combined
Net revenues	$	961,874	$	2,819		$	—			$	964,693
Costs and expenses:
Cost of revenues		121,794		227			1,722		(b)		123,743
Research and development		91,228		526							91,754
Sales and marketing		120,328		577			628		(b)		121,533
General and administrative		56,699		1,065							57,764
Stock-based compensation(1)		229,361		29			203		(b)		229,593
Total costs and expenses		619,410		2,424			2,553				624,387
Income from operations		342,464		395			(2,553	)			340,306
Interest income, expense and other, net		4,190		(9	)		(141	)	(a)		4,040
Income before income taxes		346,654		386			(2,694	)			344,346
Provision for income taxes		241,006		154			(1,886	)	(c)		239,274
Net income	$	105,648	$	232		$	(808	)		$	105,071
Income per share—basic	$	0.77				$	0.76
Income per share—diluted	$	0.41				$	0.41
Shares used in per share calculation—basic		137,697					138,153
Shares used in per share calculation—diluted		256,638					257,225
(1)    Stock-based compensation, consisting of amortization of deferred stock-based compensation and the fair value of options and warrants issued to non-employees for services rendered, is allocated as followed:
	Google		ASI			Pro forma Adjustments				Pro forma Combined
Cost of revenues	$	8,557	$	—		$	16			$	8,573
Research and development		138,378		—			23				138,401
Sales and marketing		44,607		—			104				44,711
General and administrative		37,819		29			60				37,908
	$	229,361	$	29		$	203			$	229,593

Pro Forma Adjustments

See Notes to Unaudited Pro forma Combined Condensed Consolidated Statement of Operations

UNAUDITED PRO FORMA COMBINED CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS

a) To reflect decrease in interest income resulting from cash payment of $41.5 million for the acquisition.

b) To eliminate the amortization of ASI historical deferred compensation and reflect amortization of the amortizable intangible assets and deferred compensation resulting from the acquisition. The weighted average life of amortizable intangible assets approximates 3 years and the remaining vesting period of unvested employee stock options approximates 2 years.

c) To adjust the provision for taxes to reflect the impact of ASI’s net income and the pro forma adjustments.

NOTES TO UNAUDITED PRO FORMA COMBINED CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS

1.    Basis of Pro Forma Presentation

The unaudited pro forma combined condensed statement of operations of Google and ASI for the year ended December 31, 2003 is presented as if the transaction had been consummated on January 1, 2003. The unaudited pro forma combined condensed statement of operations for the twelve months ended December 31, 2003 combines the results of operations of Google and ASI for the fiscal year ended December 31, 2003.

The total purchase price was $102.4 million. The fair value of Google stock options to be issued was determined using the Black-Scholes option-pricing model. For the unvested options assumed, the intrinsic value was recorded as unearned stock-based compensation and will be amortized as compensation expense on an accelerated basis over the related vesting periods of one to forty-seven months contingent upon each stockholder’s continued employment with the Company. The total purchase price of the ASI acquisition is as follows (in thousands):

Cash consideration (including $350K of merger related costs)	$	41,451
Fair value of Google common stock issued		47,383
Fair value of options issued to purchase Google common stock		13,603
Aggregate purchase price	$	102,437

The total purchase price is allocated to ASI’s net tangible and intangible assets based upon their estimated fair value at the merger date. The purchase price allocation is as follows (in thousands):

Goodwill	$	84,192
Identified intangible assets		20,700
Deferred stock-based compensation		1,933
Net tangible assets		3,612
Deferred tax liabilities		(8,000	)
Aggregate purchase price	$	102,437

$84.2 million has been allocated to Goodwill. Goodwill represents the excess of the purchase price over the fair value of the net tangible and intangible assets acquired. In accordance with Statement of Financial Accounting Standards No. 142, “Goodwill and Other Intangible Asset”, goodwill will not be amortized and will be tested for impairment at least annually.

Identified intangible assets acquired were valued using assistance from an appraiser. Identified intangible assets are comprised of the following (in thousands):

	Fair Value		Estimated Useful Life
Developed Technology	$	16,600	3 years
Customer contracts	$	3,700	2 years
Trademark	$	200	3 years
Non-compete agreement	$	200	2 years

2.    Pro Forma Combined Net Income Per Share

Shares used to calculate unaudited pro forma net income per basic share were computed by adding 1,825,226 shares issued in exchange for the outstanding ASI shares to Google’s weighted average shares outstanding. Shares used to calculate unaudited pro forma net income per diluted share were computed by adding 1,826,000 shares and xxx,000 options (using the treasury stock method) issued as part of the acquisition.