S-1/A

Use these links to rapidly review the document
TABLE OF CONTENTS
Table of Contents

As filed with the Securities and Exchange Commission on September 23, 2011

Registration No. 333-174661

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

Amendment No. 3
to
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933

Groupon, Inc.
(Exact name of Registrant as specified in its charter)

Delaware	7379	27-0903295
(State or other jurisdiction of incorporation or organization)	(Primary Standard Industrial Classification Code Number)	(I.R.S. Employer Identification Number)
600 West Chicago Avenue, Suite 620 Chicago, Illinois 60654 312-676-5773 (Address, including zip code, and telephone number, including area code, of Registrant's principal executive offices)

Andrew D. Mason
Chief Executive Officer
Groupon, Inc.
600 West Chicago Avenue, Suite 620
Chicago, Illinois 60654
312-676-5773
(Name, address, including zip code, and telephone number, including area code, of agent for service)

Copies to:

Steven J. Gavin, Esq.
Matthew F. Bergmann, Esq.
Winston & Strawn LLP
35 West Wacker Drive
Chicago, Illinois 60601
312-558-5600 David R. Schellhase, Esq.
General Counsel
Groupon, Inc.
600 West Chicago Avenue, Suite 620
Chicago, Illinois 60654
312-676-5773 Peter M. Astiz, Esq.
Gregory M. Gallo, Esq.
Jason C. Harmon, Esq.
DLA Piper LLP (US)
2000 University Avenue
East Palo Alto, California 94303
650-833-2036

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

         If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act, check the following box. o

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

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

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

         Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of "large accelerated filer," "accelerated filer," and "smaller reporting company" in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer o	Accelerated filer o
Non-accelerated filer ý (Do not check if a smaller reporting company)	Smaller reporting company o

The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the Registration Statement shall become effective on such date as the Commission acting pursuant to said Section 8(a) may determine.

PROSPECTUS (Subject to Completion)
Issued September 23, 2011

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

                    Shares

CLASS A COMMON STOCK

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

Following this offering, we will have two classes of authorized common stock, Class A common stock and Class B common stock. The rights of the holders of Class A common stock and Class B common stock will be identical, except with respect to voting and conversion. Each share of Class A common stock will be entitled to one vote per share. Each share of Class B common stock will be entitled to               votes per share and will be convertible at any time into one share of Class A common stock. Outstanding shares of Class B common stock will represent approximately          % of the voting power of our outstanding capital stock following this offering.

We expect to apply to list our Class A common stock on the                   under the symbol "GRPN."

Investing in our Class A common stock involves risks. See "Risk Factors" beginning on page 11.

PRICE $     A SHARE

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

Groupon, Inc. and the selling stockholders have granted the underwriters the right to purchase up to an additional                   shares of Class A common stock to cover over-allotments.

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

The underwriters expect to deliver the shares of Class A common stock to purchasers on                           , 2011.

MORGAN STANLEY GOLDMAN, SACHS & CO. CREDIT SUISSE

ALLEN & COMPANY LLC BofA MERRILL LYNCH BARCLAYS CAPITAL CITI

DEUTSCHE BANK SECURITIES J.P. MORGAN WELLS FARGO SECURITIES WILLIAM BLAIR & COMPANY

LOOP CAPITAL MARKETS RBC CAPITAL MARKETS THE WILLIAMS CAPITAL GROUP, L.P.

                           , 2011

TABLE OF CONTENTS

	Page
Prospectus Summary	1
Risk Factors	11
Letter from Andrew D. Mason	33
Special Note Regarding Forward-Looking Statements and Industry Data	35
Use of Proceeds	37
Dividend Policy	37
Capitalization	38
Dilution	41
Selected Consolidated Financial and Other Data	43
Management's Discussion and Analysis of Financial Condition and Results of Operations	47
Business	75
Management	93
Executive Compensation	101
Related Party Transactions	121
Principal and Selling Stockholders	129
Description of Capital Stock	132
Material United States Federal Tax Considerations	139
Shares Eligible for Future Sale	145
Underwriting	147
Legal Matters	154
Experts	154
Where You Can Find Additional Information	154
Index to Consolidated Financial Statements	F-1
Appendix A—Excerpts from Email from the Chief Executive Officer of Groupon, Inc.	A-1

        You should rely only on the information contained in this prospectus or in any free writing prospectus filed with the Securities and Exchange Commission. Neither we, the selling stockholders nor the underwriters have authorized anyone to provide you with additional or different information. We and the selling stockholders are offering to sell, and seeking offers to buy, our Class A common stock only in jurisdictions where offers and sales are permitted. The information in this prospectus or any free writing prospectus is accurate only as of its date, regardless of its time of delivery or any sale of shares of our Class A common stock.

Until                        , 2011 (the 25th day after the date of this prospectus), all dealers that buy, sell or trade shares of our Class A common stock, whether or not participating in this offering, may be required to deliver a prospectus. This delivery requirement is in addition to the obligation of dealers to deliver a prospectus when acting as underwriters and with respect to their unsold allotments or subscriptions.

        For investors outside the United States: Neither we, the selling stockholders nor any of the underwriters have done anything that would permit this offering or possession or distribution of this prospectus in any jurisdiction where action for that purpose is required, other than the United States. You are required to inform yourself about and to observe any restrictions relating to the offering of the shares of Class A common stock and the distribution of this prospectus outside of the United States.

PROSPECTUS SUMMARY

This summary highlights information contained elsewhere in this prospectus and does not contain all of the information you should consider in making your investment decision. Before investing in our Class A common stock, you should carefully read this entire prospectus, including our consolidated financial statements and the related notes and the information set forth under the headings "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations," in each case included elsewhere in this prospectus. Except where the context requires otherwise, in this prospectus the terms "Company," "Groupon," "we," "us" and "our" refer to Groupon, Inc., a Delaware corporation, and where appropriate, its direct and indirect subsidiaries.

GROUPON, INC.

        Groupon is a local e-commerce marketplace that connects merchants to consumers by offering goods and services at a discount. Traditionally, local merchants have tried to reach consumers and generate sales through a variety of methods, including the yellow pages, direct mail, newspaper, radio, television and online advertisements, promotions and the occasional guy dancing on a street corner in a gorilla suit. By bringing the brick and mortar world of local commerce onto the internet, Groupon is creating a new way for local merchants to attract customers and sell goods and services. We provide consumers with savings and help them discover what to do, eat, see and buy in the places where they live and work.

        We started Groupon in October 2008 and believe the growth of our business demonstrates the power of our solution and the size of our market opportunity:

•

We increased our revenue from $1.2 million in the second quarter of 2009 to $392.6 million in the second quarter of 2011. We generated these revenues from gross billings of $3.3 million for the second quarter of 2009 as compared to gross billings of $909.2 million for the second quarter of 2011. We had net income of $21,000 for the second quarter of 2009 as compared to a net loss of $101.2 million for the second quarter of 2011.

•

We expanded from five North American markets as of June 30, 2009 to 175 North American markets and 45 countries as of June 30, 2011. Revenue from our international and North American operations was $235.4 million and $157.2 million, respectively, in the second quarter of 2011.

•

We increased our subscriber base from 152,203 as of June 30, 2009 to 115.7 million as of June 30, 2011. A total of 43,014 customers purchased Groupons through the end of the second quarter of 2009 as compared to 23,072,600 through the end of the second quarter of 2011, including 12,066,676 customers who have purchased more than one Groupon since January 1, 2009.

•

We increased the number of merchants featured in our marketplace from 212 in the second quarter of 2009 to 78,466 in the second quarter of 2011.

•

We sold 116,231 Groupons in the second quarter of 2009 compared to 32.5 million Groupons in the second quarter of 2011.

•

We grew from 37 employees as of June 30, 2009 to 9,625 employees as of June 30, 2011.

        Each day we email our subscribers discounted offers for goods and services that are targeted by location and personal preferences. Consumers also access our deals directly through our websites and mobile applications. A typical deal might offer a $20 Groupon that can be redeemed for $40 in value at a restaurant, spa, yoga studio, car wash or other local merchant. Customers purchase Groupons from us and redeem them with our merchants. Our revenue is the purchase price paid by the customer for the Groupon less an agreed upon percentage of the purchase price paid to the featured merchant. Our gross billings represent the gross amounts collected from customers for Groupons sold.

1

Our Advantage

        Customer experience and relevance of deals.    We are committed to providing a great customer experience and maintaining the trust of our customers. We use our technology and scale to target relevant deals based on individual subscriber preferences. As we increase the volume of transactions through our marketplace, we increase the amount of data that we have about deal performance and customer interests. This data allows us to continue to improve our ability to help merchants design the most effective deals and deliver deals to customers that better match their interests.

        Merchant scale and quality.    In the first half of 2011, we featured deals from over 135,000 merchants worldwide across over 140 categories of goods and services. Our salesforce of over 4,800 sales representatives enables us to work with local merchants in 175 North American markets and 45 countries. We draw on the experience we have gained in working with merchants to evaluate prospective merchants based on quality, location and relevance to our subscribers. We maintain a large base of prospective merchants interested in our marketplace, which enables us to be more selective and offer our subscribers higher quality deals. Increasing our merchant base also increases the number and variety of deals that we offer to consumers, which we believe drives higher subscriber and user traffic, and in turn promotes greater merchant interest in our marketplace.

        Brand.    We believe we have built a trusted and recognizable brand by delivering a compelling value proposition to consumers and merchants. A benefit of our well recognized brand is that a substantial portion of our subscribers in our established markets is acquired through word-of-mouth. We believe our brand is trusted due to our dedication to our customers and our significant investment in customer satisfaction.

Our Strategy

        Our objective is to become an essential part of everyday local commerce for consumers and merchants. Key elements of our strategy include the following:

        Grow our subscriber base.    We have made significant investments to acquire subscribers through online marketing initiatives. Our subscriber base has also increased by word-of-mouth. Our investments in subscriber growth are driven by the cost to acquire a subscriber relative to the profits we expect to generate from that subscriber over time. Our goal is to retain existing and acquire new subscribers by providing more targeted and real-time deals, delivering high quality customer service and expanding the number and categories of deals we offer.

        Grow the number of merchants we feature.    To drive merchant growth, we have expanded the number of ways in which consumers can discover deals through our marketplace. For example, to better target subscribers, in February 2011, we launched Deal Channels, which aggregates daily deals from the same category. We adjust the number and variety of products we offer merchants based on merchant demand in each market. We have also made significant investments in our salesforce, which builds merchant relationships and local expertise. Our merchant retention efforts are focused on providing merchants with a positive experience by offering targeted placement of their deals to our subscriber base, high quality customer service and tools to manage deals more effectively.

        Increase the number and variety of our products through innovation.    We have launched a variety of new products in the past 12 months and we plan to continue to launch new products to increase the number of subscribers and merchants that transact business through our marketplace. As our local e-commerce marketplace grows, we believe consumers will use Groupon not only as a discovery tool for local merchants, but also as an ongoing connection point to their favorite merchants.

        Expand with acquisitions and business development partnerships.    Since May 2010, we have made 17 acquisitions and we have entered into several agreements with local partners to expand our

2

international presence. The increase in our revenue, key operating metrics and employee headcount from 2009 to 2010 is partially attributable to these acquisitions and the subsequent growth of our international operations as a result of such acquisitions. We have also entered into affiliate programs with companies such as eBay, Microsoft, Yahoo and Zynga, pursuant to which these partners display, promote and distribute our deals to their users in exchange for a share of the revenue generated from our deals. We intend to continue to expand our business with strategic acquisitions and business development partnerships.

Our Metrics

        We have organized our operations into two principal segments: North America, which represents the United States and Canada, and International, which represents the rest of our global operations.

        The key metrics we use to measure our business include revenue, free cash flow and consolidated segment operating (loss) income, or CSOI. Free cash flow and CSOI are non-GAAP financial measures. See "—Summary Consolidated Financial and Other Data—Non-GAAP Financial Measures" for a reconciliation of these measures to the most applicable financial measures under U.S. GAAP.

        We believe revenue is an important indicator for our business because it is a reflection of the value of our service to our merchants. In 2010 and the first half of 2011, we generated revenue of $312.9 million and $688.1 million, respectively.

        We believe free cash flow is an important indicator for our business because it measures the amount of cash we generate after spending on marketing, wages and benefits, capital expenditures and other items. Free cash flow also reflects changes in working capital. In 2010 and the first half of 2011, we generated free cash flow of $72.2 million and $36.8 million, respectively.

        We believe CSOI is an important measure for management to evaluate the performance of our business as it represents the operating results of our segments and, as reported under U.S. GAAP, does not include certain non-cash expenses. In 2010 and the first half of 2011, our CSOI was $(181.0) million and $(160.6) million, respectively.

Our Risks

        Our business is subject to a number of risks of which you should be aware before making an investment decision. These risks are discussed more fully under the caption "Risk Factors," and include but are not limited to the following:

•

we may not maintain the revenue growth that we have experienced since inception;

•

we have experienced rapid growth over a short period in a new market we have created and we do not know whether this market will continue to develop or whether it can be maintained;

•

we base our decisions regarding investments in subscriber acquisition on assumptions regarding our ability to generate future profits that may prove to be inaccurate;

•

we have incurred net losses since inception and we expect our operating expenses to increase significantly in the foreseeable future;

•

if we fail to retain our existing subscribers or acquire new subscribers, our revenue and business will be harmed;

•

if we fail to retain existing merchants or add new merchants, our revenue and business will be harmed;

•

our business is highly competitive and competition presents an ongoing threat to the success of our business;

3

•

if we are unable to recover subscriber acquisition costs with revenue generated from those subscribers, our business and operating results will be harmed;

•

if we are unable to maintain favorable terms with our merchants, our revenue may be adversely affected; and

•

our operating cash flow and results of operations could be adversely impacted if we change our merchant payment terms or our gross billings do not continue to grow.

Corporate Information

        We are a Delaware corporation. Our principal executive offices are located at 600 West Chicago Avenue, Suite 620, Chicago, Illinois 60654, and our telephone number at this address is (312) 676-5773. Our website is www.groupon.com. Information contained on our website is not a part of this prospectus.

        GROUPON, the GROUPON logo, GROUPON NOW and other GROUPON—formative marks are trademarks of Groupon, Inc. in the United States or other countries. This prospectus also includes other trademarks of Groupon and trademarks of other persons.

Letter from Andrew D. Mason

        A letter from Andrew D. Mason, one of our co-founders and our Chief Executive Officer, appears on page 33 of this prospectus.

4

THE OFFERING

Class A common stock offered
	By us		shares
	By the selling stockholders		shares
		Total	shares
Class A common stock to be outstanding after this offering			shares
Class B common stock to be outstanding after this offering			shares
		Total shares of common stock to be outstanding after this offering	shares
Use of proceeds			We expect our net proceeds from this offering will be approximately $         million. We plan to use the net proceeds to us from this offering for working capital and other general corporate purposes, which may include the acquisition of other businesses, products or technologies; however, we do not have any commitments for any acquisitions at this time. We will not receive any of the proceeds from the sale of shares of Class A common stock by the selling stockholders. See "Use of Proceeds."
Risk factors			You should read the "Risk Factors" section of this prospectus for a discussion of factors to consider carefully before deciding to invest in shares of our common stock.
Proposed                symbol			"GRPN"

        The number of shares of our Class A common stock that will be outstanding after this offering is based on 297,813,591 shares outstanding at June 30, 2011, and excludes:

•

1,199,988 shares of Class A common stock issuable upon the conversion of our Class B common stock that will be outstanding after this offering;

•

11,613,319 shares of Class A common stock issuable upon the exercise of stock options outstanding as of June 30, 2011 at a weighted average exercise price of $2.33 per share;

•

480,000 shares of Class A common stock issuable upon the vesting of performance stock units granted in connection with certain of our acquisitions;

•

5,484,233 shares of Class A common stock issuable upon the vesting of restricted stock units granted under our 2010 Plan;

•

1,191,366 shares of Class A common stock available for additional grants under our 2010 Plan; and

•

25,000,000 shares of Class A common stock available for grants under our 2011 Plan, which we adopted effective August 17, 2011.

5

        Prior to the closing of this offering, we intend to recapitalize all of our outstanding shares of capital stock (other than our Series B preferred stock) into newly issued shares of our Class A common stock. In addition, we intend to recapitalize all of our outstanding shares of our Series B preferred stock into newly issued shares of our Class B common stock. The purpose of the recapitalization is to exchange all of our outstanding shares of capital stock (other than our Series B preferred stock) for shares of the Class A common stock that will be sold in this offering. See "Related Party Transactions—Recapitalization." Except as otherwise indicated, all information in this prospectus (other than historical financial statements) assumes:

•

the amendment and restatement of our certificate of incorporation upon the closing of this offering;

•

the consummation of the recapitalization prior to the closing of this offering; and

•

no exercise of the underwriters' over-allotment option.

6

SUMMARY CONSOLIDATED FINANCIAL AND OTHER DATA

We present below our summary consolidated financial and other data for the periods indicated. Financial information for periods prior to 2008 has not been provided because we began operations in 2008. The summary consolidated statements of operations data for the years ended December 31, 2008, 2009 and 2010 and the balance sheet data as of December 31, 2009 and 2010 have been derived from our audited consolidated financial statements included elsewhere in this prospectus. The balance sheet data for the year ended December 31, 2008 was derived from financial statements that are not included in this prospectus. The summary consolidated statements of operations data for the periods ended June 30, 2010 and 2011 and the balance sheet data as of June 30, 2011 have been derived from our unaudited consolidated financials statements included elsewhere in this prospectus. The unaudited information was prepared on a basis consistent with that used to prepare our audited financial statements and includes all adjustments, consisting of normal and recurring items, that we consider necessary for a fair presentation of the unaudited period. The historical results presented below are not necessarily indicative of financial results to be achieved in future periods. You should read this information together with "Management's Discussion and Analysis of Financial Condition and Results of Operations" and our audited and unaudited consolidated financial statements and accompanying notes, each included elsewhere in this prospectus.

				Year Ended December 31,									Six Months Ended June 30,
				2008			2009			2010			2010			2011
				(Restated)(1)			(Restated)(1)			(Restated)(1)			(Restated)(1) (unaudited)			(Restated)(1) (unaudited)
				(dollars in thousands, except per share data)
Consolidated Statements of Operations Data:
Revenue (gross billings of $94, $34,082, $745,348, $135,807 and $1,597,423, respectively)				$	5		$	14,540		$	312,941		$	58,938		$	688,105
Costs and expenses:
	Cost of revenue				6			4,355			32,494			4,024			66,522
	Marketing				163			4,873			284,348			39,848			432,093
	Selling, general and administrative				1,468			6,389			213,260			33,880			407,665
	Acquisition-related				—			—			203,183			9,434			—
		Total operating expenses			1,637			15,617			733,285			87,186			906,280
Loss from operations					(1,632	)		(1,077	)		(420,344	)		(28,248	)		(218,175	)
Interest and other income (expense), net					90			(16	)		284			(96	)		1,539
Equity-method investment activity, net of tax					—			—			—			—			(8,763	)
Loss before provision for income taxes					(1,542	)		(1,093	)		(420,060	)		(28,344	)		(225,399	)
Provision (benefit) for income taxes					—			248			(6,674	)		(905	)		(1,732	)
Net loss					(1,542	)		(1,341	)		(413,386	)		(27,439	)		(223,667	)
Less: Net loss attributable to noncontrolling interests					—			—			23,746			61			19,759
Net loss attributable to Groupon, Inc.					(1,542	)		(1,341	)		(389,640	)		(27,378	)		(203,908	)
Dividends on preferred stock					(277	)		(5,575	)		(1,362	)		(1,046	)		—
Redemption of preferred stock in excess of carrying value					—			—			(52,893	)		—			(34,327	)
Adjustment of redeemable noncontrolling interests to redemption value					—			—			(12,425	)		—			(15,651	)
Preferred stock distributions					(339	)		—			—			—			—
Net loss attributable to common stockholders				$	(2,158	)	$	(6,916	)	$	(456,320	)	$	(28,424	)	$	(253,886	)
Net loss per share
	Basic			$	(0.01	)	$	(0.04	)	$	(2.66	)	$	(0.17	)	$	(1.66	)
	Diluted			$	(0.01	)	$	(0.04	)	$	(2.66	)	$	(0.17	)	$	(1.66	)
Weighted average number of shares outstanding
	Basic				166,738,129			168,604,142			171,349,386			169,048,421			152,813,014
	Diluted				166,738,129			168,604,142			171,349,386			169,048,421			152,813,014
Other Financial Data:
	Segment operating (loss) income:
		North America		$	(1,608	)	$	(962	)	$	(10,437	)	$	8,309		$	(32,279	)
		International			—			—			(170,556	)		(23,047	)		(128,314	)
			CSOI(2)	$	(1,608	)	$	(962	)	$	(180,993	)	$	(14,738	)	$	(160,593	)

7

(1)

The Consolidated Financial Statements have been restated for the presentation of revenue on a net basis for all periods presented. See Note 2 to our Consolidated Financial Statements. In addition, the six month period ended June 30, 2011 has been restated to reduce selling, general and administrative expense to correct for an error. See Note 2 to our Condensed Consolidated Financial Statements.

(2)

Consolidated segment operating (loss) income, or CSOI, is a non-GAAP financial measure. See "—Summary Consolidated Financial and Other Data—Non-GAAP Financial Measures" for a reconciliation of this measure to the most applicable financial measure under U.S. GAAP. We do not allocate stock-based compensation and acquisition-related expense to the segments. See Note 14 "Segment Information" of Notes to Consolidated Financial Statements and Note 15 "Segment Information" of Notes to Condensed Consolidated Financial Statements (Unaudited) for additional information.

	Year Ended December 31,						Six Months Ended June 30,
	2008		2009		2010		2010		2011
Operating Metrics:
Gross billings(1)	$	94	$	34,082	$	745,348	$	135,807	$	1,597,423
Subscribers(2)		*		1,807,278		50,583,805		10,445,521		115,717,299
Cumulative customers(3)		*		375,099		9,031,807		2,379,611		23,072,600
Featured merchants(4)		*		2,695		66,289		12,468		135,247
Groupons sold(5)		*		1,248,792		30,296,070		5,822,856		60,620,482
Average revenue per subscriber(6)		*	$	8.0	$	11.9	$	9.6	$	8.3
Average cumulative Groupons sold per customer(7)		*		3.3		3.5		3.0		4.0
Average revenue per Groupon sold(8)		*	$	11.6	$	10.3	$	10.1	$	11.4
Cumulative repeat customers(9)		*		162,323		4,483,976		1,056,966		12,066,676

*

Not available

(1)

Reflects the gross amounts collected from customers for Groupons sold, excluding any applicable taxes and net of estimated refunds, in the applicable period.

(2)

Reflects the total number of subscribers who had a Groupon account on the last day of the applicable period, less individuals who have unsubscribed. May include individual subscribers with multiple registrations because the information we collect from subscribers does not permit us to identify when a subscriber may have created multiple accounts, nor do we prevent subscribers from creating multiple accounts.

(3)

Reflects the total number of unique customers who have purchased Groupons from January 1, 2009 through the end of the applicable period. May include individual customers with multiple registrations.

(4)

Reflects the total number of merchants featured in the applicable period.

(5)

Reflects the total number of Groupons sold in the applicable period.

(6)

Reflects the average revenue generated per average number of subscribers in the applicable period.

(7)

Reflects the average number of Groupons sold per cumulative repeat customer from January 1, 2009 through the end of the applicable period.

(8)

Reflects the average revenue generated per Groupon sold in the applicable period.

(9)

Reflects the total number of customers who have purchased more than one Groupon from January 1, 2009 through the end of the applicable period.

		As of December 31,									As of June 30, 2011
		2008			2009			2010			Actual			Pro Forma(1)	Pro Forma As Adjusted(2)(3)
		(unaudited)
		(in thousands, other than per share amounts)
Consolidated Balance Sheet Data:
	Cash and cash equivalents	$	2,966		$	12,313		$	118,833		$	225,093
	Working capital (deficit)		2,643			3,988			(196,564	)		(304,904	)
	Total assets		3,006			14,962			381,570			637,712
	Total long-term liabilities		—			—			1,621			25,713
	Redeemable preferred stock		4,747			34,712			—			—
	Cash dividends per common share		—			0.125			—			—
	Total Groupon, Inc. stockholders' (deficit) equity		(2,091	)		(29,969	)		8,077			(66,419	)

(1)

The pro forma column gives effect to (i) the recapitalization of all outstanding shares of our capital stock (other than our Series B preferred stock) into 297,813,591 shares of Class A common stock and all outstanding shares of our Series B preferred stock into 1,199,988 shares of Class B common stock immediately prior to the closing of this offering; and (ii) the amendment and restatement of our certificate of incorporation upon the closing of this offering.

(2)

The pro forma as adjusted column gives further effect to the sale by us of Class A common stock in this offering at an assumed initial public offering price of $            per share, which is the midpoint of the range reflected on the cover page of this prospectus, after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us.

(3)

Each $1.00 increase (decrease) in the assumed initial public offering price of $            per share would increase (decrease) the amount of pro forma as adjusted cash and cash equivalents, working capital (deficit), total assets and total Groupon, Inc. stockholders' equity by approximately $       million, assuming the number of shares offered by us, as set forth on the cover page of this prospectus, remains the same and after deducting the estimated underwriting discounts and commissions and estimated offering expenses payable by us. Similarly, each increase (decrease) of one million shares in the number of shares of Class A common stock offered by us would increase (decrease) cash and cash equivalents, working capital (deficit), total assets and total Groupon, Inc. stockholders' equity by approximately $       million, assuming the assumed initial public offering price remains the same and after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us.

8

Non-GAAP Financial Measures

        We use free cash flow and consolidated segment operating (loss) income, or CSOI, as key non-GAAP financial measures. Free cash flow and CSOI are used in addition to and in conjunction with results presented in accordance with U.S. GAAP and should not be relied upon to the exclusion of U.S. GAAP financial measures.

        Free cash flow, which is reconciled to "Net cash (used in) provided by operating activities," is cash flow from operations reduced by "Purchases of property and equipment." We use free cash flow, and ratios based on it, to conduct and evaluate our business because, although it is similar to cash flow from operations, we believe it typically will present a more conservative measure of cash flows as purchases of fixed assets, software developed for internal use and website development costs are a necessary component of ongoing operations.

        Free cash flow has limitations due to the fact that it does not represent the residual cash flow available for discretionary expenditures. For example, free cash flow does not include the cash payments for business acquisitions. In addition, free cash flow reflects the impact of the timing difference between when we are paid by customers and when we pay merchants. Therefore, we believe it is important to view free cash flow as a complement to our entire consolidated statements of cash flows.

        CSOI is the consolidated operating (loss) income of our two segments, North America and International, adjusted for acquisition-related costs and stock-based compensation expense. Acquisition-related costs are non-recurring, non-cash items related to certain of our acquisitions. Stock-based compensation expense is a non-cash item. We do not allocate stock-based compensation and acquisition-related expenses to the segments. See Note 14 "Segment Information" of Notes to Consolidated Financial Statements and Note 15 "Segment Information" of Notes to Condensed Consolidated Financial Statements (Unaudited) for additional information.

        We consider CSOI to be an important measure for management to evaluate the performance of our business as it excludes certain non-cash expenses. We believe it is important to view CSOI as a complement to our entire consolidated statements of operations. When evaluating our performance, you should consider CSOI alongside other financial performance measures, including various cash flow metrics, net loss and our other U.S. GAAP results.

Free Cash Flow

        The following is a reconciliation of free cash flow to the most comparable U.S. GAAP measure, "Net cash (used in) provided by operating activities," for the years ended December 31, 2008, 2009 and 2010 and the first half of 2010 and 2011:

	Year Ended December 31,									Six Months Ended June 30,
	2008			2009			2010			2010			2011
	(in thousands)
Net cash (used in) provided by operating activities	$	(1,526	)	$	7,510		$	86,885		$	15,528		$	57,984
Purchases of property and equipment		(19	)		(290	)		(14,681	)		(3,934	)		(21,202	)
Free cash flow	$	(1,545	)	$	7,220		$	72,204		$	11,594		$	36,782

9

CSOI

        The following is a reconciliation of CSOI to the most comparable U.S. GAAP measure, "Loss from operations," for the years ended December 31, 2008, 2009 and 2010 and the first half of 2010 and 2011:

		Year Ended December 31,									Six Months Ended June 30,
		2008			2009			2010			2010			2011
		(in thousands)
Loss from operations		$	(1,632	)	$	(1,077	)	$	(420,344	)	$	(28,248	)	$	(218,175	)
	Adjustments:
	Stock-based compensation(1)		24			115			36,168			4,076			57,582
	Acquisition-related(2)		—			—			203,183			9,434			—
	Total adjustments		24			115			239,351			13,510			57,582
CSOI		$	(1,608	)	$	(962	)	$	(180,993	)	$	(14,738	)	$	(160,593	)

(1)

Represents non-cash stock-based compensation expense recorded within selling, general and administrative expense.

(2)

Primarily represents non-cash charges for remeasurement of the fair value of contingent consideration related to acquisitions made in 2010. The amount of the charge was due to the significant increase in the value of common stock from the original acquisition date until the date the contingency was ultimately settled.

10

RISK FACTORS

An investment in our Class A common stock involves a high degree of risk. You should carefully consider the risks described below and all of the other information contained in this prospectus before deciding whether to purchase our Class A common stock. Our business, prospects, financial condition or operating results could be materially adversely affected by any of these risks, as well as other risks not currently known to us or that we currently consider immaterial. The trading price of our Class A common stock could decline due to any of these risks, and you may lose all or part of your investment. In assessing the risks described below, you should also refer to the other information contained in this prospectus, including our consolidated financial statements and the related notes, before deciding to purchase any shares of our Class A common stock.

Risks Related to Our Business

We may not maintain the revenue growth that we have experienced since inception.

        Although our revenue has increased substantially since inception, we may not be able to maintain our historical rate of revenue growth. We believe that our continued revenue growth will depend, among other factors, on our ability to:

•

acquire new subscribers who purchase Groupons;

•

retain our existing subscribers and have them continue to purchase Groupons;

•

attract new merchants who wish to offer deals through the sale of Groupons;

•

retain our existing merchants and have them offer additional deals through our marketplace;

•

expand the number, variety and relevance of products and deals we offer each day;

•

increase the awareness of our brand across geographies;

•

provide our subscribers and merchants with a superior experience;

•

respond to changes in consumer access to and use of the internet and mobile devices; and

•

react to challenges from existing and new competitors.

        However, we cannot assure you that we will successfully implement any of these actions.

We have experienced rapid growth over a short period in a new market that we have created and we do not know whether this market will continue to develop or whether it can be maintained. If we are unable to successfully respond to changes in the market, our business could be harmed.

        Our business has grown rapidly as merchants and consumers have increasingly used our marketplace. However, this is a new market which we only created in late 2008 and which has operated at a substantial scale for only a limited period of time. Given the limited history, it is difficult to predict whether this market will continue to grow or whether it can be maintained. For example, as a result of our limited operating history in a new industry and because the majority of our subscribers registered for our service or made their initial purchase of a Groupon in the past 12 months, it is difficult to discern meaningful or established trends with respect to the purchase activity of our subscribers or customers. We expect that the market will evolve in ways which may be difficult to predict. For example, we anticipate that over time we will reach a point in most markets where we have achieved a market penetration such that investments in new subscriber acquisition are less productive and the continued growth of our revenue will require more focus on increasing the rate at which our existing subscribers purchase Groupons. It is also possible that merchants or customers could broadly determine that they no longer believe in the value of our current services or marketplace. In the event of these or any other changes to the market, our continued success will depend on our ability to successfully adjust our strategy to meet the changing market dynamics. If we

11

are unable to do so, our business could be harmed and our results of operations subject to a material negative impact.

We base our decisions regarding investments in subscriber acquisition primarily on our analysis of the profits generated from subscribers that we acquired in prior periods. If the estimates and assumptions we use are inaccurate, we may not be able to recover our subscriber acquisition costs and our growth rate and financial results will be adversely affected.

        Our decisions regarding investments in subscriber acquisition substantially depend upon our analysis of the profits generated from subscribers we acquired in earlier periods. We refer to this as our subscriber economics. Our analysis regarding subscriber economics includes several assumptions, including:

•

Because the costs of offering or distributing deals to existing subscribers are not significant, our analysis focuses on the online marketing costs incurred during the quarter in which the subscribers are originally acquired and makes various assumptions with respect to the level of additional marketing or other expenses necessary to maintain subscriber loyalty and generate purchase activity in subsequent periods. If our assumptions regarding such expenses in subsequent periods are incorrect, our subscriber economics could be less favorable than we believe.

•

The analysis which we present below in "Business—Subscriber Economics" includes a discussion of our Q2 2010 cohort and case studies from certain of our largest markets. These results inherently reflect a distinct group of merchants, subscribers and geographies and may not be representative of our current or future composite group of merchants, subscribers and geographies. For example, our Q2 2010 cohort and market case studies may reflect unique market dynamics or the novelty of our service during the periods covered.

        If our assumptions regarding our subscriber economics, including those relating to the effectiveness of our marketing spend, prove incorrect, our ability to generate profits from our investments in new subscriber acquisitions may be less than we have assumed. In such case, we may need to increase expenses or otherwise alter our strategy and our results of operations could be negatively impacted.

We have incurred net losses since inception and we expect our operating expenses to increase significantly in the foreseeable future.

        We incurred net losses of $389.6 million and $203.9 million in 2010 and the first half of 2011, respectively, and had an accumulated deficit of $623.4 million as of June 30, 2011. We anticipate that our operating expenses will increase substantially in the foreseeable future as we continue to invest to increase our subscriber base, increase the number and variety of deals we offer each day, expand our marketing channels, expand our operations, hire additional employees and develop our technology platform. These efforts may prove more expensive than we currently anticipate, and we may not succeed in increasing our revenue sufficiently to offset these higher expenses. Many of our efforts to generate revenue from our business are new and unproven, and any failure to increase our revenue could prevent us from attaining or increasing profitability. We cannot be certain that we will be able to attain or increase profitability on a quarterly or annual basis. If we are unable to effectively manage these risks and difficulties as we encounter them, our business, financial condition and results of operations may suffer.

If we fail to retain our existing subscribers or acquire new subscribers, our revenue and business will be harmed.

        We spent $345.1 million on online marketing initiatives relating to subscriber acquisition for the first half of 2011 and expect to continue to spend significant amounts to acquire additional subscribers. We must continue to retain and acquire subscribers that purchase Groupons in order to increase revenue and achieve profitability. We cannot assure you that the revenue from subscribers we acquire will ultimately exceed the cost of acquiring new subscribers. If consumers do not perceive our Groupon offers to be of high value and quality or if we fail to introduce new and more relevant deals, we may not be able to acquire

12

or retain subscribers. If we are unable to acquire new subscribers who purchase Groupons in numbers sufficient to grow our business, or if subscribers cease to purchase Groupons, the revenue we generate may decrease and our operating results will be adversely affected.

        We believe that many of our new subscribers originate from word-of-mouth and other non-paid referrals from existing subscribers, and therefore we must ensure that our existing subscribers remain loyal to our service in order to continue receiving those referrals. If our efforts to satisfy our existing subscribers are not successful, we may not be able to acquire new subscribers in sufficient numbers to continue to grow our business or we may be required to incur significantly higher marketing expenses in order to acquire new subscribers. Further, we believe that our success is influenced by the level of communication and sharing among subscribers. If the level of usage by our subscriber base declines or does not grow as expected, we may suffer a decline in subscriber growth or revenue. A significant decrease in the level of usage or subscriber growth would have an adverse effect on our business, financial condition and results of operations.

If we fail to retain existing merchants or add new merchants, our revenue and business will be harmed.

        We depend on our ability to attract and retain merchants that are prepared to offer products or services on compelling terms through our marketplace. We do not have long-term arrangements to guarantee the availability of deals that offer attractive quality, value and variety to consumers or favorable payment terms to us. We must continue to attract and retain merchants in order to increase revenue and achieve profitability. If new merchants do not find our marketing and promotional services effective, or if existing merchants do not believe that utilizing our products provides them with a long-term increase in customers, revenue or profit, they may stop making offers through our marketplace. In addition, we may experience attrition in our merchants in the ordinary course of business resulting from several factors, including losses to competitors and merchant closures or bankruptcies. If we are unable to attract new merchants in numbers sufficient to grow our business, or if too many merchants are unwilling to offer products or services with compelling terms through our marketplace or offer favorable payment terms to us, we may sell fewer Groupons and our operating results will be adversely affected.

        If our efforts to market, advertise and promote products and services from our existing merchants are not successful, or if our existing merchants do not believe that utilizing our services provides them with a long-term increase in customers, revenue or profit, we may not be able to retain or attract merchants in sufficient numbers to grow our business or we may be required to incur significantly higher marketing expenses or accept lower margins in order to attract new merchants. A significant increase in merchant attrition or decrease in merchant growth would have an adverse effect on our business, financial condition and results of operation.

Our business is highly competitive. Competition presents an ongoing threat to the success of our business.

        We expect competition in e-commerce generally, and group buying in particular, to continue to increase because there are no significant barriers to entry. A substantial number of group buying sites that attempt to replicate our business model have emerged around the world. In addition to such competitors, we expect to increasingly compete against other large internet and technology-based businesses, such as Google and Microsoft, each of which has launched initiatives which are directly competitive to our business. We also expect to compete against other internet sites that are focused on specific communities or interests and offer coupons or discount arrangements related to such communities or interests. We also compete with traditional offline coupon and discount services, as well as newspapers, magazines and other traditional media companies who provide coupons and discounts on products and services.

        We believe that our ability to compete depends upon many factors both within and beyond our control, including the following:

•

the size and composition of our subscriber base and the number of merchants we feature;

13

•

the timing and market acceptance of deals we offer, including the developments and enhancements to those deals offered by us or our competitors;

•

subscriber and merchant service and support efforts;

•

selling and marketing efforts;

•

ease of use, performance, price and reliability of services offered either by us or our competitors;

•

our ability to cost-effectively manage our operations; and

•

our reputation and brand strength relative to our competitors.

        Many of our current and potential competitors have longer operating histories, significantly greater financial, marketing and other resources and larger subscriber bases than we do. These factors may allow our competitors to benefit from their existing customer or subscriber base with lower customer acquisition costs or to respond more quickly than we can to new or emerging technologies and changes in consumer habits. These competitors may engage in more extensive research and development efforts, undertake more far-reaching marketing campaigns and adopt more aggressive pricing policies, which may allow them to build larger subscriber bases or generate revenue from their subscriber bases more effectively than we do. Our competitors may offer deals that are similar to the deals we offer or that achieve greater market acceptance than the deals we offer. This could attract subscribers away from our websites and applications, reduce our market share and adversely impact our revenue. In addition, we are dependent on some of our existing or potential competitors, including Google and Microsoft, for banner advertisements and other marketing initiatives to acquire new subscribers. Our ability to utilize their platforms to acquire new subscribers may be adversely affected if they choose to compete more directly with us.

If we are unable to recover subscriber acquisition costs with revenue generated from those subscribers, our business and operating results will be harmed.

        As of June 30, 2011, we had 115.7 million subscribers to our daily emails, and we expect the number of subscribers to grow significantly during the remainder of 2011. Acquiring a subscriber base is costly, and the success of our business depends on our ability to generate revenue from new and existing subscribers. In 2010 and the first half of 2011, we spent $241.5 million and $345.1 million, respectively, on online marketing initiatives relating to subscriber acquisition. As our subscriber base continues to evolve, it is possible that the composition of our subscribers may change in a manner that makes it more difficult to generate revenue to offset the costs associated with acquiring new subscribers. For example, if we acquire a large number of new subscribers who are not viewed as an attractive demographic by merchants, we may not be able to generate compelling products for those subscribers to offset the cost of acquiring those subscribers. If the cost to acquire subscribers is greater than the revenue we generate over time from those subscribers, our business and operating results will be harmed.

If we are unable to maintain favorable terms with our merchants, our revenue may be adversely affected.

        The success of our business depends in part on our ability to retain and increase the number of merchants who use our service. Currently, when a merchant partners with us to offer a deal for its products or services, it receives an agreed upon percentage of the gross billings from each Groupon sold, and we retain the rest. If merchants decide that utilizing our services no longer provides an effective means of attracting new customers or selling their goods and services, they may demand a higher percentage of the gross billings from each Groupon sold. This would adversely affect our revenue.

        In addition, we expect to face increased competition from other internet and technology-based businesses such as Google and Microsoft, each of which has launched initiatives which are directly competitive to our business. We also have seen that some competitors will accept lower margins, or negative margins, to attract attention and acquire new subscribers. If competitors engage in group buying

14

initiatives in which merchants receive a higher percentage of the gross billings than we currently offer, we may be forced to pay a higher percentage of the gross billings than we currently offer, which may reduce our revenue.

Our operating cash flow and results of operations could be adversely impacted if we change our merchant payment terms or our gross billings do not continue to grow.

        Our merchant payment terms and revenue growth have provided us with operating cash flow to fund our working capital needs. Our merchant arrangements are generally structured such that we collect cash up front when our customers purchase Groupons and make payments to our merchants at a subsequent date. In North America, we typically pay our merchants in installments within sixty days after the Groupon is sold. In our International segment, merchants are not paid until the customer redeems the Groupon. Our accrued merchant payable, which primarily consists of payment obligations to our merchants, has grown, both nominally and as a percentage of gross billings, as our gross billings have increased, particularly the gross billings from our International segment. Our accrued merchant payable balance increased from $4.3 million as of December 31, 2009 to $391.9 million as of June 30, 2011. We use the operating cash flow provided by our merchant payment terms and revenue growth to fund our working capital needs. If we offer our merchants more favorable or accelerated payment terms or our gross billings do not continue to grow in the future, our operating cash flow and results of operations could be adversely impacted and we may have to seek alternative financing to fund our working capital needs.

Our business relies heavily on email and other messaging services, and any restrictions on the sending of emails or messages or a decrease in subscriber willingness to receive messages could adversely affect our revenue and business.

        Our business is highly dependent upon email and other messaging services. Deals offered through emails and other messages sent by us, or on our behalf by our affiliates, generate a substantial portion of our revenue. Because of the importance of email and other messaging services to our businesses, if we are unable to successfully deliver emails or messages to our subscribers or potential subscribers, or if subscribers decline to open our emails or messages, our revenue and profitability would be adversely affected. Actions by third parties to block, impose restrictions on, or charge for the delivery of, emails or other messages could also materially and adversely impact our business. From time to time, internet service providers block bulk email transmissions or otherwise experience technical difficulties that result in our inability to successfully deliver emails or other messages to third parties. In addition, our use of email and other messaging services to send communications about our website or other matters may result in legal claims against us, which if successful might limit or prohibit our ability to send emails or other messages. Any disruption or restriction on the distribution of emails or other messages or any increase in the associated costs would materially and adversely affect our revenue and profitability.

We have a rapidly evolving business model and our new product and service offerings could fail to attract or retain subscribers or generate revenue.

        We have a rapidly evolving business model and are regularly exploring entry into new market segments and the introduction of new products and features with respect to which we may have limited experience. In addition, our subscribers may not respond favorably to our new products and services. These products and services may present new and significant technology challenges, and we may be subject to claims if subscribers of these offerings experience service disruptions or failures or other quality issues. If products or services we introduce, such as changes to our websites and applications, the introduction of social networking and location-based marketing elements to our websites, or entirely new lines of business that we may pursue, fail to engage subscribers or merchants, we may fail to acquire or retain subscribers or generate sufficient revenue or other value to justify our investment, and our business may be materially and adversely affected. Our ability to retain or increase our subscriber base and revenue will depend

15

heavily on our ability to innovate and to create successful new products and services. In addition, the relative profitability, if any, of our new activities may be lower than that of our historical activities, and we may not generate sufficient revenue from new activities to recoup our investments in them. If any of this were to occur, it could damage our reputation, limit our growth and negatively affect our operating results.

If we are unable to retain the services of certain individuals involved in the operations of our International segment, our international expansion may suffer.

        Our international expansion has been rapid and our international business has become critical to the growth in our revenue and our ability to achieve profitability. In the first half of 2010 and the first half of 2011, 5.1% and 57.3%, respectively, of our revenue was generated from our International segment. We began our international operations in May 2010 with the acquisition of CityDeal Europe GmbH, or CityDeal, which was founded by Oliver Samwer and Marc Samwer. Since the CityDeal acquisition, Messrs. Samwer have served as consultants and been extensively involved in the development and operations of our International segment. The agreements under which Messrs. Samwer provide us with consulting services will expire in October 2011. In the event Messrs. Samwer do not continue to provide us with consulting services after October 2011, we can make no assurances that the loss of their services will not disrupt our international operations or have an adverse effect on our ability to grow our international business.

Our international operations are subject to increased challenges, and our inability to adapt to the varied commercial and regulatory landscapes of our international markets may adversely affect our business.

        Further expansion into international markets requires management attention and resources and requires us to localize our services to conform to a wide variety of local cultures, business practices, laws and policies. The different commercial and internet infrastructure in other countries may make it more difficult for us to replicate our business model. In many countries, we compete with local companies that understand the local market better than we do, and we may not benefit from first-to-market advantages. We may not be successful in expanding into particular international markets or in generating revenue from foreign operations. As we continue to expand internationally, we are increasingly subject to risks of doing business internationally, including the following:

•

strong local competitors;

•

different regulatory requirements, including regulation of gift cards and coupon terms, internet services, professional selling, distance selling, bulk emailing, privacy and data protection, banking and money transmitting, that may limit or prevent the offering of our services in some jurisdictions or prevent enforceable agreements;

•

difficulties in integrating with local payment providers, including banks, credit and debit card networks and electronic funds transfer systems;

•

different employee/employer relationships and the existence of workers' councils and labor unions;

•

shorter payment cycles, different accounting practices and greater problems in collecting accounts receivable;

•

higher internet service provider costs;

•

seasonal reductions in business activity;

•

expenses associated with localizing our products, including offering subscribers the ability to transact business in the local currency; and

•

differing intellectual property laws.

16

        If, as we continue to expand internationally, we are unable to successfully replicate our business model due to commercial and regulatory constraints in our international markets, our business may be adversely affected.

The integration of our international operations with our North American technology platform may result in business interruptions.

        We currently use a common technology platform in our North America segment to operate our business and are in the process of migrating our operations in our International segment to the same platform. Such changes to our technology platform and related software carry risks such as cost overruns, project delays and business interruptions and delays. If we experience a material business interruption as a result of this process, it could have a material adverse effect on our business, financial position and results of operations and could cause the market value of our common stock to decline.

17

An increase in the costs associated with maintaining our international operations could adversely affect our results of operations.

        Certain factors may cause our international costs of doing business to exceed our comparable costs in North America. For example, in some countries, expansion of our business may require a close commercial relationship with one or more local banks, a shared ownership interest with a local entity or registration as a bank under local law. Such requirements may reduce our revenue, increase our costs or limit the scope of our activities in particular countries.

        Further, as we expand our international operations and have additional portions of our international revenue denominated in foreign currencies, we could become subject to increased difficulties in collecting accounts receivable and repatriating money without adverse tax consequences and increased risks relating to foreign currency exchange rate fluctuations. Further, we could be subject to the application of U.S. tax rules to acquired international operations and local taxation of our fees or of transactions on our websites.

        We conduct certain functions, including product development, subscriber support and other operations, in regions outside of North America. Any factors which reduce the anticipated benefits, including cost efficiencies and productivity improvements, associated with providing these functions outside of North America, including increased regulatory costs associated with our international operations, could adversely affect our business.

An increase in our refund rates could reduce our liquidity and profitability.

        Our "Groupon Promise" states that we will provide our customers with a refund of the purchase price of a Groupon if they believe that we have let them down. As we increase our revenue, our refund rates may exceed our historical levels. A downturn in general economic conditions may also increase our refund rates. An increase in our refund rates could significantly reduce our liquidity and profitability.

        As we do not have control over our merchants and the quality of products or services they deliver, we rely on a combination of our historical experience with each merchant and online and offline research of customer reviews of merchants for the development of our estimate for refund claims. Our actual level of refund claims could prove to be greater than the level of refund claims we estimate. If our refund reserves are not adequate to cover future refund claims, this inadequacy could have a material adverse effect on our liquidity and profitability.

        Our standard agreements with our merchants generally limit the time period during which we may seek reimbursement for customer refunds or claims. Our customers may make claims for refunds with respect to which we are unable to seek reimbursement from our merchants. Our inability to seek reimbursement from our merchants for refund claims could have an adverse effect on our liquidity and profitability.

If our merchants do not meet the needs and expectations of our subscribers, our business could suffer.

        Our business depends on our reputation for providing high-quality deals, and our brand and reputation may be harmed by actions taken by merchants that are outside our control. Any shortcomings of one or more of our merchants, particularly with respect to an issue affecting the quality of the deal offered or the products or services sold, may be attributed by our subscribers to us, thus damaging our reputation, brand value and potentially affecting our results of operations. In addition, negative publicity and subscriber sentiment generated as a result of fraudulent or deceptive conduct by our merchants could damage our reputation, reduce our ability to attract new subscribers or retain our current subscribers, and diminish the value of our brand.

We cannot assure you that we will be able to manage the growth of our organization effectively.

        We have experienced rapid growth in demand for our services since our inception. Our employee headcount and number of subscribers have increased significantly since our inception, and we expect this growth to continue for the foreseeable future. The growth and expansion of our business and service

18

offerings places significant demands on our management and our operational and financial resources. We are required to manage multiple relations with various merchants, subscribers, technology licensors and other third parties. In the event of further growth of our operations or in the number of our third-party relationships, our information technology systems or our internal controls and procedures may not be adequate to support our operations. To effectively manage our growth, we must continue to implement operational plans and strategies, improve and expand our infrastructure of people and information systems, and train and manage our employee base.

The loss of one or more key members of our management team, or our failure to attract, integrate and retain other highly qualified personnel in the future, could harm our business.

        We currently depend on the continued services and performance of the key members of our management team, including Andrew D. Mason, our Chief Executive Officer, and Jason E. Child, our Chief Financial Officer. Mr. Mason is one of our founders and his leadership has played an integral role in our growth. The loss of key personnel, including key members of management as well as our marketing, sales, product development and technology personnel, could disrupt our operations and have an adverse effect on our ability to grow our business. Moreover, many members of our management are new to our team or have been recently promoted to new roles.

        Eric P. Lefkofsky is one of our founders and has served as the Executive Chairman of our Board of Directors since our inception. Although Mr. Lefkofsky historically has devoted a significant amount of his business time to Groupon, he is under no contractual or other obligation to do so and may not do so in the future. Mr. Lefkofsky invests his business time and financial resources in a variety of other businesses, including Lightbank LLC, a private investment firm that Mr. Lefkofsky co-founded with Bradley A. Keywell. Such investments may be in areas that present conflicts with, or involve businesses related to, our operations. If Mr. Lefkofsky devotes less time to our business in the future, our business may be adversely affected.

        As we become a more mature company, we may find our recruiting and retention efforts more challenging. We are seeking to hire a significant number of personnel, including certain key management personnel. If we do not succeed in attracting, hiring and integrating excellent personnel, or retaining and motivating existing personnel, we may be unable to grow effectively.

We may be subject to additional unexpected regulation which could increase our costs or otherwise harm our business.

        The application of certain laws and regulations to Groupons, as a new product category, is uncertain. These include laws and regulations such as the Credit Card Accountability Responsibility and Disclosure Act of 2009, or the CARD Act, and unclaimed and abandoned property laws. In addition, from time to time, we may be notified of additional laws and regulations which governmental organizations or others may claim should be applicable to our business. For example, we were recently notified by the Massachusetts Alcoholic Beverages Control Commission that Groupon discounts for some Massachusetts restaurants may not be in compliance with Massachusetts liquor laws and regulations. If we are required to alter our business practices as a result of any laws and regulations, our revenue could decrease, our costs could increase and our business could otherwise be harmed. In addition, the costs and expenses associated with defending any actions related to such additional laws and regulations and any payments of related penalties, judgments or settlements could adversely impact our profitability.

The implementation of the CARD Act and similar state and foreign laws may harm our business and results of operations.

        Groupons may be considered gift cards, gift certificates, stored value cards or prepaid cards and therefore governed by, among other laws, the CARD Act, and state laws governing gift cards, stored value cards and coupons. Other foreign jurisdictions have similar laws in place, in particular European jurisdictions where the European E-Money Directive regulates the business of electronic money

19

institutions. Many of these laws contain provisions governing the use of gift cards, gift certificates, stored value cards or prepaid cards, including specific disclosure requirements and prohibitions or limitations on the use of expiration dates and the imposition of certain fees. For example, if Groupons are subject to the CARD Act and are not included in the exemption for promotional programs, it is possible that the purchase value, which is the amount equal to the price paid for the Groupon, or the promotional value, which is the add-on value of the Groupon in excess of the price paid, or both, may not expire before the later of (i) five years after the date on which the Groupon was issued or the date on which the subscriber last loaded funds on the Groupon if the Groupon has a reloadable feature; (ii) the Groupon's stated expiration date (if any); or (iii) a later date provided by applicable state law. We and several merchants with whom we have partnered are currently defendants in 16 purported class actions that have been filed in federal and state court claiming that Groupons are subject to the CARD Act and various state laws governing gift cards and that the defendants have violated these laws by issuing Groupons with expiration dates and other restrictions. We are also the defendant to a purported class action in the Canadian province of Ontario in which similar violations of provincial legislation governing gift cards are alleged. In the event that it is determined that Groupons are subject to the CARD Act or any similar state or foreign law or regulation, and are not within various exemptions that may be available under the CARD Act or under some of the various state or foreign jurisdictions, our liabilities with respect to unredeemed Groupons may be materially higher than the amounts shown in our financial statements and we may be subject to additional fines and penalties. In addition, if federal or state laws require that the face value of Groupons have a minimum expiration period beyond the period desired by a merchant for its promotional program, or no expiration period, this may affect the willingness of merchants to issue Groupons in jurisdictions where these laws apply. If we are required to materially increase the estimated liability recorded in our financial statements with respect to unredeemed gift cards, our net income could be materially and adversely affected.

If we are required to materially increase the estimated liability recorded in our financial statements with respect to unredeemed Groupons, our net income could be materially and adversely affected.

        In certain states and foreign jurisdictions, Groupons may be considered a gift card. Some of these states and foreign jurisdictions include gift cards under their unclaimed and abandoned property laws which require companies to remit to the government the value of the unredeemed balance on the gift cards after a specified period of time (generally between one and five years) and impose certain reporting and recordkeeping obligations. We do not remit any amounts relating to unredeemed Groupons based on our assessment of applicable laws. The analysis of the potential application of the unclaimed and abandoned property laws to Groupons is complex, involving an analysis of constitutional and statutory provisions and factual issues, including our relationship with subscribers and merchants and our role as it relates to the issuance and delivery of a Groupon. In the event that one or more states or foreign jurisdictions successfully challenges our position on the application of its unclaimed and abandoned property laws to Groupons, or if the estimates that we use in projecting the likelihood of Groupons being redeemed prove to be inaccurate, our liabilities with respect to unredeemed Groupons may be materially higher than the amounts shown in our financial statements. If we are required to materially increase the estimated liability recorded in our financial statements with respect to unredeemed gift cards, our net income could be materially and adversely affected. Moreover, a successful challenge to our position could subject us to penalties or interest on unreported and unremitted sums, and any such penalties or interest would have a further material adverse impact on our net income.

Government regulation of the internet and e-commerce is evolving, and unfavorable changes or failure by us to comply with these regulations could substantially harm our business and results of operations.

        We are subject to general business regulations and laws as well as regulations and laws specifically governing the internet and e-commerce. Existing and future regulations and laws could impede the growth of the internet or other online services. These regulations and laws may involve taxation, tariffs, subscriber privacy, anti-spam, data protection, content, copyrights, distribution, electronic contracts and other

20

communications, consumer protection, the provision of online payment services and the characteristics and quality of services. It is not clear how existing laws governing issues such as property ownership, sales and other taxes, libel and personal privacy apply to the internet as the vast majority of these laws were adopted prior to the advent of the internet and do not contemplate or address the unique issues raised by the internet or e-commerce. In addition, it is possible that governments of one or more countries may seek to censor content available on our websites and applications or may even attempt to completely block access to our websites. Adverse legal or regulatory developments could substantially harm our business. In particular, in the event that we are restricted, in whole or in part, from operating in one or more countries, our ability to retain or increase our subscriber base may be adversely affected and we may not be able to maintain or grow our revenue as anticipated.

New tax treatment of companies engaged in internet commerce may adversely affect the commercial use of our services and our financial results.

        Due to the global nature of the internet, it is possible that various states or foreign countries might attempt to regulate our transmissions or levy sales, income or other taxes relating to our activities. Tax authorities at the international, federal, state and local levels are currently reviewing the appropriate treatment of companies engaged in internet commerce. New or revised international, federal, state or local tax regulations may subject us or our subscribers to additional sales, income and other taxes. We cannot predict the effect of current attempts to impose sales, income or other taxes on commerce over the internet. New or revised taxes and, in particular, sales taxes, VAT and similar taxes would likely increase the cost of doing business online and decrease the attractiveness of advertising and selling goods and services over the internet. New taxes could also create significant increases in internal costs necessary to capture data, and collect and remit taxes. Any of these events could have an adverse effect on our business and results of operations.

Failure to comply with federal, state and international privacy laws and regulations, or the expansion of current or the enactment of new privacy laws or regulations, could adversely affect our business.

        A variety of federal, state and international laws and regulations govern the collection, use, retention, sharing and security of consumer data. The existing privacy-related laws and regulations are evolving and subject to potentially differing interpretations. In addition, various federal, state and foreign legislative and regulatory bodies may expand current or enact new laws regarding privacy matters. For example, recently there have been Congressional hearings and increased attention to the capture and use of location-based information relating to users of smartphones and other mobile devices. We have posted privacy policies and practices concerning the collection, use and disclosure of subscriber data on our websites and applications. Several internet companies have incurred penalties for failing to abide by the representations made in their privacy policies and practices. In addition, several states have adopted legislation that requires businesses to implement and maintain reasonable security procedures and practices to protect sensitive personal information and to provide notice to consumers in the event of a security breach. Any failure, or perceived failure, by us to comply with our posted privacy policies or with any data-related consent orders, Federal Trade Commission requirements or orders or other federal, state or international privacy or consumer protection-related laws, regulations or industry self-regulatory principles could result in claims, proceedings or actions against us by governmental entities or others or other liabilities, which could adversely affect our business. In addition, a failure or perceived failure to comply with industry standards or with our own privacy policies and practices could result in a loss of subscribers or merchants and adversely affect our business. Federal, state and international governmental authorities continue to evaluate the privacy implications inherent in the use of third-party web "cookies" for behavioral advertising. The regulation of these cookies and other current online advertising practices could adversely affect our business.

21

We may suffer liability as a result of information retrieved from or transmitted over the internet and claims related to our service offerings.

        We may be, and in certain cases have been, sued for defamation, civil rights infringement, negligence, patent, copyright or trademark infringement, invasion of privacy, personal injury, product liability, breach of contract, unfair competition, discrimination, antitrust or other legal claims relating to information that is published or made available on our websites or service offerings we make available (including provision of an application programming interface platform for third parties to access our website, mobile device services and geolocation applications). This risk is enhanced in certain jurisdictions outside the United States, where our liability for such third-party actions may be less clear and we may be less protected. In addition, we could incur significant costs in investigating and defending such claims, even if we ultimately are not found liable. If any of these events occurs, our net income could be materially and adversely affected.

        We are subject to risks associated with information disseminated through our websites and applications, including consumer data, content that is produced by our editorial staff and errors or omissions related to our product offerings. Such information, whether accurate or inaccurate, may result in our being sued by our merchants, subscribers or third parties and as a result our revenue and goodwill could be materially and adversely affected.

Our business depends on our ability to maintain and scale the network infrastructure necessary to operate our websites and applications, and any significant disruption in service on our websites or applications could result in a loss of subscribers, customers or merchants.

        Subscribers access our deals through our websites and applications. Our reputation and ability to acquire, retain and serve our subscribers and customers are dependent upon the reliable performance of our websites and applications and the underlying network infrastructure. As our subscriber base and the amount of information shared on our websites and applications continue to grow, we will need an increasing amount of network capacity and computing power. We have spent and expect to continue to spend substantial amounts on data centers and equipment and related network infrastructure to handle the traffic on our websites and applications. The operation of these systems is expensive and complex and could result in operational failures. In the event that our subscriber base or the amount of traffic on our websites and applications grows more quickly than anticipated, we may be required to incur significant additional costs. Interruptions in these systems, whether due to system failures, computer viruses or physical or electronic break-ins, could affect the security or availability of our websites and applications, and prevent our subscribers from accessing our services. A substantial portion of our network infrastructure is hosted by third-party providers. Any disruption in these services or any failure of these providers to handle existing or increased traffic could significantly harm our business. Any financial or other difficulties these providers face may adversely affect our business, and we exercise little control over these providers, which increases our vulnerability to problems with the services they provide. If we do not maintain or expand our network infrastructure successfully or if we experience operational failures, we could lose current and potential subscribers and merchants, which could harm our operating results and financial condition.

Our business depends on the development and maintenance of the internet infrastructure.

        The success of our services will depend largely on the development and maintenance of the internet infrastructure. This includes maintenance of a reliable network backbone with the necessary speed, data capacity and security, as well as timely development of complementary products, for providing reliable internet access and services. The internet has experienced, and is likely to continue to experience, significant growth in the number of users and amount of traffic. The internet infrastructure may be unable to support such demands. In addition, increasing numbers of users, increasing bandwidth requirements or problems caused by viruses, worms, malware and similar programs may harm the performance of the internet. The backbone computers of the internet have been the targets of such programs. The internet has

22

experienced a variety of outages and other delays as a result of damage to portions of its infrastructure, and it could face outages and delays in the future. These outages and delays could reduce the level of internet usage generally as well as the level of usage of our services, which could adversely impact our business.

We may not be able to adequately protect our intellectual property rights or may be accused of infringing intellectual property rights of third parties.

        We regard our subscriber list, trademarks, service marks, copyrights, patents, trade dress, trade secrets, proprietary technology and similar intellectual property as critical to our success, and we rely on trademark, copyright and patent law, trade secret protection and confidentiality and/or license agreements with our employees and others to protect our proprietary rights. Effective intellectual property protection may not be available in every country in which our deals are made available. We also may not be able to acquire or maintain appropriate domain names or trademarks in all countries in which we do business. Furthermore, regulations governing domain names may not protect our trademarks and similar proprietary rights. We may be unable to prevent third parties from acquiring and using domain names that are similar to, infringe upon or diminish the value of our trademarks and other proprietary rights. We may be unable to prevent third parties from using and registering our trademarks, or trademarks that are similar to, or diminish the value of, our trademark in some countries.

        We may not be able to discover or determine the extent of any unauthorized use of our proprietary rights. Third parties that license our proprietary rights also may take actions that diminish the value of our proprietary rights or reputation. The protection of our intellectual property may require the expenditure of significant financial and managerial resources. Moreover, the steps we take to protect our intellectual property may not adequately protect our rights or prevent third parties from infringing or misappropriating our proprietary rights. We are currently subject to multiple litigations and disputes related to our intellectual property and service offerings. We may in the future be subject to additional litigation and disputes. The costs of supporting such litigation and disputes are considerable, and there can be no assurances that favorable outcomes will be obtained.

        We are currently subject to third-party claims that we infringe their proprietary rights or trademarks and expect to be subject to additional claims in the future. Such claims, whether or not meritorious, may result in the expenditure of significant financial and managerial resources, injunctions against us or the payment of damages by us. We may need to obtain licenses from third parties who allege that we have infringed their rights, but such licenses may not be available on terms acceptable to us or at all. These risks have been amplified by the increase in third parties whose sole or primary business is to assert such claims.

Our business depends on a strong brand, and if we are not able to maintain and enhance our brand, or if we receive unfavorable media coverage, our ability to expand our base of subscribers and merchants will be impaired and our business and operating results will be harmed.

        We believe that the brand identity that we have developed has significantly contributed to the success of our business. We also believe that maintaining and enhancing the "Groupon" brand is critical to expanding our base of subscribers and merchants. Maintaining and enhancing our brand may require us to make substantial investments and these investments may not be successful. If we fail to promote and maintain the "Groupon" brand, or if we incur excessive expenses in this effort, our business, operating results and financial condition will be materially and adversely affected. We anticipate that, as our market becomes increasingly competitive, maintaining and enhancing our brand may become increasingly difficult and expensive. Maintaining and enhancing our brand will depend largely on our ability to be a group buying leader and to continue to provide reliable, trustworthy and high quality deals, which we may not do successfully.

        We receive a high degree of media coverage around the world. Unfavorable publicity or consumer perception of our websites, applications, practices or service offerings, or the offerings of our merchants, could adversely affect our reputation, resulting in difficulties in recruiting, decreased revenue and a

23

negative impact on the number of merchants we feature and the size of our subscriber base, the loyalty of our subscribers and the number and variety of deals we offer each day. As a result, our business, financial condition and results of operations could be materially and adversely affected.

Acquisitions, joint ventures and strategic investments could result in operating difficulties, dilution and other harmful consequences.

        We expect to continue to evaluate and consider a wide array of potential strategic transactions, including acquisitions and dispositions of businesses, joint ventures, technologies, services, products and other assets and strategic investments. At any given time, we may be engaged in discussions or negotiations with respect to one or more of these types of transactions. Any of these transactions could be material to our financial condition and results of operations. The process of integrating any acquired business may create unforeseen operating difficulties and expenditures and is itself risky. The areas where we may face difficulties include:

•

diversion of management time, as well as a shift of focus from operating the businesses to issues related to integration and administration, particularly given the number, size and varying scope of our recent acquisitions;

•

the need to integrate each company's accounting, management, information, human resource and other administrative systems to permit effective management, and the lack of control if such integration is delayed or not implemented;

•

the need to implement controls, procedures and policies appropriate for a public company at companies that prior to acquisition had lacked such controls, procedures and policies;

•

in some cases, the need to transition operations and subscribers onto our existing platforms; and

•

liability for activities of the acquired company before the acquisition, including violations of laws, rules and regulations, commercial disputes, tax liabilities and other known and unknown liabilities.

        Moreover, we may not realize the anticipated benefits of any or all of our acquisitions, or we may not realize them in the time frame expected. Future acquisitions or mergers may require us to issue additional equity securities, spend a substantial portion of our available cash, or incur debt or liabilities, amortize expenses related to intangible assets or incur write-offs of goodwill, which could adversely affect our results of operations and dilute the economic and voting rights of our stockholders.

Our total number of subscribers may be higher than the number of our actual individual subscribers and may not be representative of the number of persons who are active potential customers.

        Our total number of subscribers may be higher than the number of our actual individual subscribers because some subscribers have multiple registrations, other subscribers have died or become incapacitated and others may have registered under fictitious names. Given the challenges inherent in identifying these subscribers, we do not have a reliable system to accurately identify the number of actual individual subscribers, and thus we rely on the number of total subscribers as our measure of the size of our subscriber base. In addition, the number of subscribers includes the total number of individuals that have completed registration through a specific date, less individuals who have unsubscribed, and should not be considered as representative of the number of persons who continue to actively consider our deals by reviewing our email offers.

Our business may be subject to seasonal sales fluctuations which could result in volatility or have an adverse effect on the market price of our common stock.

        Our business, like that of our merchants, may be subject to some degree of sales seasonality. As the growth of our business stabilizes, these seasonal fluctuations may become more evident. Seasonality may cause our working capital cash flow requirements to vary from quarter to quarter depending on the variability in the volume and timing of sales. These factors, among other things, make forecasting more

24

difficult and may adversely affect our ability to manage working capital and to predict financial results accurately, which could adversely affect the market price of our common stock.

We depend on the continued growth of online commerce.

        The business of selling goods and services over the internet, particularly through coupons, is dynamic and relatively new. Concerns about fraud, privacy and other problems may discourage additional consumers and merchants from adopting the internet as a medium of commerce. In countries such as the U.S., Germany, the United Kingdom, France and Japan, where our services and online commerce generally have been available for some time and the level of market penetration of our services is high, acquiring new subscribers for our services may be more difficult and costly than it has been in the past. In order to expand our subscriber base, we must appeal to and acquire subscribers who historically have used traditional means of commerce to purchase goods and services and may prefer internet analogues to our offerings, such as the retailer's own website. If these consumers prove to be less active than our earlier subscribers, or we are unable to gain efficiencies in our operating costs, including our cost of acquiring new subscribers, our business could be adversely impacted.

Our business is subject to interruptions, delays or failures resulting from earthquakes, other natural catastrophic events or terrorism.

        Our services, operations and the data centers from which we provide our services are vulnerable to damage or interruption from earthquakes, fires, floods, power losses, telecommunications failures, terrorist attacks, acts of war, human errors, break-ins and similar events. A significant natural disaster, such as an earthquake, fire or flood, could have a material adverse impact on our business, financial condition and results of operations and our insurance coverage may be insufficient to compensate us for losses that may occur. Acts of terrorism could cause disruptions to the internet, our business or the economy as a whole. We may not have sufficient protection or recovery plans in certain circumstances, such as natural disasters affecting areas where data centers upon which we rely are located, and our business interruption insurance may be insufficient to compensate us for losses that may occur. Such disruptions could negatively impact our ability to run our websites, which could harm our business.

Our results of operations may be negatively impacted by investments we make as we enter new product and service categories.

        We have offered Groupons in over 140 different types of businesses, services and activities that fall into six broad categories. We intend to continue to invest in the development of our existing categories and to expand into new categories. We may make substantial investments in such new categories in anticipation of future revenue. We may also face greater competition in specific categories from internet sites that are more focused on such categories. If the launch of a new category requires investments greater than we expect, if we are unable to generate sufficient merchant offers which are of high quality, value and variety or if the revenue generated from a new category grows more slowly or produces lower revenue than we expect, our results of operations could be adversely impacted.

Failure to deal effectively with fraudulent transactions and subscriber disputes would increase our loss rate and harm our business.

        Groupons are issued in the form of redeemable coupons with unique identifiers. It is possible that consumers or other third parties will seek to create counterfeit Groupons in order to fraudulently purchase discounted goods and services from our merchants. While we use advanced anti-fraud technologies, it is possible that technically knowledgeable criminals will attempt to circumvent our anti-fraud systems using increasingly sophisticated methods. In addition, our service could be subject to employee fraud or other internal security breaches, and we may be required to reimburse consumers and/or merchants for any funds stolen or revenue lost as a result of such breaches. Our merchants could also request reimbursement, or stop using Groupon, if they are affected by buyer fraud or other types of fraud.

25

        We may incur significant losses from fraud and counterfeit Groupons. We may incur losses from claims that the consumer did not authorize the purchase, from merchant fraud, from erroneous transmissions, and from consumers who have closed bank accounts or have insufficient funds in them to satisfy payments. In addition to the direct costs of such losses, if they are related to credit card transactions and become excessive, they could potentially result in our losing the right to accept credit cards for payment. If we were unable to accept credit cards for payment, we would suffer substantial reductions in revenue, which would cause our business to suffer. While we have taken measures to detect and reduce the risk of fraud, these measures need to be continually improved and may not be effective against new and continually evolving forms of fraud or in connection with new product offerings. If these measures do not succeed, our business will suffer.

We are exposed to fluctuations in currency exchange rates and interest rates.

        Because we conduct a significant and growing portion of our business outside the United States but report our financial results in U.S. dollars, we face exposure to adverse movements in currency exchange rates. Our foreign operations are exposed to foreign exchange rate fluctuations as the financial results are translated from the local currency into U.S. dollars upon consolidation. If the U.S. dollar weakens against foreign currencies, the translation of these foreign currency denominated transactions will result in increased revenue, operating expenses and net income. Similarly, if the U.S. dollar strengthens against foreign currencies, the translation of these foreign currency denominated transaction will result in decreased revenue, operating expenses and net income. As exchange rates vary, sales and other operating results, when translated, may differ materially from expectations. In addition, we face exposure to fluctuations in interest rates which may impact our investment income unfavorably.

We are subject to payments-related risks.

        We accept payments using a variety of methods, including credit card, debit card and gift certificates. As we offer new payment options to consumers, we may be subject to additional regulations, compliance requirements and fraud. For certain payment methods, including credit and debit cards, we pay interchange and other fees, which may increase over time and raise our operating costs and lower profitability. We rely on third parties to provide payment processing services, including the processing of credit cards and debit cards and it could disrupt our business if these companies become unwilling or unable to provide these services to us. We are also subject to payment card association operating rules, certification requirements and rules governing electronic funds transfers, which could change or be reinterpreted to make it difficult or impossible for us to comply. If we fail to comply with these rules or requirements, we may be subject to fines and higher transaction fees and lose our ability to accept credit and debit card payments from consumers or facilitate other types of online payments, and our business and operating results could be adversely affected.

        We are also subject to or voluntarily comply with a number of other laws and regulations relating to money laundering, international money transfers, privacy and information security and electronic fund transfers. If we were found to be in violation of applicable laws or regulations, we could be subject to civil and criminal penalties or forced to cease our payments services business.

Federal laws and regulations, such as the Bank Secrecy Act and the USA PATRIOT Act and similar foreign laws, could be expanded to include Groupons.

        Various federal laws, such as the Bank Secrecy Act and the USA PATRIOT Act and foreign laws and regulations, such as the European Directive on the prevention of the use of the financial system for the purpose of money laundering and terrorist financing, impose certain anti-money laundering requirements on companies that are financial institutions or that provide financial products and services. For these purposes, financial institutions are broadly defined to include money services businesses such as money transmitters, check cashers and sellers or issuers of stored value cards. Examples of anti-money laundering requirements imposed on financial institutions include subscriber identification and verification programs, record retention policies and procedures and transaction reporting. We do not believe that we are a

26

financial institution subject to these laws and regulations based, in part, upon the characteristics of Groupons and our role with respect to the distribution of Groupons to subscribers. However, the Financial Crimes Enforcement Network, a division of the U.S. Treasury Department tasked with implementing the requirements of the Bank Secrecy Act, recently proposed amendments to the scope and requirements for parties involved in stored value or prepaid access cards, including a proposed expansion of financial institutions to include sellers or issuers of prepaid access cards. In the event that this proposal is adopted as proposed, it is possible that a Groupon could be considered a financial product and that we could be a financial institution. In the event that we become subject to the requirements of the Bank Secrecy Act or any other anti-money laundering law or regulation imposing obligations on us as a money services business, our regulatory compliance costs to meet these obligations would likely increase which could reduce our net income.

State and foreign laws regulating money transmission could be expanded to include Groupons.

        Many states and certain foreign jurisdictions impose license and registration obligations on those companies engaged in the business of money transmission, with varying definitions of what constitutes money transmission. We do not currently believe we are a money transmitter given our role and the product terms of Groupons. However, a successful challenge to our position or expansion of state or foreign laws could subject us to increased compliance costs and delay our ability to offer Groupons in certain jurisdictions pending receipt of any necessary licenses or registrations.

Current uncertainty in global economic conditions could adversely affect our revenue and business.

        Our operations and performance depend on worldwide economic conditions, which deteriorated significantly in the United States and other countries in late 2008 and through 2009. The current economic environment continues to be uncertain. These conditions may make it difficult for our merchants to accurately forecast and plan future business activities, and could cause our merchants to terminate their relationships with us or could cause our subscribers to slow or reduce their spending. Furthermore, during challenging economic times, our merchants may face issues gaining timely access to sufficient credit, which could result in their unwillingness to continue with our service or impair their ability to make timely payments to us. If that were to occur, we may experience decreased revenue, be required to increase our allowance for doubtful accounts and our days receivables outstanding would be negatively impacted. If we are unable to finance our operations on acceptable terms as a result of renewed tightening in the credit markets, we may experience increased costs or we may not be able to effectively manage our business. We cannot predict the timing, strength or duration of any economic slowdown or subsequent economic recovery, worldwide, in the United States or in our industry. These and other economic factors could have a material adverse effect on our financial condition and operating results.

Our management team has a limited history of working together and may not be able to execute our business plan.

        Our management team has worked together for only a limited period of time and has a limited track record of executing our business plan as a team. We have recently filled a number of positions in our senior management and finance and accounting staff. Accordingly, certain key personnel have only recently assumed the duties and responsibilities they are now performing. In addition, certain of our executives have limited experience managing a large global business operation. Accordingly, it is difficult to predict whether our management team, individually and collectively, will be effective in operating our business.

Our management team has limited experience managing a public company, and regulatory compliance may divert its attention from the day-to-day management of our business.

        The individuals who now constitute our management team have limited experience managing a publicly-traded company and limited experience complying with the increasingly complex laws pertaining to public companies. Our management team may not successfully or efficiently manage our transition to being a public company that will be subject to significant regulatory oversight and reporting obligations under the federal securities laws. In particular, these new obligations will require substantial attention from

27

our senior management and could divert their attention away from the day-to-day management of our business, which could materially and adversely impact our business operations.

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

        We will face increased legal, accounting, administrative and other costs and expenses as a public company that we do not incur as a private company. The Sarbanes-Oxley Act of 2002, including the requirements of Section 404, as well as new rules and regulations subsequently implemented by the Securities and Exchange Commission, or the SEC, the Public Company Accounting Oversight Board and the exchange on which our Class A common stock is listed, impose additional reporting and other obligations on public companies. We expect that compliance with these public company requirements will increase our costs and make some activities more time-consuming. A number of those requirements will require us to carry out activities we have not done previously. For example, we will adopt new internal controls and disclosure controls and procedures. In addition, we will incur additional expenses associated with our SEC reporting requirements. For example, under Section 404 of the Sarbanes-Oxley Act, for our annual report on Form 10-K for our fiscal year ending December 31, 2012, we will need to document and test our internal control procedures, our management will need to assess and report on our internal control over financial reporting and our independent registered public accounting firm will need to issue an opinion on the effectiveness of those controls. Furthermore, if we identify any issues in complying with those requirements (for example, if we or our accountants identify a material weakness or significant deficiency in our internal control over financial reporting), we could incur additional costs rectifying those issues, and the existence of those issues could adversely affect us, our reputation or investor perceptions of us. We also expect that it will be difficult and expensive to obtain director and officer liability insurance, and we may be required to accept reduced policy limits and coverage or incur substantially higher costs to obtain the same or similar coverage. As a result, it may be more difficult for us to attract and retain qualified persons to serve on our board of directors or as executive officers. Advocacy efforts by stockholders and third parties may also prompt even more changes in corporate governance and reporting requirements. We expect that the additional reporting and other obligations imposed on us by these rules and regulations will increase our legal and financial compliance costs and the costs of our related legal, accounting and administrative activities significantly. These increased costs will require us to divert a significant amount of money that we could otherwise use to expand our business and achieve our strategic objectives.

Our ability to raise capital in the future may be limited, and our failure to raise capital when needed could prevent us from growing.

        We may in the future be required to raise capital through public or private financing or other arrangements. Such financing may not be available on acceptable terms, or at all, and our failure to raise capital when needed could harm our business. Additional equity financing may dilute the interests of our common stockholders, and debt financing, if available, may involve restrictive covenants and could reduce our profitability. If we cannot raise funds on acceptable terms, we may not be able to grow our business or respond to competitive pressures.

Risks Related to the Securities Markets and Ownership of Our Class A Common Stock

In making your investment decision, you should not rely on a reported statement in a June 2011 news report attributed to our co-founder and Executive Chairman. You should rely only on statements made in this prospectus in determining whether to purchase our shares.

        In a June 5, 2011 news story reported on Bloomberg.com, our co-founder and Executive Chairman was reported to have stated in a June 3, 2011 interview that "Groupon was going to be wildly profitable." The story and reported statement have been reprinted in various news media outlets. Our Executive Chairman did not agree to be interviewed for the news story and, through representatives, requested that the statement not be published. The reported statement does not accurately or completely reflect our Executive Chairman's views and should not be considered by prospective investors in isolation or at all.

28

Prospective investors are cautioned to consider the risks and uncertainties disclosed in this Risk Factors section and elsewhere in this prospectus.

        You should carefully evaluate all of the information in this prospectus. We have in the past, and may continue to receive, a high degree of media coverage, including coverage that is not directly attributable to statements made by our officers and employees, incorrectly reports on statements made by our officers or employees or is misleading as a result of omitting to state information provided by us or our officers or employees. You should rely only on the information contained in this prospectus in determining whether to purchase our shares.

In making your investment decision, you should not rely on a memorandum sent by our Chief Executive Officer to certain employees that was leaked to the media without our knowledge. The email and its contents, including the information set forth in Appendix A to this prospectus, should not be considered in isolation and you should make your investment decision only after reading this entire prospectus carefully.

        Information about the Company and our business was included in an email sent by our Chief Executive Officer to certain of our employees on August 25, 2011. The email was leaked to the media without our knowledge and has been reprinted by a number of news outlets. Excerpts from the email are included as Appendix A to this prospectus. The email was intended for employees and not prospective investors and, therefore, did not contain the more complete information, including discussion of various risks and uncertainties, described in this prospectus. The email and its contents, including the information set forth in Appendix A, should not be considered in isolation and you should make your investment decision only after reading this entire prospectus carefully.

        Investors also should be aware of the following clarifications with respect to the content of the email:

•

"Revenues" reflected in the email are reported as "gross billings" in this prospectus and represent the amounts collected from customers for Groupons sold, excluding any applicable taxes and net of estimated refunds.

•

The email states that our "revenues" (now gross billings) in August 2011 grew by about 12% over the prior month while we reduced marketing expenses by 20% in the same period. This financial information for August 2011 reflects only the first 21 days of August.

•

References to "ACSOI" refer to Adjusted Consolidated Segment Operating Income, a metric used internally by management to gauge performance that is discussed in the letter from our Chief Executive Officer on page 33 of this prospectus.

•

The email presents information with respect to the size of our business relative to certain competitors. Such information is based on publicly available data as of August 25, 2011.

Our Class A common stock has no prior market. We cannot assure you that our stock price will not decline after the offering.

        Before this offering, there has not been a public market for our Class A common stock, and an active public market for our Class A common stock may not develop or be sustained after this offering. The market price of our Class A common stock could be subject to significant fluctuations after this offering. The price of our stock may change in response to variations in our operating results and also may change in response to other factors, including factors specific to technology companies, many of which are beyond our control. Among the factors that could affect our stock price are:

•

the financial projections that we may choose to provide to the public, any changes in these projections or our failure for any reason to meet these projections;

•

the development and sustainability of an active trading market for our Class A common stock;

•

success of competitive products or services;

29

•

the public's response to press releases or other public announcements by us or others, including our filings with the SEC and announcements relating to litigation;

•

speculation about our business in the press or the investment community;

•

future sales of our Class A common stock by our significant stockholders, officers and directors;

•

changes in our capital structure, such as future issuances of debt or equity securities;

•

our entry into new markets;

•

regulatory developments in the United States or foreign countries;

•

strategic actions by us or our competitors, such as acquisitions or restructurings; and

•

changes in accounting principles.

        In particular, we cannot assure you that you will be able to resell your shares of our Class A common stock at or above the initial public offering price. The initial public offering price will be determined by negotiations between the representatives of the underwriters and us.

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

        After this offering, our Class B common stock will have                votes per share and our Class A common stock, which is the stock we are selling in this offering, will have one vote per share. We anticipate that our founders, executive officers, employees and directors and their affiliates will together own approximately        % of our outstanding capital stock, representing approximately        % of the voting power of our outstanding capital stock. In particular, following this offering, our founders, Eric P. Lefkofsky, Bradley A. Keywell and Andrew D. Mason, will control 100% of our outstanding Class B common stock and approximately        % of our outstanding Class A common stock, representing approximately        % of the voting power of our outstanding capital stock. Messrs. Lefkofsky, Keywell and Mason will therefore have significant influence over management and affairs and over all matters requiring stockholder approval, including the election of directors and significant corporate transactions, such as a merger or other sale of our company or its assets, for the foreseeable future. In addition, because of this dual class structure, Messrs. Lefkofsky, Keywell and Mason will continue to be able to control all matters submitted to our stockholders for approval even if they own less than 50% of the outstanding shares of our capital stock. This concentrated control will limit your ability to influence corporate matters and, as a result, we may take actions that our stockholders do not view as beneficial. As a result, the market price of our Class A common stock could be adversely affected.

Possible future sales of shares by our stockholders could negatively affect our stock price after this offering.

        Sales of a substantial number of shares of our Class A common stock in the public market after this offering, or the perception that these sales might occur, could depress the market price of our Class A common stock and could impair our ability to raise capital through the sale of additional equity securities. Based on the total number of shares of our common stock outstanding as of June 30, 2011, upon completion of this offering, we will have                        shares of Class A common stock and 1,199,988 shares of Class B common stock outstanding, assuming no exercise of our outstanding options and the sale of                        shares of our Class A common stock to be sold by the selling stockholders.

        All of the shares of Class A common stock sold in this offering will be freely tradable without restrictions or further registration under the Securities Act of 1933, as amended, or the Securities Act, except for any shares held by our affiliates as defined in Rule 144 under the Securities Act. Substantially all of the remaining                        shares of Class A common stock and 1,199,988 shares of Class B common stock outstanding after this offering, based on shares outstanding as of June 30, 2011, will be restricted as a result of securities laws, lock-up agreements or other contractual restrictions that restrict transfers for at

30

least 180 days after the date of this prospectus (or such earlier date or dates as agreed between us and Morgan Stanley & Co. LLC), subject to certain extensions.

        Morgan Stanley & Co. LLC may, in its sole discretion, release all or some portion of the shares subject to lock-up agreements prior to expiration of the lock-up period.

        Our 2011 Incentive Plan, which we refer to as the 2011 Plan, allows us to issue, among other things, stock options, stock appreciation rights, restricted stock and restricted stock units to eligible individuals (including our named executive officers). We also have our 2010 Stock Plan, which we refer to as the 2010 Plan, and our 2008 Stock Option Plan, which we refer to as the 2008 Plan. Although no future awards can be issued under the 2008 Plan (and, following this offering, no future awards will be issued under the 2010 Plan), there are stock options, restricted stock units and restricted stock awards outstanding under both the 2010 Plan and the 2008 Plan, as well as restricted stock units outstanding under the 2011 Plan. We intend to file a registration statement under the Securities Act as soon as practicable after the completion of this offering to cover the issuance of shares upon the exercise or vesting of awards granted under those plans. As a result, any shares issued or granted under the plans after the completion of this offering also will be freely tradable in the public market, subject to lock-up agreements as applicable. If equity securities are issued under the plans and it is perceived that they will be sold in the public market, then the price of our Class A common stock could decline substantially.

We will have broad discretion in using our net proceeds from this offering, and the benefits from our use of the proceeds may not meet investors' expectations.

        Our management will have broad discretion over the allocation of our net proceeds from this offering as well as over the timing of their use without stockholder approval. We have not yet determined how the net proceeds of this offering to be received by us that will be used, other than for working capital and other general corporate purposes. As a result, investors will be relying upon management's judgment with only limited information about our specific intentions for the use of our net proceeds from this offering. Our failure to apply these proceeds effectively could cause our business to suffer.

If securities analysts do not publish research or if securities analysts or other third parties publish inaccurate or unfavorable research about us, the price of our Class A common stock could decline.

        The trading market for our Class A common stock will rely in part on the research and reports that securities analysts and other third parties choose to publish about us. We do not control these analysts or other third parties. The price of our Class A common stock could decline if one or more securities analysts downgrade our Class A common stock or if one or more securities analysts or other third parties publish inaccurate or unfavorable research about us or cease publishing reports about us.

Because our existing investors paid substantially less than the initial public offering price when they purchased their shares, new investors will incur immediate and substantial dilution in their investment.

        Investors purchasing shares of Class A common stock in this offering will incur immediate and substantial dilution in net tangible book value per share because the price that new investors pay will be substantially greater than the net tangible book value per share of the shares acquired. This dilution is due in large part to the fact that our existing investors paid substantially less than the initial public offering price when they purchased their shares of Class A common stock. In addition, upon the completion of this offering, there will be options to purchase 11,613,319 shares of our Class A common stock outstanding, restricted stock units with respect to 5,484,233 shares of our Class A common stock and performance stock units with respect to 480,000 shares of our Class A common stock, based on the number of such awards outstanding on June 30, 2011. To the extent shares of Class A common stock are issued with respect to such awards in the future, there will be further dilution to new investors.

        The initial public offering price for the shares sold in this offering was determined by negotiations between us and the representatives of the underwriters and may not be indicative of prices that will prevail in the trading market. See "Underwriting" for a discussion of the determination of the initial public offering price.

31

We do not intend to pay dividends for the foreseeable future.

        We intend to retain all of our earnings for the foreseeable future to finance the operation and expansion of our business and do not anticipate paying cash dividends. As a result, you can expect to receive a return on your investment in our Class A common stock only if the market price of the stock increases.

Provisions in our charter documents and under Delaware law could discourage a takeover that stockholders may consider favorable.

        Provisions in our certificate of incorporation and bylaws, as amended and restated prior to the closing of this offering, may have the effect of delaying or preventing a change of control or changes in our management. These provisions include the following:

•

Our amended and restated certificate of incorporation provides for a dual class common stock structure. As a result of this structure, our founders will have significant influence over all matters requiring stockholder approval, including the election of directors, amendments to our charter documents and significant corporate transactions, such as a merger or other sale of our company or its assets. This concentrated control could discourage others from initiating any potential merger, takeover or other change of control transaction that other stockholders may view as beneficial.

•

Our board of directors has the right to determine the authorized number of directors and to elect directors to fill a vacancy created by the expansion of the board of directors or the resignation, death or removal of a director, which prevents stockholders from being able to control the size of or fill vacancies on our board of directors.

•

Special meetings of our stockholders may be called only by our Executive Chairman of the Board, our Chief Executive Officer, our board of directors or holders of not less than the majority of our issued and outstanding capital stock. This limits the ability of minority stockholders to take certain actions other than at an annual meeting of stockholders.

•

Our stockholders may not act by written consent unless the action to be effected and the taking of such action by written consent is approved in advance by our board of directors. As a result, a holder, or holders, controlling a majority of our capital stock would generally not be able to take certain actions without holding a stockholders' meeting.

•

Our amended and restated certificate of incorporation prohibits cumulative voting in the election of directors. This limits the ability of minority stockholders to elect director candidates.

•

Stockholders must provide timely notice to nominate individuals for election to the board of directors or to propose matters that can be acted upon at an annual meeting of stockholders. These provisions may discourage or deter a potential acquiror from conducting a solicitation of proxies to elect the acquiror's own slate of directors or otherwise attempting to obtain control of our company.

•

Our board of directors may issue, without stockholder approval, shares of undesignated preferred stock. The ability to authorize undesignated preferred stock makes it possible for our board of directors to issue preferred stock with voting or other rights or preferences that could impede the success of any attempt to acquire us.

        In addition, we are governed by the provisions of Section 203 of the Delaware General Corporation Law, which generally prohibits a Delaware corporation from engaging in a broad range of business combinations with any "interested" stockholder for a period of three years following the date on which the stockholder becomes an "interested" stockholder. For a description of our capital stock, see "Description of Capital Stock."

32

September 23, 2011

LETTER FROM ANDREW D. MASON

Dear Potential Stockholders,

        On the day of this writing, Groupon's over 9,600 employees offered more than 1,000 daily deals to 115 million subscribers across 45 countries and have sold to date over 90 million Groupons. Reaching this scale in about three years required a great deal of operating flexibility, dating back to Groupon's founding.

        Before Groupon, there was The Point—a website launched in November 2007 after my former employer and one of my co-founders, Eric Lefkofsky, asked me to leave graduate school so we could start a business. The Point is a social action platform that lets anyone organize a campaign asking others to give money or take action as a group, but only once a "tipping point" of people agree to participate.

        I started The Point to empower the little guy and solve the world's unsolvable problems. A year later, I started Groupon to get Eric to stop bugging me to find a business model. Groupon, which started as a side project in October 2008, applied The Point's technology to group buying. By January 2009, its popularity soaring, we had fully shifted our attention to Groupon.

        I'm writing this letter to provide some insight into how we run Groupon. While we're looking forward to being a public company, we intend to continue operating according to the long-term focused principles that have gotten us to this point. These include:

We aggressively invest in growth.

        We spend a lot of money acquiring new subscribers because we can measure the return and believe in the long-term value of the marketplace we're creating. When we see opportunities to invest in long-term growth expect that we will pursue them regardless of the short-term impact on our profitability.

We are always reinventing ourselves.

        In our early days, each Groupon market featured only one deal per day. The model was built around our limitations: We had a tiny community of customers and merchants.

        As we grew, we ran into the opposite problem. Overwhelming demand from merchants, with nine-month waiting lists in some markets, left merchant demand unfilled and contributed to hundreds of Groupon clones springing up around the world. And as our customer base grew larger, our merchants had an entirely new problem: Dealing with too many customers instead of too few.

        To adapt, we increased our investment in technology and released deal targeting, enabling us to feature different deals for different subscribers in the same market based on their personal preferences. In addition to providing a more relevant customer experience, this helped us to manage the flow of customers and opened the Groupon marketplace to more merchants, in turn increasing the number and variety of deals offered through our marketplace.

        Today, we are pursuing models of reinvention that would not be possible without the critical mass of customers and merchants we have achieved. Groupon NOW, for example, allows customers to pull deals on demand for immediate redemption, and helps keep merchants bustling throughout the day.

        Expect us to make ambitious bets in technology and product innovation that distract us from our current business. Some bets we'll get right, and others we'll get wrong, but we think it's the only way to continuously build exciting products.

We are unusual and we like it that way.

        We want the time people spend with Groupon to be memorable. Life is too short to be a boring company. Whether it's with a deal for something unusual, such as fire dancing classes, or a marketing

33

campaign such as Grouspawn⁽¹⁾, we seek to create experiences for our customers that make today different enough from yesterday to justify getting out of bed. While weighted toward the measurable, our decision-making process also considers what we feel in our gut to be great for our customers and merchants, even if it can't be quantified immediately.

⁽¹⁾

Grouspawn is a foundation we created that awards college scholarships to babies whose parents used a Groupon on their first date.

Our customers and merchants are what we care about.

        After selling out on our original mission of saving the world to start hawking coupons, in order to live with ourselves, we vowed to make Groupon a service that people love using. We set out to upturn the stigmas created by traditional discounting services, trusting that nothing would be as crucial to our long-term success as happy customers and merchants. We put our phone number on our printed Groupons and built a huge customer service operation, manned in part with members of Chicago's improv community. We developed a sophisticated, multi-stage process to pick deals from high quality merchants with vigorously fact-checked editorial content. We built a dedicated merchant services team that works with our merchant partners to ensure satisfaction. And we have a completely open return policy, giving customers a refund if they ever feel like Groupon let them down. We do these things to make our customers and merchants happy, believing that market success will follow.

        We believe that when once-great companies fall, they don't lose to competitors, they lose to themselves—and that happens when they stop focusing on making people happy. As such, we do not intend to be reactive to competitors. We will watch them, but we won't distract ourselves with decisions that aren't designed primarily to make our customers and merchants happy.

We don't measure ourselves in conventional ways.

        There are three main financial metrics that we track internally.

        First, we track revenue—our gross billings less the amounts we pay our merchants—because we believe it is the best proxy for the value we're creating. Second, we measure free cash flow, which is our cash flow from operations, reduced by our capital expenditures. We use this measure as an indicator of our long-term financial stability.

        Third, we track Adjusted Consolidated Segment Operating Income (ACSOI) which is our Consolidated Segment Operating Income (CSOI) reported under U.S. GAAP before our new subscriber acquisition costs. We exclude those costs because, unlike our other marketing expenses, they are an up-front investment to acquire new subscribers that we expect to decline significantly as this period of rapid expansion in our subscriber base concludes and we determine that the returns on such investment are no longer attractive. While we track this management metric internally to gauge our performance, we encourage you to base your investment decision on whatever metrics make you comfortable.

        If you're thinking about investing, hopefully it's because, like me, you believe that Groupon is better positioned than any company in history to reshape local commerce. The speed of our growth reflects the enormous opportunity before us to create a more efficient local marketplace. As with any business in a new industry, success for our investors is not guaranteed. We have yet to reach sustained profitability and we have no shortage of competition. Our path will include some moments of brilliance and others of sheer stupidity. Knowing that this will at times be a bumpy ride, we thank you for considering joining us.

34

SPECIAL NOTE REGARDING
FORWARD-LOOKING STATEMENTS AND INDUSTRY DATA

        This prospectus includes forward-looking statements. All statements other than statements of historical facts contained in this prospectus, including statements regarding our future results of operations and financial position, business strategy and plans and our objectives for future operations, are forward-looking statements. The words "believe," "may," "will," "estimate," "continue," "anticipate," "intend," "expect" and similar expressions are intended to identify forward-looking statements. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our financial condition, results of operations, business strategy, short-term and long-term business operations and objectives, and financial needs. These forward-looking statements are subject to a number of risks, uncertainties and assumptions, including those described in "Risk Factors." Moreover, we operate in a very competitive and rapidly changing environment. New risks emerge from time-to-time. It is not possible for our management to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements we may make. In light of these risks, uncertainties and assumptions, the forward-looking events and circumstances discussed in this prospectus may not occur and actual results could differ materially and adversely from those anticipated or implied in the forward-looking statements.

        Factors that may cause actual results to differ from expected results include, among others:

•

our future financial performance, including our gross billings, revenue, operating expenses and our ability to attain or increase profitability;

•

our ability to retain and grow our merchant and subscriber bases;

•

competition in our business;

•

our ability to recover subscriber acquisition costs;

•

our ability to maintain favorable payment terms with our merchants;

•

our liability with respect to unredeemed Groupons or increases in refund rates;

•

restrictions on our ability to send emails or messages;

•

our international expansion;

•

the effect of laws applying to our business;

•

our ability to maintain the network infrastructure necessary to operate our websites and applications;

•

our ability to adequately protect our intellectual property rights; and

•

the increased costs associated with being a public company.

        You should not rely upon forward-looking statements as predictions of future events. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee that the future results, levels of activity, performance or events and circumstances reflected in the forward-looking statements will be achieved or occur. Moreover, neither we nor any other person assumes responsibility for the accuracy and completeness of the forward-looking statements. We undertake no obligation to update publicly any forward-looking statements for any reason after the date of this prospectus to conform these statements to actual results or to changes in our expectations.

        You should read this prospectus and the documents that we reference in this prospectus and have filed with the SEC as exhibits to the registration statement of which this prospectus is a part with the understanding that our actual future results, levels of activity, performance and events and circumstances may be materially different from what we expect.

35

        Unless otherwise indicated, information contained in this prospectus concerning our industry and the market in which we operate, including our general expectations and market position, market opportunity and market size, is based on information from various sources, on assumptions that we have made that are based on those data and other similar sources and on our knowledge of the markets for our offerings. These data involve a number of assumptions and limitations, and you are cautioned not to give undue weight to such estimates. We have not independently verified any third-party information. While we believe the market position, market opportunity and market size information included in this prospectus is generally reliable, such information is inherently imprecise. In addition, projections, assumptions and estimates of our future performance and the future performance of the industry in which we operate is necessarily subject to a high degree of uncertainty and risk due to a variety of factors, including those described in "Risk Factors" and elsewhere in this prospectus. These and other factors could cause results to differ materially from those expressed in the estimates made by the independent parties and by us.

36

USE OF PROCEEDS

        We estimate that our net proceeds from the sale of the Class A common stock offered by us will be approximately $             million, assuming an initial public offering price of $            per share, which is the midpoint of the range reflected on the cover page of this prospectus, and after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us. If the underwriters' option to purchase additional shares in this offering is exercised in full, we estimate that our net proceeds will be approximately $            , after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us. We will not receive any proceeds from the sale of shares of Class A common stock by the selling stockholders. A $1.00 increase or decrease in the assumed initial public offering price of $            per share would increase or decrease the net proceeds to us from the offering by approximately $             million, assuming the number of shares offered by us remains the same and after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us. Similarly, each increase or decrease of one million shares in the number of shares of Class A common stock offered by us would increase or decrease the net proceeds to us from this offering by approximately $             million, assuming the assumed initial public offering price remains the same and after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us.

        As of the date of this prospectus, we cannot specify with certainty all of the particular uses for the net proceeds to us of this offering. However, we intend to use the net proceeds to us from this offering for working capital and other general corporate purposes, which may include the acquisition of other businesses, products or technologies; however, we do not have any commitments for any acquisitions at this time. Based on our current cash and cash equivalents, together with cash generated from operations, we do not expect that we will utilize any of the net proceeds to us of this offering to fund operations, including online marketing expenses, during the next twelve months. We will have broad discretion in the way we use the net proceeds. Pending use of the net proceeds as described above, we intend to invest the net proceeds in money market funds and investment grade debt securities.

DIVIDEND POLICY

        We declared dividends on our preferred stock in the amounts of $0.3 million, $5.6 million and $1.4 million in 2008, 2009 and 2010, respectively. We declared dividends on our common stock in the amount of $21.3 million in 2009. We did not declare any dividends on our common stock in 2008 or 2010. We currently do not anticipate paying any cash dividends on our Class A common stock or Class B common stock in the foreseeable future. Any future determination to declare cash dividends will be made at the discretion of our board of directors, subject to applicable laws and will depend on our financial condition, results of operations, capital requirements, general business conditions and other factors that our board of directors may deem relevant.

37

CAPITALIZATION

        The following table sets forth our cash and cash equivalents and capitalization as of June 30, 2011 on:

•

an actual basis;

•

a pro forma basis giving effect to (i) the recapitalization of all outstanding shares of our capital stock (other than our Series B preferred stock) into 297,813,591 shares of Class A common stock and all outstanding shares of our Series B preferred stock into 1,199,988 shares of Class B common stock immediately prior to the closing of this offering; and (ii) the amendment and restatement of our certificate of incorporation upon the closing of this offering; and

•

a pro forma as adjusted basis giving further effect to the sale by us of Class A common stock in this offering at an assumed initial public offering price of $            per share, which is the midpoint of the range reflected on the cover page of this prospectus, after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us.

        The information below is illustrative only and our cash and cash equivalents and capitalization following the completion of this offering will be based on the actual initial public offering price and other terms of this offering determined at pricing. You should read this table together with "Management's Discussion and Analysis of Financial Condition and Results of Operations" and our consolidated financial statements and related notes included elsewhere in this prospectus.

38

			As of June 30, 2011
			Actual			Pro Forma	Pro Forma As Adjusted(1)
			(unaudited) (in thousands)
Cash and cash equivalents			$	225,093		$	$
Total debt				—		$	$
Redeemable noncontrolling interests				681
Stockholders' (deficit) equity:
Common Stock
	Class A common stock, par value $0.0001 per share, no shares authorized, no shares issued and outstanding, actual;            shares authorized, 297,813,591 shares issued and outstanding, pro forma;            shares authorized,             shares issued and outstanding, pro forma as adjusted			—
	Class B common stock, par value $0.0001 per share, no shares authorized, no shares issued and outstanding, actual;            shares            authorized, 1,199,988 shares issued and outstanding, pro forma;            shares authorized,            shares issued and outstanding, pro forma as adjusted			—
	Common stock, par value $0.0001 per share, no shares authorized, issued and outstanding, actual;          shares authorized, no shares issued and outstanding, pro forma and pro forma as adjusted			—
	Voting common stock, par value $0.0001 per share, 500,000,000 shares authorized, 211,495,998 shares issued and 144,531,311 shares outstanding, actual; no shares authorized, no shares issued and outstanding, pro forma and pro forma as adjusted			4
	Non-voting convertible common stock, par value $0.0001 per share, 100,000,000 shares authorized, 10,061,288 shares issued and 7,821,086 shares outstanding, actual; no shares authorized, no shares issued and outstanding, pro forma and pro forma as adjusted			—
Preferred Stock
	Preferred Stock, par value $0.0001 per share, no shares authorized, issued and outstanding, actual;            authorized, no shares issued and outstanding, pro forma and pro forma as adjusted			—
	Series B, convertible preferred stock, par value $0.0001 per share, 199,998 shares authorized, issued and outstanding, actual; no shares authorized, no shares issued and outstanding, pro forma and pro forma as adjusted			—
	Series D, convertible preferred stock, par value $0.0001 per share, 6,560,174 shares authorized and 5,956,420 shares issued and outstanding, actual; no shares authorized, no shares issued and outstanding, pro forma and pro forma as adjusted			1
	Series E, convertible preferred stock, par value $0.0001 per share, 4,406,160 shares authorized and 4,060,183 shares issued and outstanding, actual; no shares authorized, no shares issued and outstanding, pro forma and pro forma as adjusted			—
	Series F, convertible preferred stock, par value $0.0001 per share, 4,202,658 shares authorized, issued and outstanding, actual; no shares authorized, no shares issued and outstanding, pro forma and pro forma as adjusted			1
	Series G, convertible preferred stock, par value $0.0001 per share, 30,075,690 shares authorized, and 30,072,814 shares issued and outstanding, actual; no shares authorized, no shares issued and outstanding, pro forma and pro forma as adjusted			3
Treasury stock				(808,448	)
Additional paid-in capital				1,352,133
Stockholder receivable				(180	)
Accumulated deficit				(623,376	)
Accumulated other comprehensive income				13,443
	Total Groupon, Inc. stockholders' equity			(66,419	)
		Total capitalization	$	(65,738	)	$	$

(1)

Each $1.00 increase (decrease) in the assumed initial public offering price of $            per share would increase (decrease) the amount of pro forma as adjusted cash and cash equivalents, additional paid-in capital, total Groupon, Inc. stockholders' equity and total capitalization we receive from this offering by approximately $             million, assuming the number of shares offered by us, as set forth on the cover page of this prospectus, remains the same and after deducting the estimated underwriting discounts and commissions and estimated offering expenses payable by us. Similarly, each increase (decrease) of one million shares in the number of shares of Class A common stock offered by us would increase (decrease) cash and cash equivalents,

39

additional paid-in capital, total Groupon, Inc. stockholders' equity and total capitalization by approximately $             million, assuming the assumed initial public offering price remains the same and after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us.

The table above excludes the following shares:

•

1,199,988 shares of Class A common stock issuable upon the conversion of our Class B common stock that will be outstanding after this offering;

•

11,613,319 shares of Class A common stock issuable upon the exercise of stock options outstanding as of June 30, 2011 at a weighted average exercise price of $2.33 per share;

•

480,000 shares of Class A common stock issuable upon the vesting of performance stock units granted in connection with certain of our acquisitions;

•

5,484,233 shares of Class A common stock issuable upon the vesting of restricted stock units granted under our 2010 Plan;

•

1,191,366 shares of Class A common stock available for additional grants under our 2010 Plan; and

•

25,000,000 shares of Class A common stock available for issuance under our 2011 Plan, which we adopted effective August 17, 2011.

40

DILUTION

        If you invest in our Class A common stock, your investment will be diluted immediately to the extent of the difference between the public offering price per share of our Class A common stock and the pro forma net tangible book value per share of our Class A and Class B common stock after this offering. Our pro forma net tangible book value as of June 30, 2011 was a deficit of approximately $270.9 million, or $0.91 per share of Class A and Class B common stock. Pro forma net tangible book value per share represents the amount of our total tangible assets, less our total liabilities, divided by the number of shares of Class A and Class B common stock outstanding as of June 30, 2011, after giving effect to the recapitalization of all outstanding shares of our capital stock (other than our Series B preferred stock) into 297,813,591 shares of Class A common stock and all outstanding shares of our Series B preferred stock into 1,199,988 shares of Class B common stock immediately prior to the closing of this offering.

        Net tangible book value dilution per share to new investors represents the difference between the amount per share paid by purchasers of shares of Class A common stock in this offering and the pro forma net tangible book value per share of Class A and Class B common stock immediately after the completion of this offering. After giving effect to our sale of shares of Class A common stock in this offering at an assumed initial public offering price of $            per share, which is the midpoint of the range set forth on the cover page of this prospectus, and after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us, our pro forma net tangible book value as of June 30, 2011 would have been $             million, or $            per share. This represents an immediate increase in net tangible book value of $            per share to existing stockholders and an immediate dilution in net tangible book value of $            per share to investors purchasing Class A common stock in this offering, as illustrated in the following table:

Assumed initial public offering price per share of Class A common stock			$
	Pro forma net tangible book value per share as of June 30, 2011	$
	Increase per share attributable to this offering	$
Pro forma net tangible book value per share, as adjusted to give effect to this offering			$
Dilution per share to new investors			$

        A $1.00 increase (decrease) in the assumed initial public offering price of $            per share, which is the midpoint of the range set forth on the cover page of this prospectus, would increase (decrease) our pro forma as adjusted net tangible book value per share by $            , assuming the number of shares offered by us remains the same as set forth on the cover page of this prospectus and after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us.

        If the underwriters exercise their option to purchase additional shares of our Class A common stock in full, the pro forma as adjusted net tangible book value per share would be $            per share, the increase in pro forma net tangible book value per share to existing stockholders would be $            per share and the dilution per share to new investors purchasing shares in this offering would be $            per share.

        The following table presents, on a pro forma basis as of June 30, 2011, after giving effect to the sale of                shares of Class A common stock and recapitalization of all of our capital stock (other than our Series B preferred stock) into 297,813,591 shares of Class A common stock and all outstanding shares of our Series B preferred stock into 1,199,988 shares of Class B common stock immediately prior to the closing of this offering, the differences between the existing stockholders and the purchasers of shares in this offering with respect to the number of shares purchased from us, the total consideration paid and the average price paid per share:

41

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

        A $1.00 increase (decrease) in the assumed initial public offering price of $            per share, which is the midpoint of the range set forth on the cover page of this prospectus, would increase (decrease) total consideration paid by new investors by $            , total consideration paid by all stockholders by $             and the average price per share paid by all stockholders by $            , in each case assuming the number of shares offered by us, as set forth on the cover page of this prospectus, remains the same, and without deducting the estimated underwriting discounts and commissions and estimated offering expenses payable by us.

        The foregoing calculations are based on 297,813,591 shares of our Class A common stock outstanding as of June 30, 2011 and exclude:

•

1,199,988 shares of Class A common stock issuable upon the conversion of our Class B common stock that will be outstanding after this offering;

•

11,613,319 shares of Class A common stock issuable upon the exercise of stock options outstanding as of June 30, 2011 at a weighted average exercise price of $2.33 per share;

•

480,000 shares of Class A common stock issuable upon the vesting of performance stock units granted in connection with certain of our acquisitions;

•

5,484,233 shares of Class A common stock issuable upon the vesting of restricted stock units granted under our 2010 Plan;

•

1,191,366 shares of Class A common stock available for additional grants under our 2010 Plan; and

•

25,000,000 shares of Class A common stock available for issuance under our 2011 Plan, which we adopted effective August 17, 2011.

        Sales by the selling stockholders in this offering will cause the number of shares held by existing stockholders to be reduced to                        shares, or        % of the total number of shares of our Class A and Class B common stock outstanding after this offering. If the underwriters' overallotment option is exercised in full, the number of shares held by the existing stockholders after this offering would be reduced to            , or         % of the total number of shares of our Class A and Class B common stock outstanding after this offering, and the number of shares held by new investors would increase to             , or        % of the total number of shares of our Class A common stock outstanding after this offering.

        To the extent that any outstanding options are exercised or outstanding restricted stock units vest, new investors will experience further dilution. If all of these options were exercised and all of these restricted stock units vest, then our existing stockholders, including the holders of these options and restricted stock units, would own        % and our new investors would own        % of the total number of shares of our Class A and Class B common stock outstanding upon the closing of this offering. The net tangible book value per share after this offering would be $            , causing dilution to new investors of $            per share.

42

SELECTED CONSOLIDATED FINANCIAL AND OTHER DATA

        The following table presents selected consolidated financial and other data as of and for the periods indicated. Financial information for periods prior to 2008 has not been provided because we began operations in 2008. The statements of operations data for the years ended December 31, 2008, 2009 and 2010 and the balance sheet data as of December 31, 2009 and 2010 are derived from our audited financial statements included elsewhere in this prospectus. The balance sheet data for the year ended December 31, 2008 was derived from our unaudited financial statements which are not included in this prospectus. The summary consolidated statements of operations data for the periods ended June 30, 2010 and 2011 and the balance sheet data as of June 30, 2011 have been derived from our unaudited consolidated financials statements included elsewhere in this prospectus. The unaudited information was prepared on a basis consistent with that used to prepare our audited financial statements and includes all adjustments, consisting of normal and recurring items, that we consider necessary for a fair presentation of the unaudited period.

        We made several acquisitions during 2010, including the acquisitions of CityDeal, Qpod.inc. Ludic Labs, Inc. and Mobly, Inc. The consolidated statements of operations, balance sheets and statements of cash flows include the results of entities acquired from the effective date of the acquisition for accounting purposes.

43

        The following information should be read together with the more detailed information contained in "Management's Discussion and Analysis of Financial Condition and Results of Operations" and our consolidated financial statements and the accompanying notes.

				Year Ended December 31,									Six Months Ended June 30,
				2008			2009			2010			2010			2011
				(Restated)(1)			(Restated)(1)			(Restated)(1)			(Restated)(1)			(Restated)(1)
													(unaudited)			(unaudited)
				(dollars in thousands, except share data)
Consolidated Statements of Operations Data:
Revenue (gross billings of $94, $34,082, $745,348, $135,807 and $1,597,423, respectively)				$	5		$	14,540		$	312,941		$	58,938		$	688,105
Costs and expenses:
	Cost of revenue				6			4,355			32,494			4,024			66,522
	Marketing				163			4,873			284,348			39,848			432,093
	Selling, general and administrative				1,468			6,389			213,260			33,880			407,665
	Acquisition-related				—			—			203,183			9,434			—
	Total operating expenses				1,637			15,617			733,285			87,186			906,280
Loss from operations					(1,632	)		(1,077	)		(420,344	)		(28,248	)		(218,175	)
Interest and other income (expense), net					90			(16	)		284			(96	)		1,539
Equity-method investment activity, net of tax					—			—			—			—			(8,763	)
Loss before provision for income taxes					(1,542	)		(1,093	)		(420,060	)		(28,344	)		(225,399	)
Provision (benefit) for income taxes					—			248			(6,674	)		(905	)		(1,732	)
Net loss					(1,542	)		(1,341	)		(413,386	)		(27,439	)		(223,667	)
Less: Net loss attributable to noncontrolling interests					—			—			23,746			61			19,759
Net loss income attributable to Groupon, Inc.					(1,542	)		(1,341	)		(389,640	)		(27,378	)		(203,908	)
Dividends on preferred stock					(277	)		(5,575	)		(1,362	)		(1,046	)		—
Redemption of preferred stock in excess of carrying value					—			—			(52,893	)		—			(34,327	)
Adjustment of redeemable noncontrolling interests to redemption value					—			—			(12,425	)		—			(15,651	)
Preferred stock distributions					(339	)		—			—			—			—
Net loss attributable to common stockholders				$	(2,158	)	$	(6,916	)	$	(456,320	)	$	(28,424	)	$	(253,886	)
Net loss per share
	Basic			$	(0.01	)	$	(0.04	)	$	(2.66	)	$	(0.17	)	$	(1.66	)
	Diluted			$	(0.01	)	$	(0.04	)	$	(2.66	)	$	(0.17	)	$	(1.66	)
Weighted average number of shares outstanding
	Basic				166,738,129			168,604,142			171,349,386			169,048,421			152,813,014
	Diluted				166,738,129			168,604,142			171,349,386			169,048,421			152,813,014
Other Financial Data:
	Segment operating (loss) income:
		North America		$	(1,608	)	$	(962	)	$	(10,437	)	$	8,309		$	(32,279	)
		International			—			—			(170,556	)		(23,047	)		(128,314	)
			CSOI(1)	$	(1,608	)	$	(962	)	$	(180,993	)	$	(14,738	)	$	(160,593	)

(1)

The Consolidated Financial Statements have been restated for the presentation of revenue on a net basis for all periods presented. See Note 2 to our Consolidated Financial Statements. In addition, the six month period ended June 30, 2011 has been restated to reduce selling, general and administrative expense to correct for an error. See Note 2 to our Condensed Consolidated Financial Statements.

(2)

Consolidated segment operating (loss) income, or CSOI, is a non-GAAP financial measure. See "—Selected Consolidated Financial and Other Data—Non-GAAP Financial Measures" for a reconciliation of this measure to the most applicable financial measure under U.S. GAAP. We do not allocate stock-based compensation and acquisition-related expenses to the segments. See Note 14 "Segment Information" of Notes to Consolidated Financial Statements and Note 15 "Segment Information" of Notes to Condensed Consolidated Financial Statements (Unaudited) for additional information.

44

		Year Ended December 31,						Six Months Ended June 30,
		2008		2009		2010		2010		2011
Operating Metrics:
	Gross billings(1)	$	94	$	34,082	$	745,348	$	135,807	$	1,597,423
	Subscribers(2)		*		1,807,278		50,583,805		10,445,521		115,717,299
	Cumulative customers(3)		*		375,099		9,031,807		2,379,611		23,072,600
	Featured merchants(4)		*		2,695		66,289		12,468		135,247
	Groupons sold(5)		*		1,248,792		30,296,070		5,822,856		60,620,482
	Average revenue per subscriber(6)		*	$	8.0	$	11.9	$	9.6	$	8.3
	Average cumulative Groupons sold per customer(7)		*		3.3		3.5		3.0		4.0
	Average revenue per Groupon sold(8)		*	$	11.6	$	10.3	$	10.1	$	11.4
	Cumulative repeat customers(9)		*		162,323		4,483,976		1,056,966		12,066,676

*

Not available

(1)

Reflects the gross amounts collected from customers for Groupons sold, excluding any applicable taxes and net of estimated refunds, in the applicable period.

(2)

Reflects the total number of subscribers who had a Groupon account on the last day of the applicable period, less individuals who have unsubscribed. May include individual subscribers with multiple registrations because the information we collect from subscribers does not permit us to identify when a subscriber may have created multiple accounts, nor do we prevent subscribers from creating multiple accounts.

(3)

Reflects the total number of unique customers who have purchased Groupons from January 1, 2009 through the end of the applicable period. May include individual customers with multiple registrations.

(4)

Reflects the total number of merchants featured in the applicable period.

(5)

Reflects the total number of Groupons sold in the applicable period.

(6)

Reflects the average revenue generated per average number of subscribers in the applicable period.

(7)

Reflects the average number of Groupons sold per cumulative repeat customer from January 1, 2009 through the end of the applicable period.

(8)

Reflects the average revenue generated per Groupon sold in the applicable period.

(9)

Reflects the total number of customers who have purchased more than one Groupon from January 1, 2009 through the end of the applicable period.

		As of December 31,
											As of June 30, 2011
		2008			2009			2010
		(unaudited)									(unaudited)
		(in thousands, other than per share amounts)
Consolidated Balance Sheet Data:
	Cash and cash equivalents	$	2,966		$	12,313		$	118,833		$	225,093
	Working capital (deficit)		2,643			3,988			(196,564	)		(304,904	)
	Total assets		3,006			14,962			381,570			637,712
	Total long-term liabilities		—			—			1,621			25,713
	Redeemable preferred stock		4,747			34,712			—			—
	Cash dividends per common share		—			0.125			—			—
	Total Groupon, Inc. stockholders' (deficit) equity		(2,091	)		(29,969	)		8,077			(66,419	)

Non-GAAP Financial Measures

        We use free cash flow and consolidated segment operating (loss) income, or CSOI, as key non-GAAP financial measures. Free cash flow and CSOI are used in addition to and in conjunction with results presented in accordance with U.S. GAAP and should not be relied upon to the exclusion of U.S. GAAP financial measures.

        Free cash flow, which is reconciled to "Net cash (used in) provided by operating activities," is cash flow from operations reduced by "Purchases of property and equipment." We use free cash flow, and ratios based on it, to conduct and evaluate our business because, although it is similar to cash flow from operations, we believe it typically will present a more conservative measure of cash flows as purchases of

45

fixed assets, software developed for internal use and website development costs are a necessary component of ongoing operations.

        Free cash flow has limitations due to the fact that it does not represent the residual cash flow available for discretionary expenditures. For example, free cash flow does not include the cash payments for business acquisitions. In addition, free cash flow reflects the impact of the timing difference between when we are paid by customers and when we pay merchants. Therefore, we believe it is important to view free cash flow as a complement to our entire consolidated statements of cash flows.

        CSOI is the consolidated operating (loss) income of our two segments, North America and International, adjusted for acquisition-related costs and stock-based compensation expense. Acquisition-related costs are non-recurring, non-cash items related to certain of our acquisitions. Stock-based compensation expense is a non-cash item. We do not allocate stock-based compensation and acquisition-related expenses to the segments. See Note 14 "Segment Information" of Notes to Consolidated Financial Statements and Note 15 "Segment Information" of Notes to Condensed Consolidated Financial Statements (Unaudited) for additional information.

        We consider CSOI to be an important measure for management to evaluate the performance of our business as it excludes certain non-cash expenses. We believe it is important to view CSOI as a complement to our entire consolidated statements of operations. When evaluating our performance, you should consider CSOI alongside other financial performance measures, including various cash flow metrics, net loss and our other U.S. GAAP results.

Free Cash Flow

        The following is a reconciliation of free cash flow to the most comparable U.S. GAAP measure, "Net cash (used in) provided by operating activities," for the years ended December 31, 2008, 2009 and 2010 and the first half of 2010 and 2011:

	Year Ended December 31,									Six Months Ended June 30,
	2008			2009			2010			2010			2011
	(in thousands)
Net cash (used in) provided by operating activities	$	(1,526	)	$	7,510		$	86,885		$	15,528		$	57,984
Purchases of property and equipment		(19	)		(290	)		(14,681	)		(3,934	)		(21,202	)
Free cash flow	$	(1,545	)	$	7,220		$	72,204		$	11,594		$	36,782

CSOI

        The following is a reconciliation of CSOI to the most comparable U.S. GAAP measure, "loss from operations," for the years ended December 31, 2008, 2009 and 2010 and the first half of 2010 and 2011:

		Year Ended December 31,									Six Months Ended June 30,
		2008			2009			2010			2010			2011
		(in thousands)
Loss from operations		$	(1,632	)	$	(1,077	)	$	(420,344	)	$	(28,248	)	$	(218,175	)
	Adjustments:
	Stock-based compensation(1)		24			115			36,168			4,076			57,582
	Acquisition-related(2)		—			—			203,183			9,434			—
	Total adjustments		24			115			239,351			13,510			57,582
CSOI		$	(1,608	)	$	(962	)	$	(180,993	)	$	(14,738	)	$	(160,593	)

(1)

Represents non-cash stock-based compensation expense recorded within selling, general and administrative expense.

(2)

Primarily represents non-cash charges for remeasurement of the fair value of contingent consideration related to acquisitions made by us in 2010. The amount of the charge was due to the significant increase in the value of our common stock from the original acquisition date until the date the contingency was ultimately settled.

46

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS

You should read the following discussion together with our consolidated financial statements and the related notes included elsewhere in this prospectus. This discussion contains forward-looking statements about our business and operations. Our actual results may differ materially from those we currently anticipate as a result of many factors, including those we describe under "Risk Factors" and elsewhere in this prospectus. See "Special Note Regarding Forward-Looking Statements and Industry Data."

Overview

        Groupon is a local e-commerce marketplace that connects merchants to consumers by offering goods and services at a discount. Traditionally, local merchants have tried to reach consumers and generate sales through a variety of methods, including the yellow pages, direct mail, newspaper, radio, television and online advertisements and promotions. By bringing the brick and mortar world of local commerce onto the internet, Groupon is creating a new way for local merchants to attract customers and sell goods and services. We provide consumers with savings and help them discover what to do, eat, see and buy in the places where they live and work.

        Each day we email our subscribers discounted offers for goods and services that are targeted by location and personal preferences. Consumers access our deals directly through our websites and mobile applications. Our revenue is the purchase price paid by the customer for the Groupon less an agreed upon percentage of the purchase price paid to the featured merchant. In 2010, we generated revenue of $312.9 million, compared to $14.5 million in 2009. During the first half of 2011, we generated revenue of $688.1 million, compared to $58.9 million in the first half of 2010. The increases in revenue were partially due to our rapid international expansion during 2010, which included our acquisition of CityDeal. Revenue from our international operations was $112.5 million and $394.3 million in 2010 and the first half of 2011, respectively.

        We have organized our operations into two principal segments: North America, which represents the United States and Canada, and International, which represents the rest of our global operations. For the first half of 2011, we derived 57.3% of our revenue from our International segment, compared to 5.1% in the first half of 2010. We expect the percentage of revenue derived from outside North America to continue to increase in future periods as we continue to expand globally.

        We incurred a net loss of $203.9 million for the six months ended June 30, 2011 and have an accumulated deficit of $623.4 million as of June 30, 2011. Since our inception, we have driven our growth through substantial investments in infrastructure and marketing to drive subscriber acquisition. In particular, our net loss for the six months ended June 30, 2011 was driven primarily by the rapid expansion of our International segment during the period, which involved investing heavily in upfront marketing, sales and infrastructure related to the build out of our operations in South Korea, Australia and Japan. We intend to continue to pursue a strategy of significant investment in these regions and elsewhere in the future, consistent with the strategy we previously employed in North America and Europe.

Changes in Statements of Operations Presentation

        We revised certain aspects of our Statements of Operations presentation. Most significantly, we changed our reporting of revenue from Groupons sold to be net of the amounts related to merchant fees. Historically, we reported the gross amounts billed to our customers as revenue. We are now presenting that information as "gross billings." All prior periods have been revised to reflect this net presentation. This change resulted in a reduction of previously reported revenue and corresponding reductions in cost of revenue in those periods. The change in Statements of Operations presentation had no effect on pre-tax loss or net loss for any period presented.

47

        The change in presentation reflects, in our view, the challenges that participants in new industries confront in the application of accounting standards. It does not impact in any respect the scope or nature of our business. We previously reported our revenue as essentially the amount of cash collected from the sale of Groupons, less deductions for refunds and discounts. Now, we are presenting revenue as the amount of cash collected from the sale of Groupons, less applicable merchant payments. We historically referred to that amount as "gross profit." We consistently have stated that the amount we retain—rather than bill or collect—from the sale of Groupons is the key measure of the value we create. This change in presentation is consistent with that belief.

How We Measure Our Business

        We measure our business with several financial and operating metrics. We use these metrics to assess the progress of our business, make decisions on where to allocate capital, time and technology investments, and assess the longer-term performance of our marketplace. The key metrics are as follows:

Financial Metrics

•

Revenue.  Our revenue is the purchase price paid by the customer for the Groupon less an agreed upon percentage of the purchase price paid to the featured merchant. We believe revenue is an important indicator for our business because it is a reflection of the value of our service to our merchants. Revenue as a percentage of gross billings is influenced by the mix of national and local deals we offer.

•

Free cash flow.  Free cash flow is cash flow from operations less amounts paid for purchases of property and equipment, including internal-use software and website development. We believe free cash flow is an important indicator for our business because it measures the amount of cash we generate after spending on marketing, wages and benefits, capital expenditures and other items. Free cash flow also reflects changes in working capital. We use free cash flow to conduct and evaluate our business because we believe free cash flow captures the cash flow of our ongoing operations. Free cash flow is a non-GAAP financial measure. See "Selected Consolidated Financial and Other Data—Non-GAAP Financial Measures" for further information and a reconciliation to the most applicable financial measure under U.S. GAAP.

•

Consolidated segment operating (loss) income.  CSOI is the consolidated operating (loss) income of our two segments, North America and International. As reported under U.S. GAAP, we do not allocate stock-based compensation and acquisition-related expense to our segments. We use CSOI to allocate resources and evaluate performance internally. See Note 14 "Segment Information" of Notes to Consolidated Financial Statements and Note 15 "Segment Information" of Notes to Condensed Consolidated Financial Statements (Unaudited) for additional information. CSOI is a non-GAAP financial measure. See "Selected Consolidated Financial and Other Data—Non-GAAP Financial Measures" for further information and a reconciliation to the most applicable financial measure under U.S. GAAP.

Operating Metrics

•

Gross billings.  This metric represents the gross amounts collected from customers for Groupons sold, excluding any applicable taxes and net of estimated refunds, in a given time period. We consider this metric to be an important indicator of our growth and business performance.

•

Subscribers.  We define subscribers as the total number of individuals that have completed registration through a specific date, less individuals who have unsubscribed. To sign up for our service and become a subscriber, an individual provides an email address. We can measure our overall growth in the market as well as our potential revenue opportunity as a function of our total subscriber base. The subscriber base does not take into consideration the activity level of the

48

subscriber with our service, nor does it adjust for multiple or unused accounts. Despite these drawbacks, we believe this metric provides valuable insight about the trajectory and scale of our business. Although the vast majority of our revenue comes from subscribers, we also sell Groupons to customers that purchase as guests and, as such, are not included in our total subscriber number.

•

Cumulative customers.  We define cumulative customers as the total number of unique customers that have purchased Groupons from January 1, 2009 (the first date we began tracking unique customers) through a specific date. We consider this metric to be an important indicator of our business performance as it helps us to understand the purchase rate of our subscribers.

•

Featured merchants.  This metric represents the total number of merchants featured in a given time period. For deals offered on a nationwide basis, we count the national merchant once. For deals offered by national merchants on a local or regional basis, we count the national merchant as a separate merchant in each market in which the deal is offered. We consider this metric to be a good indicator of growth as well as an important measure of the effectiveness of our sales and marketing infrastructure.

•

Groupons sold.  This metric represents the total number of Groupons sold in a given time period. This metric is presented net of Groupons refunded during the same time period. We use this metric to measure our growth and activity level in the aggregate as well as in our individual markets.

•

Average revenue per subscriber.  This metric represents the average revenue generated per average number of subscribers in a given time period. This metric is presented as the total revenue generated in a given time period, divided by the average number of subscribers during such period. Although this metric is difficult to evaluate in light of our rapid subscriber growth, we believe that this measure is an indicator of subscriber activity level.

•

Average cumulative Groupons sold per customer.  This metric represents the average number of Groupons sold per cumulative repeat customer from January 1, 2009 through a specified date. This metric is presented as the total number of Groupons sold in a given time period, divided by the total number of cumulative repeat customers at the end of such period. We consider this metric to be an important indicator of our business performance as it helps us to understand the purchase rate of our customers.

•

Average revenue per Groupon sold.  This metric represents the average revenue generated per Groupon sold in a given time period. This metric is presented as the total revenue generated in a given time period, divided by the number of Groupons sold in such time period. Although we believe total revenue, not average revenue per Groupon sold, is a better indicator of the overall growth of our marketplace, average revenue per Groupon sold provides an opportunity to evaluate whether our growth is primarily driven by volume of sales or the prices of Groupons.

•

Cumulative repeat customers.  We define cumulative repeat customers as customers who have purchased more than one Groupon from January 1, 2009 (the first date we began tracking unique customers) through a specified date. In light of our limited operating history, the vast majority of our subscribers and customers registered or made their initial purchase of a Groupon within the past 12 months. Accordingly, this metric is currently difficult to evaluate. Over time, however, we

49

expect this metric will be an indicator of our business performance as it will help us to understand the purchase activity of our customers.

	Year Ended December 31,						Six Months Ended June 30,
	2008		2009		2010		2010		2011
Operating Metrics:
Gross billings(1)	$	94	$	34,082	$	745,348	$	135,807	$	1,597,423
Subscribers(2)		*		1,807,278		50,583,805		10,445,521		115,717,299
Cumulative customers(3)		*		375,099		9,031,807		2,379,611		23,072,600
Featured merchants(4)		*		2,695		66,289		12,468		135,247
Groupons sold(5)		*		1,248,792		30,296,070		5,822,856		60,620,482
Average revenue per subscriber(6)		*	$	8.0	$	11.9	$	9.6	$	8.3
Average cumulative Groupons sold per customer(7)		*		3.3		3.5		3.0		4.0
Average revenue per Groupon sold(8)		*	$	11.6	$	10.3	$	10.1	$	11.4
Cumulative repeat customers(9)		*		162,323		4,483,976		1,056,966		12,066,676

*

Not available

(1)

Reflects the gross amounts collected from customers for Groupons sold, excluding any applicable taxes and net of estimated refunds, in the applicable period.

(2)

Reflects the total number of subscribers who had a Groupon account on the last day of the applicable period, less individuals who have unsubscribed. May include individual subscribers with multiple registrations because the information we collect from subscribers does not permit us to identify when a subscriber may have created multiple accounts, nor do we prevent subscribers from creating multiple accounts.

(3)

Reflects the total number of unique customers who have purchased Groupons from January 1, 2009 through the end of the applicable period. May include individual customers with multiple registrations.

(4)

Reflects the total number of merchants featured in the applicable period.

(5)

Reflects the total number of Groupons sold in the applicable period.

(6)

Reflects the average revenue generated per average number of subscribers in the applicable period.

(7)

Reflects the average number of Groupons sold per cumulative repeat customer from January 1, 2009 through the end of the applicable period.

(8)

Reflects the average revenue generated per Groupon sold in the applicable period.

(9)

Reflects the total number of customers who have purchased more than one Groupon from January 1, 2009 through the end of the applicable period.

Factors Affecting Our Performance

        Subscriber acquisition costs.    We must continue to acquire and retain subscribers who purchase Groupons in order to increase revenue and achieve profitability. We characterize online marketing expenses as subscriber acquisition costs because these expenses are intended to acquire new subscribers. We spent $345.1 million on online marketing initiatives relating to subscriber acquisition for the first half of 2011 and expect to continue to expend significant amounts to acquire additional subscribers. If consumers do not perceive our Groupon offerings to be of high value and quality, or if we fail to introduce new or more relevant deals, we may not be able to acquire or retain subscribers. In our limited operating history, we have not incurred significant marketing or other expense on initiatives designed to re-activate subscribers or increase the level of purchases by our existing subscribers. If such expenditures or initiatives become necessary to maintain a desired level of activity in our marketplace, our business and profitability could be adversely affected.

        Deal sourcing and quality.    We consider our merchant relationships to be a vital part of our business model. We depend on our ability to attract and retain merchants that are prepared to offer products or services on compelling terms. We do not have long-term arrangements to guarantee availability of deals that offer attractive quality, value and variety to consumers or favorable payment terms to us. In light of

50

our significant merchant pool and our objective to promote variety in our daily deals, our general practice to date has been to limit repeat merchants. If new merchants do not find our marketing and promotional services effective, or if our existing merchants do not believe that utilizing our services provides them with a long-term increase in customers, revenue or profit, they may stop making offers through our marketplace.

        Competitive pressure.    Our growth and geographical expansion have drawn a significant amount of attention to our business model. As a result, a substantial number of group buying sites that attempt to replicate our business model have emerged around the world. In addition to such competitors, we expect to increasingly compete against other large internet and technology-based businesses, such as Google and Microsoft, each of which has launched initiatives which are directly competitive to our business. We also expect to compete against other internet sites that are focused on specific communities or interests and offer coupons or discount arrangements related to such communities or interests.

        Investment in growth.    We are a high-growth company and have aggressively invested, and intend to continue to invest, to support this growth. As a result, we have incurred net losses in the majority of quarters since our inception. We anticipate that our operating expenses will increase substantially in the foreseeable future as we continue to increase the number and variety of deals we offer each day, broaden our subscriber base, expand our marketing channels, expand our operations, hire additional employees and develop our technology.

        Pace and effectiveness of expansion.    We have grown our business rapidly since inception, adding new subscribers and markets both domestically and internationally. Our international operations have become critical to our revenue growth and our ability to achieve profitability. In the first half of 2010 and the first half of 2011, 5.1% and 57.3%, respectively, of our revenue was generated from our international operations. Expansion into international markets requires management attention and resources and requires us to localize our services to conform to a wide variety of local cultures, business practices, laws and policies. International acquisitions also expose us to a variety of execution risks. The different commercial and internet infrastructure in other countries may make it more difficult for us to replicate our traditional business model.

Basis of Presentation

Revenue

        Revenue primarily consists of the net amount we retain from the sale of Groupons after paying an agreed upon percentage of the purchase price to the featured merchant, excluding any applicable taxes and net of estimated refunds.

Cost of revenue

        Cost of revenue is primarily comprised of direct costs incurred to generate revenue, including costs related to credit card processing fees, refunds provided to customers under the Groupon Promise and other processing costs.

Marketing

        We direct consumers to our websites and applications primarily through a number of targeted online marketing channels, such as display advertising networks, sponsored search, social networking sites, portal advertising, email marketing campaigns, loyalty programs, affiliate programs and other similar initiatives, which we consider to be subscriber acquisition costs. Our marketing expenses are largely variable, impacted by the amount of subscriber growth we wish to pursue and changes in online marketing rates. To the extent there is increased or decreased competition for these traffic sources, or to the extent our mix of

51

these channels shifts, we would expect to see a corresponding change in our marketing expense. We also incur offline marketing costs from television, radio and print advertising.

        Marketing is the primary method by which we acquire subscribers, and as such, is a critical part of our growth strategy. Over time we expect that our marketing expense will decrease as a percentage of gross billings as our opportunity to aquire new subscribers diminishes and we move to transactional marketing focused on converting subscribers into customers.

Selling, General and Administrative

        Selling, general and administrative expense primarily consists of wages and benefits (including stock-based compensation), consulting and professional fees, depreciation and amortization and technology-related costs. Approximately 50% of our employees were part of our salesforce as of June 30, 2011, and their compensation represented a significant portion of our selling, general and administrative expenses. Our salesforce is critical to growing and maintaining our merchant base and is the main source for driving new Groupon offers. We expect that our salesforce headcount will continue to grow over time as we continue to expand our business into new markets.

Acquisition-Related

        In May 2010, we acquired CityDeal, a European-based collective buying power business launched in January 2010 that provided daily deals and online marketing services substantially similar to the Company. As part of the overall consideration paid, we were obligated to issue additional shares of our common stock in December 2010 due to the achievement of financial and performance earn-out targets. We recorded a liability on our consolidated balance sheet as of the original acquisition date for this consideration and subsequently remeasured the liability on a periodic basis until final settlement. As a result of this remeasurement, we recorded a total charge of $204.2 million in acquisition-related expenses in 2010, which was partially offset by other nominal acquisition-related items.

Interest and Other Income (Expense)

        Interest and other income (expense) primarily consists of foreign currency gains and losses resulting from foreign currency transactions which are denominated in currencies other than our functional currencies and interest expense on our loans from related parties.

52

Results of Operations

Comparison of the Six Months Ended June 30, 2010 and 2011:

			Six Months Ended June 30,
			2010			2011
			(Restated)			(Restated)
			(in thousands)
Revenue (gross billings of $135,807 and $1,597,423, respectively)			$	58,938		$	688,105
Costs and expenses:
	Cost of revenue			4,024			66,522
	Marketing			39,848			432,093
	Selling, general and administrative			33,880			407,665
	Acquisition-related			9,434			—
		Total operating expenses		87,186			906,280
Loss from operations				(28,248	)		(218,175	)
Interest and other (expense) income, net				(96	)		1,539
Equity-method investment activity, net of tax				—			(8,763	)
Loss before provision for income taxes				(28,344	)		(225,399	)
Benefit for income taxes				(905	)		(1,732	)
Net loss				(27,439	)		(223,667	)
Less: Net loss attributable to noncontrolling interests				61			19,759
Net loss attributable to Groupon, Inc.				(27,378	)		(203,908	)
Dividends on preferred stock				(1,046	)		—
Redemption of preferred stock in excess of carrying value				—			(34,327	)
Adjustment of redeemable noncontrolling interests to redemption value				—			(15,651	)
Net loss attributable to common stockholders			$	(28,424	)	$	(253,886	)

Gross Billings

        For the six months ended June 30, 2010 and 2011, our gross billings were $135.8 million and $1,597.4 million, respectively, reflecting an increase of $1,461.6 million, or 1,076%. The increase in gross billings was directly attributable to the increase in the number of Groupons we sold in the period compared to the same period of the prior year. The increase in the number of Groupons sold was driven by subscriber growth in our existing markets and our entry into new markets. In May 2010, we also began our international expansion by acquiring CityDeal, which added 1.9 million subscribers as of the date of the acquisition in several major European markets, including London, Berlin and Paris, and ended the year with operations in 38 countries. As a result of the entry into these new markets and growth in existing markets we added 105.3 million new subscribers from June 30, 2010 through June 30, 2011.

Segment Gross Billings

		Six Months Ended June 30,
		2010		% of total			2011		% of total
		(dollars in thousands)
North America		$	124,962		92.0	%	$	685,142		42.9	%
International			10,845		8.0	%		912,281		57.1	%
	Gross billings	$	135,807		100.0	%	$	1,597,423		100.0	%

53

        For six months ended June 30, 2010 and 2011, our gross billings were $125.0 million and $685.1 million, respectively, for our North America segment. Subsequent to June 30, 2010, we added 111 new North American markets and continued to grow in our existing markets. For the six months ended June 30, 2010 and 2011, our gross billings were $10.8 million and $912.3 million, respectively, for our International segment. In May 2010, we commenced our international operations with the purchase of CityDeal, a European-based local e-commerce business similar to ours, which operated in 80 markets in 16 countries with 1.9 million subscribers at the time of acquisition. We subsequently completed eight additional international acquisitions during 2010 and five international acquisitions in 2011, which gave us access to markets and additional subscribers around the world.

Revenue

        Revenue for each of the periods presented was as follows:

	Six Months Ended June 30,
	2010		2011
	(dollars in thousands)
Revenue	$	58,938	$	688,105

        Revenue increased by $629.2 million to $688.1 million for the six months ended June 30, 2011 as compared to the six months ended June 30, 2010. The increase in revenue was primarily due to our international expansion in 2010 and the entry into new markets domestically, which led to an increase in gross billings. We retained less of the gross billings paid by our customers and remitted more to merchants on a percentage basis in the six months ended June 30, 2011 compared with the six months ended June 30, 2010. This lower deal margin was primarily due to our Asia-Pacific region, which is our fastest growing region. In the Asia-Pacific region, we have accepted a lower deal margin to acquire new subscribers and establish our brand in this market. The lower deal margin in our Asia-Pacific region has been offset by higher deal margins elsewhere in our International segment. In addition, we offer fewer deals in our International segment as compared to our North America segment. As a result, we experienced overall higher margins in our International segment than our North America segment.

Cost of revenue

        Cost of revenue increased by $62.5 million to $66.5 million for the six months ended June 30, 2011 as compared to the six months ended June 30, 2010. The increase in cost of revenue was directly related to our growth in merchant transaction volume.

Marketing

        Marketing expense as a percentage of gross billings for the six months ended June 30, 2010 and June 30, 2011 was 29.3% and 27.0%, respectively. We evaluate our marketing expense as a percentage of gross billings because it gives us an indication of how well our marketing spend is driving volume. Our marketing expense increased by $392.2 million to $432.1 million for the six months ended June 30, 2011 as compared to the six months ended June 30, 2010. This increase was primarily driven by investments in subscriber acquisition in new markets. We have focused the majority of our marketing spend online, particularly on display advertising networks, as part of our new subscriber acquisition strategy. Our subscriber loyalty and rewards program also contributed to our increase in marketing expense as many of these programs were not put in place until the second half of 2010. For the six months ended June 30, 2011, marketing expense as a percentage of gross billings for the North America and International segments was 22.9% and 30.2%, respectively. The higher marketing expense as a percentage of gross billings for our International segment reflects our launch into new international markets, which requires higher marketing costs to establish a strong initial subscriber base. We believe that our marketing investments in our

54

International segment will continue to be significant as a percentage of gross billings in the foreseeable future, but will decline as those markets begin to mature.

Selling, General and Administrative

        Our selling, general and administrative expense increased by $373.8 million to $407.7 million for the six months ended June 30, 2011 as compared to June 30, 2010. The increase in selling, general and administrative expense was principally related to the build out of our salesforce and investments in our corporate infrastructure necessary to support our current and anticipated growth.

        Wages and benefits (excluding stock-based compensation) increased by $193.5 million to $208.8 million for the six months ended June 30, 2011 as compared to June 30, 2010, as we continued to add sales and administrative staff to support our business. Stock-based compensation costs also increased to $57.6 million for the six months ended June 30, 2011 from $4.1 million for the six months ended June 30, 2010 due to awards issued to retain key employees and awards issued in connection with our acquisitions. System maintenance and equipment expenses increased as a percentage of revenue because of our continued investment in technologies required to support our growth. Depreciation and amortization expense increased in total for the six months ended June 30, 2011 as compared to June 30, 2010 primarily because we recorded $53.6 million of intangible assets in connection with our acquisitions through June 30, 2011, which accounted for a majority of the $10.7 million of amortization expense for the six months ended June 30, 2011. In addition, selling, general and administrative expense was negatively impacted for the six months ended June 30, 2011 as a result of accruals for ongoing litigation.

Loss from operations

        For the six months ended June 30, 2010 and 2011, our loss from operations was $28.2 million and $218.2 million, respectively, reflecting an increase of $190.0 million, or 674%. The increase in the loss from operations was primarily attributable to our International segment. The loss from operations for our International segment increased from $26.0 million for the six months ended June 30, 2010 to $156.2 million for the six months ended June 30, 2011. The increase in our International segment loss from operations was driven by our rapid expansion in the segment during the period, which involved investing heavily in upfront marketing, sales and infrastructure related to the build out of our operations in South Korea, Australia and Japan. The loss from operations for our North America segment increased $59.8 million from the six months ended June 30, 2010 to the six months ended June 30, 2011. The increase in our North America segment loss from operations was driven primarily by our continued investment in subscriber acquisition.

Interest and Other Income (Expense)

        For the six months ended June 30, 2010 and 2011, we had less than $0.1 million of foreign currency losses and $2.0 million of foreign currency gains, respectively.

Provision (Benefit) for Income Taxes

        We recorded a benefit for income taxes for the six months ended June 30, 2010 and 2011 as we were able to benefit from losses in certain foreign jurisdictions.

55

Comparison of the Years Ended December 31, 2008, 2009 and 2010:

			Year Ended December 31,
			2008			2009			2010
			(Restated)			(Restated)			(Restated)
			(in thousands)
Revenue (gross billings of $94, $34,082 and $745,348, respectively)			$	5		$	14,540		$	312,941
Costs and expenses:
	Cost of revenue			6			4,355			32,494
	Marketing			163			4,873			284,348
	Selling, general and administrative			1,468			6,389			213,260
	Acquisition-related			—			—			203,183
		Total operating expenses		1,637			15,617			733,285
Loss from operations				(1,632	)		(1,077	)		(420,344	)
Interest and other income (expense), net				90			(16	)		284
Loss before provision for income taxes				(1,542	)		(1,093	)		(420,060	)
Provision (benefit) for income taxes				—			248			(6,674	)
Net loss				(1,542	)		(1,341	)		(413,386	)
Less: Net loss attributable to noncontrolling interests				—			—			23,746
Net loss attributable to Groupon, Inc.				(1,542	)		(1,341	)		(389,640	)
Dividends on preferred stock				(277	)		(5,575	)		(1,362	)
Redemption of preferred stock in excess of carrying value				—			—			(52,893	)
Adjustment of redeemable noncontrolling interests to redemption value				—			—			(12,425	)
Preferred stock distributions				(339	)		—			—
Net loss attributable to common stockholders			$	(2,158	)	$	(6,916	)	$	(456,320	)

Gross Billings

        For the years ended December 31, 2008, 2009 and 2010, our gross billings were $0.1 million, $34.1 million and $745.3 million, respectively, reflecting growth rates of 36,157% and 2,087%, respectively, as compared to the corresponding prior year.

        2010 compared to 2009.    In 2010, our gross billings increased by $711.2 million to $745.3 million, an increase of 2,087%. As the average revenue per Groupon remained relatively consistent year-to-year, the overall increase in revenue was directly attributable to the increase in volume of Groupons that we sold. The increase in the number of Groupons sold was driven by subscriber growth in our existing markets and our entry into new markets. During 2010, we added 124 new North American markets and 48.8 million new subscribers. In 2010, we also began our international expansion by acquiring CityDeal, which added 1.9 million subscribers as of the date of the acquisition in several major European markets, including London, Berlin and Paris. We ended the year with operations in 38 countries.

        2009 compared to 2008.    In 2009, our gross billings increased by $34.0 million to $34.1 million, an increase of 36,157%. 2009 was our first full year of operations, and during the period we added 29 North American markets and 1.8 million subscribers. Significant markets entered in 2009 included Boston, Los Angeles and New York.

        In addition to expanding the scale of our business domestically and internationally through acquisitions and entering new markets, we have several other initiatives that have driven revenue growth over the last three years. We have increased our total marketing spend significantly, focusing on acquiring subscribers through online channels such as social networking websites and search engines. We also have

56

added substantially to our salesforce, allowing us to increase the number of merchant relationships and offer more deals on a daily basis on our websites and higher quality deals to subscribers.

Segment Gross Billings

		Year Ended December 31,
		2008		% of total			2009		% of total			2010		% of total
		(dollars in thousands)
North America		$	94		100.0	%	$	34,082		100.0	%	$	475,003		63.7	%
International			—		—			—		—			270,345		36.3	%
	Gross billings	$	94		100.0	%	$	34,082		100.0	%	$	745,348		100.0	%

        Gross billings for our International segment were $270.3 million for the year ended December 31, 2010. In May 2010, we commenced our international operations with the purchase of CityDeal, a European-based local e-commerce website similar to ours, which operated in 80 markets in 16 countries with 1.9 million subscribers at the time of acquisition. We subsequently completed eight additional international acquisitions during 2010, which gave us access to markets and additional subscribers around the world.

Revenue

        Revenue for each of the years presented were as follows:

	Year Ended December 31,
	2008		2009		2010
	(dollars in thousands)
Revenue	$	5	$	14,540	$	312,941

        Revenue increased by $298.4 million to $312.9 million for the year ended December 31, 2010, an increase of 2,052%. The increase in revenue was primarily due to our international expansion in 2010 and the entry into new markets domestically, which led to an increase in gross billings. Revenue also increased because we were able to retain more of the gross billings paid by our customers and remit less to merchants. This deal margin is negotiated with merchants and is generally higher for our International segment because we offer fewer national deals compared to the North America segment. National deals are utilized to increase brand awareness but typically generate a lower deal margin.

Cost of revenue

        For the years ended December 31, 2010, 2009 and 2008 our cost of revenue was $32.5 million, $4.4 million and less than $0.1 million.

2010 compared to 2009

        Cost of revenue increased $28.1 million to $32.5 million for the year ended December 31, 2010 compared to the year ended December 31, 2009. The increase in cost of revenue was primarily driven by a $19.5 million increase in credit card processing fees and $8.6 million increase in customer refunds provided under the Groupon Promise. Increases in these customer refunds and credit card processing and other fees are both driven by higher merchant transaction volumes.

2009 compared to 2008

        Cost of revenue increased by $4.3 million to $4.4 million for the year ended December 31, 2009 compared to the year ended December 31, 2008. The increase in cost of revenue was primarily driven by a

57

$3.2 million increase in customer refunds provided under the Groupon Promise and a $1.1 million increase in credit card and other processing fees. Increases in these customer refunds and credit card and other processing fees are both driven by higher merchant transaction volumes.

Marketing

        Marketing expense as a percentage of gross billings for the years ended December 31, 2009 and 2010 was 14.3% and 38.1%, respectively. We evaluate our marketing expense as a percentage of gross billings because it gives us an indication of how well our marketing spend is driving volume.

        2010 compared to 2009.    In 2010, our marketing expense increased by $279.5 million to $284.3 million, an increase of 5,735%. The significant increase was primarily attributable to an increase in online marketing spend, particularly on display advertising networks as part of our new subscriber acquisition strategy. Our subscriber loyalty and rewards program also contributed significantly to our increase in marketing expense as many of these programs were not put in place until the second half of 2010. For the year ended December 31, 2010, marketing expense as a percentage of gross billings for the North America and International segments was 25.5% and 60.4%, respectively. In 2010, we made significant marketing investments in our International segment to accelerate growth and establish our presence in new markets. As a result, we experienced much larger operating losses for our International segment than we did for our North America segment.

        2009 compared to 2008.    In 2009, our marketing expense increased by $4.7 million to $4.9 million, an increase of 2,890%. Marketing expense as a percentage of revenue for the year ended December 31, 2008 is not indicative of normal operating levels due to the small number of transactions processed in 2008, as we started selling Groupons in October 2008.

Selling, General and Administrative

        The increases in selling, general and administrative expense were principally related to the build out of our salesforce and investments in our corporate infrastructure necessary to support our current and anticipated growth. Over time, as our operations mature in a greater percentage of our markets, we expect that our selling, general and administrative expense will decrease as a percentage of gross billings.

        2010 compared to 2009.    In 2010, our selling, general and administrative expense increased by $206.9 million to $213.3 million, an increase of 3,238%. As described below, the increase in selling, general and administrative expense for the year ended December 31, 2010 compared to the year ended December 31, 2009 was due to increases in wages and benefits, consulting and professional fees and depreciation and amortization expenses. Additionally, the selling, general and administrative expenses as a percentage of gross billings for our International segment were significantly higher than for our North America segment, which contributed to larger operating losses in our International segment. This was primarily a result of the build out of our international operations, including our salesforce, to support future revenue growth. We expect that over time selling, general and administrative expenses for our International segment will decline as a percentage of gross billings for the segment.

        Wages and benefits (excluding stock-based compensation) increased by $87.6 million to $91.3 million in the year ended December 31, 2010 as we continued to add sales and administrative staff to support our business. Stock-based compensation costs also increased to $36.2 million for the year ended December 31, 2010 from $0.1 million for the year ended December 31, 2009 due to awards issued to retain key employees and awards issued in connection with our acquisitions. Our consulting and professional fees increased in 2010 primarily related to higher legal and technology-related costs. Depreciation and amortization expense increased in 2010 primarily because we recorded $47.3 million of intangible assets in connection with our acquisitions, resulting in $11.0 million of amortization expense.

58

        2009 compared to 2008.    In 2009, our selling, general and administrative expense increased by $4.9 million to $6.4 million, an increase of 335%.

Loss from operations

        2010 compared to 2009.    For the years ended December 31, 2009 and 2010, our loss from operations was $1.1 million and $420.3 million, respectively, reflecting an increase of $419.2 million, or 38,929%. The increase in the loss from operations was primarily attributable to our expansion in North America and our entrance into the international market in 2010. The loss from operations for the North America segment increased from $1.1 million for the year ended December 31, 2009 to $222.6 million for the year ended December 31, 2010. The loss from operations for our International segment was $197.7 million for the year ended December 31, 2010. The increase in both our North America and International segment loss from operations was driven by our rapid expansion in each segment during the period. We invested heavily in upfront marketing, sales and infrastructure related to the build out of our operations in both our North American and international markets.

        2009 compared to 2008.    For the years ended December 31, 2008 and 2009, our loss from operations was $1.6 million and $1.1 million, respectively, reflecting a decrease of $0.5 million, or 34.0%. The decrease in the loss from operations was primarily attributable to our revenue growth of 290,700% in our North America segment during 2009.

Acquisition-Related

        In May 2010, we acquired CityDeal, a European-based collective buying power business similar to ours. As part of the overall consideration paid, we were obligated to issue additional shares of our common stock in December 2010 due to the achievement of financial and performance earn-out targets. We recorded a liability on our consolidated balance sheet as of the original acquisition date for this consideration and subsequently remeasured the liability on a periodic basis until final settlement. As a result of this remeasurement, we recorded a total expense of $204.2 million as acquisition-related expenses, which was partially offset by other nominal acquisition-related items.

Interest and Other Income (Expense)

        For the year ended December 31, 2010 we had other income of $0.5 million related to foreign currency gains. We did not incur any foreign currency gains or losses for the years ended December 31, 2008 and 2009 as we did not have any international operations until 2010. We also recorded $0.4 million of interest expense for the year ended December 31, 2010 related to interest on loans from related parties.

Provision (Benefit) for Income Taxes

        The benefit for income taxes for the six months ended June 30, 2011 and 2010 was due to our ability to benefit from losses in the United States and foreign jurisdictions.

59

Quarterly Results of Operations

        The following table represents data from our unaudited statements of operations and our key operating metrics for our most recent nine quarters. You should read the following table in conjunction with our consolidated financial statements and related notes appearing elsewhere in this prospectus. The results of operations of any quarter are not necessarily indicative of the results that may be expected for any future period.

			Three Months Ended
			June 30, 2009		Sept. 30, 2009		Dec. 31, 2009			Mar. 31, 2010		June 30, 2010			Sept. 30, 2010			Dec. 31, 2010			Mar. 31, 2011			June 30, 2011
			(unaudited) (dollars in thousands)
																								(Restated)
Consolidated Statements of Operations Data:
Revenue			$	1,209	$	3,996	$	9,252		$	20,272	$	38,666		$	81,779		$	172,224		$	295,523		$	392,582
Income (loss) from operations			$	17	$	848	$	(1,626	)	$	8,571	$	(36,819	)	$	(55,967	)	$	(336,129	)	$	(117,148	)	$	(101,027	)
Net income (loss) attributable to Groupon, Inc.			$	21	$	850	$	(1,903	)	$	8,551	$	(35,929	)	$	(49,032	)	$	(313,230	)	$	(102,668	)	$	(101,240	)
Other Financial Data:
Income (loss) from operations			$	17	$	848	$	(1,626	)	$	8,571	$	(36,819	)	$	(55,967	)	$	(336,129	)	$	(117,148	)	$	(101,027	)
	Adjustments:
	Stock-based compensation(1)			12		29		64			116		3,960			4,663			27,429			18,864			38,718
	Acquisition-related(2)			—		—		—			—		9,434			28,410			165,339			—			—
	Total adjustments			12		29		64			116		13,394			33,073			192,768			18,864			38,718
CSOI(3)			$	29	$	877	$	(1,562	)	$	8,687	$	(23,425	)	$	(22,894	)	$	(143,361	)	$	(98,284	)	$	(62,309	)
	North America		$	29	$	877	$	(1,562	)	$	8,687	$	(378	)	$	3,160		$	(21,905	)	$	(21,778	)	$	(10,501	)
	International			—		—		—			—		(23,047	)		(26,054	)		(121,456	)		(76,506	)		(51,808	)
		CSOI	$	29	$	877	$	(1,562	)	$	8,687	$	(23,425	)	$	(22,894	)	$	(143,361	)	$	(98,284	)	$	(62,309	)
Operating Metrics:
Gross billings(4)			$	3,301	$	10,002	$	20,526		$	44,383	$	91,424		$	194,272		$	415,269		$	688,174		$	909,249
Subscribers(5)				152,203		627,051		1,807,278			3,434,610		10,445,521			21,369,608			50,583,805			83,100,006			115,717,299
Cumulative customers(6)				43,014		153,471		375,099			874,017		2,379,611			4,623,267			9,031,807			15,803,995			23,072,600
Featured merchants(7)				212		765		1,644			2,903		9,565			18,722			35,099			56,781			78,466
Groupons sold(8)				116,231		340,471		764,869			1,760,398		4,062,458			8,237,733			16,235,481			28,094,743			32,525,739
Average revenue per subscriber(9)			$	15.9	$	10.3	$	7.6		$	7.7	$	5.6		$	5.1		$	4.8		$	4.4		$	3.9
Average cumulative Groupons sold per customer(10)				3.3		3.2		3.3			3.4		3.0			3.3			3.5			3.8			4.0
Average revenue per Groupon sold(11)			$	10.4	$	11.7	$	12.1		$	11.5	$	9.5		$	9.9		$	10.6		$	10.5		$	12.1
Cumulative repeat customers(12)				14,857		59,398		162,323			420,667		1,056,966			2,186,791			4,483,976			8,195,412			12,066,676

(1)

Represents non-cash stock-based compensation expense recorded within selling, general and administrative expenses.

(2)

Primarily represents non-cash charges for remeasurement of the fair value of contingent consideration related to acquisitions made by us in 2010. The amount of the charge was due to the significant increase in the value of our common stock from the original acquisition date until the date the contingency was ultimately settled.

(3)

Consolidated segment operating (loss) income, or CSOI, is a non-GAAP financial measure. See "—Summary Consolidated Financial and Other Data—Non-GAAP Financial Measures" for a reconciliation of this measure to the most applicable financial measure under U.S. GAAP. We do not allocate stock-based compensation and acquisition-related expense to the segments. See Note 14 "Segment Information" of Notes to Consolidated Financial Statements and Note 15 "Segment Information" of Notes to Condensed Consolidated Financial Statements (Unaudited) for additional information.

(4)

Reflects the gross amounts collected from customers for Groupons sold, excluding any applicable taxes and net of estimated refunds, in the applicable period.

(5)

Reflects the total number of subscribers who had a Groupon account on the last day of the applicable period, less individuals who have unsubscribed. May include individual subscribers with multiple registrations because the information we collect from subscribers does not permit us to identify when a subscriber may have created multiple accounts, nor do we prevent subscribers from creating multiple accounts.

(6)

Reflects the total number of unique customers who have purchased Groupons from January 1, 2009 through the end of the applicable period. May include individual customers with multiple registrations.

(7)

Reflects the total number of merchants featured in the applicable period.

(8)

Reflects the total number of Groupons sold in the applicable period.

(9)

Reflects the average revenue generated per average number of subscribers in the applicable period.

(10)

Reflects the average number of Groupons sold per cumulative repeat customer from January 1, 2009 through the end of the applicable period.

(11)

Reflects the average revenue generated per Groupon sold in the applicable period.

(12)

Reflects the total number of customers who have purchased more than one Groupon from January 1, 2009 through the end of the applicable period.

60

2011 Quarterly Highlights

Gross Billings

        Our gross billings for the second quarter of 2011 increased 895% year over year from $91.4 million in the second quarter of 2010 to $909.2 million in the second quarter of 2011. On a sequential quarterly basis, our gross billings increased 32.1% from $688.2 million in the first quarter of 2011 to $909.2 million in the second quarter of 2011.

Revenue

        Our revenue for the second quarter of 2011 increased 914% year over year to $392.6 million from $38.7 million in the second quarter of 2010. On a sequential quarterly basis, our revenue increased 33% from $295.5 million in the first quarter of 2011 to $392.6 million in the second quarter of 2011.

Consolidated Segment Operating (Loss) Income

        Our consolidated segment operating (loss) income, or CSOI, for the second quarter of 2011 improved by $36.0 million from a $98.3 million loss in the first quarter of 2011 to a $62.3 million loss in the second quarter of 2011. North America segment operating loss improved by 51.8% from a $21.8 million loss in the first quarter of 2011 to a $10.5 million loss in the second quarter of 2011. International segment operating loss improved by 32.3% from a $76.5 million loss in the first quarter of 2011 to a $51.8 million loss in the second quarter of 2011. North America segment operating loss was positively affected by increased revenue, partially offset by significant investments we made in personnel related to various new initiatives that were started in the second quarter of 2011, including Groupon NOW, Groupon Live and Groupon Getaways. Additionally, North America segment operating loss was negatively impacted by a legal reserve we established in the quarter. International segment operating loss was positively affected by increased revenue, partially offset by upfront marketing and other investments of approximately $52.0 million related to the build out of our operations in South Korea, Australia and Japan.

        The improvement in CSOI quarter over quarter was largely driven by the absolute increase in revenue resulting from the increase in Groupons sold and the increase in our subscriber base to 115.7 million aided by expansion into new markets. CSOI is a non-GAAP financial measure. See "Selected Consolidated Financial and Other Data—Non-GAAP Financial Measures" for further information and a reconciliation to the most applicable financial measure under U.S. GAAP.

Quarterly Trends

        Our overall operating results fluctuate from quarter to quarter as a result of a variety of factors. We have experienced exceptional growth since our inception as well as significant changes in our business. For instance, we have entered into many new markets, made several international acquisitions, and increased our merchant and subscriber base over the last three years. These changes have resulted in substantial growth in revenue and corresponding increases in operating costs and expenses to support our growth. Our growth has led to uneven overall operating results due to differences in the terms and types of deals that we offer, changes in our investment in marketing from quarter-to-quarter, increases in employee headcount and the impact of our acquisitions. We have determined in the past, and expect to continue to determine in the future, to undertake substantial marketing expense increases when we perceive opportunities to enter new markets or penetrate existing markets more deeply. The return on these investments is generally achieved in future periods and, as a result, these investments can adversely impact near term results. For example, although we generated net income in the first quarter of 2010, we subsequently pursued a much more aggressive growth strategy, including rapid international expansion, acquisitions and a substantial increase in our marketing expenses. This has resulted in losses from operations for the three months ended June 30, 2010, September 30, 2010, December 31, 2010, March 31, 2011 and June 30, 2011.

61

        In addition, our business is directly affected by the behavior of our merchants and subscribers. Economic conditions and competitive pressures can positively and negatively impact the types of deals that we can offer and the rate at which they are purchased. Consequently, the results of any prior quarterly or annual periods should not be relied upon as indications of our future operating performance.

Liquidity and Capital Resources

        As of June 30, 2011, we had $225.1 million in cash and cash equivalents, which primarily consisted of cash and money market accounts.

        Since our inception, we have funded our working capital requirements and expansion primarily through private sales of common and preferred stock, yielding net proceeds of $1,112.9 million. We used $941.7 million of the proceeds from these sales to redeem shares of our common and preferred stock, and the remainder to fund acquisitions and for working capital and general corporate purposes. We used a significant portion of the net proceeds received from our private offerings to redeem shares because management and the board of directors determined that projected cash flow from future operations would be sufficient to support our growth strategy. As a result, we have funded our working capital requirements primarily with cash flow from operations to date. We generated positive cash flow from operations for the years ended December 31, 2009 and December 31, 2010 and the six months ended June 30, 2011 despite experiencing net losses in each of these periods, and we expect annual cash flow from operations to remain positive in the foreseeable future. We generally use this cash flow to fund our operations, make additional acquisitions, purchase capital expenditures and meet our other cash operating needs. Cash flow from operations was $7.5 million for the year ended December 31, 2009, $86.9 million for the year ended December 31, 2010 and $58.0 million for the six months ended June 30, 2011.

        Although we can provide no assurances, we believe that the net proceeds from this offering, together with our available cash and cash equivalents balance and cash generated from operations, should be sufficient to meet our working capital requirements and other capital expenditures for the next twelve months.

Anticipated Uses of Cash

        Our priority in 2011 is to continue to increase our gross billings and improve our revenue by increasing the volume of transactions that are processed through our marketplace, coupled with expansion and penetration into new domestic and international markets. We intend to continue to invest to acquire subscribers, to expand our salesforce and aggressively market our products, and to acquire or make strategic investments in complementary businesses that add to our subscriber or customer base or provide incremental technology. In order to support our overall global business expansion, we also expect to make significant investments in our corporate facilities and information technology infrastructure, with approximately $65.0 million of capital expenditures planned for the year ending December 31, 2011. We currently plan to fund these expenditures with cash flows generated from operations during this period. We also may use a portion of the net proceeds from this offering to fund these uses of cash. We do not intend to pay dividends in the foreseeable future.

62

Cash Flow

        Our net cash flow from operating, investing and financing activities for the periods below were as follows:

	Year Ended December 31,									Six Months Ended June 30,
	2008			2009			2010			2010			2011
	(in thousands)
Cash provided by (used in):
Operating activities	$	(1,526	)	$	7,510		$	86,885		$	15,528		$	57,984
Investing activities		(19	)		(1,961	)		(11,879	)		1,869			(70,503	)
Financing activities		4,408			3,798			30,445			16,725			111,684
Effect of changes in exchange rates on cash and cash equivalents		—			—			1,069			(516	)		7,095
Net increase in cash and cash equivalents	$	2,863		$	9,347		$	106,520		$	33,606		$	106,260

Cash Provided By (Used In) Operating Activities

        Cash provided by (used in) operating activities primarily consists of our net loss adjusted for certain non-cash items, including depreciation and amortization, stock-based compensation, deferred income taxes, acquisition-related expenses and the effect of changes in working capital and other items.

        Our current merchant arrangements are structured such that we collect cash up front when our customers purchase Groupons and make payments to most of our merchants at a subsequent date. Under our traditional merchant payment model, we pay our merchants in installments over a period of generally sixty days for all Groupons purchased. Under this payment model, merchants are paid regardless of whether the Groupon is redeemed. Under the redemption payment model, which we utilize in most of our international operations in conformity with local market practice, merchants are not paid until the customer redeems the Groupon that has been purchased. If a customer does not redeem the Groupon under this payment model, we retain all of the gross billings for the Groupon purchase. As a result of these payment models, we experience swings in merchant payable that can cause volatility in working capital levels and impact cash balances more or less than our operating income or loss would indicate. In general, merchant payable balances have increased in line with the growth of our overall business, which has created additional cash flow from operations. Furthermore, growth in our international operations has accelerated cash flow due to more favorable payment terms with our merchants. The redemption model generally improves our overall cash flow because we do not pay our merchants until the customer redeems the Groupon. To the extent we offer our merchants more favorable or accelerated payment terms or our gross billings does not continue to grow in the future, our cash flow could be adversely impacted.

        For the six months ended June 30, 2011, our net cash provided by operating activities of $58.0 million consisted of net loss of $223.7 million, offset by $77.8 million in adjustments for non-cash items and $205.4 million in cash provided by changes in working capital and other activities. Adjustments for non-cash items primarily consisted of an increase in cash due to $57.6 million in stock-based compensation expense, $5.0 million in depreciation expense on property and equipment, $10.7 million in amortization of intangible assets and $8.8 million in losses in equity interests, partially offset by an excess tax benefit on stock-based compensation of $3.5 million and deferred income taxes of $2.2 million. The increase in cash resulting from changes in working capital activities primarily consisted of a $216.9 million increase in our merchant payable, due to the growth in the number of Groupons sold, and a $74.8 million increase in accrued expenses and other current liabilities primarily related to online marketing costs incurred to acquire subscribers and operational expenses such as payroll and benefits, customer refunds, costs associated with subscriber loyalty and reward programs, and a $1.6 million increase in other assets and liabilities. These increases were partially offset by a decrease in operating cash flow due to a $14.4 million

63

decrease in accounts payable, due to the timing of invoices received and paid, a $53.1 million increase in accounts receivable, and a $17.2 million increase in prepaid expenses and other current assets. Our accounts receivable at June 30, 2011 primarily relate to amounts due from credit card processors. The increase in accounts receivable for the six months ended June 30, 2011 was attributable to the increase in gross billings and the timing of receipt of cash from the credit card processors. The accounts receivable related to our International segment represent a significant portion of total accounts receivable. Increases in accrued expenses, accounts receivable, prepaid expenses and other current assets primarily reflect the significant increase in the number of employees, vendors, and subscribers resulting from our internal growth and global expansion through recent acquisitions.

        For the six months ended June 30, 2010, our net cash provided by operating activities of $15.5 million consisted of net loss of $27.4 million, offset by $28.4 million in cash provided by changes in working capital and other activities and $14.5 million in adjustments for non-cash items. Adjustments for non-cash items primarily consisted of $9.4 million in acquisition-related costs and $4.1 million in stock-based compensation. The increase in cash resulting from changes in working capital primarily consisted of a $18.7 million increase in accrued merchant payable due to an increase in the number of Groupons sold, a $4.7 million increase in accounts payable due to timing of invoices received and paid, an increase of $3.1 million in accrued expense and other current liabilities, an increase in due to related parties of $3.6 million and a decrease in prepaid expenses and other current assets of $2.8 million. These increases were partially offset by a decrease in operating cash flow due to an increase in accounts receivable of $3.5 million. The increases in accounts payable, accrued expenses, other current liabilities, due to related parties and accounts receivable are a result of internal business growth.

        For the year ended December 31, 2010, our net cash provided by operating activities of $86.9 million consisted of a net loss of $413.4 million, offset by $245.1 million in adjustments for non-cash items and $255.2 million in cash provided by changes in working capital and other activities. Adjustments for non-cash items primarily consisted of $203.2 million in acquisition-related expenses, $36.2 million in stock-based compensation expense, $1.9 million in depreciation expense on property and equipment and $11.0 million in amortization of intangible assets, partially offset by $7.3 million in deferred income taxes. The increase in cash resulting from changes in working capital activities primarily consisted of a $149.0 million increase in our merchant payable, due to the growth in the number of Groupons sold, a $94.6 million increase in accrued expenses and other current liabilities primarily related to online marketing costs incurred to acquire subscribers and operational expenses such as payroll and benefits, customer refunds and costs associated with subscriber loyalty and reward programs, and a $50.8 million increase in accounts payable. These increases were partially offset by a decrease in operating cash flow due to a $34.9 million increase in accounts receivable, a $2.5 million increase in prepaid expenses and other current assets and a $1.5 million increase in other assets and liabilities. Our accounts receivable at December 31, 2010 primarily relate to amounts due from credit card processors. The increase in accounts receivable at December 31, 2010 was attributable to the increase in gross billings and the timing of receipt of cash from the credit card processors. The accounts receivable related to our International segment represent a significant portion of total accounts receivable. Increases in accrued expenses, accounts payable, accounts receivable and other current assets primarily reflect the significant increase in the number of employees, vendors, and subscribers resulting from our internal growth and global expansion through recent acquisitions.

        For the year ended December 31, 2009, our net cash provided by operating activities of $7.5 million was comprised of a net loss of $1.3 million, offset by $8.8 million in cash provided by working capital and other items. The increase in cash resulting from changes in working capital primarily consisted of a $4.3 million increase in accrued merchant payable and accrued expenses resulting from internal business growth.

        For the year ended December 31, 2008, our net cash used in operating activities of $1.5 million primarily reflected our net loss of $1.5 million.

64

Cash Provided by (Used In) Investing Activities

        Cash used in investing activities primarily consists of capital expenditures, acquisitions of businesses and changes in the balances of restricted stock.

        For the six months ended June 30, 2011, our net cash used in investing activities of $70.5 million primarily consisted of $44.3 million invested in subsidiaries and equity interests, $21.2 million in purchases of capital expenditures and $3.7 million in net cash paid in business acquisitions.

        For the six months ended June 30, 2010, our net cash used in investing activities of $1.9 million primarily consisted of $5.6 million in cash received from acquisitions, partially offset by $3.9 million in capital expenditures.

        For the year ended December 31, 2010, our net cash used in investing activities of $11.9 million was primarily comprised of $14.7 million in capital expenditures, partially offset by $3.8 million in net cash received from acquisitions. The capital expenditures reflect the significant growth of the business domestically and internationally. We received net cash from our acquisitions in 2010, as a significant portion of the purchase price paid consisted of stock and contingent consideration.

        For the year ended December 31, 2009, our net cash used in investing activities of $2.0 million primarily reflected a $1.4 million change in restricted cash related to cash paid for a security agreement with our merchant processor and a letter of credit for a facility lease agreement.

Cash Provided By Financing Activities

        Cash provided by financing activities primarily consists of net proceeds from the issuance of common and preferred stock and the exercise of stock options by employees, net of the repurchase of founders' stock, common stock and preferred stock held by certain stockholders.

        For the six months ended June 30, 2011, our net cash provided by financing activities of $111.7 million was driven primarily by net cash proceeds from the issuance of common and preferred stock of $509.7 million. We used $353.6 million of the proceeds to repurchase our common stock, $35.0 million to redeem shares of our preferred stock and $13.6 million to pay our related party loans incurred in connection with the CityDeal acquisition.

        For the six months ended June 30, 2010, our net cash provided by financing activities of $16.7 million was driven primarily by net cash proceeds from the issuance of common and preferred stock of $134.9 million. We used $119.9 million of the proceeds to repurchase our common stock.

        For the year ended December 31, 2010, our net cash provided by financing activities of $30.4 million was driven primarily by net cash proceeds from the issuance of preferred stock of $584.7 million. We used $503.2 million of the proceeds to repurchase our common stock, $55.0 million to redeem shares of our preferred stock, and $1.3 million to pay dividends to our preferred stockholders. In addition, we received $5.0 million from related party loans throughout 2010.

        For the year ended December 31, 2009, our net cash provided by financing activities of $3.8 million was due primarily to $29.9 million of net cash proceeds from the sale and issuance of preferred stock, of which $26.4 million was used to fund a special dividend to certain holders of our capital stock.

        For the year ended December 31, 2008, our net cash provided by financing activities of $4.4 million reflected $4.7 million in net proceeds from the sale and issuance of preferred stock.

65

Contractual Obligations and Commitments

        The following table summarizes our future contractual obligations and commitments as of June 30, 2011:

	Payments due by period
	Total		2011		2012		2013		2014		2015		Thereafter
	(in thousands)
Operating lease obligations(1)	$	81,386	$	9,579	$	15,347	$	11,809	$	10,184	$	10,069	$	24,398
Purchase obligations(2)		20,180		4,453		7,727		8,000		—		—		—
Total	$	101,566	$	14,032	$	23,074	$	19,809	$	10,184	$	10,069	$	24,398

(1)

The operating lease obligations are for office facilities and are non-cancelable. Certain leases contain periodic rent escalation adjustments and renewal and expansion options. Operating lease obligations expire at various dates with the latest maturity in 2017.

(2)

Purchase obligations primarily represent non-cancelable contractual obligations related to sales and marketing services.

Off-Balance Sheet Arrangements

        We did not have any off-balance sheet arrangements as of June 30, 2011.

Quantitative and Qualitative Disclosures about Market Risk

        We have operations both within the United States and internationally, and we are exposed to market risks in the ordinary course of our business, including the effect of foreign currency fluctuations, interest rate changes and inflation. Information relating to quantitative and qualitative disclosures about these market risks is set forth below.

Foreign Currency Exchange Risk

        We transact business in various foreign currencies other than the U.S. dollar, principally the euro, British pound sterling and Japanese yen, which exposes us to foreign currency risk. For the first half of 2011, we derived approximately 57.3% of our revenue from international customers and we expect the percentage of revenue derived from outside the United States to increase in future periods as we continue to expand globally. Revenue and related expenses generated from our international operations are denominated in the functional currencies of the corresponding country. The functional currency of our subsidiaries that either operate or support these markets is generally the same as the corresponding local currency. The results of operations of, and certain of our intercompany balances associated with, our international operations are exposed to foreign exchange rate fluctuations. Upon consolidation, as exchange rates vary, our revenue and other operating results may differ materially from expectations, and we may record significant gains or losses on the remeasurement of intercompany balances.

        We assess our market risk based on changes in foreign currency exchange rates utilizing a sensitivity analysis that measures the potential impact in earnings, fair values and cash flows based on a hypothetical 10% change (increase and decrease) in currency rates. We use a current market pricing model to assess the changes in the value of the U.S. dollar on foreign currency denominated monetary assets and liabilities. The primary assumption used in these models is a hypothetical 10% weakening or strengthening of the U.S. dollar against all our currency exposures as of June 30, 2011.

        We used June 30, 2011 market rates on outstanding foreign currency denominated monetary assets and liabilities to perform the sensitivity analyses separately for each of our currency exposures. The estimates are based on the market risk sensitive portfolios described in the preceding paragraphs and assume instantaneous, parallel shifts in exchange rates. As of June 30, 2011, our working capital deficit (defined as current assets less current liabilities) subject to foreign currency translation risk was

66

$247.8 million. The potential decrease in net current assets from a hypothetical 10% adverse change in quoted foreign currency exchange rates would be $24.8 million.

Interest Rate Risk

        Our cash and cash equivalents primarily consisted of highly-rated commercial paper and money market funds. We currently have no investments of any type and do not have any long-term borrowings. Our exposure to market risk for changes in interest rates is limited because nearly all of our cash and cash equivalents have a short-term maturity and are used primarily for working capital purposes.

Impact of Inflation

        We believe that our results of operations are not materially impacted by moderate changes in the inflation rate. Inflation and changing prices did not have a material effect on our business, financial condition or results of operations in 2008, 2009, 2010 or the first half of 2011.

Critical Accounting Policies and Estimates

        The preparation of financial statements in conformity with generally accepted accounting principles of the United States, or U.S. GAAP, requires estimates and assumptions that affect the reported amounts and classifications of assets and liabilities, revenues and expenses, and the related disclosures of contingent liabilities in the consolidated financial statements and accompanying notes. The SEC has defined a company's critical accounting policies as the ones that are most important to the portrayal of the company's financial condition and results of operations, and which require the company to make its most difficult and subjective judgments, often as a result of the need to make estimates of matters that are inherently uncertain. Based on this definition, we have identified the following critical accounting policies and estimates addressed below. We also have other key accounting policies, which involve the use of estimates, judgments, and assumptions that are significant to understanding our results. See Note 3 "Summary of Significant Accounting Policies" of Notes to Consolidated Financial Statements for further information. Although we believe that our estimates, assumptions, and judgments are reasonable, they are based upon information available at the time. Actual results may differ significantly from these estimates under different assumptions, judgments, or conditions.

Revenue Recognition

        We recognize revenue from Groupons when the following criteria are met: persuasive evidence of an arrangement exists; delivery has occurred; the selling price is fixed or determinable; and collectability is reasonably assured. These criteria generally are met when the number of customers who purchase the daily deal exceeds the predetermined threshold, based on the executed contract with our merchants. We record as revenue the net amount we retain from the sale of Groupons after paying an agreed upon percentage of the purchase price to the featured merchant excluding any applicable taxes. Revenue is recorded on a net basis because we are acting as an agent of the merchant in the transaction.

Subscriber Loyalty and Reward Programs

        We use various subscriber loyalty and reward programs to build brand loyalty, generate traffic to the website and provide subscribers with incentives to buy Groupons. When subscribers perform qualifying acts, such as providing a referral to a new subscriber or participating in promotional offers, we grant the customer credits that can be redeemed for awards such as free or discounted goods or services in the future. We accrue the costs related to the associated obligation to redeem the award credits granted at issuance in accrued expenses on the consolidated balance sheets and record the expense within marketing expense in the consolidated statements of operations. If our judgments regarding estimated accrued costs

67

associated with subscriber loyalty and reward programs are inaccurate, reported results of operations could differ from the amount we previously accrued.

Refunds

        At the time of sale, we record an allowance for estimated customer refunds primarily based on historical experience. We accrue costs associated with refunds in accrued expenses on the consolidated balance sheets. The cost of refunds where the amount payable to the merchant is recovered is recorded in the consolidated statements of operations as a reduction to revenue. The cost of refunds under the Groupon Promise, when there is no amount recovered from the merchant, are presented as a cost of revenue. To the extent the refund is provided to a subscriber, we record the expense within selling general and administrative expense in the consolidated statements of operations. If our judgments regarding estimated customer refunds are inaccurate, reported results of operations could differ from the amount we previously accrued.

Acquisitions and the Recoverability of Goodwill and Long-Lived Intangible Assets

        A component of our growth strategy has been to acquire and integrate businesses that complement our existing operations. We account for business combinations using the purchase method of accounting and allocate the purchase price of acquired companies to the tangible and intangible assets acquired and liabilities assumed based upon their estimated fair value at the purchase date. The difference between the purchase price and the fair value of the net assets acquired is recorded as goodwill.

        In determining the fair value of assets acquired and liabilities assumed in a business combination, we primarily use recognized valuation methods such as an income approach or a cost approach and apply present value modeling. Our significant estimates in the income or cost approach include identifying business factors such as size, growth, profitability, risk and return on investment and assessing comparable revenue and operating income multiples in estimating the fair value. Further, we make certain assumptions within present value modeling valuation techniques including risk-adjusted discount rates, future price levels, rates of increase in operating expenses, weighted average cost of capital, rates of long-term growth, and effective income tax rates. Valuations are performed by management or independent valuation specialists under management's supervision, where appropriate. We believe that the estimated fair value assigned to the assets acquired and liabilities assumed are based on reasonable assumptions that marketplace participants would use. However, such assumptions are inherently uncertain and actual results could differ from those estimates.

        Future changes in our assumptions or the interrelationship of those assumptions may negatively impact future valuations. In future measurements of fair value, adverse changes in discounted cash flow assumptions could result in an impairment of goodwill or intangible assets that would require a non-cash charge to the consolidated statements of operations and may have a material effect on our financial condition and operating results.

Stock-Based Compensation

        We measure stock-based compensation cost at fair value, net of estimated forfeitures, and generally recognize the corresponding compensation expense on a straight-line basis over the service period during which awards are expected to vest. We include stock-based compensation expense in selling, general and administrative expenses in our consolidated statements of operations. The fair value of restricted stock and restricted stock units is based on the valuation of our common stock on the date of grant. Determining the fair value of stock-based awards at the grant date requires judgment.

        We use the Black-Scholes-Merton option-pricing model to determine the fair value of stock options. The determination of the grant date fair value of options using an option-pricing model is affected by our estimated common stock fair value as well as assumptions regarding a number of other complex and

68

subjective variables. These variables include the fair value of our common stock, our expected stock price volatility over the expected term of the options, stock option exercise and cancellation behaviors, risk-free interest rates, and expected dividends, which are estimated as follows:

•

Fair Value of Our Common Stock.  Because our stock has not been publicly traded, we must estimate the fair value of common stock, as discussed in "Common Stock Valuations" below.

•

Expected Term.  The expected term represents the period of time the stock options are expected to be outstanding and is based on the "simplified method" allowed under SEC guidance. We used the "simplified method" due to the lack of sufficient historical exercise data to provide a reasonable basis upon which to otherwise estimate the expected life of the stock options.

•

Volatility.  Since we do not have a trading history for our common stock, the expected stock price volatility was estimated by taking the average historic price volatility for publicly-traded options of comparable industry peers similar in size, stage of life cycle and financial leverage, based on daily price observations over a period equivalent to the expected term of the stock option grants. We did not rely on implied volatilities of traded options in our industry peers' common stock because the volume of activity was relatively low. We intend to continue to consistently apply this process using the same or similar public companies until a sufficient amount of historical information regarding the volatility of our own common stock share price becomes available, or unless circumstances change such that the identified companies are no longer similar to us, in which case, more suitable companies whose share prices are publicly available would be utilized in the calculation.

•

Risk-free Interest Rate.  The risk-free interest rate is based on the yields of U.S. Treasury securities with maturities similar to the expected term of the options for each option group.

•

Dividend Yield.  We do not presently plan to pay cash dividends in the foreseeable future. Consequently, we used an expected dividend yield of zero.

        If any of the assumptions used in the Black-Scholes-Merton model changes significantly, stock-based compensation for future awards may differ materially compared with the awards granted previously.

        The following table presents the weighted-average assumptions used to estimate the fair value of options granted during the years ended December 31, 2008, 2009, 2010 and the six months ended June 30, 2011:

	2008			2009			2010			Six months ended June 30, 2011
Dividend yield		—			—			—			—
Risk-free interest rate		3.10	%		2.82	%		2.58	%		1.79	%
Expected term (in years)		5.98			6.84			6.13			4.47
Expected volatility		46	%		46	%		46	%		44	%

Common Stock Valuations

        The fair value of the common stock underlying our stock options was determined by our board of directors, or the Board, which intended that all options granted were exercisable at a price per share not less than the per share fair value of our common stock underlying those options on the date of grant. The assumptions we use in the valuation model are based on future expectations combined with management judgment. In the absence of a public trading market, the Board with input from management exercised significant judgment and considered numerous objective and subjective factors to determine the fair value of our common stock as of the date of each option grant, including the following factors:

•

the prices, rights, preferences and privileges of our preferred stock relative to the common stock;

•

the prices of our preferred stock sold to outside investors in arms-length transactions;

69

•

our operating and financial performance;

•

current business conditions and projections;

•

the hiring of key personnel;

•

the history of our company and the introduction of new products and services;

•

our stage of development;

•

the likelihood of achieving a liquidity event for the shares of common stock underlying these stock options, such as an initial public offering or sale of our company, given prevailing market conditions;

•

any adjustment necessary to recognize a lack of marketability for our common stock;

•

the market performance of comparable publicly-traded companies; and

•

the U.S. and global capital market conditions.

        We granted stock options with the following exercise price ranges each quarter since the beginning of 2008. We have not granted any stock options subsequent to June 30, 2011.

Three Months Ended	Shares Underlying Options		Weighted Average Exercise Price ($)
March 31, 2008		—		—
June 30, 2008		30,000		0.03
September 30, 2008		480,000		0.03
December 31, 2008		600,000		0.03
March 31, 2009		300,000		0.05
June 30, 2009		2,814,000		0.09
September 30, 2009		3,258,000		0.16
December 31, 2009		873,000		0.51
March 31, 2010		5,625,000		2.42
June 30, 2010		1,121,400		3.35
September 30, 2010		1,868,200		4.49
December 31, 2010		150,600		6.95
March 31, 2011		60,000		15.80
June 30, 2011(1)		19,000		0.03

(1)

The 19,000 options granted in the three months ended June 30, 2011 have an exercise price of $0.03 because they were granted as part of a settlement agreement with a former employee. The exercise price of these options represents the fair market value of the stock when the employee left the Company.

        Summarized below are the significant factors the Board considered in determining the fair value of the common stock underlying our stock-based awards.

Fiscal Year 2008 and Prior

        We raised $4.7 million in net proceeds from the issuance convertible preferred stock in January 2008 and began operations with the launch of our first market in Chicago in October 2008.

Fiscal Year 2009

First Quarter 2009.    In the first quarter, we generated revenue of less than $0.1 million in the Chicago market.

70

Second Quarter 2009.    In the second quarter, we launched our services in four additional markets (New York, Washington D.C., San Francisco and Boston) and the total number of subscribers rose to approximately 0.2 million at June 30, 2009. We generated revenue of $1.2 million for the second quarter of 2009.

Third Quarter 2009.    In the third quarter, we launched our services in 12 new markets across the United States and the total number of subscribers increased to approximately 0.6 million at September 30, 2009. We generated revenue of $4.0 million for the third quarter of 2009.

Fourth Quarter 2009.    In the fourth quarter, we raised $29.9 million in net proceeds from the issuance of convertible preferred stock in November 2009 and the total number of subscribers increased to approximately 1.8 million at December 31, 2009 as we launched our services in 13 additional markets across the United States. We generated revenue of $9.3 million for the fourth quarter of 2009.

Fiscal Year 2010

First Quarter 2010.    In the first quarter, the total number of subscribers increased to approximately 3.4 million as of March 31, 2010 as we launched our services in 13 new markets across the United States. In addition, we launched our official Groupon application for the Apple iPhone and iPod touch, which provides at no additional cost a more convenient buying and redemption process for both consumers and merchants. We generated revenue of $20.3 million for the first quarter of 2010.

Second Quarter 2010.    In the second quarter, we raised $134.9 million in net proceeds from the issuance of convertible preferred stock in April 2010. We also expanded our global presence to 80 markets and 16 countries in Europe and in Latin America with acquisitions. In addition, we acquired a mobile development company in May 2010. We also launched our services in 20 additional markets across North America, including Toronto and Vancouver, increasing the total number of subscribers to approximately 10.4 million as of June 30, 2010. We generated revenue of $38.7 million for the second quarter of 2010.

Third Quarter 2010.    In the third quarter, the total number of subscribers increased to approximately 21.4 million as of September 30, 2010 as we launched our services in 22 new markets across North America, including Calgary, Edmonton and Ottawa. We also expanded our global presence into the Russian Federation and Japan in August 2010. In addition, we began targeting deals to subscribers based upon their personal preferences and buying history. We generated revenue of $81.8 million for the third quarter of 2010.

Fourth Quarter 2010.    In the fourth quarter, we raised $449.7 million in net proceeds from the issuance of preferred stock in December 2010. In addition, we expanded our presence in the Asia-Pacific region, and we also acquired Ludic Labs, Inc., a company that designs and develops local marketing services, in November 2010. The total number of subscribers increased to approximately 50.6 million as of December 31, 2010 as we launched our services in 69 additional markets across North America, including 12 markets in Canada. We generated revenue of $172.2 million for the fourth quarter of 2010.

Fiscal Year 2011

First Quarter 2011.    In the first quarter of 2011 we raised $492.5 million in net proceeds from the issuance of preferred stock. We expanded our presence into new and growing markets in India, Malaysia, South Africa and the Middle East through a series of acquisitions. The total number of subscribers increased to approximately 83.1 million as of March 31, 2011 as we launched our services in 21 additional markets across North America. We generated revenue of $295.5 million for the first quarter of 2011.

71

Second Quarter 2011.    In the second quarter of 2011 we expanded our presence into Indonesia. The total number of subscribers increased to approximately 115.7 million as of June 30, 2011. We generated revenue of $392.6 million for the second quarter of 2011.

Income Taxes

        We are subject to income taxes in both the U.S. and numerous foreign jurisdictions. Significant judgment is required in evaluating our tax positions and determining our provision for income taxes. During the ordinary course of business, there are many transactions and calculations for which the ultimate tax determination is uncertain. For example, our effective tax rates could be adversely affected by earnings being lower than anticipated in countries where we have lower statutory rates and higher than anticipated in countries where we have higher statutory rates, by changes in foreign currency exchange rates, by changes in the valuation of our deferred tax assets and liabilities, or by changes in the relevant tax, accounting and other laws, regulations, principles and interpretations.

        We are subject to audit in various jurisdictions, and such jurisdictions may assess additional income tax against us. Although we believe our tax estimates are reasonable, the final determination of any tax audits and any related litigation could be materially different from historical income tax provisions and accruals. The results of an audit or litigation could have a material effect on our operating results or cash flows in the period or periods for which that determination is made.

        We account for income taxes using the liability method, under which deferred income tax assets and liabilities are recognized based upon anticipated future tax consequences attributable to differences between financial statement carrying values of assets and liabilities and their respective tax bases. We regularly review deferred tax assets to assess their potential realization and establish a valuation allowance for portions of such assets to reduce the carrying value if we do not consider it to be more likely than not that the deferred tax assets will be realized. Any change in the valuation allowance would be charged to income in the period such determination was made.

        We began foreign operations in 2010 and generated taxable losses in our foreign jurisdictions. Since we have no prior history of capturing our future income projections by jurisdiction, we record a full valuation allowance in all foreign jurisdictions in a net deferred tax asset position at December 31, 2010. The Company's unrecoverable foreign net operating loss carryforwards are primarily in Europe and Asia. We will continue to reassess the need for a valuation allowance on our foreign deferred tax assets on a quarterly basis.

        In performing this review, we make estimates and assumptions regarding projected future taxable income, the expected timing of reversals of existing temporary differences and the implementation of tax planning strategies. A change in these assumptions could cause an increase or decrease to the valuation allowance resulting in an increase or decrease in the Company's effective tax rate, which could materially impact our results of operations.

Recent Accounting Pronouncements

        In September 2006, the Financial Accounting Standards Board, or the FASB, issued accounting guidance, which, among other requirements, defines fair value, establishes a framework for measuring fair value, and expands disclosures about the use of fair value measurements. Such guidance prescribes a single definition of fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. For financial instruments and certain nonfinancial assets and liabilities that are recognized or disclosed at fair value on a recurring basis at least annually, the guidance was effective beginning the first fiscal year that begins after November 15, 2007. This portion of the guidance, which was adopted as of the beginning of 2008, had no impact on our consolidated financial statements. For all other nonfinancial assets and liabilities the guidance was effective for fiscal years beginning after November 15, 2008. We adopted this guidance effective as of the

72

beginning of 2009, and its application had no impact on our consolidated financial statements. In January 2010, the FASB issued additional guidance that improves disclosures about fair value measures that were originally required. The new guidance is effective for interim and annual periods beginning after December 15, 2009, except for the disclosures about purchases, sales, issuances and settlements in the roll forward of activity in Level 3 fair value measurements. Those disclosures are effective for fiscal years beginning after December 15, 2010, and for interim periods within those years. The adoption of this guidance did not impact our financial position or results of operations.

        In December 2007, the FASB issued guidance that establishes principles and requirements for determining how a company recognizes and measures the fair value of identifiable assets acquired, liabilities assumed, noncontrolling interests and certain contingent considerations acquired in a business combination. The guidance on business combinations also requires acquisition-related transaction expenses and restructuring costs be expensed as incurred rather than capitalized. This guidance became effective for fiscal years beginning after December 15, 2008 and we adopted the provisions of this guidance prospectively beginning in 2009. In December 2010, the FASB issued an update to this guidance, which specifies that if a public entity presents comparative financial statements, the entity should disclose revenue and earnings of the combined entity as though the business combination(s) that occurred during the current year had occurred as of the beginning of the comparable prior annual reporting period. The amendments also expand the supplemental pro forma disclosures that are required. The new guidance is effective prospectively for business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2010. We adopted the provisions of this business combinations guidance at the beginning of 2011.

        In April 2008, the FASB issued a staff position that amends the list of factors an entity should consider in developing renewal or extension assumptions used in determining the useful life of recognized intangible assets. This new guidance applies to intangible assets that are acquired individually or with a group of other assets in business combinations and asset acquisitions. Under this guidance, entities estimating the useful life of a recognized intangible asset must consider their historical experience in renewing or extending similar arrangements or, in the absence of historical experience, must consider assumptions that market participants would use about renewal or extension. This staff position became effective for fiscal years beginning after December 15, 2008. We adopted the provisions of this guidance prospectively beginning in 2009, and its application had no impact on our consolidated financial statements.

        In June 2009, the FASB issued guidance that establishes the FASB Accounting Standards Codification as the sole source of authoritative U.S. GAAP. Pursuant to these provisions, we have incorporated the applicable references in its consolidated financial statements. The adoption of this guidance did not impact our financial position or results of operations.

        In June 2009, the FASB issued guidance that eliminates the qualifying special purpose entity concept, changes the requirements for derecognizing financial assets and requires enhanced disclosures about transfers of financial assets. The guidance also revises earlier guidance for determining whether an entity is a variable interest entity, requires a new approach for determining who should consolidate a variable interest entity, changes when it is necessary to reassess who should consolidate a variable interest entity, and requires enhanced disclosures related to an enterprise's involvement in variable interest entities. The guidance is effective for the first annual reporting period that begins after November 15, 2009. We adopted the provisions of this guidance prospectively beginning in 2010, and its application had no impact on our consolidated financial statements.

        In September 2009, the FASB issued guidance that allows companies to allocate arrangement consideration in a multiple element arrangement in a way that better reflects the transaction economics. It provides another alternative for establishing fair value for a deliverable when vendor specific objective evidence or third-party evidence for deliverables in an arrangement cannot be determined. When this

73

evidence cannot be determined, companies will be required to develop a best estimate of the selling price to separate deliverables and allocate arrangement consideration using the relative selling price method. The guidance also expands the disclosure requirements to require that an entity provide both qualitative and quantitative information about the significant judgments made in applying this guidance. This guidance was effective on a prospective basis for revenue arrangements entered into or materially modified on or after January 1, 2011. The adoption of this guidance did not have a material impact on our consolidated financial statements.

        In January 2010, the FASB issued additional guidance that improves disclosures for certain fair value measures that were originally required. The new guidance is effective for interim and annual periods beginning after December 15, 2009, except for the disclosures about purchases, sales, issuances and settlements in the roll forward of activity in Level 3 fair value measurements. Those disclosures are effective for fiscal years beginning after December 15, 2010, and for interim periods within those years. The adoption of this guidance did not impact our financial position or results of operations.

        In February 2010, the FASB issued guidance, effective immediately that removes the requirement to disclose the date through which subsequent events were evaluated in both originally issued and reissued financial statements for SEC filers. The adoption of this guidance did not have a material impact on our consolidated financial statements.

        In December 2010, the FASB issued guidance about when to perform Step 2 of the goodwill impairment test for reporting units with zero or negative carrying amounts. According to the new guidance, entities must consider whether it is more likely than not that goodwill impairment exists by assessing if there are any adverse qualitative factors indicating impairment. The qualitative factors are consistent with the existing guidance. The new guidance is effective for fiscal years, and interim periods within those years, beginning after December 15, 2010. The adoption of this new guidance did not have a material impact on our consolidated financial statements.

        In December 2010, the FASB issued guidance about the disclosure of supplementary pro forma information for business combinations, which clarifies the disclosure requirements for pro forma financial information related to a material business combination or a series of immaterial business combinations that are material in the aggregate. The guidance clarified that the pro forma disclosures are prepared assuming the business combination occurred at the start of the prior annual reporting period. Additionally, a narrative description of the nature and amount of material, non-recurring pro forma adjustments would be required. The new guidance is effective prospectively for business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2010. The adoption of this guidance did not have a material impact on our consolidated financial statements.

        In May 2011, the FASB issued guidance that changed the requirement for presenting "Comprehensive Income" in the consolidated financial statements. The update requires an entity to present the components of other comprehensive income either in a single continuous statement of comprehensive income or in two separate but consecutive statements. The update is effective for fiscal years, and interim periods within those years, beginning after December 15, 2011 and should be applied retrospectively. The adoption of the standard will not have a material impact on our financial position or results of operations.

        In May 2011, the FASB issued guidance that amends certain fair value measurement principles and disclosure requirements. The new guidance states, among other things, that the concepts of highest and best use and valuation premise are only relevant when measuring the fair value of nonfinancial assets and prohibits the grouping of financial instruments for purposes of determining their fair values when the unit of account is specified in other guidance. The update is to be applied prospectively and is effective during interim and annual periods beginning after December 15, 2011. The adoption of this guidance will not have a material impact on our financial position or results of operations.

74

BUSINESS

        Groupon is a local e-commerce marketplace that connects merchants to consumers by offering goods and services at a discount. Traditionally, local merchants have tried to reach consumers and generate sales through a variety of methods, including the yellow pages, direct mail, newspaper, radio, television and online advertisements, promotions and the occasional guy dancing on a street corner in a gorilla suit. By bringing the brick and mortar world of local commerce onto the internet, Groupon is creating a new way for local merchants to attract customers and sell goods and services. We provide consumers with savings and help them discover what to do, eat, see and buy in the places where they live and work.

        We started Groupon in October 2008 and believe the growth of our business demonstrates the power of our solution and the size of our market opportunity:

•

We increased our revenue from $1.2 million in the second quarter of 2009 to $392.6 million in the second quarter of 2011. We generated these revenues from gross billings of $3.3 million for the second quarter of 2009 as compared to gross billings of $909.2 million for the second quarter of 2011. We had net income of $21,000 for the second quarter of 2009 as compared to a net loss of $101.2 million for the second quarter of 2011.

•

We expanded from five North American markets as of June 30, 2009 to 175 North American markets and 45 countries as of June 30, 2011. Revenue from our international and North American operations was $235.4 million and $157.2 million, respectively, in the second quarter of 2011.

•

We increased our subscriber base from 152,203 as of June 30, 2009 to 115.7 million as of June 30, 2011. A total of 43,014 customers purchased Groupons through the end of the second quarter of 2009 as compared to 23,072,600 through the end of the second quarter of 2011, including 12,066,676 customers that have purchased more than one Groupon since January 1, 2009.

•

We increased the number of merchants featured in our marketplace from 212 in the second quarter of 2009 to 78,466 in the second quarter of 2011.

•

We sold 116,231 Groupons in the second quarter of 2009 compared to 32.5 million Groupons in the second quarter of 2011.

•

We grew from 37 employees as of June 30, 2009 to 9,625 employees as of June 30, 2011.

        Each day we email our subscribers discounted offers for goods and services that are targeted by location and personal preferences. Consumers also access our deals directly through our websites and mobile applications. A typical deal might offer a $20 Groupon that can be redeemed for $40 in value at a restaurant, spa, yoga studio, car wash or other local merchant. Customers purchase Groupons from us and redeem them with our merchants. Our revenue is the purchase price paid by the customer for the Groupon less an agreed upon percentage of the purchase price paid to the featured merchant. Our gross billings represent the gross amounts collected from customers for Groupons sold.

        Groupon primarily addresses the worldwide local commerce markets in the leisure, recreation, foodservice and retail sectors. The leisure, recreation and foodservice market is expected to be $1.4 trillion in the U.S. and $5.3 trillion internationally in 2011 (Euromonitor International 2011 report). The retail market is expected to be $2.9 trillion in the U.S. and $12.2 trillion internationally in 2011. We believe a substantial portion of these expenditures on leisure, recreation, foodservice and retail will be spent with local merchants. This belief is based on the collective experience of our management and employees that commerce involving individuals is primarily local and has been substantiated by the growth we have experienced since our inception. Groupon also addresses the online advertising market serving these merchants. The size of the U.S. online advertising market is estimated to be $51.9 billion in 2011, of which $16.1 billion is estimated to be spent by local merchants according to Borrell Associates. The size of the global online advertising market is estimated to be approximately $79 billion in 2011 (IDC May 2011 Worldwide New Media Market Model, 2H10).

75

Our Business

        The following examples illustrate how our marketplace works and the benefits it can provide our merchants and consumers.

•

Two-Hour Romantic Dinner Cruise With Star Fleet Entertainment Yachts, Houston, Texas

Merchant Objective:    Star Fleet Entertainment Yachts, a yacht charter business on the Texas Gulf Coast, hosts murder mystery themed and romantic dinner cruises for up to 150 passengers. Star Fleet regularly sold out its murder mystery themed cruises, but had trouble filling its romantic dinner cruises. The President and Chief Executive Officer of Star Fleet sought to use our service as a marketing tool to introduce Star Fleet to new consumers and increase sales.

The Deal:    On January 19, 2010, we emailed and posted the following Groupon daily deal in Houston, Texas that offered one ticket on a two-hour romantic dinner cruise on the Star Fleet Entertainment Yacht for $32, a 50% discount.



The Results:    We sold 2,181 Groupons in 24 hours. By targeting an under-performing segment of its business, Star Fleet was able to increase ticket sales for romantic dinner cruises. In addition, more than half of the Groupons were sold to new customers. Star Fleet's website traffic peaked on the day the deal was offered at approximately 6,700 unique visits, 82% of which were from new visitors. Star Fleet sold out all romantic dinner cruises from January 19, 2010 through September 30, 2010 and substantially increased its gross sales for romantic dinner cruises compared to the same period in the prior year.

76

•

Latin Cuisine and Drinks at Seviche, Louisville, Kentucky

Merchant Objective:    Seviche is an award-winning restaurant located in Louisville, Kentucky. Despite Seviche's award-winning status, it struggled during the winter months to maintain sales even after trying several forms of traditional local marketing.

The Deal:    On February 8, 2010, we emailed and posted the following Groupon daily deal in Louisville, Kentucky that offered $60 worth of Latin cuisine and drinks for $25, a 58% discount.



The Results:    We sold 793 Groupons in 24 hours. Seviche's customer headcount increased by 170% in the week following the daily deal. The Groupon customers spent an average 68% above the $60 face value of the Groupon, generating approximately $80,000 in gross sales.

77

        We have offered deals involving over 140 different types of businesses, services and activities that fall into the six broad categories identified below. The following chart shows the percentage of deals we offered across these categories during the first half of 2011 in our North America and International segments:

North America	International

Our Advantage

        We have created an e-commerce marketplace for connecting local merchants to consumers. Although there are many companies which have tried to replicate our approach, we believe that the customer experience and relevancy of our deals, our merchant scale and quality and our brand are sustainable competitive advantages.

        Customer Experience and Relevance of Deals.    We are committed to providing a great customer experience and maintaining the trust of our customers. Consistent with this commitment, our "Groupon Promise" is core to our customer service philosophy:

"Nothing is more important to us than treating our customers well. If you ever feel like Groupon let you down, give us a call and we'll return your purchase—simple as that."

        In addition, we use our technology and scale to target relevant deals based on individual subscriber preferences. As we increase the volume of transactions through our marketplace, we increase the amount of data that we have about deal performance and customer interests. This data allows us to continue to improve our ability to help merchants design the most effective deals and deliver deals to customers that better match their interests. We use information about our subscribers to select and send deals via email and our mobile applications can also target deals to subscribers based on proximity to the sponsoring merchant. Increased relevancy enables us to offer several daily deals, which we believe results in increasing purchases by targeted subscribers, thereby driving greater demand for Groupons. We monitor the relevancy of deals by measuring purchasing rates among targeted subscribers.

        Merchant Scale and Quality.    In the first half of 2011, we featured deals from over 135,000 merchants worldwide across over 140 categories of goods and services. Our salesforce of over 4,800 sales representatives enables us to work with local merchants in 175 North American markets and 45 countries. We draw on the experience we have gained to evaluate prospective merchants based on quality, location and relevance to our subscribers. We maintain a large base of prospective merchants interested in our marketplace, which enables us to be more selective and offer our subscribers higher quality deals. Increasing our merchant base also increases the number and variety of deals that we offer to consumers, which we believe drives higher subscriber and user traffic, and in turn promotes greater merchant interest in offering deals through our marketplace, creating a network effect.

78

        Brand.    We believe we have built a trusted and recognizable brand by delivering a compelling value proposition to merchants and consumers. A benefit of our brand is that a substantial portion of our subscribers are acquired through word-of-mouth, which we consider sources other than from a paid-for link to our website. For example, during the first half of 2011, approximately 40% of our subscribers in our North America segment were acquired through word-of-mouth. We believe our brand is trusted due to our dedication to our customers and our significant investment in customer satisfaction. We believe that trust in our brand is evidenced by our repeat customers and the scale of our merchant pool.

Our Strategy

        Our objective is to become an essential part of everyday local commerce for consumers and merchants. Key elements of our strategy include the following:

        Grow our subscriber base.    As of June 30, 2011, we had 115.7 million subscribers. We have made significant investments to acquire subscribers through online marketing initiatives, such as search engine marketing, display advertisements, referral programs and affiliate marketing. In 2010 and during the first half of 2011, we spent $241.5 million and $345.1 million, respectively, on these initiatives. In addition, our subscriber base has increased by word-of-mouth. We intend to continue to invest in acquiring subscribers so long as we believe the economics of our business support such investments. See "—Subscriber Economics." Our goal is to retain existing and acquire new subscribers by providing more targeted and real-time deals, delivering high quality customer service and expanding the number and categories of deals we offer. We intend to continue to invest in the development of increased relevance of our service as the number and variety of our deals we offer our subscribers increase and we gain more information about our subscribers' interests.

        Grow the number of merchants we feature.    During 2010 and the first half of 2011, we featured Groupon daily deals for over 66,000 merchants and over 135,000 merchants worldwide, respectively. To drive merchant growth, we have expanded the number of ways in which consumers can discover deals through our marketplace. We adjust the number and variety of products we offer merchants based on merchant demand in each market. We have also made significant investments in our salesforce, which builds merchant relationships and local expertise. Our merchant retention efforts are focused on providing merchants with a positive experience by offering targeted placement of their deals to our subscriber base, high quality customer service and tools to manage deals more effectively. For example, we recently began offering a mobile redemption application that enables our merchants to manage their Groupon business and maintain an ongoing relationship with their Groupon customers. We routinely solicit feedback from our merchants to ensure their objectives are met and they are satisfied with our services. Based on this feedback, we believe our merchants consider the profitability of the immediate deal, potential revenue generated by repeat customers and increased brand awareness for the merchant and the resulting revenue stream that brand awareness may generate over time. Some merchants view our deals as a marketing expense and may be willing to offer deals with little or no immediate profitability in an effort to gain future customers and increased brand awareness.

        Increase the number and variety of our products through innovation.    We have launched a variety of new products in the past 12 months and we plan to continue to launch new products to increase the number of subscribers and merchants that transact business through our marketplace. For example, to better target subscribers, in February 2011, we launched Deal Channels, which aggregates daily deals from the same category. We currently offer Deal Channels in home and garden and event tickets and travel. In addition, we recently have launched Groupon NOW, which is a deal initiated by a merchant on demand and offered instantly to subscribers through mobile devices and our website. As our local e-commerce marketplace grows, we believe consumers will use Groupon not only as a discovery tool for local merchants, but also as an ongoing connection point to their favorite merchants.

79

        Expand with acquisitions and business development partnerships.    Since May 2010, we have made 17 acquisitions. The increase in our revenue, key operating metrics and employee headcount from 2009 to 2010 is partially attributable to these acquisitions and the subsequent growth of our International segment as a result of such acquisitions. Our largest transaction to date was our acquisition of CityDeal, a company based in Europe that operated in 80 markets in 16 countries with 1.9 million subscribers at the time of acquisition. Excluding CityDeal, each of the companies we have acquired had less than $1 million in annual revenue at the time of acquisition. Typically, the core assets that we gain from an acquisition are a local management team and small subscriber and merchant bases, to which we then apply our expertise, resources and brand to scale the business. In addition to acquisitions, we have entered into agreements with local partners to expand our international presence. For example, in February 2011, we entered into a partnership with TCH Burgundy Limited, or Tencent, a Chinese internet company, to operate a Chinese e-commerce website. We have also entered into affiliate programs with companies such as eBay, Microsoft, Yahoo and Zynga, pursuant to which these partners display, promote and distribute our deals to their users in exchange for a share of the revenue generated from our deals. We intend to continue to expand our business with acquisitions and business development partnerships.

Subscriber Economics

        We have grown our subscriber base from 0.2 million as of June 30, 2009 to 115.7 million subscribers worldwide as of June 30, 2011. The chart below shows the number of our subscribers as of the end of each quarter since June 30, 2009 in our North America and International segments:

North American Subscribers (in millions)	International Subscribers (in millions)

        We grow our subscriber base through marketing initiatives and word-of-mouth. Online marketing consists of search engine marketing, display advertisements, referral programs and affiliate marketing and has historically represented our largest operating expense. Our offline marketing programs include traditional television, billboard, and radio advertisements, public relations as well as sponsored events to increase our visibility and build our brand.

        In 2010 and the first half of 2011, we spent $241.5 million and $345.1 million, respectively, on subscriber acquisition. We acquired 48.8 million and 65.1 million subscribers, respectively, during those periods. Since our inception, we have prioritized growth, and investments in our marketing initiatives have contributed to our losses. Our investments in subscriber growth are driven by the cost to acquire a subscriber as compared to the profits we expect to generate from that subscriber over time. Once acquired, subscribers have been relatively inexpensive to maintain because our interaction is largely limited to daily emails and our mobile applications. Over time, as our business continues to scale and we become more established in a greater percentage of our markets, we expect that our marketing expense will decrease as a percentage of gross billings.

        To demonstrate the economics of our business model, we have compared the revenue generated from the North American subscribers we acquired in the second quarter of 2010, which we refer to as our Q2 2010 cohort, to the online marketing expenses incurred to acquire such subscribers, which is a portion of

80

our total marketing expenses. The revenue attributed to such subscribers reflects the amount we retained after paying an agreed upon percentage to the featured merchants for the Groupons purchased by such subscribers. The Q2 2010 cohort is illustrative of trends we have seen among our North American subscriber base. The Q2 2010 cohort included 3.7 million subscribers that we initially spent $18.0 million in online marketing to acquire in the second quarter of 2010. In that quarter, we generated $12.8 million in revenue from the sale of approximately 1.2 million Groupons to these subscribers. Through June 30, 2011, we generated an aggregate of $77.3 million in revenue from the sale of approximately 8.0 million Groupons to the Q2 2010 cohort. In summary, we spent $18.0 million in online marketing expense to acquire subscribers in the Q2 2010 cohort and generated $77.3 million in revenue from this group of subscribers over five quarters.

City Case Studies

        To further illustrate our business model, we have provided case studies for Chicago, the site of our North American headquarters and our oldest North American market, Boston, our second oldest North American market, Berlin, the site of our international headquarters, and London, both international markets we entered through the CityDeal acquisition. As illustrated below, the number of subscribers, cumulative customers, featured merchants, gross billings and Groupons sold generally increased in each of these markets over the periods presented. The number of cumulative repeat customers is not presented as we currently do not track such data on a per city basis. Revenue across each of the markets presented increased in a manner consistent with the increases in gross billings. Average revenue per Groupon sold declined or remained stable in each of these markets for the periods presented as a result of the mix of categories featured. Although average revenue per Groupon sold declined in certain markets in certain periods, we believe that revenue, rather than average revenue per Groupon sold, is a better indicator of our overall growth in each market because it is the measure that we seek to maximize in each market. The performance of these markets is not necessarily indicative of our current or future performance in other markets.

Case Study: Chicago

        Chicago is the first market we entered, and we offered our first daily deal there in October 2008. Chicago is also our largest market. Due to our history in Chicago and the fact that we are headquartered there, we have tested new features and strategies in Chicago. As of June 30, 2009, we had 36,891 subscribers, and, for the second quarter of 2009, we generated $1.6 million in gross billings from 46,909 Groupons sold. As of June 30, 2011, we had 1.9 million subscribers, and, for the second quarter of 2011, we generated $25.7 million in gross billings from 1.1 million Groupons sold. The following table shows information regarding subscribers and cumulative customers as of the end of each quarter and featured merchants, gross billings and Groupons sold in each quarter beginning with the second quarter of 2009:

	Three Months Ended,
Chicago	June 30, 2009		Sept. 30, 2009		Dec. 31, 2009		Mar. 31, 2010		June 30, 2010		Sept. 30, 2010		Dec. 31, 2010		Mar. 31, 2011		June 30, 2011
Gross billings (in millions)	$	1.6	$	3.0	$	4.0	$	6.5	$	9.9	$	13.9	$	17.7	$	22.7	$	25.7
Subscribers		36,891		62,038		147,882		268,056		492,826		750,118		1,102,146		1,504,978		1,887,348
Cumulative customers		19,003		43,023		74,237		125,403		184,074		285,987		409,746		552,712		699,580
Featured merchants		67		92		131		144		157		233		470		759		1,228
Groupons sold		46,909		84,373		149,371		263,304		350,928		541,084		678,933		950,689		1,079,559
Average gross billings per subscriber	$	43	$	61	$	38	$	31	$	26	$	22	$	19	$	17	$	15
Average cumulative Groupons sold per customer		2.5		3.1		3.8		4.3		4.9		5.0		5.2		5.5		5.9
Average gross billings per Groupon sold	$	34	$	36	$	27	$	25	$	28	$	26	$	26	$	24	$	24

81

Case Study: Boston

        Boston is the second market we entered, and we offered our first daily deal there in April 2009. As of June 30, 2009, we had 17,069 subscribers, and, for the second quarter of 2009, we generated $0.7 million in gross billings from 26,032 Groupons sold. As of June 30, 2011, we had 944,024 subscribers, and, for the second quarter of 2011, we generated $11.6 million in gross billings from 387,319 Groupons sold. The following table shows information regarding subscribers and cumulative customers as of the end of each quarter and featured merchants, gross billings and Groupons sold in each quarter beginning with the second quarter of 2009:

	Three Months Ended,
Boston	June 30, 2009		Sept. 30, 2009		Dec. 31, 2009		Mar. 31, 2010		June 30, 2010		Sept. 30, 2010		Dec. 31, 2010		Mar. 31, 2011		June 30, 2011
Gross billings (in millions)	$	0.7	$	1.4	$	1.8	$	3.0	$	4.7	$	6.1	$	7.5	$	10.0	$	11.6
Subscribers		17,069		56,904		122,375		194,615		285,615		412,467		561,064		778,936		944,024
Cumulative customers		8,545		20,953		36,634		62,610		94,617		142,930		197,961		272,548		342,196
Featured merchants		66		75		87		110		116		145		286		456		667
Groupons sold		26,032		39,996		56,457		95,755		152,675		223,469		284,157		388,178		387,319
Average gross billings per subscriber	$	41	$	38	$	20	$	19	$	20	$	17	$	15	$	15	$	13
Average cumulative Groupons sold per customer		3.0		3.2		3.3		3.5		3.9		4.2		4.4		4.6		4.8
Average gross billings per Groupon sold	$	27	$	35	$	32	$	31	$	31	$	27	$	26	$	26	$	30

Case Study: Berlin

        Berlin was one of the international markets we entered through our acquisition of CityDeal which was completed in May 2010 and is the site of our European headquarters. As of June 30, 2010, we had 92,500 subscribers and, for the second quarter of 2010, we generated $1.0 million in gross billings from 47,068 Groupons sold. As of June 30, 2011, we had 492,300 subscribers, and, for the second quarter of 2011, we generated $8.7 million in gross billings from 251,930 Groupons sold. The following table shows information regarding subscribers and cumulative customers as of the end of each quarter and featured merchants, gross billings and Groupons sold in each quarter beginning with the second quarter of 2010:

	Three Months Ended,
Berlin	June 30, 2010		Sept. 30, 2010		Dec. 31, 2010		Mar. 31, 2011		June 30, 2011
Gross billings (in millions)	$	1.0	$	2.4	$	4.5	$	6.1	$	8.7
Subscribers		92,500		152,800		261,200		396,000		492,300
Cumulative customers		20,237		40,350		67,574		107,898		152,518
Featured merchants		108		268		303		416		543
Groupons sold		47,068		89,321		124,585		229,279		251,930
Average gross billings per subscriber	$	11	$	20	$	22	$	19	$	20
Average cumulative Groupons sold per customer		2.3		3.4		3.9		4.5		4.9
Average gross billings per Groupon sold	$	21	$	27	$	36	$	27	$	35

Case Study: London

        London also was one of the international markets we entered through our acquisition of CityDeal. As of June 30, 2010, we had 159,156 subscribers, and for the second quarter of 2010, we generated $1.7 million in gross billings from 49,564 Groupons sold. As of June 30, 2011, we had 2,005,854 subscribers, and, for the second quarter of 2011, we generated $24.1 million in gross billings from 420,492 Groupons sold. The following table shows information regarding subscribers and cumulative customers as of the end of each quarter and featured merchants, gross billings and Groupons sold in each quarter beginning with the second quarter of 2010:

	Three Months Ended,
London	June 30, 2010		Sept. 30, 2010		Dec. 31, 2010		Mar. 31, 2011		June 30, 2011
Gross billings (in millions)	$	1.7	$	5.4	$	10.8	$	20.1	$	24.1
Subscribers		159,156		423,660		993,622		1,602,968		2,005,854
Cumulative customers		25,419		70,514		137,075		262,189		377,585
Featured merchants		102		232		294		432		583
Groupons sold		49,564		126,916		237,756		402,086		420,492
Average gross billings per subscriber	$	11	$	19	$	15	$	15	$	13
Average cumulative Groupons sold per customer		1.9		2.5		3.0		3.1		3.3
Average gross billings per Groupon sold	$	34	$	43	$	45	$	50	$	57

82

Our Merchants

        In the first half of 2011, we featured deals from over 135,000 merchants worldwide. To drive merchant growth, we have expanded the number and variety of product offerings available through our marketplace and invested in our salesforce. The charts below show the number of merchants we featured in our North America and International segments, which we entered in May 2010 with the acquisition of CityDeal, during each quarter indicated:

North American Merchants Featured	International Merchants Featured

        Our salesforce includes over 4,800 inside and outside merchant sales representatives who build merchant relationships and provide local expertise. Our North American merchant sales representatives are based in our offices in Chicago and our international merchant sales representatives work from our 74 international offices. As the size of our salesforce has grown, the productivity of our sales representatives has increased. In the first quarter of 2009, when we first began investing in the development of our salesforce, the average number of merchants featured per sales representative per month was six and the average gross billings per sales representative per month was $87,000. In the second quarter of 2011, the average number of merchants featured per sales representative per month was 16 and the average gross billings per sales representative per month was $138,000. The following table lists the number of sales representatives in our North America and International segments as of the end of each quarter beginning with the first quarter of 2009:

Size of Salesforce		Mar. 31, 2009		June 30, 2009		Sept. 30, 2009		Dec. 31, 2009		Mar. 31, 2010		June 30, 2010		Sept. 30, 2010		Dec. 31, 2010		Mar. 31, 2011		June 30, 2011
North America			2		18		44		76		128		201		348		493		661		990
International			—		—		—		—		—		1,080		1,224		2,080		2,895		3,860
	Total		2		18		44		76		128		1,281		1,572		2,573		3,556		4,850

        The number of sales representatives is higher as a percentage of revenue in our International segment due to the need to have separate sales organizations for most of the different countries in which we operate. Due to local economic conditions, however, the average cost of each sales representative is lower in most countries in our International segment as compared to the costs in our North America segment.

        Our standard contractual arrangements grant us the exclusive right to feature deals for a merchant's products and services for a limited time period and provide us with the discretion as to whether or not to offer the deal during such period. Our merchant pool represents the number of committed deals that we have discretion to run at any time. Our merchant pool has grown from 15 as of March 31, 2009 to over 49,000 as of June 30, 2011. We restrict the size of our merchant pool to manage the length of time between contract signing to deal launch, but have expanded the pool as we have increased our capacity to offer more deals each day. The scale of our merchant pool benefits our marketplace by enabling us to offer a wider variety of more relevant deals. In light of our significant merchant pool and our objective to promote variety in our daily deals, our general practice to date has been to limit repeat merchants.

83

        The charts below show the size of our merchant pool for our North America and International segments, which we entered in May 2010 with the acquisition of CityDeal, as of the end of each quarter indicated:

North American Merchant Pool	International Merchant Pool

Our Products

        As our operations have grown, we have increased the number and variety of products that we offer. Our new products have allowed us to serve more merchants each day by segmenting our subscriber base, offering more relevant, targeted deals and increasing the rate at which deals are purchased within each segment. We employ an algorithmic approach to deal targeting based on data collected by us about our subscribers, merchants and deals. We launched our first targeted deals in June 2010 in our largest North American markets. The combination of our North American salesforce of 990 as of June 30, 2011, our technology platform and our merchant pool of over 20,000 merchants as of June 30, 2011 gives us the ability to target deals to subsets of North American subscribers within a particular market. In addition, instead of featuring one deal per city per day, we can feature multiple deals per city per day matched to different groups of subscribers based on what we know about their personal preferences. We intend to continue to build our international infrastructure to enable us to offer targeted deals worldwide, as targeting increases the number of deals that we can offer across our marketplace.

        Our products include:

        Featured Daily Deals.    We distribute a featured daily deal by email on behalf of local merchants to subscribers using our targeting technology, which distributes deals to subscribers based on their location and personal preferences. We also have offered daily deals from more than 40 national merchants, including Bath & Body Works, The Body Shop, Hyatt Regency, InterContinental Hotels, Lions Gate, Redbox, Shutterfly and Zipcar across subsets of the North American market. We initially offered one daily deal to all subscribers in a given market but now offer several daily deals in most established markets. We launched this product in October 2008 and it is offered in all of our North American and international markets.

        Deals Nearby.    Daily deals that do not appear as a featured daily deal appear as Deals Nearby. Each Deal Nearby currently is summarized in fewer than 20 words next to the featured daily deal. Deals Nearby often extend beyond the subscriber's closest market or buying preferences. Deals Nearby can also be targeted to certain subscribers, where access to the deal can only be obtained through an emailed hyperlink. Upon clicking the hyperlink, a subscriber is directed to a full description of the deal that is presented in the same format as the subscriber's featured daily deal. We launched this product in January 2009 and it is offered in substantially all of our North American and international markets.

84

        The following graphic captures the featured daily deal and all Deals Nearby offered in Washington, D.C. on March 24, 2011:

85

        National Deals.    National merchants also have used our marketplace as an alternative to traditional marketing and brand advertising. Although our primary focus continues to be on local deals, we use national deals from time to time to build our brand awareness, acquire new customers and generate additional revenue. As an example, on August 19, 2010, we emailed and posted a Groupon daily deal offering $50 of apparel at Gap for $25 to 9.2 million subscribers across 85 markets in North America. We sold approximately 433,000 Groupons in 24 hours, generating over $10.8 million in gross billings. Of the consumers who purchased Groupons, approximately 200,000 were new subscribers. The Gap deal was our first deal from a national brand that we distributed across our North American markets. Since the Gap deal, we have featured deals from Barnes & Noble, FTD and Nordstrom across our North American markets.

        Groupon NOW.    Groupon NOW is a deal initiated by a merchant on demand and offered instantly to subscribers through mobile devices and our website. Groupon NOW deals target subscribers within close proximity of the merchant and the purchased Groupons typically expire within a few hours of the deal launch. Merchants launch Groupon NOW deals from our platform and can use this product to attract customers when they have excess capacity. We launched Groupon NOW in the second quarter of 2011 in 25 North American markets.

        Deal Channels.    Deal Channels aggregate daily deals from the same category and are accessible through our website and through email alerts that subscribers sign up to receive. We currently offer Deal Channels in home and garden and event tickets and travel. Merchants can register their deals to be included in a Deal Channel. Subscribers can use Deal Channels to focus on deals that are of interest to them. We launched Deal Channels in February 2011 in selected North American markets.

        Self-Service Deals.    Self-Service Deals allows our merchants to use a self-service platform to create and launch deals at their discretion. The use of the platform is free and allows merchants to establish a permanent e-commerce presence on Groupon that can be visited and followed by subscribers. We receive a portion of the purchase price from deals sold through Self-Service Deals based on the extent to which we marketed the deal. We launched Self-Service Deals in December 2010 in selected North American markets.

Distribution

        We distribute our deals directly through several platforms: a daily email, our websites, our mobile applications and social networks. We also utilize various online affiliates to display and promote Groupon deals on their websites, as well as agreements with several large online brands to distribute our deals. Our large online affiliates include eBay, Microsoft, Yahoo and Zynga. Other partnerships allow us to distribute daily deals to a partner's user base. For example, in December 2010, we partnered with Redbox to offer a daily deal to their user base and we acquired over 200,000 new customers through that offer and in March 2011, we partnered with eBay to offer a daily deal to their user base and we acquired over 290,000 new customers through that offer.

        In addition, we have partnered with thousands of smaller online affiliates. Affiliates can embed our widget onto their website and earn a commission when their website visitors purchase Groupons through the affiliate link. Our commission rate varies depending on whether the customer is new or existing and the website's overall sales volume. We also offer commissions to affiliates when they refer a customer to Groupon. We expect to continue to pursue relationships to extend the distribution of our deals.

        We also use various subscriber loyalty and reward programs to build brand loyalty, generate traffic to the website and provide customers with incentives to buy Groupons. When customers perform qualifying acts, such as providing a referral to a new subscriber or participating in promotional offers, we grant the customer credits that can be redeemed for awards such as free or discounted goods or services in the future.

86

        Email.    The featured daily deal email contains one headline deal with a full description of the deal and often contains links to "More Great Deals Nearby," all of which are available within a subscriber's market. A subscriber who clicks on a deal within the daily email is directed to our website to learn more about the deal and to purchase the Groupon. We sometimes email "WOW" deals to targeted subscribers as they are available, which are deals that have performed well in the past and can be offered on behalf of the merchant on demand.

        Websites.    Visitors are prompted to register as a subscriber when they first visit our website and thereafter use the website as a portal for featured daily deals, Deals Nearby, national deals, and where available, Deal Channels and Self-Service Deals. Our website also provides opportunities to engage with the Groupon community through the GrouBLOGpon, a blog maintained by our employees, Groupon Meetups, a forum for meeting with others to redeem Groupons at a particular location, Groupon Flickr, a collection of digital photos from subscribers, and rewards programs for referring new subscribers, such as our offer of $10 in Groupon Bucks to subscribers who refer someone who later buys a Groupon.

        Mobile Applications.    Consumers also access our deals through our mobile applications, which are available at no additional cost on the iPhone, Android, Blackberry and Windows mobile operating systems. We launched our first mobile application in March 2010 and our applications have been downloaded 8.8 million times since then. These applications enable consumers to browse, purchase, manage and redeem deals on their mobile devices as well as access Groupon NOW deals that are offered based on the location of the subscriber.

        Social Networks.    We publish our daily deals through various social networks and our notifications are adapted to the particular format of each of these social networking platforms. Our website and mobile application interfaces enable our consumers to push notifications of our deals to their personal social networks.

Operations

        Our business operations are divided into the following core functions to address the needs of our merchants and customers.

        City Planners.    Our city planners identify merchant leads and manage deal scheduling to maximize deal quality and variety within our markets. In identifying leads, city planners rank local merchants based on reviews, local feedback and other data. In certain cases, city planners submit requests to merchant services representatives for certain deals based on a scoring system that considers past performance of similar deals, quality of merchant reviews, number of redemption locations and the zip code of the merchant. In scheduling deals, city planners review deals in our merchant pool and determine which deals to offer based on the viability of the deal as well as revenue and marketing goals. City planners also work with our salesforce to establish sales quotas based on subcategory-level performance in a particular city, such as addressable market size and scheduling diversity. As of June 30, 2011, we employed 297 city planners.

        Editorial.    Our editorial department is responsible for creating editorial content on the daily deals we offer, as well as additional content featured on our website. Each deal that we feature typically goes through several stages to ensure that the deal description meets our standards for accuracy, quality and editorial voice. After offer details are reviewed, our editorial staff verifies the accuracy of the deal and its value through independent research. Once a deal is vetted, our editorial staff drafts a full description of the deal, which is passed through voice editing and copy editing before being launched. As of June 30, 2011, we employed 1,176 editorial staff.

87

        Merchant Services.    Once a contract is signed, one of our merchant services representatives initiates the first of several communications with the merchant to introduce the merchant to the tools that we provide and plan for Groupon redemptions through expiration. Typically, a merchant services representative communicates with merchants before, during, and after a daily deal is featured. Before the deal is run, the representative works with the merchant to prepare staffing and inventory capacity in anticipation of increased customer traffic. The representative communicates with the merchant on the day the deal is featured to review deal performance. After the deal has closed, the representative maintains contact with the merchant to support the merchant's redemption efforts and to prepare the merchant for a potential spike in redemption near expiration. We also offer several merchant tools to help merchants manage their deals. These tools include status updates on deal performance, analytics that measure purchase traffic and demographic information of purchasers, a capacity calculator to estimate demand for the deal ahead of its feature date, and a return on investment calculator that estimates the return on investment that the merchant may receive from the deal. Each of these tools is accessible through an online account that is personal to the merchant and accessed through our website. As of June 30, 2011, we employed 689 merchant services representatives.

        Customer Service Representatives.    Our customer service representatives can be reached via phone or email 24 hours a day, seven days a week. Our Groupon Promise is core to our customer service philosophy. The customer service team also works with our information technology team to improve the customer experience on the website and mobile applications based on customer feedback. As of June 30, 2011, we employed 1,125 customer representatives.

        Technology.    We employ technology to improve the experience we offer to subscribers and merchants, increase the rate at which our subscribers purchase Groupons, and enhance the efficiency of our business operations. A component of our strategy is to continue developing and refining our technology.

        We currently use a common technology platform across our North American operations that includes business operations tools to track internal workflow, applications and infrastructure to serve content at scale, dashboards and reporting tools to display operating and financial metrics for historical and ongoing deals, and a publishing and purchasing system for consumers. Over time, we plan to merge our North American technology platform with our international technology platforms and we expect this to enable greater efficiencies and consistency across our global organization.

        Our websites are hosted at U.S. datacenters in Miami, Florida and Dallas, Texas and international datacenters in Asia and Europe. Our data centers host our public-facing websites and applications, as well as our back-end business intelligence systems. We use commercial antivirus, firewall and patch-management technologies to protect and maintain the systems located at our data centers. We have invested in intrusion detection and pattern detection tools to try to recognize intrusions to our website. We have also engaged a third-party internet security provider to test the security of our website and identify vulnerabilities. In financial transactions between our website and our customers, we use Secure Socket Layer to provide encryption in transferring data. We have designed our websites to be available, secure and cost-effective using a variety of proprietary software and freely available and commercially supported tools. We believe we can scale to accommodate increasing numbers of subscribers by adding relatively inexpensive industry-standard hardware or using a third-party provider of computing resources.

        We devote a substantial portion of our resources to developing new technologies and features and improving our core technologies. Our information technology team is focused on the design and development of new features and products, maintenance of our websites and development and maintenance of our internal operations systems. As of June 30, 2011, our information technology team consisted of 380 employees.

Competition

        Since our inception, a substantial number of competing group buying sites have emerged around the world attempting to replicate our business model. Our major domestic competitors include Google, Microsoft, Eversave, BuyWithMe and LivingSocial. These competitors offer substantially the same or similar product offerings as us. We also compete with businesses that focus on particular merchant

88

categories or markets. We also compete with traditional offline coupon and discount services, as well as newspapers, magazines and other traditional media companies that provide coupons and discounts on products and services. We believe the principal competitive factors in our market include the following:

•

breadth of subscriber base and merchants featured;

•

local presence and understanding of local business trends;

•

ability to deliver a high volume of relevant deals to consumers;

•

ability to produce high purchase rates for deals among subscribers;

•

ability to generate positive return on investment for merchants; and

•

strength and recognition of our brand.

We believe we compete favorably on the factors described above. In particular, as of June 30, 2011, our subscriber base was 115.7 million and during the first half of 2011 we featured 135,247 merchants and delivered deals in 175 North American markets and 45 countries. Furthermore, we deliver a high volume of relevant deals to consumers, which has resulted in 92.2 million Groupons sold through June 30, 2011.

        Although we believe we compete favorably on the factors described above, we anticipate that larger, more established companies may directly compete with us as we continue to demonstrate the viability of a local e-commerce business model. Many of our current and potential competitors have longer operating histories, significantly greater financial, technical, marketing and other resources and larger customer bases than we do. These factors may allow our competitors to benefit from their existing customer or subscriber base with lower acquisition costs or to respond more quickly than we can to new or emerging technologies and changes in customer requirements. These competitors may engage in more extensive research and development efforts, undertake more far-reaching marketing campaigns and adopt more aggressive pricing policies, which may allow them to build a larger subscriber base or to monetize that subscriber base more effectively than us. Our competitors may develop products or services that are similar to our products and services or that achieve greater market acceptance than our products and services. In addition, although we do not believe that merchant payment terms are a principal competitive factor in our market, they may become such a factor and we may be unable to compete fairly on such terms.

Regulation

        We are subject to a number of foreign and domestic laws and regulations that affect companies conducting business on the internet, many of which are still evolving and could be interpreted in ways that could harm our business. In the United States and abroad, laws relating to the liability of providers of online services for activities of their users and other third parties are currently being tested by a number of claims. These regulations and laws may involve taxation, tariffs, subscriber privacy, data protection, content, copyrights, distribution, electronic contracts and other communications, consumer protection, the provision of online payment services and the characteristics and quality of services. It is not clear how existing laws governing issues such as property ownership, sales and other taxes, libel and personal privacy apply to the internet as the vast majority of these laws were adopted prior to the advent of the internet and do not contemplate or address the unique issues raised by the internet or e-commerce. In addition, it is possible that governments of one or more countries may seek to censor content available on our websites or may even attempt to completely block access to our websites. Accordingly, adverse legal or regulatory developments could substantially harm our business.

        The CARD Act, as well as the laws of most states, contain provisions governing product terms and conditions of gift cards, gift certificates, stored value or pre-paid cards or coupons ("gift cards"), such as provisions prohibiting or limiting the use of expiration dates on gift cards or the amount of fees charged in connection with gift cards or requiring specific disclosures on or in connection with gift cards. Groupons generally are included within the definition of "gift cards" in many of these laws. In addition, certain foreign jurisdictions have laws that govern disclosure and certain product terms and conditions, including restrictions on expiration dates and fees that may apply to Groupons. However, the CARD Act as well as a number of states and certain foreign jurisdictions also have exemptions from the operation of these provisions or otherwise modify the application of these provisions applicable to gift cards that are issued as

89

part of a promotion or promotional program. If Groupons are subject to the CARD Act, and are not included in the exemption for promotional programs, it is possible that the purchase value, which is the amount equal to the price paid for the Groupon, or the promotional value, which is the add-on value of the Groupon in excess of the price paid, or both, may not expire before the later of (i) five years after the date on which the Groupon was issued or the date on which the customer last loaded funds on the Groupon if the Groupon has a reloadable feature; (ii) the Groupon's stated expiration date (if any), unless Groupons come within an exemption in the CARD Act for promotional programs; or (iii) a later date provided by applicable state law. In addition, regardless of whether an exemption for Groupons applies under the CARD Act, in those states that prohibit or otherwise restrict expiration dates on gift cards that are defined to include Groupons and that do not have exemptions that apply to the purchase value or the promotional value, or both, of Groupons, Groupons may be required to be honored for the full offer value (the total of purchase value and promotional value) until redeemed. Our terms of use and agreements with our merchants require merchants to continue to honor unredeemed Groupons that are past the stated expiration date of the promotional value of the Groupon to the extent required under the applicable law. Recently, we changed our policy to provide that the purchase value of the Groupon, which is the amount equal to the purchase price that the consumer paid, will never expire unless redeemed or refunded. The promotional value of the Groupon will expire on the date stated on the Groupon, unless applicable law prohibits expiration of the promotional value. While we are attempting to comply with exemptions for promotional programs available under these laws so that our Groupons' promotional value can expire on the date stated on the Groupon, we continue to require that merchants with whom we partner honor Groupons under the provisions of all laws applicable to Groupons, including laws that prohibit expiration.

        We and several merchants with whom we have partnered are currently defendants in over 16 purported class actions that have been filed in federal and state court claiming that Groupons are subject to the CARD Act and various state laws governing gift cards and that the defendants have violated these laws by issuing Groupons with expiration dates and other restrictions. Plaintiffs seek injunctive relief, restitution, damages and/or disgorgement in unspecified amounts as well as attorneys' fees and costs. Recently, all pending federal court actions have been ordered to be transferred to one federal court under rules governing multidistrict litigation and consolidated for certain pre-trial purposes. While Groupon intends to defend these actions vigorously, the outcome of these actions or the court rulings that they may entail may substantially harm our business.

        In addition, some states and foreign jurisdictions also include gift cards under their unclaimed and abandoned property laws which require companies to remit to the government the value of the unredeemed balance on the gift cards after a specified period of time (generally between one and five years) and impose certain reporting and recordkeeping obligations. We do not remit any amounts relating to unredeemed Groupons based upon our assessment of applicable laws. The analysis of the potential application of the unclaimed and abandoned property laws to Groupons is complex, involving an analysis of constitutional and statutory provisions and factual issues, including our relationship with customers and merchants and our role as it relates to the issuance and delivery of a Groupon. We are currently subject to several actions claiming that Groupons are subject to various unclaimed and abandoned property laws. In addition, we have received inquiries from the attorneys general of various states regarding the operation of our business under state laws.

        Many states have passed laws requiring notification to subscribers when there is a security breach of personal data. There are also a number of legislative proposals pending before the U.S. Congress, various state legislative bodies and foreign governments concerning data protection. In addition, data protection laws in Europe and other jurisdictions outside the United States may be more restrictive, and the interpretation and application of these laws are still uncertain and in flux. It is possible that these laws may be interpreted and applied in a manner that is inconsistent with our data practices. If so, in addition to the possibility of fines, this could result in an order requiring that we change our data practices, which could have an adverse effect on our business. Furthermore, the Digital Millennium Copyright Act has provisions that limit, but do not necessarily eliminate, our liability for linking to third-party websites that include materials that infringe copyrights or other rights, so long as we comply with the statutory requirements of

90

this act. Complying with these various laws could cause us to incur substantial costs or require us to change our business practices in a manner adverse to our business.

        Various federal laws, such as the Bank Secrecy Act and the USA PATRIOT Act, impose certain anti-money laundering requirements on companies that are financial institutions or that provide financial products and services. For these purposes, financial institutions are broadly defined to include money services businesses such as money transmitters, check cashers and sellers or issuers of stored value. Examples of anti-money laundering requirements imposed on financial institutions include customer identification and verification programs, record retention policies and procedures and transaction reporting. We do not believe that we are a financial institution subject to these laws and regulations based, in part, on the characteristics of the Groupons and our role with respect to the distribution of the Groupons to customers. However, the Financial Crimes Enforcement Network, a division of the U.S. Treasury Department tasked with implementing the requirements of the Bank Secrecy Act, recently proposed amendments to the scope and requirements for parties involved in stored value or prepaid access, including a proposed expansion of the definition of financial institution to include sellers or issuers of prepaid access. In the event that this proposal is adopted as proposed, it is possible that a Groupon could be considered a financial product and that we could be a financial institution. In addition, foreign laws and regulations, such as the European Directive on the prevention of the use of the financial system for the purpose of money laundering and terrorist financing, impose certain anti-money laundering requirements on companies that are financial institutions or that provide financial products and services. Although we do not believe we are a financial institution or otherwise subject to these laws and regulations, it is possible that the Company could be considered a financial institution or provider of financial products.

        We are or may be subject to similar laws and regulations in jurisdictions outside of the United States.

Intellectual Property

        We protect our intellectual property rights by relying on federal, state and common law rights, as well as contractual restrictions. We control access to our proprietary technology by entering into confidentiality and invention assignment agreements with our employees and contractors, and confidentiality agreements with third parties.

        In addition to these contractual arrangements, we also rely on a combination of trade secrets, copyrights, trademarks, service marks, trade dress, domain names and patents to protect our intellectual property. We pursue the registration of our copyrights, trademarks, service marks and domain names in the United States and in certain locations outside the United States. As of June 30, 2011, we had approximately 160 trademarks registered or pending in approximately 60 countries or regions, including the United States, the European Union, and countries in the South America, Asia-Pacific, Middle East and Africa regions. Our registration efforts have focused on gaining protection of the following trademarks (among others): GROUPON, the GROUPON logo, GROUPON NOW and other GROUPON-formative marks. These marks are material to our business as they enable others to easily identify us as the source of the services offered under these marks and are essential to our brand identity. In addition, as of June 30, 2011, we owned one issued U.S. patent and five pending U.S. patent applications.

        Circumstances outside our control could pose a threat to our intellectual property rights. For example, effective intellectual property protection may not be available in the United States or other countries in which we operate. Also, the efforts we have taken to protect our proprietary rights may not be sufficient or effective. Any significant impairment of our intellectual property rights could harm our business or our ability to compete. Also, protecting our intellectual property rights is costly and time-consuming. Any unauthorized disclosure or use of our intellectual property could make it more expensive to do business and harm our operating results.

        Companies in the internet, social media technology and other industries may own large numbers of patents, copyrights and trademarks and may frequently request license agreements, threaten litigation or file suit against us based on allegations of infringement or other violations of intellectual property rights. We are currently subject to, and expect to face in the future, allegations that we have infringed the

91

trademarks, copyrights, patents and other intellectual property rights of third parties, including our competitors and non-practicing entities. As we face increasing competition and as our business grows, we will likely face more claims of infringement.

Employees

        As of June 30, 2011, we had 2,385 employees in our North America segment, consisting of 1,084 corporate and operational staff, 990 sales representatives and 311 customer service representatives, and 7,240 employees in our International segment, consisting of 2,566 corporate and operational staff, 3,860 sales representatives and 814 customer service representatives.

Properties

        Our principal executive offices in North America are located in Chicago, Illinois and our principal international executive offices are located in Berlin, Germany. As of June 30, 2011, the properties listed below represented our materially important facilities. We believe that our properties are generally suitable to meet our needs for the foreseeable future. However, we will continue to seek additional space as needed to satisfy our growth.

Description of Use	Square Footage		Operating Segment	Lease Expiration
Corporate office facilities		358,000	North America		From 2011 through 2017
Corporate office facilities		298,000	International		From 2011 through 2016

Legal Proceedings

        We currently are involved in several disputes or regulatory inquiries in the United States and Canada, including suits by our customers (individually or as class actions) alleging, among other things, violation of the CARD Act and state and Canadian provincial laws governing gift cards, stored value cards and coupons, violations of unclaimed and abandoned property laws and violations of privacy laws. The number of these disputes and inquiries is increasing. Any claims or regulatory actions against us, whether meritorious or not, could be time consuming, result in costly litigation, damage awards, injunctive relief or increased costs of doing business through adverse judgment or settlement, require us to change our business practices in expensive ways, require significant amounts of management time, result in the diversion of significant operational resources or otherwise harm our business.

        In addition, third parties have from time to time claimed, and others may claim in the future, that we have infringed their intellectual property rights. We are subject to intellectual property disputes, and expect that we will increasingly be subject to intellectual property infringement claims as our services expand in scope and complexity. We have in the past been forced to litigate such claims. We may also become more vulnerable to third-party claims as laws such as the Digital Millennium Copyright Act are interpreted by the courts, and as we become subject to laws in jurisdictions where the underlying laws with respect to the potential liability of online intermediaries like ourselves are either unclear or less favorable. We believe that additional lawsuits alleging that we have violated patent, copyright or trademark laws will be filed against us. Intellectual property claims, whether meritorious or not, are time consuming and costly to resolve, could require expensive changes in our methods of doing business, or could require us to enter into costly royalty or licensing agreements.

        From time to time, we may become party to litigation incident to the ordinary course of business. Although the results of litigation and claims cannot be predicted with certainty, we currently believe that the final outcome of these matters will not have a material adverse effect on our business. Regardless of the outcome, litigation can have an adverse impact on us because of defense and settlement costs, diversion of management resources and other factors. In addition, we have received inquiries from the attorneys general of various states and regulatory authorities in the Canadian province of Alberta regarding the operation of our business under state and provincial laws. The inquiries range in scope and subject matter but we do not believe that such inquiries, individually or in the aggregate, will have a material adverse effect on our business.

92

MANAGEMENT

Officers and Directors

        The following table sets forth information about our officers and directors as of September 23, 2011:

Name		Age	Position
Officers:
	Andrew D. Mason	30	Co-Founder, Chief Executive Officer and Director
	Jason E. Child	42	Chief Financial Officer
	Joseph M. Del Preto II	36	Chief Accounting Officer
	Jason D. Harinstein	35	Senior Vice President—Corporate Development
	Jeffrey Holden	43	Senior Vice President—Product Management
	David R. Schellhase	47	General Counsel
	Brian J. Schipper	50	Senior Vice President—Human Resources
	Brian K. Totty	45	Senior Vice President—Engineering and Operations
Directors:
	Eric P. Lefkofsky	42	Co-Founder and Executive Chairman of the Board
	Peter J. Barris(2)(3)	59	Director
	Kevin J. Efrusy(1)(2)	39	Director
	Mellody Hobson(2)	42	Director
	Bradley A. Keywell(2)(3)	41	Co-Founder and Director
	Theodore J. Leonsis(1)(3)	55	Vice Chairman of the Board
	Howard Schultz(1)	57	Director

(1)

Member of our Audit Committee.

(2)

Member of our Compensation Committee.

(3)

Member of our Nominating and Corporate Governance Committee.

Executive Officers

Andrew D. Mason is a co-founder of the Company and has served as our Chief Executive Officer and a director since our inception. In 2007, Mr. Mason co-founded ThePoint, a web platform that enables users to promote collective action to support social, educational and civic causes, from which Groupon evolved. Prior to co-founding ThePoint, Mr. Mason worked as a computer programmer with InnerWorkings, Inc. (NASDAQ: INWK). Mr. Mason received his Bachelor of Arts from Northwestern University. Mr. Mason brings to our Board the perspective and experience as one of our founders and as Chief Executive Officer. Mr. Mason was elected to the Board pursuant to voting rights granted to holders of our common stock and preferred stock under our voting agreement, which will be terminated upon the closing of this offering.

Jason E. Child has served as our Chief Financial Officer since December 2010. From March 1999 through December 2010, Mr. Child held several positions with Amazon.com, Inc. (NASDAQ: AMZN), including Vice President of Finance, International from April 2007 to December 2010, Vice President of Finance, Asia from July 2006 to July 2007, Director of Finance, Amazon Germany from April 2004 to July 2006, Director of Investor Relations from April 2003 to April 2004, Director of Finance, Worldwide Application Software from November 2001 to April 2003, Director of Finance, Marketing and Business Development from November 2000 to November 2001 and Global Controller from October 1999 to November 2000. Prior to joining Amazon.com, Mr. Child spent more than seven years at Arthur Andersen where he was a C.P.A. and a consulting manager. Mr. Child received his Bachelor of Arts from the Foster School of Business at the University of Washington.

Joseph M. Del Preto II has served as our Chief Accounting Officer since April 2011. From January 2011 to April 2011, Mr. Del Preto served as our Global Controller. Prior to joining Groupon,

93

Mr. Del Preto served as Controller and Vice President, Finance of Echo Global Logistics, Inc. (NASDAQ: ECHO) from April 2009 to December 2010. From January 2006 to March 2009, Mr. Del Preto served as Controller of InnerWorkings, Inc. (NASDAQ: INWK). Mr. Del Preto began his career at PricewaterhouseCoopers LLP. Mr. Del Preto received his Bachelor of Science from Indiana University.

        Jason D. Harinstein has served as our Senior Vice President of Corporate Development since March 2011. From June 2005 to February 2011, Mr. Harinstein served in several capacities at Google, Inc. (NASDAQ: GOOG), including most recently as Director of Corporate Development. From July 2003 to June 2005, Mr. Harinstein worked as an Equity Research Associate at Deutsche Bank Securities, Inc. where he covered Internet advertising, online search, eCommerce and video game companies. Previously, Mr. Harinstein served as a strategy consultant at iXL, Inc. (now part of Razorfish) from June 1999 to June 2001, and at Andersen Consulting Strategic Services (now Accenture) from September 1997 to June 1999. Mr. Harinstein received his Bachelor of Arts in Economics from Northwestern University and his Masters in Business Administration from the University of Chicago.

Jeffrey Holden has served as our Senior Vice President, Product Management since April 2011. In 2006, Mr. Holden co-founded Pelago, Inc. and served as its Chief Executive Officer until Groupon acquired Pelago in April 2011. Prior to co-founding Pelago, Mr. Holden held several positions at Amazon.com, Inc. (NASDAQ: AMZN), including Senior Vice President, Worldwide Discovery, from March 2005 to January 2006, Senior Vice President, Consumer Applications, from April 2004 to March 2005, Vice President, Consumer Applications, from April 2002 to April 2004, and Director, Automated Merchandising and Discovery from February 2000 to April 2002. Mr. Holden joined Amazon.com in May 1997 as Director, Supply Chain Optimization Systems. Mr. Holden received his Bachelor of Science and Master of Science degrees in Computer Science from the University of Illinois, Urbana-Champaign.

David R. Schellhase has served as our General Counsel since June 2011. From March 2010 to May 2011, Mr. Schellhase served as Executive Vice President, Legal of salesforce.com, inc. (NYSE: CRM) From December 2004 to March 2010, Mr. Schellhase served as the Senior Vice President and General Counsel of salesforce.com, and he served as Vice President and General Counsel of salesforce.com July 2002 to December 2004. From December 2000 to June 2002, Mr. Schellhase was an independent legal consultant and authored a treatise entitled Corporate Law Department Handbook. Previously, he served as General Counsel at Linuxcare, Inc., The Vantive Corporation and Premenos Technology Corp. Mr. Schellhase received a Bachelor of Arts from Columbia University and a Juris Doctor from Cornell University.

Brian J. Schipper, has served as our Senior Vice President of Human Resources since June 2011. From October 2006 to May 2011, Mr. Schipper served as Senior Vice President and Chief Human Resources Officer of Cisco Systems, Inc. (NASDAQ: CSCO). From November 2003 to October 2006, Mr. Schipper served as the Corporate Vice President, Human Resources of Microsoft Corporation (NASDAQ: MSFT). From February 2002 to March 2003, Mr. Schipper was Partner and Head of Human Resources and Administration for Andor Capital Management LLC. From March 2000 to February 2002, Mr. Schipper served as Senior Vice President of Human Resources and Administration at DoubleClick, Inc. Prior to joining DoubleClick, Mr. Schipper served as Vice President, Human Resources at PepsiCo, Inc. (NYSE: PEP) from May 1995 to March 2000. Prior to joining PepsiCo, Mr. Schipper worked at Compaq Computer Corporation, where he was global head of compensation and benefits and head of Human Resources for North America. Mr. Schipper received his Bachelors Degree from Hope College and his Masters in Business Administration from Michigan State University.

Brian K. Totty, Ph.D., has served as our Senior Vice President of Engineering since November 2010. Dr. Totty was the Chief Executive Officer of Ludic Labs, Inc., a startup venture developing a new class of software applications from January 2006 through November 2007. We acquired Ludic Labs in November 2010. Dr. Totty also was a co-founder and Senior Vice President of Research and Development of Inktomi Corporation from February 2006 to August 2007. Dr. Totty received his Ph.D. in computer science from

94

the University of Illinois at Urbana-Champaign, his Master of Public Administration from Harvard's Kennedy School and his Bachelor of Science from the Massachusetts Institute of Technology.

Directors

Eric P. Lefkofsky is a co-founder of the Company and has served as our Executive Chairman since our inception. Mr. Lefkofsky was elected to the Board pursuant to voting rights granted to the former holders of our Series B Preferred Stock under our voting agreement, which will be terminated upon the closing of this offering. Mr. Lefkofsky is a co-founder of Echo Global Logistics, Inc. (NASDAQ: ECHO) and has served on its board of directors since February 2005. Mr. Lefkofsky is the co-founder of InnerWorkings, Inc. (NASDAQ: INWK) and has served on its board of directors since August 2008. In 2008, Mr. Lefkofsky co-founded Lightbank LLC, a private investment firm specializing in information technology companies, and has served as a manager since that time. In April 2006, Mr. Lefkofsky co-founded MediaBank, LLC, an electronic exchange and database that automates the procurement and administration of advertising media, and has served as a director or manager since that time. From May 2000 to April 2001, Mr. Lefkofsky served as Chief Operating Officer and director of HA-LO Industries Inc. Mr. Lefkofsky co-founded Starbelly.com, Inc., and served as its President from September 1999 to May 2000, at which point Starbelly.com was acquired by HA-LO. In July 2001, HA-LO filed for bankruptcy under Chapter 11 of the United States Bankruptcy Code. Mr. Lefkofsky also serves on the board of directors of Children's Memorial Hospital, the board of trustees of the Steppenwolf Theatre, the board of trustees of the Art Institute of Chicago and the board of trustees of the Museum of Contemporary Art in Chicago. Mr. Lefkofsky holds a bachelor's degree from the University of Michigan and a Juris Doctor degree from the University of Michigan Law School. Mr. Lefkofsky brings to the Board an in-depth knowledge and understanding of the Company's business as one of its founders as well as experience as the director of several public companies.

Peter J. Barris has served on our Board since January 2008. Mr. Barris was elected pursuant to voting rights granted to New Enterprise Associates under our voting agreement, which will be terminated upon the closing of this offering. Since July 2009, Mr. Barris has served on the board of directors of Echo Global Logistics, Inc. (NASDAQ: ECHO) and since January 2006, Mr. Barris has served on the board of directors of InnerWorkings, Inc. (NASDAQ: INWK). Since 1999, Mr. Barris has been the Managing General Partner of New Enterprise Associates where he specializes in information technology investing. Mr. Barris also serves on the board of directors of Vonage Holdings Corp. (NASDAQ: VG) and Neutral Tandem, Inc. (NASDAQ: TNDM). Mr. Barris is a member of the board of trustees, Northwestern University and board of advisors, Tuck's Center for Private Equity and Entrepreneurship at Dartmouth. He received a Master of Business Administration from Dartmouth College and a Bachelor of Science in Electrical Engineering from Northwestern University. Mr. Barris brings to the Board a sophisticated knowledge of information technology companies that includes investments in over twenty information technology companies that have completed public offerings or successful mergers as well as experience serving as a director of several public companies.

Kevin J. Efrusy has served on our Board since November 2009. Mr. Efrusy was elected pursuant to voting rights granted to Accel Growth Fund L.P. under our voting agreement, which will be terminated upon the closing of the offering. Mr. Efrusy joined Accel in 2003 where serves as a General Partner. From 1999 to 2002 he co-founded and served as President and VP of Business Development of IronPlanet, an online marketplace for heavy equipment. In 1998 he was a co-founder of Corio, an ASP/SaaS pioneer that went public on NASDAQ and was acquired by IBM in 2005. Mr. Efrusy was a product manager at Zip2 from 1996 to 1997 and an Associate Consultant at Bain & Company from 1995 to 1996. Mr. Efrusy also serves on the boards of directors of several private consumer internet service and SaaS/open source software companies. He formerly served on the boards of Xensource (acquired by Citrix in 2007), Springsource (acquired by VMWare in 2009), and BBN Technologies (acquired by Raytheon in 2009). Mr. Efrusy received his Master of Business Administration from the Stanford Graduate School of Business

95

where he was an Arjay Miller Scholar. He received his Master of Science in Electrical Engineering, Bachelor of Science in Electrical Engineering, and Bachelor of Arts from Stanford University. Mr. Efrusy brings to the Board an in-depth knowledge of the consumer internet services industry.

Mellody Hobson has served as the president and a director of Ariel Investments, LLC, a Chicago-based investment management firm, since 2000 and as the chairman since 2006 and a trustee since 1993 of the mutual funds it manages. She previously served as senior vice president and director of marketing at Ariel Capital Management, Inc. from 1994 to 2000, and as vice president of marketing at Ariel Capital Management, Inc. from 1991 to 1994. Ms. Hobson has served as a director of Starbucks, Inc. (NASDAQ: SBUX) since February 2005, DreamWorks Animation SKG, Inc. (NASDAQ: DWA) since 2004 and The Estee Lauder Companies, Inc. (NYSE: EL) since 2004. Ms. Hobson works with a variety of civic and professional institutions, including serving as a director of the Field Museum, the Chicago Public Education Fund and the Sundance Institute. Additionally, she is on the board of governors of the Investment Company Institute. Ms. Hobson received her Bachelor of Arts from Princeton University. Ms. Hobson brings to the Board significant operational, investment and financial experience and valuable knowledge of corporate governance and similar issues from her service on other publicly-traded companies' boards of directors as well as her prior service on the Securities and Exchange Commission Investment Advisory Committee.

Bradley A. Keywell is a co-founder of the Company and has served on our Board since December 2006. Mr. Keywell was elected pursuant to voting rights granted to the holders of our Series B preferred stock under our voting agreement, which will be terminated upon the closing of this offering. Mr. Keywell is a co-founder of Echo Global Logistics, Inc. (NASDAQ: ECHO) and has served on its board of directors since February 2005. In 2008, Mr. Keywell co-founded Lightbank LLC, a private investment firm specializing in information technology companies, and has served as a manager since that time. In April 2006, Mr. Keywell co-founded MediaBank, LLC, an electronic exchange and database that automates the procurement and administration of advertising media, and has served as a director or manager since that time. From May 2000 to March 2001, Mr. Keywell served as the President of HA-LO Industries Inc. Mr. Keywell co-founded Starbelly.com Inc., which was acquired by HA-LO in May 2000. In July 2001, HA-LO filed for bankruptcy under Chapter 11 of the United States Bankruptcy Code. Mr. Keywell also serves as a trustee of Equity Residential (NYSE: EQR), a real estate investment trust. Mr. Keywell serves on the board of trustees of the Zell-Lurie Entrepreneurship Institute at the University of Michigan, the NorthShore University HealthSystem Foundation and the Museum of Contemporary Art in Chicago. Mr. Keywell is the Chairman of the Illinois Innovation Council. Mr. Keywell is also the founder and Chairman of Chicago Ideas Week and the Connect to the Future Foundation. Mr. Keywell holds a bachelor's degree from the University of Michigan and a Juris Doctor degree from the University of Michigan Law School. Mr. Keywell brings to the Board an in-depth knowledge and understanding of the information technology sector as well as experience as a director of a public company.

Theodore J. Leonsis has served on our Board since June 2009 and as our Vice Chairman since April 2011. Mr. Leonsis was elected pursuant to voting rights granted to the holders of our common stock and preferred stock under our voting agreement, which will be terminated upon the closing of this offering. Since 1999, Mr. Leonsis has served as the Chairman and Chief Executive Officer of Monumental Sports & Entertainment, LLC, a sports and entertainment company that owns the NBA's Washington Wizards, NHL's Washington Capitals, WNBA's Washington Mystics, the Verizon Center in Washington, D.C. and the Baltimore-Washington Ticketmaster franchise. Mr. Leonsis also has served as a Vice Chairman Emeritus of AOL LLC, a leading global Web company, since December 2006. Mr. Leonsis held a number of other executive positions with AOL from September 1994 to December 2006, most recently as Vice Chairman and President, AOL Audience Business. Mr. Leonsis has served as a director of American Express Co. (NYSE: AXP) since July 2010, a director of Rosetta Stone Ltd. (NYSE: RST) since December 2009 and a director of NutriSystem, Inc. (NASDAQ: NTRI) since December 2008. Mr. Leonsis also serves on the board of directors of several private internet and technology companies. Mr. Leonsis is an

96

acknowledged innovator and internet entrepreneur. Mr. Leonsis brings to the Board his experiences in digital businesses, his innovative approaches, and his expertise in identifying business opportunities and driving new strategies based on changing technologies, social media, and the internet.

        Howard Schultz has served on our Board since February 2011. Mr. Schultz was elected pursuant to voting rights granted to the holders of our common stock and preferred stock under our voting agreement, which will be terminated upon the closing of this offering. Mr. Schultz is the founder of Starbucks Corporation (NASDAQ: SBUX) and serves as its Chairman, President and Chief Executive Officer. Mr. Schultz has served as the Chairman of Starbucks since 1985 and reassumed the role of President and Chief Executive Officer in January 2008. Mr. Schultz also served as a director of Dreamworks, Animation SKG, Inc. (NASDAQ: DWA) from October 2004 to May 2008. As the founder of Starbucks, Mr. Schultz brings to the Board a record of innovation, achievement and leadership as well as almost 30 years of experience in brand marketing and international distribution and operations.

Our Founders

        Andrew D. Mason, our Chief Executive Officer, Eric P. Lefkofsky, our Executive Chairman, and Bradley A. Keywell, one of our directors (who we collectively refer to in this prospectus as our "founders"), founded Groupon in October 2008. Groupon evolved from The Point, which is a web platform that enables users to promote collective action in support of social, educational or other causes. Mr. Mason conceived of the idea for The Point in 2006 and Mr. Lefkofsky provided funding to the business, which led to its launch in November 2007. In October 2008, Groupon began operations when Mr. Mason decided to apply the concept of web-based collective action to create an e-commerce marketplace.

        Working closely together since our inception, Messrs. Mason and Lefkofsky have had key roles in the management of our company. Mr. Mason serves as our Chief Executive Officer and Mr. Lefkofsky serves as our Executive Chairman of our Board of Directors. As Executive Chairman, Mr. Lefkofsky will continue to work actively with Mr. Mason and senior management concerning a broad range of operating and strategic issues.

        In addition, as a result of the concentration of our capital stock ownership with our founders, they will have significant influence over management and over all matters requiring stockholder approval, including the election of directors and significant corporate transactions, such as a merger or other sale of our company or its assets, for the foreseeable future. Our Class B common stock has            votes per share and our Class A common stock has one vote per share. As of                2011, our founders owned shares of Class A common stock and Class B common stock representing approximately      % of the voting power of our outstanding capital stock. As a result of this dual class structure, our founders will continue to be able to control all matters submitted to our stockholders for approval even if they come to own less than 50% of the outstanding shares of our common stock.

Consulting Arrangements

        Oliver Samwer and Marc Samwer ("Messrs. Samwer") are the founders of CityDeal, a European-based collective buying power business that we acquired in May 2010. Since the CityDeal acquisition, Messrs. Samwer have served as consultants and been extensively involved in the development and operations of our International segment.

        Messrs. Samwer entered into consulting agreements with CityDeal on May 12, 2010. Pursuant to their consulting agreements, Messrs. Samwer advise CityDeal with respect to its goals and spend at least 50% of their work hours consulting for CityDeal. Messrs. Samwer do not receive any additional compensation from CityDeal or Groupon in connection with their consulting role. The term of Messrs. Samwers' consulting agreements expire on October 18, 2011.

97

Code of Ethics

        In connection with the completion of this offering, we will adopt a Code of Ethics for Principal Executive and Senior Financial Officers, which is applicable to our chief executive officer, chief financial officer and other principal executive and senior financial officers. This code will become effective as of the effective date of this offering.

Board of Directors

        Our board of directors currently consists of eight members. Our bylaws permit our board of directors to establish by resolution the authorized number of directors consisting of not less than one and not more than thirteen directors, and nine directors are currently authorized.

        Pursuant to our certificate of incorporation as currently in effect and a voting agreement among us and significant holders of our preferred stock and common stock, who together have substantial control of the total voting power of our outstanding capital stock, those holders vote together to cause the election of all of our directors as follows:

•

Mr. Barris, who was elected as the designee of New Enterprise Associates;

•

Mr. Efrusy, who was elected as the designee of Accel Growth Fund L.P.;

•

Messrs. Leonsis and Schultz, who were elected as the designees of (i) the holders of a majority of our common stock, voting as a class and (ii) the holders of a majority of our preferred stock, voting as a class, which holders also have the right to elect one additional director pursuant to the voting agreement;

•

Mr. Mason, who was elected as the designee of the holders of a majority of our preferred stock and common stock, voting together; and

•

Messrs. Lefkofsky and Keywell and Ms. Hobson, who were elected as the designees of the holders of a majority of the outstanding shares of our Series B preferred stock.

        Upon the closing of this offering, the voting agreement by which these directors were elected will terminate.

Director Independence

        Under                        , a majority of a listed company's board of directors must be comprised of independent directors, and each member of a listed company's audit, compensation and nominating and corporate governance committees must be independent as well. Under                        , a director will only qualify as an "independent director" if that company's board of directors affirmatively determines that the director has no material relationship with that company, either directly or as a partner, shareholder or officer of an organization that has a relationship with that company.

        In addition, following the effectiveness of this registration statement, the members of our audit committee must satisfy the independence criteria set forth in Rule 10A-3 under the Securities Exchange Act of 1934, as amended, or Rule 10A-3. In order to be considered to be independent for purposes of Rule 10A-3, no member of the audit committee may, other than in his capacity as a member of the audit committee, the board of directors, or any other Board committee: (1) accept, directly or indirectly, any consulting, advisory, or other compensatory fee from the company or any of its subsidiaries; or (2) be an affiliated person of the company or any of its subsidiaries.

        Prior to the completion of this offering, our board of directors will undertake a review of the independence of each director and consider whether any director has a material relationship with us that could compromise his ability to exercise independent judgment in carrying out his responsibilities. We do

98

not intend to take advantage of the exceptions to corporate governance requirements for controlled companies pursuant to                             rules.

Committees of the Board of Directors

        Our board of directors has established an audit committee, a compensation committee and a nominating and corporate governance committee, each of which has the composition and responsibilities described below.

Audit Committee

        Our audit committee is comprised of Messrs. Efrusy, Leonsis and Schultz, each of whom is a non-employee member of our board of directors. Mr. Leonsis is the chairperson of our audit committee. Our board of directors has determined that each member of the audit committee meets the financial literacy requirements under the rules and regulations of the                        and the SEC and Mr. Leonsis qualifies as our audit committee financial expert under the SEC rules implementing Section 407 of the Sarbanes-Oxley Act of 2002. Under the audit committee charter to be effective upon the completion of this offering, our audit committee will be responsible for, among other things:

•

selecting and hiring our independent auditors, and approving the audit and non-audit services to be performed by our independent auditors;

•

evaluating the qualifications, performance and independence of our independent auditors;

•

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

•

reviewing the adequacy and effectiveness of our internal control policies and procedures;

•

discussing the scope and results of the audit with the independent auditors and reviewing with management and the independent auditors our interim and year-end operating results; and

•

preparing the audit committee report that the SEC requires in our annual proxy statement.

Compensation Committee

        Our compensation committee is currently comprised of Messrs. Barris, Efrusy, Keywell and Leonsis. Mr. Barris is the chairperson of our compensation committee. Under the compensation committee charter to be effective upon the completion of this offering, our compensation committee will be responsible for, among other things:

•

reviewing and approving for our executive officers: the annual base salary, the annual incentive bonus, including the specific goals and amount, equity compensation, employment agreements, severance arrangements and change in control arrangements, and any other benefits, compensation or arrangements;

•

reviewing the succession planning for our executive officers;

•

reviewing and recommending compensation goals and bonus and stock compensation criteria for our employees;

•

preparing the compensation committee report that the SEC requires to be included in our annual proxy statement; and

•

administering, reviewing and making recommendations with respect to our equity compensation plans.

99

Nominating and Corporate Governance Committee

        Our nominating and corporate governance committee is comprised of Messrs. Barris, Keywell and Leonsis. Mr. Keywell is the chairperson of our nominating and corporate governance committee. Under the nominating and corporate governance committee charter to be effective upon the completion of this offering, our nominating and corporate governance committee will be responsible for, among other things:

•

assisting our board of directors in identifying prospective director nominees and recommending nominees for each annual meeting of stockholders to the board of directors;

•

reviewing developments in corporate governance practices and developing and recommending governance principles applicable to our board of directors;

•

overseeing the evaluation of our board of directors and management; and

•

recommending members for each committee of our board of directors.

Compensation Committee Interlocks and Insider Participation

        Messrs. Efrusy, Keywell and Lefkofsky served as members of the compensation committee during 2010. None of the members of our compensation committee, other than Mr. Lefkofsky, is or has in the past served as an officer or employee of our company. None of our executive officers currently serves, or in the past year has served, as a member of the board of directors or compensation committee of any entity that has one or more executive officers serving on our board of directors or compensation committee.

100

EXECUTIVE COMPENSATION

Compensation Discussion and Analysis

        The following is a presentation of the material elements of the compensation arrangements of the following current and former executive officers, who are also identified in the "Summary Compensation Table" for 2010 (collectively, our "named executive officers" or "NEOs"):

•

Andrew D. Mason, Chief Executive Officer

•

Jason E. Child, Chief Financial Officer

•

Robert S. Solomon, Former President and Chief Operating Officer

•

Brian K. Totty, Senior Vice President of Engineering and Operations

•

Kenneth M. Pelletier, Former Chief Technology Officer

        This discussion also contains forward-looking statements that are based on our current plans, considerations, expectations and determinations regarding future compensation programs.

Overview

        Our business is highly competitive, and competition presents an ongoing challenge to our success. We expect competition in the internet business generally, and the group buying business in particular, to continue to increase because there are not substantial barriers to entry. Our ability to compete and succeed in this environment is directly tied to our ability to recruit, incentivize and retain skilled and talented individuals to form an executive team characterized by a high level of sales, marketing, operations, financial, and strategic acquisitions expertise. Our compensation philosophy is centered around our goal of establishing and maintaining an executive compensation program that attracts proven, talented leaders who possess the skills and experience necessary to materially add to the Company's long-term value, expansion and ability to achieve our strategic goals. To that end, our executive compensation program also permits us to recognize and reward individual achievements within the framework of the Company's overarching goals and objectives.

        Briefly, the primary goals of our executive compensation program are as follows:

•

Recruit and retain talented and experienced individuals who are able to develop, implement and deliver on long-term value creation strategies;

•

Provide a substantial portion of each executive's compensation in components that are directly tied to the long-term value and growth of the Company;

•

Reward both Company and individual performance and achievement; and

•

Ensure that our compensation is reasonable and competitive with opportunities made available to executives at companies with which we compete for executive talent.

Our Compensation-Setting Process

        Historically, the initial compensation arrangements with our executive officers, including the named executive officers, have been the result of arm's-length negotiations between the Company and each individual executive. Prior to the formation of our compensation committee, the Board was primarily responsible for overseeing and approving the negotiation of these arrangements on behalf of the Company. We have been undergoing a period of substantial growth and development in recent years in a highly competitive business and technological environment, and the focus of these arrangements has been to recruit talented individuals to help us meet specific long-term financial and growth objectives. Individual

101

compensation arrangements with executives have been influenced by a number of factors, including the following, each as of the time of the applicable hiring decision:

•

our need to fill a particular position;

•

our financial position and growth direction at the time of hiring;

•

the individual's expertise and experience; and

•

the competitive nature of the position.

        In May 2010, we formed our compensation committee. Our compensation committee is now composed entirely of independent directors, and is responsible for overseeing our executive compensation program and approving ongoing compensation arrangements for our named executive officers.

        In February 2011, we retained a compensation consultant, Compensia, Inc. ("Compensia"), to review and assess our current employee compensation practices relative to market compensation practices. Specifically, Compensia was engaged to:

•

provide data for the establishment of a peer group of companies to serve as a basis for assessing competitive executive and director compensation practices going forward;

•

review and assess our current executive compensation programs relative to market to determine any changes that may need to be implemented in connection with or following our initial public offering;

•

assist in the development of salary and equity guidelines for certain technology positions; and

•

assess current cash and equity compensation levels relative to market and compensation strategy and structure for executive, director and technology positions and certain other employee groups.

        The results of Compensia's review and assessment were presented to the compensation committee in April 2011. The compensation committee continues to take the review and assessment provided by Compensia under advisement for further discussion and analysis.

        Our compensation committee generally expects to seek input from our chief executive officer and chief human resources officer when discussing the performance and compensation of the other named executive officers, as well as during the process of searching for and negotiating compensation packages with new senior management hires. The compensation committee also expects to coordinate with our chief financial officer in determining the financial and accounting implications of our compensation programs and hiring decisions. None of our named executive officers participates in compensation committee deliberations relating to his or her own compensation.

        Due to the relatively recent formation of our compensation committee, its members are in the process of formulating a comprehensive overall approach to executive compensation. On August 17, 2011, we established our 2011 Incentive Plan, summarized in "2011 Incentive Plan" below, which we intend to use as the primary vehicle for awarding equity compensation going forward. We expect that our named executive officer compensation program in the future may vary, perhaps significantly, from our historical practices; however, other than as described above, we currently have no definitive plans to change such compensation policies and practices in connection with or following our initial public offering.

Elements of Our Compensation Program

        The four key elements of our compensation package for named executive officers are base pay, discretionary performance bonuses, equity-based awards, and our benefits programs. We do not use specific formulas or weightings in determining the allocation of the various pay elements; rather, each named executive officer's compensation has been designed to provide a combination of fixed and at-risk compensation that is tied to achievement of the Company's short- and long-term objectives.

102

        Base Salary.    We offer reasonable base salaries that are intended to provide a level of stable fixed compensation to executives for performance of day-to-day services. Each named executive officer's base salary was established as the result of arm's-length negotiation with the individual, and is generally reviewed annually to determine whether an adjustment is warranted or required. The base salaries paid to our named executive officers in 2010 are set forth in the "Summary Compensation Table" below. The following table sets forth the base salary rates in effect for 2010:

Name	2010 Base Salary Rate ($)
Andrew D. Mason		180,000	(1)
Jason E. Child		350,000
Robert S. Solomon		350,000
Brian K. Totty		250,000
Kenneth M. Pelletier		185,000

(1)

At his own recommendation to the compensation committee, Mr. Mason's base salary for 2011 was reduced to $756.72 effective January 1, 2011.

        Discretionary Performance Bonus.    We offer our named executive officers the opportunity to earn annual performance bonuses, which are determined by the Board or the compensation committee at its sole discretion, based on each officer's job performance and the Company's financial performance. As a privately-held company, we believe that a discretionary cash bonus program has allowed the Board and compensation committee to retain flexibility to conserve cash while rewarding results as determined to be appropriate. Because of the rapidly-changing nature of our business, the Board and compensation committee have not believed that selecting pre-set performance metrics would enhance incentive efforts, and instead have focused on using equity incentives to encourage company-wide improvements. No discretionary bonuses were awarded to any named executive officers for 2010 performance.

        Equity-Based Awards.    Our practice, as a private and rapidly growing company, has been to grant equity awards to our newly hired executive officers, in order to effectively align the interests of the executive with our long-term growth objectives. As such, we have not generally made regular equity awards to our named executive officers, although we anticipate that annual equity awards may form a component of our compensation structure for executives going forward, in order to more effectively align the interests of executive officers and our stockholders and ensure appropriate long-term incentives remain in place. The sizes and types of awards that have historically been granted to newly hired executive officers have not been determined based on a specific formula, but rather on a combination of the Board's or compensation committee's discretionary judgment regarding the appropriate level of compensation for the position, the need to fill a particular position, and the negotiation process with the particular individual involved.

        Benefits Programs.    Our employee benefit programs, including our 401(k) plan and health, dental, vision and short-term disability coverage programs, are designed to provide a stable array of support to our employees generally, including our named executive officers, and their families.

Post-Employment Compensation

        The terms and conditions of employment for Messrs. Mason, Child and Totty are set forth in their employment agreements. Prior to his departure from the position of President and Chief Operating Officer, the terms and conditions of employment for Mr. Solomon were also set forth in his employment agreement. The material terms of these agreements are summarized under "Employment Agreements" below. These employment agreements also provide for certain benefits in the event of the named executive officer's termination of employment under specified circumstances or upon a change in control. We believe that our extension of these post-employment and change in control benefits was necessary in order to induce these individuals to forego other competitive opportunities that were available to them. The material terms of these post-employment arrangements, including the terms of Mr. Solomon's separation

103

agreement and Mr. Pelletier's separation agreement, are set forth in "Potential Payments Upon Termination or Change in Control" below. Prior to his departure from the Company, Mr. Pelletier had not entered into any formal employment agreement or post-employment compensation arrangement with us.

Effect of Accounting and Tax Treatment on Compensation Decisions

        Accounting Treatment.    We recognize a charge to earnings for accounting purposes for equity awards over their vesting period. When we become a publicly-held company, we expect that our compensation committee will continue to review and consider the accounting impact of equity awards in addition to considering the impact for dilution and overhang when deciding on amounts and terms of equity grants.

        Deductibility of Executive Compensation.    Following our initial public offering, Section 162(m) of the Internal Revenue Code of 1986, as amended, or the Code, may limit the amount that we may deduct from our federal income taxes for compensation paid to our executive officers to $1 million dollars per executive officer per year, unless certain requirements are met. Section 162(m) provides an exception from this deduction limit for certain forms of performance-based compensation. While our compensation committee is mindful of the benefit to us of the full deductibility of compensation, the Board and the compensation committee believe that we should not be constrained by the requirements of the Section 162(m) exception where those requirements would impair our flexibility in compensating our executive officers in a manner that can best promote our corporate objectives. Therefore, the Board and the compensation committee have not adopted a policy that would require that all compensation be deductible. We intend to continue to compensate our executive officers in a manner consistent with the best interests of the Company and our stockholders.

        Taxation of Parachute Payments and Deferred Compensation.    We do not provide and have no obligation to provide any executive officer, including any named executive officer, with a "gross-up" or other reimbursement payment for any tax liability that he or she might owe as a result of the application of Section 280G, 4999, or 409A of the Code. Sections 280G and 4999 of the Code provide that executive officers and directors who hold significant equity interests and certain other service providers may be subject to an excise tax if they receive payments or benefits in connection with a change in control that exceed certain limits prescribed by the Code, and that the employer may forfeit a deduction on the amounts subject to this additional tax. Our 2011 Plan and our 2010 Plan permit a participant to elect, in his or her discretion, to reduce a payment or acceleration of vesting under the applicable plan to the extent necessary to avoid the imposition of an excise tax under Sections 280G and 4999. Section 409A of the Code also may impose significant taxes on a service provider in the event that he or she receives deferred compensation that does not comply with the requirements of Section 409A. We have structured our compensation arrangements with the intention of complying with or otherwise being exempt from the requirements of Section 409A. Further, our 2011 Plan and our 2010 Plan provide that the Board may amend the terms of each plan or any award agreement to the extent necessary to comply with or effectuate an exemption from the requirements of Section 409A.

104

Summary Compensation Table

        The following table sets forth information regarding the compensation of the individuals who served as our named executive officers during 2010.

Name and Principal Position(1)	Year		Salary ($)			Bonus ($)(2)		Option Awards ($)(3)		Stock Awards ($)(4)		All Other Compensation ($)(5)		Total Compensation ($)
Andrew D. Mason Chief Executive Officer		2010		180,000	(6)		—		—		—		4,599		184,599
Jason E. Child(7) Chief Financial Officer		2010		5,384			375,000		—		9,477,000		140		9,857,524
Robert S. Solomon(8) Former President and Chief Operating Officer		2010		263,846			—		5,068,785		—		2,160		5,334,791
Brian K. Totty Senior Vice President of Engineering and Operations		2010		20,833			—		—		2,659,334		—		2,680,167
Kenneth M. Pelletier(9) Former Chief Technology Officer		2010		185,000			—		—		—		7,838		192,838

(1)

Eric P. Lefkofsky, our co-founder and Executive Chairman, is not an employee of the Company and receives no compensation for his service as an executive officer. Therefore, he is not included in the compensation tables or "Compensation Discussion and Analysis". Mr. Lefkofsky's compensation for his service as a non-employee director is disclosed in "Director Compensation in 2010" below.

(2)

There were no discretionary performance bonuses paid to any of our named executive officers for 2010. Mr. Child received a one-time signing bonus in connection with the execution of his employment agreement, effective December 20, 2010.

(3)

Amounts disclosed in this column relate to grants of stock options made under the 2010 Plan, except for Mr. Solomon's options, which were granted under the 2008 Plan. With respect to each stock option grant, the amounts disclosed generally reflect the grant date fair value computed in accordance with FASB ASC Topic 718 "Stock Compensation". The exercise price of stock options is equal to the fair market value of the underlying stock on the grant date, determined in good faith by the Board and in a manner consistent with Section 409A of the Code. Grant date fair value was determined using a generally accepted option valuation methodology referred to as the Black-Scholes-Merton option pricing model. Information regarding assumptions used in calculating the value of stock option awards made to executive officers is provided in "Management's Discussion and Analysis of Financial Condition and Results of Operations" above.

(4)

Amounts disclosed in this column relate to grants of restricted stock units made under the 2010 Plan. With respect to each restricted stock unit grant, the amounts disclosed generally reflect the grant date fair value computed in accordance with FASB ASC Topic 718. Grant date fair value for each restricted stock unit award was determined in good faith by the Board without regard to lapsing restrictions and in a manner consistent with Section 409A of the Code.

(5)

Amounts disclosed in this column relate to amounts paid to reimburse our named executive officers for the cost of participation in our group health and dental plans and for parking costs at the Company's headquarters in Chicago, Illinois.

(6)

At his own recommendation to the compensation committee, Mr. Mason's base salary rate for 2011 was reduced to $756.72, effective January 1, 2011.

(7)

Mr. Child was appointed as our Chief Financial Officer on December 20, 2010. Prior to his appointment, no single individual served in the capacity of or performed the functions of chief financial officer of the Company.

(8)

Mr. Solomon ceased to be our President and Chief Operating Officer on March 22, 2011.

(9)

Mr. Pelletier's employment with us terminated on March 23, 2011.

Employment Agreements

        Overview.    We have entered into employment agreements with each of Messrs. Mason, Child and Totty. Prior to his departure from the position of President and Chief Operating Officer, we had entered into an employment agreement with Mr. Solomon. Prior to his separation, Mr. Pelletier did not have a formal employment agreement with the Company.

105

        Andrew D. Mason.    We entered into an employment agreement with Mr. Mason to serve as our Chief Executive Officer effective November 1, 2009, which replaced his prior employment agreement. His current agreement expires on December 1, 2014. Pursuant to his agreement, Mr. Mason is to be paid a base salary of $180,000 annually, which amount is to be increased by at least fifteen percent per year thereafter. Notwithstanding this provision of his employment agreement, Mr. Mason's base salary for 2011 has been reduced to $575, upon his own recommendation to the compensation committee. He is also eligible to receive an annual performance bonus of up to fifty percent of his base salary, which is payable as determined by the Board and the compensation committee in their sole discretion based on Mr. Mason's job performance, our financial performance, and certain performance targets that may be approved by the Board and the compensation committee. Notwithstanding this provision of his employment agreement, Mr. Mason's bonus has been eliminated as a component of his 2011 compensation, upon his own recommendation to the compensation committee. Mr. Mason is also entitled to participate in our executive and employee benefit plans on the same basis as other members of our senior management, and is reimbursed by us for the costs of those plans in which he elects to participate. In connection with the execution of his employment agreement, Mr. Mason purchased 1,800,000 shares of our Class A common stock on November 1, 2009 at their then current fair market value with a promissory note. In April 2011, Mr. Mason repaid the promissory note with respect to 1,650,000 shares and forfeited 150,000 shares. In connection with the repayment of the promissory note and forfeiture of the shares, the remaining balance of the promissory note was cancelled. These shares are subject to our right to repurchase upon a termination of Mr. Mason's employment for any reason prior to November 1, 2014, at a purchase price of their fair market value on the repurchase date. The repurchase right lapses with respect to twenty percent of the underlying shares for every year in which Mr. Mason continues to be employed commencing on November 1, 2009. Mr. Mason is also entitled to receive certain benefits upon certain terminations of employment, which benefits are summarized below in "Potential Payments Upon Termination or Change in Control."

        Jason E. Child.    We entered into an employment agreement with Mr. Child to serve as our Chief Financial Officer effective December 20, 2010, which was amended and restated effective April 29, 2011, and expires on December 20, 2015. Pursuant to his amended and restated employment agreement, Mr. Child is paid a base salary of $350,000 annually. Mr. Child is also eligible to receive an annual performance bonus of at least $350,000, determined by the Board and the compensation committee, payable semi-annually on June 20^th and December 20^th of each year. Mr. Child is entitled to participate in our executive and employee benefit plans on the same basis as other members of our senior management, and is reimbursed by us for the costs of those plans in which he elects to participate. In connection with the execution of his employment agreement in December 2010, Mr. Child received a one-time signing bonus of $375,000, and an award of 600,000 restricted stock units under our 2010 Plan. We granted Mr. Child an additional 50,000 restricted stock units on April 29, 2011 in connection with the execution of his amended and restated employment agreement. No restricted stock units will vest until the earliest of (i) December 20, 2011, (ii) six months after the effective date of our initial public offering, or (iii) a change in control. On the first of the foregoing events to occur, 130,000 restricted stock units will vest, and on the last day of each subsequent three-month period, 32,500 additional restricted stock units will vest. No restricted stock units will vest if Mr. Child has not been continuously employed by us up to and including the applicable vesting date. Mr. Child is also entitled to receive certain benefits upon certain terminations of employment and a change in control, which benefits are summarized below in "Potential Payments Upon Termination or Change in Control."

        Robert S. Solomon.    Mr. Solomon ceased to hold the position of President and Chief Operating Officer of the Company on March 22, 2011. Prior to that date, we had entered into an employment agreement with Mr. Solomon to serve as our President and Chief Operating Officer effective March 15, 2010. Pursuant to his agreement, Mr. Solomon was paid a base salary of $350,000 annually. He was also eligible to receive an annual performance bonus of up to thirty-three percent of his base salary, which was payable as determined by the Board and the compensation committee in their sole discretion based on

106

Mr. Solomon's job performance, our financial performance, and certain performance targets approved by the Board. Mr. Solomon was also entitled to participate in our executive and employee benefit plans on the same basis as other members of our senior management, and was reimbursed by us for the costs of those plans in which he elected to participate. In connection with the execution of his employment agreement, Mr. Solomon received an award of options to purchase 4,110,000 shares of our Class A common stock under our 2008 Plan, 1,027,500 of which vested on March 22, 2011, with the remaining options to vest in approximately equal increments each quarter thereafter beginning on June 22, 2011. Mr. Solomon entered into a transition services and separation agreement with us on April 5, 2011, as amended, pursuant to which he receives certain benefits throughout a specified transition period and following his termination, which benefits are summarized below in "Potential Payments Upon Termination or Change in Control."

        Brian K. Totty.    We entered into an employment agreement with Mr. Totty to serve as our Senior Vice President of Engineering and Operations, effective November 30, 2010. His agreement does not have a specified term. Pursuant to his agreement, Mr. Totty is paid a base salary of $250,000 annually. Mr. Totty is also eligible to participate in those fringe benefit plans generally available to our employees. In connection with the execution of his employment agreement, Mr. Totty received an award of 197,280 restricted stock units under our 2010 Plan, which vest in equal increments over thirty-six months beginning December 30, 2010. No restricted stock units will vest if Mr. Totty has not been continuously employed by us up to and including the applicable vesting date. If, as of November 30, 2012, there has not been a change in control, an initial public offering, or a bona fide third-party offer to purchase Mr. Totty's shares of Class A common stock, Mr. Totty will have a one-time right to require us to purchase his shares of Company capital stock at their then current fair market value, up to an aggregate value of $2,000,000, which right shall expire after 60 days. This right will terminate automatically if Mr. Totty voluntarily terminates employment (other than following a demotion) at any time prior to November 30, 2012. Mr. Totty is also entitled to receive certain benefits upon certain terminations of employment and a change in control, which benefits are summarized below in "Potential Payments Upon Termination or Change in Control."

        Margaret H. Georgiadis.    Ms. Georgiadis resigned as Chief Operating Officer of the Company on September 22, 2011. We had entered into an employment agreement with Ms. Georgiadis to serve in that position effective April 15, 2011. Pursuant to the terms of her employment agreement, Ms. Georgiadis was paid a base salary of $500,000 per year. She was also eligible to receive a discretionary annual bonus not to exceed 100% of her base salary and to participate in our employee and executive benefit plans. In connection with her hiring, Ms. Georgiadis was granted 1,100,000 restricted stock units under our 2010 Plan, 300,000 of which were immediately vested, subject to certain conditions. The remaining restricted stock units were subject to vesting based on Ms. Georgiadis' continued employment.

107

Grants of Plan-Based Awards in 2010

        The following table sets forth information regarding grants of awards made to our named executive officers during 2010. These amounts have been adjusted to reflect a three-for-one stock split completed in August 2010, and a two-for-one stock split completed in January 2011.

Name	Grant Date		Number of Securities Underlying Restricted Stock Units (#)			Number of Securities Underlying Options (#)			Exercise Price of Option Awards ($/sh)		Grant Date Fair Value of Stock and Option Awards ($)(1)
Andrew D. Mason		—		—			—			—		—
Jason E. Child		12/20/2010		600,000	(2)		—			—		9,477,000
Robert S. Solomon		3/22/2010		—			155,424	(3)		2.57		191,684
		3/22/2010		—			3,954,576	(4)		2.57		4,877,179
Brian K. Totty		11/30/2010		197,280	(5)		—			—		2,659,334
Kenneth M. Pelletier		—		—			—			—		—

(1)

Reflects grant date fair value of restricted stock units and option awards computed in accordance with FASB ASC Topic 718. Assumptions underlying the valuations are set forth in footnotes 2 and 3 to the Summary Compensation Table above.

(2)

Reflects the award of restricted stock units under the 2010 Plan upon Mr. Child's employment as Chief Financial Officer, pursuant to his entering into an employment agreement with us.

(3)

Reflects the award of incentive stock options under the 2008 Plan upon Mr. Solomon's employment as President and Chief Operating Officer, pursuant to his entering into an employment agreement with us.

(4)

Reflects the award of nonqualified statutory stock options under the 2010 Plan upon Mr. Solomon's employment as President and Chief Operating Officer, pursuant to his entering into an employment agreement with us.

(5)

Reflects the award of restricted stock units under the 2010 Plan upon Mr. Totty's employment as Senior Vice President of Engineering and Operations, pursuant to his entering into an employment agreement with us.

Outstanding Equity Awards at 2010 Year-End

        The following table lists all outstanding equity awards held by our named executive officers as of December 31, 2010. These amounts have been adjusted to reflect a three-for-one stock split completed in August 2010, and a two-for-one stock split completed in January 2011.

	Option Awards									Stock Awards
Name	Number of Securities Underlying Unexercised Options (#) Exercisable		Number of Securities Underlying Unexercised Options (#) Unexercisable			Option Exercise Price ($)		Option Expiration Date		Number of Shares of Stock that Have Not Vested (#)			Market Value of Shares of Stock that Have Not Vested ($)
Andrew D. Mason		—		—			—		—		—			—
Jason E. Child		—		—			—		—		600,000	(1)		9,477,000
Robert S. Solomon		—		4,110,000	(2)		2.57		3/22/2020		—			—
Brian K. Totty		—		—			—		—		191,800	(3)		3,029,481
Kenneth M. Pelletier		—		45,000	(4)		0.02		9/1/2017		—			—
		—		143,750	(5)		0.02		11/7/2018		—			—
		—		387,500	(6)		0.16		7/9/2019		—			—

(1)

Restricted stock units vest according to the following schedule: 120,000 on the earliest of (i) December 20, 2011, (ii) six months after the effective date of our initial public offering, or (iii) a change in control event; and an additional 30,000 on the last day of each subsequent three-month period following the initial vesting event. Vesting is subject to Mr. Child's continued employment by the Company up to and including each applicable vesting date.

(2)

Stock options would have vested according to the following schedule: 1,027,500 on March 22, 2011; an additional 256,878 on June 22, 2011 and on each monthly anniversary of such date thereafter through December 22, 2011; and an additional 256,842 on March 22, 2014. Vesting of certain of Mr. Solomon's stock options was accelerated pursuant to his separation agreement, as described below in "Mr. Solomon's Transition Services and Separation Agreement."

108

(3)

Restricted stock units vest according to the following schedule: 5,480 on December 31, 2010 and on each monthly anniversary of such date thereafter. Vesting is subject to Mr. Totty's continued employment by us up to and including each applicable vesting date.

(4)

Stock options would have vested according to the following schedule: 5,000 on January 1, 2011 and on each monthly anniversary of such date thereafter. Vesting of certain of Mr. Pelletier's stock options was accelerated pursuant to his separation agreement, as described below in "Mr. Pelletier's Separation Agreement."

(5)

Stock options would have vested according to the following schedule: 6,250 on January 7, 2011 and on each monthly anniversary of such date thereafter. Vesting of certain of Mr. Pelletier's stock options was accelerated pursuant to his separation agreement, as described below in "Mr. Pelletier's Separation Agreement."

(6)

Stock options would have vested according to the following schedule: 12,500 on January 9, 2011 and on each monthly anniversary of such date thereafter. Vesting of certain of Mr. Pelletier's stock options was accelerated pursuant to his separation agreement, as described below in "Mr. Pelletier's Separation Agreement."

Option Exercises and Stock Vested in 2010

        The following table sets forth all exercises of stock options by our named executive officers during 2010. These amounts have been adjusted to reflect a three-for-one stock split completed in August 2010, and a two-for-one stock split completed in January 2011.

	Option Awards				Stock Awards
Name	Number of Shares Acquired on Exercise (#)		Value Realized on Exercise ($)(1)		Number of Shares Acquired on Vesting (#)			Value Realized on Vesting ($)(2)
Andrew D. Mason		—		—		—			—
Jason E. Child		—		—		—			—
Robert S. Solomon		—		—		—			—
Brian K. Totty		—		—		5,480	(3)		86,584
Kenneth M. Pelletier		544,998		2,424,762		—			—

(1)

The value realized on exercise is the difference between the fair market value of the underlying stock at the time of exercise and the exercise price of the option.

(2)

The value realized on vesting is the fair market value of the underlying stock on the vesting date.

(3)

Consists of shares settled upon the vesting of restricted stock units awarded on November 30, 2010.

Pension Benefits

        Aside from our 401(k) plan, we do not maintain any pension plan or arrangement under which our named executive officers are entitled to participate or receive post-retirement benefits.

Non-Qualified Deferred Compensation

        We do not maintain any nonqualified deferred compensation plans or arrangements under which our named executive officers are entitled to participate.

Potential Payments Upon Termination or Change in Control

        Potential Payments pursuant to Mr. Mason's Employment Agreement.    Upon a termination of employment by us without cause or by Mr. Mason for good reason, Mr. Mason is entitled to receive, for a period of 180 days following termination, (i) continued payment of his base salary, less applicable withholding, and (ii) continuation of his then-current benefits under our benefit plans. Mr. Mason is also subject to non-competition and non-solicitation restrictive covenants for a period of two years following a termination of employment for any reason.

109

        "Cause" is defined in Mr. Mason's employment agreement as:

•

failure to perform reasonable legally assigned duties following written notice of such failure and a reasonable opportunity to cure;

•

theft, dishonesty, or falsification of employment or Company records;

•

an act or acts constituting a felony or involving moral turpitude;

•

willful misconduct or gross negligence that has had a material adverse effect on our reputation or business; or

•

material breach of the employment agreement following written notice of such breach and reasonable opportunity to cure.

        "Good reason" is defined in Mr. Mason's employment agreement as:

•

material reduction of duties and responsibilities below what is customary for his position, without Mr. Mason's consent;

•

office relocation more than twenty-five miles from our current office, without Mr. Mason's consent; or

•

our breach of the employment agreement which has continued for more than thirty days following notice to us of such breach.

        "Change in control" is defined in Mr. Mason's employment agreement by reference to our 2008 Plan, which is described below under "2008 Stock Option Plan."

        Potential Payments pursuant to Mr. Child's Employment Agreement.    Upon a termination of employment by us without cause or by Mr. Child for good reason, Mr. Child is entitled to receive immediate vesting of 110,000 unvested restricted stock units (from his original grant of 600,000 restricted stock units) and, for a period of six months following termination, (i) continued payment of his base salary, less applicable withholding, and (ii) continuation of Company-provided insurance benefits until he has secured insurance benefits elsewhere. Upon a change in control, Mr. Child is entitled to immediate vesting of fifty percent of his then unvested restricted stock units. However, in the event of a change of control that occurs on or before December 20, 2011, Mr. Child has the option to elect, in lieu of such immediate vesting, to receive a contractual commitment from us to pay him $2,650,000 annually, payable on a quarterly basis over the next five years, contingent on Mr. Child's remaining employed by us on each payment date. If Mr. Child makes such an election, and his employment is terminated by us without cause or by Mr. Child for good reason during the period beginning three months prior to the public announcement of a change in control and ending twelve months following a change in control, Mr. Child shall be entitled to receive a lump sum payment of the amount he would have received had he remained employed by us for an additional thirty-six months, payable in a lump sum. Mr. Child is also subject to non-competition and non-solicitation restrictive covenants for a period of six months following a termination of employment for any reason.

        "Cause" is defined in Mr. Child's employment agreement as:

•

theft, material dishonesty, or falsification of employment or Company records;

•

an act or acts constituting a felony; or

•

willful misconduct or gross negligence that has had a material adverse effect on our reputation or business.

110

        "Good reason" is defined in Mr. Child's employment agreement as:

•

material reduction of duties and responsibilities below what is customary for his position, without Mr. Child's consent;

•

a change in title;

•

our requirement that he report to anyone other than the chief executive officer;

•

office relocation more than fifty miles from our current office, without Mr. Child's consent;

•

material reduction of his base salary or minimum annual bonus, without a corresponding similar reduction to the base salaries or annual bonuses of other executive officers; or

•

our material breach of the employment agreement which has continued for more than thirty days following notice to us of such breach.

        "Change in control" is defined in Mr. Child's employment agreement by reference to our 2010 Plan, which is described below under "2010 Stock Plan."

        Potential Payments pursuant to Mr. Solomon's Employment Agreement.    Upon a termination of employment by us without cause or by Mr. Solomon for good reason, Mr. Solomon was entitled to receive, for a period of six months following termination, (i) continued payment of his base salary, less applicable withholding, (ii) continuation of Company-provided insurance benefits until he has secured insurance benefits elsewhere, and (iii) immediate vesting of 900,000 options. If such a termination had occurred during the period beginning three months prior to the public announcement of a change in control and ending twelve months following a change in control, Mr. Solomon also would have been entitled to immediate vesting of the options that would have vested over the next two years. Mr. Solomon is also subject to non-competition and non-solicitation restrictive covenants for a period of two years following a termination of employment for any reason.

        "Cause" is defined in Mr. Solomon's employment agreement as:

•

failure to perform reasonably assigned duties following written notice of such failure and a thirty-day cure period;

•

theft, dishonesty, or falsification of employment or Company records;

•

an act or acts constituting a felony or involving moral turpitude;

•

willful misconduct or gross negligence that has had a material adverse effect on our reputation or business; or

•

material breach of the employment agreement following written notice of such breach and a thirty-day cure period.

        "Good reason" is defined in Mr. Solomon's employment agreement as:

•

material reduction of duties and responsibilities below what is customary for his position, without Mr. Solomon's consent;

•

office relocation more than one hundred miles from our current office, without Mr. Solomon's consent; or

•

our breach of the employment agreement which has continued for more than thirty days following notice to us of such breach.

        "Change in control" is defined in Mr. Solomon's employment agreement by reference to the Company's 2010 Plan, which is described below under "2010 Stock Plan."

111

        Mr. Solomon's Transition Services and Separation Agreement.    Upon his departure from the position of President and Chief Operating Officer on March 22, 2011, Mr. Solomon entered into a transition services and separation agreement with us on April 5, 2011, as amended. Pursuant to this agreement, he is required to perform certain transitional duties during the transition period, which ends on October 7, 2011 (the "Separation Date"). During the transition period, Mr. Solomon will continue to receive his former base salary and be eligible to participate in our employee benefit plans. In addition, 900,000 options was accelerated as of March 22, 2011, an additional 416,556 options vested as of July 25, 2011, and Mr. Solomon will be permitted to exercise his vested options for a period of ninety days following the Separation Date. Following the Separation Date, and provided that Mr. Solomon executes a release of claims, Mr. Solomon is entitled to receive (i) continued payment of his base salary, less applicable withholding, for a period of six months following termination and (ii) continued group health insurance benefits through October 31, 2011 and Company-paid COBRA premiums thereafter through January 31, 2012. However, if Mr. Solomon is terminated for cause during the transition period, he will not be eligible to receive any post-employment benefits under this agreement. Mr. Solomon is also subject to non-competition and non-solicitation restrictive covenants for a period of two years following his termination of employment.

        "Cause" is defined in Mr. Solomon's separation agreement as:

•

theft, dishonesty, or falsification of employment or Company records;

•

an act or acts constituting a felony or involving moral turpitude;

•

willful misconduct or gross negligence that has had a material adverse effect on our reputation or business; or

•

material breach of the separation agreement following written notice of such breach and a thirty-day cure period.

        Potential Payments pursuant to Mr. Totty's Employment Agreement.    Upon a termination of employment by us without cause or a demotion, in each case, that occurs before November 30, 2012, Mr. Totty is entitled to receive immediate vesting of fifty percent of his then unvested restricted stock units. Mr. Totty is also subject to a non-solicitation restrictive covenant for a period of one year following a termination of employment for any reason. Upon a change in control, Mr. Totty is entitled to receive immediate vesting of fifty percent of his restricted stock units, to the extent they have not already vested in accordance with their terms. In addition, upon a change in control that is agreed to prior to November 30, 2011, Mr. Totty is entitled to receive:

•

a cash amount equal to the positive difference, if any, between (i) $4,575,000, and (ii) the value of 307,500 shares of our stock (as of the date of the change in control); and

•

one-third of the "retention shortfall", which is determined by subtracting (i) the value of 600,000 restricted stock units (as of the date of the change in control), from (ii) the difference between $38,300,000 and the sum of the (x) the value of 1,230,000 shares (as of the date of the change in control) and (y) four times the amount described in the first bullet point above. Mr. Totty's share of the retention shortfall is subject to vesting in equal monthly increments over the three year period commencing on November 30, 2010, provided that Mr. Totty has been continuously employed by us on each applicable vesting date. In the event that Mr. Totty experiences a demotion or is terminated without cause prior to the full vesting of his share of the retention shortfall, his entire share shall be immediately vested. All amounts above have been adjusted to reflect the January 2011 stock split.

        "Cause" is defined in Mr. Totty's employment agreement as:

•

conviction of or plea of nolo contendere to any felony or other crime involving fraud, theft or moral turpitude;

112

•

fraud, theft, embezzlement, or other material dishonesty involving the Company or a material breach of his fiduciary duty to the Company;

•

gross negligence or willful misconduct in the performance of his employment duties to the extent such gross negligence or willful misconduct materially and adversely affects the Company; or

•

material breach of his employment agreement, which is not curable or is not cured within fifteen days following notice by us to Mr. Totty specifying the nature of such breach.

        A "demotion" is defined in Mr. Totty's employment agreement as:

•

material reduction in his duties and responsibilities or a permanent change in his duties and responsibilities which is materially inconsistent with the duties and responsibilities of his position, which reduction or change is not cured within thirty days following notice by Mr. Totty to us thereof.

        "Change in control" is defined in Mr. Totty's employment agreement as (i) the acquisition by any person or entity of the beneficial ownership of more than fifty percent of the then outstanding shares of our common stock or the combined voting power of the then outstanding securities entitled to vote in the election of directors; (ii) the closing of a sale or other conveyance of substantially all of the Company's assets; (iii) the consummation of any merger or other business combination involving the Company if, immediately after such transaction, the holders of a majority of the outstanding securities entitled to vote in the election of directors of the surviving entity of such transaction are not persons or entities who, immediately prior to such transaction, held such securities; or (iv) the completion of any other transaction that has the same effect as any of the foregoing.

        Mr. Pelletier's Separation Agreement.    Upon his separation from the Company on March 23, 2011, Mr. Pelletier entered into a separation agreement and general release with us on April 6, 2011. Pursuant to this agreement, Mr. Pelletier is entitled to (i) continued payment of his base salary, less applicable withholding, for a period of six months following termination, and (ii) immediate vesting of fifty percent of his unvested stock options, which remained exercisable for thirty days following termination.

113

        The table below shows the estimated amount of payments and benefits that we would provide to our named executive officers assuming that their employment was terminated as of December 31, 2010 by us without cause or by the officer for good reason, including in connection with a change in control. None of our named executive officers were retirement eligible as of December 31, 2010. The table below also shows the estimated amount of payments and benefits that we would provide to our named executive officers assuming a change of control as of December 31, 2010.

Executive	Payment Elements		Change in Control ($)			Termination Without Cause or for Good Reason in Connection with a Change in Control ($)			Termination Without Cause or for Good Reason ($)
Andrew D. Mason		Salary		—			88,767			88,767
		Stock Options		—			—			—
		Restricted Stock Units		—			—			—
		Restricted Stock		—			—			—
		Health Coverage		—			5,400			5,400
		Total		—			94,167			94,167
Jason E. Child		Salary		—			175,000			175,000
		Stock Options		—			—			—
		Restricted Stock Units		4,738,500			4,738,500			—
		Restricted Stock		—			—			—
		Health Coverage		—			5,400			5,400
		Total		4,738,500			4,918,900			180,400
Robert S. Solomon		Salary		—			175,000			175,000
		Stock Options		—			49,271,668			11,902,500
		Restricted Stock Units		—			—			—
		Restricted Stock		—			—			—
		Health Coverage		—			5,400			5,400
		Total		—			49,452,068			12,082,900
Brian K. Totty		Salary		—			—			—
		Stock Options		—			—			—
		Restricted Stock Units		1,558,019			1,558,019	(1)		1,514,741	(1)
		Restricted Stock		—			—			—
		Health Coverage		—			—			—
		Additional Payments		3,131,685	(2)		3,131,685	(2)		—
		Total		4,689,704			4,689,704			1,514,741
Kenneth M. Pelletier		Salary		—			—			—
		Stock Options		—			—			—
		Restricted Stock Units		—			—			—
		Restricted Stock		—			—			—
		Health Coverage		—			—			—
		Total		—			—			—

(1)

Vesting of Mr. Totty's restricted stock units is accelerated upon a demotion or a termination of his employment by us without cause. See "Potential Payments pursuant to Mr. Totty's Employment Agreement" above for further details.

(2)

Represents potential payments made upon a change in control occurring prior to November 30, 2011, in connection with the merger of Groupon Ludic, Inc. and Ludic Labs, Inc. See "Potential Payments pursuant to Mr. Totty's Employment Agreement" above for further details.

114

Employee Benefit Plans

2011 Incentive Plan

        We established the 2011 Incentive Plan effective August 17, 2011 and referred to herein as the 2011 Plan. The purpose of the 2011 Plan is to advance the interests of the Company and its subsidiaries by providing a variety of equity-based and cash incentives designed to motivate, retain and attract employees, directors, consultants, independent contractors, agents, and other persons providing services to the Company through the acquisition of a larger personal financial interest in the Company. The 2011 Plan provides for the award of incentive stock options, nonqualified stock options, stock appreciation rights, cash incentive awards, and a variety of full value awards (including restricted stock, restricted stock units, deferred stock, deferred stock units, performance shares, and performance share units).

        Administration.    The 2011 Plan is administered by a committee designated by the Board, or, in the absence of such a committee, by the Board. The committee has the full authority and discretion to determine the terms, conditions, performance targets, restrictions and other provisions of awards under the 2011 Plan, including selecting those persons who will receive awards and the types of awards granted. Awards of stock options, stock appreciation rights and full value awards under the 2011 Plan shall be evidenced by award agreements.

        Grant of Awards; Shares Available for Awards.    Generally, awards under the 2011 Plan may be granted to employees, directors, consultants, independent contractors, agents, and other persons providing services to the Company or any subsidiary, other than incentive stock options, which may only be granted to employees. An aggregate of (i) 25,000,000 shares of our Class A common stock, plus (ii) any shares that become available for issuance under the 2010 Plan following completion of this offering, are reserved for issuance under the 2011 Plan. The number of shares issued or reserved pursuant to the 2011 Plan may be adjusted by the committee as it deems appropriate as the result of stock splits, stock dividends, and similar changes in our Class A common stock.

        Stock Options and Stock Appreciation Rights.    Under the 2011 Plan, the committee may grant participants incentive stock options (which qualify for special tax treatment under United States tax law), nonqualified stock options, and stock appreciation rights. The committee establishes the duration of each option or right at the time of grant, with a maximum duration of ten years from the effective date of the grant. The committee may also establish any performance criteria or period of service requirements that must be satisfied prior to the exercise of options or rights. Options and stock appreciation rights must have an exercise price that is not less than the fair market value of a share of common stock on the grant date. Payment of the exercise price for shares being purchased pursuant to a stock option may be made in cash, by tendering previously owned shares or shares to which the participant would otherwise be entitled, through a broker-dealer cashless exercise, or by any combination thereof.

        Full Value Awards.    Full value awards may be made in the form of restricted stock, restricted stock units, deferred stock, deferred stock units, performance shares, and performance share units. The committee shall establish any performance criteria or period of service requirements that must be satisfied prior to the vesting of any full value awards. Full value awards may be granted to comply with the exception from the deductibility limits of Section 162(m) of the Code for performance-based compensation. A performance-based full value award granted under Section 162(m) will be conditioned on the achievement of one or more performance goals as determined by the committee.

        Cash Incentive Awards.    Cash incentive awards are payable in the form of cash or shares or a combination thereof, as determined by the committee. Cash incentive awards may be granted to comply with the exception from the deductibility limits of Section 162(m) of the Code for performance-based compensation. A performance-based cash incentive award granted under Section 162(m) will be conditioned on the achievement of one or more performance goals as determined by the committee.

115

        Change in Control Provisions.    The Board may, in the event of a change in control, provide that outstanding awards become fully vested and/or exercisable, substitute shares of a successor entity for shares subject to outstanding awards under the 2011 Plan, and/or cancel outstanding awards in exchange for payment in the form of cash, shares of a successor entity, or a combination thereof. A change in control is defined as either (i) a sale of more than fifty percent of our outstanding stock, a merger or consolidation, or a sale of substantially all of our assets, wherein the Company's stockholders do not retain, immediately after the transaction, in substantially the same proportions as their ownership of shares of voting stock immediately before the transaction, direct or indirect ownership of more than fifty percent of the total combined voting power of the Company's outstanding voting stock entitled to vote generally in the election of Board members, or (ii) our stockholders' approval of a plan of liquidation or dissolution.

        Compliance With Laws.    The 2011 Plan is designed to comply with all applicable federal, state and foreign securities laws, including the Securities Act of 1933 and the Securities Exchange Act of 1934. The 2011 Plan and all awards granted thereunder are intended to comply with, or otherwise be exempt from, Section 409A of the Code.

        Amendment and Termination.    The Board may amend or terminate the 2011 Plan at any time. However, no amendment that requires the approval of our stockholders may be made without such stockholder approval, and no amendment may adversely affect any outstanding awards. Notwithstanding the foregoing, the 2011 Plan or any award agreement may be amended without the consent of the participant to the extent necessary to comply with any applicable requirements of law, including Section 409A of the Code.

Employee Equity Awards

        In connection with this offering, we anticipate granting equity-based incentive awards to certain of our non-executive officer employees in an aggregate amount of approximately 1,200,000 shares of our Class A common stock. Awards with respect to approximately 500,000 of these shares would be in the form of performance awards for non-U.S. employees and awards with respect to approximately 720,000 of these shares would be in the form of a broad-based grant of restricted stock units for our employees who have not received prior equity awards. We will grant these awards under our 2011 Plan.

2010 Stock Plan

        We established the 2010 Stock Plan, originally effective April 16, 2010 and most recently amended on April 1, 2011, referred to herein as the 2010 Plan. No new awards may be granted under the 2010 Plan following the completion of this offering; however, awards previously granted and outstanding under the 2010 Plan remain subject to the terms of the 2010 Plan and the applicable award agreement. The purpose of the 2010 Plan is to advance the interests of the Company, and our affiliates and stockholders, by providing incentives to retain and reward participants and motivate them to contribute to our growth and profitability. The 2010 Plan provides for the award of incentive stock options, nonqualified stock options, restricted stock purchase rights, restricted stock units, and restricted stock bonuses.

        Administration.    The 2010 Plan is administered and interpreted by the compensation committee. The compensation committee has the full and final power and authority to determine the terms of awards under the 2010 Plan, including designating those persons who will receive awards, the types of awards granted, the fair market value of shares of stock or other property, and the restrictions and conditions that may be applicable to each award and underlying shares. Awards under the 2010 Plan are evidenced by award agreements.

        Grant of Awards; Shares Available for Awards.    Generally, awards under the 2010 Plan may be granted to employees, consultants and directors of the Company or any affiliate, other than incentive stock options, which may only be granted to employees. An aggregate of 10,000,000 shares of our Class A common stock

116

(as adjusted to reflect a three-for-one stock split completed in August 2010 and a two-for-one stock split completed in January 2011), in the aggregate, were reserved for issuance under the 2010 Plan. The number of shares issued or reserved pursuant to the 2010 Plan may be adjusted by the compensation committee, as it deems appropriate, as the result of stock splits, stock dividends, and similar changes in our Class A common stock. No new awards will be granted under the 2010 Plan following the completion of this offering.

        Stock Options.    Under the 2010 Plan, the compensation committee may grant participants incentive stock options, which qualify for special tax treatment under United States tax law, as well as nonqualified stock options. The compensation committee establishes the duration of each option at the time of grant, with a maximum duration of ten years from the effective date of the grant. The compensation committee also establishes any performance criteria or passage of time requirements that must be satisfied prior to the exercise of options. Option grants must have an exercise price that is not less than the fair market value of a share of common stock on the grant date. Payment of the exercise price for shares being purchased pursuant to a stock option may be made in cash or check, or, if the Company permits, by means of a stock tender exercise, a cashless exercise or a net exercise.

        Restricted Stock Awards.    Restricted stock awards under the 2010 Plan may be made in the form of either restricted stock bonuses or restricted stock purchase rights. Restricted stock bonuses are awards of shares that vest in accordance with terms and conditions established by the compensation committee. Restricted stock purchase rights are awards of rights to purchase shares that vest in accordance with terms and conditions established by the compensation committee; these rights are exercisable for a period established by the compensation committee that shall not exceed thirty days from the grant date. Except as otherwise provided by an award agreement, recipients of restricted stock awards have all the rights of stockholders with respect to the underlying shares, including the right to vote such shares and receive dividends on such shares.

        Restricted Stock Units.    Under the 2010 Plan, the compensation committee may grant participants restricted stock units, which are units representing the right to receive shares of our common stock, or the cash value of such shares, on a specified date in the future, subject to forfeiture of such right. The compensation committee establishes the time or times on which a restricted stock unit will vest and the form of consideration (shares, cash or a combination of both) to be distributed to a participant on settlement.

        Change in Control Provisions.    The compensation committee may provide that, in the event of a termination of a participant's service in connection with a change in control, an outstanding award will become fully vested and/or exercisable. In the event of a change in control, the 2010 Plan provides that the surviving entity may assume or continue our rights and obligations under any outstanding award, or may substitute substantially equivalent awards with respect to the surviving entity's stock. The compensation committee may also, in its discretion, determine that an outstanding award may be cashed out in connection with a change in control. A change in control is defined as either (i) a sale of more than fifty percent of our outstanding stock, a merger or consolidation, or a sale of substantially all of our assets, wherein the Company's stockholders do not retain, immediately after the transaction, in substantially the same proportions as their ownership of shares of voting stock immediately before the transaction, direct or indirect ownership of more than fifty percent of the total combined voting power of the Company's outstanding voting stock, or (ii) our stockholders' approval of a plan of liquidation or dissolution.

        Compliance with Laws.    The 2010 Plan is designed to comply with all applicable federal, state and foreign securities laws, including the Securities Act of 1933 and the Securities Exchange Act of 1934. The 2010 Plan and all awards granted thereunder are intended to comply with, or otherwise be exempt from, Section 409A of the Code.

117

        Amendment and Termination.    The compensation committee may amend, suspend or terminate the 2010 Plan at any time. However, no amendment that requires the approval of our stockholders shall be made without the approval of the Company's stockholders. In addition, no amendment, suspension, or termination of the 2010 Plan may adversely affect any outstanding awards; provided, however, that the compensation committee may amend the 2010 Plan or any award agreement for the purposes of conforming the 2010 Plan or the award agreement to the requirements of law, including the requirements of Section 409A of the Code.

2008 Stock Option Plan

        We established the 2008 Stock Option Plan, originally effective January 15, 2008, referred to herein as the 2008 Plan. The 2008 Plan was frozen in December 2010; however, option awards previously granted and outstanding under the 2008 Plan remain subject to the terms of the 2008 Plan and the applicable award agreement. The purpose of the 2008 Plan is to advance the interests of the Company and our affiliates and stockholders, by providing incentives to retain and reward participants and motivate them to contribute to our growth and profitability. The 2008 Plan provides for the award of incentive stock options and nonqualified stock options.

        Administration.    The 2008 Plan is administered and interpreted by the compensation committee. The compensation committee has the full and final power and authority to determine the terms of option awards under the 2008 Plan, including designating those persons who will receive option awards, the number of shares to be subject to each option award, the fair market value of shares of stock or other property, and the restrictions and conditions that may be applicable to each option award and the underlying shares. Awards under the 2008 Plan are evidenced by option award agreements.

        Grant of Option Awards; Shares Available for Awards.    Generally, option awards under the 2008 Plan may be granted to employees, consultants and directors of the Company or any affiliate, other than incentive stock options, which may only be granted to employees. An aggregate of 32,309,250 shares of our Class A common stock (as adjusted to reflect a three-for-one stock split completed in August 2010 and a two-for-one stock split completed in January 2011), in the aggregate, were reserved for issuance under the 2008 Plan. The number of shares issued or reserved pursuant to the 2008 Plan may be adjusted by the compensation committee, as it deems appropriate, as the result of stock splits, stock dividends, and similar changes in our Class A common stock. No new option awards have been granted under the 2008 Plan since it was frozen in December 2010.

        Stock Options.    Under the 2008 Plan, the compensation committee granted participants incentive stock options, which qualified for special tax treatment under United States tax law, as well as nonqualified stock options. The compensation committee established the duration of each option at the time of grant, with a maximum duration of ten years from the effective date of the grant. The compensation committee also established any performance criteria or passage of time requirements that must be satisfied prior to the exercise of options. Incentive stock option grants were required to have an exercise price that was not less than the fair market value of a share of common stock on the grant date, while nonqualified stock option grants were required to have an exercise price that was not less than eighty-five percent of the fair market value of a share of common stock on the grant date. Payment of the exercise price for shares being purchased pursuant to a stock option may be made in cash or check, or, if the Company permits, by means of a stock tender exercise, a cashless exercise or a net exercise.

        Change in Control Provisions.    In the event of a change in control, the surviving entity may assume or continue the Company's rights and obligations under any outstanding option award, or may substitute substantially equivalent options with respect to the surviving entity's stock. Options that are neither assumed nor substituted upon a change in control shall terminate and cease to be outstanding as of the date of the change in control. A change in control is defined as either (i) a sale of more than fifty percent of our outstanding stock, a merger or consolidation, or a sale of substantially all of our assets, wherein the

118

Company's stockholders do not retain, immediately after the transaction, in substantially the same proportions as their ownership of shares of voting stock immediately before the transaction, direct or indirect ownership of more than fifty percent of the total combined voting power of the Company's outstanding voting stock, or (ii) our stockholders' approval of a plan of liquidation or dissolution.

        Compliance with Laws.    The 2008 Plan was designed to comply with all applicable federal, state and foreign securities laws, including the Securities Act of 1933 and the Securities Exchange Act of 1934.

        Amendment and Termination.    The compensation committee may amend or terminate the 2008 Plan at any time. However, no amendment that requires the approval of our stockholders shall be made without the approval of the Company's stockholders. In addition, no amendment or termination of the 2008 Plan may adversely affect any outstanding options without the participant's consent, unless the amendment or termination is required to enable an option designated as an incentive stock option to qualify as an incentive stock option or is necessary to comply with applicable law.

401(k) Plan

        Our 401(k) plan, which is generally available to all employees, allows participants to defer amounts of their annual compensation before taxes, up to the maximum amount specified by the Code, which was $16,500 per person for calendar year 2010. Elective deferrals are immediately vested and nonforfeitable upon contribution by the employee.

Compensation and Risk

        The Company has undertaken a risk review of the Company's employee compensation plans and arrangements in which our employees (including our executive officers) participate, to determine whether these plans and arrangements have any features that might create undue risks or encourage unnecessary and excessive risk-taking that could threaten the value of the Company. In our review, we considered numerous factors and design elements that manage and mitigate risk, without diminishing the effect of the incentive nature of compensation, including the following: a commission-based incentive program for sales employees that only results in payout based on actual revenue; discretionary bonuses for executive employees that are not tied to specific quantitative formulas and may be adjusted for qualitative factors and individual performance; ownership of a large percentage of our shares and equity-based awards by senior management; and our practice of awarding long-term equity grants upon hire to our executives in order to directly tie the executive's expectation of compensation to their contributions to our long-term value of the Company. Based on our review, we concluded that any potential risks arising from our employee compensation programs, including our executive programs, are not reasonably likely to have a material adverse effect on the Company.

Director Compensation in 2010

        Historically, with the exception of cash payments to Messrs. Keywell and Lefkofsky in 2010, we have not paid our non-employee directors any cash compensation for their services as members of our Board. We have provided occasional grants of equity awards to directors, though none were granted in 2010. As described below, we have implemented an annual cash and equity compensation program for our

119

non-employee directors to be effective following this offering. The following table sets forth the compensation paid to our non-employee directors in 2010.

Name	Fees Earned or Paid in Cash ($)		Option Awards ($)		All Other Compensation ($)		Total ($)
Peter J. Barris		—		—		—		—
Kevin J. Efrusy		—		—		—		—
Jason Fried(1)		—		—		—		—
Bradley A. Keywell		90,000		—		—		—
Eric P. Lefkofsky		90,000		—		—		—
Theodore J. Leonsis		—		—		—		—
John R. Walter(1)		—		—		—		—
Harry Weller(1)		—		—		—		—

(1)

Messrs. Fried, Walter and Weller ceased to be members of the Board as of January 13, 2011.

        As of December 31, 2010, as adjusted for the August 2010 and January 2011 stock splits, the aggregate option awards outstanding for our non-employee directors were as follows: Theodore J. Leonsis—600,000; and Jason Fried—450,000. There were no outstanding stock or option awards for any other non-employee directors.

        On February 1, 2011, we granted Howard Schultz 60,000 stock options upon his appointment to the Board. These options will vest in four equal installments on each anniversary of the grant date, subject to Mr. Schultz's continued service on the Board through each vesting date. On June 1, 2011, we granted Mellody Hobson 20,000 restricted stock units upon her appointment to the Board. One-fourth of her restricted stock units were immediately vested on the date of grant, while the remainder will vest in equal increments on May 31 of each of 2012, 2013 and 2014, subject to Ms. Hobson's continued service on the Board through each vesting date. We have also implemented an annual cash and equity compensation program, to be effective following this offering, under which each non-employee director will receive a retainer of $200,000 annually, half of which will be paid in cash, and half in restricted stock units. However, each non-employee director may elect to receive his or her entire retainer in the form of restricted stock units.

120

RELATED PARTY TRANSACTIONS

        In addition to the cash and equity compensation arrangements of our directors and executive officers discussed above under "Management—Director Compensation" and "Executive Compensation," the following is a description of transactions since January 1, 2008, to which we have been a party in which the amount involved exceeded or will exceed $120,000 within any fiscal year and in which any of our directors, executive officers, beneficial holders of more than 5% of our capital stock or entities affiliated with them had or will have a direct or indirect material interest.

Legal Services of Lefkofsky & Gorosh, P.C.

        Steven P. Lefkofksy, the brother of Eric P. Lefkofsky, is a founder and shareholder of Lefkofsky & Gorosh, P.C. For 2009, 2010 and the first half of 2011, we paid Lefkofsky & Gorosh, P.C. approximately $0.1 million, $0.3 million and $0.4 million, respectively, for legal services rendered. We expect to continue to obtain legal services from Lefkofsky & Gorosh in the future.

Subleases with Echo Global Logistics, Inc.

        In May 2009, we entered into an agreement with Echo Global Logistics, Inc. (NASDAQ: ECHO), which was subsequently amended, pursuant to which we sub-leased portions of Echo's office space in Chicago on a month-to-month basis for $20,275 per month. Pursuant to the sublease, we paid Echo approximately $0.1 million, $0.2 million and $0.1 million for 2009, 2010, and the first half of 2011, respectively. During the first half of 2011, we cancelled our sub-lease with Echo. Three of our directors, Peter A. Barris, Eric P. Lefkofsky and Bradley A. Keywell, are also directors of Echo and have direct and/or indirect ownership interests in Echo. In addition, John R. Walter, one of our former directors, is also a director of Echo and has an ownership interest in Echo. Certain of our stockholders, including Old Willow Partners, LLC, an entity controlled by Richard A. Heise, Jr., and affiliates of New Enterprise Associates, also have direct and/or indirect ownership interests in Echo.

Sales of Our Securities

        We sold the following capital stock to our directors, officers and holders of 5% or more of our outstanding capital stock, and their respective affiliates, in private transactions on the dates set forth below. The information set forth below with respect to our voting and non-voting common stock gives effect to (i) the three-for-one stock split of our voting and non-voting common stock that was completed in August 2010 and (ii) the two-for-one stock split of our voting and non-voting common stock that was completed in January 2011.

Name of Stockholder	Series D Preferred Stock(1)		Series E Preferred Stock(2)		Series F Preferred Stock(3)	Series G Preferred Stock(4)	Voting Common Stock(5)		Non-Voting Common Stock(6)		Date of Purchase		Total Purchase Price
Entities Affiliated with New Enterprise Associates		6,560,174										1/15/08	$	4,799,999
Andrew D. Mason										1,800,000		11/1/09	$	144,000
Entities Affiliated with Accel Growth Fund L.P.				2,932,552								11/17/09	$	20,000,005
Entities Affiliated with New Enterprise Associates				1,466,276								11/17/09	$	10,000,002
Entities Affiliated with Oliver and Marc Samwer(7)								11,880,594				5/15/10		(8)
Entities Affiliated with Oliver and Marc Samwer(7)								13,560,600				12/1/10		(9)
Howard Schultz(10)										949,668		2/10/11	$	15,000,006
Theodore J. Leonsis										63,331		2/10/11	$	1,000,313
Entities Affiliated with Oliver and Marc Samwer(11)										1,454,428		7/20/11		(12)

(1)

Each share of Series D preferred stock will convert into six shares of Class A common stock upon the consummation of this offering.

121

(2)

Each share of Series E preferred stock will convert into six shares of Class A common stock upon the consummation of this offering.

(3)

Each share of Series F preferred stock will convert into six shares of Class A common stock upon the consummation of this offering.

(4)

Each share of Series G preferred stock will convert into two shares of Class A common stock upon the consummation of this offering.

(5)

Each share of voting common stock will convert into one share of Class A common stock upon the consummation of this offering.

(6)

Each share of non-voting common stock will convert into one share of Class A common stock upon the consummation of this offering.

(7)

Shares issued to CD-Rocket Holdings UG (haftungsbeschraenkt) & Co. Beteiligungs KG ("CD-Rocket") is owned by Rocket Internet GmbH, 83.34% of which is owned by European Founders Fund GmbH. European Founders Fund is owned by Oliver Samwer (33.33%), Marc Samwer (33.33%) and Alexander Samwer (33.33%).

(8)

These shares were issued to CD-Rocket as consideration in connection with the acquisition of CityDeal Europe GmbH by Groupon Germany GbR.

(9)

These shares were issued to CD-Rocket as contingent consideration in connection with the acquisition of CityDeal Europe GmbH by Groupon Germany GbR.

(10)

Includes 567,269 shares of non-voting common stock owned by Maveron Equity Partners IV, L.P., 47,483 shares of non-voting common stock held by MEP Associates IV, L.P. and 18,360 shares of non-voting common stock held by Maveron IV Entrepreneurs' Fund, L.P. (together, the "Maveron Funds"). Mr. Schultz is a limited partner of MEP Associates IV, L.P. and has an economic membership interest in, but is not a manager of, Maveron General Partner IV LLC, the general partner of the Maveron Funds.

(11)

Shares issued to Rocket Asia GmbH & Co. KG is owned by Rocket Internet GmbH, 83.34% of which is owned by European Founders Fund GmbH. European Founders Fund is owned by Oliver Samwer (33.33%), Marc Samwer (33.33%) and Alexander Samwer (33.33%).

(12)

These shares were issued as consideration in connection with an increase in Groupon's interest in E-Commerce King Limited. See "—Transactions and Relationships with Samwers and Affiliated Entities—E-Commerce King Limited Joint Venture China."

Series D Preferred Stock Investment

        In January 2008, we issued 6,560,174 shares of our Series D preferred stock to entities affiliated with New Enterprise Associates in exchange for $4.8 million in cash (or $4.7 million, net of issuance costs), or $0.73 per share. Each share of our Series D preferred stock is convertible into six shares of Class A common stock. We used the proceeds for working capital and general corporate purposes.

Series E Preferred Stock Investment

        In November 2009, we issued 4,406,160 shares of our Series E preferred stock to a group of third-party investors in exchange for $30.0 million in cash (or $29.9 million, net of issuance costs), or $6.82 per share. Each share of our Series E preferred stock is convertible into six shares of Class A common stock. We retained $3.5 million of the proceeds for working capital and general corporate purposes. We used the remaining $26.4 million of these proceeds to fund a dividend to our stockholders on a pro-rata basis of

122

$0.125 per share. In connection with this dividend, the following directors, officers and 5% or greater stockholders (or their respective affiliates) of the Company received the payments listed below:

Director, Officer or 5% Stockholder (or Affiliate)	Dividend Payment Amount
Green Media, LLC(1)	$	10,218,750
Andrew D. Mason	$	3,225,000
Entities Affiliated with New Enterprise Associates	$	4,920,131
600 West Groupon LLC(2)	$	1,799,970
Rugger Ventures LLC(3)	$	4,125,000
John R. Walter(4)	$	586,500
Kenneth M. Pelletier(5)	$	75,000
Theodore J. Leonsis	$	37,500

(1)

Green Media, LLC is owned by Eric P. Lefkofsky (50%) and his wife, Elizabeth Kramer Lefkofsky (50%).

(2)

The manager of 600 West Groupon LLC is Blue Media, LLC, an entity owned by Eric P. Lefkofsky (50%) and his wife, Elizabeth Kramer Lefkofsky (50%).

(3)

Rugger Ventures LLC is owned by Kimberly Keywell (80%), the wife of Bradley A. Keywell, and Mr. Keywell's children (20%).

(4)

Mr. Walter is one of our former directors.

(5)

Mr. Pelletier is our former Chief Technology Officer.

Series F Preferred Stock Investment

        In April 2010, we issued 4,202,658 shares of our Series F preferred stock to a group of third-party investors in exchange for $135.0 million in cash (or $134.9 million, net of issuance costs), or $32.12 per share. Each share of our Series F preferred stock is convertible into six shares of Class A common stock. We retained $15.0 million of these proceeds for working capital and general corporate purposes. We used the remaining $119.9 million of these proceeds to redeem voting and non-voting common stock from our existing stockholders at a purchase price of $5.3537 per share (on a post-stock split basis). The terms and conditions of the issuance of the Series F preferred stock, including the related redemption of voting and non-voting common stock, were determined through arm's-length negotiations among the Company's Series F preferred stock investors, the holders of the Company's other outstanding series of preferred stock, the holders of a majority of the Company's outstanding common stock and the Company. As a result, the voting and non-voting common stock was redeemed on a voluntary basis at the same price per share as the sale price of the Series F preferred stock, as compared to the fair value of the common stock of $3.1783 at that time.

        In connection with this redemption, the following directors, officers and 5% or greater stockholders (or their respective affiliates) of the Company received the payments listed below:

Director, Officer or 5% Stockholder (or Affiliate)	Shares Redeemed(1)	Original Purchase Price		Redemption Payment Amount
Green Media, LLC(2)	10,665,450 shares of voting common stock	$	178	$	57,095,709
Rugger Ventures LLC(3)	4,336,284 shares of voting common stock	$	72	$	23,213,574
Andrew D. Mason	3,349,584 shares of voting common stock	$	720	$	17,931,440
Theodore J. Leonsis	38,946 shares of non-voting common stock	$	3,635	$	208,491
600 West Groupon LLC(4)	1,869,534 shares of voting common stock	$	31	$	10,008,239
Kenneth M. Pelletier(5)	181,110 shares of non-voting common stock	$	3	$	969,542
John R. Walter(6)	609,156 shares of voting common stock	$	10	$	3,261,015

(1)

The number of shares of voting and non-voting common stock redeemed gives effect to the subsequent (i) three-for-one stock split of our voting and non-voting common stock that was completed in August 2010 and (ii) two-for-one stock split of our voting and non-voting common stock that was completed in January 2011.

(2)

Green Media, LLC is owned by Eric P. Lefkofsky (50%) and his wife, Elizabeth Kramer Lefkofsky (50%).

(3)

Rugger Ventures LLC is owned by Kimberly Keywell (80%), the wife of Bradley A. Keywell, and Mr. Keywell's children (20%).

(4)

The manager of 600 West Groupon LLC is Blue Media, LLC, an entity owned by Eric P. Lefkofsky (50%) and his wife, Elizabeth Kramer Lefkofsky (50%).

(5)

Mr. Pelletier is our former Chief Technology Officer.

(6)

Mr. Walter is one of our former directors.

123

Series G Preferred Stock Investment

        In December 2010 and January 2011, we issued 30,072,814 aggregate shares of our Series G preferred stock to a group of third-party investors in exchange for $946.0 million in cash (or $942.2 million, net of issuance costs), or $31.59 per share. Each share of our Series G preferred stock is convertible into two shares of Class A common stock. We retained $132.4 million of these proceeds for working capital and general corporate purposes. We used the remaining $809.8 million of these proceeds to redeem voting and non-voting common stock from our existing stockholders at a purchase price of $15.795 per share (on a post-stock split basis), and Series D preferred stock and Series E preferred stock from our existing stockholders at a purchase price of $31.59 per share, which was the fair value of the voting and non-voting common stock and the preferred stock at the time. In connection with this redemption, the following directors, officers and 5% or greater stockholders (or their respective affiliates) of the Company received the payments listed below:

Director, Officer or 5% Stockholder (or Affiliate)	Shares Redeemed(1)	Original Purchase Price		Redemption Payment Amount
Andrew D. Mason	633,172 shares of voting common stock	$	136	$	10,000,000
600 West Groupon LLC(2)	3,899,526 shares of voting common stock	$	65	$	61,593,013
Green Media, LLC(3)	16,302,446 shares of voting common stock	$	272	$	257,481,829
John R. Walter(4)	1,302,460 shares of voting common stock	$	22	$	20,571,482
Entities Affiliated with Accel Growth Fund L.P.	1,266,222 shares of Series E preferred stock	$	1,439,272	$	19,999,976
Entities Affiliated with New Enterprise Associates	3,622,524 shares of Series D preferred stock and 809,640 shares of Series E preferred stock	$	1,362,050	$	70,006,030
Entities Affiliated with Oliver and Marc Samwer(5)	7,311,142 shares of voting common stock		(6)	$	115,479,488
Rugger Ventures LLC(7)	8,447,860 shares of voting common stock	$	141	$	133,427,720
Brian K. Totty	41,470 shares of non-voting common stock		(8)	$	655,019
Kenneth M. Pelletier(9)	481,918 shares of non-voting common stock	$	1,057	$	7,611,895
Jason Fried(10)	35,310 shares of non-voting common stock	$	5,767	$	557,721

(1)

The number of shares of voting and non-voting common stock redeemed gives effect to (i) the three-for-one stock split of our voting and non-voting common stock that was completed in August 2010 and (ii) subsequent two-for-one stock split of our voting and non-voting common stock that was completed in January 2011.

(2)

The manager of 600 West Groupon LLC is Blue Media, LLC, an entity owned by Eric P. Lefkofsky (50%) and his wife, Elizabeth Kramer Lefkofsky (50%).

(3)

Green Media, LLC is owned by Eric P. Lefkofsky (50%) and his wife, Elizabeth Kramer Lefkofsky (50%).

(4)

Mr. Walter is one of our former directors.

(5)

Shares owned by CD-Rocket Holdings UG (haftungsbeschraenkt) & Co. Beteiligungs KG is owned by Rocket Internet GmbH, 83.34% of which is owned by European Founders Fund GmbH. European Founders Fund is owned by Oliver Samwer (33.33%), Marc Samwer (33.33%) and Alexander Samwer (33.33%).

(6)

These shares were issued as consideration in connection with the acquisition of City Deal Europe GmbH by Groupon Germany GbR.

(7)

Rugger Ventures LLC is owned by Kimberly Keywell (80%), the wife of Bradley A. Keywell, and Mr. Keywell's children (20%).

(8)

These shares were issued as partial consideration in connection with the merger of Ludic Labs, Inc. with and into Groupon Ludic, Inc.

(9)

Mr. Pelletier is our former Chief Technology Officer.

(10)

Mr. Fried is one of our former directors.

124

Non-Voting Common Stock Investment

        In February 2011, we issued 1,090,830 shares of our non-voting common stock to Howard Shultz and his affiliates, Theodore Leonsis, Matt McCutchen and Placido Arango in exchange for $17.2 million in cash, or $15.795 per share. We retained $0.2 million of the proceeds for working capital and general corporate purposes. We used the remaining $17.0 million of these proceeds to redeem non-voting common stock from our existing stockholders at a purchase price of $15.795 per share. In connection with this redemption, the following directors, officers and 5% or greater stockholders of the Company received the payments listed below:

Director, Officer or 5% Stockholder	Shares Redeemed	Original Purchase Price		Redemption Payment Amount
John R. Walter(1)	253,325 shares of voting common stock	$	4	$	4,001,268
Robert S. Solomon(2)	316,556 shares of non-voting common stock	$	814,604	$	5,000,002	(3)

(1)

Mr. Walter is one of our former directors.

(2)

Mr. Solomon is our former President and Chief Operating Officer.

(3)

Prior to the redemption, Mr. Solomon exercised options to purchase 316,556 shares of non-voting common stock.

Total Redemption and Dividend Payments to Directors, Officers and 5% Stockholders

        As indicated above, the following directors, officers and 5% stockholders received stock redemption and dividend payments from our inception through August 9, 2011 as follows:

Director, Officer or 5% Stockholder	Original Purchase Price		Redemption Date	Redemption Payment Amount			Dividend Payment Date	Dividend Payment Amount
Andrew D. Mason	$	720	April 2010	$	17,931,440		November 2009	$	3,225,000
	$	136	December 2010 and January 2011	$	10,000,000
Thoedore J. Leonsis	$	3,635	April 2010	$	208,491			$	37,500
Eric P. Lefkofsky(1)	$	178	April 2010	$	57,095,709		November 2009	$	10,218,750
	$	31	April 2010	$	10,008,239		November 2009	$	1,799,970
	$	65	December 2010 and January 2011	$	61,590,170
	$	272	December 2010 and January 2011	$	257,481,816
Bradley A. Keywell(2)	$	72	April 2010	$	23,213,574		November 2009	$	4,125,000
	$	141	December 2010 and January 2011	$	133,427,713
John R. Walter(3)	$	10	April 2010	$	3,261,015		November 2009	$	586,000
	$	22	December 2010 and January 2011	$	20,571,482
	$	4	February 2011	$	4,001,268
Kenneth M. Pelletier(4)	$	3	April 2010	$	969,542		November 2009	$	75,000
	$	1,057	December 2010 and January 2011	$	7,611,895
Brian K. Totty		(5)	December 2010 and January 2011	$	655,019
Jason Fried(6)	$	5,767	December 2010 and January 2011	$	557,721
Robert S. Solomon(7)	$	814,604	February 2011	$	5,000,002	(8)
New Enterprise Associates, Inc. and Affiliates	$	1,362,050	December 2010 and January 2011	$	70,006,315		November 2009	$	4,920,131
Accel Growth Fund L.P. and Affiliates	$	1,439,272	December 2010 and January 2011	$	19,999,976		December 2010	$	1,298,630
Oliver and Marc Samwer and Affiliates		(9)	December 2010 and January 2011	$	115,479,488

125

(1)

Includes an aggregate of 26,967,896 shares redeemed by and $10.3 million of dividends paid to Green Media, LLC, an entity owned by Eric P. Lefkofsky (50%) and his wife, Elizabeth Kramer Lefkofsky (50%), and an aggregate of 5,769,060 shares redeemed by and $1.8 million of dividends paid to 600 West Groupon LLC, the manager of which is Blue Media LLC, an entity owned by Mr. Lefkofsky (50%) and Mrs. Lefkofsky (50%).

(2)

Includes an aggregate of 12,784,144 shares redeemed by and $4.2 million of dividends paid to Rugger Ventures LLC, an entity owned by Kimberly Keywell (80%), the wife of Bradley A. Keywell, and Mr. Keywell's children (20%).

(3)

Mr. Walter is one of our former directors.

(4)

Mr. Pelletier is our former Chief Technology Officer.

(5)

These shares were issued as partial consideration in connection with the merger of Ludic Labs, Inc. with and into Groupon Ludic, Inc.

(6)

Mr. Fried is one of our former directors.

(7)

Mr. Solomon is our former President and Chief Operating Officer.

(8)

Prior to the redemption, Mr. Solomon exercised options to purchase 316,556 shares of non-voting common stock.

(9)

These shares were issued as consideration in connection with the acquisition of CityDeal Europe GmbH by Groupon Germany GbR.

Loan to Andrew D. Mason

        On November 1, 2009, Andrew D. Mason, our Chief Executive Officer and one of our directors, purchased 1,800,000 shares of our non-voting common stock with a promissory note to Groupon in the amount of $144,000. Mr. Mason repaid the promissory note with respect to $132,000 on May 4, 2011 and forfeited 150,000 shares. The remaining balance of the promissory note was cancelled.

Transactions and Relationships with Samwers and Affiliated Entities

        CityDeal Acquisition.    On May 15, 2010, we entered into and consummated a Share Exchange and Transfer Agreement by and among CD-Inv Holding UG (haftungsbeschraenkt) & Co. Beteiligungs KG ("Holding"), CD-Rocket Holding UG (haftungsbeschraenkt) & Co. Beteiligungs KG ("Rocket"), CityDeal Management UG (haftungsbeschraenkt) & Co. Beteiligungs KG ("CityDeal Management"), CityDeal Europe GmbH ("CityDeal"), Groupon Germany Gbr ("Groupon Germany") and Groupon, Inc., pursuant to which Holding and Rocket in its own name and for the account of CityDeal Management transferred all of the outstanding shares of CityDeal to Groupon Germany in exchange for 19,800,000 shares of our voting common stock. An additional 21,600,000 shares of our voting common stock were issued to Holding, Rocket and CityDeal Management on December 1, 2010, as contingent consideration for the share exchange. Rocket is owned by Rocket Internet GmbH, 83.34% of which is owned by European Founders Fund GmbH. European Founders Fund is owned by Oliver Samwer (33.33%), Marc Samwer (33.33%) and Alexander Samwer (33.33%). As a result of the share exchange, Rocket acquired an aggregate of 25,441,194 shares of our voting common stock, which after a subsequent redemption currently amounts to 18,130,052 shares of our voting common stock, representing 6.1% of the total outstanding voting shares as of August 9, 2011. Our founders may vote the shares held by Holding, Rocket and CityDeal Management. See "Principal and Selling Stockholders" for further information.

        CityDeal Loan Agreement.    In May 2010, we and the former CityDeal shareholders (including Rocket and Rocket Internet GmbH) entered into a loan agreement to provide CityDeal with a $20.0 million term loan facility (the "Facility"). The Facility subsequently was amended on July 20, 2010 increasing the total commitment to $25.0 million. Each of the Company and the former CityDeal shareholders was obligated to make available $12.5 million under the terms of the Facility. The entire $25.0 million under the Facility was disbursed to CityDeal during 2010. Proceeds from the Facility were used to fund operational and working capital needs. The outstanding balance accrued interest at a rate of 5% per annum. The outstanding balance and accrued interest were payable upon termination of the Facility, which was the earlier of any prepayments or December 2012. In March 2011, CityDeal repaid all amounts outstanding to the former CityDeal shareholders related to the Facility.

126

        Consulting Agreement with Oliver Samwer.    On May 12, 2010, CityDeal entered into a consulting agreement with Oliver Samwer, pursuant to which Mr. Samwer advises CityDeal with respect to its goals and spends at least fifty-percent of his work hours consulting for CityDeal. CityDeal reimburses Mr. Samwer for travel and other expenses incurred in connection with his service to CityDeal. Mr. Samwer does not receive any additional compensation from CityDeal or Groupon in connection with his consulting role. The term of Mr. Samwer's consulting agreement expires on October 18, 2011. We paid $0.1 million to reimburse Mr. Samwer for travel and other expenses for 2010.

        Consulting Agreement with Marc Samwer.    On May 12, 2010, CityDeal entered into a consulting agreement with Marc Samwer, pursuant to which Mr. Samwer advises CityDeal with respect to its goals and spends at least fifty-percent of his work hours consulting for CityDeal. CityDeal reimburses Mr. Samwer for travel and other expenses incurred in connection with his service to CityDeal. Mr. Samwer does not receive any additional compensation from CityDeal or Groupon in connection with his consulting role. The term of Mr. Samwer's consulting agreement expires on October 18, 2011. We paid less than $0.1 million to reimburse Mr. Samwer for travel and other expenses for 2010.

        Management Services.    CityDeal entered into agreements with Rocket Internet GmbH ("Rocket Internet") and various other companies in which the Samwers have direct and/or indirect ownership interests to provide information technology, marketing and other services to CityDeal. Rocket Internet is owned 83.34% by European Founders Fund, which is owned by Oliver Samwer (33.33%), Marc Samwer (33.33%) and Alexander Samwer (33.33%). CityDeal paid $1.4 million to Rocket Internet and a total of $0.2 million to the other companies for services rendered for 2010. In April 2011, this arrangement terminated and the personnel primarily responsible for the services provided to us became our employees.

        Merchant Contracts.    CityDeal entered into several agreements with merchant companies in which the Samwers have direct and/or indirect ownership interests, and, in some cases, who are also directors of these companies, pursuant to which CityDeal conducts its business by offering goods and services at a discount with these merchants. CityDeal paid in total $1.1 million to these companies under the merchant agreements for 2010.

        E-Commerce King Limited Joint Venture (China).    On January 14, 2011, Groupon, B.V. entered into a joint venture with Rocket Asia GmbH & Co. KG, an entity owned by Rocket Internet ("Rocket Asia"), TCH Burgundy Limited ("Tencent") and Group Discount (HK) Limited ("Yunfeng"). On July 29, 2011, we issued 1,454,428 shares of non-voting common stock to Rocket Asia in exchange for the transfer of 900,000 shares of E-Commerce to Groupon B.V. Pursuant to the joint venture arrangement, Groupon B.V., Tencent, Yunfeng and Rocket Asia own 49%, 40%, 10% and 1%, respectively, of E-Commerce King Limited ("E-Commerce"). Pursuant to a shareholders agreement entered into in connection with the joint venture, the board of directors of E-Commerce consists of a director appointed by a subsidiary of Groupon, a director appointed by Rocket Asia, who is Oliver Samwer, and two directors appointed by Tencent. Each of the parties to the joint venture also has rights of co-sale and first refusal pursuant to the shareholders agreement.

Recapitalization

        Prior to the completion of this offering, we intend to recapitalize all outstanding shares of our capital stock (other than our Series B preferred stock) into newly issued shares of Class A common stock. Each share of Series D preferred stock, Series E preferred stock and Series F preferred stock will be converted into newly issued shares of Class A common stock on a six-for-one basis; each share of Series G preferred stock will be converted into newly issued shares of Class A common stock on a two-for-one basis; and each share of non-voting common stock and common stock will be converted into newly issued shares of Class A common stock on a one-for-one basis. In addition, prior to the completion of this offering, we intend to recapitalize all outstanding shares of our Series B preferred stock into newly issued shares of our Class B common stock on a six-for-one basis. The purpose of the recapitalization is to exchange all of our outstanding shares of our capital stock (other than our Series B preferred stock) for shares of the Class A

127

common stock that will be sold in this offering. In addition, each outstanding option will be converted into an option to receive one share of Class A common stock.

Investor Rights Agreement

        We have entered into an investor rights agreement with certain holders of our common stock and preferred stock that provides for certain rights relating to the registration of their shares of common stock, including those shares issued in connection with the recapitalization. See "Description of Capital Stock—Registration Rights" below for additional information.

Indemnification of Officers and Directors

        Upon completion of this offering, our amended and restated certificate of incorporation and bylaws will provide that we will indemnify each of our directors and officers to the fullest extent permitted by Delaware law.

Board of Directors

        Prior to the closing of this offering, New Enterprise Associates, Accel Growth Fund L.P. the holders of preferred stock and common stock and the holders of our Series B preferred stock had the rights to appoint individual directors. See "Management—Board of Directors" above for more information. These rights terminate upon the closing of this offering. The respective nominees will remain on our Board following this offering, but we are under no contractual obligation to retain them.

Policies and Procedures for Related Party Transactions

        Prior to the closing of this offering, our board of directors will adopt a written related party transaction policy setting forth the policies and procedures for the review and approval or ratification of related person transactions. The policy, effective upon the closing of this offering, will cover any transactions, arrangements or relationships, or any series of similar transactions, arrangements or relationships, in which we are to be a participant and our executive officers, directors, nominees for election as a director, beneficial owners of more than 5% of any class of our common stock and any members of the immediate family of any of the foregoing persons had or will have a direct or indirect material interest, as determined by the audit committee of our board of directors. Related party transactions include, without limitation, purchases of goods or services by or from the related person or entities in which the related party has a material interest, and indebtedness, guarantees of indebtedness or employment by us of a related party. All related party transactions must be presented to our audit committee for review, consideration and approval. In approving or rejecting any such proposal, our audit committee is to consider the material facts of the transaction, including, but not limited to, whether the transaction is on terms no less favorable than terms generally available to an unaffiliated third party under the same or similar circumstances and the extent of the related party's interest in the transaction.

        All related party transactions described in this section occurred prior to adoption of this policy and as such, these transactions were not subject to the approval and review procedures set forth in the policy. However, these transactions were reviewed and approved or will be ratified by our board of directors prior to the completion of the offering.

128

PRINCIPAL AND SELLING STOCKHOLDERS

        The following table sets forth certain information with respect to the beneficial ownership of our common stock at August 31, 2011, and as adjusted to reflect the sale of Class A common stock offered by us in this offering, for

•

each person who we know beneficially owns more than five percent of our outstanding capital stock;

•

each of our directors;

•

each of our named executive officers;

•

all of our directors and executive officers as a group; and

•

all selling stockholders.

        Unless otherwise noted below, the address of each beneficial owner listed in the table is c/o Groupon, Inc., 600 West Chicago Avenue, Suite 620, Chicago, Illinois 60654.

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

        Applicable percentage ownership is based on 301,112,478 shares of Class A common stock and 1,199,988 shares of Class B common stock outstanding at August 31, 2011, assuming the recapitalization of all outstanding shares of Series B preferred stock into Class B common stock and all other classes of preferred stock, voting common stock and non-voting common stock into Class A common stock. In computing the number of shares of common stock beneficially owned by a person and the percentage ownership of that person, we deemed outstanding shares of common stock subject to options held by that person that are currently exercisable or exercisable within 60 days of August 31, 2011. We did not deem these shares outstanding, however, for the purpose of computing the percentage ownership of any other person. Beneficial ownership representing less than one percent is denoted with an "*."

	Shares Beneficially Owned Prior to Offering										Shares Beneficially Owned After Offering
	Class A Common Stock				Class B Common Stock
											Class A Common Stock		Class B Common Stock
									% Total Voting Power(1)	Shares Being Offered(16)					% Total Voting Power(1)
Name of Beneficial Owner	Shares		%		Shares		%				Shares	%	Shares	%
Executive Officers and Directors
Andrew D. Mason(2)(15)		22,967,252		7.6		499,992		41.7
Jason E. Child		—		—		—		—
Kenneth M. Pelletier(3)		1,309,472		*		—		—
Robert S. Solomon(4)		2,027,500		*		—		—
Brian K. Totty(5)		301,748		*		—		—
Peter J. Barris(6)		—		—		—		—
Kevin J. Efrusy(7)		—		—		—		—
Mellody Hobson		5,000		*
Bradley A. Keywell(8)(16)		20,412,515		6.8		200,004		16.7
Eric P. Lefkofsky(9)(16)		64,119,712		21.3		499,992		41.7
Theodore J. Leonsis(10)		924,385		*		—		—
Howard Schultz(11)		964,668		*		—		—
All executive officers and directors as a group (13 persons)(12)		109,695,280		36.4		1,199,988		100.0

129

	Shares Beneficially Owned Prior to Offering										Shares Beneficially Owned After Offering
	Class A Common Stock				Class B Common Stock
											Class A Common Stock		Class B Common Stock
									% Total Voting Power(1)	Shares Being Offered(16)					% Total Voting Power(1)
Name of Beneficial Owner	Shares		%		Shares		%				Shares	%	Shares	%
5% Stockholders (other than directors and executive officers)
Green Media, LLC(9)(16)		64,119,712		21.3		499,992		41.7
Rugger Ventures LLC(8)(16)		20,412,515		6.8		200,004		16.7
Entities Affiliated with New Enterprise Associates, Inc. 1954 Greenspring Drive, Suite 600 Timonium, MD 21093(12)		43,726,536		14.5		—		—
Entities Affiliated with Accel Growth Fund L.P. c/o Accel Partners 428 University Avenue Palo Alto, CA 94301(14)		16,601,964		5.5		—		—
Entities Affiliated with Oliver and Marc Samwer(15) Saarbruecker Str. 20/21 10405 Berlin Federal Republic of Germany		19,584,480		6.5		—		—
Selling Stockholders

(1)

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

(2)

Includes 21,317,252 shares of our Class A common stock and 499,992 shares of our Class B common stock held by the Andrew Mason Trust dated April 6, 2010. Does not include 91,120 shares of our Class A common stock held by 600 West Groupon LLC, which represents Mr. Mason's proportionate economic interest in the shares of Class A common stock held by 600 West Groupon LLC. Does not include an aggregate of 30,621,280 shares over which Mr. Mason has proxy authority with respect to certain material transactions. See footnote 17.

(3)

Includes 1,309,472 shares of our Class A common stock held by the Ken Pelletier Trust dated August 26, 2010.

(4)

Includes 2,027,500 shares of our Class A common stock issuable upon the exercise of options that are exercisable within 60 days of August 31, 2011. Mr. Solomon ceased to be our President and Chief Operating Officer on March 22, 2011.

(5)

Includes 10,960 shares of our Class A common stock issuable upon the vesting of restricted stock units that will vest within 60 days of August 31, 2011.

(6)

Does not include shares held by entities affiliated with New Enterprise Associates described in footnote 14. Mr. Barris is the Managing General Partner of New Enterprise Associates.

(7)

Does not include shares held by entities affiliated with Accel Growth Fund L.P. Mr. Efrusy is the General Partner of Accel.

(8)

Includes 20,412,515 shares of our Class A common stock and 200,004 shares of our Class B common stock held by Rugger Ventures LLC, an entity owned by Kimberly Keywell (80%), the wife of Bradley A. Kewell, and Mr. Keywell's children (20%). Does not include an aggregate of 30,621,280 shares over which Rugger Ventures has proxy authority with respect to certain material transactions. See footnote 16.

(9)

Includes 54,682,108 shares of our Class A common stock and 499,992 shares of our Class B common stock held by Green Media, LLC, an entity owned by Eric P. Lefkofsky (50%) and his wife, Elizabeth Kramer Lefkofsky (50%). Mr. Lefkofsky shares voting and investment control with respect to the shares held by Green Media, LLC. Also includes 9,437,604 shares of our Class A common stock held by 600 West Groupon LLC, the manager of which is Blue Media, LLC, an entity owned by Mr. Lefkofsky (50%) and Mrs. Lefkofsky (50%). Does not include an aggregate of 30,621,280 shares over which Green Media has proxy authority with respect to certain material transactions. See footnote 16.

(10)

Includes 300,000 shares of our Class A common stock issuable upon the exercise of options that are exercisable within 60 days of August 31, 2011.

(11)

Includes 567,269 shares of our Class A common stock owned by Maveron Equity Partners IV, L.P., 47,483 shares of our Class A common stock held by MEP Associates IV, L.P. and 18,360 shares of our Class A common stock held by Maveron IV Entrepreneurs' Fund, L.P.

130

(together, the "Maveron Funds"). Mr. Schultz is a limited partner of MEP Associates IV, L.P. and has an economic membership interest in, but is not a manager of, Maveron General Partner IV LLC, the general partner of the Maveron Funds. Also includes 15,000 shares of our Class A common stock issuable upon the exercise of options that are exercisable within 60 days of August 31, 2011.

(12)

Excludes shares beneficially owned by Kenneth M. Pelletier and Rob Solomon, who were not executive officers on August 31, 2011. Includes shares beneficially owned by Joseph M. Del Preto, Jeffrey Holden and David R. Schellhase, who were executive officers as of August 31, 2011.

(13)

Includes 43,592,478 shares of our Class A common stock held by New Enterprise Associates 12, Limited Partnership ("NEA 12"). The shares directly held by NEA 12 are indirectly held by NEA Partners 12, Limited Partnership ("NEA Partners 12"), the sole general partner of NEA 12, NEA 12 GP, LLC ("NEA 12 LLC"), the sole general partner of NEA Partners 12, and each of the individual Managers of NEA 12 LLC. The individual Managers (collectively, the "Managers") of NEA 12 LLC are M. James Barrett, Peter J. Barris, Forest Baskett, Ryan D. Drant, Patrick J. Kerins, Krishna "Kittu" Kolluri, C. Richards Kramlich, Charles W. Newhall III, Mark W. Perry and Scott D. Sandell. NEA Partners 12, NEA 12 LLC and the Managers share voting and dispositive power over the shares directly held by NEA 12. Also includes 134,058 shares of our Class A common stock held by NEA Ventures 2008, L.P. ("Ven 2008"). The shares directly held by Ven 2008 are indirectly held by Karen P. Welsh, the general partner of Ven 2008, who holds voting and dispositive power over the shares directly held by Ven 2008. All indirect holders of the above referenced shares disclaim beneficial ownership of all applicable shares except to the extent of their actual pecuniary interest therein.

(14)

Includes 15,809,826 shares of our Class A common stock held by Accel Growth Fund L.P., 210,648 shares of our Class A common stock held by Accel Growth Fund Investors 2009 LLC, 308,616 shares of our Class A common stock held by Accel Growth Fund Strategic Partners LP, 24,122 shares of our Class A common stock held by Accel Investors 2007 LLC, 224,820 shares of our Class A common stock held by Accel IX L.P. and 23,932 shares of our Class A common stock held by Accel IX Strategic Partners L.P.

(15)

Includes 18,130,052 shares of our Class A common stock held by CD-Rocket Holdings UG (haftungsbeschraenkt) & Co. Beteiligungs KG, which is owned by Rocket Internet GmbH, 83.34% of which is owned by European Founders Fund GmbH. European Founders Fund Gmbh is owned by Oliver Samwer (33.33%), Marc Samwer (33.33%) and Alexander Samwer (33.33%). Also includes 1,454,428 shares of our Class A common stock held by Rocket Asia GmbH & Co. KG, which is owned by Rocket Internet GmbH, 83.34% of which is owned by European Founders Fund GmbH. European Founders Fund Gmbh is owned by Oliver Samwer (33.33%), Marc Samwer (33.33%) and Alexander Samwer (33.33%).

(16)

In connection with the CityDeal acquisition, Holding, Rocket, CityDeal Management, Rocket Internet GmbH and European Founders Fund GmbH entered into a shareholders agreement with our founders. Pursuant to the shareholders agreement, an aggregate of 30,621,280 shares of our Class A common stock owned by such entities and their affiliates must be voted in the same manner as the majority-in-interest of the shares of Class A common stock held by our founders in connection with the initial public offering of our Class A common stock, the authorization, designation or issuance of any new class or series of our capital stock or a material acquisition or asset transfer. This does not include the power to vote for directors. In connection with the shareholders agreement, Holding, Rocket, CityDeal, Rocket Internet GmbH, European Founders Fund GmbH and their affiliates have granted our founders, president and secretary proxy authority to vote their shares in connection with such material transactions for five years following the closing of this offering.

(17)

If the underwriters' over-allotment option is exercised in full,        of the additional shares will be allocated to the Company and the balance of the additional shares sold will be allocated among the selling stockholders as follows:

Selling Stockholders Shares
Subject to the
Over-allotment
Option

If the underwriters' over-allotment option is exercised in part, the additional shares sold would be allocated pro rata based upon the share amounts set forth in the preceding table.

131

DESCRIPTION OF CAPITAL STOCK

General

        The following is a summary of our capital stock and provisions of our amended and restated certificate of incorporation, amended and restated bylaws and recapitalization agreement, as each will be in effect upon the closing of this offering, and certain provisions of Delaware law. This summary does not purport to be complete and is qualified in its entirety by the provisions of our amended and restated certificate of incorporation and amended and restated bylaws, copies of which have been or will be filed with the SEC as exhibits to the registration statement of which this prospectus is a part. References in this section to the "Company," "we," "us" and "our" refer to Groupon, Inc. and not to any of its subsidiaries.

        Upon the completion of this offering, our amended and restated certificate of incorporation will provide for three classes of common stock: Class A common stock, Class B common stock and common stock. No shares of common stock will be issued or outstanding until five years after the completion of this offering, at which time all outstanding shares of Class A common stock and Class B common stock will automatically convert into shares of common stock. In addition, our amended and restated certificate of incorporation will authorize shares of undesignated preferred stock, the rights, preferences and privileges of which may be designated from time to time by our board of directors.

        Upon the closing of this offering, the total amount of our authorized capital stock will consist of            shares, all with a par value of $0.0001 per share, of which             shares are designated as Class A common stock,            shares are designated as Class B common stock,             shares are designated as common stock and             shares are designated as preferred stock.

        On                  , 2011, we had outstanding            shares of Class A common stock, held of record by            stockholders, and            shares of Class B common stock, held of record by three stockholders. These amounts assume the conversion of all outstanding shares of our existing common stock and series of preferred stock, other than the Series B preferred stock, into Class A common stock, and the conversion of the Series B preferred stock into Class B common stock prior to the completion of this offering.
See "—Recapitalization" below.

        As of                  , 2011, we had outstanding options to acquire            shares of common stock held by employees and consultants, all of which will become options to acquire an equivalent number of shares of Class A common stock immediately prior to the completion of this offering. In addition, as of                  , 2011, we also had outstanding             restricted stock units held by employees and consultants, all of which will vest into an equivalent number of shares of Class A common stock.

Recapitalization

        Prior to the completion of this offering, we intend to recapitalize all outstanding shares of our capital stock (other than our Series B preferred stock) into newly issued shares of Class A common stock. Each share of Series D preferred stock, Series E preferred stock and Series F preferred stock will be converted into newly issued shares of Class A common stock on a six-for-one basis; each share of Series G preferred stock will be converted into newly issued shares of Class A common stock on a two-for-one basis; and each share of non-voting common stock and common stock will be converted into newly issued shares of Class A common stock on a one-for-one basis. In addition, prior to the completion of this offering, we intend to recapitalize all outstanding shares of our Series B preferred stock into newly issued shares of our Class B common stock on a six-for-one basis. The purpose of the recapitalization is to exchange all of our outstanding shares of our capital stock (other than our Series B preferred stock) into shares of the Class A common stock that will be sold in this offering. In addition, each outstanding option will be converted into an option to receive one share of Class A common stock upon the applicable exercise date, and each unvested restricted stock unit will vest into one share of Class A common stock upon the applicable settlement date.

132

Class A and Class B Common Stock

Voting Rights

        Holders of our Class A and Class B common stock have identical rights, except that holders of our Class A common stock are entitled to one vote per share and holders of our Class B common stock are entitled to                        votes per share. Holders of shares of Class A common stock and Class B common stock will vote together as a single class on all matters (including the election of directors) submitted to a vote of stockholders, except that there will be separate votes of holders of shares of our Class A common stock and Class B common stock in the following circumstances:

•

if we propose to amend our certificate of incorporation to alter or change the powers, preferences or special rights of the shares of a class of our stock so as to affect them adversely or to increase or decrease the par value of the shares of a class of our stock;

•

if we propose to treat the shares of a class of our stock differently with respect to any dividend or distribution of cash, property or shares of our stock paid or distributed by us;

•

if we propose to treat the shares of a class of our stock differently with respect to any subdivision or combination of the shares of a class of our stock; or

•

if we propose to treat the shares of a class of our stock differently in connection with a change in control, liquidation, dissolution, distribution of assets or winding down of the Company with respect to any consideration into which the shares are converted or any consideration paid or otherwise distributed to our stockholders.

        Upon the completion of this offering, under our amended and restated certificate of incorporation, we may not increase or decrease the authorized number of shares of Class A common stock or Class B common stock without the affirmative vote of the holders of the majority of the combined voting power of the outstanding shares of Class A common stock and Class B common stock, voting together as a single class. In addition, under our amended and restated certificate of incorporation, we may not issue any shares of Class B common stock, other than in connection with stock dividends, stock splits and similar transactions, unless that issuance is approved by the affirmative vote of the holders of a majority of the outstanding shares of Class B common stock.

        We have not provided for cumulative voting for the election of directors in our amended and restated certificate of incorporation.

Economic Rights

        Except as otherwise expressly provided in our amended and restated certificate of incorporation or as required by applicable law, shares of our Class A common stock and Class B common stock will have the same rights and privileges and rank equally, share ratably and be identical in all respects as to all matters, including, without limitation, those described below.

        Dividends.    Subject to preferences that may apply to any shares of preferred stock outstanding at the time, the holders of Class A common stock and Class B common stock shall be entitled to share equally, ratably and identically, on a per share basis, with respect to any dividends that our board of directors may determine to issue from time to time, unless different treatment of the shares of such class is approved by the affirmative vote of the holders of the majority of the outstanding shares of Class A common stock and Class B common stock, each voting separately as a class. In the event a dividend is paid in the form of shares of common stock or rights to acquire shares of common stock, the holders of Class A common stock shall receive shares of Class A common stock, or rights to acquire shares of Class A common stock, as the case may be, and the holders of Class B common stock shall receive shares of Class B common stock, or rights to acquire shares of Class B common stock, as the case may be.

133

        Liquidation Rights.    Upon our liquidation, dissolution or winding-up, the holders of Class A common stock and Class B common stock shall be entitled to share equally, ratably and identically in all assets remaining after the payment of any liabilities and the liquidation preferences on any outstanding preferred stock, unless different treatment of the shares of such class is approved by the affirmative vote of the holders of the majority of the outstanding shares of Class A common stock and Class B common stock, each voting separately as a class.

        Change of Control Transactions.    Upon (i) the closing of the sale, transfer or other disposition of all or substantially all of our assets, (ii) the consummation of a merger, consolidation, business combination or other similar transaction which results in our voting securities outstanding immediately prior to the transaction (or the voting securities issued with respect to our voting securities outstanding immediately prior to the transaction) representing less than a majority of the combined voting power and outstanding capital stock of the voting securities of the Company or the surviving or acquiring entity, (iii) the recapitalization, liquidation, dissolution or other similar transaction which results in the voting securities outstanding immediately prior to the transaction representing less than a majority of the of the combined voting power and outstanding capital stock of the Company or the surviving entity or parent entity or (iv) an issuance by the Company, in one transaction or a series of related transactions, of voting securities representing more than 2% of the total voting power of the Company (assuming the Class A common stock and Class B common stock each have one vote per share) to any person or group of affiliated persons who prior to such issuance held less than a majority of the total voting power of the Company (assuming the Class A common stock and Class B common stock each have one vote per share) and who subsequent to the issuance would hold a majority of the total voting power, the holders of Class A common stock and Class B common stock will be treated equally and identically with respect to shares of Class A common stock or Class B common stock owned by them, unless different treatment of the shares of each class is approved by the affirmative vote of the holders of a majority of the outstanding shares of Class A common stock and Class B common stock, each voting separately as a class.

        Subdivisions and Combinations.    If we subdivide or combine in any manner outstanding shares of Class A common stock or Class B common stock, the outstanding shares of the other class will be subdivided or combined in the same manner, unless different treatment of the shares of each class is approved by the affirmative vote of the holders of a majority of the outstanding shares of Class A common stock and Class B common stock, each voting separately as a class.

Conversion

        Our Class A common stock and Class B common stock will automatically convert into a single class of common stock five years after the completion of this offering.

        Each share of Class B common stock is convertible at any time at the option of the holder into one share of Class A common stock. In addition, each share of Class B common stock shall convert automatically into one share of Class A common stock upon the date specified by the affirmative vote or written consent of the holders of at least 66²/3% of the outstanding shares of Class B common stock or upon any transfer, whether or not for value, except for certain transfers described in our amended and restated certificate of incorporation, including the following:

•

transfers between holders of Class B common stock; and

•

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

        Upon the death or permanent incapacity of a holder of Class B common stock who is a natural person, the Class B common stock held by that person or his or her permitted estate planning entities will convert automatically into Class A common stock. However, a Class B stockholder may transfer voting control of shares of Class B common stock to another Class B stockholder contingent or effective upon his

134

or her death or permanent incapacity without triggering a conversion to Class A common stock, provided that the shares of Class B common stock so transferred shall convert to Class A common stock nine months after the death of the transferring stockholder.

        Once transferred and converted into Class A common stock, the Class B common stock shall not be reissued unless approved by an affirmative vote of the holders of a majority of the outstanding Class B common stock. Following the conversion of all outstanding shares of Class A common stock and Class B common stock into a single class of common stock five years following the completion of this offering, no additional shares of Class A common stock or Class B common stock will be issued.

Preferred Stock

        Upon the closing of this offering, each outstanding share of our Series D preferred stock, Series E preferred stock and Series F preferred stock will be converted into six shares of Class A common stock and each outstanding share of our Series G preferred stock will be converted into two shares of Class A common stock. In addition, upon the closing of this offering, each share of our Series B preferred stock will be converted into six shares of our Class B common stock.

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

Registration Rights

        Pursuant to the terms of the investor rights agreement between us and certain holders of our stock, including certain of our directors, officers and holders of 5% or greater of our outstanding capital stock are entitled to demand and piggyback registration rights. The stockholders who are party to the investor rights agreement will hold an aggregate of approximately            shares, or approximately        % of our Class A common stock, and            shares, or 100% of our Class B common stock, outstanding upon completion of this offering (assuming no exercise of the underwriters' over-allotment option). The registration rights described below will expire five years after the effective date of the registration statement of which this prospectus forms a part.

        Demand Registration Rights.    At any time beginning 180 days after the effective date of the registration statement of which this prospectus forms a part, the holders of a majority of the shares of Class A common stock issued upon conversion of our Series G preferred stock may, on not more than two occasions, request that we register all or a portion of their shares. Such request for registration must cover that number of shares with an aggregate offering price to the public of at least $50 million. We will not be required to effect a demand registration during the period beginning on the date of the filing of the registration statement of which this prospectus forms a part and ending on the date 180 days after the effective date of the registration statement. Depending on certain conditions, we may defer a demand registration for up to 90 days.

        Piggyback Registration Rights.    In connection with this offering, the holders of registrable securities are entitled to include their shares of registrable securities in this offering. In the event that we propose to register any of our securities under the Securities Act, either for our account or for the account of our

135

other security holders, the holders of registrable shares will be entitled to certain "piggyback" registration rights allowing the holder to include their shares in such registration, subject to certain marketing and other limitations. As a result, whenever we propose to file a registration under the Securities Act, other than with respect to a registration statement on Form S-4 or Form S-8, the holders of these shares are entitled to notice of the registration and have the right, subject to limitations that the underwriters may impose on the number of shares included in the registration, to include their shares in the registration.

        Form S-3 Registration Rights.    Any holder of registrable securities may make a request that we register their shares on Form S-3 if we are qualified to file a registration statement on Form S-3 and if the aggregate price to the public is equal to or would exceed $25 million. We would not be required to effect more than two registrations on Form S-3 within any 12-month period.

Elimination of Liability in Certain Circumstances

        Our amended and restated certificate of incorporation eliminates the liability of our directors to us or our stockholders for monetary damages resulting from breaches of their fiduciary duties as directors. Directors will remain liable for breaches of their duty of loyalty to us or our stockholders, as well as for acts or omissions not in good faith or that involve intentional misconduct or a knowing violation of law, and transactions from which a director derives improper personal benefit. Our amended and restated certificate of incorporation will not absolve directors of liability for payment of dividends or stock purchases or redemptions by us in violation of Section 174 (or any successor provision of the Delaware General Corporation Law).

        The effect of this provision is to eliminate the personal liability of directors for monetary damages for actions involving a breach of their fiduciary duty of care, including any such actions involving gross negligence. We do not believe that this provision eliminates the liability of our directors to us or our stockholders for monetary damages under the federal securities laws. Our amended and restated certificate of incorporation and our amended and restated bylaws provide indemnification for the benefit of our directors and officers to the fullest extent permitted by the Delaware General Corporation Law as it may be amended from time to time, including most circumstances under which indemnification otherwise would be discretionary.

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

        Dual Class Structure.    Our Class B common stock has          votes per share, while our Class A common stock, which is the class of stock we are selling in this offering and which will be the only class of common stock which is publicly traded, has one vote per share. After the offering, 100% of our Class B common stock will be controlled by our founders, representing        % of the voting power of our outstanding capital stock. As a result, our founders will continue to be able to control all matters submitted to our stockholders for approval even if they come to owns significantly less than 50% of the shares of our outstanding common stock. This concentrated control could discourage others from initiating any potential merger, takeover or other change of control transaction that other stockholders may view as beneficial.

        Number of Directors; Removal; Vacancies.    We currently have eight directors and our amended and restated bylaws provide that we shall have such number of directors as is determined by a resolution of the board of directors then in office. Vacancies on the board of directors may be filled only by the affirmative vote of a majority of the remaining directors then in office. Our amended and restated certificate of incorporation and our amended and restated bylaws provide that directors may be removed only for cause by the affirmative vote of the holders of a majority of the outstanding shares entitled to vote generally in the election of directors.

136

        Special Meetings of Stockholders; Limitations on Stockholder Action by Written Consent.    Our amended and restated certificate of incorporation and our amended and restated bylaws provide that special meetings of our stockholders may be called only by our Executive Chairman of the Board, our Chief Executive Officer, our board of directors or holders of not less than a majority of our issued and outstanding voting stock. Any action required or permitted to be taken by our stockholders must be effected at an annual or special meeting of stockholders and may not be effected by written consent unless the action to be effected and the taking of such action by written consent have been approved in advance by our board of directors.

        Amendments; Vote Requirements.    Certain provisions of our amended and restated certificate of incorporation and amended and restated bylaws provide that the affirmative vote of a majority of the shares entitled to vote on any matter is required for stockholders to amend our amended and restated certificate of incorporation or amended and restated bylaws, including those provisions relating to action by written consent and the ability of stockholders to call special meetings.

        Authorized but Unissued Shares; Undesignated Preferred Stock.    The authorized but unissued shares of our Class A common stock will be available for future issuance without stockholder approval. These additional shares may be utilized for a variety of corporate purposes, including future public offerings to raise additional capital, corporate acquisitions and employee benefit plans. In addition, our board of directors may authorize, without stockholder approval, undesignated preferred stock with voting rights or other rights or preferences that could impede the success of any attempt to acquire us. The existence of authorized but unissued shares of Class A common stock or preferred stock could render it more difficult or discourage an attempt to obtain control of us by means of a proxy contest, tender offer, merger or otherwise.

        Advance Notice Requirements for Stockholder Proposals and Nomination of Directors.    Our amended and restated bylaws provide that stockholders seeking to bring business before an annual meeting of stockholders, or to nominate individuals for election as directors at an annual meeting of stockholders, must provide timely notice in writing. To be timely, a stockholder's notice must be delivered to or mailed and received at our principal executive offices not less than 90 days nor more than 120 days prior to the anniversary date of the immediately preceding annual meeting of stockholders. However, in the event that the annual meeting is called for a date that is not within 30 days before or 60 days after such anniversary date, such notice will be timely only if received not later than the close of business on the tenth day following the date on which a public announcement of the date of the annual meeting was made. Our amended and restated bylaws also specify requirements as to the form and content of a stockholder's notice.

        Section 203 of the Delaware General Corporation Law.    We are subject to Section 203 of the Delaware General Corporation Law, which prohibits a Delaware corporation from engaging in any business combination with any interested stockholder for a period of three years after the date that such stockholder became an interested stockholder, with the following exceptions:

•

before such date, the board of directors of the corporation approved either the business combination or the transaction that resulted in the stockholder becoming an interested stockholder;

•

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

137

•

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

        In general, Section 203 defines a business combination to include the following:

•

any merger or consolidation involving the corporation and the interested stockholder;

•

any sale, transfer, pledge or other disposition of 10% or more of the assets of the corporation involving the interested stockholder;

•

subject to certain exceptions, any transaction that results in the issuance or transfer by the corporation of any stock of the corporation to the interested stockholder;

•

any transaction involving the corporation that has the effect of increasing the proportionate share of the stock or any class or series of the corporation beneficially owned by the interested stockholder; or

•

the receipt by the interested stockholder of the benefit of any loss, advances, guarantees, pledges or other financial benefits by or through the corporation.

        In general, Section 203 defines an "interested stockholder" as an entity or person who, together with the person's affiliates and associates, beneficially owns, or within three years prior to the time of determination of interested stockholder status did own, 15% or more of the outstanding voting stock of the corporation.

Choice of Forum

        Our amended and restated certificate of incorporation provides that the Court of Chancery of the State of Delaware will be the exclusive forum for: (i) any derivative action or proceeding brought on our behalf; (ii) any action asserting a breach of fiduciary duty; (iii) any action asserting a claim against us arising pursuant to the Delaware General Corporation Law, our amended certificate of incorporation or our amended and restated bylaws; or (iv) or any action asserting a claim against us that is governed by the internal affairs doctrine.

Transfer Agent and Registrar

        Upon the closing of this offering, the transfer agent and registrar for our Class A common stock will be BNY Mellon Shareowner Services. The transfer agent's address is 480 Washington Blvd., Jersey City, New Jersey, 07310.

Stock Exchange Listing

        We expect to apply to list our Class A common stock listed on the                        under the symbol "GRPN."

138

MATERIAL UNITED STATES FEDERAL TAX CONSIDERATIONS

        The following discussion describes material U.S. federal income tax consequences associated with the purchase, ownership and disposition of our Class A common stock, as of the date of this prospectus. It is assumed in this discussion that you hold shares of our Class A common stock as capital assets within the meaning of Section 1221 of the Code. Furthermore, the discussion below is based upon the provisions of the Code, its legislative history, the final, temporary and proposed U.S. Treasury regulations promulgated thereunder, or the Regulations, and administrative and judicial interpretations thereof, all as of the date of this prospectus, and all of which are subject to change or differing interpretation, possibly with retroactive effect, so as to result in different U.S. federal income tax consequences than those discussed herein. This discussion does not address any state, local, or non-U.S. tax consequences, nor does this discussion address any U.S. federal tax consequences other than U.S. federal income tax consequences.

        This discussion is not a comprehensive discussion of all of the U.S. federal income tax considerations applicable to us or that may be relevant to a particular holder of our Class A common stock in view of such holder's particular circumstances and, except to the extent provided below, this discussion does not apply to holders of our Class A common stock subject to special treatment under the U.S. federal income tax laws, such as banks or other financial institutions, dealers in securities or currencies, tax-exempt organizations, retirement plans, individual retirement accounts, tax-deferred accounts, certain former U.S. citizens or long-term residents of the U.S., corporations that accumulate earnings to avoid U.S. federal income tax, regulated investment companies, real estate investment trusts, insurance companies, mutual funds, persons holding shares as part of a hedge or a position in an integrated or conversion transaction, risk reduction transaction, constructive sale transaction or a straddle, traders in securities that elect to use a mark-to-market method of accounting for their securities holdings, brokers or dealers in securities or currencies, charitable remainder unit trusts, common trust funds, passive foreign investment companies, or controlled foreign corporations. As a general discussion, this summary does not address all U.S. federal income tax considerations, including, but not limited to, the Medicare contribution tax and the alternative minimum tax and the application of such tax considerations to a holder of our Class A common stock.

        The following discussion also does not address entities that are taxed as grantor trusts under subpart E of subchapter J of the Code, disregarded entities for U.S. federal income tax purposes, partnerships or similar entities classified as flow-through entities for U.S. federal income tax purposes. If a grantor trust, disregarded entity, partnership or other flow-through entity holds our Class A common stock, the tax treatment of such grantor trust, disregarded entity, partnership (or other flow-through entity) and its partners (or beneficial owners) will depend on the status of the partner (or beneficial owner) and the activities of the entity. Partnerships, grantor trusts, disregarded entities, (and other flow-through entities) and their partners (or beneficial owners) should consult with their own tax advisors to determine the tax consequences of acquiring, owning or disposing of our Class A common stock.

        There can be no assurance that the Internal Revenue Service, or the IRS, will not take a contrary position to the discussion of the U.S. federal income tax consequences discussed herein or that such position will not be sustained by a court. No ruling from the IRS or opinion of counsel has been obtained with respect to the U.S. federal income tax consequences of acquiring, owning, or disposing of our Class A common stock.

Persons considering the purchase, ownership, and disposition of our Class A common stock should consult their own tax advisors to determine the U.S. federal, state, local and non-U.S. income tax, tax treaties or other tax (such as estate and gift tax laws) consequences of acquiring, owning or disposing our Class A common stock in light of their particular situations.

139

U.S. Holder

        A "U.S. Holder" of our Class A common stock means a holder that is for U.S. federal income tax purposes:

•

an individual citizen or resident of the U.S. including an alien individual who is a lawful, permanent resident of the U.S. or who meets the "substantial presence" test under Section 7701(b) of the Code;

•

a corporation, or other entity taxable as a corporation for U.S. federal income tax purposes, that was created or organized in or under the laws of the U.S., any state thereof or the District of Columbia;

•

an estate whose income is subject to U.S. federal income taxation regardless of its source;

•

a trust (i) if it is subject to the supervision of a court within the U.S. and one or more U.S. persons have the authority to control all substantial decisions of the trust or (ii) that has a valid election in effect under applicable Regulations to be treated as a U.S. person; or

•

an entity that is disregarded as separate from its owner if all of its interests are owned by a single U.S. Holder, as defined above.

        Under the "substantial presence" test referred to above, an individual may, subject to certain exceptions, be deemed to be a resident of the U.S. by reason of being present in the U.S. for at least 31 days in the calendar year and for an aggregate of at least 183 days during the three-year period ending on the last day of the current calendar year (counting for such purposes all of the days present in the current year, one-third of the days present in the immediately preceding year and one-sixth of the days present in the second preceding year).

Distributions on Class A Common Stock to U.S. Holder

        In general, any distribution we make to a U.S. Holder with respect to its shares of our Class A common stock that constitutes a dividend for U.S. federal income tax purposes will be taxable upon receipt as ordinary income, although possibly at reduced rates, as discussed below. A distribution will constitute a dividend for U.S. federal income tax purposes to the extent made out of our current or accumulated earnings and profits as determined for U.S. federal income tax purposes. Any distribution not constituting a dividend will be treated first as reducing the adjusted basis in the U.S. Holder's shares of our Class A common stock (as applicable) and, to the extent such distribution exceeds such basis, will be treated as capital gain from the sale or exchange of such stock.

        Dividends received by corporate U.S. Holders will be eligible for the dividends-received deduction, subject to certain restrictions, including restrictions relating to the corporate U.S. Holder's taxable income, holding period and debt financing. Under current law, dividends paid to individual U.S. Holders in taxable years beginning before January 1, 2013 will qualify for taxation at special rates if certain holding period and other applicable requirements are met. As of the date of this prospectus, such special rates will no longer be available, and ordinary income tax rates will apply, to dividends paid in tax years beginning after December 31, 2012.

        A dividend that exceeds certain thresholds in relation to a U.S. Holder's tax basis in our Class A common stock (as applicable) could be characterized as an "extraordinary dividend," as defined under the Code. Generally, a corporate U.S. Holder that receives an extraordinary dividend is required to reduce its stock basis by the portion of such dividend that is not taxed because of the dividends-received deduction. If the amount of the reduction exceeds such corporate U.S. Holder's tax basis in our Class A common stock (as applicable), the excess is treated as taxable gain. If you are a non-corporate U.S. Holder and you receive an extraordinary dividend in taxable years beginning before January 1, 2013, you will be required to treat any losses on the sale of our Class A common stock as long-term capital losses to the extent of the

140

extraordinary dividends you receive that qualify for the special tax rate on certain dividends described above.

U.S. Holder's Sale or Exchange of Class A Common Stock

        Upon the sale or other disposition of our Class A common stock, you will generally recognize capital gain or loss equal to the difference between the amount realized and your adjusted tax basis in such stock. Such capital gain or loss will generally be long-term capital gain or loss if your holding period in respect of the stock is more than one year. Under current law, net long-term capital gains, recognized in tax years beginning prior to January 1, 2013 by U.S. Holders who are individuals, are eligible for reduced rates of taxation. As of the date of this prospectus, such reduced rates will increase from the current rates for net long-term capital gains recognized in tax years beginning after December 31, 2012. The deductibility of capital losses is subject to limitations.

Information Reporting and Backup Withholding Consequences to U.S. Holder

        U.S. backup withholding (currently at a rate of 28%, but as of the date of this prospectus, scheduled to increase to 31% for payments made after December 31, 2012) is imposed on certain payments to persons that fail to furnish the information required under the U.S. information reporting requirements. Dividends on our Class A common stock paid to a U.S. Holder will generally be exempt from backup withholding, provided the U.S. Holder meets applicable certification requirements, including providing a U.S. taxpayer identification number, or otherwise establishes an exemption. We must report annually to the IRS and to each U.S. Holder, the amount of dividends paid to that holder and the proceeds from the sale, exchange or other disposition of our Class A common stock, unless a U.S. Holder is an exempt recipient.

        Backup withholding does not represent an additional tax. Any amounts withheld from a payment to a U.S. Holder under the backup withholding rules will be allowed as a credit against the U.S. Holder's U.S. federal income tax liability and may entitle the holder to a refund, provided that the required information or returns are timely furnished by the holder to the IRS.

Non-U.S. Holder

        As used in this discussion, "Non-U.S. Holder" means a beneficial owner of our Class A common stock, other than a partnership, disregarded entity (or an entity or arrangement classified as either a partnership or a disregarded entity for U.S. federal income tax purposes), a non-U.S. simple trust or a grantor trust under subpart E of subchapter J of the Code, which is not a U.S. Holder.

Distributions on Class A Common Stock to Non-U.S. Holder

        Distributions on our Class A common stock, paid to a Non-U.S. Holder, will generally constitute dividends for U.S. federal income tax purposes to the extent such distributions are paid from our current or accumulated earnings and profits, as determined under U.S. federal income tax principles. If a distribution exceeds our current and accumulated earnings and profits, the excess will be treated as a tax-free return of the Non-U.S. Holder's investment to the extent of the Non-U.S. Holder's adjusted tax basis in our Class A common stock. Any remaining excess will be treated as capital gain from a sale or disposition of such stock. A Non-U.S. Holder's adjusted tax basis is generally the purchase price of our Class A common stock, reduced by the amount of any tax-free return of capital. See "U.S. Holder's Sale or Exchange of Class A Common Stock" for additional information.

        Dividends paid to a Non-U.S. Holder generally will be subject to withholding of U.S. federal income tax at a 30% rate or such lower rate as may be specified by an applicable income tax treaty. A Non-U.S. Holder of our Class A common stock who wishes to claim the benefit of an applicable income tax treaty rate for dividends will be required to (a) complete IRS Form W-8BEN (or appropriate substitute form) and certify, under penalty of perjury, that such holder is not a U.S. person (or, in the case of a Non-U.S.

141

Holder that is an estate or trust, such forms certifying the status of each beneficiary of the estate or trust as not a U.S. person, as so defined) and is eligible for the benefits allowed by such treaty with respect to dividends or (b) hold our Class A common stock through certain non-U.S. intermediaries and satisfy the certification requirements for treaty benefits of applicable Regulations. Special certification requirements apply to certain Non-U.S. Holders that act as intermediaries (as well as to certain non-U.S. partnerships that act as intermediaries). A Non-U.S. Holder eligible for a reduced rate of U.S. withholding tax pursuant to an income tax treaty may obtain a refund of any excess amounts withheld by timely filing an appropriate claim for refund with the IRS.

        This U.S. withholding tax generally will not apply to dividends that are (a) effectively connected with the conduct of a trade or business by the Non-U.S. Holder within the U.S., and, (b) in cases in which certain income tax treaties apply, attributable to a U.S. permanent establishment or fixed base of the Non-U.S. Holder (collectively "effectively connected dividends"). Effectively connected dividends are subject to U.S. federal income tax generally in the same manner as if the Non-U.S. Holder was a U.S. person, as defined under the Code. Certain IRS certification and disclosure requirements, including delivery of a properly executed IRS Form W-8ECI, must be complied with in order for effectively connected dividends to be exempt from withholding. Any such effectively connected dividends received by a Non-U.S. Holder that is a non-U.S. corporation may, under certain circumstances, be subject to an additional "branch profits tax" at a 30% rate or such lower rate as may be specified by an applicable income tax treaty.

        The certification requirements described above may require a non-U.S. Holder that provides an IRS W-8 form (or appropriate substitute form), or that claims the benefit of an income tax treaty, to also provide its U.S. taxpayer identification number.

        Any applicable IRS Form W-8 (or appropriate substitute form) provided must be received by us (as the withholding agent) before the payment of a dividend occurs and the beneficial owner must inform us (as the withholding agent) of any change in the information as provided on such IRS Form W-8 (or appropriate substitute form) within 30 days of such change and may be required to provide an updated properly executed IRS Form W-8 (or appropriate substitute form) upon its expiration.

Non-U.S. Holder's Sale or Exchange of Class A Common Stock

        A Non-U.S. Holder generally will not be subject to U.S. federal income tax (or any withholding thereof) with respect to gain recognized on a sale or other disposition of our Class A common stock unless:

•

the gain is effectively connected with a trade or business of the Non-U.S. Holder in the U.S. and, in cases in which certain tax treaties apply, is attributable to a U.S. permanent establishment or fixed base of the Non-U.S. Holder (collectively, "effectively connected gain");

•

the Non-U.S. Holder is a nonresident alien individual who is present in the U.S. for 183 or more days during the taxable year of disposition and meets certain other requirements; or

•

we are or have been a "U.S. real property holding corporation" within the meaning of Section 897(c)(2) of the Code, also referred to as a USRPHC, for U.S. federal income tax purposes at any time within the five-year period preceding the disposition (or, if shorter, the Non-U.S. Holder's holding period for our Class A common stock).

        Effectively connected gain is subject to U.S. federal income tax on a net income basis generally in the same manner as if the Non-U.S. Holder were a U.S. person, as defined under the Code. Any such effectively connected gain from the sale or disposition of our Class A common stock received by a Non-U.S. Holder that is a non-U.S. corporation may, under certain circumstances, be subject to an additional "branch profits tax" at a 30% rate or such lower rate as may be specified by an applicable income tax treaty.

142

        An individual nonresident alien Non-U.S. Holder who is present in the U.S. for 183 or more days during the taxable year of disposition generally will be subject to a 30% tax imposed on the gain derived from the sale or disposition of our Class A common stock, which may be offset by U.S. source capital losses realized in the same taxable year.

        We believe that we currently are not a USRPHC, and we do not anticipate becoming a USRPHC for U.S. federal income tax purposes. However, no assurances can be provided in this regard.

Information Reporting and Backup Withholding Consequences to Non-U.S. Holder

        We must report annually to the IRS and to each Non-U.S. Holder the amount of dividends paid to such holder and the tax withheld with respect to such dividends, regardless of whether withholding was required. Copies of the information returns reporting such dividends and withholding may also be made available to the tax authorities in the country in which the Non-U.S. Holder resides under the provisions of an applicable income tax treaty.

        The U.S. imposes a backup withholding tax on dividends and certain other types of payments to U.S. persons, as defined under the Code, (currently at a rate of 28%, but as of the date of this prospectus, scheduled to increase to 31% for payments made after December 31, 2012) of the gross amount. Dividends paid to a Non-U.S. Holder will not be subject to backup withholding if proper certification of non-U.S. status (usually on an IRS Form W-8BEN) is provided, and the payor does not have actual knowledge or reason to know that the beneficial owner is a U.S. person, as defined under the Code.

        The payment of the proceeds from the disposition of our Class A common stock to or through the U.S. office of any broker (U.S. or non-U.S.) will be subject to information reporting and possible backup withholding unless the Non-U.S. Holder certifies as to such holder's non-U.S. status under penalties of perjury or otherwise establishes an exemption and the broker does not have actual knowledge or reason to know that the Non-U.S. Holder is a U.S. person, as defined under the Code, or that the conditions of another exemption are not, in fact, satisfied. The payment of proceeds from the disposition of our Class A common stock to or through a non-U.S. office of a non-U.S. broker will not be subject to information reporting or backup withholding unless the non-U.S. broker has certain types of relationships with the U.S. (a "U.S. related financial intermediary"). In the case of the payment of proceeds from the disposition of our Class A common stock to or through a non-U.S. office of a broker that is either a U.S. person (as defined under the Code) or a U.S. related financial intermediary, the U.S. Treasury regulations require information reporting (but not backup withholding) on the payment unless the broker has documentary evidence in its files that the beneficial owner is a Non-U.S. person, as defined under the Code and the broker has no knowledge to the contrary.

        Any amounts withheld under the backup withholding rules may be allowed as a refund or a credit against such Non-U.S. Holder's U.S. federal income tax liability, provided the required information is timely furnished to the IRS.

Recently Enacted Withholding and Information Reporting Legislation Applicable to U.S. and Non-U.S. Holders

        Newly enacted legislation may impose withholding taxes on certain types of payments made to "foreign financial institutions," as defined under the Code, and certain other non-U.S. entities after December 31, 2012. The legislation imposes a 30% withholding tax on dividends on, or gross proceeds from the sale or other disposition of, our Class A common stock paid to a foreign financial institution, unless the foreign financial institution enters into an agreement with the U.S. Treasury to, among other things, undertake to identify accounts held by certain U.S. persons, as defined under the Code (including certain equity and debt holders of such institutions), or U.S.-owned foreign entities, annually report certain information about such accounts, and withhold 30% on payments to account holders whose actions prevent it from complying with these reporting and other requirements. Foreign financial institutions for

143

this purpose include non-U.S. entities that are financial institutions, mutual funds (or their foreign equivalent), funds of funds (and other similar investments), exchange-traded funds, hedge funds, private equity and venture capital funds, other managed funds, commodity pools, and other investment vehicles. In addition, the legislation imposes a 30% withholding tax on the same types of payments made to a "non-financial foreign entity," as defined under the Code, unless the entity certifies that it does not have any "substantial U.S. owners" (which generally includes any U.S. person that directly or indirectly owns more than 10%, by vote or by value) or furnishes identifying information regarding each substantial U.S. owner. Additionally, in taxable years beginning after March 18, 2010, certain U.S. Holders, which hold our Class A common stock through certain foreign financial institutions or foreign accounts maintained by such foreign financial institutions, may be required to file an information report (along with their tax returns) with respect to such assets, to the extent the U.S. Holder owns "specified foreign financial assets" with an aggregate value in excess of $50,000 in the relevant taxable year. "Specified foreign financial assets" include any financial accounts maintained by foreign financial institutions, including, but not limited to, any custodial account maintained by such financial institution. Prospective investors should consult their own tax advisors regarding this legislation.

144

SHARES ELIGIBLE FOR FUTURE SALE

        Prior to this offering, there has been no public market for shares of our Class A common stock. Future sales of substantial amounts of shares of our Class A common stock, including shares issued upon the exercise of outstanding options, in the public market after this offering, or the possibility of these sales occurring, could adversely affect the prevailing market price for our Class A common stock from time to time or impair our ability to raise equity capital in the future.

        Based on the number of shares outstanding as of                    , 2011, upon the completion of this offering,             shares of common stock will be outstanding, assuming no exercise of the underwriters' overallotment option and no exercise of outstanding options or warrants. Of the outstanding shares,                         shares sold in this offering will be freely tradable, except that any shares acquired by our affiliates, as that term is defined in Rule 144 under the Securities Act, in this offering may only be sold in compliance with the limitations described below.

        The remaining            shares of Class A common stock outstanding after this offering will be restricted as a result of securities laws, the investor rights agreement or lock-up agreements as described below. Following the expiration of the lock-up period, all shares will be eligible for resale in compliance with Rule 144 or Rule 701 to the extent such shares have been released from any repurchase option that we may hold. "Restricted securities" as defined under Rule 144 were issued and sold by us in reliance on exemptions from the registration requirements of the Securities Act. These shares may be sold in the public market only if registered or pursuant to an exemption from registration, such as Rule 144 or Rule 701 under the Securities Act.

Lock-Up Agreements

        Pursuant to the terms of an investor rights agreement between us and certain holders of our stock, including certain of our directors, officers and holders of 5% or greater of our outstanding capital stock, such holders have agreed that they will not, during the period ending 180 days after the date of this prospectus, sell, transfer, make any short sale of, grant any option for the purchase of, or enter into any hedging or similar transaction with the same economic event as a sale, any shares of our common stock or other securities of the Company, provided, that all of our directors, officers and holders of 1% of our voting securities are bound by and have entered into similar agreements. This agreement is subject to certain exceptions, and is also subject to extension for up to an additional 18 days, as we and the underwriters may reasonably request. The stockholders who are party to the investor rights agreement will hold an aggregate of approximately            shares, or approximately        % of our Class A common stock, and            shares, or 100% of our Class B common stock, outstanding upon completion of this offering (assuming no exercise of the underwriters' over-allotment option).

        In connection with this offering, officers, directors, employees and stockholders, who together hold substantially all of our outstanding stock and stock options, have agreed, subject to limited exceptions, not to directly or indirectly sell or dispose of any shares of our common stock or any securities convertible into or exchangeable or exercisable for shares of our common stock for a period of 180 days after the date of this prospectus (or such earlier date or dates as agreed between us and Morgan Stanley & Co. LLC), and in specific circumstances, up to an additional 34 days, without the prior written consent of Morgan Stanley & Co. LLC on behalf of the underwriters. For additional information, see "Underwriting."

Rule 144

        In general, under Rule 144 as currently in effect, once we have been subject to public company reporting requirements for at least 90 days, a person who is not deemed to have been one of our affiliates for purposes of the Securities Act at any time during 90 days preceding a sale and who has beneficially owned the shares proposed to be sold for at least six months, including the holding period of any prior owner other than our affiliates, is entitled to sell such shares without complying with the manner of sale,

145

volume limitation or notice provisions of Rule 144, subject to compliance with the public information requirements of Rule 144. If such a person has beneficially owned the shares proposed to be sold for at least one year, including the holding period of any prior owner other than our affiliates, then such person is entitled to sell such shares without complying with any of the requirements of Rule 144.

        In general, under Rule 144, as currently in effect, our affiliates or persons selling shares on behalf of our affiliates are entitled to sell upon expiration of the lock-up agreements described above, within any three-month period beginning 90 days after the date of this prospectus, a number of shares that does not exceed the greater of:

•

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

•

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

        Sales under Rule 144 by our affiliates or persons selling shares on behalf of our affiliates are also subject to certain manner of sale provisions and notice requirements and to the availability of current public information about us.

Rule 701

        Rule 701 generally allows a stockholder who purchased shares of our common stock pursuant to a written compensatory plan or contract and who is not deemed to have been an affiliate of our company during the immediately preceding 90 days to sell these shares in reliance upon Rule 144, but without being required to comply with the public information, holding period, volume limitation, or notice provisions of Rule 144. Rule 701 also permits affiliates of our company to sell their Rule 701 shares under Rule 144 without complying with the holding period requirements of Rule 144. All holders of Rule 701 shares, however, are required to wait until 90 days after the date of this prospectus before selling such shares pursuant to Rule 701.

Registration Rights

        Upon completion of this offering, the holders of            shares of our Class A common stock and            shares of our Class B common stock or their transferees will be entitled to various rights with respect to the registration of these shares under the Securities Act. Registration of these shares under the Securities Act would result in these shares becoming fully tradable without restriction under the Securities Act immediately upon the effectiveness of the registration, except for shares held by affiliates. See "Description of Capital Stock—Registration Rights" for additional information. Shares covered by a registration statement will be eligible for sales in the public market upon the expiration or release from the terms of the investor rights agreement or the lock-up agreement, as applicable.

Registration Statements

        We intend to file a registration statement on Form S-8 under the Securities Act following this offering to register all of the shares of Class A common stock issued or reserved for issuance under our 2011 Plan, our 2010 Plan and our 2008 Plan. We expect to file this registration statement as soon as practicable after this offering. Shares covered by this registration statement will be eligible for sale in the public market, upon the expiration or release from the terms of the lock-up agreements, and subject to vesting of such shares.

146

UNDERWRITING

        Under the terms and subject to the conditions in an underwriting agreement dated the date of this prospectus, the underwriters named below, for whom Morgan Stanley & Co. LLC, Goldman, Sachs & Co. and Credit Suisse Securities (USA) LLC are acting as representatives, have severally agreed to purchase, and we and the selling stockholders have agreed to sell to them, severally, the number of shares indicated below:

Name		Number of Shares
Morgan Stanley & Co. LLC
Goldman, Sachs & Co.
Credit Suisse Securities (USA) LLC
Allen & Company LLC
Merrill Lynch, Pierce, Fenner & Smith                       Incorporated
Barclays Capital Inc.
Citigroup Global Markets Inc.
Deutsche Bank Securities Inc.
J.P. Morgan Securities LLC
Wells Fargo Securities, LLC
William Blair & Company L.L.C.
Loop Capital Markets, Inc.
RBC Capital Markets, LLC
The Williams Capital Group, L.P.
	Total

        The underwriters and the representatives are collectively referred to as the "underwriters" and the "representatives," respectively. The underwriters are offering the shares of Class A common stock subject to their acceptance of the shares from us and subject to prior sale. The underwriting agreement provides that the obligations of the several underwriters to pay for and accept delivery of the shares of Class A common stock offered by this prospectus are subject to the approval of certain legal matters by their counsel and to certain other conditions. The underwriters are obligated to take and pay for all of the shares of Class A common stock offered by this prospectus if any such shares are taken. However, the underwriters are not required to take or pay for the shares covered by the underwriters' over-allotment option described below. If an underwriter defaults, the underwriting agreement provides that the purchase commitments of the non-defaulting underwriters may be increased, or, in the case of a default with respect to the shares covered by the underwriters' over-allotment described below, the underwriting agreement may be terminated.

        The underwriters initially propose to offer part of the shares of Class A common stock directly to the public at the offering price listed on the cover page of this prospectus and part to certain dealers at a price that represents a concession not in excess of $            per share under the public offering price. Any underwriter may allow, and such dealers may reallow, a concession not in excess of $            per share to other underwriters or to certain dealers. After the initial offering of the shares of Class A common stock, the offering price and other selling terms may from time to time be varied by the representatives.

        We and the selling stockholders have granted to the underwriters an option, exercisable for 30 days from the date of this prospectus, to purchase up to            additional shares of Class A common stock at the public offering price listed on the cover page of this prospectus, less underwriting discounts and commissions. The underwriters may exercise this option solely for the purpose of covering over-allotments, if any, made in connection with the offering of the shares of Class A common stock offered by this

147

prospectus. To the extent the option is exercised, each underwriter will become obligated, subject to certain conditions, to purchase the same percentage of the additional shares of Class A common stock as the number listed next to the underwriter's name in the preceding table bears to the total number of shares of Class A common stock listed next to the names of all underwriters in the preceding table.

        The following table shows the per share and total public offering price, underwriting discounts and commissions, and proceeds before expenses to us and the selling stockholders. These amounts are shown assuming both no exercise and full exercise of the underwriters' option to purchase up to an additional            shares of Class A common stock.

		Total
		Share	No Exercise	Full Exercise
Public offering price		$	$	$
Underwriting discounts and commissions to be paid by:
	Us	$	$	$
	The selling stockholders	$	$	$
Proceeds, before expenses, to us		$	$	$
Proceeds, before expenses, to selling stockholders		$	$	$

        The estimated offering expenses payable by us, exclusive of the underwriting discounts and commissions, are approximately $             million.

        The underwriters have informed us that they do not intend sales to discretionary accounts to exceed 5% of the total number of shares of Class A common stock offered by them.

        We expect to list our Class A common stock on                        under the trading symbol "GRPN."

        We and all directors and officers and the holders of substantially all of our outstanding stock and stock options, including holders of all of our unregistered securities acquired within the past 180 days, have agreed that, without the prior written consent of Morgan Stanley & Co. LLC on behalf of the underwriters, and subject to certain exceptions, we and they will not, during the period ending 180 days after the date of this prospectus (or such earlier date or dates as agreed between us and Morgan Stanley & Co. LLC):

•

offer, pledge, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase, lend or otherwise transfer or dispose of directly or indirectly, any shares of common stock beneficially owned or any other securities convertible into or exercisable or exchangeable for common stock;

•

enter into any swap or other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of the common stock, whether any such transaction described in the immediately preceding bullet or this bullet is to be settled by delivery of our common stock or such other securities, in cash or otherwise;

•

engage in any short selling of our common stock or securities convertible into or exercisable or exchangeable for our common stock; or

•

make any demand for, or exercise any right with respect to, the registration of any shares of common stock or any security convertible into or exercisable or exchangeable for common stock.

In addition, we and all directors and officers and the holders of substantially all of our outstanding stock and stock options have agreed that, without the prior written consent of Morgan Stanley & Co. LLC on behalf of the underwriters, and subject to certain exceptions, we and they will not, during the period ending 180 days after the date of this prospectus (or such earlier date or dates as agreed between us and Morgan Stanley & Co. LLC), file any registration statement with the SEC relating to the offering of any shares of

148

common stock or any securities convertible into or exercisable or exchangeable for common stock. The restrictions described in this paragraph do not apply to:

•

sales of our common stock to the underwriters;

•

transactions relating to shares of our common stock or other securities acquired in connection with this offering open market transactions after the completion of this offering, provided that no filing under Section 16(a) of the Exchange Act is required or is voluntarily made in connection with subsequent sales of shares of our common stock or other securities acquired in such open market transactions;

•

transfers of shares of our common stock or any security convertible into shares of our common stock as a bona fide gift or gifts;

•

distributions of shares of our common stock or any security convertible into our common stock to partners, members or stockholders of a security holder;

•

distributions or transfers by a security holder of shares of our common stock or any security convertible into our common stock to any trust, partnership, limited liability company or other entity for the direct or indirect benefit of the security holder or its immediate family;

•

transfers by a security holder of shares of our common stock to any beneficiary of the security holder pursuant to a will or other testamentary document or applicable laws of descent;

•

transfers by a security holder of shares of our common stock to us (including, without limitation, any transfer in accordance with the terms of the recapitalization agreement to be entered into by us and all or certain of our stockholders in connection with this offering);

•

exercises of any options to purchase our common stock that have been granted by us prior to the date hereof where the shares of our common stock received upon such exercise are held by a security holder, individually or as a fiduciary, in accordance with and subject to the terms of the lock-up letter signed by us and the holders of our outstanding stock and stock options; or

•

the establishment of a trading plan pursuant to Rule 10b5-1 under the Exchange Act for the transfer of shares of our common stock, provided that such plan does not provide for the transfer of our shares of common stock during the restricted period and no public announcement or filing under the Exchange Act regarding the establishment of such plan shall be required of or voluntarily made by or on behalf of us or the security holder.

In the case of any transfer or distribution pursuant to the third, fourth and fifth bullet immediately above, (i) each done, transferee or distributee must sign and deliver a lock-up letter substantially in the form of the lock-up letter signed by us and the holders of our outstanding stock and stock options, (ii) any such transfer must not involve a disposition for value, and (iii) no filing under Section 16(a) of the Exchange Act, reporting a reduction in beneficial ownership of shares of our common stock, is required or shall be voluntarily made during the 180-day restricted period.

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

•

during the last 17 days of the 180-day restricted period, we issue an earnings release or a material news event relating to us occurs, or

•

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

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

149

        In order to facilitate the offering of our Class A common stock, the underwriters may engage in transactions that stabilize, maintain or otherwise affect the price of our Class A common stock. Specifically, the underwriters may over-allot in connection with the offering, creating a short position in the Class A common stock for their own accounts. In addition, to cover over-allotments or to stabilize the price of the Class A common stock, the underwriters may bid for, and purchase, shares of Class A common stock in the open market to stabilize the price of the Class A common stock. Finally, the underwriting syndicate may reclaim selling concessions allowed to an underwriter or a dealer for distributing the Class A common stock in the offering, if the syndicate repurchases previously distributed Class A common stock in transactions to cover syndicate short positions, in stabilization transactions or otherwise. Any of these activities may stabilize or maintain the market price of the Class A common stock above independent market levels or prevent or retard a decline in the market price of the Class A common stock. The underwriters are not required to engage in these activities and may end any of these activities at any time.

        The underwriters may also impose a penalty bid. This occurs when a particular underwriter repays to the underwriters a portion of the underwriting discount received by it because the representatives have repurchased shares sold by or for the account of such underwriter in stabilizing or short covering transactions.

        We, the selling stockholders and the underwriters have agreed to indemnify each other against certain liabilities, including liabilities under the Securities Act, or to contribute to payments the underwriters may be required to make because of any of these liabilities.

        A prospectus in electronic format may be made available on websites maintained by one or more underwriters, or selling group members, if any, participating in this offering. The representatives may agree to allocate a number of shares of Class A common stock to underwriters for sale to their online brokerage account holders. Internet distributions will be allocated by the representatives to underwriters that may make internet distributions on the same basis as other allocations.

        The underwriters and their respective affiliates are full service financial institutions engaged in various activities, which may include securities trading, commercial and investment banking, financial advisory, investment management, investment research, principal investment, hedging, financing and brokerage activities. Certain of the underwriters and their respective affiliates have, from time to time, performed, and may in the future perform, various financial advisory and investment banking services for the issuer, for which they received or will receive customary fees and expenses.

        In the ordinary course of their various business activities, the underwriters and their respective affiliates may make or hold a broad array of investments and actively trade debt and equity securities (or related derivative securities) and financial instruments (including bank loans) for their own account and for the accounts of their customers, and such investment and securities activities may involve securities and/or instruments of the issuer. The underwriters and their respective affiliates may also make investment recommendations and/or publish or express independent research views in respect of such securities or instruments and may at any time hold, or recommend to clients that they acquire, long and/or short positions in such securities and instruments.

Pricing of the Offering

        Prior to this offering, there has been no public market for our Class A common stock. The initial public offering price will be determined by negotiations between us and the representatives. Among the factors to be considered in determining the initial public offering price will be the future prospects and those of our industry in general, our revenue, earnings and certain other financial and operating information in recent periods, and the price-earnings ratios, price-sales ratios, market prices of securities, and certain financial and operating information of companies engaged in activities similar to ours. The estimated initial public offering price range set forth on the cover page of this preliminary prospectus is subject to change as a result of market conditions and other factors. We cannot assure you that the prices

150

at which the shares will sell in the public market after this offering will not be lower than the initial public offering price or that an active trading market in our Class A common stock will develop and continue after this offering.

European Economic Area

        In relation to each Member State of the European Economic Area which has implemented the Prospectus Directive, each, a Relevant Member State, an offer to the public of any shares of our Class A common stock may not be made in that Relevant Member State, except that an offer to the public in that Relevant Member State of any shares of our Class A common stock may be made at any time under the following exemptions under the Prospectus Directive, if they have been implemented in that Relevant Member State:

        (a)   to any legal entity which is a qualified investor as defined in the Prospectus Directive;

        (b)   to fewer than 100 or, if the Relevant Member State has implemented the relevant provision of the 2010 PD Amending Directive, 150, natural or legal persons (other than qualified investors as defined in the Prospectus Directive), as permitted under the Prospectus Directive, subject to obtaining the prior consent of the representatives for any such offer; or

        (c)   in any other circumstances falling within Article 3(2) of the Prospectus Directive, provided that no such offer of shares of our Class A common stock shall result in a requirement for the publication by us or any underwriter of a prospectus pursuant to Article 3 of the Prospectus Directive.

        For the purposes of this provision, the expression an "offer to the public" in relation to any shares of our Class A common stock in any Relevant Member State means the communication in any form and by any means of sufficient information on the terms of the offer and any shares of our Class A common stock to be offered so as to enable an investor to decide to purchase any shares of our Class A common stock, as the same may be varied in that Member State by any measure implementing the Prospectus Directive in that Member State, the expression "Prospectus Directive" means Directive 2003/71/EC (and amendments thereto, including the 2010 PD Amending Directive, to the extent implemented in the Relevant Member State), and includes any relevant implementing measure in the Relevant Member State, and the expression "2010 PD Amending Directive" means Directive 2010/73/EU.

United Kingdom

        Each underwriter has represented and agreed that:

        (a)   it has only communicated or caused to be communicated and will only communicate or cause to be communicated an invitation or inducement to engage in investment activity (within the meaning of Section 21 of the FSMA) received by it in connection with the issue or sale of the shares of our Class A common stock in circumstances in which Section 21(1) of the FSMA does not apply to us; and

        (b)   it has complied and will comply with all applicable provisions of the FSMA with respect to anything done by it in relation to the shares of our Class A common stock in, from or otherwise involving the United Kingdom.

Hong Kong, Singapore and Japan

        The shares may not be offered or sold by means of any document other than (i) in circumstances which do not constitute an offer to the public within the meaning of the Companies Ordinance (Cap.32, Laws of Hong Kong), or (ii) to "professional investors" within the meaning of the Securities and Futures Ordinance (Cap.571, Laws of Hong Kong) and any rules made thereunder, or (iii) in other circumstances which do not result in the document being a "prospectus" within the meaning of the Companies Ordinance (Cap.32, Laws of Hong Kong), and no advertisement, invitation or document relating to the shares may be

151

issued or may be in the possession of any person for the purpose of issue (in each case whether in Hong Kong or elsewhere), which is directed at, or the contents of which are likely to be accessed or read by, the public in Hong Kong (except if permitted to do so under the laws of Hong Kong) other than with respect to shares which are or are intended to be disposed of only to persons outside Hong Kong or only to "professional investors" within the meaning of the Securities and Futures Ordinance (Cap. 571, Laws of Hong Kong) and any rules made thereunder.

        This prospectus has not been registered as a prospectus with the Monetary Authority of Singapore. Accordingly, this prospectus and any other document or material in connection with the offer or sale, or invitation for subscription or purchase, of the shares may not be circulated or distributed, nor may the shares be offered or sold, or be made the subject of an invitation for subscription or purchase, whether directly or indirectly, to persons in Singapore other than (i) to an institutional investor under Section 274 of the Securities and Futures Act, Chapter 289 of Singapore (the "SFA"), (ii) to a relevant person, or any person pursuant to Section 275(1A), and in accordance with the conditions, specified in Section 275 of the SFA or (iii) otherwise pursuant to, and in accordance with the conditions of, any other applicable provision of the SFA.

        Where the shares are subscribed or purchased under Section 275 by a relevant person which is: (a) a corporation (which is not an accredited investor) the sole business of which is to hold investments and the entire share capital of which is owned by one or more individuals, each of whom is an accredited investor; or (b) a trust (where the trustee is not an accredited investor) whose sole purpose is to hold investments and each beneficiary is an accredited investor, shares, debentures and units of shares and debentures of that corporation or the beneficiaries' rights and interest in that trust shall not be transferable for 6 months after that corporation or that trust has acquired the shares under Section 275 except: (1) to an institutional investor under Section 274 of the SFA or to a relevant person, or any person pursuant to Section 275(1A), and in accordance with the conditions, specified in Section 275 of the SFA; (2) where no consideration is given for the transfer; or (3) by operation of law.

        The securities have not been and will not be registered under the Financial Instruments and Exchange Law of Japan (the Financial Instruments and Exchange Law) and each underwriter has agreed that it will not offer or sell any securities, directly or indirectly, in Japan or to, or for the benefit of, any resident of Japan (which term as used herein means any person resident in Japan, including any corporation or other entity organized under the laws of Japan), or to others for re-offering or resale, directly or indirectly, in Japan or to a resident of Japan, except pursuant to an exemption from the registration requirements of, and otherwise in compliance with, the Financial Instruments and Exchange Law and any other applicable laws, regulations and ministerial guidelines of Japan.

Notice to Prospective Investors in Switzerland

        The shares may not be publicly offered in Switzerland and will not be listed on the SIX Swiss Exchange ("SIX") or on any other stock exchange or regulated trading facility in Switzerland. This document has been prepared without regard to the disclosure standards for issuance prospectuses under art. 652a or art. 1156 of the Swiss Code of Obligations or the disclosure standards for listing prospectuses under art. 27 ff. of the SIX Listing Rules or the listing rules of any other stock exchange or regulated trading facility in Switzerland. Neither this document nor any other offering or marketing material relating to the shares or the offering may be publicly distributed or otherwise made publicly available in Switzerland.

        Neither this document nor any other offering or marketing material relating to the offering, the Company, the shares have been or will be filed with or approved by any Swiss regulatory authority. In particular, this document will not be filed with, and the offer of shares will not be supervised by, the Swiss Financial Market Supervisory Authority FINMA ("FINMA"), and the offer of shares has not been and will not be authorized under the Swiss Federal Act on Collective Investment Schemes ("CISA"). The investor

152

protection afforded to acquirers of interests in collective investment schemes under the CISA does not extend to acquirers of shares.

Notice to Prospective Investors in the Dubai International Financial Centre

        This prospectus supplement relates to an Exempt Offer in accordance with the Offered Securities Rules of the Dubai Financial Services Authority ("DFSA"). This prospectus supplement is intended for distribution only to persons of a type specified in the Offered Securities Rules of the DFSA. It must not be delivered to, or relied on by, any other person. The DFSA has no responsibility for reviewing or verifying any documents in connection with Exempt Offers. The DFSA has not approved this prospectus supplement nor taken steps to verify the information set forth herein and has no responsibility for the prospectus supplement. The shares to which this prospectus supplement relates may be illiquid and/or subject to restrictions on their resale. Prospective purchasers of the shares offered should conduct their own due diligence on the shares. If you do not understand the contents of this prospectus supplement you should consult an authorized financial advisor.

153

LEGAL MATTERS

        The validity of the shares of Class A common stock offered hereby will be passed upon for us by Winston & Strawn LLP, Chicago, Illinois. DLA Piper LLP (US), East Palo Alto, California, is acting as counsel to the underwriters. DLA Piper LLP (US) has in the past provided, and continues to provide, legal services to Groupon.

EXPERTS

        The consolidated financial statements of Groupon, Inc. at December 31, 2009 and 2010, and for each of the three years in the period ended December 31, 2010, appearing in this Prospectus and Registration Statement have been audited by Ernst & Young LLP, independent registered public accounting firm, as set forth in their report thereon appearing elsewhere herein, and are included in reliance upon such report given on the authority of such firm as experts in accounting and auditing.

        The consolidated financial statements of Goodrec, Inc. for the years ended December 31, 2008 and 2009 appearing in this Prospectus and Registration Statement have been audited by Ernst & Young LLP, independent auditors, as set forth in their report thereon appearing elsewhere herein, and are included in reliance upon such report given on the authority of such firm as experts in accounting and auditing.

        The consolidated financial statements of CityDeal Europe GmbH for the period from January 1, 2010 to May 15, 2010, appearing in this Prospectus and Registration Statement have been audited by Ernst & Young GmbH Wirtschaftsprüfungsgesellschaft, independent auditors, as set forth in their report thereon appearing elsewhere herein, and are included in reliance upon such report given on the authority of such firm as experts in accounting and auditing.

        The financial statements of Qpod.inc for the period from June 4, 2010 to August 11, 2010, appearing in this Prospectus and Registration Statement have been audited by Ernst & Young ShinNihon LLC, independent auditors, as set forth in their report thereon appearing elsewhere herein, and are included in reliance upon such report given on the authority of such firm as experts in accounting and auditing.

        The consolidated financial statements of Ludic Labs, Inc. for the years ended December 31, 2008 and 2009 appearing in this Prospectus and Registration Statement have been audited by Ernst & Young LLP, independent auditors, as set forth in their report thereon appearing elsewhere herein, and are included in reliance upon such report given on the authority of such firm as experts in accounting and auditing.

WHERE YOU CAN FIND ADDITIONAL INFORMATION

        We have filed with the SEC a registration statement on Form S-1 under the Securities Act with respect to the shares of common stock offered hereby. This prospectus, which constitutes a part of the registration statement, does not contain all of the information set forth in the registration statement or the exhibits and schedules filed therewith. For further information about us and the common stock offered hereby, we refer you to the registration statement and the exhibits and schedules filed thereto. Statements contained in this prospectus regarding the contents of any contract or any other document that is filed as an exhibit to the registration statement are not necessarily complete, and each such statement is qualified in all respects by reference to the full text of such contract or other document filed as an exhibit to the registration statement. Following this offering, we will be required to file periodic reports, proxy statements, and other information with the SEC pursuant to the Securities Exchange Act of 1934. You may read and copy this information at the Public Reference Room of the SEC, 100 F Street, N.E., Room 1580, Washington, D.C. 20549. You may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. The SEC also maintains a website that contains reports, proxy statements and other information about issuers, like us, that file electronically with the SEC. The address of that site is www.sec.gov.

154

Table of Contents

Groupon, Inc. Consolidated Financial Statements As of December 31, 2009 and 2010 and for the Years Ended December 31, 2008, 2009 and 2010
Consolidated Financial Statements
Report of Independent Registered Public Accounting Firm	F-3
Consolidated Balance Sheets	F-4
Consolidated Statements of Operations	F-5
Consolidated Statements of Stockholders' (Deficit) Equity	F-6
Consolidated Statements of Cash Flows	F-7
Notes to Consolidated Financial Statements	F-8
Groupon, Inc. Condensed Consolidated Financial Statements (Unaudited) Six Months Ended June 30, 2010 and 2011
Condensed Consolidated Financial Statements (Unaudited)
Condensed Consolidated Balance Sheets (Unaudited)	F-49
Condensed Consolidated Statements of Operations (Unaudited)	F-50
Condensed Consolidated Statement of Stockholders' Equity (Unaudited)	F-51
Condensed Consolidated Statements of Cash Flows (Unaudited)	F-52
Notes to Condensed Consolidated Financial Statements (Unaudited)	F-53
Goodrec, Inc. Financial Statements Years Ended December 31, 2008 and 2009 and Three Months Ended March 31, 2009 and 2010
Financial Statements
Report of Independent Auditors	F-78
Statements of Operations	F-79
Statements of Cash Flows	F-80
Notes to Financial Statements	F-81
CityDeal Europe GmbH Consolidated Financial Statements Period Ended May 15, 2010
Consolidated Financial Statements
Report of Independent Auditors	F-89
Consolidated Statement of Operations and Consolidated Statement of Comprehensive Loss	F-90
Consolidated Statement of Cash Flows	F-91
Notes to Consolidated Financial Statements	F-92

F-1

Qpod.inc Consolidated Financial Statements Period Ended August 11, 2010
Financial Statements
Report of Independent Auditors	F-103
Statement of Operations	F-104
Statement of Stockholders' Equity	F-105
Statement of Cash Flows	F-106
Notes to Financial Statements	F-107
Ludic Labs, Inc. Financial Statements Years Ended December 31, 2008 and 2009 and Nine Months Ended September 30, 2009 and 2010
Financial Statements
Report of Independent Auditors	F-113
Statements of Operations	F-114
Statements of Cash Flows	F-115
Notes to Financial Statements	F-116
Groupon, Inc. Pro Forma Condensed Consolidated Financial Statement (Unaudited) Year Ended December 31, 2010
Pro Forma Condensed Consolidated Statement of Operations (Unaudited)	F-124
Notes to Pro Forma Condensed Consolidated Statement of Operations (Unaudited)	F-126

F-2

Report of Independent Registered Public Accounting Firm

        The Board of Directors and Stockholders of Groupon, Inc.

        We have audited the accompanying consolidated balance sheets of Groupon, Inc. as of December 31, 2009 and 2010, and the related consolidated statements of operations, stockholders' (deficit) equity, and cash flows for each of the three years in the period ended December 31, 2010. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits.

        We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. We were not engaged to perform an audit of the Company's internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

        In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Groupon, Inc. at December 31, 2009 and 2010, and the consolidated results of its operations and its cash flows for each of the three years in the period ended December 31, 2010, in conformity with U.S. generally accepted accounting principles.

        As discussed in Note 2, the consolidated financial statements have been restated for the presentation of revenue on a net basis.

/s/ Ernst & Young LLP
Chicago, Illinois
June 2, 2011, except for Note 2, as to which the date is September 23, 2011

F-3

GROUPON, INC.

CONSOLIDATED BALANCE SHEETS

(in thousands, except share data)

			December 31,
			2009			2010
Assets
Current assets:
	Cash and cash equivalents		$	12,313		$	118,833
	Accounts receivable, net			601			42,407
	Prepaid expenses and other current assets			1,293			12,615
		Total current assets		14,207			173,855
Property and equipment, net				274			16,490
Goodwill				—			132,038
Intangible assets, net				239			40,775
Deferred income taxes, non-current				—			14,544
Other non-current assets				242			3,868
		Total Assets	$	14,962		$	381,570
Liabilities and Stockholders' (Deficit) Equity
Current liabilities:
	Accounts payable		$	182		$	57,543
	Accrued merchant payable			4,324			162,409
	Accrued expenses			4,836			98,323
	Due to related parties			—			13,321
	Deferred income taxes, current			—			17,210
	Other current liabilities			877			21,613
		Total current liabilities		10,219			370,419
Deferred income taxes, non-current				—			604
Other non-current liabilities				—			1,017
		Total Liabilities		10,219			372,040
Commitments and contingencies (see Note 8)
Series B, redeemable convertible preferred stock $.0001 par value, 199,998 shares authorized, issued and outstanding at December 31, 2009 and 0 shares authorized, issued and outstanding at December 31, 2010				20			—
Series D, redeemable convertible preferred stock $.0001 par value, 6,560,174 shares authorized, issued and outstanding at December 31, 2009 and 0 shares authorized, issued and outstanding at December 31, 2010				4,727			—
Series E, redeemable convertible preferred stock $.0001 par value, 4,406,160 shares authorized, issued and outstanding at December 31, 2009 and 0 shares authorized, issued and outstanding at December 31, 2010				29,965			—
Redeemable noncontrolling interests				—			2,983
Groupon, Inc. Stockholders' (Deficit) Equity
Series B, convertible preferred stock $.0001 par value, 0 shares authorized, issued and outstanding at December 31, 2009 and 199,998 shares authorized, issued and outstanding at December 31, 2010				—			—
Series D, convertible preferred stock $.0001 par value, 0 shares authorized, issued and outstanding at December 31, 2009 and 6,560,174 shares authorized and issued, and 6,258,297 shares outstanding at December 31, 2010				—			1
Series E, convertible preferred stock $.0001 par value, 0 shares authorized, issued and outstanding at December 31, 2009 and 4,406,160 shares authorized and issued, and 4,127,653 shares outstanding at December 31, 2010				—			—
Series F, convertible preferred stock $.0001 par value, 0 shares authorized, issued and outstanding at December 31, 2009 and 4,202,658 shares authorized, issued and outstanding at December 31, 2010				—			1
Series G, convertible preferred stock $.0001 par value, 0 shares authorized, issued and outstanding at December 31, 2009 and 30,075,690 shares authorized and 14,245,018 shares issued and outstanding at December 31, 2010, liquidation preference of $450,000				—			1
Voting common stock, $.0001 par value, 500,000,000 shares authorized, 170,095,998 shares issued and outstanding at December 31, 2009, and 211,495,998 shares issued and 165,616,260 shares outstanding at December 31, 2010				3			4
Non-voting convertible common stock, $.0001 par value, 100,000,000 shares authorized, 2,850,498 shares issued and outstanding at December 31, 2009, and 5,864,486 shares issued and 5,079,896 shares outstanding at December 31, 2010				—			—
Treasury stock, at cost, 0 shares at December 31, 2009 and 46,664,328 shares at December 31, 2010				—			(503,173	)
Additional paid-in capital				—			921,122
Stockholder receivable				(144	)		(286	)
Accumulated deficit				(29,828	)		(419,468	)
Accumulated other comprehensive income				—			9,875
		Total Groupon, Inc. Stockholders' (Deficit) Equity		(29,969	)		8,077
Noncontrolling interests				—			(1,530	)
		Total (Deficit) Equity		(29,969	)		6,547
		Total Liabilities and (Deficit) Equity	$	14,962		$	381,570

See Notes to Consolidated Financial Statements.

F-4

GROUPON, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except share and per share amounts)

			Year Ended December 31,
			2008			2009			2010
			(Restated)			(Restated)			(Restated)
Revenue (gross amounts billed of $94, $34,082 and $745,348, respectively)			$	5		$	14,540		$	312,941
Costs and expenses:
	Cost of revenue			6			4,355			32,494
	Marketing			163			4,873			284,348
	Selling, general and administrative			1,468			6,389			213,260
	Acquisition-related			—			—			203,183
		Total operating expenses		1,637			15,617			733,285
Loss from operations				(1,632	)		(1,077	)		(420,344	)
Interest and other income (expense), net				90			(16	)		284
Loss before provision for income taxes				(1,542	)		(1,093	)		(420,060	)
Provision (benefit) for income taxes				—			248			(6,674	)
Net loss				(1,542	)		(1,341	)		(413,386	)
Less: Net loss attributable to noncontrolling interests				—			—			23,746
Net loss attributable to Groupon, Inc.				(1,542	)		(1,341	)		(389,640	)
Dividends on preferred stock				(277	)		(5,575	)		(1,362	)
Redemption of preferred stock in excess of carrying value				—			—			(52,893	)
Adjustment of redeemable noncontrolling interests to redemption value				—			—			(12,425	)
Preferred stock distributions				(339	)		—			—
Net loss attributable to common stockholders			$	(2,158	)	$	(6,916	)	$	(456,320	)
Net loss per share
	Basic		$	(0.01	)	$	(0.04	)	$	(2.66	)
	Diluted		$	(0.01	)	$	(0.04	)	$	(2.66	)
Weighted average number of shares outstanding
	Basic			166,738,129			168,604,142			171,349,386
	Diluted			166,738,129			168,604,142			171,349,386

See Notes to Consolidated Financial Statements.

F-5

GROUPON, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' (DEFICIT) EQUITY

(in thousands, except share amounts)

		Groupon, Inc. Stockholders' (Deficit) Equity
		Series B, C, D, E, F, and G Preferred Stock																									Total Groupon Inc. Stockholders' (Deficit) Equity
								Common Stock
													Treasury Stock			Additional Paid-In Capital			Stockholder Receivable			Accumulated Deficit			Accumulated Other Comp. Income					Non- controlling Interests			Total (Deficit) Equity
		Shares			Amount			Shares			Amount
Balance at December 31, 2007			1,000,000		$	1,000			160,895,998		$	2	$	—		$	72		$	—		$	(1,032	)	$	—	$	42		$	—		$	42
	Net loss and comprehensive loss		—			—			—			—		—			—			—			(1,542	)		—		(1,542	)		—			(1,542	)
	Conversion of preferred stock		(1,000,000	)		(1,000	)		6,000,000			1		—			999			—			—			—		—			—			—
	Exercise of stock options		—			—			60,000			—		—			1			—			—			—		1			—			1
	Vesting of restricted stock units		—			—			1,000,000			—		—			—			—			—			—		—			—			—
	Stock-based compensation expense		—			—			—			—		—			24			—			—			—		24			—			24
	Preferred stock distributions		—			—			—			—		—			(339	)		—			—			—		(339	)		—			(339	)
	Preferred stock dividends		—			—			—			—		—			(277	)		—			—			—		(277	)		—			(277	)
Balance at December 31, 2008			—			—			167,955,998			3		—			480			—			(2,574	)		—		(2,091	)		—			(2,091	)
	Net loss and comprehensive loss		—			—			—			—		—			—			—			(1,341	)		—		(1,341	)		—			(1,341	)
	Issuance of stock		—			—			1,800,000			—		—			144			(144	)		—			—		—			—			—
	Exercise of stock options, including tax benefits		—			—			2,010,498			—		—			216			—			—			—		216			—			216
	Vesting of restricted stock units		—			—			1,180,000			—		—			—			—			—			—		—			—			—
	Stock-based compensation expense		—			—			—			—		—			115			—			—			—		115			—			115
	Common stock dividends, $0.125 per share		—			—			—			—		—			(955	)		—			(20,338	)		—		(21,293	)		—			(21,293	)
	Preferred stock dividends		—			—			—			—		—			—			—			(5,575	)		—		(5,575	)		—			(5,575	)
Balance at December 31, 2009			—			—			172,946,496			3		—			—			(144	)		(29,828	)		—		(29,969	)		—			(29,969	)
	Net loss		—			—			—			—		—			—			—			(389,640	)		—		(389,640	)		(1,530	)		(391,170	)
	Foreign currency translation		—			—			—			—		—			—			—			—			9,875		9,875			—			9,875
	Comprehensive loss		—			—			—			—		—			—			—			—			—		(379,765	)		—			(381,295	)
	Adjustment of redeemable noncontrolling interests to redemption value		—			—			—			—		—			(12,425	)		—			—			—		(12,425	)		—			(12,425	)
	Stock issued in connection with business combinations		—			—			43,117,156			1		—			348,016			—			—			—		348,017			—			348,017
	Proceeds from issuance of stock (net of issuance costs)		18,447,676			2			—			—		—			584,656			—			—			—		584,658			—			584,658
	Exercise of stock options, including tax benefits		—			—			1,214,332			—		—			369			(142	)		—			—		227			—			227
	Vesting of restricted stock units		—			—			82,500			—		—			—			—			—			—		—			—			—
	Stock-based compensation expense		—			—			—			—		—			22,160			—			—			—		22,160			—			22,160
	Redemption of preferred stock		(580,384	)		—			—			—		—			(55,003	)		—			—			—		(55,003	)		—			(55,003	)
	Repurchase of common stock		—			—			(46,664,328	)		—		(503,173	)		—			—			—			—		(503,173	)		—			(503,173	)
	Reclassification of redeemable preferred stock		11,166,332			1			—			—		—			34,711			—			—			—		34,712			—			34,712
	Preferred stock dividends		—			—			—			—		—			(1,362	)		—			—			—		(1,362	)		—			(1,362	)
Balance at December 31, 2010			29,033,624		$	3			170,696,156		$	4	$	(503,173	)	$	921,122		$	(286	)	$	(419,468	)	$	9,875	$	8,077		$	(1,530	)	$	6,547

See Notes to Consolidated Financial Statements.

F-6

GROUPON, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

			Year Ended December 31,
			2008			2009			2010
Operating activities
Net loss			$	(1,542	)	$	(1,341	)	$	(413,386	)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
	Depreciation and amortization			17			80			12,952
	Stock-based compensation			24			115			36,168
	Deferred income taxes			—			—			(7,349	)
	Excess tax benefit on stock-based compensation			—			(143	)		(32	)
	Non-cash interest expense			—			—			106
	Acquisition-related expense			—			—			203,183
	Change in assets and liabilities, net of acquisitions:
		Accounts receivable		—			(601	)		(34,905	)
		Prepaid expenses and other current assets		(4	)		(67	)		(2,467	)
		Accounts payable		—			182			50,835
		Accrued merchant payable		(3	)		4,305			149,044
		Accrued expenses and other current liabilities		(18	)		5,038			94,592
		Due to related parties		—			(20	)		(319	)
		Other		—			(38	)		(1,537	)
Net cash (used in) provided by operating activities				(1,526	)		7,510			86,885
Investing activities
Purchases of property and equipment				(19	)		(290	)		(14,681	)
Acquisitions of businesses, net of acquired cash				—			—			3,816
Purchases of intangible assets				—			(271	)		(922	)
Changes in restricted cash				—			(1,400	)		(92	)
Net cash used in investing activities				(19	)		(1,961	)		(11,879	)
Financing activities
Issuance of stock, net of issuance costs				4,746			29,946			584,658
Excess tax benefit on stock-based compensation				—			143			32
Loans from related parties				—			—			5,035
Preferred stock distributions				(339	)		—			—
Repurchase of common stock				—			—			(503,173	)
Proceeds from exercise of stock options				1			72			195
Dividends paid on common and preferred stock				—			(26,363	)		(1,299	)
Redemption of preferred stock				—			—			(55,003	)
Net cash provided by financing activities				4,408			3,798			30,445
Effect of exchange rate changes on cash and cash equivalents				—			—			1,069
Net increase in cash and cash equivalents				2,863			9,347			106,520
Cash and cash equivalents, beginning of year				103			2,966			12,313
Cash and cash equivalents, end of year			$	2,966		$	12,313		$	118,833
Supplemental disclosure of cash flow information
	Income tax payments			—			—		$	140
	Cash interest payments			—			—		$	287
Non-cash investing activity
	Capital expenditures incurred not yet paid			—		$	34		$	2,379
	Contingent consideration given in connection with acquisitions			—			—		$	63,180
	Issuance of common stock in connection with acquisitions			—			—		$	80,200
Non-cash financing activity
	Receivable for stock options exercised not yet paid			—			—		$	142
	Receivable for stock issuance proceeds not yet paid			—		$	144			—
	Dividends accrued		$	277		$	505		$	278

See Notes to Consolidated Financial Statements.

F-7

GROUPON, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. DESCRIPTION OF BUSINESS

        Groupon, Inc., together with the subsidiaries through which it conducts business (the "Company"), is a local e-commerce marketplace (www.groupon.com) that connects merchants to consumers by offering goods and services at a discount. The Company, which commenced operations in October 2008, creates a new way for local merchants to attract customers, while providing consumers with savings and helping them discover what to do, eat, see and buy in the places they live and work. Each day, the Company emails its subscribers with discounted offers for goods and services that are targeted by location and personal preferences. Consumers also access deals directly through the Company's website and mobile application.

        The Company, based in Chicago, Illinois, was founded by Andrew D. Mason, the Company's CEO, and Eric P. Lefkofsky, the Company's Executive Chairman, and evolved from a business they founded called The Point (www.thepoint.com), which is a web platform that enables users to promote collective action in support of social, educational and other causes. The Point originally was established as a limited liability company ("ThePoint"). Effective January 15, 2008, The Point converted its legal form to a corporation organized and existing under the General Corporation Law of the State of Delaware, and merged with and into ThePoint.com, a newly-established corporation ("ThePoint.com"). ThePoint.com subsequently changed its legal name to Groupon, Inc.

        The Company has organized its operations into two principal segments: North America and International. See Note 14 "Segment Information."

2. RESTATEMENT

        The Company has restated its previously issued Consolidated Statements of Operations for the years ended December 31, 2008, 2009 and 2010 to correct for an error in its presentation of revenue.

        Most significantly, the Company restated its reporting of revenues from Groupons to be net of the amounts related to merchant fees. Historically, the Company has reported the gross amounts billed to its subscribers as revenue. All prior periods have been restated to show the net amount the Company retains after paying the merchant fees. The effect of the correction resulted in a reduction of previously reported revenues and corresponding reductions in cost of revenue in those periods. The change in presentation had no effect on pre-tax loss, net loss or any per share amounts for any period presented.

        The Company has also changed the presentation of certain other income statement expenses to be consistent with reporting revenue on a net basis. These changes include presenting loyalty programs as a component of marketing rather than as an offset to revenue. The Company believes that this classification is most appropriate as it is acting as an agent on behalf of the merchant in driving traffic to generate revenue. In addition, refunds made to subscribers under the Groupon Promise are presented as a component of cost of revenue, rather than as an offset to revenue, as these amounts are not paid directly to the merchants.

        Credit card and other processing expenses have been reclassified to cost of revenue from selling, general and administrative for all periods presented. The Company has concluded the amounts could alternatively be viewed as a cost of the service the Company is providing.

F-8

GROUPON, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

2. RESTATEMENT (Continued)

        The following tables summarize the corrections on each of the affected financial statement line items for each period presented (in thousands).

	As Previously Reported(1)		Restatement Adjustment			As Restated
For the year ended December 31, 2008
Revenue	$	94	$	(89	)	$	5
Cost of revenue		89		(83	)		6
Marketing		163		—			163
Selling, general and administrative		1,474		(6	)		1,468
For the year ended December 31, 2009
Revenue	$	30,471	$	(15,931	)	$	14,540
Cost of revenue		19,542		(15,187	)		4,355
Marketing		4,548		325			4,873
Selling, general and administrative		7,458		(1,069	)		6,389
For the year ended December 31, 2010
Revenue	$	713,365	$	(400,424	)	$	312,941
Cost of revenue		433,411		(400,917	)		32,494
Marketing		263,202		21,146			284,348
Selling, general and administrative		233,913		(20,653	)		213,260

(1)

Includes certain reclassifications to conform to the current presentation

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

        The consolidated financial statements include the accounts of the Company and its subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation. The Company's consolidated financial statements were prepared in accordance with United States generally accepted accounting principles ("U.S. GAAP") and include the assets, liabilities, revenues and expenses of all wholly-owned subsidiaries and majority-owned subsidiaries over which the Company exercises control. Outside stockholders' interests in subsidiaries are shown in the consolidated financial statements as "Noncontrolling interests." The consolidated statements of operations include the results of entities acquired from the date of the acquisition for accounting purposes.

Stock Splits

        In May 2010, the Company's Board of Directors (the "Board") approved a resolution to effect a three-for-one stock split of the Company's common stock with no corresponding change to the par value. The stock split became effective in August 2010. The Board also approved a two-for-one stock split of the Company's common stock in December 2010 with no corresponding change in par value, which became effective in January 2011. All common share numbers and per share amounts for all periods presented have been adjusted retroactively to reflect both the three-for-one and the two-for-one stock splits.

F-9

GROUPON, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Use of Estimates

        The preparation of financial statements in conformity with U.S. GAAP requires estimates and assumptions that affect the reported amounts and classifications of assets and liabilities, revenues and expenses, and the related disclosures of contingent liabilities in the consolidated financial statements and accompanying notes. Estimates are utilized for, but not limited to, stock-based compensation, income taxes, valuation of acquired goodwill and intangible assets, customer refunds, contingent liabilities and the depreciable lives of fixed assets. Actual results could differ materially from those estimates.

Cash and Cash Equivalents

        The Company considers all highly-liquid investments with an original maturity of three months or less from the date of purchase to be cash equivalents.

Restricted Cash

        The Company had $1.2 and $0.2 million of restricted cash recorded in prepaid expenses and other current assets and other non-currents assets, respectively, at December 31, 2009. The Company had $0.3 million and $0.2 million of restricted cash recorded in prepaid expenses and other current assets and other non-currents assets, respectively, at December 31, 2010. The carrying value of restricted cash approximates fair value.

Accounts Receivable, net

        Accounts receivable primarily represent the net cash due from the Company's credit card and other payment processors for cleared transactions. The carrying amount of the Company's receivables is reduced by an allowance for doubtful accounts that reflects management's best estimate of amounts that will not be collected. The allowance is based on historical loss experience and any specific risks identified in collection matters. Accounts receivable are charged off against the allowance for doubtful accounts when it is determined that the receivable is uncollectible. The Company's allowance for doubtful accounts at December 31, 2009 and 2010 was $0 and less than $0.1 million, respectively. The corresponding bad debt expense for the years ended December 31, 2008, 2009 and 2010 was $0, $0 and less than $0.1 million, respectively.

Property and Equipment, net

        Property and equipment includes assets such as furniture and fixtures, leasehold improvements, computer hardware, and office and telephone equipment. The Company accounts for property and equipment at cost less accumulated depreciation and amortization. Depreciation expense is recorded on a straight-line basis over the estimated useful lives of the assets (generally three years for computer hardware and office and telephone equipment, five years for furniture and fixtures, and the shorter of the life of the lease or five years for leasehold improvements) and is classified within selling, general and administrative expenses in the consolidated statements of operations. See Note 6 "Property and Equipment, net."

Lease Obligations

        The Company categorizes leases at their inception as either operating or capital leases, and may receive renewal or expansion options, rent holidays, and leasehold improvement and other incentives on

F-10

GROUPON, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

certain lease agreements. The Company recognizes lease costs on a straight-line basis taking into account adjustments for market provisions, such as free or escalating base monthly rental payments, or deferred payment terms such as rent holidays that defer the commencement date of required payments. Additionally, the Company treats any incentives received as a reduction of costs over the term of the agreement. The Company records rent expense associated with lease obligations in selling, general and administrative expenses in the consolidated statements of operations. See Note 8 "Commitments and Contingencies."

Goodwill and Other Intangible Assets

        The Company evaluates goodwill for impairment annually or more frequently when an event occurs or circumstances change that indicates the carrying value may not be recoverable. The Company evaluates the recoverability of goodwill using a two-step impairment test. In the first step, the fair value for the reporting unit is compared to its book value including goodwill. In the case that the fair value is less than the book value, a second step is performed that compares the implied fair value of goodwill to the book value of the goodwill. The fair value for the implied goodwill is determined based on the difference between the fair value of the reporting unit, which is generally based on the discounted future cash flows, and the net fair values of the identifiable assets and liabilities excluding goodwill. If the implied fair value of the goodwill is less than the book value, the difference is recognized as an impairment charge in the consolidated statements of operations. Absent any special circumstances that could require an interim test, the Company has elected to test for goodwill impairment during the fourth quarter of each year.

        Accounting guidance for the impairment or disposal of long-lived assets, other than goodwill, also requires that intangible assets with finite lives be amortized over their respective estimated useful lives and reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets might not be recoverable. Conditions that would necessitate an impairment assessment include a significant decline in the observable market value of an asset, a significant change in the extent or manner in which an asset is used, or any other significant adverse change that would indicate that the carrying amount of an asset or group of assets may not be recoverable. Amortization is computed using the straight-line method over the estimated useful lives of the respective intangible assets, generally from one to five years. See Note 5 "Goodwill and Other Intangible Assets."

Subscriber Loyalty and Rewards Programs

        The Company uses various subscriber loyalty and reward programs to build brand loyalty, generate traffic to the website and provide subscribers with incentives to buy Groupons. When subscribers perform qualifying acts, such as providing a referral to a new subscriber or participating in promotional offers, the Company grants credits that can be redeemed for awards such as free or discounted Groupons in the future. The Company accrues the costs related to the associated obligation to redeem the award credits granted at issuance in accrued expenses on the consolidated balance sheets (see Note 7 "Accrued Expenses") and records the expense within marketing on the consolidated statements of operations.

Refunds

        At the time of sale, the Company records an allowance for estimated refunds primarily based on historical experience. The Company accrues costs associated with refunds in accrued expenses on the consolidated balance sheets. The cost of refunds, where the amount payable to the merchant is recovered,

F-11

GROUPON, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

is recorded in the statements of operations as a reduction to revenue. The cost of refunds under the Groupon Promise, when there is no amount recovered from the merchant, is presented as a cost of revenue to the extent the refund is provided to a subscriber. If our judgments regarding estimated refunds are inaccurate, actual results of operations could differ from the amount we recognize.

Income Taxes

        The provision for income taxes is determined using the asset and liability method. Under this method, deferred tax assets and liabilities are calculated based upon the temporary differences between the financial statement and income tax bases of assets and liabilities using the enacted tax rates that are applicable in a given year. The deferred tax assets are recorded net of a valuation allowance when, based on the weight of available evidence, the Company believes it is more likely than not that some portion or all of the recorded deferred tax assets will not be realized in future periods. The Company considers many factors when assessing the likelihood of future realization of its deferred tax assets, including recent cumulative earnings experience, expectations of future taxable income and capital gains by taxing jurisdiction, the carry-forward periods available for tax reporting purposes, and other relevant factors. The Company allocates its valuation allowance to current and long-term deferred tax assets on a pro-rata basis. A change in the estimate of future taxable income may require an increase or decrease to the valuation allowance.

        The Company utilizes a two-step approach to recognizing and measuring uncertain tax positions ("tax contingencies"). The first step is to evaluate the tax position for recognition by determining if the weight of available evidence indicates it is more likely than not that the position will be sustained on audit, including resolution of related appeals or litigation processes. The second step is to measure the tax benefit as the largest amount which is more than 50% likely of being realized upon ultimate settlement. The Company considers many factors when evaluating and estimating its tax positions and tax benefits, which may require periodic adjustments and which may not accurately forecast actual outcomes. The Company includes interest and penalties related to tax contingencies in the provision for income taxes on the statements of operations. See Note 13 "Income Taxes."

Fair Value of Financial Instruments

        The carrying amounts of the Company's financial instruments, including cash and cash equivalents, accounts receivable, accounts payable, accrued merchant payable, accrued expenses and loans from related parties, approximate fair value due to their generally short-term maturities. The Company records money market funds and contingent consideration at fair value. See Note 12 "Fair Value Measurements."

Revenue Recognition

        The Company recognizes revenue from Groupons when the following criteria are met: persuasive evidence of an arrangement exists; delivery has occurred; the selling price is fixed or determinable; and collectability is reasonably assured. These criteria generally are met when the number of customers who purchase the daily deal exceeds the predetermined threshold, based on the executed contract between the Company and its merchants. The Company records the net amount it retains from the sale of Groupons after paying an agreed upon percentage of the purchase price to the featured merchant excluding any applicable taxes. Revenue is recorded on a net basis because the Company is acting as an agent of the merchant in the transaction.

F-12

GROUPON, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Cost of Revenue

        Cost of revenue is primarily comprised of direct costs incurred to generate revenue, including costs related to credit card processing fees, refunds provided to customers under the Groupon Promise and other processing costs. Credit card and other processing costs are expensed as incurred. At the time of sale, the Company records a liability for estimated costs to provide refunds under the Groupon Promise based upon historical experience. These costs are generally variable in nature and are primarily driven by transaction volume.

Marketing

        Marketing expense consists primarily of online marketing costs, such as sponsored search, advertising on social networking sites, email marketing campaigns, loyalty programs, affiliate programs, and to a lesser extent, offline marketing costs such as television, radio and print advertising. The Company records these costs in marketing expense on the consolidated statements of operations when incurred.

Stock-Based Compensation

        The Company measures stock-based compensation cost at fair value, net of estimated forfeitures, and generally recognizes the corresponding compensation expense on a straight-line basis over the service period during which awards are expected to vest. The Company includes stock-based compensation expense in the selling, general and administrative expenses in the consolidated statements of operations. The fair value of restricted stock units and restricted stock is estimated based on valuations of the Company's (or subsidiaries') stock on the grant date or reporting date if required to be remeasured under accounting guidance. The fair value of stock options is determined on the date of grant using the Black-Scholes-Merton valuation model. See Note 10 "Stock-Based Compensation."

Foreign Currency

        Balance sheet accounts of the Company's operations outside of the U.S. are translated from foreign currencies into U.S. dollars at the exchange rates as of the consolidated balance sheet dates. Revenues and expenses are translated at average exchange rates during the period. Foreign currency translation gains or losses are included in accumulated other comprehensive income on the consolidated balance sheet. Gains and losses resulting from foreign currency transactions, which are denominated in currencies other than the entity's functional currency, are included in other income (expense) in the consolidated statements of operations. For the year ended December 31, 2010, the Company had $0.5 million of foreign currency transaction gains.

Recent Accounting Pronouncements

        In September 2006, the Financial Accounting Standards Board ("FASB") issued accounting guidance, which, among other requirements, defines fair value, establishes a framework for measuring fair value, and expands disclosures about the use of fair value measurements. Such guidance prescribes a single definition of fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. For financial instruments and certain nonfinancial assets and liabilities that are recognized or disclosed at fair value on a recurring basis at least annually, the guidance was effective beginning the first fiscal year that begins after November 15, 2007. This portion of the guidance, which was adopted as of the beginning of fiscal 2008, had no impact on the

F-13

GROUPON, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

consolidated financial statements. For all other nonfinancial assets and liabilities, the guidance was effective for fiscal years beginning after November 15, 2008. The Company adopted this guidance effective as of the beginning of fiscal 2009, and its application had no impact on the consolidated financial statements. In January 2010, the FASB issued additional guidance that improves disclosures about fair value measures that were originally required. The new guidance was effective for interim and annual periods beginning after December 15, 2009, except for the disclosures about purchases, sales, issuances and settlements in the roll forward of activity in Level 3 fair value measurements. Those disclosures are effective for fiscal years beginning after December 15, 2010, and for interim periods within those years. The adoption of this guidance did not impact the Company's financial position or results of operations.

        In December 2007, the FASB issued guidance that establishes principles and requirements for determining how a company recognizes and measures the fair value of identifiable assets acquired, liabilities assumed, noncontrolling interests and certain contingent considerations acquired in a business combination. The guidance on business combinations also requires acquisition-related transaction expenses and restructuring costs be expensed as incurred rather than capitalized. This guidance became effective for fiscal years beginning after December 15, 2008 and the Company adopted the provisions of this guidance prospectively beginning in 2009. In December 2010, the FASB issued an update to this guidance, which specifies that if a public entity presents comparative financial statements, the entity should disclose revenue and earnings of the combined entity as though the business combination(s) that occurred during the current year had occurred as of the beginning of the comparable prior annual reporting period. The amendments also expand the supplemental pro forma disclosures that are required. The new guidance is effective prospectively for business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2010. The Company plans to adopt the provisions of this business combinations guidance at the beginning of 2011.

        In April 2008, the FASB issued a staff position that amends the list of factors an entity should consider in developing renewal or extension assumptions used in determining the useful life of recognized intangible assets. This new guidance applies to intangible assets that are acquired individually or with a group of other assets in business combinations and asset acquisitions. Under this guidance, entities estimating the useful life of a recognized intangible asset must consider their historical experience in renewing or extending similar arrangements or, in the absence of historical experience, must consider assumptions that market participants would use about renewal or extension. This staff position became effective for fiscal years beginning after December 15, 2008. The Company adopted the provisions of this guidance prospectively beginning in 2009, and its application had no impact on the consolidated financial statements.

        In June 2009, the FASB issued guidance that establishes the FASB Accounting Standards Codification as the sole source of authoritative U.S. GAAP. Pursuant to these provisions, the Company has incorporated the applicable guidance in its consolidated financial statements. The adoption of this guidance did not impact the consolidated financial statements.

        In June 2009, the FASB issued guidance that eliminates the qualifying special purpose entity concept, changes the requirements for derecognizing financial assets and requires enhanced disclosures about transfers of financial assets. The guidance also revises earlier guidance for determining whether an entity is a variable interest entity, requires a new approach for determining who should consolidate a variable interest entity, changes when it is necessary to reassess who should consolidate a variable interest entity, and requires enhanced disclosures related to an enterprise's involvement in variable interest entities. The

F-14

GROUPON, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

guidance is effective for the first annual reporting period that begins after November 15, 2009. The Company adopted the provisions of this guidance prospectively beginning in 2010, and its application had no impact on the consolidated financial statements.

        In September 2009, the FASB issued guidance that allows companies to allocate arrangement consideration in a multiple element arrangement in a way that better reflects the transaction economics. It provides another alternative for establishing fair value for a deliverable when vendor specific objective evidence or third-party evidence for deliverables in an arrangement cannot be determined. When this evidence cannot be determined, companies will be required to develop a best estimate of the selling price to separate deliverables and allocate arrangement consideration using the relative selling price method. The guidance also expands the disclosure requirements to require that an entity provide both qualitative and quantitative information about the significant judgments made in applying this guidance. This guidance was effective on a prospective basis for revenue arrangements entered into or materially modified on or after January 1, 2011. The adoption of this guidance did not have a material impact on the consolidated financial statements.

        In February 2010, the FASB issued guidance, effective immediately, which removes the requirement to disclose the date through which subsequent events were evaluated in both originally issued and reissued financial statements for Securities and Exchange Commission ("SEC") filers. The adoption of this guidance did not have a material impact on the consolidated financial statements.

        In December 2010, the FASB issued guidance about when to perform Step 2 of the goodwill impairment test for reporting units with zero or negative carrying amounts. According to the new guidance, entities must consider whether it is more likely than not that goodwill impairment exists by assessing if there are any adverse qualitative factors indicating impairment. The qualitative factors are consistent with the existing guidance. The new guidance is effective for fiscal years, and interim periods within those years, beginning after December 15, 2010. The adoption of this guidance did not have a material impact on the consolidated financial statements.

4. ACQUISITIONS

CityDeal Europe GmbH Acquisition

        In May 2010, the Company entered into a Share Exchange and Transfer Agreement (the "CityDeal Agreement") to acquire CityDeal Europe GmbH ("CityDeal"), a collective buying power business launched in January 2010 that provides daily deals and online marketing services substantially similar to the Company. Headquartered in Berlin, Germany, CityDeal (which, prior to the acquisition, was doing business as CityDeal but now operates under the Groupon MyCityDeal and Groupon CityDeal names) operated in more than 80 European cities and 16 countries including France, Germany, Italy, the Netherlands, Poland, Spain, Turkey and the United Kingdom. As a result of the acquisition, the Company believes it has established a significant presence in the European market by strategically expanding into new geographies and increasing its subscriber base, gained CityDeal management's local expertise in maintaining existing vendor relationships and establishing new relationships, and obtained an assembled workforce that has significant experience and knowledge of the industry.

        Under the terms of the CityDeal Agreement, by and among the Company, CityDeal, CD-Rocket Holding UG ("Rocket Holding"), CityDeal Management UG ("CityDeal Management") and Groupon Germany Gbr ("Groupon Germany"), Rocket Holding and CityDeal Management transferred all of the

F-15

GROUPON, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

4. ACQUISITIONS (Continued)

outstanding shares of CityDeal to Groupon Germany, in exchange for $0.6 million in cash and 41,400,000 shares of the Company's voting common stock (valued at $125.4 million as of the acquisition date), and CityDeal merged with and into Groupon Germany with CityDeal as the surviving entity and a wholly-owned subsidiary of the Company. The Company delivered 19,800,000 of such shares of voting common stock in May 2010, with the remaining 21,600,000 shares delivered as of December 31, 2010, due to the achievement of financial and performance earn-out targets discussed below.

        In connection with the acquisition, Rocket Holding and CityDeal Management entered into a Shareholders Agreement with the Company. Pursuant to the Shareholders Agreement, the shares of the Company's common stock owned by Rocket Holding, CityDeal Management and their affiliates must be voted in the same manner as the majority-in-interest of the shares of voting common stock held by the Company's founders related to certain material transactions, including an initial public offering of the Company's voting common stock, the authorization, designation or issuance of any new class or series of the Company's capital stock or a material acquisition or asset transfer. In addition, the Company and the former CityDeal shareholders entered into a loan agreement to provide CityDeal with a $25.0 million term loan facility. See Note 15 "Related Parties."

        The acquisition was accounted for using the purchase method of accounting and the operations of CityDeal were included in the consolidated financial statements from the date of the acquisition. The purchase price was allocated to the tangible assets and intangible assets acquired and liabilities assumed based on their estimated fair values on the acquisition date, with the remaining unallocated purchase price recorded as goodwill. The fair value assigned to identifiable intangible assets acquired was determined using an income approach for subscriber relationships and trade names, and a cost approach for vendor relationships and developed technology. Purchased identifiable intangible assets are amortized on a straight-line basis over their respective useful lives, which range from one to five years.

        The Company had an obligation, as part of the CityDeal Agreement, to transfer additional common stock of the Company to the former shareholders of CityDeal as part of the share exchange, if specified financial and performance earn-outs targets were achieved. The Company determined that the acquisition-date fair value of this consideration was $62.9 million based on the likelihood of contingent earn-out payments. The Company subsequently remeasured the fair value of the contingent consideration on a recurring basis due to the earnout target not meeting the criteria for equity treatment and recorded a total charge of $204.2 million in acquisition-related expenses for the year ended December 31, 2010, which is reported separately in the consolidated statement of operations with other acquisition-related expenses. The charge resulted primarily due to the significant increase in the value of the Company's common stock from the original valuation date until the date the contingency was settled.

F-16

GROUPON, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

4. ACQUISITIONS (Continued)

        The following table summarizes the purchase price allocations (in thousands). Goodwill of $95.0 million represents the premium the Company paid over the fair value of the net tangible and intangible assets it acquired. None of the goodwill is deductible for tax purposes.

Description		Fair Value
Net working capital (including cash of $6.4 million)		$	7,331
Property and equipment, net			746
Goodwill			94,992
Intangible assets(1):
	Vendor relationships		5,786
	Developed technology		985
	Trade names		5,048
	Subscriber relationships		28,438
Deferred tax liability			(9,344	)
Due to related party			(7,962	)
		$	126,020

(1)

Acquired intangible assets have estimated useful lives of between 1 and 5 years.

        The following unaudited pro forma information presents a summary of the operating results of the Company for the year ended December 31, 2010, as if the Company had acquired CityDeal as of January 1, 2010 (in thousands).

	Groupon, Inc.
	Pro Forma Combined 2010
Revenue	$	314,426
Loss from operations		(448,861	)
Net loss		(442,146	)
Less: Net loss attributable to noncontrolling interests		27,986
Net loss attributable to Groupon, Inc.	$	(414,160	)

        Revenue and net loss for CityDeal for the period from May 16, 2010 to December 31, 2010 was $89.3 million and $126.6 million, respectively.

Qpod.inc Acquisition

        In August 2010, the Company acquired Qpod.inc ("Qpod"), a Japanese corporation established in June 2010, which operates a collective buying power business that provides daily deals and online marketing services substantially similar to the Company. Headquartered in Tokyo, Japan, Qpod launched its daily deals services in July 2010. As a result of the acquisition, the Company believes it has established a significant presence in the Japanese market by increasing its subscriber base, gained Qpod management's local expertise in establishing new vendor relationships, and obtained an assembled workforce that has knowledge of the industry.

        Under the terms of the purchase agreement, the Company acquired approximately 55.1% of the total issued and outstanding capital stock of Qpod in exchange for $10.2 million in cash. In conjunction with the

F-17

GROUPON, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

4. ACQUISITIONS (Continued)

acquisition, the Company entered into an agreement with certain founding members and other shareholders of Qpod, which provided the Company with call rights that allow it to buy a percentage of the remaining shares of Qpod. Exercising all of the call rights would entitle the Company to an aggregate of up to 90% of the outstanding capital stock of Qpod. Additionally, the remaining Qpod shareholders have put rights to sell their outstanding capital stock to the Company in the event of an initial public offering of the Company, subject to certain conditions, which if exercised in full, would give the Company up to an aggregate of 90% of the outstanding capital stock of Qpod. Management determined that Qpod is not a variable interest entity and therefore consolidated Qpod under the traditional voting interest model since the Company has a controlling financial interest in Qpod and the non-controlling interest holders do not have the right to vote on any ordinary course of business decisions.

        The acquisition was accounted for using the purchase method of accounting and the operations of Qpod were included in the consolidated financial statements from the date of the acquisition. The purchase price and fair value of the noncontrolling interest were allocated to the tangible assets and intangible assets acquired and liabilities assumed based on their estimated fair values on the acquisition date, with the remaining unallocated amount recorded as goodwill. The fair value assigned to identifiable intangible assets acquired and the noncontrolling interest was determined using an income approach for subscriber relationships and trade names, a cost approach for vendor relationships and developed technology and assuming a discount for lack of control to value the noncontrolling interest. Purchased identifiable intangible assets are amortized on a straight-line basis over their respective useful lives, which range from one to five years. The following table summarizes the allocation of the purchase price of $10.2 million and the fair value of noncontrolling interest of $8.5 million as of the acquisition date (in thousands). Goodwill of $7.0 million represents the premium the Company paid over the fair value of the net tangible and intangible assets it acquired. None of the goodwill is deductible for tax purposes.

Description		Fair Value
Net working capital (including cash of $11.0 million)		$	10,384
Property and equipment, net			31
Goodwill			7,031
Intangible assets(1):
	Vendor relationships		200
	Developed technology		60
	Trade names		20
	Subscriber relationships		1,000
		$	18,726

(1)

Acquired intangible assets have estimated useful lives of between 1 and 5 years.

F-18

GROUPON, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

4. ACQUISITIONS (Continued)

        The following unaudited pro forma information presents the operating results of the Company for the year ended December 31, 2010, as if the Company had acquired Qpod as of January 1, 2010 (in thousands).

	Groupon, Inc. Pro Forma Combined 2010
Revenue	$	312,984
Loss from operations		(422,256	)
Net loss		(415,331	)
Less: Net loss attributable to noncontrolling interests		23,746
Net loss attributable to Groupon, Inc.	$	(391,585	)

        The noncontrolling interest is redeemable at the option of the holder as of December 31, 2010. The Company recorded $11.6 million in "Additional paid-in capital" to adjust the noncontrolling interest to its redemption value as of December 31, 2010. For the year ended December 31, 2010, there was $20.3 million of the net loss and $0.2 million of other comprehensive income related to foreign currency translation attributed to Qpod.

        The revenue and net loss for Qpod for the period from August 12 to December 31, 2010 was $11.8 million and $45.0 million, respectively.

Other Acquisitions

        In 2010, the Company acquired certain other entities (excluding CityDeal and Qpod) for an aggregate purchase price of $34.8 million, consisting of $16.8 million in cash and the issuance of shares of the Company's voting common stock (valued at $18.0 million). The primary reasons for these acquisitions were to establish the Company's presence in selected Asia Pacific and Latin American markets, by strategically expanding into new geographies and increasing the Company's subscriber base, to obtain an assembled workforce that has experience and knowledge of the industry, and to gain local expertise in establishing new vendor relationships. In addition, the Company acquired two U.S.-based businesses that specialize in local marketing services and developing mobile technology to help expand and advance the Company's product offerings.

        The acquisitions were accounted for using the purchase method of accounting and the operations of these acquired companies were included in the consolidated financial statements from the date of the acquisition. The purchase price and fair value of the noncontrolling interests were allocated to the tangible and intangible assets acquired and liabilities assumed based on their estimated fair values on their corresponding acquisition date, with the remaining unallocated amount recorded as goodwill. The fair value assigned to identifiable intangible assets acquired and noncontrolling interest was determined using an income approach for subscriber relationships and trade names, a cost approach for vendor relationships and developed technology and assuming a discount for lack of control to value the noncontrolling interest. Purchased identifiable intangible assets are amortized on a straight-line basis over their respective useful lives, which range from one to five years.

        The following table summarizes the allocation of the combined purchase price of $34.8 million and the fair value of noncontrolling interest of $4.2 million as of the acquisition date (in thousands). Goodwill

F-19

GROUPON, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

4. ACQUISITIONS (Continued)

of $21.5 million represents the premium the Company paid over the fair value of the net tangible and intangible assets it acquired. None of the goodwill is deductible for tax purposes.

Description		Fair Value
Net working capital (including cash of $14.1 million)		$	11,544
Property and equipment, net			266
Goodwill			21,464
Intangible assets(1):
	Vendor relationships		290
	Developed technology		920
	Trade names		110
	Subscriber relationships		4,390
		$	38,984

(1)

Acquired intangible assets have estimated useful lives of between 1 and 5 years.

        The financial effect of these acquisitions, individually and in the aggregate, was not material to the consolidated financial statements. Pro forma results of operations have not been presented because the effects of these business combinations, individually and in the aggregate, were not material to the consolidated results of operations as most of the acquisitions were start-up businesses.

        Certain of the noncontrolling interests are redeemable at the option of the holders as of December 31, 2010. The Company attributed $2.0 million of the net loss to the noncontrolling interests and recorded $0.9 million in "Additional paid-in capital" to adjust the noncontrolling interests to their redemption value as of December 31, 2010.

5. GOODWILL AND OTHER INTANGIBLE ASSETS

        The following summarizes the Company's goodwill activity in 2010 (in thousands):

	North America		International		Consolidated
Balance as of December 31, 2009	$	—	$	—	$	—
Goodwill related to the CityDeal acquisition		—		94,992		94,992
Goodwill related to the Qpod.inc acquisition		—		7,031		7,031
Goodwill related to other acquisitions		19,605		1,859		21,464
Other adjustments(1)		—		8,551		8,551
Balance as of December 31, 2010	$	19,605	$	112,433	$	132,038

(1)

Includes changes in foreign exchange rates for goodwill.

F-20

GROUPON, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

5. GOODWILL AND OTHER INTANGIBLE ASSETS (Continued)

        The following summarizes the Company's other intangible assets (in thousands):

	As of December 31, 2009						Weighted- Average Remaining Useful Life (in years)
Asset Category	Gross Carrying Value		Accumulated Amortization		Net Carrying Value
Subscriber relationships	$	—	$	—	$	—	$	—
Merchant relationships		—		—		—		—
Trade names		—		—		—		—
Developed technology		—		—		—		—
Other intangible assets		270		31		239		4.4
	$	270	$	31	$	239		4.4

	As of December 31, 2010						Weighted- Average Remaining Useful Life (in years)
Asset Category	Gross Carrying Value		Accumulated Amortization		Net Carrying Value
Subscriber relationships	$	36,389	$	3,760	$	32,629		4.5
Merchant relationships		6,789		3,801		2,988		0.5
Trade names		5,619		3,230		2,389		0.4
Developed technology		2,054		395		1,659		1.6
Other intangible assets		1,263		153		1,110		3.8
	$	52,114	$	11,339	$	40,775		3.8

        Amortization expense for these intangible assets was less than $0.1 million and $11.0 million for the years ended December 31, 2009 and 2010, respectively. There was no amortization expense recorded in 2008 since all intangible assets were acquired in 2009 and 2010. The following summarizes the Company's estimated future amortization expense of these intangible assets as of December 31, 2010 (in thousands):

Year Ended December 31,
	2011	$	14,106
	2012		8,110
	2013		7,481
	2014		7,449
	2015		3,629
		$	40,775

F-21

GROUPON, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

6. PROPERTY AND EQUIPMENT, NET

        The following summarizes the Company's property and equipment, net as of December 31 (in thousands):

	2009			2010
Furniture and fixtures	$	258		$	6,691
Leasehold improvements		—			5,233
Computer hardware and other		—			3,396
External software		33			1,767
Office and telephone equipment		57			1,408
Property and equipment		348			18,495
Less: accumulated depreciation and amortization		(74	)		(2,005	)
Property and equipment, net	$	274		$	16,490

        Depreciation expense on property and equipment was less than $0.1 million for the years ended December 31, 2008 and 2009 and $1.9 million for the year ended December 31, 2010.

7. ACCRUED EXPENSES

        The following summarizes the Company's accrued expenses as of December 31(in thousands):

	2009		2010
Marketing	$	572	$	48,244
Refunds reserve		2,932		13,938
Payroll and benefits		337		12,187
Customer rewards		199		8,333
Rent		26		3,169
Credit card fees		301		2,500
Professional fees		—		2,341
Other		469		7,611
	$	4,836	$	98,323

8. COMMITMENTS AND CONTINGENCIES

Operating Leases

        The Company has entered into various non-cancelable operating lease agreements, primarily covering certain of its offices throughout the world, with original lease periods expiring between 2011 and 2017. Rent expense under these operating leases was less than $0.1 million, $0.2 million and $3.7 million for the years ended December 31, 2008, 2009 and 2010, respectively.

        Certain of these arrangements have renewal or expansion options and adjustments for market provisions, such as free or escalating base monthly rental payments. The Company recognizes rent expense under such arrangements on the straight-line basis over the initial term of the lease. The difference between the straight-line expense and the cash paid for rent has been recorded as deferred rent.

F-22

GROUPON, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

8. COMMITMENTS AND CONTINGENCIES (Continued)

        The Company is responsible for paying its proportionate share of the actual operating expenses and real estate taxes under certain of these lease agreements. These operating expenses are not included in the table below. At December 31, 2010, future payments under operating leases (including rent escalation clauses) were as follows (in thousands):

Year Ended December 31,
	2011	$	10,780
	2012		6,054
	2013		3,964
	2014		3,200
	2015		3,067
Thereafter			3,625
		$	30,690

Purchase Obligations

        The Company entered into a non-cancelable service contract, primarily covering marketing services, which expires in 2012. At December 31, 2010, future payments under this contractual obligation were as follows (in thousands):

Year Ended December 31,
	2011	$	906
	2012		227
	2013		—
	2014		—
	2015		—
Thereafter			—
		$	1,133

Letter of Credit

        The Company is contingently liable under an irrevocable letter of credit. The letter of credit is in lieu of a security deposit and is required under a sublease agreement, which began in April 2010. The letter of credit, which is included in other non-current assets and prepaid expenses and other current assets on the consolidated balance sheet at December 31, 2009 and December 31, 2010, respectively, is for $0.2 million and expired on June 1, 2011.

Legal Matters

        The Company currently is involved in several disputes or regulatory inquiries, including suits by its customers (individually or as class actions) alleging, among other things, violation of the Credit Card Accountability, Responsibility and Disclosure Act and state laws governing gift cards, stored value cards and coupons, violations of unclaimed and abandoned property laws and violations of privacy laws. The number of these disputes and inquiries is increasing. Any claims or regulatory actions against the Company, whether meritorious or not, could be time consuming, result in costly litigation, damage awards,

F-23

GROUPON, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

8. COMMITMENTS AND CONTINGENCIES (Continued)

injunctive relief or increased costs of doing business through adverse judgment or settlement, require the Company to change its business practices in expensive ways, require significant amounts of management time, result in the diversion of significant operational resources or otherwise harm the Company's business.

        In addition, third parties have from time to time claimed, and others may claim in the future, that the Company has infringed their intellectual property rights. The Company is subject to intellectual property disputes, and expects that it will increasingly be subject to intellectual property infringement claims as its services expand in scope and complexity. The Company has in the past been forced to litigate such claims. The Company may also become more vulnerable to third-party claims as laws such as the Digital Millennium Copyright Act are interpreted by the courts, and as the Company becomes subject to laws in jurisdictions where the underlying laws with respect to the potential liability of online intermediaries are either unclear or less favorable. The Company believes that additional lawsuits alleging that it has violated patent, copyright or trademark laws will be filed against it. Intellectual property claims, whether meritorious or not, are time consuming and costly to resolve, could require expensive changes in the Company's methods of doing business, or could require it to enter into costly royalty or licensing agreements.

        From time to time, the Company may become party to litigation incident to the ordinary course of business. The Company assesses the likelihood of any adverse judgments or outcomes with respect to these matters and determines loss contingency assessments on a gross basis after assessing the probability of incurrence of a loss and whether a loss is reasonably estimable. In addition, the Company considers other relevant factors that could impact its ability to reasonably estimate a loss. A determination of the amount of reserves required, if any, for these contingencies is made after analyzing each matter. The Company's reserves may change in the future due to new developments or changes in strategy in handling these matters. Although the results of litigation and claims cannot be predicted with certainty, the Company currently believes that the final outcome of these matters will not have a material adverse effect on its business, consolidated financial position, results of operations, or cash flows. Regardless of the outcome, litigation can have an adverse impact on the Company because of defense and settlement costs, diversion of management resources and other factors.

Indemnifications

        In the normal course of business to facilitate transactions related to its operations, the Company indemnifies certain parties, including lessors and from time to time merchants with respect to certain matters. The Company has agreed to hold certain parties harmless against losses arising from a breach of representations or covenants, or other claims made against certain parties. These agreements may limit the time within which an indemnification claim can be made and the amount of the claim. In addition, the Company has entered into indemnification agreements with its officers and directors, and the bylaws contain similar indemnification obligations to agents.

        It is not possible to determine the maximum potential amount under these indemnification agreements due to the limited history of prior indemnification claims and the unique facts and circumstances involved in each particular agreement. Historically, the payments that the Company has made under these agreements have not had a material impact on the operating results, financial position, or cash flows of the Company.

F-24

GROUPON, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

9. STOCKHOLDERS' EQUITY (DEFICIT)

        ThePoint.com, a Delaware LLC, sold an aggregate amount of 159,895,998 common units in 2006 and 2007 to certain equity holders including members of management and the Board for $1.0 million, and used the proceeds from the sale for working capital and general corporate purposes. On January 15, 2008, these equity holders contributed to the Company all of the outstanding membership interests in ThePoint.com in exchange for equity interests in the Company, and ThePoint.com merged with and into the Company with the Company surviving as the surviving corporation.

Common Stock

        The Board has authorized two classes of common stock, voting and non-voting. At December 31, 2010, there were 500,000,000 and 100,000,000 shares authorized and there were 165,616,260 and 5,079,896 shares outstanding of voting and non-voting common stock, respectively. The rights of the holders of voting and non-voting common stock are identical, except with respect to voting. Each share of voting common stock is entitled to one vote per share while the non-voting common stock has no voting rights, except as required by law. Shares of non-voting common stock automatically convert into shares of voting common stock immediately upon the closing of a firmly underwritten public offering covering the offer and sale of common stock for the Company's account (an "initial public offering"). Voting and non-voting common stock are collectively referred to as common stock throughout the notes to these financial statements unless otherwise noted.

        In May 2010, the Board approved a resolution to effect a three-for-one stock split of the Company's common stock with no corresponding change to the par value. The stock split became effective in August 2010. The Board also approved a two-for-one stock split of the Company's common stock in December 2010 with no corresponding change in par value, which became effective in January 2011. All common share numbers and per share amounts for all periods presented have been adjusted retroactively to reflect both the three-for-one and the two-for-one stock split.

        The Company issues stock-based awards to its employees in the form of stock options, restricted stock units and restricted stock, all of which have the potential to increase the outstanding shares of common stock in the future. See Note 10 "Stock-Based Compensation."

        Upon any liquidation, dissolution or winding up of the Company (a "liquidation event"), the remaining assets of the Company will be distributed ratably among all preferred and common stockholders only after the payment of the full Series G Convertible Preferred Stock ("Series G Preferred") liquidation preference of $450.0 million has been satisfied.

Convertible Preferred Stock

        The Company authorized 199,998 shares of Series B Convertible Preferred Stock ("Series B Preferred"), 6,560,174 shares of Series D Convertible Preferred Stock ("Series D Preferred"), 4,406,160 shares of Series E Convertible Preferred Stock ("Series E Preferred"), 4,202,658 shares of Series F Convertible Preferred Stock ("Series F Preferred") and up to 30,075,690 shares of Series G Preferred. The Series B Preferred, Series D Preferred, Series E Preferred, Series F Preferred and Series G Preferred, collectively, are referenced below as the "Series Preferred." The rights, preferences, privileges, restrictions and other matters relating to the Series Preferred are as follows:

F-25

GROUPON, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

9. STOCKHOLDERS' EQUITY (DEFICIT) (Continued)

Series B Preferred

        In 2007, the Company authorized the sale and issuance of 199,998 shares of Series B Preferred for less than $0.1 million, and used the proceeds from the sale for working capital and general corporate purposes. There were 199,998 shares outstanding at December 31, 2009 and 2010, respectively. The holders of Series B Preferred were entitled to annual dividends payable at a rate of 6% of the Series B Preferred original issue price. The dividends were cumulative and accrued from the date of issue while the shares were redeemable at the option of the holders. These dividend rights were subsequently rescinded by the Board in December 2010. As of December 31, 2009 and 2010, there was less than $0.1 million of accrued preferred dividends due to Series B Preferred holders. The Company recorded the accrued dividends as a reduction to "Additional paid-in capital" or "Accumulated deficit." The holders of Series B Preferred also are entitled to receive, on an as-converted to voting common stock basis, any other dividend or distribution when, as and if declared by the Board, participating equally with the holders of common stock and the holders of Series Preferred.

        Holders of Series B Preferred are entitled to the number of votes equal to the product obtained by multiplying (i) the number of shares of voting common stock into which their shares of Series B Preferred could be converted and (ii) 150. In addition, the Series B Preferred holders are entitled to receive, upon a liquidation event, the amount that would have been received if all shares of Series Preferred had been converted into voting common stock immediately prior to such liquidation event, only after the payment of the full Series G Preferred liquidation preference has been satisfied. If, upon the liquidating event, the assets of the Company are insufficient to fully pay the amounts owed to Series B Preferred holders, all distributions would be made ratably in proportion to the full amounts to which preferred and common stockholders would have otherwise been entitled. In the event that the Company is a party to an acquisition or asset transfer, each holder of Series B Preferred is entitled to receive the amount of cash, securities, or other property to which such holder would be entitled to receive in a liquidation event.

        Each share of Series B Preferred shall automatically be converted into shares of voting common stock upon the earliest of the following events to occur: (i) holders of at least 50% of the outstanding shares of Series B Preferred consent to a conversion, or (ii) upon any sale, assignment, transfer, conveyence, hypothecation or other disposition of any legal or beneficial interest in such shares, whether or not for value and whether voluntary or involuntary or by operation of law, subject to certain exceptions. The number of shares of voting common stock to which a Series B Preferred stockholder is entitled upon conversion is calculated by multiplying the applicable conversion rate then in effect (currently 6.0) by the number of Series B Preferred shares to be converted. The conversion rate for the Series B Preferred shares is subject to change in accordance with anti-dilution provisions contained in the agreement with those holders. More specifically, the conversion price is subject to adjustment to prevent dilution on a weighted-average basis in the event that the Company issues additional shares of common stock or securities convertible or exercisable for common stock at a purchase price less than the then effective conversion price. As of December 31, 2009 and 2010, 1,199,988 shares of voting common stock would have been required to be issued assuming conversion of all of the issued and outstanding shares of Series B Preferred.

        The Company evaluated various components of the Series B Preferred, including redemption features, dividend and voting rights, protective covenants and conversion rights. The Company concluded that the Series B Preferred was redeemable at the option of the holder at December 31, 2009 and classified the Series B Preferred in mezzanine equity. The Series B Preferred was not adjusted to its redemption value because it was not probable the holders would redeem at December 31, 2009. The Company

F-26

GROUPON, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

9. STOCKHOLDERS' EQUITY (DEFICIT) (Continued)

subsequently reevaluated its conclusion due to the elimination of the holders' redemption rights in December 2010, and determined that the Series B Preferred should be classified as an equity instrument as of December 31, 2010.

Series D Preferred

        In January 2008, the Company authorized the sale and issuance of 6,560,174 shares of Series D Preferred for $4.8 million in gross proceeds (or $4.7 million, net of issuance costs), and used the proceeds from the sale for working capital and general corporate purposes. There were 6,560,174 shares and 6,258,297 shares outstanding at December 31, 2009 and 2010, respectively. The holders of Series D Preferred were entitled to annual dividends payable at a rate of 6% of the Series D Preferred original issue price. The dividends were cumulative and accrued from the date of issue while the shares were redeemable at the option of the holder. These dividend rights were subsequently rescinded by the Board in December 2010. As of December 31, 2009 and 2010, the accrued preferred dividends due to Series D Preferred holders were $0.6 million and $0.8 million, respectively. The Company recorded the accrued dividends as a reduction to "Additional paid-in capital" or "Accumulated deficit." The holders of Series D Preferred also are entitled to receive, on an as-converted to voting common stock basis, any other dividend or distribution when, as and if declared by the Board, participating equally with the holders of common stock and the holders of Series Preferred.

        Holders of Series D Preferred are entitled to the number of votes equal to the number of shares of voting common stock into which their shares of Series D Preferred could be converted. In addition, the Series D Preferred holders are entitled to receive, upon a liquidation event, the amount that would have been received if all shares of Series Preferred had been converted into voting common stock immediately prior to such liquidation event, only after the payment of the full Series G Preferred liquidation preference has been satisfied. If, upon the liquidating event, the assets of the Company are insufficient to fully pay the amounts owed to Series D Preferred holders, all distributions would be made ratably in proportion to the full amounts to which preferred and common stockholders would have otherwise been entitled. In the event that the Company is a party to an acquisition or asset transfer, each holder of Series D Preferred is entitled to receive the amount of cash, securities, or other property to which such holder would be entitled to receive in a liquidation event.

        Each share of Series D Preferred shall automatically be converted into shares of voting common stock upon the earliest of the following events to occur: (i) holders of at least 50% of the outstanding shares of Series D Preferred consent to a conversion, or (ii) immediately upon the closing of an initial public offering. The number of shares of voting common stock to which a Series D Preferred stockholder is entitled upon conversion is calculated by multiplying the applicable conversion rate then in effect (currently 6.0) by the number of Series D Preferred shares to be converted. The conversion rate for the Series D Preferred shares is subject to change in accordance with anti-dilution provisions contained in the agreement with those holders. More specifically, the conversion price is subject to adjustment to prevent dilution on a weighted-average basis in the event that the Company issues additional shares of common stock or securities convertible or exercisable for common stock at a purchase price less than the then effective conversion price. As of December 31, 2009 and 2010, the number of shares of voting common stock that would have been required to be issued assuming conversion of all of the issued and outstanding shares of Series D Preferred was 39,361,044 and 37,549,782 respectively.

F-27

GROUPON, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

9. STOCKHOLDERS' EQUITY (DEFICIT) (Continued)

        The Company evaluated various components of the Series D Preferred, including redemption features, dividend and voting rights, protective covenants and conversion rights. The Company concluded that the Series D Preferred was redeemable at the option of the holder at December 31, 2009 and classified the Series D Preferred in mezzanine equity. The Series D Preferred was not adjusted to its redemption value because it was not probable the holders would redeem at December 31, 2009. The Company subsequently reevaluated its conclusion due to the elimination of the holders' redemption rights in December 2010, and determined that the Series D Preferred should be classified as an equity instrument as of December 31, 2010.

Series E Preferred

        In November 2009, the Company authorized the sale and issuance of 4,406,160 shares of Series E Preferred for $30.0 million in gross proceeds (or $29.9 million, net of issuance costs), and used $26.4 million of the proceeds from the sale to fund a dividend paid to holders of the Company's capital stock on a pro-rata basis and the remainder for working capital and general corporate purposes. The Company recorded the dividend payments as a reduction to "Accumulated deficit," and to a lesser extent, "Additional paid-in capital." There were 4,406,160 shares and 4,127,653 shares outstanding at December 31, 2009 and 2010, respectively. The holders of Series E Preferred were entitled to annual dividends payable at a rate of 6% of the Series E Preferred original issue price. The dividends were cumulative and accrued from the date of issue. These dividend rights were subsequently rescinded by the Board in December 2010. As of December 31, 2009 and 2010, the accrued preferred dividends due to Series E Preferred holders were $0.2 million and $0, respectively. The holders of Series E Preferred also are entitled to receive, on an as-converted to voting common stock basis, any other dividend or distribution when, as and if declared by the Board, participating equally with the holders of common stock and the holders of Series Preferred.

        Holders of Series E Preferred are entitled to the number of votes equal to the number of shares of voting common stock into which their shares of Series E Preferred could be converted. In addition, the Series E Preferred holders are entitled to receive, upon a liquidation event, the amount that would have been received if all shares of Series Preferred had been converted into voting common stock immediately prior to such liquidation event, only after the payment of the full Series G Preferred liquidation preference has been satisfied. If, upon the liquidating event, the assets of the Company are insufficient to fully pay the amounts owed to Series E Preferred holders, all distributions would be made ratably in proportion to the full amounts to which preferred and common stockholders would have otherwise been entitled. In the event that the Company is a party to an acquisition or asset transfer, each holder of Series E Preferred is entitled to receive the amount of cash, securities, or other property to which such holder would be entitled to receive in a liquidation event.

        Each share of Series E Preferred shall automatically be converted into shares of voting common stock upon the earliest of the following events to occur: (i) holders of at least 50% of the outstanding shares of Series E Preferred consent to a conversion, or (ii) immediately upon the closing of an initial public offering. The number of shares of voting common stock to which a Series E Preferred stockholder is entitled upon conversion is calculated by multiplying the applicable conversion rate then in effect (currently 6.0) by the number of Series E Preferred shares to be converted. The conversion rate for the Series E Preferred shares is subject to change in accordance with anti-dilution provisions contained in the agreement with those holders. More specifically, the conversion price is subject to adjustment to prevent dilution on a weighted-average basis in the event that the Company issues additional shares of common

F-28

GROUPON, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

9. STOCKHOLDERS' EQUITY (DEFICIT) (Continued)

stock or securities convertible or exercisable for common stock at a purchase price less than the then effective conversion price. As of December 31, 2009 and 2010, the number of shares of voting common stock that would have been required to be issued assuming conversion of all of the issued and outstanding shares of Series E Preferred was 26,436,960 and 24,765,918, respectively.

        The Company evaluated various components of the Series E Preferred, including redemption features, dividend and voting rights, protective covenants and conversion rights. The Company concluded that the Series E Preferred was redeemable at the option of the holders at December 31, 2009 and classified the Series E Preferred in mezzanine equity. The Series E Preferred was not adjusted to its redemption value because it was not probable the holder would redeem at December 31, 2009. The Company subsequently reevaluated its conclusion due to the elimination of the holders' redemption rights in December 2010, and determined that the Series E Preferred should be classified as an equity instrument as of December 31, 2010.

Series F Preferred

        In April 2010, the Company authorized the sale and issuance of 4,202,658 shares of Series F Preferred for $135.0 million in gross proceeds (or $134.9 million, net of issuance costs), and used $119.9 million of the proceeds from the sale to redeem shares of its outstanding common stock held by certain shareholders and the remainder for working capital and general corporate purposes. All shares of Series F Preferred were outstanding at December 31, 2010. The holders of Series F Preferred were not entitled to annual preferred dividends, but are entitled to receive, on an as-converted to voting common stock basis, any other dividend or distribution when, as and if declared by the Board, participating equally with the holders of common stock and the holders of Series Preferred.

        Holders of Series F Preferred are entitled to the number of votes equal to the number of shares of voting common stock into which their shares of Series F Preferred could be converted. In addition, the Series F Preferred holders are entitled to receive, upon a liquidation event, the amount that would have been received if all shares of Series Preferred had been converted into voting common stock immediately prior to such liquidation event, only after the payment of the full Series G Preferred liquidation preference has been satisfied. If, upon the liquidating event, the assets of the Company are insufficient to fully pay the amounts owed to Series F Preferred holders, all distributions would be made ratably in proportion to the full amounts to which preferred and common stockholders would have otherwise been entitled. In the event that the Company is a party to an acquisition or asset transfer, each holder of Series F Preferred is entitled to receive the amount of cash, securities, or other property to which such holder would be entitled to receive in a liquidation event.

        Each share of Series F Preferred shall automatically be converted into shares of voting common stock upon the earliest of the following events to occur: (i) holders of at least 50% of the outstanding shares of Series F Preferred consent to a conversion, or (ii) immediately upon the closing of an initial public offering. The number of shares of voting common stock to which a Series F Preferred stockholder is entitled upon conversion is calculated by multiplying the applicable conversion rate then in effect (currently 6.0) by the number of Series F Preferred shares to be converted. The conversion rate for the Series F Preferred shares is subject to change in accordance with anti-dilution provisions contained in the agreement with those holders. More specifically, the conversion price is subject to adjustment to prevent dilution on a weighted-average basis in the event that the Company issues additional shares of common stock or securities convertible or exercisable for common stock at a purchase price less than the then

F-29

GROUPON, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

9. STOCKHOLDERS' EQUITY (DEFICIT) (Continued)

effective conversion price. As of December 31, 2009 and 2010, 25,215,948 shares of voting common stock would have been required to be issued assuming conversion of all of the issued and outstanding shares of Series F Preferred.

Series G Preferred

        In December 2010, the Company authorized the sale of 30,075,690 shares of Series G Preferred and the initial issuance of 14,245,018 shares of Series G Preferred for $450.0 million in gross proceeds (or $449.7 million, net of issuance costs), and used $438.3 million of the proceeds from the sale to redeem shares of its outstanding common stock and preferred stock held by certain shareholders and the remainder for working capital and general corporate purposes. All issued shares of Series G Preferred were outstanding at December 31, 2010. The holders of Series G Preferred are not entitled to annual preferred dividends, but are entitled to receive, on an as-converted to voting common stock basis, any other dividend or distribution when, as and if declared by the Board, participating equally with the holders of common stock and the holders of Series Preferred.

        Holders of Series G Preferred are entitled to the number of votes equal to the number of shares of voting common stock into which their shares of Series G Preferred could be converted. In addition, the Series G Preferred holders are entitled, before any distribution or payment is made upon any Series B Preferred, Series D Preferred, Series E Preferred, Series F Preferred or common stock, to be paid an amount per share equal to 100% of the Series G Preferred original price, plus all declared but unpaid dividends on the Series G Preferred. If, upon the liquidating event, the assets of the Company are insufficient to fully pay the amounts owed to Series G Preferred holders, all distributions would be made ratably in proportion to the full amounts to which Series G Preferred holders would have otherwise been entitled. In the event that the Company is a party to an acquisition or asset transfer, each holder of Series G Preferred is entitled to receive the amount of cash, securities, or other property to which such holder would be entitled to receive in a liquidation event.

        Each share of Series G Preferred shall automatically be converted into shares of voting common stock upon the earliest of the following events to occur: (i) holders of at least 50% of the outstanding shares of Series G Preferred consent to a conversion, or (ii) immediately upon the closing of an initial public offering. The number of shares of voting common stock to which a Series G Preferred stockholder is entitled upon conversion is calculated by multiplying the applicable conversion rate then in effect (currently 2.0) by the number of Series G Preferred shares to be converted. The conversion rate for the Series G Preferred shares is subject to change in accordance with anti-dilution provisions contained in the agreement with those holders. More specifically, the conversion price is subject to adjustment to prevent dilution on a weighted-average basis in the event that the Company issues additional shares of common stock or securities convertible or exercisable for common stock at a purchase price less than the then effective conversion price. As of December 31, 2010, 28,490,036 shares of voting common stock would have been required to be issued assuming conversion of all of the issued and outstanding shares of Series G Preferred.

Stock Repurchase Activity

        In April 2010 and December 2010, the Board authorized the Company to repurchase shares of its capital stock held by certain holders, using a portion of the proceeds from the sale of Series F Preferred and the sale of Series G Preferred, respectively. The Company repurchased 46,664,328 shares of common

F-30

GROUPON, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

9. STOCKHOLDERS' EQUITY (DEFICIT) (Continued)

stock for $503.2 million, and 580,384 shares of preferred stock for $55.0 million in 2010. Total shares repurchased from Company employees were 4,370,959.

10. STOCK-BASED COMPENSATION

Groupon, Inc. Stock Plans

        In January 2008, the Company adopted the ThePoint.com 2008 Stock Option Plan, as amended (the "2008 Plan"), under which options for up to 32,309,250 shares of common stock were authorized to be issued to employees, consultants, and directors of ThePoint.com, which is now the Company. In April 2010, the Company established the Groupon, Inc. 2010 Stock Plan, as amended (the "2010 Plan"), under which stock options and restricted stock units ("RSUs") for up to 7,000,000 shares of non-voting common stock were authorized for future issuance to employees, consultants and directors of the Company. The 2008 Plan and the 2010 Plan (the "Plans") are administered by the Board, who determine the number of awards to be issued, the corresponding vesting schedule and the exercise price for options. As of December 31, 2010, 1,997,700 shares were available for future issuance under the Plans. In addition to the Plans, the Company has issued stock options, restricted stock and RSUs that are governed by employment agreements, some of which are still unvested and outstanding.

Stock Options

        The exercise price of stock options granted is equal to the fair market value of the underlying stock on the date of grant. The contractual term for stock options expires ten years from the grant date. Stock options generally vest over a three or four-year period, with 25% of the awards vesting after one year and the remainder of the awards vesting on a monthly basis thereafter. The fair value of stock options on the date of grant is amortized on a straight-line basis over the requisite service period.

F-31

GROUPON, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

10. STOCK-BASED COMPENSATION (Continued)

        The table below summarizes the stock option activity during the years ended December 31, 2008, 2009 and 2010:

		Options			Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Term (in years)		Aggregate Intrinsic Value (in thousands)(a)
Outstanding at December 31, 2007			1,656,000		$	0.02		9.40	$	—
	Granted		1,110,000		$	0.03		9.72
	Exercised		(60,000	)	$	0.02		8.50
	Forfeited		—			—		—
Outstanding at December 31, 2008			2,706,000		$	0.02		8.94	$	66
	Granted		7,245,000		$	0.17		9.54
	Exercised		(2,010,498	)	$	0.04		8.16
	Forfeited		(942,000	)	$	0.10		9.31
Outstanding at December 31, 2009			6,998,502		$	0.16		9.35	$	6,274
	Granted		8,765,200		$	3.05		9.32
	Exercised		(1,214,332	)	$	0.16		7.79
	Forfeited		(816,518	)	$	0.27		8.58
Outstanding at December 31, 2010			13,732,852		$	2.00		9.00	$	189,406
Exercisable at December 31, 2010			1,733,574		$	0.29		8.43	$	26,872

(a)

The aggregate intrinsic value of options outstanding and exercisable represents the total pretax intrinsic value (the difference between the fair value of the Company's stock on the last day of each fiscal year and the exercise price, multiplied by the number of options where the exercise price exceeds the fair value) that would have been received by the option holders had all option holders exercised their options as of December 31, 2008, 2009 and 2010, respectively.

        The fair value of stock options granted is estimated on the date of grant using the Black-Scholes-Merton option-pricing model. Expected volatility is based on historical volatilities for publicly-traded options of comparable companies over the estimated expected life of the stock options. The expected term represents the period of time the stock options are expected to be outstanding and is based on the "simplified method." The Company used the "simplified method" due to the lack of sufficient historical exercise data to provide a reasonable basis upon which to otherwise estimate the expected life of the stock options. The risk-free interest rate is based on yields on U.S. Treasury STRIPS with a maturity similar to the estimated expected life of the stock options. The weighted-average assumptions for stock options granted during the years ended December 31, 2008, 2009 and 2010 are outlined in the following table.

	2008			2009			2010
Dividend yield		—			—			—
Risk-free interest rate		3.10	%		2.82	%		2.58	%
Expected term (in years)		5.98			6.84			6.13
Expected volatility		46	%		46	%		46	%

        Based on the above assumptions, the weighted-average grant date fair value of stock options granted during the years ended December 31, 2008, 2009 and 2010 was $0.01, $0.09 and $1.45, respectively. The

F-32

GROUPON, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

10. STOCK-BASED COMPENSATION (Continued)

total fair value of options that vested during the years ended December 31, 2008, 2009 and 2010 was less than $0.1 million, less than $0.1 million and $0.3 million, respectively.

Restricted Stock Units

        The restricted stock units granted under the Plans vest over a four-year period, with 25% of the awards vesting after one year and the remaining awards vesting on a monthly basis thereafter. The fair value of restricted stock units on the date of grant is amortized on a straight-line basis over the requisite service period. The fair value of restricted stock units that vested during each of the years ended December 31, 2008, 2009 and 2010 was less than $0.1 million.

        The table below summarizes activity regarding unvested restricted stock units under the Plans during the years ended December 31, 2008, 2009 and 2010:

		Restricted Stock Units			Weighted- Average Grant Date Fair Value (per share)
Unvested at December 31, 2007			2,345,000		$	0.02
	Granted		—		$	—
	Vested		(1,000,000	)	$	0.03
	Forfeited		—		$	—
Unvested at December 31, 2008			1,345,000		$	0.02
	Granted		—		$	—
	Vested		(1,180,000	)	$	0.02
	Forfeited		(82,500	)	$	0.02
Unvested at December 31, 2009			82,500		$	0.02
	Granted		1,788,300		$	14.32
	Vested		(82,500	)	$	0.02
	Forfeited		—		$	—
Unvested at December 31, 2010			1,788,300		$	14.32

Performance Stock Units

        Performance stock units ("PSUs") are not granted under the Plans. Rather, PSUs are granted pursuant to arm's-length negotiated contracts in connection with certain of our acquisitions. In May 2010, the Company issued PSUs under the terms of the agreement to acquire Mobly, Inc., a mobile technology company. The Company agreed to issue up to 720,000 PSUs to the previous Mobly shareholders contingent on meeting certain performance-based operational objectives over the next three years. Upon being granted, the PSUs immediately vest as common stock. During 2010, a total 120,000 shares were granted, and 600,000 shares are still eligible to be granted in the future based on the performance criteria and discretion of the Board. The Company started recording stock compensation expense at the service inception date, which began at the date of acquisition and precedes the grant date. Due to the subjective nature of the performance evaluation, the fair value of the PSUs is remeasured each period until the grant date, when stock compensation expense is adjusted to the grant date fair value. The total fair value of PSUs that vested during the year ended December 31, 2010 was $1.1 million.

F-33

GROUPON, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

10. STOCK-BASED COMPENSATION (Continued)

        The Company recognized stock compensation expense of less than $0.1 million, $0.1 million and $7.1 million during the years ended December 31, 2008, 2009 and 2010, respectively, related to awards issued under the Plans and employment agreements. The corresponding tax benefit provided by stock compensation was $0, $0.1 million and less than $0.1 million for the years ended December 31, 2008, 2009 and 2010, respectively.

        As of December 31, 2010, a total of $42.0 million of unrecognized compensation costs related to unvested stock options and unvested restricted stock units issued under the Plans are expected to be recognized over the remaining weighted-average period of four years.

Acquisition-Related Stock Awards

        During 2010, the Company made several acquisitions of subsidiaries that resulted in the issuance of additional equity-based awards to employees of the acquired companies.

CityDeal Acquisition

        In May 2010, the Company acquired CityDeal (see Note 4 "Acquisitions"), which resulted in the issuance of 3,180,115 shares of the Company's restricted stock to a trust for current CityDeal employees. The restricted stock vests quarterly generally over a period of three years. There were 1,520,925 shares of restricted stock granted on the acquisition date at a fair market value of $3.46 per share, which is amortized on a straight-line basis over the requisite service period. These shares are classified in the additional paid-in capital on the consolidated balance sheet.

        Additional restricted stock was granted in two separate tranches as part of a contingent earn-out payment related to the achievement of financial performance targets. Tranche A consists of 1,607,341 shares of restricted stock and was initially classified as a liability on the consolidated balance sheet due to performance characteristics that resulted in a variable number of shares. Changes in the fair market values associated with Tranche A restricted stock were recorded as stock-based compensation expense within selling, general and administrative expenses on the statement of operations. Upon settlement and issuance of the restricted stock in December 2010, the restricted stock was reclassified from a liability to additional paid-in capital within stockholders' equity (deficit) based on the fair market value on the settlement date. The adjusted fair value of $13.48 per share at settlement is amortized on an accelerated basis over the requisite service period.

        Tranche B consists of 51,849 shares of restricted stock and is classified in additional paid-in capital on the consolidated balance sheet. The fair value of $3.46 per share for Tranche B restricted stock on the date of grant is amortized on an accelerated basis over the requisite service period.

F-34

GROUPON, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

10. STOCK-BASED COMPENSATION (Continued)

        The table below summarizes activity regarding unvested restricted stock issued as part of the CityDeal acquisition during the year ended December 31, 2010:

		Restricted Stock			Weighted- Average Grant Date Fair Value (per share)
Unvested at December 31, 2009			—		$	—
	Granted		3,180,115		$	8.52
	Vested		(960,510	)	$	8.52
Unvested at December 31, 2010			2,219,605		$	8.52

        The fair value of restricted stock that vested during the year ended December 31, 2010 was $8.2 million.

        The Company recognized stock compensation expense of $15.6 million during 2010 related to restricted stock granted as part of the CityDeal acquisition, none of which provided the Company with a tax benefit. As of December 31, 2010, a total of $11.6 million of unrecognized compensation costs related to unvested restricted stock are expected to be recognized over the remaining weighted-average period of two years.

Subsidiary Awards

        The Company made several other acquisitions during the year ended December 31, 2010 in which the selling shareholders of the acquired companies were granted RSUs and stock options ("subsidiary awards") in the Company's subsidiaries. These subsidiary awards were issued in conjunction with the acquisitions as a way to retain and incentivize key employees. They generally vest on a quarterly basis for a period of three or four years, and dilute the Company's ownership percentage of the corresponding subsidiaries as they vest over time. The fair market value of the subsidiary shares granted was determined on a contemporaneous basis. A significant portion of the subsidiary awards are classified as liabilities on the consolidated balance sheet due to the existence of put rights that allow the selling shareholders to put their stock back to the Company. The liabilities for the subsidiary shares were remeasured on a quarterly basis, with the offset to stock-based compensation expense in selling, general and administrative expenses on the consolidated statement of operations. Additionally, the Company has call rights on most of the subsidiary awards, which allow it to purchase the remaining outstanding shares based on contractual agreements.

        The Company recognized stock compensation expense of $13.5 million during 2010 related to subsidiary awards, none of which provided the Company with a tax benefit. As of December 31, 2010, a total of $71.8 million of unrecognized compensation costs related to unvested subsidiary awards are expected to be recognized over the remaining weighted-average period of three years. The amount of unrecognized compensation costs is management's best estimate based on the current fair market values of each of the subsidiaries and could change significantly based on future valuations.

Common Stock Valuations

        The Company determined the fair value per share of the common stock underlying the stock-based awards through the contemporaneous application of a discounted future earnings model initially and then

F-35

GROUPON, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

10. STOCK-BASED COMPENSATION (Continued)

a discounted cash flow methodology going forward, which was approved by the Board. Stock-based awards were granted to employees in the form of stock options, restricted stock units and restricted stock. All such awards granted were exercisable at a price per share equal to the per share fair value of the Company's common stock on the date of grant. Determining the fair value of the Company's common stock required making complex and subjective judgments. The assumptions used in the valuation models were based on future expectations combined with management estimates.

        The discounted future earnings method calculates the present value of future economic benefits using a discount rate based on the nature of the business, the level of overall risk and the expected stability of the estimated future economic benefits. The future economic benefits are estimated over a period of years sufficient to reach stability of the business, and management expects the Company to grow substantially for several years before revenue stabilizes. The discounted cash flow method valued the business by discounting future available cash flows to present value at an approximate rate of return. The cash flows were determined using forecasts of revenue, net income and debt-free future cash flow. The discount rate was derived using a Capital Asset Pricing Model for companies in the "expansion" stage of development. The Company also applied a lack of marketability discount to its enterprise value, which took into account that investments in private companies are less liquid than similar investments in public companies. There is inherent uncertainty in all of these estimates.

        Summarized below are the significant factors the Board considered in determining the fair value of the common stock underlying the Company's stock-based awards granted to its employees:

Fiscal Year 2008

The Company raised $4.7 million in net proceeds from the issuance convertible preferred stock in January 2008 and began operations with the launch of its first market in Chicago in October 2008.

Fiscal Year 2009

First Quarter 2009

In the first quarter, the Company continued to grow the Chicago market and increase its subscriber base.

Second Quarter 2009

In the second quarter, the Company launched its services in four additional markets (New York, Washington D.C., San Francisco, and Boston) and the total number of subscribers rose to approximately 0.2 million at June 30, 2009.

Third Quarter 2009

In the third quarter, the Company launched its services in 12 new markets across the United States and the total number of subscribers increased to approximately 0.6 million at September 30, 2009.

Fourth Quarter 2009

In the fourth quarter, the Company raised $29.9 million in net proceeds from the issuance of convertible preferred stock in November 2009 and the total number of subscribers increased to

F-36

GROUPON, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

10. STOCK-BASED COMPENSATION (Continued)

approximately 1.8 million at December 31, 2009 as the Company launched its services in 13 additional markets across the United States.

Fiscal Year 2010

First Quarter 2010

In the first quarter, the total number of subscribers increased to approximately 3.4 million as of March 31, 2010 as the Company launched its services in 13 new markets across the United States. In addition, the Company launched its official Groupon application for the Apple iPhone and iPod touch, which provides a more convenient buying and redemption process for both consumers and merchants.

Second Quarter 2010

In the second quarter, the Company raised $134.9 million in net proceeds from the issuance of convertible preferred stock in April 2010. The Company also expanded its global presence to 80 markets and 16 countries in Europe and in Latin America with acquisitions. In addition, the Company acquired a mobile technology company in May 2010. The Company also launched its services in 20 additional markets across North America, including Toronto and Vancouver, increasing the total number of subscribers to approximately 10.4 million as of June 30, 2010.

Third Quarter 2010

In the third quarter, the total number of subscribers increased to approximately 21.4 million as of September 30, 2010 as the Company launched its services in 22 new markets across North America, including Calgary, Edmonton and Ottawa. The Company also expanded its global presence into the Russian Federation and Japan in August 2010. In addition, the Company began targeting deals to subscribers based upon their personal preferences and buying history.

Fourth Quarter 2010

In the fourth quarter, the Company raised $449.7 million in net proceeds from the issuance of preferred stock in December 2010. In November 2010, the Company expanded its presence in the Asia-Pacific region and also acquired Ludic Labs, Inc., a company that designs and develops local marketing services. The total number of subscribers increased to approximately 50.6 million as of December 31, 2010 as the Company launched its services in 69 additional markets across North America, including 12 markets in Canada.

F-37

GROUPON, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

11. LOSS PER SHARE

        The table below summarizes the calculation of basic and diluted net loss per share for the years ended December 31, 2008, 2009 and 2010 (in thousands, except share and per share amounts):

	Year Ended December 31,
	2008			2009			2010
Net loss	$	(1,542	)	$	(1,341	)	$	(413,386	)
Dividends on preferred stock		(277	)		(5,575	)		(1,362	)
Redemption of preferred stock in excess of carrying value		—			—			(52,893	)
Adjustment of redeemable noncontrolling interests to redemption value		—			—			(12,425	)
Preferred stock distributions		(339	)		—			—
Less: Net loss attributable to noncontrolling interests		—			—			23,746
Net loss attributable to common stockholders	$	(2,158	)	$	(6,916	)	$	(456,320	)
Net loss per share:
Weighted-average shares outstanding for basic and diluted net loss per share(a)		166,738,129			168,604,142			171,349,386
Basic and diluted net loss per share	$	(0.01	)	$	(0.04	)	$	(2.66	)

(a)

Stock options, restricted stock units, performance stock units and convertible preferred shares are not included in the calculation of diluted net loss per share for the years ended December 31, 2008, 2009 and 2010 because the Company had a net loss for each year. Accordingly, the inclusion of these equity awards would have had an antidilutive effect on the calculation of diluted loss per share.

        The following outstanding equity awards are not included in the diluted net loss per share calculation above because they would have had an antidilutive effect:

	Year Ended December 31,
Antidilutive equity awards	2008		2009		2010
Stock options		2,706,000		6,998,502		13,732,852
Restricted stock units		1,345,000		82,500		1,788,300
Convertible preferred shares		40,561,032		66,997,992		117,221,672
Performance stock units		—		—		600,000
Total		44,612,032		74,078,994		133,342,824

12. FAIR VALUE MEASUREMENTS

        Fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or a liability.

F-38

GROUPON, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

12. FAIR VALUE MEASUREMENTS (Continued)

        To increase the comparability of fair value measures, the following hierarchy prioritizes the inputs to valuation methodologies used to measure fair value:

Level 1—Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets.

Level 2—Include other inputs that are directly or indirectly observable in the marketplace.

Level 3—Unobservable inputs that are supported by little or no market activities. Valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable, such as pricing models, discounted cash flow models and similar techniques not based on market, exchange, dealer or broker-traded transactions.

        In determining fair value, the Company uses various valuation approaches within the fair value measurement framework. The valuation methodologies used for the Company's instruments measured at fair value and their classification in the valuation hierarchy are summarized below:

Cash equivalents—Cash equivalents primarily consisted of highly-rated commercial paper and money market funds. The Company classified cash equivalents as Level 1, due to their short-term maturity, and measured the fair value based on quoted prices in active markets for identical assets.

Contingent consideration—During the year ended December 31, 2010, the Company had obligations to transfer additional common stock to the former owners of certain acquirees as part of the exchange for control of these acquirees, if specified future operational objectives were met. The Company determined the acquisition-date fair value of these contingent liabilities, based on the likelihood of contingent earn-out payments, as part of the consideration transferred, and subsequently remeasured the fair value using either a cost or income approach that are primarily determined based on the present value of future cash flows using internal models. The Company classified this financial liability as Level 3, due to the lack of relevant observable inputs and market activity.

        The following table summarizes the Company's assets and liabilities that are measured at fair value on a recurring basis (in thousands):

				Fair Value Measurement at Reporting Date Using
Description		As of December 31, 2009		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets:
	Cash equivalents	$	10,500	$	10,500	$	—	$	—

F-39

GROUPON, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

12. FAIR VALUE MEASUREMENTS (Continued)

				Fair Value Measurement at Reporting Date Using
Description		As of December 31, 2010		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets:
	Cash equivalents	$	23,028	$	23,028	$	—	$	—

        There were no changes to the Company's valuation techniques used to measure asset and liability fair values on a recurring basis during 2009 and 2010.

        During the year ended December 31, 2010, the Company recorded contingent consideration as part of the CityDeal acquisition, which was subsequently remeasured on a recurring basis until settlement occurred in December 2010. As a result, the Company recorded a corresponding charge of $204.2 million associated with this obligation, which was reported separately as acquisition-related expenses in the consolidated statement of operations with other acquisition-related expenses. The charge resulted primarily due to the significant increase in the value of the Company's common stock from the original valuation date until the date the contingency was settled. As the contingent consideration was settled during 2010, no amounts were included in the table above.

        The Company's other financial instruments consist primarily of accounts receivable, accounts payable, accrued merchant payable, accrued expenses and loans from related parties. The carrying value of these assets and liabilities approximate their respective fair values as of December 31, 2009 and 2010, due to their short maturity. At December 31, 2009 and 2010 no material fair value adjustments were required for non-financial assets and liabilities.

13. INCOME TAXES

        On January 15, 2008, the Company completed a conversion pursuant to which The Point, LLC, converted to The Point, Inc., a corporation. As a limited liability company, the Company was recognized as a partnership for federal income tax purposes. All items of income, expense, gain and loss generally were reportable on the tax returns of members of The Point, LLC. Accordingly, the Company did not provide for income taxes at the company level prior to conversion to a corporation.

        The components of pretax loss for the years ended December 31, 2008, 2009 and 2010 were as follows (in thousands):

	Year Ended December 31,
	2008			2009			2010
United States	$	(1,542	)	$	(1,093	)	$	(222,594	)
International		—			—			(197,466	)
Loss before income taxes	$	(1,542	)	$	(1,093	)	$	(420,060	)

F-40

GROUPON, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

13. INCOME TAXES (Continued)

        The provision (benefit) for income taxes at December 31, 2008, 2009 and 2010 consisted of the following components (in thousands):

			Year Ended December 31,
			2008		2009		2010
Current taxes:
	U.S. federal		$	—	$	226	$	—
	State			—		22		57
	International			—		—		618
		Total current taxes		—		248		675
Deferred taxes:
	U.S. federal and state			—		—		—
	International			—		—		(7,349	)
		Total deferred taxes		—		—		(7,349	)
Provision (benefit) for income taxes			$	—	$	248	$	(6,674	)

        The items accounting for differences between income taxes computed at the federal statutory rate and the provision for income taxes were as follows:

		Year Ended December 31,
		2008			2009			2010
U.S. federal income tax rate			34.0	%		34.0	%		35.0	%
	Impact of foreign differential		—			—			(1.7	)
	State income taxes, net of federal benefits		4.8			2.4			0.6
	Valuation allowance		(38.4	)		(57.5	)		(12.0	)
	Revaluation of shares and other		(0.4	)		(0.7	)		(20.2	)
	Effect of state rate change on deferred items		—			(0.9	)		(0.1	)
			—	%		(22.7	)%		1.6	%

Supplemental Disclosure for Tax Impact of Noncontrolling Interest

	2008			2009			2010
Less: amount attributable to noncontrolling interest		—	%		—	%		(1.6	)%
Effective tax rate for noncontrolling interest		—	%		—	%		—	%

F-41

GROUPON, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

13. INCOME TAXES (Continued)

        The deferred income tax assets and liabilities consisted of the following components (in thousands):

				December 31,
				2009			2010
Deferred tax assets:
	Reserves and allowances			$	1,275		$	5,691
	Intangible assets				8			—
	Foreign exchange loss				—			226
	Charitable contributions				52			153
	Deferred rent				—			349
	Tax credits				164			327
	Stock-based compensation				33			2,138
	Net operating loss carryforward				44			73,803
		Total deferred tax assets			1,576			82,687
		Less valuation allowance			(1,528	)		(55,956	)
			Deferred tax assets, net of valuation allowance		48			26,731
Deferred tax liabilities:
	Unearned revenue for tax				(12	)		(17,525	)
	Intangible assets				—			(11,249	)
	Fixed assets				(36	)		(1,227	)
		Net deferred tax liability		$	—		$	(3,270	)

        The deferred tax amounts have been classified on the consolidated balance sheets as follows:

		December 31,
		2009		2010
Assets:
	Deferred income taxes, non-current	$	—	$	14,544
Liabilities:
	Deferred income taxes, current		—		(17,210	)
	Deferred income taxes, non-current		—		(604	)

        In determining the need for a valuation allowance, the Company weighs both positive and negative evidence in the various taxing jurisdictions in which it operates to determine whether it is more likely than not that its deferred tax assets are recoverable. In assessing the ultimate realizability of its net deferred tax assets, the Company considers its past performance, available tax strategies, and expected future taxable income. At December 31, 2009 and 2010, the Company recorded a valuation allowance of $1.5 million and $56.0 million, respectively, against its domestic and foreign net deferred tax assets, as it believes it is more likely than not that these benefits will not be realized.

        At December 31, 2009 and 2010, the Company had $0 and $6.3 million of federal net operating loss carryforwards, respectively, which will expire beginning in 2026. In addition, at December 31, 2009 and 2010, the Company has $0.2 million and $0.3 million of federal research tax credit carryforwards, respectively, which will expire beginning in 2026. At December 31, 2010 the Company also has

F-42

GROUPON, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

13. INCOME TAXES (Continued)

$223.1 million of foreign net operating loss carryforwards, a significant portion of which carryforward for an indefinite period.

        The Company is subject to taxation in the United States federal and various state and foreign jurisdictions. Significant judgment is required in determining the worldwide provision for income taxes and recording the related income tax assets and liabilities. The Company's practice for accounting for uncertainty in income taxes is to recognize the financial statement benefit of a tax position only after determining that the relevant tax authority would more likely than not sustain the position following an audit. For tax positions meeting the more-likely-than-not criteria, the amount recognized in the financial statements is the largest benefit that has a greater than 50 percent likelihood of being realized upon ultimate settlement with the relevant tax authority. All of the Company's tax years are currently open to examination by the U.S. federal, state and foreign tax authorities. At December 31, 2009 and 2010, the Company did not have any material unrecognized tax benefits recorded on its consolidated balance sheets.

        The Company's practice is to recognize interest and penalties related to income tax matters in income tax expense. The Company did not recognize any interest or penalties in its consolidated statement of operations for the years ended December 31, 2008, 2009 and 2010.

        At December 31, 2010, no provision has been made for U.S. federal and state taxes related to undistributed earnings of the Company's foreign subsidiaries, as the Company currently does not expect to remit those earnings in the foreseeable future. Determination of the amount of unrecognized U.S. deferred tax liability related to undistributed earnings of the Company's foreign subsidiaries is not practical due to the complexities associated with the related calculation.

14. SEGMENT INFORMATION

        The Company has organized its operations into two principal segments: North America, which represents the United States and Canada; and International, which represents the rest of the Company's global operations. Segment operating results reflect earnings before stock-based compensation, acquisition-related expenses, interest and other income (expense), net, and provision (benefit) for income taxes. Segment information reported below represents the operating segments of the Company for which separate information is available and for which segment results are evaluated regularly by the Company's chief operating decision-maker (i.e., chief executive officer) in assessing performance and allocating resources.

        Revenue for each segment is based on the geographic market that sells the Groupons. There are no internal revenue transactions or allocations of costs between reporting segments. Revenue and profit or

F-43

GROUPON, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

14. SEGMENT INFORMATION (Continued)

loss information by reportable segment reconciled to consolidated net income (loss) was as follows (in thousands):

		Year Ended December 31,
		2008			2009			2010
North America
	Revenue(1)	$	5		$	14,540		$	200,412
	Segment operating expenses(2)		1,613			15,502			210,849
	Segment operating loss		(1,608	)		(962	)		(10,437	)
International
	Revenue	$	—		$	—		$	112,529
	Segment operating expenses(2)		—			—			283,085
	Segment operating loss		—			—			(170,556	)
Consolidated
	Revenue	$	5		$	14,540		$	312,941
	Segment operating expenses(2)		1,613			15,502			493,934
	Segment operating loss		(1,608	)		(962	)		(180,993	)
	Stock-based compensation		(24	)		(115	)		(36,168	)
	Acquisition-related		—			—			(203,183	)
	Interest and other income (expense), net		90			(16	)		284
	Loss before income taxes		(1,542	)		(1,093	)		(420,060	)
	Provision (benefit) for income taxes		—			248			(6,674	)
	Net loss	$	(1,542	)	$	(1,341	)	$	(413,386	)

(1)

North America contains revenue from the United States of $0.1 million, $14.5 million and $190.5 million for the years ended December 31, 2008, 2009 and 2010, respectively.

(2)

Represents operating expenses, excluding stock-based compensation, acquisition-related expense and interest and other income (expense), net, which are not allocated to segments.

        No single customer or individual foreign country accounted for more than 10% of revenue during the last three years.

        Total assets by reportable segment reconciled to consolidated assets were as follows (in thousands):

		December 31,
		2009		2010
North America		$	14,962	$	104,606
International			—		276,964
	Consolidated total	$	14,962	$	381,570

F-44

GROUPON, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

14. SEGMENT INFORMATION (Continued)

        Property and equipment, net, by reportable segment was as follows (in thousands):

		December 31,
		2009		2010
North America(1)		$	274	$	9,880
International			—		6,610
	Consolidated total	$	274	$	16,490

(1)

All property and equipment included in North America are located in the United States.

        Property and equipment located in Japan represented approximately 20% of consolidated property and equipment, net. There were no other individual countries located outside of the United States that represented more than 10% of consolidated property and equipment, net.

15. RELATED PARTIES

CityDeal Loan Agreement

        In May 2010, the Company and the former CityDeal shareholders (including Oliver Samwer, Marc Samwer and Alexander Samwer, collectively, the "Samwers") entered into a loan agreement to provide CityDeal with a $20.0 million term loan facility (the "facility"). The facility subsequently was amended in July 2010 increasing the total commitment to $25.0 million. Both the Company and the former CityDeal shareholders each were obligated to make available $12.5 million under the terms of the facility, both of which were fully disbursed to CityDeal during the year ended December 31, 2010. Proceeds from the facility were used to fund operational and working capital needs. The outstanding balance accrues interest at a rate of 5% per year and is payable upon termination of the facility, which is the earlier of any prepayments or December 2012. The outstanding balance payable to the former CityDeal shareholders at December 31, 2010 of $13.0 million, along with corresponding accrued interest of $0.1 million, is included in "Due to related parties" on the consolidated balance sheet. The amount due to the former CityDeal shareholders exceeds the amount of the facility in US dollars as a result of changes in foreign currency exchange rates throughout the year ended December 31, 2010. The amounts due to the Company from CityDeal under the facility were not included in the consolidated balance sheet due to the elimination of intercompany transactions.

Management Services

        The Company has entered into agreements with Rocket Internet GmbH ("Rocket") and various other companies in which the Samwers have direct or indirect ownership interests, to provide information technology, marketing and other services to the Company. The Company paid $1.4 million to Rocket and a total of $0.2 million to these other companies for services rendered for the year ended December 31, 2010, which are classified within selling, general and administrative expenses in the consolidated statement of operations. As of December 31, 2010, $0.2 million was due to Rocket, which was recorded in "Due to related parties" on the consolidated balance sheet.

F-45

GROUPON, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

15. RELATED PARTIES (Continued)

Merchant Contracts

        The Company entered into several agreements with merchant companies in which the Samwers have direct or indirect ownership interests, and, in some cases, who are also directors of these companies, pursuant to which the Company conducts its business by offering goods and services at a discount with these merchants. The Company paid $1.1 million to these companies under the merchant agreements for the year ended December 31 2010, which was recorded as an offset to revenue in the consolidated statements of operations. The Company did not have any amounts due to these companies as of December 31, 2010.

Consulting Agreements

        In May 2010, the Company entered into consulting agreements with the Samwers, pursuant to which they advise CityDeal, the Company's European subsidiary, with respect to its goals and spend at least fifty-percent of their work hours consulting for CityDeal. The Company reimburses the Samwers for travel and other expenses incurred in connection with their service to the Company. They do not receive any additional compensation from the Company in connection with their consulting roles. The terms of their consulting agreements expire in October 2011. The Company paid $0.1 million to reimburse the Samwers for travel and other expenses incurred for the year ended December 31, 2010, which are classified within selling, general and administrative expenses in the consolidated statement of operations. The Company had no amounts due to the Samwers as of December 31, 2010.

Sublease Agreements

        The Company has entered into agreements with various companies in which certain of the Company's current and former Board members have direct or indirect ownership interests and, in some cases, who are also directors of these companies, pursuant to which the Company subleased a portion of office space in Chicago from these companies. The Company paid $0.1 million and $0.3 million to these companies under the sublease agreements for the years ended December 31, 2009 and 2010, respectively, which was classified within selling, general and administrative expenses in the consolidated statements of operations. The Company did not have any amounts due to these companies as of December 31, 2009 and 2010.

Legal Services

        The Company has engaged the law firm of Lefkofsky & Gorosh, P.C. ("L&G"), whose founder (Steven P. Lefkofsky) is the brother of the Company's co-founder and Executive Chairman of the Board, to provide certain legal services to the Company. The Company paid less than $0.1 million and $0.3 million, respectively to L&G for legal services rendered for the years ended December 31, 2009 and 2010. The Company had $0 and approximately $0.1 million due to L&G as of December 31, 2009 and 2010.

16. SUBSEQUENT EVENTS

Preferred Stock Issuance

        In January 2011, the Company authorized the sale and additional issuance of 15,827,796 shares of Series G Preferred for $496.0 million in gross proceeds (or $492.5 million, net of issuance costs), and used $371.5 million of the proceeds from the sale to redeem shares of its outstanding common stock and preferred stock held by certain shareholders and the remainder for working capital and general corporate

F-46

GROUPON, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

16. SUBSEQUENT EVENTS (Continued)

purposes. Included in the additional stock issuance was 126,622 shares of Series G Preferred (or the equivalent of $4.0 million) the Company transferred to its placement agent in exchange for financial advisory services provided. Holders of Series G Preferred have similar rights and preferences as other Series Preferred stockholders, with the exception of the following: (1) Series G Preferred holders are not entitled to any annual preferred dividends, but are entitled to receive, on an as-converted to voting common stock basis, any other dividend or distribution when, as and if declared by the Board, participating equally with the holders of common stock and the holders of Series Preferred; and (2) in the event of liquidation, the Series G Preferred holders are entitled, before any distribution or payment is made upon any Series B Preferred, Series D Preferred, Series E Preferred, Series F Preferred or common stock, to be paid an amount per share equal to 100% of the Series G Preferred original price plus all accrued and unpaid dividends on the Series G Preferred.

Qpod Stock Purchase

        In January 2011, the Company entered into a Stock Purchase Agreement with other shareholders and certain founding members of Qpod (collectively, the "other shareholders"), whereby the Company purchased an additional percentage of the shares of Qpod from the other shareholders of Qpod, increasing the Company's ownership in Qpod to 90%. Under the terms of the agreement, the Company acquired 21,812 shares of the total issued and outstanding capital stock of Qpod, on a fully-diluted basis, in exchange for $25.0 million in cash.

Other Acquisitions

        In January 2011, the Company acquired certain other entities that provide daily deals and online marketing services substantially similar to the Company for an aggregate purchase price of $20.9 million. The primary reasons for these acquisitions were to utilize the collective buying power websites to further grow the Company's subscribers and provide strategic entries into new and expanding markets in India, Malaysia, South Africa and the Middle East.

        The acquisitions will be accounted for using the purchase method of accounting and the operations of these acquired companies will be included in the consolidated financial statements from their respective date of the acquisition. The financial effect of these acquisitions, individually and in the aggregate, was not material to the Company's consolidated financial statements. Pro forma results of operations have not been presented because the effects of these business combinations, individually and in the aggregate, were not material to the Company's consolidated results of operations as they were start-up businesses.

Investments in Equity Interests

        In January 2011, the Company acquired 50 percent of the ordinary shares of Restaurantdiary.com Limited ("Restaurantdiary") in exchange for $1.3 million. Restaurantdiary is a private limited company organized under the laws of the United Kingdom that owns the internet media property called restaurantdiary.com. The Company also acquired 40 percent of the ordinary shares of E-Commerce King Limited ("E-Commerce"), a company organized under the laws of the British Virgin Islands, in exchange for $4.0 million. The Company entered into the joint venture along with Rocket Asia GmbH & Co. KG ("Rocket Asia"), an entity controlled by the Samwers. Rocket Asia acquired 10 percent of the ordinary shares in E-Commerce. E-Commerce subsequently established a wholly foreign owned enterprise, which created a domestic operating company headquartered in Beijing, China ("GaoPeng.com"), to operate a

F-47

GROUPON, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

16. SUBSEQUENT EVENTS (Continued)

business offering localized group-buying discounts for products and services to individual consumers and businesses via internet websites and social and interactive media in various markets throughout China. GaoPeng.com began offering daily deals in March in Beijing and Shanghai with expansion to other major cities in China to follow.

        The investments in equity interests will be accounted for using the equity method and the Company will record its share of the operating results from the respective date of the investment. Pro forma results of operations have not been presented because the financial effect of these investments in equity interests, individually and in the aggregate, were not material to the Company's consolidated results of operations.

Newly Elected Directors

        In February 2011, the Company appointed Howard Schultz to the Company's Board of Directors. Mr. Schultz is chairman, president and chief executive officer of Starbucks Corporation. In June 2011, the Company appointed Mellody Hobson to the Company's Board of Directors. Ms. Hobson is the president and chairman of Ariel Investments, LLC, a Chicago-based investment management firm.

Non-voting Common Stock Issuance

        In February 2011, the Board authorized the issuance and sale, by way of a private placement, of 1,090,830 shares of non-voting common stock for $17.2 million in gross proceeds, and used $17.0 million of the proceeds from the sale to redeem shares of its outstanding common stock held by certain shareholders and the remainder for working capital and general corporate purposes. Included in the stock issuance of non-voting common stock were 949,668 shares sold to Mr. Schultz and to several partnerships of Maveron LLC, a venture capital firm co-founded by Mr. Schultz, for an aggregate purchase price of $15.0 million.

Facility Repayment

        In March 2011, the CityDeal repaid all amounts outstanding to the former CityDeal shareholders related to the facility described in Note 15 "Related Parties."

F-48

GROUPON, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)

(in thousands, except share data)

			December 31, 2010			June 30, 2011			June 30, 2011 Pro forma for distribution and recapitalization (Note 3)
						(Unaudited)			(Unaudited)
Assets
Current assets:
	Cash and cash equivalents		$	118,833		$	225,093
	Accounts receivable, net			42,407			99,674
	Prepaid expenses and other current assets			12,615			50,947
		Total current assets		173,855			375,714			—
Property and equipment, net				16,490			36,532
Goodwill				132,038			162,796
Intangible assets, net				40,775			39,516
Investments in equity interests				—			1,256
Deferred income taxes, non-current				14,544			14,119
Other non-current assets				3,868			7,779
		Total Assets	$	381,570		$	637,712		$	—
Liabilities and Stockholders' Equity (Deficit)
Current liabilities:
	Accounts payable		$	57,543		$	49,033
	Accrued merchant payable			162,409			391,894
	Accrued expenses			98,323			164,700
	Due to related parties			13,321			264
	Deferred income taxes, current			17,210			13,058
	Other current liabilities			21,613			61,669
		Total current liabilities		370,419			680,618			—
Deferred income taxes, non-current				604			2,180
Other non-current liabilities				1,017			23,533
		Total Liabilities		372,040			706,331			—
Commitments and contingencies (see Note 9)
Redeemable noncontrolling interests				2,983			681
Groupon, Inc. Stockholders' Equity (Deficit)
Series B, convertible preferred stock, $.0001 par value, 199,998 shares authorized, issued and outstanding at December 31, 2010 and June 30, 2011				—			—
Series D, convertible preferred stock, $.0001 par value, 6,560,174 shares authorized and issued, 6,258,297 shares outstanding at December 31, 2010 and 5,956,420 shares outstanding at June 30, 2011				1			1
Series E, convertible preferred stock, $.0001 par value, 4,406,160 shares authorized and issued, 4,127,653 shares outstanding at December 31, 2010 and 4,060,183 shares outstanding at June 30, 2011				—			—
Series F, convertible preferred stock, $.0001 par value, 4,202,658 shares authorized, issued and outstanding at December 31, 2010 and June 30, 2011				1			1
Series G, convertible preferred stock, $.0001 par value, 30,075,690 shares authorized, 14,245,018 shares issued and outstanding at December 31, 2010 and 30,072,814 shares issued and outstanding at June 30, 2011, liquidation preference of $450,000 and $950,000 at December 31, 2010 and June 30, 2011, respectively				1			3
Voting common stock, $.0001 par value, 500,000,000 shares authorized, 211,495,998 shares issued and 165,616,260 shares outstanding at December 31, 2010 and 211,495,998 shares issued and 144,531,311 shares outstanding at June 30, 2011				4			4
Non-voting convertible common stock, $.0001 par value, 100,000,000 shares authorized, 5,864,486 shares issued and 5,079,896 shares outstanding at December 31, 2010 and 10,061,288 shares issued and 7,821,086 shares outstanding at June 30, 2011				—			—
Treasury stock, at cost, 46,664,328 shares at December 31, 2010 and 69,204,889 shares at June 30, 2011				(503,173	)		(808,448	)
Additional paid-in capital				921,122			1,352,133
Stockholder receivable				(286	)		(180	)
Accumulated deficit				(419,468	)		(623,376	)
Accumulated other comprehensive income				9,875			13,443
		Total Groupon, Inc. Stockholders' Equity (Deficit)		8,077			(66,419	)		—
Noncontrolling interests				(1,530	)		(2,881	)
		Total Equity (Deficit)		6,547			(69,300	)		—
		Total Liabilities and Equity (Deficit)	$	381,570		$	637,712		$	—

See Notes to Condensed Consolidated Financial Statements.

F-49

GROUPON, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

(in thousands, except per share amounts)

			Six Months Ended June 30,
			2010			2011
			(Restated)			(Restated)
Revenue (gross amounts billed of $135,807 and $1,597,423, respectively)			$	58,938		$	688,105
Costs and expenses:
	Cost of revenue			4,024			66,522
	Marketing			39,848			432,093
	Selling, general and administrative			33,880			407,665
	Acquisition-related			9,434			—
		Total operating expenses		87,186			906,280
Loss from operations				(28,248	)		(218,175	)
Interest and other (expense) income, net				(96	)		1,539
Equity-method investment activity, net of tax				—			(8,763	)
Loss before provision for income taxes				(28,344	)		(225,399	)
Benefit for income taxes				(905	)		(1,732	)
Net loss				(27,439	)		(223,667	)
Less: Net loss attributable to noncontrolling interests				61			19,759
Net loss attributable to Groupon, Inc.				(27,378	)		(203,908	)
Dividends on preferred stock				(1,046	)		—
Redemption of preferred stock in excess of carrying value				—			(34,327	)
Adjustments of redeemable noncontrolling interests to redemption value				—			(15,651	)
Net loss attributable to common stockholders			$	(28,424	)	$	(253,886	)
Net loss per share:
	Basic		$	(0.17	)	$	(1.66	)
	Diluted		$	(0.17	)	$	(1.66	)
Weighted average number of shares outstanding:
	Basic			169,048,421			152,813,014
	Diluted			169,048,421			152,813,014

See Notes to Condensed Consolidated Financial Statements.

F-50

GROUPON, INC.

CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIT) (UNAUDITED)

(in thousands, except share amounts)

		Series B, D, E, F, and G Preferred Stock																								Total Groupon Inc. Stockholders' Equity (Deficit)
							Common Stock
												Treasury Stock			Additional Paid-In Capital			Stockholder Receivable			Accumulated Deficit			Accumulated Other Comp. Income					Non- controlling Interests			Total Equity (Deficit)
		Shares			Amount		Shares			Amount
Balance at December 31, 2010			29,033,624		$	3		170,696,156		$	4	$	(503,173	)	$	921,122		$	(286	)	$	(419,468	)	$	9,875	$	8,077		$	(1,530	)	$	6,547
	Net loss		—			—		—			—		—			—			—			(203,908	)		—		(203,908	)		(1,351	)		(205,259	)
	Foreign currency translation		—			—		—			—		—			—			—			—			3,568		3,568			—			3,568
	Comprehensive loss		—			—		—			—		—			—			—			—			—		(201,833	)		—			(203,184	)
	Adjustment of redeemable noncontrolling interests to redemption value		—			—		—			—		—			(15,651	)		—			—			—		(15,651	)		—			(15,651	)
	Stock issued in connection with business combinations		—			—		166,466			—					3,879			—			—			—		3,879			—			3,879
	Restricted stock issued in connection with business combinations		—			—		23,684			—		—			538			—			—			—		538			—			538
	Proceeds from issuance of shares (net of issuance costs)		15,827,796			2		1,090,830			—		—			509,690			—			—			—		509,692			—			509,692
	Exercise of stock options		—			—		1,920,246			—		—			1,272			(180	)		—			—		1,092			—			1,092
	Repayment of receivable		—			—		—			—		—			(7	)		286			—			—		279			—			279
	Vesting of restricted stock units		—			—		429,688			—		—			—			—			—			—		—			—			—
	Vesting of performance stock units							120,000																			—			—			—
	Stock-based compensation expense		—			—		—			—		—			32,693			—			—			—		32,693			—			32,693
	Redemption of preferred stock		(369,347	)		—		—			—		—			(35,003	)		—			—			—		(35,003	)		—			(35,003	)
	Repurchase of common stock		—			—		(22,540,561	)		—		(353,550	)		—			—			—			—		(353,550	)		—			(353,550	)
	Purchase of addditional shares in majority-owned subsidiary		—			—		445,888			—		—			(21,657	)		—			—			—		(21,657	)		—			(21,657	)
	Reclassification of dividends paid on redemption of common stock		—			—		—			—		48,275			(48,275	)		—			—			—		—			—			—
	Excess tax benefit on stock-based compensation		—			—		—			—		—			3,532			—			—			—		3,532			—			3,532
Balance at June 30, 2011			44,492,073		$	5		152,352,397		$	4	$	(808,448	)	$	1,352,133		$	(180	)	$	(623,376	)	$	13,443	$	(66,419	)	$	(2,881	)	$	(69,300	)

See Notes to Condensed Consolidated Financial Statements

F-51

GROUPON, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

(in thousands)

			Six Months Ended June 30,
			2010			2011
Operating activities
Net loss			$	(27,439	)	$	(223,667	)
Adjustments to reconcile net loss to net cash provided by operating activities:
	Depreciation and amortization			1,886			15,696
	Stock-based compensation			4,076			57,582
	Deferred income taxes			(929	)		(2,237	)
	Excess tax benefit on stock-based compensation			—			(3,532	)
	Losses in equity interests			—			8,763
	Non cash interest expense			72			—
	Acquisition related expenses			9,434			—
	Change in assets and liabilities, net of acquisitions:
		Accounts receivable		(3,477	)		(53,072	)
		Prepaid expenses and other current assets		2,818			(17,221	)
		Accounts payable		4,702			(14,374	)
		Accrued merchant payable		18,726			216,870
		Accrued expenses and other current liabilities		3,084			74,756
		Due to related parties		3,555			46
	Other			(980	)		(1,626	)
Net cash provided by operating activities				15,528			57,984
Investing activities
Purchases of property and equipment				(3,934	)		(21,202	)
Acquisitions of businesses, net of acquired cash				5,603			(3,696	)
Purchases of intangible assets				—			(272	)
Changes in restricted cash				200			(1,025	)
Purchases of investments in subsidiaries				—			(34,387	)
Purchases of equity investments				—			(9,921	)
Net cash provided by (used in) investing activities				1,869			(70,503	)
Financing activities
Issuance of shares, net of issuance costs				134,932			509,692
Excess tax benefit on stock-based compensation				—			3,532
Loans from related parties				1,647			—
Repayments of related party loans				—			(14,358	)
Repurchase of common stock				(119,891	)		(353,550	)
Proceeds from exercise of stock options				37			1,234
Proceeds from sale of common stock				—			137
Redemption of preferred stock				—			(35,003	)
Net cash provided by financing activities				16,725			111,684
Effect of exchange rate changes on cash and cash equivalents				(516	)		7,095
Net increase in cash and cash equivalents				33,606			106,260
Cash and cash equivalents, beginning of period				12,313			118,833
Cash and cash equivalents, end of period			$	45,919		$	225,093
Non-cash investing activity
	Capital expenditures incurred not yet paid		$	2		$	1,514
	Contingent consideration given in connection with acquisitions		$	63,180		$	15,920
Non-cash financing activity
		Dividends accrued	$	1,046		$	—

See Notes to Condensed Consolidated Financial Statements.

F-52

GROUPON, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

1. DESCRIPTION OF BUSINESS

        Groupon, Inc., together with its consolidated subsidiaries (the "Company"), operates a local e-commerce marketplace (www.Groupon.com) that connects merchants to consumers by offering goods and services at a discount. The Company, which commenced operations in October 2008, creates a new way for local merchants to attract new customers, while providing consumers with savings and helping them discover what to do, eat, see and buy in the places they live and work.

2. RESTATEMENT

        The Company has restated its previously issued Condensed Consolidated Statements of Operations for the six month periods ended June 30, 2010 and 2011 to correct for an error in its presentation of revenue. Most significantly, the Company restated its reporting of revenues from Groupons to be net of the amounts related to merchant fees. Historically, the Company has reported the gross amounts billed to its subscribers as revenue. All prior periods have been restated to show the net amount the Company retains after paying the merchant fees. The effect of the correction resulted in a reduction of previously reported revenues and corresponding reductions in cost of revenue in those periods.

        The Company has also changed the presentation of certain other income statement expenses to be consistent with reporting revenue on a net basis. These changes include presenting loyalty programs as a component of marketing rather than an offset to revenue. The Company believes that this classification is most appropriate as it is acting as an agent on behalf of the merchant in driving traffic to generate revenue. In addition, refunds made to subscribers under the Groupon Promise are presented as a component of cost of revenue, rather than as an offset to revenue, as these amounts are not paid directly to the merchants.

        Credit card and other processing expenses have been reclassified to cost of revenue from selling, general and administrative for all periods presented. The Company concluded the amounts could alternatively be viewed as a cost of the service the Company is providing.

        The Company has restated the interim financial statements for the six months ended June 30, 2011 to reduce selling, general and administrative expense by $1.5 million to correct for an error in compensation expense.

F-53

GROUPON, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

2. RESTATEMENT (Continued)

        The following tables summarize the corrections on each of the affected financial statement line items for each period presented (in thousands).

			As Previously Reported			Restatement Adjustment			As Restated
		Condensed Consolidated Statement of Operations
For the six months ended June 30, 2010
Revenue			$	131,534		$	(72,596	)	$	58,938
Cost of revenue				77,176			(73,152	)		4,024
Marketing				35,495			4,353			39,848
Selling, general and administrative				37,677			(3,797	)		33,880
For the six months ended June 30, 2011
Revenue			$	1,522,746		$	(834,641	)	$	688,105
Cost of revenue				911,699			(845,177	)		66,522
Marketing				378,735			53,358			432,093
Selling, general and administrative				451,980			(44,315	)		407,665
Loss from operations				(219,668	)		1,493			(218,175	)
Loss before provision for income taxes				(226,892	)		1,493			(225,399	)
Net loss				(225,160	)		1,493			(223,667	)
Net loss attributable to Groupon, Inc.				(205,401	)		1,493			(203,908	)
Loss before attributable to common stockholders				(255,379	)		1,493			(253,886	)
Net loss per share
	Basic			(1.67	)		0.01			(1.66	)
	Diluted			(1.67	)		0.01			(1.66	)
		Condensed Consolidated Statement of Cash Flows
For the six months ended June 30, 2011
Stock-based compensation				59,075			(1,493	)		57,582
		Condensed Consolidated Balance Sheet as of June 30, 2011
For the six months ended June 30, 2011
Treasury stock				(809,941	)		1,493			(808,448	)
Additional paid-in capital				1,355,119			(2,986	)		1,352,133
Accumulated deficit				(624,869	)		1,493			(623,376	)

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principles of Consolidation

        The condensed consolidated financial statements include the accounts of the Company and its majority-owned subsidiaries. Intercompany balances and transactions have been eliminated. Investments in entities in which the Company can exercise significant influence, but does not own a majority equity interest or otherwise control, are accounted for using the equity method and are included as investments in equity interests on the condensed consolidated balance sheet. See Note 7 "Investments in Equity Interests." The Company has included the results of operations of acquired companies from the date of the acquisition.

Basis of Presentation

        The accompanying condensed consolidated financial statements of the Company were prepared in accordance with United States generally accepted accounting principles ("U.S. GAAP") for interim financial information. Certain information and disclosures normally included in consolidated financial statements prepared in accordance with U.S. GAAP have been condensed or omitted. Accordingly, these

F-54

GROUPON, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

condensed consolidated financial statements should be read in conjunction with the Company's historical consolidated financial statements and accompanying notes included in this Form S-1 Registration Statement. In the opinion of management, all adjustments, consisting of a normal recurring nature, considered necessary for a fair presentation have been included in the condensed consolidated financial statements. The operating results for the six months ended June 30, 2011 are not necessarily indicative of the results expected for the full year ending December 31, 2011.

Pro Forma for Distribution and Recapitalization

        The pro forma balance sheet gives effect to the one-time mandatory payment of $0.8 million for the accrued dividends payable to the Company's preferred shareholders and the conversion of Series D Convertible Preferred Stock ("Series D Preferred"), Series E Convertible Preferred Stock ("Series E Preferred"), Series F Convertible Preferred Stock ("Series F Preferred") and Series G Convertible Preferred Stock ("Series G Preferred") into 145,461,194 shares of newly-issued common stock of the Company.

Stock Splits

        In May 2010, the Company's Board of Directors (the "Board") approved a resolution to effect a three-for-one stock split of the Company's common stock with no corresponding change to the par value. The stock split became effective in August 2010. The Board also approved a two-for-one stock split of the Company's common stock in December 2010 with no corresponding change to the par value, which became effective in January 2011. All common share numbers and per share amounts for all periods presented have been adjusted retroactively to reflect both the three-for-one and the two-for-one stock splits.

Use of Estimates

        The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts and classifications of assets and liabilities, revenues and expenses, and the related disclosures of contingent liabilities in the condensed consolidated financial statements and accompanying notes. Estimates are utilized for, but not limited to, stock-based compensation, income taxes, valuation of acquired goodwill and intangible assets, customer refunds, contingent liabilities and the depreciable lives of fixed assets. Actual results could differ materially from those estimates and assumptions.

Restricted Cash

        The Company had $0.3 million and $0.2 million of restricted cash recorded in prepaid expenses and other current assets and other non-currents assets, respectively, at December 31, 2010. The Company had $1.2 million and $0.2 million of restricted cash recorded in prepaid expenses and other current assets and other non-currents assets, respectively, at June 30, 2011. The carrying value of restricted cash approximates fair value.

Fair Value of Financial Instruments

        The carrying amounts of the Company's financial instruments, including cash and cash equivalents, accounts receivable, accounts payable, accrued merchant payable, accrued expenses and amounts due to related parties, approximate fair value due to their generally short-term maturities. The Company records money market funds and contingent consideration at fair value. See Note 13 "Fair Value Measurements."

F-55

GROUPON, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Investments in Equity Interests

        Investments in the common stock of entities in which the Company can exercise significant influence but does not own a majority equity interest or otherwise control are accounted for using the equity method and are included as investments in equity interests on the condensed consolidated balance sheet. The Company records its share of the results of these companies within "Equity-method investment activity, net of tax" on the condensed consolidated statement of operations. The Company reviews its investments for other-than-temporary impairment whenever events or changes in business circumstances indicate that the carrying value of the investment may not be fully recoverable. Investments identified as having an indication of impairment are subject to further analysis to determine if the impairment is other-than-temporary and this analysis requires estimating the fair value of the investment. The determination of fair value of the investment involves considering factors such as current economic and market conditions, the operating performance of the companies including current earnings trends and forecasted cash flows, and other company and industry specific information. See Note 7 "Investments in Equity Interests."

Foreign Currency

        Balance sheet accounts of the Company's operations outside of the U.S. are translated from foreign currencies into U.S. dollars at the exchange rates as of the condensed consolidated balance sheet dates. Revenues and expenses are translated at average exchange rates during the period. Foreign currency translation gains or losses are included in accumulated other comprehensive income on the condensed consolidated balance sheets. Gains and losses resulting from foreign currency transactions, which are denominated in currencies other than the entity's functional currency, are included in interest and other (expense) income, net in the condensed consolidated statements of operations. For the six months ended June 30, 2010 and 2011, the Company had less than $0.1 million of foreign currency losses and $2.0 million of foreign currency gains, respectively.

Recent Accounting Pronouncements

        In January 2010, the Financial Accounting Standards Board ("FASB") issued additional guidance that improves disclosures about fair value measures that were originally required. The new guidance is effective for interim and annual periods beginning after December 15, 2009, except for the disclosures about purchases, sales, issuances and settlements in the roll forward of activity in Level 3 fair value measurements. Those disclosures are effective for fiscal years beginning after December 15, 2010, and for interim periods within those years. The adoption of this guidance did not impact the Company's financial position or results of operations. See Note 13 "Fair Value Measurements."

        In May 2011, the FASB issued guidance that changed the requirement for presenting "Comprehensive Income" in the consolidated financial statements. The update requires an entity to present the components of other comprehensive income either in a single continuous statement of comprehensive income or in two separate but consecutive statements. The update is effective for fiscal years, and interim periods within those years, beginning after December 15, 2011 and should be applied retrospectively. The adoption of this guidance will not have a material impact on the Company's financial position or results of operations.

        In May 2011, the FASB issued guidance that amends certain fair value measurement principles and disclosure requirements. The new guidance states, among other things, that the concepts of highest and best use and valuation premise are only relevant when measuring the fair value of nonfinancial assets and prohibits the grouping of financial instruments for purposes of determining their fair values when the unit of account is specified in other guidance. The update is to be applied prospectively and is effective during

F-56

GROUPON, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

interim and annual periods beginning after December 15, 2011. The adoption of this guidance will not have a material impact on the Company's financial position or results of operations.

4. ACQUISITIONS

CityDeal Europe GmbH Acquisition

        On May 15, 2010, the Company acquired 100% of CityDeal Europe GmbH ("CityDeal"), a collective buying power business launched in January 2010 that provides daily deals and online marketing services substantially similar to the Company, primarily in European markets. The acquisition was accounted for using the purchase method of accounting and the operations of CityDeal were included in the Company's condensed consolidated financial statements from the date of the acquisition. In connection with the acquisition, the Company and the former CityDeal shareholders entered into a loan agreement. See Note 16 "Related Parties."

Qpod.inc Acquisition

        On August 11, 2010, the Company acquired approximately 55.1% of the total issued and outstanding capital stock of Qpod.inc ("Qpod"), a collective buying power business launched in July 2010 that provides daily deals and online marketing services in Japan substantially similar to the Company. The acquisition was accounted for using the purchase method of accounting and the operations of Qpod were included in the condensed consolidated financial statements from the date of the acquisition.

        In conjunction with the acquisition, the Company entered into an agreement with certain founding members and other shareholders of Qpod, which provided the Company with call rights that allow it to buy a percentage of the remaining shares of Qpod. Exercising all of the call rights would entitle the Company to an aggregate of up to 90% of the outstanding capital stock of Qpod. Additionally, the remaining Qpod shareholders have put rights to sell their outstanding capital stock to the Company in the event of an initial public offering of the Company, subject to certain conditions, which if exercised in full, would give the Company up to an aggregate of 90% of the outstanding capital stock of Qpod.

        In January 2011, the Company entered into a Stock Purchase Agreement (the "SPA") with the other shareholders, whereby the Company purchased an additional percentage of the shares of Qpod from the other shareholders, increasing the Company's ownership in Qpod to 90%. Under the terms of the SPA, the Company acquired 21,812 shares of the total issued and outstanding capital stock of Qpod, on a fully-diluted basis, in exchange for $25.0 million in cash. The additional investment was accounted for as an equity transaction in accordance with the guidance on accounting for changes in a parent's ownership interest in a subsidiary in consolidated financial statements. In conjunction with the SPA, the Company has call rights that allow it to buy all of the remaining shares of Qpod. Exercising the call rights would give the Company 100% ownership of the outstanding capital stock of Qpod. Additionally, the remaining Qpod shareholders have put rights to sell their outstanding capital stock to the Company, including any shares of capital stock issuable upon exercise of options, which would give the Company 100% of the outstanding capital stock of Qpod.

Other Acquisitions

        For the six months ended June 30, 2011, the Company acquired certain entities for an aggregate purchase price of $27.3 million, consisting of $7.0 million in cash, the issuance of shares of the Company's non-voting common stock (valued at $4.4 million), and contingent consideration valued at $15.9 million as of the acquisition date. See Note 13 "Fair Value Measurements." The primary purpose of these acquisitions

F-57

GROUPON, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

4. ACQUISITIONS (Continued)

was to utilize these entities' collective buying power businesses to further grow the Company's subscriber base and provide strategic entries into new and expanding markets in India, Malaysia, South Africa, Indonesia and the Middle East. In addition, the Company acquired a business that specializes in developing mobile technology to expand and advance the Company's product offerings.

        The acquisitions were accounted for using the purchase method of accounting and the operations of these acquired companies were included in the condensed consolidated financial statements from the date of the acquisition. The purchase price and fair value of the noncontrolling interest was allocated to the tangible and intangible assets acquired and liabilities assumed based on their estimated fair values on their corresponding acquisition date, with the remaining unallocated amount recorded as goodwill. The fair value assigned to identifiable intangible assets acquired was determined using an income or cost approach based on the nature of each asset.

        The financial effect of these acquisitions, individually and in the aggregate, was not material to the condensed consolidated financial statements. Pro forma results of operations have not been presented because the effects of these business combinations, individually and in the aggregate, were not material to the Company's consolidated results of operations as all of the acquisitions were start-up businesses. Goodwill of $20.3 million represents the premium the Company paid over the fair value of the net tangible and intangible assets it acquired. None of the goodwill is deductible for tax purposes. The following table summarizes the allocation of the combined purchase price of $27.3 million and the fair value of noncontrolling interest of $0.6 million as of the acquisition date (in thousands):

Description		Fair Value
Net working capital (including cash of $3.3 million)		$	2,680
Property and equipment, net			81
Goodwill			20,299
Intangible assets(1):
	Subscriber relationships		5,390
	Trade names		370
	Developed technology		550
Deferred tax liability			(1,484	)
		$	27,886

(1)

Acquired intangible assets have estimated useful lives of between 1 and 5 years.

Purchase of Additional Interests

        In April 2011, the Company entered into an agreement to purchase additional interests in one of its subsidiaries for an aggregate purchase price of $21.1 million, increasing its total ownership in the subsidiary to 100%. The initial purchase price consisted of $9.4 million of cash and $10.4 million in stock. The additional investment was accounted for as an equity transaction in accordance with guidance on accounting for changes in a parent's ownership interest in a subsidiary in consolidated financial statements. In connection with this purchase, certain subsidiary awards were settled in exchange for cash and shares of stock. The total compensation expense of $12.7 million related to the liability awards as of the settlement date was equal to the fair value of the consideration transferred. In addition, the Company will recognize $0.6 million of compensation in the form of cash and $0.7 million of stock compensation over a period of two years in connection with the acquisition.

F-58

GROUPON, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

5. GOODWILL AND OTHER INTANGIBLE ASSETS

        The changes in the carrying amount of goodwill for the six months ended June 30, 2011 were as follows (in thousands):

	North America			International		Consolidated
Balance as of December 31, 2010	$	19,605		$	112,433	$	132,038
Goodwill related to acquisitions		5,043			15,256		20,299
Other adjustments(1)		(13	)		10,472		10,459
Balance as of June 30, 2011	$	24,635		$	138,161	$	162,796

(1)

Includes adjustments primarily due to changes in foreign exchange rates.

        The following summarizes the Company's other intangible assets (in thousands):

	As of December 31, 2010						Weighted- Average Remaining Useful Life (in years)
Asset Category	Gross Carrying Value		Accumulated Amortization		Net Carrying Value
Subscriber relationships	$	36,389	$	3,760	$	32,629		4.5
Vendor relationships		6,789		3,801		2,988		0.5
Trade names		5,619		3,230		2,389		0.4
Developed technology		2,054		395		1,659		1.6
Other intangible assets		1,263		153		1,110		3.8
	$	52,114	$	11,339	$	40,775		3.8

	As of June 30, 2011						Weighted- Average Remaining Useful Life (in years)
Asset Category	Gross Carrying Value		Accumulated Amortization		Net Carrying Value
Subscriber relationships	$	44,846	$	8,540	$	36,307		4.1
Vendor relationships		7,304		7,185		119		0.3
Trade names		6,520		6,229		291		0.5
Developed technology		2,692		1,002		1,690		1.4
Other intangible assets		1,366		256		1,110		3.7
	$	62,728	$	23,212	$	39,516		3.9

        Amortization expense for intangible assets was $1.4 million and $10.7 million for the six months ended June 30, 2010 and 2011, respectively. As of June 30, 2011, the estimated future amortization expense of intangible assets for each of the next five years and thereafter is as follows (in thousands):

Year Ended December 31,
	2011 (remaining 6 months)	$	5,816
	2012		10,139
	2013		9,305
	2014		9,182
	2015		5,064
	Thereafter		10
		$	39,516

F-59

GROUPON, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

6. PROPERTY AND EQUIPMENT, NET

        The following summarizes the Company's property and equipment, net (in thousands):

	December 31, 2010			June 30, 2011
Furniture and fixtures	$	6,691		$	12,090
Leasehold improvements		5,233			9,334
Computer hardware and other		3,396			12,903
External software		1,767			6,283
Office and telephone equipment		1,408			2,970
Property and equipment		18,495			43,580
Less: accumulated depreciation and amortization		(2,005	)		(7,048	)
Property and equipment, net	$	16,490		$	36,532

        Depreciation expense on property and equipment was $0.4 million and $5.0 million for the six months ended June 30, 2010 and 2011, respectively.

7. INVESTMENTS IN EQUITY INTERESTS

        The following summarizes the Company's investments in equity interests (in thousands):

		December 31, 2010		June 30, 2011		Percent Ownership of Common Stock
Restaurantdiary.com		$	—	$	1,256		50.0	%
GaoPeng.com			—		—		40.0	%
	Total	$	—	$	1,256

Equity Investment in Restaurantdiary.com Limited

        In January 2011, the Company acquired 50.0% of the ordinary shares of Restaurantdiary.com Limited ("Restaurantdiary") in exchange for $1.3 million. The investment in Restaurantdiary is being accounted for using the equity method, and the total investment is classified as part of investments in equity interests on the condensed consolidated balance sheet as of June 30, 2011. The Company recorded its share of the results of Restaurantdiary within "Equity-method investment activity, net of tax" in the condensed consolidated statement of operations for the six months ended June 30, 2011.

Equity Investment in E-Commerce King Limited

        In January 2011, the Company acquired 40.0% of the ordinary shares of E-Commerce King Limited ("E-Commerce"), a company organized under the laws of the British Virgin Islands, in exchange for $4.0 million. The Company entered into the joint venture along with Rocket Asia GmbH & Co. KG ("Rocket Asia"), an entity controlled by the Samwers. Rocket Asia acquired 10.0% of the ordinary shares in E-Commerce. E-Commerce subsequently established a wholly foreign owned enterprise that created a domestic operating company headquartered in Beijing, China ("GaoPeng.com"), which operates a group-buying site offering discounts for products and services to individual consumers and businesses via internet websites and social and interactive media. GaoPeng.com began offering daily deals in March 2011 in Beijing and Shanghai with expansion to other major cities in China to follow. The Company made an additional investment of $4.6 million in E-Commerce in May 2011. At the same time, the remaining

F-60

GROUPON, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

7. INVESTMENTS IN EQUITY INTERESTS (Continued)

investors made additional proportionate investments that resulted in no change to the Company's ownership percentage in the joint venture.

        The investment in E-Commerce is being accounted for using the equity-method to the extent that the Company's share of investee losses is not in excess of the total investment carrying amounts. As of June 30, 2011, the Company's total investment was reduced to zero as a result of cumulative investee losses. The Company recorded its share of the results of E-Commerce within "Equity-method investment activity, net of tax" in the condensed consolidated statement of operations for the six months ended June 30, 2011. The Company's share of investee losses that have not been recorded because they exceed the total investment, and the Company's liability is limited to its total investment, which is $0.5 million.

8. ACCRUED EXPENSES

        The following summarizes the Company's accrued expenses (in thousands):

	December 31, 2010		June 30, 2011
Marketing	$	48,244	$	41,276
Refunds reserve		13,938		35,359
Payroll and benefits		12,187		28,995
Customer rewards		8,333		26,826
Rent		3,169		3,110
Credit card fees		2,500		4,500
Professional fees		2,341		6,742
Legal reserve		—		5,800
Other		7,611		12,092
	$	98,323	$	164,700

9. COMMITMENTS AND CONTINGENCIES

Operating Leases

        The Company has entered into various non-cancelable operating lease agreements, primarily covering certain of its offices throughout the world, with original lease periods expiring between 2011 and 2017. Rent expense under these operating leases was $0.6 million and $9.3 million for the six months ended June 30, 2010 and 2011, respectively.

        Certain of these arrangements have renewal or expansion options and adjustments for market provisions, such as free or escalating base monthly rental payments. The Company recognizes rent expense under such arrangements on a straight-line basis over the initial term of the lease. The difference between the straight-line expense and the cash paid for rent has been recorded as deferred rent.

        The Company is responsible for paying its proportionate share of the actual operating expenses and real estate taxes under certain of these lease agreements. These operating expenses are not included in the

F-61

GROUPON, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

9. COMMITMENTS AND CONTINGENCIES (Continued)

table below. As of June 30, 2011, the estimated future payments under operating leases (including rent escalation clauses) for each of the next five years and thereafter is as follows (in thousands):

Year Ended December 31,
	2011 (remaining 6 months)	$	9,579
	2012		15,347
	2013		11,809
	2014		10,184
	2015		10,069
Thereafter			24,398
		$	81,386

Purchase Obligations

        The Company has entered into non-cancelable service contracts, primarily covering sales and marketing services, which expire in 2013. At June 30, 2011, future payments under these contractual obligations were as follows (in thousands):

Year Ended December 31,
	2011 (remaining 6 months)	$	4,453
	2012		7,727
	2013		8,000
	2014		—
	2015		—
Thereafter			—
		$	20,180

Legal Matters

        The Company currently is involved in several disputes or regulatory inquiries, including suits by its customers (individually or as class actions) alleging, among other things, violation of the Credit Card Accountability, Responsibility and Disclosure Act and state laws governing gift cards, stored value cards and coupons, violations of unclaimed and abandoned property laws and violations of privacy laws. The number of these disputes and inquiries is increasing. Any claims or regulatory actions against the Company, whether meritorious or not, could be time consuming, result in costly litigation, damage awards, injunctive relief or increased costs of doing business through adverse judgment or settlement, require the Company to change its business practices in expensive ways, require significant amounts of management time, result in the diversion of significant operational resources or otherwise harm the Company's business.

        In addition, third parties from time to time have claimed, and others may claim in the future, that the Company has infringed their intellectual property rights. The Company is subject to intellectual property disputes, and expects that it will increasingly be subject to intellectual property infringement claims as its services expand in scope and complexity. The Company has in the past been forced to litigate such claims. The Company may also become more vulnerable to third-party claims as laws such as the Digital Millennium Copyright Act are interpreted by the courts, and as the Company becomes subject to laws in jurisdictions where the underlying laws with respect to the potential liability of online intermediaries are either unclear or less favorable. Management believes that additional lawsuits alleging that it has violated patent, copyright or trademark laws will be filed against the Company. Intellectual property claims,

F-62

GROUPON, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

9. COMMITMENTS AND CONTINGENCIES (Continued)

whether meritorious or not, are time consuming and costly to resolve, could require expensive changes in the Company's methods of doing business, or could require it to enter into costly royalty or licensing agreements.

        From time to time, the Company may become party to additional litigation incident to the ordinary course of business. The Company assesses the likelihood of any adverse judgments or outcomes with respect to these matters and determines loss contingency assessments on a gross basis after assessing the probability of incurrence of a loss and whether a loss is reasonably estimable. In addition, the Company considers other relevant factors that could impact its ability to reasonably estimate a loss. A determination of the amount of reserves required, if any, for these contingencies is made after analyzing each matter. The Company's reserves may change in the future due to new developments or changes in strategy in handling these matters.

        Although the results of litigation and claims cannot be predicted with certainty, the Company currently believes that the final outcome of the matters in which it is presently involved will not have a material adverse effect on its business, consolidated financial position, results of operations, or cash flows. Regardless of the outcome, litigation can have an adverse impact on the Company because of defense and settlement costs, diversion of management resources and other factors.

10. STOCKHOLDERS' EQUITY (DEFICIT)

Common Stock

        The Board has authorized two classes of common stock, voting and non-voting. At June 30, 2011, there were 500,000,000 and 100,000,000 shares authorized and there were 144,531,311 and 7,821,086 shares outstanding of voting and non-voting common stock, respectively. Voting and non-voting common stock are referred to as common stock throughout the notes to these financial statements, unless otherwise noted.

        In February 2011, the Board authorized the issuance and sale, by way of a private placement, of 1,090,830 shares of non-voting common stock for $17.2 million in gross proceeds, and used $17.0 million of the proceeds from the sale to redeem shares of its outstanding common stock held by certain shareholders and the remainder for working capital and general corporate purposes. See Note 16 "Related Parties."

        Upon any liquidation, dissolution or winding up of the Company (a "liquidation event"), the remaining assets of the Company will be distributed ratably among all preferred and common stockholders only after the payment of the full Series G Preferred liquidation preference of $950.0 million has been satisfied.

        The Company issues stock-based awards to its employees in the form of stock options, restricted stock units and restricted stock, all of which have the potential to increase the outstanding shares of common stock in the future. See Note 11 "Stock-Based Compensation."

Convertible Preferred Stock

        The Company has authorized 199,998 shares of Series B Preferred, 6,560,174 shares of Series D Preferred, 4,406,160 shares of Series E Preferred, 4,202,658 shares of Series F Preferred and 30,075,690 shares of Series G Preferred. The Series B Preferred, Series D Preferred, Series E Preferred, Series F Preferred and Series G Preferred, collectively, are referenced below as the "Series Preferred." The rights, preferences, privileges, restrictions and other matters relating to the Series Preferred are summarized below.

F-63

GROUPON, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

10. STOCKHOLDERS' EQUITY (DEFICIT) (Continued)

Series B Preferred

        There were 199,998 shares of Series B Preferred outstanding at June 30, 2011, and less than $0.1 million of accrued preferred dividends due to Series B Preferred holders. The Series B Preferred holders are entitled to receive, upon a liquidation event, the amount that would have been received if all shares of Series Preferred had been converted into voting common stock immediately prior to such liquidation event, only after the payment of the full Series G Preferred liquidation preference has been satisfied. As of June 30, 2011, 1,199,988 shares of voting common stock would have been required to be issued assuming conversion of all of the issued and outstanding shares of Series B Preferred.

Series D Preferred

        There were 5,956,420 shares of Series D Preferred outstanding at June 30, 2011, and $0.8 million of accrued preferred dividends due to Series D Preferred holders. The Series D Preferred holders are entitled to receive, upon a liquidation event, the amount that would have been received if all shares of Series Preferred had been converted into voting common stock immediately prior to such liquidation event, only after the payment of the full Series G Preferred liquidation preference has been satisfied. As of June 30, 2011, 35,738,520 shares of voting common stock would have been required to be issued assuming conversion of all of the issued and outstanding shares of Series D Preferred.

Series E Preferred

        There were 4,060,183 shares of Series E Preferred outstanding at June 30, 2011. The Series E Preferred holders are entitled to receive, upon a liquidation event, the amount that would have been received if all shares of Series Preferred had been converted into voting common stock immediately prior to such liquidation event, only after the payment of the full Series G Preferred liquidation preference has been satisfied. As of June 30, 2011, 24,361,098 shares of voting common stock would have been required to be issued assuming conversion of all of the issued and outstanding shares of Series E Preferred.

Series F Preferred

        There were 4,202,658 shares of Series F Preferred outstanding at June 30, 2011. The Series F Preferred holders are entitled to receive, upon a liquidation event, the amount that would have been received if all shares of Series Preferred had been converted into voting common stock immediately prior to such liquidation event, only after the payment of the full Series G Preferred liquidation preference has been satisfied. As of June 30, 2011, 25,215,948 shares of voting common stock would have been required to be issued assuming conversion of all of the issued and outstanding shares of Series F Preferred.

Series G Preferred

        In January 2011, the Company authorized the sale and additional issuance of 15,827,796 shares of Series G Preferred for $496.0 million in gross proceeds (or $492.5 million, net of issuance costs), and used $371.5 million of the proceeds from the sale to redeem shares of its outstanding common stock and preferred stock held by certain shareholders and the remainder for working capital and general corporate purposes. Included in the additional stock issuance was 126,622 shares of Series G Preferred (or the equivalent of $4.0 million) the Company transferred to its underwriter in exchange for financial advisory services provided. There were 30,075,690 shares authorized and 30,072,814 shares outstanding at June 30, 2011.

F-64

GROUPON, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

10. STOCKHOLDERS' EQUITY (DEFICIT) (Continued)

        Holders of Series G Preferred are entitled to the number of votes equal to the number of shares of voting common stock into which their shares of Series G Preferred could be converted. In addition, the Series G Preferred holders are entitled, before any distribution or payment is made upon any Series B Preferred, Series D Preferred, Series E Preferred, Series F Preferred or common stock, to be paid an amount per share equal to 100% of the Series G Preferred original price, plus all declared but unpaid dividends on the Series G Preferred. If, upon the liquidating event, the assets of the Company are insufficient to fully pay the amounts owed to Series G Preferred holders, all distributions would be made ratably in proportion to the full amounts to which holders would have otherwise been entitled. In the event that the Company is a party to an acquisition or asset transfer, each holder of Series G Preferred is entitled to receive the amount of cash, securities, or other property to which such holder would be entitled to receive in a liquidation event.

        Each share of Series G Preferred shall automatically be converted into shares of voting common stock upon the earliest of the following events to occur: (i) holders of at least 50% of the outstanding shares of Series G Preferred consent to a conversion, or (ii) immediately upon the closing of an initial public offering. The number of shares of voting common stock to which a Series G Preferred stockholder is entitled upon conversion is calculated by multiplying the applicable conversion rate then in effect (currently 2.0) by the number of Series G Preferred shares to be converted. The conversion rate for the Series G Preferred shares is subject to change in accordance with anti-dilution provisions contained in the agreement with those holders. More specifically, the conversion price is subject to adjustment to prevent dilution on a weighted-average basis in the event that the Company issues additional shares of common stock or securities convertible or exercisable for common stock at a purchase price less than the then effective conversion price. As of June 30, 2011, 60,145,628 shares of voting common stock would have been required to be issued assuming conversion of all of the issued and outstanding shares of Series G Preferred.

Stock Repurchase Activity

        In December 2010, the Board authorized the Company to repurchase shares of its capital stock held by certain holders, using a portion of the proceeds from the sale of Series G Preferred. In conjunction with the sale and additional issuance of Series G Preferred shares in January 2011, the Company repurchased 21,307,276 shares of common stock for $336.5 million and 369,347 shares of preferred stock for $35.0 million. The Board also authorized the Company to repurchase additional shares using a portion of the proceeds from the sale of non-voting common stock in February 2011. As a result, the Company repurchased 1,076,371 shares of common stock for $17.0 million, which is reflected as "Treasury stock" on the condensed consolidated balance sheet at June 30, 2011.

11. STOCK-BASED COMPENSATION

Groupon, Inc. Stock Plans

        In January 2008, the Company adopted the ThePoint.com 2008 Stock Option Plan, as amended (the "2008 Plan"), under which options for up to 32,309,250 shares of common stock were authorized to be issued to employees, consultants, and directors of ThePoint.com, which is now the Company. In April 2010, the Company established the Groupon, Inc. 2010 Stock Plan, as amended in April 2011 (the "2010 Plan"), under which options and restricted stock units ("RSUs") for up to 10,000,000 shares of non-voting common stock were authorized for future issuance to employees, consultants and directors of the

F-65

GROUPON, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

11. STOCK-BASED COMPENSATION (Continued)

Company. The 2008 Plan and the 2010 Plan (the "Plans") are administered by the Board, who determine the number of awards to be issued, the corresponding vesting schedule and the exercise price for options. As of June 30, 2011, 1,191,366 shares were available for future issuance under the Plans. Prior to January 2008, the Company issued stock options and RSUs that are governed by employment agreements, some of which are still unvested and outstanding.

Stock Options

        The exercise price of stock options granted is equal to the fair market value of the underlying stock on the date of grant. The contractual term for stock options expires ten years from the grant date. Stock options generally vest over a three or four-year period, with 25% of the awards vesting after one year and the remainder of the awards vesting on a monthly or quarterly basis thereafter. The fair value of stock options on the date of grant is amortized on a straight-line basis over the requisite service period.

        The table below summarizes the stock option activity during the six months ended June 30, 2011:

		Options			Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Term (in years)		Aggregate Intrinsic Value (in thousands)(a)
Outstanding at December 31, 2010			13,732,852		$	2.00		9.00	$	189,406
	Granted(b)		79,000		$	12.01		9.68
	Exercised		(1,920,246	)	$	0.67		8.01
	Forfeited		(278,287	)	$	0.49		8.11
Outstanding at June 30, 2011			11,613,319		$	2.33		8.61	$	279,971
Exercisable at June 30, 2011			3,665,191		$	1.75		8.45	$	106,160

(a)

The aggregate intrinsic value of options outstanding and exercisable represents the total pretax intrinsic value (the difference between the fair value of the Company's stock on the last day of each fiscal year or quarter and the exercise price, multiplied by the number of options where the exercise price exceeds the fair value) that would have been received by the option holders had all option holders exercised their options as of December 31, 2010 and June 30, 2011, respectively.

(b)

Of the 79,000 options granted during the six months ended June 30, 2011, 19,000 options were granted with an exercise price of $0.03. These options were granted as part of a settlement with a former employee and the exercise price represents the fair market value of the stock when the employee left the Company. As a result of this grant, the weighted average exercise price for the options granted during the six months ended June 30, 2011 is below the actual fair market values during the period. The options immediately vested and were expensed at the grant date fair value.

        The fair value of stock options granted is estimated on the date of grant using the Black-Scholes-Merton option-pricing model. Expected volatility is based on historical volatilities for publicly-traded options of comparable companies over the estimated expected life of the stock options. The expected term represents the period of time the stock options are expected to be outstanding and is based on the "simplified method". The Company used the "simplified method" due to the lack of sufficient historical exercise data to provide a reasonable basis upon which to otherwise estimate the expected life of the stock options. The risk-free interest rate is based on yields on U.S. Treasury STRIPS with a maturity similar to

F-66

GROUPON, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

11. STOCK-BASED COMPENSATION (Continued)

the estimated expected life of the stock options. The weighted-average assumptions for stock options granted during the six months ended June 30, 2011 are outlined in the following table:

	Six Months Ended June 30, 2011
Dividend yield		—
Risk-free interest rate		1.79	%
Expected term (in years)		4.47
Expected volatility		43.71	%

        Based on the above assumptions, the weighted-average grant date fair value of stock options granted during the six months ended June 30, 2011 was $12.01. The total fair value of options that vested during the six months ended June 30, 2011 was $4.0 million.

Restricted Stock Units

        The restricted stock units granted under the Plans vest over a four-year period, with 25% of the awards vesting after one year and the remaining awards vesting on a monthly or quarterly basis thereafter. The fair value of restricted stock units on the date of grant is amortized on a straight-line basis over the requisite service period.

        The table below summarizes activity regarding unvested restricted stock units under the Plans during the six months ended June 30, 2011:

		Restricted Stock Units			Weighted- Average Grant Date Fair Value (per share)
Unvested at December 31, 2010			1,788,300		$	14.32
	Granted		4,166,021		$	23.67
	Vested		(429,688	)	$	21.74
	Forfeited		(40,400	)	$	13.48
Unvested at June 30, 2011			5,484,233		$	20.85

Performance Stock Units

        In May 2010, the Company issued performance stock units ("PSUs") under the terms of the agreement to acquire Mobly, Inc., a mobile technology company. The Company agreed to issue up to 720,000 PSUs to the previous Mobly shareholders contingent on meeting certain performance-based operational objectives over the next three years. Upon being granted, the PSUs immediately vest as common stock. During the six months ended June 30, 2011, a total of 120,000 shares were granted, and 480,000 shares are still eligible to be granted in the future based on the performance criteria and discretion of the Board. The Company started recording stock compensation expense at the service inception date, which began at the date of acquisition and precedes the grant date. Due to the subjective nature of the performance evaluation, the fair value of the PSUs is remeasured each period until the grant date, when stock compensation expense is adjusted to the grant date fair value. The total fair value of the PSUs that vested during the six months ended June 30, 2011 was $3.1 million.

F-67

GROUPON, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

11. STOCK-BASED COMPENSATION (Continued)

        The Company recognized stock compensation expense of $1.0 million and $29.7 million during the six months ended June 30, 2010 and 2011, respectively, related to stock options, restricted stock units and performance stock units issued under the Plans and employment agreements. The corresponding tax benefit provided by stock compensation was $0 and $3.5 million for the six months ended June 30, 2010 and 2011, respectively.

        As of June 30, 2011, a total of $124.8 million of unrecognized compensation costs related to unvested stock options and unvested restricted stock units issued are expected to be recognized over the remaining weighted-average period of three years.

Acquisition-Related Stock Awards

        During 2010, the Company made several acquisitions of subsidiaries that resulted in the issuance of additional equity-based awards to employees of the acquired companies.

CityDeal Acquisition

        In May 2010, the Company acquired CityDeal, which resulted in the issuance of shares of the Company's restricted stock to a trust for current CityDeal employees. The restricted stock vests quarterly generally over a period of three years and is amortized on a straight-line basis over the requisite service period.

        The table below summarizes activity regarding unvested restricted stock issued as part of the CityDeal acquisition during the six months ended June 30, 2011:

		Restricted Stock			Weighted- Average Grant Date Fair Value (per share)
Unvested at December 31, 2010			2,219,605		$	8.52
	Granted		108,788		$	15.80
	Vested		(472,044	)	$	8.80
	Forfeitures		(206,144	)	$	8.52
Unvested at June 30, 2011			1,650,205		$	8.92

        The fair value of restricted stock that vested during the six months ended June 30, 2011 was $4.2 million.

        The Company recognized stock compensation expense of $3.5 million during the six months ended June 30, 2011 related to restricted stock granted as part of the CityDeal acquisition, none of which provided the Company with a tax benefit. As of June 30, 2011, a total of $8.0 million of unrecognized compensation costs related to unvested restricted stock are expected to be recognized over the remaining weighted-average period of two years.

Subsidiary Awards

        The Company made several other acquisitions during the year ended December 31, 2010 in which the selling shareholders of the acquired companies were granted RSUs and stock options ("subsidiary

F-68

GROUPON, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

11. STOCK-BASED COMPENSATION (Continued)

awards") in the Company's subsidiaries. These subsidiary awards were issued in conjunction with the acquisitions as a way to retain and incentivize key employees. They generally vest on a quarterly basis for a period of three or four years, and dilute the Company's ownership percentage of the corresponding subsidiaries as they vest over time. The fair market value of the subsidiary shares granted was determined on a contemporaneous basis. A significant portion of the subsidiary awards are classified as liabilities on the condensed consolidated balance sheet due to the existence of put rights that allow the selling shareholders to put their stock back to the Company. The liabilities for the subsidiary shares are remeasured on a quarterly basis, with the offset to stock-based compensation expense within selling, general and administrative expenses on the condensed consolidated statement of operations. Additionally, the Company has call rights on most of the subsidiary awards, which allow it to purchase the remaining outstanding shares based on contractual agreements.

        The Company recognized stock compensation expense of $24.4 million during the six months ended June 30, 2011 related to subsidiary awards, none of which provided the Company with a tax benefit. As of June 30, 2011, a total of $61.7 million of unrecognized compensation costs related to unvested subsidiary awards are expected to be recognized over the remaining weighted-average period of two years. The amount of unrecognized compensation costs is management's best estimate based on the current fair market values of each of the subsidiaries and could change significantly based on future valuations.

Common Stock Valuations

        The Company determined the fair value per share of the common stock underlying the stock-based awards through the contemporaneous application of a discounted future earnings model initially and then a discounted cash flow methodology going forward, which was approved by the Board. Stock-based awards were granted to employees in the form of stock options, restricted stock units and restricted stock. All such awards granted were exercisable at a price per share equal to the per share fair value of the Company's common stock on the date of grant. Determining the fair value of the Company's common stock required making complex and subjective judgments. The assumptions used in the valuation models were based on future expectations combined with management estimates.

        The discounted future earnings method calculates the present value of future economic benefits using a discount rate based on the nature of the business, the level of overall risk and the expected stability of the estimated future economic benefits. The future economic benefits are estimated over a period of years sufficient to reach stability of the business, and management expects the Company to grow substantially for several years before revenue stabilizes. The discounted cash flow method valued the business by discounting future available cash flows to present value at an approximate rate of return. The cash flows were determined using forecasts of revenue, net income and debt-free future cash flow. The discount rate was derived using a Capital Asset Pricing Model for companies in the "expansion" stage of development. The Company also applied a lack of marketability discount to its enterprise value, which took into account that investments in private companies are less liquid than similar investments in public companies. There is inherent uncertainty in all of these estimates.

F-69

GROUPON, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

11. STOCK-BASED COMPENSATION (Continued)

        Summarized below are the significant factors the Board considered in determining the fair value of the common stock underlying the Company's stock-based awards granted to its employees during the six months ended June 30, 2011:

First Quarter 2011

        In the first quarter of 2011, the following significant events occurred: (1) the Company raised $492.5 million in net proceeds from the issuance of Series G Preferred in January 2011; (2) the Company expanded its presence into new and expanding markets in India, Malaysia, South Africa and the Middle East through a series of acquisitions; and (3) the number of subscribers increased to approximately 83.1 million as of March 31, 2011 and the Company launched its services in 21 additional markets across North America.

Second Quarter 2011

        In the second quarter of 2011, the following significant events occurred: (1) the number of subscribers increased to approximately 115.7 million as of June 30, 2011; (2) the Company acquired a technology company and established its presence in Indonesia through an acquisition; (3) the Company launched "Groupon Now!" and established partnerships with Expedia, Inc. and Live Nation Entertainment Inc.; and (4) the Company hired Margaret H. Georgiadis as Chief Operating Officer.

12. LOSS PER SHARE

        The table below summarizes the calculation of basic and diluted net loss per share for the six months ended June 30, 2010 and 2011 (in thousands, except share and per share amounts):

	Six Months Ended June 30,
	2010			2011
Net loss	$	(27,439	)	$	(223,667	)
Dividends on preferred shares		(1,046	)		—
Redemption of preferred shares in excess of carrying value		—			(34,327	)
Adjustment of redeemable noncontrolling interests to redemption value		—			(15,651	)
Less: Net loss attributable to noncontrolling interests		61			19,759
Net loss attributable to common stockholders	$	(28,424	)	$	(253,886	)
Net loss per share:
Weighted-average shares outstanding for basic and diluted net loss per share(a)		169,048,421			152,813,014
Basic and diluted net loss per share	$	(0.17	)	$	(1.66	)

(a)

Stock options, restricted stock units, performance stock units and convertible preferred shares are not included in the calculation of diluted net loss per share for the six months ended June 30, 2010 and June 30, 2011 because the Company had a net loss. Accordingly, the inclusion of these equity awards would have an antidilutive effect on the calculation of diluted loss per share.

F-70

GROUPON, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

12. LOSS PER SHARE (Continued)

        The following outstanding equity awards are not included in the diluted loss per share calculation above because they would have had an antidilutive effect:

		Six Months Ended June 30,
Antidilutive equity awards		2010		2011
Stock options			12,749,604		11,613,319
Restricted stock units			—		5,484,233
Restricted stock			—		23,684
Convertible preferred shares			92,213,940		146,661,182
Performance stock units			600,000		480,000
	Total		105,563,544		164,262,418

13. FAIR VALUE MEASUREMENTS

        Fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or a liability.

        To increase the comparability of fair value measures, the following hierarchy prioritizes the inputs to valuation methodologies used to measure fair value:

Level 1—Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets.

Level 2—Include other inputs that are directly or indirectly observable in the marketplace.

Level 3—Unobservable inputs that are supported by little or no market activities. Valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable, such as pricing models, discounted cash flow models and similar techniques not based on market, exchange, dealer or broker-traded transactions.

        In determining fair value, the Company uses various valuation approaches within the fair value measurement framework. The valuation methodologies used for the Company's instruments measured at fair value and their classification in the valuation hierarchy are summarized below:

        Cash equivalents—Cash equivalents primarily consisted of highly-rated commercial paper and money market funds. The Company classified cash equivalents as Level 1, due to their short-term maturity, and measured the fair value based on quoted prices in active markets for identical assets.

        Contingent consideration—As of the six months ended June 30, 2011, the Company had obligations to transfer $15.9 million in contingent payment considerations to the former owners of certain acquirees as part of the exchange for control of these acquirees, if specified future operational objectives and financial results are met over the next three years. The Company determined the acquisition-date fair value of these contingent liabilities, based on the likelihood of contingent earn-out payments, as part of the consideration transferred, and subsequently remeasured the fair value using an income approach that is primarily determined based on the present value of future cash flows using internal models. The Company classified this financial liability as Level 3, due to the lack of relevant observable inputs and market activity.

F-71

GROUPON, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

13. FAIR VALUE MEASUREMENTS (Continued)

        The following table summarizes the Company's assets and liabilities that are measured at fair value on a recurring basis (in thousands):

				Fair Value Measurement at Reporting Date Using
Description		As of December 31, 2010		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets:
	Cash equivalents	$	23,028	$	23,028	$	—	$	—

				Fair Value Measurement at Reporting Date Using
Description		As of June 30, 2011		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets:
	Cash equivalents	$	1,002	$	1,002	$	—	$	—
Liabilities:
	Contingent consideration	$	15,920	$	—	$	—	$	15,920

        The following table provides a roll-forward of the fair value of the contingent consideration categorized as Level 3 for the six months ended June 30, 2011 (in thousands):

	Fair Value
Balance as of December 31, 2010	$	—
Issuance of contingent consideration in connection with acquisitions		15,920
Balance as of June 30, 2011	$	15,920

        There were no changes to the Company's valuation techniques used to measure asset and liability fair values on a recurring basis during the six months ended June 30, 2011.

        The Company's other financial instruments consist primarily of accounts receivable, accounts payable, accrued merchant payable, accrued expenses and amounts due to related parties. The carrying value of these assets and liabilities approximate their respective fair values as of June 30, 2011, due to their short maturity. At June 30, 2011 there were no material fair value adjustments required for non-financial assets and liabilities.

14. INCOME TAXES

        The Company is subject to taxation in the United States federal, various state and foreign jurisdictions. Significant judgment is required in determining the worldwide provision for income taxes and

F-72

GROUPON, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

14. INCOME TAXES (Continued)

recording the related income tax assets and liabilities. At June 30, 2011, the Company recorded an unrecognized tax benefit related to uncertain tax positions of approximately $7.0 million related to a position taken in the current year. As of June 30, 2011, it is expected that less than $1 million of the total would favorably affect the effective tax rate if resolved in the Company's favor. The Company did not have an unrecognized tax benefit related to uncertain tax positions at December 31, 2010.

        The Company's effective tax rate could fluctuate significantly on a quarterly basis and could be adversely affected to the extent earnings are lower than anticipated in countries where the Company has lower statutory rates and higher than anticipated in countries where the Company has higher statutory rates. The effective tax rate could also fluctuate due to changes in the valuation of deferred tax assets or liabilities, or by changes in tax laws, regulations, accounting principles, or interpretations thereof. In addition, the Company is subject to the continuous examination of its income tax returns by the Internal Revenue Service and other tax authorities. The Company regularly assesses the likelihood of adverse outcomes resulting from these examinations to determine the adequacy of its provision for income taxes.

        For the interim reporting of income taxes, the Company calculates the effective tax rate on an actual basis instead of an estimated annual effective tax rate for the year. Since the Company does not have an ability to reasonably forecast certain items, management has determined that current period results are its best estimate of the Company's annual effective tax rate.

15. SEGMENT INFORMATION

        The Company has organized its operations into two principal segments: North America, which represents the United States and Canada, and International, which includes the rest of the Company's global operations. Segment operating results reflect earnings before stock-based compensation, acquisition-related expenses, interest and other income (expense), net, equity-method investment activity, net, and provision (benefit) for income taxes. Segment information reported below represents the operating segments of the Company for which separate information is available and for which segment results are evaluated regularly by the Company's chief operating decision-maker (i.e. chief executive officer) in assessing performance and allocating resources.

F-73

GROUPON, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

15. SEGMENT INFORMATION (Continued)

        Revenues for each segment are based on the geographic market that sells the Groupons. There are no internal revenue transactions. Revenue and profit or loss information by reportable segment reconciled to consolidated net loss was as follows (in thousands):

		Six Months Ended June 30,
		2010			2011
North America
	Revenue(1)	$	55,924		$	293,817
	Segment operating expenses(2)		47,615			326,096
	Segment operating income (loss)		8,309			(32,279	)
International
	Revenue	$	3,014		$	394,288
	Segment operating expenses(2)		26,061			522,602
	Segment operating loss		(23,047	)		(128,314	)
Consolidated
	Revenue	$	58,938		$	688,105
	Segment operating expenses(2)		73,676			848,698
	Segment operating loss		(14,738	)		(160,593	)
	Stock-based compensation		(4,076	)		(57,582	)
	Acquisition-related		(9,434	)		—
	Interest and other (expense) income, net		(96	)		1,539
	Equity-method investment activity, net		—			(8,763	)
	Loss before income taxes		(28,344	)		(225,399	)
	Benefit for income taxes		(905	)		(1,732	)
	Net loss	$	(27,439	)	$	(223,667	)

(1)

North America contains revenue from the United States of $56.8 million and $272.7 million for the six months ended June 30, 2010 and 2011, respectively.

(2)

Represents operating expenses, excluding stock-based compensation, acquisition-related expense, interest and other (expense) income, net, and equity-method investment activity, net, which are not allocated to segments.

        No single customer or individual foreign country accounted for more than 10% of revenue during the six months ended June 30, 2010 and 2011.

        Total assets by reportable segment reconciled to consolidated assets were as follows (in thousands):

		December 31, 2010		June 30, 2011
North America		$	104,606	$	230,189
International			276,964		407,523
	Consolidated total	$	381,570	$	637,712

F-74

GROUPON, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

16. RELATED PARTIES

Non-voting Common Stock Issuance

        In February 2011, the Board authorized the issuance and sale, by way of a private placement, of 1,090,830 shares of non-voting common stock for $17.2 million in gross proceeds. Included in the stock issuance of non-voting common stock were a total of 949,668 shares sold to Howard Schultz and to several partnerships of Maveron LLC, a venture capital firm co-founded by Mr. Schultz, for an aggregate purchase price of $15.0 million. Mr. Schultz is a member of the Company's Board of Directors.

CityDeal Loan Agreement

        In connection with the CityDeal acquisition, the Company and the former CityDeal shareholders (including Oliver Samwer, Marc Samwer and Alexander Samwer) entered into a loan agreement, as amended, to provide CityDeal with an aggregate $25.0 million term loan facility (the "facility"). Both the Company and the former CityDeal shareholders each were obligated to make available $12.5 million under the terms of the facility, both of which were fully disbursed to CityDeal during the year ended December 31, 2010. The outstanding balance accrued interest at a rate of 5% per year and was payable upon termination of the facility, which was the earlier of any prepayments or December 2012. The outstanding balance payable to the former CityDeal shareholders at December 31, 2010 of $13.0 million, along with corresponding accrued interest of $0.1 million, is included in "Due to related parties" on the consolidated balance sheet. The amount due to the former CityDeal shareholders exceeds the amount of the facility in US dollars as a result of changes in foreign currency exchange rates throughout the year ended December 31, 2010. In March 2011, CityDeal repaid all amounts outstanding to the former CityDeal shareholders, including all accrued interest. There were no outstanding commitments remaining on the loan agreement with the former CityDeal shareholders at June 30, 2011 and CityDeal may not reborrow any part of the facility which was repaid.

Technology and Other Services

        The Company has entered into agreements various companies in which Oliver Samwer, Marc Samwer and Alexander Samwer (the "Samwers") have direct or indirect ownership interests, including Rocket Internet GmbH, as well as other companies in which certain subsidiary founders have direct interests, to provide information technology, marketing and other services to the Company. The Company recognized $1.0 million and $0.1 million of expense for services rendered by companies owned by the Samwers and these other companies, respectively, for the six months ended June 30, 2011, which was classified as selling, general and administrative expenses in the condensed consolidated statement of operations. As of June 30, 2011, less than $0.1 million in total was due to these companies, which was classified in "Due to related parties" on the condensed consolidated balance sheet.

Merchant Contracts

        The Company entered into several agreements with merchant companies in which the Samwers have direct or indirect ownership interests, and, in some cases, are also directors of these companies, pursuant to which the Company conducts its business by offering goods and services at a discount with these merchants. The Company recognized $3.0 million of expense under the merchant agreements for the six months ended June 30, 2011, which was recorded as an offset to revenue in the condensed consolidated statement of operations. The Company had less than $0.1 million due to these companies as of June 30, 2011, which was classified in "Due to related parties" on the condensed consolidated balance sheet.

F-75

GROUPON, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

16. RELATED PARTIES (Continued)

Consulting Agreements

        In May 2010, the Company entered into consulting agreements with the Samwers, pursuant to which they advise CityDeal, the Company's European subsidiary, with respect to its goals and spend at least fifty-percent of their work hours consulting for CityDeal. The Company reimburses the Samwers for travel and other expenses incurred in connection with their service to the Company. They do not receive any additional compensation from the Company in connection with their consulting roles. The terms of their consulting agreements expire in October 2011. The Company expensed less than $0.1 million to reimburse the Samwers for travel and other expenses incurred for the six months ended June 30, 2011, which is classified within selling, general and administrative expenses in the condensed consolidated statement of operations. The Company had less than $0.1 million due to the Samwers as of June 30, 2011, which was classified in "Due to related parties" on the condensed consolidated balance sheet.

Legal Services

        The Company has engaged the law firm of Lefkofsky & Gorosh, P.C. ("L&G"), whose founder (Steven P. Lefkofsky) is the brother of the Company's co-founder and Executive Chairman of the Board, to provide certain legal services to the Company. The Company expensed $0.5 million to L&G for legal services rendered for six months ended June 30, 2011, which was classified as selling, general and administrative in the condensed consolidated statement of operations. The Company had $0.1 million due to L&G as of June 30, 2011, which was classified in "Due to related parties" on the condensed consolidated balance sheet.

Sublease Agreements

        The Company has entered into agreements with various companies in which certain of the Company's current and former Board members have direct or indirect ownership interests and, in some cases, who are also directors of these companies, pursuant to which the Company subleased a portion of office space in Chicago from these companies. The Company recognized expense of $0.2 million primarily for services related to these sublease agreements for the six months ended June 30, 2011, which was classified as selling, general and administrative in the condensed consolidated statement of operations. The Company had less than $0.1 million due to these companies as of June 30, 2011, which was classified in "Due to related parties" on the condensed consolidated balance sheet.

Marketing Services

        During 2011, the Company transacted with InnerWorkings, Inc. ("InnerWorkings"), a company co-founded by the Company's co-founder and Executive Chairman of the Board, for promotional services. The Company recognized expense of $0.2 million for the six months ended June 30, 2011 for these services, which was primarily classified as marketing in the condensed consolidated statement of operations. The Company had less than $0.1 million due to InnerWorkings as of June 30, 2011, which was classified in "Due to related parties" on the condensed consolidated balance sheet.

E-Commerce King Limited Joint Venture

        In January 2011, Groupon B.V. entered into a joint venture along with Rocket Asia GmbH & Co. KG ("Rocket Asia"), an entity controlled by the Samwers. See Note 7 "Investments in Equity Interests."

F-76

GROUPON, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

17. SUBSEQUENT EVENTS

Acquisitions

        In the third quarter of 2011, the Company acquired two companies for an aggregate purchase price of $15.3 million. The purchase price consisted of $8.6 million of cash and $6.7 million in common stock. Of these amounts, $0.7 million of cash and $0.6 million in common stock will be paid one year after the respective closing date of each acquisition. Additional compensation may be paid if certain earn-out provisions are met. The primary purpose of these acquisitions was to enhance the Company's ability to develop software in-house and improve the services provided to the Company's customers and merchants through implementation of the technologies powered by the acquired companies.

        The acquisitions will be accounted for using the purchase method of accounting and the operations of these acquired companies will be included in the Company's consolidated financial statements from their respective date of acquisition. The financial effect of these acquisitions, individually and in the aggregate, was not material to the Company's consolidated financial statements. Pro forma results of operations have not been presented because the effects of these business combinations, individually and in the aggregate, were not material to the Company's consolidated results of operations.

Additional Investment in Equity Interest

        In July 2011, the Company purchased an additional 9.0% of the outstanding shares of E-Commerce King Limited ("E-Commerce") for an aggregate purchase price of $44.7 million in common stock. The purchase results in the Company owning a total of 49.0% of the outstanding shares of E-Commerce. The Company will continue accounting for the investment using the equity method.

F-77

Report of Independent Auditors

The Board of Directors of Goodrec, Inc.

        We have audited the accompanying statements of operations and cash flows of Goodrec, Inc. for the years ended December 31, 2008 and 2009. The statements of operations and cash flows are the responsibility of the Company's management. Our responsibility is to express an opinion on the statements of operations, and cash flows based on our audits.

        We conducted our audits in accordance with auditing standards generally accepted in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. We were not engaged to perform an audit of the Company's internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

        In our opinion, the statements of operations and cash flows referred to above present fairly, in all material respects, the results of operations and cash flows of Goodrec, Inc. for the years ended December 31, 2008 and 2009, in conformity with U.S. generally accepted accounting principles.

/s/ ERNST & YOUNG LLP
Chicago, Illinois
July 13, 2011

F-78

GOODREC, INC.

STATEMENTS OF OPERATIONS

(in thousands)

			Year Ended December 31,						Three Months Ended March 31,
			2008			2009			2009			2010
									(unaudited)
Revenue			$	—		$	196		$	—		$	202
Operating expenses:
	Salaries and related expense			523			584			141			161
	Marketing			28			26			5			6
	Selling, general and administrative			93			92			15			50
		Total operating expenses		644			702			161			217
Loss from operations				(644	)		(506	)		(161	)		(15	)
Interest and other expense, net				(38	)		—			(1	)		—
Net loss			$	(682	)	$	(506	)	$	(162	)	$	(15	)

See Notes to Statements of Operations and Cash Flows.

F-79

GOODREC, INC.

STATEMENTS OF CASH FLOWS

(in thousands)

			Year Ended December 31,						Three Months Ended March 31,
			2008			2009			2009			2010
									(unaudited)
Operating activities
Net loss			$	(682	)	$	(506	)	$	(162	)	$	(15	)
Adjustments to reconcile net loss to net cash (used in) provided by operating activities:
	Depreciation			3			3			1			1
	Stock-based compensation			1			2			—			—
	Non-cash interest expense			37			—			—			—
	Change in assets and liabilities, net of acquisitions:
		Accounts receivable		—			(46	)		—			(39	)
		Prepaid expenses and other current assets		(5	)		(2	)		(5	)		2
		Accounts payable		(3	)		16			(2	)		11
		Deferred revenue		—			73			—			73
		Accrued expenses and other current liabilities		6			24			(1	)		(9	)
		Other		(2	)		—			—			—
Net cash (used in) provided by operating activities				(645	)		(436	)		(169	)		24
Investing activities
Purchases of property and equipment				(6	)		—			—			(4	)
Net cash used in investing activities				(6	)		—			—			(4	)
Financing activities
Issuance of stock, net of issuance costs				834			—			—			—
Net cash provided by financing activities				834			—			—			—
Net increase (decrease) in cash and cash equivalents				183			(436	)		(169	)		20
Cash and cash equivalents, beginning of period				254			437			437			1
Cash and cash equivalents, end of period			$	437		$	1		$	268		$	21

See Notes to Statements of Operations and Cash Flows.

F-80

GOODREC, INC.

NOTES TO STATEMENTS OF OPERATIONS AND CASH FLOWS

1. DESCRIPTION OF BUSINESS

        Goodrec, Inc. ("Goodrec"), a company operating under the name Mob.ly, is in the business of providing mobile technical "know-how" and expertise and related services in the areas of development and design. Goodrec was founded in 2007, and operates in the United States.

        On May 6, 2010 Goodrec was purchased by Groupon, Inc. Groupon, Inc. ("Groupon") acquired 100% of the common and Series Seed Preferred stock from Goodrec shareholders in exchange for purchase price of $1.8 million, consisting of $0.4 million in cash, $0.2 million in contingent consideration and the issuance of shares of Groupon's voting common stock (valued at $1.2 million). The accompanying financial statements within are presented for the fiscal periods prior to acquisition. Goodrec was subsequently renamed Groupon Mobly Inc.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

        Goodrec's financial statements were prepared in accordance with United States generally accepted accounting principles ("U.S. GAAP").

Unaudited Interim Financial Statements

        The accompanying condensed financial statements of the Company for the three months ended March 31, 2009 and 2010 were prepared in accordance with U.S. GAAP for interim financial information and are unaudited. Certain information and disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted. Accordingly, these condensed financial statements should be read in conjunction with the Company's historical financial statements and accompanying notes included herein. In the opinion of management, all adjustments, consisting of a normal recurring nature considered necessary for a fair presentation have been included in the condensed financial statements. The operating results for the three months ended March 31, 2010 are not necessarily indicative of the results expected for the full year ending December 31, 2010.

Use of Estimates

        The preparation of financial statements in conformity with U.S. GAAP requires estimates and assumptions that affect the reported amounts and classifications of assets and liabilities, revenues and expenses in the consolidated financial statements and accompanying notes. Estimates are utilized for, but not limited to, stock-based compensation, income taxes and the depreciable lives of fixed assets. Actual results could differ materially from those estimates.

Revenue Recognition

        Goodrec recognizes revenue when persuasive evidence of an arrangement exists, delivery has occurred or services have been rendered, the selling price is fixed or determinable, and collectability is reasonably assured. Goodrec derives revenue from providing mobile application software development services. Goodrec's contracts are primarily fixed fee based. Revenues from fixed fee based contracts are recognized when the work is complete and customer acceptance has been received. Amounts invoiced prior to the completion of the contract are recorded as deferred revenue.

F-81

GOODREC, INC.

NOTES TO STATEMENTS OF OPERATIONS AND CASH FLOWS (Continued)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Cost of revenue

        Cost of revenue is primarily comprised of direct costs incurred to generate revenue, including costs related to credit card processing fees, refunds provided to customers under the Groupon Promise and other processing costs. Credit card and other processing costs are expensed as incurred. At the time of sale, the Company records a liability for estimated costs to provide refunds under the Groupon Promise based upon historical experience. These costs are generally variable in nature and are primarily driven by transaction volume.

Marketing

        Marketing expense consists primarily of online marketing costs, such as advertising on social networking sites and through search engines. Online marketing expense is recognized based on the terms of the individual agreements, while other marketing expense generally is recognized in the period in which it is incurred.

Stock-Based Compensation

        Goodrec measures stock-based compensation cost at fair value, net of forfeitures, and recognizes the corresponding compensation expense on a straight-line basis over the service period during which awards are expected to vest. Goodrec includes stock-based compensation expense in the salaries and related expense in the statement of operations and includes the offset to additional paid in capital on the balance sheet. The fair value of stock options are determined based on valuations of Goodrec's stock on the grant date. See Note 5 "Stock-Based Compensation."

Cash and Cash Equivalents

        Goodrec considers all highly-liquid investments with an original maturity of three months or less from the date of purchase to be cash equivalents.

Receivables, net

        Accounts receivable primarily represent the cash due from Goodrec's customers based on amounts billed for application development. The carrying amount of Goodrec's receivables is reduced by an allowance for doubtful accounts that reflects management's best estimate of amounts that will not be collected. Accounts receivable are charged off against the allowance for doubtful accounts when it is determined that the receivable is uncollectible. Goodrec's allowance for doubtful accounts and related bad debt expense were insignificant as of and for the years ended December 31, 2008 and 2009 and for the three month periods ended March 31, 2009 and 2010.

Property and Equipment, net

        Property and equipment includes assets such as furniture and fixtures, external software, and office and telephone equipment. Goodrec accounts for property and equipment at cost less accumulated depreciation and amortization. Depreciation and amortization expense are recorded on a straight-line basis over the estimated useful lives of the assets (generally three years for computer hardware and office and telephone equipment and five years for furniture and fixtures) and are classified within selling, general and administrative expenses in Goodrec's consolidated statement of operations.

F-82

GOODREC, INC.

NOTES TO STATEMENTS OF OPERATIONS AND CASH FLOWS (Continued)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

        Goodrec performs a review for the impairment or disposal of long-lived assets whenever events or changes in circumstances indicate that the carrying amount of the assets might not be recoverable. Conditions that would necessitate an impairment assessment include a significant decline in the observable market value of an asset, a significant change in the extent or manner in which an asset is used, or any other significant adverse change that would indicate that the carrying amount of an asset or group of assets may not be recoverable. Goodrec did not identify any long-lived asset impairments for the periods ending December 31, 2008 and 2009 or for the three month periods ended March 31, 2009 and 2010.

Lease Obligations

        Goodrec categorizes leases at their inception as either operating or capital leases, and may receive renewal or expansion options, rent holidays, and leasehold improvement and other incentives on certain lease agreements. Goodrec recognizes lease costs on a straight-line basis taking into account adjustments for market provisions, such as free or escalating base monthly rental payments, or deferred payment terms such as rent holidays that defer the commencement date of required payments. Additionally, Goodrec treats any incentives received as a reduction of costs over the term of the agreement. Goodrec records rent expense associated with lease obligations in selling, general and administrative expense on the statement of operations. See Note 3 "Commitments and Contingencies."

Income Taxes

        The provision for income taxes is determined using the asset and liability method. Under this method, deferred tax assets and liabilities are calculated based upon the temporary differences between the financial statement and income tax bases of assets and liabilities using the statutory tax rates that are applicable in a given year. The deferred tax assets are recorded net of a valuation allowance when, based on the weight of available evidence, Goodrec believes it is more likely than not that some portion or all of the recorded deferred tax assets will not be realized in future periods. Goodrec considers many factors when assessing the likelihood of future realization of its deferred tax assets, including recent cumulative earnings experience, expectations of future taxable income and capital gains by taxing jurisdiction, the carry-forward periods available for tax reporting purposes, and other relevant factors. Goodrec allocates its valuation allowance to current and long-term deferred tax assets on a pro-rata basis. A change in the estimate of future taxable income may require an increase or decrease to the valuation allowance.

        Goodrec utilizes a two-step approach to recognizing and measuring uncertain tax positions ("tax contingencies"). The first step is to evaluate the tax position for recognition by determining if the weight of available evidence indicates it is more likely than not that the position will be sustained on audit, including resolution of related appeals or litigation processes. The second step is to measure the tax benefit as the largest amount that is more than 50% likely to be realized upon ultimate settlement. Goodrec considers many factors when evaluating and estimating its tax positions and tax benefits, which may require periodic adjustments and which may not accurately forecast actual outcomes. Goodrec includes interest and penalties related to tax contingencies in income tax expense. See Note 6 "Income Taxes."

Fair Value of Financial Instruments

        The carrying amounts of Goodrec's financial instruments, including cash and cash equivalents, accounts receivable, accounts payable, and accrued expenses, approximate fair value due to their generally short-term maturities.

F-83

GOODREC, INC.

NOTES TO STATEMENTS OF OPERATIONS AND CASH FLOWS (Continued)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Recent Accounting Pronouncements

        In January 2010, the FASB issued guidance that improves disclosures about fair value measures that were originally required. The new guidance is effective for interim and annual periods beginning after December 15, 2009, except for the disclosures about purchases, sales, issuances and settlements in the roll forward of activity in Level 3 fair value measurements. Those disclosures are effective for fiscal years beginning after December 15, 2010, and for interim periods within those years. The adoption of this guidance did not impact Goodrec's financial position or results of operations.

        In July 2010, the FASB issued guidance that requires providing disclosures that facilitate financial statement users' evaluation of: 1) the nature of credit risk inherent in the entity's portfolio of financing receivables; 2) how that risk is analyzed and assessed in arriving at the allowance for credit losses; 3) the changes and reasons for those changes in the allowance for credit losses. The disclosures as of the end of a reporting period are effective for interim and annual reporting periods ending on or after December 15, 2010. The disclosures about activity that occurs during a reporting period are effective for interim and annual reporting periods beginning on or after December 15, 2010. Goodrec adopted this guidance on January 1, 2011. The adoption of this guidance did not impact Goodrec's financial position or results of operations.

3. COMMITMENTS AND CONTINGENCIES

Operating Leases

        Goodrec has entered into multiple lease agreements for three different office spaces since 2007. Rent expense under the operating leases was less than $0.1 million for the years ended December 31, 2008 and 2009. As of December 31, 2009 and March 31, 2010, Goodrec has no future lease commitments beyond one year.

Legal Matters

        Goodrec believes that there are no matters outstanding that will have a material adverse effect on its business, consolidated financial position, results of operations, or cash flows. Goodrec may become party to litigation resulting from the ordinary course of business. In such an instance Goodrec would assess the likelihood of any adverse judgments or outcomes with respect to potential matters and determine loss contingency assessments on a gross basis after assessing the probability of incurrence of a loss and whether a loss is reasonably estimable. In addition, Goodrec would consider other relevant factors that could impact its ability to reasonably estimate a loss. A determination of the amount of reserves required, if any, for such contingencies would be made after analyzing each matter.

4. STOCKHOLDERS' EQUITY (DEFICIT)

Common Stock

        The board of directors (the "Board") of Goodrec has authorized 10,303,077 shares of voting common stock with a par value of $0.0001. As of December 31, 2009 and March 31, 2010 there were 6,093,125 shares issued and outstanding. Each share of voting common stock is entitled to one vote per share. Voting common stock is referred to as common stock throughout the notes to these financial statements, unless otherwise noted.

F-84

GOODREC, INC.

NOTES TO STATEMENTS OF OPERATIONS AND CASH FLOWS (Continued)

4. STOCKHOLDERS' EQUITY (DEFICIT) (Continued)

        Goodrec issued stock-based awards to its employees in the form of stock options, which have the potential to increase the outstanding shares of common stock. See Note 5 "Stock-based Compensation."

        Upon any liquidation, dissolution or winding up of Goodrec (a "liquidation event"), the remaining assets of Goodrec will be distributed ratably among holders of common stock only after the payment of the full Series Seed Preferred Stock ("Series Seed Preferred") liquidation preference has been satisfied.

Preferred Stock

Series Seed Preferred

        Goodrec has authorized 2,424,615 shares of Series Seed Preferred Stock with a par value of $0.0001. In March 2008, Goodrec authorized the sale and issuance of 2,121,538 shares of Series Seed Preferred for $0.9 million, net of issuance costs. In June 2008, Goodrec amended the original agreement and authorized the sale and issuance of an additional 303,077 shares for $0.2 million. Total proceeds consisted of $0.8 million of cash and the conversion of $0.3 million of debt and accrued interest to 630,578 shares of Series Seed Preferred. The convertible debt contained a beneficial conversion feature. The unamortized discount of $0.04 million was recognized as interest expense on the conversion date. The cash proceeds were used for working capital and general corporate purposes. The conversion of debt to equity was a non-cash financing activity in 2008. There were 2,424,615 shares issued and outstanding of Series Seed Preferred as of December 31, 2009 and March 31, 2010.

        Holders of Series Seed Preferred are entitled to the number of votes equal to the number of shares of voting common stock into which their shares of Series Seed Preferred could be converted. In addition, the Series Seed Preferred holders are entitled to be paid, upon a liquidation event, an amount per share equal to 100% of the Series Seed Preferred original issue price. If, upon the liquidating event, the assets of Goodrec are insufficient to fully pay the amounts owed to Series Seed Preferred holders, all distributions would be made ratably in proportion to the full amounts to which holders would have otherwise been entitled.

        The holders of Series Seed Preferred are also entitled to receive any noncumulative dividend declared by the Board.

        Each share of Series Seed Preferred shall automatically be converted into shares of voting common stock upon the earliest of the following events to occur: (i) holders of at least 50% of the outstanding shares of Series Seed Preferred consent to a conversion, or (ii) immediately upon the closing of an initial public offering in which the aggregate public offering price equals or exceeds $20 million. The number of shares of voting common stock to which a Series Seed Preferred stockholder is entitled upon conversion is calculated by multiplying the applicable conversion rate then in effect (currently 1) by the number of Series Seed Preferred shares to be converted. The conversion rate for the Series Seed Preferred shares is subject to change in accordance with anti-dilution provisions contained in the agreement with those holders. More specifically, the conversion price is subject to adjustment to prevent dilution on a weighted-average basis in the event that the Company issues additional shares of common stock or securities convertible or exercisable for common stock at a purchase price less than the then effective conversion price. As of December 31, 2008 and 2009, the number of shares of voting common stock that would have been required to be issued assuming conversion of all of the issued and outstanding shares of Series Seed Preferred was 2,424,615.

F-85

GOODREC, INC.

NOTES TO STATEMENTS OF OPERATIONS AND CASH FLOWS (Continued)

4. STOCKHOLDERS' EQUITY (DEFICIT) (Continued)

Dividends

        No dividends were declared during the years ended December 31, 2008 or 2009 or for the three month period ended March 31, 2009 and 2010.

5. STOCK-BASED COMPENSATION

        The Board adopted a "2007 Stock Incentive Plan" under which they granted certain employees stock option awards in return for employee services to be rendered under which options for up to 500,000 shares of common stock were authorized to be issued to employees, consultants and directors of Goodrec. The awards typically vest monthly over a requisite service period of up to four years and have a contractual life of ten years. The fair value of stock options on the date of grant is amortized on a straight line basis over the requisite service period and is recorded as a component of employee compensation expense within salaries and related expense in the statement of operations. For the years ended December 31, 2008 and December 31, 2009, the Company expensed $0.001 million and $0.002 million, respectively, and for the three months ended March 31, 2009 and March 31, 2010, less than $0.001 million was recorded.

        The table below summarizes activity regarding the stock option awards granted to employees during the years ended December 31, 2008 and 2009:

		Options			Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Term (in years)
Outstanding at December 31, 2007			—		$	—		—
	Granted		255,000		$	0.04		9.21
	Exercised		(93,125	)	$	0.01		9.03
	Forfeited		(21,875	)	$	0.05		9.73
Outstanding at December 31, 2008			140,000		$	0.05		9.24
	Granted		122,500		$	0.05		9.04
	Exercised		—		$	—		—
	Forfeited		—		$	—		—
Outstanding at December 31, 2009			262,500		$	0.05		8.61
Exercisable at December 31, 2009			88,385		$	0.05		8.25

        The fair value of stock options granted is estimated on the date of grant using the Black-Scholes-Merton option-pricing model. Expected volatility is based on historical volatilities for publicly-traded options of comparable companies over the estimated expected life of the stock options. The expected term represents the period of time the stock options are expected to be outstanding and is based on the "simplified method." Goodrec used the "simplified method" due to the lack of sufficient historical exercise data to provide a reasonable basis upon which to otherwise estimate the expected life of the stock options. The risk-free interest rate is based on yields on U.S. Treasury STRIPS with a maturity similar to the

F-86

GOODREC, INC.

NOTES TO STATEMENTS OF OPERATIONS AND CASH FLOWS (Continued)

5. STOCK-BASED COMPENSATION (Continued)

estimated expected life of the stock options. The weighted-average assumptions for stock options granted during the years ended December 31, 2008 and 2009 are outlined in the following table:

	2008			2009
Dividend yield		—			—
Risk-free interest rate		3.12	%		1.80	%
Expected term (in years)		6.25			6.25
Expected volatility		46	%		46	%

        Based on the above assumptions, the weighted average grant date fair value of stock options granted during the years ended December 31, 2008 and 2009 was $0.02 and $0.02.

        As of December 31, 2009, a total of $0.004 million of unrecognized compensation costs related to unvested stock options issued under the Plan are expected to be recognized over the remaining weighted-average period of 3 years.

        In connection with the acquisition of Goodrec by Groupon on May 6, 2010 vesting of all awards issued under the 2007 Stock Incentive Plan were accelerated prior to the acquisition and the shareholders had the option to exercise. If the stock options were not exercised prior to the acquisition the options expired.

6. INCOME TAXES

        The items accounting for differences between income taxes computed at the statutory rate and the provision for income taxes are as follows):

		Year Ended December 31,
		2008			2009
U.S. federal income tax rate			35.0	%		35.0	%
	Valuation allowance		(35.0	)		(35.0	)
Provision for income taxes, net			—	%		—	%

        At December 31, 2008 and 2009, Goodrec had $0.3 and $0.7 million of federal net operating loss carryforwards, respectively, which will expire beginning in 2028.

        Goodrec has provided a full valuation allowance against its net deferred tax asset due to the historical taxable losses incurred since inception.

        For all tax jurisdictions, all fiscal periods from the commencement of business starting in 2007 are subject to tax audits.

        Goodrec had no amounts recorded related to uncertain tax positions in the periods presented.

7. FAIR VALUE MEASUREMENTS

        Fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or a liability.

F-87

GOODREC, INC.

NOTES TO STATEMENTS OF OPERATIONS AND CASH FLOWS (Continued)

7. FAIR VALUE MEASUREMENTS (Continued)

        To increase the comparability of fair value measures, the following hierarchy prioritizes the inputs to valuation methodologies used to measure fair value:

        Level 1—Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets.

        Level 2—Include other inputs that are directly or indirectly observable in the marketplace.

        Level 3—Unobservable inputs that are supported by little or no market activities. Valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable, such as pricing models, discounted cash flow models and similar techniques not based on market, exchange, dealer or broker-traded transactions.

        In determining fair value, Goodrec uses various valuation approaches within the fair value measurement framework. The valuation methodologies used for Goodrec's instruments measured at fair value and their classification in the valuation hierarchy are summarized below:

        Cash equivalents—Cash equivalents primarily consisted of highly-rated commercial paper and money market funds. Goodrec classified cash equivalents as Level 1, due to their short-term maturity, and measured the fair value based on quoted prices in active markets for identical assets.

        The following table summarizes Goodrec's assets that are measured at fair value on a recurring basis (in thousands):

				Fair Value Measurement at Reporting Date Using
Description		As of December 31, 2008		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets:
	Cash equivalents	$	395	$	395	$	—	$	—

        There were no changes to Goodrec's valuation techniques used to measure asset and liability fair values on a recurring basis in the years ended December 31, 2008 and 2009. The money market fund as of December 31, 2009 was nominal.

        At December 31, 2009, there were no material fair value adjustments required for non-financial assets and liabilities.

8. SUBSEQUENT EVENTS

        Goodrec has evaluated subsequent events through July 13, 2011, the date the consolidated financial statements were available to be issued.

F-88

CityDeal Europe GmbH

Report of Independent Auditors

The Management Board of Groupon Europe GmbH (formerly named CityDeal Europe GmbH)

        We have audited the accompanying consolidated statements of operations, comprehensive loss and cash flows of CityDeal Europe GmbH for the period from January 1, 2010 to May 15, 2010. The statements of operations, comprehensive loss and cash flows are the responsibility of the Company's management. Our responsibility is to express an opinion on the statements of operations, comprehensive loss and cash flows based on our audit.

        We conducted our audit in accordance with auditing standards generally accepted in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. We were not engaged to perform an audit of the Company's internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

        In our opinion, the statements of operations, comprehensive loss and cash flows referred to above present fairly, in all material respects, the consolidated results of operations and cash flows of CityDeal Europe GmbH for the period January 1, 2010 to May 15, 2010, in conformity with U.S. generally accepted accounting principles.

        As discussed in Note 2, the Consolidated Statement of Operations has been restated for the presentation of revenue on a net basis.

Ernst & Young GmbH
Wirtschaftsprüfungsgesellschaft
Berlin, Germany
May 31, 2011, except for Note 2, as to which the date is September 23, 2011

/s/ Jantz
(Jantz)
Certified Public Accountant /s/ Stander
(Stander)
Wirtschaftsprüfer

F-89

CITYDEAL EUROPE GMBH

CONSOLIDATED STATEMENT OF OPERATIONS AND CONSOLIDATED
STATEMENT OF COMPREHENSIVE LOSS

(in thousands of US dollars)

			Period from January 1, 2010 to May 15, 2010
			(Restated)
Consolidated Statement of Operations
Revenue (gross amount billed of $7,859)			$	1,485
Costs and expenses:
	Cost of revenue			321
	Marketing			8,228
	Selling, general and administrative			13,546
		Total operating expenses		22,095
Loss from operations				(20,610	)
Interest and other expense, net				243
Loss before provision for income taxes				(20,853	)
Income taxes				—
Net loss			$	(20,853	)
Attributable to CityDeal Europe GmbH				(16,613	)
Attributable to noncontrolling interest				(4,240	)
			$	(20,853	)
Consolidated Statement of Comprehensive Loss
Net loss				(20,853	)
Currency translation adjustment (net of $0 tax)				512
Comprehensive loss			$	(20,341	)
Attributable to CityDeal Europe GmbH—
Currency translation adjustment				512
Comprehensive loss				(16,101	)
Attributable to noncontrolling interest—
Currency translation adjustment				—
Comprehensive loss				(4,240	)

See Notes to Consolidated Statements of Operations, Comprehensive Loss and Cash Flows

F-90

CITYDEAL EUROPE GMBH

CONSOLIDATED STATEMENT OF CASH FLOWS

(in thousands of US dollars)

			Period from January 1, 2010 to May 15, 2010
Operating activities
Net loss			$	(20,853	)
Adjustments to reconcile net loss to net cash used in operating activities:
	Depreciation and amortization			25
	Stock-based compensation			612
	Accrued interest			61
	Change in assets and liabilities:
		Accounts receivable		(3,538	)
		Prepaid expenses and other current assets		(4,979	)
		Accounts payable		1,952
		Accrued merchant payable		6,935
		Accrued expenses and other current liabilities		4,341
Net cash used in operating activities				(15,444	)
Investing activities
Purchases of property and equipment				(736	)
Purchases of intangible assets				(71	)
Net cash used in investing activities				(807	)
Financing activities
Proceeds from issuance of shares				12,605
Cost of issuance of shares				(64	)
Cash received from loans from related parties				17,113
Repayments of loans from related parties				(8,579	)
Net cash provided by financing activities				21,075
Effect of exchange rate changes on cash and cash equivalents				(266	)
Net increase in cash and cash equivalents				4,558
Cash and cash equivalents, beginning of year				183
Cash and cash equivalents, end of year			$	4,741
Interest paid			$	—
Income taxes paid			$	—

See Notes to Consolided Statements of Operations, Comprehensive Loss and Cash Flows

F-91

CityDeal Europe GmbH

NOTES TO CONSOLIDATED STATEMENTS OF OPERATIONS,
COMPREHENSIVE LOSS AND CASH FLOWS

1. DESCRIPTION OF BUSINESS

        CityDeal Europe GmbH ("CityDeal"), together with its subsidiaries through which it conducts business, is a collective buying power business that launched operations in January 2010. CityDeal uses collective buying power to offer significant discounts to consumers on a wide variety of local goods, services and events throughout Europe.

        CityDeal was founded in December 2009 and was a development-stage enterprise prior to commencing operations at the start of 2010.

        CityDeal is a limited liability company under German law and is based in Berlin, Germany. CityDeal operates in various European countries including France, Germany, Italy and the United Kingdom.

        On May 15, 2010 CityDeal was purchased by Groupon, Inc. Groupon, Inc. acquired 100% of the stock from CityDeal shareholders in exchange for $0.6 million in cash and 41,400,000 shares of Groupon, Inc. Class A Voting Common Stock (valued at $125.4 million as of the acquisition date). The accompanying financial statements within are presented for the fiscal period prior to acquisition. CityDeal Europe GmbH was subsequently renamed Groupon Europe GmbH.

2. RESTATEMENT

        CityDeal has restated its previously issued Consolidated Statements of Operations for the period from January 1, 2010 to May 15, 2010 to correct for an error in its presentation of revenue. Most significantly, CityDeal restated its reporting of revenues from coupons to be net of the amounts related to merchant fees. Historically, CityDeal reported the gross amounts billed to its subscribers as revenue. The period presented has been restated to show the net amount CityDeal retained after paying the merchant fees. The effect of the correction resulted in a reduction of previously reported revenues and corresponding reductions in cost of revenue in the period. The change in presentation had no effect on pre-tax loss, net loss, or any per-share amounts for the period presented.

        CityDeal has also changed the presentation of certain other income statement expenses to be consistent with reporting revenue on a net basis. These changes include presenting loyalty programs as a component of marketing rather than an offset to revenue. CityDeal believes that this classification is most appropriate as it is acting as an agent on behalf of the merchant in driving traffic to generate revenue. These changes also include the reclassification of the net expense related to gift card promotions from revenue and cost of revenue to marketing expense.

        Credit card and other processing expenses have been reclassified to cost of revenue from selling, general and administrative for the period presented. CityDeal concluded the amounts could alternatively be viewed as a cost of the service CityDeal is providing.

        The following tables summarize the corrections on the affected financial statement line items for the period presented.

	As Previously Reported		Restatement Adjustment			As Restated
For the period from January 1, 2010 to May 15, 2010
Revenue	$	8,419	$	(6,934	)	$	1,485
Cost of revenue		9,211		(8,890	)		321
Marketing		6,784		1,444			8,228
Selling, general and administrative		13,034		512			13,546

F-92

CityDeal Europe GmbH

NOTES TO CONSOLIDATED STATEMENTS OF OPERATIONS,
COMPREHENSIVE LOSS AND CASH FLOWS (Continued)

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

        The consolidated financial statements present the consolidated results of operations and cash flows from January 1, 2010 to May 15, 2010, the date of acquisition by Groupon, Inc. The consolidated financial statements include the accounts of CityDeal and its subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation. CityDeal's consolidated financial statements were prepared in accordance with United States generally accepted accounting principles ("U.S. GAAP"). Subsidiaries are fully consolidated from the date the Company obtains control and continues to be consolidated until the date that such control ceases. A change in ownership interest of a subsidiary, without the loss of control, is accounted for as an equity transaction. At May 15, 2010, all subsidiaries of CityDeal were wholly-owned.

Use of Estimates

        The preparation of financial statements in conformity with U.S. GAAP requires estimates and assumptions that affect the reported amounts and classifications of assets and liabilities, revenues and expenses in the consolidated financial statements and accompanying notes. Estimates are utilized for, but not limited to, stock-based compensation, income taxes, customer refunds and the depreciable lives of fixed assets. Actual results could differ materially from those estimates.

Revenue Recognition

        CityDeal recognizes revenue from its daily deals when the following criteria are met: persuasive evidence of an arrangement exists; delivery has occurred; the selling price is fixed or determinable; and collectability is reasonably assured. These criteria generally are met when the number of customers who purchase the daily deal exceeds the predetermined threshold, based on the executed contract between CityDeal and its merchants. CityDeal records revenue in the amount that it will retain from the sale of daily deals. This amount is net of the agreed upon portion of the daily deal purchase price that CityDeal will pay to the featured merchant upon customer redemption. Revenue is recorded on a net basis because the Company is acting as an agent of the merchant in the transaction.

Cost of revenue

        Cost of revenue is primarily comprised of direct costs incurred to generate revenue, including costs related to credit card and other processing fees. Credit card and other processing costs are expensed as incurred. These costs are generally variable in nature and are primarily driven by transaction volume.

Subscriber Loyalty and Rewards Programs

        CityDeal uses various subscriber loyalty and reward programs to build brand loyalty, generate traffic to the website and provide subscribers with incentives to buy vouchers. When subscribers perform qualifying acts, such as providing a referral to a new subscriber or participating in promotional offers, CityDeal grants credits that can be redeemed for awards such as free or discounted vouchers in the future. CityDeal accrues the costs related to the associated obligation to redeem the award credits granted at issuance in accrued expenses and records the expense within marketing on the consolidated statements of operations.

F-93

CityDeal Europe GmbH

NOTES TO CONSOLIDATED STATEMENTS OF OPERATIONS,
COMPREHENSIVE LOSS AND CASH FLOWS (Continued)

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Marketing

        Marketing expense consists primarily of online marketing costs, such as advertising on social networking sites and through search engines, and to a lesser extent, television and print advertising. CityDeal also records costs associated with customer acquisition and affiliate arrangements in marketing expense on the consolidated statement of operations. Online marketing expense is recognized based on the terms of the individual agreements, while other marketing expense generally is recognized in the period in which it is incurred.

Stock-Based Compensation

        CityDeal measures stock-based compensation cost at fair value, net of forfeitures, and generally recognizes the corresponding compensation expense on a straight-line basis over the service period during which awards are expected to vest. CityDeal includes stock-based compensation expense in the selling, general and administrative expenses in the consolidated statement of operations and includes the offset to additional paid in capital on the balance sheet. The fair value of restricted stock is determined based on valuations of CityDeal's stock at or around the grant date. See Note 6 "Stock-Based Compensation."

Foreign Currency

        The functional currencies of CityDeal and its subsidiaries are the local currencies of countries in which CityDeal operates, primarily the Euro and the British Pound. The Company's reporting currency is the U.S. dollar.

        Balance sheet accounts are translated from foreign currencies into U.S. dollars at the exchange rates as of the consolidated balance sheet date. Revenues and expenses are translated at average exchange rates during the period. Foreign currency translation gains or losses are included in accumulated other comprehensive income in stockholders' deficit. Gains and losses resulting from foreign currency transactions, which are denominated in currencies other than the entity's functional currency, are included in interest and other expense, net on the consolidated statement of operations.

Cash and Cash Equivalents

        CityDeal considers all highly-liquid investments with an original maturity of three months or less from the date of purchase to be cash equivalents.

Receivables, net

        Accounts receivable primarily represent the net cash due from CityDeal's credit card and other payment processors for cleared transactions. The carrying amount of CityDeal's receivables is reduced by an allowance for doubtful accounts that reflects management's best estimate of amounts that will not be collected. Accounts receivable are charged off against the allowance for doubtful accounts when it is determined that the receivable is uncollectible. CityDeal's allowance for doubtful accounts and related bad debt expense were insignificant as of May 15, 2010.

F-94

CityDeal Europe GmbH

NOTES TO CONSOLIDATED STATEMENTS OF OPERATIONS,
COMPREHENSIVE LOSS AND CASH FLOWS (Continued)

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Inventory

        Inventories are stated at the lower of cost or market, with cost determined on a purchase cost specific identification basis.

Property and Equipment, net

        Property and equipment includes assets such as furniture and fixtures, external software, and office and telephone equipment. CityDeal accounts for property and equipment at cost less accumulated depreciation and amortization. Depreciation and amortization expense are recorded on a straight-line basis over the estimated useful lives of the assets (generally three years for computer hardware and office and telephone equipment and five years for furniture and fixtures) and are classified within selling, general and administrative expenses in CityDeal's consolidated statement of operations.

        CityDeal performs a review for the impairment or disposal of long-lived assets whenever events or changes in circumstances indicate that the carrying amount of the assets might not be recoverable. Conditions that would necessitate an impairment assessment include a significant decline in the observable market value of an asset, a significant change in the extent or manner in which an asset is used, or any other significant adverse change that would indicate that the carrying amount of an asset or group of assets may not be recoverable. CityDeal did not identify any long-lived asset impairments for the period ending May 15, 2010.

Lease Obligations

        CityDeal categorizes leases at their inception as either operating or capital leases, and may receive renewal or expansion options, rent holidays, and leasehold improvement and other incentives on certain lease agreements. CityDeal recognizes lease costs on a straight-line basis taking into account adjustments for market provisions, such as free or escalating base monthly rental payments, or deferred payment terms such as rent holidays that defer the commencement date of required payments. Additionally, CityDeal treats any incentives received as a reduction of costs over the term of the agreement. CityDeal records rent expense associated with lease obligations in selling, general and administrative expense on the consolidated statement of operations. See Note 4 "Commitments and Contingencies."

Income Taxes

        The provision for income taxes is determined using the asset and liability method. Under this method, deferred tax assets and liabilities are calculated based upon the temporary differences between the financial statement and income tax bases of assets and liabilities using the statutory tax rates that are applicable in a given year. The deferred tax assets are recorded net of a valuation allowance when, based on the weight of available evidence, CityDeal believes it is more likely than not that some portion or all of the recorded deferred tax assets will not be realized in future periods. CityDeal considers many factors when assessing the likelihood of future realization of its deferred tax assets, including recent cumulative earnings experience, expectations of future taxable income and capital gains by taxing jurisdiction, the carry-forward periods available for tax reporting purposes, and other relevant factors. CityDeal allocates its valuation allowance to current and long-term deferred tax assets on a pro-rata basis. A change in the estimate of future taxable income may require an increase or decrease to the valuation allowance.

F-95

CityDeal Europe GmbH

NOTES TO CONSOLIDATED STATEMENTS OF OPERATIONS,
COMPREHENSIVE LOSS AND CASH FLOWS (Continued)

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

        CityDeal utilizes a two-step approach to recognizing and measuring uncertain tax positions ("tax contingencies"). The first step is to evaluate the tax position for recognition by determining if the weight of available evidence indicates it is more likely than not that the position will be sustained on audit, including resolution of related appeals or litigation processes. The second step is to measure the tax benefit as the largest amount which is more than 50% likely to be realized upon ultimate settlement. CityDeal considers many factors when evaluating and estimating its tax positions and tax benefits, which may require periodic adjustments and which may not accurately forecast actual outcomes. CityDeal includes interest and penalties related to tax contingencies in income tax expense. See Note 7 "Income Taxes."

Fair Value of Financial Instruments

        The carrying amounts of CityDeal's financial instruments, including cash and cash equivalents, accounts receivable, accounts payable, accrued merchant payable, and accrued expenses, approximate fair value due to their generally short-term maturities. See Note 9 "Fair Value Measurements" for a discussion of the terms and conditions of the related party loans payable. It was not practical to estimate the fair value of related party loans.

Recent Accounting Pronouncements

        In January 2010, the FASB issued guidance that improves disclosures about fair value measures that were originally required. The new guidance is effective for interim and annual periods beginning after December 15, 2009, except for the disclosures about purchases, sales, issuances and settlements in the roll forward of activity in Level 3 fair value measurements. Those disclosures are effective for fiscal years beginning after December 15, 2010, and for interim periods within those years. The adoption of this guidance did not impact CityDeal's financial position or results of operations.

        In July 2010, the FASB issued guidance that requires providing disclosures that facilitate financial statement users' evaluation of: 1) the nature of credit risk inherent in the entity's portfolio of financing receivables; 2) how that risk is analyzed and assessed in arriving at the allowance for credit losses; 3) the changes and reasons for those changes in the allowance for credit losses. The disclosures as of the end of a reporting period are effective for interim and annual reporting periods ending on or after December 15, 2010. The disclosures about activity that occurs during a reporting period are effective for interim and annual reporting periods beginning on or after December 15, 2010. CityDeal will adopt this guidance on January 1, 2011. CityDeal does not expect this guidance to have a material impact on CityDeal's consolidated financial statements.

        In April 2010, the FASB issued guidance clarifying that an employee share-based payment award with an exercise price denominated in the currency of a market in which a substantial portion of the entity's equity securities trades should not be considered to contain a condition that is not a market, performance, or service condition. Therefore, an entity would not classify such an award as a liability if it otherwise qualifies as equity. This guidance is effective for interim and annual reporting periods beginning after December 15, 2010. CityDeal will adopt this guidance on January 1, 2011. CityDeal does not expect this guidance to have a material impact on CityDeal's consolidated financial statements.

F-96

CityDeal Europe GmbH

NOTES TO CONSOLIDATED STATEMENTS OF OPERATIONS,
COMPREHENSIVE LOSS AND CASH FLOWS (Continued)

4. COMMITMENTS AND CONTINGENCIES

Operating Leases

        CityDeal has entered into various non-cancellable operating lease agreements, primarily covering certain of its offices throughout Europe, with original lease periods expiring between 2011 and 2012. Rent expense under these operating leases was $0.3 million for the period ended May 15, 2010.

        Certain of these arrangements have renewal or expansion options and adjustments for market provisions, such as free or escalating base monthly rental payments. CityDeal recognizes rent expense under such arrangements on the straight-line basis over the term of the lease. The difference between the straight-line expense and the cash paid for rent has been recorded as deferred rent.

        CityDeal is responsible for paying its proportionate share of the actual operating expenses and real estate taxes under certain of these lease agreements. These operating expenses are not included in the table below.

        As of May 15, 2010, future payments under non-cancellable operating leases (including rent escalation clauses) were as follows (in thousands):

Year Ended December 31,
		2010 (remaining period)	$	257
		2011		374
		2012		136
		2013		—
		2014		—
		2015		—
	Thereafter			—
			$	767

Legal Matters

        CityDeal believes that there are no matters outstanding that will have a material adverse effect on its business, consolidated financial position, results of operations, or cash flows. CityDeal may become party to litigation resulting from the ordinary course of business. In such an instance CityDeal would assess the likelihood of any adverse judgments or outcomes with respect to potential matters and determine loss contingency assessments on a gross basis after assessing the probability of incurrence of a loss and whether a loss is reasonably estimable. In addition, CityDeal would consider other relevant factors that could impact its ability to reasonably estimate a loss. A determination of the amount of reserves required, if any, for such contingencies would be made after analyzing each matter.

5. STOCKHOLDERS' DEFICIT

        CityDeal sold an aggregate amount of 25,000 shares of common stock to one investor, Rocket Internet GmbH, a German limited liability company ("Rocket") and used the proceeds from the sale for working capital and general corporate purposes.

F-97

CityDeal Europe GmbH

NOTES TO CONSOLIDATED STATEMENTS OF OPERATIONS,
COMPREHENSIVE LOSS AND CASH FLOWS (Continued)

5. STOCKHOLDERS' DEFICIT (Continued)

Common Stock

        The board of directors (the "Board") of CityDeal has authorized one class of voting common stock. As of May 15, 2010 there were 25,000 shares authorized, issued and outstanding of voting common stock, respectively. Each share of voting common stock is entitled to one vote per share. Voting common stock is referred to as common stock throughout the notes to these financial statements, unless otherwise noted.

        CityDeal issued stock-based awards to its employees in the form of restricted stock, which have the potential to increase the outstanding shares of common stock. See Note 6 "Stock-based Compensation."

        Upon any liquidation, dissolution or winding up of CityDeal (a "liquidation event"), the remaining assets of CityDeal will be distributed ratably among holders of common stock only after the payment of the full Series B Preferred Stock ("Series B Preferred") liquidation preference and Series A Preferred Stock ("Series A Preferred") liquidation preference has been satisfied.

Preferred Stock

        CityDeal has 13,656 of authorized shares of Series A Preferred Stock and 7,732 of authorized shares of Series B Preferred Stock as of May 15, 2010. The rights, preferences, privileges, restrictions and other matters relating to the Series Preferred are as follows.

Series A Preferred

        In February 2010, CityDeal authorized the sale and issuance of 5,934 shares of Series A Preferred for $3.1 million. In March 2010, CityDeal authorized the sale and issuance of 7,722 Series A Preferred for $2.7 million. The proceeds were used for working capital and general corporate purposes. There were 13,656 shares outstanding as of May 15, 2010.

        Holders of Series A Preferred are entitled to the number of votes equal to the number of shares held. In addition, the Series A Preferred holders are entitled to receive, upon a liquidation event, the amount equal to the amount of contributions made by the holders of Series A. If, upon the liquidating event, the assets of CityDeal are insufficient to fully pay the amounts owed to Series A Preferred holders, all distributions would be made ratably in proportion to the full amounts to which holders would have otherwise been entitled.

        The holders of Series A Preferred are also entitled to receive any dividend declared by the Board, by participating equally with the holders of common stock and the holders of Series B Preferred.

Series B Preferred

        In March 2010, CityDeal authorized the sale and issuance of 7,732 shares of Series B Preferred for $6.7 million. The proceeds were used for working capital and general corporate purposes. There were 7,732 shares outstanding as of May 15, 2010.

        Holders of Series B Preferred are entitled to the number of votes equal to the number of shares held. In addition, the Series B Preferred holders are entitled to receive, upon a liquidation event, the amount equal to the amount of contributions made by the holders of Series B. If, upon the liquidating event, the assets of CityDeal are insufficient to fully pay the amounts owed to Series B Preferred holders, all

F-98

CityDeal Europe GmbH

NOTES TO CONSOLIDATED STATEMENTS OF OPERATIONS,
COMPREHENSIVE LOSS AND CASH FLOWS (Continued)

5. STOCKHOLDERS' DEFICIT (Continued)

distributions would be made ratably in proportion to the full amounts to which holders would have otherwise been entitled.

        The holders of Series B Preferred are also entitled to receive any dividend declared by the Board, by participating equally with the holders of common stock and the holders of Series A Preferred.

Dividends

        No dividends were declared during the period from January 1, 2010 to May 15, 2010.

6. STOCK-BASED COMPENSATION

        In the period from January 1, 2010 to May 15, 2010, CityDeal granted certain employees restricted stock awards in subsidiaries of CityDeal, in return for employee services to be rendered. The restricted stock awards vest quarterly over a requisite service period up to three years, with an initial cliff vesting term between three and six months. In the case of two employees, the restricted stock awards were granted with immediate vesting, in return for employee services previously rendered. There were 3,509 shares of restricted stock awards granted during the period from January 1, 2010 to May 15, 2010 with a weighted-average grant date fair value of $748.38 per share, which is amortized on a straight-line basis over the requisite service period as a component of employee compensation expense. The offset to the restricted stock award expense is classified as a component of additional paid-in capital within stockholders' deficit.

        The table below summarizes activity regarding unvested restricted stock awards granted to employees during the period from January 1, 2010 to May 15, 2010:

		Restricted Stock			Weighted-Average Grant Date Fair Value (per share)
Unvested at January 1, 2010			3,065		$	5.57
	Granted		3,509		$	748.38
	Vested		(205	)	$	403.26
	Forfeited		(3,065	)	$	5.57
Unvested at May 15, 2010			3,304		$	783.19

        The fair value of restricted stock that vested during the period from January 1, 2010 to May 15, 2010 was $0.1 million. CityDeal recognized stock compensation expense for restricted stock awards granted to employees of $0.2 million for the period from January 1, 2010 to May 15, 2010, none of which provided CityDeal with a tax benefit as a result of a full valuation allowance on deferred tax assets. As of May 15, 2010, a total of $9.4 million of unrecognized compensation costs related to unvested restricted stock awards granted to employees are expected to be recognized over the remaining weighted average period of 2.7 years.

        In the period from January 1, 2010 to May 15, 2010 CityDeal awarded certain non-employees (managers of Rocket and the Rocket parent company the European Founders Fund GmbH) with fully-vested restricted stock awards in subsidiaries of CityDeal, in return for consulting services received. There were awards for 399 shares of fully-vested restricted stock granted to non-employees during the period from January 1, 2010 to May 15, 2010 with a cumulative grant date fair value of $0.4 million which were

F-99

CityDeal Europe GmbH

NOTES TO CONSOLIDATED STATEMENTS OF OPERATIONS,
COMPREHENSIVE LOSS AND CASH FLOWS (Continued)

6. STOCK-BASED COMPENSATION (Continued)

recognized as a component of consulting expense in the income statement upon issuance. The offset to the restricted stock award expense is classified as a component of additional paid-in capital within stockholders' deficit. CityDeal did not recognize a tax benefit associated with the restricted stock awards granted to non-employees as a result of a full valuation allowance on deferred tax assets.

        The fair value of the restricted stock awards granted to employees and non-employees was determined by reference to the terms and conditions of the capital increases during the period January 1, 2010 to May 15, 2010 (See Note 5 "Stockholders' Deficit"), as well as by the reference to the information available in connection with the CityDeal's acquisition by Groupon, Inc. on May 15, 2010.

        On May 14, 2010 and to facilitate the CityDeal's acquisition by Groupon Inc. (see Note 11 "Subsequent Events"), all share-based awards granted to employees and nonemployees in CityDeal subsidiaries were proportionately exchanged for share-based awards in CityDeal. With the exception of changing the legal entity with which the share-based awards are associated, no other terms and conditions of the original awards granted in CityDeal subsidiaries were changed as a result of the exchange. The exchange of fully-vested share-based awards in CityDeal subsidiaries was accounted for as the acquisition of all outstanding non-controlling interests in the CityDeal subsidiaries. The exchange of unvested share-based awards in CityDeal subsidiaries for unvested share-based awards in CityDeal was accounted for as a modification on the date of exchange, with the additional fair value of the unvested share-based awards granted being recognized over the remaining requisite service period.

7. INCOME TAXES

        The components of pretax loss for the period are as follows (in thousands):

	Period from January 1, 2010 to May 15, 2010
				Provision for income taxes
	Loss before provision for income taxes
				Current		Deferred
Germany	$	(9,225	)	$	—	$	—
International		(11,628	)		—		—
Loss before provision of income taxes	$	(20,853	)	$	—	$	—

        The items accounting for differences between income taxes computed at the statutory rate and the provision for income taxes were as follows:

		Period from January 1, 2010 to May 15, 2010
Statutory income tax rate			30.2	%
	Valuation allowance		(30.2	)%
Total provision for income taxes			—	%

        At May 15, 2010, CityDeal had $21.5 million of operating loss carryforwards, which will carryforward indefinitely.

F-100

CityDeal Europe GmbH

NOTES TO CONSOLIDATED STATEMENTS OF OPERATIONS,
COMPREHENSIVE LOSS AND CASH FLOWS (Continued)

7. INCOME TAXES (Continued)

        For all tax jurisdictions, all fiscal periods from the commencement of business starting in 2009 are subject to tax audits.

        No accrual has been recorded at January 1, 2010 nor at May 15, 2010 for uncertain tax positions and no provision for uncertain tax positions has been recorded for the period from January 1, 2010 to May 15, 2010.

8. CONCENTRATION RISKS

        CityDeal is potentially subject to financial instrument concentration of credit risk through its cash equivalents and trade accounts receivable. CityDeal performs evaluations of the relative credit standing of these financial institutions and limits the amount of credit exposure with any one institution. A significant amount of accounts receivable is with several payment and credit card processing service providers in Europe.

        For the period from January 1, 2010 to May 15, 2010, revenues of $1.0 million was transacted in Germany and the remaining revenues of $0.4 million arose in other locations within Europe.

9. FAIR VALUE MEASUREMENTS

        Fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or a liability.

        To increase the comparability of fair value measures, the following hierarchy prioritizes the inputs to valuation methodologies used to measure fair value:

Level 1—Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets.

Level 2—Include other inputs that are directly or indirectly observable in the marketplace.

Level 3—Unobservable inputs that are supported by little or no market activities. Valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable, such as pricing models, discounted cash flow models and similar techniques not based on market, exchange, dealer or broker-traded transactions.

        In determining fair value, CityDeal uses various valuation approaches within the fair value measurement framework. The valuation methodologies used for CityDeal's instruments measured at fair value and their classification in the valuation hierarchy are summarized below:

Cash equivalents—Cash equivalents primarily consisted of highly-rated commercial paper and money market funds. The Company classified cash equivalents as Level 1, due to their short-term maturity, and measured the fair value based on quoted prices in active markets for identical assets.

F-101

CityDeal Europe GmbH

NOTES TO CONSOLIDATED STATEMENTS OF OPERATIONS,
COMPREHENSIVE LOSS AND CASH FLOWS (Continued)

9. FAIR VALUE MEASUREMENTS (Continued)

        The following table summarizes CityDeal's assets that are measured at fair value on a recurring basis (in thousands):

				Fair Value Measurement at Reporting Date Using
Description		As of May 15, 2010		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets:
	Cash equivalents	$	4,741	$	4,741	$	—	$	—

        There were no changes to CityDeal's valuation techniques used to measure asset and liability fair values on a recurring basis for the period of January 1, 2010 through May 15, 2010.

        At May 15, 2010 there were no material fair value adjustments required for non-financial assets and liabilities.

10. RELATED PARTIES

Shareholder Loans

        CityDeal and its shareholders entered into several loan agreements starting in March 2010, whereby certain CityDeal shareholders provided cash to fund operational and working capital needs of the business. During the period from January 1, 2010 to May 15, 2010, CityDeal received $17.1 million of proceeds from shareholders, of which $8.5 million was outstanding as of May 15, 2010. The outstanding balance accrues interest at a rate of 5% per year and is payable upon termination of the facility, which is the earlier of any prepayments or December 2012. As of May 15, 2010, the accrued interest was insignificant.

Consulting

        CityDeal purchased administrative and other consulting services from CityDeal shareholders during the period from January 1, 2010 to May 15, 2010 with expenses for the period of $1.1 million. In addition, in conjunction with such consulting services, CityDeal awarded certain employees who were shareholders restricted stock in subsidiaries of CityDeal. There were 399 shares of restricted stock granted during the period from January 1, 2010 to May 15, 2010 with a grant date fair value of $0.4 million, which was recognized as consulting expense in the consolidated statement of operations.

11. SUBSEQUENT EVENTS

        CityDeal has evaluated subsequent events through May 31, 2011, the date the consolidated financial statements were originally available and September 23, 2011, the date the consolidated financial statements, as restated, were reissued.

F-102

Report of Independent Auditors

The Board of Directors
Groupon Japan, Inc. (formerly known as Qpod.inc)

        We have audited the accompanying statement of operations, stockholders' equity, and cash flows of Qpod.inc (the "Company") for the period from June 4, 2010 to August 11, 2010. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit.

        We conducted our audit in accordance with auditing standards generally accepted in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. We were not engaged to perform an audit of the Company's internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

        In our opinion, the financial statements referred to above present fairly, in all material respects, the result of its operations and its cash flows of Qpod.inc for the period from June 4, 2010 to August 11, 2010 in conformity with U.S. generally accepted accounting principles.

        As discussed in Note 2, the Statement of Operations has been restated for the presentation of revenue on a net basis.

/s/ Ernst & Young ShinNihon LLC

Tokyo, Japan
May 25, 2011, except for Note 2 as to which the date is September 23, 2011

F-103

QPOD.INC

STATEMENT OF OPERATIONS

(in thousands of Japanese Yen)

			Period from June 4, 2010 to August 11, 2010
			(Restated)
Revenue			¥	3,770
Costs and expenses:
	Cost of revenue			1,666
	Marketing			57,304
	Selling, general and administrative			88,013
		Total operating expenses		146,983
Loss from operations				(143,213	)
Interest and other expenses, net				(328	)
Loss before provision for income taxes				(143,541	)
Provision for income taxes				(2,543	)
Net loss			¥	(146,084	)

See Notes to Financial Statements.

F-104

QPOD.INC

STATEMENT OF STOCKHOLDERS' EQUITY

(in thousands of Japanese Yen, except shares)

		Preference A				Common
										Additional Paid-In Capital		Accumulated Deficit			Total Stockholders' Equity
		Shares		Amount		Shares		Amount
Balance as of June 4, 2010			—	¥	—		—	¥	—	¥	—	¥	—		¥	—
	Net loss		—		—		—		—		—		(146,084	)		(146,084	)
	Issuance of common stock		—		—		10,000		100		—		—			100
	Issuance of preferred stock		9,600		100,800		—		—		100,024		—			200,824
Balance as of August 11, 2010			9,600	¥	100,800		10,000	¥	100	¥	100,024	¥	(146,084	)	¥	54,840

See Notes to Financial Statements.

F-105

QPOD.INC

STATEMENT OF CASH FLOWS

(in thousands of Japanese Yen)

			Period from June 4, 2010 to August 11, 2010
Operating activities
Net loss			¥	(146,084	)
Adjustments to reconcile net loss to net cash used in operating activities:
	Depreciation and amortization			552
	Deferred income taxes			2,480
	Change in assets and liabilities:
		Accounts receivable		(18,679	)
		Prepaid expenses and other current assets		(17,375	)
		Accounts payable		15,389
		Accrued expenses and other current liabilities		102,622
Net cash used in operating activities				(61,095	)
Investing activities
Purchases of property and equipment				(23,767	)
Purchases of intangible assets				(5,933	)
Investments in security deposits				(51,244	)
Net cash used in investing activities				(80,944	)
Financing activities
Issuance of common stock, net of issuance costs				100
Issuance of preferred stock, net of issuance costs				200,824
Net cash provided by financing activities				200,924
Net increase in cash				58,885
Cash, beginning of period				—
Cash, end of period			¥	58,885

See Notes to Financial Statements.

F-106

QPOD.INC

NOTES TO FINANCIAL STATEMENTS

1. DESCRIPTION OF BUSINESS

        Qpod.inc ("Qpod"), a Japanese corporation based in Tokyo, Japan, is a collective buying power business that provides online marketing services that enable consumers to purchase high-discount daily deals on a wide array of local goods, services and events. Qpod was established in June 2010 and commenced operations in July 2010. On August 11, 2010, Qpod became a subsidiary of Groupon B.V., a wholly-owned subsidiary of Groupon, Inc. ("Groupon"), and changed its name to Groupon Japan, Inc. See Note 8 Subsequent Events.

2. RESTATEMENT

        Qpod has restated its previously issued Statement of Operations for the period from June 4, 2010 to August 11, 2010 to correct for an error in its presentation of revenue. Most significantly, Qpod restated its reporting of revenues from coupons to be net of the amounts related to merchant fees. Historically, Qpod has reported the gross amounts billed to its subscribers as revenue. The period presented has been restated to show the net amount Qpod retained after paying the merchant fees. The effect of the correction resulted in a reduction of previously reported revenues and corresponding reductions in cost of revenue in the period. The change in presentation had no effect on pre-tax loss, net loss, or any per-share amounts for the period presented.

        Qpod has also changed the presentation of certain other income statement expenses to be consistent with reporting revenue on a net basis. Credit card and other processing expenses have been reclassified to cost of revenue from selling, general and administrative for the period presented. Qpod concluded the amounts could alternatively be viewed as a cost of the service Qpod is providing.

        The following tables summarize the corrections on the affected financial statement line items for the period presented.

	As Previously Reported		Restatement Adjustment			As Restated
For the period from June 4, 2010 to August 11, 2010
Revenue	¥	23,099	¥	(19,329	)	¥	3,770
Cost of revenue		19,329		(17,663	)		1,666
Selling, general and administrative		89,679		(1,666	)		88,013

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation and Use of Estimates

        Qpod's financial statements were prepared in accordance with United States generally accepted accounting principles ("U.S. GAAP") and on the premise of a going concern. Qpod has suffered losses from operations and has had negative operating cash flows. As discussed in Note 8 Subsequent Events, Qpod has entered into agreements with Groupon and its group companies to provide the necessary level of financial support at least through August 12, 2011.

        The preparation of financial statements in conformity with U.S. GAAP requires estimates and assumptions that affect the reported amounts and classifications of assets and liabilities, revenues and expenses, and the related disclosures of contingent liabilities in the financial statements and accompanying notes. Actual results could differ materially from those estimates.

F-107

QPOD.INC

NOTES TO FINANCIAL STATEMENTS (Continued)

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Revenue Recognition

        Qpod recognizes revenue from its daily deals when the following criteria are met: persuasive evidence of an arrangement exists; delivery has occurred; the selling price is fixed or determinable; and collectability is reasonably assured. These criteria generally are met when the number of customers who purchase the daily deal exceeds the predetermined threshold, based on the executed contract between Qpod and its merchants. Qpod records the amount it retains from the sale of daily deals after paying an agreed upon percentage of the purchase price or negotiated amount to the featured merchant as revenue, excluding any applicable taxes. Revenue is recorded on a net basis because Qpod is acting as an agent of the merchant in the transaction.

Cost of revenue

        Cost of revenue is primarily comprised of direct costs incurred to generate revenue, including costs related to credit card and other processing fees. Credit card and other processing costs are expensed as incurred. These costs are generally variable in nature and are primarily driven by transaction volume.

Marketing

        Marketing expense consists primarily of online marketing costs, such as advertising on social networking sites and through search engines, and offline marketing costs such as television and print advertising. Qpod also records costs associated with customer acquisition and affiliate arrangements in marketing expense on the statement of operations. Online marketing expense is recognized based on the terms of the individual agreements, while offline marketing expense generally is recognized in the period in which it is incurred.

Depreciation and Amortization

        Depreciation expense is recorded on a straight-line basis over the estimated useful lives of the assets (generally three years for external software and licenses and five years for furniture and fixtures) and is classified within selling, general and administrative expenses in the statement of operations.

Income Taxes

        The provision for income taxes is determined using the asset and liability method. Under this method, deferred tax assets and liabilities are calculated based upon the temporary differences between the financial statement and income tax bases of assets and liabilities using the statutory tax rates that are applicable in a given year. The deferred tax assets are recorded net of a valuation allowance when, based on the weight of available evidence, Qpod believes it is more likely than not that some portion or all of the recorded deferred tax assets will not be realized in future periods. Qpod considers many factors when assessing the likelihood of future realization of its deferred tax assets, including recent cumulative earnings experience, expectations of future taxable income and capital gains by taxing jurisdiction, the carry-forward periods available for tax reporting purposes, and other relevant factors. Qpod allocates its valuation allowance to current and long-term deferred tax assets on a pro-rata basis. A change in the estimate of future taxable income may require an increase or decrease to the valuation allowance.

F-108

QPOD.INC

NOTES TO FINANCIAL STATEMENTS (Continued)

4. OPERATING LEASES

        Qpod has entered into non-cancelable operating lease agreements, primarily covering certain of its offices, with original lease periods expiring between 2010 and 2012. Rent expense under these operating leases was 3.0 million Japanese Yen for the period from June 4, 2010 to August 11, 2010.

        Qpod is responsible for paying its proportionate share of the actual operating expenses and real estate taxes under certain of these lease agreements. These operating expenses are not included in the table below.

        As of August 11, 2010, future payments under operating leases (including rent escalation clauses) were as follows (in thousands of Japanese Yen):

Year Ending December 31,
		2010 (remaining period)	¥	460
		2011		1,188
		2012		635
		2013		—
		2014		—
	Thereafter			—
			¥	2,283

5. STOCKHOLDERS' EQUITY

Common Stock

        In June 2010, Qpod authorized the sale and issuance of 10,000 shares of common stock for 0.1 million Japanese Yen, and used the proceeds from the sale for working capital and general corporate purposes. Each share of common stock is entitled to one vote per share.

        Qpod also issued stock-based awards to its employees in the form of stock options, all of which have the potential to increase shares of common stock in the future.

Preferred Stock

        In July 2010, Qpod authorized the sale and issuance of 9,600 shares of Preference A stock for 201.6 million Japanese Yen, and used the proceeds from the sale for working capital and general corporate purposes. The holders of Preference A stock are entitled to receive, on an as-converted to common stock basis, any other dividend or distribution if declared by Qpod's Board of Directors (the "Board"), participating equally with the holders of common stock.

6. INCOME TAXES

        The provision for income taxes for the period from June 4, 2010 to August 11, 2010 consisted of the following components (in thousands of Japanese Yen):

Current Tax Expense	¥	63
Deferred Tax Expense		2,480
Total Tax Expense	¥	2,543

F-109

QPOD.INC

NOTES TO FINANCIAL STATEMENTS (Continued)

6. INCOME TAXES (Continued)

        The reconciliation between the applicable income tax rate and the effective income tax rate for the period from June 4, 2010 to August 11, 2010 is as follows:

Stautory income taxe rate		40.69	%
Decrease in tax rate:
	Valuation allowance for deferred tax assets	(42.23	)
	Other	(0.24	)
Effective income tax rate		(1.78	)

        In determining the need for a valuation allowance, Qpod weighs both positive and negative evidence in the taxing jurisdictions in which it operates to determine whether it is more likely than not that its deferred tax assets are recoverable. In assessing the ultimate realizability of its net deferred tax assets, Qpod considers its past performance, available tax strategies, and expected future taxable income, At August 11, 2010, Qpod recorded a valuation allowance of 60.6 million Japanese Yen against its net deferred tax assets, as it believes it is more likely than not that these benefits will not be realized. At August 11, 2010, Qpod has approximately 142.5 million Japanese Yen of net operating loss carryforwards, which can be carried forward for 7 years.

7. RELATED PARTIES

Service Agreements

        Qpod has entered into various agreements with companies in which certain of Qpod's Board members have direct and/or indirect ownership interests, to provide information technology, marketing and other services to Qpod. Qpod paid a total of 36.9 million Japanese Yen to these companies for services rendered for the period from June 4, 2010 to August 11, 2010, which were classified within operating expenses in Qpod's statement of operations. The related party payments consisted of the following components (in thousands of Japanese Yen):

Payroll and benefits	¥	14,346
Advertising		18,183
Commission		3,819
Other		559
	¥	36,907

Sublease Agreements

        Qpod has entered into agreements with a company in which certain of Qpod's Board members have direct and/or indirect ownership interests, pursuant to which Qpod subleased a portion of office space in Tokyo from this company. Qpod paid 1.6 million Japanese Yen in rent expense, and 11.1 million Japanese Yen in deposits, to this company under the sublease agreements for the period from June 4, 2010 to August 11, 2010.

F-110

QPOD.INC

NOTES TO FINANCIAL STATEMENTS (Continued)

8. SUBSEQUENT EVENTS

        Qpod evaluated subsequent events or transactions through May 25, 2011, the date the financial statements were originally available for issuance, and September 23, 2011, the date the financial statements, as restated, were reissued, and determined following items were non-recognized events:

Letter Agreement

        In August 2010, Qpod entered into a Letter Agreement (the "Agreement") with Groupon B.V., a private limited liability company, and other investors (together with Groupon B.V., the "Purchasers") to sell all of Qpod's newly issued Preference B shares ("B shares") for a cash purchase price of 31,378 Japanese Yen per share (the "Purchase Price"). The Purchase Price paid by all Purchasers amounted to 945.3 million Japanese Yen. Under this Agreement, Groupon B.V. acquired 90.9% of Qpod's B shares, and the other investors acquired the remaining 9.1%. As of the date of the Agreement, the B Shares acquired by the Purchasers represented 55.1% of the total issued and outstanding capital stock of Qpod, and the B Shares acquired by Groupon B.V. represented 50.1% of the total issued and outstanding capital stock of Qpod, on a fully-diluted basis.

Shareholders Agreement

        In conjunction with the Agreement, certain founding members and other shareholders of Qpod (collectively, the "other shareholders") entered into an agreement with Groupon, which provided Groupon with call rights that allow it to buy a percentage of the remaining shares of Qpod. Exercising all of the call rights would give Groupon an aggregate of 90.0% of the outstanding capital stock of Qpod. Additionally, the other shareholders have put rights to sell their outstanding capital stock to Groupon in the event of an initial public offering of Groupon, subject to certain conditions, which would give Groupon up to an aggregate of 90% of the outstanding capital stock of Qpod.

Stock Purchase Agreement

        In January 2011, Groupon entered into a Stock Purchase Agreement (the "SPA") with the other shareholders, whereby Groupon purchased an additional percentage of the shares of Qpod from the other shareholders, increasing Groupon's ownership in Qpod to 90.0%. Under the terms of the SPA, Groupon acquired 21,812 shares of the total issued and outstanding capital stock of Qpod, on a fully-diluted basis, for a cash purchase price of 94,442 Japanese Yen per share, or 2,060.0 million Japanese Yen. In conjunction with the SPA, Groupon has call rights that allow it to buy all of the remaining shares of Qpod. Exercising the call rights would give Groupon 100.0% ownership of the outstanding capital stock of Qpod. Additionally, the remaining Qpod shareholders have put rights to sell their outstanding capital stock to Groupon, including any shares of capital stock issuable upon exercise of options, which would give Groupon 100% of the outstanding capital stock of Qpod.

Issuance of convertible bonds

        In November 2010, Qpod issued convertible bonds of 657.3 million Japanese Yen, all of which were subscribed by Groupon B.V. Each bond will accrue simple interest on its outstanding principal balance at 3.5% per annum. Qpod shall pay Groupon B.V. an amount in cash equal to all outstanding principal and accrued and unpaid interest on July 31, 2014, the maturity date. If Qpod becomes a wholly owned subsidiary of Groupon B.V., Groupon B.V. has the right to set the maturity date as the date 30 days after the day on which Qpod becomes a wholly owned subsidiary of Groupon B.V.

F-111

QPOD.INC

NOTES TO FINANCIAL STATEMENTS (Continued)

8. SUBSEQUENT EVENTS (Continued)

        During the conversion period from November 17, 2010 through July 30, 2014, Groupon B.V. shall have the right to convert all outstanding principal under each bond issued by Qpod and subscribed for by Groupon B.V. into Preference B shares of Qpod at a predetermined conversion rate. However, Groupon B.V. may not exercise its right to convert the bonds until Qpod is a wholly owned subsidiary of Groupon B.V. On the conversion date, Qpod will pay in cash to Groupon B.V. all interest accrued.

        On December 15, 2010, Qpod issued convertible bonds of 325.2 million Japanese Yen, all of which were subscribed by Groupon B.V. Each bond will accrue simple interest on its outstanding principal balance at 1.0% per annum until December 31, 2010. Start from January 1, 2011 that the annual interest rate will be raised to 3.5% instead. Qpod shall pay Groupon B.V. an amount in cash equal to all outstanding principal and accrued and unpaid interest on July 31, 2014, the maturity date. If Qpod becomes a wholly owned subsidiary of Groupon B.V., Groupon B.V. has the right to set the maturity date as the date 30 days after the day on which Qpod becomes a wholly owned subsidiary of Groupon B.V.

        During the conversion period from January 1, 2011 through July 31, 2014, Groupon B.V. shall have the right to convert all outstanding principal under each bond issued by Qpod and subscribed for by Groupon B.V. into Preference B shares of Qpod at a predetermined conversion rate. However, Groupon B.V. may not exercise its right to convert the bonds until Qpod is a wholly owned subsidiary of Groupon B.V. On the conversion date, Qpod will pay in cash to Groupon B.V. all interest accrued.

F-112

Report of Independent Auditors

The Board of Directors of Ludic Labs, Inc.

        We have audited the accompanying statements of operations and cash flows of Ludic Labs, Inc. for the years ended December 31, 2008 and 2009. The statements of operations, and cash flows are the responsibility of the Company's management. Our responsibility is to express an opinion on the statements of operations and cash flows based on our audits.

        We conducted our audits in accordance with auditing standards generally accepted in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. We were not engaged to perform an audit of the Company's internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provides a reasonable basis for our opinion.

        In our opinion, the statements of operations and cash flows referred to above present fairly, in all material respects, the results of operations and cash flows of Ludic Labs, Inc. for the years ended December 31, 2008 and 2009, in conformity with U.S. generally accepted accounting principles.

/s/ ERNST & YOUNG LLP 
Chicago, Illinois
July 13, 2011

F-113

LUDIC LABS, INC.

STATEMENTS OF OPERATIONS

(in thousands)

			Year Ended December 31,						Nine Months Ended September 31,
			2008			2009			2009			2010
Revenue			$	—		$	1		$	1		$	2
Operating expenses:
	Salaries and related expenses			1,137			941			728			466
	Marketing			114			144			126			70
	Selling, general and administrative			463			295			243			233
		Total operating expenses		1,714			1,380			1,097			769
Loss from operations				(1,714	)		(1,379	)		(1,096	)		(767	)
Interest and other income, net				57			6			5			6
Net loss			$	(1,657	)	$	(1,373	)	$	(1,091	)	$	(761	)

See Notes to Statements of Operations and Cash Flows

F-114

LUDIC LABS, INC.

STATEMENTS OF CASH FLOWS

(in thousands)

			Year Ended December 31,						Nine Months Ended September 30,
			2008			2009			2009			2010
Operating activities
Net loss			$	(1,657	)	$	(1,373	)	$	(1,091	)	$	(761	)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
	Depreciation			31			17			14			5
	Stock-based compensation			7			9			8			2
	Change in assets and liabilities, net of acquisitions:
		Prepaid expenses and other current assets		(6	)		(1	)		(4	)		(1	)
		Accounts payable		(37	)		12			18			11
		Accrued expenses and other current liabilities		21			(23	)		(24	)		208
Net cash (used in) provided by operating activities				(1,641	)		(1,359	)		(1,079	)		(536	)
Investing activities
Purchases of property and equipment				(12	)		(3	)		(3	)		(4	)
Net cash used in investing activities				(12	)		(3	)		(3	)		(4	)
Financing activities
Proceeds from exercise of stock options				14			21			21			—
Repurchase of common stock				(74	)		—			—			—
Repurchase of unvested option exercises upon forfeiture				—			(3	)		(3	)		(12	)
Net cash (used in) provided by financing activities				(60	)		18			18			(12	)
Net decrease in cash and cash equivalents				(1,713	)		(1,344	)		(1,064	)		(552	)
Cash and cash equivalents, beginning of period				3,790			2,077			2,077			733
Cash and cash equivalents, end of period			$	2,077		$	733		$	1,013		$	181

See Notes to Statements of Operations and Cash Flows.

F-115

LUDIC LABS, INC.

NOTES TO STATEMENTS OF OPERATIONS AND CASH FLOWS

1. DESCRIPTION OF BUSINESS

        Ludic Labs, Inc. ("Ludic"), based in San Mateo, California, was founded in 2006. Ludic engages in research, design, and development of media applications for Internet and mobile devices in the United States.

        On November 30, 2010, Ludic was purchased by Groupon, Inc. Groupon, Inc. acquired 100% of the stock from Ludic shareholders in exchange for purchase price of $18.1 million, consisting of $1.5 million in cash and the issuance of shares of Groupon's voting common stock (valued at $16.6 million). The accompanying financial statements within are presented for the fiscal periods prior to acquisition.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

        Ludic's financial statements were prepared in accordance with United States generally accepted accounting principles ("U.S. GAAP").

Unaudited Interim Financial Statements

        The accompanying condensed financial statements of the Company for the nine months ended September 30, 2009 and 2010 were prepared in accordance with U.S. GAAP for interim financial information and are unaudited. Certain information and disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted. Accordingly, these condensed financial statements should be read in conjunction with the Company's historical financial statements and accompanying notes included herein. In the opinion of management, all adjustments, consisting of a normal recurring nature considered necessary for a fair presentation have been included in the condensed financial statements. The operating results for the nine months ended September 30, 2010 are not necessarily indicative of the results expected for the full year ending December 31, 2010.

Use of Estimates

        The preparation of financial statements in conformity with U.S. GAAP requires estimates and assumptions that affect the reported amounts and classifications of assets and liabilities, revenues and expenses in the financial statements and accompanying notes. Estimates are utilized for, but not limited to, stock-based compensation, income taxes, and the depreciable lives of fixed assets. Actual results could differ materially from those estimates.

Marketing

        Marketing expense consists primarily of online marketing costs, such as advertising on social networking sites and through search engines. Online marketing expense is recognized based on the terms of the individual agreements, while other marketing expense generally is recognized in the period in which it is incurred.

Stock-Based Compensation

        Ludic measures stock-based compensation cost at fair value, net of forfeitures, and recognizes the corresponding compensation expense on a straight-line basis over the service period during which awards are expected to vest. Ludic includes stock-based compensation expense in the salaries and related expenses in the statement of operations and includes the offset to additional paid in capital on the balance sheet.

F-116

LUDIC LABS, INC.

NOTES TO STATEMENTS OF OPERATIONS AND CASH FLOWS (Continued)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

The fair value of the stock options are determined based on valuations of Ludic's stock on the grant date. See Note 5 "Stock-Based Compensation."

Cash and Cash Equivalents

        Ludic considers all highly-liquid investments with an original maturity of three months or less from the date of purchase to be cash equivalents.

Property and Equipment, net

        Property and equipment includes assets such as furniture and fixtures, external software, and office and telephone equipment. Ludic accounts for property and equipment at cost less accumulated depreciation and amortization. Depreciation and amortization expense are recorded on a straight-line basis over the estimated useful lives of the assets (generally two to three years for all types of assets) and are classified within selling, general and administrative expenses in Ludic's statement of operations.

        Ludic performs a review for the impairment or disposal of long-lived assets whenever events or changes in circumstances indicate that the carrying amount of the assets might not be recoverable. Conditions that would necessitate an impairment assessment include a significant decline in the observable market value of an asset, a significant change in the extent or manner in which an asset is used, or any other significant adverse change that would indicate that the carrying amount of an asset or group of assets may not be recoverable. Ludic did not identify any long-lived asset impairments for the years ended December 31, 2008 and 2009 or for the nine month periods ended September 30, 2009 and 2010.

Lease Obligations

        Ludic categorizes leases at their inception as either operating or capital leases, and may receive renewal or expansion options, rent holidays, and leasehold improvement and other incentives on certain lease agreements. Ludic recognizes lease costs on a straight-line basis taking into account adjustments for market provisions, such as free or escalating base monthly rental payments, or deferred payment terms such as rent holidays that defer the commencement date of required payments. Additionally, Ludic treats any incentives received as a reduction of costs over the term of the agreement. Ludic records rent expense associated with lease obligations in selling, general and administrative expense on the statement of operations. See Note 3 "Commitments and Contingencies."

Income Taxes

        The provision for income taxes is determined using the asset and liability method. Under this method, deferred tax assets and liabilities are calculated based upon the temporary differences between the financial statement and income tax bases of assets and liabilities using the statutory tax rates that are applicable in a given year. The deferred tax assets are recorded net of a valuation allowance when, based on the weight of available evidence, Ludic believes it is more likely than not that some portion or all of the recorded deferred tax assets will not be realized in future periods. Ludic considers many factors when assessing the likelihood of future realization of its deferred tax assets, including recent cumulative earnings experience, expectations of future taxable income and capital gains by taxing jurisdiction, the carry-forward periods available for tax reporting purposes, and other relevant factors. Ludic allocates its valuation allowance to current and long-term deferred tax assets on a pro-rata basis. A change in the estimate of future taxable income may require an increase or decrease to the valuation allowance.

F-117

LUDIC LABS, INC.

NOTES TO STATEMENTS OF OPERATIONS AND CASH FLOWS (Continued)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

        Ludic utilizes a two-step approach to recognizing and measuring uncertain tax positions ("tax contingencies"). The first step is to evaluate the tax position for recognition by determining if the weight of available evidence indicates it is more likely than not that the position will be sustained on audit, including resolution of related appeals or litigation processes. The second step is to measure the tax benefit as the largest amount that is more than 50% likely to be realized upon ultimate settlement. Ludic considers many factors when evaluating and estimating its tax positions and tax benefits, which may require periodic adjustments and which may not accurately forecast actual outcomes. Ludic includes interest and penalties related to tax contingencies in income tax expense. See Note 6 "Income Taxes."

Fair Value of Financial Instruments

        The carrying amounts of Ludic's financial instruments, including cash and cash equivalents, accounts payable, and accrued expenses, approximate fair value due to their generally short-term maturities.

Recent Accounting Pronouncements

        In January 2010, the Financial Accounting Standards Board ("FASB") issued guidance that improves disclosures about fair value measures that were originally required. The new guidance is effective for interim and annual periods beginning after December 15, 2009, except for the disclosures about purchases, sales, issuances and settlements in the roll forward of activity in Level 3 fair value measurements. Those disclosures are effective for fiscal years beginning after December 15, 2010, and for interim periods within those years. The adoption of this guidance did not impact Ludic's financial position or results of operations.

3. COMMITMENTS AND CONTINGENCIES

Operating Leases

        Ludic has entered into one non-cancellable operating lease agreement with a lease period, including exercised renewal options, expiring in 2011. Rent expense under the operating lease was less than $0.1 million for each of the years ended December 31, 2008 and 2009 and for each of the nine month periods ended September 30, 2009 and 2010.

        Ludic is responsible for paying its proportionate share of the actual operating expenses and real estate taxes under certain of the lease agreements. These operating expenses are not included in the table below.

F-118

LUDIC LABS, INC.

NOTES TO STATEMENTS OF OPERATIONS AND CASH FLOWS (Continued)

3. COMMITMENTS AND CONTINGENCIES (Continued)

        As of December 31, 2009, future payments under the non-cancellable operating lease were as follows (in thousands):

Year Ended December 31,
	2010	$	55
	2011		41
	2012		—
	2013		—
	2014		—
	2015		—
Thereafter			—
		$	96

Legal Matters

        Ludic believes that there are no matters outstanding that will have a material adverse effect on its business, financial position, results of operations, or cash flows. Ludic may become party to litigation resulting from the ordinary course of business. In such an instance Ludic would assess the likelihood of any adverse judgments or outcomes with respect to potential matters and determine loss contingency assessments on a gross basis after assessing the probability of incurrence of a loss and whether a loss is reasonably estimable. In addition, Ludic would consider other relevant factors that could impact its ability to reasonably estimate a loss. A determination of the amount of reserves required, if any, for such contingencies would be made after analyzing each matter.

4. STOCKHOLDERS' DEFICIT

Common Stock

        The board of directors (the "Board") of Ludic has authorized 15 million shares of voting common stock with a par value of $0.0001. As of December 31, 2009, there were 5,731,878 shares issued and 5,381,878 shares outstanding. As of September 30, 2010, there were 4,783,226 shares issued and 4,433,226 shares outstanding of voting common stock. Each share of voting common stock is entitled to one vote per share. Voting common stock is referred to as common stock throughout the notes to these financial statements, unless otherwise noted.

        Ludic issued stock-based awards to its employees in the form of stock options, which have the potential to increase the outstanding shares of common stock. See Note 5 "Stock-based Compensation."

        Upon any liquidation, dissolution or winding up of Ludic (a "liquidation event"), the remaining assets of Ludic will be distributed ratably among holders of common stock only after the payment of the full Series A Preferred Stock ("Series A Preferred") liquidation preference has been satisfied.

Convertible Preferred Stock

Series A Preferred

        Ludic has authorized 4,300,000 shares of Series A Preferred Stock with a par value of $0.00001. In 2007, Ludic authorized the sale and issuance of 4,185,675 shares of Series A Preferred Stock for

F-119

LUDIC LABS, INC.

NOTES TO STATEMENTS OF OPERATIONS AND CASH FLOWS (Continued)

4. STOCKHOLDERS' DEFICIT (Continued)

$5.1 million (or $5.0 million, net of issuance costs). Total proceeds consisted of $3.7 million of cash and the conversion of $1.4 million of debt and accrued interest to 1,198,153 shares of Series A Preferred and 213,065 shares of common stock. The cash proceeds were used to repurchase 350,000 shares of common stock for $0.1 million from certain shareholders and the remainder for working capital and general corporate purposes. There were 4,185,675 shares of Series A Preferred issued and outstanding as of December 31, 2009 and September 30, 2010.

        Holders of Series A Preferred are entitled to the number of votes equal to the number of shares of voting common stock into which their shares of Series A Preferred could be converted. In addition, the Series A Preferred holders are entitled to be paid, upon a liquidation event, an amount per share equal to 100% of the Series A Preferred original issue price. If, upon the liquidating event, the assets of Ludic are insufficient to fully pay the amounts owed to Series A Preferred holders, all distributions would be made ratably in proportion to the full amounts to which holders would have otherwise been entitled.

        The holders of Series A Preferred are also entitled to receive any noncumulative dividends declared by the Board, by participating equally with the holders of common stock.

        Each share of Series A Preferred shall automatically be converted into shares of voting common stock upon the earliest of the following events to occur: (i) holders of at least 60% of the outstanding shares of Series A Preferred consent to a conversion, or (ii) immediately upon the closing of an initial public offering in which the aggregate public offering price equals or exceeds $30 million. The number of shares of voting common stock to which a Series A Preferred stockholder is entitled upon conversion is calculated by multiplying the applicable conversion rate then in effect (currently 1) by the number of Series A Preferred shares to be converted. The conversion rate for the Series A Preferred shares is subject to change in accordance with anti-dilution provisions contained in the agreement with those holders. More specifically, the conversion price is subject to adjustment to prevent dilution on a weighted-average basis in the event that the Company issues additional shares of common stock or securities convertible or exercisable for common stock at a purchase price less than the then effective conversion price. As of December 31, 2008 and 2009, the number of shares of voting common stock that would have been required to be issued assuming conversion of all of the issued and outstanding shares of Series A Preferred was 4,185,675.

        In connection with Groupon's acquisition of Ludic in November 2010, the Series A Preferred Stock was converted to common stock and 100% of the stock was acquired.

Dividends

        No dividends have been declared in the years ended December 31, 2008 and 2009 or for the nine month periods ended September 30, 2009 and 2010.

5. STOCK-BASED COMPENSATION

        The Board adopted a 2007 Stock Incentive Plan under which it granted certain employees stock option awards in return for employee services to be rendered under which options for up to 1,634,610 shares of common stock were authorized to be issued to employees, consultants, and directors of Ludic. The options are immediately exercisable upon issuance but subject to vesting. The award contains a share repurchase feature at a price equal to the original share purchase price that is exercisable only if the employee is terminated within a specific period and is a forfeiture provision accounted for as such. The awards typically vest monthly over a requisite service period of one to four years and have a contractual life

F-120

LUDIC LABS, INC.

NOTES TO STATEMENTS OF OPERATIONS AND CASH FLOWS (Continued)

5. STOCK-BASED COMPENSATION (Continued)

of ten years. The fair value of stock options on the date of grant is amortized on a straight line basis over the requisite service period and is recorded as a component of employee compensation expense within salaries and related expense in the statement of operations. For the years ended December 31, 2008 and 2009 the Company expensed $0.007 million, $0.009 million, respectively, and for the nine month periods ended September 30, 2009 and 2010 the Company expensed $0.008 million and $0.002 million related to stock options, respectively. As of December 31, 2009, 1,169,710 shares were available for future issuance under the Plans.

        The table below summarizes activity regarding the stock option awards granted to employees during the years ended December 31, 2008 and 2009:

		Options			Weighted-Average Exercise Price		Weighted-Average Remaining Contractual Term (in years)
Outstanding at December 31, 2007			—		$	—		—
	Granted		123,500		$	0.21		9.36
	Exercised		(65,000	)	$	0.21		9.17
	Forfeited		(17,800	)	$	0.21		9.64
Outstanding at December 31, 2008			40,700		$	0.21		9.53
	Granted		141,500		$	0.21		9.39
	Exercised		(101,200	)	$	0.21		9.25
	Forfeited		(26,000	)	$	0.21		9.32
Outstanding at December 31, 2009			55,000		$	0.21		9.04
Exercisable at December 31, 2009			55,000		$	0.21		9.04

        Amounts received by Ludic from the exercise of unvested stock options are classified as accrued expenses until vesting occurs. The share amounts in the chart above include vested and unvested exercises.

        The fair value of stock options granted is estimated on the date of grant using the Black-Scholes-Merton option-pricing model. Expected volatility is based on historical volatilities for publicly-traded options of comparable companies over the estimated expected life of the stock options. The expected term represents the period of time the stock options are expected to be outstanding and is based on the "simplified method." Ludic used the "simplified method" due to the lack of sufficient historical exercise data to provide a reasonable basis upon which to otherwise estimate the expected life of the stock options. The risk-free interest rate is based on yields on U.S. Treasury STRIPS with a maturity similar to the estimated expected life of the stock options. The weighted-average assumptions for stock options granted during the years ended December 31, 2008 and 2009 are outlined in the following table:

	2008			2009
Dividend yield		—			—
Risk-free interest rate		2.46	%		2.15	%
Expected term (in years)		6.06			5.81
Expected volatility		46	%		46	%

        Based on the above assumptions, the weighted average grant date fair value of stock options granted during the years ended December 31, 2008 and 2009 were $0.10 and $0.08.

F-121

LUDIC LABS, INC.

NOTES TO STATEMENTS OF OPERATIONS AND CASH FLOWS (Continued)

5. STOCK-BASED COMPENSATION (Continued)

        As of December 31, 2009, a total of $0.002 million of unrecognized compensation costs related to unvested awards issued under the Plan are expected to be recognized over the remaining weighted-average period of 0.31 years.

        In connection with the acquisition of Ludic by Groupon on November 30, 2010 vesting of all awards issued under the 2007 Stock Incentive Plan were accelerated prior to the acquisition and the shareholders had the option to exercise. If the stock options were not exercised prior to the acquisition the options expired.

6. INCOME TAXES

        The items accounting for differences between income taxes computed at the statutory rate and the provision for income taxes were as follows:

		Year Ended December 31,
		2008			2009
U.S. federal income tax rate			35.0	%		35.0	%
	Valuation allowance		(35.0	)		(35.0	)
Provision for income taxes, net			—	%		—	%

        At December 31, 2008 and 2009, Ludic had $2.8 million and $4.2 million of federal net operating loss carryforwards, respectively, which will expire beginning in 2028. Additionally, the Company had $0.1 million of Federal R&D credits to carryforward as of December 31, 2008 and 2009, which will expire beginning in 2026.

        Ludic has provided a full valuation allowance against its net deferred tax asset due to the historical taxable losses incurred since inception.

        For all tax jurisdictions, all fiscal periods from the commencement of business starting in 2006 are subject to tax audits.

        Ludic had no amounts recorded related to uncertain tax positions in the periods presented.

7. FAIR VALUE MEASUREMENTS

        Fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or a liability.

        To increase the comparability of fair value measures, the following hierarchy prioritizes the inputs to valuation methodologies used to measure fair value:

        Level 1—Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets.

        Level 2—Include other inputs that are directly or indirectly observable in the marketplace.

        Level 3—Unobservable inputs that are supported by little or no market activities. Valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are

F-122

LUDIC LABS, INC.

NOTES TO STATEMENTS OF OPERATIONS AND CASH FLOWS (Continued)

7. FAIR VALUE MEASUREMENTS (Continued)

unobservable, such as pricing models, discounted cash flow models and similar techniques not based on market, exchange, dealer or broker-traded transactions.

        In determining fair value, Ludic uses various valuation approaches within the fair value measurement framework. The valuation methodologies used for Ludic's instruments measured at fair value and their classification in the valuation hierarchy are summarized below:

        Cash equivalents—Cash equivalents primarily consisted of highly-rated commercial paper and money market funds. Ludic classified cash equivalents as Level 1, due to their short-term maturity, and measured the fair value based on quoted prices in active markets for identical assets.

        The following table summarizes Ludic's assets that are measured at fair value on a recurring basis (in thousands):

				Fair Value Measurement at Reporting Date Using
Description		As of December 31, 2008		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets:
	Cash equivalents	$	1,923	$	1,923	$	—	$	—

				Fair Value Measurement at Reporting Date Using
Description		As of December 31, 2009		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets:
	Cash equivalents	$	602	$	602	$	—	$	—

        There were no changes to Ludic's valuation techniques used to measure asset and liability fair values on a recurring basis in the years ended December 31, 2008 and 2009.

        At December 31, 2009, there were no material fair value adjustments required for non-financial assets and liabilities.

8. SUBSEQUENT EVENTS

        Ludic has evaluated subsequent events through July 13, 2011, the date the financial statements were available to be issued.

F-123

GROUPON, INC.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 2010

        During the year ended December 31, 2010, Groupon, Inc. (the "Company") made the following acquisitions:

•

Effective May 6, 2010, the Company acquired Goodrec, Inc. ("Goodrec"), a U.S. corporation which provides mobile technical "know-how" and expertise and related services in the areas of development and design;

•

Effective May 15, 2010, the Company acquired CityDeal Europe GmbH ("CityDeal"), a collective buying power business that provides daily deals and online marketing services substantially similar to the Company;

•

Effective August 11, 2010, the Company acquired Qpod.inc ("Qpod"), a Japanese corporation which also operates a collective buying power business that provides daily deals and online marketing services substantially similar to the Company; and

•

Effective November 30, 2010, the Company acquired Ludic Labs, Inc. ("Ludic"), a U.S. corporation which engages in research, design, and development of media applications for Internet and mobile devices.

        As a result of the CityDeal and Qpod acquisitions, the Company believes it has established a significant presence in the European and Japanese markets by strategically expanding into new geographies and increasing its subscriber base. In addition, with the acquisitions of CityDeal and Qpod, the Company believes it has gained management's local expertise in maintaining vendor relationships and establishing new relationships and obtained an assembled workforce that has significant experience and knowledge of the industry. The acquisitions of Goodrec and Ludic allowed the Company to increase its technological expertise in order to improve services offered through media applications for Internet and mobile devices. For purposes of the Unaudited Pro Forma Condensed Consolidated Statement of Operations for the year ended December 31, 2010, the Company assumed that the Goodrec, CityDeal, Qpod and Ludic acquisitions occurred on January 1, 2010. As a result, the Unaudited Pro Forma Condensed Consolidated Statement of Operations was derived from:

•

the audited historical consolidated statement of operations of the Company for the year ended December 31, 2010;

•

the unaudited historical statement of operations of Goodrec for the period from January 1, 2010 to May 6, 2010;

•

the audited historical consolidated statement of operations of CityDeal for the period from January 1, 2010 to May 15, 2010;

•

the audited historical statement of operations of Qpod for the period from January 1, 2010 to August 11, 2010; and

•

the unaudited historical statement of operations of Ludic for the period from January 1, 2010 to November 30, 2010.

        The Unaudited Pro Forma Condensed Consolidated Statement of Operations is presented for illustration purposes only and does not necessarily indicate the operating results that would have been achieved if the Goodrec, CityDeal, Qpod and Ludic acquisitions had occurred at the beginning of the period presented, nor is it indicative of future operating results.

        The Unaudited Pro Forma Condensed Consolidated Statement of Operations should be read in conjunction with the Company's historical consolidated financial statements and accompanying notes included in this prospectus.

F-124

GROUPON, INC.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 2010
(in thousands, except share and per share amounts)

			Groupon, Inc. Historical			Goodrec, Inc. Period from January 1, 2010 through May 6, 2010		CityDeal Europe GmbH Period from January 1, 2010 through May 15, 2010			Qpod.inc Period from January 1, 2010 through August 11, 2010			Ludic Labs, Inc. Period from January 1, 2010 through November 30, 2010			Acquisition Pro Forma Adjustments			Pro Forma
Revenue			$	312,941		$	354	$	1,485		$	43		$	3		$	—		$	314,826
Costs and expenses:
	Cost of revenue			32,494			—		321			19			—			—			32,834
	Marketing			284,348			10		8,228			655			71			—			293,312
	Selling, general and administrative			213,260			277		13,546			1,002			880			8,500	(a)		237,465
	Acquisition-related (b)			203,183			—		—			—			—			—			203,183
		Total operating expenses		733,285			287		22,095			1,676			951			8,500			766,794
Loss (income) from operations				(420,344	)		67		(20,610	)		(1,633	)		(948	)		(8,500	)		(451,968	)
Interest and other income (expense), net				284			—		(243	)		(4	)		7			—			44
Loss (income) before provision for income taxes				(420,060	)		67		(20,853	)		(1,637	)		(941	)		(8,500	)		(451,924	)
(Benefit) provision for income taxes				(6,674	)		1		—			29			—			—			(6,644	)
Net loss (income)				(413,386	)		66		(20,853	)		(1,666	)		(941	)		(8,500	)		(445,280	)
Less: Net loss attributable to noncontrolling interests				23,746			—		4,240			—			—			—			27,986
Net loss (income) attributable to Groupon, Inc.				(389,640	)		66		(16,613	)		(1,666	)		(941	)		(8,500	)		(417,294	)
Dividends on preferred stock				(1,362	)		—		—			—			—			—			(1,362	)
Redemption of preferred stock in excess of carrying value				(52,893	)		—		—			—			—			—			(52,893	)
Adjustment of redeemable noncontrolling interests to redemption value				(12,425	)		—		—			—			—			—			(12,425	)
Net loss (income) attributable to common stockholders			$	(456,320	)	$	66	$	(16,613	)	$	(1,666	)	$	(941	)	$	(8,500	)	$	(483,974	)
Net loss per share
	Basic		$	(2.66	)																	(c)
	Diluted		$	(2.66	)																	(c)
	Pro forma basic (unaudited)																					(c)
Weighted average number of shares outstanding
	Basic			171,349,386																		(c)
	Diluted			171,349,386																		(c)

F-125

GROUPON, INC.

NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 2010

(a)   Amortization

        The pro forma adjustment reflects the additional amortization that would have been recognized on the intangible assets had the acquisitions occurred on January 1, 2010 (dollars in thousands).

Amortization of Intangibles

		Useful Life	Goodrec Amortization January 1, 2010 to May 6, 2010		CityDeal Amortization January 1, 2010 to May 15, 2010		Qpod Amortization January 1, 2010 to August 11, 2010		Ludic Amortization January 1, 2010 to November 30, 2010		Total
Vendor relationships		1 year	$	—	$	2,689	$	124	$	—	$	2,813
Developed technology		2 years		21		229		19		293		562
Trade names		1 year		—		2,346		12		—		2,358
Subscriber relationships		5 years		—		2,643		124		—		2,767
	Total		$	21	$	7,907	$	279	$	293	$	8,500

(b)   Acquisition-related

        The Company recorded contingent consideration in the form of common stock as part of the CityDeal acquisition, which was subsequently remeasured on a periodic basis during the year ended December 31, 2010 until final settlement. Had the transaction occurred on January 1, 2010 the amount may have been materially different.

(c)   Earnings per share

        The pro forma basic earnings per share includes 146,661,182 shares of Series B, Series D, Series E, Series F and Series G preferred stock converted into shares of common stock and the              shares of additional common stock issued in this offering. The pro forma diluted earnings per share include the dilutive effect of              stock options outstanding using the treasury stock method.

F-126

Appendix A

        The following information was included in an email dated August 25, 2011 from the Chief Executive Officer of Groupon, Inc. to certain Groupon employees. Please see Risk Factors—"In making an investment decision, you should not rely on a memorandum sent by our Chief Executive Officer to certain employees that was leaked to the media without our knowledge. The email and its contents, including the information set forth in Appendix A to this prospectus, should not be considered in isolation and you should make your investment decision only after reading this entire prospectus carefully." for clarification of certain information contained in the email.

1.     GROWTH IN THE CORE BUSINESS

        Thanks to a tremendous effort by our sales team, August in the U.S. is shaping up to be a pivotal month. It appears that will revenues grow by about 12% over last month (which is a lot), while we cut our marketing expenses by 20% in the same period.

        The way Groupon spends on marketing is unique in three ways:

        1.     We are currently spending more than just about any company ever on marketing—in Q2, we spent nearly 20% of our net revenue on marketing, while a typical company spends less than 5%. Why do we spend so much? The simple answer is "because it works." But that's only part of what makes our situation special.

        2.     Our marketing—at least the customer acquisition marketing that we remove from ACSOI—is designed to add people to our own long-term marketing channel—our daily email list. Once we have a customer's email, we can continually market to them at no additional cost. Compare this to Johnson and Johnson, McDonald's, or most other companies. If I'm a Johnson, and I'm trying to sell you a box of Band Aids, I have to keep spending money on commercials and magazine ads and stuff to remind you about how sweet Band Aids are, even after you've bought your first box. With Groupon, we just spend money one time to get you on our email list, and then every day we email you a reminder of the sweetness of our metaphorical Band Aid. There is no cost of reacquisition—that's unusual (and we created ACSOI to point that out). If Johnson wanted to follow the Groupon strategy, he would have to start a free daily newspaper about bandages and then run Band Aid ads in it every day.

        3.     Eventually, we'll ramp down marketing just as fast as we ramped it up, reducing the customer acquisition part of our marketing expenses (the piece that we remove in ACSOI) to nominal levels. We are spending a ton now because we're acquiring as many subscribers as we can as quickly as we can. We aren't paying attention to marketing budget (just marketing ROI) in the way a normal company would, because we know that even if we wanted to continue to spend at these levels, we would eventually run out of new subscribers to acquire. So our customer acquisition spend drops severely to reflect the fact that eventually we'll run out of people we can add to our email list. We view this internally as a very large one-time expense and then our job forever after will be to continually convert these subscribers into customers and to make sure our customers keep buying from us. Ongoing, the normal marketing dollars we spend are not something we would remove from our internal calculation of ACSOI.

        Over the past several months we've been consistently reducing our marketing spend and yet revenues are still increasing at a significant pace. In Q1 of this year, marketing represented 32.3% of our net revenues. By the end of Q2 it had fallen to 19.4%. And it has continued to fall over the past several months all because we've been investing in our own long-term marketing channel—our email list.

A-1

        Internationally we see the same trends—marketing is down, but revenues are up—every country is either losing less or making more. Even in young markets like Korea, where we're still making massive investments, we're seeing unprecedented growth. We started building our Korean team this January, despite the presence of two competitors that were larger than any we'd previously battled from behind. Thanks to the brilliant execution of the Korean team, we are set to be the market leader within months. We've never had a country grow as fast as Korea!

2.     NEW BUSINESS LINES ARE BOOMING

        Travel and Product are enormous opportunities. After only a few months, they're already making up 20% of revenue in some countries. We sold $2M worth of mattresses in the UK—in one day! Groupon Getaways will do $10M in its first calendar month—which you might think is awesome, but we're actually disappointed with those results because we know how much better we'll be doing soon.

        While there's still a ton of work to do, Groupon Now! continues to see weekly double digit growth. The model works and I believe it will play a major part in the future of our global business as more merchants and customers join the marketplace.

3.     WE ARE PULLING AWAY FROM COMPETITION

        If there's a question I've received from Groupon skeptics more than any other, it's, "how will you fend off the competition—especially massive companies like Google and Facebook?" I could give a dozen reasons to bet on Groupon, but it's impossible to predict the future or the actions of others. Well, now the sleeping giants have woken up—and the numbers are showing that what was proven true with literally thousands of other competitors is just as true with the incumbents of the Internet: it's kind of hard to build a Groupon. And since anyone with an Internet connection can track the performance of our competitors, I can be more specific:

•

Google Offers is small and not growing. In the three markets where we compete, we are 450% of their size.

•

Yelp is small and not growing. In the 15 markets where we compete, our daily deals are 500% of their size.

•

Living Social's U.S. local business is about 1/3rd our size in revenue (and smaller in GP) and has shrunk relative to us in the last several months. This, in part, appears to be driving them toward short-sighted tactics to buy revenue, like buying gift certificates from national retailers at full price and then paying out of their own pocket to give the appearance of a 50% off deal. Our marketing team has tested this tactic enough to know that it's generally a bad idea, and not a profitable form of customer acquisition.

•

Facebook sales are harder to track, but are even less significant at present.

        My point is not that our competitors will fail—some may actually develop sustainable businesses, or even grow—after all, local commerce is an enormous market. The real point is that our business is a lot harder to build than people realize and our scale creates competitive advantages that even the largest technology companies are having trouble penetrating. And with the launch of NOW, I suspect our competition will have an even harder time in light of the natural barriers to entry that are needed to build a real-time local deals marketplace.

A-2

4.     OUR TEAM

        This is the fluffiest of the four points, but maybe the most important—we've built a global team of hungry entrepreneurial operators and seasoned executives that rivals any team I know of.

        I point out the team because while today the business is strong and it appears we must endure success for awhile longer (despite its impermanence), we will inevitably be challenged with issues we didn't predict—and when that happens, the quality of our team will be a deciding factor in our ultimate long-term success.

A-3

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 13.    OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.

        The following table sets forth all expenses to be paid by the registrant, other than estimated underwriting discounts and commissions, in connection with this offering. All expenses will be borne by the registrant (except any underwriting discounts and commissions and expenses incurred by the selling stockholders in this offering). All amounts shown are estimates except for the SEC registration fee, the FINRA filing fee and the                listing fee.

SEC registration fee			$	87,075
FINRA filing fee			$	75,500
		listing fee		*
Printing and engraving				*
Legal fees and expenses				*
Accounting fees and expenses				*
Blue sky fees and expenses (including related legal fees)				*
Transfer agent and registrar fees				*
Miscellaneous expenses				*
	Total		$	*

*

To be provided by amendment

ITEM 14.   INDEMNIFICATION OF DIRECTORS AND OFFICERS.

        Section 145 of the Delaware General Corporation Law authorizes a corporation's board of directors to grant, and authorizes a court to award, indemnity to officers, directors and other corporate agents.

        As permitted by Section 102(b)(7) of the Delaware General Corporation Law, or DGCL, the registrant's certificate of incorporation to be in effect upon the closing of this offering includes provisions that eliminate the personal liability of its directors and officers for monetary damages for breach of their fiduciary duty as directors and officers, except for liability (i) for any breach of the director's duty of loyalty to the corporation or its stockholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) for unlawful payments of dividends or unlawful stock repurchases, redemptions or other distributions or (iv) for any transaction from which the director derived an improper personal benefit. The registrant's amended and restated certificate of incorporation provides for such limitation of liability.

        In addition, as permitted by Section 145 of the DGCL, the bylaws of the registrant to be effective upon completion of this offering provide that:

•

The registrant shall indemnify its directors and officers for serving the registrant in those capacities or for serving other business enterprises at the registrant's request, to the fullest extent permitted by Delaware law. Delaware law provides that a corporation may indemnify such person if such person acted in good faith and in a manner such person reasonably believed to be in or not opposed to the best interests of the registrant and, with respect to any criminal action or proceeding, had no reasonable cause to believe such person's conduct was unlawful.

•

The registrant may, in its discretion, indemnify employees and agents in those circumstances where indemnification is permitted by applicable law.

•

The registrant is required to advance expenses, as incurred, to its directors and officers in connection with defending a proceeding, except that such director or officer shall undertake to

II-1

repay such advances if it is ultimately determined that such person is not entitled to indemnification.

•

The registrant will not be obligated pursuant to the bylaws to indemnify a person with respect to proceedings initiated by that person, except with respect to proceedings authorized by the registrant's board of directors or brought to enforce a right to indemnification.

•

The rights conferred in the bylaws are not exclusive, and the registrant is authorized to enter into indemnification agreements with its directors, officers, employees and agents and to obtain insurance to indemnify such persons.

•

The registrant may not retroactively amend the bylaw provisions to reduce its indemnification obligations to directors, officers, employees and agents.

        The registrant's policy is to enter into separate indemnification agreements with each of its directors and officers that provide the maximum indemnity allowed to directors and executive officers by Section 145 of the DGCL and certain additional procedural protections. The registrant will also maintain directors and officers insurance to insure such persons against certain liabilities.

        These indemnification provisions and the indemnification agreements entered into between the registrant and its officers and directors may be sufficiently broad to permit indemnification of the registrant's officers and directors for liabilities (including reimbursement of expenses incurred) arising under the Securities Act.

        The underwriting agreement to be filed as Exhibit 1.1 to this registration statement provides for indemnification by the underwriters of the registrant and its officers and directors for certain liabilities arising under the Securities Act and otherwise.

ITEM 15.    RECENT SALES OF UNREGISTERED SECURITIES.

        We sold the following shares of our Series D preferred stock, Series E preferred stock, Series F preferred stock, Series G preferred stock, voting common stock and non-voting common stock to the following entities and individuals on the dates set forth below. The issuances of these securities were deemed to be exempt from registration under the Securities Act of 1933, as amended, in reliance on Section 4(2) of the Securities Act as transactions not involving a public offering. The information set forth below with respect to our voting and non-voting common stock gives effect to (i) the three-for-one stock split of our voting and non-voting common stock that was completed in August 2010 and (ii) the two-for-one stock split of our voting and non-voting common stock that was completed in January 2011.

Name of Stockholder	Series D Preferred Stock(1)		Series E Preferred Stock(2)		Series F Preferred Stock(3)		Voting Common Stock(4)		Non-Voting Common Stock(5)		Series G Preferred Stock(6)	Date of Purchase		Total Purchase Price
Entities affiliated with New Enterprise Associates		6,560,174											1/15/08	$	4,799,999
Andrew D. Mason								1,800,000					11/1/09	$	144,000
Entities affiliated with Accel Partners				2,932,552									11/17/09	$	20,000,005
Entities affiliated with New Enterprise Associates				1,466,276									11/17/09	$	10,000,002
The Board of Trustees of Leland Stanford Junior University				7,332									11/17/09	$	50,004
Entities affiliated with Digital Sky Technologies						3,113,080							4/16/10	$	100,000,000
Entities affiliated with Battery Ventures						1,089,578							4/16/10	$	35,000,000
Goodrec, Inc. stockholders										357,300			5/6/10		(7)

II-2

Name of Stockholder	Series D Preferred Stock(1)	Series E Preferred Stock(2)	Series F Preferred Stock(3)	Voting Common Stock(4)		Non-Voting Common Stock(5)		Series G Preferred Stock(6)		Date of Purchase		Total Purchase Price
CityDeal Management UG (haftungsbeschraenkt) & Co. Beteiligungs KG					1,980,000						5/15/10		(8)
CD-Inv Holding UG (haftungsbeschraenkt) & Co. Beteiligungs KG					5,939,406						5/15/10		(8)
Entities Affiliated with Oliver and Marc Samwer(9)					11,880,594						5/15/10		(8)
Goodrec, Inc. stockholders							120,000				11/6/10		(10)
Ludic Labs Inc. stockholders							1,230,000				11/30/10		(11)
CityDeal Management UG (haftungsbeschraenkt) & Co. Beteiligungs KG					2,010,000						12/1/10		(12)
CD-Inv Holding UG (haftungsbeschraenkt) & Co. Beteiligungs KG					6,029,400						12/1/10		(12)
Entities Affiliated with Oliver and Marc Samwer(9)					13,560,600						12/1/10		(12)
Entities affiliated with The Growth Fund of America, Inc.									5,539,730		12/17/10	$	175,000,071
Entities affiliated with Fidelity Investments									3,165,559		12/17/10	$	100,000,009
Entities affiliated with Morgan Stanley Investment Management									2,374,170		12/17/10	$	75,000,030
Entities affiliated with T. Rowe Price									3,165,559		12/17/10	$	100,000,009
Allen & Company, LLC									126,622		1/11/11	$	3,999,989
Entities affiliated with DST Global Limited									1,614,436		1/11/11	$	51,000,033
Andreessen Horowitz Fund II, L.P.									1,266,223		1/11/11	$	39,999,985
Entities affiliated with Battery Ventures VIII, L.P.									728,079		1/11/11	$	23,000,016
Entities affiliated with Greylock XIII Limited Partnership									2,057,613		1/11/11	$	64,999,995
Guy Oseary Family Trust									63,311		1/11/11	$	1,999,994
KPCB Holdings, Inc.									2,057,614		1/11/11	$	65,000,026
Entities affiliated with Maverick Fund Private Investments, Ltd.									1,582,780		1/11/11	$	50,000,020
SLP Green Holdings, L.L.C.									1,582,779		1/11/11	$	49,999,989
Entities affiliated with TCV Member Fund, L.P.									4,748,339		1/11/11	$	150,000,029
Howard Schultz							316,556				2/10/11	$	5,000,002
Matt McCutchen							14,520				2/10/11	$	229,343
Entities affiliated with MEP Associates IV, L.P.							633,112				2/10/11	$	10,000,004
Placido Arango							63,311				2/10/11	$	999,997
Theodore J. Leonsis							63,331				2/24/11	$	1,000,313
Zappedy stockholders							213,092				7/15/11		(13)
Entities Affiliated with Oliver and Marc Samwer(14)									1,454,428		7/29/11		(15)

(1)

Each share of Series D preferred stock will convert into six shares of Class A common stock upon the consummation of this offering.

(2)

Each share of Series E preferred stock will convert into six shares of Class A common stock upon the consummation of this offering.

(3)

Each share of Series F preferred stock will convert into six shares of Class A common stock upon the consummation of this offering.

II-3

(4)

Each share of voting common stock will convert into one share of Class A common stock upon the consummation of this offering.

(5)

Each share of non-voting common stock will convert into one share of Class A common stock upon the consummation of this offering.

(6)

Each share of Series G preferred stock will convert into two shares of Class A common stock upon the consummation of this offering.

(7)

These shares were issued as partial consideration in connection with the merger of Goodrec, Inc. d/b/a Mobly with and into Groupon Mobly, Inc.

(8)

These shares were issued as consideration in connection with acquisition the of CityDeal Europe GmbH by Groupon Germany GbR.

(9)

Shares issued to CD-Rocket Holdings UG (haftungsbeschraenkt) & Co. Beteiligungs KG is owned by Rocket Internet GmbH, 83.34% of which is owned by European Founders Fund GmbH. European Founders Fund is owned by Oliver Samwer (33.33%), Marc Samwer (33.33%) and Alexander Samwer (33.33%).

(10)

These shares were issued as contingent consideration in connection with the merger of Goodrec, Inc. d/b/a Mobly with and into Groupon Mobly, Inc.

(11)

These shares were issued as partial consideration in connection with the merger of Ludic Labs, Inc. with and into Groupon Ludic, Inc.

(12)

These shares were issued as contingent consideration in connection with the acquisition of CityDeal Europe GmbH by Groupon Germany GbR.

(13)

These shares were issued as consideration in connection with the acquisition of Zappedy, Inc. by Groupon.

(14)

Shares issued to Rocket Asia GmbH & Co. KG is owned by Rocket Internet GmbH, 83.34% of which is owned by European Founders Fund GmbH. European Founders Fund is owned by Oliver Samwer (33.33%), Marc Samwer (33.33%) and Alexander Samwer (33.33%).

(15)

These shares were issued as consideration in connection with an increase in Groupon's interest in E-Commerce King Limited.

        Since January 1, 2008, we have granted options to 664 of our employees or consultants to purchase an aggregate of 18,855,200 shares of our common stock, of which 5,657,622 have been exercised, 3,893,112 have expired and 9,304,466 remain either unvested or unexercised. The weighted average exercise price for the unvested and/or unexercised options is $2.26 per share. In addition, since January 1, 2008, we have granted 9,841,748 restricted stock units to 292 of our employees or consultants, 5,930,848 of which remain unvested. Each of the option and restricted stock unit grants were awarded under either the Company's 2010 Stock Plan or 2008 Stock Option Plan and, subject to the terms of those plans, vest and allow for exercise, as applicable, in accordance with the terms of each individual grant.

        Other than the transactions listed immediately above, we have not issued and sold any unregistered securities in the three years preceding the filing of this registration statement.

ITEM 16.    EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.

(a)

Exhibits. The following exhibits are included herein or incorporated herein by reference:

Exhibit Number			Description
	1.1	*	Form of Underwriting Agreement.
	3.1		Fifth Amended and Restated Certificate of Incorporation, as currently in effect.
	3.2	*	Form of Amended and Restated Certificate of Incorporation, to be in effect upon the closing of this offering.
	3.3		By-Laws, as currently in effect.
	3.4	*	Form of Amended and Restated Bylaws, to be in effect upon the closing of this offering.
	4.1	*	Specimen Class A common stock certificate of the Registrant.

II-4

Exhibit Number			Description
	4.2		Third Amended and Restated Investors Rights Agreement, dated as of December 10, 2010, between Groupon, Inc. and certain investors named therein.
	5.1	*	Opinion of Winston & Strawn LLP.
	10.1	+	2008 Stock Option Plan.**
	10.2	+	Form of Notice of Grant of Stock Option under 2008 Stock Option Plan.**
	10.3	+	2010 Stock Plan.**
	10.4	+	Form of Notice of Grant of Stock Option under 2010 Stock Plan.**
	10.5	+	Form of Notice of Restricted Stock Unit Award under 2010 Stock Plan.**
	10.6		Employment Agreement, dated as of November 1, 2009, by and between Groupon, Inc. and Andrew D. Mason.**
	10.7		Amendment to Employment Agreement, dated as of December 15, 2010, by and between Groupon, Inc. and Andrew D. Mason.**
	10.8	+	Amended and Restated Employment Agreement, dated as of April 29, 2011, by and between Groupon, Inc. and Jason Child.**
	10.9		Employment Agreement, dated as of March 15, 2010, by and between Groupon, Inc. and Rob Solomon.**
	10.10		Amendment to Employment Agreement, dated as of December 15, 2010, by and between Groupon, Inc. and Rob Solomon.**
	10.11		Employment Agreement, dated as of November 30, 2010, by and between Groupon, Inc., Groupon Ludic, Inc. and Brian Totty.**
	10.12	+	Consulting Contract, dated May 12, 2010, between CityDeal Europe GmbH and Oliver Samwer.**
	10.13	+	Share Exchange and Transfer Agreement, dated as of May 15, 2010, by and among CD-Inv Holding UG, CD-Rocket Holding UG, CityDeal Management UG, CityDeal Europe GmbH, Groupon German GbR and Groupon,  Inc.
	10.14	+	Earn-out Agreement, dated as of May 15, 2010, by and among CD-Inv Holding UG, CD-Rocket Holding UG, CityDeal Management UG, CityDeal Europe GmbH, Groupon German GbR and Groupon, Inc.
	10.15	+	First Amendment to Earn-Out Agreement, dated as of September 14, 2010, by and among CD-Inv Holding UG, CD-Rocket Holding UG, CityDeal Management UG, CityDeal Europe GmbH, Groupon German GbR and Groupon,  Inc.
	10.16	+	Second Amendment to Earn-Out Agreement, dated as of November 30, 2010, by and among CD-Inv Holding UG, CD-Rocket Holding UG, CityDeal Management UG, CityDeal Europe GmbH, Groupon German GbR and Groupon,  Inc.
	10.17	+	Agreement of Lease, dated as of October 14, 2010, by and between 600 West Chicago Associates LLC and Groupon, Inc.
	10.18	+	Sublease, dated as of June 2010, by and between Lightbank LLC and Groupon, Inc.
	10.19	+	Office Sublease Agreement, dated as of June 23, 2009, by and between InnerWorkings, Inc. and The Point.

II-5

Exhibit Number			Description
	10.20	+	Agreement of Lease, dated as of December 7, 2010, by and between 600 West Chicago Associates LLC and Groupon, Inc.
	10.21		Agreement and Plan of Merger, dated as of May 6, 2010, by and among Groupon, Inc., Groupon Mobly, Inc., Goodrec, Inc. and the Stockholders' Representative named therein.
	10.22		Agreement and Plan of Merger, dated as of November 30, 2010, by and among Groupon, Inc., Groupon Ludic, Inc., Ludic Labs, Inc. and the Stockholders Representative named therein.
	10.23		Separation Agreement and General Release, dated as of April 6, 2011, by and between Groupon, Inc. and Ken Pelletier.**
	10.24		Transition Services and Separation Agreement and Mutual General Release, dated as of April 5, 2011, by and between Groupon, Inc. and Rob Solomon.**
	10.25	+	Employment Agreement, dated as of April 15, 2011, by and between Groupon, Inc. and Margaret H. Georgiadis.**
	10.26		Letter Agreement, dated as of August 11, 2010, by and between Qpod.inc, IVP Fund A, L.P., IVP Fund B, L.P. and Groupon B.V. and Groupon, Inc.
	10.27	*	Form of Indemnification Agreement**
	10.28		2011 Incentive Plan**
	21.1		Subsidiaries of Groupon, Inc.
	23.1		Consent of Ernst & Young LLP for Groupon, Inc.
	23.2		Consent of Ernst & Young GmbH Wirtschaftsprüfungsgesellschaft.
	23.3		Consent of Ernst & Young ShinNihon LLC.
	23.4		Consent of Ernst & Young LLP for Ludic Labs, Inc. and Goodrec, Inc.
	23.5	*	Consent of Winston & Strawn LLP (included in Exhibit 5.1).
	24.1+		Power of Attorney.

*

To be filed by amendment

**

Management contract or compensatory plan or arrangement.

+

Previously filed.

II-6

(b)

Financial Statement Schedules.

Report of Independent Registered Public Accounting Firm

        The Board of Directors and Stockholders of Groupon, Inc.

        We have audited the consolidated financial statements of Groupon, Inc. as of December 31, 2009 and 2010, and for each of the three years in the period ended December 31, 2010, and have issued our report thereon dated June 2, 2011 (included elsewhere in this Registration Statement). Our audits also included the financial statement schedule listed in Item 16(b) of Form S-1 of this Registration Statement. This schedule is the responsibility of the Company's management. Our responsibility is to express an opinion based on our audits.

        In our opinion, the financial statement schedule referred to above, when considered in relation to the basic financial statements taken as a whole, presents fairly in all material respects the information set forth therein.

/s/ Ernst & Young LLP
Chicago, Illinois
June 2, 2011

Schedule II—Valuation and Qualifying Accounts

		Balance at Beginning of Year		Charged to Expense		Acquisitions and Other		Balance at End of Year
		(in thousands)
TAX VALUATION ALLOWANCE:
	Year ended December 31, 2008	$	—	$	644	$	252	$	896
	Year ended December 31, 2009		896		682		—		1,528
	Year ended December 31, 2010		1,528		50,474		3,954		55,956

        All other schedules have been omitted because they are either inapplicable or the required information has been given in the consolidated financial statements or the notes thereto.

II-7

ITEM 17.    UNDERTAKINGS.

        The undersigned registrant hereby undertakes to provide to the underwriters at the closing specified in the underwriting agreement certificates in such denominations and registered in such names as required by the underwriters to permit prompt delivery to each purchaser.

        Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue.

        The undersigned registrant hereby undertakes that:

        (1)   For purposes of determining any liability under the Securities Act of 1933, the information omitted from the form of prospectus filed as part of this registration statement in reliance upon Rule 430A and contained in a form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be part of this registration statement as of the time it was declared effective.

        (2)   For the purpose of determining any liability under the Securities Act of 1933, each post effective amendment that contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

II-8

SIGNATURES

        Pursuant to the requirements of the Securities Act of 1933, the registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in Chicago, Illinois, on the 23^rd day of September, 2011.

GROUPON, INC.
By:	/s/ ANDREW D. MASON
	Name:	Andrew D. Mason
	Title:	Chief Executive Officer

        Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities and on the dates indicated.

Signature	Title	Date
/s/ ANDREW D. MASON Andrew D. Mason	President, Chief Executive Officer and Director (Principal Executive Officer)	September 23, 2011
* Jason E. Child	Chief Financial Officer (Principal Financial Officer)	September 23, 2011
* Joseph M. Del Preto	Chief Accounting Officer (Principal Accounting Officer)	September 23, 2011
* Peter J. Barris	Director	September 23, 2011
* Kevin J. Efrusy	Director	September 23, 2011
* Mellody Hobson	Director	September 23, 2011
* Bradley A. Keywell	Director	September 23, 2011

II-9

Signature	Title	Date
* Eric P. Lefkofsky	Director	September 23, 2011
* Theodore J. Leonsis	Director	September 23, 2011
* Howard Schultz	Director	September 23, 2011

*By: /s/ ANDREW D. MASON
Andrew D. Mason, as attorney-in-fact

II-10

EXHIBIT INDEX

Exhibit Number			Description
	1.1	*	Form of Underwriting Agreement.
	3.1		Fifth Amended and Restated Certificate of Incorporation, as currently in effect.
	3.2	*	Form of Amended and Restated Certificate of Incorporation, to be in effect upon the closing of this offering.
	3.3		By-Laws, as currently in effect.
	3.4	*	Form of Amended and Restated Bylaws, to be in effect upon the closing of this offering.
	4.1	*	Specimen Class A common stock certificate of the Registrant.
	4.2		Third Amended and Restated Investors Rights Agreement, dated as of December 10, 2010, between Groupon, Inc. and certain investors named therein.
	5.1	*	Opinion of Winston & Strawn LLP.
	10.1	+	2008 Stock Option Plan.**
	10.2	+	Form of Notice of Grant of Stock Option under 2008 Stock Option Plan.**
	10.3	+	2010 Stock Plan.**
	10.4	+	Form of Notice of Grant of Stock Option under 2010 Stock Plan.**
	10.5	+	Form of Notice of Restricted Stock Unit Award under 2010 Stock Plan.**
	10.6		Employment Agreement, dated as of November 1, 2009, by and between Groupon, Inc. and Andrew D. Mason.**
	10.7		Amendment to Employment Agreement, dated as of December 15, 2010, by and between Groupon, Inc. and Andrew D. Mason.**
	10.8	+	Amended and Restated Employment Agreement, dated as of April 29, 2011, by and between Groupon, Inc. and Jason Child.**
	10.9		Employment Agreement, dated as of March 15, 2010, by and between Groupon, Inc. and Rob Solomon.**
	10.10		Amendment to Employment Agreement, dated as of December 15, 2010, by and between Groupon, Inc. and Rob Solomon.**
	10.11		Employment Agreement, dated as of November 30, 2010, by and between Groupon, Inc., Groupon Ludic, Inc. and Brian Totty.**
	10.12	+	Consulting Contract, dated May 12, 2010, between CityDeal Europe GmbH and Oliver Samwer.**
	10.13	+	Share Exchange and Transfer Agreement, dated as of May 15, 2010, by and among CD-Inv Holding UG, CD-Rocket Holding UG, CityDeal Management UG, CityDeal Europe GmbH, Groupon Germany GbR and Groupon,  Inc.
	10.14	+	Earn-out Agreement, dated as of May 15, 2010, by and among CD-Inv Holding UG, CD-Rocket Holding UG, CityDeal Management UG, CityDeal Europe GmbH, Groupon Germany GbR and Groupon, Inc.

II-11

Exhibit Number			Description
	10.15	+	First Amendment to Earn-Out Agreement, dated as of September 14, 2010, by and among CD-Inv Holding UG, CD-Rocket Holding UG, CityDeal Management UG, CityDeal Europe GmbH, Groupon Germany GbR and Groupon,  Inc.
	10.16	+	Second Amendment to Earn-Out Agreement, dated as of November 30, 2010, by and among CD-Inv Holding UG, CD-Rocket Holding UG, CityDeal Management UG, CityDeal Europe GmbH, Groupon Germany GbR and Groupon, Inc.
	10.17	+	Agreement of Lease, dated as of October 14, 2010, by and between 600 West Chicago Associates LLC and Groupon, Inc.
	10.18	+	Sublease, dated as of June 2010, by and between Lightbank LLC and Groupon, Inc.
	10.19	+	Office Sublease Agreement, dated as of June 23, 2009, by and between InnerWorkings, Inc. and The Point.
	10.20	+	Agreement of Lease, dated as of December 7, 2010, by and between 600 West Chicago Associates LLC and Groupon, Inc.
	10.21		Agreement and Plan of Merger, dated as of May 6, 2010, by and among Groupon, Inc., Groupon Mobly, Inc., Goodrec, Inc. and the Stockholders' Representative named therein.
	10.22		Agreement and Plan of Merger, dated as of November 30, 2010, by and among Groupon, Inc., Groupon Ludic, Inc., Ludic Labs, Inc. and the Stockholders' Representative named therein.
	10.23		Separation Agreement and General Release, dated as of April 6, 2011, by and between Groupon, Inc. and Ken Pelletier.**
	10.24		Transition Services and Separation Agreement and Mutual General Release, dated as of April 5, 2011, by and between Groupon, Inc. and Rob Solomon.**
	10.25	+	Employment Agreement, dated as of April 15, 2011, by and between Groupon, Inc. and Margaret H. Georgiadis.**
	10.26		Letter Agreement, dated as of August 11, 2010, by and between Qpod.inc, IVP Fund A, L.P., IVP Fund B, L.P. and Groupon B.V. and Groupon, Inc.
	10.27	*	Form of Indemnification Agreement.**
	10.28		2011 Incentive Plan.**
	21.1		Subsidiaries of Groupon, Inc.
	23.1		Consent of Ernst & Young LLP for Groupon, Inc.
	23.2		Consent of Ernst & Young GmbH Wirtschaftsprüfungsgesellscaft.
	23.3		Consent of Ernst & Young ShinNihon LLC.
	23.4		Consent of Ernst & Young LLP for Ludic Labs, Inc. and Goodrec, Inc.
	23.5	*	Consent of Winston & Strawn LLP (included in Exhibit 5.1).
	24.1+		Power of Attorney.

*

To be filed by amendment

**

Management contract or compensatory plan or arrangement.

+

Previously Filed.

II-12

EX-3.1

Exhibit 3.1

FIFTH AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
GROUPON, INC.

Andrew Mason hereby certifies that:

ONE:          The original name of this company was ThePoint.com, Inc. and the date of filing the original Certificate of Incorporation of this company with the Secretary of State of the State of Delaware was January 15, 2008.

TWO:        This company changed its name to Groupon, Inc. by filing a Certificate of Amendment to the Amended and Restated Certificate of Incorporation on June 16, 2009.

THREE:     This company effected a three shares-for-one share stock split by filing a Certificate of Amendment to the Third Amended and Restated Certificate of Incorporation on August 10, 2010.

FOUR:       He is the duly elected and acting Chief Executive Officer of Groupon, Inc., a Delaware corporation.

FIVE:          The Fourth Amended and Restated Certificate of Incorporation of this company filed with the Secretary of State of the State of Delaware on December 17, 2010 is hereby amended and restated to read as follows:

I.

The name of this company is Groupon, Inc. (the “Corporation”).

II.

The address of the registered office of the Corporation in the State of Delaware is Corporation Trust Center, 1209 Orange Street, City of Wilmington, County of New Castle, Delaware 19801, and the name of the registered agent of the Corporation in the State of Delaware at such address is The Corporation Trust Company.

III.

The purpose of the Corporation is to engage in any lawful act or activity for which a corporation may be organized under the Delaware General Corporation Law (“DGCL”).

IV.

A.            The Corporation is authorized to issue two classes of stock to be designated, respectively, “Common Stock” and “Preferred Stock.” The total number of shares which the

Corporation is authorized to issue is 645,444,680 shares, 600,000,000 shares of which shall be Common Stock (the “Common Stock”), and 45,444,680 shares of which shall be Preferred Stock (the “Preferred Stock” and collectively with the Common Stock, the “Stock”). The Preferred Stock shall have a par value of $0.0001 per share. The Common Stock shall have a par value of $0.0001 per share.

B.            500,000,000 of the authorized shares of Common Stock are hereby designated “Voting Common Stock” (the “Voting Common Stock”), and 100,000,000 of the authorized shares of Common Stock are hereby designated “Nonvoting Common Stock” (the “Nonvoting Common Stock”).

C.            Immediately upon the filing of this Fifth Amended and Restated Certificate of Incorporation with the Secretary of State of the State of Delaware (the “Effective Time”), (i) each one (1) share of Voting Common Stock issued and outstanding immediately prior to the Effective Time shall be, and is automatically, reclassified as and subdivided into (without any further action by the Corporation or the holder thereof) two (2) shares of Voting Common Stock, and (ii) each one (1) share of Nonvoting Common Stock issued and outstanding immediately prior to the Effective Time shall be, and is automatically, reclassified as and subdivided into (without any further action by the Corporation or the holder thereof) two (2) shares of Nonvoting Common Stock ((i) and (ii), collectively, the “Stock Split”). Each stock certificate that immediately prior to the date hereof represented shares of Voting Common Stock or Nonvoting Common Stock (the “Old Certificates”) shall thereafter represent that number of shares of Voting Common Stock or Nonvoting Common Stock, as applicable, into which the shares of Voting Common Stock or Nonvoting Common Stock represented by the Old Certificate shall have been reclassified and subdivided pursuant to the Stock Split. The Corporation shall not be obligated to issue new stock certificates evidencing the number of shares of Common Stock represented by each stock certificate as a result of the Stock Split unless and until the Old Certificates are either surrendered to the Corporation for transfer, or the holder of such Old Certificates notifies the Corporation that such Old Certificates have been lost, stolen or destroyed and executes an agreement satisfactory to the Corporation to indemnify the Corporation from any loss incurred by it in connection with such Old Certificates.

D.            The number of authorized shares of the Common Stock may be increased or decreased (but not below the number of shares of Common Stock then outstanding) by the affirmative vote of the holders of a majority of the capital stock of the Corporation entitled to vote (voting together as a single class on an as-if-converted basis).

E.             199,998 of the authorized shares of Preferred Stock are hereby designated “Series B Preferred Stock” (the “Series B Preferred”), 6,560,174 of the authorized shares of Preferred Stock are hereby designated “Series D Preferred Stock” (the “Series D Preferred”), 4,406,160 of the authorized shares of Preferred Stock are hereby designated “Series E Preferred Stock” (the “Series E Preferred”), 4,202,658 of the authorized shares of Preferred Stock are hereby designated “Series F Preferred Stock” (the “Series F Preferred”), and 30,075,690 of the authorized shares of Preferred Stock are hereby designated “Series G Preferred Stock” (the “Series G Preferred” and collectively with the Series B Preferred, the Series D Preferred, the Series E Preferred and the Series F Preferred, the “Series Preferred”).

2

F.             The rights, preferences, privileges, restrictions and other matters relating to the Common Stock and Series Preferred are as follows:

1.             DIVIDEND RIGHTS. When, as, and if declared by the Board of Directors of the Corporation (the “Board”) and to the extent permitted under applicable law and this Fifth Amended and Restated Certificate of Incorporation (this “Restated Certificate”), the Corporation shall pay dividends to the holders of Common Stock and the holders of Series Preferred, participating equally on an as-converted to Voting Common Stock basis. For the avoidance of doubt, as of the date of this Restated Certificate, there shall be no accrued or declared but unpaid dividends with respect to any Series Preferred.

2.             VOTING RIGHTS.

(a)           General Rights. Except as required by law, the holders of Voting Common Stock shall be entitled to vote their shares on all matters. The holders of Nonvoting Common Stock shall have no voting rights, except as required by law. Each holder of shares of Series D Preferred, Series E Preferred, Series F Preferred and Series G Preferred shall be entitled to the number of votes for each such share of Series Preferred Stock equal to the number of shares of Voting Common Stock into which such share of Series Preferred could be converted (pursuant to Section 5 hereof) immediately after the close of business on the record date fixed for such meeting or for any action of stockholders taken by written consent in lieu of a meeting and, except as required by law, shall vote together with the Voting Common Stock on all matters and shall be entitled to notice of any stockholders’ meeting in accordance with the bylaws of the Corporation. Each holder of shares of Series B Preferred shall be entitled to the number of votes for each such share of Series B Preferred equal to the product obtained by multiplying (i) the number of shares of Voting Common Stock into which such share of Series B Preferred could be converted (pursuant to Section 5 hereof) immediately after the close of business on the record date fixed for such meeting or for any action of stockholders taken by written consent in lieu of a meeting, and (ii) 150, and shall, except as required by law, vote together with the Voting Common Stock on all matters and shall be entitled to notice of any stockholders’ meeting in accordance with the bylaws of the Corporation. Except as otherwise provided herein or as required by law, at any annual or special meeting of the stockholders or in any action by written consent, the holders of Series Preferred shall vote together with the holders of Voting Common Stock as a single class and not as separate classes. With respect to any matter required by law or this Restated Certificate to be submitted to a separate class vote of the holders of Series Preferred, each holder of shares of Series Preferred shall be entitled to one vote for each share of Series Preferred held by such holder.

(b)           Separate Vote of Series E Preferred. For so long as any shares of Series E Preferred are outstanding, in addition to any other vote or consent required herein or by law, the vote or written consent of the holders of at least a majority of the outstanding Series E Preferred, voting or consenting as a separate class, shall be necessary for effecting or validating the following actions (whether by merger, recapitalization or otherwise):

(i)            Any amendment, alteration, or repeal of any provision of this Restated Certificate or the Bylaws of the Corporation (including any filing of a Certificate of Designation); provided, however, that for so long as the majority of the number of directors

3

serving on the Board consists of directors that are not employees of the Corporation (“Independent Directors”), (A) any amendment, alteration, or repeal of any provision of this Restated Certificate or the Bylaws of the Corporation (including any filing of a Certificate of Designation) solely for the purpose of authorizing, designating or issuing any new class or series of stock or any other securities convertible into equity securities of the Corporation ranking on a parity with or senior to the Series E Preferred in right of redemption, liquidation preference, voting or dividend rights or any increase in the authorized or designated number of any such new class or series shall not require approval by the holders of at least a majority of the Series E Preferred under this Section 2(b) if such amendment, alteration or repeal (including any filing of a Certificate of Designation) is approved by at least a majority of the members of the Board, and (B) any amendment, alteration, or repeal of any provision of this Restated Certificate or the Bylaws of the Corporation (including any filing of a Certificate of Designation) in connection with any Acquisition or Asset Transfer shall not require approval by the holders of at least a majority of the Series E Preferred under this Section 2(b) if such amendment, alteration or repeal (including any filing of a Certificate of Designation) is approved by at least a majority of the members of the Board;

(ii)           Any increase or decrease in the authorized number of shares of Preferred Stock or Common Stock; provided, however, that for so long as the majority of the number of directors serving on the Board consists of Independent Directors, (A) any increase or decrease in the authorized number of shares of Preferred Stock or Common Stock solely for the purpose of authorizing, designating or issuing any new class or series of stock or any other securities convertible into equity securities of the Corporation ranking on a parity with or senior to the Series E Preferred in right of redemption, liquidation preference, voting or dividend rights or any increase in the authorized or designated number of any such new class or series shall not require approval by the holders of at least a majority of the Series E Preferred under this Section 2(b) if such increase or decrease is approved by at least a majority of the members of the Board, and (B) any increase or decrease in the authorized number of shares of Preferred Stock or Common Stock in connection with any Acquisition or Asset Transfer shall not require approval by the holders of at least a majority of the Series E Preferred under this Section  2(b) if such increase or decrease is approved by at least a majority of the members of the Board;

(iii)         Any redemption or repurchase with respect to Common Stock or Preferred Stock (other than repurchases of shares in connection with the termination of an employee or consultant pursuant to a stock restriction or similar agreement); provided, however, that for so long as the majority of the number of directors serving on the Board consists of Independent Directors, approval for any such redemption or repurchase by the holders of at least a majority of the Series E Preferred shall not be required under this Section 2(b) if such redemption or repurchase is approved by at least a majority of the members of the Board;

(iv)          Any voluntary dissolution or liquidation of the Corporation or any recapitalization or reclassification of the outstanding stock of the Corporation; and

(v)            Any change to the composition of the Board such that Independent Directors would comprise less than a majority of the Board.

4

(c)           Separate Vote of Series D Preferred. For so long as any shares of Series D Preferred are outstanding, in addition to any other vote or consent required herein or by law, the vote or written consent of the holders of at least a majority of the outstanding Series D Preferred, voting or consenting as a separate class, shall be necessary for effecting or validating the following actions (whether by merger, recapitalization or otherwise):

(i)            Any amendment, alteration, or repeal of any provision of this Restated Certificate or the Bylaws of the Corporation (including any filing of a Certificate of Designation); provided, however, that for so long as the majority of the number of directors serving on the Board consists of Independent Directors, (A) any amendment, alteration, or repeal of any provision of this Restated Certificate or the Bylaws of the Corporation (including any filing of a Certificate of Designation) solely for the purpose of authorizing, designating or issuing any new class or series of stock or any other securities convertible into equity securities of the Corporation ranking on a parity with or senior to the Series D Preferred in right of redemption, liquidation preference, voting or dividend rights or any increase in the authorized or designated number of any such new class or series shall not require approval by the holders of at least a majority of the Series D Preferred under this Section 2(c) if such amendment, alteration or repeal (including any filing of a Certificate of Designation) is approved by at least a majority of the members of the Board, and (8) any amendment, alteration, or repeal of any provision of this Restated Certificate or the Bylaws of the Corporation (including any filing of a Certificate of Designation) in connection with any Acquisition or Asset Transfer shall not require approval by the holders of at least a majority of the Series D Preferred under this Section 2(c) if such amendment, alteration or repeal (including any filing of a Certificate of Designation) is approved by at least a majority of the members of the Board;

(ii)           Any increase or decrease in the authorized number of shares of Preferred Stock or Common Stock; provided, however, that for so long as the majority of the number of directors serving on the Board consists of Independent Directors, (A) any increase or decrease in the authorized number of shares of Preferred Stock or Common Stock solely for the purpose of authorizing, designating or issuing any new class or series of stock or any other securities convertible into equity securities of the Corporation ranking on a parity with or senior to the Series D Preferred in right of redemption, liquidation preference, voting or dividend rights or any increase in the authorized or designated number of any such new class or series shall not require approval by the holders of at least a majority of the Series D Preferred under this Section 2(c) if such increase or decrease is approved by at least a majority of the members of the Board, and (B) any increase or decrease in the authorized number of shares of Preferred Stock or Common Stock in connection with any Acquisition or Asset Transfer shall not require approval by the holders of at least a majority of the Series D Preferred under this Section 2(c) if such increase or decrease is approved by at least a majority of the members of the Board;

(iii)         Any redemption or repurchase with respect to Common Stock or Preferred Stock (other than repurchases of shares in connection with the termination of an employee or consultant pursuant to a stock restriction or similar agreement); provided, however, that for so long as the majority of the number of directors serving on the Board consists of Independent Directors, approval for any such redemption or repurchase by the holders of at least a majority of the Series D Preferred shall not be required under this Section 2(c) if such redemption or repurchase is approved by at least a majority of the members of the Board;

5

(iv)          Any voluntary dissolution or liquidation of the Corporation or any recapitalization or reclassification of the outstanding stock of the Corporation; and

(v)            Any change to the composition of the Board such that Independent Directors would comprise less than a majority of the Board.

(d)           Separate Vote of Series B Preferred. For so long any shares of Series B Preferred remain outstanding, in addition to any other vote or consent required herein or by law, the vote or written consent of the holders of at least a majority of the outstanding Series B Preferred, voting or consenting as a separate class, shall be necessary for effecting or validating the following actions (whether by merger, recapitalization or otherwise):

(i)            Any amendment, alteration, or repeal of any provision of this Restated Certificate or the Bylaws of the Corporation (including any filing of a Certificate of Designation); provided, however, that for so long as the majority of the number of directors serving on the Board consists of Independent Directors, (A) any amendment, alteration, or repeal of any provision of this Restated Certificate or the Bylaws of the Corporation (including any filing of a Certificate of Designation) solely for the purpose of authorizing, designating or issuing any new class or series of stock or any other securities convertible into equity securities of the Corporation ranking on a parity with or senior to the Series B Preferred in right of redemption, liquidation preference, voting or dividend rights or any increase in the authorized or designated number of any such new class or series shall not require approval by the holders of at least a majority of the Series B Preferred under this Section 2(d) if such amendment, alteration or repeal (including any filing of a Certificate of Designation) is approved by at least a majority of the members of the Board, and (B) any amendment, alteration, or repeal of any provision of this Restated Certificate or the Bylaws of the Corporation (including any filing of a Certificate of Designation) in connection with any Acquisition or Asset Transfer shall not require approval by the holders of at least a majority of the Series B Preferred under this Section 2(d) if such amendment, alteration or repeal (including any filing of a Certificate of Designation) is approved by at least a majority of the members of the Board;

(ii)           Any increase or decrease in the authorized number of shares of Preferred Stock or Common Stock; provided, however, that for so long as the majority of the number of directors serving on the Board consists of Independent Directors, (A) any increase or decrease in the authorized number of shares of Preferred Stock or Common Stock solely for the purpose of authorizing, designating or issuing any new class or series of stock or any other securities convertible into equity securities of the Corporation ranking on a parity with or senior to the Series B Preferred in right of redemption, liquidation preference, voting or dividend rights or any increase in the authorized or designated number of any such new class or series shall not require approval by the holders of at least a majority of the Series B Preferred under this Section 2(d) if such increase or decrease is approved by at least a majority of the members of the Board, and (B) any increase or decrease in the authorized number of shares of Preferred Stock or Common Stock in connection with any Acquisition or Asset Transfer shall not require approval by the holders of at least a majority of the Series B Preferred under this Section 2(d) if such increase or decrease is approved by at least a majority of the members of the Board;

6

(iii)         Any redemption or repurchase with respect to Common Stock or Preferred Stock (other than repurchases of shares in connection with the termination of an employee or consultant pursuant to a stock restriction or similar agreement); provided, however, that for so long as the majority of the number of directors serving on the Board consists of Independent Directors, approval for any such redemption or repurchase by the holders of at least a majority of the Series B Preferred shall not be required under this Section 2(d) if such redemption or repurchase is approved by at least a majority of the members of the Board;

(iv)          Any voluntary dissolution or liquidation of the Corporation or any recapitalization or reclassification of the outstanding stock of the Corporation; and

(v)            Any change to the composition of the Board such that Independent Directors would comprise less than a majority of the Board.

(e)           Separate Vote of Series F Preferred. For so long as any shares of Series F Preferred are outstanding, in addition to any other vote or consent required herein or by law, the vote or written consent of the holders of at least a majority of the outstanding Series F Preferred, voting or consenting as a separate class, shall be necessary for effecting or validating the following actions (whether by merger, recapitalization or otherwise):

(i)            Any amendment, alteration, or repeal of any provision of this Restated Certificate or the Bylaws of the Corporation (including any filing of a Certificate of Designation); provided, however, that for so long as the majority of the number of directors serving on the Board consists of Independent Directors, (A) any amendment, alteration, or repeal of any provision of this Restated Certificate or the Bylaws of the Corporation (including any filing of a Certificate of Designation) solely for the purpose of authorizing, designating or issuing any new class or series of stock or any other securities convertible into equity securities of the Corporation ranking on a parity with or senior to the Series F Preferred in right of redemption, liquidation preference, voting or dividend rights or any increase in the authorized or designated number of any such new class or series shall not require approval by the holders of at least a majority of the Series F Preferred under this Section 2(e) if such amendment, alteration or repeal (including any filing of a Certificate of Designation) is approved by at least a majority of the members of the Board, and (B) any amendment, alteration, or repeal of any provision of’ this Restated Certificate or the Bylaws of the Corporation (including any filing of a Certificate of Designation) in connection with any Acquisition or Asset Transfer shall not require approval by the holders of at least a majority of the Series F Preferred under this Section 2(e) if such amendment, alteration or repeal (including any filing of a Certificate of Designation) is approved by at least a majority of the members of the Board; and

(ii)           Any increase or decrease in the authorized number of shares of Preferred Stock or Common Stock; provided, however, that for so long as the majority of the number of directors serving on the Board consists of Independent Directors, (A) any increase or decrease in the authorized number of shares of Preferred Stock or Common Stock solely for the purpose of authorizing, designating or issuing any new class or series of stock or any other securities convertible into equity securities of the Corporation ranking on a parity with or senior to the Series F Preferred in right of redemption, liquidation preference, voting or dividend rights or any increase in the authorized or designated number of any such new class or

7

series shall not require approval by the holders of at least a majority of the Series F Preferred under this Section 2(e) if such increase or decrease is approved by at least a majority of the members of the Board, and (B) any increase or decrease in the authorized number of shares of Preferred Stock or Common Stock in connection with any Acquisition or Asset Transfer shall not require approval by the holders of at least a majority of the Series F Preferred under this Section 2(e) if such increase or decrease is approved by at least a majority of the members of the Board.

(f)            Separate Vote of Series G Preferred. For so long as any shares of Series G Preferred are outstanding, in addition to any other vote or consent required herein or by law, the vote or written consent of the holders of at least a majority of the outstanding Series G Preferred, voting or consenting as a separate class, shall be necessary for effecting or validating the following actions (whether by merger, recapitalization or otherwise):

(i)            Any amendment, alteration, or repeal of any provision of this Restated Certificate or the Bylaws of the Corporation (including any filing of a Certificate of Designation); provided, however, that for so long as the majority of the number of directors serving on the Board consists of Independent Directors, (A) any amendment, alteration, or repeal of any provision of this Restated Certificate or the Bylaws of the Corporation (including any filing of a Certificate of Designation) solely for the purpose of authorizing, designating or issuing any new class or series of stock or any other securities convertible into equity securities of the Corporation ranking on a parity with or senior to the Series G Preferred in right of redemption, liquidation preference, voting or dividend rights or any increase in the authorized or designated number of any such new class or series shall not require approval by the holders of at least a majority of the Series G Preferred under this Section 2(e) if (x) such amendment, alteration or repeal (including any filing of a Certificate of Designation) is approved by at least a majority of the members of the Board and (y) the shares of such new class or series are to be issued or sold for an Effective Price (as defined in Section 5(h) below) not less than $11.055 per share (as adjusted for any stock dividends, combinations, splits, recapitalizations and the like with respect to such shares after the Effective Time), and (B) any amendment, alteration, or repeal of any provision of this Restated Certificate (other than the Liquidation Rights set forth in Section 3 of Part E of this Article IV) or the Bylaws of the Corporation (including any filing of a Certificate of Designation) in connection with any Acquisition or Asset Transfer shall not require approval by the holders of at least a majority of the Series G Preferred under this Section 2(f) if such amendment, alteration or repeal (including any filing of a Certificate of Designation) is approved by at least a majority of the members of the Board;

(ii)           Any increase or decrease in the authorized number of shares of Preferred Stock or Common Stock; provided, however, that for so long as the majority of the number of directors serving on the Board consists of Independent Directors, (A) any increase or decrease in the authorized number of shares of Preferred Stock or Common Stock solely for the purpose of authorizing, designating or issuing any new class or series of stock or any other securities convertible into equity securities of the Corporation ranking on a parity with or senior to the Series G Preferred in right of redemption, liquidation preference, voting or dividend rights or any increase in the authorized or designated number of any such new class or series shall not require approval by the holders of at least a majority of the Series G Preferred under this Section 2(f) if such increase or decrease is approved by at least a majority of the members of the Board, and (B) any increase or decrease in the authorized number of shares of

8

Preferred Stock or Common Stock in connection with any Acquisition or Asset Transfer shall not require approval by the holders of at least a majority of the Series G Preferred under this Section 2(f) if such increase or decrease is approved by at least a majority of the members of the Board; and

(iii)         Any change to the composition of the Board such that Independent Directors would comprise less than a majority of the Board.

(g)           Series Preferred Directors. As long as any shares of Series D Preferred Stock are outstanding, the holders of such shares of Series D Preferred Stock shall be entitled to elect one (1) director of the Corporation at any election of directors. As long as any shares of Series E Preferred Stock are outstanding, the holders of such shares of Series E Preferred Stock shall be entitled to elect one (1) director of the Corporation at any election of directors.

3.             LIQUIDATION RIGHTS.

Upon any liquidation, dissolution or winding up of the Corporation (a “Liquidation Event”), whether voluntary or involuntary, any amounts or assets of the Corporation (or the consideration received in such transaction) legally available for distribution to the holders of the Corporation’s capital stock of all classes shall be paid as follows:

(a)           First, the holders of the shares of Series G Preferred shall be entitled, before any distribution or payment is made upon any Series F Preferred, Series E Preferred, Series D Preferred, Series B Preferred or Common Stock, to be paid an amount per share of Series G Preferred equal to (i) 100% of the Series G Original Issue Price, plus (ii) all declared but unpaid dividends on the Series G Preferred for each share of Series G Preferred held by such holders (the “Series G Liquidation Preference”). If, upon any such Liquidation Event, the assets of the Corporation (or the consideration received by the Company or its stockholders in such Acquisition or Asset Transfer) shall be insufficient to make payment in full to all holders of Series G Preferred of the Series G Liquidation Preference, then such assets (or consideration) shall be distributed among the holders of Series G Preferred at the time outstanding, ratably in proportion to the full amounts to which they would otherwise be respectively entitled if the entire Series G Liquidation Preference were paid in full.

(b)           Second, after the payment of the full Series G Liquidation Preference pursuant to Section 3(a) above, the remaining assets of the Company legally available for distribution in such Liquidation Event (or the consideration received by the Company or its stockholders in such Acquisition or Asset Transfer), if any, shall be distributed ratably to the holders of the Common Stock based on the number of shares of Common Stock then held by each such holder. For purposes of this Section 3, each holder of Series Preferred shall be entitled to receive, upon a Liquidation Event, (i) with respect to each share of Series G Preferred held by such holder, the greater of (x) the Series G Liquidation Preference or (y) the amount such holder would have received if all shares of Series G Preferred had been converted into Voting Common Stock immediately prior to such Liquidation Event, and (ii) with respect to each share of Series B Preferred, Series D Preferred, Series E Preferred and Series F Preferred held by such holder,

9

the amount such holder would have received if all shares of Series Preferred had been converted into Voting Common Stock immediately prior to such Liquidation Event.

4.             ASSET TRANSFER OR ACQUISITION RIGHTS.

(a)           In the event that the Corporation is a party to an Acquisition or Asset Transfer (as hereinafter defined), then each holder of Stock shall be entitled to receive, out of the proceeds of such Acquisition or Asset Transfer, the amount of cash, securities or other property to which such holder would be entitled to receive in a Liquidation Event pursuant to Section 3 above.

(b)           For the purposes of this Restated Certificate: (i) “Acquisition” shall mean (A) any consolidation or merger of the Corporation with or into any other corporation or other entity or person, or any other corporate reorganization or acquisition of the Corporation, other than any such consolidation, merger, reorganization or acquisition in which the stockholders of the Corporation immediately prior to such consolidation, merger, reorganization or acquisition, continue to hold, as a result of shares of the Corporation held by such holders prior to such transaction, at least a majority of the voting power of the surviving entity in substantially the same proportions (or, if the surviving entity is a wholly owned subsidiary, its parent) immediately after such consolidation, merger or reorganization; or (B) any transaction or series of related transactions to which the Corporation is a party in which in excess of fifty percent (50%) of the Corporation’s voting power is transferred; provided that an Acquisition shall not include any transaction or series of transactions principally for bona fide equity financing purposes in which cash is received by the Corporation or any successor or indebtedness of the Corporation is cancelled or converted or a combination thereof; and (ii) “Asset Transfer” shall mean a sale, lease, exclusive license or other disposition of all or substantially all of the assets of the Corporation.

(c)           In any Acquisition or Asset Transfer, if the consideration to be received is securities of a corporation or other property other than cash, its value will be deemed its fair market value as determined in good faith by the Board on the date such determination is made.

(d)           In the event of any transaction described in clause (A) of the definition of “Acquisition” above , if any portion of the consideration payable to the stockholders of the Corporation is placed into escrow and/or is payable to the stockholders of the Corporation subject to contingencies, the merger agreement with respect to such transaction shall provide that (i) the portion of such consideration that is not placed in escrow and not subject to any contingencies (the “Initial Consideration”) shall be allocated among the holders of capital stock of the Corporation in accordance with Section 3 of Part E of this Article IV as if the Initial Consideration were the only consideration payable in connection with such Acquisition and (b) any additional consideration which becomes payable to the stockholders of the Corporation upon release from escrow or satisfaction of contingencies shall be allocated among the holders of capital stock of the Corporation in accordance with Section 3 of Part E of this Article IV after taking into account the previous payment of the Initial Consideration as part of the same transaction

10

5.             CONVERSION RIGHTS.

The holders of the Series Preferred and the Nonvoting Common Stock shall have the following rights with respect to the conversion of the Series Preferred and the Nonvoting Common Stock into shares of Voting Common Stock (the “Conversion Rights”):

(a)           Optional Conversion of Series Preferred. Subject to and in compliance with the provisions of this Section 5, any shares of Series Preferred may, at the option of the holder, be converted at any time into fully-paid and nonassessable shares of Voting Common Stock. The number of shares of Voting Common Stock to which a holder of Series Preferred shall be entitled upon conversion shall be the product obtained by multiplying the applicable “Series Preferred Conversion Rate” then in effect (determined as provided in Section 5(b)) by the number of shares of the applicable series of Series Preferred being converted.

(b)           Series Preferred Conversion Rate. The conversion rate in effect at any time for conversion of the applicable series of Series Preferred (the “Series Preferred Conversion Rate”) shall be the quotient obtained by dividing (x) the applicable Original Issue Price of the applicable series of Series Preferred by (y) the applicable “Series Preferred Conversion Price,” calculated as provided in Section 5(c).  Such initial Series Preferred Conversion Rate shall be adjusted in accordance with this Section 5. For purposes of this Restated Certificate, the “Series G Original Issue Price” shall mean $31.59 per share of Series G Preferred (as adjusted for any stock dividends, combinations, splits, recapitalizations and the like with respect to such shares after the Effective Time), the “Series F Original Issue Price” shall mean $32.122527 per share of Series F Preferred (as adjusted for any stock dividends, combinations, splits, recapitalizations and the like with respect to such shares after the Effective Time), the “Series E Original Issue Price” shall mean $6.82 per share of Series E Preferred (as adjusted for any stock dividends, combinations, splits, recapitalizations and the like with respect to such shares after the Effective Time), the “Series D Original Issue Price” shall mean $0.7316878 per share of Series D Preferred (as adjusted for any stock dividends, combinations, splits, recapitalizations and the like with respect to such shares after the Effective Time), and the “Series B Original Issue Price” shall mean $1.00 per share of Series B Preferred (as adjusted for any stock dividends, combinations, splits, recapitalizations and the like with respect to such shares after the Effective Time). The Series B Original Issue Price, the Series D Original Issue Price, the Series E Original Issue Price, the Series F Original Issue Price, and the Series G Original Issue Price shall each be referred to herein as the “Original Issue Price,” as applicable.

(c)           Series Preferred Conversion Price. For purposes of this Restated Certificate, the “Series G Preferred Conversion Price” shall initially mean $15.795 per share of Series G Preferred (as adjusted for any stock dividends, combinations, splits, recapitalizations and the like with respect to such shares after the Effective Time pursuant to Section 5(e), 5(f) or 5(g) below), the “Series F Preferred Conversion Price” shall initially mean $5.3537545 per share of Series F Preferred (as adjusted for any stock dividends, combinations, splits, recapitalizations and the like with respect to such shares after the Effective Time pursuant to Section 5(e), 5(f) or 5(g) below), the “Series E Preferred Conversion Price” shall initially mean $1.1366667 per share of Series E Preferred (as adjusted for any stock dividends, combinations, splits, recapitalizations and the like with respect to such shares after the Effective Time pursuant to Section 5(e), 5(f) or 5(v) below), the “Series D Preferred Conversion Price” shall initially

11

mean $0.121948 per share of Series D Preferred (as adjusted for any stock dividends, combinations, splits, recapitalizations and the like with respect to such shares after the Effective Time pursuant to Section 5(e), 5(f) or 5(g) below), and the “Series B Preferred Conversion Price” shall initially mean $0.166667 per share of Series B Preferred (as adjusted for any stock dividends, combinations, splits, recapitalizations and the like with respect to such shares after the Effective Time pursuant to Section 5(e), 5(f) or 5(g) below). The initial Series B Preferred Conversion Price, the initial Series D Preferred Conversion Price, the initial Series E Preferred Conversion Price, the initial Series F Preferred Conversion Price, and the initial Series G Preferred Conversion Price shall each be referred to herein as the “Series Preferred Conversion Price,” as applicable. Such initial Series Preferred Conversion Price shall be adjusted from time to time in accordance with this Section 5. All references to the Series Preferred Conversion Price herein shall mean the applicable Series Preferred Conversion Price as so adjusted.

(d)           Mechanics of Conversion. Each holder of Series Preferred who desires to convert the same into shares of Voting Common Stock pursuant to this Section 5 shall surrender the certificate or certificates therefor, duly endorsed, at the office of the Corporation or any transfer agent for the Series Preferred, and shall give written notice to the Corporation at such office that such holder elects to convert the same. Such notice shall state the number of shares of Series Preferred being converted. Thereupon, the Corporation shall promptly issue and deliver at such office to such holder a certificate or certificates for the number of shares of’ Voting Common Stock to which such holder is entitled and shall promptly pay (i) in cash or, to the extent sufficient funds are not then legally available therefore or at such holder’s election, in Voting Common Stock (at the Voting Common Stock’s fair market value determined by the Board as of the date of such conversion), any declared but unpaid dividends on the shares of Series Preferred being converted, and (ii) in cash (at the Voting Common Stock’s fair market value determined by the Board as of the date of conversion) the value of any fractional share of Voting Common Stock otherwise issuable to any holder of Series Preferred. Such conversion shall be deemed to have been made at the close of business on the date of such surrender of the certificates representing the shares of Series Preferred to be converted, and the person entitled to receive the shares of Voting Common Stock issuable upon such conversion shall be treated for all purposes as the record holder of such shares of Voting Common Stock on such date.

(e)           Adjustment for Stock Splits and Combinations. If at any time or from time to time on or after the Effective Time the Corporation effects a subdivision of the outstanding Common Stock without a corresponding subdivision of the Series Preferred, the applicable Series Preferred Conversion Price in effect immediately before that subdivision shall be proportionately decreased. Conversely, if at any time or from time to time after the Effective Time the Corporation combines the outstanding shares of Common Stock into a smaller number of shares without a corresponding combination of the Series Preferred, the applicable Series Preferred Conversion Price in effect immediately before the combination shall be proportionately increased. Any adjustment under this Section 5(e) shall become effective at the close of business on the date the subdivision or combination becomes effective.

(f)            Adjustment for Common Stock Dividends and Distributions.  If at any time or from time to time on or after the Effective Time the Corporation pays to holders of Common Stock a dividend or other distribution in additional shares of Common Stock without a corresponding dividend or other distribution to holders of Preferred

12

Stock, the applicable Series Preferred Conversion Price then in effect shall be decreased as of the time of such issuance, as provided below:

(i)            The applicable Series Preferred Conversion Price shall be adjusted by multiplying the applicable Series Preferred Conversion Price then in effect by a fraction equal to:

(A)          the numerator of which is the total number of shares of Common Stock issued and outstanding immediately prior to the time of such issuance, and

(B)          the denominator of which is the total number of shares of Common Stock issued and outstanding immediately prior to the time of such issuance plus the number of shares of Common Stock issuable in payment of such dividend or distribution;

(ii)           If the Corporation fixes a record date to determine which holders of Common Stock are entitled to receive such dividend or other distribution, the applicable Series Preferred Conversion Price shall be fixed as of the close of business on such record date and the number of shares of Common Stock shall be calculated immediately prior to the close of business on such record date; and

(iii)         If such record date is fixed and such dividend is not fully paid or if such distribution is not fully made on the date fixed therefor, the applicable Series Preferred Conversion Price shall be recomputed accordingly as of the close of business on such record date and thereafter the applicable Series Preferred Conversion Price shall be adjusted pursuant to this Section 5(f) to reflect the actual payment of such dividend or distribution.

(g)           Adjustment for Reclassification, Exchange, Substitution, Reorganization, Merger or Consolidation. If at any time or from time to time on or after the Effective Time, the Voting Common Stock issuable upon the conversion of the Series Preferred is changed into the same or a different number of shares of any class or classes of stock, whether by recapitalization, reclassification, merger, consolidation or otherwise (other than an Acquisition or Asset Transfer as defined in Section 4 or a subdivision or combination of shares or stock dividend provided for elsewhere in this Section 5), in any such event each holder of Series Preferred shall then have the right to convert such stock into the kind and amount of stock and other securities and property receivable upon such recapitalization, reclassification, merger, consolidation or other change by holders of the maximum number of shares of Voting Common Stock into which such shares of Series Preferred could have been converted immediately prior to such recapitalization, reclassification, merger, consolidation or change, all subject to further adjustment as provided herein or with respect to such other securities or property by the terms thereof. In any such case, appropriate adjustment shall be made in the application of the provisions of this Section 5 with respect to the rights of the holders of Series Preferred after the capital reorganization to the end that the provisions of this Section 5 (including adjustment of the applicable Series Preferred Conversion Price then in effect and the number of shares issuable upon conversion of the Series Preferred) shall be applicable after that event and be as nearly equivalent as practicable.

13

(h)           Sale of Shares Below Series Preferred Conversion Price.

(i)            If at any time or from time to time on or after the Effective Time the Corporation issues or sells, or is deemed by the express provisions of this Section 5(h) to have issued or sold, Additional Shares of Common Stock (as defined below), other than as provided in Section 5(e), 5(f) or 5(g) above, for an Effective Price (as defined below) less than the then effective Series E Preferred Conversion Price, Series D Preferred Conversion Price and/or Series B Preferred Conversion Price, as applicable (each a “Qualifying Dilutive Issuance”), then and in each such case, the then existing Series E Preferred Conversion Price, with respect to a Qualifying Dilutive Issuance applicable to the Series E Preferred, the then existing Series D Preferred Conversion Price, with respect to a Qualifying Dilutive Issuance applicable to the Series D Preferred, and/or the then existing Series B Preferred Conversion Price, with respect to a Qualifying Dilutive Issuance applicable to the Series B Preferred, shall be reduced, as applicable, as of the opening of business on the date of such issue or sale, to a price determined by multiplying the applicable Series Preferred Conversion Price in effect immediately prior to such issuance or sale by a fraction equal to:

(A)          the numerator of which shall be (A) the number of shares of Common Stock deemed outstanding (as determined below) immediately prior to such issue or sale, plus (B) the number of shares of Common Stock which the Aggregate Consideration (as defined below) received or deemed received by the Corporation for the total number of Additional Shares of Common Stock so issued would purchase at such then-existing applicable Series Preferred Conversion Price, and

(B)          the denominator of which shall be the number of shares of Common Stock deemed outstanding (as determined below) immediately prior to such issue or sale plus the total number of Additional Shares of Common Stock so issued.

For the purposes of the preceding sentence. the number of shares of Common Stock deemed to be outstanding as of a given date shall be the sum of (A) the number of shares of Common Stock outstanding, (B) the number of shares of Voting Common Stock into which the then outstanding shares of Series Preferred could be converted if fully converted on the day immediately preceding the given date, and (C) the number of shares of Common Stock which are issuable upon the exercise or conversion of all other rights, options and convertible securities outstanding on the day immediately preceding the given date.

(ii)           No adjustment shall be made to the Series Preferred Conversion Price in an amount less than one cent per share. Any adjustment required by this Section 5(h) shall be rounded to the nearest one cent $0.01 per share. Any adjustment otherwise required by this Section 5(h) that is not required to be made due to the preceding two sentences shall be included in any subsequent adjustment to the applicable Series Preferred Conversion Price.

(iii)         For the purpose of making any adjustment required under this Section 5(h), the aggregate consideration received by the Corporation for any issue or sale of securities (the “Aggregate Consideration”) shall be defined as: (A) to the extent it consists of cash, be computed at the gross amount of cash received by the Corporation before deduction of

14

any underwriting or similar commissions, compensation or concessions paid or allowed by the Corporation in connection with such issue or sale and without deduction of any expenses payable by the Corporation, (B) to the extent it consists of property other than cash, be computed at the fair value of that property as determined in good faith by the Board, and (C) if Additional Shares of Common Stock, Convertible Securities (as defined below) or rights or options to purchase either Additional Shares of Common Stock or Convertible Securities are issued or sold together with other stock or securities or other assets of the Corporation for a consideration which covers both, be computed as the portion of the consideration so received that may be reasonably determined in good faith by the Board to be allocable to such Additional Shares of Common Stock, Convertible Securities or rights or options.

(iv)          For the purpose of the adjustment required under this Section 5(h), if the Corporation issues or sells (x) Preferred Stock or other stock, options, warrants, purchase rights or other securities convertible into, Additional Shares of Common Stock (such convertible stock or securities being herein referred to as “Convertible Securities”) or (y) rights or options for the purchase of Additional Shares of Common Stock or Convertible Securities and if the Effective Price of such Additional Shares of Common Stock is less than the applicable Series Preferred Conversion Price, in each case the Corporation shall be deemed to have issued at the time of the issuance of such rights or options or Convertible Securities the maximum number of Additional Shares of Common Stock issuable upon exercise or conversion thereof and to have received as consideration for the issuance of such shares an amount equal to the total amount of the consideration, if any, received by the Corporation for the issuance of such rights or options or Convertible Securities plus:

(A)          in the case of such rights or options, the minimum amounts of consideration, if any, payable to the Corporation upon the exercise of such rights or options; and

(B)          in the case of Convertible Securities, the minimum amounts of consideration, if any, payable to the Corporation upon the conversion thereof (other than by cancellation of liabilities or obligations evidenced by such Convertible Securities); provided that if the minimum amounts of such consideration cannot be ascertained, but are a function of anti-dilution or similar protective clauses, the Corporation shall be deemed to have received the minimum amounts of consideration without reference to such clauses.

(C)          If the minimum amount of consideration payable to the Corporation upon the exercise or conversion of rights, options or Convertible Securities is reduced over time or on the occurrence or non-occurrence of specified events other than by reason of anti-dilution adjustments, the Effective Price shall be recalculated using the figure to which such minimum amount of consideration is reduced; provided further, that if the minimum amount of consideration payable to the Corporation upon the exercise or conversion of such rights, options or Convertible Securities is subsequently increased, the Effective Price shall be again recalculated using the increased minimum amount of consideration payable to the Corporation upon the exercise or conversion of such rights, options or Convertible Securities.

15

(D)          No further adjustment of the applicable Series Preferred Conversion Price, as adjusted upon the issuance of such rights, options or Convertible Securities, shall be made as a result of the actual issuance of Additional Shares of Common Stock or the exercise of any such rights or options or the conversion of any such Convertible Securities. If any such rights or options or the conversion privilege represented by any such Convertible Securities shall expire without having been exercised, the Series Preferred Conversion Price as adjusted upon the issuance of such rights, options or Convertible Securities shall be readjusted to the applicable Series Preferred Conversion Price which would have been in effect had an adjustment been made on the basis that the only Additional Shares of Common Stock so issued were the Additional Shares of Common Stock, if any, actually issued or sold on the exercise of such rights or options or rights of conversion of such Convertible Securities, and such Additional Shares of Common Stock, if any, were issued or sold for the consideration actually received by the Corporation upon such exercise, plus the consideration, if any, actually received by the Corporation for the granting of all such rights or options, whether or not exercised, plus the consideration received for issuing or selling the Convertible Securities actually converted, plus the consideration, if any, actually received by the Corporation (other than by cancellation of liabilities or obligations evidenced by such Convertible Securities) on the conversion of such Convertible Securities, provided that such readjustment shall not apply to prior conversions of Series Preferred.

(v)            For the purpose of making any adjustment to the Conversion Price of the Series E Preferred, the Series D Preferred and/or the Series B Preferred, as applicable and as required under this Section 5(h), “Additional Shares of Common Stock”-shall mean all shares of Common Stock issued by the Corporation or deemed to be issued pursuant to this Section 5(h) (including shares of Common Stock subsequently reacquired or retired by the Corporation), other than:

(A)          shares of Voting Common Stock issued upon conversion of the Series Preferred;

(B)          shares of Common Stock or Convertible Securities issued after the Effective Time to employees, officers or directors of, or consultants or advisors to the Corporation or any subsidiary pursuant to stock purchase or stock option plans or other arrangements that are approved by the Board;

(C)          shares of Common Stock issued pursuant to the exercise of Convertible Securities outstanding as of the Effective Time;

(D)          shares of Common Stock or Convertible Securities issued for consideration other than cash pursuant to a merger, consolidation, acquisition, strategic alliance or similar business combination approved by the Board;

(E)           shares of Common Stock or Convertible Securities issued pursuant to any equipment loan or leasing arrangement, real property leasing arrangement or debt financing from a bank or similar financial institution approved by the Board;

16

(F)           shares of Common Stock or Convertible Securities issued in connection with a firmly underwritten public offering pursuant to an effective registration statement under the Securities Act of 1933, as amended (the “Securities Act”), in which all shares of Series Preferred are converted to Common Stock;

(G)          shares of Common Stock or Convertible Securities issued to third-party service providers in exchange for or as partial consideration for services rendered to the Corporation; provided that the issuance of shares therein has been approved by the Board; and

(H)          any Common Stock or Convertible Securities issued in connection with strategic transactions involving the Corporation and other entities, including (i) joint ventures, manufacturing, marketing or distribution arrangements or (ii) technology transfer or development arrangements; provided that the issuance of shares therein has been approved by the Board.

References to Common Stock in the subsections of this clause (v) above shall mean all shares of Common Stock issued by the Corporation or deemed to be issued pursuant to this Section 5(h). The “Effective Price” of Additional Shares of Common Stock shall mean the quotient determined by dividing the total number of Additional Shares of Common Stock issued or sold, or deemed to have been issued or sold by the Corporation under this Section 5(h), into the Aggregate Consideration received, or deemed to have been received by the Corporation for such issue under this Section 5(h), for such Additional Shares of Common Stock. In the event that the number of shares of Additional Shares of Common Stock or the Effective Price cannot be ascertained at the time of issuance, such Additional Shares of Common Stock shall be deemed issued immediately upon the occurrence of the first event that makes such number of shares or the Effective Price, as applicable, ascertainable.

(vi)          In the event that the Corporation issues or sells, or is deemed to have issued or sold, Additional Shares of Common Stock in a Qualifying Dilutive Issuance (the “First Dilutive Issuance”), then in the event that the Corporation issues or sells, or is deemed to have issued or sold, Additional Shares of Common Stock in a Qualifying Dilutive Issuance other than the First Dilutive Issuance as a part of the same transaction or series of related transactions as the First Dilutive Issuance (a “Subsequent Dilutive Issuance”), then and in each such case upon a Subsequent Dilutive Issuance the applicable Series Preferred Conversion Price shall be reduced to the applicable Series Preferred Conversion Price that would have been in effect had the First Dilutive Issuance and each Subsequent Dilutive Issuance all occurred on the closing date of the First Dilutive Issuance.

(vii)         Notwithstanding anything herein to the contrary, any downward adjustment of the Series Preferred Conversion Price of any series of Preferred Stock may be waived, either prospectively or retroactively and either generally or in a particular instance, by the consent or vote of the holders of a majority of the outstanding shares of such series of Series Preferred. Any such waiver shall bind all future holders of shares of such series of Preferred Stock.

17

(i)            Certificate of Adjustment. In each case of an adjustment or readjustment of the applicable Series Preferred Conversion Price for the number of shares of Voting Common Stock or other securities issuable upon conversion of the Series Preferred, if the Series Preferred is then convertible pursuant to this Section 5, the Corporation, at its expense, shall compute such adjustment or readjustment in accordance with the provisions hereof and shall promptly prepare a certificate showing such adjustment or readjustment, and shall mail such certificate, by first class mail, postage prepaid, to each registered holder of Series Preferred at the holder’s address as shown in the Corporation’s books no later than ten (10) business days after the record date for such adjustment. The certificate shall set forth such adjustment or readjustment, showing in detail the facts upon which such adjustment or readjustment is based, including a statement of (i) the consideration received or deemed to be received by the Corporation for any Additional Shares of Common Stock issued or sold or deemed to have been issued or sold, (ii) the applicable Series Preferred Conversion Price at the time in effect, (iii) the number of Additional Shares of Common Stock and (iv) the type and amount, if any, of other property which at the time would be received upon conversion of the Series Preferred. Failure to request or provide such notice shall have no effect on any such adjustment.

(j)            Notices of Record Date. Upon (i) any taking by the Corporation of a record of the holders of any class of securities for the purpose of determining the holders thereof who are entitled to receive any dividend or other distribution, or (ii) any Acquisition (as defined in Section 4) or other capital reorganization of the Corporation, any reclassification or recapitalization of the capital stock of the Corporation, any merger or consolidation of the Corporation with or into any other corporation, or any Asset Transfer (as defined in Section 4), or any voluntary or involuntary dissolution, liquidation or winding up of the Corporation, the Corporation shall mail to each holder of Series Preferred at least ten (10) days prior to (x) the record date, if any, specified therein; or (y) if no record date is specified, the date upon which such action is to take effect (or, in either case, such shorter period approved by the holders of a majority of the outstanding Series D Preferred and holders of a majority of the outstanding and Series E Preferred, each voting as a separate series) a notice specifying (A) the date on which any such record is to be taken for the purpose of such dividend or distribution and a description of such dividend or distribution, (B) the date on which any such Acquisition, reorganization, reclassification, transfer, consolidation, merger, Asset Transfer, dissolution, liquidation or winding up is expected to become effective, and (C) the date, if any, that is to be fixed as to when the holders of record of Common Stock (or other securities) shall be entitled to exchange their shares of Common Stock (or other securities) for securities or other property deliverable upon such Acquisition, reorganization, reclassification, transfer, consolidation, merger, Asset Transfer, dissolution, liquidation or winding up.

(k)           Automatic Conversion.

(i)            Each share of Series G Preferred shall automatically be converted into shares of Voting Common Stock, based on the then-effective Series G Preferred Conversion Price upon the earliest to occur of any of the following events: (A) at any time upon the affirmative election of the holders of at least a majority of the outstanding shares of the Series G Preferred, voting as a separate series, or (B) immediately upon the closing of a firmly underwritten public offering on the New York Stock Exchange, the NASDAQ Global Select Market or the NASDAQ Global Market pursuant to an effective registration statement under the

18

Securities Act covering the offer and sale of Common Stock for the account of the Corporation (an “IPO”). Upon such automatic conversion, any declared but unpaid dividends with respect to the Series G Preferred shall be paid in accordance with the provisions of Section 5(d).

(ii)           Each share of Series F Preferred shall automatically be converted into shares of Voting Common Stock, based on the then-effective Series F Preferred Conversion Price upon the earliest to occur of any of the following events: (A) at any time upon the affirmative election of the holders of at least a majority of the outstanding shares of the Series F Preferred, voting as a separate series, or (B) immediately upon the closing of an IPO. Upon such automatic conversion, any declared but unpaid dividends with respect to the Series F Preferred shall be paid in accordance with the provisions of Series 5(d).

(iii)         Each share of Series E Preferred shall automatically be converted into shares of Voting Common Stock, based on the then-effective Series E Preferred Conversion Price upon the earliest to occur of any of the following events: (A) at any time upon the affirmative election of the holders of at least a majority of the outstanding shares of the Series Preferred, voting as a separate series, or (B) immediately upon the closing of an IPO. Upon such automatic conversion, any declared but unpaid dividends with respect to the Series E Preferred shall be paid in accordance with the provisions of Section 5(d).

(iv)          Each share of Series D Preferred shall automatically be converted into shares of Voting Common Stock, based on the then-effective Series D Preferred Conversion Price upon the earliest to occur of any of the following events: (A) at any time upon the affirmative election of the holders of at least a majority of the outstanding shares of the Series 5(d) Preferred, voting as a separate series, or (B) immediately upon the closing of an IPO. Upon such automatic conversion, any declared but unpaid dividends with respect to the Series D Preferred shall be paid in accordance with the provisions of Section 5(d).

(v)            Each share of Series B Preferred shall automatically be converted into shares of Voting Common Stock, based on the then-effective Series B Preferred Conversion Price, at any time upon the affirmative election of the holders of at least a majority of the outstanding shares of the Series B Preferred, voting as a separate series. In addition, each share of Series B Preferred shall automatically be converted into shares of Voting Common Stock, based on the then-effective Series B Preferred Conversion Price, upon any sale, assignment, transfer, conveyance, hypothecation or other disposition of any legal or beneficial interest in such share, whether or not for value and whether voluntary or involuntary or by operation of law (a “Transfer”), other than (i) any Transfer without consideration by a holder of Series B Preferred to such holder’s ancestors, descendants, siblings or spouse or to trusts or other entities established primarily for the purpose of estate planning for the benefit of such persons or such holder, (ii) any Transfer or Transfers by a holder of Series B Preferred to another holder of Series B Preferred or its Controlled Affiliate, (iii) any Transfer or Transfers to Controlled Affiliates, or (iv) any Transfers by (A) a partnership transferring to its partners or former partners in accordance with their interest in the partnership, (B) a corporation transferring to a wholly-owned subsidiary, its stockholders or to former stockholders in accordance with their interest in the corporation, or (C) a limited liability company transferring to its members or former members in accordance with their interest in the limited liability company. For purposes of this Restated Certificate, “Controlled Affiliate” shall mean, with respect to any person or entity, any

19

other person or entity which, directly or indirectly, is controlled by, or is under common control with, such person or entity, where “control” shall mean and include the ownership or eighty percent (80%) or more of the voting securities or other voting interest of another person or entity. Upon any such automatic conversion, any declared but unpaid dividends with respect to the Series B Preferred shall be paid in accordance with the provisions of Section 5(d).

(vi)          Each share of Nonvoting Common Stock shall automatically be converted into one share of Voting Common Stock immediately upon the closing of an IPO.

(vii)         Upon the occurrence of the events specified in Section  5(k)(i), (ii), (hi), (iv), (v) or (vi) above, as applicable, the outstanding shares of Series Preferred and Nonvoting Common Stock shall be converted automatically without any further action by the holders of such shares and whether or not the certificates representing such shares are surrendered to the Corporation or its transfer agent; provided, however, that the Corporation shall not be obligated to issue certificates evidencing the shares of Voting Common Stock issuable upon such conversion unless the certificates evidencing such shares of Series Preferred and Nonvoting Common Stock are either delivered to the Corporation or its transfer agent as provided below, or the holder notifies the Corporation or its transfer agent that such certificates have been lost, stolen or destroyed and executes an agreement satisfactory to the Corporation to indemnify the Corporation from any loss incurred by it in connection with such certificates. Upon the occurrence of such automatic conversion of the applicable series of Series Preferred, the holders of such applicable series of Series Preferred shall sun-ender the certificates representing such shares at the office of the Corporation or any transfer agent for the Series Preferred. Thereupon, there shall be issued and delivered to such holder promptly at such office and in its name as shown on such surrendered certificate or certificates, a certificate or certificates for the number of shares of Voting Common Stock into which the shares of Series Preferred surrendered were convertible on the date on which such automatic conversion occurred, and any declared but unpaid dividends shall be paid in accordance with the provisions of Section 5(d). Upon the occurrence of such automatic conversion of the Nonvoting Common Stock, the holders of the Nonvoting Common Stock shall surrender the certificates representing such shares at the office of the Corporation or any transfer agent for the Nonvoting Common Stock. Thereupon, there shall be issued and delivered to such holder promptly at such office and in its name as shown on such surrendered certificate or certificates, a certificate or certificates for the number of shares of Voting Common Stock into which the shares of Nonvoting Common Stock surrendered were convertible on the date on which such automatic conversion occurred.

(l)            Fractional Shares. No fractional shares of Voting Common Stock shall be issued upon conversion of Series Preferred. All shares of Voting Common Stock (including fractions thereof) issuable upon conversion of more than one share of Series Preferred by a holder thereof shall be aggregated for purposes of determining whether the conversion would result in the issuance of any fractional share. lf, after the aforementioned aggregation, the conversion would result in the issuance of any fractional share, the Corporation shall, in lieu of issuing any fractional share, pay cash equal to the product of such fraction multiplied by the fair market value of one share of Voting Common Stock (as determined by the Board) on the date of conversion.

20

(m)          Reservation of Stock Issuable Upon Conversion. The Corporation shall at all times reserve and keep available out of its authorized but unissued shares of Voting Common Stock, solely for the purpose of effecting the conversion of the shares of the Series Preferred and the Nonvoting Common Stock, such number of its shares of Voting Common Stock as shall from time to time be sufficient to effect the conversion of all outstanding shares of the Series Preferred and Nonvoting Common Stock. If at any time the number of authorized but unissued shares of Voting Common Stock shall not be sufficient to effect the conversion of all then outstanding shares of the Series Preferred and the Nonvoting Common Stock, the Corporation will take such corporate action as may be necessary to increase its authorized but unissued shares of Common Stock to such number of shares as shall be sufficient for such purpose.

(n)           Notices. Any notice required by the provisions of this Section 5 hall be in writing and shall be deemed effectively given: (i) upon personal delivery to the party to be notified, (ii) when sent by confirmed electronic mail or facsimile if sent during normal business hours of the recipient; if not, then on the next business day, (iii) five (5) days after having been sent by registered or certified mail, return receipt requested, postage prepaid, or (iv) one (1) day after deposit with a nationally recognized overnight courier, specifying next day delivery, with verification of receipt. All notices shall be addressed to each holder of record at the address of such holder appearing on the books of the Corporation.

(o)           Payment of Taxes. The Corporation will pay all taxes (other than taxes based upon income) and other governmental charges that may be imposed with respect to the issue or delivery of shares of Voting Common Stock upon conversion of shares of Series Preferred and Nonvoting Common Stock, excluding any tax or other charge imposed in connection with any transfer involved in the issue and delivery of shares of Voting Common Stock in a name other than that in which the shares of Series Preferred and Nonvoting Common Stock so converted were registered.

6.             NO REISSUANCE OF SERIES PREFERRED.

No shares of Series Preferred acquired by the Corporation by reason of purchase, conversion or otherwise shall be reissued.

V.

A.            The liability of the directors of the Corporation for monetary damages shall be eliminated to the fullest extent under applicable law.

B.            Any repeal or modification of this Article V shall only be prospective and shall not affect the rights under this Article V in effect at the time of the alleged occurrence of any action or omission to act giving rise to liability.

C.            In the event that a member of the Board who is also a partner or employee of an entity that is a holder of Preferred Stock and that is in the business of investing and reinvesting in other entities, or an employee of an entity that manages such an entity (each, a “Fund’) acquires knowledge of a potential transaction or other matter in such individual’s capacity as a partner or employee of the Fund or the manager or general partner of the Fund (and other than directly in

21

connection with such individual’s service as a member of the Board) and that may be an opportunity of interest for both the Corporation and such Fund (a “Corporate Opportunity”), then the Corporation (i) renounces any expectancy that such director or Fund offer an opportunity to participate in such Corporate Opportunity to the Corporation and (ii) to the fullest extent permitted by law, waives any claim that such opportunity constituted a Corporate Opportunity that should have been presented by such director or Fund to the Corporation or any of its affiliates; provided, however, that such director acts in good faith.

VI.

For the management of the business and for the conduct of the affairs of the Corporation, and in further definition, limitation and regulation of the powers of the Corporation, of its directors and of its stockholders or any class thereof, as the case may be, it is further provided that:

A.            The management of the business and the conduct of the affairs of the Corporation shall be vested in the Board. The number of directors which shall constitute the whole Board shall be fixed by the Board in the manner provided in the Bylaws, subject to any restrictions which may be set forth in this Restated Certificate.

B.            Except for any vote of the holders of any class or series of stock of the Corporation required by law or by this Certificate of Incorporation, the Board is expressly empowered to adopt, amend or repeal the Bylaws of the Corporation.

C.            The directors of the Corporation need not be elected by written ballot unless the Bylaws so provide.

****

SIX:            This Fifth Amended and Restated Certificate of Incorporation has been duly approved by the Board of Directors of the Corporation.

SEVEN:     This Fifth Amended and Restated Certificate of Incorporation was approved by the holders of the requisite number of shares of said corporation in accordance with Section 228 of the DGCL. This Fifth Amended and Restated Certificate of Incorporation has been duly adopted in accordance with the provisions of Sections 242 and 245 of the DGCL by the stockholders of the Corporation.

[SIGNATURE PAGE FOLLOWS]

22

IN WITNESS WHEREOF, GROUPON, INC. has caused this Fifth Amended and Restated Certificate of Incorporation to be signed by its Chief Executive Officer as of January 24, 2011.

GROUPON, INC.
Signature:	/s/ Andrew Mason
Print Name:		Andrew Mason
Title:		Chief Executive Officer

23

EX-3.3

Exhibit 3.3

BY-LAWS

OF

GROUPON, INC.

ARTICLE I

OFFICES

Section 1.Registered Office.  The address of the Corporation’s registered office in the State of Delaware is Corporation Trust Center, 1209 Orange Street, Wilmington, New Castle County, Delaware 19801.  The name of its registered agent at such address is The Corporation Trust Company.  The registered office and/or registered agent of the Corporation may be changed from time to time by action of the Board of Directors.

Section 2.Other Offices. The Corporation may also have offices at such other places, both within and without the State of Delaware, as the Board of Directors may from time to time determine or the business of the Corporation may require.

ARTICLE II

STOCKHOLDERS

Section 1.Time and Place of Meetings.  All meetings of the stockholders for the election of directors or for any other purpose shall be held at such time and place, within or without the State of Delaware, as shall be designated by the Board of Directors. In the absence of a designation of a place for any such meeting by the Board of Directors, each such meeting shall be held at the principal office of the Corporation.

Section 2.Annual Meetings.  An annual meeting of stockholders shall be held for the purpose of electing directors and transacting such other business as may properly be brought before the meeting. The date of the annual meeting shall be determined by the Board of Directors.

Section 3.Special Meetings.  Special meetings of the stockholders, for any purpose or purposes, unless otherwise prescribed by the Certificate of Incorporation or by law, may be called by the Chairman of the Board or by the President and shall be called by the Secretary at the direction of a majority of the Board of Directors, or at the request in writing delivered to the Chairman of the Board, the President or the Secretary of the Corporation of stockholders owning (i) a majority in amount of the entire preferred stock of the Corporation issued and outstanding and entitled to vote or (ii) a majority in amount of the entire common stock of the Corporation issued and outstanding and entitled to vote.

Section 4.Notice of Meetings.  Written notice of each meeting of the stockholders stating the place, date and time of the meeting shall be given not less than ten (10) nor more than sixty (60) days before the date of the meeting, to each stockholder entitled to vote at such meeting. The notice of any special meeting of stockholders shall state the purpose or purposes

for which the meeting is called. Business transacted at any special meeting of stockholders shall be limited to the purpose or purposes stated in the notice. Neither the business to be transacted at, nor the purpose or purposes of, an annual or special meeting of stockholders need be specified in any written waiver of notice.

Section 5.Quorum; Adjournments.  The holders of a majority of the capital stock issued and outstanding and entitled to vote thereat, present in person or represented by proxy, shall constitute a quorum at all meetings of the stockholders for the transaction of business, except as otherwise required by the Certificate of Incorporation or the Delaware General Corporation Law as from time to time in effect (the “Delaware Law”). If a quorum is not represented, the holders of the stock present in person or represented by proxy at the meeting and entitled to vote thereat shall have power, by affirmative vote of the holders of a majority of such stock, to adjourn the meeting to another time and/or place, without notice other than announcement at the meeting, except as hereinafter provided, until a quorum shall be present or represented. At such adjourned meeting, at which a quorum shall be present or represented, any business may be transacted which might have been transacted at the original meeting. If the adjournment is for more than thirty (30) days, or if after the adjournment a new record date is fixed for the adjourned meeting, a notice of the adjourned meeting shall be given to each stockholder of record entitled to vote at the meeting. Withdrawal of stockholders from any meeting shall not cause the failure of a duly constituted quorum at such meeting.

Section 6.Voting.

(a)At all meetings of the stockholders, each stockholder shall be entitled to vote, in person, or by proxy appointed in an instrument in writing subscribed by the stockholder or otherwise appointed in accordance with Section 212 of the Delaware Law, each share of voting stock owned by such stockholder of record on the record date for the meeting. Each stockholder shall be entitled to one vote for each share of voting stock held by such stockholder, unless otherwise provided in the Delaware Law or the Certificate of Incorporation.

(b)When a quorum is present at any meeting, the affirmative vote of the holders of a majority of the stock having voting power present in person or represented by proxy and voting shall decide any question brought before such meeting, unless the question is one upon which, by express provision of law or the Certificate of Incorporation, a different vote is required, in which case such express provision shall govern and control the decision of such question. Any stockholder who is in attendance at a meeting of stockholders either in person or by proxy, but who abstains from the vote on any matter, shall not be deemed present or represented at such meeting for purposes of the preceding sentence with respect to such vote, but shall be deemed present or represented at such meeting for all other purposes. Notwithstanding anything to the contrary contained herein, directors shall be elected by a majority of the votes of the shares present in person or represented by proxy at the meeting entitled to vote on the election of directors.

Section 7.Informal Action by Stockholders.  Any action required to be taken at a meeting of the stockholders, or any other action which may be taken at a meeting of the

2

stockholders, may be taken without a meeting, without prior notice and without a vote, if a consent in writing, setting forth the action so taken, shall be signed by the holders of outstanding stock having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted. Prompt notice of the taking of the corporate action without a meeting by less than unanimous written consent shall be given to those stockholders who have not consented in writing.

ARTICLE III

DIRECTORS

Section 1.General Powers.  The business and affairs of the Corporation shall be managed and controlled by or under the direction of its Board of Directors, which may exercise all such powers of, and do all such acts and things as may be done by, the Corporation and do all such lawful acts and things as are not by law or by the Certificate of Incorporation or by these By-laws directed or required to be exercised or done by the stockholders.

Section 2.Number, Qualification and Tenure.  The Board of Directors of the Corporation shall consist of not less than one (1) member and not more than thirteen (13) members. Within the limit above specified, the number of directors shall be determined from time to time by resolution of the Board of Directors. The directors shall be elected at the annual meeting of the stockholders, except as provided in the Certificate of Incorporation or Section 3 of this Article, and each director elected shall hold office until his or her successor is elected and qualified or until his or her earlier death, termination, resignation or removal from office. Directors need not be stockholders.

Section 3.Vacancies and Newly-Created Directorships.  Vacancies and newly created directorships resulting from any increase in the number of directors may be filled by a majority of the directors then in office, although less than a quorum or by a sole remaining director, and each director so chosen shall hold office until his or her successor is elected and qualified or until his or her earlier death, termination, resignation, retirement, disqualification or removal from office. If there are no directors in office, then an election of directors may be held in the manner provided by law.

Section 4.Place of Meetings.  The Board of Directors may hold meetings, both regular and special, either within or without the State of Delaware.

Section 5.Meetings.  The Board of Directors shall hold a regular meeting, to be known as the annual meeting, immediately following each annual meeting of the stockholders. Other regular meetings of the Board of Directors shall be held at such time and place as shall from time to time be determined by the Board. No notice of regular meetings need be given, other than by announcement at the immediately preceding regular meeting. Special meetings of the Board may be called by the Chairman of the Board, the President or the Secretary on the written request of at least one member of the Board of Directors. Notice of any special meeting of the Board shall be given at least two (2) days prior thereto, either in writing, or telephonically if confirmed promptly in writing, to each director at the address shown for such director on the records of the Corporation.

3

Section 6.Waiver of Notice; Business and Purpose.  Notice of any meeting of the Board of Directors may be waived in writing signed by the person or persons entitled to such notice either before or after the time of the meeting. The attendance of a director at any meeting shall constitute a waiver of notice of such meeting, except where a director attends a meeting for the express purpose of objecting to the transaction of any business because the meeting is not lawfully called or convened, records such objection at the beginning of the meeting with the person acting as secretary of the meeting and does not thereafter vote on any action taken at the meeting. Neither the business to be transacted at, nor the purpose or purposes of, any regular or special meeting of the Board need be specified in the notice or waiver of notice of such meeting, unless specifically required by Delaware Law.

Section 7.Quorum and Manner of Acting.  At all meetings of the Board of Directors, a majority of the total number of directors shall constitute a quorum for the transaction of business. If a quorum shall not be present at any meeting of the Board of Directors, the directors present thereat may adjourn the meeting to another time and/or place, without notice other than announcement at the meeting, until a quorum shall be present. The act of a majority of the directors present at any meeting at which there is a quorum shall be the act of the Board of Directors, except as may be otherwise specifically provided by Delaware Law or by the Certificate of Incorporation. Withdrawal of directors from any meeting shall not cause the failure of a duly constituted quorum at such meeting. A director who is in attendance at a meeting of the Board of Directors but who abstains from the vote on any matter shall not be deemed present at such meeting for purposes of determining the act of a majority of the directors with respect to such vote, but shall be deemed present at such meeting for all other purposes.

Section 8.Organization.  The Chairman of the Board, if elected, shall act as chairman at all meetings of the Board of Directors. If the Chairman of the Board is not elected or, if elected, is not present, a director chosen by a majority of the directors present, shall act as chairman at such meeting of the Board of Directors.

Section 9.Committees.  The Board of Directors, by resolution adopted by a majority of the entire Board, may create one or more other committees and appoint one or more directors to serve on such committee or committees. Each director appointed to serve on any such committee shall serve, unless the resolution designating the respective committee is sooner amended or rescinded by the Board of Directors, until the next annual meeting of the Board or until their respective successors are designated. The Board of Directors, by resolution adopted by a majority of the entire Board, may also designate additional directors as alternate members of any committee to serve as members of such committee in the place and stead of any regular member or members thereof who may be unable to attend a meeting or otherwise unavailable to act as a member of such committee. In the absence or disqualification of a member and all alternate members designated to serve in the place and stead of such member, the member or members thereof present at any meeting and not disqualified from voting, whether or not such member or members constitute a quorum, may unanimously appoint another director to act at the meeting in the place and stead of such absent or disqualified member.

Any committee may exercise the power and authority of the Board of Directors to the extent specified by the resolution establishing such committee, the Certificate of Incorporation or these By-laws; provided, however, that no committee may take any action that is expressly

4

required by Delaware Law, the Certificate of Incorporation or these By-laws to be taken by the Board of Directors and not by a committee thereof. Each committee shall keep a record of its acts and proceedings, which shall form a part of the records of the Corporation in the custody of the Secretary, and all actions of each committee shall be reported to the Board of Directors at the next meeting of the Board.

Meetings of committees may be called at any time by the Chairman of the Board, if any, or the chairman of the respective committee. A majority of the members of the committee shall constitute a quorum for the transaction of business and, except as expressly limited by this section, the act of a majority of the members present at any meeting at which there is a quorum shall be the act of such committee. Except as expressly provided in this section or in the resolution designating the committee, a majority of the members of any such committee may select its chairman, fix its rules of procedure, determine the time and place of its meetings and specify what notice of meetings, if any, shall be given.

Section 10.Action without Meeting.  Unless otherwise specifically prohibited by the Certificate of Incorporation or these By-laws, any action required or permitted to be taken at any meeting of the Board of Directors or of any committee thereof may be taken without a meeting, if all members of the Board of Directors or such committee, as the case may be, execute a consent thereto in writing setting forth the action so taken, and the writing or writings are filed with the minutes of proceedings of the Board of Directors or such committee.

Section 11.Attendance by Telephone.  Members of the Board of Directors, or any committee thereof, may participate in and act at any meeting of the Board of Directors, or such committee, as the case may be, through the use of a conference telephone or other communications equipment by means of which all persons participating in the meeting can hear each other. Participation in such meeting shall constitute attendance and presence in person at the meeting of the person or persons so participating.

Section 12.Removal of Directors.  A director, or the entire Board of Directors, may be removed, with or without cause, at a meeting of stockholders by the affirmative vote of the holders of a majority of the outstanding shares then entitled to vote at an election of directors, unless otherwise prescribed by the Certificate of Incorporation or by law; provided, however, that the notice of such meeting shall state that a purpose of such meeting is to vote upon the removal of one or more of the directors named in the notice.

Section 13.Compensation.  By resolution of the Board of Directors, irrespective of any personal interest of any of the members, the directors may be paid their reasonable expenses, if any, of attendance at each meeting of the Board of Directors and may be paid a fixed sum of money for attendance at meetings or a stated salary as directors. These payments shall not preclude any director from serving the Corporation in any other capacity and receiving compensation therefor.  The directors are also eligible to receive stock option grants at the discretion of the Board of Directors or other administrator of the plan.

5

ARTICLE IV

OFFICERS

Section 1.Enumeration.  The officers of the Corporation shall be chosen by the Board of Directors and shall include a President and a Secretary. The Board of Directors may also elect a Chairman of the Board, one or more Vice Presidents, one or more Assistant Secretaries, a Treasurer and one or more Assistant Treasurers, a Chief Financial Officer and such other officers and agents as it may deem appropriate. Any number of offices may be held by the same person.

Section 2.Term of Office.  The officers of the Corporation shall be elected at the annual meeting of the Board of Directors and shall hold office until their successors are elected and qualified, or until their earlier death, termination, resignation or removal from office. Any officer or agent of the Corporation may be removed at any time by the Board of Directors, with or without cause. Any vacancy in any office because of death, resignation, termination, removal, disqualification or otherwise, may be filled by the Board of Directors for the unexpired portion of the term.

Section 3.Chairman of the Board.  The Chairman of the Board shall preside at all meetings of the Board of Directors and stockholders and shall have such other powers and perform such other duties as may be prescribed by the Board of Directors or provided in these by-laws.  The Chairman of the Board is authorized to execute bonds, mortgages and other contracts requiring a seal, under the seal of the Corporation, except where required or permitted by law to be otherwise signed and executed and except where the signing and execution thereof shall be expressly delegated by the Board of Directors to some other officer or agent of the Corporation

Section 4.Chief  Executive Officer.  The Chief Executive Officer shall have the powers and perform the duties incident to that position. Subject to the powers of the Board of Directors, he or she shall be in the general and active charge of the entire business and affairs of the Corporation, and shall be its chief policy-making officer. The Chief Executive Officer is authorized to execute bonds, mortgages and other contracts requiring a seal, under the seal of the Corporation, except where required or permitted by law to be otherwise signed and executed and except where the signing and execution thereof shall be expressly delegated by the Board of Directors to some other officer or agent of the Corporation. The Chief Executive Officer shall, in the absence or disability of the Chairman of the Board, act with all of the powers, perform all duties and be subject to all the restrictions of the Chairman of the Board. The Chief Executive Officer shall have such other powers and perform such other duties as may be prescribed by the Chairman of the Board or the Board of Directors or as may be provided in these by-laws.

Section 5.President.  The President of the Corporation shall, subject to the powers of the Board of Directors, the Chairman of the Board and the Chief Executive Officer, shall have general charge of the business, affairs and property of the Corporation, and control over its officers, agents and employees; and shall see that all orders and resolutions of the Board of Directors and the Chief Executive Officer are carried into effect.  The President shall, in the absence or disability of the Chief Executive Officer, act with all of the powers and be subject to

6

all the restrictions of the Chief Executive Officer. The President is authorized to execute bonds, mortgages and other contracts requiring a seal, under the seal of the Corporation, except where required or permitted by law to be otherwise signed and executed and except where the signing and execution thereof shall be expressly delegated by the Board of Directors to some other officer or agent of the Corporation. The President shall have such other powers and perform such other duties as may be prescribed by the Chairman of the Board, the Chief Executive Officer or the Board of Directors or as may be provided in these by-laws.

Section 6.Chief Financial Officer. The Chief Financial Officer of the Corporation shall, under the direction of the Chairman of the Board, the Chief Executive Officer and the President, be responsible for all financial and accounting matters and for the direction of the offices of treasurer and controller. The Chief Financial Officer shall have such other powers and perform such other duties as may be prescribed by the Chairman of the Board, the Chief Executive Officer or the Board of Directors or as may be provided in these by-laws.

Section 7.Vice  President.  Each Vice President shall perform such duties and have such other powers as may from time to time be prescribed by the Board of Directors, the Chairman of the Board or the President.

Section 8.Secretary.  The Secretary shall: (a) keep a record of all proceedings of the stockholders, the Board of Directors and any committees thereof in one or more books provided for that purpose; (b) give, or cause to be given, all notices that are required by law or these Bylaws to be given by the Secretary; (c) be custodian of the corporate records and, if the Corporation has a corporate seal, of the seal of the Corporation; (d) have authority to affix the seal of the Corporation to all instruments the execution of which requires such seal and to attest such affixing of the seal; (e) keep a register of the post office address of each stockholder which shall be furnished to the Secretary by such stockholder; (f) sign, with the Chairman, the President or any Vice President, or any other officer thereunto authorized by the Board of Directors, any certificates for shares of the Corporation, or any deeds, mortgages, bonds, contracts or other instruments which the Board of Directors has authorized to be executed by the signature of more than one officer; (g) have general charge of the stock transfer books of the Corporation; (h) have authority to certify as true and correct, copies of the By-laws, resolutions of the stockholders, the Board of Directors and committees thereof, and other documents of the Corporation; and (i) in general, perform the duties incident to the office of secretary and such other duties as from time to time may be prescribed by the Board of Directors, the Chairman of the Board or the President. The Board of Directors may give general authority to any other officer to affix the seal of the Corporation and to attest such affixing of the seal.

Section 9.Assistant Secretary.  The Assistant Secretary, of if there shall be more than one, each Assistant Secretary in the absence of the Secretary or in the event of the Secretary’s inability or refusal to act, shall have the authority to perform the duties of the Secretary, subject to such limitations thereon as may be imposed by the Board of Directors, and such other duties as may from time to time be prescribed by the Board of Directors, the Chairman of the Board, the President or the Secretary.

Section 10.Treasurer.  The Treasurer shall be the principal accounting and financial officer of the Corporation. The Treasurer shall: (a) have charge of and be responsible for the

7

maintenance of adequate books of account for the Corporation; (b) have charge and custody of all funds and securities of the Corporation, and be responsible therefor and for the receipt and disbursement thereof; and (c) perform duties incident to the office of treasurer and such other duties as may from time to time be prescribed by the Board of Directors, the Chairman of the Board or the President. The Treasurer may sign with the Chairman, the President, or any Vice President, or any other officer thereunto authorized by the Board of Directors, certificates for shares of the Corporation. If required by the Board of Directors, the Treasurer shall give a bond for the faithful discharge of his or her duties in such sum and with such surety or sureties as the Board of Directors may determine.

Section 11.Assistant Treasurer.  The Assistant Treasurer, or if there shall be more than one, each Assistant Treasurer, in the absence of the Treasurer or in the event of the Treasurer’s inability or refusal to act, shall have the authority to perform the duties of the Treasurer, subject to such limitations thereon as may be imposed by the Board of Directors, and such other duties as may from time to time be prescribed by the Board of Directors, the Chairman of the Board, the President or the Treasurer.

Section 12.Other Officers and Agents.  Any officer or agent who is elected or appointed from time to time by the Board of Directors and whose duties are not specified in these By-laws shall perform such duties and have such powers as may from time to time be prescribed by the Board of Directors, the Chairman of the Board or the President.

Section 13.Absence or Disability of Officers. In the case of the absence or disability of any officer of the Corporation and of any person hereby authorized to act in such officer’s place during such officer’s absence or disability, the Board of Directors may by resolution delegate the powers and duties of such officer to any other officer or to any director, or to any other person selected by it.

ARTICLE V

CERTIFICATES OF STOCK AND THEIR TRANSFER

Section 1.Form.  The shares of the Corporation shall be represented by certificates; provided, however, the Board of Directors may provide by resolution or resolutions that some or all of any or all classes or series of the Corporation’s stock shall be uncertificated shares. Each certificate for shares shall be consecutively numbered or otherwise identified. Certificates of stock in the Corporation, shall be signed by or in the name of the Corporation by the Chairman of the Board or the President or a Vice President and by the Treasurer or an Assistant Treasurer or the Secretary or an Assistant Secretary of the Corporation. Where a certificate is countersigned by a transfer agent, other than the Corporation or an employee of the Corporation, or by a registrar, the signatures of one or more officers of the Corporation may be facsimiles. In case any officer, transfer agent or registrar who has signed or whose facsimile signature has been placed upon a certificate shall have ceased to be such officer, transfer agent or registrar before such certificate is issued, the certificate may be issued by the Corporation with the same effect as if such officer, transfer agent or registrar were such officer, transfer agent or registrar at the date of its issue.

8

Section 2.Transfer.  Upon surrender to the Corporation or the transfer agent of the Corporation of a certificate for shares duly endorsed or accompanied by proper evidence of succession, assignment or authority to transfer, the Corporation shall issue a new certificate of stock or uncertificated shares in place of any certificate theretofore issued by the Corporation to the person entitled thereto, cancel the old certificates and record the transaction in its stock transfer books.

Section 3.Replacement.  In case of the loss, destruction, mutilation or theft of a certificate for any stock of the Corporation, a new certificate of stock or uncertificated shares in place of any certificate theretofore issued by the Corporation may be issued upon the surrender of the mutilated certificate or, in the case of loss, destruction or theft of a certificate, upon satisfactory proof of such loss, destruction or theft and upon such terms as the Board of Directors may prescribe. The Board of Directors may in its discretion require the owner of the lost, destroyed or stolen certificate, or his legal representative, to give the Corporation a bond, in such sum and in such form and with such surety or sureties as it may direct, to indemnify the Corporation against any claim that may be made against it with respect to the certificate alleged to have been lost, destroyed or stolen.

ARTICLE VI

INDEMNIFICATION OF DIRECTORS, OFFICERS, EMPLOYEES AND AGENTS

Section 1.Third Party Actions.  The Corporation shall indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending, or completed action, suit or proceeding, whether civil, criminal, administrative, or investigative, including all appeals (other than an action, suit or proceeding by or in the right of the Corporation) by reason of the fact that he or she is or was a director or office of the Corporation (and the Corporation, in the discretion of the Board of Directors, may so indemnify a person by reason of the fact that he or she is or was an employee or agent of the Corporation or is or was serving at the request of the Corporation in any other capacity for another corporation, partnership, joint venture, trust or other enterprise), against expenses (including attorneys’ fees), judgments, decrees, fines, penalties, and amounts paid in settlement actually and reasonably incurred by him or her in connection with such action, suit or proceeding if he or she acted in good faith and in a manner which he or she reasonably believed to be in or not opposed to the best interests of the Corporation and, with respect to any criminal action or proceeding, had no reasonable cause to believe his or her conduct was unlawful. The termination of any action, suit or proceeding by judgment, order, settlement, conviction, or upon a plea of nolo contendere or its equivalent, shall not, of itself, create a presumption that the person did not act in good faith or in a manner which he or she reasonably believed to be in or not opposed to the best interests of the Corporation and, with respect to any criminal action or proceeding, had reasonable cause to believe that his conduct was unlawful. Notwithstanding the foregoing, -the Corporation shall be required to indemnify a director or officer in connection with an action, suit or proceeding as authorized by the Board of Directors.

Section 2.Actions by or in the Right of the Corporation.  The Corporation shall indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending, or completed action or suit, including all appeals, by or in the right of the Corporation

9

to procure a judgment in its favor by reason of the fact that he or she is or was a director or officer of the Corporation (and the Corporation, in the discretion of the Board of Directors, may so indemnify a person by reason of the fact that he or she is or was an employee or agent of the Corporation or is or was serving at the request of the Corporation in any other capacity for another corporation, partnership, joint venture, trust or other enterprise), against expenses (including attorneys’ fees) actually and reasonably incurred by him or her in connection with the defense or settlement of such action or suit if he or she acted in good faith and in a manner he or she reasonably believed to be in or not opposed to the best interests of the Corporation, except that no indemnification shall be made in respect of any claim, issue or matter as to which such person shall have been finally adjudged to be liable to the Corporation unless and only to the extent that the court in which such action or suit was brought, or any other court of competent jurisdiction, shall determine upon application that, despite the adjudication of liability but in view of all the circumstances of the case, such person is fairly and reasonably entitled to indemnity for such expenses as such court shall deem proper. Notwithstanding the foregoing, the Corporation shall be required to indemnify a director or officer in connection with an action, suit or proceeding initiated by such person only if such action, suit or proceeding was authorized by the Board of Directors.

Section 3.Indemnity if Successful.  To the extent that a director, officer, employee or agent of the Corporation has been successful on the merits or otherwise in defense of any action, suit or proceeding referred to in Section 1 or 2 of this Article, or in defense of any claim, issue or matter therein, he or she shall be indemnified against expenses (including attorneys’ fees) actually and reasonably incurred by him or her in connection therewith.

Section 4.Standard of Conduct.  Except in a situation governed by Section 3 of this Article, any indemnification under Section 1 or 2 of this Article (unless ordered by a court) shall be made by the Corporation only as authorized in the specific case upon a determination that indemnification of the director, officer, employee or agent is proper in the circumstances because he or she has met the applicable standard of conduct set forth in Section 1 or 2, as applicable, of this Article. Such determination shall be made (i) by a majority vote of directors acting at a meeting at which a quorum consisting of directors who were not parties to such action, suit or proceeding is present, or (ii) if such a quorum is not obtainable, or even if obtainable, a quorum of disinterested directors so directs, by independent legal counsel in a written opinion, or (iii) by the stockholders. The determination required by clauses (i) and (ii) of this Section 4 may in either event be made by written consent of the majority required by each clause.

Section 5.Expenses.  Expenses (including attorneys’ fees) of each director and officer hereunder indemnified actually and reasonably incurred in defending any civil, criminal, administrative or investigative action, suit or proceeding or threat thereof shall be paid by the Corporation in advance of the final disposition of such action, suit or proceeding upon receipt of an undertaking by or on behalf of such person to repay such amount if it shall ultimately be determined that he or she is not entitled to be indemnified by the Corporation as authorized in this Article. Such expenses (including attorneys’ fees) incurred by employees and agents may be so paid upon the receipt of the aforesaid undertaking and upon such terms and conditions, if any, as the Board of Directors deems appropriate.

10

Section 6.Nonexclusivity.  The indemnification and advancement of expenses provided by, or granted pursuant to, other Sections of this Article shall not be deemed exclusive of any other rights to which those seeking indemnification or advancement of expenses may now or hereafter be entitled under any law, by-law, agreement, vote of stockholders or disinterested directors or otherwise, both as to action in his or her official capacity and as to action in another capacity while holding such office.

Section 7.Insurance.  The Corporation may purchase and maintain insurance on behalf of any person who is or was a director, officer, employee or agent of the Corporation, or is or was serving at the request of the Corporation as a director, officer, employee or agent of another Corporation, partnership, joint venture, trust or other enterprise against any liability asserted against him or her and incurred by him or her in any such capacity, or arising out of his or her status as such, whether or not the Corporation would have the power to indemnify him or her against such liability under the provisions of Delaware Law.

Section 8.Definitions.  For purposes of this Article, references to “the Corporation” shall include, in addition to the resulting corporation, any constituent corporation (including any constituent of a constituent) absorbed in a consolidation or merger which, if its separate existence had continued, would have had the power and authority to indemnify any or all of its directors, officers, employees and agents, so that any person who is or was a director, officer, employee or agent of such constituent corporation, or is or was serving at the request of such constituent corporation in any other capacity for another corporation, partnership, joint venture, trust or other enterprise, shall stand in the same position under the provisions of this Article with respect to the resulting or surviving corporation as such person would have had with respect to such constituent corporation if its separate existence had continued.

For purposes of this Article, references to “other capacities” shall include serving as a trustee or agent for any employee benefit plan; references to “other enterprises” shall include employee benefit plans; references to “fines” shall include any excise taxes assessed on a person with respect to an employee benefit plan; and references to “serving at the request of the Corporation” shall include any service as a director, officer, employee or agent of the Corporation which imposes duties on, or involves services by such director, officer, employee, or agent with respect to an employee benefit plan, its participants, or beneficiaries. A person who acted in good faith and in a manner he or she reasonably believed to be in the best interests of the participants and beneficiaries of an employee benefit plan shall be deemed to have acted in a manner “not opposed to the best interests of the Corporation” as referred to in this Article.

Section 9.Continuation.  The indemnification and advancement of expenses provided by, or granted pursuant to, Delaware Law, unless otherwise provided when authorized or ratified, continue as to a person who has ceased to be a director, officer, employee or agent and shall inure to the benefit of the heirs, executors and administrators of such person.

Section 10.Severability.  If any provision hereof is invalid or unenforceable in any jurisdiction, the other provisions hereof shall remain in full force and effect in such jurisdiction, and the remaining provisions hereof shall be liberally construed to effectuate the provisions hereof, and the invalidity of any provision hereof in any jurisdiction shall not affect the validity of enforceability of such provision in any other jurisdiction.

11

Section 11.Amendment.  The right to indemnification conferred by this Article shall be deemed to be a contract between the Corporation and each person referred therein until amended or repealed, but no amendment to or repeal of these provisions shall apply to or have any effect on the right to indemnification of any person with respect to any liability or alleged liability of such person for or with respect to any act or omission of such person occurring prior to such amendment or repeal.

ARTICLE VII

GENERAL PROVISIONS

Section 1.Fiscal Year.  The fiscal year of the Corporation shall be fixed from time to time by the Certificate of Incorporation or by resolution of the Board of Directors.

Section 2.Corporation Seal.  The corporate seal, if any, of the Corporation shall be in such form as may be approved from time to time by the Board of Directors. The seal may be used by causing it or a facsimile thereof to be impressed or affixed or in any other manner reproduced.

Section 3.Dividends. Dividends upon the capital stock of the Corporation, subject to the provisions of the Certificate of Incorporation, if any, may be declared by the Board of Directors at any regular or special meeting, in accordance with applicable law.  Dividends may be paid in cash, in property, or in shares of the capital stock, subject to the provisions of the Certificate of Incorporation.  Before payment of any dividend, there may be set aside out of any funds of the Corporation available for dividends such sum or sums as the directors from time to time, in their absolute discretion, think proper as a reserve or reserves to meet contingencies, or for equalizing dividends, or for repairing or maintaining any property of the Corporation, or any other purpose and the directors may modify or abolish any such reserve in the manner in which it was created.

Section 4.Checks, Drafts or Orders. All checks, drafts, or other orders for the payment of money by or to the Corporation and all notes and other evidences of indebtedness issued in the name of the Corporation shall be signed by such officer or officers, agent or agents of the Corporation, and in such manner, as shall be determined by resolution of the board of directors or a duly authorized committee thereof.

Section 5.Contracts. In addition to the powers otherwise granted to officers pursuant to Article IV hereof, the board of directors may authorize any officer or officers, or any agent or agents, of the Corporation to enter into any contract or to execute and deliver any instrument in the name of and on behalf of; the Corporation, and such authority may be general or confined to specific instances.

Section 6.Notices and Mailing.  Except as otherwise provided in the Act, the Articles of Incorporation or these By-laws, all notices required to be given by any provision of these By-laws shall be deemed to have been given (i) when received, if given in person, (ii) on the date of acknowledgment of receipt, if sent by telex, facsimile or other wire transmission, (iii) one day after delivery, properly addressed, to a reputable courier for same day or overnight

12

delivery or (iv) three (3) days after being deposited, properly addressed, in the U.S. Mail, certified or registered mail, postage prepaid.

Section 7.Waiver of Notice.  Whenever any notice is required to be given under Delaware Law or the provisions of the Certificate of Incorporation or these By-laws, a waiver thereof in writing, signed by the person or persons entitled to such notice, whether before or after the time stated therein, shall be deemed equivalent to notice.

Section 8.Section Headings. Section headings in these by-laws are for convenience of reference only and shall not be given any substantive effect in limiting or otherwise construing any provision herein.

Section 9.Inconsistent Provisions.  In the event that any provision of these By-Laws is or becomes inconsistent with any provision of the certificate of incorporation, the General Corporation Law of the State of Delaware or any other applicable law, the provision of these by-laws shall not be given any effect to the extent of such inconsistency but shall otherwise be given full force and effect.

Section 10.Interpretation.  In these By-laws, unless a clear contrary intention appears, the singular number includes the plural number and vice versa, and reference to either gender includes the other gender.

ARTICLE VIII

AMENDMENTS

These By-laws may be altered, amended or repealed or new By-laws may be adopted by the Board of Directors. The fact that the power to amend, alter, repeal or adopt the By-laws has been conferred upon the Board of Directors shall not divest the stockholders of the same powers.

13

EX-4.2

Exhibit 4.2

GROUPON, INC.

THIRD AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT

TABLE OF CONTENTS

		Page
SECTION 1	GENERAL	2
1.1	Amendment and Restatement of Prior Agreement	2
1.2	Definitions	2
SECTION 2	REGISTRATION; RESTRICTIONS ON TRANSFER	4
2.1	Restrictions on Transfer	4
2.2	Demand Registration	5
2.3	Piggyback Registrations	7
2.4	Form S-3 Registration	8
2.5	Expenses of Registration	9
2.6	Obligations of the Company	10
2.7	Delay of Registration; Furnishing Information	11
2.8	Indemnification	12
2.9	Assignment of Registration Rights	14
2.10	Limitation on Subsequent Registration Rights	14
2.11	“Market Stand-Off” Agreement	14
2.12	Agreement to Furnish Information	15
2.13	Rule 144 Reporting	15
SECTION 3	COVENANTS OF THE COMPANY	16
3.1	Basic Financial Information and Reporting	16
3.2	Inspection Rights	17
3.3	Confidentiality of Records	17
3.4	Reservation of Common Stock	17
3.5	Stock Vesting	17
3.6	Proprietary Information and Inventions Agreement	18
3.7	Directors’ Liability and Indemnification	18
3.8	Board of Directors	18
3.9	Director and Officer Insurance	18
3.10	Board Approval of Certain Transactions	18
3.11	Indemnification Matters	19

i

3.12	Observer Rights	20
3.13	Termination of Covenants	20
SECTION 4	RIGHTS OF FIRST REFUSAL	20
4.1	Subsequent Offerings	20
4.2	Exercise of Rights	21
4.3	Issuance of Equity Securities to Other Persons	21
4.4	Sale Without Notice	21
4.5	Termination of Rights of First Refusal	21
4.6	Assignment of Rights of First Refusal	21
4.7	Excluded Securities	21
SECTION 5	MISCELLANEOUS	22
5.1	Governing Law	22
5.2	Successors and Assigns	22
5.3	Entire Agreement	23
5.4	Severability	23
5.5	Amendment and Waiver	23
5.6	Delays or Omissions	23
5.7	Notices	24
5.8	Attorneys’ Fees	24
5.9	Titles and Subtitles	24
5.10	Additional Investors	24
5.11	Counterparts	24
5.12	Aggregation of Stock	24
5.13	Massachusetts Business Trusts	24
5.14	Pronouns	25
5.15	Termination	25

ii

GROUPON, INC

THIRD AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT

THIS THIRD AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT (this “Agreement”) is entered into as of December 17, 2010 (the “Effective Date”), by and among GROUPON, INC., a Delaware corporation (the “Company”) and the investors listed on Exhibit A, referred to in this Agreement as the “Investors” and each individually as an “Investor.”

RECITALS

WHEREAS, certain of the Investors are purchasing shares of the Company’s Series G Preferred Stock (the “Series G Preferred”) pursuant to that certain Series G Preferred Stock Purchase Agreement (the “Purchase Agreement”) dated as of even date herewith (the “Financing”);

WHEREAS, the obligations in the Purchase Agreement are conditioned upon the execution and delivery of this Agreement;

WHEREAS, certain of the Investors (the “Prior Investors”) are holders of shares of the Company’s Series F Preferred Stock (the “Series F Preferred”), shares of the Company’s Series E Preferred Stock (the “Series E Preferred”), shares of the Company’s Series D Preferred Stock (the “Series D Preferred”) and shares of the Company’s Series B Preferred Stock (the “Series B Preferred” and together with the Series G Preferred, the Series F Preferred, the Series E Preferred and the Series D Preferred, the “Preferred Stock”);

WHEREAS, the Prior Investors and the Company are parties to a Second Amended and Restated Investor Rights Agreement dated April 16, 2010 (the “Prior Agreement”);

WHEREAS, the parties to the Prior Agreement desire to amend and restate the Prior Agreement and accept the rights and covenants hereof in lieu of their rights and covenants under the Prior Agreement;

WHEREAS, in connection with the consummation of the Financing, the Company and the Investors have agreed to the registration rights, information rights, and other rights as set forth below; and

WHEREAS, in connection with the consummation of the Financing, the Company and the Investors holding Preferred Stock have agreed to enter into this Agreement in order to grant registration, information rights and other rights to the Investors and certain other holders of Preferred Stock as set forth below.

NOW, THEREFORE, in consideration of these premises and for other good and valuable consideration, the receipt and sufficiency of which are acknowledged, the parties agree as follows:

SECTION 1GENERAL.

1.1Amendment and Restatement of Prior Agreement. The Prior Agreement is hereby amended in its entirety and restated herein. Such amendment and restatement is effective upon the execution of this Agreement by the Company, the holders of at least a majority of the outstanding Series F Preferred, voting separately as a class, the holders of at least a majority of the outstanding Series E Preferred, voting separately as a class, the holders of at least a majority of the outstanding Series D Preferred, voting separately as a class, and the holders of at least a majority of the outstanding Series B Preferred, voting separately as a class. Upon such execution, all provisions of, rights granted and covenants made in the Prior Agreement are hereby waived, released and superseded in their entirety and shall have no further force or effect, including, without limitation, all rights of first refusal and any notice period associated therewith otherwise applicable to the transactions contemplated by the Purchase Agreement.

1.2Definitions. As used in this Agreement the following terms shall have the following respective meanings:

(a)“Adviser” shall mean a registered investment adviser.

(b)“Advisory Holder” shall mean any Holder that is an advisory client of an Adviser or a registered investment company advised by an Adviser.

(c)“Battery” means Battery Ventures VIII, L.P., Battery Ventures VIII Side Fund, L.P. and their affiliates.

(d)“Board” shall mean the Company’s Board of Directors.

(e)“Certificate” shall mean the Company’s Fourth Amended and Restated Certificate of Incorporation as filed with the Delaware Secretary of State on the date hereof, as amended from time to time.

(f)“Common Stock” shall mean, collectively, the Company’s Voting Common Stock and Nonvoting Common Stock.

(g)“Exchange Act” means the Securities Exchange Act of 1934, as amended.

(h)“Form S-3” means such form under the Securities Act as in effect on the date hereof or any successor or similar registration form under the Securities Act subsequently adopted by the SEC which permits inclusion or incorporation of substantial information by reference to other documents filed by the Company with the SEC.

(i)“Holder” means any person owning of record Registrable Securities that have not been sold to the public or any assignee of record of such Registrable Securities in accordance with Section 2.9 hereof.

(j)“Initial Offering” means the Company’s first firm commitment underwritten public offering of its Common Stock registered under the Securities Act.

2

(k)“Nonvoting Common Stock” means shares of Nonvoting Common Stock, par value $0.0001 per share, of the Company.

(l)“Register,” “registered,” and “registration” refer to a registration effected by preparing and filing a registration statement in compliance with the Securities Act, and the declaration or ordering of effectiveness of such registration statement or document.

(m)“Registrable Securities” means (a) shares of Common Stock of the Company issuable or issued upon conversion of the Shares, (b) any Common Stock of the Company issued as (or issuable upon the conversion or exercise of any warrant, right or other security which is issued as) a dividend or other distribution with respect to, or in exchange for or in replacement of, such above-described securities and (c) any Common Stock otherwise acquired by the Holders. Notwithstanding the foregoing, Registrable Securities shall not include any securities (i) sold by a person to the public either pursuant to a registration statement or Rule 144, (ii) sold in a private transaction in which the transferor’s rights under Section 2 of this Agreement are not assigned or (iii) held by a Holder (together with its affiliates) if, as reflected on the Company’s list of stockholders, such Holder (together with its affiliates) holds less than 1% of the Company’s outstanding Common Stock (treating all shares of Preferred Stock on an as converted basis), twelve (12) months have elapsed since the Company completed its Initial Offering, and all shares of Common Stock of the Company issuable or issued upon conversion of the Shares held by and issuable to such Holder (and its affiliates) may be sold pursuant to Rule 144 during any ninety (90) day period.

(n)“Registrable Securities then outstanding” shall be the number of shares of the Company’s Common Stock that are Registrable Securities and either (a) are then issued and outstanding or (b) are issuable pursuant to then exercisable or convertible securities.

(o)“Registration Expenses” shall mean all expenses incurred by the Company in complying with Sections 2.2, 2.3 and 2.4 hereof, including, without limitation, all registration and filing fees, printing expenses, fees and disbursements of counsel for the Company, reasonable fees and disbursements not to exceed twenty-five thousand dollars ($25,000) of a single special counsel for the Holders, blue sky fees and expenses, fees and expenses relating to the removal of legends and the expense of any special audits incident to or required by any such registration (but excluding the compensation of regular employees of the Company which shall be paid in any event by the Company).

(p)“SEC” or “Commission” means the Securities and Exchange Commission.

(q)“Securities Act” shall mean the Securities Act of 1933, as amended.

(r)“Selling Expenses” shall mean all underwriting discounts and selling commissions applicable to the sale.

(s)“Shares” shall mean the shares of Preferred Stock held from time to time by the Investors listed on Exhibit A hereto and their permitted assigns.

3

(t)“Special Registration Statement” shall mean (i) a registration statement relating to any employee benefit plan or (ii) with respect to any corporate reorganization or transaction under Rule 145 of the Securities Act, any registration statements related to the issuance or resale of securities issued in such a transaction or (iii) a registration related to stock issued upon conversion of debt securities.

(u)“Voting Common Stock” means shares of Voting Common Stock, par value $0.0001 per share, of the Company.

SECTION 2REGISTRATION; RESTRICTIONS ON TRANSFER.

2.1Restrictions on Transfer.

(a)Each Holder agrees not to make any disposition of all or any portion of the Shares or Registrable Securities unless and until:

(i)there is then in effect a registration statement under the Securities Act covering such proposed disposition and such disposition is made in accordance with such registration statement; or

(ii)(A) The transferee has agreed in writing to be bound by the terms of this Agreement, (B) such Holder shall have notified the Company of the proposed disposition and settlement date and shall have furnished the Company with a detailed statement of the circumstances surrounding the proposed disposition, and (C) if reasonably requested by the Company, such Holder shall have furnished the Company with an opinion of counsel, reasonably satisfactory to the Company, that such disposition will not require registration of such shares under the Securities Act. It is agreed that the Company will not require opinions of counsel for transactions made pursuant to Rule 144, except in unusual circumstances. After its Initial Offering, the Company will not require any transferee pursuant to Rule 144 to be bound by the terms of this Agreement if the shares so transferred do not remain Registrable Securities hereunder following such transfer.

(b)Notwithstanding the provisions of subsection (a) above, no such restriction shall apply to (i) a transfer by a Holder to an Affiliate (as defined in Rule 405 under the Securities Act) of such Holder, or (ii) a transfer by a Holder that is (A) a partnership transferring to its partners or former partners in accordance with partnership interests, (B) a corporation transferring to its shareholders or former shareholders in accordance with their respective equity interests, (C) a corporation transferring to a wholly-owned subsidiary or a parent corporation that owns all of the capital stock of the Holder, (D) a limited liability company transferring to its members or former members in accordance with their interest in the limited liability company, (E) an individual transferring to the Holder’s family members or trust or other entity for the benefit of an individual Holder or his family members, (F) a trust transferring to its grantors or beneficiaries, (G) an Advisory Holder transferring to another Advisory Holder of the same or affiliated Adviser, or (H) a registered investment company transferring to another registered investment company pursuant to a reorganization or merger; provided that, in each case, the transferee will agree in writing to be subject to the terms of this Agreement to the same extent as if he were an original Holder hereunder.

4

(c)Each certificate representing Shares or Registrable Securities shall be stamped or otherwise imprinted with legends substantially similar to the following (in addition to any legend required under applicable state securities laws):

THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE “ACT’) AND MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED, ASSIGNED, PLEDGED OR HYPOTHECATED UNLESS AND UNTIL REGISTERED UNDER THE ACT OR UNLESS THE COMPANY HAS RECEIVED AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY AND ITS COUNSEL THAT SUCH REGISTRATION IS NOT REQUIRED.

THE SALE, PLEDGE, HYPOTHECATION OR TRANSFER OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE IS SUBJECT TO THE TERMS AND CONDITIONS OF A CERTAIN INVESTOR RIGHTS AGREEMENT BY AND BETWEEN THE STOCKHOLDER AND THE COMPANY. COPIES OF SUCH AGREEMENT MAY BE OBTAINED UPON WRITTEN REQUEST TO THE SECRETARY OF THE COMPANY.

(d)The Company shall be obligated to reissue promptly, and in no event more than five (5) business days after a proper request therefor, unlegended certificates at the request of any Holder thereof if the Company has completed its Initial Offering and the Holder shall have obtained an opinion of counsel (which counsel may be counsel to the Company) reasonably acceptable to the Company to the effect that the securities proposed to be disposed of may lawfully be so disposed of without registration, qualification and legend; provided that the second legend listed above shall be removed only at such time as the Holder of such certificate is no longer subject to any restrictions hereunder.

(e)Any legend endorsed on an instrument pursuant to applicable state securities laws and the stop-transfer instructions with respect to such securities shall be removed upon receipt by the Company of an order of the appropriate blue sky authority authorizing such removal.

2.2Demand Registration.

(a)Subject to the conditions of this Section 2.2, if the Company shall receive a written request from the Holders of a majority of the Registrable Securities issued or issuable upon conversion of the Series G Preferred (the “Initiating Holders”), that the Company file a registration statement under the Securities Act, on form S-1 or a successor form thereto, covering the registration of an aggregate offering price to the public of at least $50,000,000 of the Registrable Securities then outstanding, then the Company shall, within thirty (30) days of the receipt thereof, give written notice of such request to all Holders, and subject to the limitations of this Section 2.2, effect, as expeditiously as reasonably possible, the registration under the Securities Act of all Registrable Securities that all Holders request to be registered. For purposes of this Section 2, “Holders” shall be deemed to include the Adviser for any Advisory Holder.

5

(b)If the Initiating Holders intend to distribute the Registrable Securities covered by their request by means of an underwriting, they shall so advise the Company as a part of their request made pursuant to this Section 2.2 or any request pursuant to Section 2.4 and the Company shall include such information in the written notice referred to in Section 2.2(a) or Section 2.4(a), as applicable. In such event, the right of any Holder to include its Registrable Securities in such registration shall be conditioned upon such Holder’s participation in such underwriting and the inclusion of such Holder’s Registrable Securities in the underwriting to the extent provided herein. All Holders proposing to distribute their securities through such underwriting shall enter into an underwriting agreement in customary form with the underwriter or underwriters selected for such underwriting by the Company (which underwriter or underwriters shall be reasonably acceptable to the Holders of a majority of the Registrable Securities held by all Initiating Holders). Subject to Sections 2.2(d) and 2.2(e), if the underwriter advises the Company that marketing factors require a limitation of the number of securities to be underwritten (including Registrable Securities) then the Company shall so advise all Holders of Registrable Securities that would otherwise be underwritten pursuant hereto, and the number of shares that may be included in the underwriting shall be allocated to the Holders of such Registrable Securities on a pro rata basis based on the number of Registrable Securities held by all such Holders (including the Initiating Holders); provided, however, that the number of shares of Registrable Securities to be included in such underwriting and registration shall not be reduced unless all other securities of the Company are first entirely excluded from the underwriting and registration. Any Registrable Securities excluded or withdrawn from such underwriting shall be withdrawn from the registration.

(c)The Company shall not be required to effect a registration pursuant to thisSection 2.2:

(i)prior to the earlier of (A) thirty (30) months following the date of this Agreement or (B) six (6) months following the Initial Offering;

(ii)after the Company has effected two (2) registrations pursuant to this Section 2.2, and such registrations have been declared or ordered effective;

(iii)during the period starting with the date of filing of, and ending on the date one hundred eighty (180) days following the effective date of the registration statement pertaining to the Initial Offering (or such longer period as may be determined pursuant to Section 2.11 hereof); provided, that the Company makes reasonable good faith efforts to cause such registration statement to become effective;

(iv)if within thirty (30) days of receipt of a written request from Initiating Holders pursuant to Section 2.2(a), the Company gives notice to the Holders of the Company’s intention to file a registration statement for its Initial Offering within ninety (90) days;

(v)if the Company shall furnish to Holders requesting a registration statement pursuant to this Section 2.2 a certificate signed by the Chairman of the Board stating that in the good faith judgment of the Board of Directors of the Company, it would be materially detrimental to the Company and its stockholders for such registration statement to be effected at

6

such time, in which event the Company shall have the right to defer such filing for a period of not more than ninety (90) days after receipt of the request of the Initiating Holders; provided, that such right to delay a request shall be exercised by the Company not more than once in any twelve (12) month period; or

(vi)if the Initiating Holders propose to dispose of shares of Registrable Securities that may be immediately registered on Form S-3 pursuant to a request made pursuant to Section 2.4 below.

2.3Piggyback Registrations. The Company shall notify all Holders of Registrable Securities in writing at least fifteen (15) days prior to the filing of any registration statement under the Securities Act for purposes of a public offering of securities of the Company (including, but not limited to, registration statements relating to secondary offerings of securities of the Company, but excluding Special Registration Statements) and will afford each such Holder an opportunity to include in such registration statement all or part of such Registrable Securities held by such Holder. Each Holder desiring to include in any such registration statement all or any part of the Registrable Securities held by it shall, within fifteen (15) days after the above-described notice from the Company, so notify the Company in writing. Such notice shall state the intended method of disposition of the Registrable Securities by such Holder. If a Holder decides not to include all of its Registrable Securities in any registration statement thereafter filed by the Company, such Holder shall nevertheless continue to have the right to include any Registrable Securities in any subsequent registration statement or registration statements as may be filed by the Company with respect to offerings of its securities, all upon the terms and conditions set forth herein.

(a)Underwriting. If the registration statement of which the Company gives notice under this Section 2.3 is for an underwritten offering, the Company shall so advise the Holders of Registrable Securities. In such event, the right of any such Holder to include Registrable Securities in a registration pursuant to this Section 2.3 shall be conditioned upon such Holder’s participation in such underwriting and the inclusion of such Holder’s Registrable Securities in the underwriting to the extent provided herein. All Holders proposing to distribute their Registrable Securities through such underwriting shall enter into an underwriting agreement in customary form with the underwriter or underwriters selected for such underwriting by the Company. Notwithstanding any other provision of this Agreement, subject to Sections 2.2(d) and 2.2(e), if the underwriter determines in good faith that marketing factors require a limitation of the number of shares to be underwritten, the number of shares that may be included in the underwriting shall be allocated, first, to the Company; second, to the Holders on a pro rata basis based on the total number of Registrable Securities held by the Holders; and third, to any stockholder of the Company (other than a Holder) on a pro rata basis; provided, however, that no such reduction shall reduce the amount of securities of the selling Holders included in the registration below twenty five percent (25%) of the total amount of securities included in such registration, unless such offering is the Initial Offering and such registration does not include shares of any other selling stockholders, in which event any or all of the Registrable Securities of the Holders may be excluded in accordance with the immediately preceding clause. If the Holders are so limited, however, no party shall sell shares in such registration other than the Company. In no event will shares of any other selling stockholder be included in such registration that would reduce the number of shares which may be included by Holders without

7

the written consent of Holders of not less than a majority of the Registrable Securities proposed to be sold in the offering. If any Holder disapproves of the terms of any such underwriting, such Holder may elect to withdraw therefrom by written notice to the Company and the underwriter, delivered at least ten (10) business days prior to the effective date of the registration statement. Any Registrable Securities excluded or withdrawn from such underwriting shall be excluded and withdrawn from the registration. For any Holder which is a partnership, limited liability company, corporation, trust or natural person, the partners, retired partners, members, retired members, stockholders, beneficiaries, grantors and family members of such Holder, or the estates and family members of any such partners, retired partners, members, retired members, beneficiaries, grantors and family members and any trusts or other entities for the benefit of any of the foregoing persons shall be deemed to be a single “Holder,” and any pro rata reduction with respect to such “Holder” shall be based upon the aggregate amount of shares carrying registration rights owned by all entities and individuals included in such “Holder,” as defined in this sentence or as otherwise provided in Section 5.12.

(b)Right to Terminate Registration. The Company shall have the right to terminate or withdraw any registration initiated by it under this Section 2.3 whether or not any Holder has elected to include securities in such registration, and shall promptly notify any Holder that has elected to include shares in such registration of such termination or withdrawal. The Registration Expenses of such withdrawn registration shall be borne by the Company in accordance with Section 2.5 hereof.

2.4Form S-3 Registration. In case the Company shall receive from any Holder or Holders of Registrable Securities a written request or requests that the Company effect a registration on Form S-3 (or any successor to Form S-3) or any similar short-form registration statement and any related qualification or compliance with respect to all or a part of the Registrable Securities owned by such Holder or Holders, the Company will:

(a)promptly give written notice of the proposed registration, and any related qualification or compliance, to all other Holders of Registrable Securities; and

(b)as soon as practicable, effect such registration and all such qualifications and compliances as may be so requested and as would permit or facilitate the sale and distribution of all or such portion of such Holder’s or Holders’ Registrable Securities as are specified in such request, together with all or such portion of the Registrable Securities of any other Holder or Holders joining in such request as are specified in a written request given within fifteen (15) days after receipt of such written notice from the Company; provided, however, that the Company shall not be obligated to effect any such registration, qualification or compliance pursuant to this Section 2.4:

(i)if Form S-3 is not available for such offering by the Holders;

(ii)if the Holders, together with the holders of any other securities of the Company entitled to inclusion in such registration, propose to sell Registrable Securities and such other securities (if any) at an aggregate price to the public of less than twenty-five million dollars ($25,000,000);

8

(iii)if within thirty (30) days of receipt of a written request from any Holder or Holders pursuant to this Section 2.4, the Company gives notice to such Holder or Holders of the Company’s intention to make a public offering within ninety (90) days, other than pursuant to a Special Registration Statement;

(iv)if the Company has, within the twelve (12) month period preceding the date of such request, already effected two (2) registrations on Form S-3 for the Holders pursuant to this Section 2.4; or

(v)if the Company shall furnish to the Holders a certificate signed by the Chairman of the Board of Directors of the Company stating that in the good faith judgment of the Board of Directors of the Company, it would be materially detrimental to the Company and its stockholders for such Form S-3 registration to be effected at such time, in which event the Company shall have the right to defer the filing of the Form S-3 registration statement for a period of not more than one hundred twenty (120) days after receipt of the request of the Holder or Holders under this Section 2.4; provided, that such right to delay a request shall be exercised by the Company not more than once in any twelve (12) month period.

(c)Subject to the foregoing, the Company shall file a Form S-3 registration statement covering the Registrable Securities and other securities so requested to be registered as soon as practicable after receipt of the requests of the Holders. Registrations effected pursuant to this Section 2.4 shall not be counted as demands for registration or registrations effected pursuant to Section 2.2. All Registration Expenses incurred in connection with registrations requested pursuant to this Section 2.4 shall be paid by the Company, including the expense of one (1) special counsel of the selling stockholders.

2.5Expenses of Registration.Except as specifically provided herein, all Registration Expenses incurred in connection with any registration, qualification or compliance pursuant to Section 2.2, 2.3 or 2.4 herein shall be borne by the Company. All Selling Expenses incurred in connection with any registrations hereunder shall be borne by the holders of the securities so registered pro rata on the basis of the number of shares so registered. The Company shall not, however, be required to pay for expenses of any registration proceeding begun pursuant to Section 2.2 or 2.4, the request of which has been subsequently withdrawn by the Initiating Holders unless (a) the withdrawal is based upon material adverse information concerning the Company of which the Initiating Holders were not aware at the time of such request or (b) the Holders of a majority of Registrable Securities agree to deem such registration to have been effected as of the date of such withdrawal for purposes of determining whether the Company shall be obligated pursuant to Section 2.2(c) or 2.4(b), as applicable, to undertake any subsequent registration, in which event such right shall be forfeited by all Holders). If the Holders are required to pay the Registration Expenses, such expenses shall be borne by the holders of securities (including Registrable Securities) requesting such registration in proportion to the number of shares for which registration was requested. If the Company is required to pay the Registration Expenses of a withdrawn offering pursuant to clause (a) above, then such registration shall not be deemed to have been effected for purposes of determining whether the Company shall be obligated pursuant to Section 2.2(c) or 2.4(b), as applicable, to undertake any subsequent registration.

9

2.6Obligations of the Company. Whenever required to effect the registration of any Registrable Securities, the Company shall, as expeditiously as reasonably possible:

(a)prepare and file with the SEC a registration statement with respect to such Registrable Securities, use all reasonable efforts to cause such registration statement to become effective, and keep such registration statement effective for up to one hundred eighty (180) days or, if earlier, until the Holder or Holders have completed the distribution related thereto; provided, however, that at any time, upon written notice to the participating Holders and for a period not to exceed sixty (60) days thereafter (the “Suspension Period”), the Company may delay the filing or effectiveness of any registration statement or suspend the use or effectiveness of any registration statement (and the Initiating Holders hereby agree not to offer or sell any Registrable Securities pursuant to such registration statement during the Suspension Period) if the Company reasonably believes that there is or may be in existence material nonpublic information or events involving the Company, the failure of which to be disclosed in the prospectus included in the registration statement could result in a Violation (as defined below). In the event that the Company shall exercise its right to delay or suspend the filing or effectiveness of a registration hereunder, the applicable time period during which the registration statement is to remain effective shall be extended by a period of time equal to the duration of the Suspension Period. The Company may extend the Suspension Period for an additional consecutive sixty (60) days with the consent of the holders of a majority of the Registrable Securities registered under the applicable registration statement, which consent shall not be unreasonably withheld. No more than one (1) such Suspension Period shall occur in any twelve (12) month period. In no event shall any Suspension Period, when taken together with all prior Suspension Periods, exceed 120 days in the aggregate. If so directed by the Company, all Holders registering shares under such registration statement shall (i) not offer to sell any Registrable Securities pursuant to the registration statement during the period in which the delay or suspension is in effect after receiving notice of such delay or suspension; and (ii) use their best efforts to deliver to the Company (at the Company’s expense) all copies, other than permanent file copies then in such Holders’ possession, of the prospectus relating to such Registrable Securities current at the time of receipt of such notice. Notwithstanding the foregoing, the Company shall not be required to file, cause to become effective or maintain the effectiveness of any registration statement other than a registration statement on Form S-3 that contemplates a distribution of securities on a delayed or continuous basis pursuant to Rule 415 under the Securities Act.

(b)Prepare and file with the SEC such amendments and supplements to such registration statement and the prospectus used in connection with such registration statement as may be necessary to comply with the provisions of the Securities Act with respect to the disposition of all securities covered by such registration statement for the period set forth in subsection (a) above. The Company shall provide to each Adviser a draft copy of all documents to be filed with the SEC to the extent such draft documents contain information regarding such Adviser or the Advisory Holders and shall in each case promptly notify each Adviser of the effective date of any registration statement covering the Registrable Securities of an Advisory Holder.

(c)Furnish to the Holders such number of copies of a prospectus, including a preliminary prospectus, in conformity with the requirements of the Securities Act, and such other

10

documents as they may reasonably request in order to facilitate the disposition of Registrable Securities owned by them.

(d)Use its reasonable efforts to register and qualify the securities covered by such registration statement under such other securities or Blue Sky laws of such jurisdictions as shall be reasonably requested by the Holders; provided that the Company shall not be required in connection therewith or as a condition thereto to qualify to do business or to file a general consent to service of process in any such states or jurisdictions.

(e)In the event of any underwritten public offering, enter into and perform its obligations under an underwriting agreement, in usual and customary form, with the managing underwriter(s) of such offering. Each Holder participating in such underwriting shall also enter into and perform its obligations under such an agreement.

(f)Notify each Holder of Registrable Securities covered by such registration statement at any time when a prospectus relating thereto is required to be delivered under the Securities Act of the happening of any event as a result of which the prospectus included in such registration statement, as then in effect, includes an untrue statement of a material fact or omits to state a material fact required to be stated therein or necessary to make the statements therein not misleading in the light of the circumstances then existing. The Company will use reasonable efforts to amend or supplement such prospectus in order to cause such prospectus not to include any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading in the light of the circumstances then existing.

(g)Use its reasonable efforts to furnish, on the date that such Registrable Securities are delivered to the underwriters for sale, if such securities are being sold through underwriters, (i) an opinion, dated as of such date, of the counsel representing the Company for the purposes of such registration, in form and substance as is customarily given to underwriters in an underwritten public offering, addressed to the underwriters, if any, and (ii) a letter, dated as of such date, from the independent certified public accountants of the Company, in form and substance as is customarily given by independent certified public accountants to underwriters in an underwritten public offering addressed to the underwriters.

2.7Delay of Registration; Furnishing Information.

(a)No Holder shall have any right to obtain or seek an injunction restraining or otherwise delaying any such registration as the result of any controversy that might arise with respect to the interpretation or implementation of this Section 2.

(b)It shall be a condition precedent to the obligations of the Company to take any action pursuant to Section 2.2, 2.3 or 2.4 that the selling Holders shall furnish to the Company such information regarding themselves, the Registrable Securities held by them and the intended method of disposition of such securities as shall be required to effect the registration of their Registrable Securities.

(c)The Company shall have no obligation with respect to any registration requested pursuant to Section 2.2 or Section 2.4 if the number of shares or the anticipated

11

aggregate offering price of the Registrable Securities to be included in the registration does not equal or exceed the number of shares or the anticipated aggregate offering price required to originally trigger the Company’s obligation to initiate such registration as specified in Section 2.2 or Section 2.4, whichever is applicable.

2.8Indemnification. In the event any Registrable Securities are included in a registration statement under Sections 2.2, 2.3 or 2.4:

(a)To the extent permitted by law, the Company will indemnify and hold harmless each Holder, the partners, members, trustees, managers, officers and directors of each Holder, any underwriter (as defined in the Securities Act) for such Holder and each person, if any, who controls such Holder or underwriter within the meaning of the Securities Act or the Exchange Act, against any losses, claims, damages, or liabilities (joint or several) to which they may become subject under the Securities Act, the Exchange Act or other federal or state law, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon any of the following statements, omissions or violations (collectively a “Violation”) by the Company: (i) any untrue statement or alleged untrue statement of a material fact contained in such registration statement or incorporated reference therein, including any preliminary prospectus or final prospectus contained therein or any amendments or supplements thereto, (ii) the omission or alleged omission to state therein a material fact required to be stated therein, or necessary to make the statements therein not misleading, or (iii) any violation or alleged violation by the Company of the Securities Act, the Exchange Act, any state securities law or any rule or regulation promulgated under the Securities Act, the Exchange Act or any state securities law in connection with the offering covered by such registration statement; and the Company will reimburse each such Holder, partner, member, trustee, manager, officer, director, underwriter or controlling person for any legal or other expenses reasonably incurred by them in connection with investigating or defending any such loss, claim, damage, liability or action; provided however, that the indemnity agreement contained in this Section 2.8(a) shall not apply to amounts paid in settlement of any such loss, claim, damage, liability or action if such settlement is effected without the consent of the Company, which consent shall not be unreasonably withheld, nor shall the Company be liable in any such case for any such loss, claim, damage, liability or action to the extent that it arises out of or is based upon a Violation which occurs in reliance upon and in conformity with written information furnished expressly for use in connection with such registration by such Holder, partner, member, trustee, manager, officer, director, underwriter or controlling person of such Holder.

(b)To the extent permitted by law, each Holder will, if Registrable Securities held by such Holder are included in the securities as to which such registration, qualifications or compliance is being effected, severally (and not jointly) indemnify and hold harmless the Company, each of its directors, its officers and each person, if any, who controls the Company within the meaning of the Securities Act, any underwriter and any other Holder selling securities under such registration statement or any of such other Holder’s partners, trustees, managers, directors or officers or any person who controls such Holder, against any losses, claims, damages or liabilities (joint or several) to which the Company or any such director, officer, trustee, manager, controlling person, underwriter or other such Holder, or partner, director, officer, trustee, manager, or controlling person of such other Holder may become subject under the Securities Act, the Exchange Act or other federal or state law, insofar as such losses, claims,

12

damages or liabilities (or actions in respect thereto) arise out of or are based upon any of the following statements: (i) any untrue statement or alleged untrue statement of a material fact contained in such registration statement or incorporated reference therein, including any preliminary prospectus or final prospectus contained therein or any amendments or supplements thereto, (ii) the omission or alleged omission to state therein a material fact required to be stated therein, or necessary to make the statements therein not misleading, or (iii) any violation or alleged violation by the Company of the Securities Act (collectively, a “Holder Violation”), in each case to the extent (and only to the extent) that such Holder Violation occurs in reliance upon and in conformity with written information furnished by such Holder under an instrument duly executed by such Holder and stated to be specifically for use in connection with such registration; and each such Holder will reimburse any legal or other expenses reasonably incurred by the Company or any such director, officer, controlling person, underwriter or other Holder, or partner, trustee, manager, officer, director or controlling person of such other Holder in connection with investigating or defending any such loss, claim, damage, liability or action if it is judicially determined that there was such a Holder Violation; provided, however, that the indemnity agreement contained in this Section 2.8(b) shall not apply to amounts paid in settlement of any such loss, claim, damage, liability or action if such settlement is effected without the consent of the Holder, which consent shall not be unreasonably withheld; provided further, that in no event shall any indemnity under this Section 2.8 exceed the net proceeds from the offering received by such Holder.

(c)Promptly after receipt by an indemnified party under this Section 2.8 of notice of the commencement of any action (including any governmental action), such indemnified party will, if a claim in respect thereof is to be made against any indemnifying party under this Section 2.8, deliver to the indemnifying party a written notice of the commencement thereof and the indemnifying party shall have the right to participate in, and, to the extent the indemnifying party so desires, jointly with any other indemnifying party similarly noticed, to assume the defense thereof with counsel mutually satisfactory to the parties; provided, however, that an indemnified party shall have the right to retain its own counsel, with the fees and expenses thereof to be paid by the indemnifying party, if representation of such indemnified party by the counsel retained by the indemnifying party would be inappropriate due to actual or potential differing interests between such indemnified party and any other party represented by such counsel in such proceeding. The failure to deliver written notice to the indemnifying party within a reasonable time of the commencement of any such action shall relieve such indemnifying party of any liability to the indemnified party under this Section 2.8 to the extent, and only to the extent, prejudicial to its ability to defend such action, but the omission so to deliver written notice to the indemnifying party will not relieve it of any liability that it may have to any indemnified party otherwise than under this Section 2.8.

(d)If the indemnification provided for in this Section 2.8 is held by a court of competent jurisdiction to be unavailable to an indemnified party with respect to any losses, claims, damages or liabilities referred to herein, the indemnifying party, in lieu of indemnifying such indemnified party thereunder, shall to the extent permitted by applicable law contribute to the amount paid or payable by such indemnified party as a result of such loss, claim, damage or liability in such proportion as is appropriate to reflect the relative fault of the indemnifying party on the one hand and of the indemnified party on the other in connection with the Violation(s) or Holder Violation(s) that resulted in such loss, claim, damage or liability, as well as any other

13

relevant equitable considerations. The relative fault of the indemnifying party and of the indemnified party shall be determined by a court of law by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission to state a material fact relates to information supplied by the indemnifying party or by the indemnified party and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission; provided, that in no event shall any contribution by a Holder hereunder exceed the net proceeds from the offering received by such Holder.

(e)The obligations of the Company and Holders under this Section 2.8 shall survive completion of any offering of Registrable Securities in a registration statement and, with respect to liability arising from an offering to which this Section 2.8 would apply that is covered by a registration filed before termination of this Agreement, such termination. No indemnifying party, in the defense of any such claim or litigation, shall, except with the consent of each indemnified party, consent to entry of any judgment or enter into any settlement which does not include as an unconditional term thereof the giving by the claimant or plaintiff to such Indemnified Party of a release from all liability in respect to such claim or litigation.

2.9Assignment of Registration Rights. The rights to cause the Company to register Registrable Securities pursuant to this Section 2 may be assigned by a Holder to a transferee or assignee of Registrable Securities (for so long as such shares remain Registrable Securities) that (a) is a partner or retired partner of any Holder which is a partnership, (b) is a member or former member, of any Holder which is a limited liability company, (c) is a shareholder or former shareholder of any Holder which is a corporation, (d) is an Affiliate (as defined in Rule 405 under the Securities Act) of any Holder; (e) is a family member or trust or other entity for the benefit of any individual Holder or his family members, (f) is a grantor or beneficiary of any Holder which is a trust, (g) acquires at least 3,000,000 shares of Registrable Securities, (h) is an Advisory Holder to another Advisory Holder with a common or affiliated Advisor, or (i) is a registered investment company party to a merger or reorganization of one or more Holders who are registered investment companies; provided, however, that (i) the transferor shall, within ten (10) days after such transfer, furnish to the Company written notice of the name and address of such transferee or assignee and the securities with respect to which such registration rights are being assigned and (ii) such transferee agrees in writing to be subject to all restrictions set forth in this Agreement.

2.10Limitation on Subsequent Registration Rights. Other than as provided in Section 5.10, after the date of this Agreement, the Company shall not enter into any agreement with any holder or prospective holder of any securities of the Company that would grant such holder rights to demand the registration of shares of the Company’s capital stock, or to include such shares in a registration statement that would reduce the number of shares includable by the Holders.

2.11“Market Stand-Off” Agreement. Each Holder hereby agrees that such Holder shall not sell, transfer, make any short sale of, grant any option for the purchase of, or enter into any hedging or similar transaction with the same economic effect as a sale, any Common Stock (or other securities) of the Company held by such Holder (other than those included in the registration, purchased in the Initial Offering or in the secondary market after the Initial Offering) during the 180-day period following the effective date of the Initial Offering (or such

14

longer period, not to exceed 18 days after the expiration of the 180-day period, as the underwriters or the Company shall reasonably request in order to facilitate compliance with NASD Rule 2711); provided, that all officers and directors of the Company and holders of at least one percent (1%) of the Company’s voting securities are bound by and have entered into similar agreements. The obligations described in this Section 2.11 shall not apply to a registration relating solely to employee benefit plans on Form S-1 or Form S-8 or similar forms that may be promulgated in the future, or a registration relating solely to a transaction on Form S-4 or similar forms that may be promulgated in the future. Any discretionary waiver or termination of the restrictions in this Section 2.11 by the Company or the underwriters shall apply pro rata to all Holders based on the number of shares of Common Stock held by such Holder, except that, notwithstanding the foregoing, the Company and the underwriters may, in their sole discretion, waive or terminate these restrictions with respect to up to 50,000 shares of Common Stock.

2.12Agreement to Furnish Information. Each Holder agrees to execute and deliver such other agreements as may be reasonably requested by the Company or the underwriter that are consistent with the Holder’s obligations under Section 2.11 or that are necessary to give further effect thereto. In addition, if requested by the Company or the representative of the underwriters of Common Stock (or other securities) of the Company, each Holder shall provide, within ten (10) days of such request, such information as may be required by the Company or such representative in connection with the completion of any public offering of the Company’s securities pursuant to a registration statement filed under the Securities Act. The obligations described in Section 2.11 and this Section 2.12 shall not apply to a Special Registration Statement. The Company may impose stop-transfer instructions with respect to the shares of Common Stock (or other securities) subject to the foregoing restriction until the end of said day period. Each Holder agrees that any transferee of any shares of Registrable Securities shall be bound by Sections 2.11 and 2.12. The underwriters of the Company’s stock are intended third party beneficiaries of Sections 2.11 and 2.12 and shall have the right, power and authority to enforce the provisions hereof as though they were a party hereto.

2.13Rule 144 Reporting. With a view to making available to the Holders the benefits of certain rules and regulations of the SEC which may permit the sale of the Registrable Securities to the public without registration, the Company agrees to use its best efforts to:

(a)Make and keep public information available, as those terms are understood and defined in SEC Rule 144 or any similar or analogous rule promulgated under the Securities Act, at all times after the effective date of the first registration filed by the Company for an offering of its securities to the general public;

(b)File with the SEC, in a timely manner, all reports and other documents required of the Company under the Exchange Act; and

(c)So long as a Holder owns any Registrable Securities, furnish to such Holder forthwith upon request: a written statement by the Company as to its compliance with the reporting requirements of said Rule 144 of the Securities Act, and of the Exchange Act (at any time after it has become subject to such reporting requirements); a copy of the most recent annual or quarterly report of the Company filed with the Commission; and such other reports and

15

documents as a Holder may reasonably request in connection with availing itself of any rule or regulation of the SEC allowing it to sell any such securities without registration.

SECTION 3COVENANTS OF THE COMPANY.

3.1Basic Financial Information and Reporting.

(a)The Company will maintain true books and records of account in which full and correct entries will be made of all its business transactions pursuant to a system of accounting established and administered in accordance with generally accepted accounting principles consistently applied (except as noted therein) and will set aside on its books all such proper accruals and reserves as shall be required under generally accepted accounting principles consistently applied.

(b)As soon as practicable after the end of each fiscal year of the Company, and in any event within one hundred twenty (120) days thereafter, the Company will furnish each Investor that (x) (together with its affiliates and related Investors) owns not less than 3,000,000 shares of Registrable Securities, including Common Stock issued on conversion of such stock (as adjusted for stock splits and combinations) or (y) is an Advisory Holder (a “Major Investor”), a balance sheet of the Company, as at the end of such fiscal year, and a statement of income and a statement of cash flows of the Company, for such year, all prepared in accordance with generally accepted accounting principles consistently applied (except as noted therein and setting forth in each case in comparative form the figures for the previous fiscal year, all in reasonable detail). Such financial statements shall be audited and accompanied by a report and opinion thereon by independent public accountants of national standing selected by the Company’s Board of Directors. The obligation to deliver such information to Advisory Holders shall be satisfied if such information is delivered to the Adviser for such Advisory Holders.

(c)The Company will furnish each Major Investor, as soon as practicable after the end of the first, second and third quarterly accounting periods in each fiscal year of the Company, and in any event within forty-five (45) days thereafter, a balance sheet of the Company as of the end of each such quarterly period, and a statement of income and a statement of cash flows of the Company for such period and for the current fiscal year to date, prepared in accordance with generally accepted accounting principles consistently applied (except as noted therein, with the exception that no notes need be attached to such statements and year-end audit adjustments may not have been made.

(d)The Company will furnish each Major Investor: (i) at least thirty (30) days prior to the beginning of each fiscal year an annual budget and operating plans for such fiscal year (and as soon as available, any subsequent written revisions thereto); and (ii) as soon as practicable after the end of each month, and in any event within twenty (20) days thereafter, a balance sheet of the Company as of the end of each such month, and a statement of income and a statement of cash flows of the Company for such month and for the current fiscal year to date, including a comparison to plan figures for such period, prepared in accordance with generally accepted accounting principles consistently applied (except as noted thereon), with the exception that no notes need be attached to such statements and year-end audit adjustments may not have been made.

16

(e)The Company will furnish each Major Investor, as soon as practicable upon request, a summary of its then-current equity capitalization.

(f)The Company will furnish each holder of Series G Preferred, as soon as practicable after the end of each quarterly accounting period in each fiscal year of the Company, and in any event within forty-five (45) days thereafter, an internally prepared report which sets forth certain operating metrics of the Company, as determined by the Company in its sole discretion, which are sufficient for such holder to determine the value of the shares of Series G Preferred then held by such holder (each, an “Internal Valuation Report”). The holders of Series G Preferred acknowledge and agree that the Company shall not make, and shall not be deemed to make, any representations or warranties to such holders regarding the accuracy or completeness of such Internal Valuation Reports.

3.2Inspection Rights. Each Major Investor shall have the right to visit and inspect any of the properties of the Company or any of its subsidiaries, and to discuss the affairs, finances and accounts of the Company or any of its subsidiaries with its officers, and to review such information as is reasonably requested all at such reasonable times and as often as may be reasonably requested; provided, however, that the Company shall not be obligated under this Section 3.2 with respect to a competitor of the Company or with respect to information which the Board of Directors determines in good faith is confidential or attorney-client privileged and should not, therefore, be disclosed.

3.3Confidentiality of Records. Each Investor agrees to use the same degree of care as such Investor uses to protect its own confidential information to keep confidential any information furnished to such Investor that the Company identifies as being confidential or proprietary (so long as such information is not in the public domain), except that such Investor may disclose such proprietary or confidential information (i) to any Adviser, trustee, legal representative, auditor, custodial agent, partner, member, shareholder, grantor, beneficiary, family member, subsidiary or parent of such Investor as long as such Adviser, trustee, legal representative, auditor, custodial agent, partner, member, shareholder, grantor, beneficiary, family member, subsidiary or parent is advised of and agrees or has agreed to be bound by the confidentiality provisions of this Section 3.3 or comparable restrictions; (ii) at such time as it enters the public domain through no fault of such Investor; (iii) that is communicated to it free of any obligation of confidentiality; (iv) that is developed by Investor or its agents independently of and without reference to any confidential information communicated by the Company; or (v) as required by applicable law.

3.4Reservation of Common Stock. The Company will at all times reserve and keep available, solely for issuance and delivery upon the conversion of the Preferred Stock, all Common Stock issuable from time to time upon such conversion.

3.5Stock Vesting. Any accelerated vesting relating to any stock options and other stock equivalents issued by the Company after the date of this Agreement to employees, directors, consultants and other service providers shall require prior approval of the Board. With respect to restricted stock and stock issued by the Company as a result of early exercised options, the Company’s repurchase option shall provide that, upon termination of the employment of the shareholder, with or without cause, the Company or its assignee (to the extent permissible under

17

applicable securities law qualification) retains the option to repurchase at cost any unvested shares held by such shareholder.

3.6Proprietary Information and Inventions Agreement. The Company shall require all current and former officers, employees and consultants of the Company to execute and deliver a Proprietary Information and Inventions Agreement substantially in a form acceptable to the Investors, which shall include acceptable non-solicitation and non-competition provisions.

3.7Directors’ Liability and Indemnification. The Certificate and Bylaws shall provide (a) for elimination of the liability of director to the maximum extent permitted by law and (b) for indemnification of directors for acts on behalf of the Company to the maximum extent permitted by law.

3.8Board of Directors. The Company shall reimburse the expenses of the Directors and Board observers for reasonable costs incurred in attending meetings of the Board, including any meetings of the committees of the Board, and any other meetings or events attended on behalf of the Company.

3.9Director and Officer Insurance. The Company will use its best efforts to maintain in full force and effect director and officer liability insurance in an amount reasonably acceptable to the Board of Directors.

3.10Board Approval of Certain Transactions. The Company will not do any of the following, unless previously approved by a majority of the Board:

(a)Incur or assume any indebtedness in excess of five million dollars ($5,000,000) in the aggregate;

(b)Make or commit to make any capital expenditures (including capital expenditures under capitalized leases) in excess of five million dollars ($5,000,000) in the aggregate not included in the Approved Budget (as defined below);

(c)Increase the number of shares of Common Stock reserved for issuance pursuant to the Company’s 2008 Stock Option Plan, 2010 Stock Plan and 2010 Restricted Stock Unit Plan (collectively, the “Option Plans”), or establish any new employee stock option plan, employee stock purchase plan, employee restricted stock plan or other similar stock plan;

(d)Create any committees of the Board;

(e)Acquire all or substantially all of the stock or assets of any other business entity (whether by stock or asset purchase, merger, consolidation or otherwise);

(f)Form, contribute any capital or assets, or loan or advance any funds, to any subsidiary, joint venture or similar business entity, in excess of five million dollars ($5,000,000) in the aggregate;

18

(g)Approve the Company’s annual operating or capital budget (the “Approved Budget”);

(h)Enter into any material new line of business or materially change the Company’s existing line of business;

(i)Exclusively license any of the Company’s intellectual property or enter into an exclusive distribution or partnership agreement relating to the Company’s intellectual property;

(j)Enter any transaction that results in first priority security interest being placed on all or substantially all of the Company’s assets or intellectual property; or

(k)Sell, transfer, pledge, dispose of or license any of the intellectual property rights of the Company or other Company assets, other than in the ordinary course of the Company’s business.

3.11Indemnification Matters.

(a)The Company hereby acknowledges that one or more of the members of its Board of Directors (the “Investor Directors”) may have certain rights to indemnification, advancement of expenses and/or insurance provided by one or more of the Investors and certain of their affiliates (collectively, the “Fund Indemnitors”). The Company hereby agrees (i) that it is the indemnitor of first resort (i.e., its obligations to any such Investor Director are primary and any obligation of the Fund Indemnitors to advance expenses or to provide indemnification for the same expenses or liabilities incurred by such Investor Director are secondary), (ii) that it shall be required to advance the full amount of expenses incurred by such Investor Director and shall be liable for the full amount of all expenses, judgments, penalties, fines and amounts paid in settlement by or on behalf of any such director to the extent legally permitted and as required by the Certificate, as may be amended from time to time, or the Company’s Bylaws (or any agreement between the Company and such Investor Director), without regard to any rights such Investor Director may have against the Fund Indemnitors, and (iii) that it irrevocably waives, relinquishes and releases the Fund Indemnitors from any and all claims against the Fund Indemnitors for contribution, subrogation or any other recovery of any kind in respect thereof. The Company further agrees that no advancement or payment by the Fund Indemnitors on behalf of any such Investor Director with respect to any claim for which such Investor Director has sought indemnification from the Company shall affect the foregoing and the Fund Indemnitors shall have a right of contribution and/or be subrogated to the extent of such advancement or payment to all of the rights of recovery of such Investor Director against the Company.

(b)If the Company or any of its successors or assignees consolidates with or merges into any other Person and is not the continuing or surviving corporation or entity of such consolidation or merger, then to the extent necessary, proper provision shall be made so that the successors and assignees of the Company assume the obligations of the Company with respect to indemnification of members of the Board of Directors as in effect immediately before such transaction, whether such obligations are contained in the Company’s Bylaws, its Certificate, as may be amended from time to time, or elsewhere, as the case may be.

19

3.12Observer Rights. As long as Battery owns any shares of Series F Preferred, the Company shall allow one representative designated by Battery to attend all meetings of the Board in a nonvoting capacity. In connection therewith, the Company shall give such representative copies of all notices, minutes, consents and other materials, financial or otherwise, that the Company provides to the Board; provided, however, that the Company reserves the right to exclude such representative from access to any material or meeting or portion thereof if the Company believes upon advice of counsel that such exclusion is reasonably necessary to preserve the attorney-client privilege, to protect highly confidential information or for other similar reasons. The decision of the Board with respect to the privileged or confidential nature of such information shall be final and binding. Notwithstanding the foregoing, the rights of Battery pursuant to this Section 3.12 shall terminate in event that the Board determines at any time that such rights are not in the best interests of the Company.

3.13Termination of Covenants. All covenants of the Company contained in Section 3 of this Agreement (other than the provisions of Sections 3.3, 3.7, 3.9 and 3.11) shall expire and terminate as to each Investor upon the earlier of (i) the effective date of the registration statement pertaining to an Initial Offering that results in the Series B Preferred, Series D Preferred, Series E Preferred, F Preferred and Series G Preferred being automatically converted into Common Stock or (ii) upon an “Acquisition” or “Asset Transfer” as defined in the Company’s Certificate of Incorporation as in effect as of the Effective Date hereof; provided that in the event of an Acquisition or Asset Transfer involving a purchaser that is not publicly traded, the Company shall require such purchaser to provide equivalent information rights to Advisers of Advisory Holders.

SECTION 4RIGHTS OF FIRST REFUSAL.

4.1Subsequent Offerings. Subject to applicable securities laws, each Investor that qualifies an “accredited investor” under Regulation D of the Securities Act (a “Qualified Investor”) shall have a right of first refusal to purchase its pro rata share of all Equity Securities (as defined below) that the Company may, from time to time, propose to sell and issue after the date of this Agreement, other than the Equity Securities excluded by Section 4.7 hereof. Each Qualified Investor’s pro rata share is equal to the ratio of (a) the number of shares of the Company’s Common Stock (including all shares of Common Stock issuable or issued upon conversion of the Shares or upon the exercise of outstanding warrants or options) of which such Qualified Investor is deemed to be a holder immediately prior to the issuance of such Equity Securities to (b) the total number of shares of the Company’s outstanding Common Stock (including all shares of Common Stock issued or issuable upon conversion of the Shares or upon the exercise of any outstanding warrants or options) immediately prior to the issuance of the Equity Securities. The collective pro rata share of Advisory Holders that share a common or affiliated Adviser may be allocated among such Adviser or Advisers’ advisory clients as determined by the Adviser or Advisers. The term “Equity Securities” shall mean (i) any Common Stock, Preferred Stock or other security of the Company, (ii) any security convertible into or exercisable or exchangeable for, with or without consideration, any Common Stock, Preferred Stock or other security (including any option to purchase such a convertible security), (iii) any security carrying any warrant or right to subscribe to or purchase any Common Stock, Preferred Stock or other security or (iv) any such warrant or right.

20

4.2Exercise of Rights. If the Company proposes to issue any Equity Securities, it shall give each Qualified Investor written notice of its intention, describing the Equity Securities, the price and the terms and conditions upon which the Company proposes to issue the same. Each Qualified Investor shall have twenty (20) days from the delivery of such notice to agree to purchase its pro rata share of the Equity Securities for the price and upon the terms and conditions specified in the notice by giving written notice to the Company and stating therein the quantity of Equity Securities to be purchased. Notwithstanding the foregoing, the Company shall not be required to offer or sell such Equity Securities to any Qualified Investor who would cause the Company to be in violation of applicable federal securities laws by virtue of such offer or sale.

4.3Issuance of Equity Securities to Other Persons. If not all of the Qualified Investors elect to purchase their pro rata share of the Equity Securities, then the Company shall promptly notify in writing the Qualified Investors who do so elect and shall offer such Qualified Investors the right to acquire such unsubscribed shares on a pro rata basis. The Qualified Investors shall have five (5) days after receipt of such notice to notify the Company of its election to purchase all or a portion of the unsubscribed shares. The Company shall have ninety (90) days thereafter to sell the Equity Securities in respect of which the Qualified Investors’ rights were not exercised, at a price not lower and upon general terms and conditions not materially more favorable to the purchasers thereof than specified in the Company’s notice to the Qualified Investors pursuant to Section 4.2 hereof. If the Company has not sold such Equity Securities within such ninety (90) day period, the Company shall not thereafter issue or sell any Equity Securities, without first offering such securities to the Qualified Investors in the manner provided above.

4.4Sale Without Notice. In lieu of giving notice to the Qualified Investors prior to the issuance of Equity Securities as provided in Section 4.2, the Company may elect to give notice to the Qualified Investors within thirty (30) days after the issuance of Equity Securities. Such notice shall describe the type, price and terms of the Equity Securities. Each Qualified Investor shall have twenty (20) days from the date of receipt of such notice to elect to purchase up to the number of shares that would, if purchased by such Qualified Investor, maintain such Qualified Investor’s pro rata share (as set forth in Section 4.1) of the Company’s equity securities after giving effect to all such purchases. The closing of such sale shall occur within sixty (60) days of the date of notice to the Qualified Investors.

4.5Termination of Rights of First Refusal. The rights of first refusal established by this Section 4 shall not apply to, and shall terminate upon the earlier of (i) the effective date of the registration statement pertaining to the Company’s Initial Offering or (ii) an Acquisition or Asset Transfer.

4.6Assignment of Rights of First Refusal. The rights of first refusal of each Qualified Investor under this Section 4 may be assigned to the same parties, subject to the same restrictions as any transfer of registration rights pursuant to Section 2.9.

4.7Excluded Securities. The rights of first refusal established by this Section 4 shall have no application to any of the following Equity Securities:

21

(a)           shares issued or to be issued after the date hereof to employees, officers or directors of, or consultants or advisors to the Company or any subsidiary, pursuant to stock purchase or stock option plans or other arrangements that are approved by the Board of Directors or any stock issued or issuable pursuant thereto;

(b)           stock issued or issuable pursuant to any rights or agreements, options, warrants or convertible securities outstanding as of the date of this Agreement; and stock issued pursuant to any such rights or agreements granted after the date of this Agreement, so long as the rights of first refusal established by this Section 4 were complied with, waived, or were inapplicable pursuant to any provision of this Section 4.7 with respect to the initial sale or grant by the Company of such rights or agreements;

(c)           any Equity Securities issued for consideration other than cash pursuant to a merger, consolidation, acquisition or similar business combination approved by the Board of Directors;

(d)           any Equity Securities issued in connection with any stock split, stock dividend or recapitalization by the Company;

(e)           any Equity Securities issued pursuant to any equipment loan or leasing arrangement, real property leasing arrangement, or debt financing from a bank or similar financial or lending institution approved by the Board of Directors;

(f)            any Equity Securities that are issued by the Company pursuant to the Initial Offering; and

(g)           any Equity Securities issued in connection with strategic transactions involving the Company and other entities, including (i) joint ventures, manufacturing, marketing or distribution arrangements or (ii) technology transfer or development arrangements; provided, that the issuance of shares therein has been approved by the Company’s Board of Directors; and provided, further, that such transaction is not substantially for equity financing purposes.

SECTION 5MISCELLANEOUS.

5.1          Governing Law. This Agreement shall be governed by and construed under the laws of the State of Delaware in all respects as such laws are applied to agreements among Delaware residents entered into and to be performed entirely within Delaware, without reference to conflicts of laws or principles thereof. The parties agree that any action brought by any party under or in relation to this Agreement, including, without limitation, to interpret or enforce any provision of this Agreement, shall be brought in, and each party agrees to and does hereby submit to the jurisdiction and venue of, any state or federal court located in Delaware.

5.2          Successors and Assigns. Except as otherwise expressly provided herein, the provisions hereof shall inure to the benefit of, and be binding upon, the parties hereto and their respective successors, assigns, heirs, executors, and administrators and shall inure to the benefit of and be enforceable by each person who shall be a holder of Registrable Securities from time to time; provided, however, that prior to the receipt by the Company of adequate written notice of the transfer of any Registrable Securities specifying the full name and address of the

22

transferee, the Company may deem and treat the person listed as the holder of such shares in its records as the absolute owner and holder of such shares for all purposes, including the payment of dividends or any redemption price.

5.3          Entire Agreement. This Agreement, the Exhibits and Schedules hereto, the Purchase Agreement and the other documents delivered pursuant thereto constitute the full and entire understanding and agreement between the parties with regard to the subjects hereof and no party shall be liable or bound to any other in any manner by any oral or written representations, warranties, covenants and agreements except as specifically set forth herein and therein. Each party expressly represents and warrants that it is not relying on any oral or written representations, warranties, covenants or agreements outside of this Agreement.

5.4          Severability. In the event one or more of the provisions of this Agreement should, for any reason, be held to be invalid, illegal or unenforceable in any respect, such invalidity, illegality, or unenforceability shall not affect any other provisions of this Agreement, and this Agreement shall be construed as if such invalid, illegal or unenforceable provision had never been contained herein.

5.5          Amendment and Waiver.

(a)           Except as otherwise expressly provided, this Agreement may be amended or modified, and the obligations of the Company and the rights of the Investors and Holders under this Agreement may be waived, only upon the written consent of (i) the Company, (ii) the holders of at least a majority of the then-outstanding Series G Preferred, voting separately as a class, (iii) the holders of at least a majority of the then-outstanding Series F Preferred, voting separately as a class, (iv) the holders of at least a majority of the then-outstanding Series E Preferred, voting separately as a class, (v) the holders of at least a majority of the then-outstanding Series D Preferred, voting separately as a class, and (vi) the holders of at least a majority of the then-outstanding Series B Preferred, voting separately as a class; provided, however, that notwithstanding the foregoing, Section 3.12 of this Agreement shall not be amended or waived without the written consent of Battery. Any amendment, termination or waiver effected in accordance with this Section 5.5 shall be binding on all parties hereto, even if they do not execute such consent.

(b)           For the purposes of determining the number of Holders or Investors entitled to vote or exercise any rights hereunder, the Company shall be entitled to rely solely on the list of record holders of its stock as maintained by or on behalf of the Company.

5.6          Delays or Omissions. It is agreed that no delay or omission to exercise any right, power, or remedy accruing to any party, upon any breach, default or noncompliance by another party under this Agreement shall impair any such right, power, or remedy, nor shall it be construed to be a waiver of any such breach, default or noncompliance, or any acquiescence therein, or of any similar breach, default or noncompliance thereafter occurring. It is further agreed that any waiver, permit, consent, or approval of any kind or character on any party’s part of any breach, default or noncompliance under this Agreement or any waiver on such party’s part of any provisions or conditions of this Agreement must be in writing and shall be effective only

23

to the extent specifically set forth in such writing. All remedies, either under this Agreement, by law, or otherwise afforded to any party, shall be cumulative and not alternative.

5.7          Notices. All notices required or permitted hereunder shall be in writing and shall be deemed effectively given: (a) upon personal delivery to the party to be notified, (b) when sent by confirmed electronic mail or facsimile if sent during normal business hours of the recipient; if not, then on the next business day, (c) five (5) days after having been sent by registered or certified mail, return receipt requested, postage prepaid, or (d) one (1) day after deposit with a nationally recognized overnight courier, specifying next day delivery, with written verification of receipt. All communications shall be sent to the party to be notified at the address as set forth on the signature pages hereof or Exhibit A hereto or at such other address as such party may designate by ten (10) days advance written notice to the other parties hereto.

5.8          Attorneys’ Fees. In the event that any suit or action is instituted under or in relation to this Agreement, including, without limitation, to enforce any provision in this Agreement, the prevailing party in such dispute shall be entitled to recover from the losing party all fees, costs and expenses of enforcing any right of such prevailing party under or with respect to this Agreement, including, without limitation, such reasonable fees and expenses of attorneys and accountants, which shall include, without limitation, all fees, costs and expenses of appeals.

5.9          Titles and Subtitles. The titles of the sections and subsections of this Agreement are for convenience of reference only and are not to be considered in construing this Agreement.

5.10        Additional Investors. Notwithstanding anything to the contrary contained herein, if the Company shall issue Equity Securities in accordance with Section 4.7 (c), (e) or (g) of this Agreement, any purchaser of such Equity Securities may become a party to this Agreement by executing and delivering an additional counterpart signature page to this Agreement and shall be deemed an “Investor,” a “Holder” and a party hereunder.

5.11        Counterparts. This Agreement may be executed in any number of counterparts, including facsimile signatures and signatures delivered by other electronic means, each of which shall be an original, but all of which together shall constitute one instrument.

5.12        Aggregation of Stock. All shares of Registrable Securities held or acquired by affiliated entities or persons or persons or entities under common management or control, including the Registrable Securities held by the Advisory Holders of a common Adviser or affiliated Advisers, shall be aggregated together for the purpose of determining the availability of any rights under this Agreement.

5.13        Massachusetts Business Trusts.

(a)           A copy of the Agreement and Declaration of Trust of each Investor affiliated with Fidelity Management & Research Company (a “Fidelity Investor”) or any affiliate thereof is on file with the Secretary of State of the Commonwealth of Massachusetts and notice is hereby given that this Agreement is executed on behalf of the trustees of such Fidelity Investor or any affiliate thereof as trustees and not individually and that the obligations of this Agreement are not binding on any of the trustees, officers or stockholders of such Fidelity

24

Investor or any affiliate thereof individually but are binding only upon such Fidelity Investor or any affiliate thereof and its assets and property.

(b)           Certain of the Investors for which Morgan Stanley Investment Advisors Inc. (an affiliate of Morgan Stanley Investment Management Inc.) acts as investment adviser are Massachusetts Business Trusts. A copy of the Agreement and Declaration of Trust of each such Investor is on file with the Secretary of State of the Commonwealth of Massachusetts and notice is hereby given that this Agreement is executed on behalf of the trustees of each such Investor as trustees and not individually and that the obligations of this Agreement are not binding on any of the trustees, officers or stockholders of any such Investor individually but are binding only upon each such Investor and its assets and property.

5.14        Pronouns. All pronouns contained herein, and any variations thereof, shall be deemed to refer to the masculine, feminine or neutral, singular or plural, as to the identity of the parties hereto may require.

5.15        Termination. This Agreement shall terminate and be of no further force or effect upon the earlier of (i) an Acquisition or Asset Transfer, or (ii) the date five (5) years following the Closing of the Initial Offering that results in the conversion of all outstanding shares of Series D Preferred, Series E Preferred, Series F Preferred and Series G Preferred into Common Stock of the Company.

25

[SIGNATURE PAGE FOLLOWS]

26

IN WITNESS WHEREOF, the parties hereto have executed this THIRD AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT as of the date set forth in the first paragraph hereof.

COMPANY:	GROUPON, INC.
	By:	/s/ Andrew Mason
						Chief Executive Officer
INVESTORS:	ACCEL GROWTH FUND L.P.
	By:			Accel Growth Fund Associates L.L.C.,
				its general partner
	By:	Illegible
						Attorney in Fact
	ACCEL GROWTH FUND STRATEGIC PARTNERS L.P.
	By:		Accel Growth. Fund Associates L.L.C.,
			its general partner
	By:	Illegible
						Attorney in Fact
	ACCEL GROWTH FUND INVESTORS 2009 L.L.C.
	By:	Illegible
					Attorney in Fact

SIGNATURE PAGE TO THIRD AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT

INVESTORS (CONT’D):	NEW ENTERPRISE ASSOCIATES 12,
	LIMITED PARTNERSHIP
	By:	NEA Partners 12, Limited Partnership, its general partner
		By:			NEA 12 GP, LLC, its general partner
	By:			/s/ Charles W. Newhall II
	Name:			Charles W. Newhall II
	Title:			Manager
	NEA VENTURES 2008, LIMITED PARTNERSHIP
	By:		/s/ Karen P. Welsh
	Name:		Karen P. Welsh
	Title:		General Partner

SIGNATURE PAGE TO THIRD AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT

INVESTORS (CONT’D):	MAIL.RU GROUP LIMITED
	(F/K/A DIGITAL SKY TECHNOLOGIES LIMITED)
	By:	Illegible
	Name:
	Title:
	DST GLOBAL LIMITED
	By:	/s/ Sean Hogan
	Name:	Sean Hogan
	Title:	Director
	DST GLOBAL II L.P.
	By:	DST Managers Limited
	By:	/s/ Sean Hogan
	Name:	Sean Hogan
	Title:	Director

SIGNATURE PAGE TO THIRD AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT

INVESTORS (CONT’D):	BATTERY VENTURES VIII, L.P.
	By:	Battery Partners VIII, LLC
		General Partner
	/s/ Morgan Jones
	Name:				Morgan Jones
	Title				Member Manager
	BATTERY VENTURES VIII SIDE FUND, L.P.
	By:		Battery Partners VIII Side Fund, LLC
			General Partner
	/s/ Morgan Jones
	Name:			Morgan Jones
	Title:			Member Manager

SIGNATURE PAGE TO THIRD AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT

INVESTORS (CONT’D):	THE BOARD OF TRUSTEES OF THE LELAND STANFORD JUNIOR UNIVERSITY (SEVF II)
	By:	/s/ Martina Poquet
	Name: Martina Poquet
	Title: Managing Director — Separate Investments

SIGNATURE PAGE TO THIRD AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT

INVESTORS (CONT’D):	THE UNIVERSAL INSTITUTIONAL FUNDS,
	INC. - MID CAP GROWTH PORTFOLIO
	By:		Morgan Stanley Investment Management Inc.
			Investment Manager
	By:				/s/ Sandeep Chainani
	Name:				Sandeep Chainani
	Title:				MD
	MORGAN STANLEY MID CAP GROWTH FUND
	By:		Morgan Stanley Investment Advisors Inc. Investment Adviser
	By:				/s/ Sandeep Chainani
	Name:				Sandeep Chainani
	Title:				MD
	MORGAN STANLEY SELECT DIMENSIONS INVESTMENT SERIES — MID CAP GROWTH PORTFOLIO
	By:		Morgan Stanley Investment Advisors Inc. Investment Adviser
	By:				/s/ Sandeep Chainani
	Name:				Sandeep Chainani
	Title:				MD
	MORGAN STANLEY INSTITUTIONAL FUND TRUST — MID CAP GROWTH PORTFOLIO
	By:	Morgan Stanley Investment Management Inc. Investment Adviser
	By:			/s/ Sandeep Chainani
	Name:			Sandeep Chainani
	Title:			MD

SIGNATURE PAGE TO THIRD AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT

ALLIANZ VARIABLE INSURANCE TRUST — AZL MORGAN STANLEY MID CAP GROWTH FUND
By:	Morgan Stanley Investment Management Inc.
By:				/s/ Sandeep Chainani
Name:				Sandeep Chainani
Title:				MD
EQUITABLE ADVISORS TRUST — EQ/MORGAN STANLEY MID-CAP GROWTH PORTFOLIO
By:	Morgan Stanley Investment Management Inc. Sub-Adviser
By:			/s/ Sandeep Chainani
Name:			Sandeep Chainani
Title:			MD
TRANSAMERICA FUNDS - TRANSAMERICA MORGAN STANLEY MID-CAP GROWTH
By:	Morgan Stanley Investment Management Inc. Sub-Adviser By:
By:				/s/ Sandeep Chainani
Name:				Sandeep Chainani
Title:				MD
LAWRENCIUM ATOLL INVESTMENTS LTD.
By:	Morgan Stanley Investment Management Inc. Investment Manager By:
By:		/s/ Sandeep Chainani
Name:		Sandeep Chainani
Title:		MD

SIGNATURE PAGE TO THIRD AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT

MET INVESTOR SERIES TRUST — MORGAN STANLEY MID CAP GROWTH PORTFOLIO
By:	Morgan Stanley Investment Management Inc. Sub-Adviser
By:		/s/ Sandeep Chainani
Name:		Sandeep Chainani
Title:		MD
TRANSAMERICA SERIES TRUST — TRANSAMERICA MORGAN STANLEY MID-CAP GROWTH VP
By:	Morgan Stanley Investment Management Inc.
By:		/s/ Sandeep Chainani
Name:		Sandeep Chainani
Title:		MD
VALIC COMPANY I — MID CAP STRATEGIC GROWTH FUND
By:	Morgan Stanley Investment Management Inc. Sub-Adviser
By:		/s/ Sandeep Chainani
Name:		Sandeep Chainani
Title:		MD

SIGNATURE PAGE TO THIRD AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT

INVESTORS (CONT’D):	FIDELITY CONTRAFUND: FIDELITY CONTRAFUND
	By:	/s/ Adrien Deberghes
	Name:	Adrien Deberghes
	Title:	Deputy Treasurer
	FIDELITY CONTRAFUND: FIDELITY ADVISOR NEW INSIGHTS FUND
	By:	/s/ Adrien Deberghes
	Name:	Adrien Deberghes
	Title:	Deputy Treasurer

SIGNATURE PAGE TO THIRD AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT

INVESTORS (CONT’D):	AMERICAN FUNDS INSURANCE SERIES — GROWTH FUND
	By:	Capital World Investors, a division of Capital Research and Management Company
	By:					/s/ Paul G. Haaga, Jr.
	Name:					Paul G. Haaga, Jr.
	Title:					Chairman
	THE GROWTH FUND OF AMERICA, INC.
	By:	Capital World Investors, a division of Capital Research and Management Company
	By:				/s/ Paul G. Haaga, Jr.
	Name:				Paul G. Haaga, Jr.
	Title:				Chairman
	AMERICAN FUNDS INSURANCE SERIES — GLOBAL DISCOVERY FUND
	By:	Capital Research Global Investors, a division of Capital Research and Management Company
	By:			/s/ Paul G. Haaga, Jr.
	Name:			Paul G. Haaga, Jr.
	Title:			Chairman
	THE GROWTH FUND OF AMERICA, INC.
	By:	Capital Research Global Investors, a division of Capital Research and Management Company
	By:		/s/ Paul G. Haaga, Jr.
	Name:		Paul G. Haaga, Jr.
	Title:		Chairman

SIGNATURE PAGE TO THIRD AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT

THE NEW ECONOMY FUND
By:	Capital World Investors, a division of Capital Research and Management Company
/s/ Paul G. Haaga, Jr.
Name:		Paul G. Haaga, Jr.
Title:		Chairman

SIGNATURE PAGE TO THIRD AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT

INVESTORS (CONT’D):	T. ROWE PRICE ASSOCIATES, INC., INVESTMENT ADVISER, FOR AND ON BEHALF OF ITS ADVISORY CLIENTS ON ATTACHMENT A
	T. ROWE PRICE ASSOCIATES, INC., INVESTMENT MANAGER FOR AND ON BEHALF OF:
	LINCOLN VARIABLE INSURANCE PRODUCTS TRUST — LVIP T. ROWE PRICE STRUCTURED MID CAP GROWTH FUND
	ING PARTNERS, INC. — ING T. ROWE PRICE DIVERSIFIED MID CAP GROWTH PORTFOLIO
	By:	/s/ D. Deters
	Name:	Donald Deters
	Title:	Vice President
	T. ROWE PRICE ASSOCIATES, INC., INVESTMENT MANAGER FOR AND ON BEHALF OF:
	T. ROWE PRICE GLOBAL TECHNOLOGY FUND, INC.
	TD MUTUAL FUNDS — TD SCIENCE & TECHNOLOGY FUND
	By:	/s/ David Liswert
	Name:	David Liswert
	Title:	Vice President

SIGNATURE PAGE TO THIRD AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT

T. ROWE PRICE ASSOCIATES, INC., INVESTMENT MANAGER FOR AND ON BEHALF OF:
T. ROWE PRICE SCIENCE & TECHNOLOGY FUND, INC.
VALIC COMPANY I-SCIENCE & TECHNOLOGY FUND
By:	/s/ Ken Allen
Name:	Ken Allen
Title:	VP
T. ROWE PRICE ASSOCIATES, INC. , INVESTMENT MANAGER FOR AND ON BEHALF OF:
T. ROWE PRICE MEDIA & TELECOMMUNICATIONS FUND, INC.
TD MUTUAL FUNDS - TD ENTERTAINMENT & COMMUNICATIONS FUND
By:	/s/ Daniel Martino
Name:	Daniel Martino
Title:	Vice President

SIGNATURE PAGE TO THIRD AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT

T. ROWE PRICE ASSOCIATES, INC., INVESTMENT MANAGER FOR AND ON BEHALF OF:
ING PARTNERS, INC. — ING T. ROWE PRICE GROWTH EQUITY PORTFOLIO
T. ROWE PRICE GROWTH STOCK FUND, INC.
JNL SERIES TRUST — JNL/T. ROWE PRICE ESTABLISHED GROWTH FUND
METROPOLITAN SERIES FUND, INC. — T. ROWE PRICE LARGE CAP GROWTH PORTFOLIO
By:	/s/ Paul R. Bartolo
Name:	Paul R. Bartolo
Title:	Vice President
T. ROWE PRICE ASSOCIATES, INC, INVESTMENT MANAGER FOR AND ON BEHALF OF:
T. ROWE PRICE INSTITUTIONAL LARGE-CAP GROWTH FUND
CATERPILLAR MASTER PENSION TRUST
By:	/s/ Robert Sharps
Name:	Robert Sharps
Title:	Vice President

SIGNATURE PAGE TO THIRD AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT

INVESTORS (CONT’D):	GREEN MEDIA, LLC
	By:	/s/ Eric Lefkofsky
	Name:	Eric Lefkofsky
	Title:	Manager
	RUGGER VENTURES, LLC
	By:	/s/ Brad Keywell
	Name:	Brad Keywell
	Title:	Manager
	OLD WILLOW PARTNERS, LLC
	By:	/s/ Richard A. Heise, Jr.
	Name:	Richard A. Heise, Jr.
	Title:	Manager

SIGNATURE PAGE TO THIRD AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT

INVESTORS (CONT’D.):	GREYLOCK XIII LIMITED PARTNERSHIP
	By:	Greylock XIII GP LLC, its General Partner
	By:	/s/ Donald A. Sullivan
	Name:	Donald A. Sullivan
	Title:	Administrative Partner
	GREYLOCK XIII-A LIMITED PARTNERSHIP
	By:	Greylock XIII GP LLC, its General Partner
	By:	/s/ Donald A. Sullivan
	Name:	Donald A. Sullivan
	Title:	Administrative Partner
	GREYLOCK XIII PRINCIPALS LLC
	By:	Greylock Management Corporation, Sole Member
	By:	/s/ Donald A. Sullivan
	Name:	Donald A. Sullivan
	Title:	Administrative Partner

SIGNATURE PAGE TO THIRD AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT

INVESTORS (CONT’D.):	KPCB HOLDINGS, INC., AS NOMINEE
	By:	Illegible
	Name:
	Title:

SIGNATURE PAGE TO THIRD AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT

INVESTORS (CONT’D.):	ANDREESSEN HOROWITZ FUND II, L.P.
	AS NOMINEE FOR
	ANDREESSEN HOROWITZ FUND II, L.P.
	ANDREESSEN HOROWITZ FUND II-A, L.P.
	AND
	ANDREESSEN HOROWITZ FUND II-B, L.P.
	By:	AH Equity Partners H, L.L.C., its General Partner
	By:	/s/ Ben Horowitz
	Name:	Ben Horowitz
	Title:	Managing Member

SIGNATURE PAGE TO THIRD AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT

INVESTORS (CONT’D.):	TCV VII (A), L.P.
	a Cayman Islands exempted limited partnership, acting by its general partner
	Technology Crossover Management VII, L.P.
	a Cayman Islands exempted limited partnership, acting by its general partner
	Technology Crossover Management VII, Ltd.
	a Cayman Islands exempted company
	By:	/s/ Carla S. Newell
	Name:	Carla S. Newell
	Title:	Authorized Signatory
	TCV MEMBER FUND, L.P.
	a Cayman Islands exempted limited partnership, acting by its general partner
	Technology Crossover Management VII, Ltd.
	a Cayman Islands exempted company
	By:	/s/ Carla S. Newell
	Name:	Carla S. Newell
	Title:	Authorized Signatory
	TCV VII, L.P.
	a Cayman Islands exempted limited partnership, acting by its general partner
	Technology Crossover Management VII, L.P.
	a Cayman Islands exempted limited partnership, acting by its general partner
	Technology Crossover Management VII, Ltd.
	a Cayman Islands exempted company
	By:	/s/ Carla S. Newell
	Name:	Carla S. Newell
	Title:	Authorized Signatory

SIGNATURE PAGE TO THIRD AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT

INVESTORS (CONT’D.):	MAVERICK II PRIVATE INVESTMENTS, LTD.
	By:	Maverick Capital, Ltd., its Investment Advisor
	By:	/s/ John T. McCafferty
	Name:	John T. McCafferty
	Title:	Limited Partner & General Counsel
	MAVERICK FUND PRIVATE INVESTMENTS, LTD.
	By:	Maverick Capital, Ltd., under Power of Attorney effective as of December 30, 2008
	By:	/s/ John T. McCafferty
	Name:	John T. McCafferty
	Title:	Limited Partner & General Counsel
	MAVERICK USA PRIVATE INVESTMENTS, LLC
	By:	Maverick Capital, Ltd., under Power of Attorney effective as of December 30, 2008
	By:	/s/ John T. McCafferty
	Name:	John T. McCafferty
	Title:	Limited Partner & General Counsel

SIGNATURE PAGE TO THIRD AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT

INVESTORS (CONT’D.):	SLP Green Holdings, L.L.C.
	By:	Silver Lake Partners III, L.P., a managing member
	By:	Silver Lake Technology Associates III, L.P., its general partner
	By:	SLTA III (GP), L.L.C., its general partner
	By:	Silver Lake Group, L.L.C., its sole member
	By:	/s/ Egon Durban
	Name:	Egon Durban
	Title:	Managing Director
	By:	Silver Lake Technology Investors III, LP., a managing member
	By:	Silver Lake Technology Associates III, L.P., its general partner
	By:	SLTA III (GP), L.L.C., its general partner
	By:	Silver Lake Group, L.L.C., its sole member
	By:	/s/ Egon Durban
	Name:	Egon Durban
	Title:	Managing Director

SIGNATURE PAGE TO THIRD AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT

INVESTORS (CONT’D.):
	/s/ Guy Oseary
	Guy Oseary, as Trustee of the Guy Oseary Family Trust

SIGNATURE PAGE TO THIRD AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT

INVESTORS (CONT’D.):	ALLEN & COMPANY LLC, AS NOMINEE FOR ITSELF AND CERTAIN EMPLOYEES
	By:	/s/ Kim Wieland
	Name:	Kim Wieland
	Title:	CFO

SIGNATURE PAGE TO THIRD AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT

INVESTORS (CONT’D.):	DST INTERNATIONAL INVESTMENT SOURCING L.P.
	By:	Terragold — Its General Partner
	By:	/s/ Sean Hogan
	Name:	Sean Hogan
	Title:	Director

SIGNATURE PAGE TO THIRD AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT

EXHIBIT A

SCHEDULE OF INVESTORS

The Universal Institutional Funds, Inc. — Mid Cap Growth Portfolio

Morgan Stanley Mid Cap Growth Fund

Morgan Stanley Select Dimensions Investment Series — Mid Cap Growth Portfolio Morgan Stanley Institutional Fund Trust - Mid Cap Growth Portfolio

Allianz Variable Insurance Trust — AZL Morgan Stanley Mid Cap Growth Fund Equitable Advisors Trust — EQ/Morgan Stanley Mid-Cap Growth Portfolio Transamerica Funds — Transamerica Morgan Stanley Mid-Cap Growth
Lawrencium Atoll Investments Ltd.
MET Investor Series Trust- Morgan Stanley Mid Cap Growth Portfolio
Transamerica Series Trust — Transamerica Morgan Stanley Mid-Cap Growth VP
Valic Company I — Mid Cap Strategic Growth Fund

c/o Morgan Stanley Investment Management
522 Fifth Avenue
New York, New York 10036

Fidelity Contrafund: Fidelity Contrafund
Fidelity Contrafund: Fidelity Advisor New Insights Fund

c/o Fidelity Investments
82 Devonshire Street, V 13H
Boston, MA 02109
Attn: Andrew Boyd

American Funds Insurance Series — Growth Fund
The Growth Fund Of America, Inc.
American Funds Insurance Series — Global Discovery Fund
The New Economy Fund

333 S. Hope Street
55th Floor
Los Angeles, CA 90071

EXHIBIT TO THIRD AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT

Lincoln Variable Insurance Products Trust — LVIP T. Rowe Price Structured Mid Cap Growth Fund
ING Partners, Inc. — ING T. Rowe Price Diversified Mid Cap Growth Portfolio
T. Rowe Price Global Technology Fund, Inc.
TD Mutual Funds — TD Science & Technology Fund
T. Rowe Price Science & Technology Fund
Valic Company I — Science & Technology Fund
T. Rowe Price Media & Telecommunications Fund, Inc.
TD Mutual Funds — TD Entertainment & Communications Fund
ING Partners, Inc. — ING T. Rowe Price Growth Equity Portfolio
T. Rowe Price Growth Stock Fund, Inc.
JNL Series Trust — JNL/T. Rowe Price Established Growth Fund
Metropolitan Series Fund, Inc. — T. Rowe Price Large Cap Growth Portfolio
T. Rowe Price Institutional Large-Cap Growth Fund
Caterpillar Master Pension Trust

c/o Andrew Baek
Vice President, Senior Legal Counsel
T. Rowe Price Associates, Inc.
100 East Pratt Street
Mail Code BA-1020
Baltimore, MD 21202

DST Global Limited
Mail.Ru Group Limited (F/K/A Digital Sky Technologies Limited)
DST Global II L.P.
DST International Investment Sourcing L.P.

c/o Tulloch & Co.
4 Hill Street
London W1J 5NE
United Kingdom
Attn: Alastair Tulloch

Battery Ventures VIII, L.P.
Battery Ventures VIII Side Fund, L.P.

c/o Battery Ventures
930 Waltham Street, Suite 2500
Waltham, MA 02451
Attention: General Counsel

Accel Growth Fund L.P.
Accel Growth Fund Strategic Partners L.P.
Accel Growth Fund Investors 2009 L.L.C.

c/o Accel Partners
428 University Avenue
Palo Alto, CA 94301
Attn:Kevin J. Efrusy
Richard Zamboldi

New Enterprise Associates 12, Limited Partnership
NEA Ventures 2008, Limited Partnership

1119 St. Paul Street
Baltimore, MD 21202
Attn: Louis Citron, Esq., General Counsel

Green Media, LLC

c/o Groupon, Inc.
600 W. Chicago Ave., Suite 620
Chicago, IL 60654

Rugger Ventures, LLC

c/o Groupon, Inc.
600 W. Chicago Ave., Suite 620
Chicago, IL 60654

Old Willow Partners, LLC

c/o Groupon, Inc.
600 W. Chicago Ave., Suite 620
Chicago, IL 60654

Allen & Company, LLC

711 5th Ave., 9th Fl.
New York, NY 10022

Andreessen Horowitz Fund II, L.P. Andreessen Horowitz Fund II-A, L.P. Andreessen Horowitz Fund II-B, L.P.

2875 Sand Hill Road
Suite 101
Menlo Park, CA 94025

Greylock XIII Limited PartnershipGreylock XIII-A Limited Partnership
Greylock XIII Principals LLC

2550 Sand Hill Road
Menlo Park, CA 94025

KPCB Holdings, Inc. (delivered in person, by courier or by certified mail)

c/o Kleiner Perkins Caufield & Byers
Attention: Mary Meeker and Eric Keller
2750 Sand Hill Road
Menlo Park, CA 94025

With a copy to (which shall not constitute the giving of notice):
Sayre E. Stevick Fenwick & West LLP
801 Mountain View, CA 94041

Maverick II Private Investments, Ltd.
Maverick Fund Private Investments, Ltd.
Maverick USA Private Investments, LLC

300 Crescent Corut, 18th Floor
Dallas, TX 75201

Guy Oseary

c/o Bill Vuylsteke
Senior Managing Director
Provident Financial Management
2850 Ocean Park Blvd, Suite 300
Santa Monica, CA 90405

SLP Green Holdings, LLC

c/o Silver Lake
2775 Sand Hill Road, Suite 100
Menlo Park, CA 94025

TCV VII, L.P.

TCV VII (A), L.P.

TCV Member Fund, L.P.

c/o Technology Crossover Ventures
528 Ramona Street
Palo Alto, CA 94301

EX-10.6

Exhibit 10.6

EMPLOYMENT AGREEMENT

THIS EMPLOYMENT AGREEMENT (this “Agreement”) is made and entered into as of November 1, 2009 (the “Effective Date”), by and between Groupon, INC., a Delaware Corporation (the “Company”), and Andrew Mason (“Mason”).

1.Employment; Position and Duties.  The Company agrees to employ Mason, and Mason agrees to be employed by the Company, upon the terms and conditions of this Agreement.  Mason shall be employed by the Company as the Company’s President reporting to the Board of Directors or others that are duly appointed by the Board of Directors from time to time.  In this capacity, Mason agrees to devote his full time, energy and skill to the faithful performance of his duties herein, and shall perform the duties and carry out the responsibilities assigned to him to the best of his ability and in a diligent, businesslike and efficient manner.  Mason’s duties shall include all those duties customarily performed by the President, as well as those additional duties commensurate with his position as President that may be reasonably assigned by the Board of Directors or the Company.  Mason shall comply with any policies and procedures established for Company employees, including without limitation, those policies and procedures contained in the Company’s employee handbook.  During his term of employment, Mason shall be entitled to serve on the Company’s Board of Directors.

2.Term of Employment.  This Agreement shall become effective upon the Effective Date.  The term of this Agreement shall commence on November 1, 2009 and shall expire on December 1, 2014, unless earlier terminated by either party, in accordance with the terms of this Agreement and/or the following sentence.  This Agreement may be terminated by Mason or by the Company’s Board of Directors, or through a majority vote of the holders of the Company’s Series B Membership Units, at any time, with or without Cause (as defined below).  Upon the termination of Mason’s employment with the Company for any reason, neither party shall have any further obligation or liability under this Agreement to the other party, except as set forth in Sections 6, 7, 8, 9, 10, 11 and 12 of this Agreement.

3.Compensation.  Mason shall be compensated by the Company for his services as follows:

(a)Base Salary.  During the term of this Agreement, Mason shall be paid a base salary (“Base Salary”) of $12,500 per month (or $180,000 on an annualized basis), subject to applicable withholding, in accordance with the Company’s normal payroll procedures.  Mason’s salary shall be reviewed on an annual basis by the Company for possible increase (but not decrease) based on the Company’s operating results and financial condition, salaries paid to other Company executives, and general marketplace and other applicable considerations.  Such increased Base Salary, if any, shall then constitute Mason’s “Base Salary” for purposes of this Agreement.  Mason’s base salary shall be increased by no less than fifteen percent (15%) per annum during the term of this Agreement.

(b)Benefits.  During the term of this Agreement, Mason shall have the right, on the same basis as other members of senior management of the Company, to participate in and to receive benefits under any of the Company’s executive and employee benefit plans, insurance

programs and/or indemnification agreements, as currently in effect and as may be in effect from time to time.  In addition, Mason shall be entitled to the benefits afforded to other members of senior management under the Company’s vacation, holiday and business expense reimbursement policies, provided that in no event will Mason be entitled to less than three (3) weeks vacation in each calendar year commencing with 2009.

(c)Bonuses.

(i)Performance Bonus.  In addition to the Base Salary, Mason shall be eligible to receive an annual performance bonus (“Performance Bonus”) of up to fifty percent of his Base Salary.  The Performance Bonus shall be a discretionary bonus, determined in the sole discretion of the Company, based upon Mason’s performance of his duties and the Company’s financial performance, as well certain performance targets that are approved by the Board of Directors.  The Performance Bonus, if earned, shall be paid within 45 days following the end of each fiscal year of the Company.  The Company and Mason agree that, no later than the last day of February in each calendar year, the Company and Mason shall use good faith, commercially reasonable efforts to mutually agree on performance targets for the then current fiscal year.  Upon termination of this Agreement for any reason, the Company shall within thirty (30) days of the date of termination pay to Mason all earned but unpaid bonuses owing to Mason through and including the date of termination.

(d)Expenses.  In addition to reimbursement for business expenses incurred by Mason in the normal and ordinary course of his employment by the Company pursuant to the Company’s standard business expense reimbursement policies and procedures, the Company shall reimburse Mason for the full amount of his health, medical and insurance costs should he elect to participate in such of the Company’s program(s).  Upon termination of this Agreement for any reason, the Company shall within thirty (30) days pay to Mason all business expense reimbursements owing to Mason through and including the date of termination.

4.Restricted Stock.  Upon the execution of this Agreement and Mason’s commencement of work in accordance thereof, Mason shall be granted 300,000 Class A Common Voting Shares of the Company, which he can purchase at any time based on the fair market value of the Company as determined by the Company’s internal accounting staff as of November 1, 2009, which shall be subject to a right of repurchase as follows: Should Mason’s employment with the Company be terminated for any reason prior to November 1, 2014, the Company may purchase back from Mason the shares of restricted stock he is being granted by virtue of this Agreement at the same fair market value purchase price as defined herein, subject to the following schedule: (1) for every year in which Mason is employed commencing on November 1, 2009, the amount the Company can repurchase shall be reduced by twenty percent (20%).

5.Benefits Upon Termination.

(a)Termination for Cause or Termination for Other than Good Reason.  In the event of the termination of Mason’s employment by the Company for Cause (as defined below), the termination of Mason’s employment by reason of his death or disability, or the termination of Mason’s employment by Mason for any reason other than Good Reason (as defined below),

2

Mason shall be entitled to no further compensation or benefits from the Company other than those earned under Sections 3(a), 3(b), and 3(c) through the date of termination, or in the case of any Restricted Units, such Restricted Units which are no longer subject to a risk of forfeiture through the date of termination.

For purposes of this Agreement, a termination for “Cause” occurs if Mason’s employment is terminated by the Company for any of the following reasons:

(i)his failure to perform reasonably legally assigned duties as President of the Company after written notice of such failure and a reasonable opportunity to remedy such failure,

(ii)theft, dishonesty, or falsification of any employment or Company records by Mason;

(iii)the determination by the Company that Mason has committed an act or acts constituting a felony or any act involving moral turpitude;

(iv)the determination by the Company that Mason has engaged in willful misconduct or gross negligence that has had a material adverse effect on the Company’s reputation or business; or

(v)the material breach by Mason of any provision of this Agreement after written notice of such breach and a reasonable opportunity to cure such breach.

For purposes of the above, prior to termination the Company will provide Mason with a detailed written notice setting forth the basis on which the Company has determined to terminate Mason’s employment for “Cause”, and prior to the effective date of termination will provide Mason with a reasonable opportunity to address and discuss such basis with the Board of Directors of the Company (or any then current governing body of the Company), with counsel present.

For purposes of this Agreement, a termination for “Good Reason” occurs if Mason terminates his employment for any of the following reasons:

(i)the Company materially reduces Mason’s duties or responsibilities below what is customary for a President of a business that is similar to Company without Mason’s written consent;

(ii)the Company requires Mason to relocate his office more than 25 miles from the current office of the Company without his written consent; or

(iii)the Company has breached the terms of this Agreement and such breach continues for more than thirty (30) days after notice from Mason to the Company specifying the action which constitutes the breach and demanding its discontinuance.

(b)Termination Without Cause or Termination for Good Reason.  If Mason’s employment is terminated by the Company for any reason other than for Cause or by reason of his death or disability, or if Mason’s employment is terminated by Mason for Good Reason,

3

Mason shall be entitled to receive (A) continued payment of his Base Salary for 180 days, less applicable withholding, in accordance with the Company’s normal payroll procedures, and (B) continuation of his then current benefits as provided pursuant to Section 3(b) above, in each case for 180 days following the termination of Mason’s employment;

Notwithstanding anything to the contrary herein, no payments shall be due under this Section 6(b) unless and until Mason and the Company shall have executed a mutual general release and waiver of claims, consistent with Section 9 below, and in a customary and usual form reasonably satisfactory to the Company.

6.Change of Control.  If, during the ninety (90) days prior to the public announcement of a proposed Change of Control, or three hundred and sixty five (365) days following a Change of Control, Mason’s employment is terminated by the Company for any reason other than Cause, or terminated by Mason for Good Reason, Mason shall be entitled to, in addition to the compensation and benefits outlined under Section 6(b) above, immediate lapse of any remaining risk of forfeiture with respect to his Restricted Units that would otherwise have been applicable with respect to the full next year of his employment as if Mason’s employment had continued for a period of twelve months following the termination.  For purposes of this Agreement, a “Change of Control” shall have the same meaning as the term “Change of Control” set forth in the Company’s 2006 Unit Option Plan as in effect on the date hereof or as initially implemented by the Company, a copy of which has been provided to Mason.

7.Employee Inventions and Proprietary Rights Assignment Agreement.  Mason agrees to abide by the terms and conditions of the Company’s standard Employee Inventions and Proprietary Rights Assignment Agreement as executed by Mason and attached hereto as Exhibit A.

8.Covenants Not to Compete or Solicit.  Dining Mason’s employment and for a period of two (2) years following the termination of Mason’s employment for any reason, Mason shall not, anywhere in the Geographic Area (as defined below), other than on behalf of Company or with the prior written consent of Company, directly or indirectly:

(a)perform services for (whether as an employee, agent, consultant, advisor, independent contractor, proprietor, partner, officer, director or otherwise), have any ownership interest in (except for passive ownership of five percent (5%) or less of any entity whose securities have been registered under the Securities Act or Section 12 of the Securities Exchange Act of 1934, as amended), or participate in the financing, operation, management or control of, any firm, partnership, corporation, entity or business that engages or participates in a “competing business purpose” (as defined below);

(b)induce or attempt to induce any customer, potential customer, supplier, licensee, licensor or business relation of Company known to Mason to cease doing business with Company, or in any way interfere with the relationship between any customer, potential customer, supplier, licensee, licensor or business relation of Company known to Mason, or solicit the business of any customer or potential customer of Company known to Mason for a competing business purpose, whether or not Mason had personal contact with such entity; and

4

(c)solicit, encourage, hire or take any other action which is intended to induce or encourage, or has the effect of inducing or encouraging, any employee or Independent Contractor of Company or any subsidiary of Company to terminate his or his employment or relationship with Company or any subsidiary of the Company, other than in the discharge of his duties as an officer of the Company.

For the purpose of this Agreement, the term “competing business purpose” means the sale or provision of any bundle of products and/or services that are competitive in any material manner with the bundle of products and/or services sold or offered by the Company during the term of this Agreement for the purpose of organizing issue oriented social networks or communities on the world wide web or the purpose of organizing people, associations, organizations, or businesses through the world wide web to take action concerning an issue.  The term “Geographic Area” shall mean the United States of America.

The covenants contained in this Section 9 shall be construed as a series of separate covenants, one for each county, city, state, or any similar subdivision in any Geographic Area.  Except for geographic coverage, each such separate covenant shall be deemed identical in terms to the covenant contained in the preceding Sections.  If, in any judicial proceeding, a court refuses to enforce any of such separate covenants (or any part thereof), then such unenforceable covenant (or such part) shall be eliminated from this Agreement to the extent necessary to permit the remaining separate covenants (or portions thereof) to be enforced.  In the event that the provisions of this Section 9 are deemed to exceed the time, geographic or scope limitations permitted by applicable law, then such provisions shall be reformed to the maximum time, geographic or scope limitations, as the case may be, permitted by applicable laws.

9.Equitable Remedies.  Mason acknowledges and agrees that the agreements and covenants set forth in Sections 8 and 9 are reasonable and necessary for the protection of the Company’s business interests, that irreparable injury will result to the Company if Mason breaches any of the terms of said covenants, and that in the event of Mason’s actual or threatened breach of any such covenants, the Company will have no adequate remedy at law.  Mason accordingly agrees that, in the event of any actual or threatened breach by Mason of any of said covenants, the Company will be entitled to seek immediate injunctive and other equitable relief, without bond and without the necessity of showing actual monetary damages.  Nothing in this Section 10 will be construed as prohibiting the Company from pursuing any other remedies available to it for such breach or threatened breach, including the recovery of any damages that it is able to prove.

10.Dispute Resolution.  In the event of any dispute or claim relating to or arising out of this Agreement (including, but not limited to, any claims of breach of contract, wrongful termination or age, sex, race or other discrimination), Mason and the Company agree that all such disputes shall be fully and finally resolved by binding arbitration conducted by the American Arbitration Association in Chicago, Illinois in accordance with its National Employment Dispute Resolution rules, as those rules are currently in effect (and not as they may be modified in the future).  The parties acknowledge that by accepting this arbitration provision they are waiving any right to a jury trial in the event of such dispute.  Notwithstanding the foregoing, this arbitration provision shall not apply to any disputes or claims relating to or arising out of the misuse or misappropriation of trade secrets or proprietary information.

5

11.Governing Law.  This Agreement has been executed in the State of Illinois, and Mason and the Company agree that this Agreement shall be interpreted in accordance with and governed by the laws of the State of Illinois, without regard to its conflicts of laws principles.

12.Successors and Assigns.  This Agreement shall inure to the benefit of and be binding upon the Company and its successors and assigns and Mason and his heirs and personal representatives; provided that in the case of the Company a successor or assignee is the successor to substantially all of the assets of the Company, or a majority of its then outstanding voting Units, and that such successor or assignee assumes the liabilities, obligations and duties of the Company under this Agreement, either contractually or as a matter of law.  In view of the personal nature of the services to be performed under this Agreement by Mason, he shall not have the right to assign or transfer any of his rights, obligations or benefits under this Agreement, except as otherwise noted herein or by will or the laws of inheritance.

13.Entire Agreement.  This Agreement, including its attached Exhibit, constitutes the entire employment agreement between Mason and the Company regarding the terms and conditions of his employment.  This Agreement supersedes all prior negotiations, representations or agreements between Mason and the Company, whether written or oral, concerning the subject matter of this Agreement.

14.No Conflict.  Mason represents and warrants to the Company that neither his entry into this Agreement nor his performance of his obligations hereunder will conflict with or result in a breach of the terms, conditions or provisions of any other agreement or obligation to which Mason is a party or by which Mason is bound, including without limitation, any non-competition or confidentiality agreement previously entered into by Mason.

15.Validity.  Except as otherwise provided in Section 9 above, if any one or more of the provisions (or any part thereof) of this Agreement shall be held invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions (or any part thereof) shall not in any way be affected or impaired thereby.

16.Modification.  This Agreement may not be modified or amended except by a written agreement signed by Mason and the Company.

17.Notices.  All notices hereunder shall be in writing and shall be deemed delivered (i) upon receipt if by hand or by email, or (ii) one (1) business day after deposit for overnight delivery by a nationally recognized delivery service that guarantees overnight delivery, or (iii) four (4) days after deposit for delivery by U.S. first-class, registered or certified mail, return receipt requested, postage prepaid, addressed as follows:

If to the Company:Groupon, INC. 
600 W.  Chicago Avenue, Suite 850
Chicago, Illinois 60610
Attn:  Eric Lefkofsky
Email:  eric@groupon.com

If to Mason:Andrew Mason

6

Either party may from time to time designate a new address by notice given in accordance with this Section.  Notice shall be effective when actually received by the addressee.

7

IN WITNESS WHEREOF, the parties have executed this Agreement as of the date and year written below.

Groupon, INC.
By:	/s/ Eric Lefkofsky
Name:	Eric Lefkofsky
Its:	Director
/s/ Andrew Mason
Andrew Mason

EXHIBITS TO EMPLOYMENT AGREEMENT

Exhibit A — Employee Inventions and Proprietary Rights Assignment Agreement

See Attached

8

EXHIBIT A

EMPLOYEE INNOVATIONS AND PROPRIETARY RIGHTS
ASSIGNMENT AGREEMENT

This Agreement is intended to formalize in writing certain understandings and procedures which have been in effect since the time I (the undersigned “Employee or Contractor” in the signature block area at the bottom of this Agreement) was initially employed by and/or doing work for Groupon, Inc., a Delaware Corporation (“Company”). In return for my new or continued employment and/or payment for services rendered by Company and other good and valuable consideration, the receipt and sufficiency of which I hereby acknowledge, I acknowledge and agree that:

18.Duties; At-Will Employment; No Conflict.  I will perform for Company such duties as may be designated by Company from time to time. I agree that my employment and/or independent contractor relationship with Company is for no specified term, and may be terminated by Company at any time, with or without cause, and with or without notice. Similarly, I may terminate my employment with Company at any time, with or without cause, and with or without notice. During my period of employment by Company, I will devote my best efforts to the interests of Company and will not engage in other employment or in any activities determined by Company to be detrimental to the best interests of Company without the prior written consent of Company.

19.Prior Work.  All previous work done by me for Company relating in any way to the conception, reduction to practice, creation, derivation, design, development, manufacture, sale or support of products or services for Company is the property of Company, and I hereby assign to Company all of my right, title and interest in and to such previous work.

20.Proprietary Information.  My employment and/or independent contractor status creates a relationship of confidence and trust between Company and me with respect to any information: (a) Applicable to the business of Company; or (b) Applicable to the business of any client or customer of Company, which may be made known to me by Company or by any client or customer of Company, or learned by me in such context during the period of my employment.

All such information has commercial value in the business in which Company is engaged and is hereinafter called “Proprietary Information.” By way of illustration, but not limitation, Proprietary Information includes any and all technical and non-technical information including patent, copyright, trade secret, and proprietary information, techniques, sketches, drawings, models, inventions, know-how, processes, apparatus, equipment, algorithms, software programs, software source documents, and formulae related to the current, future and proposed products and services of Company, and includes, without limitation, respective information concerning research, experimental work, development, design details and specifications, engineering, financial information, procurement requirements, purchasing manufacturing, customer lists, business forecasts, sales and merchandising and marketing plans and information. “Proprietary Information” also includes proprietary or confidential information of any third party who may disclose such information to Company or to me in the course of Company’s business.

9

21.Ownership and Nondisclosure of Proprietary Information.  All Proprietary Information is the sole property of Company, Company’s assigns, and Company’s customers, and Company, Company’s assigns and Company’s customers shall be the sole and exclusive owner of all patents, copyrights, mask works, trade secrets and other rights in the Proprietary Information. I hereby do and will assign to Company all rights, title and interest I may have or acquire in the Proprietary Information. At all times, both during my employment by Company and after termination of such employment, I will keep in confidence and trust all Proprietary Information, and I will not use or disclose any Proprietary Information or anything directly relating to Proprietary Information without the written consent of Company, except as may be necessary in the ordinary course of performing my duties as an employee of Company.

22.Ownership and Return of Materials.  All materials (including, without limitation, documents, drawings, models, apparatus, sketches, designs, lists, and all other tangible media of expression) furnished to me by Company shall remain the property of Company. Upon termination of my employment and/or independent contractor status, or at any time on the request of Company before termination, 1 will promptly (but no later than five (5) days after the earlier of said termination or Company’s request) destroy or deliver to Company, at Company’s option, (a) all materials furnished to me by Company, (b) all tangible media of expression which are in my possession and which incorporate any Proprietary Information or otherwise relate to Company’s business, and (c) written certification of my compliance with my obligations under this sentence.

23.Innovations. As used in this Agreement, the term “Innovations” means all processes, machines, manufactures, compositions of matter, improvements, inventions (whether or not protectable under patent laws), works of authorship, information fixed in any tangible medium of expression (whether or not protectable under copyright laws), moral rights, mask works, trademarks, trade names, trade dress, trade secrets, know-how, ideas (whether or not protectable under trade secret laws), and all other subject matter protectable under patent, copyright, moral right, mask work, trademark, trade secret or other laws, and includes without limitation all new or useful art, combinations, discoveries, formulae, manufacturing techniques, technical developments, discoveries, artwork, software, and designs. “Innovations” includes “Inventions,” which is defined to mean any inventions protected under patent laws. The innovations as used in this agreement only fall under this contract if the innovation is related to any coupon, discount, promotion, incentive, or other offer for services, products, or merchandise offered to consumers or businesses for the purpose of inducing such consumer or business to buy services, products, or merchandise, or any services similar to or competitive with the Groupon business model, or any other activity directly competitive with the current business activities of the Company or any subsidiary of the Company.

24.Disclosure of Prior Innovations.  I have identified on Exhibit A (“Prior Innovations”) attached hereto all Innovations, applicable to the business of Company or relating in any way to Company’s business or demonstrably anticipated research and development or business, which were conceived, reduced to practice, created, derived, developed, or made by me prior to my employment with Company (collectively, the “Prior Innovations”), and I represent that such list is complete. I represent that I have no rights in any such Innovations other than those Prior Innovations specified in Exhibit A (“Prior Innovations”). If there is no such list on Exhibit A (“Prior Innovations”), I represent that I have neither conceived, reduced to practice,

10

created, derived, developed nor made any such Prior Innovations at the time of signing this Agreement.

25.Assignment of Innovations; License of Prior Innovations.  I hereby agree promptly to disclose and describe to Company, and I hereby do and will assign to Company or Company’s designee my entire right, title, and interest in and to, (a) each of the Innovations (including Inventions), and any associated intellectual property rights, which I may solely or jointly conceive, reduce to practice, create, derive, develop or make during the period of my employment with Company, which either (i) relate, at the time of conception, reduction to practice, creation, derivation, development, or making of such Innovation, to Company’s business or actual or demonstrably anticipated research or development, or (ii) were developed on any amount of Company’s time or with the use of any of Company’s equipment, supplies, facilities or trade secret information, or (iii) resulted from any work I performed for Company, and (b) each of the Innovations which is not an Invention (as demonstrated by me by evidence meeting the clear and convincing standard of proof), and any associated intellectual property rights, which I may solely or jointly conceive, develop, reduce to practice, create, derive, develop, or make during the period of my employment with Company, which are applicable to the business of Company (collectively, the Innovations identified in clauses (a) and (b) are hereinafter the “Company Innovations”). To the extent any of the rights, title and interest in and to Company Innovations cannot be assigned by me to Company, I hereby grant to Company an exclusive, royalty-free, transferable, irrevocable, worldwide license (with rights to sublicense through multiple tiers of sublicensees) to practice such non-assignable rights, title and interest. To the extent any of the rights, title and interest in and to Company Innovations can be neither assigned nor licensed by me to Company, I hereby irrevocably waive and agree never to assert such non-assignable and non-licensable rights, title and interest against Company or any of Company’s successors in interest to such non-assignable and non-licensable rights. I hereby grant to Company or Company’s designees a royalty free, irrevocable, worldwide license (with rights to sublicense through multiple tiers of sublicensees) to practice all applicable patent, copyright, moral right, mask work, trade secret and other intellectual property rights relating to any Prior Innovations which I incorporate, or permit to be incorporated, in any Company Innovations. Notwithstanding the foregoing, I agree that I will not incorporate, or permit to be incorporated, any Prior Innovations in any Company Innovations without Company’s prior written consent.

26.Future Innovations.  I recognize that Innovations or Proprietary Information relating to my activities while working for Company and conceived, reduced to practice, created, derived, developed, or made by me, alone or with others, within three (3) months after termination of my employment and/or independent contractor relationship may have been conceived, reduced to practice, created, derived, developed, or made, as applicable, in significant part while employed by or working for Company. Accordingly, I agree that such Innovations and Proprietary Information shall be presumed to have been conceived, reduced to practice, created, derived, developed, or made, as applicable, during my employment with Company and are to be promptly assigned to Company unless and until I have established the contrary by written evidence satisfying the clear and convincing standard of proof.

11

27.Cooperation in Perfecting Rights to Proprietary Information and Innovations.

(a)I agree to perform, during and after my employment and/or independent contractor status, all acts deemed necessary or desirable by Company to permit and assist Company, at Company’s expense, in obtaining and enforcing the full benefits, enjoyment, rights and title throughout the world in the Proprietary Information and Innovations assigned or licensed to, or whose rights are irrevocably waived and shall not be asserted against, Company under this Agreement. Such acts may include, but are not limited to, execution of documents and assistance or cooperation (i) in the filing, prosecution, registration, and memorialization of assignment of any applicable patents, copyrights, mask work, or other applications, (ii) in the enforcement of any applicable patents, copyrights, mask work, moral rights, trade secrets, or other proprietary rights, and (iii) in other legal proceedings related to the Proprietary Information or Innovations.

(b)In the event that Company is unable for any reason to secure my signature to any document required to file, prosecute, register, or memorialize the assignment of any patent, copyright, mask work or other applications or to enforce any patent, copyright, mask work, moral right, trade secret or other proprietary right under any Proprietary Information (including improvements thereof) or any Innovations (including derivative works, improvements, renewals, extensions, continuations, divisionals, continuations in part, continuing patent applications, reissues, and reexaminations thereof), I hereby irrevocably designate and appoint Company and Company’s duly authorized officers and agents as my agents and attorneys-in-fact to act for and on my behalf and instead of me, (i) to execute, file, prosecute, register and memorialize the assignment of any such application, (ii) to execute and file any documentation required for such enforcement, and (iii) to do all other lawfully permitted acts to further the filing, prosecution, registration, memorialization of assignment, issuance, and enforcement of patents, copyrights, mask works, moral rights, trade secrets or other rights under the Proprietary Information, or Innovations, all with the same legal force and effect as if executed by me.

28.No Violation of Rights of Third Parties.  My performance of all the terms of this Agreement and as an employee of Company does not and will not breach any agreement to keep in confidence proprietary information, knowledge or data acquired by me prior to my employment with Company, and I will not disclose to Company, or induce Company to use, any confidential or proprietary information or material belonging to any previous employer or others. I am not a party to any other agreement which will interfere with my full compliance with this Agreement. I agree not to enter into any agreement, whether written or oral, in conflict with the provisions of this Agreement.

29.Survival.  This Agreement (a) shall survive my employment and/or independent contract with Company; (b) does not in any way restrict my right or the right of Company to terminate my employment at any time, for any reason or for no reason; (c) inures to the benefit of successors and assigns of Company; and (d) is binding upon my heirs and legal representatives.

30.Covenant Not to Compete or Solicit.

(a)I will not during the Non-Compete Period (as defined below), other than on behalf of Company, directly or indirectly, without the prior written consent of Company,

12

engage anywhere in the Geographic Area (as defined below) in (whether as an employee, agent, consultant, advisor, independent contractor, proprietor, partner, officer, director or otherwise), or have any ownership interest in (except for passive ownership of five percent (5%) or less of any entity whose securities have been registered under the Securities Act of 1933 or Section 12 of the Securities Exchange Act of 1934), or participate in the financing, operation, management or control of, any firm, partnership, corporation, entity or business that engages or participates in a “competing business purpose.” The term “competing business purpose” shall mean any creation or provision of a coupon, discount, promotion, incentive, or other offer for services, products, or merchandise offered to consumers or businesses for the purpose of inducing such consumer or business to buy services, products, or merchandise, or any services similar to or competitive with the Groupon business model, or any other activity directly competitive with the current business activities of the Company or any subsidiary of the Company. The Non-Compete Period shall begin on the date of this Agreement (the “Effective Date”) and shall end twenty four (24) months after the termination of this Agreement.

(b)I will not during the Non-Compete Period, without the prior written consent of Company, directly or indirectly (i) induce or attempt to induce any customer, supplier, licensee, or business relation of Company to cease doing business with Company, or in any way interfere with the relationship between any customer, supplier, licensee, or business relation of Company or (ii) solicit the business of any customer of Company, whether or not I have or had personal contact with such entity for the purpose of engaging in a competing business purpose.

(c)During the Non-Compete Period, I will not, directly or indirectly, without the prior written consent of Company, solicit, encourage, hire or take any other action which is intended to induce or encourage, or has the effect of inducing or encouraging, any employee of Company or any subsidiary of Company to terminate his employment with Company or any subsidiary of Company.

(d)The Geographic Area shall mean (i) the United States or (ii) anywhere in the world outside the United States where Company or any subsidiary of Company conducts business.

31.Separate Covenants.  I understand that the covenants contained in the preceding Section 13 shall be construed as a series of separate covenants, one for each county, city, state, or any similar subdivision in any Geographic Area. Except for geographic coverage, each such separate covenant shall be deemed identical in terms to the covenant contained in the preceding paragraphs. If, in any judicial proceeding, a court refuses to enforce any of such separate covenants (or any part thereof), then such unenforceable covenant (or such part) shall be eliminated from this Agreement to the extent necessary to permit the remaining separate covenants (or portions thereof) to be enforced. In the event that the provisions of the preceding Section 13 are deemed to exceed the time, geographic or scope limitations permitted by applicable law, then such provisions shall be reformed to the maximum time, geographic or scope limitations, as the case may be, permitted by applicable laws.

32.Injunctive Relief.  A breach of any of the promises or agreements contained herein will result in irreparable and continuing damage to Company for which there will be no adequate remedy at law, and Company shall be entitled to injunctive relief and/or a decree for

13

specific performance, and such other relief as may be proper (including monetary damages if appropriate).

33.Notices.  Any notice required or permitted by this Agreement shall be in writing and shall be delivered as follows, with notice deemed given as indicated: (a) by personal delivery, when delivered personally; (b) by overnight courier, upon written verification of receipt; (c) by telecopy or facsimile transmission, upon acknowledgment of receipt of electronic transmission; or (d) by certified or registered mail, return receipt requested, upon verification of receipt. Notices to me shall be sent to any address in Company’s records or such other address as I may specify in writing. Notices to Company shall be sent to Company’s Human Resources Department or to such other address as Company may specify in writing.

34.Governing Law.  This Agreement shall be governed in all respects by the laws of the United States of America and by the laws of the State of Illinois, as such laws are applied to agreements entered into and to be performed entirely within Illinois between Illinois residents. Each of the parties irrevocably consents to the exclusive personal jurisdiction of the federal and state courts located in Illinois, as applicable, for any matter arising out of or relating to this Agreement, except that in actions seeking to enforce any order or any judgment of such federal or state courts located in Illinois, such personal jurisdiction shall be nonexclusive.

35.Severability.  If any provision of this Agreement is held by a court of law to be illegal, invalid or unenforceable, (i) that provision shall be deemed amended to achieve as nearly as possible the same economic effect as the original provision, and (ii) the legality, validity and enforceability of the remaining provisions of this Agreement shall not be affected or impaired thereby.

36.Waiver; Amendment; Modification.  The waiver by Company of a term or provision of this Agreement, or of a breach of any provision of this Agreement by me, shall not be effective unless such waiver is in writing signed by Company. No waiver by Company of, or consent by Company to, a breach by me, will constitute a waiver of, consent to or excuse of any other or subsequent breach by me. This Agreement may be amended or modified only with the written consent of both me and Company. No oral waiver, amendment or modification shall be effective under any circumstances whatsoever.

37.Entire Agreement.  This Agreement represents my entire understanding with Company with respect to the subject matter of this Agreement and supersedes all previous understandings, written or oral.

14

I certify and acknowledge that I have carefully read all of the provisions of this Employee Innovations and Proprietary Rights Assignment Agreement and that I understand and will fully and faithfully comply with such provisions.

“COMPANY”		EMPLOYEE OR CONTRACTOR:
Groupon, Inc.
By:	Illegible	By:	/s/ Andrew Mason
Title:	Business Manager	Printed Name:	Andrew Mason
Dated:	7/15/09	Dated:	7/15/09

15

EX-10.7

Exhibit 10.7

AMENDMENT TO
EMPLOYMENT AGREEMENT

This Amendment to Employment Agreement (the “Amendment”) is made effective as of December 15, 2010 (the “Amendment Date”), by and between Groupon, Inc., a Delaware corporation (the “Company”), and Andrew Mason (“Mason”), in order to amend the Employment Agreement entered into between the Company and Mason as of November 1, 2009 (the “Employment Agreement”).

WHEREAS, the parties desire to enter into this Amendment to bring certain of the provisions of the Employment Agreement into documentary compliance with the applicable requirements of Section 409A of the Internal Revenue Code, as amended, and the Treasury Regulations issued thereunder (together, “Section 409A”); and

WHEREAS, the parties intend that this Amendment qualify for the relief accorded by Internal Revenue Service Notice 2010-6 and Notice 2010-80 (the “IRS Notices”);

NOW, THEREFORE, in consideration of the mutual covenants and promises herein contained, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Company and Mason hereby agree as follows:

1.Section 5(b) of the Employment Agreement is amended in its entirety to read as follows:

(b)Termination Without Cause or Termination for Good Reason.  If Mason’s employment is terminated by the Company for any reason other than for Cause or by reason of his death or disability, or if Mason’s employment is terminated by Mason for Good Reason, Mason shall be entitled to receive (A) continued payment of his Base Salary for 180 days (“Severance”), less applicable withholding, in accordance with the Company’s normal payroll procedures as provided below, and (B) continuation of his then current benefits as provided pursuant to Section 3(b) above, in each case for 180 days following the termination of Mason’s employment.

Notwithstanding anything to the contrary herein, no payments shall be due under this Section 5(b) unless Mason and the Company shall have executed a mutual general release and waiver of claims, consistent with Section 8 below, and in a customary and usual form reasonably satisfactory to the Company and such release has become effective in accordance with its terms on or before the 60th day following Mason’s termination of employment.  Subject to such effective release, payment of Severance shall begin on the first regular payroll date following such 60th day, and the initial payment shall include that portion of Severance that would otherwise have been payable on the Company’s regular payroll dates occurring between the date of Mason’s termination of employment and the initial Severance payment date.

2.A new Section 18 is added to the Employment Agreement as follows:

18.Compliance with Section 409A of the Code.

(a)The Company intends that income provided to Mason pursuant to this Agreement will not be subject to taxation under Section 409A of the Internal Revenue Code and the Treasury Regulations thereunder (collectively, “Section 409A”), The provisions of this Agreement shall be interpreted and construed in favor of satisfying any applicable requirements of Section 409A.  However, the Company does not guarantee any particular tax effect for income provided to Mason pursuant to this Agreement.  In any event, except for the Company’s responsibility to withhold applicable income and employment taxes from compensation paid or provided to Mason, the Company shall not be responsible for the payment of any applicable taxes, penalties, interest, costs, fees, including attorneys fees, or other liability incurred by Employee in connection with compensation paid or provided to Mason pursuant to this Agreement.

(b)Notwithstanding anything set forth herein to the contrary, no amount payable pursuant to this Agreement on account of Mason’s termination of employment with the Company which constitutes a “deferral of compensation” within the meaning of Section 409A shall be paid unless and until Mason has incurred a “separation from service” within the meaning of Section 409A.  Furthermore, if Mason is a “specified employee” within the meaning of Section 409A as of the date of Mason’s separation from service, no amount that constitutes a deferral of compensation which is payable on account of Mason’s separation from service shall be paid to Mason before the date (the “Delayed Payment Date”) which is the first business day of the seventh month after the date of Mason’s separation from service or, if earlier, the date of Mason’s death following such separation from service.  All such amounts that would, but for this Section, become payable prior to the Delayed Payment Date will be accumulated and paid on the Delayed Payment Date.

(c)The Company agrees that in accordance with the IRS Notices it will each attach to its Federal income tax return for the taxable year containing the Amendment Date the applicable statement under Section XII of Notice 2010-6, substantially in the forms attached hereto as Appendix 1.

3.Except as modified by this Amendment, the Employment Agreement will remain in full force and effect.

2

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

GROUPON, INC.
By:	/s/ Robert Solomon
Name:	Robert Solomon
Title:	President
MASON
/s/ Andrew Mason
Andrew Mason

3

APPENDIX 1

[Form of Statement to be filed with the Groupon, Inc. Federal Income Tax Return for its taxable year containing December       , 2010]

§409A Document Correction under §VI.B of Notice 2010-6

1.Name and taxpayer ID number of each service provider affected by the document failure:

Andrew Mason
Social Security Number:        -    -

2.Plan with respect to which failure occurred:

Employment Agreement between Groupon, Inc. and Andrew Mason, dated November 1, 2009.

3.Statement of correction:

The document failure identified herein is eligible for correction under Section VI.B of Notice 2010-6.  Groupon, Inc. has taken all actions required and otherwise met all requirements for such corrections as of the last day of its taxable in year in which the correction is made.  Pursuant to Section XI.A of Notice 2010-6, no income inclusion is required as a result of this correction.  The date of the correction is December       , 2010 and, pursuant to Section XI.A of Notice 2010-6, is treated as effective on November 1, 2009.

4.Amount involved:

The amount involved is unknown as of the date of the statement because the event at which time such amount would be become determinable has not occurred.  Pursuant to Section XI.A of Notice 2010-6, no income inclusion is required as a result of this correction.

EX-10.9

Exhibit 10.9

EMPLOYMENT AGREEMENT

THIS EMPLOYMENT AGREEMENT (this “Agreement”) is made and entered into as of March 15, 2010 (the “Effective Date”), by and between Groupon, Inc., a Delaware Corporation (the “Company”), and Rob Solomon (“Solomon”).

1.Employment; Position and Duties.  The Company agrees to employ Solomon, and Solomon agrees to be employed by the Company, upon the terms and conditions of this Agreement. Solomon shall be employed by the Company as the Company’s President reporting to the Chief Executive Officer (“CEO”) and Board of Directors (“Directors”) of the Company. In this capacity, Solomon agrees to devote his full time, energy and skill to the faithful performance of his duties herein, and shall perform the duties and carry out the responsibilities assigned to him to the best of his ability and in a diligent, businesslike and efficient manner. Solomon’s duties shall include all those duties customarily performed by the President, as well as those additional duties commensurate with his position as President that may be reasonably assigned by the CEO or Directors. Solomon shall comply with any policies and procedures established for Company employees, including without limitation, those policies and procedures contained in the Company’s employee handbook previously delivered to Solomon.

2.Director Meetings.  Solomon shall be entitled to attend all meetings of the Board of Directors of the Company in a non-voting, observer capacity; provided that the Directors may exclude Solomon from any portion of a meeting in their sole discretion.

3.Term of Employment.  This Agreement shall become effective upon the Effective Date. The term of this Agreement shall commence on March 15, 2010 and shall expire on March 15, 2014, unless earlier terminated by either party, in accordance with the terms of this Agreement and/or the following sentence. This Agreement may be terminated by Solomon or by the Company, at any time, with or without Cause (as defined below). Upon the termination of Solomon’s employment with the Company for any reason, neither party shall have any further obligation or liability under this Agreement to the other party, except as set forth in Sections 6, 7, 8, 9, 10, 11 and 12 of this Agreement.

4.Compensation.  Solomon shall be compensated by the Company for his services as follows:

(a)Base Salary.  From the commencement of this Agreement through the end of its term, Solomon shall be paid a base salary (“Base Salary”) of $350,000 per year, subject to applicable withholding, in accordance with the Company’s normal payroll procedures.

(b)Benefits.  During the term of this Agreement, Solomon shall have the right, on the same basis as other members of senior management of the Company, to participate in and to receive benefits under any of the Company’s executive and employee benefit plans, insurance programs and/or indemnification agreements, as may be in effect from time to time, subject to any applicable waiting periods and other restrictions. In addition, Solomon shall be entitled to the benefits afforded to other members of senior management under the Company’s vacation, holiday and business expense reimbursement policies.

(c)Bonuses.

(i)Performance Bonus.  In addition to the Base Salary, Solomon shall be eligible to receive an annual performance bonus (“Performance Bonus”) of up to thirty three percent (33%) of his Base Salary. The Performance Bonus shall be a discretionary bonus, determined in the sole discretion of the Directors of the Company, based upon Solomon’s performance of his duties and the Company’s financial performance, as well certain performance targets that are approved by the Directors of the Company. The Performance Bonus shall be paid within 45 days following the end of each fiscal year of the Company.

For purposes of this Agreement, a “Liquidity Event” means any capital reorganization, recapitalization, consolidation, merger or sale of the Company’s assets or outstanding securities to or with another person or entity which is effected in a manner that holders of Stock of the Company are entitled to receive (either directly or upon subsequent liquidation) stock, securities or assets with respect to or in exchange for Stock.

For purposes of this Agreement, a “Public Offering” means any offering by the Company of its equity securities to the public pursuant to an effective registration statement under the Securities Act of 1933, as amended (the “Securities Act”), or any comparable statement under any similar federal law then in force, that results in no less than $20,000,000 of net proceeds into the Company.

(d)Expenses.  In addition to reimbursement for business expenses incurred by Solomon in the normal and ordinary course of his employment by the Company pursuant to the Company’s standard business expense reimbursement policies and procedures, the Company shall reimburse Solomon for the full amount of his insurance costs should he elect to participate in the Company’s insurance program(s).

5.Stock Options.  Concurrently with the execution of this Agreement, Solomon shall be granted one or more options to purchase an aggregate of 685,000 (six hundred and eighty five thousand) A Common Non-Voting Shares of Stock of the Company (the “Options”) at the fair market value of the company’s stock options determined in accordance with GAAP, which is currently estimated not to exceed $3.00/share. The Shares acquired upon exercise of the Options shall be subject to a right of first refusal which shall terminate upon the completion of the Company’s initial Public Offering (as defined below). In the event that Solomon’s employment with the Company is terminated, Solomon shall have ninety (90) days following such termination to exercise any vested Options; provided, however, that in the case of termination due to death or disability, such period to exercise shall be six (6) months. Notwithstanding the foregoing, the Options shall not be exercisable after the expiration of their terms. The Options shall vest as follows: 171,250 Shares on March 16, 2011; an additional 42,813 Shares each quarter thereafter based on the following dates: June 16, 2011; September 16, 2011; December 16, 2011; March 16, 2012; June 16, 2012; September 16, 2012; December 16, 2012; March 16, 2013; June 16, 2013; September 16, 2013; and December 16, 2013; and an additional 42,807 Shares on March 16, 2014.

Except as provided herein, such Options shall be subject to the terms of the Company’s 2007 Option Plan and the option agreements provided to Solomon pursuant to the plan, and Solomon’s

2

receipt of the Options shall be subject to his executing such option agreement. A copy of each of the 2007 Option Plan and such option agreement are attached hereto as Exhibit A and Exhibit B, respectively. The number of Shares and option price per Share set forth in this Section 5 shall be adjusted to reflect any Share splits or Share dividends after the Effective Date.

(a)Right to Vote.  Upon full vesting of all 685,000 Options specified above, and upon Solomon exercising all of the Options as set forth in Section 5 above, the Shares shall convert from A Common Non-Voting Shares to A Common Shares. The Directors agree to take any and all reasonable actions to effectuate this conversion in voting status at that time.

6.Benefits Upon Termination.

(a)Termination for Cause or Termination for Other than Good Reason.  In the event of the termination of Solomon’s employment by the Company for Cause (as defined below), the termination of Solomon’s employment by reason of his death or disability, or the termination of Solomon’s employment by Solomon for any reason other than Good Reason (as defined below), Solomon shall be entitled to no further compensation or benefits from the Company other than those earned under Sections 4(a), 4(b), and 4(c) through the date of termination, or in the case of any Options, vested through the date of termination. Any unvested portion of the Options shall thereupon terminate immediately.

For purposes of this Agreement, a termination for “Cause” occurs if Solomon’s employment is terminated by the Company for any of the following reasons:

(i)his failure to perform reasonably assigned duties as President of the Company after written notice of such failure and a thirty (30) day period in which to remedy such failure,

(ii)theft, dishonesty, or falsification of any employment or Company records by Solomon;

(iii)the determination by the Directors or the holders of a majority of the Company’s Share that Solomon has committed an act or acts constituting a felony or any act involving moral turpitude;

(iv)the determination by the Directors or the holders of a majority of the Company’s Shares that Solomon has engaged in willful misconduct or gross negligence that has had a material adverse effect on the Company’s reputation or business; or the material breach by Solomon of any provision of this Agreement after written notice of such breach and a reasonable opportunity to cure such breach;

(v)Notwithstanding the foregoing, actions undertaken by Solomon in good faith in his capacity as President to benefit shareholders shall not be considered “Cause” under the terms of this Agreement;

For purposes of this Agreement, a termination for “Good Reason” occurs if Solomon terminates his employment for any of the following reasons:

3

(i)the Company materially reduces Solomon’s duties or responsibilities below what is customary for a President or Chief Operating Officer of a business that is similar to Company without Solomon’s consent;

(ii)the Company requires Solomon to relocate his office more than 100 miles from any office of the Company without his consent; or

(iii)the Company has breached the terms of this Agreement and such breach continues for more than thirty (30) days after notice from Solomon to the Company specifying the action which constitutes the breach and demanding its discontinuance.

(b)Termination Without Cause or Termination for Good Reason.  If Solomon’s employment is terminated by the Company for any reason other than for Cause or by reason of his death or disability, or if Solomon’s employment is terminated by Solomon for Good Reason, Solomon shall be entitled to:

(i)receive continued payment of his Base Salary, less applicable withholding, in accordance with the Company’s normal payroll procedures, for six (6) months following the termination of Solomon’s employment; and

(ii)if after September 15, 2010, an additional vesting of 150,000 Options; and

(iii)receive continued Company provided insurance benefits with the costs borne by Company for Solomon and his dependents until such time as he has secured comparable benefits through another organization’s benefits program; and

Notwithstanding anything to the contrary herein, no payments shall be due under this Section 6(b) unless and until Solomon shall have executed a general release and waiver of claims against the Company, consistent with Section 9 below, and in a form reasonably satisfactory to the Company, and the execution of such general release and waiver shall be a condition to Solomon’s rights under this Section 6(b).

7.Change of Control.  If, during the three (3) months prior to the public announcement of a proposed Change of Control, defined as the sale to any third party of at least fifty percent (50%) of the then-outstanding total Shares of the Company, or during the twelve (12) months following a Change of Control, Solomon’s employment is terminated by the Company for any reason other than Cause, or terminated by Solomon for Good Reason, Solomon shall be entitled to, in addition to the compensation and benefits outlined under Section 6(b) above, immediate vesting of the next two (2) year’s Options as if Solomon’s employment had continued for a period of twelve months following the termination. For purposes of this Agreement, a “Change of Control” shall have the same meaning as the term “Change of Control” set forth in the Company’s 2007 Option Plan.

4

8.Employee Inventions and Proprietary Rights Assignment Agreement.  Solomon agrees to abide by the terms and conditions of the Company’s standard Employee Inventions and Proprietary Rights Assignment Agreement as executed by Solomon and attached hereto as Exhibit C.

9.Covenants Not to Compete or Solicit.  During Solomon’s employment and for a period of twenty-four (24) months following the termination of Solomon’s employment for any reason, so long as Solomon is being paid severance in accordance with the terms of Section 6(b) above, Solomon shall not, anywhere in the Geographic Area (as defined below), other than on behalf of Company or with the prior written consent of Company, directly or indirectly:

(a)perform services for (whether as an employee, agent, consultant, advisor, independent contractor, proprietor, partner, officer, director or otherwise), have any ownership interest in (except for passive ownership of five percent (5%) or less of any entity whose securities have been registered under the Securities Act or Section 12 of the Securities Exchange Act of 1934, as amended), or participate in the financing, operation, management or control of, any firm, partnership, corporation, entity or business that engages or participates in a “competing business purpose” (as defined below);

(b)induce or attempt to induce any customer, potential customer, supplier, licensee, licensor or business relation of Company to cease doing business with Company, or in any way interfere with the relationship between any customer, potential customer, supplier, licensee, licensor or business relation of Company or solicit the business of any customer or potential customer of Company, whether or not Solomon had personal contact with such entity; and

(c)solicit, encourage, hire or take any other action which is intended to induce or encourage, or has the effect of inducing or encouraging, any employee or Independent Contractor of Company or any subsidiary of Company to terminate his or his employment or relationship with Company or any subsidiary of the Company, other than in the discharge of his duties as an officer of the Company.

In the event that Solomon receives a waiver of the “non-competition” provision from Company, which Company may or may not grant in its sole discretion, Solomon agrees that he will waive any further claim for severance and insurance benefits beginning on the date of his employment with a new organization, provided that such new employment is comparable to Solomon’s employment with Company in salary and benefits.

For the purpose of this Agreement, the term “competing business purpose” shall mean the sale or provision of any local goods or services through a deal of the day site that is similar with www.groupon.com. The term “Geographic Area” shall mean the United States of America.

The covenants contained in this Section 9 shall be construed as a series of separate covenants, one for each county, city, state, or any similar subdivision in any Geographic Area. Except for geographic coverage, each such separate covenant shall be deemed identical in terms to the covenant contained in the preceding Sections. If, in any judicial proceeding, a court

5

refuses to enforce any of such separate covenants (or any part thereof), then such unenforceable covenant (or such part) shall be eliminated from this Agreement to the extent necessary to permit the remaining separate covenants (or portions thereof) to be enforced. In the event that the provisions of this Section 9 are deemed to exceed the time, geographic or scope limitations permitted by applicable law, then such provisions shall be reformed to the maximum time, geographic or scope limitations, as the case may be, permitted by applicable laws.

10.Equitable Remedies.  Solomon acknowledges and agrees that the agreements and covenants set forth in Sections 8 and 9 are reasonable and necessary for the protection of the Company’s business interests, that irreparable injury will result to the Company if Solomon breaches any of the terms of said covenants, and that in the event of Solomon’s actual or threatened breach of any such covenants, the Company will have no adequate remedy at law. Solomon accordingly agrees that, in the event of any actual or threatened breach by Solomon of any of said covenants, the Company will be entitled to seek immediate injunctive and other equitable relief, without bond and without the necessity of showing actual monetary damages. Nothing in this Section 10 will be construed as prohibiting the Company from pursuing any other remedies available to it for such breach or threatened breach, including the recovery of any damages that it is able to prove.

11.Dispute Resolution.  In the event of any dispute or claim relating to or arising out of this Agreement (including, but not limited to, any claims of breach of contract, wrongful termination or age, sex, race or other discrimination), Solomon and the Company agree that all such disputes shall be fully and finally resolved by binding arbitration conducted by the American Arbitration Association in Chicago, Illinois in accordance with its National Employment Dispute Resolution rules, as those rules are currently in effect (and not as they may be modified in the future). Solomon acknowledges that by accepting this arbitration provision he is waiving any right to a jury trial in the event of such dispute. Notwithstanding the foregoing, this arbitration provision shall not apply to any disputes or claims relating to or arising out of the misuse or misappropriation of trade secrets or proprietary information.

12.Attorneys’ Fees.  Solomon shall be entitled to recover from the Company his reasonable attorneys’ fees and costs if he prevails in an action to enforce any right arising out of this Agreement.

13.Governing Law.  This Agreement has been executed in the State of Illinois, and Solomon and the Company agree that this Agreement shall be interpreted in accordance with and governed by the laws of the State of Illinois, without regard to its conflicts of laws principles.

14.Successors and Assigns.  This Agreement shall inure to the benefit of and be binding upon the Company and its successors and assigns, provided that successor or assignee is the successor to substantially all of the assets of the Company, or a majority of its then outstanding Shares, and that such successor or assignee assumes the liabilities, obligations and duties of the Company under this Agreement, either contractually or as a matter of law. In view of the personal nature of the services to be performed under this Agreement by Solomon, she shall not have the right to assign or transfer any of his rights, obligations or benefits under this Agreement, except as otherwise noted herein.

6

15.Entire Agreement.  This Agreement, including its attached Exhibits, constitutes the entire employment agreement between Solomon and the Company regarding the terms and conditions of his employment, with the exception of (i) those provisions of the Company’s 2004 Share Option Plan incorporated by reference pursuant to Section 7, (ii) the promissory note described in Section 5, and (iii) any stock option agreement between Solomon and the Company described in Section 5. This Agreement (including the documents described in clauses (i), (ii), and (iii) of this Section 15) supersedes all prior negotiations, representations or agreements between Solomon and the Company, whether written or oral, concerning Solomon’s employment.

16.No Conflict.  Solomon represents and warrants to the Company that neither his entry into this Agreement nor his performance of his obligations hereunder will conflict with or result in a breach of the terms, conditions or provisions of any other agreement or obligation to which Solomon is a party or by which Solomon is bound, including without limitation, any non-competition or confidentiality agreement previously entered into by Solomon.

17.Validity.  Except as otherwise provided in Section 9, above, if any one or more of the provisions (or any part thereof) of this Agreement shall be held invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions (or any part thereof) shall not in any way be affected or impaired thereby.

18.Modification. This Agreement may not be modified or amended except by a written agreement signed by Solomon and the Company.

IN WITNESS WHEREOF, the parties have executed this Agreement as of the date and year written below.

	Groupon, Inc.
Date:	By:	/s/ Andrew Mason
	Name:	Andrew Mason
	Its:	CEO
Date:	/s/ Rob Solomon
	Rob Solomon

7

EX-10.10

Exhibit 10.10

AMENDMENT TO
EMPLOYMENT AGREEMENT

This Amendment to Employment Agreement (the “Amendment”) is made effective as of December 15, 2010 (the “Amendment Date”), by and between Groupon, Inc., a Delaware corporation (the “Company”), and Rob Solomon (“Solomon”), in order to amend the Employment Agreement entered into between the Company and Solomon as of March 15, 2010 (the “Employment Agreement”).

WHEREAS, the parties desire to enter into this Amendment to bring certain of the provisions of the Employment Agreement into documentary compliance with the applicable requirements of Section 409A of the Internal Revenue Code, as amended, and the Treasury Regulations issued thereunder (together, “Section 409A”); and

WHEREAS, the parties intend that this Amendment qualify for the relief accorded by Internal Revenue Service Notice 2010-6 and Notice 2010-80 (the “IRS Notices”);

NOW, THEREFORE, in consideration of the mutual covenants and promises herein contained, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Company and Solomon hereby agree as follows:

1.Section 6(b) of the Employment Agreement is amended in its entirety to read as follows:

(a)Termination Without Cause or Termination for Good Reason. If Solomon’s employment is terminated by the Company for any reason other than for Cause or by reason of his death or disability, or if Solomon’s employment is terminated by Solomon for Good Reason, Solomon shall be entitled to:

(i)receive continued payment of his Base Salary, less applicable withholding, in accordance with the Company’s normal payroll procedures as provided below, for six (6) months following the termination of Solomon’s employment (“Severance”); and

(ii)if after September 15, 2010, an additional vesting of 150,000 Options; and

(iii)receive continued Company provided insurance benefits with the costs borne by Company for Solomon and his dependents until such time as he has secured comparable benefits through another organization’s benefits program; provided, however, that to the extent that all or any portion of the Company’s payment of or reimbursement to Solomon for the cost of such benefits (the “Company-Provided Benefits”) would exceed an amount for which, or continue for a period of time in excess of which, such Company Provided Benefits would qualify for an exemption from treatment as deferred compensation subject to Section 409A of the Internal Revenue Code, then, for the duration of the applicable period during which the Company is required to provide such benefits: (1) the amount of Company-Provided Benefits furnished in any taxable year of Solomon shall not affect the amount of Company-

Provided Benefits furnished in any other taxable year of Solomon; (2) any right of Solomon to Company-Provided Benefits shall not be subject to liquidation or exchange for another benefit; and (c) any reimbursement for Company-Provided Benefits to which Solomon is entitled shall be paid no later than the last day of Solomon’s taxable year following the taxable year in which Solomon’s expense for such Company-Provided Benefits was incurred.

Notwithstanding anything to the contrary herein, no payments shall be due under this Section 6(b) unless Solomon shall have executed a general release and waiver of claims against the Company, consistent with Section 9 below, and in a form reasonably satisfactory to the Company, and such release has become effective in accordance with its terms on or before the 60th day following Solomon’s termination of employment. Subject to such effective release, payment of Severance shall begin on the first regular payroll date following such 60th day, and the initial payment shall include that portion of Severance that would otherwise have been payable on the Company’s regular payroll dates occurring between the date of Solomon’s termination of employment and the initial Severance payment date.

2.A new Section 19 is added to the Employment Agreement as follows:

19.Compliance with Section 409A of the Code.

(a)The Company intends that income provided to Solomon pursuant to this Agreement will not be subject to taxation under Section 409A of the International Revenue Code and the Treasury Regulations thereunder (collectively, Section 409A”).  The provisions of this Agreement shall be interpreted and construed in favor of satisfying any applicable requirements of Section 409A.  However, the Company does not guarantee any particular tax effect for income provided to Solomon, the Company shall not be responsible for the payment of any applicable taxes, penalties, interest, costs, fees, including Attorneys fees, or other liability incurred by Employee in connection with compensation paid or provided to Solomon pursuant to this Agreement.

(b)Notwithstanding anything set forth herein to the contrary, no amount payable pursuant to this Agreement on account of Solomon’s termination of employment with the Company which constitutes a “deferral of compensation” within the meaning of Section 409A shall be paid unless and until Solomon has incurred a “separation from service” within the meaning of Section 409A. Furthermore, if Solomon is a “specified employee” within the meaning of Section 409A as of the date of Solomon’s separation from service, no amount that constitutes a deferral of compensation which is payable on account of Solomon’s separation from service shall be paid to Solomon before the date {the “Delayed Payment Date”) which is the first business day of the seventh month after the date of Solomon’s separation from service or, if earlier, the date of Solomon’s death following such separation from service. All such amounts that would, but for this Section, become payable prior to the Delayed Payment Date will be accumulated and paid on the Delayed Payment Date.

2

(c)The Company agrees that in accordance with the IRS Notices it will each attach to its Federal income tax return for the taxable year containing the Amendment Date the applicable statement under Section XII of Notice 2010-6, substantially in the forms attached hereto as Appendix I.

3.Except as modified by this Amendment, the Employment Agreement will remain in full force and effect.

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

GROUPON, INC.
By:	/s/ Andrew Mason
Name:	Andrew Mason
Title:	CEO
SOLOMON:
/s/ Rob Solomon
Rob Solomon

3

APPENDIX 1

[Form of Statement to be filed with the Groupon, Inc. Federal Income Tax Return for its taxable year containing December       , 2010]

§409A DOCUMENT CORRECTION UNDER §VI.B OF NOTICE 2010-6

1.Name and taxpayer ID number of each service provider affected by the document failure:

Rob Solomon

Social Security Number:        -     -      

2.Plan with respect to which failure occurred:

Employment Agreement between Groupon, Inc. and Rob Solomon, dated March 15, 2010.

3.Statement of correction:

The document failure identified herein is eligible for correction under Section VI.B of Notice 2010-6. Groupon, Inc. has taken all actions required and otherwise met all requirements for such corrections as of the last day of its taxable in year in which the correction is made. Pursuant to Section XI.A of Notice 2010-6, no income inclusion is required as a result of this correction. The date of the correction is December           , 2010 and, pursuant to Section XI.A of Notice 2010-6, is treated as effective on March 15, 2010.

4.Amount involved:

The amount involved is unknown as of the date of the statement because the event at which time such amount would be become determinable has not occurred. Pursuant to Section XI.A of Notice 2010-6, no income inclusion is required as a result of this correction.

EX-10.11

Exhibit 10.11

EMPLOYMENT AGREEMENT

This EMPLOYMENT AGREEMENT (“Agreement”) is made effective as of November 30, 2010 (the “Effective Date”), by and between Groupon Ludic, Inc., a Delaware corporation, which, along with its parent company, Groupon, Inc., a Delaware corporation (“Groupon”), shall be referred to herein as the “Company,” and Brian Totty (“Employee”).

The parties agree as follows:

1.Employment.  Company hereby employs Employee, and Employee hereby accepts such employment, upon the terms and conditions set forth herein.

2.Duties.

2.1Position.  Employee is employed as Senior Vice President of Engineering and Operations and shall have the duties and responsibilities assigned by Company both upon initial hire and as may be reasonably assigned from time to time. Employee shall perform faithfully and diligently all duties assigned to Employee.

2.2Full-time/Best Efforts.  This is a full-time, exempt position. Employee will expend Employee’s best efforts on behalf of Company, and will abide by all policies and decisions made by Company, as well as all applicable federal, state and local laws, regulations or ordinances.

2.3Work Location.  Employee’s principal place of work shall be located in California, or such other location as the parties may agree upon from time to time.

3.Term of Employment.  The term of employment under this Agreement shall commence on the Effective Date and shall continue until terminated pursuant to the provisions of this Agreement (the “Term”).

4.Compensation.

4.1Base Salary.  As compensation for Employee’s performance of Employee’s duties hereunder, Company shall pay to Employee an initial base salary of $250,000 per year (“Base Salary”), payable in accordance with the normal payroll practices of Company, less required deductions for state and federal withholding tax, social security and all other employment taxes and payroll deductions.

4.2Restricted Stock Units.  Employee will be granted 98,640 restricted stock units (the “RSUs”) under the Groupon, Inc. 2010 Stock Plan (as amended and restated, the “Plan”), attached hereto as Exhibit A. The RSUs will be subject to the terms and conditions of the Plan and the standard restricted stock unit grant agreement provided pursuant to the Plan, which Employee will be required to sign as a condition of receiving the RSUs; provided, however, that any vested RSUs will be settled in shares of Groupon common stock, except that the number of RSUs with a fair market value equal to the minimum amount required for tax withholding obligations will be settled in the form of cash. Subject to Sections 7.4 and 8.2, the RSUs shall vest 1/36 each month following the Effective Date.

4.3Performance and Salary Review.  Company will periodically review Employee’s performance on no less than an annual basis. Adjustments to salary or other compensation, if any, will be made by Company in its sole and absolute discretion.

5.Customary Fringe Benefits.  Employee will be eligible for all customary and usual fringe benefits generally available to employees of Company subject to the terms and conditions of Company’s benefit plan documents. Company reserves the right to change or eliminate the fringe benefits on a prospective basis, at any time, effective upon notice to Employee.

6.No Conflict of Interest.  During Employee’s employment with Company, Employee must not engage in any work, paid or unpaid, that creates an actual conflict of interest with Company. Such work shall include, but is not limited to, directly or indirectly competing with Company in any way, or acting as an officer, director, employee, consultant, stockholder, volunteer, lender, or agent of any business enterprise of the same nature as, or which is in direct competition with, the business in which Company is now engaged or in which Company becomes engaged during Employee’s employment with Company, as may be determined by Company in its sole discretion. If Company believes such a conflict exists, Company may ask Employee to choose to discontinue the other work or resign employment with Company; provided, however, that nothing in this Agreement will prevent Employee from owning up to one percent (1%) of the outstanding equity securities of a corporation whose stock is listed on a national exchange or up to five percent (5%) of any privately held corporation.

7.Termination of Employment.

7.1Termination.  The Company shall have the right to terminate Employee’s employment with Company with or without Cause (as hereinafter defined) at any time. For purposes of this Agreement, “Cause” shall mean any of the following events, actions or inactions by Employee:

(a)Employee’s conviction of (or plea of nolo contendere to) any felony or to any other crime involving fraud, theft or moral turpitude;

(b)Employee’s fraud, theft, embezzlement, or other material dishonesty involving the Company or a material breach of a fiduciary duty owed by Employee to the Company or Groupon;

(c)Employee’s gross negligence or willful misconduct in the performance of his employment duties to the extent such gross negligence or willful misconduct materially and adversely affects the Company; or

(d)Employee’s material breach of any provision of this Agreement, which breach is not curable, or if curable, is not cured by Employee within fifteen (15) days following written notice by Company to Employee specifying the nature of such breach.

7.2Demotion.  For purposes of this Agreement, a “Demotion” means a material reduction of Employee’s duties and responsibilities in his capacity as a Senior Vice President of Engineering and Operations of Company or a permanent change in Employee’s

2

duties and responsibilities which are materially inconsistent with the duties and responsibilities of a Senior Vice President of Engineering and Operations of Company, which reduction or change is not cured within thirty (30) days of the receipt by Company of written notice by Employee stating the nature of such breach.

7.3Compensation Upon Termination.  Upon the termination of Employee’s employment under this Agreement, Executive shall be entitled to the following: (i) the earned but unpaid Base Salary earned by him before the effective date of termination, and (ii) any unreimbursed business expenses outstanding as of the effective date of termination.

7.4Accelerated Vesting upon Termination or Demotion.  If during the two (2) year period commencing on the Effective Date Employee’s employment with the Company is terminated by the Company without Cause or Employee receives a Demotion, then fifty percent (50%) of the then unvested RSUs shall immediately vest.

8.Change of Control.

8.1Change of Control.  For purposes of this Agreement, a “Change of Control” means (a) the acquisition in one or more transactions by any person or entity of the beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Securities Exchange Act of 1934, as amended) of more than 50% of (i) the then outstanding shares of common stock (on an as-converted basis) of Groupon or (ii) the combined voting power of the then outstanding securities (on an as-converted basis) of Groupon entitled to vote generally in the election of directors; (b) the closing of a sale, lease, license (other than in the ordinary course of business), exchange, transfer or other conveyance of all or substantially all of the assets of Groupon; (c) the consummation of any merger, share exchange, consolidation, or other business combination involving Groupon if immediately after such transaction persons or entities who hold a majority of the outstanding securities (on an as-converted basis) entitled to vote generally in the election of directors of the surviving entity (or the entity owning 100% of such surviving entity) of such transaction are not persons or entities who, immediately prior to such transaction, held such securities (on an as-converted basis) of Groupon; or (d) the completion of any other similar transaction, involving Groupon or its successors, which has the same effect as any of the foregoing.

8.2Accelerated Vesting upon Change of Control.  If during the Term a Change of Control occurs, then fifty percent (50%) of the original RSUs shall immediately vest, to the extent they have not already vested in accordance with their terms.

8.3Shortfall Payments upon Change of Control.  In the event of a Change of Control, Groupon shall pay Employee any shortfall payments as set forth in Section 20 of the Agreement and Plan of Merger, dated as of November 30, 2010, by and among Groupon, Groupon Ludic, Inc., and the Stockholders’ Representative, as such terms are defined therein (the “Merger Agreement”).

9.Put Right. lf, during the two (2) year period commencing on the Effective Date, there is not either (a) a Change of Control that enables Employee to sell any of the shares of capital stock of Groupon then owned by Employee (the “Employee Shares”) (b) an initial

3

underwritten public offering of Groupon’s securities registered pursuant to the Securities Act of 1933, as amended, or (c) an offer from a bona fide third-party purchaser on any secondary market for shares of private companies (including, but not limited to, SecondMarket and SharesPost) to purchase any of the shares of capital stock of Groupon then owned by Employee, then Employee, within sixty (60) days after the expiration of such two-year period, shall have the one-time right and option (the “Put Right”) to require Groupon to purchase up to $2,000,000 worth of the Employee Shares, based upon the Fair Market Value (as hereinafter defined) of the common stock of Groupon, by delivering notice of such exercise (a “Put Exercise Notice”) in writing to Groupon. If the Put Right is exercised, then Employee shall be obligated to sell, and Groupon shall be obligated to purchase, the Employee Shares requested to be purchased in the Put Exercise Notice. Following receipt of the Put Exercise Notice, Employee and Groupon shall then mutually select an independent valuation firm to determine the current Fair Market Value of such Employee Shares. The determination of such independent valuation firm shall be final and binding on the parties. Within ten (10) days following such determination, Employee and Groupon shall consummate the purchase and sale transaction with respect to such Employee Shares and the purchase price therefore shall be payable in cash. In connection therewith, Groupon will be entitled to receive customary representations and warranties from Employee (including representations and warranties regarding good title to the shares, the absence of any liens on such title or other encumbrances with respect to the sale of the shares and the ability of Employee to consummate the sale). Notwithstanding the foregoing, Employee shall not be entitled to deliver a Put Exercise Notice, and the Put Right shall automatically terminate and become null and void, if during the two (2) year period commencing on the Effective Date Employee voluntarily terminates his employment with the Company for any reason, except for a voluntary termination following a Demotion.

For purposes of this Agreement, “Fair Market Value” shall mean the per share consideration that the equity holders of Groupon would receive in exchange for all of their equity interests in Groupon, net of reasonable and customarily incurred transaction costs, consistent with then current industry practices, from an informed and willing bona fide third-party purchaser in an arm’s length transaction structured such that such purchaser will acquire, upon closing, directly or through merger, equity acquisition or otherwise, all or substantially all of the Company’s assets and liabilities.

10.Confidentiality and Proprietary Rights.  Employee agrees to read, sign and abide by Company’s standard Employee Confidentiality, Inventions and Non-Solicitation Agreement (“Confidentiality Agreement”), which is attached hereto as Exhibit B.

11.Agreement to Arbitrate.  To the fullest extent permitted by law, Employee and Company agree to arbitrate any controversy, claim or dispute between them arising out of or in any way related to this Agreement, the employment relationship between Company and Employee and any disputes upon termination of employment, including, but not limited to, breach of contract, tort, discrimination, harassment, wrongful termination, demotion, discipline, failure to accommodate, family and medical leave, compensation or benefits claims, constitutional claims; and any claims for violation of any local, state or federal law, statute, regulation or ordinance or common law. For the purpose of this agreement to arbitrate, references to “Company” include all parent, subsidiary or related entities and their employees, supervisors, officers, directors, agents, pension or benefit plans, pension or benefit plan sponsors,

4

fiduciaries, administrators, affiliates and all successors and assigns of any of them, and this agreement shall apply to them to the extent Employee’s claims arise out of or relate to their actions on behalf of Company.

11.1Consideration.  The mutual promise by Company and Employee to arbitrate any and all disputes between them rather than litigate them before the courts or other bodies, provides the consideration for this agreement to arbitrate.

11.2Initiation of Arbitration.  Either party may exercise the right to arbitrate by providing the other party with written notice of any and all claims forming the basis of such right in sufficient detail to inform the other party of the substance of such claims. In no event shall the request for arbitration be made after the date when institution of legal or equitable proceedings based on such claims would be barred by the applicable statute of limitations.

11.3Arbitration Procedure.  The arbitration will be conducted in the state of California by a single neutral arbitrator and in accordance with the then current rules for resolution of employment disputes of the American Arbitration Association (“AAA”). The parties are entitled to representation by an attorney or other representative of their choosing. The arbitrator shall have the power to enter any award that could be entered by a judge of the trial court of the State of California, and only such power, and shall follow the law. The parties agree to abide by and perform any award rendered by the arbitrator. The arbitrator shall issue the award in writing and therein state the essential findings and conclusions on which the award is based. Judgment on the award may be entered in any court having jurisdiction thereof. The parties agree that the arbitrator’s decision is final, conclusive and binding and that they will abide by and perform any award rendered by the arbitrator. Judgment on the award may be entered in any court having jurisdiction thereof.

11.4Costs of Arbitration.  Company shall bear the costs of the arbitration filing and hearing fees and the cost of the arbitrator.

12.General Provisions.

12.1Successors and Assigns.  The rights and obligations of Company under this Agreement shall inure to the benefit of and shall be binding upon the successors and assigns of Company. Employee shall not be entitled to assign any of Employee’s rights or obligations under this Agreement.

12.2Waiver.  Either parry’s failure to enforce any provision of this Agreement shall not in any way be construed as a waiver of any such provision, or prevent that party thereafter from enforcing each and every other provision of this Agreement.

12.3Attorneys’ Fees.  Each side will bear its own attorneys’ fees in any dispute unless a statutory section at issue, if any, authorizes the award of attorneys’ fees to the prevailing party.

12.4Severability.  In the event any provision of this Agreement is found to be unenforceable by an arbitrator or court of competent jurisdiction, such provision shall be deemed modified to the extent necessary to allow enforceability of the provision as so limited, it being

5

intended that the parties shall receive the benefit contemplated herein to the fullest extent permitted by law. If a deemed modification is not satisfactory in the judgment of such arbitrator or court, the unenforceable provision shall be deemed deleted, and the validity and enforceability of the remaining provisions shall not be affected thereby.

12.5Interpretation; Construction.  The headings set forth in this Agreement are for convenience only and shall not be used in interpreting this Agreement. This Agreement has been drafted by legal counsel representing Company, but Employee has participated in the negotiation of its terms. Furthermore, Employee acknowledges that Employee has had an opportunity to review and revise the Agreement and have it reviewed by legal counsel, if desired, and, therefore, the normal rule of construction to the effect that any ambiguities are to be resolved against the drafting party shall not be employed in the interpretation of this Agreement.

12.6Governing Law.  This Agreement will be governed by and construed in accordance with the laws of the United States and the State of California. Each party consents to the jurisdiction and venue of the state or federal courts in California, if applicable, in any action, suit, or proceeding arising out of or relating to this Agreement.

12.7Notices.  Any notice required or permitted by this Agreement shall be in writing and shall be delivered as follows with notice deemed given as indicated: (a) by personal delivery when delivered personally; (b) by overnight courier upon written verification of receipt; (c) by telecopy or facsimile transmission upon acknowledgment of receipt of electronic transmission; or (d) by certified or registered mail, return receipt requested, upon verification of receipt. Notice shall be sent to the addresses set forth below, or such other address as either party may specify in writing.

12.8Survival.  Sections 8.3 (“Shortfall Payments Upon Change of Control”), 9 (“Put Right”), 10 (“Confidentiality and Proprietary Rights”), 11 (“Agreement to Arbitrate”), 12 (“General Provisions”) and 13 (“Entire Agreement”) of this Agreement shall survive Employee’s employment by Company.

13.Entire Agreement.  This Agreement, including the Company’s Employee Confidentiality, Inventions and Non-Solicitation Agreement attached hereto as Exhibit B, section 20 of the Merger Agreement referred to in section 8.3 of this Agreement, and the Plan and related restricted stock unit documents described in section 4.2 of this Agreement, constitute the entire agreement between the parties relating to this subject matter and supersede all prior or simultaneous representations, discussions, negotiations, and agreements, whether written or oral. This Agreement may be amended or modified only with the written consent of Employee and the CEO of Groupon. No oral waiver, amendment or modification will be effective under any circumstances whatsoever.

THE PARTIES TO THIS AGREEMENT HAVE READ THE FOREGOING AGREEMENT AND FULLY UNDERSTAND EACH AND EVERY PROVISION CONTAINED HEREIN. WHEREFORE, THE PARTIES HAVE EXECUTED THIS AGREEMENT ON THE DATES SHOWN BELOW.

6

Dated:	November 30, 2010	Employee
		/s/ Brian Totty
		Name: Brian Totty
		Address:
		Groupon Ludic, Inc. and Groupon, Inc.
Dated:	November 30, 2010	By:	/s/ Andrew Mason
			Andrew Mason, CEO
			600 W. Chicago Ave., Suite 620, Chicago, IL 60654

7

EXHIBIT A

2010 STOCK PLAN

See Exhibit 10.3 to Groupon, Inc.’s Form S-1 Registration Statement (No. 333-174661).

EXHIBIT B

EMPLOYEE CONFIDENTIALITY, INVENTIONS AND NON-SOLICITATION AGREEMENT

This Agreement sets forth in writing certain understandings and procedures in effect as of the date of my initial employment with Groupon Ludic, Inc., a Delaware corporation, which, along with its parent company, Groupon, Inc. and any and all affiliates or subsidiaries, shall be referred to herein as the “Company.”

1.Duties.  In return for the compensation and benefits now and hereafter paid or provided to me, I hereby agree to perform those duties for Company as Company may designate from time to time. During my employment with Company, I further agree that I will (i) devote my best efforts to the interests of Company, and (ii) not engage in other employment or in any conduct that could either be in direct conflict with Company’s interests or that could cause a material and substantial disruption to Company and (iii) otherwise abide by all of Company’s policies and procedures as they may be established and updated from time to time. Furthermore, I will not (a) reveal, disclose or otherwise make available to any unauthorized person any Company password or key, whether or not the password or key is assigned to me or (b) obtain, possess or use in any manner a Company password or key that is not assigned to me. I will use my best efforts to prevent the unauthorized use of any laptop or personal computer, peripheral device, cell phone, smartphone, personal digital assistant (PDA), software or related technical documentation that the Company issues to me. I will not input, load or otherwise attempt any unauthorized use of software in any Company computer or other device, whether or not the computer or device is assigned to me.

2.“Proprietary Information” Definition.  “Proprietary Information” means (a) any information that is confidential or proprietary, technical or non-technical information of Company, including for example and without limitation, information that is a Company Innovation or is related to any Company Innovations (as defined in Section 4 below), concepts, techniques, processes, methods, systems, designs, computer programs, source documentation, trade secrets, formulas, development or experimental work, work in progress, forecasts, proposed and future products, marketing plans, business plans, customers and suppliers and any other nonpublic information that has commercial value or (b) any information Company has received from others that Company is obligated to treat as confidential or proprietary, which may be made known to me by Company, a third party or otherwise that I may learn during my employment with Company.

3.Ownership and Nondis-closure of Proprietary Information.  All Proprietary Information and all worldwide: patents (including, but not limited to, any and all patent applications, patents, continuations, continuation-in-parts, reissues, divisionals, substitutions, and extensions), copyrights, mask works, trade secrets and other worldwide intellectual property and other rights in and to the Proprietary Information are the property of Company, Company’s assigns, Company’s customers and Company’s suppliers, as applicable. I will not disclose any Proprietary Information to anyone outside Company, and I will use and disclose Proprietary Information to those inside Company only as necessary to perform my duties as an employee of Company. If I have

1

any questions as to whether information is Proprietary Information, or to whom, if anyone, inside Company, any Proprietary Information may be disclosed, I will ask my manager at Company

4.“Innovations” Definition.  In this Agreement, “Innovations” means all discoveries, designs, developments, improvements, inventions (whether or not protectable under patent laws), works of authorship, information fixed in any tangible medium of expression (whether or not protectable under copyright laws), trade secrets, know-how, ideas (whether or not protectable under trade secret laws), mask works, trademarks, service marks, trade names and trade dress.

5.Disclosure and License of Prior Innovations.  I have listed on Exhibit A (“Prior Innovations”) attached hereto all Innovations relating in any way to Company’s business or demonstrably anticipated research and development or business, which were conceived, reduced to practice, created, derived, developed, or made by me prior to my employment with Company (collectively, the “Prior Innovations”).  I represent that I have no rights in any such Company-related Innovations other than those Innovations listed in Exhibit A (“Prior Innovations”). If nothing is listed on Exhibit A (“Prior Innovations”), I represent that there are no Prior Innovations at the time of signing this Agreement. I hereby grant to Company and Company’s designees a royalty-free, irrevocable, worldwide, fully paid-up license (with rights to sublicense through multiple tiers of sublicensees) to practice all patent, copyright, moral right, mask work, trade secret and other intellectual property rights relating to any Prior Innovations that I incorporate, or permit to be incorporated, in any Innovations that I, solely or jointly with others, conceive, develop or reduce to practice within the scope of my employment with Company (the “Company Innovations”). Notwithstanding the foregoing, I will not incorporate, or permit to be incorporated, any Prior Innovations in any Company Innovations without Company’s prior written consent.

6.Disclosure and Assignment of Company Innovations.  I will promptly disclose and describe to Company all Company Innovations. I hereby do and will assign to Company or Company’s designee all my right, title, and interest in and to any and all Company Innovations. To the extent any of the rights, title and interest in and to Company Innovations cannot be assigned by me to Company, I hereby grant to Company an exclusive, royalty-free, transferable, irrevocable, worldwide license (with rights to sublicense through multiple tiers of sublicensees) to practice such non-assignable rights, title and interest, including, but not limited to, the right to make, use, sell, offer for sale, import, have made, and have sold, such Company Innovations. To the extent any of the rights, title and interest in and to Company Innovations can neither be assigned nor licensed by me to Company, I hereby irrevocably waive and agree never to assert such non-assignable and non-licensable rights, title and interest against Company, any of Company’s successors in interest, or any of Company’s customers. This Section 6 shall not apply to any Innovations that (a) do not relate, at the time of conception, reduction to practice, creation, derivation, development or making of such Innovation to Company’s business or actual or demonstrably anticipated research, development or business; and (b) were developed entirely on my own time; and (c) were developed without use of any of Company’s equipment, supplies, facilities or trade secret information; and (d) did not

2

result from any work I performed for Company.

7.Future Innovations.  I will disclose promptly in writing to Company all Innovations conceived, reduced to practice, created, derived, developed, or made by me within the scope of my employment with the Company, whether or not I believe such Innovations are subject to this Agreement, to permit a determination by Company as to whether or not the Innovations should be considered Company Innovations. Company will receive any such information in confidence.

8.Notice of Nonassignable Innovations to Employees in California. This Agreement does not apply to an Innovation that qualifies fully as a nonassignable invention under the provisions of Section 2870 of the California Labor Code. I acknowledge that a condition for an Innovation to qualify fully as a non-assignable invention under the provisions of Section 2870 of the California Labor Code is that the invention must be protected under patent laws. I have reviewed the notification in Exhibit B (“Limited Exclusion Notification”) and agree that my signature acknowledges receipt of the notification.

9.Cooperation in Perfecting Rights to Company Innovations. I agree to perform, during and after my employment, all acts that Company deems necessary or desirable to permit and assist Company, at its expense, in obtaining and enforcing the full benefits, enjoyment, rights and title throughout the world in the Company Innovations as provided to Company under this Agreement. If Company is unable for any reason to secure my signature to any document required to file, prosecute, register or memorialize the assignment of any rights or application or to enforce any right under any Company Innovations as provided under this Agreement, I hereby irrevocably designate and appoint Company and Company’s duly authorized officers and agents as my agents and attorneys-in-fact to act for and on my behalf and instead of me to take all lawfully permitted acts to further the filing, prosecution, registration, memorialization of assignment, issuance, and enforcement of rights under such Innovations, all with the same legal force and effect as if executed by me. The foregoing is deemed a power coupled with an interest and is irrevocable.

10.Return of Materials.  At any time upon Company’s request, and when my employment with Company is over, I will return all materials (including, without limitation, documents, drawings, papers, diskettes and tapes) containing or disclosing any Proprietary Information (including all copies thereof), as well as any keys, pass cards, identification cards, computers, printers, pagers, cellular phones, smartphones, personal digital assistants or similar items or devices that the Company has provided to me. I will provide Company with a written certification of my compliance with my obligations under this Section.

11.No Violation of Rights of Third Parties.  During my employment with Company, I will not (a) breach any agreement to keep in confidence any confidential or proprietary information, knowledge or data acquired by me prior to my employment with Company or (b) disclose to Company, or use or induce Company to use, any confidential or proprietary information or material belonging to any previous employer or any other third party. I am not currently a party, and will not become a party, to any other agreement that is in conflict, or will prevent me from complying, with this Agreement.

3

12.Survival.  This Agreement (a) shall survive my employment by Company; (b) does not in any way restrict my right to resign or the right of Company to terminate my employment at any time, for any reason or for no reason; (c) inures to the benefit of successors and assigns of Company; and (d) is binding upon my heirs and legal representatives.

13.No Solicitation Using Proprietary Information.  During the course of my employment with Company, and after the termination thereof, I shall not use any Company Proprietary Information (as defined in Section 2 above) in order to solicit Company’s customers, suppliers, licensees, licensors, franchisees, consultants or other business associates or to encourage any of same to cease doing business with Company. In addition, throughout my employment with Company and for one (1) year thereafter, I will not solicit, encourage, or cause others to solicit or encourage any employees or independent contractors of Company to terminate their employment with Company.

14.Injunctive Relief.  I agree that if I violate this Agreement, Company will suffer irreparable and continuing damage for which money damages are insufficient, and Company is entitled to injunctive relief, a decree for specific performance, and all other relief as may be proper (including money damages if appropriate), to the extent permitted by law, without the need to post a bond.

15.Notices. Any notice required or permitted by this Agreement shall be in writing and shall be delivered as follows, with notice deemed given as indicated: (a) by personal delivery, when actually delivered; (b) by overnight courier, upon written verification of receipt; (c) by facsimile transmission, upon acknowledgment of receipt of electronic transmission; or (d) by certified or registered mail, return receipt requested, upon verification of receipt. Notices to me shall be sent to any address in Company’s records or such other address as I may provide in writing. Notices to Company shall be sent to Company’s Human Resources Department or to such other address as Company may specify in writing.

16.Governing Law; Forum.  This Agreement shall be governed by the laws of the United States of America and by the laws of the State of California, as such laws are applied to agreements entered into and to be performed entirely within California between California residents. Company and I each irrevocably consent to the exclusive personal jurisdiction of the federal and state courts located in California for any matter arising out of or relating to this Agreement, except that in actions seeking to enforce any order or any judgment of such federal or state courts located in California, such personal jurisdiction shall be nonexclusive. Additionally, notwithstanding anything in the foregoing to the contrary, a claim for equitable relief arising out of or related to this Agreement may be brought in any court of competent jurisdiction.

17.Severability.  If an arbitrator or court of law holds any provision of this Agreement to be illegal, invalid or unenforceable, (a) that provision shall be deemed amended to provide Company the maximum protection permitted by applicable law and (b) the legality, validity and enforceability of the remaining provisions of this Agreement shall not be affected.

18.Waiver; Modification.  If Company waives any term, provision or breach by me of this Agreement, such

4

waiver shall not be effective unless it is in writing and signed by Company. No waiver shall constitute a waiver of any other or subsequent breach by me. This Agreement may be modified only if both Company and I consent in writing.

19.Entire Agreement.  This Agreement, including any agreement to arbitrate claims or disputes relating to my employment that I may have signed in connection with my employment by Company, represents my entire understanding with Company with respect to the subject matter of this Agreement and supersedes all previous understandings, written or oral.

I certify and acknowledge that I have carefully read all of the provisions of this Agreement and that I understand and will fully and faithfully comply with such provisions.

“COMPANY”		EMPLOYEE:
Groupon Ludic, Inc., Groupon, Inc., and their affiliates and subsidiaries		Brian Totty
By:	/s/ Andrew Mason	By:	/s/ Brian Totty
Title:	CEO	Title:	SVP Engineering & Operations
Dated:	November 30, 2010	Dated:	November 30, 2010

[Signature Page of Employee Confidentiality, Inventions and Non-Solicitation Agreement]

5

Exhibit A

PRIOR INNOVATIONS

Check one of the following:

™NO SUCH PRIOR INNOVATIONS EXIST.

OR

™YES, SUCH PRIOR INNOVATIONS EXIST AS DESCRIBED BELOW (include basic description of each Prior Innovation):

Exhibit B

LIMITED EXCLUSION NOTIFICATION TO EMPLOYEES IN CALIFORNIA

THIS IS TO NOTIFY you in accordance with Section 2872 of the California Labor Code that the foregoing Agreement between you and Company does not require you to assign or offer to assign to Company any invention that you developed entirely on your own time without using Company’s equipment, supplies, facilities or trade secret information except for those inventions that either:

(1)Relate at the time of conception or reduction to practice of the invention to Company’s business, or actual or demonstrably anticipated research or development of Company; or

(2)Result from any work performed by you for Company.

To the extent a provision in the foregoing Agreement purports to require you to assign an invention otherwise excluded from the preceding Section, the provision is against the public policy of California and is unenforceable.

This limited exclusion does not apply to any patent or invention covered by a contract between Company and the United States or any of its agencies requiring full title to such patent or invention to be in the United States.

I ACKNOWLEDGE RECEIPT of a copy of this notification.

Groupon Ludic, Inc., Groupon, Inc., and their affiliates and subsidiaries		By:	/s/ Brian Totty
By:	/s/ Andrew Mason	Brian Totty
		(Printed Name of Employee)
Title:	CEO
Dated:	November 30, 2010	Dated:	November 30, 2010

EX-10.21

Exhibit 10.21

AGREEMENT AND PLAN OF MERGER

BY AND AMONG

GROUPON, INC.,

GROUPON MOBLY, INC.,

GOODREC, INC.

AND

THE STOCKHOLDERS’ REPRESENTATIVE

(as defined herein)

May 6, 2010

AGREEMENT AND PLAN OF MERGER dated as of May 6, 2010 (this “Agreement”), by and among Groupon, Inc., a Delaware corporation (the “Buyer”), Groupon Mobly, Inc., a Delaware corporation (“Acquisition Sub”), and Goodrec, Inc., a Delaware corporation doing business as Mob.ly (the “Company”, and together with the Buyer, Acquisition Sub, and the Stockholders’ Representative (as defined below), the “Parties”).  Capitalized terms used but not otherwise defined herein have the meanings set forth in Annex I hereto.

WHEREAS, the Company is engaged in the business of providing mobile technical “know-how” and expertise and related services in the areas of development and design (the “Business”).

WHEREAS, the respective boards of directors of each of Acquisition Sub and the Company have duly approved and adopted this Agreement, the Certificate of Merger in substantially the form of Exhibit A attached hereto (the “Certificate of Merger”), and the proposed merger (the “Merger”) of the Company with and into Acquisition Sub in accordance with, and subject to, the terms and conditions of this Agreement, the Certificate of Merger and the Delaware General Corporation Law (the “DGCL”), whereby, among other things, one hundred percent (100%) of the issued and outstanding shares of Common Stock, par value $0.0001 per share (the “Common Stock”), and one hundred percent (100%) of the issued and outstanding shares of Series Seed Preferred Stock, par value $0.0001 per share (the “Preferred Stock” and collectively with the shares of Common Stock, the “Company Stock”), of the Company not owned of record by the Company will be converted into the right to receive cash and certain securities of the Buyer in the manner set forth in ARTICLE II of this Agreement and the Certificate of Merger.

WHEREAS, it is intended that the Merger shall constitute a reorganization within the meaning of Section 368 of the Code and that this Agreement shall constitute a “plan of reorganization” for the purposes of Section 368 of the Code and, furthermore, that this Agreement is hereby adopted as such within the meaning of Treasury Regulation Section 1.368-2(g).

NOW, THEREFORE, in consideration of the premises and the mutual benefits to be derived from this Agreement and the Certificate of Merger and the representations, warranties, covenants, agreements and conditions contained herein and in the Certificate of Merger, the Parties hereby agree as follows:

ARTICLE I

GENERAL

1.1The Merger.  In accordance with, and subject to, the provisions of this Agreement, the Certificate of Merger and the DGCL, at the Effective Time, the Company shall be merged with and into Acquisition Sub, which, at and after the Effective Time, shall be and is hereinafter sometimes referred to as the “Surviving Corporation.”  The Company and Acquisition Sub are hereinafter sometimes collectively referred to as the “Constituent Corporations.”

1.2Effective Time of the Merger.  The Merger shall become effective upon the filing by Acquisition Sub of the Certificate of Merger with the Secretary of State of the State of Delaware.  The Certificate of Merger shall be executed and delivered in the manner provided under the DGCL.  The date and time when the Merger shall become effective is referred to herein as the “Effective Time.”

1.3Effect of the Merger.  Except as specifically set forth herein or in the Certificate of Merger, at the Effective Time, the identity, existence, corporate organization, purposes, powers, objects, franchises, privileges, rights, immunities, restrictions, debts, liabilities and duties (collectively, the “Corporate Rights”) of Acquisition Sub shall continue in effect and be unimpaired by the Merger, and the Corporate Rights of the Company shall be merged with and into Acquisition Sub, which shall, as the Surviving Corporation, be fully vested therewith.  At the Effective Time, the separate existence and corporate organization of the Company shall cease, and the Company shall be merged with and into the Surviving Corporation.  From and after the Effective Time, the Surviving Corporation shall be a direct wholly-owned subsidiary of the Buyer.

1.4Charter, By-Laws, Officers and Directors of Surviving Corporation.  From and after the Effective Time, (a) the certificate of incorporation of Acquisition Sub shall be the certificate of incorporation of the Surviving Corporation until altered, amended or repealed as provided in the DGCL, (b) the By-laws of Acquisition Sub shall be the By-laws of the Surviving Corporation, unless and until altered, amended or repealed as provided in the DGCL, the Surviving Corporation’s certificate of incorporation or such By-laws; and (c) the officers and directors of Acquisition Sub shall be the officers and directors of the Surviving Corporation, respectively, unless and until removed or until their respective terms of office shall have expired in accordance with the DGCL or the Surviving Corporation’s certificate of incorporation or By-laws, as applicable.

1.5Authorization of the Merger, this Agreement and the Certificate of Merger.  Simultaneously with the execution and delivery of this Agreement, Stockholders holding a majority of the issued and outstanding Company Stock (on a fully-diluted basis) shall execute a written consent in lieu of a meeting, and the Buyer, as the sole stockholder of Acquisition Sub, shall execute a written consent in lieu of a meeting, each of which written consents shall include resolutions approving and adopting the Merger, this Agreement, the Certificate of Merger and the consummation of the Transactions, including any actions necessary to approve and effect the actions  contemplated by Section 1.4, in each case as required by the DGCL.  The Company, Acquisition Sub and Buyer shall each take, as promptly as practicable, all such other actions as may be necessary or advisable under the DGCL and any other applicable Law in connection with this Agreement, the Merger or the Certificate of Merger.

1.6Closing; Closing Deliveries.

(a)The closing (the “Closing”) of the consummation of the Transactions, unless another date or place is agreed to by the Parties, shall take place at the offices of DLA Piper LLP (US), 203 North LaSalle Street, Suite 1900, Chicago, Illinois 60601, on the date hereof or such other date as the Buyer and the Stockholders’ Representative may mutually

2

determine (such date on which the Closing is consummated being referred to herein as the “Closing Date”).

(b)At the Closing, the Company and the Stockholders’ Representative shall deliver to the Buyer:

(i)counterparts of the Certificate of Merger, duly executed by the Company;

(ii)a certificate of incorporation and certificate of good standing of the Company, certified by an appropriate authority of the Governmental Authority issuing such certificate in the jurisdiction of the Company’s organization and in any other jurisdiction where the Company is qualified to do business;

(iii)a certificate of the Company, executed by the secretary of the Company, certifying as true and correct the following with respect to the Company: the certificate of incorporation; by-laws; and resolutions authorizing the Transactions and the execution, delivery and performance of this Agreement and the other documents contemplated hereby by the Company;

(iv)counterparts to the Non-Competition Agreements, duly executed by each of Jeff Anderson, Michael Burton, Swati Raju, Marcus Harvey, Mihir Shah and Yishai Lerner;

(v)counterparts to the Confidentiality, Inventions and Non-Solicitation Agreements, duly executed by each of Jeff Anderson, Michael Burton, Swati Raju, Marcus Harvey, Mihir Shah and Yishai Lerner;

(vi)joinders to each of the Right of First Refusal and Co-Sale Agreement and the Voting Agreement, duly executed by each Stockholder;

(vii)counterparts of the Option Agreements, duly executed by each of Jeff Anderson, Michael Burton, Swati Raju, Marcus Harvey, Mihir Shah and Yishai Lerner;

(viii)a stockholder questionnaire, duly executed by each Stockholder, stating, among other things, that such Stockholder is an “accredited investor;” and

(ix)counterparts of the Consent, Release and Stockholders’ Representative Agreement, duly executed by each of the Stockholders.

(c)At the Closing, the Buyer and Acquisition Sub shall deliver:

(i)after confirmation from the Delaware Secretary of State of the effectiveness of the Certificate of Merger, the Merger Consideration, payable in accordance with Sections 2.1, 2.2 and 2.4;

3

(ii)a counterpart of the Certificate of Merger, duly executed by Acquisition Sub;

(iii)a counterpart of each of the Option Agreements, duly executed by the Buyer;

(iv)a counterpart of each of the Non-Competition Agreements, duly executed by the Buyer and Acquisition Sub; and

(v)a counterpart of each of the Confidentiality, Inventions and Non-Solicitation Agreements, duly executed by the Buyer and Acquisition Sub.

1.7Stockholders’ Representative.  The Buyer shall be entitled to rely on the full power and authority of the Stockholders’ Representative to act hereunder and under any Annex, Exhibit or Schedule attached hereto on behalf of the Stockholders, and the Buyer shall not be liable to any Stockholder for any action the Buyer takes or omits to take in reliance upon such power and authority.

ARTICLE II

PAYMENT OF CLOSING CONSIDERATION;
EFFECT OF MERGER ON CAPITAL STOCK
OF CONSTITUENT CORPORATIONS

2.1Effect on Capital Stock.  The manner and basis of converting, exchanging or canceling the shares of capital stock of, and Equity Interests in, each of the Constituent Corporations into or for securities (or the contingent right to receive securities) of the Surviving Corporation shall be as follows:

(a)each share of common stock, par value $0.0001 per share, of Acquisition Sub issued and outstanding immediately prior to the Effective Time shall remain outstanding and shall, following the Effective Time, represent one (1) share of common stock, par value $0.0001 per share, of the Surviving Corporation;

(b)each share of Company Stock issued and outstanding immediately prior to the Effective Time and owned directly by the Company (whether as treasury stock or otherwise) shall, by virtue of the Merger and without any action on the part of the holder thereof, be canceled and no consideration shall be delivered in exchange therefor;

(c)each share of Common Stock outstanding immediately prior to the Effective Time (other than those cancelled in accordance with Section 2.1(b)) shall, by virtue of the Merger and without any action on the part of the holder thereof, cease to be outstanding and be converted into the right for such holder to receive (i) at the Effective Time, cash in an amount equal to the Cash Consideration, multiplied by such Stockholder’s Common Stock Percentage Interest, (ii) at the Effective Time, a number of shares of Buyer’s Nonvoting Common Stock equal to the Common Buyer Shares, multiplied by such Stockholder’s Common Stock Percentage Interest, rounded to the nearest 0.01, and (iii) following the Effective Time, and at the times set forth in Section 2.4, the number of shares of Buyer’s Nonvoting Common Stock equal

4

to the Common Additional Buyer Shares issuable from time to time, multiplied by such Stockholder’s Common Stock Percentage Interest, rounded to the nearest 0.01 (subject to set-off pursuant to Section 6.7);

(d)each share of Preferred Stock outstanding immediately prior to the Effective Time (other than those cancelled in accordance with Section 2.1(b)) shall, by virtue of the Merger and without any action on the part of the holder thereof, cease to be outstanding and be converted into the right for such holder to receive (i) at the Effective Time, a number of shares of Buyer’s Nonvoting Common Stock equal to the Preferred Buyer Shares, multiplied by such Stockholder’s Preferred Stock Percentage Interest, rounded to the nearest 0.01, and (ii) following the Effective Time, on the date that is six months following the Closing Date, the number of shares of Buyer’s Nonvoting Common Stock equal to the 2011 Preferred Additional Buyer Shares, multiplied by such Stockholder’s Preferred Stock Percentage Interest, rounded to the nearest 0.01 (subject to set-off pursuant to Section 6.7);

(e)each Merger Option shall, in accordance with Section 18.1 of the Company’s 2007 Stock Incentive Plan, be canceled and no consideration shall be delivered in exchange therefore; and

(f)each authorized but unissued share of Company Stock immediately prior to the Effective Time shall be canceled.

2.2Delivery of Funds; Surrender of Certificates.

(a)At the Effective Time, upon surrender by each Stockholder to the Surviving Corporation of (i) the certificate(s) which, immediately prior to the Effective Time, represented Merger Shares (each a “Certificate”) or (ii) an affidavit of loss with respect thereto, as applicable, such Stockholder shall, from and after the Effective Time in accordance with the provisions hereof, be entitled to receive in exchange therefor the cash and securities which such Stockholder is entitled to receive pursuant to Sections 2.1(c) and 2.4, as applicable.  Upon surrender of a Certificate or an affidavit of loss to the Surviving Corporation, the Buyer shall, or shall cause the Surviving Corporation to, promptly deliver the Merger Consideration from time to time that such holder has the right to receive.  Shares of Company Stock represented by a Certificate so surrendered or with respect to which an affidavit of loss has been delivered shall forthwith be cancelled.  Until surrendered as contemplated by this Section 2.2 and the Certificate of Merger, each Certificate shall be deemed, at and after the Effective Time, to represent only the right to receive upon such surrender securities as contemplated by this ARTICLE II, the Certificate of Merger and the DGCL.

(b)With respect to all payments or distributions to be made hereunder, the Buyer and the Surviving Corporation each reserves the right to make any withholdings required by applicable Laws and to appropriately reduce the Merger Consideration payable to any Stockholder by the amount of any withholdings or payments that are required to be made by the Buyer or the Surviving Corporation on behalf of such Stockholder.  To the extent that amounts are so withheld, such withheld amounts shall be paid over to the appropriate Taxing authority and treated for all purposes of this Agreement as having been paid to the Stockholder  in respect of which such deduction and withholding was made.

5

2.3No Further Ownership Rights in Company Stock.

(a)The consideration paid in respect of the surrender of Certificates in accordance with the provisions of this ARTICLE II and the Certificate of Merger shall be deemed to have been paid in full satisfaction of all rights pertaining to such shares of Company Stock.  At and after the Effective Time, the stock transfer books of the Surviving Corporation shall be closed with respect to the capital stock of the Company, and there shall be no further registration of transfers of the Company Stock thereafter on the records of the Surviving Corporation.  If, after the Effective Time, certificates representing shares of Company Stock are presented to the Surviving Corporation for any reason, they shall be canceled and exchanged as provided in this ARTICLE II and the Certificate of Merger.

(b)None of the Buyer or the Surviving Corporation or any Party hereto shall be liable to any Person in respect of any amount properly delivered to a public official in accordance with any applicable abandoned property, escheat or similar Law.

2.4Additional Buyer Shares.

(a)Subject to Sections 2.4(b) and (c) and Section 6.7:

(i)On the date that is six (6) months following the Closing Date, the Buyer shall issue to each Stockholder (i) a number of shares of Buyer’s Nonvoting Common Stock equal to the number of 2011 First Tranche Common Additional Buyer Shares multiplied by such Stockholder’s Common Stock Percentage Interest, rounded to the nearest 0.01, and (ii) a number of shares of Buyer’s Nonvoting Common Stock equal to the number of 2011 Preferred Additional Buyer Shares multiplied by such Stockholder’s Preferred Stock Percentage Interest, rounded to the nearest 0.01;

(ii)On the first (1st) anniversary of the Closing Date, the Buyer shall issue to each Stockholder a number of shares of Buyer’s Nonvoting Common Stock equal to the number of 2011 Second Tranche Common Additional Buyer Shares multiplied by such Stockholder’s Common Stock Percentage Interest, rounded to the nearest 0.01;

(iii)On the date that is eighteen (18) months following the Closing Date, the Buyer shall issue to each Stockholder a number of shares of Buyer’s Nonvoting Common Stock equal to one-half of the number of 2012 Additional Buyer Shares multiplied by such Stockholder’s Common Stock Percentage Interest, rounded to the nearest 0.01;

(iv)On the second (2nd) anniversary of the Closing Date, the Buyer shall issue to each Stockholder a number of shares of Buyer’s Nonvoting Common Stock equal to one-half of the number of 2012 Additional Buyer Shares multiplied by such Stockholder’s Common Stock Percentage Interest, rounded to the nearest 0.01;

(v)On the date that is thirty (30) months following the Closing Date, the Buyer shall issue to each Stockholder a number of shares of Buyer’s Nonvoting Common Stock equal to one-half of the number of 2013 Additional Buyer Shares

6

multiplied by such Stockholder’s Common Stock Percentage Interest, rounded to the nearest 0.01; and

(vi)On the third (3rd) anniversary of the Closing Date, the Buyer shall issue to each Stockholder a number of shares of Buyer’s Nonvoting Common Stock equal to one-half of the number of 2013 Additional Buyer Shares multiplied by such Stockholder’s Common Stock Percentage Interest, rounded to the nearest 0.01.

(b)From and after the Closing Date: (i) the employees of the Company who are employed by the Buyer or any of its subsidiaries from time to time (the “Continuing Employees”) shall operate the Business in a manner intended to further the best interests of the Buyer’s business; (ii) the Continuing Employees shall provide mobile technical “know-how” and expertise to the Buyer; and (iii) the Continuing Employees shall comply with the requests and directives of the Buyer’s management and the Board ((i), (ii) and (iii), collectively, the “Operational Objectives”).  If, after the Closing Date, the Continuing Employees fail at any time to meet any of the Operational Objectives, then all of the Additional Buyer Shares that have not yet been issued as of such time shall be forfeited and not issued or issuable to the Stockholders.  The determination of whether the Continuing Employees have failed to meet the Operational Objectives shall be made in good faith by the Board.

(c)In connection with a Sale of the Buyer, and provided that the Continuing Employees have not failed to meet the Operational Objectives from and after the Closing Date through and including the date of the Sale of the Buyer, any and all Additional Buyer Shares that have not been issued to the Stockholders prior to the date of the Sale of the Buyer shall be issued to the Stockholders, in accordance with such Stockholders’ Preferred Stock Percentage Interest, in the case of 2011 Preferred Additional Buyer Shares, and such Stockholders’ Common Stock Percentage Interest, in the case of all other Additional Buyer Shares, as of immediately prior to the consummation of the Sale of the Buyer.

2.5Treatment of Transaction.  It is intended that the Merger shall constitute a reorganization within the meaning of Section 368 of the Code and that this Agreement shall constitute a “plan of reorganization” for the purposes of Section 368 of the Code.

ARTICLE III

REPRESENTATIONS AND WARRANTIES OF THE COMPANY

The Company represents and warrants to the Buyer that the statements contained in this ARTICLE III are correct and complete as of the date of this Agreement, except as set forth in the disclosure schedule delivered by the Company to the Buyer on the date hereof (the “Schedules”).

3.1Corporate Status.  The Company is corporation duly organized, validly existing, and in good standing under the Laws of the State of Delaware.  The Company is duly qualified to conduct its business as a foreign entity and is in good standing under the Laws of each jurisdiction where such qualification is required (except for any jurisdiction where the failure to be so qualified would not, individually or in the aggregate, result in a Material Adverse Effect).  The Company has the requisite power and authority necessary to own, lease, or operate its

7

properties and to carry on its business as presently conducted.  The Stockholders’ Representative has made available to the Buyer correct and complete copies of the Organizational Documents of the Company, as presently in full force and effect.  The Company is not in Breach of any provision of its Organizational Documents.

3.2No Violation.  The consummation of the Transactions will not (a) Breach in any respect or require any Consent pursuant to any Material Contract or any Permit, Law, or Order to which the Company’s assets are subject or bound, (b) Breach in any material respect any provision of the Organizational Documents of the Company, or (c) require any Consent of or to any Governmental Authority or any other material Consent.

3.3Capitalization; Subsidiaries; Indebtedness; Working Capital.

(a)The authorized Equity Interests of the Company are as set forth on Schedule 3.3(a).  All of the issued and outstanding Equity Interests of the Company are held of record and, to the Knowledge of the Company, beneficially owned, in such amounts and by such holders as set forth on Schedule 3.3(a).  All of the issued and outstanding Equity Interests of the Company are held free and clear of any Encumbrances (other than restrictions under the Securities Act and state securities Laws).  All of the issued and outstanding Equity Interests of the Company (i) have been duly authorized and are validly issued, fully paid, and nonassessable, (ii) were issued in compliance with, or pursuant to an exemption from, all applicable state, federal and other applicable securities Laws and (iii) were not issued in violation of any preemptive rights or rights of first refusal.  Except as set forth on Schedule 3.3(a), as of the date hereof, (x) no outstanding Commitments exist with respect to the Equity Interests of the Company, (y) there are no Contracts with respect to the voting, transfer, disposition or registration of the Equity Interests of the Company, and (z) there are no outstanding obligations of the Company to redeem, repurchase, or otherwise acquire any of its Equity Interests.  All Merger Options have been canceled as of immediately prior to the Effective Time.

(b)The Company does not own or hold any Equity Interests in any Person.

(c)There is no outstanding Company Indebtedness.

(d)The Company has a positive Working Capital balance.

3.4Financial Statements.

(a)Set forth on Schedule 3.4(a) are true, complete and correct copies of the unaudited balance sheet and statements of income and cash flow of the Company as of and for the fiscal year ended December 31, 2009 (the “Financial Statements”).

(b)The Financial Statements (i) have been prepared in accordance with GAAP applied on a consistent basis throughout the periods covered thereby, except as set forth on Schedule 3.4(b), (ii) present fairly in all materials respects the financial position of the Company and the results of operations and cash flow of the Company for the periods covered thereby, and (iii) are consistent with the books and records of the Company.

8

3.5Subsequent Events.  Since December 31, 2009, (i) the Company has conducted its businesses only in, and has not engaged in any transaction other than in accordance with, the Ordinary Course of Business, and (ii) the Company has not suffered a Material Adverse Effect.

3.6Liabilities.  The Company has no Liability required to be set forth on a balance sheet prepared in accordance with GAAP, except for (a) Liabilities disclosed in the Schedules, (b) Liabilities reflected in the Financial Statements, (c) Liabilities incurred in the Ordinary Course of Business since the Balance Sheet Date, (d) Liabilities under the executory portion of Contracts (none of which (i) relates to breach of contract or warranty, tort, infringement or violation of Law or (ii) arose out of any action, suit, claim, governmental investigation or arbitration proceeding) and (e) immaterial Liabilities.

3.7Legal Compliance.  The Company is in compliance in all material respects with all Laws applicable to its assets, properties, businesses and operations, and no Action is pending or, to the Knowledge of the Company, Threatened, against the Company that challenges or may have the effect of preventing, delaying, making illegal, or otherwise interfering with any of the Transactions.

3.8Tax Matters.

(a)(i) The Company has complied with all material Laws relating to Taxes, (ii) the Company has filed all income and other material Tax Returns that it was required to file, and (iii) all such Tax Returns were true, correct and complete in all material respects.  All material Taxes due and payable by the Company (whether or not shown on a Tax Return) have been paid or adequate reserves have been established on the books and records of the Company.   There are no Encumbrances for Taxes (other than Taxes not yet due and payable) on any asset of the Company.

(b)The Company has (i) withheld all required amounts from its employees, agents, contractors, nonresidents, and other Persons and remitted such amounts to the proper Governmental Authorities in accordance with all applicable Laws; (ii) paid all material employer contributions and premiums; and (iii) filed all material Tax Returns with respect to employee income Tax withholding, social security Taxes and premiums, and unemployment Taxes and premiums, all in compliance with the Code and other applicable Laws as in effect for the applicable year.

(c)The Company has delivered to the Buyer (i) complete copies of  all material Tax Returns filed by the Company and (ii) complete copies of all material notices of deficiencies, material notices of proposed adjustments, material notices of assessments, material revenue agent reports, material closing agreements and any other similar material document, notice, or correspondence, in each case, that the Company (or its representative) has received from, sent to, or entered into with the IRS or other taxing authority.  No Action is pending, or is threatened in writing, alleging that the Company has not properly paid Taxes or filed Tax Returns in a jurisdiction in which the Company does not currently file a Tax Return.

9

(d)The Company has not waived any statute of limitations in respect of Taxes or agreed to any extension of time with respect to a Tax assessment or deficiency, which waiver or extension is currently in effect.

(e)The Company has never been a member of any consolidated, combined or unitary group for federal, state, local or foreign Tax purposes (other than the group of which the Company is or was the common parent). The Company is not liable for Taxes of any other Person under Treasury Regulations Section 1.1502-6 (or any similar provision of state, local or foreign law) or as a result of successor Liability, transferee Liability, joint and several Liability, contractual Liability or otherwise.

(f)No Tax audits or other administrative or court proceedings are presently in progress, or, threatened in writing with regard to any Taxes or Tax Returns of the Company.

(g)The Company is not a party to any Tax allocation or sharing contract.

(h)The Company has never been a party (either as a distributing corporation, a controlled corporation or otherwise) to any transaction intended to qualify under Section 355 of the Code.

(i)The Company has not had a permanent establishment in any foreign country, as defined in any applicable Tax treaty or convention between the United States and such foreign country.  The Company has not participated in any “reportable transaction” within the meaning of Treasury Regulations Section 1.6011-4.

(j)The Company is not and has never been subject to income Tax imposed by any jurisdiction other than the United States, and states or other subdivisions thereof.

(k)Schedule 3.8(k) contains a list of all jurisdictions to which any Tax is or has been payable by the Company.

(l)The Company is not and has never been a “United States real property holding corporation” within the meaning of Code Section 897(c)(2).

(m)Other than in connection with the Merger, the Company will not be required to include any item of income in, or exclude any item of deduction from, taxable income for any taxable period (or portion thereof) ending after the Closing Date as a result of any:  (i) change in method of accounting for a taxable period ending on or prior to the Closing Date; (ii) “closing agreement” as described in Code Section 7121 (or any corresponding or similar provision of state, local, or non-U.S. income Tax law) executed on or prior to the Closing Date; (iii) intercompany transaction or excess loss account described in Treasury Regulations under Code Section 1502 (or any corresponding or similar provision of state, local or non-U.S. income Tax law); (iv) installment sale or open transaction disposition made on or prior to the Closing Date; (v) prepaid amount received on or prior to the Closing Date; or (vi) election pursuant to Code Section 108(i) made effective on or prior to the Closing Date.

10

(n)The Company has not taken or agreed to take any action or knows of any fact, agreement, plan or other circumstances that is reasonably likely to prevent or impede the Merger from qualifying as a “reorganization” under Section 368 of the Code.

3.9Title to Assets.  The Company has good and valid title to, or a valid leasehold or sub-leasehold interest in or license for, the properties and tangible assets (the “Assets”) used in the conduct of its business or shown on the Financial Statements, free and clear of all Encumbrances, except for properties and assets disposed of in the Ordinary Course of Business since the Balance Sheet Date.  The Assets are in good condition and repair, subject to ordinary wear and tear.

3.10Intellectual Property.

(a)Schedule 3.10(a) lists all of the registered or applied-for Intellectual Property owned by the Company or exclusively licensed to the Company and used in the operation of its business as presently conducted.  The Company owns or, to the Knowledge of the Company, has the right to use all Intellectual Property used in the operation of its business as presently conducted, free and clear of all Encumbrances and without payment to any third party.  All patent applications, trademark applications, service mark applications, and copyright applications that are listed in Schedule 3.10(a) are presently pending. All issued patents, trademark registrations and copyright registrations that are listed in Schedule 3.10(a) are presently in force.

(b)The Company has not (i) violated, infringed upon, or misappropriated any other Person’s Intellectual Property rights (except with respect to patents), (ii) to the Knowledge of the Company, violated, infringed upon, or misappropriated any other Person’s patents, or (iii) received any written notice alleging any such infringement, misappropriation, or violation (including any claim that the Company must license or refrain from using any other Person’s Intellectual Property rights).  To the Knowledge of the Company, no other Person has violated, infringed upon, or misappropriated any Intellectual Property rights of the Company.  There are no pending or, to the Knowledge of the Company, Threatened claims against the Company or its employees or independent contractors alleging that the Company’s Intellectual Property infringes on or conflicts with the rights of any other Person.

3.11Real Property.  The Company does not own any real property.  Schedule 3.11 sets forth a list of all of the leases and subleases (the “Leases”) and each leased and subleased parcel of real property in which the Company has a leasehold or subleasehold interest.  The Company holds a valid and existing leasehold or subleasehold interest under each of the Leases, free and clear of all Encumbrances, except Encumbrances imposed under the terms of any such lease.  The Company has made available to the Buyer true, correct, complete and accurate copies of each of the Leases.  With respect to each Lease:  (i) the Lease is legal, valid, binding and Enforceable against the Company and, to the Knowledge of the Company, against the other parties thereto, (ii) the Lease is in full force and effect; (iii) the Lease will continue to be legal, valid, binding and Enforceable against the Company and, to the Knowledge of the Company, against the other parties thereto, and will be in full force and effect immediately following the Effective Time in accordance with the terms thereof; (iv) neither the Company nor, to the Knowledge of the Company, any other party to the Lease is in material Breach thereunder, and,

11

to the Knowledge of the Company, no event has occurred which, with notice or lapse of time, would constitute such a material Breach thereunder; (v) to the Knowledge of the Company, no other party to the Lease has repudiated any provision thereof; and (vi) no Consent of the landlords under any of the Leases is required as a result of the consummation of the Transactions.  All facilities leased or subleased under any Lease are supplied with utilities and other services reasonably necessary for the Company’s activities thereat as presently conducted.

3.12Contracts.

(a)Schedule 3.12(a) lists, by applicable subparts set forth below, the following Contracts to which the Company is a party or pursuant to which any Assets are bound (the “Material Contracts”):

(i)any Contract (or group of related Contracts) for the lease of personal property to or from any Person;

(ii)any partnership agreement or joint venture agreement, or similar Contract;

(iii)any Contract (A) pursuant to which the Company has granted exclusivity, (B) containing covenants that restrict the Company’s ability to freely engage in any line of business or compete with any Person or (C) that otherwise restricts the activities of the Company;

(iv)any Contract for the employment or engagement as an independent contractor of any individual;

(v)any Contract under which the Company has advanced, loaned or guaranteed any loan in any amount to any of its Affiliates, directors, officers, or employees (or any of their Affiliates) outside the Ordinary Course of Business;

(vi)any Contract under or pursuant to which the Company has borrowed money, guaranteed or assumed indebtedness for borrowed money, mortgaged, pledged or otherwise placed an Encumbrance on any asset or group of assets or entered into any letter of credit arrangements or Capital Lease Obligation;

(vii)any Contract under or pursuant to which the Company has agreed to acquire any assets or make any capital expenditures in connection with, or in any way affecting, the Company, in each case, other than in the Ordinary Course of Business;

(viii)any Contract with any customer or any supplier;

(ix)all licenses, agreements or other arrangements with respect to any Intellectual Property to which the Company is a party, whether as licensee, licensor or otherwise (other than non-exclusive end-user licenses for commercially available prepackaged computer software generally available to the public);

(x)all powers of attorney executed on behalf of the Company;

12

(xi)all Contracts with any Governmental Authority;

(xii)all Contracts containing a provision to indemnify any party or assume any tax or environmental Liability;

(xiii)any other Contract (or group of related Contracts) which is outside the Ordinary Course of Business and the performance of which is reasonably expected to involve consideration in excess of $100,000.

(b)The Company has made available to the Buyer a true, correct and complete copy of each written Material Contract (as amended to date) and a written summary of each oral Material Contract.  With respect to each such Material Contract:

(i)the Contract is Enforceable against the Company and, to the Knowledge of the Company, the other party thereto;

(ii)no Consent is required under the Contract in connection with the consummation of the Transactions and the continuation, validity and effectiveness of the Contract will not be affected by the consummation of the Transactions;

(iii)the Company is not in Breach thereof, and no event has occurred which, with notice or lapse of time, would constitute a Breach by the Company under the Contract and, to the Knowledge of the Company, no other party to any Material Contract is in breach thereof or with notice or lapse of time would be in Breach thereof; and

(iv)the Company has not, and to the Knowledge of the Company, the other party thereto has not, repudiated any provision of the Contract.

3.13Insurance.  Schedule 3.13 contains a true and complete list of each insurance policy Contract (including policies providing property, fire, burglary, casualty, liability, and workers’ compensation coverage and bond and surety arrangements, as applicable) held by the Company or under which the Company or any employees or assets thereof are covered (the “Insurance Policies”).  The Company is not in Breach or default (including with respect to the payment of premiums or the giving of notices) with respect to its obligations under any Insurance Policy Contract.

3.14Litigation.  There are no material Actions pending or, to the Knowledge of the Company, Threatened, against or by the Company that (a) are by or against the Company, or affect any of its properties or Assets or (b) would prohibit the consummation of the Transactions.  The Company is not subject to any outstanding Order of any Governmental Authority that would reasonably be expected to prohibit the consummation of the Transactions.  There is no Action pending or, to the Knowledge of the Company, Threatened, which questions the legality or propriety of the Transactions, this Agreement or the documents, instruments, and agreements to be executed, delivered, and performed in connection herewith.

3.15Labor; Employees.  The Company is not a party to or bound by any collective bargaining Contract, nor has the Company experienced any strikes, grievances, claims of unfair labor practices, or other collective bargaining disputes.  To the Knowledge of the Company,

13

there is no organizational effort currently being made or Threatened by or on behalf of any labor union with respect to employees of the Company.  Except as listed on Schedule 3.12(a), the Company has not entered into any agreements or arrangements with any employees or independent contractors of the Company who perform services for or in connection with the business of the Company.

3.16Employment.  The Company is in compliance in all material respects with all Laws pertaining to employment, including, but not limited to, Laws governing or regarding the payment of wages or other compensation, employee benefits, employment discrimination and harassment, occupational safety and health, and any and all other applicable Laws governing or pertaining to the terms and conditions of employment.  There is no material Action pending nor, to the Knowledge of the Company, Threatened against the Company alleging any failure to so comply.  The Company is not in material Breach of any Contract for the employment of any individual.

3.17Employee Benefits.

(a)Schedule 3.17(a) lists each Employee Benefit Plan.

(b)Neither the Company nor any member of the Company’s controlled group of companies within the meaning of Code Section 414(b), (c), (m) or (o) (an “ERISA Affiliate”) has (i) at any time maintained, participated in, or contributed to any “multiemployer plan” (as defined in Section 3(37) of ERISA) or a “multiple employer plan” (as defined in Section 4063 of ERISA), or (ii) incurred any withdrawal liability to a multiemployer plan as a result of a complete or partial withdrawal from such multiemployer plan that has not been satisfied in full.

(c)Each Employee Benefit Plan that is intended to qualify under Section 401(a) of the Code has an opinion letter or determination letter from the IRS as to its qualified status under Section 401(a) of the Code on which it can rely.  To the Knowledge of the Company, no facts have occurred that if known by the IRS could cause disqualification of any of those plans.  To the Knowledge of the Company, no non-exempt “prohibited transaction” (as defined in Section 4975 of the Code or Section 406 of ERISA) has occurred which involves the assets of any Employee Benefit Plan and in which the Company, any of their employees or, to the Knowledge of the Company, any trustee, administrator or other fiduciary of any trusts created under any Employee Benefit Plan has engaged which would subject the Company to the Tax or penalty on prohibited transactions imposed by Section 4975 of the Code or the sanctions imposed under Title I of ERISA.

(d)All premiums required to be paid, all benefits, expenses and other amounts due and payable, and all contributions, transfers or payments required to be made to or under the Employee Benefit Plans will have been paid, made, or accrued for all services on or prior to the Closing Date.

(e)No Employee Benefit Plan is or has ever been covered by Title IV of ERISA or subject to Section 412 of the Code.  The Company has not contributed to or been obligated to contribute to any plan subject to Title IV of ERISA.

14

(f)The Company has not maintained or contributed, or been required to contribute, to any Employee Benefit Plan providing medical, health, or life insurance or other welfare type benefits for current or future retired or terminated employees, their spouses, or their dependents (other than in accordance with Code Section 4980B or similar state law).

(g)Neither the execution and delivery of this Agreement nor the consummation of the Transactions will:

(i)result in any payment to be made by the Company, including without limitation, severance, golden parachute (as defined in Section 280G of the Code), or otherwise, becoming due to any current or former employee, director, or consultant of the Company; or

(ii)increase any benefits or compensation or accelerate vesting otherwise provided under any Employee Benefit Plan.

(h)There is no Contract or arrangement to which the Company is a party that will, individually or collectively, result in the payment of any amount that would not be deductible by reason of Section 280G (as determined without regard to Section 280G(b)(4)), 162 or 404 of the Code.  The Company is not a party to any Contract or has granted any compensation, equity or award that constitutes deferred compensation that would result in an additional Tax imposed by Section 409A(a)(1)(B)(i) of the Code.

(i)With respect to each Employee Benefit Plan maintained by the Company or any ERISA Affiliate, such Employee Benefit Plan permits the plan sponsor to amend or terminate the plan at any time and without any liability, subject to the applicable requirements of ERISA and the Code for plan termination.

(j)No employee, former employee, spouse or individual otherwise covered under any Employee Benefit Plan is, as of the date hereof, on continuation of benefits under any Employee Benefit Plan required by the Consolidated Omnibus Budget Reconciliation Act, as amended.

(k)There are no Actions pending or instituted against the Employee Benefit Plans other than routine claims for benefits and, to the Knowledge of the Company, no such Action has been Threatened.

3.18Environmental.  Except as would not have a Material Adverse Effect:

(a)The Company has operated its business in compliance with all applicable limitations, restrictions, conditions, standards, prohibitions, requirements, and obligations of Environmental Laws.

(b)There are no Environmental Liabilities pending nor, to the Knowledge of the Company, Threatened against the Company relating to the operation of its business that are caused by (i) any Remediation obligations under any applicable Environmental Law, (ii) violations by the Company of any Environmental Law, (iii) personal injury or property damage

15

claims relating to a Release of Hazardous Materials, or (iv) Remediation costs under any Environmental Law.

(c)All material permits required under applicable Environmental Laws for the operation of the business of the Company have been obtained and are in full force and effect, and the Company is not aware of any basis for revocation or suspension of, or material change in, any such environmental permits.

(d)Except as in compliance with Environmental Laws, there has been no disposal or material Release by or at the direction of the Company of any Hazardous Materials.

(e)The Company has not received any notice of violations, non-compliance, potential responsibility or similar notifications relating to Environmental Liabilities currently pending or, to the Knowledge of the Company, Threatened, relating or pertaining to the business thereof, or any properties owned or operated by the Company.

(f)There are no Environmental Liabilities pending nor, to the Knowledge of the Company, Threatened against any Person whose Environmental Liability the Company has or may have assumed contractually.

3.19Permits.  The Company possesses all material Permits that are required for the ownership of the Company’s properties and the operation of its business as currently conducted.  Schedule 3.19 sets forth a complete and accurate list of all such Permits.  The Company is in compliance in all material respects with all such Permits, each of which is in full force and effect.  No Consent from any Governmental Authority is necessary for the continued validity of any such Permit after the consummation of the Transactions and no such Permit will be impaired or affected by the Transaction.

3.20Bank Accounts; Officers and Directors.  Schedule 3.20 lists (a) the account numbers and names of each bank, broker, or other depository institution at which the Company maintains a depository account and each Person authorized as a signatory with respect thereto and (b) each officer and director of the Company.

3.21Affiliate Transactions.  Except with respect to holdings of a less than 5% interest in a publicly traded company, and except for compensation arrangements with regular employees of the Company made in the Ordinary Course of Business, no current officer, director, stockholder or Affiliate of the Company or such Affiliates’ directors, officers or stockholders (i) is now a party to any agreement, contract, commitment or transaction with the Company (other than at-will employment arrangements) or has any interest in any property used by the Company, (ii) is now the direct or indirect owner of an interest in any Person that is a competitor, lessor, lessee, supplier or customer of the Company or (iii) receives income from any source which should properly accrue to the Company.

3.22Brokers’ Fees.  The Company has no obligation to pay any fee, commission, or other compensation to any broker, finder, or agent retained by the Company with respect to the Transactions.

16

ARTICLE IV

REPRESENTATIONS AND WARRANTIES OF
THE BUYER AND ACQUISITION SUB

The Buyer and Acquisition Sub, jointly and severally, represent and warrant to the Company that the statements contained in this ARTICLE IV are correct and complete as of the date of this Agreement.

4.1Entity Status.  Each of the Buyer and Acquisition Sub is an entity duly organized, validly existing, and in good standing under the Laws of the State of Delaware.  Each of the Buyer and Acquisition Sub has the requisite power and authority necessary to own, lease, or operate its properties and assets and to carry on its business as presently conducted.

4.2Power and Authority; Enforceability.  Each of the Buyer and Acquisition Sub has the corporate power and authority to execute and deliver this Agreement and to perform and consummate the Transactions.  Each of the Buyer and Acquisition Sub has taken all actions necessary to authorize its execution and delivery of this Agreement, the performance of its obligations hereunder, and the consummation by it of the Transactions.  This Agreement has been duly authorized, executed, and delivered by, and (assuming the due authorization, execution and delivery hereof by the other Parties hereto) is Enforceable against, each of the Buyer and Acquisition Sub.

4.3No Violation.  The execution and delivery by the Buyer and Acquisition Sub of this Agreement and the performance and consummation of the Transactions by Buyer and Acquisition Sub will not (i) Breach in any material respect any Contract to which the Buyer and/or Acquisition Sub is a Party or any Permit, Law, or Order to which the Buyer and/or Acquisition Sub or any of their respective assets are subject or bound, (ii) Breach in any material respect any provision of the Organizational Documents of the Buyer or Acquisition Sub, or (iii) require any Consent.

4.4Brokers’ Fees.  None of the Buyer, Acquisition Sub or any of their respective officers, directors, stockholders or employees (or any Affiliate of any of the foregoing) has any obligation to pay any fee, commission, or other compensation to any broker, finder, or agent retained by such Person with respect to the Transactions.

4.5Litigation.  There is no Action pending or, to the knowledge of Buyer or Acquisition Sub, Threatened against Buyer or Acquisition Sub, which questions the legality or propriety of the Transactions, this Agreement or the documents, instruments, and agreements to be executed, delivered, and performed in connection herewith.

4.6Buyer Shares.  The Buyer Shares have been duly authorized and, when issued in accordance with this Agreement, will be validly issued, fully paid and nonassessable and will be free and clear of all Encumbrances of any kind except for restrictions of transfer imposed under applicable securities laws, the Right of First Refusal and Co-Sale Agreement and the Voting Agreement.

17

4.7Capitalization.  The authorized Equity Interests of the Buyer are as set forth on Schedule 4.7.  All of the issued and outstanding Equity Interests of the Buyer are held of record in such amounts and by such holders as set forth on Schedule 4.7.  All of the issued and outstanding Equity Interests of the Buyer (a) have been duly authorized and are validly issued, fully paid, and nonassessable, (b) were issued in compliance with, or pursuant to an exemption from, all applicable state, federal and other applicable securities Laws and (c) were not issued in violation of any preemptive rights or rights of first refusal.  Except as set forth on Schedule 4.7, as of the date hereof, (x) no outstanding Commitments exist with respect to the Equity Interests of the Buyer, (y) there are no Contracts with respect to the voting, transfer, disposition or registration of the Equity Interests of the Buyer, and (z) there are no outstanding obligations of the Buyer to redeem, repurchase, or otherwise acquire any of its Equity Interests.

4.8Financial Statements.

(a)Set forth on Schedule 4.8 are true, complete and correct copies of (i) the unaudited balance sheet and statements of income and cash flow of the Buyer as of and for the fiscal year ended December 31, 2009, and (ii) the unaudited balance sheet and statements of income and cash flow of the Buyer as of and for the 3-month period ended March 31, 2010 ((i) and (ii), collectively, the “Buyer Financial Statements”).

(b)The Buyer Financial Statements (i) have been prepared in accordance with GAAP applied on a consistent basis throughout the periods covered thereby, (ii) present fairly in all materials respects the financial position of the Buyer and the results of operations and cash flow of the Buyer for the periods covered thereby, and (iii) are consistent with the books and records of the Buyer.

4.9No Material Adverse Effect.  Since March 31, 2010, the Buyer has not suffered a Material Adverse Effect.

4.10Reorganization.  The Buyer and Acquisition Sub have not taken or agreed to take any action or know of any fact, agreement, plan or other circumstance that is reasonably likely to prevent or impede the Merger from qualifying as a “reorganization” under Section 368 of the Code.

ARTICLE V

POST CLOSING COVENANTS

The Parties agree as follows with respect to the period following the Closing:

5.1General.  In case at any time after the Closing any further action is necessary or desirable to carry out the purposes of this Agreement, each Party will take such further action (including the execution and delivery of such further instruments, notices, and documents) not inconsistent with this Agreement as any other Party reasonably may request, all at the requesting Party’s sole cost and expense (unless the requesting Party is entitled to indemnification therefor under ARTICLE VI); provided, that the requesting Party shall not be responsible for any of such costs or expenses incurred by any other Party that are not out-of-pocket costs or expenses paid or payable to a third party, such as costs in the nature of the allocation of overhead.  The Company

18

acknowledges and agrees that after the Closing the Buyer will be entitled to possession of all documents, books, records, agreements, and financial data of any sort relating to the Company, but the Stockholders’ Representative will be permitted to retain copies of any such documents, books, records, agreements, and financial data.

5.2Litigation Support.  So long as any Party actively is contesting or defending against any Action in connection with (a) the Transactions or (b) any fact, situation, circumstance, status, condition, activity, practice, plan, occurrence, event, incident, action, failure to act, or transaction attributable to the period prior to the Closing Date involving the Company, each other Party will cooperate with such Party and such Party’s counsel in the contest or defense, make available their personnel, and provide such testimony and access to their books and records as shall be reasonably necessary in connection with the contest or defense, at the sole cost and expense of the contesting or defending Party (unless the contesting or defending Party is entitled to indemnification therefor under ARTICLE VI); provided, that the defending Party shall not be responsible for any of such costs or expenses incurred by any other Party that are not out-of-pocket costs or expenses paid or payable to a third party, such as costs in the nature of the allocation of overhead.

ARTICLE VI

INDEMNIFICATION

6.1Survival of Representations, Warranties and Covenants.

(a)The representations and warranties of the Company contained in Section 3.3 (Capitalization; Subsidiaries; Indebtedness; Working Capital), Section 3.8 (Tax Matters), Section 3.17 (Employee Benefits) and Section 3.22 (Brokers’ Fees) (collectively, the “Fundamental Representations”) shall survive the Closing and remain in full force and effect until the earlier of (i) three (3) years following the Closing, and (ii) the closing of a Sale of the Buyer, at which time such representations and warranties shall expire and terminate and be of no further force and effect, and all other representations and warranties of the Company, the Buyer and Acquisition Sub contained in this Agreement shall survive the Closing and remain in full force and effect for twelve (12) months thereafter, at which time such representations and warranties shall expire and terminate and be of no further force and effect; provided, however, if the Buyer or the Stockholders’ Representative, as the case may be, provides proper notice of a claim within the applicable time period set forth in this Section 6.1(a), then Liability for such claim (but solely with respect to such then pending claim) shall continue until such claim is resolved.

(b)Each covenant of the Stockholders’ Representative, the Company or the Buyer set forth herein shall survive until such time as each such covenant expires, has been fully performed and satisfied or  expiration of the applicable statute of limitations, in accordance with the respective terms of such covenant.

19

6.2Indemnification Provisions for the Buyer’s Benefit.

Subject to the provisions of this ARTICLE VI (including the limitations set forth in Section 6.5), the Stockholders, severally, not jointly, pro rata according to such Stockholder’s Proportionate Percentage, shall defend, indemnify, and hold the Buyer Indemnified Persons harmless from and will reimburse the Buyer Indemnified Persons for any and all Damages (including any Damages they may suffer or incur after the end of any applicable survival period, provided that an indemnification claim with respect to such Damages is properly made prior to the end of any applicable survival period), directly or indirectly, resulting from, relating to, arising out of, or attributable to any of the following:

(a)any Breach of any representation or warranty made by the Company in this Agreement or in any certificate delivered in connection with this Agreement by the Company or the Stockholders’ Representative;

(b)any Breach of any covenant or obligation of the Company or the Stockholders’ Representative in this Agreement; and

(c)any Designated Pre-Closing Liabilities, without duplication of any other recovery with respect to such amounts hereunder.

6.3Indemnification Provisions for Stockholders’ Benefit.

The Buyer and the Company, jointly and severally, will defend, indemnify, and hold the Stockholder Indemnified Persons harmless from and will reimburse the Stockholder Indemnified Persons for any and all Damages (including any Damages they may suffer or incur after the end of any applicable survival period, provided that an indemnification claim with respect to such Damages is properly made prior to the end of any applicable survival period), directly or indirectly, resulting from, relating to, arising out of, or attributable to any of the following:

(a)any Breach of any representation or warranty made by the Buyer or Acquisition Sub in this Agreement or in any certificate delivered in connection with this Agreement by the Buyer; and

(b)any Breach of any covenant or obligation of the Buyer or Acquisition Sub in this Agreement.

6.4Indemnification Claim Procedures.

(a)The party seeking indemnity in good faith hereunder (“Indemnitee”) will give prompt written notice to the party or parties providing indemnity (“Indemnitor”) of any matter for which it may make a claim for indemnification after the Closing, stating the nature, basis and (to the extent known) amount thereof; provided, however, that no delay on the part of Indemnitee in notifying any Indemnitor shall relieve Indemnitor from any Liability hereunder unless (and then solely to the extent) Indemnitor is prejudiced by such delay.  Copies of any papers received in connection with any related Action shall be forwarded to Indemnitor together with the notice of the matter.

(b)In case of any Action by a third party or by any Governmental Authority, or any Action involving claims brought by such a third party or Governmental Authority with

20

respect to which Indemnitor may have Liability under the indemnification provisions contained in this ARTICLE VI (a “Third-Party Claim”), then Indemnitor shall have the right to assume the defense thereof at its own expense and by its own counsel, which counsel shall be reasonably satisfactory to Indemnitee; provided, however, that Indemnitor shall not have the right to assume the defense of such Third-Party Claim if (i) the Third-Party Claim seeks only an injunction or other equitable relief, (ii) Indemnitee shall have been advised by counsel that there are one or more legal or equitable defenses available to Indemnitee that are different from or in addition to those available to Indemnitor and, in the reasonable opinion of Indemnitee, counsel for Indemnitor could not adequately represent Indemnitee’s interests because they conflict with those of Indemnitor, (iii) such Third-Party Claim involves, or could have a material effect on, any material matter beyond the scope of the indemnification obligation of Indemnitor or (iv) Indemnitor shall not have assumed the defense of such Third-Party Claim in a timely fashion.  If Indemnitor shall assume the defense of a Third-Party Claim (under circumstances in which the proviso in the preceding sentence is not applicable), provided that Indemnitor does not fail to reasonably pursue a defense of such Third-Party Claim, Indemnitor shall not be responsible for any legal or other defense costs subsequently incurred by Indemnitee in connection with the defense thereof.  If Indemnitor does not exercise its rights to assume the defense of a Third-Party Claim or is otherwise restricted from so assuming such defense, Indemnitor shall nevertheless be entitled to participate in such defense with its own counsel and at its own expense; and in any such case Indemnitee may assume the defense of the Third-Party Claim, with counsel that shall be reasonably satisfactory to Indemnitor, and shall act reasonably and in accordance with its good faith business judgment and shall not effect any settlement without the consent of Indemnitor, which consent shall not be unreasonably withheld or delayed.  If Indemnitor exercises its right to assume the defense of a Third-Party Claim, it shall not effect any settlement without the consent of Indemnitee, which consent shall not be unreasonably withheld or delayed; provided, that such consent shall not be required where (i) the terms of such settlement do not include or require any finding or admission of any violation of Law or any violation of the rights of any Person and (ii) pursuant to the terms of such settlement the sole relief to be provided is monetary damages that are to be paid in full by Indemnitor.  The Indemnitor will keep the Indemnitee apprised of all material developments, including settlement offers, with respect to the Third-Party Claim, permit the Indemnitee, at its sole cost and expense, to participate in the defense of the Third-Party Claim and promptly provide the Indemnitee with all notices, filings, communications and documents produced, sent or received and all other relevant records relating to such matters.

6.5Limitations on Indemnification; Calculation of Damages.

(a)Notwithstanding anything to the contrary herein, except in the event of fraud, the Stockholders shall have no obligation under, and the Buyer Indemnified Persons shall not be entitled to indemnification from the Stockholders pursuant to, Section 6.2(a) for an aggregate amount of Damages incurred by the Buyer Indemnified Persons in excess of fifteen percent (15%) of the Merger Consideration (the “Cap”); provided, however, that the Cap shall not apply with respect to (i) any Damages resulting from or relating to any Breach of the Fundamental  Representations, and none of any such Damages shall count towards satisfaction of the Cap and (ii) any Action arising from fraud, intentional misrepresentation or willful Breach by the Company or the Stockholders’ Representative of any term or provision of this Agreement or any other documents contemplated in connection with the Transactions; provided further, that (x)

21

in no event shall the Stockholders have any obligation hereunder, nor shall the Buyer Indemnified Persons be entitled to indemnification, for any Damages in excess of the Merger Consideration, and (y) no Stockholder shall have any obligation hereunder, nor shall the Buyer Indemnified Persons be entitled to indemnification from such Stockholder, for any Damages in excess of the Merger Consideration actually received by such Stockholder.

(b)For purposes of determining the Stockholders’ liability under this ARTICLE VI for any Damages, appropriate reductions shall be made to reflect (i) the Tax benefits, if any, actually recognized by any Buyer Indemnified Person and (ii) the recovery pursuant to any insurance policy or from any third party actually received by any Buyer Indemnified Person in respect of such Damages.  If an indemnification payment is received by any Buyer Indemnified Person, and such Buyer Indemnified Person later recognizes Tax benefits, insurance recoveries or third-party recoveries, as described in the immediately preceding sentence, in respect of the related Damages or indemnification payments, which Tax benefits, insurance recoveries or third-party recoveries were not previously accounted for with respect to such Damages or indemnification payments when made, such Buyer Indemnified Person shall promptly notify the Stockholders’ Representative, and, promptly but in any event no later than five (5) Business Days after delivery of such notice by such Buyer Indemnified Person, such Buyer Indemnified Person shall pay to the Stockholders an amount equal to the lesser of (A) any such Tax benefits, insurance recoveries and third-party recoveries and (B) the actual amount of the indemnification payments previously paid by the Stockholders with respect to such Damages.

(c)NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED IN THIS AGREEMENT, NO PARTY TO THIS AGREEMENT SHALL BE LIABLE TO OR OTHERWISE RESPONSIBLE TO ANY OTHER PARTY HERETO, OR ANY AFFILIATE OF ANY OTHER PARTY HERETO, FOR CONSEQUENTIAL, SPECIAL, INDIRECT, INCIDENTAL, PUNITIVE OR EXEMPLARY DAMAGES, FOR DIMINUTION IN VALUE OR LOST PROFITS OR FOR ANY DAMAGES MEASURED BY LOST PROFITS OR A MULTIPLE OF EARNINGS, IN EACH CASE THAT ARISE OUT OF OR RELATE TO THIS AGREEMENT OR THE PERFORMANCE OR BREACH HEREOF OR ANY LIABILITY RETAINED OR ASSUMED HEREUNDER, EXCEPT IN THE CASE OF ANY CONSEQUENTIAL, PUNITIVE OR EXEMPLARY DAMAGES THAT ARE PAYABLE TO A THIRD PARTY IN RESPECT OF A THIRD-PARTY CLAIM THAT GIVES RISE TO INDEMNIFICATION RIGHTS HEREUNDER.

(d)In no event shall any Indemnitee be entitled to recover any amounts that would constitute a betterment or that would, if applied towards the repair or replacement of any asset or property underlying an Indemnitee’s direct or indirect investment, enhance the value of such asset or property beyond the value of such asset or property if the applicable representation, warranty, covenant or agreement giving rise to the applicable indemnification obligation had not been breached (a “Betterment”), and any Damages otherwise subject to indemnification under this ARTICLE VI shall be reduced by the amount of any portion thereof that constitutes a Betterment.

(e)No Indemnitor shall have any liability under any provision of this Agreement for any Damages caused by actions of any Indemnitee taken after the Closing.

22

6.6Reduction of Merger Consideration.  Any indemnification amounts payable by the Stockholders pursuant to this ARTICLE VI shall be treated for all Tax purposes to be an adjustment to the Merger Consideration, unless a final determination by a Governmental Authority requires otherwise.

6.7Right of Set-Off.  If the Buyer Indemnified Persons have a right to indemnification under this ARTICLE VI, then the Buyer shall set-off the amount of such recovery against the Additional Buyer Shares, in each case at the rate of $15.00 per share, at any time prior to their respective issuance.  Any such Additional Buyer Shares that are set-off against shall not be available for issuance to the Stockholders.

6.8Exclusive Remedy.  In the absence of fraud, from and after the Closing, the rights of the Parties to indemnification under this Agreement shall be strictly limited to those contained in this ARTICLE VI, and such indemnification rights shall be the exclusive remedies of the Parties with respect to any matter in any way relating to or arising in connection with this Agreement or the Transactions.  In furtherance of the foregoing, but without limiting the rights of indemnification expressly provided for under this ARTICLE VI, each Indemnitee hereby waives, to the fullest extent permitted under applicable Law, except in the event of fraud, any and all rights, claims and causes of action (including any right, whether arising at Law or in equity, to seek indemnification, contribution, cost recovery, damages or any other recourse or remedy, including the remedy of rescission and remedies that may arise under common law) it may have against any Indemnitor, whether arising under or based upon any federal, state, local or foreign Law (including any Environmental Laws) or otherwise.

ARTICLE VII

TAX MATTERS

7.1Tax Returns.

(a)For federal income Tax purposes, the taxable year of the Company shall end as of the close of business on the Closing Date and, with respect to all other Taxes, the Stockholders’ Representative and the Buyer will, if permitted by applicable Law, close the taxable period of the Company as of the close of business on the Closing Date.  Except as otherwise required by applicable Law, no Party shall take any position inconsistent with the preceding sentence on any Tax Return.

(b)The Buyer shall cause the Company to prepare and timely file all Tax Returns of the Company due after the Closing Date for all taxable periods ending on or before the Closing Date or including the Closing Date. All such Tax Returns shall be prepared in a manner consistent with past practice and in accordance with existing accounting methods of the Company, unless such practice or method does not have sufficient legal support to avoid the imposition of penalties, fines or similar amounts. The Buyer shall deliver to the Stockholders’ Representative for his review a draft of each Tax Return of the Company to be filed after the Closing Date that may give rise to any Tax liability of the Stockholders or any Tax liability of the Company for which the Stockholders are liable under this Agreement not fewer than thirty (30) days prior to the deadline for filing such Tax Return.  The Stockholders’ Representative

23

shall notify the Buyer in writing if he objects to any portion of the draft Tax Return within fifteen (15) days after the draft Tax Return is delivered to the Stockholders’ Representative.  If the Buyer does not receive a written objection by the end of the fifteen (15)-day period, the Buyer may file the Tax Return.  If the Stockholders’ Representative notifies the Buyer that he objects to any portion of the draft Tax Return on or before the end of the fifteen (15) days, the Buyer and the Stockholders’ Representative shall attempt to mutually resolve any disagreements in good faith regarding such draft Tax Return by negotiation or submission to an arbitrator mutually selected by the Parties.

7.2Liability for Taxes.  Promptly upon written demand to the Stockholders’ Representative from the Buyer, the Stockholders shall reimburse the Buyer or the Company for all Taxes of the Company for any Pre-Closing Tax Period and for the Stockholders’ portion (as determined under Section 7.3) of all Taxes of the Company for any Tax period that begins before the Closing Date and ends after the Closing Date (a “Straddle Period”).  The Buyer shall be responsible for all Taxes of the Company for any Post-Closing Tax Period and for its portion (as determined under Section 7.3) of all Taxes of the Company for any Straddle Period.  Any amounts paid by the Stockholders to the Buyer or the Company under this Section 7.2 shall be treated as an adjustment to the Purchase Price unless otherwise required by Law.

7.3Apportionment of Straddle Period Taxes.  With respect to any Straddle Period, the Taxes attributable to such Straddle Period shall be apportioned between the portion of the Straddle Period that begins on the first day of the Straddle Period and ends on the Closing Date (the “Pre-Closing Straddle Period”), which portion shall be the responsibility of the Stockholders, and the portion of the Straddle Period that begins on the day immediately following the Closing Date and ends on the last day of the Straddle Period (“Post-Closing Straddle Period”), which portion shall be the responsibility of the Buyer.  In the case of income Taxes, sales and use Taxes, and Taxes based on gross or net receipts or payments, the portion of the Tax allocated to the Pre-Closing Straddle Period shall equal the amount that would be payable if the Straddle Period ended on the last day of the Pre-Closing Straddle Period by means of closing of the books and records of the Company as of the last day of the Pre-Closing Straddle Period, provided that all permitted allowances, exemptions and deductions that are normally computed on the basis of an entire year or period (such as depreciation and amortization deductions) shall accrue on a daily basis and shall be allocated between the Pre-Closing Straddle Period and the Post-Closing Straddle Period in proportion to the number of days in each such period.  In the case of Taxes not described in the immediately preceding sentence, the portion of the Tax allocated to the Pre-Closing Straddle Period shall equal the amount of Tax for the entire Straddle Period multiplied by the ratio of the number of days during the Pre-Closing Straddle Period to the number of days during the entire Straddle Period.  The portion of Tax allocated to the Post-Closing Straddle Period shall equal the balance of the Tax attributable to the Straddle Period.

7.4Cooperation on Tax Matters.  The Buyer, the Surviving Corporation, and the Stockholders’ Representative shall provide, and the Surviving Corporation shall cause the Company to provide, each other with such assistance as may reasonably be requested by the others in connection with the preparation of any Tax Return, any audit or other examination by any Governmental Authority, or any judicial or administrative proceedings relating to Liabilities for Taxes.  Such assistance shall include making employees available on a mutually convenient

24

basis to provide additional information or explanation of material provided hereunder and shall include providing copies of relevant Tax Returns and supporting material.  The party requesting assistance hereunder shall reimburse the assisting party for reasonable out-of-pocket expenses incurred in providing assistance.  The Buyer, the Surviving Corporation and the Stockholders’ Representative will retain, and the Surviving Corporation shall cause the Company to retain, for the full period of any statute of limitations and provide the others with any records or information which may be relevant to such preparation, audit, examination, proceeding or determination.

7.5Tax Contests.

(a)If any Governmental Authority issues to the Company (i) a written notice of its intent to audit, examine or conduct another proceeding with respect to Taxes or Tax Returns of the Company for any Pre-Closing Tax Period or Pre-Closing Straddle Period or (ii) a written notice of deficiency, written notice of reassessment, written proposed adjustment, written assertion of claim or written demand concerning Taxes or Tax Returns of the Company for any Pre-Closing Tax Period or Pre-Closing Straddle Period (each, a “Tax Claim”), the Buyer or the Company shall notify the Stockholders’ Representative of the receipt of such communication from the Governmental Authority within fifteen (15) days after receiving such Tax Claim.  No failure or delay of the Buyer or the Company in the performance of the foregoing shall reduce or otherwise affect the obligations or liabilities of the Stockholders under this Agreement, except to the extent that such failure precludes the Company or the Stockholders from defending against any liability or claim for Taxes that the Stockholders are obligated to pay hereunder.

(b)The Buyer and the Company shall control any proceeding relating to any Tax Claim (a “Tax Contest”); provided that (i) the Stockholders’ Representative shall have the right to participate in any such Tax Contest to the extent it relates to Taxes or a Tax Return for a Pre-Closing Tax Period or Pre-Closing Straddle Period and in such case the Buyer and the Company shall provide the Stockholders’ Representative with copies of all written communications relating to the Tax Contest, (ii) the Buyer shall keep the Stockholders’ Representative informed regarding the progress of any Tax Contest and consult with the Stockholders’ Representative with respect to any issue relating to such Tax Contest that could reasonably be expected to have a material adverse effect on the Stockholders, and (iii) the Buyer and the Company shall not settle or otherwise resolve any Tax Contest (or any issue raised in any Tax Contest) if such settlement or other resolution relates to Taxes for which the Stockholders are liable under this Agreement without the permission of the Stockholders’ Representative (which shall not be unreasonably withheld, conditioned or delayed).

(c)At the request of the Stockholders’ Representative, the Buyer and the Company shall settle any issue related to Taxes for any Pre-Closing Tax Period or Pre-Closing Straddle Period on terms acceptable to the Stockholders’ Representative and the applicable Governmental Authority provided that (i) the Stockholders shall have paid to the Company or the Buyer prior to or when entering into the settlement all Taxes (and other amounts) for which the Stockholders are liable under this Agreement as a result of such settlement, and (ii) the settlement could not result in the Buyer, the Company or any of their respective Affiliates paying any Taxes (or other amounts) for which the Stockholders are not required to fully indemnify the Buyer or the Company under this Agreement.

25

7.6Amended Tax Returns.  The Stockholders shall not file or cause or permit to be filed any amended Tax Returns that affect or may affect the Tax liability of the Buyer, the Company or any Affiliate of the foregoing for any period without the prior written consent of the Buyer, which consent may not be unreasonably withheld, conditioned or delayed.  The Buyer shall not file or cause to be filed any amended Tax Returns covering any period or adjusting any Taxes for a period that includes any period prior to or including the Closing Date without the prior written consent of the Stockholders’ Representative, which consent may not be unreasonably withheld, conditioned or delayed.

7.7Transfer and Similar Taxes.  All real property transfer or gains taxes, other transfer, documentary, sales, use, registration, stamp and similar Taxes and fees (including any penalties and interest) incurred in connection with this Agreement shall be paid one-half by the Stockholders’ Representative and one-half by the Buyer.  The Stockholders’ Representative shall file all necessary Tax Returns and other documentation with respect to all such Taxes and fees, and the Buyer and the Surviving Corporation shall, and shall cause the Company to, reasonably cooperate with the Stockholders’ Representative in connection therewith.

7.8No Limitation.  Notwithstanding any other provision in this Agreement to the contrary, the rights and obligations of the Parties hereto set forth in this ARTICLE VII shall not be subject to the limitations in ARTICLE VI (Indemnification) but shall be without duplication of amounts payable under such Article.  In the event of a conflict between this ARTICLE VII and any other provision of this Agreement, this ARTICLE VII shall govern and control.

ARTICLE VIII

MISCELLANEOUS

8.1Interpretation.  In this Agreement, unless a contrary intention is stated:

(a)A defined term (including those set forth in Annex I hereto) has its defined meaning throughout this Agreement and each Annex, Exhibit and Schedule attached hereto, regardless of whether it appears before or after the place where it is defined.

(b)All references in this Agreement to an “Article,” Section,” “subsection,” “Exhibit” or “Schedule” shall be to an Article, Section, subsection, Exhibit or Schedule of this Agreement.

(c)Unless the context otherwise requires, the words “this Agreement,” “hereof,” “hereunder,” “herein,” “hereby,” or words of similar import shall refer to this Agreement as a whole and not to a particular Article, Section, subsection or other subdivision thereof.

(d)All references to any document, instrument, or agreement shall be deemed to refer to such document, instrument, or agreement, as well to all exhibits, schedules, or addenda thereto.

(e)Whenever the context requires, the words used herein shall include the masculine, feminine and neuter gender, and the singular and plural.

26

(f)The word “includes” and its derivatives mean “including without limitation” or “including, but not limited to” and corresponding derivative expressions.

(g)The words “shall” and “will” have equal force and effect.

(h)The word “or” is used in the inclusive sense of “and/or.”

(i)Examples shall not be construed to limit, expressly or by implication, the matter they illustrate.

(j)The currency amounts referenced herein are in U.S. Dollars, unless the context requires otherwise.

(k)Any reference to a number of days shall refer to calendar days, unless Business Days are specified.

(l)Any reference to a federal, state, local, or foreign Law shall be deemed also to refer to any such Law as amended and currently in effect, or any successor thereto, and all rules and regulations promulgated thereunder, unless the context requires otherwise.

8.2Entire Agreement.  This Agreement, together with the Exhibits and Schedules hereto and the certificates, documents, instruments, and writings that are delivered pursuant hereto, constitute the entire agreement and understanding of the Parties with respect to the subject matter hereof and supersede all prior understandings, agreements, or representations by or among the Parties, written or oral, to the extent they relate in any way to the subject matter hereof or the Transactions.

8.3Successors and Assigns.  All of the terms, agreements, covenants, representations, warranties, and conditions of this Agreement are binding upon, and inure to the benefit of and are enforceable by, the Parties and their respective successors and assigns.  No Party may assign either this Agreement or any of its rights, interests, or obligations hereunder without the prior written approval of the other Parties hereto.

8.4Notices.  All notices, requests, demands, claims and other communications hereunder will be in writing. Any notice, request, demand, claim or other communication hereunder shall be deemed duly given if (and then two (2) Business Days after) it is sent by registered or certified mail, return receipt requested, postage prepaid, or sent by facsimile with proof of transmission (and then one (1) Business Day thereafter) and addressed to the intended recipient as set forth below:

If to the Buyer and, after the Closing, to the Company:

Groupon, Inc.
600 West Chicago Avenue
Suite 830
Chicago, Illinois  60610
Attn:  Andrew Mason

27

Fax:  (312) 276-3231
Email: andrew@groupon.com

With a copy to (which copy shall not constitute notice):

DLA Piper LLP (US)

203 North LaSalle Street

Suite 1900

Chicago, Illinois  60601

Attn:  Richard E. Ginsberg

Fax: (312) 630-5388

Email: richard.ginsberg@dlapiper.com

If to the Stockholders’ Representative:

211 Sutter Street

San Francisco, CA 94108

Attn:  Mihir Shah

Fax: (415) 512-7123

Email: mihir@mob.ly.com

With a copy to (which copy shall not constitute notice):

Goodwin Procter LLP

135 Commonwealth Drive

Menlo Park, CA 94025

Attn:  Anthony McCusker, Esq.

Fax:  (650) 853-1038

Email: amccusker@goodwinprocter.com

Any Party may send any notice, request, demand, claim, or other communication hereunder to the intended recipient at the address set forth above using any other means (including personal delivery, expedited courier, messenger service, telex, 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 intended recipient.  Any Party may change the address to which notices, requests, demands, claims, and other communications hereunder are to be delivered by giving the other Parties notice in the manner herein set forth.

8.5Execution; Counterparts.  The Parties may execute this Agreement in multiple counterparts, each of which will be deemed an original and all of which, when taken together, will constitute one and the same instrument.  The Parties may deliver executed signature pages to this Agreement by facsimile or by electronic mail in portable document format (pdf).  No Party shall raise as a defense to the formation or enforceability of this Agreement as a contract, and each Party forever waives any such defense, either (i) the use of facsimile or e-mail transmission to deliver a signature or (ii) the fact that any signature was signed and subsequently transmitted via facsimile or e-mail transmission.

28

8.6Headings.  The article and section headings contained in this Agreement are inserted for convenience of reference only and shall not be part of or affect in any way the meaning or interpretation of this Agreement.

8.7Governing Law.  THIS AGREEMENT AND THE PERFORMANCE OF THE TRANSACTIONS AND OBLIGATIONS OF THE PARTIES HEREUNDER WILL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE, WITHOUT GIVING EFFECT TO ANY CHOICE OF LAW PRINCIPLES.

8.8Amendments and Waivers.  No amendment, modification, replacement, termination or cancellation of any provision of this Agreement will be valid, unless the same shall be in writing and signed by the Buyer and the Stockholders’ Representative.  No waiver by any Party of any default, misrepresentation, or Breach of warranty or covenant hereunder may 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 because of any prior or subsequent such occurrence.

8.9Severability.  The provisions of this Agreement shall be deemed severable and the invalidity or unenforceability of any provision shall not affect the validity or Enforceability of the other provisions hereof.

8.10Expenses.  Except as otherwise expressly provided in this Agreement, (a) the Buyer and Acquisition Sub each will bear its own costs and expenses incurred in connection with the preparation, execution, and performance of this Agreement and the Transactions, including all fees and expenses of agents, representatives, financial advisors, legal counsel, and accountants, and (b) the Stockholders will bear the costs and expenses of the Company incurred in connection with the preparation, execution, and performance of this Agreement and the Transactions, including all fees and expenses of agents, representatives, financial advisors, legal counsel, and accountants; provided, however, that Acquisition Sub will reimburse the Stockholders on a dollar-for-dollar basis for each dollar of Company accounts receivable as of the Closing Date that is actually collected by Acquisition Sub following the Closing Date, up to $50,000 maximum reimbursement.

8.11Construction.  The Parties have participated jointly in the negotiation and drafting of this Agreement with the benefit of legal representation.  It is expressly agreed that this Agreement shall not be construed against any Party, and if an ambiguity or question of intent or interpretation arises, this Agreement shall be construed as if drafted jointly by the Parties and no presumption or burden of proof shall arise favoring or disfavoring any Party because of the authorship of any provision of this Agreement.  Each Party agrees that this Agreement has been purposefully drawn and correctly reflects its understanding of the Transactions.  The Parties intend that each representation, warranty, and covenant contained herein shall have independent significance.

8.12Third Party Beneficiaries.  This Agreement shall not confer any rights or remedies upon any Person other than the Parties, the Stockholders and their respective successors and permitted assigns.

29

8.13        Incorporation of Annexes, Exhibits and Schedules.  The Annexes, Exhibits and Schedules identified in this Agreement are incorporated herein by reference and made a part hereof for all purposes.

8.14        Waiver of Jury Trial; Submission to Jurisdiction.

(a)           EACH OF THE PARTIES HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT.

(b)           EACH OF THE PARTIES SUBMITS TO THE EXCLUSIVE JURISDICTION OF ANY STATE OR FEDERAL COURT SITTING IN CHICAGO, ILLINOIS, IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT, AGREES THAT ALL CLAIMS IN RESPECT OF THE ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN ANY SUCH COURT AND AGREES NOT TO BRING ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT IN ANY OTHER COURT.  EACH OF THE PARTIES WAIVES ANY DEFENSE OF INCONVENIENT FORUM TO THE MAINTENANCE OF ANY ACTION OR PROCEEDING SO BROUGHT AND WAIVES ANY BOND, SURETY OR OTHER SECURITY THAT MIGHT BE REQUIRED OF ANY OTHER PARTY WITH RESPECT THERETO. EACH PARTY AGREES THAT SERVICE OF SUMMONS AND COMPLAINT OR ANY OTHER PROCESS THAT MIGHT BE SERVED IN ANY ACTION OR PROCEEDING MAY BE MADE ON SUCH PARTY BY SENDING OR DELIVERING A COPY OF THE PROCESS TO THE PARTY TO BE SERVED AT THE ADDRESS OF THE PARTY AND IN THE MANNER PROVIDED FOR THE GIVING OF NOTICES IN SECTION 8.4.  EACH PARTY AGREES THAT A FINAL JUDGMENT IN ANY ACTION OR PROCEEDING SO BROUGHT SHALL BE CONCLUSIVE AND MAY BE ENFORCED BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW.

[THE REMAINDER OF THIS PAGE LEFT INTENTIONALLY BLANK]

30

IN WITNESS WHEREOF, each of the Parties hereto has duly executed this Agreement and Plan of Merger as of the date first written above.

BUYER:
GROUPON, INC.
By:	/s/ Andrew Mason
Name: Andrew Mason
Title: Chief Executive Officer
ACQUISITION SUB:
GROUPON MOBLY, INC.
By:	/s/ Andrew Mason
Name: Andrew Mason
Title: President
COMPANY:
GOODREC, INC.
By:	/s/ Mihir Shah
Name: Mihir Shah
Title: President & CEO
STOCKHOLDERS’ REPRESENTATIVE:
By:	/s/ Mihir Shah
Name: Mihir Shah

[Signature Page to Agreement and Plan of Merger]

ANNEX I

DEFINITIONS

The following terms used in the Agreement and Plan of Merger shall have the following respective meanings:

“2011 Additional Buyer Shares” means, collectively, the 2011 First Tranche Common Additional Buyer Shares, the 2011 Second Tranche Common Additional Buyer Shares and the 2011 Preferred Additional Buyer Shares.

“2011 First Tranche Common Additional Buyer Shares” means 7,574 shares of the Buyer’s Nonvoting Common Stock.

“2011 Preferred Additional Buyer Shares” means 12,426 shares of the Buyer’s Nonvoting Common Stock.

“2011 Second Tranche Common Additional Buyer Shares” means 20,000 shares of the Buyer’s Nonvoting Common Stock.

“2012 Additional Buyer Shares” means 40,000 shares of the Buyer’s Nonvoting Common Stock.

“2013 Additional Buyer Shares” means 40,000 shares of the Buyer’s Nonvoting Common Stock.

“Acquisition Sub” has the meaning set forth in the preamble to this Agreement.

“Action” means any action, administrative enforcement, appeal, petition, plea, charge, complaint, claim, suit, demand, litigation, arbitration, mediation, hearing, or other proceeding commenced, brought, or heard by or before any Governmental Authority.

“Additional Buyer Shares” means, collectively, the 2011 Additional Buyer Shares, the 2012 Additional Buyer Shares and the 2013 Additional Buyer Shares.

“Affiliate” means, with respect to any specified Person, a Person that, directly or indirectly, through one or more intermediaries, controls or is controlled by, or is under common control with, such specified Person, and in the case of a natural Person shall include such natural Person’s immediate family members.

“Agreement” has the meaning set forth in the preamble to this Agreement.

“Assets” has the meaning set forth in Section 3.9.

“Balance Sheet Date” means December 31, 2009.

“Betterment” has the meaning set forth in Section 6.5(d).

“Board” means the Buyer’s board of directors.

A-1

“Breach” means any breach, default (or any event which would, with the passage of time or giving of notice or both, constitute a default), event giving rise to any right of payment under or right terminate, amend, modify, abandon or accelerate or resulting in any Encumbrance being created or imposed, violation, acceleration, termination, cancellation, modification, or required notification.

“Business” has the meaning set forth in the recitals.

“Business Day” means any day other than Saturday, Sunday, or any other day in which banks in Chicago, Illinois are authorized or required to be closed.

“Buyer” has the meaning set forth in the preamble to this Agreement.

“Buyer Financial Statements” has the meaning set forth in Section 4.8(a).

“Buyer Indemnified Persons” means the Buyer and its officers, directors, employees, and agents.

“Buyer Shares” means, collectively, the Common Buyer Shares and the Preferred Buyer Shares.

“Buyer’s Nonvoting Common Stock” means the Buyer’s Nonvoting Common Stock, par value $0.0001 per share.

“Cap” has the meaning set forth in Section 6.5(a).

“Capital Lease Obligations” means the obligations (including all prepayment or other similar fees, expenses or penalties on or relating to the repayment or assumption thereof) of the Company, on a consolidated basis, to pay rent or other amounts under any lease of (or other arrangement covering the right to use) real or personal property, which obligations are required to be classified and accounted for as capital leases on a consolidated balance sheet of the Company as of such date computed in accordance with GAAP, consistently applied with the Financial Statements.

“Cash Consideration” means an amount in cash equal to Three Hundred Seventy-Five Thousand Dollars ($375,000).

“Certificate” has the meaning set forth in Section 2.2(a).

“Certificate of Merger” has the meaning set forth in the recitals.

“Closing” has the meaning set forth in Section 1.6(a).

“Merger Consideration” means the Cash Consideration plus an amount equal to the aggregate value of (i) the Buyer Shares plus (ii) the 2011 Additional Buyer Shares plus (iii) the 2012 Additional Buyer Shares plus (iv) the 2013 Additional Buyer Shares (each such Buyer Share, 2011 Additional Buyer Share, 2012 Additional Buyer Share and 2013 Additional Buyer Share being valued at $15.00 per share), but in the case of clauses (ii) through (iv), solely to the

A-2

extent that such Additional Buyer Shares are actually issued to the Stockholders in accordance with the terms of this Agreement.

“Closing Date” has the meaning set forth in Section 1.6(a).

“Code” means the Internal Revenue Code of 1986, as amended, as in effect as of the Closing.

“Commitment” with respect to any Person means: (a) options, warrants, convertible securities, exchangeable securities, subscription rights, conversion rights, exchange rights, or other Contracts that could require such Person to issue any of its Equity Interests, or any other securities convertible into, exchangeable or exercisable for, or representing the right to subscribe for any Equity Interest of such Person, (b) pre-emptive rights or rights of first refusal, and (c) stock appreciation rights, phantom stock, profit participation, or other similar rights with respect to such Person.

“Common Additional Buyer Shares” means, collectively, the 2011 First Tranche Common Additional Buyer Shares, 2011 Second Tranche Common Additional Buyer Shares, 2012 Additional Buyer Shares and 2013 Additional Buyer Shares.

“Common Buyer Shares” means 22,720 shares of the Buyer’s Nonvoting Common Stock.

“Common Stock” has the meaning set forth in the recitals.

“Common Stock Percentage Interest” means with respect to any Stockholder, the quotient obtained by dividing (a) the aggregate number of shares of Common Stock held by such Stockholder immediately prior to the Effective Time by (b) the aggregate number of shares of Common Stock outstanding immediately prior to the Effective Time.

“Company” has the meaning set forth in the preamble to this Agreement.

“Company Indebtedness” means, without duplication and with respect to the Company, (a) any indebtedness for borrowed money or issued in substitution for or exchange of indebtedness for borrowed money, (b) indebtedness of the type described in clause (a) above guaranteed, directly or indirectly, in any manner by the Company or in effect guaranteed, directly or indirectly, in any manner by the Company through an agreement, contingent or otherwise, to supply funds to, or in any other manner invest in, the debtor, or to purchase indebtedness, or to purchase and pay for property if not delivered or pay for services if not performed, primarily for the purpose of enabling the debtor to make payment of the indebtedness or to assure the owners of the indebtedness against loss, (c) any indebtedness evidenced by any note, bond, debenture or other debt security, (d) any indebtedness for the deferred purchase price of property with respect to which a Person is liable, contingently or otherwise, as obligor or otherwise, (e) any indebtedness secured by a lien (other than Permitted Encumbrances) on a Person’s assets, (f) any drawn amounts under letter of credit arrangements, (g) any Capital Lease Obligations, (h) any accrued interest on any of the foregoing and (i) any prepayment, breakage, premiums or other similar fees, expenses or penalties on or relating to the repayment or assumption of any of the foregoing.

A-3

“Company Stock” has the meaning set forth in the recitals.

“Confidentiality, Inventions and Non-Solicitation Agreements” means those certain Confidentiality, Inventions and Non-Solicitation Agreements, substantially in the form attached hereto as Exhibit B, dated as of the Closing Date, by and among the Buyer, Acquisition Sub and each of Jeff Anderson, Michael Burton, Swati Raju, Marcus Harvey, Mihir Shah and Yishai Lerner.

“Consent” means any consent, approval, notification, waiver, registration, or other similar action that is necessary under the circumstances.

“Consent, Release and Stockholders’ Representative Agreement” means that certain Consent, Release and Stockholders’ Representative Agreement, substantially in the form attached hereto as Exhibit C, dated as of the Closing Date, by and among the Company, the Stockholders’ Representative and each of the Stockholders.

“Constituent Corporations” has the meaning set forth in Section 1.1.

“Continuing Employees” has the meaning set forth in Section 2.4(b).

“Contract” means, with respect to a Person, any contract, agreement, lease, license, commitment, instrument, document, or other similar arrangement, whether written or oral, which is legally binding upon such Person.

“Corporate Rights” has the meaning set forth in Section 1.3.

“Damages” means all damages, losses, payments, amounts paid in settlement, obligations, fines, penalties, costs and expenses (including reasonable fees and expenses of outside attorneys, accountants and other professional advisors).

“Designated Pre-Closing Liabilities” means any outstanding Company Indebtedness and unpaid Transaction Costs of the Company.

“DGCL” has the meaning set forth in the recitals.

“Effective Time” has the meaning set forth in Section 1.2.

“Employee Benefit Plan” means (a) any employee welfare benefit and employee pension benefit plan as defined in Sections 3(1) and 3(2) of ERISA, including plans that provide retirement income or result in a deferral of income by employees for periods extending to termination of employment or beyond, and plans that provide medical, surgical, or hospital care benefits or benefits in the event of sickness, accident, disability, death, or unemployment, and (b) all other material employee benefit agreements or arrangements, whether or not subject to ERISA, including deferred compensation plans, incentive plans, bonus plans or arrangements, stock option plans, stock purchase plans, stock award plans, golden parachute agreements, severance pay plans, dependent care plans, cafeteria plans, employee assistance programs, scholarship programs, employment contracts, vacation policies, and other similar plans, agreements, and arrangements that are currently in effect, or have been approved before the date

A-4

hereof but are not yet effective, for the benefit of directors, officers, employees, or former employees (or their beneficiaries) of the Company.

“Encumbrances” means any encumbrance, Order, Security Interest, easement, covenant, or restriction on transfer, other than a Permitted Encumbrance.

“Enforceable” means that the Contract is the legal, valid, and binding obligation of the applicable Person enforceable against such Person in accordance with its terms and conditions, except as such enforceability may be subject to the effects of bankruptcy, insolvency, reorganization, moratorium, receivership, or similar Laws or judicial decisions now or hereafter in effect relating to, limiting, or affecting the rights of creditors generally or by general principles of equity.

“Environment” means soil, land surface or subsurface strata, waters (including, navigable ocean, stream, pond, reservoirs, drainage, basins, wetland, ground, and drinking), sediments, ambient air (including indoor), noise, plant life, animal life, and all other environmental media or natural resources.

“Environmental Laws” means all applicable Laws, regulations, enforceable requirements that have the effect of law, orders, decrees, judgments, or injunctions issued, promulgated, or entered into by any Governmental Authority pertaining to the protection of human health or the Environment, including, without limitation, with respect to property or Persons located in the United States, the Comprehensive Environmental Response, Compensation and Liability Act, as amended by the Superfund Amendments and Reauthorization Act, 42 U.S.C. § 9601 et seq., the Solid Waste Disposal Act, as amended by the Resource Conservation and Recovery Act, 42 U.S.C. § 6901 et seq., the Federal Water Pollution Control Act, as amended by the Clean Water Act, 33 U.S.C. § 1251 et seq., the Clean Air Act, 42 U.S.C. § 7401 et seq., the Toxic Substances Control Act, 15 U.S.C. § 2601 et seq., and any similar state or local statutes, in each case in effect as of the Closing Date.

“Environmental Liabilities” means all Liabilities, responsibilities, claims, suits, losses, costs (including Remediation costs and expenses), other causes of action, damages, settlements, expenses, charges, assessments, liens, penalties, fines, pre-judgment and post-judgment interest, attorneys’ fees and other legal fees (a) pursuant to any agreement, order, notice, or responsibility, directive (including directives embodied in Environmental Laws), injunction, judgment, or similar documents (including settlements), arising out of or in connection with any Environmental Laws, (b) pursuant to any claim by a Governmental Authority or other Person for personal injury, property damage, damage to natural resources, Remediation, or payment or reimbursement of response costs incurred or expended by the Governmental Authority or Person or (c) otherwise relating to or arising under any Environmental Laws.

“Equity Interest” means (a) with respect to a corporation, any and all shares of capital stock, or other securities or rights convertible into capital stock, of such corporation, (b) with respect to a partnership, limited liability company, trust, or similar Person, any and all units, interests, or other partnership/limited liability company interests, and (c) any other direct or

A-5

indirect equity ownership or participation in a Person or rights to acquire or convert into any Equity Interests.

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended and in effect from time to time.

“Financial Statements” has the meaning set forth in Section 3.4(a).

“Fundamental Representations” has the meaning set forth in Section 6.1(a).

“GAAP” means U.S. generally accepted accounting principles, as amended and in effect from time to time.

“Governmental Authority” means any legislature, agency, bureau, branch, department, division, commission, court, tribunal, magistrate, justice, multi-national organization, quasi-governmental body, or other similar recognized organization or body of any federal, state, county, municipal, local, or foreign government or other similar recognized organization or body exercising similar powers or authority.

“Hazardous Materials” means any waste, pollutant, contaminant, hazardous substance, toxic or corrosive substance, hazardous waste, special waste, industrial substance, by-product, process-intermediate product or waste, petroleum or petroleum-derived substance or waste, chemical liquids or solids, liquid or gaseous products, or any constituent of any such substance or waste, the Release, use, handling, treatment, storage, or disposal of which is regulated or may result in Environmental Liability pursuant to any applicable Environmental Law.

“Indemnitee” is defined in Section 6.4(a).

“Indemnitor” is defined in Section 6.4(a).

“Insurance Policies” has the meaning set forth in Section 3.13.

“Intellectual Property” means all (a) inventions (whether patentable or unpatentable and whether or not reduced to practice), and all patents, patent applications, and patent disclosures, together with all reissuances, continuations, continuations-in-part, revisions, extensions, and reexaminations relating thereto, (b) trademarks, service marks, trade dress, logos, and all goodwill associated therewith, together with all applications, registrations, and renewals relating thereto, (c) copyrightable works, all copyrights, and all applications, registrations, and renewals relating thereto, (d) trade secrets (including ideas, research and development, know-how, mobile technology expertise, formulas, compositions, manufacturing and production processes and techniques, technical data, designs, drawings, specifications, customer and supplier lists, pricing and cost information, and business and marketing plans and proposals), other rights, rights in Internet web sites or protocol addresses, Internet domain names and registration rights, uniform resource locators, and copies and tangible embodiments of the foregoing (in whatever form or medium).

A-6

“Knowledge” - with respect to the Company, the Company will be deemed to have “Knowledge” of a particular fact or matter if any of Mihir Shah or Yishai Lerner is actually aware of such fact or matter after making reasonable inquiry of their respective direct reports who should reasonably be expected to have knowledge with respect to the particular fact or matter at issue.

“Law” means any federal, state, local or national law, ordinance, code, statute, treaty, rule, directive or regulation enacted, adopted, promulgated, or applied by any Governmental Authority, each as amended and now in effect.

“Leases” has the meaning set forth in Section 3.11.

“Liability” means, with respect to any Person, any liability or obligation of such Person of any kind, known or unknown, whether absolute or contingent, matured or unmatured, conditional or unconditional, accrued or unaccrued, liquidated or unliquidated, secured or unsecured, or due or to become due.

“Material Adverse Effect” means any change or effect that individually or in the aggregate with other changes or effects will or would reasonably be expected to have a material adverse effect on the financial condition, properties or results of operations of the relevant Person, taken as a whole, but shall exclude any change or effect (whether short-term or long-term) related to or resulting from (a) general economic, banking, currency, capital market, regulatory, political or other similar conditions (including acts of war, declared or undeclared, armed hostilities and terrorism), general financial, securities or commodities market conditions or prevailing interest rates, (b) general business or economic conditions affecting the industry or industries in which such Person operates, so long as such changes do not have a materially disproportionate effect on such Person relative to other participants in such industries, (c) the taking of any action contemplated by this Agreement or the announcement of this Agreement or the transactions contemplated hereby, (d) any change in Law or GAAP, (e) any failure to meet a forecast (whether internal or published) of revenue, earnings, cash flow or other data for any period or any change in such a forecast, or (f) any matter set forth in the Schedules.

“Material Contracts” has the meaning set forth in Section 3.12(a).

“Merger” has the meaning set forth in the recitals.

“Merger Options” means any options or warrants that are convertible or exercisable into shares of Company Stock and are outstanding immediately prior to the Effective Time.

“Merger Shares” means the shares of Company Stock that are issued and outstanding immediately prior to the Effective Time that are not owned directly or indirectly by the Company (whether as treasury stock or otherwise).

“Non-Competition Agreements” means those certain Non-Competition Agreements, substantially in the form attached hereto as Exhibit D, dated as of the Closing Date, by and among the Buyer, Acquisition Sub and each of Jeff Anderson, Michael Burton, Swati Raju, Marcus Harvey, Mihir Shah and Yishai Lerner.

A-7

“Operational Objectives” has the meaning set forth in Section 2.4(b).

“Option Agreements” means those certain Option Agreements, substantially in the form attached hereto as Exhibit E, dated as of the Closing Date, by and between the Buyer and each of Jeff Anderson, Michael Burton, Swati Raju, Marcus Harvey, Mihir Shah and Yishai Lerner.

“Order” means any order, ruling, decision, verdict, writ, compliance agreement, decree, award (including arbitration awards), judgment, injunction, or other similar determination or finding by, before, or under the supervision of any Governmental Authority, arbitrator, or mediator of competent jurisdiction.

“Ordinary Course of Business” means the ordinary course of business consistent with past custom and practice of the relevant Person and its subsidiaries and as proposed to be conducted.

“Organizational Documents” means the articles of incorporation, certificate of incorporation, charter, bylaws, articles of formation, articles of association, memorandum of association, regulations, operating agreement, certificate of limited partnership, partnership agreement, and all other similar documents, instruments or certificates executed, adopted, or filed in connection with the creation, formation, or organization of a Person, including any amendments thereto, as applicable.

“Parties” has the meaning set forth in the preamble to this Agreement.

“Permit” means any permit, license, certificate, approval, consent, registration, filing, accreditation, or other similar authorization issued, granted, or otherwise made available by or under the authority of any Governmental Authority or pursuant to any Law, and which is related primarily to or required for the operation of the business of the Company as presently conducted.

“Permitted Encumbrances” means (a) Encumbrances for Taxes not yet due and payable or being contested in good faith by appropriate proceedings and for which there are adequate accruals or reserves on the books, (b) workers or unemployment compensation liens arising in the ordinary course of business, (c) mechanic’s, materialmen’s, supplier’s, vendor’s or similar liens arising in the ordinary course of business securing amounts that are not delinquent, (d) other liens arising in the ordinary course of business and not incurred in connection with the borrowing of money.

“Person” shall be construed broadly and shall include an individual, a partnership, a corporation, a limited liability company, an association, a joint stock company, a trust, a joint venture, an unincorporated organization or a Governmental Authority (or any department, agency or political subdivision thereof).

“Post-Closing Straddle Period” has the meaning set forth in Section 7.3.

“Post-Closing Tax Period” means any Tax period beginning after the Closing Date.

A-8

“Pre-Closing Straddle Period” has the meaning set forth in Section 7.3.

“Pre-Closing Tax Period” means any Tax period ending on or before the Closing Date.

“Preferred Buyer Shares” means 37,280 shares of the Buyer’s Nonvoting Common Stock.

“Preferred Stock” has the meaning set forth in the recitals.

“Preferred Stock Percentage Interest” means with respect to any Stockholder, the quotient obtained by dividing (a) the aggregate number of shares of Preferred Stock held by such Stockholder immediately prior to the Effective Time by (b) the aggregate number of shares of Preferred Stock outstanding immediately prior to the Effective Time.

“Proportionate Percentage” means with respect to any Stockholder, the quotient obtained by dividing (a) the portion of the Merger Consideration received by such Stockholder by (b) the Merger Consideration.

“Release” means any spilling, leaking, emitting, discharging, depositing, escaping, leaching, dumping, or other release into the Environment.

“Remediate” or “Remediation” means the removal, abatement, response, investigative, cleanup, and/or monitoring activities undertaken to address any pollution, or Release of Hazardous Materials, including, without limitation, excavation, transportation, and disposal of Hazardous Materials, any investigation, study, assessment, testing, monitoring, containment, removal, disposal, closure, corrective action, passive remediation, natural attenuation, or bioremediation, and the installation and operation of remediation systems.

“Right of First Refusal and Co-Sale Agreement” means that certain Second Amended and Restated Right of First Refusal and Co-Sale Agreement dated as of April 16, 2010, by and among Buyer, each of the Persons listed on Exhibit A thereto as “Investors” and  each of the Persons listed on Exhibit B thereto as “Subject Stockholders”.

“Sale of the Buyer” means: (a) the acquisition in one or more transactions by any Person of the beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Securities Exchange Act of 1934, as amended) of more than fifty percent (50%) of (i) the then outstanding shares of the Buyer’s capital stock (on an as-converted basis), or (ii) the combined voting power of the then outstanding shares of the Buyer’s capital stock (on an as-converted basis) entitled to vote generally in the election of directors; (b) the closing of a sale or other conveyance of all or substantially all of the assets of the Buyer; (c) the effective time of any merger, share exchange, consolidation, or other business combination involving the Buyer if immediately after such transaction Persons who hold a majority of the outstanding shares of the Buyer’s capital stock (on an as-converted basis) entitled to vote generally in the election of directors of the surviving entity (or the entity, directly or indirectly, owning 100% of such surviving entity) are not Persons who, immediately prior to such transaction, held such shares of the Buyer’s capital stock (on an as-converted basis); (d) the completion of any other similar transaction, involving the Buyer or its successors, which has the same effect as any of the

A-9

foregoing; or (e) the completion of the initial public offering of shares of the Buyer’s capital stock to the public pursuant to an effective registration statement under the Securities Act or any comparable statement under any similar federal statute then in force.

“Schedules” has the meaning set forth in the preamble to ARTICLE III.

“Securities Act” means the Securities Act of 1933, as amended from time to time.

“Security Interest” means any security interest, deed of trust, mortgage, pledge, lien, charge, claim, or other similar interest or right, except for (a) liens for taxes, assessments, governmental charges, or claims which are being contested in good faith by appropriate Actions promptly instituted and diligently conducted, (b) statutory liens of landlords and warehousemen’s, carriers, mechanics’, suppliers’, materialmen’s, repairmen’s, or other like liens (including contractual landlords’ liens) arising in the Ordinary Course of Business and with respect to amounts not yet delinquent or being contested in good faith by appropriate proceedings, and (c) liens incurred or deposits made in the Ordinary Course of Business in connection with workers’ compensation, unemployment insurance, and other similar types of social security.

“Stockholders” means the holders of the issued and outstanding Company Stock immediately prior to the Effective Time.

“Stockholder Indemnified Persons” means the Stockholders and their respective officers, directors, employees, agents, representatives, controlling Persons, and Equity Interest owners.

“Stockholders’ Representative” shall mean the Person designated from time to time as the Stockholders’ Representative pursuant to the Consent, Release and Stockholders’ Representative Agreement.

“Straddle Period” has the meaning set forth in Section 7.2.

“Surviving Corporation” has the meaning set forth in Section 1.1.

“Tax” means any federal, state, local, or foreign income, gross receipts, license, payroll, employment, excise, severance, stamp, occupation, premium, windfall profits, taxes under Code Section 59A, capital stock, franchise, profits, withholding, social security, unemployment, disability, real property, personal property, sales, use, transfer, registration, value added, alternative or add-on minimum, estimated, or other tax of any kind whatsoever, including any interest, penalty, or addition thereto, whether disputed or not, and including any obligations to indemnify or otherwise assume or succeed to the Tax liability of another Person.

“Tax Claim” has the meaning set forth in Section 7.5(a).

“Tax Contest” has the meaning set forth in Section 7.5(b).

A-10

“Tax Return” means any return, declaration, report, claim for refund, or information return or statement relating to Taxes required to be filed with any Governmental Authority, including any schedule or attachment thereto, and including any amendment thereof.

“Third-Party Claim” has the meaning set forth in Section 6.4(b).

“Threatened” means a demand or statement has been made, or a notice has been given, that would be reasonably likely to result in an Action being asserted, commenced, taken, or otherwise pursued in the future.

“Transaction Costs” means any and all (a) legal, accounting, tax, financial advisory, environmental consultants and other professional or transaction related costs, fees and expenses incurred in connection with this Agreement (including any amounts owed to any consultants, auditors, accountants, attorneys, brokers or investment bankers), (b) payments, bonuses or severance which become due or are otherwise required to be made as a result of or in connection with the Closing or as a result of any change of control or other similar provisions, (c) payroll, employment or other Taxes, if any, required to be paid by the Buyer (on behalf of the Company) or the Company with respect to the amounts payable pursuant to this Agreement, the amounts described in clauses (a) and (b), or the forgiveness of any loans or other obligations owed by Stockholders or employees in connection with the Transactions, in all cases as incurred by the Company on or prior to the Closing Date.

“Transactions” means all of the transactions contemplated by this Agreement, including, but not limited to: (a) the conversion, exchange or cancellation of the shares of capital stock of, and Equity Interests in, each of the Constituent Corporations as described in ARTICLE II, (b) the execution, delivery, and performance of all of the documents, instruments, and agreements to be executed, delivered, and performed in connection herewith, (c) the performance by the Company, the Buyer and the Stockholders’ Representative of their respective covenants and obligations under this Agreement, and (d) the Merger.

“Voting Agreement” means that certain Second Amended and Restated Voting Agreement dated as of April 16, 2010, by and among Buyer, each of the Persons listed on Exhibit A thereto as “Common Stockholders” and  each of the Persons listed on Exhibit B thereto as “Investors”.

“Working Capital” means the excess of all of the Company’s current assets over current liabilities as of the close of business on the Business Day immediately prior to the Closing Date; provided, however, that the Parties agree that for purposes of determining Working Capital, the Company’s current liabilities shall not include (i) any Funded Indebtedness of the Company, all of which shall be paid off in full as of the Closing Date, or (ii) any liabilities and expenses which Acquisition Sub is obligated to pay or reimburse pursuant to Section 8.10 of this Agreement.

A-11

EXHIBIT A

Certificate of Merger

State of Delaware

Secretary of State

Division of Corporations

Delivered 09:40 AM 05/06/2010

FILED 09:40 AM 05/06/2010

SRV 100468833 - 4816601 FILE

STATE OF DELAWARE
CERTIFICATE OF MERGER OF
DOMESTIC CORPORATION
INTO A
DOMESTIC CORPORATION

Pursuant to Title 8, Section 251 of the Delaware General Corporation Law, the undersigned corporations executed the following Certificate of Merger:

FIRST: The name of the surviving corporation is Groupon Mobly, Inc. and the name of the corporation being merged into this surviving corporation is GOODREC Inc..

SECOND: The Agreement and Plan of Merger has been approved, adopted, executed and acknowledged by each of the constituent corporations.

THIRD: The name of the surviving corporation is Groupon Mobly, Inc.

FOURTH: The merger is to become effective upon filing of this Certificate of Merger.

FIFTH: The Agreement and Plan of Merger is on file at 600 West Chicago Avenue, Suite 830, Chicago, Illinois 60610, the place of business of the surviving corporation.

SIXTH: A copy of the Agreement and Plan of Merger will be furnished by the surviving corporation, on request and without cost, to any stockholder of any constituent corporation.

SEVENTH: The Certificate of Incorporation of the surviving corporation shall be its Certificate of Incorporation.

IN WITNESS WHEREOF, said corporations have caused this certificate to be signed by an authorized officer, the 5 day of May, 2010.

GROUPON MOBLY, INC.
Name:	/s/ Andrew Mason
Title:	PRESIDENT
	ANDREW MASON

EXHIBIT B

Form of Confidentiality, Inventions and Non-Solicitation Agreement

FORM OF EMPLOYEE CONFIDENTIALITY, INVENTIONS AND NON-SOLICITATION AGREEMENT

This Agreement sets forth in writing certain understandings and procedures in effect as of the date of my initial employment with Groupon Mobly, Inc., a Delaware corporation, which, along with its parent company, Groupon, Inc. and any and all affiliates or subsidiaries, shall be referred to herein as the “Company.”

1.             Duties.  In return for the compensation and benefits now and hereafter paid or provided to me, I hereby agree to perform those duties for Company as Company may designate from time to time.  During my employment with Company, I further agree that I will (i) devote my best efforts to the interests of Company, and (ii) not engage in other employment or in any conduct that could either be in direct conflict with Company’s interests or that could cause a material and substantial disruption to Company and (iii) otherwise abide by all of Company’s policies and procedures as they may be established and updated from time to time. Furthermore, I will not (a) reveal, disclose or otherwise make available to any unauthorized person any Company password or key, whether or not the password or key is assigned to me or (b) obtain, possess or use in any manner a Company password or key that is not assigned to me.  I will use my best efforts to prevent the unauthorized use of any laptop or personal computer, peripheral device, cell phone, smartphone, personal digital assistant (PDA), software or related technical documentation that the Company issues to me.  I will not input, load or otherwise attempt any unauthorized use of software in any Company computer or other device, whether or not the computer or device is assigned to me.

2.             “Proprietary Information” Definition.  “Proprietary Information” means (a) any information that is confidential or proprietary, technical or non-technical information of Company, including for example and without limitation, information that is a Company Innovation or is related to any Company Innovations (as defined in Section 4 below), concepts, techniques, processes, methods, systems, designs, computer programs, source documentation, trade secrets, formulas, development or experimental work, work in progress, forecasts, proposed and future products, marketing plans, business plans, customers and suppliers and any other nonpublic information that has commercial value or (b) any information Company has received from others that Company is obligated to treat as confidential or proprietary, which may be made known to me by Company, a third party or otherwise that I may learn during my employment with Company.

3.             Ownership and Nondisclosure of Proprietary Information.  All Proprietary Information and all worldwide: patents (including, but not limited to, any and all patent applications, patents, continuations, continuation-in-parts, reissues, divisionals, substitutions, and extensions), copyrights, mask works, trade secrets and other worldwide intellectual property and other rights in and to the Proprietary Information are the property of Company, Company’s assigns, Company’s customers and Company’s suppliers, as applicable.  I will not disclose any Proprietary Information to anyone outside Company, and I will use and disclose Proprietary Information to those inside Company only as necessary to perform my duties as an employee of Company.  If I have any questions as to whether information is Proprietary Information, or to whom, if anyone, inside Company, any Proprietary Information may be disclosed, I will ask my manager at Company

4.            “Innovations” Definition.  In this Agreement, “Innovations” means all discoveries, designs, developments, improvements, inventions (whether or not protectable under patent laws), works of authorship, information fixed in any tangible medium of expression (whether or not protectable under copyright laws), trade secrets, know-how, ideas (whether or not protectable

under trade secret laws), mask works, trademarks, service marks, trade names and trade dress.

5.             Disclosure and License of Prior Innovations.  I have listed on Exhibit A (“Prior Innovations”) attached hereto all Innovations relating in any way to Company’s business or demonstrably anticipated research and development or business, which were conceived, reduced to practice, created, derived, developed, or made by me prior to my employment with Company (collectively, the “Prior Innovations”).  I represent that I have no rights in any such Company-related Innovations other than those Innovations listed in Exhibit A (“Prior Innovations”).  If nothing is listed on Exhibit A (“Prior Innovations”), I represent that there are no Prior Innovations at the time of signing this Agreement.  I hereby grant to Company and Company’s designees a royalty-free, irrevocable, worldwide, fully paid-up license (with rights to sublicense through multiple tiers of sublicensees) to practice all patent, copyright, moral right, mask work, trade secret and other intellectual property rights relating to any Prior Innovations that I incorporate, or permit to be incorporated, in any Innovations that I, solely or jointly with others, conceive, develop or reduce to practice within the scope of my employment with Company (the “Company Innovations”).  Notwithstanding the foregoing, I will not incorporate, or permit to be incorporated, any Prior Innovations in any Company Innovations without Company’s prior written consent.

6.             Disclosure and Assignment of Company Innovations.  I will promptly disclose and describe to Company all Company Innovations.  I hereby do and will assign to Company or Company’s designee all my right, title, and interest in and to any and all Company Innovations.  To the extent any of the rights, title and interest in and to Company Innovations cannot be assigned by me to Company, I hereby grant to Company an exclusive, royalty-free, transferable, irrevocable, worldwide license (with rights to sublicense through multiple tiers of sublicensees) to practice such non-assignable rights, title and interest, including, but not limited to, the right to make, use, sell, offer for sale, import, have made, and have sold, such Company Innovations.  To the extent any of the rights, title and interest in and to Company Innovations can neither be assigned nor licensed by me to Company, I hereby irrevocably waive and agree never to assert such non-assignable and non-licensable rights, title and interest against Company, any of Company’s successors in interest, or any of Company’s customers.  This Section 6 shall not apply to any Innovations that (a) do not relate, at the time of conception, reduction to practice, creation, derivation, development or making of such Innovation to Company’s business or actual or demonstrably anticipated research, development or business; and (b) were developed entirely on my own time; and (c) were developed without use of any of Company’s equipment, supplies, facilities or trade secret information; and (d) did not result from any work I performed for Company.

7.             Future Innovations.  I will disclose promptly in writing to Company all Innovations conceived, reduced to practice, created, derived, developed, or made by me within the scope of my employment with the Company and for three (3) months thereafter, whether or not I believe such Innovations are subject to this Agreement, to permit a determination by Company as to whether or not the Innovations should be considered Company Innovations.  Company will receive any such information in confidence.

8.             Notice of Nonassignable Innovations to Employees in California.  This Agreement does not apply to an Innovation that qualifies fully as a nonassignable invention under the provisions of Section 2870 of the California Labor Code.  I acknowledge that a condition for an Innovation to qualify fully as a non-assignable invention under the provisions of Section 2870 of the California Labor Code is that the invention must be protected under patent laws.  I have reviewed the notification in Exhibit B (“Limited Exclusion Notification”) and agree that my signature acknowledges receipt of the notification.

9.             Cooperation in Perfecting Rights to Company Innovations.  I agree to

perform, during and after my employment, all acts that Company deems necessary or desirable to permit and assist Company, at its expense, in obtaining and enforcing the full benefits, enjoyment, rights and title throughout the world in the Company Innovations as provided to Company under this Agreement.  If Company is unable for any reason to secure my signature to any document required to file, prosecute, register or memorialize the assignment of any rights or application or to enforce any right under any Company Innovations as provided under this Agreement, I hereby irrevocably designate and appoint Company and Company’s duly authorized officers and agents as my agents and attorneys-in-fact to act for and on my behalf and instead of me to take all lawfully permitted acts to further the filing, prosecution, registration, memorialization of assignment, issuance, and enforcement of rights under such Innovations, all with the same legal force and effect as if executed by me.  The foregoing is deemed a power coupled with an interest and is irrevocable.

10.           Return of Materials.  At any time upon Company’s request, and when my employment with Company is over, I will return all materials (including, without limitation, documents, drawings, papers, diskettes and tapes) containing or disclosing any Proprietary Information (including all copies thereof), as well as any keys, pass cards, identification cards, computers, printers, pagers, cellular phones, smartphones, personal digital assistants or similar items or devices that the Company has provided to me.  I will provide Company with a written certification of my compliance with my obligations under this Section.

11.           No Violation of Rights of Third Parties.  During my employment with Company, I will not (a) breach any agreement to keep in confidence any confidential or proprietary information, knowledge or data acquired by me prior to my employment with Company or (b) disclose to Company, or use or induce Company to use, any confidential or proprietary information or material belonging to any previous employer or any other third party.  I am not currently a party, and will not become a party, to any other agreement that is in conflict, or will prevent me from complying, with this Agreement.

12.           Survival.  This Agreement (a) shall survive my employment by Company; (b) does not in any way restrict my right to resign or the right of Company to terminate my employment at any time, for any reason or for no reason; (c) inures to the benefit of successors and assigns of Company; and (d) is binding upon my heirs and legal representatives.

13.           No Solicitation Using Proprietary Information.  During the course of my employment with Company, and after the termination thereof, I shall not use any Company Proprietary Information (as defined in Section 2 above) in order to solicit Company’s customers, suppliers, licensees, licensors, franchisees, consultants or other business associates or to encourage any of same to cease doing business with Company.  In addition, throughout my employment with Company and for one (1) year thereafter, I will not solicit, encourage, or cause others to solicit or encourage any employees or independent contractors of Company to terminate their employment with Company.

14.           No Disparagement.  During my employment with Company and after the termination thereof, I will not disparage Company, its products, services, agents or employees.

15.           Injunctive Relief.  I agree that if I violate this Agreement, Company will suffer irreparable and continuing damage for which money damages are insufficient, and Company is entitled to injunctive relief, a decree for specific performance, and all other relief as may be proper (including money damages if appropriate), to the extent permitted by law, without the need to post a bond.

16.           Notices.  Any notice required or permitted by this Agreement shall be in writing and shall be delivered as follows, with notice deemed given as indicated:  (a) by personal delivery, when actually delivered; (b) by overnight courier, upon written verification of

receipt; (c) by facsimile transmission, upon acknowledgment of receipt of electronic transmission; or (d) by certified or registered mail, return receipt requested, upon verification of receipt.  Notices to me shall be sent to any address in Company’s records or such other address as I may provide in writing.  Notices to Company shall be sent to Company’s Human Resources Department or to such other address as Company may specify in writing.

17.           Governing Law; Forum.  This Agreement shall be governed by the laws of the United States of America and by the laws of the State of California, as such laws are applied to agreements entered into and to be performed entirely within California between California residents.  Company and I each irrevocably consent to the exclusive personal jurisdiction of the federal and state courts located in California for any matter arising out of or relating to this Agreement, except that in actions seeking to enforce any order or any judgment of such federal or state courts located in California, such personal jurisdiction shall be nonexclusive.  Additionally, notwithstanding anything in the foregoing to the contrary, a claim for equitable relief arising out of or related to this Agreement may be brought in any court of competent jurisdiction.

18.           Severability.  If an arbitrator or court of law holds any provision of this Agreement to be illegal, invalid or unenforceable, (a) that provision shall be deemed amended to provide Company the maximum protection permitted by applicable law and (b) the legality, validity and enforceability of the remaining provisions of this Agreement shall not be affected.

19.           Waiver; Modification.  If Company waives any term, provision or breach by me of this Agreement, such waiver shall not be effective unless it is in writing and signed by Company.  No waiver shall constitute a waiver of any other or subsequent breach by me.  This Agreement may be modified only if both Company and I consent in writing.

20.           Entire Agreement.  This Agreement, including any agreement to arbitrate claims or disputes relating to my employment that I may have signed in connection with my employment by Company, represents my entire understanding with Company with respect to the subject matter of this Agreement and supersedes all previous understandings, written or oral.

I certify and acknowledge that I have carefully read all of the provisions of this Agreement and that I understand and will fully and faithfully comply with such provisions.

“COMPANY”	EMPLOYEE:
Groupon Mobly, Inc., Groupon, Inc., and their
affiliates and subsidiaries
By:	By:
Title	Title
Dated:	Dated:

[Signature Page of Employee Confidentiality, Inventions and Non-Solicitation Agreement]

Exhibit A

PRIOR INNOVATIONS

Check one of the following:

TMNO SUCH PRIOR INNOVATIONS EXIST.

OR

TMYES, SUCH PRIOR INNOVATIONS EXIST AS DESCRIBED BELOW (include basic description of each Prior Innovation):

Exhibit B

LIMITED EXCLUSION NOTIFICATION TO EMPLOYEES IN CALIFORNIA

THIS IS TO NOTIFY you in accordance with Section 2872 of the California Labor Code that the foregoing Agreement between you and Company does not require you to assign or offer to assign to Company any invention that you developed entirely on your own time without using Company’s equipment, supplies, facilities or trade secret information except for those inventions that either:

(1)Relate at the time of conception or reduction to practice of the invention to Company’s business, or actual or demonstrably anticipated research or development of Company; or

(2)Result from any work performed by you for Company.

To the extent a provision in the foregoing Agreement purports to require you to assign an invention otherwise excluded from the preceding Section, the provision is against the public policy of California and is unenforceable.

This limited exclusion does not apply to any patent or invention covered by a contract between Company and the United States or any of its agencies requiring full title to such patent or invention to be in the United States.

I ACKNOWLEDGE RECEIPT of a copy of this notification.

Groupon Mobly, Inc., Groupon, Inc., and their affiliates and subsidiaries	By:
By:
	(Printed Name of Employee)
Title
Date:	Date:

EXHIBIT C

Form of Consent, Release and Stockholders’ Representative Agreement

FORM OF CONSENT, RELEASE AND
STOCKHOLDER REPRESENTATIVE AGREEMENT

THIS CONSENT, RELEASE AND STOCKHOLDER REPRESENTATIVE AGREEMENT (this “Agreement”) is first made and entered into as of May       , 2010 by and among Mihir Shah, an individual (the “Representative”), Goodrec, Inc., a Delaware corporation (the “Company”), and the stockholders of the Company party hereto (each individually, a “Stockholder”, and collectively, the “Stockholders”).

R E C I T A L S:

A.Groupon, Inc., a Delaware corporation (“Parent”), Groupon Mobly, Inc., a Delaware corporation and a wholly owned subsidiary of Parent (“Merger Sub”), the Company and the Representative intend to enter into an Agreement and Plan of Merger dated on or about the date hereof (the “Merger Agreement”).

B.Pursuant to the Merger Agreement, the Company will merge with and into Merger Sub and Merger Sub shall continue as the surviving corporation and as a wholly owned subsidiary of Parent, and in connection therewith all of the issued and outstanding shares of capital stock of the Company shall be converted into the right to receive the Merger Consideration (as defined in the Merger Agreement) and all of the outstanding options to purchase shares of capital stock of the Company shall be cancelled and terminated without payment of any consideration. The consummation of the Merger and the other transactions contemplated by the Merger Agreement are collectively referred to herein as the “Transactions”.

C.Each Stockholder will derive substantial benefits from the consummation of the Transactions.

D.Any capitalized terms or phrases used herein and not otherwise defined herein shall have the meanings set forth in the Merger Agreement.

AGREEMENT

NOW, THEREFORE, in consideration of the foregoing Recitals, the mutual covenants and agreements set forth herein, and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, intending to be legally bound, the Representative, the Company and each Stockholder party hereto hereby agree as follows:

ARTICLE I

CONSENT AND ACKNOWLEDGEMENT

Each Stockholder party hereto, in his, her or its capacity as a holder of Company Stock, as evidenced by his, her or its signature hereto, does hereby waive all notice of the time, place and purposes of a specia3 meeting of the Stockholders for the purpose of adopting the Merger Agreement and approving the Merger and, pursuant to the Delaware General Corporation Law

and the Company’s First Amended and Restated Certificate of Incorporation, as amended and in effect (including without limitation, Section B.6 of Article IV), does hereby consent in writing to the adoption of the Merger Agreement, the approval of the Merger and the allocation of the Merger Consideration among the holders of Company Stock as set forth in the Merger Agreement, and does hereby agree to be legally bound by the provisions and obligations thereof, including without limitation, the obligation of the Stockholders to indemnify the Buyer Indemnified Parties for certain losses in accordance with the terms of the Merger Agreement.

ARTICLE II

RELEASE

2.1Release.  From and after the Effective Time:

(a)Subject to the last sentence of this Section 2.1(a), each Stockholder party hereto on behalf of himself, herself or itself and any of his, her or its successors, assigns, heirs and controlled Affiliates hereby releases and forever discharges the Acquired Companies, Parent, Merger Sub, the Surviving Corporation, each other Stockholder and all of their respective current and former directors, officers, partners, managers, employees, agents and Affiliates (each, a “Released Party”) from any and all liability whatsoever (whether known or unknown, asserted or unasserted, absolute or contingent, accrued or unaccrued and whether due or to become due) (“Liability”) that such Stockholder ever had, now has or hereafter can, shall or may have against any Released Party in such Stockholder’s capacity as a director, officer, employee, stockholder, and/or optionholder of the Company, whether directly or derivatively through the Company, arising contemporaneously with or prior to the consummation of the Transactions, or on account of or arising out of any act, omission, transaction, matter, cause or event occurring contemporaneously with or up to and including the date of this Release, including, but not limited to (i) any Liability arising out of any action of the Board of Directors of the Company related to approval of the Merger and adoption of the Merger Agreement or any other agreement contemplated therein or consummation of the Transactions, (ii) any Liability arising out of an alleged breach by any director of the Company of his fiduciary duties to the Company, (iii) any Liability arising from or relating to the Company or its business, operations, assets or liabilities, (iv) any Liability arising from or relating to any equity interest held by Stockholder in the Company, (v) any Liability arising from or relating to any and all agreements and obligations relating to the Company entered into or incurred on or prior to the Effective Time, or (vi) any Liability in respect of any event occurring or circumstances existing on or prior to the date of the Agreement relating to any of the foregoing matters (the “Release”).  Nothing in the Release shall limit in any manner (i) any rights to indemnification the current and former directors and officers of the Company or any of its Subsidiaries may be entitled to pursuant to the Merger Agreement, any applicable contract or agreement in effect on the date hereof, applicable law or the Company’s certificate of incorporation or by-laws, (ii) any rights to payment of the Merger Consideration pursuant to the Merger Agreement or (iii) any other rights of the Stockholders pursuant to the Merger Agreement.

(b)Each Stockholder expressly waives the benefit of any statute or rule of law, which, if applied to the Release, would otherwise exclude from its binding effect any claim not known by the Released Parties on the date of execution of this Agreement.

(c)Each Stockholder party hereto hereby irrevocably covenants to refrain from, directly or indirectly through the Company or otherwise, asserting any claim or demand, or commencing, instituting or causing to be commenced, any claim or legal proceeding of any kind against any Released Party before any court, administrative agency or other forum by reason of any matters released hereby.

(d)Each Stockholder party hereto represents to the Released Parties that he, she or it has not assigned or transferred or purported to assign or transfer to any person or entity all or any part of, or any interest in, any claim, contention, demand, cause of action (at law or in equity) or Liability of any nature, character, or description whatsoever, which is or which purports to be released or discharged by the Release.

2.2Scope of Release.  Each Stockholder party hereto hereby represents that he, she or it understands and acknowledges that he, she or it may hereafter discover facts and legal theories concerning the Release and the subject matter hereof in addition to or different from those of which he, she or it now believes to be true.  Each Stockholder understands and hereby agrees that the Release shall remain effective in all respects notwithstanding those additional or different facts and legal theories or the discovery of those additional or different facts or legal theories.  Each Stockholder assumes the risk of any mistake of fact or law with regard to any potential claim or with regard to any of the facts which are now unknown to him, her or it relating thereto.  Notwithstanding the release set forth herein, the Release and all obligations assumed hereunder shall remain binding on each Stockholder.

ARTICLE III

STOCKHOLDERS’ REPRESENTATIVE

3.1Appointment of the Representative.  Each Stockholder party hereto on behalf of himself, herself or itself and any of his, her or its successors, assigns, heirs and controlled Affiliates hereby irrevocably appoints the Representative as its representative to act on behalf of such Stockholder in connection with, and to facilitate, any and all transactions arising from, in connection with and incident to the Merger.  In such capacity, the Representative shall have the sole and exclusive power and authority to perform all actions required or permitted to be performed by the Representative on behalf of the Stockholders under the Merger Agreement or any other document contemplated by the Merger Agreement.  The grant of authority provided for in Section 4.2:  (i) is coupled with an interest and shall be irrevocable and survive the death, incompetency, bankruptcy or liquidation of such Stockholder and (ii) shall survive the delivery of an assignment by such Stockholder of the whole or any fraction of his, her or its interests in the Merger Consideration or his, her or its Company Stock.  The Representative, by the execution and delivery of this Agreement, hereby accepts the appointment as such Representative.  The Stockholders parties hereto hereby ratify and confirm all actions of the Representative, if any, prior to the date of this Agreement (including, without limitation, the

execution and delivery of the Merger Agreement) with respect to matters arising from, in connection with or incident to the Transactions, and all such actions shall be, and hereby are confirmed to be, conferred by such Stockholders to the Representative pursuant to and with the authority of the Representative as granted in and pursuant to this Agreement.

3.2Authority of the Representative.  The Representative shall have the authority to act for and on behalf of the Stockholders, including, without limitation, to give and receive notices and communications, to act on behalf of the Stockholders with respect to any matters arising from, incident to or in connection with the Merger Agreement or any other document contemplated by the Merger Agreement, to authorize the delivery to the Representative or its designee of funds and property in satisfaction of claims by Parent, the Surviving Corporation, the Representative and/or third parties, to object to such deliveries, to agree to, negotiate and enter into settlements and compromises of, and commence, prosecute, participate in, settle, dismiss or otherwise terminate, as applicable, lawsuits and claims, mediation and arbitration proceedings, and to comply with orders of courts and awards of courts, mediators and arbitrators with respect to such suits, claims or proceedings, and to take all actions necessary or appropriate in the judgment of the Representative for the accomplishment of the foregoing.  In addition to and in furtherance of the foregoing, the Representative shall have the right to (i) execute and deliver written consents in the name of the Stockholders (i.e., actions taken in lieu of a meeting of the Stockholders), and such actions shall be the legal, valid, binding and enforceable actions of the Stockholders, as if executed and delivered by each such Stockholder, and (ii) employ accountants, attorneys and other professionals and incur and pay all costs and expenses related to (A) the performance of the Representative’s duties and obligations and (B) actions taken in the interests of the Stockholders under this Agreement.  The Representative shall for all purposes be deemed the sole authorized agent and attorney-in-fact of the Stockholders until such time as the agency is terminated.  Such agency may be changed by the Stockholders from time to time upon not less than thirty (30) days’ prior written notice to the Representative; provided, however, that the Representative may not be removed unless former Stockholders holding a majority of the shares of Company Stock (immediately prior to the Effective Time) agree to such removal and identify a substitute Representative.  Any vacancy in the position of Representative shall be filled by approval of former Stockholders holding a majority of the shares of Company Stock (immediately prior to the Effective Time).  No bond shall be required of the Representative.  Third party notices or communications to or from the Representative shall constitute notice to or from each of the Stockholders during the term of this Agreement.  Parent is entitled to rely on the acts of the Representative as if they were the acts of the Stockholders themselves.

3.3Limitation of Liability.  The Representative shall not incur any Liability to the Stockholders with respect to any action taken, suffered or omitted hereunder as Representative while acting in good faith and in the exercise of reasonable judgment.  The Representative may, in all questions arising hereunder, rely on the advice of counsel and other professionals and, for anything done, omitted or suffered in good faith by the Representative based on such advice, the Representative shall not be liable to the Stockholders for reasonably taking and following such advice.  The Representative undertakes to perform such duties and only such duties as are specifically set forth in this Agreement, and no other covenants of, or obligations with respect to, the Representative shall be implied or prosecuted under this Agreement against the Representative.  The Stockholders shall severally and pro rata, in accordance with their

respective pro rata interests in the Merger Consideration as set forth in the Merger Agreement, indemnify the Representative and hold the Representative harmless against any loss, Liability, cost or expense incurred (i) in connection with actions taken or omitted on behalf of the Stockholders, if such actions or omissions occur without gross negligence or bad faith on the part of the Representative, or (ii) in connection with or arising out of the acceptance or administration of the Representative’s duties under this Agreement or the Merger Agreement.

3.4Act of the Representative.  A decision, waiver, consent, instruction or other action of the Representative taken on behalf of the Stockholders by the Representative shall be and constitute a decision, waiver, consent, instruction or other action of each and all of the Stockholders, and all such decisions, waivers, consents, instructions and other actions shall be final, binding and conclusive upon each such Stockholder.  Any third party (including the Surviving Corporation and Parent) may rely upon any such decision, waiver, consent, instruction or other action of the Representative as being the decision, waiver, consent, instruction or other action of each and every Stockholder.

3.5Compensation.  The Representative will not be entitled to receive compensation for services rendered (excluding indemnification) from the Stockholders in connection with this Agreement; provided, however, that the Representative shall be reimbursed for all costs and expenses incurred in connection with its acting as representative of the Stockholders.

3.6Resignation.  In the event the Representative becomes unavailable or unwilling to continue as the representative of the Stockholders, the Representative may resign and be discharged from the duties or obligations hereunder by giving a written and dated resignation sent concurrently to each of the Stockholders that is a party hereto, specifying not less than thirty (30) days’ prior notice (the “Notice Period”) of the date when such resignation will take effect.  In the event of such a resignation, former Stockholders holding a majority of the shares of Company Stock (immediately prior to the Effective Time) shall appoint a new representative, under substantially the same terms hereof, within the Notice Period.

ARTICLE IV

TERMINATION OF EXISTING INVESTMENT DOCUMENTS

The Company and each Stockholder hereby agree that, effective as of immediately prior to and contingent upon the occurrence of the Effective Time, each of (i) the Series Seed Preferred Stock Purchase Agreement dated as of March 7, 2008 by and among the Company and the other parties thereto, (iii) the Investors’ Rights Agreement dated as of March 7, 2008 by and among the Company and the other parties thereto and (iii) Right of First Refusal and Co-Sale Agreement dated as of March 7, 2008 by and among the Company and the other parties thereto, shall be terminated and be of no further force and effect.

ARTICLE V

MISCELLANEOUS

5.1Governing Law.  It is the intention of the parties hereto that the domestic laws of the State of Delaware (irrespective of its choice of law principles) shall govern the validity of this Agreement, the construction of its terms, and the interpretation and enforcement of the rights and duties of the parties to this Agreement.

5.2Counterparts and Facsimile Signature.  This Agreement may be executed in any number of counterparts, each of which shall be an original as against any party whose signature appears on such counterpart and all of which together shall constitute one and the same instrument.  The counterparts of this Agreement may be executed and delivered by one party to another by telecopy, and the receiving party may rely on the receipt of such executed instrument as if the original had been received.

5.3Amendment.  This Agreement may be amended with the written consent of the Representative and the former Stockholders of a majority of the shares of Common Stock (immediately prior to the Effective Time); provided, however, that in no event may the parties amend, modify or waive the provisions of Articles I, II, III and IV or Section 5.3 of this Agreement.

5.4Termination.  This Agreement and the appointment of the Representative shall terminate upon the satisfaction or expiration of all obligations and rights under or pursuant to the Merger Agreement.

5.5Third Party Beneficiaries.  From and after the Effective Time, Parent shall be an intended third-party beneficiary of this Agreement with respect to Articles I, II, III and IV and Section 5.3 of this Agreement.  Prior to the Effective Time, Parent shall have no rights herein.

[signature pages follow]

IN WITNESS WHEREOF, this Representative Agreement has been executed as of the date first written above.

REPRESENTATIVE:

Name:

Its:

STOCKHOLDERS:

Name:

Its:

Name:

Its:

EXHIBIT D

Form of Non-Competition Agreement

FORM OF NON-COMPETITION AND NON-SOLICITATION AGREEMENT

This Non-Competition and Non-Solicitation Agreement (this “Agreement”) is entered into as of May         , 2010 (the “Effective Date”), by and between Groupon, Inc., a Delaware corporation (“Buyer”), and                        (“Shareholder”).

RECITALS

A.This Agreement is being entered into pursuant to and as a condition of that certain Agreement and Plan of Merger (the “Merger Agreement”), dated the date hereof, by and among Buyer, Groupon Mobly, Inc., a Delaware corporation (the “Acquisition Sub”), and Goodrec, Inc., a Delaware corporation doing business as Mob.ly (the “Company”), pursuant to which Buyer will purchase all of the shares of common stock held by the shareholders of the Company (the “Transaction”).  As a result of the Merger Agreement, the Company shall be merged with and into the Acquisition Sub, and the resulting entity shall be referred to as the “Surviving Company.”

B.It is anticipated and expected that the Effective Date of this Agreement shall correspond to the Effective Time of the Merger as set forth in Section 1.2 of the Merger Agreement.

C.Shareholder is a substantial equity holder of the Company and a key member of the management of the Company, such that he is in possession of confidential and proprietary information, including trade secrets, relating to the business and operations of the Company, and will derive substantial economic benefit from the Transaction as a result of Buyer’s purchase of all of Shareholder’s equity interest in the Company.

D.The parties recognize and agree that this Agreement is necessary to protect Buyer’s interest in the Company, including its goodwill, that will be acquired in connection with the Transaction.  As a result, in order to protect its interest in the Company, including its goodwill, Buyer desires to ensure that Shareholder will not compete with the Company for the period set forth in this Agreement, in a business which is in competition with the business of the Company, in all of the geographical areas where the Company has conducted or carried on business prior to the closing of the Transaction.

E.This Agreement is a material inducement to Buyer to enter into the Transaction, and Shareholder is agreeable to entering into this Agreement with Buyer, on the terms set forth herein, in order to protect Buyer’s legitimate interests as a buyer of the stock and goodwill of the Company.

NOW, THEREFORE, in consideration of the mutual covenants contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows:

1.RESTRICTION ON COMPETITION.  Subject to the terms and conditions hereof, Shareholder covenants and agrees that, for the Restricted Period (as defined below), Shareholder shall not, either directly or indirectly, through an affiliated or controlled entity or person, on

Shareholder’s own behalf or as an employee, shareholder, officer, director, partner, consultant, proprietor, principal, agent, creditor, security holder, trustee or otherwise in any other capacity (except by ownership of up to one percent (1%) or less of any class of the securities of any publicly held corporation that engages in or plans to engage in operations that are in competition with the Company, the Surviving Company or Buyer, if such securities are set forth in any national securities exchange or have been registered under section 12 (g) of the Exchange Act), own, manage, operate, finance, control, advise, render services to (as a shareholder, employee, officer, director, consultant, owner, partner, volunteer or in any other capacity) or guarantee the obligations of any person or entity that engages in or plans to engage in a business which is in competition with the business of the Company, the Surviving Company or Buyer, which for purposes of this Agreement shall mean the business of operating or providing services to any social commerce site that is offering time-sensitive coupon deals based on geography or a business that is otherwise competitive with the business of Buyer as conducted on the Effective Date (the “Restricted Business”) within any state or county within the United States of America in which Buyer or the Surviving Company conducts the Restricted Business during the Restricted Period (the “Restricted Territory”).  The term “Restricted Period” shall mean the period commencing on the Effective Date of this Agreement and continuing for a period of four (4) years (or if a court should determine that 4 years is not reasonable, then the parties agree that the longer period of 3 years, or 2 years, or 1 year, as the court shall deem reasonable, shall apply) or three years after the termination of Shareholder’s employment with the Surviving Company for any reason, whichever is later.  While it is contemplated that Shareholder shall remain employed by the Surviving Company after the closing of the Transaction to assist in the transition of the management of the Surviving Company, for purposes of this Agreement the cause of termination of Shareholder’s employment by the Surviving Company shall not affect the enforceability of this Agreement.

2.NONSOLICITATION.  During the Restricted Period, Shareholder shall not, whether for Shareholder’s own account or for the account of any other individual, partnership, firm, corporation or other business organization, directly or indirectly, separately or in association with others, interfere with, impair, disrupt or damage the business of the Surviving Company, Buyer or any affiliated entities by:

(i)soliciting, recruiting, or encouraging any of the Surviving Company’s, Buyer’s or their affiliated entities’ employees or independent contractors to discontinue their employment or engagement with the Surviving Company, Buyer or any affiliated entity or by causing others to solicit, recruit or encourage any of the Surviving Company’s, Buyer’s or their affiliated entities’ employees or independent contractors to discontinue their employment or engagement with the Surviving Company, Buyer or any affiliated entities.

(ii)soliciting, inducing or attempting to induce any person or entity that was a customer, supplier, licensee, licensor, franchisee, consultant or other business associate of the Restricted Business as conducted by the Company, Surviving Company, Buyer or any affiliated entity on or within one year preceding the Effective Date, or during the Restricted Period, to cease doing business with Surviving Company, Buyer or any affiliated entities.

3.NONDISPARAGEMENT. From and after the Effective Date, Shareholder agrees not to disparage the business reputation of the Company, Surviving Company, Buyer or any of their affiliated entities, or the personal or business reputations of any of their respective officers, directors or owners.

4.SEPARATE COVENANTS.  The covenants contained herein shall be construed as if each covenant is divided into separate and distinct covenants with respect to the Restricted Business, each capacity in which Shareholder is prohibited from competing and each part of the Restricted Territory in which the Company is carrying on the Restricted Business.  Each such covenant shall constitute separate and several covenants distinct from all other such covenants.  In addition, each of the parties hereto recognizes that the territorial restrictions contained in this Agreement are properly required for the adequate protection of the interests purchased by Buyer in the Transaction, and that in the event any covenant or other provision contained herein shall be deemed to be illegal, unenforceable or unreasonable by a court or other tribunal of competent jurisdiction with respect to any part of the Restricted Territory, such covenant or provision shall not be affected with respect to any and all other parts of the Restricted Territory, and each of the parties hereto agrees and submits to the reduction of said territorial restriction to such an area as said court shall deem reasonable.  Similarly, in the event any covenant or other provision contained herein shall be deemed to be illegal, unenforceable or unreasonable by a court or other tribunal of competent jurisdiction with respect to the Restricted Period, each of the parties hereto agrees and submits to the shortest reduction of the Restricted Period to such a time period as said court shall deem reasonable.

5.REPRESENTATIONS AND REMEDIES.  Each of the parties acknowledge that:  (i) Shareholder is deriving substantial economic benefit from his sale of all of his equity in the Company to the Buyer in connection with the Transaction; (ii) the covenants and the restrictions contained in this Agreement are necessary, fundamental and required for the protection of Buyer’s interest in the Company; (iii) such covenants relate to matters which are of a special, unique and extraordinary character that gives each of such covenants a special, unique and extraordinary value; (iv) Shareholder is entering into this Agreement solely in connection with the sale of all of his equity interest in the Company and not in connection with his contemplated employment with Surviving Company; and (v) a breach of any of such covenants or any other provision of this Agreement will result in irreparable harm and damage to Buyer that cannot be adequately compensated by a monetary award.  Accordingly, it is expressly agreed that in addition to all other remedies available at law or in equity (including, without limitation, money damages from Shareholder), Buyer shall be entitled to seek the remedy of a temporary restraining order, preliminary injunction or such other form of injunctive or equitable relief as may be used by any court of competent jurisdiction to restrain or enjoin any of the parties hereto from breaching any such covenant or provision or to specifically enforce the provisions hereof.

6.NOTICES.  All notices, requests, demands and other communications which are required or may be given under this Agreement shall be in writing and shall be deemed to have been duly given if delivered to Buyer in the fashion and at the addresses as specified in Section 8.4 of the Merger Agreement and to Shareholder at:

or to such other addresses as any party hereto may specify by notice in writing to the other.

7.GOVERNING LAW.  This Agreement shall be construed and interpreted and its performance shall be governed by the laws of the State of Illinois without regard to conflicts of law principles of any jurisdiction.  As a result of the fact that Buyer is headquartered in Chicago, Illinois, each of the parties hereto irrevocably consents to the exclusive jurisdiction and venue of the state or federal courts in and around Chicago, Illinois in connection with any matter based upon or arising out of this Agreement or the matters contemplated herein, agrees that process may be served upon them in any manner authorized by the laws of the State of Illinois for such persons and waives and covenants not to assert or plead any objection which they might otherwise have to such jurisdiction, venue and such process.

8.SUCCESSORS AND ASSIGNS.  This Agreement is the valid and legally binding obligation of the parties hereto, enforceable against each party in accordance with its terms, and shall inure to the benefit of such parties and their respective successors and assigns.

9.COUNTERPARTS.  This Agreement may be executed in any number of counterparts and any party hereto may execute any such counterpart, each of which when executed and delivered shall be deemed to be an original and all of which counterparts taken together shall constitute but one and the same instrument.  This Agreement shall become binding when one or more counterparts taken together shall have been executed and delivered by the parties by facsimile transmission or otherwise.

10.ENTIRE AGREEMENT.  This Agreement is entered into concurrently with the Merger Agreement, and together with the provisions therein on the same subject, constitutes the entire agreement between the parties with respect to the subject matter of this Agreement and supersedes all prior written and oral agreements and understandings between the parties with respect to the subject matter of this Agreement.  This Agreement may not be amended except by a written agreement executed by all parties.

11.WAIVER.  The rights and remedies of the parties to this Agreement are cumulative and not alternative.  Neither the failure or any delay by any party in exercising any right, power or privilege under this Agreement will operate as a waiver of such right, power or privilege, and no single or partial exercise of any such right, power or privilege will preclude any other or further exercise of such right, power or privilege or the exercise of any other right, power or privilege.  To the maximum extent permitted by applicable law:  (i) no claim or right arising out of this Agreement can be discharged by one party, in whole or in part, by a waiver or renunciation of the claim or right unless in writing signed by the other party; (ii) no waiver that may be given by a party will be applicable except in the specific instance for which it is given; and (iii) no notice to or demand on one party will be deemed to be a waiver of any obligation of such party or of the right of the party giving such notice or demand to take further action without notice or demand as provided in this Agreement.

12.INDEPENDENCE OF OBLIGATIONS.  The covenants and obligations of Shareholder set forth in this Agreement shall be construed as independent of any other agreement or arrangement between Shareholder, on the one hand, and Buyer, on the other hand, and the existence of any claim or cause of action by Shareholder against Buyer shall not constitute a defense to the enforcement of such covenants or obligations against Shareholder.

13.ADVICE OF COUNSEL.  Each party hereto acknowledges that it has either been represented by independent legal counsel or that it has waived its right to obtain advice of legal counsel in connection with the transactions contemplated by this Agreement.

IN WITNESS WHEREOF, the parties have duly executed this Non-Competition and Non-Solicitation Agreement as of the date first written above.

GROUPON, INC.

By:

Name:

Title:

SHAREHOLDER

By:

Name:

[Signature Page of Non-Competition and Non-Solicitation Agreement]

EX-10.22

Exhibit 10.22

AGREEMENT AND PLAN OF MERGER

This AGREEMENT AND PLAN OF MERGER (this “Agreement”), dated as of November 30, 2010, is entered into by and among Groupon, Inc., a Delaware corporation (the “Purchaser”), Groupon Ludic, Inc., a Delaware corporation and wholly-owned subsidiary of the Purchaser (“Merger Sub”), Ludic Labs, Inc., a Delaware corporation (the “Company”), and the person designated from time to time as the Stockholders’ Representative pursuant to that certain Consent, Release and Stockholders’ Representative Agreement dated as of the date hereof (the “Stockholders’ Representative”).

RECITALS

A.The Boards of Directors of the Company (the “Company Board”), Merger Sub and Purchaser have determined that it would be advisable and in the best interests of the security holders of their respective companies that the Company merge with and into Merger Sub (the “Merger”), with Merger Sub to survive the Merger, on the terms and subject to the conditions set forth in this Agreement, and, in furtherance thereof, have approved the Merger, this Agreement and the other transactions contemplated by this Agreement.

B.Pursuant to the Merger, among other things, the issued and outstanding shares of capital stock of the Company shall be converted into the right to receive shares of capital stock of Purchaser and/or cash consideration in the manner set forth herein. Under the terms of the Merger, Purchaser proposes to issue an aggregate of 615,000 shares of the Non-Voting Common Stock, par value $0.0001 per share, of Purchaser (the “Purchaser Common Stock”) and to pay an aggregate amount of $1,700,000 in cash, subject to certain deductions, to the stockholders of the Company as consideration for their shares of Company capital stock.

C.In connection with Merger, and subject to certain limitations, each stockholder of the Company will be given the opportunity to elect what proportion of the Merger consideration such stockholder will receive in the form of shares of Purchaser Common Stock and what proportion of the Merger consideration such stockholder will receive in the form of cash. To the extent that the Company stockholders collectively elect to receive less than, or more than, an aggregate of 615,000 shares of Purchaser Common Stock, the number of shares of Purchaser Common Stock to be received by each Company stockholder will be increased or decreased proportionately so as to ensure that the Purchaser Common Stock to be issued in the Merger is appropriately allocated amongst the Company stockholders.

D.A number of shares equal to 10% of the shares of Purchaser Common Stock to be issued, and/or an amount equal to 10% of the cash consideration payable, as applicable, to each Company stockholder in the Merger will be deposited in escrow to secure the indemnification obligations of the Company stockholders under this Agreement.

E.Concurrently with the execution of this Agreement, each of Brian Totty, Paul Gauthier and David Gourley (collectively, the “Key Employees”) is executing an Employment Agreement with Purchaser and Merger Sub (collectively, the “Employment Agreements”), each of the Key Employees is executing a Non-Competition Agreement with Purchaser (collectively, the “Non-Competition Agreements”), each of the Key Employees and each of Kan-Shun Sit

and Kimberlee Adamski (collectively, the “Other Employees”) is executing a Restricted Stock Unit Grant Agreement with Purchaser (collectively, the “RSU Grant Agreements”), each of the Other Employees is executing an employment offer letter with Purchaser (or Merger Sub), and each of the Key Employees and each of the Other Employees is executing a Confidentiality, Inventions and Non-Solicitation Agreement with Purchaser and Merger Sub (collectively, the “Employee Confidentiality Agreements”), with each of the aforementioned agreements to become effective upon the Closing (as such term is defined in Section 5 below).

F.The holders of the outstanding shares of Series A Preferred Stock, par value $0.0001 per share, of the Company (the “Series A Preferred Stock”) have approved the conversion of all such shares into shares of Common Stock, par value $0.0001 per share, of the Company (the “Company Common Stock” and collectively with the Series A Preferred Stock, the “Company Capital Stock”) in accordance with the provisions of the Amended and Restated Certificate of Incorporation of the Company contingent upon the consummation of the Merger and effective as of immediately prior to the consummation of the Merger.

E.Promptly following the execution and delivery of this Agreement, and as a material inducement to Purchaser to enter into this Agreement, the Company shall solicit and use all commercially reasonable efforts to obtain and deliver to Purchaser an executed copy of a Written Consent of the Stockholders of the Company evidencing the approval of the adoption of this Agreement by the holders of the outstanding shares of capital stock of the Company (the “Company Stockholders”) in accordance with applicable law.

NOW, THEREFORE, in consideration of the foregoing and the mutual representations, warranties, covenants and agreements herein contained, the parties hereto agree as follows:

1.The Merger.

(a)At the Effective Time (as such term is defined in Section 1(b) below), on the terms and subject to the conditions set forth in this Agreement, the Certificate of Merger in substantially the form attached hereto as Exhibit A (the “Certificate of Merger”) and the applicable provisions of Delaware Law, the Company shall merge with and into Merger Sub, the separate corporate existence of the Company shall cease and Merger Sub shall continue as the surviving corporation of the Merger and as a wholly-owned subsidiary of Purchaser.  Merger Sub, as the surviving corporation after the Merger, is hereinafter sometimes referred to as the “Surviving Corporation.”

(b)At the Closing, Merger Sub and the Company shall cause the Certificate of Merger to be filed with the Secretary of State of the State of Delaware, in accordance with the relevant provisions of Delaware Law (the time of acceptance by the Secretary of State of the State of Delaware of such filing or such later time as may be agreed to by Purchaser and the Company in writing (and set forth in the Certificate of Merger) being referred to herein as the “Effective Time”).

(c)At the Effective Time, the effect of the Merger shall be as provided in this Agreement, the Certificate of Merger and the applicable provisions of Delaware Law.  Without limiting the generality of the foregoing, and subject thereto, at the Effective Time, all the

property, rights, privileges, powers and franchises of Merger Sub and the Company shall vest in the Surviving Corporation, and all debts, liabilities and duties of Merger Sub and the Company shall become debts, liabilities and duties of the Surviving Corporation.

(d)At the Effective Time, the Certificate of Incorporation of Merger Sub shall be the certificate of Incorporation of the Surviving Corporation, until thereafter amended as provided by Delaware Law.

(e)At the Effective Time, the Bylaws of Merger Sub shall be the Bylaws of the Surviving Corporation, until thereafter amended as provided by Delaware Law, the Certificate of Incorporation of the Surviving Corporation and such Bylaws.

(f)At the Effective Time, the members of the Board of Directors of Merger Sub immediately prior to the Effective Time shall be appointed as the members of the Board of Directors of the Surviving Corporation immediately after the Effective Time until their respective successors are duly elected or appointed and qualified.

(g)At the Effective Time, the officers of Merger Sub immediately prior to the Effective Time shall be appointed as the officers of the Surviving Corporation immediately after the Effective Time until their respective successors are duly appointed.

2.Effect of the Merger on Company Capital Stock.

(a)Certain Definitions.  The following terms shall have the following meaning for the purpose of this Agreement:

“Cash Consideration Per Share” means (A) the Total Cash Consideration divided by (B) the Fully-Diluted Company Stock.

“Closing Cash Consideration Per Share” means (A) the Cash Consideration Per Share minus (B) the Escrow Cash Per Share.

“Closing Stock Consideration Per Share” means (A) the Stock Consideration Per Share minus (B) the Escrow Stock Amount Per Share.

“Company Transaction Expenses” means those fees or expenses incurred by the Company in connection with the negotiation and execution of this Agreement and the consummation of the transactions contemplated hereby in excess of the amount of such fees and expenses that Purchaser has agreed to pay pursuant to Section 8.

“Delaware Law” means the General Corporation Law of the State of Delaware.

“Dissenting Shares” means shares held by the Company Stockholders who elect to exercise dissenters’ rights under Delaware Law.

“Dissenting Stockholders” means holders of Dissenting Shares.

“Escrow Amount Per Share” means the Escrow Cash Per Share and the Escrow Stock Amount Per Share.

“Escrow Cash Per Share” means 10% of the Cash Consideration Per Share.

“Escrow Stock Amount Per Share” means 10% of the Stock Consideration Per Share.

“Fully-Diluted Company Stock” means the sum, without duplication, of the aggregate number of shares of Company Common Stock that are issued and outstanding immediately prior to the Effective Time (treating all Series A Preferred Stock on an as-converted to Company Common Stock basis).

“Merger Consideration Per Share” means the sum of (A) the Cash Consideration Per Share and (B) the dollar value of the Stock Consideration Per Share calculated on the basis of the Purchaser Common Stock Price.

“Pro Rata Share” means, with respect to a particular Company Stockholder, the sum of the portion of the cash consideration and the value of the shares of Purchaser Common Stock (based on the Purchaser Common Stock Price) that such Company Stockholder is entitled to receive pursuant to Section 2(b) with respect to its Company Common Stock (other than Dissenting Shares) and relative to the aggregate amount of the cash consideration and the aggregate value of the shares of Purchaser Common Stock (based on the Purchaser Common Stock Price) that all Company Stockholders are entitled to receive pursuant to Section 2(b) with respect to their Company Common Stock (other than Dissenting Shares).

“Purchaser Common Stock Price” means $21.79.

“Stock Consideration Per Share” means (A) the Total Share Consideration divided by (B) the Fully-Diluted Company Stock.

“Total Cash Consideration” means the sum of $1,700,000 in cash less the sum of (A) the aggregate Payoff Amounts (as defined in Section 5(c)(xii)), (B) the aggregate amount of cash payments to advisors of the Company set forth on Schedule 2 (“Transaction Bonuses”) and (C) the aggregate accrued compensation amount of $140,000 owed to certain Key Employees as described in Schedule 3(e)(iv) of the Disclosure Schedule (the “Accrued Compensation Amounts”), together with $13,000 of employer-related taxes payable thereon.

“Total Merger Consideration” means an aggregate value equal to the sum of (A) the Total Cash Consideration and (B) the value of the Total Share Consideration calculated based on the Purchaser Common Stock Price.

“Total Share Consideration” means an aggregate of 615,000 shares of Purchaser Common Stock.

(b)Company Capital Stock.  On the terms and subject to the conditions set forth in this Agreement, and without any action on the part of any holder of the Company Capital Stock:

(i)At the Effective Time, and subject to any different allocation of the consideration payable hereunder as may be implemented pursuant to Section 2(c) below, each share of Company Common Stock issued and outstanding immediately prior to the Effective Time, including shares of Company Common Stock issued upon conversion of the Series A Preferred Stock (other than Dissenting Shares and shares owned by the Company) shall be automatically converted into the right to receive (A) an amount of cash (without interest) equal to the Closing Cash Consideration Per Share, (B) a number of shares of Purchaser Common Stock equal to the Closing Stock Consideration Per Share, (C) upon release from the escrow, pursuant to and subject to terms of Section 6(f) and the Escrow Agreement, the Escrow Amount Per Share, and (D) any additional cash consideration that may become payable by Purchaser pursuant to Section 20(a) hereof.  The amount of cash and the number of shares of Purchaser Common Stock that each Company Stockholder is entitled to receive for the shares of Company Common Stock held by such Company Stockholder shall be rounded to the nearest cent or the nearest whole share, as applicable, and computed after aggregating cash amounts payable and shares issuable for all shares of Company Common Stock held by such Company Stockholder.

(ii)Purchaser shall not assume or substitute any equivalent awards for any outstanding options of the Company in connection with the Merger. The vesting of each outstanding option to purchase shares of Company Capital Stock (the “Options”) shall be accelerated in full as of the date that is two days prior to the Closing such that such Options shall become exercisable in full at such time and such Options shall terminate and be cancelled as of the Effective Time, without the payment of any consideration therefor, to the extent that such Options have not been exercised prior to the Effective Time.

(iii)Each share of capital stock of Merger Sub that is issued and outstanding immediately prior to the Effective Time will, by virtue of the Merger and without further action on the part of Purchaser, be converted into and become one share of common stock of the Surviving Corporation (and the shares of Surviving Corporation into which the shares of Merger Sub capital stock are so converted shall be the only shares of the Surviving Corporation’s capital stock that are issued and outstanding immediately after the Effective Time).  Each certificate evidencing ownership of shares of common stock of Merger Sub will evidence ownership of such shares of common stock of the Surviving Corporation.

(c)Merger Consideration Election.  Notwithstanding the provisions of Section 2(b) above, and subject to the provisions of this Section 2(c), each Company Stockholder shall be permitted to elect to receive such Company Stockholder’s portion of the Total Merger Consideration in a different proportion of cash and Purchaser Common Stock consideration to that provided pursuant to Section 2(b) hereof, as described below:

(i)Concurrently with the solicitation by the Company of the approval by the Company Stockholders of this Agreement, the Company shall deliver to each Company Stockholder a letter of transmittal in the form of Exhibit B (a “Letter of Transmittal”) and an election form in the form of Exhibit C (a “Merger Consideration Election Form”);

(ii)Each Merger Consideration Election Form shall permit the relevant Company Stockholder (or the beneficial owner through appropriate and customary

documentation and instructions) (each, a “Holder”), other than any Holder of Dissenting Shares, to specify the number of shares of Company Common Stock held by such Holder with respect to which such Holder elects to receive the Merger Consideration Per Share in the form of shares of Purchaser Common Stock, up to all of such Company Stockholder’s shares; provided that in no event, shall the aggregate number of shares of Purchaser Common Stock to be issued to the Company Stockholders in the Merger be less than or exceed 615,000 shares (the “Share Threshold”).  In the event the aggregate Merger Consideration Per Share to be paid in the form of shares of Purchaser Common Stock elected by the Company Stockholders is less than or more than the Share Threshold (or to the extent that shares of Purchaser Common Stock cannot be issued in the Merger to any Company Stockholder as a result of the failure of such Company Stockholder to qualify as an “accredited investor” within the meaning of Regulation D promulgated under the Securities Act of 1933, as amended), each Company Stockholder’s election shall be deemed to be increased or decreased pro rata, as applicable (based on the number of shares of Company Common Stock held by such Company Stockholder relative to the number of shares of Company Common Stock held by all Company Stockholders) to an amount such that the aggregate election by all Company Stockholders is equal to the Share Threshold.

(iii)The Merger Consideration Per Share for any shares remaining that are held by such Holder and for which the Holder did not elect consideration to be paid in the form of shares of Purchaser Common Stock shall be payable in cash.

(iv)The Merger Consideration Per Share for any Company Common Stock with respect to which the Purchaser has not received an effective, properly completed Merger Consideration Election Form prior to the date hereof (the “Election Deadline”) (other than any shares of Company Common Stock that constitute Dissenting Shares as of such time) shall be deemed to be payable as provided in Section 2(b) above, subject to the adjustments provided in subclause (ii) above, provided that all shares of such Company Common Stock held by the relevant Holder shall be aggregated for the purpose of such calculation, and provided further that the relevant Holder shall only be entitled to receive his or her Merger Consideration Per Share in the form of cash in the event that the Purchaser, in consultation with the Company, reasonably believes that such Holder does not qualify as an “accredited investor” under Regulation D promulgated by the Securities Act of 1933, as amended.

(v)A Merger Consideration Election Form shall have been properly made only if the Purchaser shall have actually received a properly completed Merger Consideration Election Form by the Election Deadline.  Subject to the terms of this Agreement and of the Merger Consideration Election Form, the Purchaser shall have reasonable discretion to determine whether any election has been properly or timely made and to disregard immaterial defects in the Merger Consideration Election Forms, and any good faith decisions of the Purchaser regarding such matters shall be binding and conclusive.  Purchaser shall work in good faith with any Company Stockholder to correct any defect in a Merger Consideration Election Form so as to make such Merger Consideration Election Form not defective.

(vi)The amount of cash and the number of shares of Purchaser Common Stock that each Company Stockholder is entitled to receive pursuant to this Section 2(c) for the shares of Company Common Stock held by such Company Stockholder shall be rounded to the nearest cent or the nearest whole share, as applicable, and computed after aggregating cash amounts payable and shares issuable for all shares of Company Common Stock held by such Company Stockholder.

(vii)Following any adjustment to the aggregate amounts of the Stock Consideration Per Share and the Cash Consideration Per Share to be received by a Company Stockholder in the Merger effected pursuant to Section 2(c), the Escrow Amount Per Share of such Company Stockholder shall be adjusted to consist of 10% of the number of shares of Purchaser Common Stock and 10% of the cash consideration to be received by such Company Stockholder for each share of Company Common Stock held by such Company Stockholder as determined pursuant to Section 2(c).

(viii)Purchaser and the Company shall jointly prepare a spreadsheet (the “Final Merger Consideration Spreadsheet”) setting forth the definitive allocation of the stock and cash consideration to be paid to each Stockholder with respect to the aggregate Merger Consideration Per Share to be paid to each Company Stockholder for its shares of Company Common Stock in the Merger, and the stock and cash amount constituting the aggregate Escrow Amount Per Share of such Company Stockholder, in each case, as determined in accordance with the foregoing provisions of this Section 2(c). Within two (2) Business Days following Purchaser’s receipt of (x) a completed and signed Letter of Transmittal from each and every Company Stockholder, together with the stock certificates (or a duly completed and signed affidavit of lost certificate in lieu thereof) representing such Company Stockholder’s shares of Company Capital Stock and (y) executed copies of all of the Stock Powers (as defined in the Escrow Agreement), Purchaser shall (A) deliver to each Company Stockholder receiving Purchaser Common Stock a stock certificate representing the Closing Stock Consideration Per Share to be issued to such Company Stockholder in accordance with the allocations and amounts provided in the Final Merger Consideration Spreadsheet, (B) pay the Closing Cash Consideration per Share to be paid to each Company Stockholder receiving cash in accordance with the allocations and amounts provided in the Final Merger Consideration Spreadsheet, and (C) provide to the Escrow Agent stock certificates and cash representing the aggregate Escrow Amount Per Share to be contributed by each Company Stockholder into escrow in the allocations and amounts provided in the Final Merger Consideration Spreadsheet.

(d)Treatment of Company Capital Stock Owned by the Company and Purchaser.  At the Effective Time, all shares of Company Capital Stock that are owned by the Company as treasury stock immediately prior to the Effective Time shall be canceled and extinguished without any conversion thereof, and each share of Company Capital Stock owned by Purchaser or any direct or indirect wholly-owned subsidiary of Purchaser immediately prior to the Effective Time, shall be canceled and extinguished without any conversion thereof.

(e)Appraisal Rights.  Notwithstanding anything contained herein to the contrary, any Dissenting Shares shall not be converted into the right to receive the cash amount

provided for in Section 2(b), but shall instead be converted into the right to receive such consideration as may be determined to be due with respect to any such Dissenting Shares pursuant to Delaware Law.  Each Dissenting Stockholder who, pursuant to the provisions of Delaware Law, becomes entitled to payment thereunder for his, her or its Dissenting Shares shall receive payment therefor in accordance with Delaware Law (but only after the value therefor shall have been agreed upon or finally determined pursuant to such provisions).  If, after the Effective Time, any Dissenting Shares shall lose their status as Dissenting Shares, then any such shares shall immediately be converted into the right to receive the cash payable pursuant to Section 2(b) in respect of such shares as if such shares never had been Dissenting Shares, and Purchaser shall issue and deliver to the holder thereof, the amount of cash and stock consideration to which such holder would be entitled in respect thereof under Section 2(b) as if such shares never had been Dissenting Shares.

(f)Payoff Amount. Purchaser shall pay the Payoff Amount in cash to the Key Employees at the Closing.

(g)Transaction Bonuses.  Purchaser shall provide sufficient funds to the Company to, and the Company shall, pay the Transaction Bonuses at the Closing to the individuals and in the amounts set forth on Schedule 2.  For the avoidance of doubt, the Transaction Bonuses shall be deemed paid by the Company as of immediately prior to the Closing.

(h)Accrued Compensation Amounts. Purchaser shall provide sufficient funds to the Company to, and the Company shall, pay the Accrued Compensation Amounts to the Key Employees, net of any applicable withholding Taxes, at the Closing.  For the avoidance of doubt, the Accrued Compensation shall be deemed paid by the Company as of immediately prior to the Closing.

3.Representations and Warranties of the Company.  Except as set forth on the Schedules delivered by the Company to Purchaser and attached hereto (collectively, the “Disclosure Schedule”) (it being understood and agreed that any information disclosed under any section or subsection of the Disclosure Schedule shall qualify the representations and warranties set forth in the corresponding section or subsection of this Agreement and also the representations and warranties set forth in any other section or subsection of this Agreement (whether or not a specific cross-reference is included inn the Disclosure Schedule) if and to the extent that it is reasonably apparent that such information also applies to such other sections or subsections), the Company represents and warrants to Purchaser as set forth below in this Section 3.

For purposes of this Agreement, the following terms shall have the following meanings:

“Material Adverse Effect” with respect to the Company or Purchaser, as applicable, means any change, effect, event or occurrence that is materially adverse to the assets, liabilities, business, results of operations and financial condition of such entity and its subsidiaries, taken as a whole, but excluding any effect resulting from or relating to (i) general economic conditions, or changes affecting the industry in which such entity primarily operates which do not disproportionately affect such entity as compared to such entity’s competitors, (ii) an outbreak or

escalation of hostilities involving the United States or the declaration by the United States of a national emergency or war, or the occurrence of any other calamity or crisis (including any act of terrorism, earthquake, hurricane, tornado or other force majeure event), (iii) any change in financial markets or economic conditions in the United States or elsewhere, (iv) the announcement or pendency of this Agreement or the transactions contemplated by this Agreement (including any cancellation of, or delays in, anticipated activities under customer contracts, any reduction in sales, any disruption in supplier, distributor, partner or similar relationships or any loss of employees), or (v) any change or amendment to any applicable law or any change in the manner in which any applicable law is or may be enforced.

“Transaction Documents” means the Escrow Agreement, the Employment Agreements, the RSU Grant Agreements, the Non-Competition Agreements and the Employee Confidentiality Agreements.

(a)Organization.  The Company is a corporation duly incorporated, validly existing and in good standing under the laws of the State of Delaware.  The Company is qualified to conduct business and is in good standing as a foreign corporation in the jurisdictions listed on Schedule 3(a) of the Disclosure Schedule, and there are no other jurisdictions where such qualification is required under applicable law, except any jurisdiction where the failure to be qualified would not, individually or in the aggregate, have a Material Adverse Effect.

(b)Subsidiaries.  Except as set forth on Schedule 3(b) of the Disclosure Schedule, the Company does not own, directly or indirectly, more than fifty percent (50%) of the equity interests or voting control of any other corporation, partnership, limited liability company or other entity (each, a “Subsidiary”), nor does the Company own, directly or indirectly, any stock or other equity interest in any other corporation, partnership, limited liability company or other entity.  As used in this Section 3, the term “Company” shall include each Subsidiary of the Company.

(c)Authority; Capacity.  The Company (i) has all requisite corporate power and authority to carry on the business in which it is engaged and to own and use the properties owned and used by it, (ii) subject to obtaining the approval of the Company Stockholders with respect to the adoption of this Agreement, has all requisite corporate power to enter into, and perform its obligations under, this Agreement and each other Transaction Document to which it is a party, and (i) subject to obtaining the approval of the Company Stockholders with respect to the adoption of this Agreement, has taken all requisite corporate action to authorize (A) the execution, delivery and performance of this Agreement and each other Transaction Document to which it is a party and (B) the consummation of the Merger and the other transactions contemplated by each other Transaction Document to which it is a party.  This Agreement has been duly executed and delivered by the Company and is binding upon, and legally enforceable against, the Company in accordance with its terms, except as such enforcement may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting enforcement of creditors’ rights generally and by general principles of equity (including the possibility of unavailability of specific performance or injunctive relief), regardless of whether applied in a proceeding at law or in equity.

(d)No Violation; Required Consents.  Except as set forth on Schedule 3(d) of the Disclosure Schedule, neither the execution and delivery of this Agreement or any of the other Transaction Documents by the Company, nor the consummation of the transactions contemplated hereby or thereby, will (i) violate or conflict with, or result in the breach of (A) any of the terms, conditions, or provisions of the Company’s Amended and Restated Certificate of Incorporation, or (B) any law, statute, ordinance, rule, regulation, restriction, judgment, order, writ, injunction, decree, determination or award to which the Company is subject or bound, (ii) result in the creation of any security interest, charge, adverse title claim, pledge, encumbrance, lien, option or right of first refusal of any kind whatsoever (collectively, “Encumbrances”) upon any of the material assets of the Company, or (iii) constitute a material breach or default under, or give rise to any right of termination, cancellation, modification or acceleration of any material right or obligation of the Company or to a loss of any material benefit to which the Company is entitled under any provision of any material Contract, or require any consent by any person under any Contract except where failure to obtain such consent would not have a Material Adverse Effect.  Except as set forth on Schedule 3(d) of the Disclosure Schedule, no filing, declaration or registration with, or consent, approval, order or authorization of, any governmental authority is required to be made or obtained by the Company in connection with the consummation by the Company of the transactions contemplated by this Agreement, except for the filing of the Certificate of Merger, as provided in Section 1.

(e)Capitalization; Indebtedness; Working Capital.

(i)The entire authorized capital stock of the Company consists of (A) 15,000,000 shares of Common Stock, of which 4,302,964 shares are issued and outstanding, and (B) 4,300,000 shares of Series A Preferred Stock, of which 4,185,669 shares are issued and outstanding.  Schedule 3(e)(i) of the Disclosure Schedule sets forth the name of each holder of record of the Company Capital Stock and the number and type of shares owned by such holder. All of the outstanding shares of Company Capital Stock are validly issued, fully paid and non-assessable.

(ii)There are no outstanding options, warrants, purchase rights, subscription rights, conversion rights, exchange rights or other contracts or commitments that would require the Company to issue, sell or otherwise cause to become outstanding any of its equity securities.  There are no outstanding or authorized stock appreciation, phantom stock or similar rights with respect to the shares of capital stock of the Company or other equity securities of the Company.

(iii)The Company has delivered to Purchaser complete and correct copies of any shareholder agreements, voting agreements, voting trusts, proxies and other contracts or agreements relating to the voting of the equity securities of the Company that the Company is a party to, all of which documents are listed on Schedule 3(e)(iii) of the Disclosure Schedule.

(iv)Schedule 3(e)(iv) of the Disclosure Schedule sets forth the outstanding Company Indebtedness as of immediately prior to the Closing.  All of such Company Indebtedness will be discharged at the Effective Time.  For purposes of this Agreement, “Company Indebtedness” means all indebtedness of the Company for borrowed

money, whether current or funded, secured or unsecured, direct or indirect, including any accrued and unpaid interest, fees and prepayment penalties, if any, and including, without limitation, (i) any indebtedness evidenced by any note, bond, debenture or other debt security, (ii) any indebtedness to any lender or creditor under credit facilities of the Company, (iii) any indebtedness for the deferred purchase price of property with respect to which the Company is liable, contingently or otherwise, as obligor or otherwise, (iv) any drawn amounts under letter of credit arrangements, (iii) any cash overdrafts, (iv) any capitalized leases, and (iv) any notes payable to any of the Company’s stockholders, vendors, customers or third parties (excluding, for the avoidance doubt, any accounts payable or trade payables incurred by the Company in the ordinary course of business).

(v)The Company has a positive Working Capital balance. For purposes of this Agreement, “Working Capital” means the excess of the Company’s current assets over the Company’s current liabilities as of the close of business on the business day immediately prior to the Closing Date, as determined in accordance with United States generally accepted accounting principles (“GAAP”) consistently applied; provided, however, that the parties agree that for purposes of determining Working Capital, the Company’s current liabilities shall not include any Company Indebtedness or Transaction Expenses, which shall be deducted from the Total Cash Consideration and paid off in full as of the Closing Date except for those Transaction Expenses which Purchaser has agreed to pay pursuant to Section 8.

(f)Financial Statements.  The Company has delivered to Purchaser the internally prepared and unaudited annual financial statements of the Company as of December 31, 2009, consisting of the balance sheet as of December 31, 2009 and the related statements of income and cash flows of the Company for the year ended December 31, 2009 and the internally prepared and unaudited financial statements of the Company as of September 30, 2010, consisting of the balance sheet as of September 30, 2010 and the related statements of income and cash flows of the Company for the nine-month period ended September 30, 2010 (collectively, the “Financial Statements”).  The Financial Statements fairly present, in all material respects, the financial condition and results of operations and cash flow of the Company as of and for the periods presented thereby, provided that the Financial Statements lack footnotes and other presentation items required by GAAP and are subject to normal year-end adjustments.

(g)Compliance With Laws.  The Company is in compliance in all material respects with all applicable federal, state, local and all other applicable laws and regulations relating to the operation of the Company’s business as currently conducted.  The Company has not received any written notice or written communication from any governmental body or any other person regarding any actual or alleged violation of or failure to comply with any term or requirement of applicable law.

(h)No Undisclosed Liabilities.  The Company has no debts, liabilities or obligations of any nature, whether known or unknown, accrued or unaccrued, absolute or contingent, asserted or unasserted, choate or inchoate, liquidated or unliquidated, secured or unsecured, or otherwise (collectively, “Liabilities”), except (i) to the extent such Liabilities are accurately reflected and accrued for or fully reserved against in the Financial Statements, (ii) Liabilities incurred in the ordinary course of business since September 30, 2010, (iii) Liabilities

pursuant to contractual obligations (none of which results from a breach of contract), and (iv) as set forth in Schedule 3(h) of the Disclosure Schedule.

(i)Tax Matters.

(i)For all purposes of this Agreement, the following terms shall have the following meanings:

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

“Income Tax” or “Income Taxes” means all federal, state or local or foreign income Taxes (inclusive of any and all interest and penalties thereon) which are based upon the net income or profits of the Company and imposed on the Company with respect to any period ending on or prior to the Closing Date.

“Income Tax Return” means any return, declaration, report, claim for refund, or information return or statement relating to Income Taxes, including any schedule or attachment thereto, and including any amendment thereof.

“Tax” or “Taxes” means any federal, state, county, provincial, local or foreign income, gross receipts, sales, use, ad valorem, employment, severance, transfer, gains, profits, excise, franchise, property, capital stock, premium, minimum and alternative minimum or other taxes, fees, levies, duties, assessments or charges of any kind or nature whatsoever imposed by any governmental authority (whether payable directly or by withholding and including any tax liability incurred or borne as a transferee or successor or by contract, or otherwise), together with any interest, penalty (civil or criminal), or additional amounts imposed by, any governmental authority with respect thereto.

“Tax Return” means any return, declaration, report, claim for refund, or information return or statement relating to Taxes, including any schedule or attachment thereto, and including any amendment thereof.

(ii)Except as set forth on Schedule 3(i) of the Disclosure Schedule, the Company has timely filed all Tax Returns required to be filed.  All such Tax Returns were true, complete and correct in all material respects.  Except as provided on Schedule 3(i) of the Disclosure Schedule, (A) no portion of any Tax Return has been the subject of any audit, action, suit, proceeding, claim or examination by any governmental authority and no such audit, action, suit, proceeding, claim, deficiency or assessment is pending or, to the Knowledge of the Company, threatened, (B) the Company is not currently the beneficiary of any extension of time within which to file any Tax Return, and the Company has not waived any statute of limitation with respect to any Tax or agreed to any extension of time with respect to a Tax assessment, or deficiency and (C) no claim has been made within the last three (3) years by a governmental authority in a jurisdiction where the Company does not file Tax Returns that it is or may be subject to taxation by that jurisdiction.  There are no liens for Taxes (other than Taxes not yet due and payable) upon the assets of the Company.

(iii)The Company has withheld and paid to the appropriate governmental authorities all Taxes required to have been so withheld and paid under applicable laws in connection with amounts paid or owing to any employee, stockholder, independent contractor, creditor, or other third party.

(iv)Except as set forth on Schedule 3(i) of the Disclosure Schedule, the Company has timely paid all Taxes, and all interest and penalties due thereon and payable by it (whether under applicable law or any agreement), which will have been required to be paid on or prior to the Closing Date.

(vii)The Company is not subject to Tax on “built-in gains” under Section 1374 of the Code or any similar provisions of applicable state or local Tax laws.

(viii)The Company is not a party to or bound by any tax indemnity, tax sharing or tax allocation agreement, or is otherwise liable for any Taxes of any other person.

(ix)None of the assets of the Company are “tax-exempt use property” within the meaning of Section 168(h) of the Code.

(x)The Company has neither agreed to make, nor is required to make, any adjustment under Section 481(a) of the Code by reason of a change in accounting method or otherwise.

(xi)None of the assets of the Company (including those included in the Financial Statements) is property that the Company is required to treat as being owned by any other Person for any foreign, federal, state or local income tax purpose pursuant to the “safe harbor lease” provisions of former Section 168(f)(8) of the Code or any other Tax law.

(xii)The Company has never had a permanent establishment in any foreign country, as defined in any applicable Tax treaty or convention between the United States and such foreign country.

(j)No Material Adverse Change.  Except as set forth on Schedule 3(j) of the Disclosure Schedule, since September 30, 2010, (i) the Company has conducted its business only in the ordinary course of business, and (ii) there has not been any Material Adverse Effect.  Without limitation on the foregoing and except as set forth on said Schedule 3(j) of the Disclosure Schedule, since September 30, 2010, the Company has not taken any of the following actions:

(A)declared, set aside or paid any dividend or other distribution (whether in cash, stock or property or any combination thereof) in respect of any of its capital stock or other equity interests;

(B)authorized for issuance, issued, sold, delivered or agreed or committed to issue, sell or deliver (whether through the issuance or granting of options, warrants, commitments, subscriptions, rights to purchase or otherwise) any stock of any class or any other securities (including debt securities having the

right to vote) or equity equivalents (including, without limitation, stock appreciation rights), or amended in any respect any of the terms of any such securities or equity equivalents outstanding on the date hereof (including, without limitation, accelerated, amended or changed the period of exercisability of any options or stock appreciation rights or repriced any options or stock appreciation rights);

(C)made any new material capital expenditure or commitment therefor other than in the ordinary course of business;

(D)except as may be required pursuant to existing agreements between the Company and any director, officer or employee, (1) paid any bonuses or increased the salaries or other compensation payable to any of its directors, officers or employees (other than increases in the base salaries of employees who are not officers in an amount that does not exceed 10% of such base salaries), (2) entered into any employment, severance or similar agreement with any director, officer or employee, (3) entered into any transaction or agreement with any director or officer of the Company (other than the payment of compensation or benefits in connection with services rendered by such persons in the ordinary course of business, or the reimbursement of expenses to such persons in the ordinary course of business), (4) entered into any collective bargaining agreement, (5) made any loan or advance to any director, officer or employee (other than under tax qualified plans), or (6) adopted, materially increased, accelerated, amended, modified, or terminated the schedule of payments or benefits under any Employee Benefit Plan (as such term is defined in Section 3(o)(ii) below), for or which any director, officer, consultant, agent or employee is the beneficiary;

(E)made any change in the Company’s (1) accounting methods, principles or practices, or (2) its depreciation or amortization policies or rates theretofore adopted, other than as required (i) by changes in GAAP (or any interpretation thereof), or (ii) by a change in any applicable law, if such change would have the effect of materially increasing the Tax liability of the Company after the Closing Date;

(F)made, revoked, or changed any election with respect to Taxes, changed any Tax accounting period, adopted or changed any method of Tax accounting, filed any material amended Tax return, enter into a closing agreement with any taxing authority, surrendered any right to claim a refund for material Taxes, consented to an extension of the statute of limitations applicable to any material Tax claim or assessment, or taken any other similar action (or omitted to take any action), if such election, change, amendment, agreement, settlement, surrender, consent or action or omission would have the effect of materially increasing the Tax liability of the Company after the Closing Date;

(G)sold, leased, licensed, encumbered, transferred or disposed of any material assets (except in the ordinary course of business, including the sale of inventory in the ordinary course);

(H)(1) accelerated the collection of any accounts receivables of the Company, or written-off any accounts receivable or notes receivable of the Company, other than in the ordinary course of business, or (2) delayed or postponed the payment of accounts payable of the Company other than in the ordinary course of business; or

(I)agreed, authorized, committed, whether orally or in writing, and whether or not binding, to take any of the foregoing actions.

(k)Contracts; No Defaults.  Schedule 3(k) of the Disclosure Schedule contains an accurate and complete list, and the Company has delivered to Purchaser accurate and complete copies of, each of the following written or oral contracts, agreements, instruments, leases, subleases, licenses, deeds, mortgages, purchase orders, commitments, arrangements or undertakings (collectively, the “Contracts”) to which the Company is a party or otherwise bound that is currently in effect and that relates to the assets or operation of the Company’s business as currently conducted:

(i)each Contract pursuant to which the Company has acquired a business or entity, or assets of a business or entity, whether by way of merger, consolidation, purchase of stock, purchase of assets or otherwise, or any Contract pursuant to which the Company has any material ownership interest in any other entity (other than any subsidiaries of the Company);

(ii)each Contract (other than this Agreement) relating to the divestiture of any material assets of the Company outside the ordinary course of business;

(iii)each Contract for the employment of any officer or individual employee on a full-time basis or any Contract for the provision of consulting services by any individual person (other than Contracts that provide for “at will” employment which shall be referred to herein as “At Will Employment Contracts”);

(iv)each agreement, promissory note, mortgage or indenture relating to the borrowing of money or to mortgaging, pledging or otherwise placing a lien or other encumbrance on any portion of the assets of the Company;

(v)guaranty of any obligation for borrowed money;

(vi)each lease or agreement under which the Company is lessee of, or holds or operates, any tangible personal property owned by any other person;

(vii)each lease or agreement under which the Company is lessor of, or permits any third party to hold or operate, any tangible property, real or personal, owned by the Company;

(viii)each Contract or group of related Contracts with the same party for the purchase by the Company of products or services, under which the undelivered balance of such products and services has a selling price in excess of $50,000;

(ix)each Contract or group of related Contracts with the same party for the sale of products or services by the Company under which the undelivered balance of such products or services has a sales price in excess of $50,000;

(x)each collective bargaining agreement, executive compensation plan, bonus plan, deferred compensation agreement, pension plan, retirement plan, employee stock option or stock purchase plan and group life, health and accident insurance and other employee benefit plan, agreement, arrangement or commitment to which the Company is a party (other than At Will Employment Contracts);

(xi)each agency, distributor, sales representative, franchise or similar agreement to which the Company is a party;

(xii)each Contract which expressly prohibits the Company from freely engaging in business anywhere in the world; or

(xiii)any other material Contract entered into by the Company outside of the ordinary course of business, as such business is currently conducted.

Except as set forth on Schedule 3(k) of the Disclosure Schedule:  (i) each Contract is a valid and binding agreement of the Company, enforceable against the Company and, to the Knowledge of the Company, the other parties thereto in accordance with its terms (subject to bankruptcy, reorganization, receivership and other laws affecting creditors’ rights generally and general principles of equity), except, in each case, as would not be material to the business of the Company; (ii) the Company is not in material breach of, or material default under, the terms of any Contract, and to the Knowledge of the Company, no condition exists nor has any event occurred that, with or without notice or the passage of time or both, would constitute a material breach of, or material default under, any Contract by the Company; (iv) to the Knowledge of the Company, no other party to any Contract has breached in any material respect any provision or is in material default under any Contract; (v) the Company has not given or received, at any time since December 31, 2009, any written notice or, to the Knowledge of the Company, any other written communication, regarding any actual, alleged, or potential material violation or breach of, or material default under, any of the Contracts; and (vi) there are no pending renegotiations of any of the Contracts and the Company has not received written notice from, and to the Knowledge of the Company, no party to any Contract intends to, terminate, cancel or materially change the terms of, any such Contract.

(l)Intellectual Property.  Schedule 3(l) of the Disclosure Schedule lists all of the registered Intellectual Property, and all applications to register Intellectual Property, owned by the Company and used in the operation of the Company’s business as presently conducted.  The Company owns or, to the Knowledge of the Company, has the right to use all Intellectual Property used in the operation of the Company’s business as presently conducted, free and clear of all Encumbrances and without payment to any third party.  All patent applications, trademark applications, service mark applications, and copyright applications that are listed in Schedule 3(l) of the Disclosure Schedule are presently pending except as noted on Schedule 3(l).  All issued patents, trademark registrations and copyright registrations that are listed in Schedule 3(l) of the Disclosure Schedule are presently in force except as noted on Schedule 3(l).  The Company has

not (i) violated, infringed upon, or misappropriated the Intellectual Property rights (except with respect to patents) of any other person or entity, (ii) to the Knowledge of the Company, violated, infringed upon, or misappropriated any patents of any other person or entity, or (iii) received any written notice alleging any such infringement, misappropriation, or violation (including any claim that the Company must license or refrain from using any Intellectual Property rights of any other person or entity).  To the Knowledge of the Company, no other person has violated, infringed upon, or misappropriated any Intellectual Property owned by the Company.  There are no pending or, to the Knowledge of the Company, threatened claims against the Company or its employees or independent contractors alleging that the Company’s Intellectual Property infringes on or conflicts with the rights of any other person or entity.

For purposes of this Agreement, “Intellectual Property” means all (i) inventions (whether patentable or unpatentable and whether or not reduced to practice), and all patents, patent applications, and patent disclosures, together with all reissuances, continuations, continuations-in-part, revisions, extensions, and reexaminations relating thereto, (ii) trademarks, trade names, service marks, trade dress, logos, and all goodwill associated therewith, together with all applications, registrations, and renewals relating thereto, (iii) copyrightable works, all copyrights, and all applications, registrations, and renewals relating thereto, (iv) trade secrets and other confidential or proprietary information (including ideas, research and development, know-how, mobile technology expertise, formulas, compositions, manufacturing and production processes and techniques, technical data, designs, drawings, specifications, customer and supplier lists, pricing and cost information, financial, marketing and business data, and business and marketing plans and proposals), and (v) rights in Internet web sites or protocol addresses, Internet domain names and registration rights, uniform resource locators, related security passwords or codes, and copies and tangible embodiments of the foregoing (in whatever form or medium).

(m)Title to Assets.  Except as set forth in Schedule 3(m) of the Disclosure Schedule, the Company has good and valid title to, or a valid leasehold or sub-leasehold interest in, all of the tangible properties and assets reflected in the Financial Statements, free and clear of any and all Encumbrances, other than (i) liens for Taxes or assessments and similar charges, which either are not delinquent or are being contested in good faith and by appropriate proceedings, (ii) mechanics’, materialmen’s or contractors’ liens or encumbrances or any similar statutory lien or restriction incurred in the ordinary course of business and not arising out of delinquent payment, (iii) statutory liens to secure obligations to landlords, lessors or renters under leases or rental agreements; and (iv) such imperfections of title and non-monetary Encumbrances as do not and will not detract from or interfere with the use of the assets or properties subject thereto or affected thereby, or otherwise impair business operations involving such assets or properties (the Encumbrances described in subclauses (i) through (iv) above being referred to herein collectively as “Permitted Encumbrances”).  Other than this Agreement, there are no agreements with, or options or rights granted in favor of, any person to directly or indirectly acquire the Company’s business, as currently conducted, or any interest therein or any tangible properties or assets of the Company other than in the ordinary course of business.  Except as set forth in Schedule 3(m) of the Disclosure Schedule, no tangible assets or properties used by the Company in the conduct of its business, as currently conducted, are held in the name or in the possession of any person or entity other than the Company.  Except as set forth in Schedule 3(m) of the Disclosure Schedule, to the Knowledge of the Company, each material

item of tangible property of the Company is in good condition and repair (ordinary wear and tear excepted).

(n)Real Property.  The Company does not own and has not owned any real property.  The Company has valid leasehold interests in certain real property, which it holds under the leases or subleases described in Schedule 3(n) of the Disclosure Schedule (the “Leased Real Property”) free and clear of all Encumbrances, except for Permitted Encumbrances.  The Leased Real Property constitutes all of the facilities used or occupied by the Company in the conduct of its business as currently conducted.  With respect to the Leased Real Property:  (i) to the Knowledge of the Company, the Company has all easements and rights necessary to conduct its business, as currently conducted; (ii) no portion thereof is, to the Knowledge of the Company, subject to any pending or threatened condemnation proceeding or proceeding by any governmental authority; (iii) the Company has not received written notice, and the Company has no Knowledge, of any leases, subleases, licenses, concessions or other agreements, written or oral, granting to any other party or parties the right of use or occupancy of any portion of any parcel of Leased Real Property; (v) the Company has not received written notice, and the Company has no Knowledge, of any outstanding options or rights of first refusal held by any other person to purchase any parcel of Leased Real Property, or any portion or interest therein; (vi) the Company has not received written notice, and the Company has no Knowledge, of any parties (other than the Company) being in possession of any parcel of Leased Real Property, other than tenants under any leases of the Leased Real Property who are in possession of space to which they are entitled; (vii) the Leased Real Property has been supplied with utilities and other services reasonably necessary for the operation of the Business; and (viii) each parcel of Leased Real Property abuts on and has direct vehicular access to a public road or access to a public road.

(o)Employees/Employee Benefit Plans.

(i)Schedule 3(o) of the Disclosure Schedule contains a true and complete list of the names, rates of pay per applicable period, applicable commission rates, and titles of all current officers and employees of the Company.  Except as listed on Schedule 3(o), each officer of the Company is currently deploying all of his or her time during normal business hours to the conduct of the business of the Company.  The Company has no Knowledge that any officer or key employee of the Company is planning in the future to terminate his or her employment with the Company or to change his or her work schedule with the Company in any material respect.  To the Company’s Knowledge, no current or former employee, officer, or director of the Company is a party to, or is otherwise bound by, any agreement or arrangement, including any confidentiality, non-competition or proprietary rights agreement between such individual and any person other than the Company, that in any way adversely affects, or will adversely affect, in any material respect, the performance of his or her duties as an employee, officer or director of the Company or the ability of the Company to conduct its business as currently conducted.

(ii)The Company does not sponsor, maintain or contribute to, and has never sponsored, maintained or contributed to, an Employee Pension Benefit Plan as defined in Section 3(2) of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”). Schedule 3(o) of the Disclosure Schedule sets forth a true and

complete list as of the date hereof of each “employee welfare benefit plan” (as such term is defined in Section 3(1) of ERISA) (a “Welfare Plan”), material personnel or payroll policy (including vacation time, holiday pay, service awards, moving expense reimbursement programs and sick leave) or material fringe benefit, severance agreement or plan or any medical, hospital, dental, life or disability plan, excess benefit plan, bonus, stock option, stock purchase or other incentive plan (including any equity or equity-based plan), top hat plan or deferred compensation plan, salary reduction agreement, change-of-control agreement, employment agreement (other than At Will Employment Contracts), consulting agreement, collective bargaining agreement, indemnification agreement, or retainer agreement, or any other benefit plan, policy program, arrangement, agreement or contract, whether or not written, with respect to any employee, former employee, director or any beneficiary or dependent thereof of the Company (including, without limitation, any “employee benefit plan”, as defined in Section 3(3) of ERISA (an “Other Benefit Plan” and collectively with the Welfare Plans, the “Employee Benefit Plans”), maintained, or contributed to, by the Company or to which the Company may have any liability, contingent or otherwise, by reason of being (or having been) a part of a controlled group of companies under Code Section 414(b), (c), (m) or (o) (each other company hereinafter referred to as an “ERISA Affiliate”).

(iii)With respect to each Employee Benefit Plan, to the extent applicable, the Company has heretofore delivered or made available to Purchaser a true, correct and complete copy of: (A) each writing constituting a part of such Employee Benefit Plan, including without limitation all plan documents, trust agreements, and insurance contracts and other funding vehicles; (B) the most recent Annual Report (Form 5500 Series) and accompanying schedule, if any; (C) the current summary plan description and any material modifications thereto, if any (in each case, whether or not required, to be furnished under ERISA); (D) the most recent annual financial report, trustee report, audit report, or actuarial report, if any, and (E) the most recent determination letter from the Internal Revenue Service (“IRS”), if any.  Except as specifically provided in the foregoing documents delivered to Purchaser, there are no material amendments to any Employee Benefit Plan that have been adopted or approved nor has the Company undertaken to make any such amendments or to adopt or approve any new Employee Benefit Plan.

(iv)No material lawsuits, claims or complaints to, or by, any person or governmental entity with respect to any Employee Benefit Plan have been filed or are pending and, to the Knowledge of the Company, there are no facts or contemplated events which would be expected to give rise to any such lawsuit, claim (other than routine claims for benefits) or complaint with respect to any Employee Benefit Plan.  There are, and have been, no audits by any governmental agency with respect to any Employee Benefit Plan.  Without limiting the foregoing, the following are true with respect to each Employee Benefit Plan:

(A)the Company and any ERISA Affiliates have filed or caused to be filed every material return, report statement, notice, declaration and other document required by any law or governmental agency, federal, state and local (including, without limitation, the IRS and the Department of Labor) with respect

to each such Employee Benefit Plan, each of such filings has been complete and accurate in all material respects and neither the Company nor any ERISA Affiliate has incurred any material liability in connection with such filings;

(B)the Company and any ERISA Affiliates have delivered or caused to be delivered to every participant, beneficiary and other party entitled to such material, all material plan descriptions, returns, reports, schedules, notices, statements and similar materials, including, without limitation, summary plan descriptions and summary annual reports, as are required under Title I of ERISA, the Code, or both, and neither the Company nor any ERISA Affiliate has incurred any material liability in connection with such requirements; and

(C)each Employee Benefit Plan that is a “group health plan” (as defined in ERISA section 607(1) or Code section 5001(b)(1)) has been operated at all times in compliance with COBRA and the Health Insurance Portability and Accountability Act of 1996 and any related regulation or applicable similar state law.

(v)No Welfare Plan provides benefits, including, without limitation, death or medical benefits (whether or not insured), with respect to current or former employees of the Company beyond their retirement or other termination of service, other than (1) coverage mandated by applicable law, (2) death benefits or retirement benefits under any “employee pension plan” (as such term is defined in Section 3(2) of ERISA), or (3) deferred compensation benefits accrued as liabilities on the books of the Company.

(vi)Each of the Employee Benefit Plans has been operated and administered in all material respects in accordance with applicable laws and administrative rules and regulations of any governmental entity, including, but not limited to, ERISA and the Code. All contributions or other amounts payable by the Company as of the Closing with respect to each Employee Benefit Plan in respect of current or prior plan years will have been paid or accrued before Closing in accordance with the appropriate plan document, insurance contract or as otherwise required by ERISA, the Code or GAAP.

(vii)Each Employee Benefit Plan that is a nonqualified deferred compensation plan (as defined under Section 409A of the Code) has been operated and administered in good faith compliance with Section 409A of the Code.

(viii)Except as set forth in Schedule 3(o)(x) of the Disclosure Schedule, the consummation of the transactions contemplated by this Agreement will not (a) entitle any current or former employee of the Company to severance pay, unemployment compensation or any other payment, (b) accelerate the time of payment or vesting or increase the amount of compensation due to any such employee or former employee, except as expressly provided in this Agreement or an Employment Agreement, or (c) result in any prohibited transaction described in Section 406 of ERISA or Section 4975 of the Code for which an exemption is not available.

(p)Litigation.  Except as set forth on Schedule 3(p) of the Disclosure Schedule, there is no action, suit, litigation, or proceeding (“Proceeding”) pending against the Company, or any audit or investigation pending by any governmental entity with respect to the Company (whether civil, criminal, administrative, investigative or informal) (an “Investigation”), in each case, relating in any way to the Company or its business.  To the Knowledge of the Company, there is no Proceeding or Investigation currently threatened in writing against the Company relating in any way to the Company or its business.  The Company is not a party to, or subject to the provisions of, any order, writ, injunction, judgment or decree of any court or government authority relating in any way to the Company or its business.  There is no Proceeding by the Company currently pending or that the Company intends to initiate relating in any way to the Company or its business.

(q)Insurance.  The Company has provided, or made available, to Purchaser true and complete copies of insurance policies maintained by the Company (collectively, the “Insurance Policies”).  Each Insurance Policy is in good standing, valid and subsisting, and in full force and effect in accordance with its terms.  All premiums due on the Insurance Policies or renewals thereof have been paid and there is no material default by the Company under any of the Insurance Policies.  The Company has not received any written notice from any issuer of the Insurance Policies since January 1, 2009 validly canceling or amending any of the Insurance Policies, or increasing any deductibles or retained amounts thereunder, and, to the Company’s Knowledge, no such cancellation, amendment or increase of deductibles or retainages is threatened.

(r)Licenses and Permits.  The Company holds, and is in compliance with, in all material respects, all material governmental licenses, franchises, permits, operating authorities, state operating licenses or registrations and other interstate, intrastate, national or international regulatory licenses and other governmental authorizations necessary for the conduct of its business as currently conducted (collectively, “Permits”).  Such Permits are in full force and effect in all material respects and the Company has not received any written notice that any governmental authority intends to cancel, terminate or not renew any of such Permits.  To the Knowledge of the Company, no such Permit is subject to termination or modification as a result of the transactions contemplated hereby, and except as set forth on Schedule 3(d) of the Disclosure Schedule, all of such Permits will be in full force and effect upon consummation of the Merger.

(s)Bank Accounts.  Schedule 3(s) of the Disclosure Schedule sets forth a list of each bank at which the Company has an account or safe deposit box, the number of each such account or box, and the names of all persons authorized to draw on such accounts or to have access to such boxes.

(t)Change of Control Payments.  Except as set forth on Schedule 3(t) of the Disclosure Schedule, neither the execution and delivery of this Agreement nor the consummation of the transactions contemplated hereby will result in any payment (including, without limitation, severance, unemployment compensation, golden parachute, bonus or otherwise) becoming due from the Company to any stockholder, director, officer or employee of the Company, or any such payment materially increasing or accelerating.

(u)Interested Party Transactions.  Except as set forth in Schedule 3(u) of the Disclosure Schedule, no current officer or director of the Company or, to the Knowledge of the Company, any current stockholder or employee, or any “affiliate” or “associate” (as those terms are defined in Rule 405 promulgated under the Securities Act) of any such person, has had, either directly or indirectly, a material interest in: (i) any person or entity which purchases from, or sells, licenses or furnishes to, the Company any goods, property, technology, intellectual or other property rights or services that are material to the business of the Company, as currently conducted; or (ii) any Contract to which the Company is a party or by which it may be bound.

(v)Obligations to Related Parties.  Except as set forth in Schedule 3(v) of the Disclosure Schedule, (i) there are no obligations of the Company to officers, directors, stockholders or employees of the Company other than (A) for payment of salary for services rendered, (B) reimbursement for reasonable expenses incurred on behalf of the Company, and (C) for other standard employee benefits made generally available to all employees (including stock option or similar agreements outstanding under any equity incentive plan of the Company), and (ii) none of the directors, stockholders, or officers of the Company, or any members of their immediate families, are indebted to the Company, or have any direct or indirect ownership interest in any firm or corporation which competes with the Company, other than ownership interests in publicly traded companies which may compete with the Company. The Company is not a guarantor or indemnitor of any indebtedness of any other person, firm or corporation.

(w)Brokers or Finders.  Except as set forth on Schedule 3(w) of the Disclosure Schedule, none of the Company or any of its representatives have incurred any obligation or liability, contingent or otherwise, for brokerage or finders’ fees or agents’ commissions or other similar payments in connection with the consummation of the Merger.

4.Representations and Warranties of the Purchaser.  Except as set forth on the Schedules delivered by Purchaser to the Company and attached hereto (collectively, the “Purchase Disclosure Schedule”) (it being understood and agreed that any information disclosed under any section or subsection of the Purchaser Disclosure Schedule shall qualify the representations and warranties set forth in the corresponding section or subsection of this Agreement and also the representations and warranties set forth in any other section or subsection of this Agreement (whether or not a specific cross-reference is included in the Purchaser Disclosure Schedule) if and to the extent that it is reasonably apparent that such information also applies to such other sections or subsections), Purchaser hereby represents and warrants to the Company and each of the Company Stockholders as follows:

(a)Due Organization. Each of Purchaser and Merger Sub is a corporation duly incorporated, validly existing and in good standing under the laws of Delaware.  Neither Purchaser nor Merger Sub is in violation of any of the provisions of its respective Certificate of Incorporation and Bylaws, each as amended to date.

(b)Authorization.  Each of Purchaser and Merger Sub has all requisite corporate power, right and authority to enter into and perform its obligations under this Agreement and each of the Transaction Documents to which it is a party. The execution, delivery and performance by each of Purchaser and Merger Sub of this Agreement and each of the Transaction Documents to which Purchaser or Merger Sub is a party, as the case may be, have

been duly and properly authorized by all requisite corporate action on the part of each of Purchaser and Merger Sub, as applicable, in accordance with applicable law and the respective Certificate of Incorporation and Bylaws, in each case, as amended to date. No approval of the stockholders of Purchaser is required under applicable law, the organizational documents of Purchaser, or any Contract to which Purchaser is a party, in connection with the execution, delivery and performance by Purchaser of its obligations under this Agreement and the Transaction Documents to which it is a party.

(c)Enforceability.  This Agreement and each of the Transaction Documents to which Purchaser or Merger Sub is a party have been duly executed and delivered by Purchaser or Merger Sub, as applicable, and are the valid and binding obligation of Purchaser or Merger Sub, as applicable, and are enforceable against Purchaser or Merger Sub, as applicable, in accordance with their respective terms, except as enforcement may be limited by general principles of equity, whether applied in a court of law or a court of equity and by bankruptcy, insolvency and similar laws affecting creditors’ rights and remedies generally.  No filing, declaration or registration with, or consent, approval, order or authorization of, or notifications to (i) any governmental entities, or (ii) any other persons are necessary in connection with the execution, delivery and performance by Purchaser and Merger Sub of this Agreement and the Transaction Documents to which Purchaser and Merger Sub are a party and the consummation by Purchaser and Merger Sub of the transactions contemplated hereby or thereby, except for the filing of the Certificate of Merger, as provided in Section 1.

(d)Transaction Not a Breach.  The execution, delivery and performance of this Agreement and the Transaction Documents by Purchaser and Merger Sub will not violate and conflict with, or result in the breach of (i) any of the terms, conditions, or provisions of the Certificate of Incorporation or Bylaws of Purchaser or Merger Sub, in each case as amended to date, (ii) any material Contract, agreement, mortgage, or other instrument or obligation of any nature to which Purchaser or Merger Sub is a party or by which Purchaser or Merger Sub is bound, or (iii) any law, statute, ordinance, rule, regulation, restriction, judgment, order, writ, injunction, decree, determination or award to which Purchaser or Merger Sub is subject or bound.

(e)Litigation.  There are no actions, suits, proceedings, orders, claims or investigations pending (or, to the knowledge of Purchaser, currently threatened) against Purchaser or Merger Sub which, if adversely determined, could reasonably be expected to prevent, materially delay or materially impede the consummation of the transactions contemplated by this Agreement or the Transaction Documents or to be material to Purchaser’s business.  Neither Purchaser nor Merger Sub is a party or subject to the provisions of any order, writ, injunction, judgment or decree of any court or government authority relating in any way to this Agreement or the Transaction Documents or the consummation by Purchaser or Merger Sub of the transactions contemplated hereby or that could reasonably be expected to prevent, materially delay or materially impede the consummation of the transactions contemplated by this Agreement or the Transaction Documents.

(f)Purchaser Common Stock.  The shares of Purchaser Common Stock have been duly authorized and, when issued in accordance with this Agreement, will be validly issued, fully paid and non-assessable and will be free and clear of all Encumbrances of any kind except

for restrictions of transfer imposed under applicable securities laws, that certain Second Amended and Restated Right of First Refusal and Co-Sale Agreement dated as of April 16, 2010, by and among Purchaser, each of the Persons listed on Exhibit A thereto as “Investors” and each of the Persons listed on Exhibit B thereto as “Subject Holders” (the “Right of First Refusal and Co-Sale Agreement”) and that certain Second Amended and Restated Voting Agreement dated as of April 16, 2010, by and among Purchaser, each of the Persons listed on Exhibit A thereto as “Common Holders” and each of the Persons listed on Exhibit B thereto as “Investors” (the “Voting Agreement”).

(g)Capitalization.  The authorized shares of capital stock of Purchaser, and the issued and outstanding shares of capital stock of Purchaser, are as set forth on Schedule 4(g).  All of the issued and outstanding shares of capital stock of, and other outstanding equity interests in, Purchaser (i) have been duly authorized and are validly issued, fully paid, and non-assessable, (ii) were issued in compliance with, or pursuant to an exemption from, all applicable state, federal and other applicable securities laws, and (iii) were not issued in violation of any preemptive rights or rights of first refusal.  Except as set forth on Schedule 4(g), as of the date hereof, there are no outstanding or authorized options, warrants, purchase rights, subscription rights, conversion rights, exchange rights, restricted stock units, stock appreciation rights, phantom stock rights or other contracts or commitments that could require Purchaser to issue, sell or otherwise cause to become outstanding any of its equity securities.

(h)Financial Statements.  Purchaser has delivered to the Stockholders’ Representative the unaudited balance sheet and statement of income of Purchaser as of and for the nine-month period ended September 30, 2010 (collectively, the “Purchaser Financial Statements”).  The Purchaser Financial Statements have been prepared in accordance with GAAP consistently applied and fairly present, in all material respects, the financial condition and results of operations and cash flow of Purchaser as of and for the periods presented thereby; provided that the Purchaser Financial Statements lack footnotes and other presentation items required by GAAP and are subject to normal year-end adjustments.

(i)Compliance With Laws.  Purchaser is in compliance with all applicable federal, state, local and all other applicable laws and regulations relating to the operation of Purchaser’s business as currently conducted except for any failure to be in such compliance that has not had and will not have a Material Adverse Effect on Purchaser.  Purchaser has not received any written notice or written communication from any governmental body or any other person regarding any actual or alleged violation of or failure to comply with any term or requirement of applicable law where such violation or failure to be in compliance would, or would be reasonably likely to, have a Material Adverse Effect on Purchaser.

(j)No Undisclosed Liabilities.  Purchaser has no material Liabilities, except (i) to the extent such Liabilities are accurately reflected and accrued for or fully reserved against in the Purchaser Financial Statements, (ii) Liabilities incurred in the ordinary course of business since September 30, 2010, (iii) Liabilities pursuant to contractual obligations (none of which results from a breach of contract), (iv) Liabilities incurred in connection with the transactions contemplated by this Agreement, and (v) as set forth in Schedule 4(j) of the Disclosure Schedule.

(k)Material Adverse Effect.  Since September 30, 2010, Purchaser has not suffered a Material Adverse Effect.

(l)Financing.  Purchaser has, and will have, sufficient cash funds to consummate the transactions contemplated by this Agreement and the Transaction Documents to which Purchaser is a party.

(m)No Prior Merger Sub Operations.  Merger Sub was formed solely for the purpose of effecting the Merger and has not engaged in any business activities or conducted any operations other than in connection with the transactions contemplated hereby.

(n)Brokers or Finders.  Neither Purchaser nor any of its representatives have incurred any obligation or liability, contingent or otherwise, for brokerage or finders’ fees or agents’ commissions or other similar payments in connection with the sale of the Company or the transactions contemplated by this Agreement.

5.Closing and Closing Deliveries.

(a)Closing.  The closing of the transactions contemplated hereby (the “Closing”) shall take place concurrently with execution of this Agreement at the offices of DLA Piper LLP (US), 203 North LaSalle Street, Chicago, Illinois 60601 (or at such other location as the parties may agree).  The date of the Closing is referred to as the “Closing Date.”

(b)Closing Date for Financial Reporting Purposes.  For convenience, the parties hereto agree that solely for purposes of Purchaser’s financial accounting and reporting, the Closing shall be deemed completed as of 12:01 a.m. (EST) on December 1, 2010. For the avoidance of doubt, it is understood and agreed that the representations and warranties of the Company provided herein, including all those related to financial accounting and reporting, are being given solely as of the date of this Agreement.

(c)Company Deliveries.  In connection with the execution of this Agreement and the consummation of the transactions contemplated hereby, the Company is delivering to the Purchaser the following, all of which shall be deemed to be delivered simultaneously:

(i)Escrow Agreement of even date herewith between the Stockholders’ Representative, the Company, Purchaser and the Escrow Agent (as defined below) (the “Escrow Agreement”), duly executed by the Company and the Stockholders’ Representative, in substantially the form attached hereto as Exhibit D.

(ii)The Employment Agreements, duly executed by each of the Key Employees.

(iii)The RSU Grant Agreements, duly executed by each of the Key Employees and each of the Other Employees.

(iv)The Non-Competition Agreements, duly executed by each of the Key Employees.

(v)The Employee Confidentiality Agreements, duly executed by each of the Key Employees and each of the Other Employees.

(vi)A stockholder questionnaire, duly executed by each Company Stockholder receiving Purchaser Common Stock in the Merger, stating, among other things, that such Company Stockholder is an “accredited investor.”

(vii)Joinders to the Voting Agreement, duly executed by each Company Stockholder who receives Purchaser Common Stock in the Merger.

(viii)Joinders to the Right of First Refusal and Co-Sale Agreement duly executed by each Key Employee.

(ix)A Patent Assignment, duly executed by the Company.

(x)A certificate of an executive officer of the Company certifying as to: (A) the Amended and Restated Certificate of Incorporation of the Company, as amended through the date of this Agreement; (B) the Bylaws of the Company, as amended through the date of this Agreement; (C) the resolutions adopted by the Company Stockholders and the Company Board authorizing and approving the execution, delivery and performance by the Company of this Agreement and any Transaction Documents to which the Company is a party; and (D) the incumbency and signatures of the officers of the Company.

(xi)A certificate of the Secretary of State of the State of Delaware, as of a date not earlier than ten (10) days prior to the Closing Date, as to the existence and good standing of the Company in the State of Delaware, and a certificate of the Secretary of State of the State of California, as of a date not earlier than ten (10) days prior to the Closing Date, as to the foreign qualification and good standing of the Company in the State of California.

(xii)Resignations of all officers and directors of the Company; and

(xiii)Payoff letters, if any, with respect to any Company Indebtedness owed to each Key Employee, indicating (A) the aggregate amount of indebtedness owed to each Key Employee as of the Closing Date (collectively, the “Payoff Amount”) and (B) that, upon payment of the Payoff Amount, all amounts due and owing such lender(s) by the Company shall be deemed satisfied and paid in full.

(d)Purchaser’s Deliveries. In connection with the execution of this Agreement and the consummation of the transactions contemplated hereby, Purchaser is delivering to the Company the following, all of which shall be deemed to be delivered simultaneously:

(i)The Escrow Agreement, duly executed by Purchaser.

(ii)The Employment Agreements, duly executed by Merger Sub.

(iii)The RSU Grant Agreements, duly executed by Purchaser.

(iv)The Non-Competition Agreements, duly executed by Purchaser.

(v)The Employee Confidentiality Agreements, duly executed by Purchaser and Merger Sub.

(vi)A certificate of the Secretary of State of the State of Delaware as of a date not earlier than ten (10) days prior to the Closing Date, as to the existence and good standing of Purchaser in the State of Delaware.

(vii)A certificate of an executive officer of each of Purchaser and Merger Sub certifying as to: (A) the resolutions adopted by the board of directors of Purchaser and Merger Sub, as applicable, and the resolutions adopted by Purchaser as the sole stockholder of Merger Sub, authorizing and approving the execution, delivery and performance by Purchaser and Merger Sub of this Agreement and the Transaction Documents to which Purchaser or Merger Sub, as applicable, is a party; and (B) the incumbency and signatures of the officers of Purchaser and Merger Sub.

6.Indemnification.

(a)Indemnification by Company Stockholders.  Each of the Company Stockholders, severally and not jointly, will indemnify and hold harmless Purchaser and its directors, officers, shareholders, employees, agents, subsidiaries and affiliates (the “Purchaser Indemnified Persons”), and will reimburse the Purchaser Indemnified Persons for, any loss, liability, claim, damage or expense, including reasonable out-of-pocket costs of investigation and defense of claims and reasonable attorneys’ fees and expenses (collectively, “Losses”) arising or resulting from or in connection with any of the following:

(i)any breach of any representation or warranty of the Company set forth in Section 3 of this Agreement; or

(ii)any claim by any person for payment of any Company Transaction Expenses.

(b)Indemnification By Purchaser.  Purchaser will indemnify and hold harmless the Company Stockholders and their respective directors, officers, shareholders, employees, agents, subsidiaries and affiliates (collectively, the “Company Indemnified Persons”) and will reimburse the Company Indemnified Persons for, any Losses arising or resulting from or in connection with any of the following:

(i)any breach of any representation or warranty made by Purchaser in Section 4 of this Agreement; or

(ii)any claim by any person for payment of any fees or expenses incurred by the Company in connection with the negotiation and execution of this Agreement and the consummation of the transactions contemplated hereby which Purchaser has agreed to pay pursuant to Section 8.

(c)Indemnification Limitation — Survival.  All representations and warranties of the Company and Purchaser contained in this Agreement shall survive the Closing and shall continue in full force and effect until the date that is twelve (12) months after the date of this Agreement. All covenants and other obligations of each of the Company and Purchaser contained in this Agreement shall survive the Closing and continue in full force and effect until such covenants or obligations expire, are fully performed and satisfied, or otherwise indefinitely (except as limited by applicable law) in accordance with the respective terms of such covenants and obligations set forth in this Agreement.  The right to indemnification based upon such representations, warranties, covenants and obligations shall not be affected by any examination, inspection, audit or other investigation conducted by Purchaser or the Company Stockholders, as applicable, with respect to, or any knowledge acquired at any time with respect to, the accuracy or inaccuracy of or compliance with any such representation, warranty, covenant or obligation.

(d)Indemnification Limitation — Basket.  The Company Stockholders shall have no obligation to indemnify the Purchaser Indemnified Persons under Section 6(a)(i) and for claims brought against the Company Stockholders that arise under Section 6(a)(i), and no indemnification claims shall be brought against the Company Stockholders, absent fraud, until the aggregate amount of Losses incurred by Purchaser Indemnified Persons exceeds $150,000 (the “Indemnification Basket”), at which point the Company Stockholders will be obligated to indemnify the Purchaser Indemnified Persons from and against all Losses incurred by such Purchaser Indemnified Persons, including the amount of the Indemnification Basket; provided, however, that the Indemnification Basket shall not apply to Losses arising under or resulting from breaches of the representations and warranties set forth in Sections 3(a), 3(c), 3(e)(i) and 3(e)(ii) (the “Fundamental Representations”).

(e)Indemnification Limitation — Cap.  The Company Stockholders shall have no obligation to indemnify the Purchaser Indemnified Persons under Section 6(a)(i), and no indemnification claims or any other claims shall be brought against the Company Stockholders, absent fraud, for an aggregate amount of Losses incurred by Purchaser in excess of $1,510,085 (the “Indemnification Cap”); provided, however, that the Indemnification Cap shall not apply with respect to any Losses arising under or resulting from breaches of the Fundamental Representations.  Except for fraud and breaches of Fundamental Representations, it is understood and agreed by the parties that recourse by the Purchaser Indemnified Persons to the Escrow Fund as described in Section 6(f) below shall constitute the sole and exclusive remedy of the Purchaser Indemnified Persons for all Losses up to the Indemnification Cap that are to be indemnified by the Company Stockholders hereunder. A Company Stockholder shall have no obligation to indemnify the Purchaser Indemnified Persons for any Losses arising under or resulting from any breaches of the Fundamental Representations in excess of the portion of the Total Merger Consideration actually received by such Company Stockholder under this Agreement.

(f)Indemnity Escrow.  To secure the performance by the Company Stockholders of their indemnity obligations under this Section 6, upon the Closing, Purchaser shall deposit the aggregate Escrow Amount Per Share into an escrow account (the “Escrow Fund”) established with J.P. Morgan Trust Company, National Association (the “Escrow Agent”) in accordance with the terms and conditions of the Escrow Agreement.  The fees and expenses of the Escrow Agent under the Escrow Agreement shall be borne by Purchaser.  To the

extent that a Purchaser Indemnified Person makes any claim for indemnification pursuant to Section 6(a), it shall make a claim against the Escrow Fund in accordance with the terms and conditions of the Escrow Agreement, which shall provide, among other things, that the portion of the Escrow Fund consisting of shares of Purchaser Common Stock shall be valued at an amount equal to $21.79 per share for purposes of any such claim (unless there is a Change of Control (as defined below) of Purchaser in which event such shares of Purchaser Common Stock shall be valued at the amount payable for such shares pursuant to such Change of Control).  In the event that any Purchaser Indemnified Person sustains or incurs Losses for which it is entitled to indemnification under Section 6(a), such Losses shall be recovered or paid from the Escrow Fund for the amount of such claim in accordance with the terms of the Escrow Agreement until such Losses are paid or until no portion of the Escrow Fund remains. In such event, such indemnified Loss shall be recovered by Purchaser from the aggregate Escrow Amount Per Share of each Company Stockholder, on a several basis in accordance with each Company Stockholder’s Pro Rata Share of the amount of such Loss, and consisting of cash and shares of Purchaser Common Stock (if any) in accordance with the same ratio as that applicable to the aggregate Escrow Amount Per Share deposited with the Escrow Agent on behalf of such Company Stockholder at the Closing. The period during which claims for Losses may be made (the “Claims Period”) against the Escrow Fund shall commence at the Closing and terminate on the date that is twelve (12) months after the date of this Agreement (the “Escrow Period”).  Notwithstanding anything contained herein to the contrary, such portion of the Escrow Fund at the conclusion of the Escrow Period as shall be necessary to satisfy any unresolved or unsatisfied claims for Losses hereunder shall remain in escrow until such claims for Losses have been resolved or satisfied.  The remainder of the Escrow Fund, if any, shall be delivered to the Company Stockholders promptly (and in any event within five (5) business days) after the expiration of the Escrow Period in accordance with each such Company Stockholder’s Pro Rata Share and based on the same ratio of cash and shares of Purchaser Common Stock (if any) as that applicable to the aggregate Escrow Amount Per Share deposited with the Escrow Agent on behalf of such Company Stockholder at the Closing.

(g)Indemnification Procedures.

(i)An indemnified party hereunder (the “Claiming Party”) shall give the indemnifying party (“Indemnifying Party”) prompt written notice of any claim of a third party (a “Third Party Claim”) as to which the Claiming Party proposes to demand indemnification hereunder, within twenty (20) days after learning of such Third Party Claim (or within such shorter time as may be necessary to give the Indemnifying Party a reasonable opportunity to respond to such claim), together with a statement setting forth in reasonable detail the nature and basis of such Third Party Claim and providing copies of the relevant documents evidencing such Third Party Claim, the amount of the claim, and the basis for the indemnification sought. The Third Party Claim Notice shall (i) describe the claim in reasonable detail, and (ii) indicate the amount (estimated, if necessary, and to the extent feasible) of the Losses that have been or may be suffered by the Claiming Party.  The failure to give a Third Party Claim Notice to the Indemnifying Party shall not relieve the Indemnifying Party of any liability hereunder unless the Indemnifying Party was prejudiced thereby under this Section 6, and then only to the extent of such prejudice.  The Indemnifying Party must provide written notice to the Claiming Party that it is either (i) assuming responsibility for the Third Party Claim, or

(ii) disputing the claim for indemnification against it (the “Indemnification Notice”). The Indemnification Notice must be provided by the Indemnifying Party to the Claiming Party within thirty (30) days after receipt of the notice from the Claiming Party of the Third Party Claim or within such shorter time as may be necessary to give the Claiming Party a reasonable opportunity to respond to such Third Party Claim (such period is referred to herein as the “Indemnification Notice Period”).

(ii)If the Indemnifying Party provides an Indemnification Notice to the Claiming Party within the Indemnification Notice Period that it assumes responsibility for the Third Party Claim, the Indemnifying Party shall have the right to assume and conduct the defense of such Third Party Claim at its own expense; provided, however, that the Claiming Party will be allowed a reasonable opportunity to participate in the defense of such Third Party Claim with its own counsel and at its own expense; and provided further that in the event that the interests of the Claiming Party and the Indemnifying Party are, or may reasonably become, in conflict with, or adverse to one another, with respect to such Third Party Claim, the Claiming Party may retain its own counsel at the Indemnifying Party’s expense (but limited to reasonable attorneys’ fees and expenses) with respect to such Third Party Claim; and provided further, however, that such expense must be reasonable in the context of the dispute.  In the event the Indemnifying Party assumes and conducts the defense on behalf of the Claiming Party, the Indemnifying Party shall, subject to Sections 6(c), (d), (e) and (f), as applicable, be deemed to acknowledge that it is responsible to the Claiming Party for any damages as a result of such Third Party Claim, and may settle such Third Party Claim, but shall not, without the consent of the Claiming Party (which consent shall not be unreasonably withheld or delayed), agree to any settlement that does not include a provision whereby the plaintiff or claimant in the matter releases the Claiming Party from all liability with respect thereto or agree to any relief other than money damages (and a full release related thereto).  If the Indemnifying Party does not assume the defense of such Third Party Claim in the manner provided above and does not dispute the claim for indemnification against it, or if after commencing or undertaking any such defense, fails to prosecute diligently or withdraws from such defense, the Claiming Party shall have the right to undertake the defense or settlement thereof, and the Claiming Party may defend against, or enter into any settlement with respect to, the matter in any manner the Claiming Party reasonably may deem appropriate; provided that any such settlement of such Third Party Claim must include a provision whereby the plaintiff or claimant in the matter releases the Claiming Party and the Indemnifying Party from all liability with respect thereto; and provided further that the Indemnifying Party will be allowed a reasonable opportunity to participate in the defense of such Third Party Claim with its own counsel and at its own expense. In the event that (x) a final judgment or order in favor of such third party in respect of such Third Party Claim is rendered against the Claiming Party, that is not subject to appeal or with respect to which the time to appeal has expired without an appeal having been made, or (y) such Third Party Claim is settled in accordance with this Section 6(g)(ii), resulting in liability on the part of the Claiming Party, then subject to the limitations set forth in Sections 6(c), 6(d), 6(e) and 6(f), the Indemnifying Party shall pay the amount of such liability (which payment, in the case of indemnification by the Company Stockholders, shall be made by the Escrow Agent’s transfer to Purchaser of a

portion of the Escrow Fund having a value (as determined in accordance with Section 6(f)) equal to such liability.

(iii)In the event that the Indemnifying Party disputes the claim for indemnification against it with respect to such Third Party Claim, the Claiming Party shall have the right to conduct the defense and to compromise and settle such Third Party Claim in any manner the Claiming Party may deem reasonably appropriate; provided that the Claiming Party shall not, without the consent of the Indemnifying Party, agree to any settlement that does not include a provision whereby the plaintiff or claimant of such Third Party Claim releases the Indemnifying Party from all liability with respect to such third Party Claim.  If and once such dispute has been finally resolved by a court or other tribunal of competent jurisdiction, or by mutual agreement of the Claiming Party and Indemnifying Party, providing for indemnification by the Indemnifying Party of such Third Party Claim, subject to the provisions of Sections 6(c), 6(d), 6(e) and 6(f), the Indemnifying Party shall within ten (10) days of the date of such resolution or agreement, pay to the Claiming Party all damages paid or incurred by the Claiming Party in connection therewith (which payment, in the case of indemnification by the Company Stockholders, shall be made by the Escrow Agent’s transfer to Purchaser of a portion of the Escrow Fund having a value (as determined in accordance with Section 6(f)) equal to such damages.

(iv)In the event any Indemnified Party should have a claim against any Indemnifying Party for indemnification of Losses hereunder other than in connection with a Third Party Claim, such Claiming Party shall deliver prompt notice of such claim to the Indemnifying Party within twenty (20) days after learning of such claim (or within such shorter time as may be necessary to give the Indemnifying Party a reasonable opportunity to respond to such claim) and, when the Claiming Party is the Purchaser, to the Escrow Agent, stating in reasonable detail the nature and basis of such claim and providing copies of the relevant documents evidencing such claim, the amount of the claim, and the basis for the indemnification sought. Notwithstanding the foregoing, the failure of the Claiming Party to give such notice to the Indemnifying Party shall not relieve the Indemnifying Party of any liability hereunder unless the Indemnifying Party was prejudiced thereby under this Section 6, and then only to the extent of such prejudice. If the Indemnifying Party notifies the Claiming Party that it does not dispute the claim described in such notice or fails to notify the Claiming Party within thirty (30) days after delivery of such notice by the Claiming Party whether the Indemnifying Party disputes the claim described in such notice, the Loss in the amount specified in the Claiming Party’s notice shall be conclusively deemed a liability of the Indemnifying Party and, subject to the limitations set forth in this Section 6, as applicable, Purchaser shall pay the amount of such Loss to the Company Indemnified Persons on demand, or the Escrow Agent shall cause the transfer to Purchaser of a portion of the Escrow Fund having a value (as determined in accordance with Section 6(f) above) equal to the Loss incurred by the Purchaser Indemnified Persons, as applicable.  If the Indemnifying Party has timely disputed its liability with respect to such claim, the dispute shall be resolved by mutual agreement of the Claiming Party and Indemnifying Party, or in the absence of such agreement, by a court or other tribunal of competent jurisdiction. Notwithstanding anything to the contrary contained herein, as applicable, Purchaser shall pay the

Company Indemnified Persons, or the Escrow Agent on behalf of the Company Stockholders shall transfer to Purchaser a portion of the Escrow Fund having a value equal to, the amount of any such Loss no later than ten (10) business days following the determination of the Indemnifying Party’s liability (whether such determination is made pursuant to the procedures set forth in this Section 6(g)(iv), by agreement between the Indemnifying Party and the Claiming Party or by final adjudication).

(v)Any indemnity payment due and payable by an Indemnifying Party under this Agreement shall be net of any insurance proceeds actually recovered or received by the Claiming Party or any of their respective affiliates.  The Claiming Party agrees to use commercially reasonable efforts to pursue any claims for insurance with respect to the claims or Losses for which it is seeking indemnification hereunder.  Except as otherwise provided in this Section 6(g)(iv), the existence of any insurance policies shall not affect the indemnification obligations of the Company Stockholders.

(h)Computation of Losses.  For purposes of determining whether a breach of a representation or warranty under Section 3 or under Section 4 has occurred and calculating any Losses suffered by an Indemnified Person pursuant to Section 3 or Section 4 hereof, as applicable, or under any other specific indemnification covenant contained in this Agreement, (i) the amount of the Losses suffered by the Indemnified Party shall be the net amount of the Loss so suffered after giving effect to the aggregate value of any money or other assets with a readily determinable value (including, without limitation, proceeds of insurance) realized by the Indemnified Party in connection therewith, and (i) each representation or warranty that contains any qualification as to “materiality” or “Material Adverse Effect” shall be deemed to have been given as though there were no such qualification, and any such qualification shall be disregarded for purposes of this Section 6.

(i)Exclusive Remedy.  Except with respect to any Loss that is the result of fraud on the part of the other party or any of its affiliates, each of the parties hereto agrees that from and after the Closing, his or its exclusive remedy with respect to any and all claims relating to breaches of covenants, representations and warranties of this Agreement shall be indemnification pursuant to this Section 6; provided, however, that nothing in this provision shall limit any equitable remedy, including injunctions and specific performance, that a party may have pursuant to this Agreement.

(j)Subrogation.  Upon making any indemnification payment under this Section 6, the Indemnifying Party will, to the extent of such payment, be subrogated to all rights of the Claiming Party against any third party in respect of the Losses to which such payment relates.

(k)Merger Consideration Adjustment. All indemnification payments made hereunder will be treated by all parties as adjustments to the Merger Consideration.

(l)Indemnification Limitation — Type of Losses. Neither the Company Stockholders, on the one hand, nor Purchaser, on the other hand, shall have any obligation to indemnify the Purchaser Indemnified Persons or Company Indemnified Persons, as applicable, from and against consequential damages, incidental damages, indirect damages, punitive

damages, diminution in value or lost profits, except in the case of any such damages that are payable to a third party in respect of a Third Party Claim that gives rise to indemnification rights hereunder.

7.Post-Closing Employment.  At the Closing, and except as may be otherwise provided in the Employment Agreements with respect to the Key Employees, the employees of the Company will terminate their employment with the Company and will become employees of Merger Sub upon the terms set forth in the employment offers provided by Purchaser or Merger Sub to such employees; provided that nothing set forth in this Section 7 shall constitute a guarantee of continued employment or covenant by Purchaser to continue the employment of any person following the Closing.  Following the Closing, the employees of the Company will be eligible to participate in the employee benefit programs of Purchaser to the same extent as similarly situated employees of Purchaser and its subsidiaries.  Employees will be given credit for service with the Company for determining the rate of vacation accrual under Purchaser’s standard vacation program.  Purchaser shall use commercially reasonable efforts to (i) cause any pre-existing conditions or limitations and eligibility waiting periods under any U.S. group health plans of Purchaser to be waived with respect to the continuing employees of the Company and their eligible dependents, and (ii) give each of the continuing employees credit for the plan year in which the Closing occurs toward applicable deductibles and annual out of pocket limits for expenses incurred prior to the Closing for which payment has been made.  Unused vacation days accrued by continuing employees under the plans and policies of the Company and its Subsidiaries shall carry over to Purchaser or the Surviving Corporation to the extent administratively practicable, and each such continuing employee shall be paid by the Company in cash for any accrued and unused vacation days that Purchaser determines are not administratively practicable to carry over.

8.Fees and Expenses.  Except as otherwise set forth in this Agreement, the Company, on the one hand, and Purchaser and Merger Sub, on the other hand, will each bear their own costs and expenses (including attorneys’ fees, accountants’ fees and other professional fees and expenses) in connection with the negotiation, preparation, execution and delivery of this Agreement, the Transaction Documents and the consummation of the transaction contemplated hereby and thereby; provided, however, that Purchaser shall (i) pay or reimburse at the Closing reasonable attorneys’ fees and expenses not to exceed $50,000, in the aggregate, incurred by the Company in connection with negotiation, preparation, execution and delivery of this Agreement, the Transaction Documents and the consummation of the transactions contemplated by this Agreement and the Transaction Documents and (ii) be solely responsible for the fees payable to any accounting firm that conducts an audit of the Company at the request of Purchaser.

9.Governing Law.  THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE, WITHOUT REGARD TO THE CONFLICTS OF LAWS RULES THEREOF.

10.Assignment.  This Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective successors and. assigns, but will not be assignable or delegable by Purchaser or Merger Sub without the prior written consent of the Stockholders’ Representative, provided, however, that Purchaser shall be entitled to assign its rights and benefits hereto, without the consent of the Stockholders’ Representative, (i) to an affiliate of

Purchaser so long as the affiliate assumes Purchaser’s rights and obligations hereunder, and (ii) in connection with a sale of all or substantially all of Purchaser’s assets so long as the assignee expressly assumes Purchaser’s obligations hereunder; provided further, however, no such assignment shall limit Purchaser’s obligations hereunder or cause a release of Purchaser’s obligations hereunder which shall remain primary together with any such assignee.  In the event of any such assignment and delegation, the term “Purchaser” as used in this Agreement shall be deemed to refer to each such affiliate or successor of Purchaser and shall be deemed to include both Purchaser and each such affiliate or successor where appropriate.

11.Amendment and Waiver.  This Agreement, or any provision hereof, may be amended or waived; provided that any such amendment or waiver will be binding on the parties hereto only if such amendment or waiver is set forth in a writing executed by the party or parties to be bound by such amendment or waiver.  The waiver by any party hereto of a breach of any provision of this Agreement shall not operate or be construed as a waiver of any other breach of this Agreement or any of the documents, agreements and instruments executed in connection herewith or contemplated hereby.

12.Counterparts.  This Agreement may be executed in multiple counterparts, each of which shall have the force and effect of an original, and such counterparts together shall constitute one and the same instrument.  A facsimile or PDF signature shall be acceptable as an original for all purposes.

13.Notices.  All notices, consents and other communications to be sent or given hereunder by any of the parties shall in every case be in writing and shall be deemed properly served if (a) delivered personally, (b) delivered by a recognized overnight courier service, or (c) sent by facsimile transmission with a confirmation copy sent by overnight courier, in each case, to the parties at the addresses and facsimile numbers as set forth below or at such other addresses and facsimile numbers as may be furnished in writing:

(a)If to the Stockholders’ Representative:

Paul Gauthier

P. O. Box 192626
San Francisco, CA 94119-2626
Facsimile No.: (978) 389-7930

with a copy to:

Fenwick & West LLP

555 California Street, 12th Floor
San Francisco, CA 94104

Attention: Mark Stevens

Lynda Twomey

Fax: (415) 281-1350

(b)If to Purchaser:

Groupon, Inc.

600 West Chicago, Suite 620

Chicago, Illinois 60654

Attention:  Chief Executive Officer

Fax:  (312) 276-3231

with a copy to:

DLA Piper LLP (US)

203 North LaSalle Street

Chicago, Illinois 60601

Attention:  Richard E. Ginsberg

Fax:  (312) 630-5388

Date of service of such notice shall be (x) the date such notice is personally delivered, (y) three (3) day after the date of delivery to the overnight courier if sent by overnight courier, or (z) the next succeeding business day after transmission by facsimile.

14.No Third Party Beneficiaries.  Other than the provisions of Section 6 which are intended to be for the benefit of, and will be enforceable by, the Company Indemnified Persons, and the provisions of Section 20 which are intended to be for the benefit of, and will be enforceable by, the Company Stockholders and the Key Employees, no person or entity who is not a party to this Agreement, including, but not limited to, any employee or former employee of the Company, shall be deemed to be a beneficiary of any provision of this Agreement, and no such person shall have any claim, cause of action, right or remedy pursuant to this Agreement.

15.Entire Agreement.  This Agreement, including the Exhibits, the Disclosure Schedule and the Purchaser Disclosure Schedule attached hereto, and the Transaction Documents, embody the entire agreement and understanding of the parties with respect to the transactions contemplated by this Agreement.  This Agreement supersedes all prior discussions, negotiations, agreements and understandings (both written and oral) between the parties with respect to the transactions contemplated hereby that are not reflected or set forth in this Agreement, the Transaction Documents, the Exhibits, the Disclosure Schedule or the Purchaser Disclosure Schedule attached hereto.

16.Further Assurances.  Each party hereto agrees to promptly execute and deliver all further instruments and documents and take all further action necessary or appropriate or that the other party may reasonably request in order to effect the purposes of this Agreement and the Transaction Documents.

17.No Strict Construction.  The language used in this Agreement will be deemed to be the language chosen by the parties hereto to express their mutual intent and no rule of strict construction will be applied against any party hereto.

18.“Knowledge” Defined.  Where any representation or warranty contained in this agreement is expressly qualified by reference to the “Knowledge” of the Company, such term shall mean the facts or other information that are actually known by Brian Totty, Paul Gauthier,

David Gourley or Michael Cunniff and that such persons would be reasonably expected to know after due inquiry as of the date of this Agreement.  For these purposes, “due inquiry” means solely (i) the review of the relevant Sections of this Agreement and corresponding Schedules of the Disclosure Schedule, and (ii) inquiry of individual management-level employees of the Company likely to have knowledge of the particular subject matter.

19.Public Announcements.  No party to this Agreement shall issue any press release or other public document or make any public statement relating to this Agreement or the terms, conditions or other matters contained herein without obtaining the prior approval of the other parties.  The Stockholders’ Representative and Purchaser will consult with each other and agree upon the timing of and the means by which the Company’s employees, customers, suppliers and others having dealings with the Company will be informed of the transactions contemplated by this Agreement.  Nothing in this Section 19 shall require either party to obtain consent to make, or prevent either party from making, any public announcements or disclosures in such form as may be required by, or deemed advisable by such party’s legal counsel pursuant to, the rules of any stock exchange or national securities association or any applicable legal requirements.

20.Sale of the Purchaser.  In the event that a Sale of the Purchaser (as defined below) is consummated with any party or parties with whom Purchaser has agreed on an Understanding on Terms (as defined below), and such Understanding on Terms has been agreed prior to the one year anniversary of the Closing Date (including any Understanding on Terms agreed prior to the date of this Agreement):

(a)To the extent that the Upfront Consideration received by the Company Stockholders in such Sale of the Purchaser in the aggregate, is less than $20,000,000 (such difference, the “Stockholder Shortfall”), Purchaser shall pay an aggregate amount equal to the Stockholder Shortfall in cash to the Company Stockholders as additional consideration for their shares of Company Common Stock hereunder, which amount will be allocated amongst the Company Stockholders in accordance with their Pro Rata Share of the Stockholder Shortfall, within ten (10) business days following the closing of such Sale of the Purchaser.  The sum of the Upfront Consideration and the Stockholder Shortfall, if any, is referred to herein as the “Trued Upfront Consideration.”

(b)To the extent that (x) the sum of (i) the Retention Consideration (as defined below) to be received by the Key Employees (as defined below), in the aggregate, plus (ii) the value of the restricted stock units of the Purchaser granted to the Other Employees in connection with the Closing, in the aggregate, is less than (y) any positive sum derived from deducting (iii) the Trued Upfront Consideration from (iv) $40,000,000 (such difference between (x) and (y), if any, the “Retention Shortfall”), Purchaser shall pay to each Key Employee an amount in cash equal to one-third of the Retention Shortfall (such amount, the “Retention Shortfall Share”). Each Key Employee’s Retention Shortfall Share shall be subject to vesting such that 1/36th of such amount shall vest each month over the three-year period commencing on the Closing Date provided that such Key Employee is continuing to provide services as an employee or consultant to Purchaser, the Surviving Corporation, the Groupon Buyer or any of their respective affiliates on the applicable vesting date. The amount of a Key Employee’s Retention Shortfall Share that is vested upon, or within ten (10) business days following, the closing of the Sale of the Purchaser shall be paid to such Key Employee within such ten business

day period, and the remaining amount of such Retention Shortfall Share shall thereafter be promptly paid to the relevant Key Employee on a monthly basis as such amount becomes vested in accordance with the above schedule (subject to the continued service of such Key Employee as provided above).

(c)In the event of any termination of the employment of a Key Employee without “Cause”, or a “Demotion” of a Key Employee (as such terms are defined in such Key Employee’s Employment Agreement), the vesting of such Key Employee’s Retention Shortfall Share shall accelerate in full. In the event of any voluntary termination of employment by a Key Employee prior to the full vesting of such Key Employee’s Retention Shortfall Share, such Key Employee shall be entitled to receive that portion of his Retention Shortfall Share that has vested as of the date of his termination, provided that if the closing of the Sale of the Purchaser has not occurred prior to such termination date, such Key Employee shall be paid such vested amount of his Retention Shortfall Share within ten (10) business days following the closing of the Sale of the Purchaser.

(d)To the extent any Contingent Consideration (as defined below) is paid in connection with the closing of the Sale of the Purchaser with respect to the shares of Purchaser Common Stock that are issued to the Company Stockholders pursuant to the terms of this Agreement, and the amount of such Contingent Consideration is not taken into account in the calculation and payment of the Stockholder Shortfall pursuant to Section 20(a), then the amount of any such Contingent Consideration shall be for the benefit of and paid to the Purchaser’s stockholders other than the Company Stockholders.

(e)In connection with the Sale of the Purchaser and if requested by any of the Key Employees, the Purchaser agrees that it shall submit any agreements, plans, contracts or arrangements (including the amounts contemplated to be paid pursuant to this Section 20) that may result, separately or in the aggregate, in the payment of any amount or the provision of any benefit to such Key Employee that would be characterized as a “parachute payment” within the meaning of Section 280G of the Code for approval by such number of stockholders of Purchaser as is required by the terms of Section 280G in order for such payments and benefits not to be deemed parachute payments under Section 280G of the Code, with such approval to be obtained in a manner which satisfies all applicable requirements of Section 280G(b)(5)(B) of the Code and the Treasury Regulations thereunder, including Q-7 of Section 1.280G-1 of such Treasury Regulations.

(f)The Stockholder Shortfall and the Retention Shortfall shall be calculated as of the date of the closing of the Sale of the Purchaser.

For purposes of this Section 20, the following terms have the following meanings:

“Retention Consideration” means the sum of the total cash or equity consideration (other than the Retention Shortfall) that the Key Employees, in the aggregate, are entitled to receive during the period commencing on the Closing Date and ending on the third (3rd) anniversary of the Effective Time (such period, the “Measurement Period”) pursuant to (a) the Employment Agreements and the RSU Grant Agreements, and (b) any agreements entered into between any Key Employee and the acquirer of Purchaser (the “Groupon Buyer”) in connection

with such Sale of the Purchaser, which consideration shall include, without limitation, (i) the value of any options, restricted stock units and other equity rights issued or granted to any of the Key Employees by Purchaser and/or the Groupon Buyer, in each case, as of the date of closing of such Sale of the Purchaser, and (ii) any non-salary employment compensation, including bonuses and incentive compensation, paid (or to be paid) to any of the Key Employees by Purchaser and/or the Groupon Buyer during the Measurement Period, but shall exclude any consideration paid to the Key Employees upon and in connection with the closing of the Sale of the Purchaser with respect to the shares of Purchaser Common Stock that are issued to such Key Employees pursuant to the terms of this Agreement in exchange for the equity interests of such Key Employees in the Company.

“Sale of the Purchaser” means (a) the acquisition in one or more transactions by any person or entity of the beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Securities Exchange Act of 1934, as amended) of more than 50% of (i) the then outstanding shares of common stock (on an as-converted basis) of Purchaser or (ii) the combined voting power of the then outstanding securities (on an as-converted basis) of Purchaser entitled to vote generally in the election of directors; (b) the closing of a sale, lease, license (other than in the ordinary course of business), exchange, transfer or other conveyance of all or substantially all of the assets of Purchaser; (c) the consummation of any merger, share exchange, consolidation, or other business combination involving Purchaser if immediately after such transaction persons or entities who hold a majority of the outstanding securities (on an as-converted basis) entitled to vote generally in the election of directors of the surviving entity (or the entity owning 100% of such surviving entity) of such transaction are not persons or entities who, immediately prior to such transaction, held such securities (on an as-converted basis) of Purchaser; or (d) the completion of any other similar transaction, involving Purchaser or its successors, which has the same effect as any of the foregoing.

“Understanding on Terms” means any agreement, offer, letter of intent, term sheet, memorandum of understanding, commitment, proposal or other similar document or understanding (whether written or unwritten, binding or non-binding) relating to any proposed transaction between Purchaser and any other party or parties which, if consummated, would constitute a Sale of the Purchaser.

“Upfront Consideration” means $1,700,000 plus the aggregate amount of cash consideration, and/or publicly-traded securities that are free of restrictions on transfer (other than any market standoff restriction not to exceed a period of six months that is binding in the same manner on all stockholders of Purchaser), paid or issued to the Company Stockholders upon or in connection with the closing of the Sale of the Purchaser (including any redemption of Purchaser Common Stock contemplated by any Understanding on Terms that occurs prior to such closing of the Sale of the Purchaser) with respect to the shares of Purchaser Common Stock that are issued to such Company Stockholders pursuant to the terms of this Agreement (excluding any contingent consideration such as deferred, escrowed or earnout consideration (the “Contingent Consideration”)).

[Signature Page Follows]

IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first above written.  Each of the parties hereto acknowledges that it has read and understood this Agreement and has either obtained its own independent counsel with respect to the transactions contemplated hereby, or waived its right to have counsel review this Agreement.

COMPANY:
LUDIC LABS, INC.
By:	/s/ Brian Totty
Name:	Brian Totty
Its:	CFO
STOCKHOLDERS’ REPRESENTATIVE:
/s/ Paul Gauthier
Paul Gauthier
PURCHASER:
GROUPON, INC.
By:	/s/ Andrew Mason
Name:	Andrew Mason
Its:	CEO
MERGER SUB:
GROUPON LUDIC, INC.
By:	/s/ Andrew Mason
Name:	Andrew Mason
Its:	CEO

[Signature Page to Agreement and Plan of Merger]

EXHIBIT A

Certificate of Merger

State of Delaware

Secretary of State

Division of Corporations

Delivered 07:50 PM 11/30/2010

FILED 07:50 PM 11/30/2010

SRV 101133768 - 4899498 FILE

STATE OF DELAWARE
CERTIFICATE OF MERGER OF
DOMESTIC CORPORATION
INTO A
DOMESTIC CORPORATION

Pursuant to Title 8, Section 251 of the Delaware General Corporation Law, the undersigned corporations executed the following Certificate of Merger:

FIRST: The name of the surviving corporation is Groupon Ludic, Inc. and the name of the corporation being merged into this surviving corporation is Ludic Labs, Inc..

SECOND: The Agreement and Plan of Merger has been approved, adopted, executed and acknowledged by each of the constituent corporations.

THIRD: The name of the surviving corporation is Groupon Ludic, Inc.

FOURTH: The merger is to become effective upon filing of this Certificate of Merger.

FIFTH: The Agreement and Plan of Merger is on file at 600 West Chicago Avenue, Suite 620, Chicago, Illinois 60654, the place of business of the surviving corporation.

SIXTH: A copy of the Agreement and Plan of Merger will be furnished by the surviving corporation, on request and without cost, to any stockholder of any constituent corporation.

SEVENTH: The Certificate of Incorporation of the surviving corporation shall be its Certificate of Incorporation.

IN WITNESS WHEREOF, said corporation has caused this certificate to be signed by an authorized officer, the 30th day of November, 2010.

GROUPON LUDIC, INC.
Name:	/s/ Andrew Mason
Title:	Andrew Mason, President and CEO

EXHIBIT B

Letter of Transmittal

LETTER OF TRANSMITTAL

Groupon Ludic, Inc.
107 South B Street, Suite 200
San Mateo, CA 94401

Re:Merger of Ludic Labs, Inc. and Groupon Ludic, Inc.

Ladies and Gentlemen:

In connection with the Agreement and Plan of Merger dated as of November     , 2010 (the “Merger Agreement”) by and among Groupon, Inc., a Delaware corporation (the “Purchaser”), Groupon Ludic, Inc., a Delaware corporation (the “Merger Sub”), Ludic Labs, Inc., a Delaware corporation (the “Company”), and the Stockholders’ Representative, pursuant to which the Company will merge with and into the Merger Sub with the Merger Sub being the surviving corporation (the “Merger”), the undersigned hereby transmits to you, on the terms and conditions of the Merger Agreement and this Letter of Transmittal (this “Letter”), the certificate(s) formerly representing shares of the outstanding capital stock of the Company (the “Company Capital Stock”).  Unless otherwise defined herein, all capitalized terms contained herein shall have the meanings set forth in the Merger Agreement.

In consideration of the payment of shares of capital stock of the Purchaser in exchange for the enclosed stock certificate(s) representing the Company Capital Stock (the “Certificates”), the undersigned agrees as follows:

1.Representations and Warranties.  The undersigned represents and warrants to the Merger Sub and to the Company that:

a.The undersigned is the lawful record and beneficial owner of the Company Capital Stock set forth opposite his, her or its name on Schedule A hereto and has good and valid title to such Company Capital Stock.

b.The Company Capital Stock owned by the undersigned is free and clear of any liens, restrictions, claims, charges, pledges, security interests, options, rights of first offer, rights of first refusal or other encumbrances of any nature whatsoever (collectively, “Liens”), with no defects of title whatsoever.

c.Other than as set forth in Schedule 3(e)(iii) of the Disclosure Schedule, there are no proxies, voting trusts or voting agreements with respect to the voting of the Company Capital Stock owned by the undersigned and, to the knowledge of the undersigned, there are no authorized or outstanding rights agreements, stockholder plans or other obligations of the Company entitling any person to vote (or which are convertible into or exercisable for securities having the right to vote) with the stockholders of the Company on any matter.

d.The undersigned does not own any equity interests (or rights convertible into, or exercisable for, equity interests) in the Company other than the Company Capital Stock and the options, if any, set forth opposite his, her or its name on Schedule A hereto.

e.The undersigned has the requisite power, authority and capacity to execute and deliver this Letter and to perform the undersigned’s obligations hereunder. To the extent that the undersigned is not an individual, this Letter has been duly authorized by all necessary action of the part of the undersigned. This Letter has been duly and validly executed and delivered by the undersigned and constitutes the valid and legally binding obligation of the undersigned, enforceable in accordance with its terms and conditions. The undersigned, to the best of his, her, or its knowledge, is not required to give any notice to, make any filing with, or obtain any authorization, consent, or approval of any governmental authority or any person in order to deliver or perform the obligations set forth in this Letter.

f.Neither the execution and the delivery of this Letter, nor the performance of the obligations set forth in this Letter, will (i) violate, conflict with, result in a breach of any provision of, constitute a default (or an event that, with notice or lapse of time or both, would constitute a default) under, result in the termination of, accelerate the performance required by, or result in a right of termination, cancellation or acceleration, the loss of a material right or benefit, or the creation of any lien upon the Company Capital Stock owned by the undersigned (and if the undersigned is not a natural person, under any of the provisions of the undersigned’s organizational documents or under any note, bond, mortgage, indenture, material contract, agreement, document or instrument to which the Company Capital Stock owned by the undersigned may be subject), or (ii) violate any constitution, statute, regulation, rule, injunction, judgment, order, decree, ruling, charge, or other restriction of any governmental authority, or court to which the undersigned or his, her, or its assets or properties is subject.

g.The undersigned has no liability or obligation to pay any fees or commissions to any broker, finder, or agent with respect to the transactions contemplated by this Letter for which the Merger Sub or the Company could become liable or obligated.

2.Additional Undertakings.

a.The undersigned acknowledges and agrees to the appointment of the Stockholders’ Representative pursuant to the terms of that certain Consent, Release and Stockholders’ Representative Agreement.

b.The undersigned acknowledges that he, she or it has read, understands, agrees, accepts, and agrees to be bound by and perform the applicable terms and conditions of the Merger Agreement.  The undersigned consents to the consummation of the transactions contemplated by the Merger Agreement.

c.The undersigned acknowledges that he, she, or it: (i) has received a copy of the information package dated November       , 2010, delivered by the Company to the Company Stockholders in connection with the Merger Agreement, (ii) has read and understands the documents and agreements in such information package, and (iii) has had an opportunity to consult with a lawyer and to ask questions regarding the contents of such information package.

d.The undersigned shall, upon the request of the Surviving Corporation or the Company, execute and deliver any additional documents deemed necessary or desirable to complete the transfer of the Company Capital Stock represented by the Certificate(s) surrendered hereby.

e.The undersigned hereby acknowledges that delivery of the Certificate(s) shall be effected, and the risk of loss and title to the Company Capital Stock represented by such Certificate(s) shall pass only (i) if the Merger has been consummated and (ii) upon proper delivery of this Letter and the Certificate(s). All questions as to validity, form and eligibility of any surrender of any Company Capital Stock hereunder shall be reasonably determined by the Surviving Corporation, and such determination shall be final and binding on all parties.

f.The undersigned understands that after the Merger has been consummated, payment for the Company Capital Stock represented by the surrendered Certificates will be made in accordance with the terms of the Merger Agreement.

g.The undersigned hereby agrees that he, she or it will not make any claim for indemnification against the Surviving Corporation by reason of the fact that he, she or it was a controlling person, director, employee or representative of the Company or was serving as such for another person at the request of the Company (whether such claim is for Losses of any kind or otherwise and whether such claim is pursuant to any statute, organizational document, Contract or otherwise) with respect to any claim brought by the undersigned relating to the Merger Agreement.

3.Indemnification of the Surviving Corporation and its Affiliates.

a.The representations and warranties of the undersigned set forth in Section 1 of this Letter shall survive indefinitely.

b.The undersigned shall indemnify and hold harmless the Surviving Corporation and its respective shareholders, partners, members, officers, directors, employees, agents, representatives, successors and permitted assigns, from and against any and all Losses arising out of or resulting from (i) any breach by the undersigned of any representation or warranty made in Section 1 of this Letter; and (ii) the failure by the undersigned to perform any covenant, agreement or obligation set forth in this Letter.  Such obligation shall be governed by Section 6 of the Merger Agreement; provided, however, for the avoidance of doubt, the limitations set

forth in Sections 6(c), 6(d) or 6(e) of the Merger Agreement shall not limit any such obligation.

4.Successors and Assigns. This Letter shall remain in full force and effect notwithstanding the death or incapacity of one or more of the undersigned, and shall be binding upon the heirs, personal representatives, successors and assigns of the undersigned.

5.Waiver of Dissenters’ Rights. The undersigned acknowledges and agrees that the execution of this Letter and the delivery of this Letter and the undersigned’s Certificate(s) for the Company Capital Stock constitute a waiver by the undersigned of any dissenter or appraisal rights the undersigned may have under applicable law with respect to the Company Capital Stock owned by the undersigned.

[Signature Page Follows]

PLEASE SIGN HERE

(TO BE COMPLETED BY ALL RECORD HOLDERS)

	, 2010
	, 2010
Signature(s) of Company Stockholder(s)	Date
Area Code and Tel. No.:
Address:
Taxpayer Identification or Social Security No.
Must be signed by the Company Stockholder(s) as the name(s) appear(s) on the Certificate(s). If signature is by a trustee, executor, administrator, guardian, attorney-in-fact, officer of a corporation or other person acting in a fiduciary or representative capacity, please provide the following:
Name(s)
(Please Type or Print)
Capacity (Full Title):
Address:

EXHIBIT C

Merger Consideration Election Form

LUDIC LABS, INC.

IRREVOCABLE MERGER CONSIDERATION ELECTION FORM

As described in the Information Letter and the draft Agreement and Plan of Merger (the “Merger Agreement”), which were distributed to the undersigned stockholders on or around November         , 2010, at the Effective Time of the proposed acquisition (the “Merger”) of Ludic Labs, Inc. (“Ludic”) by Groupon, Inc.(“Groupon”), each of your shares of capital stock of Ludic (the “Ludic Shares”) will be converted into the right to receive the consideration set forth in the Merger Agreement, and you may elect to receive such consideration in the form of shares of Non-voting Common Stock of Groupon (the “Groupon Shares”) or cash, or a combination of Groupon Shares and cash, as determined in part by your election pursuant to this Irrevocable Merger Consideration Election Form (this “Election Form”).  Please see Section 2(c) of the Merger Agreement for a more detailed explanation of the mechanics of this election.  Capitalized terms used but not otherwise defined herein shall have the meanings assigned to them in the Merger Agreement.

PLEASE NOTE THAT YOU MUST QUALIFY AS AN “ACCREDITED INVESTOR” WITHIN THE MEANING OF REGULATION D, RULE 501(A), PROMULGATED BY THE SECURITIES AND EXCHANGE COMMISSION UNDER THE SECURITIES ACT F 1933, AS AMENDED (THE “SECURITIES ACT”) TO RECEIVE GROUPON SHARES IN THE MERGER. IF YOU DO NOT QUALIFY AS AN ACCREDITED INVESTOR, THE CONSIDERATION TO BE PAID FOR YOUR LUDIC SHARES WILL SOLELY BE IN THE FORM OF CASH. PLEASE SEE A MORE DETAILED EXPLANATION OF THE CRITERIA FOR QUALIFYING AS AN ACCREDITED INVESTOR BELOW.

Please use this Election Form to indicate whether, with respect to each of the Ludic stock certificates you hold, you wish to (i) maximize the cash you will receive, (ii) maximize the Groupon Shares you will receive, or (iii) if you elect a combination of cash and stock, the number of Ludic shares represented by such certificate with respect to which you elect to receive consideration in the form of Groupon Shares (in which case you are deemed to elect cash consideration with respect to the remaining shares represented by such certificate).

YOUR FINAL ALLOCATION OF CASH VERSUS STOCK CONSIDERATION IN THE MERGER WILL DEPEND IN PART ON THE ELECTIONS MADE BY LUDIC’S OTHER STOCKHOLDERS AND THE EXTENT TO WHICH COMPANY STOCKHOLDERS DO NOT QUALIFY AS ACCREDITED INVESTORS AND WILL BE SUBJECT TO ADJUSTMENT AS SET FORTH IN MORE DETAIL BELOW AND IN THE MERGER AGREEMENT.

A properly completed Election Form must be returned on or before 10:00 a.m., California time, on Monday, November 29, 2010 (the “Election Deadline”).  If you do not submit a properly completed Election Form prior to the Election Deadline, you will be deemed to have made an election to receive the mix of stock and cash consideration for your Ludic Shares provided pursuant to Section 2(b)(i) of the Merger Agreement (unless your shares constitute Dissenting Shares as of such time or you do not qualify as an accredited investor), subject to the adjustments referenced above and as set forth in more detail below and in the Merger Agreement.  Section 2(b)(i) of the Merger Agreement contemplates that a substantial majority of the Merger Consideration Per Share for each Ludic Share will be payable in the form of Groupon Shares and the remainder in the form of cash.  The precise percentage of the Merger Consideration Per Share paid in the form of Groupon Shares versus the percentage paid in cash cannot be definitively determined at this time as the amount of the aggregate cash consideration payable in the Merger is subject to the deduction of certain liabilities of the Company calculated as of the closing of the Merger.

Please read the Information Letter, the Merger Agreement and the other documents distributed to you relating to the Merger carefully before making your election.  We also strongly encourage you to consult your legal, tax accounting and/or financial advisors regarding your election.  THIS ELECTION FORM IS NOT A PROXY OR STOCKHOLDER CONSENT; THIS ELECTION FORM IS IRREVOCABLE — YOU MAY NOT CHANGE

YOUR ELECTION AFTER THE ELECTION DEADLINE ABOVE.  Please complete and return this Election Form even if you do not plan to consent to the proposed acquisition.

I.Stockholder Name and Contact Information.

Name:	Office Telephone:
Street Address:	Home Telephone:
City and State (or Province):	E-mail address:
Zip/Postal Code & Country:

II.Stockholder Election

Pursuant to the terms set forth in the attached documents, the undersigned stockholder elects, as follows:

1. STOCK ELECTION. I elect to maximize the amount of Groupon Shares that I will receive in exchange for my Ludic shares represented by the below listed Ludic stock certificate(s), as such election is contemplated by Section 2(c) of the Merger Agreement.  Please fill in the numbers of the stock certificate(s) in the blanks below for any stock certificates with respect to which you wish to make a Stock Election.

Cert. No:	Cert. No:	Cert. No:
Cert. No:	Cert. No:	Cert. No:

If you need more space, please use additional sheets as necessary

2.   CASH ELECTION.  I elect to maximize the amount of cash that I will receive in exchange for my Ludic shares represented by the below listed Ludic stock certificate(s), as such election is contemplated by Section 2(c) of the Merger Agreement.  Please fill in the numbers of the stock certificate(s) in the blanks below for any stock certificates with respect to which you wish to make a Cash Election.

Cert. No:	Cert. No:	Cert. No:
Cert. No:	Cert. No:	Cert. No:

If you need more space, please use additional sheets as necessary.

3. COMBINATION ELECTION: I elect to receive both cash and Groupon Shares in exchange for my Ludic shares represented by the below listed Ludic stock certificate(s) in accordance with the allocation set forth next to each certificate listed below, as such election is contemplated by Section 2(c) of the Merger Agreement. Please fill in the numbers of the stock certificate(s) to the left below for any stock certificates with respect to which you wish to make a Combination Election and fill in the number of shares represented by such certificate which you elect to be exchanged for Groupon Shares.

Cert No.                             :                   shares represented by this certificate shall be exchanged for Groupon Shares, with [no/the remaining] shares exchanged for cash

Cert No.                             :                   shares represented by this certificate shall be exchanged for Groupon Shares, with [no/the remaining] shares exchanged for cash

Cert No.                             :                   shares represented by this certificate shall be exchanged for Groupon Shares, with [no/the remaining] shares exchanged for cash

If you need more space, please use additional sheets as necessary.

4. Non-Accredited Investor:             I am not an accredited investor within the meaning of Regulation D, Rule 501(a) promulgated under the Securities Act of 1933, as amended, and accordingly I should receive cash only for my Ludic Shares in the Merger.  

Please provide below the wire transfer instructions for the bank account to which you wish your cash proceeds in the Merger to be wired (including any escrowed amount under the Merger Agreement):

Name on Account:

Name of Bank:

Bank Account Number:

Bank Routing Number:

III.Limitations on the Election.  As set forth in Section 2(c) of the Merger Agreement, in no event, shall the aggregate amount of the Merger Consideration Per Share to be paid to the Company Stockholders in the form of Groupon Shares be less than or greater than 615,000 shares (the “Share Threshold”).  In the event the aggregate Merger Consideration Per Share to be paid in the form of Groupon Shares elected by the Company’s Stockholders is less than the Share Threshold, each Company Stockholder’s election to receive Groupon Shares will be deemed to be increased, pro rata based on the number of Ludic Shares held by such Company Stockholder relative to the number of Ludic Shares held by all Company Stockholders, to an amount such that the aggregate election by the Company Stockholders to receive Groupon Shares is equal to the Share Threshold.   In the event the aggregate Merger Consideration Per Share to be paid in the form of Groupon Shares elected by the Company’s Stockholders is greater than the Share Threshold, each Company Stockholder’s election to receive Groupon Shares will be deemed to be decreased, pro rata based on the number of Ludic Shares held by such Company Stockholder relative to the number of Ludic Shares held by all Company Stockholders, to an amount such that the aggregate election by the Company Stockholders to receive Groupon Shares is equal to the Share Threshold.

In addition, any Company Stockholder that does not qualify as an “accredited investor” under applicable securities laws (which is discussed in more detail in paragraph IV below) may only receive cash consideration in the Merger for his, her or its Ludic Shares. Accordingly, it may be necessary to decrease the cash payable, and increase the number of Groupon Shares to be issued, to other Company Stockholders who do qualify as accredited investors in order for them to take up the Groupon Shares that cannot be issued to the unaccredited investors and meet the Share Threshold.

IV.Accredited Investor Qualification. In order to receive Groupon Shares in the Merger, you must qualify as an “accredited investor” within the meaning of Regulation D, Rule 501(a) promulgated under the Securities Act of 1933, as amended. If you do not qualify as an accredited investor, you will still receive the same aggregate value for your Ludic Shares in the Merger but all of such consideration will be paid to you in cash and you will not receive any Groupon Shares. You will be asked to separately complete a Stockholder Questionnaire that, amongst other things, sets forth the criteria for qualifying as an accredited investor and requesting that you certify to Groupon and Ludic whether you meet any of such criteria.

If you are a natural person, you will qualify as an accredited investor if you satisfy one of the following criteria:

·You have a net worth (either individually or jointly with your spouse) in excess of $1,000,000; or

·You (i) either (A) had an individual annual income (exclusive of spousal income) in excess of $200,000 or (B) had a joint income with your spouse in excess of $300,000 in each of the two

preceding tax years, and (ii) reasonably expect to have the same income level (individually or jointly, as applicable) in the current tax year.

The term “net worth” means the excess of total assets over total liabilities.  In calculating “net worth,” you must exclude the estimated fair market value of your principal residence as an asset.  The term “individual income” means adjusted gross income, as reported for federal income tax purposes, less any income attributable to your spouse or property owned by your spouse, increased by the amount (if not attributable to your spouse or property owned by your spouse) of any tax-exempt shares received, losses claimed as a partner in an entity treated as a partnership for tax purposes, any deduction claimed for depletion, any deduction for long term capital gains.  The term “joint income” is defined in the same manner as “individual income,” except that income attributable to your spouse or property owned by your spouse is included.

If your Ludic Shares are held through a corporation, partnership, limited liability company or trust, there are numerous criteria, all of which are outlined in the Stockholders’ Questionnaire, upon which such entity may qualify as an accredited investor. The most commonly applicable criteria would be as follows:

·a corporation, partnership or limited liability company, not formed for the specific purpose of acquiring the Groupon Shares and having total assets in excess of $5,000,000;

·an entity in which all of the equity owners are accredited investors;

·a trust which has total assets in excess of $5,000,000, not formed for the specific purpose of acquiring the Groupon Shares, whose purchase is directed by a “sophisticated person” within the meaning of Regulation D who has such knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of an investment in Groupon;

·A revocable trust (such as a living trust) or a trust formed for the purpose of acquiring the Groupon Shares and for which, in either case, each grantor is an accredited investor.

V.By signing below, I, the undersigned stockholder of Ludic, understand and agree that:

1.If I have elected to maximize the amount of cash that I will receive for my Ludic Shares, I lose all rights I may have with respect to the Groupon Shares that I would have otherwise received, and I will not be entitled to benefit from any potential appreciation in the value of such Groupon Shares.

2.If I have elected to receive Groupon Shares, I hereby certify that I qualify as an “accredited investor” within the meaning of Regulation D promulgated under the Securities Act of 1933, as amended.

3.I have received the Information Letter and the Merger Agreement and certain enclosures referenced therein.  I have been advised to consult my legal, tax, accountant and/or financial advisor before making any decision about this election.

4.All authority in this Election Form will survive my death or incapacity, and all of my obligations in this Election Form will be binding upon my heirs, personal representatives, successors and assigns.

5.This election does not entitle me to receive consideration consisting of wholly cash or wholly Groupon Shares.  If the Merger becomes effective, I may receive some cash consideration and some Groupon Shares in connection with the surrender of my Ludic Shares pursuant to the Merger Agreement even if I have elected to maximize cash or Groupon Shares with respect to all of my stock certificates above.  I understand that the elections of all other Ludic

stockholders affect the ultimate allocation of the stock and cash consideration in the Merger amongst the Ludic stockholders, as detailed in Section 2(c) of the Merger Agreement and above.

6.The transactions contemplated by the Merger Agreement might not be consummated, in which case I will not be entitled to receive any consideration pursuant to the Merger Agreement.

7.This Election Form does not constitute a proxy or stockholder consent.  By returning this Election Form, I am in no way obligated to vote my shares of Ludic capital stock in favor of the Merger Agreement or the Merger.

8.If I fail to submit an Election Form by the Election Deadline, or if I submit a defective Election Form which is not cured by the Election Deadline, I understand that I will be deemed to have made an election to receive the mix of stock and cash consideration for my Ludic Shares provided pursuant to Section 2(b)(i) of the Merger Agreement, subject to the adjustments referenced above and as set forth in the Merger Agreement.  I acknowledge that Section 2(b)(i) of the Merger Agreement contemplates that a substantial portion of the amount of the Merger Consideration Per Share payable for each Ludic Share will be paid in the form of Groupon Shares and the remaining portion will be paid in cash.

Print Name of Stockholder or Authorized Representative of Stockholder

Signature

Date Signed

YOUR COMPLETED AND SIGNED ELECTION FORM MUST BE RECEIVED NO LATER THAN 10:00 A.M. (PACIFIC TIME) ON MONDAY, NOVEMBER 29, 2010.  PLEASE RETURN THE ELECTION FORM TO:

Brian Totty/Michael Cunniff
Ludic Labs, Inc.

107 South B Street, Suite 200
San Mateo, CA 94401

Merger Consideration Election Form

Fax Cover Sheet

Date:  November         , 2010

RECIPIENT INFORMATION
To:	Brian Totty/Michael Cunniff	Fax:	(650) 749-0303
Company:	Ludic Labs, Inc.	Phone:

SENDER INFORMATION

From:		Phone:		Return Fax:
Original: To follow via mail o		To follow via courier o
Fax Contains:	pages (including this sheet).		If incomplete, call		.
Message: Merger Consideration Election Form.

CONFIDENTIAL

This fax contains confidential and privileged material for the sole use of the intended recipient.

Any review or distribution by others is strictly prohibited.

If you are not the intended recipient, please contact the sender and destroy all copies.

EXHIBIT D

Form of Escrow Agreement

FORM OF ESCROW AGREEMENT

THIS ESCROW AGREEMENT (as the same may be amended or modified from time to time pursuant hereto, this “Agreement”) is made and entered into as of November 30, 2010, by and among Groupon, Inc., a Delaware corporation (“Purchaser”), Paul Gauthier as the Stockholders’ Representative (the “Stockholders’ Representative” and, together with Purchaser, sometimes referred to individually as “Party” or collectively as the “Parties”), and JPMorgan Chase Bank, National Association (the “Escrow Agent”).

WHEREAS, pursuant to that certain Agreement and Plan of Merger, dated as of November 30, 2010, by and among Purchaser, Groupon Ludic, Inc., a Delaware corporation and a wholly-owned subsidiary of Purchaser (“Merger Sub”), Ludic Labs, Inc. a Delaware corporation (the “Company”), and the Stockholders’ Representative (the “Merger Agreement”), the Company will merge with and into the Merger Sub (the “Merger”), with the Merger Sub being the surviving corporation of the Merger.

WHEREAS, pursuant to the Merger Agreement, the Parties have agreed to deposit in escrow at the closing of the Merger certain cash funds and stock certificates representing shares of non-voting common stock of Purchaser, which constitute a portion of the consideration payable to the stockholders of the Company in the Merger, to secure certain indemnity obligations of such stockholders under the Merger Agreement, and the Parties wish such deposit to be subject to the terms and conditions set forth herein.

NOW THEREFORE, in consideration of the foregoing and of the mutual covenants hereinafter set forth, the Parties hereto agree as follows:

1.Appointment.  The Parties hereby appoint the Escrow Agent as their escrow agent for the purposes set forth herein, and the Escrow Agent hereby accepts such appointment under the terms and conditions set forth herein.

2.Escrow Amount.  In connection with, and upon, the final payment of consideration under the Merger Agreement, Purchaser shall deposit with the Escrow Agent an aggregate of (i) $118,071.10 in immediately available funds (together with any proceeds thereof, the “Cash Escrow Amount”) and (ii) stock certificates representing an aggregate of 61,500 shares of the non-voting common stock of Purchaser issued in the names of the stockholders of the Company set forth on Schedule 1 to this Agreement (each, a “Stockholder” and collectively, the “Stockholders”), such certificates representing the number of shares of common stock of Purchaser set forth opposite each such Stockholder’s name on Schedule 1 (collectively, the “Escrow Shares” and, together with the Cash Escrow Amount, the “Escrow Amount”).  The Escrow Agent shall hold the Cash Escrow Amount and, subject to the terms and conditions hereof, shall invest and reinvest the Cash Escrow Amount and the proceeds thereof as directed in Section 3.  The Stockholders’ Representative hereby agrees to use commercially reasonable efforts to cause each Stockholder to execute three (3) stock powers of attorney in the form set forth on Exhibit A (“Stock Powers”) in favor of Purchaser, allowing for the transfer of such Stockholder’s Escrow Shares to Purchaser in the event, and only in the event, that Purchaser is entitled to receive any or all of such Escrow Shares pursuant to the terms hereof.  The

Stockholders’ Representative shall cause the Stock Powers that are provided to the Stockholders’ Representative to be deposited with the Escrow Agent within ten (10) days following the date of this Agreement. The certificates representing the Escrow Shares will be legended to reflect the deposit of such Escrow Shares under this Agreement.  Such legend shall be removed upon disbursement of the Escrow Shares, as described in Section 5 hereof.

3.Investment of Cash Escrow Amount.  During the term of this Agreement, the Cash Escrow Amount shall be invested in a JPMorgan Cash Compensation Account (“CCA”), or a successor or similar investment offered by the Escrow Agent, unless otherwise instructed in writing by the Parties and as shall be acceptable to the Escrow Agent.  CCA have rates of compensation that may vary from time to time based upon market conditions.  Instructions to make any other investment (“Alternative Investment”) must be in writing and shall specify the type and identity of the investments to be purchased and/or sold.  The Escrow Agent is hereby authorized to execute purchases and sales of investments through the facilities of its own trading or capital markets operations or those of any affiliated entity.  The Escrow Agent or any of its affiliates may receive compensation with respect to any Alternative Investment directed hereunder including, without limitation, charging any applicable agency fee in connection with each transaction.  The Parties recognize and agree that the Escrow Agent will not provide supervision, recommendations or advice relating to either the investment of the Cash Escrow Amount or the purchase, sale, retention or other disposition of any investment described herein. The Escrow Agent shall not have any liability for any loss sustained as a result of any investment in an investment made pursuant to the terms of this Agreement or as a result of any liquidation of any investment prior to its maturity or for the failure of the Parties to give the Escrow Agent instructions to invest or reinvest the Cash Escrow Amount.  The Escrow Agent shall have the right to liquidate any investments held in order to provide funds necessary to make required payments under this Agreement.

4.Restrictions on Escrow Shares.  Prior to the Distribution Date (as defined in Section 5) (i) no sale, transfer or other disposition by the Stockholders may be made of any of the Escrow Shares other than in connection with a Change of Control (as defined below) of Purchaser, and (ii) no Stockholder shall pledge or grant a security interest in the Escrow Shares or grant a security interest in his, her or its rights under this Agreement. A “Change of Control” of Purchaser means (a) the acquisition in one or more transactions by any person or entity of the beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Securities Exchange Act of 1934, as amended) of more than 50% of (i) the then outstanding shares of common stock (on an as-converted basis) of Purchaser or (ii) the combined voting power of the then outstanding securities (on an as-converted basis) of Purchaser entitled to vote generally in the election of directors; (b) the closing of a sale, lease, license (other than in the ordinary course of business), exchange, transfer or other conveyance of all or substantially all of the assets of Purchaser; (c) the consummation of any merger, share exchange, consolidation, or other business combination involving Purchaser if immediately after such transaction persons or entities who hold a majority of the outstanding securities (on an as-converted basis) entitled to vote generally in the election of directors of the surviving entity (or the entity owning 100% of such surviving entity) of such transaction are not persons or entities who, immediately prior to such transaction, held such securities (on an as-converted basis) of Purchaser; or (d) the completion of any other

similar transaction, involving Purchaser or its successors, which has the same effect as any of the foregoing.

5.Disposition and Termination.

(a)           In the event Purchaser has a claim against the Stockholders for indemnification of Losses (as defined in the Merger Agreement) under the terms of the Merger Agreement (a “Claim”), Purchaser shall deliver prompt notice of such Claim (a “Claim Notice”) to the Stockholders’ Representative and to the Escrow Agent within twenty (20) days after learning of such Claim (or within such shorter time as may be necessary to give the Stockholders a reasonable opportunity to respond to such Claim) stating in reasonable detail the nature and basis of such Claim and providing copies of the relevant documents evidencing such Claim, the amount of the Claim (the “Claimed Amount”), and the basis for the indemnification sought.

(b)           Subject to Section 5(f) below, in connection with the indemnification by the Stockholders of any Claim under the Merger Agreement, the Escrow Agent shall distribute the Escrow Amount only in accordance with (i) a written instrument delivered to the Escrow Agent that is executed by both Purchaser and the Stockholders’ Representative (the “Joint Instruction”) that  instructs the Escrow Agent as to the distribution of some or all of the Escrow Amount to Purchaser or the Stockholders, as applicable, or (ii) a final and non-appealable order or judgment of a court of competent jurisdiction (an “Order”), a copy of which is delivered to the Escrow Agent by either Purchaser or the Stockholders’ Representative, that instructs the Escrow Agent as to the distribution of some or all of the Escrow Amount to Purchaser or the Stockholders, as applicable, and which is accompanied by an opinion of such Party’s counsel stating to the finality of the court order.

(c)           To the extent the Joint Instruction provides for a portion of the Escrow Amount to be distributed to Purchaser in satisfaction of the indemnification of the relevant Claim (the “Claimed Amount”), the Joint Instruction shall specify the portion of the Cash Escrow Amount and the number of the Escrow Shares (collectively, the “Payment Amount”) to be distributed to Purchaser from the Escrow Amount in satisfaction of the payment of the Claimed Amount.  Each Payment Amount shall be withdrawn from the Escrow Amount in accordance with each Stockholder’s pro rata share set forth on Schedule 1 (referred to herein as the “Pro Rata Share” of such Stockholder) in the same ratio of cash (if any) and shares of Purchaser Common Stock (if any) as that applicable to the amount originally deposited with the Escrow Agent on behalf of each such Stockholder (as set forth in Schedule 1) as of the date hereof.  For purposes of making any distribution of Escrow Shares to Purchaser in satisfaction of any Claims, and for purposes of determining the distribution of any portion of the Escrow Amount to the Stockholders in accordance with their Pro Rata Share, hereunder, the Escrow Shares shall be deemed to have a value of $21.79 per Escrow Share unless, at the relevant time, there has been a Change of Control of Purchaser in which event each Escrow Share shall be deemed to have a value per share equal to the per share value of the consideration payable or issuable by the acquirer of Purchaser with respect to the non-voting shares of common stock of Purchaser pursuant to the terms, and upon the closing, of such Change of Control.

(d)           Any release or distribution by the Escrow Agent of Escrow Shares to Purchaser in respect of a Claimed Amount shall be made by mailing the stock certificates, together with the Stock Powers related to such stock certificates, deposited with the Escrow Agent to Purchaser. Purchaser shall complete the Stock Powers to effect transfers to Purchaser of the requisite number of Escrow Shares held by each Stockholder representing such Stockholder’s pro rata share (the “Escrow Share Percentage”) of the aggregate number of Escrow Shares to be transferred to Purchaser in satisfaction of the Escrow Share portion of the Payment Amount based on the number of Escrow Shares originally issued to such Stockholder at the closing of the Merger relative to the total number of Escrow Shares issued to all Stockholders (as set forth in Schedule 1). The Escrow Agent shall have no liability whatsoever for any error, delay or failure to act by the Purchaser, including without limitation any error, delay or failure in the delivery of such Escrow Shares.

(d)           If any portion of the Escrow Shares is not required to be transferred to Purchaser in satisfaction of the Payment Amount, Purchaser will promptly issue stock certificates to the Stockholders for such remaining portion of the Escrow Shares in accordance with each Stockholder’s Escrow Share Percentage and shall deliver such new stock certificates to the Escrow Agent to retain in escrow hereunder until distributed or released pursuant to this Agreement. No fraction of an Escrow Share shall be distributed, and each fractional share thereof shall be rounded up or down to the nearest whole number.

(e)           Within three (3) Business Days after November 30, 2011 (the “Distribution Date”), the Escrow Agent shall release and distribute from escrow any remaining Escrow Amount to the Stockholders in accordance with each such Stockholder’s Pro Rata Share and based on the same ratio of cash (if any) and shares of Purchaser Common Stock (if any) as that applicable to the amount originally deposited with the Escrow Agent on behalf of each such Stockholder (in accordance with Schedule 1) as of the date hereof; provided, however, that if on the Distribution Date there remain unresolved or unsatisfied Claims (“Open Claims”) that have been validly notified by Purchaser to the Escrow Agent prior to 5pm Chicago Time of the Distribution Date pursuant to Section 5(a) above, the Escrow Agent shall retain a portion of the Escrow Amount equal to the amount of the Open Claims as set forth in the Claim Notice until a Joint Instruction or an Order is provided to the Escrow Agent with respect to the release and distribution of such remaining amount.  At the time of delivery to each Stockholder of its pro rata share of any of the Cash Escrow Amount that is distributable to the Stockholders hereunder, the Escrow Agent shall also deliver to such Stockholder its pro rata share of any accrued but unpaid interest on the Cash Escrow Amount through such delivery date. The pro rata share of each Stockholder of the Cash Escrow Amount shall be calculated as the percentage of the Cash Escrow Amount that is deposited into the escrow on behalf of such Stockholder (if any) at the closing of the Merger.

(f)            Upon distribution and release of the Escrow Amount by the Escrow Agent in accordance with the terms of this Agreement, this Agreement shall terminate.

6.Escrow Agent.

(a)           The Escrow Agent shall have only those duties as are specifically and expressly provided herein, which shall be deemed purely ministerial in nature, and no other duties shall be implied.  Such duties shall include the following: (i) safeguarding and treating the Escrow Amount as trust funds in accordance with the provisions of this Agreement and not as the property of Purchaser, and holding the Escrow Amount in separate accounts, apart from any other funds or accounts of the Escrow Agent or any other person and (ii) holding and disposing of the Escrow Amount only in accordance with the provisions of this Agreement.  The duties of the Escrow Agent with respect to the Escrow Amount may be altered, amended, modified or revoked only by a writing signed by the Parties and the Escrow Agent.  The Escrow Agent shall neither be responsible for, nor chargeable with, knowledge of, nor have any requirements to comply with, the terms and conditions of any other agreement, instrument or document between the Parties, in connection herewith, if any, including, without limitation, the Merger Agreement, nor shall the Escrow Agent be required to determine if any person or entity has complied with the Merger Agreement, nor shall any additional obligations of the Escrow Agent be inferred from the terms of the Merger Agreement, even though reference thereto may be made in this Agreement.  In the event of any conflict between the terms and provisions of this Agreement, those of the Merger Agreement, any schedule or exhibit attached to this Agreement, or any other agreement among the Parties, the terms and conditions of this Agreement shall control.  The Escrow Agent may rely upon and shall not be liable for acting or refraining from acting upon any written notice, document, instruction or request furnished to it hereunder and believed by it to be genuine and to have been signed or presented by the proper Party or Parties without inquiry and without requiring substantiating evidence of any kind.  The Escrow Agent shall not be liable to any Party, any beneficiary or other person for refraining from acting upon any instruction setting forth, claiming, containing, objecting to, or related to the transfer or distribution of the Escrow Amount, or any portion thereof, unless such instruction shall have been delivered to the Escrow Agent in accordance with Section 12 below and the Escrow Agent has been able to satisfy any applicable security procedures as may be required hereunder and as set forth in Section 12.  The Escrow Agent shall be under no duty to inquire into or investigate the validity, accuracy or content of any such document, notice, instruction or request.  The Escrow Agent shall have no duty to solicit any payments which may be due it or the Escrow Amount, nor shall the Escrow Agent have any duty or obligation to confirm or verify the accuracy or correctness of any amounts deposited with it hereunder.

(b)           The Escrow Agent shall not be liable for any action taken, suffered or omitted to be taken by it in good faith except to the extent that a final adjudication of a court of competent jurisdiction determines that the Escrow Agent’s gross negligence or willful misconduct was the primary cause of any loss to any Party.  The Escrow Agent may execute any of its powers and perform any of its duties hereunder directly or through affiliates or agents that have been approved in writing in advance by Purchaser and the Stockholders’ Representative.  The Escrow Agent may consult with counsel to be selected and retained by it.  The Escrow Agent shall not be liable for any action taken, suffered or omitted to be taken by it in accordance with, or in reliance upon, an opinion of any such counsel.  In the event that the Escrow Agent shall be uncertain or believe there is some ambiguity as to its duties or rights hereunder or shall receive instructions, claims or demands from any Party hereto which, in its opinion, conflict with any of the

provisions of this Agreement, it shall be entitled to refrain from taking any action and its sole obligation shall be to keep safely all property held in escrow until it shall be given a direction in writing by the Parties which eliminates such ambiguity or uncertainty to the satisfaction of Escrow Agent or by a final and non-appealable order or judgment of a court of competent jurisdiction.  Anything in this Agreement to the contrary notwithstanding, in no event shall the Escrow Agent be liable for special, incidental, punitive, indirect or consequential loss or damage of any kind whatsoever (including but not limited to lost profits), even if the Escrow Agent has been advised of the likelihood of such loss or damage and regardless of the form of action.

7.Succession.

(a)The Escrow Agent may resign and be discharged from its duties or obligations hereunder by giving thirty (30) days advance notice in writing of such resignation to the Parties specifying a date when such resignation shall take effect.  If the Parties have failed to appoint a successor escrow agent prior to the expiration of thirty (30) days following receipt of the notice of resignation, the Escrow Agent may petition any court of competent jurisdiction for the appointment of a successor escrow agent or for other appropriate relief, and any such resulting appointment shall be binding upon all of the Parties hereto.  Escrow Agent’s sole responsibility after such thirty (30) day notice period expires shall be to hold the Escrow Amount (without any obligation to reinvest the Cash Escrow Amount) and to deliver the same to a designated substitute escrow agent, if any, or in accordance with the directions of a final order or judgment of a court of competent jurisdiction, at which time of delivery Escrow Agent’s obligations hereunder shall cease and terminate.

(b)Any entity into which the Escrow Agent may be merged or converted or with which it may be consolidated, or any entity to which all or substantially all the escrow business may be transferred, shall be the Escrow Agent under this Agreement without further act.

8.Compensation and Reimbursement.  Purchaser agrees to (a) pay the Escrow Agent upon execution of this Agreement and from time to time thereafter reasonable compensation for the services to be rendered hereunder, which unless otherwise agreed in writing shall be as described in Schedule 2 attached hereto, and (b) pay or reimburse the Escrow Agent upon request for all expenses, disbursements and advances, including, without limitation, reasonable attorneys’ fees and expenses, incurred or made by it in connection with the performance, modification and termination of this Agreement.  The obligations set forth in this Section 8 shall survive the resignation, replacement or removal of the Escrow Agent or the termination of this Agreement.

9.Indemnity.Purchaser shall indemnify, defend and save harmless the Escrow Agent and its affiliates and their respective successors, assigns, agents and employees (the “Indemnitees”) from and against any and all losses, damages, claims, liabilities, penalties, judgments, settlements, litigation, investigations, costs or expenses (including, without limitation, the fees and expenses of outside counsel and experts and their staffs and all expense of document location, duplication and shipment) (collectively “Losses”), arising out of or in connection with (i) the Escrow Agent’s execution and performance of this Agreement, tax reporting or withholding, the enforcement of any rights or remedies under or in connection with

this Agreement, or as may arise by reason of any act, omission or error of the Indemnitee, except in the case of any Indemnitee to the extent that such Losses are finally adjudicated by a court of competent jurisdiction to have been primarily caused by the gross negligence or willful misconduct of such Indemnitee, or (ii) its following any instructions or other directions, whether joint or singular, from the Parties, except to the extent that its following any such instruction or direction is expressly forbidden by the terms hereof.  The indemnity obligations set forth in this Section 9 shall survive the resignation, replacement or removal of the Escrow Agent or the termination of this Agreement.

10.Stockholder Rights.

(a)While any Escrow Shares are held as part of the Escrow Amount, and pending the distribution thereof to Purchaser or the Stockholders, as the case may be, in connection with any distributions from the Escrow Amount in accordance with this Agreement, each Stockholder will have all rights with respect to the Escrow Shares attributable to such Stockholder as set forth on Schedule 1 (including, without limitation, the right to vote such shares), except (i) the right of possession thereof, and (ii) the right to pledge, encumber, sell, assign or transfer such Escrow Shares or any interest therein except as contemplated herein. Any cash dividend or other distribution (other than a distribution that is not taxable pursuant to Section 305 of the Internal Revenue Code of 1986, as amended (“Non-taxable Distributions”)) made with respect to the Escrow Shares shall be distributed to the Stockholders in accordance with their respective Pro Rata Shares of the Escrow Amount and any other Non-taxable Distribution shall be deposited and included in the Escrow Amount and shall be considered Escrow Shares for purposes hereof.

(b)In case, after the date of this Agreement and prior to the Distribution Date, there is any Change of Control of Purchaser, or the shares of non-voting common stock of Purchaser are converted or reclassified into shares of a different class or series of Purchaser or other securities or property, Purchaser shall promptly provide written notice of such event to the Stockholders’ Representative and the Escrow Agent, and shall cause the Escrow Shares that then remain in escrow under this Agreement to be replaced with the consideration payable for such Escrow Shares pursuant to the terms of such Change of Control transaction (the “Change of Control Consideration”) or otherwise replaced with the appropriate instruments representing the stock or other securities or property (such stock, securities or property, together with the Change of Control Consideration, the “Replacement Property”) to which the Stockholders, as holders of such Escrow Shares, are entitled.  The Replacement Property will be held in escrow until the release and distribution thereof in accordance with this Agreement in the same manner as the Escrow Shares.

11.Patriot Act Disclosure/Taxpayer Identification Numbers/Tax Reporting.

(a)Patriot Act Disclosure.  Section 326 of the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001 (“USA PATRIOT Act”) requires the Escrow Agent to implement reasonable procedures to verify the identity of any person that opens a new account with it.  Accordingly, the Parties acknowledge that Section 326 of the USA PATRIOT Act and the Escrow Agent’s identity verification procedures require the Escrow Agent to obtain information which may be used to

confirm the Parties’ identity including, without limitation, the name, address and organizational documents (“identifying information”). The Parties agree to provide the Escrow Agent with and consent to the Escrow Agent obtaining from third parties any such identifying information required as a condition of opening an account with or using any service provided by the Escrow Agent.

(b)Certification and Tax Reporting.  The Parties have provided the Escrow Agent with their respective fully executed Internal Revenue Service (“IRS”) Form W-8, or W-9 and/or other required documentation.  All interest or other income earned under this Agreement shall be paid to the Stockholders and shall be allocated to the Stockholders in accordance with their Pro Rata Share and reported, as and to the extent required by law, by the Escrow Agent to the IRS, or any other taxing authority, on IRS Form 1099 or 1042S (or other appropriate form) as income earned from the Escrow Amount by the Stockholders whether or not said income has been distributed during such year.  The Escrow Agent shall withhold any taxes it deems appropriate in the absence of proper tax documentation or as required by law, and shall remit such taxes to the appropriate authorities. The Parties hereby represent and warrant to the Escrow Agent that (i) there is no sale or transfer of an United States Real Property Interest as defined under IRC Section 897(c) in the underlying transaction giving rise to this Agreement; and (ii) such underlying transaction does not constitute an installment sale requiring any tax reporting or withholding of imputed interest or original issue discount to the IRS or other taxing authority.

12.Notices.  All communications hereunder shall be in writing and except for communications from the Parties setting forth, claiming, containing, objecting to, or in any way related to the transfer or distribution of funds, including but not limited to funds transfer instructions (all of which shall be specifically governed by Section 13 below), shall be deemed to be duly given after it has been received and the receiving party has had a reasonable time to act upon such communication if it is sent or served (a) by facsimile; (b) by overnight courier; or (c) by prepaid registered mail, return receipt requested; to the appropriate notice address set forth below or at such other address as any party hereto may have furnished to the other parties in writing by registered mail, return receipt requested.

If to Purchaser:	Groupon, Inc.
	600 West Chicago, Suite 620
	Chicago, Illinois 60654
	Attention: Chief Executive Officer
	Fax: (312) 276-3231
	with a copy to:
	DLA Piper LLP (US)
	203 North LaSalle Street
	Chicago, Illinois 60601
	Attention: Richard E. Ginsberg
	Fax: (312) 630-5388

If to Stockholders’ Representative:

Paul Gauthier

with a copy to:

Fenwick & West LLP

555 California Street, 12th Floor

San Francisco, CA 94104

Attention: Mark Stevens

Lynda Twomey

Fax: (415) 281-1350

If to the Escrow Agent:

JPMorgan Chase Bank, N.A.

Escrow Services

420 West Van Buren, Mail Code IL1-0113

Chicago, IL 60606

Attention:  Sonny T. Lui

Fax No.: (312) 954-0430

Notwithstanding the above, in the case of communications delivered to the Escrow Agent, such communications shall be deemed to have been given on the date received by an officer of the Escrow Agent or any employee of the Escrow Agent who reports directly to any such officer at the above-referenced office.  In the event that the Escrow Agent, in its sole discretion, shall determine that an emergency exists, the Escrow Agent may use such other means of communication as the Escrow Agent deems appropriate.  For purposes of this Agreement, “Business Day” shall mean any day other than a Saturday, Sunday or any other day on which the Escrow Agent located at the notice address set forth above is authorized or required by law or executive order to remain closed.

13.Security Procedures.Notwithstanding anything to the contrary as set forth in Section 12, any instructions setting forth, claiming, containing, objecting to, or in any way related to the transfer or distribution of funds, including, but not limited to, any such funds transfer instructions that may otherwise be set forth in a written instruction permitted pursuant to Section 5 of this Agreement, may be given to the Escrow Agent only by confirmed facsimile and no instruction for or related to the transfer or distribution of the Escrow Amount, or any portion thereof, shall be deemed delivered and effective unless the Escrow Agent actually shall have received such instruction by facsimile at the number provided to the Parties by the Escrow Agent in accordance with Section 12 and as further evidenced by a confirmed transmittal to that number.

(a)In the event funds transfer instructions are so received by the Escrow Agent by facsimile, the Escrow Agent is authorized to seek confirmation of such instructions by telephone call-back to the person or persons designated on Schedule 3 hereto, and the Escrow Agent may rely upon the confirmation of anyone purporting to be the person or persons so designated.  The persons and telephone numbers for call-backs may be changed only in a writing actually received and acknowledged by the Escrow Agent.  The Escrow Agent and the beneficiary’s bank in any funds transfer may rely solely upon any account numbers or similar identifying numbers provided by Purchaser or the Stockholders’ Representative to identify (i) the beneficiary, (ii) the beneficiary’s bank, or (iii) an intermediary bank.  The Escrow Agent may apply any of the escrowed funds for any payment order it executes using any such identifying number, even when its use may result in a person other than the beneficiary being paid, or the transfer of funds to a bank other than the beneficiary’s bank or an intermediary bank designated.

(b)Purchaser acknowledges that the Escrow Agent is authorized to use the following funds transfer instructions to disburse any funds due to Purchaser under this Agreement without a verifying call-back as set forth in Section 12(a) above:

Purchaser’s Bank account information:

JPMorgan Chase Bank NA

Chicago, IL 60670

ABA:

Account Number:

For the account of Groupon, Inc.

Stockholders’ Representative acknowledges that the Escrow Agent is authorized to use the following funds transfer instructions to disburse any funds due to the Stockholders’ Representative under this Agreement without a verifying call-back as set forth in Section 12(a) above:

Stockholders’ Representative’s Bank account information:

Citibank NA

111 Wall Street, NY, NY 10043

ABA #

FBO Charles Schwab and Company

Account #

For the account of Haligonian Trust

Schwab account number

(c)In addition to their respective funds transfer instructions as set forth in Section 13(b) above, Purchaser acknowledges that repetitive funds transfer instructions may be given to the Escrow Agent for one or more beneficiaries where only the date of the requested transfer, the amount of funds to be transferred, and/or the description of the payment shall change within the repetitive instructions (“Standing Settlement Instructions”).  Accordingly, Purchaser shall deliver to Escrow Agent such specific Standing Settlement Instructions only for each respective

beneficiary as set forth in Schedule 3, by facsimile in accordance with this Section 13.  Escrow Agent may rely solely upon such Standing Settlement Instructions and all identifying information set forth therein for each beneficiary.  Escrow Agent and Purchaser agree that such Standing Settlement Instructions shall be effective as the funds transfer instructions of Purchaser, without requiring a verifying call-back as set forth in Section 13(a), whether or not authorized, if such Standing Settlement Instructions are consistent with previously authenticated Standing Settlement Instructions for that beneficiary.

(d)The Parties acknowledge that the security procedures set forth in this Section 13 are commercially reasonable.

13.Compliance with Court Orders.  In the event that any escrow property shall be attached, garnished or levied upon by any court order, or the delivery thereof shall be stayed or enjoined by an order of a court, or any order, judgment or decree shall be made or entered by any court order affecting the property deposited under this Agreement, the Escrow Agent is hereby expressly authorized, in its sole discretion, to obey and comply with all writs, orders or decrees so entered or issued, which it is advised by legal counsel of its own choosing is binding upon it, whether with or without jurisdiction, and in the event that the Escrow Agent obeys or complies with any such writ, order or decree it shall not be liable to any of the parties hereto or to any other person, entity, firm or corporation, by reason of such compliance notwithstanding such writ, order or decree be subsequently reversed, modified, annulled, set aside or vacated.

14.Miscellaneous.  Except for change to funds transfer instructions as provided in Section 13, the provisions of this Agreement may be waived, altered, amended or supplemented, in whole or in part, only by a writing signed by the Escrow Agent and the Parties.  Neither this Agreement nor any right or interest hereunder may be assigned in whole or in part by the Escrow Agent or any Party, except as provided in Section 7, without the prior consent of the Escrow Agent and the other Parties.  This Agreement shall be governed by and construed under the laws of the State of Delaware.  Each Party and the Escrow Agent irrevocably waives any objection on the grounds of venue, forum non-conveniens or any similar grounds and irrevocably consents to service of process by mail or in any other manner permitted by applicable law and consents to the jurisdiction of the courts located in the State of Illinois. To the extent that in any jurisdiction either Party may now or hereafter be entitled to claim for itself or its assets, immunity from suit, execution attachment (before or after judgment), or other legal process, such Party shall not claim, and it hereby irrevocably waives, such immunity. Each Party and the Escrow Agent further hereby waive any right to a trial by jury with respect to any lawsuit or judicial proceeding arising or relating to this Agreement. No party to this Agreement is liable to any other party for losses due to, or if it is unable to perform its obligations under, the terms of this Agreement because of, acts of God, fire, war, terrorism, floods, strikes, electrical outages, equipment or transmission failure, or other causes reasonably beyond its control. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. All signatures of the parties to this Agreement may be transmitted by facsimile or email, and such facsimile or email will, for all purposes, be deemed to be the original signature of such party whose signature it reproduces, and will be binding upon such party.  If any provision of this Agreement is determined to be prohibited or unenforceable by reason of any applicable law of a jurisdiction, then such provision shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability

without invalidating the remaining provisions thereof, and any such prohibition or unenforceability in such jurisdiction shall not invalidate or render unenforceable such provisions in any other jurisdiction. A person who is not a party to this Agreement shall have no right to enforce any term of this Agreement. The Parties represent, warrant and covenant that each document, notice, instruction or request provided by such Party to Escrow Agent shall comply with applicable laws and regulations.  Where, however, the conflicting provisions of any such applicable law may be waived, they are hereby irrevocably waived by the parties hereto to the fullest extent permitted by law, to the end that this Agreement shall be enforced as written.  Except as expressly provided in Section 9 above, nothing in this Agreement, whether express or implied, shall be construed to give to any person or entity other than the Escrow Agent and the Parties any legal or equitable right, remedy, interest or claim under or in respect of this Agreement or any funds escrowed hereunder.

[Signature Page Follows]

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date set forth above.

GROUPON, INC.

By:

Name:

Title:

STOCKHOLDERS’ REPRESENTATIVE

Paul Gauthier

JPMORGAN CHASE BANK, NATIONAL ASSOCIATION

as Escrow Agent

By:

Name:

Title:

Exhibit A

STOCK ASSIGNMENT

SEPARATE FROM CERTIFICATE

FOR VALUE RECEIVED,                                                                                  hereby sells, assigns and transfers unto Groupon, Inc., a Delaware corporation (the“Company”), Shares of the Companystanding in the name of                                                             on the books of said Company represented by Certificate No.                                          herewith, and does hereby irrevocably constitute and appoint                                          as attorney to transfer said stock on the books of the within named Company with full power of substitution in the premises.

Dated:                                       , 20   

By:

Name:

Title:

EX-10.23

Exhibit 10.23

SEPARATION AGREEMENT AND GENERAL RELEASE

This Separation Agreement and General Release (“Agreement”) is being entered into by Groupon, Inc. (“Employer”) and Ken Pelletier (“Employee”) (together, the “Parties”).

1.SEPARATION DATE

1.1           Employee is an at-will employee of Employer. Employee’s last day of employment with Employer is March 23, 2011 (“Separation Date”).

1.2           Employee is the recipient of various outstanding stock options from Company that vest over time, specifically awards on September 1, 2007 (No. 08-010), November 7, 2008 (No. 08-021), and July 9, 2009 (No. 08-051) (collectively, the “Awards”), and which are governed by the ThePoint.com, Inc. 2008 Stock Plan and the Groupon, Inc. 2010 Stock Plan (the “Plans”).

1.3           Schedule A attached hereto sets forth (i) the number of shares of Nonvoting Common Stock of Employer held by Employee and (ii) the number of shares of Nonvoting Common Stock of Employer subject to the Awards which remain unexercised and unvested, without taking into account the acceleration of vesting set forth in Section 2.1.2 below. For clarity, as of the date hereof, Employee does not hold any vested, but unexercised, stock options of Employer.

2.VALUABLE CONSIDERATION

2.1           Severance Package. Employer agrees to provide Employee with the following payments and benefits (“Severance Package”). Employee acknowledges and agrees that the Severance Package constitutes adequate legal consideration for the promises and representations made by him in the Agreement. Receipt of the Severance Package is contingent upon Employee complying with the following conditions: (i) the Agreement must become effective, as set forth in Section 6.2 below; (ii) Employee must continue to abide by the surviving provisions of the Proprietary Rights Agreements, described in Section 4.1; and (iii) Employee must make himself reasonably available to assist in the orderly transition of Employee’s duties to other employees of Employer via telephone or in-person during the period the Severance Payment is made.

2.1.1        Severance Payment. Employer agrees to pay Employee a total of $92,500 (equivalent to six months of Employee’s current Base Salary) in twelve (12) bi-monthly equal installments, less all appropriate federal and state income and employment taxes (“Severance Payment”). Employer will pay the Severance Payment in accordance with Employer’s regular payroll schedule, with the first installment to be paid on the first payday following the Effective Date and each subsequent installment to be paid on each subsequent payday thereafter.

2.1.2        Accelerated Vesting. Employer agrees to accelerate the vesting of Employee’s existing unvested stock options set forth in the Awards (and governed by the Plans, as applicable) so that 50% of his existing unvested options as of the Separation Date are vested as of the Effective Date. The parties agree that, taking into account such accelerated vesting, as of the Separation Date, (i) an aggregate of 30,000 shares, having

an exercise price equal to $0.0167 per share, are vested under Award No. 08-010, (ii) an aggregate of 125,000 shares, having an exercise price equal to $0.0167 per share, are vested under Award No. 08-021, and (iii) an aggregate of 97,500 shares, having an exercise price equal to $0.016335 per share, are vested under Award No. 08-051. All remaining unvested shares subject to the Awards will be forfeited as of the Separation Date. The parties acknowledge and agree that, as a result of the three-for-one stock split effective August 10, 2010 and the two-for-one stock split effective January 24, 2011, each share of Non-Voting Common Stock of the Company subject to the Awards represents, as of the date of this Agreement, six (6) shares of Non-Voting Common Stock, and each such post-split share shall have an exercise price equal to one-sixth (1/6) of the exercise price per share to which the Awards were originally subject.

2.2           Employee acknowledges that the benefits described above are over and above anything owed to him by law, contract or under the policies of Employer, and that they are being provided to him expressly in exchange for his entering into this Agreement.

2.3           If Employee is currently participating in any other benefit plans, Employee’s coverage will terminate effective the Separation Date. If Employee is currently receiving healthcare insurance through Employer, current law (COBRA) allows employees to continue group healthcare (medical, dental and vision) coverage, if applicable, up to eighteen months following their separation date. Employee will soon receive a COBRA notice, outlining his rights, as well as cost information. Employee’s healthcare coverage, if any, will be considered to have terminated on the Separation Date for purposes of COBRA continuation coverage. COBRA coverage for which Employee and his dependents may be eligible will be at Employee’s sole expense. For purposes of COBRA continuation, Employee’s COBRA eligibility date will be the day after the Separation Date.

3.GENERAL RELEASE AND WAIVER

3.1           In consideration of Employer’s promises made within this Agreement, Employee unconditionally, irrevocably and absolutely waives, releases and discharges Employer, and any parent and subsidiary corporations, divisions and affiliated corporations, partnerships or other affiliated entities of Employer, past and present, including but not limited to The Point, LLC, as well as the past and present employees, officers, directors, agents, successors and assigns of Employer (collectively, “Released Parties”), from all claims related in any way to the transactions or occurrences between them to date, to the fullest extent permitted by law, including, but not limited to, Employee’s employment with Employer, the termination of Employee’s employment with Employer, and all other losses, liabilities, claims, charges, demands and causes of action, known or unknown, suspected or unsuspected, arising directly or indirectly out of or in any way connected with Employee’s employment with Employer. This release is intended to have the broadest possible application and includes, but is not limited to, any tort, contract, common law, constitutional or other statutory claims, including, but not limited to claims involving intellectual property or innovations that Employee may have worked on or come up with during the period in which he was being compensated by any of the Released Parties, alleged violations of the Illinois Human Rights Act, the Illinois Minimum Wage Law, the Illinois Wage Payment and Collection Act, the Illinois One Day Rest in Seven Act, the Illinois Victims’ Economic Security and Safety Act, the Illinois Personnel Record Review Act,

2

the Illinois Worker Adjustment and Retraining Notification Act, the Illinois Right to Privacy in the Workplace Act, the Illinois Workers’ Compensation Act and any other statute set forth in Chapter 820 or any other chapter of the Illinois Compiled Statutes that pertains or relates to, or otherwise touches upon, the employment relationship between Employer and Employee, Title VII of the Civil Rights Act of 1964, the Americans with Disabilities Act, the Age Discrimination in Employment Act, and all claims for attorneys’ fees, costs and expenses. Employee expressly waives Employee’s right to recovery of any type, including damages, in any administrative or court action, whether state or federal, and whether brought by Employee or on Employee’s behalf, related in any way to the matters released herein. However, this general release is not intended to bar any claims that, by statute, may not be waived, such as claims for any challenge to the validity of Employee’s release of claims under the Age Discrimination in Employment Act, as set forth in this Agreement. Further, nothing in this Section 3.1 shall release any of the Released Parties’ obligations, covenants, and agreements under this Agreement.

3.2           Employee acknowledges that Employee may discover facts or law different from, or in addition to, the facts or law that Employee knows or believes to be true with respect to the claims released in this Agreement and agrees, nonetheless, that this Agreement and the release contained in it shall be and remain effective in all respects notwithstanding such different or additional facts or the discovery of them.

3.3           Employee declares and represents that Employee intends this Agreement to be complete and not subject to any claim of mistake, and that the release herein expresses a full and complete release and Employee intends the release herein to be final and complete.

3.4           Employee represents that, as of the date of this Agreement, he has not filed any lawsuits, charges, complaints, petitions, claims or other accusatory pleadings against Employer or any of the other Released Parties in any court or with any governmental agency.

3.5           Employee acknowledges and agrees that the general release and waiver clause in this Agreement is an essential and material term of the Agreement, and that without such clause, no agreement would have been reached by the Parties.

4.ACKNOWLEDGEMENTS BY EMPLOYEE

4.1           Employee acknowledges that he has read and signed, and will continue to abide by, Employer’s Employee Innovations and Proprietary Rights Assignment Agreement executed by Employee on July 15, 2009 and the Confidentiality Agreement, executed by Employee on April 30, 2007 (the “Proprietary Rights Agreements”) which are incorporated herein by reference as if set forth herein in its entirety. Nothing in this Agreement is intended to modify, supersede or replace any provision, right or obligation of the Proprietary Rights Agreements.

4.2           Employee acknowledges that he has been paid all wages, commissions, incentive payments, and bonuses owed to him by Employer, to date.

5.NON-DISPARAGEMENT

5.1           Employee confirms and agrees that he will not make any oral or written statements to any third party about any of the Released Parties that are intended or reasonably

3

likely either to disparage any of the Released Parties. Employee shall be freely allowed, at his discretion, to make both oral and written statements that state that he was an original employee of Groupon. Employee acknowledges and agrees that the non-disparagement clause in this Agreement is an essential and material term of the Agreement, and that without such clause, no agreement would have been reached by the Parties. Additionally, if Employee is compelled by the legal process to provide statements, information, or testimony regarding his employment with any of the Released Parties, he will do so in a truthful manner, and doing so is not a breach of the terms of this Agreement.

6.             OLDER WORKERS’ BENEFIT PROTECTION ACT. This Agreement is intended to satisfy the requirements of the Older Workers’ Benefit Protection Act, 29 U.S.C. sec. 626(f). Employee is advised to consult with an attorney before executing this Agreement.

6.1           Acknowledgements/Time to Consider. Employee acknowledges and agrees that (a) Employee has read and understands the terms of this Agreement; (b) Employee has been advised in writing to consult with an attorney before executing this Agreement; (c) Employee has obtained and considered such legal counsel as Employee deems necessary; (d) Employee has been given twenty-one (21) days to consider whether or not to enter into this Agreement (although Employee may elect not to use the full 21-day period at Employee’s option); and (e) by signing this Agreement, Employee acknowledges that Employee does so freely, knowingly, and voluntarily.

6.2           Revocation/Effective Date. This Agreement shall not become effective or enforceable until the eighth day after Employee signs this Agreement. In other words, Employee may revoke Employee’s acceptance of this Agreement within seven (7) days after the date Employee signs it. Employee’s revocation must be in writing and received by Andrew Mason, Chief Executive Officer, 600 W Chicago Ave., Suite 620, Chicago, IL 60654 by 5:00 p.m. Central Time on the seventh day in order to be effective. If Employee does not revoke acceptance within the seven (7) day period, Employee’s acceptance of this Agreement shall become binding and enforceable on the eighth day (“Effective Date”). The Severance Package shall become due and payable in accordance with Section 2 above, after the Effective Date, provided Employee signs this Agreement and does not revoke.

6.3           Preserved Rights of Employee. This Agreement does not waive or release any rights or claims that Employee may have under the Age Discrimination in Employment Act that arise after the execution of this Agreement. In addition, this Agreement does not prohibit Employee from challenging the validity of this Agreement’s waiver and release of claims under the Age Discrimination in Employment Act.

7.CONFIDENTIALITY/RETURN OF COMPANY PROPERTY

7.1           Employee represents and warrants that as of the Separation Date, he will have returned all property belonging to Employer. Such property includes, but is not limited to, keys, passwords, access cards, credit or phone cards, any computer hardware or software, any products relating to Employer or its competition, any design work, product engineering, test results, customer information, pricing and cost information, financial data or information, any vendor samples or information, management materials, including all correspondence, manuals, letters,

4

notes, notebooks, data report programs, plan proposals, and other confidential, proprietary and/or trade secret information, regardless of whether the information is in written, printed, electronic, or other form and regardless of whether it was written or compiled by Employee or other persons, as well as any and all other property that comprises property owned by Employer. Notwithstanding the foregoing to the contrary, Employer acknowledges and agrees that in connection with his performance of transition services from time to time as reasonably requested by Employer for a period not to exceed six (6) months following the Effective Date, Employee shall retain (i) all keys and access cards in order to access to Employer’s premises and (ii) his e-mail address and access to Employer’s e-mail services. In addition, Employee shall be entitled to keep his mobile telephone number and transfer such number to a device owned by Employee. Employee agrees that he will not retain any originals or copies of any Employer property, whether prepared or created by Employee or otherwise coming into Employee’s possession or control in the course of his employment with Employer. Employee agrees to keep the terms of the Agreement confidential between him and Employer, except that he may tell his immediate family and attorney or accountant, if any, as needed, but in no event should he discuss the Agreement or its terms with any current or prospective employee of Employer.

8.INITIAL OFFERING; MARKET STAND-OFF AGREEMENT

8.1           Employer shall notify Employee in writing at least ten (10) days prior to the filing of any registration statement under the Securities Act for purposes of the Initial Offering and will afford Employee an opportunity to include in such registration statement all or part of the shares of Common Stock then held by Employee. If Employee desires to include in any such registration statement all or any part of the shares of Common Stock then held by Employee, he shall, within fifteen (15) days after the above-described notice from Employer, so notify Employer in writing, and in such event, Employee shall be permitted to include in such registration up to that number of shares equal to the product obtained by multiplying (i) the aggregate number of shares of Common Stock which Employee desires to include in such registration by (ii) a fraction, (A) the numerator of which is the number of shares of Common Stock which all other holders of shares of Common Stock are permitted to register in connection with such registration, and (B) the denominator of which is the total number of shares of Common Stock then held by all other holders of shares of Common Stock. Employee acknowledges and agrees that the inclusion of any shares of Common Stock of Employee in such registration shall be conditioned upon Employee entering into any underwriting and indemnification agreements or other documents or instruments which the other holders of shares of Common Stock participating in such registration are required to enter into (and on the same terms) and bearing Employee’s proportionate share of any costs or expenses of such registration which such other holders participating in such registration are required to bear.

8.2           Employee hereby agrees that it shall not sell, transfer, make any short sale of, grant any option for the purchase of, or enter into any hedging or similar transaction with the same economic effect as a sale of, any Common Stock (or other securities) of Employer held by Employee (other than those included in the registration following the effective date of Employer’s first firm commitment underwritten public offering of its Common Stock (the “Initial Offering”) registered under the Securities Act of 1933, as amended (the “Securities Act”), purchased in the Initial Offering or purchased in the secondary market after the Initial Offering) during the 180-day period following the effective date of the Initial Offering (or such

5

longer period, not to exceed 18 days after the expiration of the 180-day period, as the underwriters or Employer shall reasonably request in order to facilitate compliance with NASD Rule 2711); provided, that all officers and directors of Employer and holders of at least one percent (1%) of Employer’s voting securities are bound by similar restrictions and have entered into similar agreements. The obligations described in this Section 8.2 shall not apply to a registration relating solely to employee benefit plans on Form S-1 or Form S-8 or similar forms that may be promulgated in the future, or a registration relating solely to a transaction on Form S-4 or similar forms that may be promulgated in the future. Any discretionary waiver or termination of the restrictions in this Section 8.2 by Employer or the underwriters shall apply pro rata to all of Employer’s stockholders based on the number of shares of Common Stock held by such stockholders, except that, notwithstanding the foregoing, Employer and the underwriters may, in their sole discretion, waive or terminate these restrictions with respect to up to 50,000 shares of Common Stock.

8.3           Employee agrees to execute and deliver such other agreements as may be reasonably requested by Employer or the underwriter that are consistent with Employee’s obligations under Section 8.2 or that are necessary to give further effect thereto. In addition, if requested by Employer or the representative of the underwriters of Common Stock (or other securities) of Employer, Employee shall provide, within ten (10) days of such request, such information as may be required by Employer or such representative in connection with the completion of any public offering of Employer’s securities pursuant to a registration statement filed under the Securities Act. Employer may impose stop-transfer instructions with respect to the shares of Common Stock (or other securities) subject to the foregoing restriction until the end of said period. Employee agrees that any transferee of any shares of Common Stock held by Employee shall be bound by Section 8.2 and this Section 8.3. The underwriters of Employer’s stock are intended third party beneficiaries of Sections 8.2 and this Section 8.3 and shall have the right, power and authority to enforce the provisions hereof as though they were a party hereto.

9.MISCELLANEOUS

9.1           The Parties agree that this Agreement, including the surviving provisions of the Proprietary Rights Agreements, the Awards, and the Plans, which are all expressly incorporated herein by reference, set forth the entire agreement between them and supersedes all other written or oral understandings or contracts. This Agreement may not be modified or amended except by a written instrument executed by both of the Parties.

9.2           The Parties agree to do all things necessary and to execute all further documents necessary and appropriate to carry out and effectuate the terms and purposes of this Agreement.

9.3           Each of the Parties to this Agreement represents and warrants that: (a) no other person or entity has or has had any interest in the claims released under this Agreement and (b) he, she or it has not assigned, transferred, conveyed, subjected to a security interest, or otherwise encumbered or impaired in any way any of the claims released under this Agreement.

9.4           In the event any provision of this Agreement is adjudicated to be unenforceable in whole or in part, the Parties intend for such provision to be modified to the extent necessary to

6

render it enforceable, or alternatively, excised from the Agreement without effecting the validity of the remaining provisions of the Agreement.

9.5           By entering into this Agreement, the Released Parties make no admission that they have engaged, or are now engaging, in any unlawful conduct. This Agreement is not an admission of wrongdoing or liability by either Employer or Employee and shall not be used or construed as such in any legal or administrative proceeding.

9.6           This Agreement may be pled as a full and complete defense to, and may be used as a basis for an injunction against, any action, suit or other proceeding that may be prosecuted, instituted or attempted by Employee in breach hereof

9.7           This Agreement shall be subject to and construed in accordance with the laws of the State of Illinois. Venue shall be in Cook County for any disputes arising out of the interpretation or enforcement of this Agreement.

9.8           This Agreement is binding on and inures to the benefit of Employer, its successors and assigns, and is binding on and inures to the benefit of Employee, his heirs and assigns.

9.9           This Agreement may be executed in counterparts. Signatures transmitted electronically are as effective as original signatures.

9.10         Each person signing this Agreement hereby expressly represents and warrants that he or she is expressly authorized in law and in fact to do so individually and/or on behalf of any entity listed herein as a signatory of this Agreement.

[THE REST OF THIS PAGE IS INTENTIONALLY LEFT BLANK]

7

HAVING READ AND UNDERSTOOD THIS AGREEMENT. CONSULTED COUNSEL OR VOLUNTARILY ELECTED NOT TO CONSULT COUNSEL, AND HAVING HAD SUFFICIENT TIME TO CONSIDER WHETHER TO ENTER INTO THIS AGREEMENT THE UNDERSIGNED HEREBY EXECUTE THIS AGREEMENT ON THE DATES SET FORTH BELOW

KEN PELLETIER		GROUPON, INC.
/s/ Ken Pelletier		By:	/s/ Jason Child
Date:	4/4/2011	Title:	CFO
		Date:	4/6/11

8

SCHEDULE A

Pelletier Outstanding Common Stock and Opertions(1)

Security Type	Number of Shares
Nonvoting Common Stock	1,171,972
Unvested Stock Options	506,000

Award	Total Grant	Shares Exercised	Unvested Outstanding
Award No. 08-010	240,000	210,000	30,000
Award No. 08-021	300,000	175,000	125,000
Award No. 08-051	600,000	250,000	350,000

TOTAL 1,676,972

(1)  The share amounts on this Schedule A reflect the three-for-one stock split effective August 10, 2010 and the two-for-one split effective January 24, 2011.

EX-10.24

Exhibit 10.24

TRANSITION SERVICES AND SEPARATION AGREEMENT AND MUTUAL
GENERAL RELEASE

This Transition Services and Separation Agreement and Mutual General Release (“Agreement”) is being entered into by Groupon, Inc. (“Employer” or “Company”) and Rob Solomon (“Employee”) (together, the “Parties”).

1.             TRANSITIONAL EMPLOYMENT; SEPARATION DATE; RESIGNATION FROM MANAGEMENT, BOARDS OF DIRECTORS; VESTED OPTIONS

1.1           Employee and Employer are parties to an Employment Agreement, dated March 15, 2010, as amended by an Amendment of Employment Agreement, dated December 17, 2010 (together, the “Amended Employment Agreement”). The Parties agree that Employee is entitled to benefits under Section 6(b) of the Amended Employment Agreement as of March 22, 2011. The Company has requested that Employee enter into a transition services arrangement with the Company until the Separation Date (defined below), and Employee has agreed to accept such arrangement on the terms set forth in this Agreement.

1.2           Employee’s last day of employment with Employer will be July 25, 2011 (the “Separation Date”). During the time-period between the present time and the Separation Date (the “Transition Period”), Employee shall no longer be the President of Company. Employee shall have no title. During the Transition Period, Employee agrees to perform transitional duties, as reasonably assigned by the Chief Executive Officer and reasonably agreed to by Employee. Employee will also continue to receive his present Base Salary during the Transition Period, unless he is terminated for “Cause,” in which case payment of his Base Salary shall terminate as of the date of termination. Employee shall also continue to be eligible for all employee benefits and reimbursement of expenses until the Separation Date unless he is terminated for Cause or resigns.

1.3           For the purposes of this Agreement, a termination for “Cause” during the Transition Period occurs if Employee’s employment is terminated by the Company for any of the following reasons: (1) theft, dishonesty, or falsification of any employment or Company records by Employee; (ii) the determination by the Directors or the holders of a majority of the Company’s Shares that Employee has committed an act or acts constituting a felony or any act involving moral turpitude; (iii) the determination by the Directors or the holders of a majority of the Company’s Shares that Employee has engaged in willful misconduct or gross negligence that has had a material adverse effect on the Company’s reputation or business; or (iv) the material breach by Employee of any provision of this Agreement after written notice of such breach and a period of no less than thirty (30) days from receipt of such notice to cure such breach. Should Employee be terminated for Cause during the Transition Period, Company will not be required to and shall not provide Employee with the Severance Package set forth in Section 2 of this Agreement.

1.4           Section 5 of the Amended Employment Agreement sets forth the Company’s grant to Employee of one or more options to purchase an aggregate of 685,000 Common Non-Voting Shares of Stock of the Company (the “Options”), which vest over time pursuant to the schedule set forth in the Amended Employment Agreement. The Parties acknowledge and agree

that, as a result of the three-for-one stock split effective August 10, 2010 and the two-for-one stock split effective January 24, 2011, each share of Non-Voting Common Stock of the Company subject to the Options represents, as of the date of this Agreement, six (6) shares of Non-Voting Common Stock, and each such post-split share shall have an exercise price equal to one-sixth (1/6) of the exercise price per share to which the Options were originally subject. The Company acknowledges and agrees that, as of March 22, 2011, 1,927,500 shares subject to the Options (determined on a post-split basis) are vested (the “Vested Options”). The Company agrees that Employee shall have ninety (90) days following the Separation Date to exercise the Vested Options and any other options that become vested pursuant to the terms of this Agreement. Other than the options contained in this section, and those outlined in section 2.1.2 below, Employee shall not be entitled to any other options or equity in the Company.

1.5           Employee hereby resigns from the Board of Directors of the Company and the boards of directors of each subsidiary and each affiliate of the Company on which Employee serves, effective as of the Effective Date (as defined in Section 6.2 of this Agreement).

2.VALUABLE CONSIDERATION

2.1           Severance Package. Employer agrees to provide Employee with the following payments and benefits (“Severance Package”). Employee acknowledges and agrees that the Severance Package constitutes adequate legal consideration for the promises and representations made by him in the Agreement. Receipt of the Severance Package is contingent upon Employee complying with the following conditions (“Severance Conditions”): (i) Employee must sign the Supplement to Severance Agreement and Mutual General Release (“Supplemental Release”) on or within 21 days following his Separation Date; (ii) Employee must not revoke the Supplemental Release; and (iii) the Supplemental Release must become effective and enforceable on the eighth day after Employee signs the Supplemental Release (“Effective Date of the Supplemental Release”); (iv) Employee must continue to abide by the surviving provisions of the Proprietary Rights Agreements, described in Section 4.1; (v) Employee must continue to abide by the covenants not to compete or solicit described in Section 4.2; and (vi) Employee must make himself reasonably available to assist in the orderly transition of Employee’s duties to other employees of Employer via telephone or in-person during the period commencing on the Separation Date and continuing during the period the Severance Payment is made.

2.1.1        Severance Payment. Employer agrees to pay Employee a total of $175,000 (equivalent to six months of Employee’s current Base Salary), in 12 equal bi-monthly installments, less all appropriate federal and state income and employment taxes (“Severance Payment”). Employer will pay the Severance Payment in accordance with Employer’s regular payroll schedule, with the first installment to be paid on the first payday following the thirtieth (30th) day following the Separation Date and each subsequent installment to be paid on each subsequent payday thereafter until the Severance Payment is paid in full.

2.1.2        Options. Company agrees that an additional 416,556 shares subject to the Options (determined on a post-split basis) shall be vested as of the Separation Date. All remaining unvested Options will be forfeited as of the Separation Transition Date.

2

2.1.3        COBRA Continuation Payments. Employer will continue to provide Employee with group health insurance benefits through July 31, 2011. Provided Employee is eligible and elects coverage under the Consolidated Omnibus Reconciliation Act of 1985 (“COBRA”), Employer will pay the COBRA premiums for Employee and Employee’s dependents through January 31, 2012.

2.2           Reaffirmation. Employee and the Company agree to execute the attached Supplemental Release on or within twenty-one days after the Separation Date in order to extend and reaffirm the promises and covenants made by them in this Agreement, including but not limited to the mutual general release of all claims. If Employee fails to execute the Supplemental Release on or within twenty-one days after the Separation Date, or effectively revokes the acceptance of the Supplemental Release, he shall not receive the Severance Package set forth in this Section 2 and its subparts.

2.3           Employee acknowledges that the additional vesting of shares subject to the Options described above in subsection 2.1.2 is over and above anything owed to him by law, contract or under the policies of Employer, and that it is being provided to him expressly in exchange for his entering into this Agreement.

3.GENERAL RELEASES AND WAIVERS

3.1           In consideration of Employer’s promises made within this Agreement, Employee unconditionally, irrevocably and absolutely waives, releases and discharges Employer, and any parent and subsidiary corporations, divisions and affiliated corporations, partnerships or other affiliated entities of Employer, past and present, including but not limited to The Point, LLC, as well as the past and present employees, officers, directors, successors and assigns of Employer (collectively, “Released Parties”), from all claims related in any way to the transactions or occurrences between them to date, to the fullest extent permitted by law, including, but not limited to, Employee’s employment with Employer, the termination of Employee’s employment with Employer, and all other losses, liabilities, claims, charges, demands and causes of action, known or unknown, suspected or unsuspected, arising directly or indirectly out of or in any way connected with Employee’s employment with Employer. This release is intended to have the broadest possible application and includes, but is not limited to, any tort, contract, common law, constitutional or other statutory claims, including, but not limited to claims involving intellectual property or innovations that Employee may have worked on or come up with during the period in which he was being compensated by any of the Released Parties, alleged violations of the Illinois Human Rights Act, the Illinois Minimum Wage Law, the Illinois Wage Payment and Collection Act, the Illinois One Day Rest in Seven Act, the Illinois Victims’ Economic Security and Safety Act, the Illinois Personnel Record Review Act, the Illinois Worker Adjustment and Retraining Notification Act, the Illinois Right to Privacy in the Workplace Act, the Illinois Workers’ Compensation Act and any other statute set forth in Chapter 820 or any other chapter of the Illinois Compiled Statutes that pertains or relates to, or otherwise touches upon, the employment relationship between Employer and Employee, Title VII of the Civil Rights Act of 1964, the Americans with Disabilities Act, the Age Discrimination in Employment Act, and all claims for attorneys’ fees, costs and expenses. Employee expressly waives Employee’s right to recovery of any type, including damages, in any administrative or court action, whether state or federal, and whether brought by Employee or on Employee’s behalf, related in any way to the matters

3

released herein. However, this general release is not intended to bar any claims that, by statute, may not be waived, such as claims for any challenge to the validity of Employee’s release of claims under the Age Discrimination in Employment Act, as set forth in this Agreement. Nothing in this Section 3.1 shall release any of the Released Parties’ obligations, covenants, and agreements under this Agreement. Further, the Company agrees to provide Employee with full indemnification rights after the Separation Date for all acts or omissions that occurred during his employment.

3.2           Employee acknowledges that Employee may discover facts or law different from, or in addition to, the facts or law that Employee knows or believes to be true with respect to the claims released in this Agreement and agrees, nonetheless, that this Agreement and the release contained in it shall be and remain effective in all respects notwithstanding such different or additional facts or the discovery of them.

3.3           Employee declares and represents that Employee intends this Agreement to be complete and not subject to any claim of mistake, and that the release herein expresses a full and complete release and Employee intends the release herein to be final and complete.

3.4           Employee represents that, as of the date of this Agreement, he has not filed any lawsuits, charges, complaints, petitions, claims or other accusatory pleadings against Employer or any of the other Released Parties in any court or with any governmental agency.

3.5           Employee acknowledges and agrees that the general release and waiver clause in this Agreement is an essential and material term of the Agreement, and that without such clause, no agreement would have been reached by the Parties.

3.6           In consideration of the Employee’s promises made within this Agreement, the Released Parties unconditionally, irrevocably and absolutely waive, release and discharge Employee from all claims related in any way to the transactions or occurrences between them to date, to the fullest extent permitted by law, including, but not limited to, Employee’s employment with Employer, the termination of Employee’s employment with Employer, and all other losses, liabilities, claims, charges, demands and causes of action, known or unknown, suspected or unsuspected, arising directly or indirectly out of or in any way connected with Employee’s employment with Employer. This release is intended to have the broadest possible application and includes, but is not limited to, any tort, contract, common law, constitutional or other statutory claims. Employee expressly waives Employee’s right to recovery of any type, including damages, in any administrative or court action, whether state or federal, and whether brought by Employee or on Employee’s behalf, related in any way to the matters released herein.

4.ACKNOWLEDGEMENTS BY EMPLOYEE

4.1           Employee acknowledges that he has read and signed, and will continue to abide by, Employer’s Employee Innovations and Proprietary Rights Assignment Agreement executed by Employee and the Confidentiality Agreement executed by Employee (the “Proprietary Rights Agreements”), which are incorporated herein by reference as if set forth herein in its entirety. Nothing in this Agreement is intended to modify, supersede or replace any provision,

4

right or obligation of the Proprietary Rights Agreements; provided, however, that the Parties agree that Employee’s post-termination non-compete period shall be twenty four (24) months.

4.2           Employee acknowledges that he is subject to, and will continue to abide by, all surviving provisions of the Amended Employment Agreement, including, without limitation, the covenants not to compete or solicit set forth in Section 9 of the Amended Employment Agreement (the “Covenants”), all of which are incorporated herein by reference as if set forth herein in their entirety. Nothing in this Agreement is intended to modify, supersede or replace any provision, right or obligation of Employee under the Covenants; provided, however, that the Parties agree that Employee’s post-termination non-compete period shall be twenty four (24) months.

4.3           Employee acknowledges that he has been paid all wages, commissions, incentive payments, and bonuses owed to him by Employer, to date.

5.NON-DISPARAGEMENT

5.1           Employee agrees that he will not make any oral or written statements to any third party about any of the Released Parties that are intended or reasonably likely to disparage any of the Released Parties, and the Released Parties confirm and agree that they will not make any oral or written statements to any third party about Employee that are intended or reasonably likely to disparage Employee; provided, however, that each Party may respond accurately and fully to any question, inquiry, or request for information when required by legal process. The Parties acknowledge and agree that the non-disparagement clause in this Agreement is an essential and material term of the Agreement, and that without such clause, no agreement would have been reached by the Parties.

6.             OLDER WORKERS’ BENEFIT PROTECTION ACT. This Agreement is intended to satisfy the requirements of the Older Workers’ Benefit Protection Act, 29 U.S.C. sec. 626(f). Employee is advised to consult with an attorney before executing this Agreement.

6.1           Acknowledgements/Time to Consider. Employee acknowledges and agrees that (a) Employee has read and understands the terms of this Agreement; (b) Employee has been advised in writing to consult with an attorney before executing this Agreement; (c) Employee has obtained and considered such legal counsel as Employee deems necessary; (d) Employee has been given twenty-one (21) days to consider whether or not to enter into this Agreement (although Employee may elect not to use the full 21-day period at Employee’s option); and (e) by signing this Agreement, Employee acknowledges that Employee does so freely, knowingly, and voluntarily.

6.2           Revocation/Effective Date. This Agreement shall not become effective or enforceable until the eighth day after Employee signs this Agreement. In other words, Employee may revoke Employee’s acceptance of this Agreement within seven (7) days after the date Employee signs it. Employee’s revocation must be in writing and received by Andrew Mason, Chief Executive Officer, 600 W Chicago Ave., Suite 620, Chicago, IL 60654 by 5:00 p.m. Central Time on the seventh day in order to be effective. If Employee does not revoke acceptance within the seven (7) day period, Employee’s acceptance of this Agreement shall

5

become binding and enforceable on the eighth day (“Effective Date”). The Severance Package shall become due and payable in accordance with Section 2 above, after the Effective Date of the Supplemental Release described in Section 2 above, provided Employee signs the Supplemental Release to this Agreement and does not revoke such Supplemental Release.

6.3           Preserved Rights of Employee. This Agreement does not waive or release any rights or claims that Employee may have under the Age Discrimination in Employment Act that arise after the execution of this Agreement. In addition, this Agreement does not prohibit Employee from challenging the validity of this Agreement’s waiver and release of claims under the Age Discrimination in Employment Act.

7.CONFIDENTIALITY/RETURN OF COMPANY PROPERTY

7.1           Employee represents and warrants that as of the Separation Date, he will have returned all property belonging to Employer unless otherwise agreed to. Such property includes, but is not limited to, keys, passwords, access cards, credit or phone cards, any computer hardware or software, any products relating to Employer or its competition, any design work, product engineering, test results, customer information, pricing and cost information, financial data or information, any vendor samples or information, management materials, including all correspondence, manuals, letters, notes, notebooks, data report programs, plan proposals, and other confidential, proprietary and/or trade secret information, regardless of whether the information is in written, printed, electronic, or other form and regardless of whether it was written or compiled by Employee or other persons, as well as any and all other property that comprises property owned by Employer. Employee agrees that he will not retain any originals or copies of any Employer property, whether prepared or created by Employee or otherwise coming into Employee’s possession or control in the course of his employment with Employer without Employer’s consent. Employee agrees to keep the terms of the Agreement confidential between him and Employer, except for his immediate family and attorney, tax advisors, or accountants, as needed, but in no event should he discuss the Agreement or its terms with any prospective employee of Employer.

8.MISCELLANEOUS

8.1           The Parties agree that this Agreement, including the surviving provisions of the Proprietary Rights Agreements and the Amended Employment Agreement (including but not limited to sections 8, 9 (subject to the provisions set forth herein), 10 and 11 of the Amended Employment Agreement) expressly incorporated herein by reference and the agreement evidencing the Options described in Section 5 of the Amended Employment Agreement, set forth the entire agreement between them and supersedes all other written or oral understandings or contracts. This Agreement may not be modified or amended except by a written instrument executed by both of the Parties.

8.2           The Parties agree to do all things necessary and to execute all further documents necessary and appropriate to carry out and effectuate the terms and purposes of this Agreement.

8.3           Each of the Parties to this Agreement represents and warrants that: (a) no other person or entity has or has had any interest in the claims released under this Agreement and (b)

6

he, she or it has not assigned, transferred, conveyed, subjected to a security interest, or otherwise encumbered or impaired in any way any of the claims released under this Agreement.

8.4           In the event any provision of this Agreement is adjudicated to be unenforceable in whole or in part, the Parties intend for such provision to be modified to the extent necessary to render it enforceable, or alternatively, excised from the Agreement without effecting the validity of the remaining provisions of the Agreement.

8.5           By entering into this Agreement, the Released Parties make no admission that they have engaged, or are now engaging, in any unlawful conduct. This Agreement is not an admission of wrongdoing or liability by either Employer or Employee and shall not be used or construed as such in any legal or administrative proceeding.

8.6           This Agreement may be pled as a full and complete defense to, and may be used as a basis for an injunction against, any action, suit or other proceeding that may be prosecuted, instituted or attempted by Employee in breach hereof.

8.7           This Agreement shall be subject to and construed in accordance with the laws of the State of Illinois. Venue shall be in Cook County for any disputes arising out of the interpretation or enforcement of this Agreement.

8.8           This Agreement is binding on and inures to the benefit of Employer, its successors and assigns, and is binding on and inures to the benefit of Employee, his heirs and assigns.

8.9           This Agreement may be executed in counterparts. Signatures transmitted electronically are as effective as original signatures.

8.10         Each person signing this Agreement hereby expressly represents and warrants that he or she is expressly authorized in law and in fact to do so individually and/or on behalf of any entity listed herein as a signatory of this Agreement.

HAVING READ AND UNDERSTOOD THIS AGREEMENT, CONSULTED COUNSEL OR VOLUNTARILY ELECTED NOT TO CONSULT COUNSEL, AND HAVING HAD SUFFICIENT TIME TO CONSIDER WHETHER TO ENTER INTO THIS AGREEMENT, THE UNDERSIGNED HEREBY EXECUTE THIS AGREEMENT ON THE DATES SET FORTH BELOW.

ROB SOLOMON		GROUPON, INC.
/s/ Rob Solomon		By:	/s/ Andrew Mason
			Andrew Mason, CEO
Date:	4/5/11
		Date:		4/5/11

7

SUPPLEMENT TO SEPARATION AGREEMENT AND MUTUAL GENERAL
RELEASE

This Supplement to Separation Agreement and Mutual General Release (“Supplemental Release”) is made by and between Groupon, Inc. (“Employer”) and Rob Solomon (“Employee”), and amends the Transition Services and Separation Agreement and Mutual General Release (“Agreement”) by extending the promises and agreements of each and every section and subsection, except Section 6 and its subparts, of the Agreement through the Separation Date.

1.             Older Workers’ Benefit Protection Act. This Supplemental Release is intended to satisfy the Older Workers’ Benefit Protection Act, 29 U.S.C. Section 626(f). Employee is advised to consult with an attorney before executing this Supplemental Release.

a.             Acknowledgement/Time to Consider. Employee acknowledges and agrees that (a) he has read and understands the terms of this Supplemental Release; (b) he has been advised to consult with an attorney; (c) that he has obtained and considered such legal counsel as he deems necessary; (d) that he has been given twenty-one (21) days to consider whether or not to sign this Supplemental Release (although Employee may elect not to use the full 21-day period at his option); and (e) that by signing this Supplemental Release, Employee acknowledges that he does so freely, knowingly, and voluntarily.

b.             Revocation/Effective Date. This Supplemental Release shall not become effective or enforceable until the eighth day after Employee signs this Supplemental Release. In other words, Employee may revoke his acceptance of this Supplemental Release within 7 days after he signs it. Employee’s revocation must be in writing and received by Andrew Mason, Chief Executive Officer, 600 W Chicago Ave., Suite 620, Chicago, IL 60654 by 5:00 p.m. Central Time, on or before the seventh day after it is signed to be effective. If Employee does not revoke his acceptance on or before that date, his acceptance of this Supplemental Release shall become binding and enforceable on the eighth (“Effective Date of the Supplemental Release”).

c.             Preserved Rights of Employee. This Supplemental Release does not waive or release any rights or claims that Employee may have under the Age Discrimination in Employment Act that arise after the execution of this Supplemental Release. In addition, this Supplemental Release does not prohibit Employee from seeking relief in the event of a breach of the Agreement, or from challenging the validity of waiver and release of claims under the Age Discrimination in Employment Act.

8

The parties to this Supplemental Release have read the foregoing Supplemental Release and fully understand each and every provision contained herein. Wherefore, the parties have FREELY AND VOLUNTARILY executed this SUPPLEMENTAL RELEASE on the dates shown below.

Dated:	4/5/11	By:	/s/ Rob Solomon
			Rob Solomon
Dated:	4/5/11	By:	/s/ Eric Lefkofsky
			Eric Lefkofsky

9

EX-10.26

Exhibit 10.26

August 11, 2010

Qpod.inc
7F, IVY East Building

3-11-11 Shibuya

Shibuya-ku, Tokyo, Japan
Attention:  Keisuke Seto

Re:Purchase of Stock of Qpod.inc

Ladies and Gentlemen:

This letter agreement (the “Agreement”) sets forth a binding agreement for the purchase by Groupon B.V., a private limited liability company organized under the laws of the Kingdom of the Netherlands (“Groupon BV”), and each of the undersigned purchasers (together with Groupon BV, the “Purchasers”) of newly issued Preference B Shares (the “Shares”) of Qpod.inc, a Japanese joint stock company (the “Company”).  Groupon BV is a wholly-owned subsidiary of Groupon, Inc., a Delaware corporation (“Groupon”), and Groupon is executing this Agreement solely with respect to Sections 3(b), 6, 7, and 8 hereof.  The Shares acquired by the Purchasers shall represent, in the aggregate, 55.1% of the total issued and outstanding capital stock of the Company on a fully-diluted basis as of the date hereof, and the Shares acquired by Groupon BV shall represent 50.1% of the total issued and outstanding capital stock of the Company on a fully-diluted basis as of the date hereof.

1.Sale and Issuance of Shares.

(a)Authorization of Shares.  The Company has authorized the sale and issuance of the Shares to the Purchasers.  The Shares have the rights, preferences, privileges and restrictions set forth in the Terms and Conditions (hakkou youkou) of the Shares (the “Terms”) and the Articles of Association of the Company(the “Articles”), each in the form attached hereto as Exhibit A.

(b)Sale and Purchase.  Subject to the terms and conditions of this Agreement, the Company hereby agrees to issue and sell to each Purchaser, and each Purchaser agrees, severally and not jointly, to purchase from the Company, the number of Shares set forth below such Purchaser’s name on the signature pages hereof, at a cash purchase price of JPY 31,378 per share (the “Purchase Price”), for an aggregate purchase price of JPY 945,293,628.  For purposes of effecting the Company’s commercial registration in connection with the issuance of the Shares, the Purchasers and the Company will execute the document attached hereto (sousu hikiuke keiyaku) as Exhibit B.

(c)Closing and Delivery.  The purchase and sale of the Shares shall occur at a closing (the “Closing”) to be held on or about August 15, 2010or at any other time mutually agreed upon by the Company and the Purchasers.  Upon the Closing, the Company will deliver to each Purchaser a certificate of matters registered in the shareholders’ registry (kabunushimeibo kisaijiko shomeisho) setting forth the number of Shares purchased by such Purchaser hereunder, against payment of the Purchase Price therefor by wire transfer to an account of the Company (the “Unrestricted Account”).  Any fees to be charged through such wire transfer, including without limitation any fees to be charged to the Purchasers or the Company by the receiving bank will be borne by the Purchasers and the Purchasers shall ensure that the full Purchase Price will be received at the account of the Company net of such fees.  Of the amount paid by the Purchasers at the Closing, JPY 859,350,000 will be transferred to an operating account of the

Company jointly controlled by the Company’s management and Groupon BV’s management (the “Joint Account”).  On or prior to the end of each fiscal quarter of the Company, the Board (defined below) will determine the amount of funds necessary for the ongoing operation of the Company that will be transferred from the Joint Account to the Unrestricted Account, such determination to be made based on the business results of the current quarter and the budget and business plan for the following quarter.  The initial approved budget and business plan of the Company is attached hereto as Exhibit C.

2.Representations and Warranties of the Company.  The Company hereby represents and warrants to each Purchaser as of the date hereof as follows:

(a)Organization.  The Company is a corporation duly organized, validly existing and in good standing under the laws of Japan.  The Company has all requisite corporate power and authority to own and operate its properties and assets, to carry on its business as presently conducted and as presently proposed to be conducted, to execute and deliver this Agreement, to issue and sell the Shares, and to carry out the provisions of this Agreement.

(b)Authorization.  All corporate action on the part of the Company, its officers, directors and Shareholders necessary for the authorization of this Agreement, the performance of all obligations of the Company hereunder, and the authorization, sale, issuance and delivery of the Shares pursuant hereto has been taken or will be taken prior to the Closing.  The Agreement, when executed and delivered by the Company, shall constitute a valid and binding obligation of the Company enforceable in accordance with its terms, except (i) as limited by laws of general application relating to bankruptcy, insolvency and the relief of debtors, and (ii) as limited by rules of law governing specific performance, injunctive relief or other equitable remedies and by general principles of equity.

(c)Capitalization; Title to Shares.   All of the outstanding shares of the Company are validly issued, fully paid and non-assessable and owned by each of the persons as set forth on Schedule 2(c) hereto.  Except as set forth in Schedule 2(c) hereto, there are no outstanding or authorized options, warrants, purchase rights, subscription rights, conversion rights, exchange rights or other contracts or commitments that could require the Company to issue, sell or otherwise cause to become outstanding any of its equity securities.  The rights, preferences, privileges and restrictions of the Shares are as stated in the Terms.  When issued in compliance with the provisions of this Agreement and the Articles, the Shares will be validly issued, fully paid and non-assessable, and will be free of any liens or encumbrances, other than any liens or encumbrances created by or imposed upon Groupon; provided, however, that the Shares may be subject to restrictions on transfer under the Articles, the Agreement, applicable securities laws as set forth herein or as otherwise required by such laws at the time a transfer is proposed.  The issuance of the Shares to the Purchasers hereunder are not and will not be subject to any preemptive rights or rights of first refusal that have not been properly waived or complied with.

(d)No Violation.  None of the execution and delivery of this Agreement, the consummation of the transactions provided for herein or contemplated hereby, nor the fulfillment by the Company of the terms hereof will (with or without notice or passage of time or both), to the Company’s knowledge: (i) violate any law, order, rule or regulation of any court, administrative agency or other national, state or local governmental authority applicable to the Company or its properties, or (ii) result in the breach of any mortgage, note, contract or other agreement or obligation of any kind or nature by which the Company or its properties may be bound.

(e)Consents.  No permits, approvals or consents of or notifications to (i) any governmental entities or (ii) any other persons are necessary by the Company in connection with the execution, delivery and performance by the Company of this Agreement and the consummation by the Company of the

2

transactions contemplated hereby, except for the post-closing commercial registration of the Shares and (ii) such filings as may be required under applicable securities laws.

(f)Financial Statement.  The Company has delivered to Groupon the unaudited consolidated balance sheet (the “Financial Statement”)of the Company and its subsidiaries as of July 15, 2010 (the “Statement Date”).  The Financial Statement fairly presents the financial condition of the Company and its subsidiaries as  of July 15, 2010.

(g)Liabilities.  The Company has no material liabilities or obligations, contingent or otherwise, except (i) to the extent such liabilities are reflected or reserved against in the Financial Statement, and (ii) current liabilities incurred in the ordinary course of business subsequent to the Statement Date which, either in any individual case or in the aggregate, would have a material adverse effect on the Company or its business, operations (including results of operations), property, assets (including intangible assets), liabilities or condition (financial or otherwise) of the Company (a “Material Adverse Effect”).

(h)Litigation.  There is no action, suit, proceeding or investigation pending or, to the Company’s knowledge, currently threatened against the Company or any of its subsidiaries that would reasonably be expected to result, either individually or in the aggregate, in a Material Adverse Effect or any change in the current equity ownership of the Company, or that questions the validity of this Agreement or the right of the Company to enter into this Agreement, or to consummate the transactions contemplated hereby.  The foregoing includes, without limitation, actions pending or, to the Company’s knowledge, threatened or any basis therefor known by the Company involving the prior employment of any of the Company’s or any of its subsidiaries’ employees, their use in connection with the Company’s or any of its subsidiaries’ business of any information or techniques allegedly proprietary to any of their former employers, or their obligations under any agreements with prior employers.  None of the Company or any of its subsidiaries is a party, or to its knowledge subject, to the provisions of any order, writ, injunction, judgment or decree of any court or government agency or instrumentality.  There is no action, suit, proceeding or investigation by the Company or any of its subsidiaries currently pending or which the Company or any of its subsidiaries intends to initiate.

(h)Taxes.  The Company and each of its subsidiaries has filed all applicable income, sales, withholding and other tax reports, documents, statements and returns (collectively “Tax Returns”) required by any law or regulation to be filed by it, and such Tax Returns are true and correct in all material respects.  All taxes shown to be due and payable on such Tax Returns, any assessments imposed, and to the Company’s knowledge, all other taxes due and payable by the Company and each of its subsidiaries on or before the date hereof have been paid or will be paid prior to the time they become delinquent.  None of the Company or any of its subsidiaries has been advised (i) that any of its Tax Returns have been or are being audited as of the date hereof, or (ii) of any deficiency in assessment or proposed judgment to any of its taxes.  The Company has no knowledge of any liability of any tax to be imposed upon its properties or assets as of the date hereof that is not adequately provided for.

(i)Compliance with Laws.  None of the Company or any of its subsidiaries is in violation of any applicable statute, rule, regulation, order or restriction of any domestic or foreign government or any instrumentality or agency thereof in respect of the conduct of its business or the ownership of its properties, which violation would result in a Material Adverse Effect.

(j)Employees.  Except a otherwise required by law or regulation, no employee of the Company or any of its subsidiaries has been granted any material compensation following termination of employment with the Company or any of its subsidiaries.  To the Company’s knowledge, no employee of the Company or any of its subsidiaries, nor any consultant with whom the Company or any of its

3

subsidiaries has contracted, is in violation of any term of any employment contract, proprietary information agreement or any other agreement relating to the right of any such individual to be employed by, or to contract with, the Company or any of its subsidiaries in all material respects; and to the Company’s knowledge the continued employment by the Company and its subsidiaries of its present employees, and the performance of the Company’s or its subsidiary’s contracts with its independent contractors, will not result in any such violation.  None of the Company or any of its subsidiaries has received any notice alleging that any such violation has occurred.  The Company is not aware that any officer, key employee or group of employees intends to terminate his, her or their employment with the Company or any of its subsidiaries, nor does the Company or any of its subsidiaries have a present intention to terminate the employment of any officer, key employee or group of employees.  There are no actions pending, or to the Company’s knowledge, threatened, by any former or current employee concerning such person’s employment by the Company or any of its subsidiaries.

(k)Insurance.  Each insurance policy of the Company is in good standing, valid and subsisting, and in full force and effect in accordance with its terms.  The insurance policies of the Company are reasonably adequate and customary for the conduct of the Company’s business as presently conducted and as presently proposed to be conducted.  All premiums due on such insurance policies or renewals thereof have been paid and, to the knowledge of the Company, there is no default by the Company under any such insurance policies.

(l)Intellectual Property.

(i)The Company owns or possesses or believes it can acquire on commercially reasonable terms sufficient legal rights to all material patents, trademarks, service marks, trade names, copyrights, trade secrets, licenses, information and other proprietary rights and processes necessary for its business as now conducted and as presently proposed to be conducted, without any infringement of the rights of others.  There are no outstanding options, licenses or agreements of any kind relating to the foregoing proprietary rights, nor is the Company bound by or a party to any options, licenses or agreements of any kind with respect to the patents, trademarks, service marks, trade names, copyrights, trade secrets, licenses, information and other proprietary rights and processes of any other person or entity other than such licenses or agreements arising from the purchase of “off the shelf” or standard software products.

(ii)The Company has not received any communications alleging that the Company has violated or, by conducting its business as presently proposed to be conducted, would violate any of the patents, trademarks, service marks, trade names, copyrights or trade secrets or other proprietary rights of any other person or entity.

(iii)The Company is not aware that any of its employees, representative directors, consultants or other service providers is obligated under any contract (including licenses, covenants or commitments of any nature) or other agreement, or subject to any judgment, decree or order of any court or administrative agency, that would interfere with their duties to the Company or that would conflict with the Company’s business as now conducted and as presently proposed to be conducted.  To the Company’s knowledge, no former and current employee, officer or consultant of the Company owns any works or inventions made prior to his or her employment with the Company which have not been properly transferred or assigned to the Company, without further payment or obligation by the Company, free and clear of any liens or other encumbrances.  The Company does not believe it is or will be necessary to utilize any inventions, trade secrets or proprietary information of any of its employees made prior to their employment by the Company, except for inventions, trade secrets or proprietary information that have been transferred or assigned to the Company.

4

(m)Title to Properties and Assets; Liens.  The Company has good title to its material properties and assets, including the properties and assets reflected in the most recent balance sheet included in the Financial Statement, and to the Company’s knowledge, good title to its leasehold estates, in each case not subject to any mortgage, pledge, lien, lease, encumbrance or charge, other than (a) those resulting from taxes which have not yet become delinquent, (b) minor liens and encumbrances which do not materially detract from the value of the property subject thereto or materially impair the operations of the Company, and (c) those that have otherwise arisen in the ordinary course of business.  All facilities, machinery, equipment, fixtures, vehicles and other properties owned, leased or used by the Company that are material to its business are in good operating condition and repair and are reasonably fit and usable for the purposes for which they are being used.

(n)Agreements; Action.

(i)Except for agreements explicitly contemplated hereby, there are no material agreements, understandings, instruments, contracts or proposed transactions between the Company and any of its officers, directors, employees, affiliates or any affiliate thereof.

(ii)Except for agreements explicitly contemplated hereby, there are no agreements, understandings, instruments, contracts, proposed transactions, judgments, orders, writs or decrees to which the Company is a party, or to its knowledge by which it is bound, which may involve (A) annual payments by the Company in excess of US $50,000 that are not terminable by the Company on up to 30 days notice, (B) the transfer or license of any patent, copyright, trademark, trade secret or other proprietary right to or from the Company (other than licenses by the Company of “off the shelf” or other standard products), (C) provisions restricting in any material respect the development, manufacture or distribution of the Company’s products or services, or (D) indemnification by the Company with respect to infringements of proprietary rights.

(iii)The Company has not (A) declared or paid any dividends, or authorized or made any distribution upon or with respect to any class or series of its capital stock, (B) incurred or guaranteed any indebtedness for money borrowed or any other liabilities (other than trade payables incurred in the ordinary course of business or as disclosed in the Financial Statements) individually in excess of $50,000 or in excess of $100,000 in the aggregate, (C) made any material loans or advances to any person, other than ordinary advances for travel expenses, or (D) sold, exchanged or otherwise disposed of any of its assets or rights, other than the sale of its inventory in the ordinary course of business.

(iv)For the purposes of subsections (ii) and (iii) above, all indebtedness, liabilities, agreements, understandings, instruments, contracts and proposed transactions involving the same person or entity (including persons or entities the Company has reason to believe are affiliated therewith) shall be aggregated for the purpose of meeting the individual minimum dollar amounts of such subsections.

(o)Obligations to Related Parties.  There are no obligations of the Company to officers, directors, stockholders, or employees of the Company other than (i) for payment of salary for services rendered, (ii) reimbursement for reasonable expenses incurred on behalf of the Company and (iii) for other standard employee benefits made generally available to all employees (including stock option agreements outstanding under any stock option plan approved by the Board of Directors of the Company).  one of the officers, directors or, to the Company’s knowledge, key employees of the Company or any members of their immediate families, is directly or indirectly indebted to the Company or has any direct or indirect ownership interest in any firm or corporation with which the Company is affiliated or with which the Company has a business relationship, or any firm or corporation that directlycompetes with the Company, other than (i) passive investments in publicly traded companies (representing less than 1% of such company) which may compete with the Company, (ii) investments by venture capital funds with

5

which directors of the Company may be affiliated and service as a board member of a company in connection therewith due to a person’s affiliation with a venture capital fund or similar institutional investor in such company and (iii) as previously disclosed to the Purchasers, the certain ownership interest of one or more of the founders of the Company in PrDirect, Inc. and PakuReserve, Inc. which provided secondment of employees and accounting outsourcing services to the Company prior to August 1, 2010.

(p)Officers and Directors.  To the knowledge of the Company, no executive officer or person nominated to become an executive officer, director or representative director of the Company (i) has been convicted in a criminal proceeding or is a named subject of a pending criminal proceeding (excluding minor traffic violations) or (ii) is or has been subject to any judgment or order of any pending civil or administrative action by any securities regulatory authority or any self-regulatory organization.

3.Representations and Warranties of the Purchasers and Groupon.

(a)Purchasers.  Each Purchaser represents and warrants, severally and not jointly, to the Company as follows:

(i)Authorization.  Such Purchaser has all requisite power, right and authority to execute and deliver the Agreement, to purchase the Shares hereunder and to carry out and perform its obligations under the terms of this Agreement.  All corporate action on the part of such Purchaser, its officers, directors and stockholders necessary for the authorization, execution, delivery and performance of the Agreement, and the performance of all of such Purchaser’s obligations hereunder, has been taken or will be taken prior to the Closing.  This Agreement, when executed and delivered by such Purchaser, shall constitute valid and legally binding obligations of such Purchaser, enforceable against such Purchaser in accordance with its terms, except: (A)  as limited by applicable bankruptcy, insolvency, reorganization, moratorium and other laws of general application affecting enforcement of creditors’ rights generally, and (B) as limited by laws relating to the availability of specific performance, injunctive relief or other equitable remedies or by general principles of equity.

(ii)No Violation.  None of the execution and delivery of this Agreement, the consummation of the transactions provided for herein or contemplated hereby, nor the fulfillment by such Purchaser of the terms hereof will (with or without notice or passage of time or both):  (A) violate any law, order, rule or regulation of any court, administrative agency or other national, state or local governmental authority applicable to such Purchaser or its properties; or (B) result in the breach of any mortgage, note, contract or other agreement or obligation of any kind or nature by which such Purchaser or its properties may be bound.

(iii)Consents. No permits, approvals or consents of or notifications to (A) any governmental entities or (B) any other persons are necessary in connection with the execution, delivery and performance by such Purchaser of this Agreement and the consummation by such Purchaser of the transactions contemplated hereby.

(iv)Investment Intent.  Such Purchaser is acquiring the Shares for investment for its own account, not as a nominee or agent, and not with the view to, or for resale in connection with, any distribution thereof, and that such Purchaser has no present intention of selling, granting any participation in, or otherwise distributing the same.  Such Purchaser further represents that it does not have any contract, undertaking, agreement or arrangement with any person or entity to sell, transfer or grant participation to such person or entity or to any third person or entity with respect to any of the Shares.

6

(v)Investment Experience.  Such Purchaser has substantial experience in evaluating and investing in private placement transactions of securities in companies similar to the Company and acknowledges that such Purchaser can protect its own interests.  Such Purchaser has such knowledge and experience in financial and business matters so that such Purchaser is capable of evaluating the merits and risks of its investment in the Company.  Such Purchaser understands and acknowledges that the Company has a limited financial and operating history and that an investment in the Company is highly speculative and involves substantial risks.  Such Purchaser can bear the economic risk of such Purchaser’s investment and is able, without impairing such Purchaser’s financial condition, to hold the Shares for an indefinite period of time and to suffer a complete loss of such Purchaser’s investment.

(vi)Access to Data.  Such Purchaser has had an opportunity to ask questions of, and receive answers from, the officers of the Company concerning the Agreement, the exhibits and schedules attached hereto and thereto and the transactions contemplated by the Agreement, as well as the Company’s business, management and financial affairs, which questions were answered to its satisfaction.  Such Purchaser also acknowledges that it is relying solely on its own counsel and not on any statements or representations of the Company or its agents for legal advice with respect to this investment or the transactions contemplated by the Agreement.  The foregoing, however, does not limit or modify the representations and warranties of the Company in Section 2 of this Agreement or the rights of Such Purchaser to rely thereon.

(vii)Tax Advisors.  Such Purchaser has reviewed with its own tax advisors the tax consequences of this investment and the transactions contemplated by the Agreement.  With respect to such matters, such Purchaser relies solely on such advisors and not on any statements or representations of the Company or any of its agents, written or oral.  Such Purchaser understands that it (and not the Company) shall be responsible for its own tax liability that may arise as a result of this investment or the transactions contemplated by the Agreement.

(viii)No Registration.  Each Purchaser understands that the Shares have not been, and will not be, registered under the securities laws of any jurisdiction. Each Purchaser acknowledges that the Shares must be held indefinitely unless subsequently registered under applicable securities laws or an exemption from such registration is available.

(b)Groupon.  Groupon represents and warrants to the Company as follows:

(i)Authorization.  Groupon has all requisite power, right and authority to execute and deliver the Agreement and to carry out and perform its obligations under the terms of this Agreement.  All corporate action on the part of Groupon, its officers, directors and stockholders necessary for the authorization, execution, delivery and performance of the Agreement, and the performance of all of Groupon’s obligations hereunder, has been taken or will be taken prior to the Closing.  This Agreement, when executed and delivered by Groupon, shall constitute valid and legally binding obligations of Groupon, enforceable against Groupon in accordance with its terms, except: (A)  as limited by applicable bankruptcy, insolvency, reorganization, moratorium and other laws of general application affecting enforcement of creditors’ rights generally, and (B) as limited by laws relating to the availability of specific performance, injunctive relief or other equitable remedies or by general principles of equity.

(ii)No Violation.  None of the execution and delivery of this Agreement, the consummation of the transactions provided for herein or contemplated hereby, nor the fulfillment by Groupon of the terms hereof will (with or without notice or passage of time or both):  (A) violate any law, order, rule or regulation of any court, administrative agency or other national, state or local governmental authority applicable to Groupon or its properties; or (B) result in the breach of any mortgage, note,

7

contract or other agreement or obligation of any kind or nature by which Groupon or its properties may be bound.

(iii)Consents. No permits, approvals or consents of or notifications to (A) any governmental entities or (B) any other persons are necessary in connection with the execution, delivery and performance by Groupon of this Agreement and the consummation by Groupon of the transactions contemplated hereby.

4.Entrustment Agreement.  Concurrently with the execution and delivery of this Agreement, the Company and Keisuke Seto (the “Manager”) shall enter into an Executive Entrustment Agreement (“Entrustment Agreement”) in substantially the form attached hereto as Exhibit D.

5.Shareholders Agreement.  Concurrently with the execution and delivery of this Agreement, the Company, the Purchasers, Groupon, and each of the individual founders listed on Exhibit B thereto, shall enter into a Shareholders Agreement (“Shareholders Agreement”) in substantially the form attached hereto as Exhibit E.

6.Notice.

(a)All notices, consent, waivers and other communications required or permitted by this Agreement shall be in writing and shall be deemed given to a party hereto if delivered or sent to the address or fax number or email address set out below:

If to Groupon BV and Groupon:

Address:  600 West Chicago Ave., Suite 620, Chicago, Illinois 60654

Fax:  312-276-3231

Attention:  Chief Executive Officer

Email:  andrew@ groupon.com

If to IVP Fund A, L.P. and IVP Fund B, L.P.:

Attention: Akio Tanaka

Email: akio@infinityventures.com

with a copy to:

Address:  Infinity Ventures LLP

4-34-23 Yoga Setagaya-ku Tokyo 158-0097 Japan

Attention:Masashi Kobayashi

If to the Company:

Address:  IVY East Bld 7F, 3-11-11 Shibuya Shibuya-ku Tokyo, 150-0002 Japan

Fax: 81-3-5469-2920

Attention:  Takeo Matsuda (CFO)

Email:  takeo_matsuda@qpod.co.jp

(b)Any notice shall be given in writing in English and may be delivered by hand or sent by messenger, fax or prepaid post (airmail in the case of international service).  A notice shall be deemed to have been duly given or served:

(i)if delivered personally, when received;

8

(ii)if transmitted by fax, upon receipt by the sending party of a transmittal confirmation;

(iii)if by express courier service, on the second Business Day following the date of deposit with such courier service; or

(iv)if by email, when actually received in readable form.

7.Confidentiality.  The terms of this Agreement and any non-public information obtained by any party from another party pursuant to this Agreement shall be kept confidential; provided, however, that each party hereto shall have the right to make any disclosure that, upon advice of its legal counsel, is required in order to comply with the requirements of any applicable law, regulation or stock exchange or national securities association requirement, provided that reasonable advance notice of the disclosure shall be provided by the disclosing party to the non-disclosing party.  Except as provided in Section 11.2 of the Shareholders Agreement, nothing in this Section 7 or elsewhere in this Agreement shall restrict or prohibit Groupon or its affiliates from making any investments or engaging in any activities, including such investments or activities that may be competitive with the Business (as defined in the Shareholders Agreement).

8.Miscellaneous.  No person which is not a party hereto shall have any rights or obligations pursuant to this Agreement.  This Agreement shall be construed and governed in accordance with the laws of Japan, without regard to its conflict of laws principles.  All disputes arising in connection with this Agreement shall be submitted to the exclusive jurisdiction of the Tokyo District Court as the court of first instance.  The parties shall promptly execute and deliver all further instruments and documents and take all further action necessary or appropriate in order to comply with the terms of or effect the transactions contemplated by this Agreement.  This Agreement may be amended only by a written agreement signed by the parties to be charged with any such amendment.  All representations and warranties contained herein shall survive the execution and delivery of this Agreement.  The rights and remedies of the parties are cumulative and not alternative.  Neither the failure nor any delay in exercising any right, power or privilege under this Agreement will operate as a waiver of such right, power or privilege, and no single or partial excuse of any such right, power or privilege will preclude any other or further exercise of such right, power or privilege or any other right, power or privilege.  This Agreement, together with the Schedules and Exhibits hereto and any other agreements or instruments executed and delivered in connection herewith, contains the entire agreement and understanding between the parties respecting the subject matter hereof, and supersedes all prior and contemporaneous agreements, statements, understandings, terms, conditions, negotiations, representations and warranties, whether written or oral, made by and among the parties concerning the matters covered by this Agreement.  This Agreement may be executed in one or more counterparts, none of which need contain the signatures of each of the parties and each of which shall be deemed an original.  The parties may deliver executed signature pages to this Agreement by facsimile or e-mail transmission in portable document format.

[Signature Page Follows]

9

If the above correctly reflects our understanding and agreement with respect to the foregoing matters, please so confirm by signing the enclosed copy of this Agreement.

Very truly yours,
PURCHASERS:
GROUPON B.V.
By:	/s/ Andrew Mason
Name:
Title:	Director
By:	/s/ Justin Verbond
Name:	Justin Verbond
Title:	Director
Number of Shares: 27,387
IVP FUND A, L.P.
Its General Partner
IVP Fund A(GP),Ltd
PO Box 309, Ugland House,
Grand Cayman, KY1-1104,
Cayman Islands
By:	/s/ Akio Tanaka
Name:	Akio Tanaka
Title:	Director
Number of Shares: 122
IVP FUND B, L.P.
Its General Partner
IVP Fund B(GP),Ltd
PO Box 309, Ugland House,
Grand Cayman, KY1-1104,
Cayman Islands
By:	/s/ Akio Tanaka
Name:	Akio Tanaka
Title:	Director
Number of Shares: 2,617

10

		Solely with respect to the provisions Sections 3(b), 6, 7 and 8 hereof:
		GROUPON:
		GROUPON, INC.
		By:	/s/ Andrew Mason
		Name:	Andrew Mason
		Title:	Chief Executive Officer
Agreed to and accepted as of the date first written above:
THE COMPANY:
QPOD.INC
By:	/s/ Keisuke Seto
Name:	Keisuke Seto
Title:	Chief Executive Officer

11

EX-10.28

Exhibit 10.28

GROUPON, INC. 2011 INCENTIVE PLAN

SECTION 1

General

1.1  Purpose.  Groupon, Inc., a Delaware corporation (“Groupon”), has established the Plan to advance the interests of Groupon and the Subsidiaries (collectively, the “Company”) by providing a variety of equity-based and cash incentives designed to motivate, retain and attract employees, directors, consultants, independent contractors, agents, and other persons providing services to the Company through the acquisition of a larger personal financial interest in Groupon.

1.2  Effect on Prior Plan.  No further awards will be made under the GROUPON, INC. 2010 Stock Plan, as amended from time to time (the “2010 Plan”), following the Effective Date and the consummation of Groupon’s initial public offering.

SECTION 2

Defined Terms

The meaning of capitalized terms used in the Plan are set forth below if not otherwise defined in the text of the Plan.

(a)“Affiliate” will have the meaning ascribed to such term in Rule 12b-2 of the General Rules and Regulations of the Exchange Act.

(b)“Agreement” will have the meaning set forth in subsection 9.9.

(c)“Approval Date” means the date on which the Plan is approved by Groupon’s stockholders.

(d)“Award” means any award described in Sections 6 through 8 of the Plan.

(e)“Beneficiary” means, unless otherwise provided in the award agreement, the person(s) or entity designated by the Participant in the most recent written beneficiary designation form filed with the Company or its designee to receive the benefits under a Participant’s Award specified under the Plan upon the Participant’s death; or, if there is no designated beneficiary or surviving designated beneficiary, the legal representative of the Participant’s estate entitled by will or the laws of descent and distribution to receive the benefits under a Participant’s Award.

(f)“Board” means the Board of Directors of Groupon.

(g)“Cash Incentive Award” has the meaning set forth in subsection 8.1.

(h)“Change in Control” means the occurrence of any of the following

(1)           an Ownership Change Event or a series of related Ownership Change Events (collectively, a “Transaction”) in which the stockholders of Groupon immediately before the Transaction do not retain immediately after the Transaction direct or indirect beneficial ownership of more than fifty percent (50%) of the total combined voting power of the outstanding securities entitled to vote generally in the election of Board members or, in the case of an Ownership Change Event described in clause (iii) of the definition of Ownership Change Event, the entity to which the assets of Groupon were transferred (the “Transferee”), as the case may be; or

(2)           approval by the stockholders of a plan of complete liquidation or dissolution of Groupon;

provided, however, that a Change in Control shall be deemed not to include a transaction described in clauses (1) or (2) of this definition in which a majority of the members of the board of directors of the

1

continuing, surviving or successor entity, or parent thereof, immediately after such transaction is comprised of Incumbent Directors.

For purposes of the preceding sentence, indirect beneficial ownership shall include, without limitation, an interest resulting from ownership of the voting securities of one or more corporations or other business entities which own Groupon or the Transferee, as the case may be, either directly or through one or more subsidiary corporations or other business entities.  The Board shall have the right to determine whether multiple sales or exchanges of the voting securities of Groupon or multiple Ownership Change Events are related, and its determination shall be final, binding and conclusive.

For purposes of this definition, an “Ownership Change Event” means the occurrence of any of the following with respect to Groupon:  (i) the direct or indirect sale or exchange in a single or series of related transactions by the stockholders of Groupon of securities of Groupon representing more than fifty percent (50%) of the total combined voting power of Groupon’s then-outstanding securities entitled to vote generally in the election of Board members; (ii) a merger or consolidation in which Groupon is a party; or (iii) the sale, exchange, or transfer of all or substantially all of the assets of Groupon (other than a sale, exchange or transfer to one or more Subsidiaries).

For purposes of this definition, an “Incumbent Director” means a director who either (i) is a member of the Board as of the Effective Date or (ii) is elected, or nominated for election, to the Board with the affirmative votes of at least a majority of the Incumbent Directors at the time of such election or nomination (but excluding a director who was elected or nominated in connection with an actual or threatened proxy contest relating to the election of directors of Groupon).

(i)“Code” means the United States Internal Revenue Code of 1986, as amended, and references to any provision of the Code will be deemed to include successor provisions and regulations.

(j)“Committee” has the meaning set forth in subsection 4.1.

(k)“Effective Date” has the meaning set forth in subsection 9.1.

(l)“Eligible Individual” means any officer, director, or other employee of Groupon or a Subsidiary, consultants, independent contractors or agents of Groupon or a Subsidiary, and persons who are expected to become officers, employees, directors, consultants, independent contractors or agents of Groupon or a Subsidiary, including in each case, directors who are not employees of Groupon or a Subsidiary.

(m)“Exchange Act” means the Securities Exchange Act of 1934, as amended.

(n)“Expiration Date” has the meaning set forth in subsection 6.9.

(o)           “Fair Market Value” of a Share means, as of any date on which the Shares are listed or quoted on a national or regional securities exchange or quotation system, and except as otherwise provided by the Committee, the closing sale price of a Share as reported on such national or regional securities exchange or quotation system. For purposes of determining the Fair Market Value of Shares that are sold pursuant to a cashless exercise program, Fair Market Value will be the price at which such Shares are sold.  If, as of any date, Shares are not listed or quoted on a national or regional securities exchange or quotation system, the Fair Market Value of a Share shall be as determined by the Committee in good faith without regard to any restriction other than a restriction that, by its terms, will never lapse, and in a manner consistent with the requirements of Section 409A of the Code.

(p)“Full Value Award” has the meaning set forth in subsection 7.1(a).

(q)“Incentive Stock Option” means an Option that is intended to satisfy the requirements applicable to an “incentive stock option” described in Section 422 of the Code.

(r)“Non-Qualified Stock Option” means an Option that is not intended to be an Incentive Stock Option.

2

(s)“Option” has the meaning set forth in subsection 6.1(a).

(t)“Outside Director” means a director of Groupon who is not an officer or employee of Groupon or any Subsidiary.

(u)“Participant” will have the meaning set forth in Section 3.

(v)“Performance-Based Compensation” will have the meaning set forth in subsection 7.3.

(w)“Performance Criteria” means performance targets based on one or more of the following criteria: (i) revenues or net revenues; (ii) operating profit or margin; (iii) expenses, operating expenses, marketing and administrative expense, restructuring or other special or unusual items, interest, tax expense, or other measures of savings; (iv) operating earnings, earnings before interest, taxes, depreciation, or amortization, net earnings, earnings per share (basic or diluted) or other measure of earnings; (v) cash flow, including cash flow from operations, investing, or financing activities, before or after dividends, investments, or capital expenditures; (vi) balance sheet performance, including debt, long or short term, inventory, accounts payable or receivable, working capital, or stockholders’ equity; (vii) return measures, including return on invested capital, sales, assets, or equity; (viii) stock price performance or stockholder return; (ix) economic value created or added; (x) implementation or completion of critical projects, including acquisitions, divestitures, and other ventures, process improvements, attainment of other strategic objectives, including market penetration, geographic expansion, product development, regulatory or quality performance, innovation or research goals, or the like. In each case, performance may be measured (A) on an aggregate or net basis; (B) before or after tax or cumulative effect of accounting changes; (C) relative to other approved measures, on an aggregate or percentage basis, over time, or as compared to performance by other companies or groups of other companies; or (D) by product, product line, business unit or segment, or geographic unit. The performance targets may include a threshold level of performance below which no payment will be made (or no vesting will occur), levels of performance at which specified payments will be made (or specified vesting will occur), and a maximum level of performance above which no additional payment will be made (or at which full vesting will occur). Where applicable, each of the foregoing performance targets will be determined in accordance with generally accepted accounting principles and will be subject to certification by the Committee; provided that the Committee will have the authority to exclude the impact of charges for restructurings, discontinued operations, extraordinary items, and other unusual, special, or non-recurring events and the cumulative effects of tax or accounting principles as identified in the financial results filed with or furnished to the Securities and Exchange Commission.

(x)“Person” will have the meaning given in Section 3(a)(9) of the Exchange Act, as modified and used in Sections 13(d) and 14(d) thereof, except that such term will not include (i) Groupon or any of its subsidiaries, (ii) a trustee or other fiduciary holding securities under an employee benefit plan of Groupon or any of its Affiliates, (iii) an underwriter temporarily holding securities pursuant to an offering of such securities, or (iv) a corporation owned, directly or indirectly, by the stockholders of Groupon in substantially the same proportions as their ownership of stock of Groupon.

(y)“Plan” means this Groupon, Inc. 2011 Incentive Plan, as it may be duly amended from time to time.

(z)“SAR” or “Stock Appreciation Right” has the meaning set forth in subsection 6.1(b).

(aa)“Share” means a share of Class A common stock, $0.0001 par value, of Groupon.

(bb)“Subsidiary” means any corporation, partnership, joint venture or other entity during any period in which a controlling interest in such entity is owned, directly or indirectly, by Groupon (or by any entity that is a successor to Groupon), and any other business venture designated by the Committee in which Groupon (or any entity that is a successor to Groupon) has, directly or indirectly, a significant interest (whether through the ownership of securities or otherwise), as determined in the discretion of the Committee. Notwithstanding the foregoing, in the case of an Incentive Stock Option or any determination

3

relating to an Incentive Stock Option, “Subsidiary” means a corporation that is a subsidiary of Groupon within the meaning of Section 424(f) of the Code.

(cc)“Substitute Award” means an Award granted or Shares issued by the Company in assumption of, or in substitution or exchange for, an award previously granted, or the right or obligation to make a future award, in all cases by a company acquired by the Company or any Subsidiary of the Company or with which the Company or a Subsidiary combines.

(dd)“Termination Date” means the date on which a Participant both ceases to be an employee of the Company and ceases to perform material services for the Company (whether as a director or otherwise), regardless of the reason for the cessation; provided that a “Termination Date” will not be considered to have occurred during the period in which the reason for the cessation of services is a leave of absence approved by Groupon or the Subsidiary which was the recipient of the Participant’s services; and provided, further that, with respect to an Outside Director, “Termination Date” means date on which the Outside Director’s service as an Outside Director terminates for any reason.

SECTION 3

Participation

Subject to the terms and conditions of the Plan, a “Participant” in the Plan is any Eligible Individual to whom an Award is granted under the Plan. Subject to the terms and conditions of the Plan, the Committee will determine and designate, from time to time, from among the Eligible Individuals those persons who will be granted one or more Awards under the Plan. Subject to the terms and conditions of the Plan, a Participant may be granted any Award permitted under the provisions of the Plan and more than one Award may be granted to a Participant. Except as otherwise agreed by Groupon and the Participant, or except as otherwise provided in the Plan, an Award under the Plan will not affect any previous Award under the Plan or an award under any other plan maintained by Groupon or any Subsidiary.

SECTION 4

Committee

4.1  Administration By Committee.  The authority to control and manage the operation and administration of the Plan will be vested in the committee described in subsection 4.2 (the “Committee”) in accordance with this Section 4. If the Committee does not exist, or for any other reason determined by the Board, the Board may take any action under the Plan that would otherwise be the responsibility of the Committee.

4.2  Selection of Committee.  So long as Groupon is subject to Section 16 of the Exchange Act, the Committee will be selected by the Board and will consist of not fewer than two members of the Board or such greater number as may be required for compliance with Rule 16b-3 issued under the Exchange Act and will be comprised of persons who are independent for purposes of applicable stock exchange listing requirements. Any Award granted under the Plan that is intended to constitute Performance-Based Compensation (including Options and SARs) will be granted by a Committee consisting solely of two or more “outside directors” within the meaning of Section 162(m) of the Code and applicable regulations; provided, however, that as of the Effective Date and continuing thereafter unless and until otherwise specified by the Board, the Committee will be the Compensation Committee of the Board.

Notwithstanding any other provision of the Plan to the contrary, with respect to any Awards to Outside Directors, the Committee for purposes of this Section 4 will be the Board.

4.3  Powers of Committee.  The authority to manage and control the operation and administration of the Plan will be vested in the Committee, subject to the following:

(a)Subject to the provisions of the Plan (including subsection 4.3(e)), the Committee will have the authority and discretion to (i) select Eligible Individuals who will receive Awards under the Plan, (ii) determine the time or times of receipt of Awards, (iii) determine the types of Awards and the number of Shares covered by theAwards, (iv) establish the terms, conditions, performance targets, restrictions, and

4

other provisions of such Awards, (v) modify the terms of, cancel, or suspend Awards; (vi) reissue or repurchase Awards, and (vii) accelerate the exercisability or vesting of any Award. In making such Award determinations, the Committee may take into account the nature of services rendered by the respective individual, the individual’s present and potential contribution to Groupon’s or a Subsidiary’s success and such other factors as the Committee deems relevant.

(b)Subject to the provisions of the Plan, the Committee will have the authority and discretion to determine the extent to which Awards under the Plan will be structured to conform to the requirements applicable to Performance-Based Compensation, and to take such action, establish such procedures, and impose such restrictions at the time such Awards are granted as the Committee determines to be necessary or appropriate to conform to such requirements.

(c)Subject to the provisions of the Plan, the Committee will have the authority and discretion to conclusively interpret the Plan, to establish, amend and rescind any rules and regulations relating to the Plan, to determine the terms and provisions of any agreements made pursuant to the Plan, to remedy any defect or omission and reconcile any inconsistency in the Plan or any Award, and to make all other determinations that may be necessary or advisable for the administration of the Plan including the termination thereof.

(d)Any interpretation of the Plan by the Committee and any decision made by it under the Plan is final and binding on all persons.

(e)Except as otherwise expressly provided in the Plan, where the Committee is authorized to make a determination with respect to any Award, such determination will be made at the time the Award is made, except that the Committee may reserve the authority to have such determination made by the Committee in the future (but only if such reservation is made at the time the Award is granted is expressly stated in the Agreement reflecting the Award and is permitted by applicable law).

4.4  Delegation by Committee.  Except to the extent prohibited by applicable law or the rules of any stock exchange, the Committee may allocate all or any portion of its responsibilities and powers to any one or more of its members and may delegate all or any part of its responsibilities and powers to any person or persons selected by it, except that Awards to individuals who are designated as “officers” under Rule 16a-1(f) of the Exchange Act may be made solely by the Committee. Any such allocation or delegation may be revoked by the Committee at any time.

4.5  Information to be Furnished to Committee.  The Company will furnish the Committee such data and information as may be required for it to discharge its duties. The records of the Company as to an individual’s employment or provision of services, termination of employment or cessation of the provision of services, leave of absence, reemployment and compensation will be conclusive on all persons unless determined to be incorrect. Participants and other persons entitled to benefits under the Plan must furnish the Committee such evidence, data or information as the Committee considers desirable to carry out the terms of the Plan.

4.6  Liability and Indemnification of Committee.  No member or authorized delegate of the Committee will be liable to any person for any action taken or omitted in connection with the administration of the Plan unless attributable to his own fraud or willful misconduct; nor will Groupon or any Subsidiary be liable to any person for any such action unless attributable to fraud or willful misconduct on the part of a director or employee of Groupon or a Subsidiary. The Committee, the individual members thereof, and persons acting as the authorized delegates of the Committee under the Plan, will be indemnified by Groupon against any and all liabilities, losses, costs and expenses (including legal fees and expenses) of whatsoever kind and nature which may be imposed on, incurred by or asserted against the Committee or its members or authorized delegates by reason of the performance of a Committee function if the Committee or its members or authorized delegates did not act dishonestly or in willful violation of the law or regulation under which such liability, loss, cost or expense arises. This indemnification will not duplicate but may supplement any coverage available under any applicable insurance.

5

SECTION 5

Shares Reserved and Limitations

5.1  Shares and Other Amounts Subject to the Plan.  The Shares for which Awards may be granted under the Plan will be subject to the following:

(a)The Shares with respect to which Awards may be made under the Plan will be shares currently authorized but unissued or currently held or subsequently acquired by Groupon as treasury shares, including shares purchased in the open market or in private transactions.

(b)Subject to the provisions of subsection 5.2, the number of Shares which may be issued with respect to Awards under the Plan will be equal to Twenty Five Million (25,000,000) Shares, plus all Shares that are or become available for issuance under the 2010 Plan following the consummation of Groupon’s initial public offering (the “Share Pool”). Except as otherwise provided herein, any Shares subject to an Award under this Plan which for any reason expires or is forfeited, cancelled, surrendered, or terminated without issuance of Shares will again be available under the Plan. Shares subject to an Award under the Plan will again be made available for issuance under the Plan if such Shares are: (i) Shares that were subject to a stock-settled SAR and were not issued or delivered upon the net settlement of such SAR; and (ii) Shares delivered to or withheld by Groupon to pay the exercise price or the withholding taxes related to outstanding Awards.

(c)Substitute Awards will not reduce the Shares that may be issued under the Plan or that may be covered by Awards granted to any one Participant during any calendar year pursuant to subsection 5.1(e) or subsection 5.1(f).

(d)Except as expressly provided by the terms of this Plan, the issuance by Groupon of shares of stock of any class, or securities convertible into shares of stock of any class, for cash or property or for labor or services, either upon direct sale, upon the exercise of rights or warrants to subscribe therefore or upon conversion of shares or obligations of Groupon or any Subsidiary convertible into such shares or other securities, will not affect, and no adjustment by reason thereof, will be made with respect to Awards then outstanding hereunder.

(e)Subject to the following provisions of this subsection 5.1, the maximum number of Shares that may be delivered to Participants and their Beneficiaries with respect to Incentive Stock Options under the Plan will be Fifteen Million (15,000,000); provided, however, that to the extent that shares not delivered must be counted against this limit as a condition of satisfying the rules applicable to Incentive Stock Options, such rules will apply to the limit on Incentive Stock Options granted under the Plan.

(f)The maximum number of Shares that may be covered by Awards granted to any one Participant during any one calendar-year period pursuant to this Plan will be One Million (1,000,000). For purposes of this subsection 5.1(g), if an Option is in tandem with an SAR, such that the exercise of the Option or SAR with respect to a Share cancels the tandem SAR or Option right, respectively, with respect to such share, the tandem Option and SAR rights with respect to each Share will be counted as covering but one Share for purposes of applying the limitations of this subsection 5.1(f).

5.2  Adjustments to Shares.  In the event there is a change in the capital structure of the Company as a result of any stock dividend or split, recapitalization, issuance of a new class of common stock, merger, consolidation, spin-off or other similar corporate change, or any distribution to stockholders holding Shares other than regular cash dividends, the Committee shall make an equitable adjustment (in the manner and form determined in the Committee’s sole discretion) in the number of Shares and forms of the Awards authorized to be granted under the Plan, including any limitation imposed on the number of Shares of Common Stock with respect to which an Award may be granted in the aggregate under the Plan or to any Participant, and make appropriate adjustments (including exercise price) to any outstanding Awards.

6

SECTION 6

Options and SARS

6.1  Definitions.

(a)The grant of an “Option” under the Plan entitles the Participant to purchase Shares at an Exercise Price established by the Committee at the time the Option is granted. Options granted under this Section 6 may be either Incentive Stock Options or Non-Qualified Stock Options, as determined in the discretion of the Committee; provided, however, that Incentive Stock Options may only be granted to employees of Groupon or a Subsidiary. An Option will be deemed to be a Non-Qualified Stock Option unless it is specifically designated by the Committee as an Incentive Stock Option.

(b)A grant of a “stock appreciation right” or “SAR” entitles the Participant to receive, in cash or Shares (as determined in accordance with the terms of the Plan), value equal to the excess of: (i) the Fair Market Value of a specified number of Shares at the time of exercise; over (ii) an Exercise Price established by the Committee at the time of grant.

(c)An Option may but need not be in tandem with an SAR, and an SAR may but need not be in tandem with an Option (in either case, regardless of whether the original award was granted under this Plan or another plan or arrangement). If an Option is in tandem with an SAR, the Exercise Price of both the Option and SAR will be the same, and the exercise of the Option or SAR with respect to a Share will cancel the corresponding tandem SAR or Option right with respect to such share.

6.2  Eligibility.  The Committee will designate the Participants to whom Options or SARs are to be granted under this Section 6 and will determine the number of Shares subject to each such Option or SAR and the other terms and conditions thereof, not inconsistent with the Plan.

6.3  Agreement. Each grant of an Option or a SAR under the Plan will be evidenced and governed exclusively by a written Agreement between the Participant and the Company. Such Option or SAR will be subject to all applicable terms and conditions of the Plan and may be subject to any other terms and conditions that are not inconsistent with the Plan and that the Committee deems appropriate for inclusion in the Agreement (including without limitation any performance conditions). The provisions of the various Agreements entered into under the Plan need not be identical. With respect to Options, the Agreement will also specify whether the Option is an Incentive Stock Option or a Non-Qualified Stock Option.

6.4  Limits on Incentive Stock Options.  If the Committee grants Incentive Stock Options, then to the extent that the aggregate fair market value of Shares with respect to which Incentive Stock Options are exercisable for the first time by any individual during any calendar year (under all plans of the Company) exceeds $100,000, such Options will be treated as Non-Qualified Stock Options to the extent required by Section 422 of the Code.

6.5  Exercise Price.  The “Exercise Price” of an Option or SAR will be established by the Committee at the time the Option or SAR is granted; provided, however, (a) in no event will such price be less than 100% of the Fair Market Value of a Share on such date and (b) no Incentive Stock Option granted to a Ten Percent Stockholder within the meaning of Section 422(b)(6) of the Code shall have an exercise price per share less than one hundred ten percent (110%) of the Fair Market Value of a Share on such date.

6.6  Exercise/Vesting.  Except as otherwise expressly provided in the Plan, an Option or SAR granted under the Plan will be exercisable in accordance with the following:

(a)An Option or SAR granted under this Section 6 will be exercised, in whole or in part (but with respect to whole Shares only) by giving notice to Groupon or its designee prior to the Expiration Date applicable thereto. Such notice will specify the number of Shares being exercised and such other information as may be required by the Committee or its designee.

7

(b)No Option or SAR may be exercised prior to the date on which it is exercisable (or vested) or after the Expiration Date.

(c)The terms and conditions relating to exercise and vesting of an Option or SAR will be established by the Committee to the extent not inconsistent with the Plan, and may include, without limitation, conditions relating to completion of a specified period of service, achievement of performance standards prior to exercise or the achievement of Share ownership objectives by the Participant. Notwithstanding the foregoing, in no event will an Option or SAR granted to any employee become exercisable or vested prior to the first anniversary of the date on which it is granted (subject to acceleration of exercisability and vesting, to the extent permitted by, and subject to such terms and conditions determined by the Committee, in the event of the Participant’s death, disability, retirement, or involuntary termination or in connection with a change in control).

6.7  Method of Exercise; Payment of Exercise Price.  A Participant may exercise an Option (i) by giving notice to the Committee or its designee specifying the number of whole Shares to be purchased and accompanying such notice with payment therefor in full, and without any extension of credit, either (A) in cash, (B) by delivery (either actual delivery or by attestation procedures established by the Committee or its designee) to the Committee or its designee of previously owned whole Shares having a Fair Market Value, determined as of the date immediately preceding the date of exercise, equal to the aggregate purchase price payable by reason of such exercise, (C) authorizing the Committee to withhold whole Shares which would otherwise be delivered having an aggregate Fair Market Value, determined as of the date of exercise, equal to the amount necessary to satisfy such obligation, provided that the Committee determines that such withholding of Shares does not cause the Company to recognize an increased compensation expense under applicable accounting principles, (D) except as may be prohibited by applicable law, in cash by a broker-dealer acceptable to the Company to whom the Participant has submitted an irrevocable notice of exercise or (E) a combination of (A), (B), (C) and (D) and (ii) by executing such documents as the Committee may reasonably request. Any fraction of a Share which would be required to pay such purchase price will be disregarded and the remaining amount due will be adjusted through the federal tax withholding mechanism. No Shares will be issued and no certification representing Common Stock will be delivered until the full purchase price therefor and any withholding taxes thereon, as described in Section 9.5, have been paid.

6.8  Post-Exercise Limitations.  The Committee, in its discretion, may provide in an Award such restrictions on Shares acquired pursuant to the exercise of an Option as it determines to be desirable, including, without limitation, restrictions relating to disposition of the shares and forfeiture restrictions based on service, performance, Share ownership by the Participant and such other factors as the Committee determines to be appropriate.

6.9  NoRepricing.  Except for adjustments pursuant to subsection 5.2 (Adjustments to Shares) or reductions of the Exercise Price approved by Groupon’s stockholders, the Exercise Price for any outstanding Option or SAR may not be decreased after the date of grant nor may an outstanding Option or SAR granted under the Plan be surrendered to Groupon as consideration for the grant of a new Award, cash, or replacement Option or SAR with a lower exercise price. In addition, no repricing of an Option or SAR will be permitted without the approval of Groupon’s stockholders if such approval is required under the rules of any stock exchange on which Shares are listed; provided, however, that the foregoing prohibition shall not apply to the actions permitted under subsection 9.2 (Change in Control).

6.10  Expiration Date.  The “Expiration Date” with respect to an Option or SAR means the date established as the Expiration Date by the Committee at the time of the grant; provided, however, that in no event will the Expiration Date of an Option or SAR be later than the date that is ten years after the date on which the Option or SAR is granted (or such shorter period required by law or the rules of any stock exchange). No Incentive Stock Option granted to a Ten Percent Stockholder within the meaning of Section 422(b)(6) of the Code shall be exercisable after the expiration of five (5) years after the effective date of grant of such Option.

8

SECTION 7

Full Value Awards

7.1  Definitions.

A “Full Value Award” is a grant of one or more Shares or a right to receive one or more Shares in the future (including restricted shares, restricted share units, deferred shares, deferred share units, performance shares and performance share units), with such grant subject to one or more of the following, as determined by the Committee:

(a)The grant may be in consideration of a Participant’s previously performed services, or surrender of other compensation that may be due.

(b)The grant may be contingent on the achievement of performance or other objectives during a specified period.

(c)The grant may be subject to a risk of forfeiture or other restrictions that will lapse upon the achievement of one or more goals relating to completion of service by the Participant or achievement of performance or other objectives.

(d)The grant may also be subject to such other conditions, restrictions and contingencies, as determined by the Committee, including provisions relating to dividend or dividend equivalent rights and deferred payment or settlement.

7.2  Agreement.  Each grant of a Full Value Award under the Plan will be evidenced and governed exclusively by a written Agreement between the Participant and the Company. Such Full Value Award will be subject to all applicable terms and conditions of the Plan and may be subject to any other terms and conditions that are not inconsistent with the Plan and that the Committee deems appropriate for inclusion in the Agreement (including without limitation any performance conditions). The provisions of the various Agreements entered into under the Plan need not be identical.

7.3  Performance-Based Full Value Awards.  Any Full Value Award granted to any Participant may constitute “Performance-Based Compensation” within the meaning of Section 162(m) of the Code and regulations thereunder. If any such award is intended to satisfy the requirements for Performance-Based Compensation under Section 162(m) of the Code, then to the extent required by Section 162(m), any Full Value Award so designated will be conditioned on the achievement of one or more performance targets as determined by the Committee and the following additional requirements will apply:

(a)The performance targets established for the performance period established by the Committee will be objective (as that term is described in regulations and other guidance under Section 162(m) of the Code), and will be established in writing by the Committee not later than 90 days after the beginning of the performance period (but in no event after 25% of the performance period has elapsed), and while the outcome as to the performance targets is substantially uncertain. The performance targets established by the Committee will be based on one or more of the Performance Criteria.

(b)A Participant otherwise entitled to receive a Full Value Award for any performance period will not receive a settlement or payment of the Award until the Committee has determined that the applicable performance target(s) have been attained. To the extent that the Committee exercises discretion in making the determination required by this subsection 7.3(b), such exercise of discretion may not result in an increase in the amount of the payment unless such discretion is exercised pursuant to Section 9.2 hereof.

(c)Except as otherwise provided by the Committee, if a Participant’s Termination Date occurs because of death or disability, the Participant’s Full Value Award will become vested without regard to whether the Full Value Award would be Performance-Based Compensation.

9

Nothing in this Section 7 will preclude the Committee from granting Full Value Awards under the Plan or the Committee, Groupon or any Subsidiary from granting any cash incentive awards outside of the Plan that are not intended to be Performance-Based Compensation; provided, however, that to the extent that the provisions of this Section 7 reflect the requirements applicable to Performance-Based Compensation, such provisions will not apply to the portion of the Award, if any, that is not intended to constitute Performance-Based Compensation.

SECTION 8

Cash Incentive Awards

8.1  Grant of Cash Incentive Awards.  Subject to the terms of the Plan, the Committee may grant to a Participant the right to receive a payment in cash (or, in the discretion of the Committee, in Shares equivalent in value to the cash otherwise payable) at any time and from time to time, as determined by the Committee (“Cash Incentive Award”). Each Cash Incentive Award will have a value as determined by the Committee, and the Committee may subject an Award to Performance Criteria or any other conditions, restrictions or contingencies, as determined in the Committee’s discretion. Payment of earned Cash Incentive Awards will be as determined by the Committee and evidenced in the Agreement. Subject to the terms of the Plan, the Committee, in its sole discretion, may pay earned Cash Incentive Awards in the form of cash or Shares (or in a combination thereof) that have an aggregate Fair Market Value equal to the value of the earned Award. The determination of the Committee with respect to the time and form of payout of such Awards will be set forth in the Agreement pertaining to the grant of the Award.

8.2  Performance-Based Cash Incentive Awards.  Any Cash Incentive Award granted to any Participant may constitute “Performance-Based Compensation” within the meaning of Section 162(m) of the Code and regulations thereunder. If any such award is intended to satisfy the requirements for Performance-Based Compensation under Section 162(m) of the Code, then to the extent required by Section 162(m), any Cash Incentive Award so designated will be conditioned on theachievement of one or more performance targets as determined by the Committee and the following additional requirements will apply:

(a)The performance targets established for the performance period established by the Committee will be objective (as that term is described in regulations under Section 162(m) of the Code), and will be established in writing by the Committee not later than 90 days after the beginning of the performance period (but in no event after 25% of the performance period has elapsed), and while the outcome as to the performance targets is substantially uncertain. The performance targets established by the Committee will be based on one or more of the Performance Criteria.

(b)A Participant otherwise entitled to receive a Cash Incentive Award for any performance period will not receive a settlement or payment of the Award until the Committee has determined that the applicable performance target(s) have been attained. To the extent that the Committee exercises discretion in making the determination required by this subsection 8.2, such exercise of discretion may not result in an increase in the amount of the payment, unless such discretion is exercised pursuant to Section 9.2 hereof.

(c)Except as otherwise provided by the Committee, if a Participant’s Termination Date occurs because of death or disability, the Participant’s Cash Incentive Award will become vested without regard to whether the Cash Incentive Award would be Performance-Based Compensation.

(d)The maximum amount payable pursuant to a Cash Incentive Award to any Participant in any calendar year is Five Million ($5,000,000).

Nothing in this Section 8 will preclude the Committee from granting Cash Incentive Awards under the Plan or the Committee, Groupon or any Subsidiary from granting any cash incentive awards outside of the Plan that are not intended to be Performance-Based Compensation; provided, however, that to the extent that the provisions of this Section 8 reflect the requirements applicable to Performance-Based Compensation, such provisions will not apply to any Cash Incentive Award that is not intended to constitute Performance-Based Compensation. Except as otherwise provided in the applicable program or arrangement, distribution of any Cash Incentive Awards by the Company for a performance period ending in a calendar year will be made to the Participant not later than March 15 of the following calendar year.

10

SECTION 9

Operation and Administration

9.1  Effective Date and Approval Date.  The Plan will be effective as of the date it is adopted by the Board (the “Effective Date”). The Plan will be unlimited in duration and, in the event of Plan termination, will remain in effect as long as any Shares awarded under it are outstanding and not fully vested; provided, however, that no new Awards will be made under the Plan on or after the tenth anniversary of the date on which the Plan is adopted by the Board.  No Option that is intended to be an Incentive Stock Option may be granted under the Plan until the Approval Date.  If the Approval Date does not occur within twelve months after the Effective Date, then no Options that are intended to be Incentive Stock Options may be granted under the Plan.

9.2  Change in Control.  (a) Notwithstanding any provision of this Plan or any Agreement, in the event of a Change in Control, the Board (as constituted prior to such Change in Control) may, in its discretion:

(i)require that (A) some or all outstanding Options and SARs will immediately become exercisable in full or in part, (B) the vesting period applicable to some or all outstanding restricted shares and restricted stock units will lapse in full or in part, (C) the performance period applicable to some or all outstanding Awards will lapse in full or in part, or (D) the performance targets applicable to some or all outstanding Awards will be deemed to be satisfied at the target, maximum or any other level;

(ii)require that shares of common stock of the company resulting from or succeeding to the business of the Company pursuant to such Change in Control, or a parent corporation thereof, be substituted for some or all of the Shares subject to an outstanding Award, with an appropriate and equitable adjustment to such Award as determined by the Board in accordance with Section 5.2;

(iii)require outstanding Awards, in whole or in part, to be surrendered to the Company by the holder, and to be immediately cancelled by the Company, and to provide for the holder to receive (A) a cash payment in an amount equal to (x) in the case of an Option or a SAR, the number of Shares then subject to the portion of such Option or SAR surrendered, to the extent such Option or SAR is then exercisable or becomes exercisable pursuant toSection 6.5 above, multiplied by the excess, if any, of the Fair Market Value (or the Change in Control price, as applicable) of a Share as of the date of the Change in Control, over the purchase price or base price per Share subject to such Option or SAR, (y) in the case of restricted shares or restricted stock units, the number of Shares then subject to the portion of such Award surrendered, to the extent the vesting period and performance period, if any, on such Award have lapsed or will lapse pursuant to Section 7.2 above and to the extent that the performance targets, if any, have been satisfied or are deemed satisfied pursuant to Sections 7.2 or 7.3 above, multiplied by the Fair Market Value (or the Change in Control price, as applicable) of a Share as of the date of the Change in Control, and (z) in the case of performance shares and performance share units, the Fair Market Value (or the Change in Control price, as applicable) of the Shares then subject to the portion of such Award surrendered, to the extent the performance period applicable to such Award has lapsed or will lapse pursuant to Section 7.3 above and to the extent the performance targets applicable to such Award have been satisfied or are deemed satisfied pursuant to Section 7.3 above; (B) shares of common stock of the corporation resulting from or succeeding to the business of the Company pursuant to such Change in Control, or a parent corporation thereof, having a fair market value not less than the amount determined under clause (A) above; or (C) a combination of the payment of cash pursuant to clause (A) above and the issuance of shares pursuant to Clause (B) above; and/or

(iv)take such other action as the Board deems appropriate, in its sole discretion.

9.3  Special Director Provisions.  Notwithstanding any other provision of the Plan to the contrary, unless otherwise provided by the Board, Awards to non-employee directors may be made in accordance with the terms of any Outside Director’s program adopted by the Board, and all such Awards will be deemed to be made under the Plan.

11

9.4  Limit on Distribution.  Distribution of Shares or other amounts under the Plan will be subject to the following:

(a)Notwithstanding any other provision of the Plan, Groupon will have no liability to deliver any Shares under the Plan or make any other distribution of benefits under the Plan unless such delivery or distribution would comply with all applicable laws and the applicable requirements of any securities exchange or similar entity.

(b)In the case of a Participant who is subject to Sections 16(a) and 16(b) of the Exchange Act, the Committee may, at any time, add such conditions and limitations to any Award to such Participant, or any feature of any such Award, as the Committee, in its sole discretion, deems necessary or desirable to comply with Section 16(a) or 16(b) and the rules and regulations thereunder or to obtain any exemption therefrom.

(c)To the extent that the Plan provides for issuance of certificates to reflect the transfer of Shares, the transfer of such Shares may be effected on a non-certificated basis, to the extent not prohibited by applicable law or the rules of any stock exchange.

9.5  Withholding.All Awards and other payments under the Plan are subject to withholding of all applicable taxes, which withholding obligations may be satisfied by one or more of the following means as determined by the Company in its sole discretion: (i) withholding from any wages or other cash compensation paid to the Participant by the Company, (ii) surrender of Shares which the Participant already owns or to which the Participant is otherwise entitled under the Plan, (iii) withholding from the proceeds of the sale of Shares owned by the Participant, or (iv) any other method of withholding authorized by the Committee;  provided, however, with the consent of the Committee, previously-owned Shares that have been held by the Participant or Shares to which the Participant is entitled under the Plan may only be used to satisfy the minimum tax withholding required by applicable law (or other rates that will not have a negative accounting impact).

9.6  Transferability.  Awards under the Plan are not transferable except to the Participant’s Beneficiary upon the death of the Participant.To the extent that the Participant who receives an Award under the Plan has the right to exercise such Award, the Award may be exercised during the lifetime of the Participant only by the Participant. Notwithstanding the foregoing provisions of this subsection 9.6, the Committee may permit Awards under the Plan to be transferred to or for the benefit of the Participant’s family (including, without limitation, to a trust or partnership for the benefit of a Participant’s family), subject to such procedures as the Committee may establish. In no event will an Incentive Stock Option be transferable to the extent that such transferability would violate the requirements applicable to such option under Section 422 of the Code.

9.7  Notices.  Any notice or document required to be filed with the Committee or the Company under the Plan must be writing and will be properly filed if delivered or mailed to the Company’s Legal Department at Groupon’s principal executive offices. If intended for the Participant, notices shall be delivered personally or shall be addressed (if sent by mail) to the Participant’s then current residence address as shown on the Company’s records, or to such other address as the Participant directs in a notice to the Company, or shall be delivered electronically to the Participant’s email address as shown on the Company’s records. All notices shall be deemed to be given on the date received at the address of the addressee or, if delivered personally or electronically, on the date delivered.  The Company may, in its sole discretion, decide to deliver any documents related to current or future participation in the Plan through an on-line or electronic system established and maintained by the Company or its designee. The Company may, by written notice to affected persons, revise its notice procedures from time to time. Any notice required under the Plan (other than a notice of election) may be waived by the person entitled to notice.

9.8  Form and Time of Elections.  Unless otherwise specified herein, each election required or permitted to be made by any Participant or other person entitled to benefits under the Plan, and any permitted modification or revocation thereof, will be in writing filed with the Committee at such times, in such form, and subject to such restrictions and limitations, not inconsistent with the terms of the Plan, as the Committee requires.

9.9  Agreement With Groupon or Subsidiary.  At the time of an Award to a Participant under the Plan, the Committee may require a Participant to enter into an agreement with Groupon or the Subsidiary, as applicable (the “Agreement”), in a form specified by the Committee, agreeing to the terms and conditions of the Plan and to such

12

additional terms and conditions, not inconsistent with the Plan, as the Committee may, in its sole discretion, prescribe.

9.10  Limitation of Implied Rights.

(a)Neither a Participant nor any other person will, by reason of the Plan, acquire any right in or title to any assets, funds or property of the Company whatsoever, including without limitation, any specific funds, assets, or other property which the Company, in its sole discretion, may set aside in anticipation of a liability under the Plan. A Participant will have only a contractual right to the amounts, if any, payable under the Plan, unsecured by any assets of the Company. Nothing contained in the Plan constitutes a guarantee by the Company or any Subsidiary that the assets of such companies will be sufficient to pay any benefits to any person.

(b)The Plan does not constitute a contract of employment or continued service, and selection as a Participant will not give any employee the right to be retained in the employ or service of the Company, nor any right or claim to any benefit under the Plan, unless such right or claim has specifically accrued under the terms of the Plan. Except as otherwise provided in the Plan, no Award under the Plan will confer upon the holder thereof any right as a stockholder of Groupon prior to the date on which the Participant fulfills all service requirements and other conditions for receipt of such rights and Shares are registered in the Participant’s name. Without limiting the generality of the foregoing, to the extent permitted or required by law, as determined by the Committee, Participants holding Shares of restricted stock granted under the Plan may be granted the right to exercise full voting rights with respect to those Shares during the vesting period. A Participant will have no voting rights with respect to any restricted stock units granted hereunder.

(c)During the vesting period, Participants holding Shares of restricted stock, restricted stock units, performance Shares or performance share units granted hereunder may, if the Committee so determines, be credited with dividends paid with respect to the underlying Shares or dividend equivalents while they are so held in a manner determined by the Committee in its sole discretion. The Committee may apply any restrictions to the dividends or dividend equivalents that the Committee deems appropriate. The Committee, in its sole discretion, may determine the form of payment of dividends or dividend equivalents, including, but not limited to, cash or Shares.

9.11  Forfeiture Events.  The Committee may specify in an Agreement that the Participant’s rights, payments, and benefits with respect to an Award will be subject to reduction, cancellation, forfeiture or recoupment upon the occurrence of certain specified events, in addition to any otherwise applicable vesting or performance conditions of an Award. Such events may include, but are not limited to, termination of employment for cause, violation of material Company, Affiliate or Subsidiary policy, breach of noncompetition, non-solicitation or confidentiality provisions that apply to the Participant, a determination that the payment of the Award was based on an incorrect determination that financial or other criteria were met or other conduct by the Participant that is detrimental to the business or reputation of the Company, its Affiliates or the Subsidiaries.

9.12  Clawback Policy.  Any compensation earned or paid pursuant to this Plan is subject to forfeiture, recovery by the Company or other action pursuant to any clawback or recoupment policy which the Company may adopt from time to time, including without limitation any such policy which the Company may be required to adopt under the Dodd-Frank Wall Street Reform and Consumer Protection Act and implementing rules and regulations thereunder, or as otherwise required by law.

9.13  Evidence.  Evidence required of anyone under the Plan may be by certificate, affidavit, document or other information which the person acting on it considers pertinent and reliable, and signed, made or presented by the proper party or parties.

9.14  Action by Groupon or Subsidiary.  Any action required or permitted to be taken by Groupon or any Subsidiary will be by resolution of its board of directors or by action of one or more members of the board (including a committee of the board) who are duly authorized to act for the board or (except to the extent prohibited by applicable law or the rules of any stock exchange) by a duly authorized officer of Groupon.

13

9.15  Gender and Number.  Where the context allows, words in any gender include any other gender, words in the singular include the plural and the plural includes the singular, and the term “or” also means “and/or” and the term “including” means “including but not limited to”.

9.16  Applicable Law.  The validity, interpretation, instruction, performance, enforcement and remedies of or relating to this Plan and any Agreement, and the rights and obligations of the parties hereunder, shall be governed by and construed in accordance with the substantive laws of the State of Delaware, without regard to the conflict of law principles, rules or statutes of any jurisdiction.

9.17  Foreign Participants.  Notwithstanding any other provision of the Plan to the contrary, the Committee may grant Awards to eligible persons who are foreign nationals on such terms and conditions different from those specified in the Plan as may, in the judgment of the Committee, be necessary or desirable to foster and promote achievement of the purposes of the Plan. In furtherance of such purposes, the Committee may make such modifications, amendments, procedures and subplans as may be necessary or advisable to comply with provisions of laws in other countries or jurisdictions in which Groupon or a Subsidiary operates or has employees.

9.18  Construction.  If any provision of the Plan or any Agreement relating to an Award intended to satisfy the requirements for Performance-Based Compensation under Section 162(m) of the Code does not comply or is inconsistent with such requirements of Section 162(m) of the Code, such provision will be construed or deemed amended to the extent necessary to conform to such requirements.

9.19  Creditor’s Rights.A holder of restricted stock units shall have no rights other than those of a general creditor of the Company. Restricted stock units represent an unfunded and unsecured obligation of the Company, subject to the terms and conditions of the applicable restricted stock unit Agreement.

9.20  Fractional Shares.Under no circumstances will the Company be required to authorize or issue fractional shares and no consideration will be provided as a result of any fractional shares not be issued or authorized.

SECTION 10

Amendment and Termination

The Board may, at any time, amend or terminate the Plan, and the Board or the Committee may amend any Agreement, provided that no amendment or termination may, in the absence of written consent to the change by the affected Participant (or, if the Participant is not then living and if applicable, the Beneficiary), adversely affect the rights of any Participant or, if applicable, Beneficiary under any Award granted under the Plan prior to the date such amendment is adopted by the Board (or the Committee, if applicable), unless an amendment is required to conform the Plan or an Agreement to the requirements of applicable law; and further provided that adjustments pursuant to subsection 5.2 will not be subject to the foregoing limitations of this Section 10; and further provided no amendment will be made to the provisions of subsection 6.8 (relating to Option and SAR repricing) without the approval of Groupon’s stockholders; and provided further, that no other amendment will be made to the Plan without the approval of Groupon’s stockholders if the approval of Groupon’s stockholders of such amendment is required by law or the rules of any stock exchange on which Shares are listed.

SECTION 11

Sections 409A and 4999 of the Code

11.1  Intent to Comply with Section 409A of the Code.  Notwithstanding anything in this Plan to the contrary (for purposes of this section, “Plan” includes all Awards under the Plan), the Plan will be construed, administered or deemed amended as necessary to comply with the requirements of Section 409A of the Code to avoid taxation under Section 409A(a)(1) of the Code to the extent subject to Section 409A of the Code. The Committee, in its sole discretion, will determine the requirements of Section 409A of the Code applicable to the Plan and will interpret the terms of the Plan consistently therewith. Under no circumstances, however, will the Company or any Subsidiary or Affiliate or any of its employees, officers, directors, service providers or agents have any liability to any person for any taxes, penalties or interest due on amounts paid or payable under the Plan, including any taxes, penalties or interest imposed under Section 409A of the Code. Any payments to Award holders

14

pursuant to this Plan are also intended to be exempt from Section 409A of the Code to the maximum extent possible, first, to the extent such payments are scheduled to be paid and are in fact paid during the short-term deferral period, as short-term deferrals pursuant to U.S. Treasury Regulation §1.409A-1(b)(4), and then, if applicable, under the separation pay exemption pursuant to U.S. Treasury Regulation §1.409A-1(b)(9)(iii), and for this purpose each payment will be considered a separate payment such that the determination of whether a payment qualifies as a short-term deferral will be made without regard to whether other payments so qualify and the determination of whether a payment qualifies under the separation pay exemption will be made without regard to any payments which qualify as short-term deferrals. To the extent any amounts under this Plan are payable by reference to an Award holder’s “termination of employment,” such term will be deemed to refer to the Award holder’s “separation from service,” within the meaning of Section 409A of the Code. Notwithstanding any other provision in this Plan, if an Award holder is a “specified employee,” as defined in Section 409A of the Code, as of the date of the Award holder’s separation from service, then to the extent any amount payable under this Plan (i) constitutes the payment of nonqualified deferred compensation, within the meaning of Section 409A of the Code, (ii) is payable upon the Award holder’s separation from service and (iii) under the terms of this Plan would be payable prior to the six-month anniversary of the Award holder’s separation from service, such payment will be delayed until the earlier to occur of (a) the six-month anniversary of the separation from service or (b) the date of the award holder’s death.

11.2  Prohibition on Acceleration of Payments.  The time or schedule of any settlement or amount scheduled to be paid pursuant to the terms of the Plan or any Agreement may not be accelerated except as otherwise permitted under Section 409A of the Code and the guidance and Treasury regulations issued thereunder.

11.3Excise Tax Under Section 4999 of the Code.  Except as otherwise expressly provided in an employment, retention, change in control, severance or similar agreement between the Participant and the Company, if any acceleration of vesting pursuant to an Award and any other payment or benefit received or to be received by a Participant would subject the Participant to any excise tax pursuant to Section 4999 of the Code due to the characterization of such acceleration of vesting, payment or benefit as an “excess parachute payment” under Section 280G of the Code, then, provided such election would not subject the Participant to taxation under Section 409A of the Code, the Participant may elect, in his or her sole discretion, to reduce the amount of any acceleration of vesting called for under the Award in order to avoid such characterization. To aid the Participant in making any election called for under this subsection, no later than the date of the occurrence of any event that might reasonably be anticipated to result in an “excess parachute payment” to the Participant as described herein, the Company shall request a determination in writing by independent public accountants selected by the Company.  As soon as practicable thereafter, such accountants shall determine and report to the Company and the Participant the amount of such acceleration of vesting, payments and benefits which would produce the greatest after-tax benefit to the Participant.  For the purposes of such determination, the accountants may rely on reasonable, good faith interpretations concerning the application of Sections 280G and 4999 of the Code.  The Company and the Participant shall furnish to the accountants such information and documents as the accountants may reasonably request in order to make their required determination.  The Company shall bear all fees and expenses the accountants charge in connection with their servicescontemplated by this subsection.

15

EX-21.1

Exhibit 21.1

Groupon, Inc.

Subsidiaries

Subsidiary	State of Incorporation / Formation
Groupon Europe GmbH	Germany
Needish, Inc.	Delaware
Groupon GmbH	Germany
Groupon Canada, Inc.	Canada
Groupon S.r.l.	Italy
Groupon Sp. z o.o.	Poland
Groupon B.V.	Netherlands
Clube Urbano Serviços Digitais Ltda.	Brazil
Groupon Spain, SL	Spain

EX-23.1

Exhibit 23.1

Consent of Independent Registered Public Accounting Firm

We consent to the reference to our firm under the caption “Experts” and to the use of our report dated  June 2, 2011 (except for Note 2 , as to which the date is September 23, 2011), in Amendment No. 3 to the Registration Statement (Form S-1 No. 333-174661) and related Prospectus of Groupon, Inc. for the registration of shares of its common stock.

/s/ Ernst & Young LLP

Chicago, Illinois
September 23, 2011

EX-23.2

Exhibit 23.2

Consent of Independent Auditors

We consent to the use of our firm under the caption “Experts” and to the use of our report dated May 31, 2011 (except for Note 2, as to which the date is September 23, 2011), with respect to the consolidated statements of operations, comprehensive loss and cash flows of CityDeal Europe GmbH included in Amendment No. 3 to the Registration Statement (Form S-1 No. 333-174661) and related Prospectus of Groupon Inc. for the registration of shares of common stock.

Ernst & Young GmbH

Wirtschaftsprüfungsgesellschaft

Berlin, Germany

September 23, 2011

/s/Jantz	/s/Stander
(Jantz)	(Stander)
Certified Public Accountant	Wirtschaftsprüfer

EX-23.3

Exhibit 23.3

Consent of Independent Auditors

We consent to the reference to our firm under the caption “Experts” and to the use of our report dated May 25, 2011, (except for Note 2, as to which the date is September 23, 2011), with respect to the financial statements of Qpod.inc for the period from June 4, 2010 to August 11, 2010 included in Amendment No. 3 to the Registration Statement (Form S-1 No. 333-174661) and related Prospectus of Groupon, Inc. for the registration of shares of its common stock.

/s/ ShinNihon LLC

Tokyo, Japan

September 23, 2011

EX-23.4

Exhibit 23.4

CONSENT OF INDEPENDENT AUDITORS

We consent to the reference to our firm under the caption “Experts” and to the use of our reports dated July 13, 2011 for Ludic Labs, Inc. and Goodrec, Inc. in Amendment No. 3 to the Registration Statement (Form S-1 No. 333-174661) and related Prospectus of Groupon, Inc. for the registration of shares of its common stock.

/s/ Ernst & Young LLP

Chicago, Illinois

September 23, 2011