10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

x Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended June 30, 2005

or

¨ Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Commission file number: 0-28432

Boston Communications Group, Inc.

(Exact name of registrant as specified in its charter)

Massachusetts	04-3026859
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

55 Middlesex Turnpike, Bedford, Massachusetts 01730

(Address of principal executive offices) (Zip Code)

Registrant’s telephone number, including area code: (781) 904-5000

(Former name, former address and former fiscal year, if changed since last report)

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

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act)    YES  x    NO  ¨

Indicate the number of shares outstanding of each of the issuer’s classes of common stock as of the latest practicable date. As of August 5, 2005, the Company had outstanding 17,644,344 shares of common stock, $.01 par value per share.

INDEX

PART I.	FINANCIAL INFORMATION:
Item 1.	Financial Statements (Unaudited)	3
	Condensed Consolidated Balance Sheets	3
	Condensed Consolidated Statements of Operations	4
	Condensed Consolidated Statements of Cash Flows	5
	Notes to Condensed Consolidated Financial Statements	6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations Certain Factors That May Affect Future Results	18
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	36
Item 4.	Controls and Procedures	36
PART II.	OTHER INFORMATION:
Item 1.	Legal Proceedings	37
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	39
Item 4.	Submission of Matters to a Vote of Security Holders	39
Item 6.	Exhibits	40

This Quarterly Report contains forward-looking statements, within the meaning of the Private Securities Litigation Reform Act of 1995, that involve risks and uncertainties, including without limitation, statements regarding:

• Earnings per share;

• Revenues;

• Continued customer concentration and diversification of revenue;

• Legal expenses related to the Freedom Wireless, Inc. (“Freedom Wireless”) lawsuit;

• Accrued estimated loss from the Freedom Wireless lawsuit;

• Expectations regarding future settlements or judgments;

• Entrance of new competitors in the wireless services market;

• Engineering, research and development expenditures;

• Sales and marketing expenses;

• General and administrative expenses;

• Interest income;

• Capital expenditures;

• Defined benefit plan contributions;

• Financing of investments with cash and short-term investments;

• Expectations regarding new product offerings and global expansion; and

• Expectation that the acquisition of PureSight, Inc. and PureSight LTD will be dilutive in the near-term.

These statements are based on the current beliefs and assumptions of management.

Any statements contained herein that are not statements of historical fact may be deemed to be forward-looking statements. Without limiting the foregoing, the words “believe,” “anticipate,” “plan,” “expect,” “intend,” and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these words.

A number of important factors could cause actual events or our actual results to differ materially from those indicated by such forward-looking statements. These factors include, without limitation, those set forth under the captions “Management’s Discussion and Analysis of Financial Condition and Results of Operations”, “Certain Factors That May Affect Future Results” and “Quantitative and Qualitative Disclosures About Market Risk”. The statements discussed herein do not reflect the potential future impact of any mergers, acquisitions or dispositions. We do not assume any obligation to update any forward-looking statements made herein.

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PART I. FINANCIAL INFORMATION

Item 1. Financial Statements (Unaudited)

BOSTON COMMUNICATIONS GROUP, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except share and per share amounts)

	June 30, 2005			December 31, 2004
	(unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	1,883		$	9,467
Short-term investments		60,208			68,285
Accounts receivable, net of allowance of $650 in 2005 and $474 in 2004		22,229			17,358
Tax refund receivable		966			—
Deferred income taxes		120			319
Prepaid expenses and other assets		3,370			2,907
Total current assets		88,776			98,336
Property and equipment:
Building, land and leasehold improvements		14,231			14,576
Telecommunications systems & software		99,202			94,900
Furniture and fixtures		918			789
Systems in development		8,132			2,837
		122,483			113,102
Less allowance for depreciation and amortization		67,974			57,543
		54,509			55,559
Intangible assets, net		4,578			2,450
Goodwill		9,164			4,753
Other assets		9,171			6,913
Total assets	$	166,198		$	168,011
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	1,725		$	312
Accrued expenses		8,528			13,386
Accrued estimated loss from litigation		24,000			—
Deferred revenue		3,391			3,753
Income taxes payable		—			1,591
Total current liabilities		37,644			19,042
Non-current liabilities:
Accrued pension liability		3,965			3,476
Deferred income taxes		1,948			7,046
Total non-current liabilities		5,913			10,522
Commitments and contingencies
Shareholders’ equity:
Preferred stock, $.01 par value, 2,000,000 shares authorized, none issued and outstanding		—			—
Common stock, voting, par value $.01 per share, 35,000,000 shares authorized; 17,642,886 and 17,581,625 shares issued and outstanding at June 30, 2005 and December 31, 2004, respectively		176			176
Additional paid-in capital		104,445			104,070
Retained earnings		18,201			34,430
Accumulated other comprehensive loss		(181	)		(229	)
Total shareholders’ equity		122,641			138,447
Total liabilities and shareholders’ equity	$	166,198		$	168,011

See accompanying notes.

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BOSTON COMMUNICATIONS GROUP, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited and in thousands, except per share amounts)

	Three months ended June 30,					Six months ended June 30,
	2005			2004		2005			2004
NET REVENUES	$	25,615		$	27,650	$	51,967		$	54,895
EXPENSES:
Cost of revenues*		6,793			6,459		13,470			12,837
Engineering, research and development		4,306			3,497		9,061			7,293
Sales and marketing		2,313			1,667		4,789			3,539
General and administrative		2,621			2,125		5,150			4,211
General and administrative – legal charges		4,319			450		6,529			1,600
Estimated loss from litigation		24,000			—		24,000			—
Depreciation and amortization		5,204			5,490		10,758			10,959
Operating income (loss)		(23,941	)		7,962		(21,790	)		14,456
Interest income		408			251		808			563
Income (loss) before income taxes		(23,533	)		8,213		(20,982	)		15,019
Provision/(benefit) for income taxes		(5,671	)		3,211		(4,753	)		5,933
Net income (loss) from continuing operations		(17,862	)		5,002		(16,229	)		9,086
Net loss from discontinued operations		—			—		—			(11	)
Net income (loss)	$	(17,862	)	$	5,002	$	(16,229	)	$	9,075
Basic net income (loss) per share:
Continuing operations	$	(1.01	)	$	0.27	$	(0.92	)	$	0.50
Net income (loss)	$	(1.01	)	$	0.27	$	(0.92	)	$	0.50
Weighted average common shares outstanding		17,641			18,295		17,622			18,286
Diluted net income (loss) per share:
Continuing operations	$	(1.01	)	$	0.27	$	(0.92	)	$	0.49
Net income (loss)	$	(1.01	)	$	0.27	$	(0.92	)	$	0.48
Weighted average common shares outstanding		17,641			18,735		17,622			18,728

* exclusive of depreciation and amortization, which is shown separately.

See accompanying notes.

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BOSTON COMMUNICATIONS GROUP, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited and in thousands)

	Six months ended June 30,
	2005			2004
OPERATING ACTIVITIES
Net income (loss) from continuing operations	$	(16,229	)	$	9,086
Adjustments to reconcile net income (loss) from continuing operations to net cash provided by operations:
Depreciation and amortization		10,758			10,959
Deferred income taxes		(4,899	)		108
Accrued estimated loss from litigation		24,000			—
Changes in operating assets and liabilities:
Accounts receivable, net		(4,663	)		(5,373	)
Tax refund receivable		(966	)		—
Prepaid expenses and other assets		(739	)		(772	)
Accounts payable, accrued expenses and deferred revenue		(3,534	)		(347	)
Income taxes payable		(1,754	)		1,181
Other non-current liabilities		489			461
Net cash provided by operating activities of continuing operations		2,463			15,303
Loss from discontinued operations		—			(11	)
Net change in operating assets and liabilities of discontinued operations		—			(260	)
Net cash used in operating activities of discontinued operations		—			(271	)
Net cash provided by operations		2,463			15,032
INVESTING ACTIVITIES
Acquisition of business		(6,651	)		—
Payment of earnout of acquired business		(591	)		(410	)
Purchases of short-term investments		(33,523	)		(31,043	)
Sales of short-term investments		41,648			31,995
Purchase of long-term investments		(1,955	)		(1,517	)
Purchases of property and equipment		(9,350	)		(10,039	)
Net cash used in investing activities		(10,422	)		(11,014	)
FINANCING ACTIVITIES
Proceeds from exercise of stock options		21			375
Proceeds from issuance of common stock		354			335
Repurchase of common stock		—			(4,935	)
Net cash provided by (used in) financing activities		375			(4,225	)
Decrease in cash and cash equivalents		(7,584	)		(207	)
Cash and cash equivalents at beginning of period		9,467			2,960
Cash and cash equivalents at end of period	$	1,883		$	2,753
SUPPLEMENTAL CASH FLOW INFORMATION
Cash paid for income taxes	$	1,789		$	4,961

See accompanying notes.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

1. Basis of Presentation

The accompanying unaudited financial statements have been prepared on a going concern basis in accordance with accounting principles generally accepted in the United States for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. This basis contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. Operating results for the three and six month periods ended June 30, 2005 are not necessarily indicative of the results that may be expected for the year ending December 31, 2005 or any other interim period.

On May 20, 2005, the jury in the Freedom Wireless patent infringement lawsuit issued a verdict of $128 million against the Company and the other co-defendants, including Cingular Wireless LLC, for past damages through December 31, 2004, an amount which exceeds the Company’s ability to pay. Based on management’s assessment of the potential outcomes of the case and in accordance with Statement of Financial Accounting Standards No. 5, Accounting for Contingencies (FAS 5) and FASB Interpretation 14, Reasonable Estimation of the Amount of a Loss (FIN 14), the Company has accrued an estimated loss of $24 million with respect to the Freedom Wireless verdict, excluding additional legal charges which are expensed as incurred. However, the actual loss, if any, may be significantly higher or lower than the amount accrued.

The balance sheet at December 31, 2004 has been derived from the audited financial statements at that date but does not include all of the information and footnotes required by accounting principles generally accepted in the United States for complete financial statements.

For further information, refer to the consolidated financial statements and footnotes thereto included in the Company’s annual report on Form 10-K for the year ended December 31, 2004 and Form 8-K filed on June 24, 2005.

2. Summary of Significant Accounting Policies

Principles of Consolidation

The consolidated financial statements include 100% of the Company’s accounts and operations and all of its wholly-owned subsidiaries. Upon consolidation, all intercompany accounts and transactions are eliminated.

Reclassifications

Certain amounts in the accompanying consolidated financial statements have been reclassified to conform to the current year presentation.

Revenue Recognition

Revenues are recognized in accordance with the Securities and Exchange Commission Staff Accounting Bulletin No. 104, “Revenue Recognition” and application of Emerging Issues Task Force Issue No. 00-21 “Revenue Arrangements with Multiple Deliverables.”

The Company earns revenues in various ways through its managed services business:

1) Real-Time Billing - the Company principally earns revenues by processing prepaid wireless minutes or as a percentage of wireless customer revenue, net of any penalties incurred related to outages on the platform;

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2) Voyager Billing - the Company earns revenues by generating a postpaid subscriber’s monthly bill; and

3) PayExtend - the Company principally earns revenues by processing transactions on behalf of wireless operators’ subscribers.

Revenues for each of these solutions are recognized as the services are provided. Managed services revenues also include amounts for licensing fees, development projects and implementations, which are typically recognized ratably over the remaining life of the contract with the respective wireless operator.

For the Company’s licensed systems sales, the Company typically recognizes revenues from the sale of systems at the time the systems are shipped or delivered to the customer, depending on shipping terms. In the event there are acceptance terms, the Company defers revenue until acceptance has occurred. In addition, certain software is licensed to distributors, who pay licensing fees to the Company as they sell the software to their customers and the revenue is recognized in the month it is earned.

For multiple element arrangements, the Company determines the fair value of each element based on the specific objective evidence for that element and allocates total revenue from these arrangements to each element based on its fair value. Installation revenue is deferred until the entire installation is complete. Revenues from maintenance and support and other services are based on vendor-specific objective evidence of fair value and recognized ratably over the term of the maintenance and support contract period. Vendor-specific objective evidence of fair value of maintenance and support is based upon the amount charged when the service is sold separately, which is typically the contract’s renewal rate. Vendor-specific objective evidence of fair value for installation and other services is based upon standard pre-established rates.

All revenues are recorded net of unbillable amounts and amounts that are estimated to be uncollectible based on historical experience. A reserve for doubtful accounts is recorded based on historical experience or specific identification of an event necessitating a reserve.

Cash, Cash Equivalents and Short-Term Investments

The Company considers all highly liquid investments with maturities of three months or less at the date of purchase to be cash equivalents. Cash equivalents consist primarily of institutional money market funds.

The Company accounts for its marketable securities in accordance with Statement of Financial Accounting Standards No. 115, “Accounting for Certain Instruments in Debt and Equity Securities.” The Company has classified all of its short-term investments as available-for-sale, and is thus reported at fair market value with unrealized gains and losses, net of tax, reported as a separate component of stockholder’s equity.

Investments that mature in more than three months but less than 36 months are considered short-term investments because the Company views its available-for-sale portfolio as available for use in its current operations. The Company’s short-term investments are invested in corporate notes, municipal auction rate securities and annuities maturing in less than thirty-six months.

Substantially all of the Company’s short-term investments have contractual maturities of twelve months or less.

In connection with the Freedom Wireless verdict discussed in Note 4 to the Condensed Consolidated Financial Statements, on July 27, 2005, the Company entered into a Funding of Security for Appeal Agreement with Cingular Wireless whereby the Company has agreed to place $41 million in escrow as security for any potential liability associated with the litigation. This agreement is subject to mutual acceptance of an escrow agent and related escrow terms.

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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 reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Legal Costs

The Company accrues the costs of settlements, damages and, under certain conditions, costs of defense when such costs are probable and estimable; otherwise, such costs are expensed as incurred. As discussed in Note 4 to the Condensed Consolidated Financial Statements, the Company expenses legal costs related to the Freedom Wireless lawsuits as incurred due to the lengthy and unpredictable nature of this litigation, which has made it difficult to continue to reasonably estimate legal costs for the litigation. Other litigation will continue to be accounted for in accordance with the Company’s accounting policy, and generally, the Company develops an estimate of probable costs in consultation with the Company’s outside legal counsel who is handling the case. There can be no assurance that the Company’s expenses will not exceed its estimate.

Income Taxes

The Company’s current and deferred income taxes, and associated valuation allowances, are impacted by events and transactions arising in the normal course of business as well as in connection with special and non-recurring items. Assessment of the appropriate amount and classification of income taxes is dependent on several factors, including estimates of the timing and realization of deferred income tax assets and the timing of income tax payments. Actual collections and payments may materially differ from these estimates as a result of changes in tax laws as well as unanticipated future transactions impacting related income tax balances.

The income tax benefit for the six months ended June 30, 2005 was $4.8 million, compared to an income tax provision of $5.9 million (39.5% effective tax rate) for the six months ended June 30, 2004. The benefit recorded in the current year reflects the Company’s assessment of its ability to realize the tax benefit from the ultimate loss, if any, from the Freedom Wireless litigation.

Comprehensive Income (Loss)

Components of comprehensive income (loss) include net income (loss) and certain transactions that have generally been reported in the condensed consolidated statements of shareholders’ equity.

(in thousands)	Three months ended June 30,						Six months ended June 30,
	2005			2004			2005			2004
Net income (loss) as reported	$	(17,862	)	$	5,002		$	(16,229	)	$	9,075
Securities valuation adjustment, net of tax		98			(206	)		49			(226	)
Foreign currency translation, net of tax		(1	)		—			(1	)		—
Comprehensive income (loss)	$	(17,765	)	$	4,796		$	(16,181	)	$	8,849

Concentrations of Credit Risk

Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash, cash equivalents, short and long-term investments and accounts receivable.

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The Company maintains cash, cash equivalents, short-term investments and long-term investments primarily with high credit quality financial institutions and monitors the amount of credit exposure to any one financial institution, thereby mitigating credit risk.

The Company’s managed services business allows wireless operators throughout the United States to utilize its real-time billing capabilities, enabling such operators to offer prepaid wireless calling to their subscribers, offer various ways to replenish their accounts and to purchase digital content. Wireless operators also utilize the Company’s managed services business to provide their subscribers with a monthly postpaid wireless bill. In addition, the Company sells licensed systems internationally, most recently in North and South America and Africa, however the Company is in the process of expanding its sales territories through Europe, Latin America and Asia, among other areas. The Company generally does not require collateral from its customers, although upfront payments for a portion of the total sale are typically required prior to shipment. In addition, certain software is licensed to distributors, who pay licensing fees to the Company as they sell the software to their customers.

Property and Equipment

Property and equipment are recorded at cost and are depreciated on a straight-line basis over the estimated useful lives of the assets, which range from 3 to 20 years. Systems in development primarily represent internally capitalized labor and purchased hardware and software to be used in the Company’s managed services and licensed products business that are not yet placed into service and will be depreciated and amortized when placed in service, typically over three to five years.

Research and Development and Software Development Costs

Research and development costs are charged to expense as incurred. However, costs incurred for the development of computer software or deployment of assets for internal use is capitalized. The direct labor and payroll related costs of development of computer software, primarily for the coding and testing of the software, are capitalized in accordance with the American Institute of Certified Public Accountants’ Statement of Position 98-1 “Accounting for the Costs of Computer Software Developed or Obtained for Internal Use.” The direct labor, travel and payroll related costs to deploy assets for internal use are capitalized until the asset is placed in service. The capitalized costs are subject to an ongoing assessment of recoverability based on the Company’s anticipated use, anticipated future undiscounted net cash flows and changes in hardware and software technologies.

Amortization of capitalized software development costs begins when the solution is made available for general release and amortization of internal use costs begins when the related asset is first placed in service. These costs are amortized on a straight-line basis over a three-year period.

Impairment of Long Lived Assets

The Company reviews the carrying value of its long-lived assets to assess the recoverability of these assets in accordance with Statement of Financial Accounting Standards (FAS) No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets.” The Company assesses assets for impairment when events and circumstances indicate that the assets might be impaired because of a change in anticipated use or technology, and the undiscounted operating cash flows estimated to be generated by those assets are less than the carrying amounts of those assets. The impairment loss is measured by comparing the fair value of the assets to their carrying values. Fair value is determined by either quoted market prices or a discounted cash flow method, whichever is more appropriate under the circumstances involved.

The Company accounts for goodwill in accordance with FAS 142 “Goodwill and Other Intangible Assets.” Under FAS 142, goodwill is not amortized but is subject to annual impairment tests. The Company evaluates goodwill for impairment annually in the fourth quarter or whenever events or changes in circumstances

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indicate that the carrying amount may not be recoverable. Goodwill is tested for impairment by comparing the fair value of a reporting unit with its carrying amount, including goodwill. If the carrying amount of the reporting unit’s goodwill exceeds the implied fair value of that goodwill, an impairment loss shall be recognized in an amount equal to that excess.

As a result of the Freedom Wireless lawsuit verdict discussed in Note 4 to the Condensed Consolidated Financial Statements, the Company performed an asset impairment test for its long-lived assets and goodwill in the quarter ended June 30, 2005 and concluded that no impairment existed.

Stock-Based Compensation

The Company has elected to follow the intrinsic value method in accordance with Accounting Principles Board Opinion No. 25, “Accounting for Stock Issued to Employees” (APB 25) and related Interpretations in accounting for its stock-based compensation plans, rather than the alternative fair value accounting method provided for under FAS No. 123, “Accounting for Stock-Based Compensation.” Under APB 25, since the exercise price of options granted under these plans equals the fair market price of the underlying stock on the date of grant, the Company recognizes no compensation expense for stock option grants.

During the first quarter of 2005, the Company accelerated the vesting of certain unvested stock options. These stock options were awarded to employees, officers and directors under the Company’s 2000 Stock Option Plan and 2004 Stock Incentive Option Plan and had exercise prices that were greater than $7.75 per share. Options to purchase 866,331 shares of bcgi Common Stock became exercisable immediately as a result of the vesting acceleration. The aggregate number of options to purchase shares of bcgi Common Stock held by directors and executive officers that were accelerated pursuant to this acceleration is 310,496. The exercise prices and number of shares subject to the accelerated options were unchanged. The acceleration of the vesting of these options did not result in a charge based on generally accepted accounting principles. For pro forma disclosure requirements under FAS 123, the Company recognized an additional $1.8 million of stock-based compensation for all options whose vesting was accelerated. The Company took this action because it will limit the negative impact on the Company’s results from operations beginning in 2006 when FAS 123(R) takes effect for the Company.

Since the Company accelerated vesting as described above for the first quarter of 2005, the expense for the six months ended June 30, 2005 is substantially higher than normal levels, and the expense for the three months ended June 30, 2005 is somewhat lower than typical levels. As a result, the results of applying the fair value method may have a materially different effect on pro forma net income (loss) in future years than the amounts shown below.

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Had compensation expense for the Company’s Stock Plans been determined consistent with FAS No. 123, the pro forma net income (loss) and net income (loss) per share would have been as follows (in thousands, except per-share information):

	Three months ended June 30,						Six months ended June 30,
	2005			2004			2005			2004
Net income (loss) as reported	$	(17,862	)	$	5,002		$	(16,229	)	$	9,075
Add: Stock-based employee compensation expense included in reported net income (loss)		—			—			—			—
Deduct: Total stock based employee compensation expense determined under fair value based method for all awards, net of tax benefit		225 (759	)		566 (759	)		2,620			1,189
Pro forma net income (loss)	$	(18,087	)	$	4,436		$	(18,849	)	$	7,886
Basic net income (loss) per share:
As reported	$	(1.01	)	$	0.27		$	(0.92	)	$	0.50
Pro forma	$	(1.03	)	$	0.24		$	(1.07	)	$	0.43
Diluted net income (loss) per share:
As reported	$	(1.01	)	$	0.27		$	(0.92	)	$	0.48
Pro forma	$	(1.03	)	$	0.24		$	(1.07	)	$	0.42

Basic and Diluted Net Income (Loss) Per Share

Basic earnings (loss) per share is computed using the weighted average number of common shares outstanding during the period. Diluted earnings (loss) per share is computed using the weighted average number of common shares outstanding during the period plus the impact, if dilutive, of common share equivalents, which are stock options. For purposes of computing diluted earnings (loss) per share, weighted average common share equivalents do not include stock options with an exercise price that exceeds the average market price of the Company’s Common Stock for the respective period. In addition, during loss periods, no stock options are included as their effect would be anti-dilutive. Accordingly, for the three months ended June 30, 2005 and 2004, options to purchase 3,397,000 and 1,048,000 shares, respectively, of Common Stock have been excluded from the computation. In addition, for the six months ended June 30, 2005 and 2004, options to purchase 3,397,000 and 1,048,000 shares, respectively, of Common Stock have been excluded from the computation.

The following table sets forth a reconciliation of basic and diluted shares for the three and six months ended June 30 (unaudited and in thousands except for shares):

	Three months ended June 30,		Six months ended June 30,
	2005	2004	2005	2004
Denominator:
Denominator for basic net income (loss) per share	17,641	18,295	17,622	18,286
Effect of dilutive employee stock options	—	440	—	442
Denominator for diluted net income (loss) per share	17,641	18,735	17,622	18,728

Recent Accounting Pronouncements

On December 16, 2004, and as amended on April 14, 2005, the Financial Accounting Standards Board (FASB) issued FASB Statement No. 123 (revised 2004), Share-Based Payment (Statement No. 123(R)), which is a revision of FASB Statement No. 123, Accounting for Stock-Based Compensation. Statement No. 123(R) supersedes APB Opinion No. 25, Accounting for Stock Issued to Employees, and amends FASB Statement No. 95, Statement of Cash Flows. Generally, the approach in Statement No. 123(R) is similar to the approach described in Statement No. 123. However, Statement No.123(R) requires all share-based payments to employees, including grants of employee stock options, to be recognized in the statement of operations based on their fair values. Pro forma disclosure will no longer be an alternative.

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Under Statement No. 123(R), the Securities and Exchange Commission allows companies to implement Statement No. 123(R) at the beginning of their next fiscal year, instead of the next reporting period, that begins after June 15, 2005. The Company expects to adopt Statement No. 123(R) on January 1, 2006.

As permitted by Statement No.123, the Company currently accounts for share-based payments to employees using Opinion 25’s intrinsic value method and, as such, generally recognizes no compensation cost for employee stock options. Accordingly, the adoption of Statement No. 123(R)’s fair value method will have a significant impact on the Company’s results of operations, although it will have no impact on the Company’s overall financial position. The impact of adoption of Statement No. 123(R) cannot be predicted at this time because it will depend on levels of share-based payments granted in the future. However, had the Company adopted Statement No. 123(R) in prior periods, the impact of that standard would have approximated the impact of Statement No. 123 as described in the disclosure of pro forma net income (loss) and earnings per share in Note 2 to the Company’s Condensed Consolidated Financial Statements. Statement No. 123(R) also requires the benefits of tax deductions in excess of recognized compensation cost to be reported as a financing cash flow, rather than as an operating cash flow as required under current literature. This requirement will reduce net operating cash flows and increase net financing cash flows in periods after adoption.

3. Other Assets

In 2004 and 2005, the Company exchanged cash totaling $1,500,000 and received secured convertible promissory notes (the “Notes”) for the same amount from an early stage entity with whom the Company has a commercial relationship.

The Notes accrued interest at a rate of 15% per annum until April, 2005 and subsequently accrue interest at a rate of 12% per annum. Because of the early-stage nature of the entity, interest income from the notes is being accounted for as interest payments are received. The Notes, together with accrued interest, are due on July 23, 2007 and are secured by the entity’s assets, properties and rights.

The Notes are convertible at any time into the borrower’s common stock or preferred stock, as defined in the agreement.

4. Contingencies

Legal

Freedom Wireless Patent Infringement Lawsuit

In March 2000, Freedom Wireless, Inc. filed a suit against the Company and a number of its current or former carrier customers (Verizon Wireless, Cingular Wireless LLC, AT&T Wireless Services, CMT Partners and Western Wireless Corp.). The suit was tried in the United States District Court in Massachusetts and alleged that the defendants infringe two patents held by Freedom Wireless, Inc. and sought damages as well as injunctive relief. On May 20, 2005, a jury determined that bcgi and certain of the other defendants infringed or are infringing the two Freedom Wireless patents. The jury damages award was in the total amount of $128 million for past damages through December 31, 2004, an amount which exceeds the Company’s ability to pay. Of this amount, bcgi and Cingular (which includes AT&T Wireless Services and CMT Partners) are jointly and severally liable for $127.8 million and bcgi and Western Wireless for $200,000. Interest and damages for infringement by bcgi and Cingular from January 1, 2005 to the date of the judgment may also be awarded. Additionally, the jury found that bcgi willfully infringed the patents and as a result, the Court may award treble damages and attorney’s fees. Any enhanced damages for willfulness would be the responsibility of bcgi. The Court, however, also has discretion to reduce the amount of the jury’s damages award.  bcgi intends to file a motion for remittitur to ask the Court to reduce the level of damages awarded.

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The Company has an obligation to indemnify the other defendants for damages they may incur with respect to any infringement by the Company’s technology. In 2005, Verizon Wireless, which was a defendant in the case, reached a settlement with Freedom Wireless and, as a result, was removed as a defendant in the case. The Company was not part of the settlement discussions and the terms of the settlement are not public.

The Court has not issued a final judgment on the suit since there are still matters pending before the Court. Following the issuance of the jury verdict, a non-jury trial for inequitable conduct was held. In this case, which concluded on July 26, 2005 and is pending before the Court, bcgi argued that the Freedom Wireless patents are unenforceable because Freedom breached its duty of candor and good faith to the Patent and Trademark Office (PTO) by knowingly withholding material prior art from the PTO. The Court has ordered the plaintiff and defendants to file proposed findings of fact and conclusions of law with the Court no later than August 15, 2005. If the Court rules in favor of bcgi and its co-defendants in the inequitable conduct trial, the patents held by Freedom Wireless would become unenforceable, a decision that Freedom Wireless, Inc. may choose to appeal. The Company intends to file motions for judgment as a matter of law and a motion for a new trial or, in the alternative, as noted above, a reduction in the damages awarded by the jury. The Company expects that the Court would rule on each of these matters in addition to determining the final judgment on the case in due course, sometime after August 15, 2005.

If the Court rules against bcgi and the co-defendants in the non-jury trial, the Company expects to appeal the Court’s decision to the Court of Appeals for the Federal Circuit. The appeal process can take 12-18 months or longer. In the event of an appeal, the Court may require the defendants to provide collateral or post a bond. The bond could approximate 110% of the final damages amount, which, depending on the final judgment, could exceed bcgi’s ability to pay. If the Company is unable to provide adequate collateral or post a sufficient bond, or an injunction is entered and not stayed, or if the Company is unable to get an adverse judgment reversed and is unable to negotiate a commercially acceptable license with Freedom Wireless to allow bcgi to continue to provide its products and services, then it will not be possible for the Company to provide the prepaid wireless or Real-Time Billing service bureau as currently offered in the United States. In that event, the Company may not be able to continue its ongoing operations or may need to seek protection under Chapter 11 of the U. S. Bankruptcy Code. If the plaintiff files for an injunction, the Court could rule that the Company may not use the alleged infringing technology.

In order to mitigate the risk that bcgi will be unable to post sufficient collateral on its own, the Company entered into an agreement with Cingular Wireless LLC, a co-defendant in the case. This agreement is subject to mutual acceptance of an escrow agent and related escrow terms. Under the terms of this agreement, bcgi has agreed to place $41 million into escrow for the purpose of using these funds as security in the event that a bond or other security must be posted for more than $41 million. In exchange for placing the funds into escrow, if a final judgment in the lawsuit is rendered against bcgi and its co-defendants, and the joint and several damages exceed $41 million, Cingular has agreed to post security in the form of an appeal bond or otherwise in an amount that, when added to bcgi’s $41 million, is determined by the court to be adequate security to stay the execution of the judgment. Cingular has also agreed to dismiss, without prejudice, the action filed by Cingular against bcgi in May 2005. Cingular originally filed this action in an effort to enforce Cingular’s indemnity rights against bcgi as a result of the Freedom Wireless verdict. This agreement is expected to allow bcgi to proceed with an appeal and potentially avoid exposure to bankruptcy while the appeal is pending, in the event that a final judgment against bcgi in this lawsuit is rendered for joint and several damages that exceed $41 million. Cingular is not obligated to provide the security for the payment of any portion of the damages for which Cingular is not jointly and severally liable. The agreement does not alter bcgi’s obligation to indemnify Cingular.

While the Company does not believe that it infringes these patents and believes that the patents are invalid in light of prior art and other reasons, in light of the adverse jury verdict, the Company believes it is probable that a loss contingency exists. Although the ultimate amount of such loss, if any, is not currently known, accounting guidelines under Statement of Financial Accounting Standards No. 5, Accounting for Contingencies (FAS 5) and FASB Interpretation 14, Reasonable Estimation of the Amount of a Loss (FIN

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14), specify that if a loss can be reasonably estimated, it should be recorded. Based on managements’ assessment of the potential outcomes of the case and in accordance with FAS 5 and FIN 14, the Company has accrued an estimated loss of $24 million with respect to the Freedom Wireless verdict. However, the actual loss, if any, may be significantly higher or lower than the amount accrued.

Freedom Wireless Patent Infringement Lawsuits Against bcgi, Nextel Communications and Alltel Corporation

On May 20, 2005, Freedom Wireless filed two separate lawsuits in the U.S. District Court for the District of Massachusetts, the first against bcgi and Nextel Communications, and the second against bcgi and Alltel Corporation. To date, the Company has not been served. These lawsuits allege that bcgi and each of its named carrier customers infringe the same two patents held by Freedom Wireless, Inc. and seek damages as well as injunctive relief. The Company has an obligation to indemnify its customers for damages they may incur with respect to any infringement by the Company’s technology. The Company intends to contest the lawsuits vigorously and believes that it does not infringe these patents and believes that the patents are invalid in light of prior art and other reasons.

Cingular Wireless LLC Indemnification Complaint

On May 23, 2005, a complaint was filed by Cingular Wireless LLC seeking judgment in indemnity against bcgi. The complaint seeks judgment for contractual indemnification against bcgi in an amount equal to Cingular’s money damages and other relief as determined by the Court in the Freedom Wireless patent infringement lawsuit. Cingular has agreed to dismiss, without prejudice, this complaint, subject to the completion of the agreement between bcgi and Cingular to escrow $41 million of bcgi’s cash.

Class Action Lawsuit

In June 2005, a putative class action complaint was filed in the U.S. District Court for the District of Massachusetts, against the Company, the Company’s Chief Executive Officer and its Chief Financial Officer on behalf of persons who purchased its common stock between November 15, 2000 and May 20, 2005. The complaint alleges that the defendants violated Sections 10(b) and 20(a) of the Exchange Act as well as Rule 10b-5 promulgated thereunder by allegedly failing to disclose adverse facts regarding the Freedom Wireless, Inc. lawsuit, including that the Company had willfully infringed the Freedom Wireless patents. Within ten days of the appointment of a lead counsel and a lead plaintiff in this case, the parties will submit for the Court’s consideration a proposed schedule for this case, including defendants’ time to respond to the complaint by motion to dismiss or otherwise. The Company intends to contest the lawsuit vigorously and believes that it and the two executive officers named as defendants have meritorious defenses to the allegations set forth in the lawsuit.

Indemnification Complaint

On April 28, 2005, a complaint by Aerotel Corporation was filed against Verizon alleging infringement by Verizon Communications, Verizon Wireless and others of a patent on prepaid technology. Verizon has notified the Company that it may be asked to indemnify them in this case under the Company’s Prepaid Wireless Services Agreement for that portion of any liability specific to Verizon Wireless prepaid offered through the use of bcgi’s service. The complaint does not specify damages as it relates to Verizon Wireless prepaid. A subpoena for documents and deposition testimony has been served on the Company. The lawsuit is currently in the discovery phase and at this time it is not possible to determine the potential cause of outcome of this indemnification claim.

Other

From time to time, as a normal incidence of the nature of the Company’s business, various claims, charges and litigation are asserted or commenced against the Company arising from, or related to, contractual matters, patents, trademarks, personal injury, and personnel and employment disputes. As to such claims and litigation, the Company can give no assurance that it will prevail. However, the Company does not believe that these matters (other than as disclosed) will have a material adverse effect on its consolidated financial position, although an adverse outcome of any of these matters could have a material adverse effect on its consolidated results of operations or cash flows in future quarters or in the quarter or annual period in which one or more of these matters are resolved.

Indemnifications

In November 2002, the Financial Accounting Standards Board (FASB) issued Interpretation No. 45, “Guarantor’s Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others” (FIN 45), which requires certain guarantees to be recorded at fair value as opposed to the previous practice of recording a liability only when a loss is probable and reasonably estimable. FIN 45 also requires a guarantor to make significant new guaranty disclosures, even when the likelihood of making any payments under the guarantee is remote.

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The Company has agreed to indemnification provisions in certain of its agreements with customers and its leases of real estate in the ordinary course of its business.

With respect to customer agreements, these provisions generally obligate the Company to indemnify the customer against losses, expenses, liabilities and damages that may be awarded against the customer in the event the Company’s systems or services infringe upon a patent or other intellectual property right of a third party. The agreements generally limit the scope of and remedies for such indemnification obligations in certain respects, including but not limited to geographical limitations and the right to replace or modify an infringing product or service. Certain of the Company’s carrier customers are currently seeking to require the Company to indemnify them for losses incurred, or that may be incurred, in connection with the Freedom Wireless and Aerotel litigation.

With respect to real estate leases, these indemnification provisions typically apply to claims asserted against the landlord by a third party relating to personal injury and property damage occurring at the leased premises or to certain breaches of the Company’s contractual obligations. The term of these indemnification provisions generally survive the termination of the lease, although the exposure is greatest during the lease term and for a short period of time thereafter. The maximum potential amount of future payments that the Company could be required to make under these indemnification provisions is unlimited. The Company has purchased insurance that reduces the amount of such exposure for landlord indemnifications. The Company has never paid any amounts to defend lawsuits or settle claims related to these landlord indemnification provisions. Accordingly, the Company believes the estimated fair value of these indemnification arrangements is minimal.

5. Segment Reporting and Discontinued Operations

FAS No. 131, “Disclosures about Segments of an Enterprise and Related Information” established standards for reporting information about operating segments in annual financial statements and requires selected information about operating segments in interim financial statements. It also established standards for related disclosures about products and services and geographic areas. Operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker, or decision making group, in deciding how to allocate resources and in assessing performance. The Company’s chief operating decision-maker is the Chief Operating Officer. Historically, the Company’s reportable operating segments consisted of Billing and Transaction Processing Services, Roaming Services and Prepaid Systems. The Company’s Billing and Transaction Processing Services solutions allowed wireless carriers to access the Company’s managed services network and transaction processing platform, enabling such carriers to offer prepaid wireless calling, replenishment capabilities and postpaid billing and customer care to their subscribers. The Roaming Services solution provided wireless carriers the ability to generate revenues from subscribers who are not covered under traditional roaming agreements by arranging payment for roaming calls. The Prepaid Systems solution assembled and marketed prepaid systems to international wireless operators. Beginning in 2004, Prepaid Systems was no longer reported as a separate segment, as it was deemed to be not material, representing less than 10% of consolidated revenues, total assets and operations for all periods presented.

In March 2004, the Company ceased providing its ROAMERplus solution, effectively discontinuing its Roaming Services segment. Pursuant to Statement of Financial Accounting Standards 144, “Accounting for the Impairment or Disposal of Long-Lived Assets” (“FAS 144”), the consolidated financial statements reflect this as a discontinued operation. Revenues for the Roaming Services segment were $563,000 for the three months ended March 31, 2004.

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In the second quarter of 2005, the Company realigned its operating units to consist of bcgi Payment, bcgi Access Management, Real-Time Billing and Voyager Billing. A general manager has been assigned to manage each of these businesses which are classified as operating units. Revenue for each business is recorded and tracked separately. The Company is currently in the process of determining direct and indirect cost allocations to these businesses and, as such, does not currently possess operating financial results in accordance with the disclosures required by SFAS 131. The Company anticipates that sufficient reliable and consistent information will be available later in 2005. Until such information is available, the Company cannot disclose the information required by FAS No. 131. Revenues for the Company’s operating units are as follows (unaudited and in thousands):

	Three months ended June 30,
	2005				2004
	Total		% of Total Revenues		Total		% of Total Revenues
Real-Time Billing	$	23,348	91	%	$	25,667	93	%
Other		2,267	9	%		1,983	7	%
Total revenues	$	25,615	100	%	$	27,650	100	%
	Six months ended June 30,
	2005				2004
	Total		% of Total Revenues		Total		% of Total Revenues
Real-Time Billing	$	47,573	92	%	$	51,070	93	%
Other		4,394	8	%		3,825	7	%
Total revenues	$	51,967	100	%	$	54,895	100	%

6. Retirement Plans

The Company offers a defined benefit retirement plan (the “Plan”) for certain executives. Contributions are based on periodic actuarial valuations and are charged to the Condensed Consolidated Statements of Operations on a systematic basis over the expected average remaining service lives of the executives as prescribed by Statement of Financial Accounting Standards No. 87, “Employers’ Accounting for Pensions” (FAS 87). The Company’s funding policy is to make annual contributions to the extent such contributions are tax deductible as actuarially determined. The benefits under the defined benefit plan are based on years of service and compensation.

The components of net periodic benefit costs for the three and six months ended June 30, 2005 and 2004 are as follows (unaudited and in thousands):

	Three months ended June 30,				Six months ended June 30,
	2005		2004		2005		2004
Components of net periodic benefit costs
Service cost	$	128	$	144	$	256	$	253
Interest cost		72		76		144		132
Amortization of unrecognized net prior service cost		45		41		90		76
Net periodic benefit costs	$	245	$	261	$	490	$	461

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7. Acquisition

In June 2005, the Company acquired the assets and certain liabilities of PureSight, Inc. and its Israeli subsidiary, PureSight LTD. (PureSight), a provider of advanced content recognition solutions for mobile operators, ISPs and enterprises. The Company paid $6.7 million in cash for PureSight, including acquisition costs. Management determined the fair value of the assets and certain liabilities acquired by considering the anticipated cash flows to be generated from the existing products, the valuation of customer contracts and relationships and non-compete agreements, the estimated life of the technology acquired and other factors. Identifiable intangible assets of $1.7 million consist of acquired technology, customer contracts and relationships, trademarks and non-compete agreements and are being amortized over four to seven years. The results of operations of PureSight are included in the Company’s Condensed Consolidated Statement of Operations from the date of acquisition. The Company expects the acquisition to be slightly dilutive in the near-term.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations Certain Factors That May Affect Future Results

Overview

We develop products and services that enable wireless operators to fully realize the potential of their networks. Our access management, billing, payment and network solutions help operators rapidly deploy and manage innovative voice and data services for subscribers. Available as licensed products and fully managed services, our solutions power wireless operators and enable mobile virtual network operators (“MVNOs”) with market-leading implementations of prepaid wireless, postpaid billing, wireless account funding and m-commerce. We provide our fully managed services and licensed products domestically to U.S. wireless operators. Internationally, we offer our products to wireless operators on a licensed basis. We sell our products and services to our wireless operator customers through our direct sales force in the United States and through both direct and indirect channels internationally.

We generate revenues from our Real-Time Billing product as a managed service principally by processing prepaid wireless minutes or as a percentage of wireless customer revenue. Real-Time Billing services revenues are recorded net of outage penalties that we may incur based on contracted service level agreements with the wireless operators. We also generate revenues from other transactions processed, including Push to Talk, Short Message Service (SMS) and other data services. Additionally, whether deployed on a managed service basis or licensed basis, we generate revenues from software licensing, implementations and special development services. These revenues are typically recognized over the term of the contract for managed services customers and at the time of shipment for licensed sales.

Our Voyager Billing revenues are earned by generating a subscriber’s monthly bill.

While there have been no bcgi Access Management revenues related to our Mobile Guardian products to date, we expect that we will generate revenues from these products by charging wireless operators on a per subscriber per month basis, or on a one-time subscriber license basis.

For bcgi Payment, we typically generate revenues by charging wireless operators a transaction fee for the services performed and paying the financial partners a fee for enabling the transaction. This technology can also be purchased on a licensed basis.

Our net revenues decreased 7% to $25.6 million in the second quarter of 2005 compared to $27.7 million in the second quarter of 2004 and decreased 5% to $52.0 million for the six months ended June 30, 2005 compared to $54.9 million for the six months ended June 30, 2004. Principally as a result of the $24.0 million estimated loss from the Freedom Wireless lawsuit recorded in the three months ended June 30, 2005, our net loss was $17.9 million in the second quarter of 2005 compared to $5.0 million in net income in the second quarter of 2004 and the $16.2 million net loss for the six months ended June 30, 2005 compared to $9.1 million in net income for the six months ended June 30, 2004.

On May 20, 2005, a jury in the Freedom Wireless patent infringement lawsuit issued a verdict of $128 million against us and the other co-defendants, including Cingular Wireless LLC, for past damages through December 31, 2004, an amount which exceeds our ability to pay. Based on management’s assessment of the potential outcomes of the case and in accordance with FAS 5 and FIN 14, we have accrued an estimated loss of $24 million with respect to the Freedom Wireless verdict, excluding additional legal charges which are expensed as incurred. However, the actual loss, if any, may be significantly higher or lower than the amount accrued.

The non-jury trial on inequitable conduct concluded on July 26, 2005 and the Court has ordered the plaintiff and defendants to file proposed findings of fact and conclusions of law with the Court on August 15, 2005. We intend to file motions for judgment as a matter of law and a motion for a new trial or, in the alternative, a reduction in the damages awarded by the jury. bcgi expects that the Court will rule on each of these matters in addition to determining the final judgment on the case in due course, sometime after August 15, 2005. The potential outcomes

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vary greatly and could include any of the following:

• If the Court rules in favor of bcgi and our co-defendants in the non-jury trial, the patents held by Freedom Wireless would become unenforceable, a decision that Freedom Wireless may choose to appeal.

• If the Court rules against bcgi and the co-defendants in the non-jury trial, the Court could reduce the amount of the $128 million jury verdict based on our expected motion for a reduction in the damages. However, the Court could also award interest and damages for infringement by bcgi and Cingular from January 1, 2005 to the date of the judgment. Additionally, the jury found that bcgi willfully infringed the patents and as a result, the Court may award treble damages and attorney’s fees. Any enhanced damages for willfulness would be the responsibility of bcgi. The Court could also enter an injunction against use of the allegedly infringing technology. The entry of such an injunction could substantially impair bcgi’s ability to continue to provide our prepaid wireless or Real-Time Billing service bureau as currently offered in the United States.

• If the Court rules against bcgi and the co-defendants in the non-jury trial, we expect to appeal the Court’s decision to the Court of Appeals for the Federal Circuit.

• If the Court rules against bcgi and the co-defendants in the non-jury trial, the Court may require us to provide collateral or post a bond to stay execution of the Court’s judgment and any injunction that the Court may enter, pending resolution of the appeal. The bond required to stay execution of the money judgment is ordinarily 110% of the final damages, unless otherwise ordered by the Court. Depending on the amount of the final damages, this could exceed bcgi’s ability to pay. If we are unable to provide adequate collateral or post a sufficient bond, or an injunction is entered and not stayed, or if bcgi is unable to get an adverse judgment reversed and is unable to negotiate a commercially acceptable license with Freedom Wireless to allow bcgi to continue to provide our products and services, then it will not be possible for us to provide the prepaid wireless or Real-Time Billing service as currently offered in the United States. In that event, we may not be able to continue our ongoing operations or may need to seek protections under Chapter 11 of the U.S. Bankruptcy Code.

• On July 27, 2005, in order to mitigate the risk that bcgi will be unable to post sufficient collateral on our own, we entered into a Funding of Security for Appeal Agreement with Cingular Wireless LLC, a co-defendant in the case. This agreement is subject to mutual acceptance of an escrow agent and related escrow terms. Under the terms of this agreement, we have agreed to place $41 million into escrow for the purpose of using these funds as security in the event that a bond or other security must be posted for more than $41 million. In exchange for placing the funds into escrow, if a final judgment in the lawsuit is rendered against us and our co-defendants, and the joint and several damages exceed $41 million, Cingular has agreed to post security in the form of an appeal bond or otherwise in an amount that, when added to our $41 million, is determined by the Court to be adequate security to stay the execution of the judgment. Cingular has also agreed to dismiss, without prejudice, the action filed by Cingular against us in May 2005. Cingular originally filed this action in an effort to enforce Cingular’s indemnity rights against us as a result of the Freedom Wireless verdict. The agreement is expected to allow us to proceed with an appeal and potentially avoid exposure to bankruptcy while the appeal is pending in the event that a final judgment against us in this lawsuit is rendered for joint and several damages that exceed $41 million. Cingular is not obligated to provide the security for the payment of any portion of the damages for which Cingular is not jointly and severally liable. The agreement does not alter bcgi’s obligation to indemnify Cingular.

• The parties may enter into a settlement agreement. However, to date, the parties have not been able to reach a settlement, even through court-ordered mediation.

Either the plaintiff or the defendants can file for appeal within 30 days of the final judgment. The appeal process can take 12-18 months, or longer.

In 2004, Verizon Wireless began to use its own internal prepaid billing platform, and began adding new subscribers and converting existing subscribers from our Real-Time Billing solution to its platform. Conversions have been ongoing and are expected to continue into early 2006. Additionally, while our Cingular Wireless contract expires in the first half of 2006, Cingular Wireless has substantially reduced its sales efforts for its TDMA prepaid offering, which is the only prepaid offering that bcgi supports for Cingular Wireless. Thus, we anticipate that we will continue to have fewer gross additions from Cingular Wireless and that all of its current subscribers will stop being hosted on our Real-Time Billing platform over time.

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We anticipate that earnings per share for the third quarter of 2005 will approximate break-even to a $0.04 loss per share, including approximately $3.0 to $4.0 million of legal costs, primarily associated with the Freedom Wireless lawsuit. We have not provided guidance for the remainder of 2005 since we cannot anticipate the rate and timing of Verizon Wireless’ and Cingular Wireless’ subscriber departures from our Real-Time Billing platform and therefore, the corresponding rate of revenue decline. In addition, Verizon Wireless may terminate our existing prepaid wireless services agreement upon 90 days written notice. We plan to continue to focus on our customer and product diversification strategy that includes investment in all of our new and existing products that we are marketing on a global basis. Based on these factors and other trends, we are estimating that revenues will range from $23.0 to $25.0 million for the third quarter of 2005.

Segment Data

(unaudited and in thousands)

	Three months ended June 30,
	2005				2004
	Total		% of Total Revenues		Total		% of Total Revenues
Real-Time Billing	$	23,348	91	%	$	25,667	93	%
Other		2,267	9	%		1,983	7	%
Total revenue	$	25,615	100	%	$	27,650	100	%
	Six months ended June 30,
	2005				2004
	Total		% of Total Revenues		Total		% of Total Revenues
Real-Time Billing	$	47,573	92	%	$	51,070	93	%
Other		4,394	8	%		3,825	7	%
Total revenue	$	51,967	100	%	$	54,895	100	%

Revenues

Real-Time Billing

Our net revenues from Real-Time Billing decreased by 9% in the second quarter of 2005 compared to the second quarter of 2004. The decrease in revenues was due primarily to our prepaid subscriber base decreasing by 240,000, bringing our subscribers to 3.8 million at June 30, 2005, along with a decrease in our average billed rate per minute. The decrease in our prepaid subscriber base is due primarily to the number of subscriber losses from Verizon Wireless and Cingular Wireless exceeding the number of subscriber additions from Nextel Communications and other customers. The Real-Time Billing average billed rate per minute declined by approximately 14% for the quarter ended June 30, 2005 compared to the same quarter in the previous year. The decline in the average billed rate per minute is due primarily to lower contractual rates and volume discounts for customers who signed contracts recently and who represent a larger percentage of total Real-Time Billing revenue. Average billed minutes of use per subscriber per month were 116 minutes for the quarter ended June 30, 2005, which was consistent with the same period in 2004.

Our net revenues from Real-Time Billing decreased by 7% in the six month period ended June 30, 2005 compared to the same period in 2004. The decrease in revenues was due primarily to our average prepaid subscriber base decreasing by 176,000, bringing our average subscribers to 3.8 million for the six month period ended June 30, 2005, and to the decrease in the average billed rate per minute. The decrease in our average prepaid subscriber base is due primarily to subscriber losses from Verizon Wireless and Cingular Wireless exceeding the number of subscriber additions from Nextel Communications and other customers. The Real-Time Billing average billed rate per minute declined by approximately 16% for the six months ended June 30, 2005 compared to the same six month

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period in the previous year. The decline in the average billed rate per minute is due primarily to lower contractual rates for customers who signed contracts more recently and who represent a larger percentage of total Real-Time Billing revenue.

In future quarters, we expect our prepaid subscriber base to further decrease, as we anticipate that Verizon Wireless conversions and subscriber churn from Cingular Wireless will exceed subscriber growth from other customers.

Other revenues

Other revenues are generated from our other three operating units, bcgi Payment, bcgi Access Management and Voyager Billing. Our net revenues from these operating units increased by 14% and 15% in the second quarter and first six months of 2005 compared to the same periods in 2004. The increase in revenues for both the three and six month periods ended June 30, 2005 was due primarily to our efforts to diversify our revenues with new products and customers.

Nextel Communications, Verizon Wireless and Cingular Wireless accounted for 37%, 22% and 16% of total revenues, respectively, in the second quarter of 2005. In addition, Nextel Communications, Verizon Wireless and Cingular Wireless accounted for 33%, 25% and 18% of total revenues, respectively, in the six month period ended June 30, 2005.

Cost of total revenues

Cost of total revenues primarily include the salaries and benefits of personnel who support our managed services network and our licensed product offerings, along with costs for maintenance, telecommunications, travel, facilities and other support costs. Cost of total revenue increased to 27% of total revenue in the second quarter of 2005 from 23% in the second quarter of 2004. Cost of total revenue increased to 26% of total revenue in the six months ended June 30, 2005 from 23% in the same six month period in 2004. The increase in absolute dollars of cost of total revenue in both the three and six month periods resulted primarily from additional personnel and wages to support our investments in professional services and global licensing.

Operating Data

(unaudited and in thousands)

	Three months ended June 30,
	2005			2004
	Total		% of Total Revenues	Total		% of Total Revenues
Total revenues	$	25,615	100%	$	27,650	100	%
Engineering, research and development		4,306	17%		3,497	13	%
Sales and marketing		2,313	9%		1,667	6	%
General and administrative		2,621	10%		2,125	8	%
General and administrative – legal		4,319	17%		450	2	%
Estimated loss from litigation		24,000	94%		—	—
Depreciation and amortization		5,204	20%		5,490	20	%
	Six months ended June 30,
	2005			2004
	Total		% of Total Revenues	Total		% of Total Revenues
Total revenues	$	51,967	100%	$	54,895	100	%
Engineering, research and development		9,061	17%		7,293	13	%
Sales and marketing		4,789	9%		3,539	6	%
General and administrative		5,150	10%		4,211	8	%
General and administrative – legal		6,529	13%		1,600	3	%
Estimated loss from litigation		24,000	46%		—	—
Depreciation and amortization		10,758	21%		10,959	20	%

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Engineering, research and development expenses

Engineering, research and development expenses primarily include the salaries and benefits for software development and engineering personnel associated with the development, implementation and maintenance of existing and new software. The increase in engineering, research and development expenses for the three month period ended June 30, 2005 compared to the same quarter in 2004 resulted primarily from additional personnel, wages and related costs of approximately $600,000 principally to support the development of bcgi Access Management and bcgi Payment, along with the enhancement of the features and functionality of our other products.

The increase in engineering, research and development expenses for the six month period ended June 30, 2005 compared to the same period in 2004 primarily resulted from additional personnel, wages and related costs of approximately $1.5 million principally to support the development of bcgi Access Management and bcgi Payment, along with the enhancement of the features and functionality of our other products. Engineering, research and development expenses in absolute dollars are expected to increase in the third quarter of 2005 compared with $4.3 million in the second quarter of 2005 primarily due to a full quarter of expense for the additional personnel from our June 2005 asset acquisition of PureSight, Inc. and PureSight Ltd.

Sales and marketing expenses

Sales and marketing expenses include direct sales and product management salaries, commissions, travel and entertainment expenses, in addition to the cost of trade shows, direct mail and other promotional expenses. Sales and marketing expenses increased in the three month period ended June 30, 2005 compared to the same period in 2004 primarily due to $575,000 in additional expense related to the expansion of our international sales focus.

Sales and marketing expenses increased in the six month period ended June 30, 2005 compared to the same period in 2004 principally due to $1.1 million in additional expense related to our international focus, including additional personnel for our international sales team and attendance at a major worldwide tradeshow. Sales and marketing expenses in absolute dollars are expected to increase in the third quarter of 2005 compared with $2.3 million in the second quarter of 2005 as we continue to strengthen our international presence by adding resources to augment our international sales efforts.

General and administrative expenses

General and administrative expenses include salaries and benefits of employees and other expenses that provide our administrative support. General and administrative expenses increased for the three month period ended June 30, 2005 compared to the same period in 2004, principally due to higher legal costs of approximating $250,000 and expanded regulatory requirements and related costs for public companies totaling approximately $110,000.

The increase in general and administrative expenses for the six month period ended June 30, 2005 compared to the same period in 2004 was due to additional wages of approximately $300,000 to support our diversification strategy, higher costs associated with outside legal support of approximately $275,000 and expanded regulatory requirements and related costs for public companies totaling approximately $200,000. General and administrative expenses in absolute dollars are expected to remain consistent in the third quarter of 2005 compared with $2.6 million in the second quarter of 2005.

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General and administrative expenses – legal charges

General and administrative legal expenses primarily represent legal expenses to defend the patent infringement suit initiated by Freedom Wireless. The increase in expense for both the three and six month periods ended June 30, 2005 compared to the respective year-earlier periods was due to higher costs associated with the commencement of the trial on February 28, 2005. We expect to incur approximately $3.0 to $4.0 million in legal expenses in the third quarter of 2005.

Estimated loss from litigation

On May 20, 2005, a jury determined that bcgi and certain of our current or former carrier customer defendants (Cingular Wireless LLC, AT&T Wireless Services, CMT Partners and Western Wireless Corp.) infringed or are infringing two Freedom Wireless patents. The jury damages award was in the total amount of $128 million for past damages through December 31, 2004, an amount which exceeds bcgi’s ability to pay. bcgi and each carrier are jointly and severally liable for specific amounts. While we do not believe that we infringe these patents and believe that the patents are invalid in light of prior art and other reasons, in light of the adverse jury verdict, we believe it is probable that a loss contingency exists. Although the ultimate amount of such loss, if any, is not currently known, accounting guidelines under Statement of Financial Accounting Standards No. 5, Accounting for Contingencies (FAS 5) and FASB Interpretation 14 Reasonable Estimation of the Amount of a Loss (FIN 14), specify that if a loss can be reasonably estimated, it should be recorded. Based on management’s assessment of the potential outcomes of the case and in accordance with FAS 5 and FIN 14, we have accrued an estimated loss of $24 million with respect to the Freedom Wireless verdict, excluding additional legal charges which are expensed as incurred. However, the actual loss, if any, may be significantly higher or lower than the amount accrued.

Depreciation and amortization expense

Depreciation and amortization expense includes depreciation of telecommunications systems and software, building, furniture and equipment and leasehold improvements. We provide for depreciation using the straight-line method over the estimated useful lives of the assets, which range from three to twenty years. The decrease in depreciation and amortization expense in absolute dollars for both the three and six month periods ended June 30, 2005 compared to the same period in 2004 was primarily due to certain capital equipment that became fully depreciated in the first half of 2005.

Interest income

Interest income increased to $408,000 for the three month period ended June 30, 2005 compared to $251,000 for the three month period ended June 30, 2004 and increased to $808,000 for the six month period ended June 30, 2005 from $563,000 for the six month period ended June 30, 2004. Interest income was earned primarily from investments, which were purchased using the cash generated from operations, from the sale of our teleservices business in 2000 and from the proceeds from our public offerings. Although our combined cash and investment positions decreased as of June 30, 2005, higher average interest rates during the periods resulted in increased levels of interest income compared to the previous year. If we ultimately incur a loss on the Freedom Wireless litigation or pledge a substantial portion of our cash to collateralize an appeal bond, this may substantially reduce our cash and investment balances and therefore reduce future interest income.

Provision for income taxes

The income tax benefit for the six months ended June 30, 2005 was $4.8 million, compared to an income tax provision or $5.9 million (39.5% effective tax rate) for the six months ended June 30, 2004. The benefit recorded in the current year reflected our assessment of our ability to realize the tax benefit from the ultimate loss, if any, from the Freedom Wireless litigation.

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Acquisitions

In June 2005, we acquired the assets and certain liabilities of PureSight, Inc. and its Israeli subsidiary, PureSight Ltd. (PureSight), a provider of advanced content recognition solutions for mobile operators, ISPs and enterprises. We paid $6.7 million in cash for PureSight, including acquisition costs. Management determined the fair value of the assets and certain liabilities acquired by considering the anticipated cash flows to be generated from the existing products, the valuation of customer contracts and relationships and non-compete agreements, the estimated life of the technology acquired and other factors. Identifiable intangible assets of $1.7 million consist of acquired technology, customer contracts and relationships, trademarks and non-compete agreements and are being amortized over four to seven years. The results of operations of PureSight are included in our Condensed Consolidated Statement of Operations from the date of acquisition.

Discontinued Operations

In March 2004, we ceased providing our ROAMERplus solution, effectively discontinuing our Roaming Services segment. This business generated a net loss of $11,000 for the six months ended June 30, 2004.

Liquidity and Capital Resources

As of June 30, 2005, cash, cash equivalents and short-term investments decreased 20% to $62.1 million compared to $77.8 million at December 31, 2004, primarily due to investing activities. The net cash provided by operations of $2.5 million in the six months ended June 30, 2005 resulted from a $16.2 million net loss, along with adjustments for depreciation and amortization of $10.8 million, increased receivables of $4.7 million caused by an increase in our days sales outstanding from 63 as of December 31, 2004 to 81 at June 30, 2005 (principally due to a $3.0 million payment that was received in early July 2005) and an increase in accounts payable, accrued expense, deferred revenue and income taxes payable of $18.7 million. The increase in accounts payable, accrued expenses, deferred revenue and income taxes payable is a result of the $24.0 million estimated loss contingency recorded in the Freedom Wireless patent infringement lawsuit, partially offset by decreases in income tax, bonus and equipment accruals as of December 31, 2004 that were subsequently paid.

Our investing activities utilized $10.4 million of net cash for the six months ended June 30, 2005. We spent approximately $9.4 million for the purchase of telecommunication equipment and software to enhance our managed services platform as well as further develop our licensed products. Internally capitalized costs were $1.8 million for the six month period ended June 30, 2005 and were $1.9 million for the same period in 2004. In addition, we acquired a business for approximately $6.7 million and contributed $1.5 million to fund our defined benefit plan, a contribution which we intend to make every year in our second quarter. We expect to continue our investment in new and existing products, resulting in capital expenditures of approximately $5.0 to $7.0 million for the third quarter of 2005.

Our financing activities provided cash of $375,000 for the six months ended June 30, 2005 primarily from proceeds from the exercise of stock options and the issuance of common stock under the Employee Stock Purchase Plan.

On July 27, 2005, we entered into an agreement with Cingular and have agreed to place $41 million of cash into escrow which will be restricted cash in that it would be intended to be used to post a bond or other security to stay the execution of judgment, in the event that the Freedom Wireless lawsuit contains joint and several liability of more than $41 million. This agreement is subject to mutual acceptance of an escrow agent and related escrow terms.

Subject to the outcome of the Freedom Wireless litigation, we believe that our cash, cash equivalents and short-term investments will be sufficient to finance our operations for at least the next twelve months and for the foreseeable future thereafter. Any amount of adverse final judgment in the Freedom Wireless litigation would likely (when paid) adversely impact our liquidity and capital resources. In addition, our liquidity and capital resources would be adversely impacted if we are required to post a bond in excess of our existing assets which could be securitized in

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order to obtain a bond. This bond could include any liability specific to bcgi only, including willful infringement. If a bond is required to be posted by bcgi which is in excess of our means, we may need to seek protection under Chapter 11 of the U.S. Bankruptcy Code.

We have non-cancelable commitments for equipment, operating lease commitments for office space, many of which are renewable at our option, as well as various other commitments for telecommunications services. We include in our commitments those agreements under which we are contractually obligated and agreements that are cancelable, but which we do not anticipate canceling. The following table summarizes our contractual obligations as of June 30, 2005 (in thousands):

			Payment due by period
	Total		within 1 year		2-3 years		4-5 years		More than 5 years
Contractual Obligations:
Operating leases	$	2,148	$	1,548	$	569	$	31	$	—
Purchase commitments		7,726		6,200		1,498		28		—
Total	$	9,874	$	7,748	$	2,067	$	59	$	—

Off-Balance Sheet Arrangements

During the second quarter of 2005, we did not engage in:

• Material off-balance sheet activities, including the use of structured finance or special purpose entities,

• Material trading activities in non-exchange traded commodity contracts, or

• Material transactions with persons or entities that benefit from their non-independent relationship with us.

Critical Accounting Policies and Estimates

The discussion and analysis of our financial condition and results of operations is based upon our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of those financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses and related disclosure of contingent assets and liabilities. On an on-going basis, we evaluate our estimates and judgments, including those related to bad debts, capitalized software and labor, long-lived assets, goodwill and intangible asset impairment, legal expenses, contingencies and litigation. We base our estimates on historical experience, known trends and events and various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from such estimates under different assumptions or conditions.

We believe the following policies to be our most critical policies in the preparation of our consolidated financial statements:

• Revenue recognition and allowance for bad debts

• Estimated loss from litigation and legal costs

• Research and development and software development costs

• Impairment of long-lived and intangible assets and goodwill

• Accounting for income taxes

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Revenue Recognition and Allowance for Bad Debts

Our revenue recognition policy is critical because revenue is a key component affecting our operations. In addition, revenue recognition determines the timing of certain expenses, such as commissions and bonuses, although historically expenses that are contingent on revenue recognition are not material. We follow very specific and detailed guidelines in recognizing revenue; however, certain judgments relating to the elements required for revenue recognition affect the application of our revenue policy. Revenue results are difficult to predict and any shortfall in revenue, changes in judgments concerning recognition of revenue, changes in uncollectible or bad debt estimates, changes in mix, amount of international sales or delays in recognizing revenue, could cause operating results to vary significantly from quarter to quarter.

We recognize our revenues in accordance with Securities and Exchange Commission Staff Accounting Bulletin No. 104, “Revenue Recognition” and application of Emerging Issues Task Force Issue No. 00-21 “Revenue Arrangements with Multiple Deliverables.” We earn revenues in various ways, depending on the type of transaction. For our managed services business, we earn revenues in the following ways:

• For Real-Time Billing, we earn revenues principally by processing prepaid wireless minutes or as a percentage of wireless customer revenue, net of any penalties incurred related to outages on our platform.

• For Voyager Billing, we earn revenues by generating a postpaid subscriber’s monthly bill.

• For PayExtend, we earn revenues by processing transactions on behalf of wireless operators’ subscribers.

Each of these revenues is recognized when the service is provided. For license fees, special projects and implementation services related to our managed services business, revenues are typically recognized ratably over the remaining life of the contract with the wireless operator.

For our licensed systems sales, we typically recognize revenue from the sale of systems at the time the systems are shipped or delivered to the customer, depending on shipping terms. In the event there are acceptance terms, we defer revenue until acceptance has occurred. In addition, certain software is licensed to distributors, who pay licensing fees to us as they sell the software to their customers and this revenue is recognized in the month in which it is earned.

For multiple element arrangements, we determine the fair value of each element based on our specific objective evidence for that element and allocate total revenue from these arrangements to each element based on its fair value. Installation revenue is deferred until the installation is complete. Revenues from maintenance and support and other services are based on vendor-specific objective evidence of fair value and recognized ratably over the term of the maintenance and support contract period or when the services are performed. Vendor-specific objective evidence of fair value for maintenance and support is based upon the amount charged when the service is sold separately, which is typically the contract’s renewal rate. Vendor-specific objective evidence of fair value for installation and other services is based upon standard pre-established rates.

In addition to recording revenues net of any penalties incurred related to outages on our managed services platform and estimated amounts that may be disputed, we evaluate the collectibility of our accounts receivable based on a combination of factors. In circumstances where we are aware of a specific customer’s inability to meet their financial obligations (e.g. bankruptcy filings, substantial downgrading of credit scores), we record a specific reserve for bad debts against amounts due to reduce the net recognized receivable to the amount we reasonably believe will be collected. In addition, we record reserves based on the length of time the receivables are past due and on historical experience. If circumstances change (e.g., higher than expected defaults or an unexpected material adverse change in a major customer’s ability to meet their financial obligations), estimates of amounts recoverable could be adversely affected. We believe that our allowance for billing adjustments and doubtful accounts fairly represents the potential amount of bad debt we could incur.

Estimated Loss from Litigation and Legal Costs

We accrue for loss contingencies in accordance with Statement of Financial Accounting Standards No. 5, Accounting for Contingencies (FAS 5) and FASB Interpretation 14 Reasonable Estimation of the Amount of a Loss (FIN 14), which specifies that if a loss is probable and can be reasonably estimated, it should be recorded.

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Furthermore, when some amount within the range appears at the time to be a better estimate than any other amount within the range, that amount shall be accrued. When no amount within the range is a better estimate than any other amount, however, the minimum amount in the range shall be accrued. There can be no assurance as to whether the actual loss will be higher or lower than the amount which is accrued.

We accrue the costs of settlements, damages and, under certain conditions, costs of defense when such costs are probable and estimable; otherwise, such costs are expensed as incurred. As discussed in Note 4 to the Condensed Consolidated Financial Statements, we are expensing legal costs related to the Freedom Wireless lawsuit as incurred due to the lengthy and unpredictable proceedings which had made it difficult to reasonably estimate legal costs for the lawsuit.

Research and Development and Software Development Costs

Research and development costs are charged to expense as incurred. However, costs incurred for the development of computer software or deployment of assets for internal use is capitalized. The direct labor and payroll related costs of development of computer software, primarily for the coding and testing of the software, are capitalized in accordance with the American Institute of Certified Public Accountants’ Statement of Position 98-1 “Accounting for the Costs of Computer Software Developed or Obtained for Internal Use.” The direct labor, travel and payroll related costs to deploy assets for internal use are capitalized until the asset is placed in service. The capitalized costs are subject to an ongoing assessment of recoverability based on the Company’s anticipated use, anticipated future undiscounted net cash flows and changes in hardware and software technologies.

Internally capitalized costs increased to $1.2 million for the three month period ended June 30, 2005 compared to $1.1 million for the three month period ended June 30, 2004 and decreased to $1.8 million for the six month period ended June 30, 2005 from $1.9 million for the same period in 2004. Amortization of capitalized software development costs begins when the solution is made available for general release and amortization of internal use costs begins when the related asset is first placed into service. These costs are amortized on a straight-line basis over a three-year period.

Impairment of Long-Lived and Intangible Assets and Goodwill

We assess the impairment of long-lived assets, identifiable intangibles and goodwill whenever events or changes in circumstances indicate that the carrying value may not be recoverable. Factors we consider important which result in an impairment review include the following:

• Significant underperformance relative to expected historical or projected future operating results;

• Significant changes in the manner of our use of the acquired assets or the strategy for our overall business; and

• Significant negative industry or economic trends.

When indicators of impairment exist and the carrying value of intangibles and long-lived assets, other than goodwill, may not be recoverable, we compare the projected undiscounted cash flows from these assets, which are determined considering a number of factors including past operating results, budgets, economic projections, market trends and solution development cycles, to their carrying value. If the carrying value of the long-lived asset exceeds the estimated undiscounted cash flows, the asset is considered impaired and the carrying value is then compared to the asset’s fair value. If the carrying value exceeds the fair value, an impairment loss equal to the excess is recorded immediately in the Statement of Operations. Fair value is determined by either a quoted market price or use of a present value technique, which requires judgments to be made by management regarding estimating future cash flows, economic life and discount rates, among other assumptions. Different assumptions could yield materially different results.

We account for goodwill in accordance with FAS 142 “Goodwill and Other Intangible Assets.” Under FAS 142, goodwill is not amortized but is subject to annual impairment tests. We evaluate goodwill for impairment annually in the fourth quarter or whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. Goodwill is tested for impairment by comparing the fair value of a reporting unit with its carrying amount, including goodwill. If the carrying amount of the reporting unit’s goodwill exceeds the implied fair value of that goodwill, an impairment loss shall be recognized in an amount equal to that excess.

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In October 2002, we acquired the assets and certain liabilities of Infotech Solutions Corporation (“ISC”) and determined the fair value of the assets acquired and liabilities assumed. The principal asset acquired was completed technology of $1.0 million related to billing software solutions for the wireless marketplace as well as customer contracts of $200,000. We may be required to pay additional contingent cash consideration based on ISC attaining certain defined annual revenue targets in 2005, which will be accounted for as additional goodwill. At June 30, 2005, we recorded an estimated contingent cash consideration liability for 2005 of $380,000.

In November 2004, we acquired the assets of Airada Networks, Inc. and Airada Networks Private Limited (“Airada”) and determined the fair value of the assets acquired and liabilities assumed. The principal asset acquired was completed technology of $1.7 million related to a payment management software solution for the wireless marketplace as well as customer contracts of $100,000. We may be required to pay additional contingent cash consideration based on Airada attaining certain defined annual revenue and operational targets through 2007, most of which will be accounted for as additional goodwill.

In June 2005, we acquired the assets and certain liabilities of PureSight and determined the fair value of the assets acquired and liabilities assumed. The principal assets acquired were completed technology related to advanced content recognition solutions for mobile operators, ISPs and enterprises, non-compete agreements, customer contracts and relationships and trademarks valued at approximately $1.7 million.

Management determined the fair value of the assets acquired by considering the anticipated cash flows to be generated from the existing products, the valuation of customer relationships, the estimated life of the technology acquired and other assumptions. The valuation of completed technology was primarily based on future cash flow projections over the estimated economic life adjusted for an incremental obsolescence rate discounted to present value. We estimated that the useful life of the acquired technology is four to seven years.

Significant judgments and estimates are involved in our acquisitions to determine the fair market value of assets acquired and their useful lives. Different assumptions could yield materially different results.

As a result of the Freedom Wireless lawsuit verdict and related accounting, we performed an asset impairment test for our long-lived assets and goodwill in the quarter ended June 30, 2005 and concluded that no impairment existed.

Income Taxes

Our current and deferred income taxes, and associated tax reserves, are impacted by events and transactions arising in the normal course of business as well as in connection with special and non-recurring items. Assessment of the appropriate amount and classification of income taxes is dependent on several factors, including estimates of the timing and realization of deferred income tax assets and the timing of income tax payments. Actual collections and payments may materially differ from these estimates as a result of changes in tax laws as well as unanticipated future transactions impacting related income tax balances.

The income tax benefit for the six months ended June 30, 2005 was $4.8 million, compared to an income tax provision of $5.9 million (39.5% effective tax rate) for the six months ended June 30, 2004. The benefit recorded in the current year reflects our assessment of our ability to realize the tax benefit from the ultimate loss, if any, from the Freedom Wireless litigation.

New Accounting Pronouncements

On December 16, 2004 and as amended on April 14, 2005, the Financial Accounting Standards Board (FASB) issued FASB Statement No. 123 (revised 2004), Share-Based Payment (Statement No. 123(R)), which is a revision of FASB Statement No. 123, Accounting for Stock-Based Compensation. Statement No. 123(R) supersedes APB Opinion No. 25, Accounting for Stock Issued to Employees, and amends FASB Statement No. 95, Statement of Cash Flows. Generally, the approach in Statement No. 123(R) is similar to the approach described in Statement 123. However, Statement No. 123(R) requires all share-based payments to employees, including grants of employee stock options, to be recognized in the statement of operations based on their fair values. Pro forma disclosure is no longer an alternative.

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Under Statement No. 123(R), the Securities and Exchange Commission allows companies to implement Statement No. 123(R) at the beginning of their next fiscal year, instead of the next reporting period, that begins after June 15, 2005. We expect to adopt Statement No. 123(R) on January 1, 2006.

As permitted by Statement 123, we currently account for share-based payments to employees using Opinion 25’s intrinsic value method and, as such, generally recognize no compensation cost for employee stock options. Accordingly, the adoption of Statement No. 123(R)’s fair value method will have a significant impact on our results of operations, although it will have no impact on our overall financial position. The impact of adoption of Statement No. 123(R) cannot be predicted at this time because it will depend on levels of share-based payments granted in the future. However, had we adopted Statement No. 123(R) in prior periods, the impact of that standard would have approximated the impact of Statement 123 as described in the disclosure of pro forma net income (loss) and earnings per share in Note 2 to our Condensed Consolidated Financial Statements. Statement No. 123(R) also requires the benefits of tax deductions in excess of recognized compensation cost to be reported as a financing cash flow, rather than as an operating cash flow as required under current literature. This requirement will reduce net operating cash flows and increase net financing cash flows in periods after adoption.

Certain Factors That May Affect Future Results

An unfavorable final judgment in the Freedom Wireless lawsuit would have a material adverse impact on our business, including potential asset impairment charges and the possibility of a Chapter 11 bankruptcy filing and would impair our ability to continue as a going concern.

On May 20, 2005, a jury determined that bcgi and certain of our current or former carrier customer defendants (Cingular Wireless LLC, AT&T Wireless Services, CMT Partners and Western Wireless Corp.) infringed or are infringing two Freedom Wireless patents. The jury damages award was in the total amount of $128 million for past damages through December 31, 2004, an amount which exceeds our ability to pay. bcgi and each carrier are jointly and severally liable for specific amounts. The total amount of damages awarded could be significantly higher if the Court awards interest, damages for infringement by bcgi and Cingular from January 1, 2005 to the date of the judgment, and/or treble damages against bcgi. We have an obligation to indemnify the other defendants for damages they may incur with respect to any infringement by our technology.

Although we are awaiting the Court’s rulings in the non-jury trial on inequitable conduct that concluded on July 26, 2005, and we intend to file motions for judgment as a matter of law and a motion for a new trial or, in the alternative, a reduction in the damages awarded by the jury, there can be no assurance that we will be successful on any of these motions or that Freedom Wireless will not appeal a decision adverse to them. In addition, if the Court rules against us and our co-defendants in the non-jury trial, we expect to appeal the Court’s decision to the Court of Appeals for the Federal Circuit. However, there can be no assurance that we will receive a favorable outcome from the appeal process.

If the original jury verdict of $128 million, or a higher amount, is ultimately upheld, this amount would exceed our ability to pay, and we may need to seek protection under Chapter 11 of the U.S. Bankruptcy Code. Even if we are successful in reducing the amount of such jury award, there can be no assurance that a reduced award would not still exceed our ability to pay. In addition, any significant delay in the Court issuing a final judgment could impair our business going forward due to ongoing uncertainty and additional legal costs.

At any time during the aforementioned proceedings, we may seek a settlement with Freedom Wireless and/or a license to use Freedom Wireless’ patents. Any such settlement or license may carry terms unfavorable to us and may significantly restrict our cash and/or future ability to generate profits.

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In addition, following the initial verdict in the Freedom Wireless lawsuit, Freedom Wireless filed two separate patent infringement lawsuits against us and Nextel Communications and Alltel Corporation, respectively. Although we are contesting the lawsuits, there can be no assurance of a favorable outcome in these matters, and we are obligated to indemnify Nextel and Alltel for damages they may incur with respect to any finding of infringement by bcgi’s technology.

Regardless of the outcome, we will continue to incur significant expenses to defend this lawsuit. We have incurred approximately $23.1 million in legal and other costs as of June 30, 2005 to defend this lawsuit, and expect to incur approximately $3.0 to $4.0 million in legal expenses in the third quarter 2005. Ongoing legal costs may fluctuate from time to time, depending on the nature of our legal proceedings.

In order to appeal the verdict in the Freedom Wireless lawsuit, we may be required to provide collateral or post a bond or may be enjoined from conducting our business as currently conducted, either of which could adversely affect and/or restrict our business during the appeal process.

As a condition to the filing of an appeal in the Freedom Wireless lawsuit, the Court may require the defendants to provide collateral or post a bond. The bond may approximate 110% of the final damages amount, which, depending on the final judgment, could exceed our ability to pay. We may be required to pledge a substantial portion of our assets to collateralize an appeal bond, which could significantly restrict our ability to operate our business and execute on our strategic plan. In addition, Freedom Wireless may seek to enjoin us from providing our prepaid wireless and Real-Time Billing in the United States while an appeal is pending. If we are unable to provide adequate collateral or post a sufficient bond, or an injunction is entered and not stayed, then we will not be able to provide the prepaid wireless or Real-Time Billing service as currently offered in the United States. In that event, we may not be able to continue our ongoing operations or may need to seek protection under Chapter 11 of the U. S. Bankruptcy Code.

If the final judgment in the Freedom Wireless lawsuit exceeds our ability to pay, execution of judgment is not stayed and Cingular does not post bond for us, this would likely result in our need to seek protection under Chapter 11 of the U.S. Bankruptcy Code.

In July 2005, we entered into an agreement with Cingular Wireless LLC, a co-defendant in the case. Under the terms of this agreement, we agreed to place $41 million into escrow for the purpose of using these funds as security in the event that a bond or other security must be posted for more than $41 million. This agreement is subject to mutual acceptance of an escrow agent and related escrow terms. In exchange for placing the funds into escrow, if a final judgment in the lawsuit is rendered against us and our co-defendants, and the joint and several damages exceed $41 million, Cingular has agreed to post security in the form of an appeal bond or otherwise in an amount that, when added to our $41 million, is determined by the Court to be adequate security to stay the execution of the judgment. This agreement may allow us to proceed with an appeal and to avoid exposure to bankruptcy while the appeal is pending, in the event that a final judgment against us in this lawsuit is rendered for joint and several damages that exceed $41 million. Cingular is not obligated to provide the security for the payment of any portion of the damages for which Cingular is not jointly and severally liable. However, in the event that Cingular does not post a bond with us to appeal the case, this could result in our need to seek protection under Chapter 11 of the U.S. Bankruptcy Code.

The agreement with Cingular Wireless LLC may substantially reduce bcgi’s working capital and access to cash.

With the current uncertainties facing bcgi and the potential for unforeseen changes in our estimates, including but not limited to loss of customers and/or higher than expected legal costs, we may need additional working capital. In such circumstances, we would not have access to the $41 million placed in escrow as security for an appeal. If we are unable to secure additional capital or finance sufficient assets, we may need to seek protection under Chapter 11 of the U.S. Bankruptcy Code.

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A class action lawsuit has been filed against us, which may result in litigation that is costly to defend and the outcome of which is uncertain and may harm our business.

In June 2005, a putative class action complaint was filed in the U.S. District Court for the District of Massachusetts, against us, our Chief Executive Officer and our Chief Financial Officer on behalf of persons who purchased our common stock between November 15, 2000 and May 20, 2005. The complaint alleges that the defendants violated Sections 10(b) and 20(a) of the Exchange Act as well as Rule 10b-5 promulgated thereunder by allegedly failing to disclose adverse facts regarding the Freedom Wireless, Inc. lawsuit, including that we had willfully infringed the Freedom Wireless patents. We intend to contest the lawsuit vigorously and believe that bcgi and the two executive officers named as defendants have meritorious defenses to the allegations set forth in the lawsuit.

We can provide no assurance as to the outcome of this complaint. Any conclusion of this matter in a manner adverse to us could have a material adverse affect on our financial position and results of operations. In addition, the costs to us of defending any litigation or other proceeding could be substantial, even if such litigation or proceedings are resolved in our favor. Furthermore, there can be no assurance that our directors’ and officers’ insurance will be sufficient to cover any potential damages from this lawsuit. Such litigation could also substantially divert the attention of our management and our resources in general. Uncertainties resulting from the initiation and continuation of any litigation or other proceeding could harm our ability to compete in the marketplace.

As the uncertainty surrounding the status of the Freedom Wireless lawsuits continues, we face challenges with our potential and existing customers, vendors and employees, all of which could have a material adverse effect on our business.

The status of the Freedom Wireless lawsuit remains unresolved and may remain unresolved for an indefinite period of time. This uncertainty will likely impact our existing business in the following ways:

• Our ability to sell our products and services to new customers may be limited;

• Existing customers may not renew their current contracts or could seek to terminate their contracts;

• Current employees may seek other employment prior to a final resolution of this matter;

• Prospective employees may not accept our employment offers; and

• Current and potential vendors may impose restrictions on us, including higher pricing, advance payments and other terms regarding our ability to obtain their products and services.

Verizon Wireless and Cingular Wireless, two of our largest customers using our Real-Time Billing managed services, are currently also utilizing in-house and/or our competitors’ prepaid solutions, which will result in the continued loss of existing subscribers and fewer subscriber additions to our platform.

Verizon Wireless may terminate our existing prepaid wireless services agreement upon 90 days written notice. Verizon Wireless began converting subscribers from our platform to its internal platform in the fourth quarter of 2004. Conversions have been ongoing and are expected to continue into 2006. In addition, because Cingular Wireless has substantially reduced marketing efforts for prepaid service on their TDMA network and began offering prepaid service on their GSM network through one of our competitors, we expect that subscribers from Cingular Wireless’ TDMA prepaid service that we currently support will churn off of our platform over time. Thus, revenues from Verizon and Cingular will substantially decrease, resulting in a reduction of overall revenue from our Real-Time Billing business from these two customers.

The loss or significant reduction of business from one of our major customers, including Nextel Communications, Verizon Wireless or Cingular Wireless, would have a material adverse effect on our business.

Historically, a significant portion of our revenues in any particular period has been attributable to a limited number of customers in the wireless telecommunications business. The following table summarizes the percentage of our total revenue received from Nextel Communications, Verizon Wireless and Cingular Wireless for the three months ended June 30, 2005:

Nextel Communications	37	%
Verizon Wireless	22	%
Cingular Wireless	16	%

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Most of our customer contracts are not exclusive. Therefore, our wireless operator customers have used and/or tested and continue to use and/or test their own services or services of our competitors in certain markets. In addition, certain of our contracts are up for renewal in 2005 and beyond. If and when each of the contracts is renewed, some contractual rates may be lower than in previous years and at lower rates than we have estimated. In addition, we depend on our wireless customers to market and sell our solutions to consumers. We can provide no assurance that they will do so successfully, and therefore, that there will be a significant market for our mobile services platform.

Nextel became our largest customer in the first quarter of 2005. We can provide no assurance that Nextel will continue to use our services beyond the term of their contract with us. If we were to lose Nextel as a customer and cannot replace the revenue, our business would be materially and adversely impacted. Additionally, there are a limited number of U.S. customers available in the marketplace and if we are unable to add new customers, our business would be materially and adversely impacted.

Our future success depends partly on the global acceptance of our newer products, including bcgi Access Management, Payment Manager and bcgi Network.

We have recently introduced bcgi Access Management, Payment Manager and bcgi Network product offerings to the marketplace. The acceptance of these new products is critical to our strategy to diversify and grow our revenue base. Our success in gaining acceptance of these offerings will depend on our ability to integrate these products into existing wireless operator billing platforms. In addition, the success of bcgi Access Management will depend on wireless operator and subscriber acceptance of the capabilities of this product. The failure or delay of any of these offerings to be accepted in the marketplace could have a material adverse effect on our business, financial condition and results of operations.

Our future operating results are difficult to predict and may materially fluctuate which may result in significant fluctuations in our stock price.

We have experienced fluctuations in our quarterly operating results and such fluctuations may continue and could intensify. Additionally, we anticipate the change in our business model will result in more revenues from licensed sales, which tend to be less predictable. Our quarterly operating results may vary significantly depending on a number of factors, including:

• Developments in the Freedom Wireless matter;

• The lack of acceptance or delayed acceptance of our newest solutions, including bcgi Access Management and Payment Manager;

• Decreased demand for our licensed solutions, caused by reductions in capital budgets of our customers, changing technologies and other reasons beyond our control;

• Delays in recognizing revenue on any transaction;

• Delays or deferrals of customer shipments and/or implementations of our products;

• Variations in volumes of minutes of use generated by our wireless customers’ subscribers;

• The number and significance of network outages in a particular quarter and the severity and timing of penalties that result from such outages;

• Rates charged and paid by our customers;

• The impact and acceptance of existing solutions or the introduction of competing solutions by wireless operators, including those who are currently our customers;

• Our wireless customers’ ability to generate additional prepaid subscribers using our solutions;

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• The extent of our wireless customers’ emphasis on promoting prepaid solutions and the timing of related marketing initiatives, including our wireless operators’ allocation of marketing resources for initiatives other than prepaid wireless services, such as data services, new technologies, etc.;

• Our wireless customers’ ability to minimize “churn” (the percentage of total prepaid subscribers that terminate service on our network);

• The relatively long sales cycles for many of our products;

• Changes in the mix of solutions we provide;

• Seasonal trends, particularly in the second and third quarters when wireless operators are not usually marketing and selling prepaid services as aggressively as in the first and fourth quarters of the year; and

• Consolidation within the wireless industry, which could lead to the loss of a major customer or the reduction in rates per minute paid by our customers.

We expect that our revenues and net income will decline in future quarters, as Verizon and Cingular generate less revenue. Also, a significant portion of our expenses is fixed. Accordingly, our results of operations are particularly sensitive to fluctuations in revenues. If our revenues fall below our expectations, we would most likely not be able to reduce our fixed or other expenses in time to sufficiently respond to such a shortfall. Additionally, due to all of the foregoing factors, it is possible that in some future quarter our results of operations will be below our expectations and/or the expectations of public market analysts and investors. In such event, the price of our common stock would likely be materially and adversely affected.

If we do not continue to develop and offer more desirable functionality and features in our solutions at competitive prices, including bcgi Billing, bcgi Access Management, bcgi Payment, bcgi Network and the new solutions currently in our pipeline, we will not be able to compete effectively and our business will be materially and adversely affected.

Our business will not be successful if we do not develop and offer more functionality and features in our solutions than those available in competitive offerings or if we are unable to develop new solutions to offer our wireless customers. Also, there can be no assurance that we will successfully support and enhance our real-time billing platform effectively or that our network will successfully support current and future growth. In addition, we may be unable to leverage our existing infrastructure to provide enhancements to our current solutions or new solutions cost-effectively. If we cannot develop and provide more desirable functionality and features than our competitors, if we cannot sell our new solutions, including bcgi Access Management, bcgi Network or bcgi Payment, or if we are unable to keep our costs down to provide new and enhanced solutions at competitive prices, we would likely lose market share or be required to reduce our pricing, which would have a material adverse effect on our business, financial condition and results of operations. In addition, if we do not successfully continue to upgrade our software and hosting environment as new wireless technologies evolve, including but not limited to 3G technology, we may lose existing and prospective customers.

Our international sales and operations subject us to additional risks that can adversely affect our operating results.

We are expanding our operations internationally and expect to derive a greater portion of our revenues from customers outside the United States. Additionally, we have recently acquired businesses in India and Israel and opened sales offices in Singapore and the United Kingdom. Our international operations are subject to a variety of risks, including:

• General economic conditions in each country or region;

• The overlap of different tax regimes;

• Fluctuations in currency exchange rates and difficulties in transferring funds from certain countries;

• The difficulty of managing an organization operating in various countries;

• Compliance with a variety of international laws and regulations, including trade restrictions, local labor ordinances and changes in tariff rates;

• Longer payment cycles and difficulties in collecting accounts receivable;

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• Import and export licensing requirements;

• Political unrest, terrorism and the potential for other hostilities, particularly in areas in which we have facilities; and

• Reduced protection for intellectual property rights in some countries.

Our success depends, in part, on our ability to anticipate and address these risks. We cannot guarantee that these or other factors will not adversely affect our business or operating results.

We entered into a strategic investment agreement with an early stage entity with which we have a commercial relationship.

In exchange for cash totaling $1.5 million, we received secured convertible promissory notes for the same amount. The notes are convertible at any time into the borrower’s common stock or preferred stock, as defined in the agreement. If the entity does not execute on its strategic plan, our investment could become impaired and therefore, may not be recovered.

We rely on complex information technology systems and networks to operate our business. If any significant system or network disruption occurs, we will be subject to financial penalties that could adversely affect our business and operating results.

We rely on the efficient and uninterrupted operation of complex information technology systems and networks. All information technology systems and networks are potentially vulnerable to damage or interruption from a variety of sources, including but not limited to computer viruses, security breaches, natural disasters, fire, power loss, terrorism, war, telecommunication failure or similar events. We have implemented various measures to guard against these risks, however, each quarter we have experienced network outages, some of which have resulted in significant reductions in revenue due to penalty clauses contained in certain of our wireless customer contracts. Our Bedford and Woburn, Massachusetts facilities are redundant and each facility is able to provide all significant processing functions of our network. We still may not be protected from a natural disaster within the greater Boston, Massachusetts area. There may also be system or network disruptions if new or upgraded business management systems are defective or are not installed properly. However, there can be no assurance that a system or network failure or significant disruption will not have a material adverse impact on our business and our operating results. In addition, in the event of such a disruption or failure, we may incur significant costs to remedy the damages caused by such a situation.

Our business would be materially adversely impacted if we cannot protect our intellectual property.

Our success and ability to compete depends in part upon our proprietary technology and our ability to protect such technology. We have a number of patent applications pending to protect our proprietary technology in the United States and internationally. If these patent applications are not approved, we may not be able to prevent others from using similar technologies and we may be subject to additional patent infringement lawsuits or royalty payments to use the technology. We rely on a combination of contractual provisions, confidentiality procedures, and patent, trademark, trade secret and copyright laws to protect the proprietary aspects of our technology. These legal protections afford only limited protection and competitors may gain access to our intellectual property that may result in the loss of customers. In addition, despite our efforts to protect our proprietary rights, unauthorized parties may attempt to copy aspects of our technology or to obtain and use our proprietary information. Litigation may be necessary to enforce our intellectual property rights, to protect our trade secrets and to determine the validity and scope of the proprietary rights of others. Any litigation could result in substantial costs and diversion of resources with no assurance of success and could seriously harm our business and operating results.

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We may never realize the anticipated benefits of any acquisitions.

A key part of our growth and diversification strategy is to engage in acquisitions. We regularly review acquisition opportunities and have acquired companies in the recent past. There can be no assurance that we will be able to identify any appropriate acquisition candidates or that any identified acquisition opportunities will be available on terms and conditions acceptable to us. We may not be able to successfully integrate recent or future acquired companies and personnel. Acquisitions involve numerous risks, including, among other things:

• Possible decreases in capital resources or dilution to existing stockholders;

• Risk that the acquired company’s technology infringes on an existing patent;

• Difficulties and expenses incurred in connection with the acquisitions and the subsequent assimilation of the operations and the services or products of the acquired company;

• Difficulties of operating a new business;

• Potential inherited liability for the past actions of the acquired company;

• Risk that any acquired company’s internal controls may not be adequate;

• Diversion of management’s attention from other business concerns;

• Limited ability to predict future operating results of the acquired company; and

• Potential loss of key employees and customers of the acquired company.

In the event that the operations of an acquired business do not meet expectations, we may be required to restructure the acquired business or write off the value of some or all of the assets of the acquired business. There can be no assurance that any acquisition will be successfully integrated into our operations or will have the intended financial or strategic results.

We may not be able to effectively manage the expansion of our business, which would adversely impact our ability to offer competitive solutions and grow.

We have expanded our operations rapidly and continue to invest in new products and features, including expanding internationally. This has created significant demands on our technical, management, operational, development and administrative personnel and other resources. Any additional expansion by us may further strain our management, financial and other resources. There can be no assurance that our systems, procedures, controls and existing space will be adequate to support expansion of our operations or that we will be successful in our expansion strategy. Inability of our management to manage operational changes effectively would materially and adversely affect the quality of our solutions, our ability to retain key personnel and our business, financial condition and results of operations. Additionally, there can be no assurance that our investments will result in generating revenues within a reasonable time or that they will be sufficient to generate a reasonable return.

Our business may suffer if we are unable to attract and retain key employees.

Competition for employees with the skills we require is intense. Our success will depend on our ability to attract and retain key employees, including members of the executive management team as well as those employees in crucial technical, marketing and staff positions. The loss of one or more key employees, our inability to attract additional qualified employees, or the delay in hiring key personnel could have a material adverse impact on our business, financial condition and results of operations.

The market for our solutions is very competitive and depends on the growth and health of the wireless industry and wireless carriers.

We have historically provided our solutions almost exclusively to wireless carriers. The market for solutions to wireless carriers is highly competitive and subject to rapid change as new technologies are continually introduced in the wireless marketplace. We anticipate continued growth and competition in the wireless services industry and, consequently, the entrance of new competitors in the future. Our competitors include independent providers of prepaid and other solutions to wireless carriers and the wireless carriers themselves who provide, or can provide, in-house services similar to ours. These wireless carriers, and many of the independent service providers, have

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significantly greater financial and other resources than we do. In addition, the wireless industry is subject to consolidation, which could potentially result in the loss of carrier customers and/or subscribers. Competitive pressures may make it difficult for us to acquire and retain customers and may require us to reduce the price of our service solutions. We cannot be certain that we will be able to compete successfully with existing or new competitors. Our failure to maintain and enhance our competitive position would limit our ability to retain and increase our market share, resulting in serious harm to our business and operating results.

To provide our solutions, we depend on a number of third-party software, hardware and service vendors, and our business, financial condition and results of operations would be materially adversely affected if we are unable, or are delayed in our ability to obtain these components and applications.

Our operations are supported by many hardware components and software applications from third-party vendors, sometimes licensed from single vendors. There can be no assurance that these vendors will continue to license these components and applications to us or that they will do so at reasonable prices. In addition, there can be no assurance that these hardware components and software applications will function in accordance with specifications agreed upon by us and our vendors. If we cannot obtain these components and applications from our existing vendors, we may not be able to timely procure or develop replacement software and hardware at commercially reasonable costs, or at all. If we are unable to do so, we may be required to delay the development or sale of our current or future solutions, which would materially and adversely affect our business, financial condition and results of operations.

Changes in government regulations could adversely impact our business.

Proposals to intensify or reduce government regulations of the wireless telephone industry continue to be discussed at both the federal and state levels. Such changes may decrease the growth of the wireless telephone industry, result in new competitors or industry consolidation, limit the number of potential customers for our solutions or impede our ability to offer competitive solutions to the wireless market or otherwise have a material adverse effect on our business, financial condition and results of operations.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

We maintain an investment portfolio in accordance with our Investment Policy. The primary objectives of our Investment Policy are to preserve principal, maintain proper liquidity to meet operating needs and maximize yields. Although our investments are subject to credit risk, our policy specifies credit quality standards for our investments and limits the amount of credit exposure from any single issue, issuer or type of investment. Our investments are also subject to interest rate risk and will decrease in value if market interest rates increase. However, since our investments are generally conservative in nature and are of a relatively short duration and some are held to maturity, interest rate risk is mitigated.

We do not use derivative financial instruments for either hedging foreign currency exposure risk or speculative trading purposes. Accordingly, we do not believe that there is any material market risk exposure with respect to derivative or other financial instruments that would require disclosure under this item.

Item 4. Controls and Procedures

Management, with the participation of our Chief Executive Officer, or CEO, and Chief Financial Officer, or CFO, evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act) as of June 30, 2005. In designing and evaluating our disclosure controls and procedures, our management recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives, and our management necessarily applied its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Based on this evaluation, our CEO and CFO concluded that, as of June 30, 2005, our disclosure controls and procedures were

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(1) designed to ensure that material information relating to us, including our consolidated subsidiaries, is made known to our CEO and CFO by others within those entities, particularly during the period in which this report was being prepared and (2) effective, in that they provide reasonable assurance that information required to be disclosed by us in the reports that we file or submit under the Securities Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms.

No change in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act) occurred during the three months ended June 30, 2005 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II. OTHER INFORMATION:

Item 1. Legal Proceedings

Freedom Wireless Patent Infringement Lawsuit

In March 2000, Freedom Wireless, Inc. filed a suit against us and a number of our current or former carrier customers (Verizon Wireless, Cingular Wireless LLC, AT&T Wireless Services, CMT Partners and Western Wireless Corp.). The suit was tried in the United States District Court in Massachusetts and alleged that the defendants infringe two patents held by Freedom Wireless, Inc. and sought damages as well as injunctive relief. On May 20, 2005, a jury determined that bcgi and certain of the other defendants infringed or are infringing the two Freedom Wireless patents. The jury damages award was in the total amount of $128 million for past damages through December 31, 2004, an amount which exceeds our ability to pay. Of this amount, bcgi and Cingular which (includes AT&T Wireless Services and CMT Partners) are jointly and severally liable for $127.8 million and bcgi and Western Wireless for $200,000. Interest and damages for infringement by bcgi and Cingular from January 1, 2005 to the date of the judgment may also be awarded. Additionally, the jury found that bcgi willfully infringed the patents and as a result, the Court may award treble damages and attorney’s fees. Any enhanced damages for willfulness would be the responsibility of bcgi. The Court, however, also has discretion to reduce the amount of the jury’s damages award. bcgi intends to file a motion for remittitur to ask the Court to reduce the level of damages awarded.

We have an obligation to indemnify the other defendants for damages they may incur with respect to any infringement by our technology. In 2005, Verizon Wireless, which was a defendant in the case, reached a settlement with Freedom Wireless and, as a result, was removed as a defendant in the case. We were not part of the settlement discussions and the terms of the settlement are not public.

The Court has not yet issued a final judgment on the suit since there are still matters pending before the Court. Following the issuance of the jury verdict, a non-jury trial for inequitable conduct was held. In this case, which concluded on July 26, 2005 and is pending before the Court, bcgi argued that the Freedom Wireless patents are unenforceable because Freedom breached its duty of candor and good faith to the Patent and Trademark Office (PTO) by knowingly withholding material prior art from the PTO. The Court has ordered the plaintiff and defendants to file proposed findings of fact and conclusions of law with the Court no later than August 15, 2005. If the Court rules in favor of us and our co-defendants in the inequitable conduct trial, the patents held by Freedom Wireless would become unenforceable, a decision that Freedom Wireless, Inc. may choose to appeal. We intend to file motions for judgment as a matter of law and a motion for a new trial or, in the alternative as noted above, a reduction in the damages awarded by the jury. We expect that the Court would rule on each of these matters in addition to determining the final judgment on the case in due course, sometime after August 15, 2005.

If the Court rules against us and our co-defendants in the non-jury trial, we expect to appeal the Court’s decision to the Court of Appeals for the Federal Circuit. The appeal process can take 12-18 months or longer. In the event of an appeal, the Court may require the defendants to provide collateral or post a bond. The bond could approximate 110% of the final damages amount, which, depending on the final judgment, could exceed our ability to pay. If we are unable to provide adequate collateral or post a sufficient bond, or an injunction is entered and not stayed, or if we are unable to get an adverse judgment reversed and are unable to negotiate a commercially acceptable license with Freedom Wireless to allow us to continue to provide our products and services, then it will not be possible for us to

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provide the prepaid wireless or Real-Time Billing service as currently offered in the United States. In that event, we may not be able to continue our ongoing operations or may need to seek protection under Chapter 11 of the U. S. Bankruptcy Code. If the plaintiff files for an injunction, the Court could rule that we may not use the alleged infringing technology.

In order to mitigate the risk that we will be unable to post sufficient collateral on our own, we entered into an agreement with Cingular Wireless LLC, a co-defendant in the case. This agreement is subject to mutual acceptance of an escrow agent and related escrow terms. Under the terms of this agreement, we have agreed to place $41 million into escrow for the purpose of using these funds as security in the event that a bond or other security must be posted for more than $41 million. In exchange for placing the funds into escrow, if a final judgment in the lawsuit is rendered against us and our co-defendants, and the joint and several damages exceed $41 million, Cingular has agreed to post security in the form of an appeal bond or otherwise in an amount that, when added to our $41 million, is determined by the court to be adequate security to stay the execution of the judgment. Cingular has also agreed to dismiss, without prejudice, the action filed by Cingular against us in May 2005. Cingular originally filed this action in an effort to enforce Cingular’s indemnity rights against us as a result of the Freedom Wireless verdict. This agreement is expected to allow us to proceed with an appeal and potentially avoid exposure to bankruptcy while the appeal is pending, in the event that a final judgment against us in this lawsuit is rendered for joint and several damages that exceed $41 million. Cingular is not obligated to provide the security for the payment of any portion of the damages for which Cingular is not jointly and severally liable. The agreement does not alter bcgi’s obligation to indemnify Cingular.

While we do not believe that we infringe these patents and believe that the patents are invalid in light of prior art and other reasons, in light of the jury verdict we believe it is probable that a loss contingency exists. Although the ultimate amount of such loss, if any, is not currently known, accounting guidelines under Statement of Financial Accounting Standards No. 5, Accounting for Contingencies (FAS 5) and FASB Interpretation 14, Reasonable Estimation of the Amount of a Loss (FIN 14), specifies that if a loss is probable and can be reasonably estimated, it should be recorded. Based on management’s assessment of the potential outcomes of the case and in accordance with FAS 5 and FIN 14, we have accrued an estimated loss of $24 million with respect to the Freedom Wireless verdict. However, the actual loss, if any, may be significantly higher or lower than the amount accrued.

Freedom Wireless Patent Infringement Lawsuits Against bcgi, Nextel Communications and Alltel Corporation

On May 20, 2005, Freedom Wireless filed two separate lawsuits in the U.S. District Court for the District of Massachusetts, the first against us and Nextel Communications, and the second against us and Alltel Corporation. To date, we have not been served. These lawsuits allege that we and each of our named carrier customers infringe the same two patents held by Freedom Wireless, Inc. and seek damages as well as injunctive relief. We have an obligation to indemnify our customers for damages they may incur with respect to any infringement by our technology. We intend to contest the lawsuits vigorously and believe that we do not infringe these patents and believe that the patents are invalid in light of prior art and other reasons.

Cingular Wireless LLC Indemnification Complaint

On May 23, 2005, a complaint was filed by Cingular Wireless LLC seeking judgment in indemnity against bcgi. The complaint seeks judgment for contractual indemnification against bcgi in an amount equal to Cingular’s money damages and other relief as determined by the Court in the Freedom Wireless patent infringement lawsuit. Cingular has agreed to dismiss, without prejudice, this complaint, subject to the completion of the agreement between bcgi and Cingular to escrow $41 million of bcgi’s cash.

Class Action Lawsuit

In June 2005, a putative class action complaint was filed in the U.S. District Court for the District of Massachusetts, against us, our Chief Executive Officer and our Chief Financial Officer on behalf of persons who purchased our common stock between November 15, 2000 and May 20, 2005. The complaint alleges that the defendants violated Sections 10(b) and 20(a) of the Exchange Act as well as Rule 10b-5 promulgated thereunder by allegedly failing to disclose adverse facts regarding the Freedom Wireless, Inc. lawsuit, including that we had willfully infringed the Freedom Wireless patents. Within ten days of the appointment of a lead counsel and a lead plaintiff in this case, the parties will submit for the Court’s consideration a proposed schedule for this case, including defendants’ time to respond to the complaint by motion to dismiss or otherwise. We intend to contest the lawsuit vigorously and believe that bcgi and the two executive officers named as defendants have meritorious defenses to the allegations set forth in the lawsuit.

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Indemnification Complaint

On April 28, 2005, a complaint by Aerotel Corporation was filed against Verizon alleging infringement by Verizon Communications, Verizon Wireless and others of a patent on prepaid technology. Verizon has notified us that we may be asked to indemnify them in this case under our Prepaid Wireless Services Agreement for that portion of any liability specific to Verizon Wireless prepaid offered through use of our services. A subpoena for documents and deposition testimony has been served to us. A subpoena for documents and deposition testimony has been served on us. The complaint does not specify damages as it relates to Verizon Wireless prepaid. The lawsuit is currently in the discovery phase and at this time it is not possible to determine the potential course of outcome of this indemnification claim.

Other

From time to time, as a normal incidence of the nature of our business, various claims, charges and litigation are asserted or commenced against us arising from, or related to, contractual matters, patents, trademarks, personal injury, and personnel and employment disputes. As to such claims and litigation, we can give no assurance that we will prevail. However, we do not believe that these matters (other than as disclosed) will have a material adverse effect on our consolidated financial position, although an adverse outcome of any of these matters could have a material adverse effect on our consolidated results of operations or cash flows in future quarters or in the quarter or annual period in which one or more of these matters are resolved.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

In June 2004, our board of directors approved the repurchase by us of up to an aggregate of 2,000,000 shares of our common stock pursuant to our repurchase program. The program expired in June 2005 with a total of 838,500 shares purchased. No shares were repurchased under the repurchase program during the quarter ending June 30, 2005.

Item 4. Submission of Matters to a Vote of Security Holders

We held our 2005 Annual Meeting of Shareholders on June 8, 2005. At our Annual meeting, the following actions were taken:

1. The shareholders elected three Class III Directors to serve three-year terms. The table below outlines the voting results:

	Number of Shares/Votes
	For	Withheld
Paul J. Tobin	15,145,073	1,299,583
E.Y. Snowden	15,315,653	1,129,003
Brian E. Boyle	15,038,205	1,406,451

In addition, Gerald McGowan, Gerald Segel, Daniel E. Somers, James A. Dwyer, Jr., Paul R. Gudonis and Frederick E. von Mering are continuing directors.

2. The shareholders ratified the adoption of our 2005 Stock Incentive Plan by a vote of 6,458,150 shares of Common Stock for, 5,604,703 shares of Common Stock against, and 24,376 shares of Common Stock abstaining.

3. The shareholders ratified the appointment of Ernst & Young LLP as our registered public accounting firm by a vote of 16,023,363 shares of Common Stock for, 396,465 shares of Common Stock against and 24,828 shares of Common Stock abstaining.

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Item 5. Other information

(a) On June 8, 2005, our shareholders ratified the adoption of our 2005 Stock Incentive Plan, the full text of which is attached as Exhibit 10.1.

(b) None

Item 6. Exhibits

Exhibits

10.1	2005 Stock Incentive Plan
10.2	Form of Nonstatutory Stock Option Agreement for employees pursuant to the Company’s 2005 Stock Incentive Plan
10.3	Form of Nonstatutory Stock Option Agreement for Directors pursuant to the Company’s 2005 Stock Incentive Plan
10.4	Form of Restricted Stock Agreement for Directors pursuant to the Company’s 2005 Stock Incentive Plan
10.5	Form of Restricted Stock Agreement Granted Under 2005 Stock Incentive Plan
10.6	Form of Incentive Stock Option Agreement for Executive Officers pursuant to the Company’s 2005 Stock Incentive Plan
10.7	PureSight Asset Purchase Agreement, dated May 20, 2005, between Cellular Express Inc. and bcgi Technologies Ltd., as Buyers, and Puresight, Inc. and PureSight Ltd. as sellers
10.8	Change of Control Agreement between the Company and Thomas M. Erskine, dated May 3, 2005
10.9	Change of Control Agreement between the Company and Ersin Galioglu, dated May 3, 2005
10.10	Change of Control Agreement between the Company and James Anderson, dated May 3, 2005
31.1	Certification of Chief Executive Officer pursuant to Rule 13a-14(a)
31.2	Certification of Chief Financial Officer pursuant to Rule 13a-14(a)
32	Certification of Chief Executive Officer and Chief Financial Officer pursuant to Rule 13a-14(b)

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SIGNATURES

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

Date: August 8, 2005

Boston Communications Group, Inc.
(Registrant)
By:	/s/ Karen A. Walker
	Karen A. Walker
	Vice President, Finance and Administration and Chief Financial Officer (Principal Financial and Accounting Officer and Duly Authorized Officer)

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EX-10.1

Exhibit 10.1

2005 STOCK INCENTIVE PLAN

1. Purpose

The purpose of this 2005 Stock Incentive Plan (the “Plan”) of Boston Communications Group, Inc., a Delaware corporation (the “Company”), is to advance the interests of the Company’s stockholders by enhancing the Company’s ability to attract, retain and motivate persons who are expected to make important contributions to the Company and by providing such persons with equity ownership opportunities and performance-based incentives that are intended to align their interests with those of the Company’s stockholders. Except where the context otherwise requires, the term “Company” shall include any of the Company’s present or future parent or subsidiary corporations as defined in Sections 424(e) or (f) of the Internal Revenue Code of 1986, as amended, and any regulations promulgated thereunder (the “Code”) and any other business venture (including, without limitation, joint venture or limited liability company) in which the Company has a controlling interest, as determined by the Board of Directors of the Company (the “Board”).

2. Eligibility

All of the Company’s employees, officers, directors, consultants and advisors are eligible to receive options, stock appreciation rights, restricted stock, restricted stock units and other stock-based awards (each, an “Award”) under the Plan. Each person who receives an Award under the Plan is deemed a “Participant”.

3. Administration and Delegation

(a) Administration by Board of Directors. The Plan will be administered by the Board. The Board shall have authority to grant Awards and to adopt, amend and repeal such administrative rules, guidelines and practices relating to the Plan as it shall deem advisable. The Board may correct any defect, supply any omission or reconcile any inconsistency in the Plan or any Award in the manner and to the extent it shall deem expedient to carry the Plan into effect and it shall be the sole and final judge of such expediency. All decisions by the Board shall be made in the Board’s sole discretion and shall be final and binding on all persons having or claiming any interest in the Plan or in any Award. No director or person acting pursuant to the authority delegated by the Board shall be liable for any action or determination relating to or under the Plan made in good faith.

(b) Appointment of Committees. To the extent permitted by applicable law, the Board may delegate any or all of its powers under the Plan to one or more committees or subcommittees of the Board (a “Committee”). All references in the Plan to the “Board” shall mean the Board or a Committee of the Board to the extent that the Board’s powers or authority under the Plan have been delegated to such Committee.

4. Stock Available for Awards

(a) Number of Shares. Subject to adjustment under Section 9, Awards may be made under the Plan for a number of shares of common stock, $.01 par value per share, of the Company (the “Common Stock”) equal to the sum of:

(1) 1,500,000 shares of Common Stock, including (i) any shares of Common Stock that remain available for issuance under the Company’s 1996 Stock Option Plan, as amended (the “1996 Plan”), (ii) any shares of Common Stock that remain available for issuance under the Company’s 1998 Stock Option Plan (the “1998 Plan”), (iii) any shares of Common Stock that remain available for issuance under the Company’s 2000 Stock Option Plan (the “2000 Plan”), and (iv) any shares of Common Stock that remain available for issuance under the Company’s 2004 Stock Incentive Plan (the “2004 Plan”, and, together with the 1996 Plan, the 1998 Plan and the 2000 Plan, the “Old Plans”), in each case as of the time immediately before termination of the Old Plans; and

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(2) any shares of Common Stock subject to awards under the Old Plans, which awards expire, terminate, or are otherwise surrendered, canceled or forfeited (subject, however, in the case of Incentive Stock Options (as hereinafter defined) to any limitations under the Code);

provided, however, that the maximum number of shares of Common Stock available for issuance of Awards under the 2005 Plan (including any shares becoming available by reason of clause (2)) shall be 3,000,000.

(b) Share Counting.

(1) Options and SARs. Subject to adjustment under Section 9, an Award of an Option or SAR (each as defined below) shall be counted against the share limit specified in Section 4(a) as one share for each share of Common Stock subject to the Option or SAR (provided that, for share counting purposes, the combination of an Option in tandem with an SAR shall be treated as a single Award).

(2) Awards other than Options and SARs. Subject to adjustment under Section 9, any Award that is settled in Common Stock (other than an Option or SAR) shall be counted against the share limit specified in Section 4(a) as two and four-tenths shares for each share of Common Stock issued upon settlement of such Awards. This factor of two and four-tenths may be changed from time to time by action of the Compensation Committee of the Board of Directors.

(3) Cash Awards. Awards settled in cash shall not count against the share limit specified in Section 4(a).

(c) Lapses. If any Award expires or is terminated, surrendered or cancelled without having been fully exercised or is forfeited in whole or in part (including as the result of shares of Common Stock subject to such Award being repurchased by the Company at the original issuance price pursuant to a contractual repurchase right) or results in any Common Stock not being issued, the unused Common Stock covered by such Award shall again be available for the grant of Awards under the Plan. However, in the case of Incentive Stock Options (as hereinafter defined), the foregoing provisions shall be subject to any limitations under the Code. Subject to adjustment under Section 9, any Common Stock that again becomes available for grant pursuant to the preceding sentence shall be added back as one share, except that any Common Stock that again becomes available for grant in connection with an Award described in Section 4(b)(2) shall be added back as two and four-tenths shares. This factor of two and four-tenths may be changed from time to time by action of the Compensation Committee of the Board of Directors.

(d) Sub-limits. Subject to adjustment under Section 9, the following sub-limits on the number of shares subject to Awards shall apply:

(1) Section 162(m) Per-Participant Limit. The maximum number of shares of Common Stock with respect to which Awards may be granted to any Participant under the Plan shall be 100,000 per calendar year. For purposes of the foregoing limit, the combination of an Option in tandem with an SAR (as each is hereafter defined) shall be treated as a single Award. The per-Participant limit described in this Section 4(d)(1) shall be construed and applied consistently with Section 162(m) of the Code or any successor provision thereto, and the regulations thereunder (“Section 162(m)”).

(2) Limit on Awards other than Options and SARs. The maximum number of shares with respect to which Awards other than Options and SARs may be granted shall be 50,000.

(3) Limit on Awards to Directors. The maximum number of shares with respect to which Awards may be granted to directors who are not employees of the Company at the time of grant shall be 100,000.

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5. Stock Options

(a) General. The Board may grant options to purchase Common Stock (each, an “Option”) and determine the number of shares of Common Stock to be covered by each Option, the exercise price of each Option and the conditions and limitations applicable to the exercise of each Option, including conditions relating to applicable federal or state securities laws, as it considers necessary or advisable. An Option which is not intended to be an Incentive Stock Option (as hereinafter defined) shall be designated a “Nonstatutory Stock Option”.

(b) Incentive Stock Options. An Option that the Board intends to be an “incentive stock option” as defined in Section 422 of the Code (an “Incentive Stock Option”) shall only be granted to employees of Boston Communications Group, Inc., any of Boston Communications Group, Inc.’s present or future parent or subsidiary corporations as defined in Sections 424(e) or (f) of the Code, and any other entities the employees of which are eligible to receive Incentive Stock Options under the Code, and shall be subject to and shall be construed consistently with the requirements of Section 422 of the Code. The Company shall have no liability to a Participant, or any other party, if an Option (or any part thereof) that is intended to be an Incentive Stock Option is not an Incentive Stock Option or for any action taken by the Board pursuant to Section 10(f), including without limitation the conversion of an Incentive Stock Option to a Nonstatutory Stock Option.

(c) Exercise Price. The Board shall establish the exercise price of each Option and specify such exercise price in the applicable option agreement; provided, however, that the exercise price shall not be less than 100% of the fair market value of the Common Stock, as determined by the Board, at the time the Option is granted.

(d) Limitation on Repricing. Unless such action is approved by the Company’s stockholders: (1) no outstanding Option granted under the Plan may be amended to provide an exercise price per share that is lower than the then-current exercise price per share of such outstanding Option (other than adjustments pursuant to Section 9) and (2) the Board may not cancel any outstanding Option and grant in substitution therefore new Awards under the Plan covering the same or a different number of shares of Common Stock and having an exercise price per share lower than the then-current exercise price per share of the cancelled Option.

(e) Duration of Options. Each Option shall be exercisable at such times and subject to such terms and conditions as the Board may specify in the applicable option agreement; provided however, that no Option will be granted for a term in excess of 10 years.

(f) Exercise of Option. Options may be exercised by delivery to the Company of a written notice of exercise signed by the proper person or by any other form of notice (including electronic notice) approved by the Board together with payment in full as specified in Section 5(g) for the number of shares for which the Option is exercised. Shares of Common Stock subject to the Option will be delivered by the Company following exercise either as soon as practicable or, subject to such conditions as the Board shall specify, on a deferred basis (with the Company’s obligation to be evidenced by an instrument providing for future delivery of the deferred shares at the time or times specified by the Board).

(g) Payment Upon Exercise. Common Stock purchased upon the exercise of an Option granted under the Plan shall be paid for as follows:

(1) in cash or by check, payable to the order of the Company;

(2) except as the Board may otherwise provide in an option agreement, by (i) delivery of an irrevocable and unconditional undertaking by a creditworthy broker to deliver promptly to the Company sufficient funds to pay the exercise price and any required tax withholding or (ii) delivery by the Participant to the Company of a copy of irrevocable and unconditional instructions to a creditworthy broker to deliver promptly to the Company cash or a check sufficient to pay the exercise price and any required tax withholding;

(3) when the Common Stock is registered under the Securities Exchange Act of 1934 (the “Exchange Act”), by delivery of shares of Common Stock owned by the Participant valued at their fair market value as determined by (or in a manner approved by) the Board (“Fair Market Value”), provided (i) such method of payment is then permitted under applicable law, (ii) such Common Stock, if

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acquired directly from the Company, was owned by the Participant for such minimum period of time, if any, as may be established by the Board in its discretion and (iii) such Common Stock is not subject to any repurchase, forfeiture, unfulfilled vesting or other similar requirements;

(4) to the extent permitted by applicable law and by the Board, by (i) delivery of a promissory note of the Participant to the Company on terms determined by the Board, or (ii) payment of such other lawful consideration as the Board may determine; or

(5) by any combination of the above permitted forms of payment.

(h) Substitute Options. In connection with a merger or consolidation of an entity with the Company or the acquisition by the Company of property or stock of an entity, the Board may grant Options in substitution for any options or other stock or stock-based awards granted by such entity or an affiliate thereof. Substitute Options may be granted on such terms as the Board deems appropriate in the circumstances, notwithstanding any limitations on Options contained in the other sections of this Section 5 or in Section 2. Substitute Options shall not count against the overall share limit set forth in Section 4(a), except as may be required by reason of Section 422 and related provisions of the Code.

6. Stock Appreciation Rights.

(a) General. A Stock Appreciation Right, or SAR, is an Award entitling the holder, upon exercise, to receive an amount in Common Stock or cash or a combination thereof (such form to be determined by the Board) determined by reference to appreciation, from and after the date of grant, in the fair market value of a share of Common Stock. The date as of which such appreciation or other measure is determined shall be the exercise date.

(b) Grants. Stock Appreciation Rights may be granted in tandem with, or independently of, Options granted under the Plan.

(1) Tandem Awards. When Stock Appreciation Rights are expressly granted in tandem with Options, (i) the Stock Appreciation Right will be exercisable only at such time or times, and to the extent, that the related Option is exercisable (except to the extent designated by the Board in connection with a Reorganization Event) and will be exercisable in accordance with the procedure required for exercise of the related Option; (ii) the Stock Appreciation Right will terminate and no longer be exercisable upon the termination or exercise of the related Option, except to the extent designated by the Board in connection with a Reorganization Event or a Change in Control Event and except that a Stock Appreciation Right granted with respect to less than the full number of shares covered by an Option will not be reduced until the number of shares as to which the related Option has been exercised or has terminated exceeds the number of shares not covered by the Stock Appreciation Right; (iii) the Option will terminate and no longer be exercisable upon the exercise of the related Stock Appreciation Right; and (iv) the Stock Appreciation Right will be transferable only with the related Option.

Shares reserved for issuance upon grant of SARs, to the extent the number of reserved shares exceeds the number of shares actually issued upon exercise of the SARs shall not become available for issuance under the Plan.

(2) Independent SARs. A Stock Appreciation Right not expressly granted in tandem with an Option will become exercisable at such time or times, and on such conditions, as the Board may specify in the SAR Award.

(c) Exercise. Stock Appreciation Rights may be exercised by delivery to the Company of a written notice of exercise signed by the proper person or by any other form of notice (including electronic notice) approved by the Board, together with any other documents required by the Board.

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7. Restricted Stock; Restricted Stock Units.

(a) General. The Board may grant Awards entitling recipients to acquire shares of Common Stock (“Restricted Stock”), subject to the right of the Company to repurchase all or part of such shares at their issue price or other stated or formula price (or to require forfeiture of such shares if issued at no cost) from the recipient in the event that conditions specified by the Board in the applicable Award are not satisfied prior to the end of the applicable restriction period or periods established by the Board for such Award. Instead of granting Awards for Restricted Stock, the Board may grant Awards entitling the recipient to receive shares of Common Stock to be delivered at the time such shares of Common Stock vest (“Restricted Stock Units”) (Restricted Stock and Restricted Stock Units are each referred to herein as a “Restricted Stock Award”).

(b) Terms and Conditions. The Board shall determine the terms and conditions of a Restricted Stock Award, including the conditions for repurchase (or forfeiture) and the issue price, if any.

(c) Stock Certificates. Any stock certificates issued in respect of a Restricted Stock Award shall be registered in the name of the Participant and, unless otherwise determined by the Board, deposited by the Participant, together with a stock power endorsed in blank, with the Company (or its designee). At the expiration of the applicable restriction periods, the Company (or such designee) shall deliver the certificates no longer subject to such restrictions to the Participant or if the Participant has died, to the beneficiary designated, in a manner determined by the Board, by a Participant to receive amounts due or exercise rights of the Participant in the event of the Participant’s death (the “Designated Beneficiary”). In the absence of an effective designation by a Participant, “Designated Beneficiary” shall mean the Participant’s estate.

(d) Limitations on Vesting.

(1) Restricted Stock Awards that vest based on the passage of time alone shall be zero percent vested prior to the first anniversary of the date of grant, no more than 33 ¹/3% vested prior to the second anniversary of the date of grant, and no more than 66 ²/3% vested prior to the third anniversary of the date of grant. Restricted Stock Awards that vest upon the passage of time and provide for accelerated vesting based on performance shall not vest prior to the first anniversary of the date of grant.

(2) Notwithstanding any other provision of this Plan, the Board may, in its discretion, either at the time a Restricted Stock Award is made or at any time thereafter, waive its right to repurchase shares of Common Stock (or waive the forfeiture thereof) or remove or modify any part or all of the restrictions applicable to the Restricted Stock Award; provided that the Board may only exercise such rights in extraordinary circumstances which shall include, without limitation, death or disability of the Participant; estate planning needs of the Participant; a merger, consolidation, sale, reorganization, recapitalization, or change in control of the Company; or any other nonrecurring significant event affecting the Company, a Participant or the Plan.

8. Other Stock-Based Awards.

Other Awards of shares of Common Stock, and other Awards that are valued in whole or in part by reference to, or are otherwise based on, shares of Common Stock or other property, may be granted hereunder to Participants (“Other Stock Unit Awards”), including without limitation Awards entitling recipients to receive shares of Common Stock to be delivered in the future. Such Other Stock Unit Awards shall also be available as a form of payment in the settlement of other Awards granted under the Plan or as payment in lieu of compensation to which a Participant is otherwise entitled. Other Stock Unit Awards may be paid in shares of Common Stock or cash, as the Board shall determine. Subject to the provisions of the Plan, the Board shall determine the conditions of each Other Stock Unit Awards, including any purchase price applicable thereto.

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9. Adjustments for Changes in Common Stock and Certain Other Events.

(a) Changes in Capitalization. In the event of any stock split, reverse stock split, stock dividend, recapitalization, combination of shares, reclassification of shares, spin-off or other similar change in capitalization or event, or any distribution to holders of Common Stock other than an ordinary cash dividend, (i) the number and class of securities available under this Plan, (ii) the sub-limits set forth in Section 4(d), (iii) the number and class of securities and exercise price per share of each outstanding Option, (iv) the share- and per-share provisions of each Stock Appreciation Right, (v) the repurchase price per share subject to each outstanding Restricted Stock Award and (vi) the share- and per-share-related provisions of each outstanding Other Stock Unit Award, shall be appropriately adjusted by the Company (or substituted Awards may be made, if applicable) to the extent determined by the Board.

(b) Reorganization Events.

(1) Definition. A “Reorganization Event” shall mean: (a) any merger or consolidation of the Company with or into another entity as a result of which all of the Common Stock of the Company is converted into or exchanged for the right to receive cash, securities or other property or is cancelled, (b) any exchange of all of the Common Stock of the Company for cash, securities or other property pursuant to a share exchange transaction or (c) any liquidation or dissolution of the Company.

(2) Consequences of a Reorganization Event on Awards Other than Restricted Stock Awards. In connection with a Reorganization Event, the Board shall take any one or more of the following actions as to all or any outstanding Awards on such terms as the Board determines: (i) provide that Awards shall be assumed, or substantially equivalent Awards shall be substituted, by the acquiring or succeeding corporation (or an affiliate thereof), (ii) upon written notice to a Participant, provide that the Participant’s unexercised Options or other unexercised Awards shall become exercisable in full and will terminate immediately prior to the consummation of such Reorganization Event unless exercised by the Participant within a specified period following the date of such notice, (iii) provide that outstanding Awards shall become realizable or deliverable, or restrictions applicable to an Award shall lapse, in whole or in part prior to or upon such Reorganization Event, (iv) in the event of a Reorganization Event under the terms of which holders of Common Stock will receive upon consummation thereof a cash payment for each share surrendered in the Reorganization Event (the “Acquisition Price”), make or provide for a cash payment to a Participant equal to (A) the Acquisition Price times the number of shares of Common Stock subject to the Participant’s Options or other Awards (to the extent the exercise price does not exceed the Acquisition Price) minus (B) the aggregate exercise price of all such outstanding Options or other Awards, in exchange for the termination of such Options or other Awards, (v) provide that, in connection with a liquidation or dissolution of the Company, Awards shall convert into the right to receive liquidation proceeds (if applicable, net of the exercise price thereof) and (vi) any combination of the foregoing.

For purposes of clause (i) above, an Option shall be considered assumed if, following consummation of the Reorganization Event, the Option confers the right to purchase, for each share of Common Stock subject to the Option immediately prior to the consummation of the Reorganization Event, the consideration (whether cash, securities or other property) received as a result of the Reorganization Event by holders of Common Stock for each share of Common Stock held immediately prior to the consummation of the Reorganization Event (and if holders were offered a choice of consideration, the type of consideration chosen by the holders of a majority of the outstanding shares of Common Stock); provided, however, that if the consideration received as a result of the Reorganization Event is not solely common stock of the acquiring or succeeding corporation (or an affiliate thereof), the Company may, with the consent of the acquiring or succeeding corporation, provide for the consideration to be received upon the exercise of Options to consist solely of common stock of the acquiring or succeeding corporation (or an affiliate thereof) equivalent in value (as determined by the Board) to the per share consideration received by holders of outstanding shares of Common Stock as a result of the Reorganization Event.

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To the extent all or any portion of an Option becomes exercisable solely as a result of clause (ii) above, the Board may provide that upon exercise of such Option the Participant shall receive shares subject to a right of repurchase by the Company or its successor at the Option exercise price; such repurchase right (x) shall lapse at the same rate as the Option would have become exercisable under its terms and (y) shall not apply to any shares subject to the Option that were exercisable under its terms without regard to clause (ii) above.

(3) Consequences of a Reorganization Event on Restricted Stock Awards. Upon the occurrence of a Reorganization Event other than a liquidation or dissolution of the Company, the repurchase and other rights of the Company under each outstanding Restricted Stock Award shall inure to the benefit of the Company’s successor and shall apply to the cash, securities or other property which the Common Stock was converted into or exchanged for pursuant to such Reorganization Event in the same manner and to the same extent as they applied to the Common Stock subject to such Restricted Stock Award. Upon the occurrence of a Reorganization Event involving the liquidation or dissolution of the Company, except to the extent specifically provided to the contrary in the instrument evidencing any Restricted Stock Award or any other agreement between a Participant and the Company, all restrictions and conditions on all Restricted Stock Awards then outstanding shall automatically be deemed terminated or satisfied.

10. General Provisions Applicable to Awards

(a) Transferability of Awards. Awards shall not be sold, assigned, transferred, pledged or otherwise encumbered by the person to whom they are granted, either voluntarily or by operation of law, except by will or the laws of descent and distribution or, other than in the case of an Incentive Stock Option, pursuant to a qualified domestic relations order, and, during the life of the Participant, shall be exercisable only by the Participant; provided, however, that the Board may permit or provide in an Award for the gratuitous transfer of the Award by the Participant to or for the benefit of any immediate family member, family trust or family partnership established solely for the benefit of the Participant and/or an immediate family member thereof if, with respect to such proposed transferee, the Company would be eligible to use a Form S-8 for the registration of the sale of the Common Stock subject to such option under the Securities Act of 1933, as amended; provided, further, that the Company shall not be required to recognize any such transfer until such time as the Participant and such permitted transferee shall, as a condition to such transfer, deliver to the Company a written instrument in form and substance satisfactory to the Company confirming that such transferee shall be bound by all of the terms and conditions of the Award. References to a Participant, to the extent relevant in the context, shall include references to authorized transferees.

(b) Documentation. Each Award shall be evidenced in such form (written, electronic or otherwise) as the Board shall determine. Each Award may contain terms and conditions in addition to those set forth in the Plan.

(c) Board Discretion. Except as otherwise provided by the Plan, each Award may be made alone or in addition or in relation to any other Award. The terms of each Award need not be identical, and the Board need not treat Participants uniformly.

(d) Termination of Status. The Board shall determine the effect on an Award of the disability, death, retirement, authorized leave of absence or other change in the employment or other status of a Participant and the extent to which, and the period during which, the Participant, or the Participant’s legal representative, conservator, guardian or Designated Beneficiary, may exercise rights under the Award.

(e) Withholding. Each Participant shall pay to the Company, or make provision satisfactory to the Company for payment of, any taxes required by law to be withheld in connection with an Award to such Participant no later than the date of the event creating the tax liability. Except as the Board may otherwise provide in an Award, for so long as the Common Stock is registered under the Exchange Act, Participants may satisfy such tax obligations in whole or in part by delivery of shares of Common Stock, including shares retained from the Award creating the tax obligation, valued at their Fair Market Value; provided, however, except as otherwise provided by the Board, that the total tax withholding where stock is being used to satisfy such tax obligations cannot exceed the Company’s minimum statutory withholding obligations (based on minimum statutory withholding rates for federal and state tax

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purposes, including payroll taxes, that are applicable to such supplemental taxable income). Shares surrendered to satisfy tax withholding requirements cannot be subject to any repurchase, forfeiture, unfulfilled vesting or other similar requirements. The Company may, to the extent permitted by law, deduct any such tax obligations from any payment of any kind otherwise due to a Participant.

(f) Amendment of Award. Except as otherwise provided in Section 5(d), the Board may amend, modify or terminate any outstanding Award, including but not limited to, substituting therefor another Award of the same or a different type, changing the date of exercise or realization, and converting an Incentive Stock Option to a Nonstatutory Stock Option; provided that the Participant’s consent to such action shall be required unless the Board determines that the action, taking into account any related action, would not materially and adversely affect the Participant.

(g) Conditions on Delivery of Stock. The Company will not be obligated to deliver any shares of Common Stock pursuant to the Plan or to remove restrictions from shares previously delivered under the Plan until (i) all conditions of the Award have been met or removed to the satisfaction of the Company, (ii) in the opinion of the Company’s counsel, all other legal matters in connection with the issuance and delivery of such shares have been satisfied, including any applicable securities laws and any applicable stock exchange or stock market rules and regulations, and (iii) the Participant has executed and delivered to the Company such representations or agreements as the Company may consider appropriate to satisfy the requirements of any applicable laws, rules or regulations.

(h) Acceleration. Except as otherwise provided in Section 7(d), the Board may at any time provide that any Award shall become immediately exercisable in full or in part, free of some or all restrictions or conditions, or otherwise realizable in full or in part, as the case may be.

(i) Performance Conditions.

(1) This Section 10(i) shall be administered by a Committee approved by the Board, all of the members of which are “outside directors” as defined by Section 162(m) (the “Section 162(m) Committee”).

(2) Notwithstanding any other provision of the Plan, if the Section 162(m) Committee determines, at the time a Restricted Stock Award or Other Stock Unit Award is granted to a Participant, that such Participant is, or may be as of the end of the tax year in which the Company would claim a tax deduction in connection with such Award, a Covered Employee (as defined in Section 162(m)), then the Section 162(m) Committee may provide that this Section 10(i) is applicable to such Award.

(3) If a Restricted Stock Award or Other Stock Unit Award is subject to this Section 10(i), then the lapsing of restrictions thereon and the distribution of cash or Shares pursuant thereto, as applicable, shall be subject to the achievement of one or more objective performance goals established by the Section 162(m) Committee, which shall be based on the relative or absolute attainment of specified levels of one or any combination of the following: (a) earnings per share, (b) return on average equity or average assets with respect to a pre-determined peer group, (c) earnings, (d) earnings growth, (e) revenues, (f) expenses, (g) stock price, (h) market share, (i) return on sales, assets, equity or investment, (j) regulatory compliance, (k) improvement of financial ratings, (l) achievement of balance sheet or income statement objectives, (m) total shareholder return, (n) net operating profit after tax, (o) pre-tax or after-tax income or (p) cash flow, and may be absolute in their terms or measured against or in relationship to other companies comparably, similarly or otherwise situated. Such performance goals may be adjusted to exclude any one or more of (i) extraordinary items, (ii) gains or losses on the dispositions of discontinued operations, (iii) the cumulative effects of changes in accounting principles, (iv) the write-down of any asset, and (v) charges for restructuring and rationalization programs. Such performance goals: (i) may vary by Participant and may be different for different Awards; (ii) may be particular to a Participant or the department, branch, line of business, subsidiary or other unit in which the Participant works and may cover such period as may be specified by the Section 162(m) Committee; and (iii) shall be set by the Section 162(m) Committee within the time period prescribed by, and shall otherwise comply with the requirements of, Section 162(m).

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(4) Notwithstanding any provision of the Plan, with respect to any Restricted Stock Award or Other Stock Unit Award that is subject to this Section 10(i), the Section 162(m) Committee may adjust downwards, but not upwards, the cash or number of Shares payable pursuant to such Award, and the Section 162(m) Committee may not waive the achievement of the applicable performance goals except in the case of the death or disability of the Participant.

(5) The Section 162(m) Committee shall have the power to impose such other restrictions on Awards subject to this Section 10(i) as it may deem necessary or appropriate to ensure that such Awards satisfy all requirements for “performance-based compensation” within the meaning of Section 162(m)(4)(C) of the Code, or any successor provision thereto.

11. Miscellaneous

(a) No Right To Employment or Other Status. No person shall have any claim or right to be granted an Award, and the grant of an Award shall not be construed as giving a Participant the right to continued employment or any other relationship with the Company. The Company expressly reserves the right at any time to dismiss or otherwise terminate its relationship with a Participant free from any liability or claim under the Plan, except as expressly provided in the applicable Award.

(b) No Rights As Stockholder. Subject to the provisions of the applicable Award, no Participant or Designated Beneficiary shall have any rights as a stockholder with respect to any shares of Common Stock to be distributed with respect to an Award until becoming the record holder of such shares. Notwithstanding the foregoing, in the event the Company effects a split of the Common Stock by means of a stock dividend and the exercise price of and the number of shares subject to such Option are adjusted as of the date of the distribution of the dividend (rather than as of the record date for such dividend), then an optionee who exercises an Option between the record date and the distribution date for such stock dividend shall be entitled to receive, on the distribution date, the stock dividend with respect to the shares of Common Stock acquired upon such Option exercise, notwithstanding the fact that such shares were not outstanding as of the close of business on the record date for such stock dividend.

(c) Effective Date and Term of Plan. The Plan shall become effective on the date on which it is adopted by the Board, but no Award may be granted unless and until the Plan has been approved by the Company’s stockholders. No Awards shall be granted under the Plan after the completion of 10 years from the earlier of (i) the date on which the Plan was adopted by the Board or (ii) the date the Plan was approved by the Company’s stockholders, but Awards previously granted may extend beyond that date.

(d) Amendment of Plan. The Board may amend, suspend or terminate the Plan or any portion thereof at any time; provided that (i) to the extent required by Section 162(m), no Award granted to a Participant that is intended to comply with Section 162(m) after the date of such amendment shall become exercisable, realizable or vested, as applicable to such Award, unless and until such amendment shall have been approved by the Company’s stockholders if required by Section 162(m) (including the vote required under Section 162(m)); (ii) no amendment that would require stockholder approval under the rules of the NASDAQ National Market, Inc. may be made effective unless and until such amendment shall have been approved by the Company’s stockholders, and (iii) if the NASDAQ National Market, Inc. amends its corporate governance rules so that such rules no longer require stockholder approval of “material revisions” to equity compensation plans, then, from and after the effective date of such amendment to the NASDAQ National Market, Inc. rules, no amendment to the Plan (A) materially increasing the number of shares authorized under the Plan (other than pursuant to Section (9), (B) expanding the types of Awards that may be granted under the Plan, or (C) materially expanding the class of participants eligible to participate in the Plan shall be effective unless stockholder approval is obtained. In addition, if at any time the approval of the Company’s stockholders is required as to any other modification or amendment under Section 422 of the Code or any successor provision with respect to Incentive Stock Options, the Board may not effect such modification or amendment without such approval.

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(e) Provisions for Foreign Participants. The Board may modify Awards or Options granted to Participants who are foreign nationals or employed outside the United States or establish subplans or procedures under the Plan to recognize differences in laws, rules, regulations or customs of such foreign jurisdictions with respect to tax, securities, currency, employee benefit or other matters.

(f) Compliance With Code Section 409A. No Award shall provide for deferral of compensation that does not comply with Section 409A of the Code, unless the Board, at the time of grant, specifically provides that the Award is not intended to comply with Section 409A of the Code.

(g) Governing Law. The provisions of the Plan and all Awards made hereunder shall be governed by and interpreted in accordance with the laws of the State of Delaware, excluding choice-of-law principles of the law of such state that would require the application of the laws of a jurisdiction other than such state.

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EX-10.2

Exhibit 10.2

Nonstatutory Stock Option Agreement

Granted Under 2005 Stock Incentive Plan

1. Grant of Option.

The following terms and conditions apply to the grant by Boston Communications Group, Inc., a Massachusetts corporation (the “Company”), on the date set forth on the cover sheet (the “Grant Date”), to Participant, of an option to purchase, in whole or in part, on the terms provided herein and in the Company’s 2005 Stock Incentive Plan (the “Plan”), that number of shares of common stock, $.01 par value per share, of the Company (“Common Stock”) (the “Shares”) at the price per Share indicated thereon. Unless earlier terminated, this option shall expire on the tenth anniversary of the Grant Date (the “Final Exercise Date”).

It is intended that the option evidenced by this agreement shall not be an incentive stock option as defined in Section 422 of the Internal Revenue Code of 1986, as amended and any regulations promulgated thereunder (the “Code”). Except as otherwise indicated by the context, the term “Participant”, as used in this option, shall be deemed to include any person who acquires the right to exercise this option validly under its terms.

2. Vesting Schedule.

This option will become exercisable (“vest”) in installments as outlined on the cover sheet. This option shall expire upon, and will not be exercisable after, the Final Exercise Date.

The right of exercise shall be cumulative so that to the extent the option is not exercised in any period to the maximum extent permissible it shall continue to be exercisable, in whole or in part, with respect to all shares for which it is vested until the earlier of the Final Exercise Date or the termination of this option under Section 3 hereof or the Plan.

3. Exercise of Option.

(1) Form of Exercise. Each election to exercise this option shall be in writing, signed by the Participant, and received by the Company at its principal office, accompanied by this agreement, and payment in full in the manner herein provided. The Participant may purchase less than the number of shares covered hereby, provided that no partial exercise of this option may be for any fractional share or for fewer than ten whole shares.

(2) Continuous Relationship with the Company Required. Except as otherwise provided in this Section 3, this option may not be exercised unless the Participant, at the time he or she exercises this option, is, and has been at all times since the Grant Date, an employee, officer or director of, or consultant or advisor to, the Company or any parent or subsidiary of the Company as defined in Section 424(e) or (f) of the Code (an “Eligible Participant”).

(3) Termination of Relationship with the Company. If the Participant ceases to be an Eligible Participant for any reason the right to exercise this option shall terminate three months after such cessation (but in no event after the Final Exercise Date), provided that this option shall be exercisable only to the extent that the Participant was entitled to exercise this option on the date of such cessation. Notwithstanding the foregoing, if the Participant, prior to the Final Exercise Date, violates the non-competition or confidentiality provisions of any employment contract, confidentiality and nondisclosure agreement or other agreement between the Participant and the Company, the right to exercise this option shall terminate immediately upon written notice to the Participant from the Company describing such violation.

(4) Exercise Period Upon Death or Disability. If the Participant dies or becomes disabled (within the meaning of Section 22(e)(3) of the Code) prior to the Final Exercise Date while he or she is an Eligible Participant this option shall be exercisable, within the period of one year following the date of death or disability of the Participant by the Participant, provided that this option shall be exercisable only to the extent that this option was exercisable by the Participant on the date of his or her death or disability, and further provided that this option shall not be exercisable after the Final Exercise Date.

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4. Withholding.

No Shares will be issued pursuant to the exercise of this option unless and until the Participant pays to the Company, or makes provision satisfactory to the Company for payment of, any federal, state or local withholding taxes required by law to be withheld in respect of this option.

5. Nontransferability of Option.

This option may not be sold, assigned, transferred, pledged or otherwise encumbered by the Participant, either voluntarily or by operation of law, except by will or the laws of descent and distribution, and, during the lifetime of the Participant, this option shall be exercisable only by the Participant.

6. Provisions of the Plan.

This option is subject to the provisions of the Plan, a copy of which is furnished to the Participant with this option.

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EX-10.3

Exhibit 10.3

BOSTON COMMUNICATIONS GROUP, INC.

Nonstatutory Stock Option Agreement

Granted Under 2005 Stock Incentive Plan

1. Grant of Option.

The following terms and conditions apply to the grant by Boston Communications Group, Inc., a Massachusetts corporation (the “Company”), on the date set forth on the cover sheet (the “Grant Date”), to Participant, of an option to purchase, in whole or in part, on the terms provided herein and in the Company’s 2005 Stock Incentive Plan (the “Plan”), that number of shares of common stock, $.01 par value per share, of the Company (“Common Stock”) (the “Shares”) at the price per Share indicated thereon. Unless earlier terminated, this option shall expire on the tenth anniversary of the Grant Date (the “Final Exercise Date”).

It is intended that the option evidenced by this agreement shall not be an incentive stock option as defined in Section 422 of the Internal Revenue Code of 1986, as amended and any regulations promulgated thereunder (the “Code”). Except as otherwise indicated by the context, the term “Participant”, as used in this option, shall be deemed to include any person who acquires the right to exercise this option validly under its terms.

2. Vesting Schedule.

This option will become exercisable (“vest”) in installments as outlined on the cover sheet. This option shall expire upon, and will not be exercisable after, the Final Exercise Date.

The right of exercise shall be cumulative so that to the extent the option is not exercised in any period to the maximum extent permissible it shall continue to be exercisable, in whole or in part, with respect to all shares for which it is vested until the earlier of the Final Exercise Date or the termination of this option under Section 3 hereof or the Plan.

3. Exercise of Option.

(1) Form of Exercise. Each election to exercise this option shall be in writing, signed by the Participant, and received by the Company at its principal office, accompanied by this agreement, and payment in full in the manner herein provided. The Participant may purchase less than the number of shares covered hereby, provided that no partial exercise of this option may be for any fractional share or for fewer than ten whole shares.

(2) Continuous Relationship with the Company Required. Except as otherwise provided in this Section 3, this option may not be exercised unless the Participant, at the time he or she exercises this option, is, and has been at all times since the Grant Date, an employee, officer or director of, or consultant or advisor to, the Company or any parent or subsidiary of the Company as defined in Section 424(e) or (f) of the Code (an “Eligible Participant”).

(3) Termination of Relationship with the Company. If the Participant ceases to be an Eligible Participant for any reason, the right to exercise this option shall terminate one year after such cessation (but in no event after the Final Exercise Date), provided that this option shall be exercisable only to the extent that the Participant was entitled to exercise this option on the date of such cessation. Notwithstanding the foregoing, if the Participant, prior to the Final Exercise Date, violates the non-competition or confidentiality provisions of any employment contract, confidentiality and nondisclosure agreement or other agreement between the Participant and the Company, the right to exercise this option shall terminate immediately upon written notice to the Participant from the Company describing such violation.

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(4) Exercise Period Upon Death or Disability. If the Participant dies or becomes disabled (within the meaning of Section 22(e)(3) of the Code) prior to the Final Exercise Date while he or she is an Eligible Participant this option shall be exercisable, within the period of one year following the date of death or disability of the Participant by the Participant, provided that this option shall be exercisable only to the extent that this option was exercisable by the Participant on the date of his or her death or disability, and further provided that this option shall not be exercisable after the Final Exercise Date.

4. Withholding.

No Shares will be issued pursuant to the exercise of this option unless and until the Participant pays to the Company, or makes provision satisfactory to the Company for payment of, any federal, state or local withholding taxes required by law to be withheld in respect of this option.

5. Nontransferability of Option.

This option may not be sold, assigned, transferred, pledged or otherwise encumbered by the Participant, either voluntarily or by operation of law, except by will or the laws of descent and distribution, and, during the lifetime of the Participant, this option shall be exercisable only by the Participant.

6. Provisions of the Plan.

This option is subject to the provisions of the Plan, a copy of which is furnished to the Participant with this option.

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EX-10.4

Exhibit 10.4

Restricted Stock Agreement

Granted Under 2005 Stock Incentive Plan

AGREEMENT made this      day of                     , [2005], between Boston Communications Group, Inc., a Massachusetts corporation (the “Company”), and                                  (the “Participant”).

For valuable consideration, receipt of which is acknowledged, the parties hereto agree as follows:

Purchase of Shares.

The Company shall issue and sell to the Participant, and the Participant shall purchase from the Company, subject to the terms and conditions set forth in this Agreement and in the Company’s 2005 Stock Incentive Plan (the “Plan”), [            ] shares (the “Shares”) of common stock, $0.01 par value, of the Company (“Common Stock”), at a purchase price of $.01 per share. The aggregate purchase price for the Shares shall be paid by the Participant by check payable to the order of the Company or such other method as may be acceptable to the Company. Upon receipt by the Company of payment for the Shares, the Company shall issue to the Participant one or more certificates in the name of the Participant for that number of Shares purchased by the Participant. The Participant agrees that the Shares shall be subject to the purchase options set forth in Section 2 of this Agreement and the restrictions on transfer set forth in Section 4 of this Agreement.

Purchase Option.

In the event that the Participant ceases to be employed by the Company for any reason or no reason, with or without cause, prior to [Date XX, 20XX], the Company shall have the right and option (the “Purchase Option”) to purchase from the Participant, for a sum of $0.01 per share (the “Option Price”), some or all of the Unvested Shares (as defined below).

“Unvested Shares” means the total number of Shares multiplied by the Applicable Percentage at the time the Purchase Option becomes exercisable by the Company. The “Applicable Percentage” shall be (i) XX% during the 12-month period ending [Date XX, 20XX], (ii) XX percent (XX %) during the twelve month period commencing [Date XX, 20XX] and ending [Date XX, 20XX], (iii) XX percent (XX%) during the twelve month period commencing [Date XX, 20XX] and ending [Date XX, 20XX], and (iv) zero on or after [Date XX, 20XX].

For purposes of this Agreement, employment with the Company shall include employment with a parent or subsidiary of the Company and service to the Company as an advisor, consultant or member of the Board of Directors of the Company.

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Exercise of Purchase Option and Closing.

The Company may exercise the Purchase Option by delivering or mailing to the Participant (or his estate), within 90 days after the termination of the employment of the Participant with the Company, a written notice of exercise of the Purchase Option. Such notice shall specify the number of Shares to be purchased. If and to the extent the Purchase Option is not so exercised by the giving of such a notice within such 90-day period, the Purchase Option shall automatically expire and terminate effective upon the expiration of such 90-day period.

Within 10 days after delivery to the Participant of the Company’s notice of the exercise of the Purchase Option pursuant to subsection (a) above, the Participant (or his estate) shall, pursuant to the provisions of the Joint Escrow Instructions referred to in Section 5 below, tender to the Company at its principal offices the certificate or certificates representing the Shares which the Company has elected to purchase in accordance with the terms of this Agreement, duly endorsed in blank or with duly endorsed stock powers attached thereto, all in form suitable for the transfer of such Shares to the Company. Promptly following its receipt of such certificate or certificates, the Company shall pay to the Participant the aggregate Option Price for such Shares (provided that any delay in making such payment shall not invalidate the Company’s exercise of the Purchase Option with respect to such Shares).

After the time at which any Shares are required to be delivered to the Company for transfer to the Company pursuant to subsection (b) above, the Company shall not pay any dividend to the Participant on account of such Shares or permit the Participant to exercise any of the privileges or rights of a stockholder with respect to such Shares, but shall, in so far as permitted by law, treat the Company as the owner of such Shares.

The Option Price may be payable, at the option of the Company, in cancellation of all or a portion of any outstanding indebtedness of the Participant to the Company or in cash (by check) or both.

The Company shall not purchase any fraction of a Share upon exercise of the Purchase Option, and any fraction of a Share resulting from a computation made pursuant to Section 2 of this Agreement shall be rounded to the nearest whole Share (with any one-half Share being rounded upward).

The Company may assign its Purchase Option to one or more persons or entities.

Restrictions on Transfer.

The Participant shall not sell, assign, transfer, pledge, hypothecate or otherwise dispose of, by operation of law or otherwise (collectively “transfer”) any Shares, or any interest therein, that are subject to the Purchase Option, except that the Participant may transfer such Shares (i) to or for the benefit of any spouse, children, parents, uncles, aunts, siblings, grandchildren and any other relatives approved by the Board of Directors (collectively, “Approved Relatives”) or to a trust established solely for the benefit of the Participant and/or Approved Relatives, provided that such Shares shall remain subject to this Agreement (including without limitation the restrictions on transfer set forth in this Section 4, and the Purchase Option) and such permitted transferee shall, as a condition to such transfer, deliver to the Company a written instrument confirming that such transferee shall be bound by all of the terms and conditions of this Agreement or (ii) as part of the sale of all or substantially all of the shares of capital stock of the Company (including pursuant to a merger or consolidation), provided that, in accordance with the Plan, the securities or other property received by the Participant in connection with such transaction shall remain subject to this Agreement.

Escrow.

The Participant agrees that Unvested Shares shall be held in escrow until such time as they shall become vested pursuant to Section 2(a) of this Agreement, and that certificates representing Shares shall not be released to the Participant until such time as the Secretary of the Company shall have authorized their release in an instruction letter to the Company’s Transfer Agent. The Participant shall simultaneously herewith, execute a stock assignment duly endorsed in blank, in the form attached to this Agreement as Exhibit A. The Participant acknowledges that it shall have the right to withdraw from escrow only those Shares as to which the Purchase Option has expired. Upon any purchase by the Company of Shares pursuant to this Agreement, the Secretary of the Company shall give the Participant a written notice specifying the purchase price for the Shares and the time for the closing of such transaction at the principal office of the Company. The Participant hereby irrevocably authorizes and directs the Secretary of the Company to close such transaction in accordance with the terms of said notice. The Secretary is further hereby authorized, at the Closing, (i) to date the stock assignment form or forms necessary for the transfer of the Shares, (ii) to fill in on such form or forms the number of Shares being transferred, and (iii) to deliver same, together with the certificate or certificates evidencing the Shares to be transferred, to the Company against the simultaneous delivery to the Participant of the purchase price for the Shares being purchased pursuant to this Agreement. Subject to the terms of this Agreement, the Participant shall exercise all rights and privileges of a stockholder of the Company while the Shares are held in escrow.

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Restrictive Legends.

All certificates representing Shares shall have affixed thereto legends in substantially the following form, in addition to any other legends that may be required under federal or state securities laws:

“The shares of stock represented by this certificate are subject to restrictions on transfer and an option to purchase set forth in a certain Restricted Stock Agreement between the corporation and the registered owner of these shares (or his predecessor in interest), and such Agreement is available for inspection without charge at the office of the Secretary of the corporation.”

Provisions of the Plan.

This Agreement is subject to the provisions of the Plan, a copy of which is furnished to the Participant with this Agreement.

As provided in the Plan, upon the occurrence of a Reorganization Event (as defined in the Plan), the repurchase and other rights of the Company hereunder shall inure to the benefit of the Company’s successor and shall apply to the cash, securities or other property which the Shares were converted into or exchanged for pursuant to such Reorganization Event in the same manner and to the same extent as they applied to the Shares under this Agreement. If, in connection with a Reorganization Event, a portion of the cash, securities and/or other property received upon the conversion or exchange of the Shares is to be placed into escrow to secure indemnification or similar obligations, the mix between the vested and unvested portion of such cash, securities and/or other property that is placed into escrow shall be the same as the mix between the vested and unvested portion of such cash, securities and/or other property that is not subject to escrow.

Withholding Taxes; Section 83(b) Election.

The Participant acknowledges and agrees that the Company has the right to deduct from payments of any kind otherwise due to the Participant any federal, state or local taxes of any kind required by law to be withheld with respect to the purchase of the Shares by the Participant or the lapse of the Purchase Option.

The Participant has reviewed with the Participant’s own tax advisors the federal, state, local and foreign tax consequences of this investment and the transactions contemplated by this Agreement. The Participant is relying solely on such advisors and not on any statements or representations of the Company or any of its agents. The Participant understands that the Participant (and not the Company) shall be responsible for the Participant’s own tax liability that may arise as a result of this investment or the transactions contemplated by this Agreement. The Participant understands that it may be beneficial in many circumstances to elect to be taxed at the time the Shares are purchased rather than when and as the Company’s Purchase Option expires by filing an election under Section 83(b) of the Code with the I.R.S. within 30 days from the date of purchase.

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

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Miscellaneous.

No Rights to Employment. The Participant acknowledges and agrees that the vesting of the Shares pursuant to Section 2 hereof is earned only by continuing service as an employee at the will of the Company (not through the act of being hired or purchasing shares hereunder). The Participant further acknowledges and agrees that the transactions contemplated hereunder and the vesting schedule set forth herein do not constitute an express or implied promise of continued engagement as an employee or consultant for the vesting period, for any period, or at all.

Severability. The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement, and each other provision of this Agreement shall be severable and enforceable to the extent permitted by law.

Waiver. Any provision for the benefit of the Company contained in this Agreement may be waived, either generally or in any particular instance, by the Board of Directors of the Company.

Binding Effect. This Agreement shall be binding upon and inure to the benefit of the Company and the Participant and their respective heirs, executors, administrators, legal representatives, successors and assigns, subject to the restrictions on transfer set forth in Section 4 of this Agreement.

Notice. All notices required or permitted hereunder shall be in writing and deemed effectively given upon personal delivery or five days after deposit in the United States Post Office, by registered or certified mail, postage prepaid, addressed to the other party hereto at the address shown beneath his or its respective signature to this Agreement, or at such other address or addresses as either party shall designate to the other in accordance with this Section 9(e).

Pronouns. Whenever the context may require, any pronouns used in this Agreement shall include the corresponding masculine, feminine or neuter forms, and the singular form of nouns and pronouns shall include the plural, and vice versa.

Entire Agreement. This Agreement and the Plan constitute the entire agreement between the parties, and supersedes all prior agreements and understandings, relating to the subject matter of this Agreement.

Amendment. This Agreement may be amended or modified only by a written instrument executed by both the Company and the Participant.

Governing Law. This Agreement shall be construed, interpreted and enforced in accordance with the internal laws of the Commonwealth of Massachusetts without regard to any applicable conflicts of laws.

Participant’s Acknowledgments. The Participant acknowledges that he or she: (i) has read this Agreement; (ii) has been represented in the preparation, negotiation, and execution of this Agreement by legal counsel of the Participant’s own choice or has voluntarily declined to seek such counsel; (iii) understands the terms and consequences of this Agreement; (iv) is fully aware of the legal and binding effect of this Agreement; and (v) understands that the law firm of Wilmer Cutler Pickering Hale and Dorr LLP, is acting as counsel to the Company in connection with the transactions contemplated by the Agreement, and is not acting as counsel for the Participant.

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

Boston Communications Group, Inc.

By:

Print Name:

Title:

Date:

Participant

(Signature)

Print Name of Participant

Date Signed:

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Exhibit A

(STOCK ASSIGNMENT SEPARATE FROM CERTIFICATE)

FOR VALUE RECEIVED, I hereby sell, assign and transfer unto Boston Communications Group, Inc., (            ) shares of Common Stock, $0.01 par value per share, of Boston Communications Group, Inc. (the “Corporation”) standing in my name on the books of the Corporation represented by Certificate(s) Number              herewith, and do hereby irrevocably constitute and appoint Equiserve, Inc. attorney to transfer the said stock on the books of the Corporation with full power of substitution in the premises.

Dated:                     

(Signature)

(Print Name)

IN THE PRESENCE OF:

(Witness Signature)

EX-10.5

Exhibit 10.5

Restricted Stock Agreement

Granted Under 2005 Stock Incentive Plan

AGREEMENT made this      day of                     , [2005], between Boston Communications Group, Inc., a Massachusetts corporation (the “Company”), and                                  (the “Participant”).

For valuable consideration, receipt of which is acknowledged, the parties hereto agree as follows:

Purchase of Shares.

The Company shall issue and sell to the Participant, and the Participant shall purchase from the Company, subject to the terms and conditions set forth in this Agreement and in the Company’s 2005 Stock Incentive Plan (the “Plan”), [            ] shares (the “Shares”) of common stock, $0.01 par value, of the Company (“Common Stock”), at a purchase price of $.01 per share. The aggregate purchase price for the Shares shall be paid by the Participant by check payable to the order of the Company or such other method as may be acceptable to the Company. Upon receipt by the Company of payment for the Shares, the Company shall issue to the Participant one or more certificates in the name of the Participant for that number of Shares purchased by the Participant. The Participant agrees that the Shares shall be subject to the purchase options set forth in Section 2 of this Agreement and the restrictions on transfer set forth in Section 4 of this Agreement.

Purchase Option.

In the event that the Participant ceases to be employed by the Company for any reason or no reason, with or without cause, prior to [Date XX, 20XX], the Company shall have the right and option (the “Purchase Option”) to purchase from the Participant, for a sum of $0.01 per share (the “Option Price”), some or all of the Unvested Shares (as defined below).

“Unvested Shares” means the total number of Shares multiplied by the Applicable Percentage at the time the Purchase Option becomes exercisable by the Company. The “Applicable Percentage” shall be (i) XX% during the 12-month period ending [Date XX, 20XX], (ii) XX percent (XX%) during the twelve month period commencing [Date XX, 20XX] and ending [Date XX, 20XX], (iii) XX percent (XX%) during the twelve month period commencing [Date XX, 20XX] and ending [Date XX, 20XX], and (iv) zero on or after [Date XX, 20XX].

For purposes of this Agreement, employment with the Company shall include employment with a parent or subsidiary of the Company and service to the Company as an advisor, consultant or member of the Board of Directors of the Company.

The vesting schedule set forth above is subject to the provisions of [INSERT LEGAL CITE - CHANGE IN CONTROL AGREEMENT].

Exercise of Purchase Option and Closing.

The Company may exercise the Purchase Option by delivering or mailing to the Participant (or his estate), within 90 days after the termination of the employment of the Participant with the Company, a written notice of exercise of the Purchase Option. Such notice shall specify the number of Shares to be purchased. If and to the extent the Purchase Option is not so exercised by the giving of such a notice within such 90-day period, the Purchase Option shall automatically expire and terminate effective upon the expiration of such 90-day period.

Within 10 days after delivery to the Participant of the Company’s notice of the exercise of the Purchase Option pursuant to subsection (a) above, the Participant (or his estate) shall, pursuant to the provisions of the Joint Escrow Instructions referred to in Section 5 below, tender to the Company at its principal offices the certificate or certificates representing the Shares which the Company has elected to purchase in accordance with the terms of this Agreement, duly endorsed in blank or with duly endorsed stock powers attached thereto, all in form suitable for the transfer of such Shares to the Company. Promptly following its receipt of such certificate or certificates, the Company shall pay to the Participant the aggregate Option Price for such Shares (provided that any delay in making such payment shall not invalidate the Company’s exercise of the Purchase Option with respect to such Shares).

After the time at which any Shares are required to be delivered to the Company for transfer to the Company pursuant to subsection (b) above, the Company shall not pay any dividend to the Participant on account of such Shares or permit the Participant to exercise any of the privileges or rights of a stockholder with respect to such Shares, but shall, in so far as permitted by law, treat the Company as the owner of such Shares.

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The Option Price may be payable, at the option of the Company, in cancellation of all or a portion of any outstanding indebtedness of the Participant to the Company or in cash (by check) or both.

The Company shall not purchase any fraction of a Share upon exercise of the Purchase Option, and any fraction of a Share resulting from a computation made pursuant to Section 2 of this Agreement shall be rounded to the nearest whole Share (with any one-half Share being rounded upward).

The Company may assign its Purchase Option to one or more persons or entities.

Restrictions on Transfer.

The Participant shall not sell, assign, transfer, pledge, hypothecate or otherwise dispose of, by operation of law or otherwise (collectively “transfer”) any Shares, or any interest therein, that are subject to the Purchase Option, except that the Participant may transfer such Shares (i) to or for the benefit of any spouse, children, parents, uncles, aunts, siblings, grandchildren and any other relatives approved by the Board of Directors (collectively, “Approved Relatives”) or to a trust established solely for the benefit of the Participant and/or Approved Relatives, provided that such Shares shall remain subject to this Agreement (including without limitation the restrictions on transfer set forth in this Section 4, and the Purchase Option ) and such permitted transferee shall, as a condition to such transfer, deliver to the Company a written instrument confirming that such transferee shall be bound by all of the terms and conditions of this Agreement or (ii) as part of the sale of all or substantially all of the shares of capital stock of the Company (including pursuant to a merger or consolidation), provided that, in accordance with the Plan, the securities or other property received by the Participant in connection with such transaction shall remain subject to this Agreement.

Escrow.

The Participant agrees that Unvested Shares shall be held in escrow until such time as they shall become vested pursuant to Section 2(a) of this Agreement, and that certificates representing Shares shall not be released to the Participant until such time as the Secretary of the Company shall have authorized their release in an instruction letter to the Company’s Transfer Agent. The Participant shall simultaneously herewith, execute a stock assignment duly endorsed in blank, in the form attached to this Agreement as Exhibit A. The Participant acknowledges that it shall have the right to withdraw from escrow only those Shares as to which the Purchase Option has expired. Upon any purchase by the Company of Shares pursuant to this Agreement, the Secretary of the Company shall give the Participant a written notice specifying the purchase price for the Shares and the time for the closing of such transaction at the principal office of the Company. The Participant hereby irrevocably authorizes and directs the Secretary of the Company to close such transaction in accordance with the terms of said notice. The Secretary is further hereby authorized, at the Closing, (i) to date the stock assignment form or forms necessary for the transfer of the Shares, (ii) to fill in on such form or forms the number of Shares being transferred, and (iii) to deliver same, together with the certificate or certificates evidencing the Shares to be transferred, to the Company against the simultaneous delivery to the Participant of the purchase price for the Shares being purchased pursuant to this Agreement. Subject to the terms of this Agreement, the Participant shall exercise all rights and privileges of a stockholder of the Company while the Shares are held in escrow.

Restrictive Legends.

All certificates representing Shares shall have affixed thereto legends in substantially the following form, in addition to any other legends that may be required under federal or state securities laws:

“The shares of stock represented by this certificate are subject to restrictions on transfer and an option to purchase set forth in a certain Restricted Stock Agreement between the corporation and the registered owner of these shares (or his predecessor in interest), and such Agreement is available for inspection without charge at the office of the Secretary of the corporation.”

Provisions of the Plan.

This Agreement is subject to the provisions of the Plan, a copy of which is furnished to the Participant with this Agreement.

As provided in the Plan, upon the occurrence of a Reorganization Event (as defined in the Plan), the repurchase and other rights of the Company hereunder shall inure to the benefit of the Company’s successor and shall apply to the

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cash, securities or other property which the Shares were converted into or exchanged for pursuant to such Reorganization Event in the same manner and to the same extent as they applied to the Shares under this Agreement. If, in connection with a Reorganization Event, a portion of the cash, securities and/or other property received upon the conversion or exchange of the Shares is to be placed into escrow to secure indemnification or similar obligations, the mix between the vested and unvested portion of such cash, securities and/or other property that is placed into escrow shall be the same as the mix between the vested and unvested portion of such cash, securities and/or other property that is not subject to escrow.

Withholding Taxes; Section 83(b) Election.

The Participant acknowledges and agrees that the Company has the right to deduct from payments of any kind otherwise due to the Participant any federal, state or local taxes of any kind required by law to be withheld with respect to the purchase of the Shares by the Participant or the lapse of the Purchase Option.

The Participant has reviewed with the Participant’s own tax advisors the federal, state, local and foreign tax consequences of this investment and the transactions contemplated by this Agreement. The Participant is relying solely on such advisors and not on any statements or representations of the Company or any of its agents. The Participant understands that the Participant (and not the Company) shall be responsible for the Participant’s own tax liability that may arise as a result of this investment or the transactions contemplated by this Agreement. The Participant understands that it may be beneficial in many circumstances to elect to be taxed at the time the Shares are purchased rather than when and as the Company’s Purchase Option expires by filing an election under Section 83(b) of the Code with the I.R.S. within 30 days from the date of purchase.

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

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Miscellaneous.

No Rights to Employment. The Participant acknowledges and agrees that the vesting of the Shares pursuant to Section 2 hereof is earned only by continuing service as an employee at the will of the Company (not through the act of being hired or purchasing shares hereunder). The Participant further acknowledges and agrees that the transactions contemplated hereunder and the vesting schedule set forth herein do not constitute an express or implied promise of continued engagement as an employee or consultant for the vesting period, for any period, or at all.

Severability. The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement, and each other provision of this Agreement shall be severable and enforceable to the extent permitted by law.

Waiver. Any provision for the benefit of the Company contained in this Agreement may be waived, either generally or in any particular instance, by the Board of Directors of the Company.

Binding Effect. This Agreement shall be binding upon and inure to the benefit of the Company and the Participant and their respective heirs, executors, administrators, legal representatives, successors and assigns, subject to the restrictions on transfer set forth in Section 4 of this Agreement.

Notice. All notices required or permitted hereunder shall be in writing and deemed effectively given upon personal delivery or five days after deposit in the United States Post Office, by registered or certified mail, postage prepaid, addressed to the other party hereto at the address shown beneath his or its respective signature to this Agreement, or at such other address or addresses as either party shall designate to the other in accordance with this Section 9(e).

Pronouns. Whenever the context may require, any pronouns used in this Agreement shall include the corresponding masculine, feminine or neuter forms, and the singular form of nouns and pronouns shall include the plural, and vice versa.

Entire Agreement. This Agreement and the Plan constitute the entire agreement between the parties, and supersedes all prior agreements and understandings, relating to the subject matter of this Agreement.

Amendment. This Agreement may be amended or modified only by a written instrument executed by both the Company and the Participant.

Governing Law. This Agreement shall be construed, interpreted and enforced in accordance with the internal laws of the Commonwealth of Massachusetts without regard to any applicable conflicts of laws.

Participant’s Acknowledgments. The Participant acknowledges that he or she: (i) has read this Agreement; (ii) has been represented in the preparation, negotiation, and execution of this Agreement by legal counsel of the Participant’s own choice or has voluntarily declined to seek such counsel; (iii) understands the terms and consequences of this Agreement; (iv) is fully aware of the legal and binding effect of this Agreement; and (v) understands that the law firm of Wilmer Cutler Pickering Hale and Dorr LLP, is acting as counsel to the Company in connection with the transactions contemplated by the Agreement, and is not acting as counsel for the Participant.

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

Boston Communications Group, Inc.

By:

Print Name:

Title:

Date:

Participant

(Signature)

Print Name of Participant

Date Signed:

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Exhibit A

(STOCK ASSIGNMENT SEPARATE FROM CERTIFICATE)

FOR VALUE RECEIVED, I hereby sell, assign and transfer unto Boston Communications Group, Inc., (            ) shares of Common Stock, $0.01 par value per share, of Boston Communications Group, Inc. (the “Corporation”) standing in my name on the books of the Corporation represented by Certificate(s) Number                  herewith, and do hereby irrevocably constitute and appoint Equiserve, Inc. attorney to transfer the said stock on the books of the Corporation with full power of substitution in the premises.

Dated:                     

(Signature)

(Print Name)

IN THE PRESENCE OF:

(Witness Signature)

EX-10.6

Exhibit 10.6

Incentive Stock Option Agreement

Granted Under 2005 Stock Incentive Plan

1. Grant of Option

The following terms and conditions apply to the grant by Boston Communications Group, Inc., a Massachusetts corporation (the “Company”) on the date set forth on the cover sheet (the “Grant Date”) to an employee of the Company (the “Participant”), of an option to purchase, in whole or in part, on the terms provided herein and in the Company’s 2005 Stock Incentive Plan (the “Plan”), that number of shares of common stock, $.01 par value per share, of the Company (“Common Stock”) (the “Shares”) set forth on the cover sheet at the price per Share indicated thereon. Unless earlier terminated, this option shall expire on the tenth anniversary of the Grant Date (the “Final Exercise Date”).

It is intended that the option evidenced by this agreement shall be an incentive stock option as defined in Section 422 of the Internal Revenue Code of 1986, as amended and any regulations promulgated thereunder (the “Code”). Except as otherwise indicated by the context, the term “Participant”, as used in this option, shall be deemed to include any person who acquires the right to exercise this option validly under its terms.

2. Vesting Schedule:

This option will become exercisable (“vest”) in installments as outlined on the cover sheet. This option shall expire upon, and will not be exercisable after, the Final Exercise Date.

The right of exercise shall be cumulative so that to the extent the option is not exercised in any period to the maximum extent permissible it shall continue to be exercisable, in whole or in part, with respect to all shares for which it is vested until the earlier of the Final Exercise Date or the termination of this option under Section 3 hereof or the Plan.

3. Exercise of Option:

(1) Form of Exercise. Each election to exercise this option shall be in writing, signed by the Participant, and received by the Company at its principal office, accompanied by this agreement, and payment in full in the manner herein provided. The Participant may purchase less than the number of shares covered hereby, provided that no partial exercise of this option may be for any fractional share or for fewer than ten whole shares.

Payment for Shares shall be made (i) in cash or by check, payable to the order of the Company; (ii) delivery of an irrevocable and unconditional undertaking by a creditworthy broker to deliver promptly to the Company sufficient funds to pay the exercise price and any required tax withholding; (iii) delivery by the Participant to the Company of a copy of irrevocable and unconditional instructions to a creditworthy broker to deliver promptly to the Company cash or a check sufficient to pay the exercise price and any required tax withholding, (iv) delivery of shares of Common Stock owned by the Participant valued at their fair market value as determined by (or in a manner approved by) the Board (“Fair Market Value”), provided (i) such method of payment is then permitted under applicable law, (ii) such Common Stock if acquired directly from the Company, was owned by the Participant at least six months prior to such delivery and (iii) such Common Stock is not subject to any repurchase, forfeiture, unfulfilled vesting or other similar requirements; (v) any other means which the Board of Directors determines are consistent with the purpose of the Plan and with applicable laws and regulations; or (vi) any combination of the above permitted forms of payment.

(2) Continuous Relationship with the Company Required. Except as otherwise provided in this Section 3, this option may not be exercised unless the Participant, at the time he or she exercises this option, is, and has been at all times since the Grant Date, an employee, officer or director of, or consultant or advisor to, the Company or any parent or subsidiary of the Company as defined in Section 424(e) or (f) of the Code (an “Eligible Participant”).

(3) Termination of Relationship with the Company. If the Participant ceases to be an Eligible Participant for any reason, the right to exercise this option shall terminate three months after such cessation (but in no event after the Final Exercise Date), provided that this option shall be exercisable only to the extent that the Participant was entitled to exercise this option on the date of such cessation. Notwithstanding the foregoing, if the Participant, prior to the Final Exercise Date, violates the non-competition or confidentiality provisions of any employment contract, confidentiality and nondisclosure agreement or other agreement between the Participant and the Company, the right to exercise this option shall terminate immediately upon written notice to the Participant from the Company describing such violation.

(4) Exercise Period Upon Death or Disability. If the Participant dies or becomes disabled (within the meaning of Section 22(e)(3) of the Code) prior to the Final Exercise Date while he or she is an Eligible this option shall be exercisable, within the period of one year following the date of death or disability of the Participant by the Participant, provided that this option shall be exercisable only to the extent that this option was exercisable by the Participant on the date of his or her death or disability, and further provided that this option shall not be exercisable after the Final Exercise Date.

4. Withholding.

No Shares will be issued pursuant to the exercise of this option unless and until the Participant pays to the Company, or makes provision satisfactory to the Company for payment of, any federal, state or local withholding taxes required by law to be withheld in respect of this option.

5. Nontransferability of Option.

This option may not be sold, assigned, transferred, pledged or otherwise encumbered by the Participant, either voluntarily or by operation of law, except by will or the laws of descent and distribution, and, during the lifetime of the Participant, this option shall be exercisable only by the Participant.

6. Disqualifying Disposition.

If the Participant disposes of Shares acquired upon exercise of this option within two years from the Grant Date or one year after such Shares were acquired pursuant to exercise of this option, the Participant shall notify the Company in writing of such disposition.

7. Provisions of the Plan.

This option is subject to the provisions of the Plan, a copy of which is furnished to the Participant with this option.

EX-10.7

Exhibit 10.7

ASSET PURCHASE AGREEMENT

dated May 20, 2005

between

Cellular Express, Inc. and bcgi Technologies Ltd., as Buyers

and

PureSight, Inc. and PureSight Ltd., as Sellers

TABLE OF CONTENTS

		Page
ARTICLE I
THE ASSET PURCHASE		4
1.1	Purchase and Sale of Assets.	4
1.2	Assumption of Liabilities.	4
1.3	Purchase Price	4
1.4	Escrow	4
1.5	The Closing.	5
1.6	Allocation	5
1.7	Further Assurances	5
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE SELLERS		5
2.1	Organization, Qualification and Corporate Power	6
2.2	Capitalization.	6
2.3	Authorization of Transaction	6
2.4	Noncontravention	7
2.5	Subsidiaries	7
2.6	Financial Statements	7
2.7	Absence of Certain Changes	7
2.8	Undisclosed Liabilities	7
2.9	Tax Matters.	7
2.10	Ownership and Condition of Assets.	9
2.11	Owned Real Property	9
2.12	Real Property Leases	9
2.13	Intellectual Property.	10
2.14	Contracts.	11
2.15	Accounts Receivable	12
2.16	[Intentionally Omitted.]	12
2.17	Insurance	12
2.18	Litigation	12
2.19	Warranties	12
2.20	Employees.	12
2.21	Employee Benefits.	13
2.22	Environmental Matters.	13
2.23	Legal Compliance	14
2.24	Customers and Suppliers	14
2.25	Permits	14
2.26	Certain Business Relationships With Affiliates	14
2.27	Brokers’ Fees	14
2.28	Books and Records	14
2.29	Disclosure	14
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE BUYERS		14
3.1	Organization and Corporate Power	15
3.2	Authorization of the Transaction	15
3.3	Noncontravention	15
3.4	Disclosure	15
3.5	Independent Investigation	15

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ARTICLE IV
PRE-CLOSING COVENANTS		15
4.1	Closing Efforts	15
4.2	Governmental and Third-Party Notices and Consents.	15
4.3	Stockholder Approval	16
4.4	Operation of Business	16
4.5	Access to Information	17
4.6	Termination of PureSight-Israel Employees	17
4.7	Exclusivity.	18
ARTICLE V
CONDITIONS TO CLOSING		18
5.1	Conditions to Obligations of each Party	18
5.2	Conditions to Obligations of the Buyer	18
5.3	Conditions to Obligations of the Sellers	20
ARTICLE VI
POST-CLOSING COVENANTS		20
6.1	Proprietary Information	20
6.2	Solicitation and Hiring.	20
6.3	Non-Competition.	21
6.4	Tax Matters	21
6.5	Sharing of Data.	21
6.6	Use of Name	21
6.7	Cooperation in Litigation	22
6.8	Collection of Accounts Receivable	22
6.9	Maintenance of Corporate Existence; Restriction on Dividends and Distributions	22
6.10	Transfer of Approved Enterprise Status	22
6.11	VAT	22
ARTICLE VII
INDEMNIFICATION		22
7.1	Indemnification by the Sellers	22
7.2	Indemnification by the Buyers	23
7.3	Indemnification Claims.	23
7.4	Survival of Representations and Warranties	25
7.5	Limitations.	25
7.6	Treatment of Indemnity Payments	26
7.7	Certain Offsets	26
7.8	Exclusive Remedy	26
ARTICLE VIII
TERMINATION		26
8.1	Termination of Agreement	26
8.2	Effect of Termination	27

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ARTICLE IX
DEFINITIONS 27
ARTICLE X
MISCELLANEOUS		35
10.1	Press Releases and Announcements	35
10.2	No Third Party Beneficiaries	35
10.3	Entire Agreement	35
10.4	Succession and Assignment	35
10.5	Counterparts and Facsimile Signature	35
10.6	Headings	35
10.7	Notices	35
10.8	Governing Law	36
10.9	Amendments and Waivers	36
10.10	Severability	36
10.11	Expenses	36
10.12	Submission to Jurisdiction	36
10.13	Specific Performance	37
10.14	Construction.	37

Exhibits

Exhibit A –     Escrow Agreement

Exhibit B –     [Omitted]

Exhibit C-1 – PureSight-US Trademark Assignment

Exhibit C-2 – PureSight-Israel Trademark Assignment

Exhibit D-1 –         U.S. Instrument of Assumption

Exhibit D-2 –         Israeli Instrument of Assumption

Exhibit E –    Form employment agreement

Exhibit F-1 – Employment Agreement with Netta Mendelson

Exhibit F-2 – Employment Agreement with Royi Cohen Exhibit F-3 – Employment Agreement with Ouri Azoulay

Exhibit F-4 – Employee Waiver

Exhibit G-1 –         Opinion of Sellers’ U.S. Counsel

Exhibit G-2 –         Opinion of Sellers’ Israeli Counsel

Exhibit H –    Consulting Agreement with Cleve Adams

Schedules

Schedule 1.1(a) – Trademarks of PureSight-US

Schedule 1.1(b) – Excluded Assets

Schedule 1.3 – Payment and Allocation of Purchase Price

Schedule 1.6 – Allocation of Purchase Price

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ASSET PURCHASE AGREEMENT

This Asset Purchase Agreement is entered into as of May 20, 2005 by and between Cellular Express, Inc., a Massachusetts corporation (“Cellular Express”), and bcgi Technologies, Ltd., a company organized under the laws of Israel (“BCGI-Israel”), on the one hand, and PureSight, Inc., a Delaware corporation (“PureSight-US”), and PureSight Ltd., a company organized under the laws of Israel (“PureSight-Israel”), on the other hand. Cellular Express and BCGI-Israel are each referred to herein as a “Buyer” and collectively as the “Buyers”. PureSight-US and PureSight-Israel are each referred to herein as a “Seller” and collectively as the “Sellers”.

This Agreement contemplates a transaction in which the Buyers will purchase substantially all of the assets and assume certain of the liabilities of the Sellers.

Capitalized terms used in this Agreement shall have the meanings ascribed to them in Article IX.

In consideration of the representations, warranties and covenants herein contained, the Parties agree as follows.

THE ASSET PURCHASE

Purchase and Sale of Assets.

Upon and subject to the terms and conditions of this Agreement, the Buyers shall purchase from the Sellers, and the Sellers shall sell, transfer, convey, assign and deliver to the Buyers, at the Closing, for the consideration specified below in this Article I, all right, title and interest in, to and under the Acquired Assets, such that (i) PureSight-US shall sell, transfer, convey, assign and deliver to the Buyer only the trademarks listed in Schedule 1.1(a) and those agreements to which PureSight-US is a party (other than those listed on Schedule 1.1(b) and (ii) PureSight-Israel shall sell, transfer, convey, assign and deliver to the Buyer all of the other Acquired Assets.

Notwithstanding the provisions of Section 1.1(a), the Acquired Assets shall not include the Excluded Assets.

Assumption of Liabilities.

Upon and subject to the terms and conditions of this Agreement, the Buyers shall assume and become responsible for, from and after the Closing, the Assumed Liabilities.

Notwithstanding the terms of Section 1.2(a) or any other provision of this Agreement to the contrary, the Buyers shall not assume or become responsible for, and the Sellers shall remain liable for, the Retained Liabilities.

Purchase Price. The Purchase Price to be paid by the Buyers for the Acquired Assets at the Closing shall be a total of US $5,800,000 in cash. In addition, at the Closing, BCGI-Israel shall pay to PureSight-Israel the VAT. Each of the Buyers shall pay a portion of the Purchase Price to the respective Seller in accordance with the schedule attached hereto as Schedule 1.3. Notwithstanding the foregoing, the amount of the Purchase Price to be delivered to the Sellers at the Closing shall be reduced by the amount, if any, that the Buyers have advanced to Sellers prior to the Closing.

Escrow. At the Closing, US $550,000 (the “Escrow Amount”) of the Purchase Price payable by the Buyers at Closing shall be paid by the Buyers to the Escrow Agent for the purpose of securing the indemnification obligations of the Sellers set forth in this Agreement. The Escrow Fund shall be held by the Escrow Agent under the Escrow Agreement pursuant to the terms thereof. The Escrow Fund shall be held as a trust fund and shall not be subject to any lien, attachment, trustee process or any other judicial process of any creditor of any party, and shall be held and disbursed solely for the purposes and in accordance with the terms of the Escrow Agreement.

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The Closing.

The Closing shall take place at the offices of Wilmer Cutler Pickering Hale and Dorr LLP in Waltham, Massachusetts commencing at 9:00 a.m. local time on the Closing Date. All transactions at the Closing shall be deemed to take place simultaneously, and no transaction shall be deemed to have been completed and no documents or certificates shall be deemed to have been delivered until all other transactions are completed and all other documents and certificates are delivered.

At the Closing:

the Sellers shall deliver to the Buyers the various certificates, instruments and documents referred to in Section 5.1;

the Buyers shall deliver to the Sellers the various certificates, instruments and documents referred to in Section 5.2;

Each Seller shall execute and deliver to the Buyers one or more trademark assignments in substantially the form attached hereto as Exhibit C-1 or Exhibit C-2, as applicable, and such other instruments of conveyance (such as real estate deeds, assigned certificates or documents of title, assigned negotiable instruments and stock transfer powers) as the Buyers may reasonably request in order to effect the sale, transfer, conveyance and assignment to the Buyers of valid ownership of the Acquired Assets;

each Buyer shall execute and deliver to the Sellers an instrument of assumption in substantially the form attached hereto as Exhibit D-1 or Exhibit D-2, as applicable, and such other instruments as the Sellers may reasonably request in order to effect the assumption by the Buyers of the Assumed Liabilities;

the Buyers shall pay to the Sellers, payable by wire transfer or other delivery of immediately available funds to an account designated by the Sellers, the Purchase Price set forth in Section 1.3, less the amount to be deposited in escrow pursuant to Section 1.4, in accordance with the allocation set forth on Schedule 1.3 attached hereto;

the Buyers, the Sellers and the Escrow Agent shall execute and deliver the Escrow Agreement and the Buyers shall deposit the Escrow Amount, by wire or other delivery of immediately available funds, with the Escrow Agent in accordance with Section 1.4;

the Sellers shall deliver to the Buyers, or otherwise put the Buyers in possession and control of, all of the Acquired Assets of a tangible nature; and

the Buyers and the Sellers shall execute and deliver to each other a cross-receipt evidencing the transactions referred to above.

Allocation. The Buyers and the Sellers agree to allocate the Purchase Price (and all other capitalizable costs) among the Acquired Assets and the non-solicitation and non-competition covenants set forth in Sections 6.2 and 6.3 for all purposes (including financial accounting and tax purposes) in accordance with the allocation schedule attached hereto as Schedule 1.6.

Further Assurances. At any time and from time to time after the Closing, at the request of the Buyers and without further consideration, the Sellers shall execute and deliver such other instruments of sale, transfer, conveyance and assignment and take such actions as the Buyers may reasonably request to more effectively transfer, convey and assign to the Buyers, and to confirm the Buyers’ rights to, title in and ownership of, the Acquired Assets and to place the Buyers in actual possession and operating control thereof.

REPRESENTATIONS AND WARRANTIES OF THE SELLERS

Each Seller, jointly and severally, represents and warrants to the Buyers that, except as set forth in the Disclosure Schedule, the statements contained in this Article II are true and correct as of the date of this Agreement and will be true and correct as of the Closing as though made as of the Closing, except to the extent such representations and warranties are specifically made as of a particular date (in which case such representations and warranties will be

5

true and correct as of such date). The Disclosure Schedule shall be arranged in sections and subsections corresponding to the numbered and lettered sections and subsections contained in this Article II. The disclosures in any section or subsection of the Disclosure Schedule shall qualify other sections and subsections in this Article II only to the extent it is clear from a reading of the disclosure that such disclosure is applicable to such other sections and subsections. For purposes of this Article II, the phrases “to the knowledge of the Sellers” or “the Sellers are not aware of” or any phrase of similar import shall be deemed to refer to the actual knowledge of Netta Mendelson, Royi Cohen, Ouri Azoulay and Cleve Adams, as well as any other knowledge which such persons would have possessed had they made reasonable inquiry of appropriate employees and agents of the Sellers with respect to the matter in question.

Organization, Qualification and Corporate Power. PureSight-US is a corporation duly organized, validly existing and in corporate and tax good standing under the laws of the State of Delaware, and PureSight-Israel is a company duly organized, validly existing and in corporate and tax good standing under the laws of Israel. Each Seller is duly qualified to conduct business and is in corporate and tax good standing under the laws of each jurisdiction listed next to such Seller’s name in Section 2.1 of the Disclosure Schedule, which jurisdictions constitute the only jurisdictions in which the nature of such Seller’s businesses or the ownership or leasing of its properties requires such qualification. Each Seller has all requisite corporate power and authority to carry on the businesses in which it is engaged and to own and use the properties owned and used by it. PureSight-US has furnished to the Buyers complete and accurate copies of its Certificate of Incorporation and by-laws and PureSight-Israel has furnished to the Buyers complete and accurate copies of its most recently updated Articles of Association. Neither Seller is in default under or in violation of any provision of its Certificate of Incorporation, by-laws or its most recently updated Articles of Association, as the case may be.

Capitalization.

The authorized capital stock of PureSight-US consists of (A) 18,250,000 shares of common stock, $.001 par value per share, of which, as of the date of this Agreement, 40 shares were issued and outstanding and no shares were held in the treasury of the Seller, and (B) 13,750,000 shares of Preferred Stock, $.001 par value per share, of which (i) 1,561,224 shares have been designated as Series A Convertible Preferred Stock, all of which, as of the date of this Agreement, were issued and outstanding, (ii) 1,758,991 shares have been designated as Series A1 Convertible Preferred Stock, all of which, as of the date of this Agreement, were issued and outstanding, (iii) 28,560 shares have been designated as Series A2 Convertible Preferred Stock, all of which, as of the date of this Agreement, were issued and outstanding, (iv) 93,840 shares have been designated as Series A3 Convertible Preferred Stock, all of which, as of the date of this Agreement, were issued and outstanding and (v) one share has been designated as Series A4 Convertible Preferred Stock, of which, as of the date of this Agreement, one share was issued and outstanding. Section 2.2 of the Disclosure Schedule sets forth a complete and accurate list, as of the date of this Agreement, of (i) all stockholders of PureSight-US, indicating the number and class or series of shares of capital stock of such Seller held by each stockholder and (for shares other than common stock) the number of shares of common stock (if any) into which such shares are convertible, (ii) all outstanding options, warrants or other instruments giving any party the right to acquire any of capital stock of such Seller, indicating (A) the holder thereof and (B) the number and class or series of capital stock of such Seller subject thereto and (for shares other than common stock) the number of shares of common stock (if any) into which such shares are convertible. There are no outstanding agreements or commitments to which PureSight-US is a party or which are binding upon such Seller providing for the redemption of any of its capital stock.

The authorized capital stock of PureSight-Israel consists of 3,600,000 ordinary shares, NIS 0.01 par value per share, of which, as of the date of this Agreement, 153,639 shares were issued and outstanding. All of the issued and outstanding shares of capital stock of PureSight-Israel are held of record and beneficially owned by PureSight-US. PureSight-Israel has never granted any options or similar rights to purchase shares of its capital stock to any person.

Authorization of Transaction. Each Seller has all requisite power and authority to execute and deliver this Agreement and the Ancillary Agreements and, subject to the Requisite Stockholder Approval in the case of PureSight-US to perform its obligations hereunder and thereunder. The execution and delivery by each Seller of this Agreement and the performance by each Seller of this Agreement and the Ancillary Agreements and the consummation by each Seller of the transactions contemplated hereby and thereby have been duly and validly authorized by all necessary corporate and, subject to the Requisite Stockholder Approval in the case of PureSight-US, stockholder action on the part of each Seller. Without limiting the generality of the foregoing, the Board of

6

Directors of PureSight-US, at a meeting duly called and held, by the unanimous vote of all directors determined that the sale of assets contemplated by this Agreement is fair to and in the best interests of the Seller and its stockholders, approved this Agreement in accordance with the Delaware General Corporation Law, directed that such asset sale be submitted to the stockholders of such Seller for their approval, and resolved to recommend that the stockholders of such Seller vote in favor of the approval of such asset sale. This Agreement has been duly and validly executed and delivered by each Seller and constitutes, and each of the Ancillary Agreements, upon its execution and delivery by each Seller, will constitute, a valid and binding obligation of each Seller, enforceable against each Seller in accordance with its respective terms.

Noncontravention. Neither the execution and delivery by either Seller of this Agreement or the Ancillary Agreements, nor the consummation by either Seller of the transactions contemplated hereby or thereby, will (a) conflict with or violate any provision of the Certificate of Incorporation or by-laws of PureSight-US or the Articles of Association of PureSight-Israel, (b) except as set forth in Section 2.4(b) of the Disclosure Schedule, require on the part of either Seller any notice to or filing with, or any permit, authorization, consent or approval of, any Governmental Entity, (c) except as set forth in Section 2.4(c) of the Disclosure Schedule, conflict with, result in a breach of, constitute (with or without due notice or lapse of time or both) a default under, result in the acceleration of obligations under, create in any party the right to terminate, modify or cancel, or require any notice, consent or waiver under, any contract or instrument to which either Seller is a party or by which either Seller is bound or to which any of their respective assets is subject, (d) result in the imposition of any Security Interest upon any assets of either Seller or (e) violate any order, writ, injunction, decree, statute, rule or regulation applicable to either Seller or any of their respective properties or assets.

Subsidiaries. Other than PureSight-Israel, which is a wholly-owned subsidiary of PureSight-US, neither Seller owns, controls directly or indirectly or has any direct or indirect equity participation or similar interest in any corporation, partnership, limited liability company, joint venture or other business association or entity.

Financial Statements. The Sellers have provided to the Buyer the Financial Statements. The Financial Statements have been prepared in accordance with GAAP applied on a consistent basis throughout the periods covered thereby, fairly present the consolidated financial condition, results of operations and cash flows of the Sellers as of the respective dates thereof and for the periods referred to therein and are consistent with the books and records of the Sellers; provided, however, that the Financial Statements referred to in clause (b) of the definition of such term are subject to normal recurring year-end adjustments (which will not be material) and do not include footnotes.

Absence of Certain Changes. Since the Most Recent Balance Sheet Date, (a) there has occurred no event or development which, individually or in the aggregate, has had, or could reasonably be expected to have in the future, a Seller Material Adverse Effect, and (b) neither Seller has taken any of the actions set forth in paragraphs (a) through (n) of Section 4.4.

Undisclosed Liabilities. Neither Seller has any liability (whether known or unknown, whether absolute or contingent, whether liquidated or unliquidated and whether due or to become due), except for (a) liabilities shown on the Most Recent Balance Sheet, (b) liabilities which have arisen since the Most Recent Balance Sheet Date in the Ordinary Course of Business and which are reflected on the Final Closing Balance Sheet and (c) contractual and other liabilities incurred in the Ordinary Course of Business which are not required by GAAP to be reflected on a balance sheet.

Tax Matters.

Each Seller has filed on a timely basis all Tax Returns that it was required to file, and all such Tax Returns were complete and accurate in all material respects. Neither Seller is or has ever been a member of a group of corporations with which it has filed (or been required to file) consolidated, combined or unitary Tax Returns, other than a group of which only the Sellers are or were members. Each Seller has paid on a timely basis all Taxes that were due and payable. The unpaid Taxes of the Sellers for tax periods through the Most Recent Balance Sheet Date do not exceed the accruals and reserves for Taxes (excluding accruals and reserves for deferred Taxes established to reflect timing differences between book and Tax income) set forth on the Most Recent Balance Sheet. Neither Seller has any actual or potential liability for any Tax obligation of any taxpayer (including any affiliated group of corporations or other entities that included the Sellers during a prior period) other than the Sellers. All Taxes that either Seller is or was required by law to withhold or collect have been duly withheld or collected and, to the extent required, have been paid to the proper Governmental Entity.

7

The Sellers have delivered to the Buyer complete and accurate copies of all federal income Tax Returns, examination reports and statements of deficiencies assessed against or agreed to by PureSight-US since inception and PureSight-Israel since 2002. The federal income Tax Returns of PureSight-US have been audited by the Internal Revenue Service or are closed by the applicable statute of limitations for all taxable years through the taxable year specified in Section 2.9(b) of the Disclosure Schedule. The Sellers have delivered or made available to the Buyer complete and accurate copies of all other Tax Returns of either Seller together with all related examination reports and statements of deficiency for all periods from and after December 31, 2001. No examination or audit of any Tax Return of either Seller by any Governmental Entity is currently in progress, nor are the Sellers aware of any such examination or audit being threatened or contemplated. Neither Seller has been informed by any jurisdiction that the jurisdiction believes that either Seller was required to file any Tax Return that was not filed. Neither Seller has waived any statute of limitations with respect to Taxes or agreed to an extension of time with respect to a Tax assessment or deficiency.

8

Ownership and Condition of Assets.

The Sellers are the true and lawful owners, and have good title to, all of the Acquired Assets, free and clear of all Security Interests, except as set forth in Section 2.10(a)(i) of the Disclosure Schedule. Upon execution and delivery by the Sellers to the Buyers of the instruments of conveyance referred to in Section 1.5(b)(iii), the Buyers will become the true and lawful owners of, and will receive good title to, the Acquired Assets, free and clear of all Security Interests other than those set forth in Section 2.10(a)(ii) of the Disclosure Schedule.

The Acquired Assets are sufficient for the conduct of the Sellers’ businesses as presently conducted and constitute all assets (other than the Excluded Assets) used by the Sellers in such businesses. Each tangible Acquired Asset is free from material defects, has been maintained in accordance with normal industry practice, is in good operating condition and repair (subject to normal wear and tear) and is reasonably suitable for the purposes for which it presently is used. PureSight-US does not own, license or otherwise use any assets (tangible or intangible), other than the trademarks listed on Schedule 1.1(b), the shares of capital stock of PureSight-Israel, and is not party to any agreement other than the PureSight Loan Agreement.

Section 2.10(c) of the Disclosure Schedule lists individually (i) all Acquired Assets which are fixed assets (within the meaning of GAAP) indicating the cost, accumulated book depreciation (if any) and the Tangible Net Book Value of each such fixed asset as of the Most Recent Balance Sheet Date, and (ii) all other Acquired Assets of a tangible nature (other than inventories) whose book value exceeds $5,000.

Each item of equipment and other asset that is being transferred to the Buyers as part of the Acquired Assets and that either Seller has possession of pursuant to a lease agreement or other contractual arrangement is in such condition that, if such equipment or other asset is returned to its lessor or owner in its current condition under the applicable lease or contract, all obligations to such lessor or owner will have been discharged in full.

Owned Real Property. Neither Seller owns any real property.

Real Property Leases. Section 2.12 of the Disclosure Schedule lists all Leases and lists the term of each such Lease, any extension and expansion options, and the rent payable thereunder. The Sellers have delivered to the Buyers complete and accurate copies of the Leases. With respect to each Lease:

such Lease is valid, binding, enforceable and in full force and effect;

such Lease is assignable by the applicable Seller to the Buyers without the consent or approval of any party (except as set forth in Section 2.4 of the Disclosure Schedule) and such Lease will continue to be, valid, binding, enforceable and in full force and effect immediately following the Closing in accordance with the terms thereof as in effect immediately prior to the Closing;

neither Seller nor, to the knowledge of the Sellers, any other party, is in breach or violation of, or default under, any such Lease, and no event has occurred, is pending or, to the knowledge of the Sellers, is threatened, which, after the giving of notice, with lapse of time, or otherwise, would constitute a breach or default by either Seller or, to the knowledge of the Sellers, any other party under such Lease;

there are no disputes, oral agreements or forbearance programs in effect as to such Lease;

neither Seller has assigned, transferred, conveyed, mortgaged, deeded in trust or encumbered any interest in the leasehold or subleasehold; and

neither Seller is aware of any Security Interest, easement, covenant or other restriction applicable to the real property subject to such lease which would reasonably be expected to materially impair the current uses or the occupancy by either Seller of the property subject thereto.

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Intellectual Property.

Section 2.13(a) of the Disclosure Schedule lists (i) each patent, patent application, copyright registration or application therefor, mask work registration or application therefor, and trademark, service mark and domain name registration or application therefor of the Sellers and (ii) each Customer Deliverable of the Sellers.

Each of the Sellers owns or has the right to use all Intellectual Property necessary (i) to use, manufacture, have manufactured, market and distribute the Customer Deliverables and (ii) to operate the Internal Systems. Upon execution and delivery by the Sellers to the Buyers of the instruments of conveyance referred to in Section 1.5(b)(iii), each item of Seller Intellectual Property will be owned or available for use by the Buyers immediately following the Closing on substantially identical terms and conditions as it was immediately prior to the Closing. Each Seller has taken all reasonable measures to protect the proprietary nature of each item of Seller Intellectual Property, and to maintain in confidence all trade secrets and confidential information, that it owns or uses. No other person or entity has any rights to any of the Seller Intellectual Property owned by either Seller (except pursuant to agreements or licenses specified in Section 2.13(d) of the Disclosure Schedule), and, to the knowledge of the Sellers, no other person or entity is infringing, violating or misappropriating any of the Seller Intellectual Property. No person or entity listed in Section 2.13(b) or Section 2.20 of the Disclosure Schedule as having not signed an assignment of inventions agreement has been involved in, or otherwise responsible for, the development or conception of any portion of any material Seller Intellectual Property.

None of the Customer Deliverables, or the marketing, distribution, provision or use thereof, infringes or violates, or constitutes a misappropriation of, any Intellectual Property rights of any person or entity. None of the Internal Systems, or the use thereof, infringes or violates, or constitutes a misappropriation of, any Intellectual Property rights of any person or entity. Section 2.13(c) of the Disclosure Schedule lists any complaint, claim or notice, or written threat thereof, received by either Seller alleging any such infringement, violation or misappropriation; and the Sellers have provided to the Buyer complete and accurate copies of all written documentation in the possession of either Seller relating to any such complaint, claim, notice or threat. The Sellers have provided to the Buyer complete and accurate copies of all written documentation in either Seller’s possession relating to claims or disputes known to the Sellers concerning any Seller Intellectual Property.

Section 2.13(d) of the Disclosure Schedule identifies each license or other agreement pursuant to which either Seller has licensed, distributed or otherwise granted any rights to any third party with respect to, any Seller Intellectual Property. Except as described in Section 2.13(d) of the Disclosure Schedule, neither Seller has agreed to indemnify any person or entity against any infringement, violation or misappropriation of any Intellectual Property rights with respect to any Customer Deliverables.

Section 2.13(e) of the Disclosure Schedule identifies each item of Seller Intellectual Property that is owned by a party other than the Sellers, and the license or agreement pursuant to which the Seller or a Subsidiary uses such Seller Intellectual Property (excluding off-the-shelf software programs licensed by the Seller pursuant to “shrink wrap” licenses).

Section 2.13(f) of the Disclosure Schedule lists all Open Source Materials that either Seller has used in the research, development, design, distribution, manufacture, testing or use of any Customer Deliverables or Internal Systems in any way. Except as set forth in Section 2.13(f) of the Disclosure Schedule, neither Seller has (i) incorporated any Open Source Materials into, or combined Open Source Materials with, any Customer Deliverables, (ii) distributed Open Source Materials in connection with any Customer Deliverables, or (iii) used Open Source Materials in any manner that (with respect to either clause (i), (ii) or (iii) above) would (A) create, or purport to create, obligations for either Seller, (B) require, or purport to require, the licensing of any Software or any software licensed to either Seller for the purpose of making derivative works, (C) grant, or purport to grant, to any third party any rights or immunities under Intellectual Property rights owned by or licensed to either Seller, (D) impose, or purport to impose, any restriction on the consideration to be charged either Seller for the distribution of any Software or any software licensed to either Seller, or (E) impose, or purport to impose, any other material limitation, restriction, or condition on the right of either Seller to use or distribute any Software or any software licensed to either Seller. Without limiting the generality of the foregoing, neither Seller has used any Open Source Materials that require, as a condition of use, modification and/or distribution of such Open Source Materials, that other software incorporated into, derived from or distributed with such Open Source Materials be (1) disclosed or distributed in source code form, (2) licensed for the purpose of making derivative works, or (3) redistributable at no charge.

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Neither Seller has disclosed the source code for the Software or other confidential information constituting, embodied in or pertaining to the Software to any person or entity, except pursuant to the agreements listed in Section 2.13(f) of the Disclosure Schedule, and each Seller has taken reasonable measures to prevent disclosure of such source code.

All of the copyrightable materials (including Software) incorporated in or bundled with the Customer Deliverables have been created by employees of a Seller within the scope of their employment by such Seller or by independent contractors of a Seller who have executed agreements expressly assigning all right, title and interest in such copyrightable materials and the copyrights therein to such Seller. No portion of such copyrightable materials was jointly developed with any third party.

The Customer Deliverables and the Internal Systems are free from significant defects or programming errors and conform in all material respects to the written documentation and specifications therefor.

Contracts.

Section 2.14 of the Disclosure Schedule lists the following agreements (written or oral) to which either Seller is a party as of the date of this Agreement:

any agreement (or group of related agreements) for the lease of personal property from or to third parties;

any agreement (or group of related agreements) for the purchase or sale of products or for the furnishing or receipt of services (A) which calls for performance over a period of more than one year, (B) which involves more than the sum of US$10,000, or (C) in which a Seller has granted manufacturing rights, “most favored nation” pricing provisions or marketing or distribution rights relating to any products or territory or has agreed to purchase a minimum quantity of goods or services or has agreed to purchase goods or services exclusively from a certain party;

any agreement concerning the establishment or operation of a partnership, joint venture or limited liability company;

any agreement (or group of related agreements) under which it has created, incurred, assumed or guaranteed indebtedness (including capitalized lease obligations) or under which it has imposed a Security Interest on any of its assets, tangible or intangible;

any agreement for the disposition of any significant portion of the assets or business of either Seller (other than sales of products in the Ordinary Course of Business) or any agreement for the acquisition of the assets or business of any other entity (other than purchases of inventory, components or supplies in the Ordinary Course of Business);

any agreement imposing a confidentiality or noncompetition obligation on either Seller;

any employment or consulting agreement;

any agreement between either Seller and any current or former officer, director or stockholder of either Seller or an Affiliate thereof;

any agreement under which the consequences of a default or termination would reasonably be expected to have a Seller Material Adverse Effect;

any agreement under which a third party would be entitled to receive a license or any other right to Intellectual Property of either Buyers or any of either Buyer’s Affiliates following the Closing;

any agreement which contains any provisions requiring either Seller to indemnify any other party (excluding indemnities contained in agreements for the purchase, sale or license of products entered into in the Ordinary Course of Business); and

any other agreement (or group of related agreements) either involving more than $10,000 or not entered into in the Ordinary Course of Business.

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The Sellers have delivered to the Buyers a complete and accurate copy of each agreement listed in Section 2.13 or Section 2.14 of the Disclosure Schedule. With respect to each agreement so listed: (i) the agreement is valid, binding and enforceable, in accordance with its respective terms, and in full force and effect; (ii) for those agreements to which either Seller is a party, the agreement is assignable by such Seller to the Buyers without the consent or approval of any party (except as set forth in Section 2.4 of the Disclosure Schedule) and will continue to be valid, binding and enforceable and in full force and effect immediately following the Closing in accordance with the terms thereof as in effect immediately prior to the Closing; and (iii) neither Seller nor, to the knowledge of the Sellers, any other party, is in breach or violation of, or default under, any such agreement, and no event has occurred, is pending or, to the knowledge of the Sellers, is threatened, which, after the giving of notice, with lapse of time, or otherwise, would constitute a breach or default by either Seller or, to the knowledge of the Sellers, any other party under such agreement.

Accounts Receivable. All accounts receivable of the Sellers reflected on the Most Recent Balance Sheet (other than those paid since such date) are valid receivables subject to no setoffs or counterclaims and are current and collectible (within 90 days after the date on which it first became due and payable), net of the applicable reserve for bad debts on the Most Recent Balance Sheet. A complete and accurate list of the accounts receivable reflected on the Most Recent Balance Sheet, showing the aging thereof, is included in Section 2.15 of the Disclosure Schedule. All accounts receivable of the Sellers that have arisen since the Most Recent Balance Sheet Date are valid receivables subject to no setoffs or counterclaims and are collectible (within 90 days after the date on which it first became due and payable), net of a reserve for bad debts in an amount proportionate to the reserve shown on the Most Recent Balance Sheet. Neither Seller has received any written notice from an account debtor stating that any account receivable in an amount in excess of $10,000 is subject to any contest, claim or setoff by such account debtor.

[Intentionally Omitted.]

Insurance. Section 2.17 of the Disclosure Schedule lists each insurance policy (including fire, theft, casualty, comprehensive general liability, workers compensation, business interruption, environmental, product liability and automobile insurance policies and bond and surety arrangements) to which either Seller is a party, all of which are in full force and effect. There is no material claim pending under any such policy as to which coverage has been questioned, denied or disputed by the underwriter of such policy. All premiums due and payable under all such policies have been paid, and each Seller is otherwise in compliance in all material respects with the terms of such policies. The Sellers have no knowledge of any threatened termination of, or premium increase with respect to, any such policy.

Litigation. There is no Legal Proceeding which is pending or has been threatened in writing against either Seller which (a) seeks either damages or equitable relief or (b) in any manner challenges or seeks to prevent, enjoin, alter or delay the transactions contemplated by this Agreement. There are no judgments, orders or decrees issued by a court of competent jurisdiction outstanding against either Seller.

Warranties. No product or service sold, licensed or delivered by either Seller is subject to any guaranty, warranty, right of return, right of credit or other indemnity other than (i) pursuant to the agreements listed in Section 2.19 of the Disclosure Schedule, and (ii) manufacturers’ warranties for which such Seller has any liability. Section 2.19 of the Disclosure Schedule sets forth the aggregate expenses incurred by the Sellers in fulfilling their obligations under their guaranty, warranty, right of return and indemnity provisions during each of the fiscal years covered by the Financial Statements; and the Sellers do not know of any reason why such expenses should reasonably be expected to significantly increase as a percentage of sales in the future.

Employees.

Section 2.20 of the Disclosure Schedule contains a list of all employees of PureSight-Israel, along with the position and the annual rate of compensation of each such person. Each current or past employee of each Seller has entered into a confidentiality/assignment of inventions agreement with such Seller, a copy or form of which has previously been delivered to the Buyers. Section 2.20 of the Disclosure Schedule contains a list of all employees of each Seller who are a party to a non-competition agreement with either Seller; copies of such agreements have previously been delivered to the Buyers. PureSight-US does not employ any individuals other than Cleve Adams. Section 2.20 of the Disclosure Schedule contains a list of all employees of PureSight-Israel that are not citizens of Israel. To the knowledge of the Sellers, no key employee or group of employees has any plans to terminate employment with the Sellers (other than for the purpose of accepting employment with BCGI-Israel following the Closing) or not to accept employment with BCGI-Israel.

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Neither Seller is a party to or bound by any collective bargaining agreement (apart from any collective bargaining agreements in Israel regarding PureSite-Israel’s employees which may have been extended through extension orders), nor has either of them experienced any strikes, grievances or other collective bargaining disputes. Neither Seller has any knowledge of any organizational effort made or threatened, either currently or within the past two years, by or on behalf of any labor union with respect to employees of either Seller.

Employee Benefits.

Section 2.21(a) of the Disclosure Schedule contains a complete and accurate list of all Seller Plans. Complete and accurate copies of all Seller Plans that have been reduced to writing and all related trust agreements have been delivered to the Buyers.

Each Seller Plan has been administered in all material respects in accordance with its terms.

Each Seller has paid all of its current employees all wages and ancillary and other expenses payable with respect to their employment with such Seller and has made all of the required contributions under law and/or agreement with respect to the employees’ employment, including, as applicable, for accrued leave, convalescence, pension, retirement, severance, commissions and bonuses pursuant to employment agreements, custom, law or as otherwise required.

There are no Legal Proceedings (except claims for benefits payable in the normal operation of the Seller Plans and proceedings with respect to qualified domestic relations orders) against or involving any Seller Plan or asserting any rights or claims to benefits under any Seller Plan that could give rise to any material liability.

There are no unfunded obligations under any Seller Plan providing benefits after termination of employment to any employee of the Sellers (or to any beneficiary of any such employee), including but not limited to retiree health coverage and deferred compensation.

No act or omission has occurred and no condition exists with respect to any Seller Plan that would subject the Sellers to any contractual indemnification or contribution obligation protecting any fiduciary, insurer or service provider with respect to any Seller Plan.

Environmental Matters.

Each Seller has complied with all applicable Environmental Laws. There is no pending or, to the knowledge of the Sellers, threatened civil or criminal litigation, written notice of violation, formal administrative proceeding, or investigation, inquiry or information request by any Governmental Entity, relating to any Environmental Law involving either Seller.

Neither Seller has any liabilities or obligations arising from the release of any Materials of Environmental Concern into the environment.

Neither Seller is a party to or bound by any court order, administrative order, consent order or other agreement with any Governmental Entity entered into in connection with any legal obligation or liability arising under any Environmental Law.

Set forth in Section 2.22(d) of the Disclosure Schedule is a list of all documents (whether in hard copy or electronic form) that contain any environmental reports, investigations and audits relating to premises currently or previously owned or operated by either Seller (whether conducted by or on behalf of such Seller or a third party, and whether done at the initiative of such Seller or directed by a Governmental Entity or other third party) which either Seller has possession of or access to. A complete and accurate copy of each such document has been provided to the Buyers.

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The Sellers are not aware of any material environmental liability of any solid or hazardous waste transporter or treatment, storage or disposal facility that has been used by either Seller.

Legal Compliance. Each Seller is currently conducting, and has at all times since inception conducted, its respective businesses in compliance with each applicable law (including rules and regulations thereunder) of any federal, state, local or foreign government, or any Governmental Entity, except for any violations or defaults that, individually or in the aggregate, have not had and would not reasonably be expected to have a Seller Material Adverse Effect. Neither Seller has received any notice or communication from any Governmental Entity alleging noncompliance with any applicable law, rule or regulation.

Customers and Suppliers. Section 2.24 of the Disclosure Schedule sets forth a list of (a) each customer that accounted for more than 1% of the consolidated revenues of the Sellers during the last full fiscal year and the amount of revenues accounted for by such customer during each such period and (b) each supplier that is the sole supplier of any significant product or service to the Sellers. No such customer or supplier has indicated within the past year that it will stop, or decrease the rate of, buying products or supplying products, as applicable, to the Sellers. All unfilled customer orders and commitments obligating either Seller to process, manufacture or deliver products or perform services were made, and are being filled, in the Ordinary Course of Business.

Permits. Section 2.25 of the Disclosure Schedule sets forth a list of all Permits issued to or held by each Seller. Such listed Permits are the only Permits that are required for the Sellers to conduct their respective businesses as presently conducted. Each such Permit is in full force and effect; the appropriate Seller is in material compliance with the terms of each such Permit, and, neither Sellers has received any written notice as to any threatened suspension or cancellation of such Permit.

Certain Business Relationships With Affiliates. No Affiliate of either Seller (other than the Sellers) (a) owns any property or right, tangible or intangible, which is used in the business of the Sellers, (b) has any claim or cause of action against either Seller, or (c) owes any money to, or is owed any money by, either Seller. Section 2.26 of the Disclosure Schedule describes any commercial transactions between either Seller and any Affiliate of either Seller which occurred or have existed since the beginning of the time period covered by the Financial Statements.

Brokers’ Fees. Neither Seller has any liability or obligation to pay any fees or commissions to any broker, finder or agent with respect to the transactions contemplated by this Agreement.

Books and Records. The minute books and other similar records of the Sellers contain complete and accurate records of all actions taken at any meetings of such Seller’s shareholders, Board of Directors or any committee thereof and of all written consents executed in lieu of the holding of any such meeting. The books and records of each Seller accurately reflect the assets, liabilities, business, financial condition and results of operations of the Sellers and have been maintained in accordance with good business and bookkeeping practices.

Disclosure. No representation or warranty by the Sellers contained in this Agreement, and no statement contained in the Disclosure Schedule or the Seller Certificate, contains or will contain any untrue statement of a material fact or omits or will omit to state any material fact necessary, in light of the circumstances under which it was or will be made, in order to make the statements herein or therein not misleading. Notwithstanding the foregoing, the Sellers shall not be deemed to make to the Buyers any representation or warranty (express or implied) other than as expressly made by the Sellers in this Agreement.

REPRESENTATIONS AND WARRANTIES OF THE BUYERS

Each Buyer, jointly and severally, represents and warrants to the Sellers that the statements contained in this Article III are true and correct as of the date of this Agreement and will be true and correct as to the Closing as though made as of the Closing.

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Organization and Corporate Power. Cellular Express is a corporation duly organized, validly existing and in good standing under the laws of the Commonwealth of Massachusetts and BCGI-Israel is a company duly organized, validly existing and in corporate and tax good standing under the laws of Israel. Each Buyer has all requisite corporate power and authority to carry on the businesses in which it is engaged and to own and use the properties owned and used by it.

Authorization of the Transaction. Each Buyer has all requisite power and authority to execute and deliver this Agreement and the Ancillary Agreements and to perform its obligations hereunder and thereunder. The execution and delivery by each Buyer of this Agreement and the Ancillary Agreements, the performance by the Buyers of this Agreement and the Ancillary Agreements, and the consummation by each Buyer of the transactions contemplated hereby and thereby have been duly and validly authorized by all necessary corporate action on the part of such Buyer. This Agreement has been duly and validly executed and delivered by each Buyer and constitutes, and each of the Ancillary Agreements, upon its execution and delivery by such Buyer, will constitute, a valid and binding obligation of such Buyer, enforceable against it in accordance with its respective terms.

Noncontravention. Neither the execution and delivery by either Buyer of this Agreement or the Ancillary Agreements, nor the consummation by either Buyer of the transactions contemplated hereby or thereby, will (a) conflict with or violate any provision of the Articles of Organization or by-laws of Cellular Express or the Articles of Association of BCGI-Israel, (b) require on the part of either Buyer any filing with, or permit, authorization, consent or approval of, any Governmental Entity, (c) conflict with, result in a breach of, constitute (with or without due notice or lapse of time or both) a default under, result in the acceleration of obligations under, create in any party any right to terminate, modify or cancel, or require any notice, consent or waiver under, any contract or instrument to which either Buyer is a party or by which it is bound or to which any of its assets is subject, (d) result in the imposition of any Security Interest upon any assets of either Buyer or (e) violate any order, writ, injunction, decree, statute, rule or regulation applicable to either Buyer or any of its properties or assets.

Disclosure. No representation or warranty by the Buyers contained in this Agreement, and no statement contained in the Buyer Certificates, contains or will contain any untrue statement of a material fact or omits or will omit to state any material fact necessary, in light of the circumstances under which it was or will be made, in order to make the statements herein or therein not misleading. Notwithstanding anything to the contrary, the Buyers shall not be deemed to make to the Sellers any representation or warranty (express or implied) other than as expressly made by the Buyers in this Agreement.

Independent Investigation. The Buyers, in entering into the transactions contemplated in this Agreement, have relied upon an independent investigation made by themselves and their representatives, if any, and information furnished to them by the Sellers. In making their decision to enter and execute this Agreement, the Buyers are not relying on any oral representations or assurances from Seller or any other person. The Buyers have such experience in business and financial matters that they are capable of evaluating the risks involved in the contemplated transaction.

PRE-CLOSING COVENANTS

Closing Efforts. Each of the Parties shall use its commercially reasonable efforts to take all actions and to do all things necessary, proper or advisable to consummate the transactions contemplated by this Agreement, including using its commercially reasonable efforts to ensure that (i) its representations and warranties remain true and correct in all material respects through the Closing Date and (ii) the conditions to the obligations of the other Party to consummate the transactions contemplated by this Agreement are satisfied.

Governmental and Third-Party Notices and Consents.

Each Party shall use its commercially reasonable efforts to obtain, at its expense, all waivers, permits, consents, approvals or other authorizations from Governmental Entities, and to effect all registrations, filings and notices with or to Governmental Entities, as may be required for such Party to consummate the transactions contemplated by this Agreement and to otherwise comply with all applicable laws and regulations in connection with the consummation of the transactions contemplated by this Agreement.

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Each Seller shall use its respective commercially reasonable efforts to obtain, at its expense, all such waivers, consents or approvals from third parties, including, with respect to PureSight-Israel if so requested by BCGI-Israel prior to the Closing, the written consent of the Israeli Investment Center regarding the assignment of PureSight-Israel’s rights and obligations under the Approved Enterprise Scheme to BCGI-Israel, including any Grants associated therewith, and to give all such notices to third parties, as are required to be listed in the Disclosure Schedule.

If (i) any of the Assigned Contracts or other assets or rights constituting Acquired Assets may not be assigned and transferred by the Sellers to the Buyers (as a result of either the provisions thereof or applicable law) without the consent or approval of a third party, (ii) the Sellers, after using their commercially reasonable efforts, are unable to obtain such consent or approval prior to the Closing and (iii) the Closing occurs nevertheless, then (A) such Assigned Contracts and/or other assets or rights shall not be assigned and transferred by the applicable Seller to the Buyers at the Closing and the Buyers shall not assume such Seller’s liabilities or obligations with respect thereto at the Closing, (B) the Sellers shall continue to use their commercially reasonable efforts to obtain the necessary consent or approval as soon as practicable after the Closing, and (C) upon the obtaining of such consent or approval, the Buyers and the Sellers shall execute such further instruments of conveyance (in substantially the form executed at the Closing) as may be necessary to assign and transfer such Assigned Contracts and/or other assets or rights (and the associated liabilities and obligations of the Sellers) to the Buyers.

Stockholder Approval.

PureSight-US shall use its commercially reasonable efforts to obtain, as promptly as practicable, the Requisite Stockholder Approval, either at a special meeting of stockholders or pursuant to a written stockholder consent, all in accordance with the applicable requirements of the Delaware General Corporation Law. If the Requisite Stockholder Approval is obtained by means of a written consent, PureSight-US shall send, pursuant to Section 228 of the Delaware General Corporation Law, a written notice to all stockholders of PureSight-US that did not execute such written consent informing them that the sale of the Acquired Assets as contemplated by this Agreement was approved by the stockholders of PureSight-US.

Blumberg Capital I, L.P., Blumberg Capital Affiliates I, L.P. and Hitachi Ltd. each agree (i) to vote all shares of capital stock of PureSight-US that are beneficially owned by him, her or it in favor of the adoption of this Agreement and the approval of the transactions contemplated by this Agreement, (ii) not to vote any such shares in favor of any other acquisition (whether by way of merger, consolidation, share, exchange, stock purchase or asset purchase) of all or a majority of the outstanding capital stock or assets of PureSight-US or PureSight-Israel and (iii) otherwise to use his, her or its commercially reasonable efforts to obtain the Requisite Stockholder Approval.

Operation of Business. Except as contemplated by this Agreement, during the period from the date of this Agreement to the Closing, each Seller shall (conduct its operations in the Ordinary Course of Business and in compliance with all applicable laws and regulations and, to the extent consistent therewith, use its commercially reasonable efforts to preserve intact its current business organization, keep its physical assets in good working condition, keep available the services of its current officers and employees and preserve its relationships with customers, suppliers and others having business dealings with it. Without limiting the generality of the foregoing, prior to the Closing, neither Seller shall, without the written consent of the Buyers:

issue or sell any shares or other securities of such Seller or any options, warrants or other rights to acquire any such shares or other securities (except pursuant to the conversion or exercise of options, warrants or other convertible securities outstanding on the date hereof);

declare, set aside or pay any dividend or other distribution (whether in cash, stock or property or any combination thereof) in respect of its capital stock;

create, incur or assume any indebtedness for borrowed money (including obligations in respect of capital leases); assume, guarantee, endorse or otherwise become liable or responsible (whether directly, contingently or otherwise) for the obligations of any other person or entity; or make any loans, advances or capital contributions to, or investments in, any other person or entity;

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enter into, adopt or amend any Employee Benefit Plan or any employment or severance agreement or arrangement of the type described in Section 2.21(k) or (except for normal increases in the Ordinary Course of Business for employees who are not Affiliates) increase in any manner the compensation or fringe benefits of, or materially modify the employment terms of, its directors, officers or employees, generally or individually, or pay any bonus or other benefit to its directors, officers or employees (except for existing payment obligations listed in Section 2.20 of the Disclosure Schedule) or (except in the Ordinary Course of Business) hire any new officers or any new employees;

acquire, sell, lease, license or dispose of any of the Acquired Assets, other than purchases and sales of assets in the Ordinary Course of Business;

mortgage or pledge any of the Acquired Assets or subject any such property or assets to any Security Interest;

amend its charter, by-laws, Articles of Association or other organizational documents in a manner that could have an adverse effect on the transactions contemplated by this Agreement;

change its accounting methods, principles or practices, except insofar as may be required by a change in GAAP, or make any new elections, or changes to any current elections, with respect to Taxes that affect the Acquired Assets;

enter into, amend, terminate, take or omit to take any action that would constitute a violation of or default under, or waive any rights under, any contract or agreement of a nature required to be listed in Section 2.12, Section 2.13 or Section 2.14 of the Disclosure Schedule;

make or commit to make any capital expenditure in excess of $10,000 in the aggregate;

institute or settle any Legal Proceeding;

take any action or fail to take any action permitted by this Agreement with the knowledge that such action or failure to take action would result in (i) any of the representations and warranties of the Sellers set forth in this Agreement becoming untrue or (ii) any of the conditions to the Closing set forth in Article V not being satisfied; or

agree in writing or otherwise to take any of the foregoing actions.

Access to Information. Each Seller shall permit representatives of the Buyers to have reasonable access (at all reasonable times during normal business hours, and in a manner so as not to interfere with the normal business operations of the Sellers) to all premises, properties, financial, tax and accounting records (including the work papers of either Seller’s independent accountants), contracts, other records and documents, and personnel, of or pertaining to the Sellers for the purpose of performing such inspections and tests as the Buyers deems necessary or appropriate. The Buyers shall hold any such information that is Proprietary Information (as defined in the Confidentiality Agreement) in accordance with the Confidentiality Agreement (to the same extent and as if they were parties thereto).

Termination of PureSight-Israel Employees. Concurrently with the execution of this Agreement, PureSight-Israel shall provide a notice to all of its employees, terminating their employment effective as of the Closing Date, and PureSight-Israel shall cease to employ all of its employees effective as of the Closing Date. BCGI-Israel, at its discretion, shall offer (directly or through any of Buyers’ Affiliates) PureSight-Israel’s employees employment with BCGI-Israel or an Affiliate effective as of the Closing Date, on substantially the terms and conditions as included in the form employment agreement attached hereto as Exhibit E. Sellers shall use their best efforts in order to cause each of their employees to execute a waiver substantially in the form attached as Exhibit F-4 hereto. It is hereby clarified that no representation is being made herein with respect to the terms and conditions of employment of any of PureSight-Israel’s employees by BCGI-Israel or its Affiliates (including the period of such employment) and in any event, no representation of the Parties herein shall confer any rights or remedies upon any employees of Sellers, and such employees shall not be deemed hereunder, as third party beneficiaries. Prior to or upon the Closing Date,

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each Seller shall pay all of its current employees, all wages and all ancillary and other expenses payable with respect to their period of employment with such Seller and the termination thereof, shall fulfill all of its obligations under the applicable Seller Plans and shall make all of the required contributions under law and/or agreement with respect to the employees’ employment and/or termination thereof, including, as applicable, for accrued leave, convalescence, pension, retirement, severance, advance notice, commissions and bonuses pursuant to employment agreements, custom, law or as otherwise required.

Exclusivity.

Neither Seller shall, and each Seller shall require each of its officers, directors, employees, representatives and agents not to, directly or indirectly, (i) initiate, solicit, encourage or otherwise facilitate any inquiry, proposal, offer or discussion with any party (other than the Buyers) concerning any merger, reorganization, consolidation, recapitalization, business combination, liquidation, dissolution, share exchange, sale of stock, sale of material assets or similar business transaction involving either Seller or any division of either Seller, (ii) furnish any non-public information concerning the business, properties or assets of either Seller or any division of either Sellers to any party (other than the Buyers) or (iii) engage in discussions or negotiations with any party (other than the Buyers) concerning any such transaction.

The Sellers shall immediately notify any party with which discussions or negotiations of the nature described in paragraph (a) above were pending that the Sellers are terminating such discussions or negotiations. If the Sellers receive any inquiry, proposal or offer of the nature described in paragraph (a) above, the Sellers shall, within one business day after such receipt, notify the Buyers of such inquiry, proposal or offer, including the identity of the other party and the terms of such inquiry, proposal or offer.

CONDITIONS TO CLOSING

Conditions to Obligations of each Party. The respective obligations of each Party to consummate the transactions contemplated by this Agreement are subject to the satisfaction of the following condition: the sale of the Acquired Assets by PureSight-US to the Buyers as contemplated by this Agreement shall have received the Requisite Stockholder Approval.

Conditions to Obligations of the Buyer. The obligation of the Buyers to consummate the transactions contemplated by this Agreement to be consummated at the Closing is subject to the satisfaction of the following additional conditions:

the Sellers shall have obtained at their own expense (and shall have provided copies thereof to the Buyers) all of the waivers, permits, consents, approvals or other authorizations, and effected all of the registrations, filings and notices, referred to in Section 4.2 which are required on the part of the Sellers, including without limitation, the written consent of the Israeli Investment Center;

the representations and warranties of the Sellers set forth in the first sentence of Section 2.1and in Section 2.3 and any representations and warranties of the Sellers set forth in this Agreement that are qualified as to materiality shall be true and correct in all respects, and all other representations and warranties of the Sellers shall be true and correct in all material respects, in each case as of the date of this Agreement and as of the Closing as though made as of the Closing, except to the extent such representations and warranties are specifically made as of a particular date (in which case such representations and warranties shall be true and correct as of such date);

each Seller shall have performed or complied with its agreements and covenants required to be performed or complied with under this Agreement as of or prior to the Closing;

no Legal Proceeding shall be pending or threatened wherein an unfavorable judgment, order, decree, stipulation or injunction would (i) restrain or prohibit consummation of the transactions contemplated by this Agreement, (ii) cause the transactions contemplated by this Agreement to be rescinded following consummation or (iii) affect adversely the right of the Buyers to own, operate or control any of the Acquired Assets, or to conduct the business of the Sellers as currently conducted, following the Closing, and no such judgment, order, decree, stipulation or injunction shall be in effect;

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the Sellers shall have delivered to the Buyers the Seller Certificates;

the Sellers shall have delivered to the Buyers documents evidencing the release or termination of all Security Interests on the Acquired Assets, including without limitation, requests for the termination of all outstanding charges registered with the Israeli Registrar of Companies duly executed by all relevant creditors, including with respect to a charge registered on August 7, 2002 and a charge registered on March 18, 2004, as well as certification issued by the Israeli Registrar of Companies confirming the termination of all charges with respect to PureSight-Israel’s assets, and copies of filed UCC termination statements with respect to all UCC financing statements evidencing Security Interests;

the Buyers shall have received from counsel to the Sellers opinions in substantially the forms attached hereto as Exhibit G-1 and Exhibit G-2, addressed to the Buyers and dated as of the Closing Date;

the Buyers shall have received such other certificates and instruments (including certificates of good standing of the Sellers, if applicable, in their jurisdiction of organization and the various foreign jurisdictions in which they are qualified, including authorizations from the Israeli Income Tax Authority with regard to PureSight-Israel’s tax deductions and managing accounting ledgers; certified charter documents; certificates as to the incumbency of officers; and the adoption of authorizing resolutions) as they shall reasonably request in connection with the Closing;

each of Netta Mendolson, Royi Cohen and Ouri Azoulay shall have entered into employment agreements with the Buyer in substantially the forms attached hereto as Exhibit F-1, Exhibit F-2 and Exhibit F-3, respectively, and approved by the Buyers;

Cleve Adams shall have entered into a consulting agreement with the Buyer in the form attached hereto as Exhibit H;

the Seller shall have delivered to the Buyer the Financial Statements;

at least 80% of the employees of PureSight-Israel shall have (i) agreed to become employed by BCGI-Israel (and signed an employment agreement in substantially the form attached hereto as Exhibit E) effective upon the Closing and (ii) executed the waiver in the form attached hereto as Exhibit F-4;

the Buyers shall have received a written confirmation issued by an Israeli CPA declaring that all amounts to be allocated and/or deposited in accordance with the Employee Benefit Plans with respect to all of PureSite-Israel’s officers and/or employees have been duly allocated and/or deposited as of the Closing Date;

the Buyers shall have received a written confirmation issued by an Israeli CPA declaring that all payments and/or contributions required to be made under law and/or agreement with respect to the employment and termination of PureSite-Israel’s officers and/or employees have been duly paid and/or contributed in full as of the Closing Date, including, with respect to accrued leave, convalescence, pension, retirement, severance, advance notice, commissions and bonuses pursuant to employment agreements, custom, law or as otherwise required; and

the Buyers shall have received written documentation, reasonably satisfactory to the Buyers, that the source code escrow arrangement in place with Hitachi has been terminated, which written documentation shall include a statement to the effect that (i) no source code has previously been released under such arrangement and (ii) Hitachi has no rights in or to any source code of the Sellers.

the Buyers shall have received a copy of the resolutions approved by the Board of Directors of PureSight-US terminating and/or rescinding the option grants listed on Section 2.2 of the Disclosure Schedule.

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Conditions to Obligations of the Sellers. The obligation of the Sellers to consummate the transactions contemplated by this Agreement to be consummated at the Closing is subject to the satisfaction of the following additional conditions:

the representations and warranties of the Buyers set forth in the first sentence of Section 3.1 and in Section 3.2 and any representations and warranties of the Buyers set forth in this Agreement that are qualified as to materiality shall be true and correct in all respects, and all other representations and warranties of the Buyers set forth in this Agreement shall be true and correct in all material respects, in each case as of the date of this Agreement and as of the Closing as though made as of the Closing, except to the extent such representations and warranties are specifically made as of a particular date (in which case such representations and warranties shall be true and correct as of such date);

each Buyer shall have performed or complied with its agreements and covenants required to be performed or complied with under this Agreement as of or prior to the Closing;

no Legal Proceeding shall be pending or threatened wherein an unfavorable judgment, order, decree, stipulation or injunction would (i) restrain or prohibit consummation of the transactions contemplated by this Agreement or (ii) cause the transactions contemplated by this Agreement to be rescinded following consummation, and no such judgment, order, decree, stipulation or injunction shall be in effect;

the Buyers shall have delivered to the Sellers the Buyer Certificates; and

the Sellers shall have received such other certificates and instruments (including certificates of good standing of the Buyers in its jurisdiction of organization, certificates as to the incumbency of officers and the adoption of authorizing resolutions) as they shall reasonably request in connection with the Closing.

POST-CLOSING COVENANTS

Proprietary Information. From and after the Closing, each Seller agrees that it shall not disclose or make use of (except to pursue its rights, under this Agreement or the Ancillary Agreements), and shall use its best efforts to cause all of its Affiliates not to disclose or make use of, any knowledge, information or documents of a confidential nature or not generally known to the public with respect to Acquired Assets, the Sellers’ business or the Buyers or its business (including the financial information, technical information or data relating to the Sellers’ products and names of customers of the Sellers, as well as filings and testimony (if any) presented in the course of any arbitration of a Dispute pursuant to Section 7.3 and the arbitral award and the Arbitrator’s reasons therefor relating to the same), except to the extent that such knowledge, information or documents shall have become public knowledge other than through improper disclosure by a Seller or an Affiliate thereof. The Sellers hereby authorize the Buyers, on behalf of the Sellers but for the benefit of the Buyers and at the Buyers’ expense, to enforce all confidentiality, invention assignments and similar agreements between either Seller and any other party, including current or former employees and other third parties, relating to the Acquired Assets or the business of the Sellers that are not Assigned Contracts.

Solicitation and Hiring.

For a period of two years after the Closing Date, neither Seller shall, either directly or indirectly (including through an Affiliate), (a) solicit or attempt to induce any Restricted Employee to terminate his employment with either Buyer or any subsidiary of either Buyer or (b) hire or attempt to hire any Restricted Employee; provided, that this clause (b) shall not apply to any individual whose employment with either Buyer or a subsidiary of either Buyer has been terminated. The Sellers hereby authorize the Buyers, on behalf of the Sellers but for the benefit of the Buyers and at the Buyers’ expense, to enforce all non-solicitation, non-hiring and similar agreements between either Seller and any other party, including current or former employees and other third parties, that are not Assigned Contracts.

For a period of two years following the termination of this Agreement pursuant to the provisions of Article VIII hereof, neither Buyer shall, either directly or indirectly (through a recruiter or intermediary) solicit or attempt to induce any individual who is employed by either Seller as of the date of this Agreement to terminate his employment with such Seller; provided, however, that this Section 6.2(b) shall not limit any Buyer’s right to continue customary general advertisement for employees. The Parties agree that irreparable damage might occur in the event that the provisions of this Section 6.2(b) were not performed in accordance with their specific terms or were otherwise breached. It is

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accordingly agreed by the Parties that the Sellers shall be entitled to seek an injunction or injunctions to prevent breaches of the provisions of this Section 6.2(b) and to seek to enforce specifically the terms and provisions hereof in any court having jurisdiction, this being in addition to any other remedy to which such party may be entitled at law or in equity.

Non-Competition.

For a period of three years after the Closing Date, neither Seller shall, either directly or indirectly as a stockholder, investor, partner, consultant or otherwise, (i) design, develop, manufacture, market, sell or license any product or provide any service anywhere in the world which is competitive with any product designed, developed (or under development), manufactured, sold or licensed or any service provided by the Sellers within the three-year period prior to the Closing Date or (ii) engage anywhere in the world in any business competitive with the business of the Sellers as conducted as of the Closing Date or during the three-year period prior to the Closing Date. The Sellers hereby authorize the Buyers, on behalf of the Sellers but for the benefit of the Buyers and at the Buyers’ expense, to enforce all non-competition and similar agreements between either Seller and any other party, including current or former employees and other third parties, that are not Assigned Contracts.

Each Seller agrees that the duration and geographic scope of the non-competition provision set forth in this Section 6.3 are reasonable. In the event that any court determines that the duration or the geographic scope, or both, are unreasonable and that such provision is to that extent unenforceable, the Sellers agree that the provision shall remain in full force and effect for the greatest time period and in the greatest area that would not render it unenforceable. The Sellers intend that this non-competition provision shall be deemed to be a series of separate covenants, one for each and every county of each and every state of the United States of America and each and every political subdivision of each and every country outside the United States of America, including, without limitation, Israel, where this provision is intended to be effective.

Each Seller shall, and shall use its best efforts to cause its Affiliates to, refer all inquiries regarding the business, products and services of the Sellers to the Buyers.

Tax Matters. All transfer taxes, deed excise stamps, stamp duty and similar charges related to the sale of the Acquired Assets contemplated by this Agreement shall be paid by the Sellers; provided, that, in accordance with Sections 1.3 and 1.4 hereof, BCGI-Israel shall pay to PureSight-Israel the VAT, which PureSight-Israel shall pay to the appropriate taxing authorities in accordance with Section 6.11 hereof.

Sharing of Data.

The Sellers shall have the right for a period of five years following the Closing Date to have reasonable access to such books, records and accounts, including financial and tax information, correspondence, production records, employment records and other records that are transferred to the Buyers pursuant to the terms of this Agreement for the limited purposes of concluding its involvement in the business conducted by the Sellers prior to the Closing Date and for complying with their respective obligations under applicable securities, tax, environmental, employment or other laws and regulations. The Buyers shall have the right for a period of five years following the Closing Date to have reasonable access to those books, records and accounts, including financial and accounting records (including the work papers of the Seller’s independent accountants), tax records, correspondence, production records, employment records and other records that are retained by the Sellers pursuant to the terms of this Agreement to the extent that any of the foregoing is reasonably needed by the Buyers for the purpose of conducting the business of the Sellers after the Closing and complying with their respective obligations under applicable securities, tax, environmental, employment or other laws and regulations. No Party shall destroy any such books, records or accounts retained by it without first providing the other Party with the opportunity to obtain or copy such books, records, or accounts at such other Party’s expense.

Promptly upon the reasonable request by the Buyers made at any time following the Closing Date, the Sellers shall authorize the release to the Buyers of all files pertaining to the Sellers, the Acquired Assets or the business or operations of the Sellers or the Subsidiaries held by any federal, state, county or local authorities, agencies or instrumentalities.

Use of Name. The Sellers shall not use, and shall not permit any Affiliate to use, the names “PureSight”, “Icognito” or “Geni” or any name reasonably similar thereto after the Closing Date in connection with any business related to,

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competitive with, or an outgrowth of, the business conducted by the Sellers on the date of this Agreement. Within one business day following the Closing, (i) PureSight-US shall amend its Certificate of Incorporation and other corporate records, if necessary, to comply with this provision and (ii) PureSight-Israel shall file with the Company Registrar a shareholder resolution amending its Articles of Association and other corporate records, if necessary, to comply with this provision.

Cooperation in Litigation. From and after the Closing Date, each Party shall fully cooperate with the other in the defense or prosecution of any litigation or proceeding already instituted or which may be instituted hereafter against or by such other Party relating to or arising out of the conduct of the business of the Sellers or the Buyers prior to or after the Closing Date (other than litigation among the Parties and/or their Affiliates arising out the transactions contemplated by this Agreement). The Party requesting such cooperation shall pay the reasonable out-of-pocket expenses incurred in providing such cooperation (including legal fees and disbursements) by the Party providing such cooperation and by its officers, directors, employees and agents, but shall not be responsible for reimbursing such Party or its officers, directors, employees and agents, for their time spent in such cooperation.

Collection of Accounts Receivable. Each Seller agrees that it shall forward promptly to the Buyers any monies, checks or instruments received by such Seller after the Closing Date with respect to the accounts receivable purchased by the Buyer from the Sellers pursuant to this Agreement. Each Seller shall provide to the Buyers such reasonable assistance as the Buyers may request with respect to the collection of any such accounts receivable, provided the Buyers pay the reasonable out-of-pocket expenses of the Sellers and their respective officers, directors and employees incurred in providing such assistance. Each Seller hereby grants to the Buyers a power of attorney to endorse and cash any checks or instruments payable or endorsed to the Sellers or its order which are received by either Buyer and which relate to accounts receivable purchased by the Buyers from the Sellers. Notwithstanding the foregoing, the Buyers shall promptly remit to the Sellers the first $100,000 of monies received by the Buyers after the Closing Date with respect to the accounts receivable purchased by the Buyers from the Sellers pursuant to this Agreement and such amount shall be deemed to be an Excluded Asset for purposes of this Agreement.

Maintenance of Corporate Existence; Restriction on Dividends and Distributions. For a period of twelve months following the Closing Date, no Seller shall dispose, set aside or pay any dividend or other distribution in cash or other property (other than capital stock of the Seller) in respect of its stock if, following such dividend or distribution the Sellers would hold cash in an amount that is less than the sum of (A) an aggregate amount for both Sellers of $550,000 plus (B) the amount that would be required to satisfy all of such Seller’s liabilities and third-party obligations in full.

Transfer of Approved Enterprise Status. To the extent that PureSight-Israel’s Approved Enterprise status and any Grants associated therewith have not been fully transferred to BCGI-Israel on or prior to the Closing Date, PureSight-Israel shall, if requested by BCGI-Israel, approach the investment Center of the Ministry of Industry, Trade and Labor and use its commercially reasonable best efforts following the Closing in order to obtain, at its expense, the written consent of the Israeli Investment Center regarding the assignment of PureSight-Israel’s rights and obligations under the Approved Enterprise Scheme to BCGI-Israel, including any Grants associated therewith.

VAT. PureSight-Israel shall, promptly following the Closing and in any event within the timeframe required by applicable laws, rules and regulations, pay to the appropriate taxing authorities the VAT.

INDEMNIFICATION

Indemnification by the Sellers. The Sellers, jointly and severally, shall indemnify the Buyers in respect of, and hold the Buyers harmless against, Damages incurred or suffered by the Buyer or any Affiliate thereof resulting from, relating to or constituting:

any breach, as of the date of this Agreement or as of the Closing Date, of any representation or warranty of the Sellers contained in this Agreement or in the Seller Certificates;

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any failure to perform any covenant or agreement of the Sellers contained in this Agreement or any Ancillary Agreement; or

any Retained Liabilities.

Indemnification by the Buyers. The Buyers, jointly and severally, shall indemnify the Sellers in respect of, and hold it harmless against, any and all Damages incurred or suffered by the Sellers resulting from, relating to or constituting:

any breach, as of the date of this Agreement or as of the Closing Date, of any representation or warranty of the Buyer contained in this Agreement or in the Buyer Certificates;

any failure to perform any covenant or agreement of the Buyers contained in this Agreement or any Ancillary Agreement; or

any Assumed Liabilities.

Indemnification Claims.

An Indemnified Party shall give written notification to the Indemnifying Party of the commencement of any Third Party Action. Such notification shall be given within 20 days after receipt by the Indemnified Party of notice of such Third Party Action, and shall describe in reasonable detail (to the extent known by the Indemnified Party) the facts constituting the basis for such Third Party Action and the amount of the claimed damages; provided, however, that no delay or failure on the part of the Indemnified Party in so notifying the Indemnifying Party shall relieve the Indemnifying Party of any liability or obligation hereunder except to the extent of any damage or liability caused by or arising out of such failure. Within 20 days after delivery of such notification, the Indemnifying Party may, upon written notice thereof to the Indemnified Party, assume control of the defense of such Third Party Action with counsel reasonably satisfactory to the Indemnified Party; provided that (i) the Indemnifying Party may only assume control of such defense if (A) it acknowledges in writing to the Indemnified Party that any damages, fines, costs or other liabilities that may be assessed against the Indemnified Party in connection with such Third Party Action constitute Damages for which the Indemnified Party shall be indemnified pursuant to this Article VII and (B) the ad damnum is less than or equal to the amount of Damages for which the Indemnifying Party is liable under this Article VII and (ii) the Indemnifying Party may not assume control of the defense of a Third Party Action involving criminal liability or in which equitable relief is sought against the Indemnified Party. If the Indemnifying Party does not, or is not permitted under the terms hereof to, so assume control of the defense of a Third Party Action, the Indemnified Party shall control such defense. The Non-controlling Party may participate in such defense at its own expense. The Controlling Party shall keep the Non-controlling Party advised of the status of such Third Party Action and the defense thereof and shall consider in good faith recommendations made by the Non-controlling Party with respect thereto. The Non-controlling Party shall furnish the Controlling Party with such information as it may have with respect to such Third Party Action (including copies of any summons, complaint or other pleading which may have been served on such party and any written claim, demand, invoice, billing or other document evidencing or asserting the same) and shall otherwise cooperate with and assist the Controlling Party in the defense of such Third Party Action. The fees and expenses of counsel to the Indemnified Party with respect to a Third Party Action shall be considered Damages for purposes of this Agreement if (i) the Indemnified Party controls the defense of such Third Party Action pursuant to the terms of this Section 7.3(a) or (ii) the Indemnifying Party assumes control of such defense and the Indemnified Party reasonably concludes pursuant to the written advice of counsel that the Indemnifying Party and the Indemnified Party have conflicting interests or different defenses available with respect to such Third Party Action. The Indemnifying Party shall not agree to any settlement of, or the entry of any judgment arising from, any Third Party Action without the prior written consent of the Indemnified Party, which shall not be unreasonably withheld, conditioned or delayed; provided that the consent of the Indemnified Party shall not be required if the Indemnifying Party agrees in writing to pay any amounts payable pursuant to such settlement or judgment and such settlement or judgment includes a complete release of the Indemnified Party from further liability and has no other adverse effect on the Indemnified Party. The Indemnified Party shall not agree to any settlement of, or the entry of any judgment arising from, any such Third Party Action without the prior written consent of the Indemnifying Party, which shall not be unreasonably withheld, conditioned or delayed.

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In order to seek indemnification under this Article VII, an Indemnified Party shall deliver a Claim Notice to the Indemnifying Party. If the Indemnified Party is the Buyer and is seeking to enforce such claim pursuant to the Escrow Agreement, the Indemnifying Party shall deliver a copy of the Claim Notice to the Escrow Agent pursuant to the Escrow Agreement.

Within 20 days after delivery of a Claim Notice, the Indemnifying Party shall deliver to the Indemnified Party a Response, in which the Indemnifying Party shall: (i) agree that the Indemnified Party is entitled to receive all of the Claimed Amount (in which case the Response shall be accompanied by a payment by the Indemnifying Party to the Indemnified Party of the Claimed Amount, by check or by wire transfer; provided that if the Indemnified Party is the Buyer and is seeking to enforce such claim pursuant to the Escrow Agreement, the Indemnifying Party and the Indemnified Party shall deliver to the Escrow Agent pursuant to the terms of the Escrow Agreement, within three days following the delivery of the Response, a written notice executed by both parties instructing the Escrow Agent to disburse the Claimed Amount to the Buyer), (ii) agree that the Indemnified Party is entitled to receive the Agreed Amount (in which case the Response shall be accompanied by a payment by the Indemnifying Party to the Indemnified Party of the Agreed Amount, by check or by wire transfer; provided that if the Indemnified Party is the Buyer and is seeking to enforce such claim pursuant to the Escrow Agreement, the Indemnifying Party and the Indemnified Party shall deliver to the Escrow Agent pursuant to the terms of the Escrow Agreement, within three days following the delivery of the Response, a written notice executed by both parties instructing the Escrow Agent to disburse the Agreed Amount to the Buyer) or (iii) dispute that the Indemnified Party is entitled to receive any of the Claimed Amount.

During the 30-day period following the delivery of a Response that reflects a Dispute, the Indemnifying Party and the Indemnified Party shall use good faith efforts to resolve the Dispute. If the Dispute is not resolved within such 30-day period, the Indemnifying Party and the Indemnified Party shall discuss in good faith the submission of the Dispute to binding arbitration, and if the Indemnifying Party and the Indemnified Party agree in writing to submit the Dispute to such arbitration, then the provisions of Section 7.3(e) shall become effective with respect to such Dispute. The provisions of this Section 7.3(d) shall not obligate the Indemnifying Party and the Indemnified Party to submit to arbitration or any other alternative dispute resolution procedure with respect to any Dispute, and in the absence of an agreement by the Indemnifying Party and the Indemnified Party to arbitrate any Dispute, such Dispute shall be resolved in a state or federal court sitting in New York, New York, in accordance with Section 10.12. If the Indemnified Party is the Buyer and is seeking to enforce the claim that is the subject of the Dispute pursuant to the Escrow Agreement, the Indemnifying Party and the Indemnified Party shall deliver to the Escrow Agent pursuant to the terms of the Escrow Agreement, promptly following the resolution of the Dispute (whether by mutual agreement, arbitration, judicial decision or otherwise), a written notice executed by both parties instructing the Escrow Agent as to what (if any) portion of the Escrow Fund shall be disbursed to the Buyer and/or the Seller (which notice shall be consistent with the terms of the resolution of the Dispute).

If, as set forth in Section 7.3(d), the Indemnified Party and the Indemnifying Party agree to submit any Dispute to binding arbitration, the arbitration shall be conducted by a single arbitrator (the “Arbitrator”) in accordance with the Commercial Rules in effect from time to time and the following provisions.

In the event of any conflict between the Commercial Rules in effect from time to time and the provisions of this Agreement, the provisions of this Agreement shall prevail and be controlling.

The Parties shall commence the arbitration by jointly filing a written submission with the New York, New York office of the AAA in accordance with Commercial Rule 5 (or any successor provision).

No depositions or other discovery shall be conducted in connection with the arbitration.

Not later than 30 days after the conclusion of the arbitration hearing, the Arbitrator shall prepare and distribute to the Parties a writing setting forth the arbitral award and the Arbitrator’s reasons therefor. Any award rendered by the Arbitrator shall be final, conclusive and binding upon the Parties, and judgment thereon may be entered and enforced in any court of competent jurisdiction (subject to Section 10.12), provided that the Arbitrator shall have no power or authority to grant injunctive relief, specific performance or other equitable relief.

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The Arbitrator shall have no power or authority, under the Commercial Rules or otherwise, to (x) modify or disregard any provision of this Agreement, including the provisions of this Section 7.3(e), or (y) address or resolve any issue not submitted by the Parties.

In connection with any arbitration proceeding pursuant to this Agreement, each Party shall bear its own costs and expenses, except that the fees and costs of the AAA and the Arbitrator, the costs and expenses of obtaining the facility where the arbitration hearing is held, and such other costs and expenses as the Arbitrator may determine to be directly related to the conduct of the arbitration and appropriately borne jointly by the parties (which shall not include any Party’s attorneys’ fees or costs, witness fees (if any), costs of investigation and similar expenses) shall be shared equally by the Indemnified Party and the Indemnifying Party.

Notwithstanding the other provisions of this Section 7.3, if a third party asserts (other than by means of a lawsuit) that an Indemnified Party is liable to such third party for a monetary or other obligation which may constitute or result in Damages for which such Indemnified Party may be entitled to indemnification pursuant to this Article VII, and such Indemnified Party reasonably determines that it has a valid business reason to fulfill such obligation, then (i) to the extent such Indemnified Party expects to seek indemnification in accordance with the provisions of this Article VII, such Indemnified Party shall be entitled to satisfy such obligation with prior notice to or consent from the Indemnifying Party, which consent shall not be unreasonably withheld or delayed, (ii) such Indemnified Party may subsequently make a claim for indemnification in accordance with the provisions of this Article VII, and (iii) to the extent the fulfillment of such obligation is consistent with the consent from the Indemnifying Party, such Indemnified Party shall be reimbursed, in accordance with the provisions of this Article VII, for any such Damages for which it is entitled to indemnification pursuant to this Article VII (subject to the right of the Indemnifying Party to dispute the Indemnified Party’s entitlement to indemnification, or the amount for which it is entitled to indemnification, under the terms of this Article VII).

Survival of Representations and Warranties. All representations and warranties that are covered by the indemnification agreements in Section 7.1(a) and Section 7.2(a) shall (a) survive the Closing and (b) shall expire on the date twelve months following the Closing Date. If an Indemnified Party delivers to an Indemnifying Party, before expiration of a representation or warranty, either a Claim Notice based upon a breach of such representation or warranty, or an Expected Claim Notice based upon a breach of such representation or warranty, then the applicable representation or warranty shall survive until, but only for purposes of, the resolution of any claims arising from or related to the matter covered by such notice. If the legal proceeding or written claim with respect to which an Expected Claim Notice has been given is definitively withdrawn or resolved in favor of the Indemnified Party, the Indemnified Party shall promptly so notify the Indemnifying Party; and if the Indemnified Party has delivered a copy of the Expected Claim Notice to the Escrow Agent and funds have been retained in escrow after the Termination Date (as defined in the Escrow Agreement) with respect to such Expected Claim Notice, the Indemnifying Party and the Indemnified Party shall promptly deliver to the Escrow Agent a written notice executed by both parties instructing the Escrow Agent to disburse such retained funds to the Seller in accordance with the terms of the Escrow Agreement. The rights to indemnification set forth in this Article VII shall not be affected by (i) any investigation conducted by or on behalf of an Indemnified Party or any knowledge acquired (or capable of being acquired) by an Indemnified Party, whether before or after the date of this Agreement or the Closing Date, with respect to the inaccuracy or noncompliance with any representation, warranty, covenant or obligation which is the subject of indemnification hereunder or (ii) any waiver (other than an explicit waiver in writing signed by the Indemnified Party) by an Indemnified Party of any closing condition relating to the accuracy of any representations and warranties or the performance of or compliance with agreements and covenants.

Limitations.

For purposes solely of this Article VII, all representations and warranties of the Sellers in Article II (other than Sections 2.7 and 2.29) shall be construed as if the term “material” and any reference to “Seller Material Adverse Effect” (and variations thereof) were omitted from such representations and warranties. Notwithstanding anything to the contrary herein, the Sellers shall not be liable under Section 7.1(a) unless and until the aggregate Damages for which the Sellers would otherwise be liable under Section 7.1(a) exceed US$50,000 (at which point the Sellers shall become liable for the aggregate Damages under Section 7.1(a), and not just amounts in excess of US$50,000). Notwithstanding anything to the contrary herein, the aggregate liability of the Sellers for Damages under Section 7.1(a) with respect to claims for which a Claim Notice or an Expected Claim Notice is delivered on or prior to the date that is twelve months following the Closing Date shall not exceed the sum of the Escrow Amount plus US$550,000. The Sellers shall not be liable for Damages under Section 7.1(a) with respect to claims for which a Claim Notice or an Expected Claim Notice is delivered after the date that is twelve months following the Closing Date.

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For purposes solely of this Article VII, all representations and warranties of the Buyer in Article III shall be construed as if the term “material” were omitted from such representations and warranties. Notwithstanding anything to the contrary herein, the Buyers shall not be liable under Section 7.2(a) unless and until the aggregate Damages for which the Buyers would otherwise be liable under Section 7.2(a) exceed US$50,000 (at which point the Buyers shall become liable for the aggregate Damages under Section 7.2(a), and not just amounts in excess of US$50,000). Notwithstanding anything to the contrary herein, the aggregate liability of the Buyers for Damages under Section 7.2(a) with respect to claims for which a Claim Notice or an Expected Claim Notice is delivered on or prior to the date that is twelve months following the Closing Date shall not exceed $1,100,000. The Buyers shall not be liable for Damages under Section 7.2(a) with respect to claims for which a Claim Notice or an Expected Claim Notice is delivered after the date that is twelve months following the Closing Date.

The Escrow Agreement is intended to secure the indemnification obligations of the Seller under this Agreement. However, the rights of the Buyer under this Article VII shall not be limited to the Escrow Fund but shall be limited under the limitations set forth in Section 7.5(a) above and, subject to the limitations set forth in Section 7.5(a) above, the Escrow Agreement shall not be the exclusive means for the Buyer to enforce such rights; provided that the Buyer shall not attempt to collect any Damages directly from the Seller unless there are no remaining funds held in escrow pursuant to the Escrow Agreement.

Treatment of Indemnity Payments. Any payments made to an Indemnified Party pursuant to this Article VII, pursuant to Article VIII or pursuant to the Escrow Agreement shall be treated as an adjustment to the Purchase Price for tax purposes.

Certain Offsets. Any indemnification payment made pursuant to this Article VII shall be reduced by the amount of any insurance proceeds actually received by the Indemnified Party with respect to the Damages incurred or suffered by the Indemnified Party that are the subject of such indemnification payment.

Exclusive Remedy. After the Closing Date, this Article VII shall provide the exclusive remedy for any of the matters addressed herein or other claims arising out of this Agreement, other than for fraud or intentional misrepresentation.

TERMINATION

Termination of Agreement. The Parties may terminate this Agreement prior to the Closing (whether before or after Requisite Stockholder Approval), as provided below:

the Parties may terminate this Agreement by mutual written consent;

the Buyers may terminate this Agreement by giving written notice to the Sellers in the event any Seller is in breach of any representation, warranty or covenant contained in this Agreement, and such breach (i) individually or in combination with any other such breach, would cause the conditions set forth in clauses (b) or (c) of Section 5.2 not to be satisfied and (ii) is not cured within 20 days following delivery by the Buyers to the Sellers of written notice of such breach; provided, however, that the right to terminate this Agreement by the Buyers shall not be available to the Buyers if either Buyer is at that time in material breach of this Agreement;

the Sellers may terminate this Agreement by giving written notice to the Buyers in the event any Buyer is in breach of any representation, warranty or covenant contained in this Agreement, and such breach (i) individually or in combination with any other such breach, would cause the conditions set forth in clauses (a) or (b) of Section 5.3 not to be satisfied and (ii) is not cured within 20 days following delivery by the Sellers to the Buyers of written notice of such breach; provided, however, that the right to terminate this Agreement by the Sellers shall not be available to the Sellers if either Seller is at that time in material breach of this Agreement;

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either Party may terminate this Agreement by giving written notice to the other Party at any time after the stockholders of PureSight-US have voted on whether to approve the sale of the Acquired Assets contemplated by this Agreement in the event such matter failed to receive the Requisite Stockholder Approval;

the Buyers may terminate this Agreement by giving written notice to the Sellers if the Closing shall not have occurred on or before July 31, 2005 by reason of the failure of any condition precedent under Section 5.1 or 5.2 (unless the failure results primarily from a breach by either Buyer of any representation, warranty or covenant contained in this Agreement); or

the Sellers may terminate this Agreement by giving written notice to the Buyers if the Closing shall not have occurred on or before July 31, 2005 by reason of the failure of any condition precedent under Section 5.1 or 5.3 (unless the failure results primarily from a breach by either Seller of any representation, warranty or covenant contained in this Agreement).

Effect of Termination. If any Party terminates this Agreement pursuant to Section 8.1, all obligations of the Parties hereunder shall terminate without any liability of any Party to the other Parties; provided that (a) the provisions of Section 6.2(b) (Solicitation and Hiring), Section 10.1 (Press Releases and Announcements), Section 10.8 (Governing Law) and Section 10.11 (Expenses) and this Section 8.2 shall remain in full force and effect and survive any termination of this Agreement; (b) the Confidentiality Agreement shall continue in full force and effect, and shall survive any termination of this Agreement in accordance with its terms; and (c) nothing herein shall relieve any Party from liability for willful breaches of this Agreement prior to such termination.

DEFINITIONS

For purposes of this Agreement, each of the following terms shall have the meaning set forth below.

“AAA” shall mean the American Arbitration Association.

“Accountant” shall mean an accountant, generally a member of the dispute resolution group, at a mutually agreed accounting firm.

“Acquired Assets” shall mean (i) the trademarks of PureSight-US, each of which is listed in Schedule 1.1 attached hereto, and (ii) all of the assets, properties and rights of PureSight-Israel existing as of the Closing, excluding the Excluded Assets, but including:

all trade and other accounts receivable and notes and loans receivable that are payable to either Seller, and all rights to unbilled amounts for products delivered or services provided, together with any security held by either Seller for the payment thereof; provided that the first $100,000 of monies collected by the Buyers from any accounts receivable shall be deemed to be an Excluded Asset and shall be paid to the Sellers in accordance with the provisions of Section 6.8 of this Agreement;

all inventories of raw materials, work in process, finished goods, supplies, packaging materials, spare parts and similar items, wherever located, including consignment inventory and inventory held on order or in transit;

all computers, machinery, equipment, tools and tooling, furniture, fixtures, supplies, leasehold improvements, motor vehicles and other tangible personal property;

all real property, leaseholds and subleaseholds in real property, and easements, rights-of-way and other appurtenants thereto;

all Intellectual Property;

all rights under Assigned Contracts;

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all claims, prepayments, deposits, refunds, causes of action, chooses in action, rights of recovery, rights of setoff and rights of recoupment;

all books, records, accounts, ledgers, files, documents, correspondence, lists (including customer and prospect lists), manufacturing and procedural manuals, Intellectual Property records, sales and promotional materials, studies, reports and other printed or written materials; and

to the extent transferred before, on or after Closing Date, all rights of the Sellers under the Approved Enterprise Scheme and any Grants associated therewith.

“Affiliate” shall mean any affiliate, as defined in Rule 12b-2 under the Securities Exchange Act of 1934.

“Agreed Amount” shall mean part, but not all, of the Claimed Amount.

“Ancillary Agreements” shall mean the Escrow Agreement, the instruments of conveyance referred to in Section 1.5(b)(iii), and the instrument of assumption and other instruments referred to in Section 1.5(b)(iv).

“Arbitrator” shall have the meaning set forth in Section 7.3(e).

“Assigned Contracts” shall mean any contracts, agreements or instruments to which either Seller is a party, including any agreements or instruments securing any amounts owed to either Seller, any leases or subleases of real property, any confidentiality agreements, assignment of inventions and similar agreements with consultants or other third parties and any licenses or sublicenses relating to Intellectual Property; provided, that the agreements, contracts, leases or licenses listed on Schedule 1.1(b) shall not be Assigned Contracts.

“Assumed Liabilities” shall mean the following obligations of the Sellers and no other obligations or liabilities:

(a) all obligations of the Sellers arising after the Closing under the Assigned Contracts; and

(b) liabilities incurred by any Seller with respect to its obligations to provide maintenance services and technical support (but not with respect to warranty or similar claims) with regard to products sold by such Seller in the Ordinary Course of Business and delivered by either Seller prior to the Closing Date.

“Buyer” or “Buyers” shall have the meaning set forth in the first paragraph of this Agreement.

“Buyer Certificates” shall mean certificates of each Buyer to the effect that each of the conditions specified in clauses (a) through (c) (insofar as clause (c) relates to Legal Proceedings involving the Buyers) of Section 5.3 is satisfied in all respects.

“CERCLA” shall mean the federal Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended.

“Claimed Amount” shall mean the amount of any Damages incurred or reasonably expected to be incurred by the Indemnified Party.

“Claim Notice” shall mean written notification which contains (i) a description of the Damages incurred or reasonably expected to be incurred by the Indemnified Party and the Claimed Amount of such Damages, to the extent then known, (ii) a statement that the Indemnified Party is entitled to indemnification under Article VII for such Damages and a reasonable explanation of the basis therefor, and (iii) a demand for payment in the amount of such Damages.

“Closing” shall mean the closing of the transactions contemplated by this Agreement.

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“Closing Date” shall mean the date two business days after the satisfaction or waiver of all of the conditions to the obligations of the Parties to consummate the transactions contemplated hereby (excluding the delivery at the Closing of any of the documents set forth in Article V), or such other date as may be mutually agreeable to the Parties.

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

“Commercial Rules” shall mean the Commercial Arbitration Rules of the AAA.

“Confidentiality Agreement” shall mean the Confidentiality Agreement by and between Boston Communications Group, Inc. and PureSight-US, dated as of December 2, 2004

“Controlling Party” shall mean the party controlling the defense of any Third Party Action.

“Customer Deliverables” shall mean (a) the products that the Seller or any Subsidiary (i) currently manufactures, markets, sells or licenses, or (ii) has manufactured, marketed, sold or licensed within the previous five years, or (iii) currently plans to manufacture, market, sell or license in the future and (b) the services that the Seller or any Subsidiary (i) currently provides, or (ii) has provided within the previous three years, or (iii) currently plans to provide in the future.

“Damages” shall mean any and all debts, obligations and other liabilities monetary damages, fines, fees, penalties, interest obligations, deficiencies, losses and expenses (including amounts paid in settlement, interest, court costs, costs of investigators, reasonable fees and expenses of attorneys, accountants, financial advisors and other experts, and other expenses of litigation, arbitration or other dispute resolution proceedings relating to a Third Party Action or an indemnification claim under Article VII), other than those costs and expenses of arbitration of a Dispute which are to be shared equally by the Indemnified Party and the Indemnifying Party as set forth in Section 7.3(e)(vi).

“Disclosure Schedule” shall mean the disclosure schedule provided by the Seller to the Buyer on the date hereof.

“Dispute” shall mean the dispute resulting if the Indemnifying Party in a Response disputes its liability for all or part of the Claimed Amount.

“Employee Benefit Plan” shall mean any “employee pension benefit plan” (as defined in Section 3(2) of ERISA), any “employee welfare benefit plan” (as defined in Section 3(1) of ERISA), “provident fund” (as defined in Section 47(a)(2) of the Israeli Income Tax Ordinance), and any other written or oral plan, agreement or arrangement involving direct or indirect compensation, including insurance coverage, severance benefits, disability benefits, deferred compensation, bonuses, stock options, stock purchase, phantom stock, stock appreciation or other forms of incentive compensation or post-retirement compensation.

“Environmental Law” shall mean any U.S. federal, state or local, Israeli or other country’s law, statute, rule, order, directive, judgment, Permit or regulation or the common law relating to the environment, occupational health and safety, or exposure of persons or property to Materials of Environmental Concern, including any statute, regulation, administrative decision or order pertaining to: (i) the presence of or the treatment, storage, disposal, generation, transportation, handling, distribution, manufacture, processing, use, import, export, labeling, recycling, registration, investigation or remediation of Materials of Environmental Concern or documentation related to the foregoing; (ii) air, water and noise pollution; (iii) groundwater and soil contamination; (iv) the release, threatened release, or accidental release into the environment, the workplace or other areas of Materials of Environmental Concern, including emissions, discharges, injections, spills, escapes or dumping of Materials of Environmental Concern; (v) transfer of interests in or control of real property which may be contaminated; (vi) community or worker right-to-know disclosures with respect to Materials of Environmental Concern; (vii) the protection of wild life, marine life and wetlands, and endangered and threatened species; (viii) storage tanks, vessels, containers, abandoned or discarded barrels and other closed receptacles; and (ix) health and safety of employees and other persons. As used above, the term “release” shall have the meaning set forth in CERCLA.

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

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“ERISA Affiliate” shall mean any entity which is, or at any applicable time was, a member of (1) a controlled group of corporations (as defined in Section 414(b) of the Code), (2) a group of trades or businesses under common control (as defined in Section 414(c) of the Code), or (3) an affiliated service group (as defined under Section 414(m) of the Code or the regulations under Section 414(o) of the Code), any of which includes or included the Seller or a Subsidiary.

“Escrow Agreement” shall mean an escrow agreement in substantially the form attached hereto as Exhibit A.

“Escrow Agent” shall mean JP Morgan Chase.

“Escrow Amount” shall have the meaning set forth in Section 1.4.

“Escrow Fund” shall mean the fund established pursuant to the Escrow Agreement paid by the Buyer to the Escrow Agent at the Closing pursuant to Section 1.4.

“Excluded Assets” shall mean the following assets of the Seller:

(a) the corporate charter, qualifications to conduct business as a foreign corporation, arrangements with registered agents relating to foreign qualifications, taxpayer and other identification numbers, seals, minute books, stock transfer books and other documents relating to the organization and existence of the Seller as a corporation;

(b) all rights relating to refunds, recovery or recoupment of Taxes;

(c) any of the rights of the Seller under this Agreement or under the Ancillary Agreements;

(d) those assets listed on Schedule 1.1(b) attached hereto;

(e) all rights of the Seller in and with respect to the assets associated with its Employee Benefit Plans;

(f) all cash, short-term investments, deposits, bank accounts and other similar assets;

(g) the corporate charter, taxpayer and other identification numbers, seals, minute books, share transfer books, blank share certificates, and other documents relating to the organization, maintenance, and existence of the Sellers as corporations;

(h) rights and Claims under any D&O insurance policy of the Sellers;

(i) all insurance policies of the Sellers, as well as all proceeds which may be payable thereunder and all rights and Claims under insurance policies of Seller;

(j) rights of the Sellers under this Agreement and the Ancillary Agreements, all as the same exist on the Closing Date;

(k) PureSight-US’s rights with respect to the loans made by PureSight-US to PureSight-Israel or any similar agreement or arrangement by which PureSight-US loaned funds to PureSight-Israel (collectively, the “PureSight Loan Agreement”); and

(l) the shares of capital stock of PureSight-Israel and the shares of capital stock of any other corporation or entity that is an Affiliate of either Seller.

“Expected Claim Notice” shall mean a notice that, as a result of a legal proceeding instituted by or written claim made by a third party, an Indemnified Party reasonably expects to incur Damages for which it is entitled to indemnification under Article VII.

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“Financial Statements” shall mean:

the audited consolidated balance sheets and statements of income, changes in stockholders’ equity and cash flows of PureSight-US as of the end of and for each of the last three fiscal years, and

the unaudited consolidated balance sheet as of April 30, 2005 and the unaudited consolidated statements of income, changes in stockholders’ equity and cash flows of PureSight-US for the four months ended April 30, 2005.

“GAAP” shall mean United States generally accepted accounting principles.

“Governmental Entity” shall mean any U.S., Israeli and/or any other country’s court, arbitrational tribunal, administrative agency or commission or other governmental or regulatory authority or agency.

“Grant” shall mean any grant, tax benefit, incentive or subsidy from any Israeli or other Governmental Body, including in relation to “Approved Enterprise Status” from the Investment Center of the Israeli Ministry of Industry, Trade and Labor.

“Indemnified Party” shall mean a party entitled, or seeking to assert rights, to indemnification under Article VII of this Agreement.

“Indemnifying Party” shall mean the party from whom indemnification is sought by the Indemnified Party.

“Intellectual Property” shall mean all:

(a) patents, patent applications, patent disclosures and all related continuation, continuation-in-part, divisional, reissue, reexamination, utility model, certificate of invention and design patents, patent applications, registrations and applications for registrations;

(b) trademarks, service marks, trade dress, Internet domain names, logos, trade names and corporate names and registrations and applications for registration thereof;

(c) copyrights and registrations and applications for registration thereof;

(d) mask works and registrations and applications for registration thereof;

(e) computer software, data and documentation;

(f) inventions, trade secrets and confidential business information, whether patentable or nonpatentable and whether or not reduced to practice, know-how, manufacturing and product processes and techniques, research and development information, copyrightable works, financial, marketing and business data, pricing and cost information, business and marketing plans and customer and supplier lists and information;

(g) other proprietary rights relating to any of the foregoing (including remedies against infringements thereof and rights of protection of interest therein under the laws of all jurisdictions); and

(h) copies and tangible embodiments thereof.

“Internal Systems” shall mean the internal systems of either Seller that are used in its business or operations, including computer hardware systems, software applications and embedded systems.

“Lease” shall mean any lease or sublease pursuant to which either Seller leases or subleases from another party any real property.

“Legal Proceeding” shall mean any action, suit, proceeding, claim, arbitration or investigation before any Governmental Entity or before any arbitrator.

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“Materials of Environmental Concern” shall mean any: pollutants, contaminants or hazardous substances (as such terms are defined under CERCLA), pesticides (as such term is defined under the Federal Insecticide, Fungicide and Rodenticide Act), solid wastes and hazardous wastes (as such terms are defined under the Resource Conservation and Recovery Act), chemicals, other hazardous, radioactive or toxic materials, oil, petroleum and petroleum products (and fractions thereof), or any other material (or article containing such material) listed or subject to regulation under any law, statute, rule, regulation, order, Permit, or directive due to its potential, directly or indirectly, to harm the environment or the health of humans or other living beings.

“Most Recent Balance Sheet” shall mean the audited consolidated balance sheet of PureSight-US as of the Most Recent Balance Sheet Date.

“Most Recent Balance Sheet Date” shall mean December 31, 2004.

“Non-controlling Party” shall mean the party not controlling the defense of any Third Party Action.

“Open Source Materials” shall mean all software or other material that is distributed as “free software”, “open source software” or under a similar licensing or distribution model, including without limitation under the GNU General Public License (GPL), GNU Lesser General Public License (LGPL), Mozilla Public License (MPL), BSD Licenses, the Artistic License, the Netscape Public License, the Sun Community Source License (SCSL) the Sun Industry Standards License (SISL) and the Apache License.

“Ordinary Course of Business” shall mean the ordinary course of business consistent with past custom and practice (including with respect to frequency and amount).

“Parties” shall mean the Buyers and the Sellers.

“Permits” shall mean all permits, licenses, registrations, certificates, orders, approvals, franchises, variances and similar rights issued by or obtained from any Governmental Entity (including those issued or required under Environmental Laws and those relating to the occupancy or use of owned or leased real property).

“Purchase Price” shall mean the purchase price to be paid by the Buyers for the Acquired Assets at the Closing, as set forth in Section 1.3.

“PureSight Loan Agreement” shall have the meaning assigned to such term in the definition of Excluded Assets.

“Requisite Stockholder Approval” shall mean the approval of the sale of the Acquired Assets of PureSight-US by PureSight-US to the Buyers as contemplated by this Agreement by (i) a majority of the votes represented by the outstanding shares of capital stock of PureSight-US entitled to vote thereon and (ii) a majority of the votes represented by the outstanding shares of Series A Preferred Stock of PureSight-US entitled to vote thereon.

“Response” shall mean a written response containing the information provided for in Section 7.3(c).

“Restricted Employee” shall mean any person who either (i) was an employee of either Buyer on either the date of this Agreement or the Closing Date or (ii) was an employee of either Seller on either the date of this Agreement or the Closing Date and received an employment offer from either Buyer within five business days following the Closing Date.

“Retained Liabilities” shall mean any and all liabilities or obligations (whether known or unknown, absolute or contingent, liquidated or unliquidated, due or to become due and accrued or unaccrued, and whether claims with respect thereto are asserted before or after the Closing) of the Sellers which are not Assumed Liabilities. The Retained Liabilities shall include, without limitation, all liabilities and obligations of the Sellers:

(a) for income, transfer, sales, use or other Taxes arising in connection with the consummation of the transactions contemplated by this Agreement (including any income Taxes arising as a result of the transfer by the Sellers to the Buyers of the Acquired Assets;

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(b) for costs and expenses incurred in connection with this Agreement or the consummation of the transactions contemplated by this Agreement;

(c) under this Agreement or the Ancillary Agreements;

(d) for any Taxes, including deferred taxes or taxes measured by income of any Seller earned prior to, on or after the Closing, any liabilities for federal or state income tax, FICA taxes and withholding taxes of employees of any Seller which any Seller is legally obligated to withhold, any liabilities of any Seller for employer FICA and unemployment taxes incurred, and any liabilities of any Seller for sales, use or excise taxes or customs and duties; and all liabilities and obligations of any Seller arising before, on or after the Closing under the Employee Benefit Plans;

(e) under any agreements, contracts, leases or licenses which are listed on Schedule 1.1(b);

(f) arising prior to the Closing under the Assigned Contracts (except to the extent set forth in clause (b) of the definition of Assumed Liabilities), and all liabilities for any breach, act or omission by any Seller prior to the Closing under any Assigned Contract;

(g) except to the extent set forth in clause (b) of the definition of Assumed Liabilities, for repair, replacement or return of products manufactured, licensed or sold by any Seller before, on or after the Closing, including without limitation, all obligations and liabilities to replace or repair products pursuant to any warranty claims against either Seller arising before, on or after the Closing Date with regard to products sold or delivered by either Seller prior to the Closing Date.

(h) arising out of events, conduct or conditions existing or occurring prior to the Closing that constitute a violation of or non-compliance with any law, rule or regulation (including Environmental Laws), any judgment, decree or order of any Governmental Entity, or any Permit or that give rise to liabilities or obligations with respect to Materials of Environmental Concern;

(i) to pay severance benefits to any employee of any Seller whose employment is terminated (or treated as terminated) in connection with the consummation of the transactions contemplated by this Agreement, and all liabilities resulting from the termination of employment of employees of any Seller that arose under any federal or state law or under any Employee Benefit Plan established or maintained by any Seller;

(j) to indemnify any person or entity by reason of the fact that such person or entity was a director, officer, employee, or agent of any Seller or was serving at the request of any Seller as a partner, trustee, director, officer, employee, or agent of another entity (whether such indemnification is for judgments, damages, penalties, fines, costs, amounts paid in settlement, losses, expenses, or otherwise and whether such indemnification is pursuant to any statute, charter document, bylaw, agreement, or otherwise);

(k) resulting from injury to or death of persons or damage to or destruction of property (including any workers compensation claim);

(l) for medical, dental and disability (both long-term and short-term benefits), whether insured or self-insured, owed to (A) employees or former employees of any Seller that are employed by either Buyer after the Closing based upon (1) exposure to conditions in existence prior to the Closing or (2) disabilities existing prior to the Closing (including any such disabilities which may have been aggravated following the Closing) and (B) employees or former employees of any Seller that are not employed by either Buyer after the Closing;

(m) all liabilities and obligations of any Seller arising before, on or after the Closing under the Employee Benefit Plans;

(n) all liabilities and obligations of the Sellers under the PureSight Loan Agreement and any other obligation of PureSight-Israel to PureSight-US under any other agreement or arrangement; and

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(o) all liabilities and obligations of the Sellers under the Convertible Secured Bridge Note, dated January 30, 2004, the Convertible Debenture issued pursuant to the Share Purchase and Convertible Loan Agreement, dated May 24, 2002, and any other notes, debentures and other securities that any Seller has issued to any person.

“Security Interest” shall mean any mortgage, pledge, security interest, encumbrance, charge, tax lien or other lien (whether arising by contract or by operation of law), other than (i) mechanic’s, materialmen’s, and similar liens, (ii) liens arising under worker’s compensation, social security, retirement, and similar legislation, (iii) tax liens of Taxes not yet due and payable and (iv) liens on goods in transit incurred pursuant to documentary letters of credit, in each case arising in the Ordinary Course of Business of the Seller and not material to the Seller.

“Seller” or “Sellers” shall have the meaning set forth in the first paragraph of this Agreement.

“Seller Certificates” shall mean certificates of each Seller to the effect that each of the conditions specified in clause (a) of Section 5.1 and clauses (a) through (d) (insofar as clause (d) relates to Legal Proceedings involving the Sellers) of Section 5.2 is satisfied in all respects.

“Seller Intellectual Property” shall mean the Intellectual Property owned by or licensed to either Seller and covering, incorporated in, underlying or used in connection with the Customer Deliverables or the Internal Systems.

“Seller Material Adverse Effect” shall mean any material adverse change, event, circumstance or development with respect to, or material adverse effect on, (i) the business, assets, liabilities, capitalization, condition (financial or other), or results of operations of the Sellers, taken as a whole, or (ii) the ability of the Buyers to operate the business of the Sellers immediately after the Closing; other than any change, event, circumstance, development or effect arising solely and directly from (i) the public announcement of this Agreement, compliance with terms of this Agreement or the consummation of the transactions contemplated by this Agreement or (ii) any economic, political or industry condition or effect that affects the economy in general or affects the Sellers’ industry on an industry-wide basis, and in each case not specifically relating to, or disproportionately affecting, the Sellers. For the avoidance of doubt, the parties agree that the terms “material”, “materially” or “materiality” as used in this Agreement with an initial lower case “m” shall have their respective customary and ordinary meanings, without regard to the meaning ascribed to Seller Material Adverse Effect.

“Seller Plan” shall mean any Employee Benefit Plan maintained, or contributed to, by any Seller or any ERISA Affiliate.

“Software” shall mean any of the software owned by any Seller.

“Taxes” shall mean all taxes, charges, fees, levies or other similar assessments or liabilities, including income, gross receipts, ad valorem, premium, value-added, excise, real property, personal property, sales, use, transfer, withholding, employment, unemployment, insurance, social security, business license, business organization, environmental, workers compensation, payroll, profits, license, lease, service, service use, severance, stamp, occupation, windfall profits, customs, duties, franchise and other taxes imposed by the United States of America, the State of Israel or any state, local or foreign government, or any agency thereof, or other political subdivision of the United States, Israel or any such government, and any interest, fines, penalties, assessments or additions to tax resulting from, attributable to or incurred in connection with any tax or any contest or dispute thereof.

“Tax Returns” shall mean all reports, returns, declarations, statements or other information required to be supplied to a taxing authority in connection with Taxes.

“Third Party Action” shall mean any suit or proceeding by a person or entity other than a Party for which indemnification may be sought by a Party under Article VII.

“VAT” shall mean the amount of Value Added Tax required to be paid by applicable law by BCGI-Israel to PureSight-Israel in connection with the purchase by BCGI-Israel of the Acquired Assets hereunder.

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MISCELLANEOUS

Press Releases and Announcements. The Sellers shall not issue any press release or public announcement relating to the subject matter of this Agreement without the prior written approval of the Buyers. The Buyers shall not issue any press release or public announcement relating to the subject matter of this Agreement, unless the Sellers shall have first been given a copy of the draft of such press release or public announcement and an opportunity to comment thereon.

No Third Party Beneficiaries. This Agreement shall not confer any rights or remedies upon any person other than the Parties and their respective successors and permitted assigns.

Entire Agreement. This Agreement (including the documents referred to herein) constitutes the entire agreement between the Parties and supersedes any prior understandings, agreements, or representations by or between the Parties, written or oral, with respect to the subject matter hereof.

Succession and Assignment. This Agreement shall be binding upon and inure to the benefit of the Parties named herein and their respective successors and permitted assigns. Neither Party may assign any of its rights or delegate any of its performance obligations hereunder without the prior written approval of the other Party; provided that either Buyer may assign some or all of its rights, interests and/or obligations hereunder to one or more direct or indirect wholly-owned subsidiaries of Boston Communications Group, Inc.; provided, however, that such assignment shall not relieve BCGI-US or BCGI-Israel from their respective duties and obligations hereunder. Any purported assignment of rights or delegation of performance obligations in violation of this Section 10.4 is void.

Counterparts and Facsimile Signature. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original but all of which together shall constitute one and the same instrument. This Agreement may be executed by facsimile signature.

Headings. The section headings contained in this Agreement are inserted for convenience only and shall not affect in any way the meaning or interpretation of this Agreement.

Notices. All notices, requests, demands, claims and other communications hereunder shall be in writing. Any notice, request, demand, claim or other communication hereunder shall be deemed duly delivered four business days after it is sent by registered or certified mail, return receipt requested, postage prepaid, or one business day after it is sent for next business day delivery via a reputable nationwide overnight courier service, in each case to the intended recipient as set forth below:

If to the Seller:	Copy to:
PureSight, Inc.	Howard Rice Nemerovski Canady Falk & Rabkin
300 Avenida de las Palmeras	Three Embarcadero Center – 7th Floor
San Clemente, CA 92672	San Francisco, CA 94111-4024
Attn: President	Attn: Michael Sullivan, Esq.
PureSight Ltd.	Berkman Whecsler Sahar Bloom & co.
300 Ave Palmeras	Law Offices
San Clemente, CA 92672	1Azrieli Center, Tel-Aviv Israel 67021
Attn: Chief Executive Officer	Attn: Alon Sahar, Adv.

35

If to the Buyer:	Copy to:
Boston Communications Group, Inc.	Wilmer Cutler Pickering Hale and Dorr LLP
55 Middlesex Turnpike	Bay Colony Corporate Center
Bedford, MA 01730	1100 Winter Street, Suite 4650
Attn: General Counsel	Waltham, MA 02451
	Attn: Michael D. Bain, Esq.

Either Party may give any notice, request, demand, claim or other communication hereunder using any other means (including personal delivery, expedited courier, messenger service, telecopy, ordinary mail, or electronic mail), but no such notice, request, demand, claim or other communication shall be deemed to have been duly given unless and until it actually is received by the party for whom it is intended. Either Party may change the address to which notices, requests, demands, claims and other communications hereunder are to be delivered by giving the other Party notice in the manner herein set forth.

Governing Law. All matters arising out of or relating to this Agreement and the transactions contemplated hereby (including without limitation its interpretation, construction, performance and enforcement) shall be governed by and construed in accordance with the internal laws of the Commonwealth of Massachusetts, without giving effect to any choice or conflict of law provision or rule (whether of the Commonwealth of Massachusetts or any other jurisdiction) that would cause the application of laws of any jurisdictions other than those of the Commonwealth of Massachusetts.

Amendments and Waivers. The Parties may mutually amend any provision of this Agreement at any time prior to the Closing; provided, however, that any amendment effected subsequent to the Requisite Stockholder Approval shall be subject to any restrictions contained in the Delaware General Corporation Law. No amendment of any provision of this Agreement shall be valid unless the same shall be in writing and signed by each of the Parties. No waiver by either Party of any right or remedy hereunder shall be valid unless the same shall be in writing and signed by the Party giving such waiver. No waiver by either Party with respect to any default, misrepresentation, or breach of warranty or covenant hereunder shall be deemed to extend to any prior or subsequent default, misrepresentation, or breach of warranty or covenant hereunder or affect in any way any rights arising by virtue of any prior or subsequent such occurrence.

Severability. Any term or provision of this Agreement that is invalid or unenforceable in any situation in any jurisdiction shall not affect the validity or enforceability of the remaining terms and provisions hereof or the validity or enforceability of the offending term or provision in any other situation or in any other jurisdiction. If the final judgment of a court of competent jurisdiction declares that any term or provision hereof is invalid or unenforceable, the Parties agree that the court making the determination of invalidity or unenforceability shall have the power to limit the term or provision, to delete specific words or phrases, or to replace any invalid or unenforceable term or provision with a term or provision that is valid and enforceable and that comes closest to expressing the intention of the invalid or unenforceable term or provision, and this Agreement shall be enforceable as so modified.

Expenses. Except as set forth in Article VII and the Escrow Agreement, each Party shall bear its own costs and expenses (including legal fees and expenses) incurred in connection with this Agreement and the transactions contemplated hereby. The Seller agrees that none of the costs and expenses (including legal fees and expenses) incurred by it in connection with this Agreement or the transactions contemplated hereby will be (a) borne by any Subsidiary or (b) paid until after the Closing.

Submission to Jurisdiction. Each Party (a) submits to the jurisdiction of any state or federal court sitting in New York, New York in any action or proceeding arising out of or relating to this Agreement or the Ancillary Agreements (including any action or proceeding for the enforcement of any arbitral award made in connection with any arbitration of a Dispute hereunder), (b) agrees that all claims in respect of such action or proceeding may be heard and determined in any such court, (c) waives any claim of inconvenient forum or other challenge to venue in such court, (d) agrees not to bring any action or proceeding arising out of or relating to this Agreement or the Ancillary Agreements in any other court and (e) waives any right it may have to a trial by jury with respect to any action or proceeding arising out of or relating to this Agreement or the Ancillary Agreements; provided in each case that, solely with respect to any arbitration of a Dispute, the Arbitrator shall resolve all threshold issues relating to the validity and applicability of the arbitration provisions of this Agreement, contract validity, applicability of statutes of

36

limitations and issue preclusion, and such threshold issues shall not be heard or determined by such court. Each party agrees to accept service of any summons, complaint or other initial pleading made in the manner provided for the giving of notices in Section 10.7, provided that nothing in this Section 10.12 shall affect the right of either Party to serve such summons, complaint or other initial pleading in any other manner permitted by law.

Specific Performance. Each Party acknowledges and agrees that the other Party would be damaged irreparably in the event any of the provisions of this Agreement (including Sections 6.1, 6.2 and 6.3) are not performed in accordance with their specific terms or otherwise are breached. Accordingly, each Party agrees that the other Party shall be entitled to an injunction or other equitable relief to prevent breaches of the provisions of this Agreement and to enforce specifically this Agreement and the terms and provisions hereof in any action instituted in any court of the United States or any state thereof having jurisdiction over the Parties and the matter, in addition to any other remedy to which it may be entitled, at law or in equity. Notwithstanding the foregoing, the Parties agree that if a Dispute is submitted to arbitration in accordance with Section 7.3(d) and Section 7.3(e), then the foregoing provisions of this Section 10.13 shall not apply to such Dispute, and the provisions of Section 7.3(d) and Section 7.3(e) shall govern availability of injunctive relief, specific performance or other equitable relief with respect to such Dispute.

Construction.

The language used in this Agreement shall be deemed to be the language chosen by the Parties to express their mutual intent, and no rule of strict construction shall be applied against either Party.

Any reference to any federal, state, local, or foreign statute or law shall be deemed also to refer to all rules and regulations promulgated thereunder, unless the context requires otherwise.

Any reference herein to “including” shall be interpreted as “including without limitation”.

Any reference to any Article, Section or paragraph shall be deemed to refer to an Article, Section or paragraph of this Agreement, unless the context clearly indicates otherwise.

[Remainder of Page Intentionally Left Blank]

37

IN WITNESS WHEREOF, the Parties have executed this Agreement as of the date first above written.

CELLULAR EXPRESS, INC.
By:	/s/ Frederick E. von Mering
Name:	Frederick E. von Mering
Title:	Chief Operating Officer
bcgi TECHNOLOGIES LTD.
By:	/s/ Frederick E. von Mering
Name:	Frederick E. von Mering
Title:	Chief Operating Officer
PURESIGHT, INC.
By:	/s/ J. Cleve Adams
Name:	J. Cleve Adams
Title:	Chief Executive Officer
PURESIGHT, LTD.
By:	/s/ Ouri Azoulay
Name:	Ouri Azoulay
Title:	General Manager

38

The following stockholders of the Seller hereby execute this Agreement for the limited purpose of agreeing to and becoming bound by the provisions of Section 4.3(b).

BLUMBERG CAPITAL I, L.P.
BLUMBERG CAPITAL AFFILIATES I, L.P.
By:	/s/ David J. Blumberg
Name:	David J. Blumberg
Title:	Managing partner
BLUMBERG CAPITAL AFFILIATES I, L.P.
By:	/s/ David J. Blumberg
Name:	David J. Blumberg
Title:	Managing partner
HITACHI LTD.
By:	/s/ Michiharu Nakamura
Name:	Michiharu Nakamura
Title:	Executive Vice President

39

EX-10.8

Exhibit 10.8

Change of Control Agreement

THIS CHANGE OF CONTROL AGREEMENT (this “Agreement”) by and between Boston Communications Group, Inc. (the “Company”), a Massachusetts Corporation with its principal place of business at 55 Middlesex Turnpike, Bedford, MA 01730, and Thomas M. Erskine (the “Executive”), is made as of May 3, 2005 (the “Effective Date”).

WHEREAS, the Company recognizes that the possibility of an acquisition of the Company exists and that such possibility, and the uncertainty and questions which it may raise among certain personnel, may result in the departure or distraction of personnel to the detriment of the Company and its stockholders, and

WHEREAS, the Board of Directors of the Company (the “Board”) has determined that appropriate steps should be taken to reinforce and encourage the continued employment and dedication of the Executive and the Executive’s continued efforts to maximize the Company’s value.

NOW, THEREFORE, as an inducement for and in consideration of the Executive remaining in its employ, the Company agrees that the Executive shall receive the benefits set forth in this Agreement upon a Change in Control (as defined in Section 1.2).

Key Definitions.

As used herein, the following terms shall have the following respective meanings:

“Cause” means:

A good faith finding by a majority of the Board (excluding the vote of the Executive, if then a member of the Board) that (1) the Executive has refused without good reason to perform his or her reasonably assigned material duties for the Company; (2) the Executive has engaged in gross negligence or willful misconduct, which has or is expected to have a material detrimental effect on the Company, (3) the Executive has engaged in fraud, embezzlement or other material dishonesty, (4) the Executive has engaged in any conduct which would constitute grounds for termination for violation of the Company’s policies in effect at that time; or (5) the Executive has breached any material provision of any nondisclosure, invention assignment, non-competition or other similar agreement between the Executive and the Company and, if amenable to cure, has not cured such breach after reasonable notice from the Company; or

The conviction by the Executive of, or the entry of a pleading of guilty or nolo contendre by the Executive to, any crime involving moral turpitude or any felony.

As used herein, “Change in Control” shall mean the occurrence of any one of the following events:

Any “person” who is not the “beneficial owner” of more than ten percent (10%) of the outstanding equity securities of the Company on a fully diluted basis on the date hereof or an “affiliate” of such party on the date hereof becomes, alone or together with such person’s affiliates, a “beneficial owner” of more than fifty percent (50%) of the outstanding equity securities of the Company (as such terms are defined in Section 13(d) of the Securities Exchange Act of 1934, as amended, and the regulations promulgated thereunder); or

In a single transaction, the consummation of a merger, consolidation or share exchange involving the Company, or the sale of all or substantially all of the assets of the Company, unless the stockholders of the Company immediately prior to the transaction own fifty percent (50%) or more of the outstanding equity securities of the continuing entity immediately following the consummation of such transaction.

“Change of Control Date” means the first date during the Term (as defined in Section 1.4) on which a Change in Control occurs. Anything in this Agreement to the contrary notwithstanding, if (a) a Change in Control occurs, (b) the Executive’s employment with the Company is terminated prior to the date on which the Change in Control occurs, and (c) it is reasonably demonstrated by the Executive that such termination of employment (i) was at the request of a third party who has taken steps reasonably calculated to effect a Change in Control or (ii) otherwise arose in connection with or in anticipation of a Change in Control, then for all purposes of this Agreement the “Change in Control Date” shall mean the date immediately prior to the date of such termination of employment.

Term of Agreement. This Agreement, and all rights and obligations of the parties hereunder, shall take effect upon the Effective Date and shall expire upon the first to occur of (a) the expiration of the Term (as defined below) if a Change in Control has not occurred during the term, (b) the termination of the Executive’s employment with the Company prior to the Change in Control Date, (c) the termination of the Executive’s employment with the Company after the Change of Control Date without Cause or for Good Reason, (d) the date twenty-four (24) months after the Change in Control Date, if the Executive is still employed by the Company as of such later date, or (e) the fulfillment by the Company of all of its obligations under Section 2 if the Executive’s employment with the Company terminates within twenty-four (24) months following the Change in Control Date. “Term” shall mean the period commencing as of the Effective Date and continuing in effect through May 3, 2010 provided, however, that commencing on May 3, 2010 and each May 3rd thereafter, the Term shall be automatically extended for one additional year unless, not later than 90 days prior to the scheduled expiration of the Term (or any extension thereof), the Company shall have given the Executive written notice that the Term will not be extended.

“Good Reason” means the occurrence, without the Executive’s written consent, of any of the events or circumstances set forth in clauses (a) through (c) below

relocation of the Executive’s primary place of business to a location that results in an increase in the Executive’s daily one way commute of at least fifty (50) miles;

any material breach by the Company or any successor thereto of any agreement entered into after the Effective Date (or in the case of any agreement to provide benefits to the Executive, entered into at any time) to which the Executive and the Company are parties, which breach is not cured within ten days after written notice thereof; or

Any material adverse change in the Executive’s authority, duties or annual base salary (including, but not limited to, any failure to pay compensation on at least a monthly basis) as in effect prior to the Change in Control.

Upon Change of Control - Any options to purchase Company stock or restricted stock of the Company held by the Executive under the Company’s stock compensation plans and arrangements will become immediately exercisable notwithstanding any contrary provisions in the documents otherwise governing the options and will remain exercisable for the period of time during which such options would otherwise have been exercisable had the Executive remained in the employ of the Company.

Termination Without Cause or for Good Reason After a Change in Control. If at any time prior to the expiration of twenty-four (24) months following a Change of Control Date, the Company terminates the Executive’s employment without Cause or the Executive terminates his or her employment for Good Reason, the Company will provide benefits as follows provided the Executive executes a release of claims drafted by the Company’s counsel and it becomes binding:

Payment

Within 30 days following the termination of employment, the Company will pay to the Executive a lump-sum cash amount equal to 100% of the Executive’s annual base salary in effect at the time of the termination of employment (or if the Executive’s annual base salary has been reduced within 61 days prior to the termination, the base salary in effect immediately prior to the reduction), less all applicable state and federal taxes.

The Executive will be paid his or her prorated target bonus due for the calendar year until his or her date of termination, less all applicable state and federal taxes. For example, an executive who is terminated on March 31 would be paid 25% of the prorated target bonus not yet paid for the applicable year. An executive who is terminated on June 30 would be paid 50% of the prorated target bonus not yet paid for the applicable year. Any other bonuses or commission earned but not yet paid will be paid to the Executive upon termination.

The Company will continue for a period of 12 months following the date of termination to provide the Executive with any medical, dental and disability and life insurance benefits in effect at the time of his or her termination (or, if his or her level of benefits has been reduced within 61 days of the termination, his or her level of benefits in effect prior to the reduction). If the Company is unable to continue any such benefit or benefits, the Company will instead pay to the Executive, within 30 days of termination, a lump sum cash payment equal to the greater of the Company’s cost of such benefits or the Executive’s individual replacement cost for such benefits. All other benefits will cease upon termination.

Taxes.

a. Notwithstanding any other provision of this Agreement, except as set forth in Section 2.2(b), in the event that the Company undergoes a “Change in Ownership or Control” (as defined below), the Company shall not be obligated to provide to the Executive a portion of any “Contingent Compensation Payments” (as defined below) that the Executive would otherwise be entitled to receive to the extent necessary to eliminate any “excess parachute payments” (as defined in Section 280G(b)(1) of the Internal Revenue Code of 1986, as amended (the “Code”)) for the Executive. For purposes of this Section 2.2, the Contingent Compensation Payments so eliminated shall be referred to as the “Eliminated Payments” and the aggregate amount (determined in accordance with Proposed Treasury Regulation Section 1.280G-1, Q/A-30 or any successor provision) of the Contingent Compensation Payments so eliminated shall be referred to as the “Eliminated Amount.”

b. Notwithstanding the provisions of Section 2.2(a), no such reduction in Contingent Compensation Payments shall be made if (i) the Eliminated Amount (computed without regard to this sentence) exceeds (ii) 110% of the aggregate present value (determined in accordance with Proposed Treasury Regulation Section 1.280G-1, Q/A-31 and Q/A-32 or any successor provisions) of the amount of any additional taxes that would be incurred by the Executive if the Eliminated Payments (determined without regard to this sentence) were paid to him or her (including, state and federal income taxes on the Eliminated Payments, the excise tax imposed by Section 4999 of the Code payable with respect to all of the Contingent Compensation Payments in excess of the Executive’s “base amount” (as defined in Section 280G(b)(3) of the Code), and any withholding taxes). The override of such reduction in Contingent Compensation Payments pursuant to this Section 2.2(b) shall be referred to as a “Section 2.2(b) Override.” For purpose of this paragraph, if any federal or state income taxes would be attributable to the receipt of any Eliminated Payment, the amount of such taxes shall be computed by multiplying the amount of the Eliminated Payment by the maximum combined federal and state income tax rate provided by law.

c. For purposes of this Section 2.2 the following terms shall have the following respective meanings:

(i) “Change in Ownership or Control” shall mean a change in the ownership or effective control of the Company or in the ownership of a substantial portion of the assets of the Company determined in accordance with Section 280G(b)(2) of the Code.

(ii) “Contingent Compensation Payment” shall mean any payment (or benefit) in the nature of compensation that is made or made available (under this Agreement or otherwise) to a “disqualified individual” (as defined in Section 280G(c) of the Code) and that is contingent (within the meaning of Section 280G(b)(2)(A)(i) of the Code) on a Change in Ownership or Control of the Company.

d. Any payments or other benefits otherwise due to the Executive following a Change in Ownership or Control that could reasonably be characterized (as determined by the Company) as Contingent Compensation Payments (the “Potential Payments”) shall not be made until the dates provided for in this Section 2.2(d). Within 30 days after each date on which the Executive first becomes entitled to receive (whether or not then due) a Contingent Compensation Payment relating to such Change in Ownership or Control, the Company shall determine and notify the Executive (with reasonable detail regarding the basis for its determinations) (i) which Potential Payments constitute Contingent Compensation Payments, (ii) the

Eliminated Amount and (iii) whether the Section 2.2(b) Override is applicable. Within 30 days after delivery of such notice to the Executive, the Executive shall deliver a response to the Company (the “Executive Response”) stating either (A) that he or she agrees with the Company’s determination pursuant to the preceding sentence, in which case he or she shall indicate, if applicable, which Contingent Compensation Payments, or portions thereof (the aggregate amount of which, determined in accordance with Proposed Treasury Regulation Section 1.280G-1, Q/A-30 or any successor provision, shall be equal to the Eliminated Amount), shall be treated as Eliminated Payments or (B) that he or she disagrees with such determination, in which case he or she shall set forth (i) which Potential Payments should be characterized as Contingent Compensation Payments, (ii) the Eliminated Amount, (iii) whether the Section 2.2(b) Override is applicable, and (iv) which (if any) Contingent Compensation Payments, or portions thereof (the aggregate amount of which, determined in accordance with Proposed Treasury Regulation Section 1.280G-1, Q/A-30 or any successor provision, shall be equal to the Eliminated Amount, if any), shall be treated as Eliminated Payments. In the event that the Executive fails to deliver an Executive Response on or before the required date, the Company’s initial determination shall be final and the Contingent Compensation Payments that shall be treated as Eliminated Payments shall be determined by the Company in its absolute discretion. If the Executive states in the Executive Response that he or she agrees with the Company’s determination, the Company shall make the Potential Payments to the Executive within three business days following delivery to the Company of the Executive Response (except for any Potential Payments which are not due to be made until after such date, which Potential Payments shall be made on the date on which they are due). If the Executive states in the Executive Response that he or she disagrees with the Company’s determination, then, for a period of 60 days following delivery of the Executive Response, the Executive and the Company shall use good faith efforts to resolve such dispute. If such dispute is not resolved within such 60-day period, such dispute shall be settled exclusively by arbitration in Boston, Massachusetts, in accordance with the rules of the American Arbitration Association then in effect. Judgment may be entered on the arbitrator’s award in any court having jurisdiction. The Company shall, within three business days following delivery to the Company of the Executive Response, make to the Executive those Potential Payments as to which there is no dispute between the Company and the Executive regarding whether they should be made (except for any such Potential Payments which are not due to be made until after such date, which Potential Payments shall be made on the date on which they are due). The balance of the Potential Payments shall be made within three business days following the resolution of such dispute. Subject to the limitations contained in Sections 2.2(a) and (b) hereof, the amount of any payments to be made to the Executive following the resolution of such dispute shall be increased by amount of the accrued interest thereon computed at the prime rate announced from time to time by Boston Communications Group, Inc.’s primary bank, compounded monthly from the date that such payments originally were due.

Mitigation. The Executive shall not be required to mitigate the amount of any payment or benefits provided for in this Section 2 by seeking other employment or otherwise. Further, the amount of any payment or benefits provided for in this Section 2 shall not be reduced by any compensation earned by the Executive as a result of employment by another employer, by retirement benefits, by offset against any amount claimed to be owed by the Executive to the Company, or otherwise.

Other Payments. This Agreement does not supercede or otherwise impact any other current obligations of the Company to the Executive. Any amounts payable hereunder shall not be offset by any amounts due to the Company from the Executive.

Other Employment Termination. If the Executive’s employment terminates for any reason other than as described in Section 2, the Executive shall only receive any compensation owed to him as of his termination date and any other post-termination benefits which the Executive is eligible to receive under any plan or program of the Company.

Successors.

Successor to Company. The Company shall require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business or assets of the Company expressly to assume and agree to perform this Agreement to the same extent that the Company would be required to perform it if no such succession had taken place. As used in this Agreement, “Company” shall mean the Company as defined above and any successor to its business or assets as aforesaid which assumes and agrees to perform this Agreement, by operation of law or otherwise.

Successor to Executive. This Agreement shall inure to the benefit of and be enforceable by the Executive’s personal or legal representatives, executors, administrators, successors, heirs, distributes, devisees and legatees. If the Executive should die while any amount would still be payable to the Executive or his or her family hereunder if the Executive had continued to live, all such amounts, unless otherwise provided herein, shall be paid in accordance with the terms of this Agreement to the executors, personal representatives or administrators of the Executive’s estate.

Notices. All notices, instructions and other communications given hereunder or in connection herewith shall be in writing. Any such notice, instruction or communication shall be sent either (i) by registered or certified mail, return receipt requested, postage prepaid, or (ii) prepaid via a reputable nationwide overnight courier service, in each case addressed to the Company, at 55 Middlesex Turnpike, Bedford, MA 01730, ATTN: President, and to the Executive at the Executive’s address indicated on the signature page of this Agreement (or to such other address as either the Company or the Executive may have furnished to the other in writing in accordance herewith). Any such notice, instruction or communication shall be deemed to have been delivered five business days after it is sent by registered or certified mail, return receipt requested, postage prepaid, or one business day after it is sent via a reputable nationwide overnight courier service. Either party may give any notice, instruction or other communication hereunder using any other means, but no such notice, instruction or other communication shall be deemed to have been duly delivered unless and until it actually is received by the party for whom it is intended.

Miscellaneous.

Employment by Subsidiary. For purposes of this Agreement, the Executive’s employment with the Company shall not be deemed to have terminated solely as a result of the Executive continuing to be employed by a wholly-owned subsidiary of the Company.

Severability. The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement, which shall remain in full force and effect.

Governing Law. The validity, interpretation, construction and performance of this Agreement shall be governed by the internal laws of the State of Massachusetts, without regard to conflicts of law principles.

Waiver of Right to Jury Trial. Both the Company and the Executive expressly waive any right that any party either has or may have to a jury trial of any dispute arising out of or in any way related to the matters covered by this Agreement.

Waivers. No waiver by the Executive at any time of any breach of, or compliance with, any provision of this Agreement to be performed by the Company shall be deemed a waiver of that or any other provision at any subsequent time.

Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed to be an original but both of which together shall constitute one and the same instrument.

Tax Withholding. Any payments provided for hereunder shall be paid net of any applicable tax withholding required under federal, state or local law.

Entire Agreement; Employment Agreement.

This Agreement sets forth the entire agreement of the parties hereto in respect of the subject matter contained herein and supersedes all prior agreements, promises, covenants, arrangements, communications, representations or warranties, whether oral or written, by any officer, employee or representative of any party hereto in respect of the subject matter contained herein; and any prior agreement of the parties hereto in respect of the subject matter contained herein is hereby terminated and cancelled.

Not an Employment Contract. The Executive acknowledges that this Agreement does not constitute a contract of employment or impose on the Company any obligation to retain the Executive as an employee and that this Agreement does not prevent the Executive from terminating employment at any time. If the Executive’s employment with the Company terminates for any reason and subsequently a Change in Control shall occur, the Executive shall not be entitled to any benefits hereunder except as otherwise provided pursuant to Section 2.

Amendments. This Agreement may be amended or modified only by a written instrument executed by both the Company and the Executive.

Executive’s Acknowledgements. The Executive acknowledges that he or she: (a) has read this Agreement; (b) has been represented in the preparation, negotiation and execution of this Agreement by legal counsel of the Executive’s own choice or has voluntarily declined to seek such counsel; and (c) understands the terms and consequences of this Agreement.

Company Acknowledgements. The Company acknowledges that it has received all necessary consents, approvals and votes, including from the Board and holders of the Company’s Preferred Stock, to permit the Company to enter into this Agreement and be bound hereby.

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

BOSTON COMMUNICATIONS GROUP, INC.
By:	/s/ E.Y. Snowden
Title:	President & Chief Executive Officer
EMPLOYEE:
By:	/s/ Thomas M. Erskine
	Thomas M. Erskine, Vice President Product Development and Marketing

EX-10.9

Exhibit 10.9

Change of Control Agreement

THIS CHANGE OF CONTROL AGREEMENT (this “Agreement”) by and between Boston Communications Group, Inc. (the “Company”), a Massachusetts Corporation with its principal place of business at 55 Middlesex Turnpike, Bedford, MA 01730, and Ersin Galioglu (the “Executive”), is made as of May 3, 2005 (the “Effective Date”).

WHEREAS, the Company recognizes that the possibility of an acquisition of the Company exists and that such possibility, and the uncertainty and questions which it may raise among certain personnel, may result in the departure or distraction of personnel to the detriment of the Company and its stockholders, and

WHEREAS, the Board of Directors of the Company (the “Board”) has determined that appropriate steps should be taken to reinforce and encourage the continued employment and dedication of the Executive and the Executive’s continued efforts to maximize the Company’s value.

NOW, THEREFORE, as an inducement for and in consideration of the Executive remaining in its employ, the Company agrees that the Executive shall receive the benefits set forth in this Agreement upon a Change in Control (as defined in Section 1.2).

Key Definitions.

As used herein, the following terms shall have the following respective meanings:

“Cause” means:

A good faith finding by a majority of the Board (excluding the vote of the Executive, if then a member of the Board) that (1) the Executive has refused without good reason to perform his or her reasonably assigned material duties for the Company; (2) the Executive has engaged in gross negligence or willful misconduct, which has or is expected to have a material detrimental effect on the Company, (3) the Executive has engaged in fraud, embezzlement or other material dishonesty, (4) the Executive has engaged in any conduct which would constitute grounds for termination for violation of the Company’s policies in effect at that time; or (5) the Executive has breached any material provision of any nondisclosure, invention assignment, non-competition or other similar agreement between the Executive and the Company and, if amenable to cure, has not cured such breach after reasonable notice from the Company; or

The conviction by the Executive of, or the entry of a pleading of guilty or nolo contendre by the Executive to, any crime involving moral turpitude or any felony.

As used herein, “Change in Control” shall mean the occurrence of any one of the following events:

Any “person” who is not the “beneficial owner” of more than ten percent (10%) of the outstanding equity securities of the Company on a fully diluted basis on the date hereof or an “affiliate” of such party on the date hereof becomes, alone or together with such person’s affiliates, a “beneficial owner” of more than fifty percent (50%) of the outstanding equity securities of the Company (as such terms are defined in Section 13(d) of the Securities Exchange Act of 1934, as amended, and the regulations promulgated thereunder); or

In a single transaction, the consummation of a merger, consolidation or share exchange involving the Company, or the sale of all or substantially all of the assets of the Company, unless the stockholders of the Company immediately prior to the transaction own fifty percent (50%) or more of the outstanding equity securities of the continuing entity immediately following the consummation of such transaction.

“Change of Control Date” means the first date during the Term (as defined in Section 1.4) on which a Change in Control occurs. Anything in this Agreement to the contrary notwithstanding, if (a) a Change in Control occurs, (b) the Executive’s employment with the Company is terminated prior to the date on which the Change in Control occurs, and (c) it is reasonably demonstrated by the Executive that such termination of employment (i) was at the request of a third party who has taken steps reasonably calculated to effect a Change in Control or (ii) otherwise arose in connection with or in anticipation of a Change in Control, then for all purposes of this Agreement the “Change in Control Date” shall mean the date immediately prior to the date of such termination of employment.

Term of Agreement. This Agreement, and all rights and obligations of the parties hereunder, shall take effect upon the Effective Date and shall expire upon the first to occur of (a) the expiration of the Term (as defined below) if a Change in Control has not occurred during the term, (b) the termination of the Executive’s employment with the Company prior to the Change in Control Date, (c) the termination of the Executive’s employment with the Company after the Change of Control Date without Cause or for Good Reason, (d) the date twenty-four (24) months after the Change in Control Date, if the Executive is still employed by the Company as of such later date, or (e) the fulfillment by the Company of all of its obligations under Section 2 if the Executive’s employment with the Company terminates within twenty-four (24) months following the Change in Control Date. “Term” shall mean the period commencing as of the Effective Date and continuing in effect through May 3, 2010 provided, however, that commencing on May 3, 2010 and each May 3rd thereafter, the Term shall be automatically extended for one additional year unless, not later than 90 days prior to the scheduled expiration of the Term (or any extension thereof), the Company shall have given the Executive written notice that the Term will not be extended.

“Good Reason” means the occurrence, without the Executive’s written consent, of any of the events or circumstances set forth in clauses (a) through (c) below

relocation of the Executive’s primary place of business to a location that results in an increase in the Executive’s daily one way commute of at least fifty (50) miles;

any material breach by the Company or any successor thereto of any agreement entered into after the Effective Date (or in the case of any agreement to provide benefits to the Executive, entered into at any time) to which the Executive and the Company are parties, which breach is not cured within ten days after written notice thereof; or

Any material adverse change in the Executive’s authority, duties or annual base salary (including, but not limited to, any failure to pay compensation on at least a monthly basis) as in effect prior to the Change in Control.

Termination Without Cause or for Good Reason After a Change in Control. If at any time prior to the expiration of twenty-four (24) months following a Change of Control Date, the Company terminates the Executive’s employment without Cause or the Executive terminates his or her employment for Good Reason, the Company will provide benefits as follows provided the Executive executes a release of claims drafted by the Company’s counsel and it becomes binding:

Payment

Within 30 days following the termination of employment, the Company will pay to the Executive a lump-sum cash amount equal to 100% of the Executive’s annual base salary in effect at the time of the termination of employment (or if the Executive’s annual base salary has been reduced within 61 days prior to the termination, the base salary in effect immediately prior to the reduction), less all applicable state and federal taxes.

The Executive will be paid his or her prorated target bonus due for the calendar year until his or her date of termination, less all applicable state and federal taxes. For example, an executive who is terminated on March 31 would be paid 25% of the prorated target bonus not yet paid for the applicable year. An executive who is terminated on June 30 would be paid 50% of the prorated target bonus not yet paid for the applicable year. Any other bonuses or commission earned but not yet paid will be paid to the Executive upon termination.

The Company will continue for a period of 12 months following the date of termination to provide the Executive with any medical, dental and disability and life insurance benefits in effect at the time of his or her termination (or, if his or

her level of benefits has been reduced within 61 days of the termination, his or her level of benefits in effect prior to the reduction). If the Company is unable to continue any such benefit or benefits, the Company will instead pay to the Executive, within 30 days of termination, a lump sum cash payment equal to the greater of the Company’s cost of such benefits or the Executive’s individual replacement cost for such benefits. All other benefits will cease upon termination.

Any options to purchase Company stock or restricted stock of the Company held by the Executive under the Company’s stock compensation plans and arrangements will become immediately exercisable notwithstanding any contrary provisions in the documents otherwise governing the options and will remain exercisable for the period of time during which such options would otherwise have been exercisable had the Executive remained in the employ of the Company.

Taxes.

a. Notwithstanding any other provision of this Agreement, except as set forth in Section 2.2(b), in the event that the Company undergoes a “Change in Ownership or Control” (as defined below), the Company shall not be obligated to provide to the Executive a portion of any “Contingent Compensation Payments” (as defined below) that the Executive would otherwise be entitled to receive to the extent necessary to eliminate any “excess parachute payments” (as defined in Section 280G(b)(1) of the Internal Revenue Code of 1986, as amended (the “Code”)) for the Executive. For purposes of this Section 2.2, the Contingent Compensation Payments so eliminated shall be referred to as the “Eliminated Payments” and the aggregate amount (determined in accordance with Proposed Treasury Regulation Section 1.280G-1, Q/A-30 or any successor provision) of the Contingent Compensation Payments so eliminated shall be referred to as the “Eliminated Amount.”

b. Notwithstanding the provisions of Section 2.2(a), no such reduction in Contingent Compensation Payments shall be made if (i) the Eliminated Amount (computed without regard to this sentence) exceeds (ii) 110% of the aggregate present value (determined in accordance with Proposed Treasury Regulation Section 1.280G-1, Q/A-31 and Q/A-32 or any successor provisions) of the amount of any additional taxes that would be incurred by the Executive if the Eliminated Payments (determined without regard to this sentence) were paid to him or her (including, state and federal income taxes on the Eliminated Payments, the excise tax imposed by Section 4999 of the Code payable with respect to all of the Contingent Compensation Payments in excess of the Executive’s “base amount” (as defined in Section 280G(b)(3) of the Code), and any withholding taxes). The override of such reduction in Contingent Compensation Payments pursuant to this Section 2.2(b) shall be referred to as a “Section 2.2(b) Override.” For purpose of this paragraph, if any federal or state income taxes would be attributable to the receipt of any Eliminated Payment, the amount of such taxes shall be computed by multiplying the amount of the Eliminated Payment by the maximum combined federal and state income tax rate provided by law.

c. For purposes of this Section 2.2 the following terms shall have the following respective meanings:

(i) “Change in Ownership or Control” shall mean a change in the ownership or effective control of the Company or in the ownership of a substantial portion of the assets of the Company determined in accordance with Section 280G(b)(2) of the Code.

(ii) “Contingent Compensation Payment” shall mean any payment (or benefit) in the nature of compensation that is made or made available (under this Agreement or otherwise) to a “disqualified individual” (as defined in Section 280G(c) of the Code) and that is contingent (within the meaning of Section 280G(b)(2)(A)(i) of the Code) on a Change in Ownership or Control of the Company.

d. Any payments or other benefits otherwise due to the Executive following a Change in Ownership or Control that could reasonably be characterized (as determined by the Company) as Contingent Compensation Payments (the “Potential Payments”) shall not be made until the dates provided for in this Section 2.2(d). Within 30 days after each date on which the Executive first becomes entitled to receive (whether or not then due) a Contingent Compensation Payment relating to such Change in Ownership or Control, the Company shall determine and notify the Executive (with reasonable detail regarding the basis for its determinations) (i) which Potential Payments constitute Contingent Compensation Payments, (ii) the Eliminated Amount and (iii) whether the Section 2.2(b) Override is applicable. Within 30 days after delivery of such notice to the Executive, the Executive shall deliver a response to the Company (the “Executive Response”) stating either (A) that he or she agrees with the Company’s determination pursuant to the preceding sentence, in which case he or she shall indicate, if applicable, which Contingent Compensation Payments, or portions thereof (the aggregate amount of which, determined in accordance with Proposed Treasury Regulation Section 1.280G-1, Q/A-30 or any successor provision, shall be equal to

the Eliminated Amount), shall be treated as Eliminated Payments or (B) that he or she disagrees with such determination, in which case he or she shall set forth (i) which Potential Payments should be characterized as Contingent Compensation Payments, (ii) the Eliminated Amount, (iii) whether the Section 2.2(b) Override is applicable, and (iv) which (if any) Contingent Compensation Payments, or portions thereof (the aggregate amount of which, determined in accordance with Proposed Treasury Regulation Section 1.280G-1, Q/A-30 or any successor provision, shall be equal to the Eliminated Amount, if any), shall be treated as Eliminated Payments. In the event that the Executive fails to deliver an Executive Response on or before the required date, the Company’s initial determination shall be final and the Contingent Compensation Payments that shall be treated as Eliminated Payments shall be determined by the Company in its absolute discretion. If the Executive states in the Executive Response that he or she agrees with the Company’s determination, the Company shall make the Potential Payments to the Executive within three business days following delivery to the Company of the Executive Response (except for any Potential Payments which are not due to be made until after such date, which Potential Payments shall be made on the date on which they are due). If the Executive states in the Executive Response that he or she disagrees with the Company’s determination, then, for a period of 60 days following delivery of the Executive Response, the Executive and the Company shall use good faith efforts to resolve such dispute. If such dispute is not resolved within such 60-day period, such dispute shall be settled exclusively by arbitration in Boston, Massachusetts, in accordance with the rules of the American Arbitration Association then in effect. Judgment may be entered on the arbitrator’s award in any court having jurisdiction. The Company shall, within three business days following delivery to the Company of the Executive Response, make to the Executive those Potential Payments as to which there is no dispute between the Company and the Executive regarding whether they should be made (except for any such Potential Payments which are not due to be made until after such date, which Potential Payments shall be made on the date on which they are due). The balance of the Potential Payments shall be made within three business days following the resolution of such dispute. Subject to the limitations contained in Sections 2.2(a) and (b) hereof, the amount of any payments to be made to the Executive following the resolution of such dispute shall be increased by amount of the accrued interest thereon computed at the prime rate announced from time to time by Boston Communications Group, Inc.’s primary bank, compounded monthly from the date that such payments originally were due.

Mitigation. The Executive shall not be required to mitigate the amount of any payment or benefits provided for in this Section 2 by seeking other employment or otherwise. Further, the amount of any payment or benefits provided for in this Section 2 shall not be reduced by any compensation earned by the Executive as a result of employment by another employer, by retirement benefits, by offset against any amount claimed to be owed by the Executive to the Company, or otherwise.

Other Payments. This Agreement does not supercede or otherwise impact any other current obligations of the Company to the Executive. Any amounts payable hereunder shall not be offset by any amounts due to the Company from the Executive.

Other Employment Termination. If the Executive’s employment terminates for any reason other than as described in Section 2, the Executive shall only receive any compensation owed to him as of his termination date and any other post-termination benefits which the Executive is eligible to receive under any plan or program of the Company.

Successors.

Successor to Company. The Company shall require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business or assets of the Company expressly to assume and agree to perform this Agreement to the same extent that the Company would be required to perform it if no such succession had taken place. As used in this Agreement, “Company” shall mean the Company as defined above and any successor to its business or assets as aforesaid which assumes and agrees to perform this Agreement, by operation of law or otherwise.

Successor to Executive. This Agreement shall inure to the benefit of and be enforceable by the Executive’s personal or legal representatives, executors, administrators, successors, heirs, distributes, devisees and legatees. If the Executive should die while any amount would still be payable to the Executive or his or her family hereunder if the

Executive had continued to live, all such amounts, unless otherwise provided herein, shall be paid in accordance with the terms of this Agreement to the executors, personal representatives or administrators of the Executive’s estate.

Notices. All notices, instructions and other communications given hereunder or in connection herewith shall be in writing. Any such notice, instruction or communication shall be sent either (i) by registered or certified mail, return receipt requested, postage prepaid, or (ii) prepaid via a reputable nationwide overnight courier service, in each case addressed to the Company, at 55 Middlesex Turnpike, Bedford, MA 01730, ATTN: President, and to the Executive at the Executive’s address indicated on the signature page of this Agreement (or to such other address as either the Company or the Executive may have furnished to the other in writing in accordance herewith). Any such notice, instruction or communication shall be deemed to have been delivered five business days after it is sent by registered or certified mail, return receipt requested, postage prepaid, or one business day after it is sent via a reputable nationwide overnight courier service. Either party may give any notice, instruction or other communication hereunder using any other means, but no such notice, instruction or other communication shall be deemed to have been duly delivered unless and until it actually is received by the party for whom it is intended.

Miscellaneous.

Employment by Subsidiary. For purposes of this Agreement, the Executive’s employment with the Company shall not be deemed to have terminated solely as a result of the Executive continuing to be employed by a wholly-owned subsidiary of the Company.

Severability. The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement, which shall remain in full force and effect.

Governing Law. The validity, interpretation, construction and performance of this Agreement shall be governed by the internal laws of the State of Massachusetts, without regard to conflicts of law principles.

Waiver of Right to Jury Trial. Both the Company and the Executive expressly waive any right that any party either has or may have to a jury trial of any dispute arising out of or in any way related to the matters covered by this Agreement.

Waivers. No waiver by the Executive at any time of any breach of, or compliance with, any provision of this Agreement to be performed by the Company shall be deemed a waiver of that or any other provision at any subsequent time.

Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed to be an original but both of which together shall constitute one and the same instrument.

Tax Withholding. Any payments provided for hereunder shall be paid net of any applicable tax withholding required under federal, state or local law.

Entire Agreement; Employment Agreement.

This Agreement sets forth the entire agreement of the parties hereto in respect of the subject matter contained herein and supersedes all prior agreements, promises, covenants, arrangements, communications, representations or warranties, whether oral or written, by any officer, employee or representative of any party hereto in respect of the subject matter contained herein; and any prior agreement of the parties hereto in respect of the subject matter contained herein is hereby terminated and cancelled.

Not an Employment Contract. The Executive acknowledges that this Agreement does not constitute a contract of employment or impose on the Company any obligation to retain the Executive as an employee and that this Agreement does not prevent the Executive from terminating employment at any time. If the Executive’s employment with the Company terminates for any reason and subsequently a Change in Control shall occur, the Executive shall not be entitled to any benefits hereunder except as otherwise provided pursuant to Section 2.

Amendments. This Agreement may be amended or modified only by a written instrument executed by both the Company and the Executive.

Executive’s Acknowledgements. The Executive acknowledges that he or she: (a) has read this Agreement; (b) has been represented in the preparation, negotiation and execution of this Agreement by legal counsel of the Executive’s own choice or has voluntarily declined to seek such counsel; and (c) understands the terms and consequences of this Agreement.

Company Acknowledgements. The Company acknowledges that it has received all necessary consents, approvals and votes, including from the Board and holders of the Company’s Preferred Stock, to permit the Company to enter into this Agreement and be bound hereby.

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

BOSTON COMMUNICATIONS GROUP, INC.
By:	/s/ E.Y. Snowden
Title:	President & Chief Executive Officer
EMPLOYEE:
By:	/s/ Ersin Galioglu
	Ersin Galioglu,
	Vice President and General Manager, Real-Time Billing and Network

EX-10.10

Exhibit 10.10

Change of Control Agreement

THIS CHANGE OF CONTROL AGREEMENT (this “Agreement”) by and between Boston Communications Group, Inc. (the “Company”), a Massachusetts Corporation with its principal place of business at 55 Middlesex Turnpike, Bedford, MA 01730, and James Anderson (the “Executive”), is made as of May 3, 2005 (the “Effective Date”).

WHEREAS, the Company recognizes that the possibility of an acquisition of the Company exists and that such possibility, and the uncertainty and questions which it may raise among certain personnel, may result in the departure or distraction of personnel to the detriment of the Company and its stockholders, and

WHEREAS, the Board of Directors of the Company (the “Board”) has determined that appropriate steps should be taken to reinforce and encourage the continued employment and dedication of the Executive and the Executive’s continued efforts to maximize the Company’s value.

NOW, THEREFORE, as an inducement for and in consideration of the Executive remaining in its employ, the Company agrees that the Executive shall receive the benefits set forth in this Agreement upon a Change in Control (as defined in Section 1.2).

Key Definitions.

As used herein, the following terms shall have the following respective meanings:

“Cause” means:

A good faith finding by a majority of the Board (excluding the vote of the Executive, if then a member of the Board) that (1) the Executive has refused without good reason to perform his or her reasonably assigned material duties for the Company; (2) the Executive has engaged in gross negligence or willful misconduct, which has or is expected to have a material detrimental effect on the Company, (3) the Executive has engaged in fraud, embezzlement or other material dishonesty, (4) the Executive has engaged in any conduct which would constitute grounds for termination for violation of the Company’s policies in effect at that time; or (5) the Executive has breached any material provision of any nondisclosure, invention assignment, non-competition or other similar agreement between the Executive and the Company and, if amenable to cure, has not cured such breach after reasonable notice from the Company; or

The conviction by the Executive of, or the entry of a pleading of guilty or nolo contendre by the Executive to, any crime involving moral turpitude or any felony.

As used herein, “Change in Control” shall mean the occurrence of any one of the following events:

Any “person” who is not the “beneficial owner” of more than ten percent (10%) of the outstanding equity securities of the Company on a fully diluted basis on the date hereof or an “affiliate” of such party on the date hereof becomes, alone or together with such person’s affiliates, a “beneficial owner” of more than fifty percent (50%) of the outstanding equity securities of the Company (as such terms are defined in Section 13(d) of the Securities Exchange Act of 1934, as amended, and the regulations promulgated thereunder); or

In a single transaction, the consummation of a merger, consolidation or share exchange involving the Company, or the sale of all or substantially all of the assets of the Company, unless the stockholders of the Company immediately prior to the transaction own fifty percent (50%) or more of the outstanding equity securities of the continuing entity immediately following the consummation of such transaction.

“Change of Control Date” means the first date during the Term (as defined in Section 1.4) on which a Change in Control occurs. Anything in this Agreement to the contrary notwithstanding, if (a) a Change in Control occurs, (b) the Executive’s employment with the Company is terminated prior to the date on which the Change in Control occurs, and (c) it is reasonably demonstrated by the Executive that such termination of employment (i) was at the request of a third party who has taken steps reasonably calculated to effect a Change in Control or (ii) otherwise arose in connection with or in anticipation of a Change in Control, then for all purposes of this Agreement the “Change in Control Date” shall mean the date immediately prior to the date of such termination of employment.

Term of Agreement. This Agreement, and all rights and obligations of the parties hereunder, shall take effect upon the Effective Date and shall expire upon the first to occur of (a) the expiration of the Term (as defined below) if a Change in Control has not occurred during the term, (b) the termination of the Executive’s employment with the Company prior to the Change in Control Date, (c) the termination of the Executive’s employment with the Company after the Change of Control Date without Cause or for Good Reason, (d) the date twenty-four (24) months after the Change in Control Date, if the Executive is still employed by the Company as of such later date, or (e) the fulfillment by the Company of all of its obligations under Section 2 if the Executive’s employment with the Company terminates within twenty-four (24) months following the Change in Control Date. “Term” shall mean the period commencing as of the Effective Date and continuing in effect through May 3, 2010 provided, however, that commencing on May 3, 2010 and each May 3rd thereafter, the Term shall be automatically extended for one additional year unless, not later than 90 days prior to the scheduled expiration of the Term (or any extension thereof), the Company shall have given the Executive written notice that the Term will not be extended.

“Good Reason” means the occurrence, without the Executive’s written consent, of any of the events or circumstances set forth in clauses (a) through (c) below

relocation of the Executive’s primary place of business to a location that results in an increase in the Executive’s daily one way commute of at least fifty (50) miles;

any material breach by the Company or any successor thereto of any agreement entered into after the Effective Date (or in the case of any agreement to provide benefits to the Executive, entered into at any time) to which the Executive and the Company are parties, which breach is not cured within ten days after written notice thereof; or

Any material adverse change in the Executive’s authority, duties or annual base salary (including, but not limited to, any failure to pay compensation on at least a monthly basis) as in effect prior to the Change in Control.

Termination Without Cause or for Good Reason After a Change in Control. If at any time prior to the expiration of twenty-four (24) months following a Change of Control Date, the Company terminates the Executive’s employment without Cause or the Executive terminates his or her employment for Good Reason, the Company will provide benefits as follows provided the Executive executes a release of claims drafted by the Company’s counsel and it becomes binding:

Payment

Within 30 days following the termination of employment, the Company will pay to the Executive a lump-sum cash amount equal to 100% of the Executive’s annual base salary in effect at the time of the termination of employment (or if the Executive’s annual base salary has been reduced within 61 days prior to the termination, the base salary in effect immediately prior to the reduction), less all applicable state and federal taxes.

The Executive will be paid his or her prorated target bonus due for the calendar year until his or her date of termination, less all applicable state and federal taxes. For example, an executive who is terminated on March 31 would be paid 25% of the prorated target bonus not yet paid for the applicable year. An executive who is terminated on June 30 would be paid 50% of the prorated target bonus not yet paid for the applicable year. Any other bonuses or commission earned but not yet paid will be paid to the Executive upon termination.

The Company will continue for a period of 12 months following the date of termination to provide the Executive with any medical, dental and disability and life insurance benefits in effect at the time of his or her termination (or, if his or

her level of benefits has been reduced within 61 days of the termination, his or her level of benefits in effect prior to the reduction). If the Company is unable to continue any such benefit or benefits, the Company will instead pay to the Executive, within 30 days of termination, a lump sum cash payment equal to the greater of the Company’s cost of such benefits or the Executive’s individual replacement cost for such benefits. All other benefits will cease upon termination.

Any options to purchase Company stock or restricted stock of the Company held by the Executive under the Company’s stock compensation plans and arrangements will become immediately exercisable notwithstanding any contrary provisions in the documents otherwise governing the options and will remain exercisable for the period of time during which such options would otherwise have been exercisable had the Executive remained in the employ of the Company.

Taxes.

a. Notwithstanding any other provision of this Agreement, except as set forth in Section 2.2(b), in the event that the Company undergoes a “Change in Ownership or Control” (as defined below), the Company shall not be obligated to provide to the Executive a portion of any “Contingent Compensation Payments” (as defined below) that the Executive would otherwise be entitled to receive to the extent necessary to eliminate any “excess parachute payments” (as defined in Section 280G(b)(1) of the Internal Revenue Code of 1986, as amended (the “Code”)) for the Executive. For purposes of this Section 2.2, the Contingent Compensation Payments so eliminated shall be referred to as the “Eliminated Payments” and the aggregate amount (determined in accordance with Proposed Treasury Regulation Section 1.280G-1, Q/A-30 or any successor provision) of the Contingent Compensation Payments so eliminated shall be referred to as the “Eliminated Amount.”

b. Notwithstanding the provisions of Section 2.2(a), no such reduction in Contingent Compensation Payments shall be made if (i) the Eliminated Amount (computed without regard to this sentence) exceeds (ii) 110% of the aggregate present value (determined in accordance with Proposed Treasury Regulation Section 1.280G-1, Q/A-31 and Q/A-32 or any successor provisions) of the amount of any additional taxes that would be incurred by the Executive if the Eliminated Payments (determined without regard to this sentence) were paid to him or her (including, state and federal income taxes on the Eliminated Payments, the excise tax imposed by Section 4999 of the Code payable with respect to all of the Contingent Compensation Payments in excess of the Executive’s “base amount” (as defined in Section 280G(b)(3) of the Code), and any withholding taxes). The override of such reduction in Contingent Compensation Payments pursuant to this Section 2.2(b) shall be referred to as a “Section 2.2(b) Override.” For purpose of this paragraph, if any federal or state income taxes would be attributable to the receipt of any Eliminated Payment, the amount of such taxes shall be computed by multiplying the amount of the Eliminated Payment by the maximum combined federal and state income tax rate provided by law.

c. For purposes of this Section 2.2 the following terms shall have the following respective meanings:

(i) “Change in Ownership or Control” shall mean a change in the ownership or effective control of the Company or in the ownership of a substantial portion of the assets of the Company determined in accordance with Section 280G(b)(2) of the Code.

(ii) “Contingent Compensation Payment” shall mean any payment (or benefit) in the nature of compensation that is made or made available (under this Agreement or otherwise) to a “disqualified individual” (as defined in Section 280G(c) of the Code) and that is contingent (within the meaning of Section 280G(b)(2)(A)(i) of the Code) on a Change in Ownership or Control of the Company.

d. Any payments or other benefits otherwise due to the Executive following a Change in Ownership or Control that could reasonably be characterized (as determined by the Company) as Contingent Compensation Payments (the “Potential Payments”) shall not be made until the dates provided for in this Section 2.2(d). Within 30 days after each date on which the Executive first becomes entitled to receive (whether or not then due) a Contingent Compensation Payment relating to such Change in Ownership or Control, the Company shall determine and notify the Executive (with reasonable detail regarding the basis for its determinations) (i) which Potential Payments constitute Contingent Compensation Payments, (ii) the Eliminated Amount and (iii) whether the Section 2.2(b) Override is applicable. Within 30 days after delivery of such notice to the Executive, the Executive shall deliver a response to the Company (the “Executive Response”) stating either (A) that he or she agrees with the Company’s determination pursuant to the preceding sentence, in which case he or she shall indicate, if applicable, which Contingent Compensation Payments, or portions thereof (the aggregate amount of which, determined in accordance with Proposed Treasury Regulation Section 1.280G-1, Q/A-30 or any successor provision, shall be equal to

the Eliminated Amount), shall be treated as Eliminated Payments or (B) that he or she disagrees with such determination, in which case he or she shall set forth (i) which Potential Payments should be characterized as Contingent Compensation Payments, (ii) the Eliminated Amount, (iii) whether the Section 2.2(b) Override is applicable, and (iv) which (if any) Contingent Compensation Payments, or portions thereof (the aggregate amount of which, determined in accordance with Proposed Treasury Regulation Section 1.280G-1, Q/A-30 or any successor provision, shall be equal to the Eliminated Amount, if any), shall be treated as Eliminated Payments. In the event that the Executive fails to deliver an Executive Response on or before the required date, the Company’s initial determination shall be final and the Contingent Compensation Payments that shall be treated as Eliminated Payments shall be determined by the Company in its absolute discretion. If the Executive states in the Executive Response that he or she agrees with the Company’s determination, the Company shall make the Potential Payments to the Executive within three business days following delivery to the Company of the Executive Response (except for any Potential Payments which are not due to be made until after such date, which Potential Payments shall be made on the date on which they are due). If the Executive states in the Executive Response that he or she disagrees with the Company’s determination, then, for a period of 60 days following delivery of the Executive Response, the Executive and the Company shall use good faith efforts to resolve such dispute. If such dispute is not resolved within such 60-day period, such dispute shall be settled exclusively by arbitration in Boston, Massachusetts, in accordance with the rules of the American Arbitration Association then in effect. Judgment may be entered on the arbitrator’s award in any court having jurisdiction. The Company shall, within three business days following delivery to the Company of the Executive Response, make to the Executive those Potential Payments as to which there is no dispute between the Company and the Executive regarding whether they should be made (except for any such Potential Payments which are not due to be made until after such date, which Potential Payments shall be made on the date on which they are due). The balance of the Potential Payments shall be made within three business days following the resolution of such dispute. Subject to the limitations contained in Sections 2.2(a) and (b) hereof, the amount of any payments to be made to the Executive following the resolution of such dispute shall be increased by amount of the accrued interest thereon computed at the prime rate announced from time to time by Boston Communications Group, Inc.’s primary bank, compounded monthly from the date that such payments originally were due.

Mitigation. The Executive shall not be required to mitigate the amount of any payment or benefits provided for in this Section 2 by seeking other employment or otherwise. Further, the amount of any payment or benefits provided for in this Section 2 shall not be reduced by any compensation earned by the Executive as a result of employment by another employer, by retirement benefits, by offset against any amount claimed to be owed by the Executive to the Company, or otherwise.

Other Payments. This Agreement does not supercede or otherwise impact any other current obligations of the Company to the Executive. Any amounts payable hereunder shall not be offset by any amounts due to the Company from the Executive.

Other Employment Termination. If the Executive’s employment terminates for any reason other than as described in Section 2, the Executive shall only receive any compensation owed to him as of his termination date and any other post-termination benefits which the Executive is eligible to receive under any plan or program of the Company.

Successors.

Successor to Company. The Company shall require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business or assets of the Company expressly to assume and agree to perform this Agreement to the same extent that the Company would be required to perform it if no such succession had taken place. As used in this Agreement, “Company” shall mean the Company as defined above and any successor to its business or assets as aforesaid which assumes and agrees to perform this Agreement, by operation of law or otherwise.

Successor to Executive. This Agreement shall inure to the benefit of and be enforceable by the Executive’s personal or legal representatives, executors, administrators, successors, heirs, distributes, devisees and legatees. If the Executive should die while any amount would still be payable to the Executive or his or her family hereunder if the

Executive had continued to live, all such amounts, unless otherwise provided herein, shall be paid in accordance with the terms of this Agreement to the executors, personal representatives or administrators of the Executive’s estate.

Notices. All notices, instructions and other communications given hereunder or in connection herewith shall be in writing. Any such notice, instruction or communication shall be sent either (i) by registered or certified mail, return receipt requested, postage prepaid, or (ii) prepaid via a reputable nationwide overnight courier service, in each case addressed to the Company, at 55 Middlesex Turnpike, Bedford, MA 01730, ATTN: President, and to the Executive at the Executive’s address indicated on the signature page of this Agreement (or to such other address as either the Company or the Executive may have furnished to the other in writing in accordance herewith). Any such notice, instruction or communication shall be deemed to have been delivered five business days after it is sent by registered or certified mail, return receipt requested, postage prepaid, or one business day after it is sent via a reputable nationwide overnight courier service. Either party may give any notice, instruction or other communication hereunder using any other means, but no such notice, instruction or other communication shall be deemed to have been duly delivered unless and until it actually is received by the party for whom it is intended.

Miscellaneous.

Employment by Subsidiary. For purposes of this Agreement, the Executive’s employment with the Company shall not be deemed to have terminated solely as a result of the Executive continuing to be employed by a wholly-owned subsidiary of the Company.

Severability. The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement, which shall remain in full force and effect.

Governing Law. The validity, interpretation, construction and performance of this Agreement shall be governed by the internal laws of the State of Massachusetts, without regard to conflicts of law principles.

Waiver of Right to Jury Trial. Both the Company and the Executive expressly waive any right that any party either has or may have to a jury trial of any dispute arising out of or in any way related to the matters covered by this Agreement.

Waivers. No waiver by the Executive at any time of any breach of, or compliance with, any provision of this Agreement to be performed by the Company shall be deemed a waiver of that or any other provision at any subsequent time.

Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed to be an original but both of which together shall constitute one and the same instrument.

Tax Withholding. Any payments provided for hereunder shall be paid net of any applicable tax withholding required under federal, state or local law.

Entire Agreement; Employment Agreement.

This Agreement sets forth the entire agreement of the parties hereto in respect of the subject matter contained herein and supersedes all prior agreements, promises, covenants, arrangements, communications, representations or warranties, whether oral or written, by any officer, employee or representative of any party hereto in respect of the subject matter contained herein; and any prior agreement of the parties hereto in respect of the subject matter contained herein is hereby terminated and cancelled.

Not an Employment Contract. The Executive acknowledges that this Agreement does not constitute a contract of employment or impose on the Company any obligation to retain the Executive as an employee and that this Agreement does not prevent the Executive from terminating employment at any time. If the Executive’s employment with the Company terminates for any reason and subsequently a Change in Control shall occur, the Executive shall not be entitled to any benefits hereunder except as otherwise provided pursuant to Section 2.

Amendments. This Agreement may be amended or modified only by a written instrument executed by both the Company and the Executive.

Executive’s Acknowledgements. The Executive acknowledges that he or she: (a) has read this Agreement; (b) has been represented in the preparation, negotiation and execution of this Agreement by legal counsel of the Executive’s own choice or has voluntarily declined to seek such counsel; and (c) understands the terms and consequences of this Agreement.

Company Acknowledgements. The Company acknowledges that it has received all necessary consents, approvals and votes, including from the Board and holders of the Company’s Preferred Stock, to permit the Company to enter into this Agreement and be bound hereby.

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

BOSTON COMMUNICATIONS GROUP, INC.
By:	/s/ E.Y. Snowden
Title:	President & Chief Executive Officer
EMPLOYEE:
By:	/s/ James Anderson
	James Anderson,
	Vice President and General Manager, Payment

EX-31.1

Exhibit 31.1

CERTIFICATIONS

I, E. Y. Snowden, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Boston Communications Group, Inc.;

2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;

3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for the periods presented in this quarterly report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f))for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;

b) Designed such internal control over financial reporting or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 8, 2005	/s/ E. Y. Snowden
	E. Y. Snowden
	President and Chief Executive Officer

EX-31.2

Exhibit 31.2

I, Karen A. Walker, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Boston Communications Group, Inc.;

2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;

3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for the periods presented in this quarterly report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f))for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;

b) Designed such internal control over financial reporting or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 8, 2005	/s/ Karen A. Walker
	Karen A. Walker
	Vice President, Finance and Administration and Chief Financial Officer

EX-32

Exhibit 32

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the quarterly report on Form 10-Q of Boston Communications Group, Inc. (the “Company”) for the period ended June 30, 2005 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned, E.Y. Snowden, President and Chief Executive Officer, and Karen A. Walker, Vice President, Finance and Administration and Chief Financial Officer, hereby certify, pursuant to 18 U.S.C. Section 1350, that:

(1) the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date August 8, 2005	/s/ E. Y. Snowden
	E.Y. Snowden
	President & Chief Executive Officer
Date: August 8, 2005	/s/ Karen A. Walker
	Karen A. Walker
	Vice President, Finance and Administration
	and Chief Financial Officer

A signed original of this written statement required by Section 906 has been provided to Boston Communications Group, Inc., and will be retained by Boston Communications Group, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.