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Delaware		3663		95-3685934
(State or other jurisdiction of incorporation or organization)		(Primary Standard Industrial Classification Code Number)		(I.R.S. Employer Identification Number)

Cameron Jay Rains, Esq. David R. Young, Esq. Randy L. Socol, Esq. Matthew W. Leivo, Esq. DLA PIPER RUDNICK GRAY CARY US LLP 4365 Executive Drive, Suite 1100 San Diego, California 92121-2133 Telephone: (858) 677-1400		David A. Hahn, Esq. Howard L. Armstrong, Esq. Ann C. Buckingham, Esq. LATHAM & WATKINS LLP 600 West Broadway, Suite 1800 San Diego, California 92101-3375 Telephone: (619) 236-1234

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

PROSPECTUS OF QUALCOMM INCORPORATED		INFORMATION STATEMENT OF FLARION TECHNOLOGIES, INC.

	Sincerely,
	/s/ Paul E. Jacobs
	Paul E. Jacobs
	Chief Executive Officer of QUALCOMM Incorporated

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			Page
REFERENCES TO ADDITIONAL INFORMATION
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION				iv
QUESTIONS AND ANSWERS ABOUT THE PROPOSED TRANSACTION				v
SUMMARY				1
	The Companies			1
	Summary of the Merger			2
	Share Ownership of Directors and Executive Officers of Flarion; Stockholder Vote			3
	QUALCOMM Market Price Data			3
	Material United States Federal Income Tax Consequences of the Mergers			3
	Accounting Treatment			4
	Regulatory Approvals			4
	QUALCOMM’S Reasons for the Merger			4
	Flarion’s Reasons for the Merger			4
	Opinion of Flarion’s Financial Advisor			5
	Interests of Flarion’s Directors and Management in the Merger			5
	Appraisal Rights			5
	Notice to Flarion Stockholders			5
FLARION’S MARKET PRICE AND DIVIDEND INFORMATION				6
QUALCOMM INCORPORATED SELECTED FINANCIAL DATA				7
RISK FACTORS				9
	Risks Related to the Transaction			9
	Risks Related to Our Business			13
THE MERGER				28
	Background of the Merger			28
	QUALCOMM’s Reasons for the Merger			30
	Flarion’s Reasons for the Merger; Recommendation of the Flarion Board of Directors			32
	Opinion of Flarion’s Financial Advisor			33
	Interests of Flarion’s Directors and Management in the Merger			40
	Management of QUALCOMM after the Merger			43
	Material United States Federal Income Tax Consequences of the Mergers			43
	Regulatory Approvals			48
	Relationships Between QUALCOMM and Flarion			48
	Stock Ownership Following the Merger			48
CERTAIN TERMS OF THE MERGER AGREEMENT				50
	General			50
	The Completion of the Merger			50
	Manner and Basis of Converting Shares of Flarion Common Stock and Flarion Preferred Stock Pursuant to the Merger			51
	Initial Purchase Price Adjustments in Connection with Estimated Closing Working Capital and Expenses			51
	Procedure for Determining Closing Working Capital			52
	Tax Adjustment			52
	Treatment of Options to Purchase Flarion Common Stock			53

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			Page
	Treatment of Warrants to Purchase Flarion Preferred Stock			54
	Exchange of Flarion Stock Certificates; No Further Rights as Flarion Stockholder			54
	Distributions with Respect to Unexchanged Shares			55
	Transfers of Ownership and Lost Stock Certificates			55
	Stockholders’ Agent and Expenses Fund			55
	Appraisal Rights			55
	Patent Milestone Payment			56
	Representations and Warranties			56
	Conduct of Flarion’s Business Before Completion of the Merger			58
	Additional Agreements			59
	Directed Options			61
	Employee Matters			61
	Conditions to the Closing of the Merger			61
	Indemnification of QUALCOMM and Flarion			63
	Limitations on Indemnification			64
	Indemnification Holdback Amount			64
	Determination of Damages			65
	Stockholders’ Agent			65
	Termination of the Merger Agreement			66
	Amendments and Waiver			66
	Termination Fee			66
	Expenses			67
	Agreements with Certain Executive Officers			67
FLARION’S BUSINESS				68
	Overview			68
	Customers and Products			68
	Sales and Marketing			69
	Manufacturing and Supply			69
	Research and Development			69
	Competition			69
	Intellectual Property			69
	Employees			70
	Legal Proceedings			70
FLARION’S MANAGEMENT PRIOR TO THE MERGER				71
FLARION’S PRINCIPAL STOCKHOLDERS PRIOR TO THE MERGER				72
DESCRIPTION OF QUALCOMM CAPITAL STOCK				75
	Common Stock			75
	Preferred Stock			75
	Rights Agreement			75
	Transfer Agent and Registrar			76
	Delaware Law and Certain Charter Provisions			76
COMPARISON OF RIGHTS OF QUALCOMM STOCKHOLDERS AND FLARION STOCKHOLDERS				78
	Capitalization			78

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			Page
	Classification, Number and Election of Directors			78
	Vacancies on the Board of Directors and Removal of Directors			79
	Committees of the Board of Directors			79
	Amendments to the Certificate of Incorporation			80
	Amendments to Bylaws			81
	Ability to Call Special Meetings of Stockholders			81
	Notice of Stockholder Action			81
	Indemnification of Directors and Officers			82
	Certain Business Combination Restrictions			83
APPRAISAL RIGHTS				84
NOTICE TO FLARION STOCKHOLDERS				87
LEGAL MATTERS				88
EXPERTS				88
WHERE YOU CAN FIND MORE INFORMATION				88
	Flarion Technologies, Inc. Index to Consolidated Financial Statements			F-1
ANNEX A — AGREEMENT AND PLAN OF REORGANIZATION				A-1
ANNEX B — OPINION OF FLARION’S FINANCIAL ADVISOR				B-1
ANNEX C — SECTION 262 OF THE GENERAL CORPORATION LAW OF THE STATE OF DELAWARE				C-1
ANNEX D — FORM OF FLARION STOCKHOLDER WRITTEN CONSENT				D-1
PART II — INFORMATION NOT REQUIRED IN THE PROSPECTUS				II-1
EXHIBIT 8.1
EXHIBIT 8.2
EXHIBIT 23.2
EXHIBIT 23.4

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Q:		Why am I receiving this prospectus/ information statement?
A:		QUALCOMM has agreed to acquire Flarion under the terms of a merger agreement that is described in this prospectus/ information statement. Please see the discussion in the section entitled “Certain Terms of the Merger Agreement.” A copy of the merger agreement is attached to this prospectus/ information statement as Annex A. On July 26, 2005, Flarion stockholders adopted the merger agreement and approved the merger pursuant to an action by written consent. As a result, no further approval of Flarion stockholders is needed to complete the merger.
Q:		What will happen in connection with the proposed transaction?
A:		In the merger, Flarion and a wholly owned subsidiary of QUALCOMM will merge and, as a result, Flarion will become a wholly owned subsidiary of QUALCOMM. Pursuant to this merger, the stockholders of Flarion will become stockholders of QUALCOMM. In this prospectus/ information statement we sometimes refer to this merger as the “first merger,” and references to the “merger,” unless specified otherwise, shall also refer to this merger. Immediately following the merger, in a second merger, Flarion will merge into another wholly owned subsidiary of QUALCOMM, with the surviving company of the second merger being a wholly owned subsidiary of QUALCOMM and the ultimate surviving entity of the mergers. In this prospectus/ information statement we sometimes refer to the first merger and second merger, taken together as a whole, as the “mergers.”
Q:		Why is Flarion proposing the merger?
A:		We believe that the proposed transaction will provide substantial benefits to the Flarion stockholders. The Flarion board of directors believes the merger provides Flarion stockholders with liquidity and strategic and growth opportunities that would not have been available to Flarion on a stand-alone basis. To review the Flarion reasons for the transaction in greater detail, see “The Merger — Flarion’s Reasons for the Merger; Recommendation of the Flarion Board of Directors.”
Q:		What will I be entitled to receive pursuant to the merger?
A:		Upon the closing of the merger, holders of Flarion common stock will be entitled to receive for each share of Flarion common stock, consideration, payable in shares of QUALCOMM common stock, equal to a pro rata portion (determined on a fully diluted, as-converted basis including all outstanding options and warrants, exclusive of directed options as described in the section entitled “Certain Terms of the Merger Agreement — Directed Options”) of $600 million, subject to certain potential adjustments. Holders of Flarion preferred stock will be entitled to receive for each share of preferred stock two times the amount of consideration that each share of Flarion common stock is entitled to receive, payable in a combination of shares of QUALCOMM common stock and cash. Based upon the Flarion shares, options, warrants and other rights outstanding as of August 5, 2005, the initial consideration per share of Flarion common stock would be approximately $3.93.
		Flarion stockholders will also be entitled to receive additional consideration in connection with the achievement of a patent milestone. Upon the issuance of 20 U.S. patents, out of approximately 125 Flarion U.S. patent applications, prior to the eighth anniversary of the closing date of the merger, Flarion stockholders, option holders (other than with respect to directed options) and warrant holders will be entitled to receive their pro rata portion (determined on a fully diluted, as-converted basis as described above) of aggregate additional consideration of $205 million, payable in cash to Flarion stockholders and shares of QUALCOMM common stock to holders of Flarion options (other than with respect to directed options) and warrants, subject to holdback and offset of up to $75 million for damages incurred by QUALCOMM for which it is entitled to indemnification pursuant to the merger agreement.
		Of the aggregate consideration that Flarion stockholders are entitled to receive, assuming payment in full of the patent milestone amount, approximately 60% of such consideration shall be payable in cash and approximately 40% shall be payable in shares of QUALCOMM common stock.

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Q:		What do I need to do now?
A:		We urge you to read this prospectus/ information statement carefully, including its annexes, and to consider how the merger affects you. The merger has already been approved by the board of directors of each of QUALCOMM and Flarion, and by the stockholders of Flarion. You are not being asked to vote on the merger agreement. Instead, this prospectus/ information statement is being provided to you for informational purposes, including alerting you of appraisal rights you may have if you hold Flarion capital stock.
Q:		What vote was needed to adopt the merger agreement?
A:		The merger did not require the vote of QUALCOMM stockholders. The vote required of the stockholders of Flarion was the affirmative vote of the holders of a majority of the outstanding shares of (i) capital stock of Flarion, voting as a single class on an as-converted basis, and (ii) preferred stock of Flarion, voting as a single class on an as-converted basis. On July 26, 2005, the requisite vote from Flarion stockholders was received by written consent and the merger agreement was adopted by the Flarion stockholders.
Q:		Did the Flarion board of directors recommend the merger?
A:		Yes. The Flarion board of directors unanimously determined that the merger is advisable and fair to, and in the best interests of, Flarion’s stockholders. The Flarion board of directors has also unanimously approved the merger agreement, the merger and the other transactions contemplated by the merger agreement. The reasons for Flarion’s board of directors’ determination are discussed in greater detail in the section entitled “The Merger — Flarion’s Reasons for the Merger; Recommendation of the Flarion Board of Directors.”
Q:		Do persons involved in the merger have interests that may conflict with mine as a Flarion stockholder?
A:		Yes. When considering the recommendations of Flarion’s board of directors, you should be aware that certain Flarion directors and officers have interests in the merger that may be different from, or are in addition to, yours. These interests include employment of certain Flarion executive officers by QUALCOMM after the mergers and the indemnification of directors and officers of Flarion by QUALCOMM. To review the interests of Flarion’s directors and management in the merger in greater detail, see “The Merger — Interests of Flarion’s Directors and Management in the Merger.”
Q:		What are the conditions to completion of the merger?
A:		The obligations of QUALCOMM and Flarion to complete the proposed merger are subject to the satisfaction or waiver of certain specified closing conditions, including governmental approvals. To review the conditions to closing in greater detail, see “Certain Terms of the Merger Agreement — Conditions to the Closing of the Merger.”
Q:		Should I send in my Flarion stock certificates now?
A:		No. After the merger is completed, holders of Flarion common stock and preferred stock will receive written instructions for exchanging stock certificates representing shares of Flarion capital stock for the merger consideration described in detail above, subject to the terms of the merger agreement.
Q:		When do you expect the merger to be completed?
A:		We are working toward completing the merger as quickly as possible. There are several conditions that must be satisfied or waived prior to the completion of the merger, including obtaining required regulatory approvals and registration of the QUALCOMM common stock to be issued in connection with the merger.
Q:		Will the proposed merger be completed?
A:		It is possible that the proposed merger will not be completed for any one of a number of reasons, such as the failure of one of the parties to satisfy a condition of closing.

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Q:		Am I entitled to appraisal rights?
A:		Holders of Flarion capital stock who did not vote in favor of adoption of the merger agreement and approval of the mergers, who hold their shares of Flarion capital stock of record and continue to own those shares through the effective time of the merger and who properly demand appraisal of their shares in writing are entitled to appraisal rights pursuant to the merger agreement under Section 262 of the General Corporation Law of the State of Delaware, or the DGCL, which is attached to this prospectus/ information statement as Annex C.
		Under Section 262, Flarion stockholders who comply with the procedures set forth in Section 262 will be entitled to have their shares appraised by the Delaware Court of Chancery and to receive payment of the fair value of the shares, exclusive of any element of value arising from the accomplishment or expectation of the merger, together with a fair rate of interest, if any, as determined by the court.
Q:		Are there risks I should consider in deciding whether to exercise my appraisal rights in connection with the merger?
A:		Yes. In evaluating the merger, you should carefully consider the factors discussed in the section entitled “Risk Factors.”
Q:		Will Flarion stockholders recognize a taxable gain or loss for United States federal income tax purposes as a result of the mergers?
A:		It is expected that the merger of a QUALCOMM subsidiary into Flarion, followed by the merger of Flarion into a QUALCOMM subsidiary, taken together as a whole, will qualify as a reorganization under Section 368(a) of the Internal Revenue Code. Assuming that the mergers qualify as a reorganization under the Internal Revenue Code, then the exchange of shares of Flarion common stock and Flarion preferred stock solely for shares of QUALCOMM common stock will not be a taxable transaction to Flarion stockholders for United States federal income tax purposes. Flarion stockholders will, however, recognize gain in the amount equal to the lesser of the amount of gain realized, or the amount of cash received. Additionally, a Flarion stockholder will recognize gain or loss with respect to any cash received in lieu of a fractional share of QUALCOMM common stock.
		Tax matters are very complicated and the tax consequences of the mergers to a Flarion stockholder will depend on the facts of each holder’s own situation. We encourage each Flarion stockholder to carefully read the discussion in the section entitled “The Merger — Material United States Federal Income Tax Consequences of the Mergers” and to consult the stockholder’s own tax advisor for a full understanding of the tax consequences of the mergers.
Q:		What will happen to options to acquire Flarion common stock upon the merger?
A:		Each option to purchase shares of Flarion common stock that would otherwise be outstanding if not for the merger will be assumed by QUALCOMM and will be converted into an option to purchase shares of QUALCOMM common stock under the terms specified in the merger agreement. Flarion option holders (other than with respect to directed options) may also be entitled to receive additional consideration, payable in shares of QUALCOMM common stock issuable upon or following the exercise of such option equal to a pro rata portion (determined on a fully diluted, as-converted basis) of additional aggregate consideration of $205 million, conditioned upon the achievement of a patent milestone, subject to a holdback or offset for indemnification, as described in the section entitled “Certain Terms of the Merger Agreement — Indemnification Holdback Amount.”
Q:		What will happen to warrants to acquire Flarion preferred stock upon the merger?
A:		QUALCOMM will issue a replacement warrant to purchase shares of QUALCOMM common stock for each warrant to purchase shares of Flarion preferred stock outstanding immediately prior to completion of the merger under the terms specified in the merger agreement. Flarion warrant holders may also be entitled to receive additional consideration, payable in shares of QUALCOMM common stock issuable upon or following the exercise of such warrant equal to a pro rata portion (determined on a fully diluted, as-converted basis) of additional aggregate consideration of $205 million, conditioned upon the

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	achievement of a patent milestone, subject to a holdback or offset for indemnification as described in the section entitled “Certain Terms of the Merger Agreement — Indemnification Holdback Amount.”

Q:		Are there any regulatory consents or approvals that are required to complete the merger?
A:		Neither QUALCOMM nor Flarion is aware of the need to obtain any regulatory approvals in order to complete the merger other than the following:

	•	the registration statement of which this prospectus/ information statement is a part must be declared effective by the Securities and Exchange Commission; and
	•	the mergers are subject to review by the United States Federal Trade Commission and the Antitrust Division of the Department of Justice under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, or the HSR Act, and under this statute, QUALCOMM and Flarion are required to make pre-merger notification filings and to await the expiration or early termination of a statutory waiting period prior to completing the mergers. In response to these filings, on September 19, 2005, QUALCOMM and Flarion received a request for additional information and documentary materials from the Department of Justice. QUALCOMM and Flarion intend to respond to this second request as expeditiously as possible.

		QUALCOMM and Flarion intend to obtain these approvals and make the necessary filings and any additional regulatory approvals and filings that may be required. However, neither of the parties can assure you that all of the approvals will be obtained.
Q:		Who can help answer my questions?
A:		If you would like additional copies, without charge, of this prospectus/ information statement or if you have questions about the merger, you should contact:

	QUALCOMM Incorporated
	Attn: Investor Relations
	5775 Morehouse Drive
	San Diego, California 92121
	Telephone No.: (858) 658-4813
	Flarion Technologies, Inc.
	Attn: Edward B. Jordan
	135 Route 202/ 206 South
	Bedminster, New Jersey 07921
	Telephone No.: (908) 947-7000

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	The exchange ratio and number of shares of QUALCOMM common stock that you will be entitled to receive is based on the QUALCOMM average closing price, which could be lower than the market value of the shares.

	If a sufficient number of Flarion U.S. patent applications do not result in issued U.S. patents, Flarion stockholders, option holders (other than with respect to directed options) and warrant holders will not receive the maximum amount of consideration payable pursuant to the merger agreement.

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	$75 million of the additional consideration payable upon the issuance of at least 20 additional U.S. patents may be subject to holdback and offset for indemnification purposes for a period of at least eighteen months.

	The Stockholders’ Agent may not act in the manner you desire.

	The need for governmental clearances may prevent or delay consummation of the merger.

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	We may not realize all of the anticipated benefits of the merger.

	•	retaining key employees;
	•	maintenance of important relationships of QUALCOMM and Flarion;
	•	minimizing the diversion of management’s attention from ongoing business matters;
	•	coordinating geographically separate organizations;
	•	consolidating research and development operations; and
	•	consolidating corporate and administrative infrastructures.

	If the mergers fail to qualify as a tax-free reorganization, you will recognize gain or loss on the exchange of your Flarion shares.

	Incremental expenses resulting from the application of the purchase method of accounting and related to Flarion’s ongoing research and development activities and product related business may adversely affect the market value of our common stock following the merger.

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	If a Flarion stockholder exercises statutory appraisal rights, the value such stockholder receives could be less than the amount per share such stockholder would otherwise receive pursuant to the merger agreement.

	Certain of Flarion’s stockholders may have claims against the corporation surviving the merger that they were not adequately afforded certain contractual rights of advance notice in connection with the merger.

	Directors and officers of Flarion may have conflicts of interest that may influence them to support or approve the merger.

	Upon completion of the merger, holders of Flarion capital stock will be entitled to become holders of our common stock, and the market price for our common stock may be affected by factors different from those affecting the capital stock of Flarion.

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	The issuance of the directed options may result in further dilution.

	If CDMA technology is not widely deployed, our revenues may not grow as anticipated.

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Our three largest customers as of June 26, 2005 accounted for 39% and 40% of consolidated revenues in the first nine months of fiscal 2005 and 2004, respectively, and 40% and 44% of consolidated revenues in fiscal 2004 and 2003, respectively. The loss of any one of our major customers or any reduction in the demand for devices utilizing our CDMA technology could reduce our revenues and harm our ability to achieve or sustain desired levels of operating results.

	•	the product requirements of these customers;
	•	the financial and operational success of these customers;
	•	the success of these customers’ products that incorporate our products;
	•	value added features which drive replacement rates;
	•	shortages of key products and components;
	•	fluctuations in channel inventory levels;
	•	the success of products sold to our customers by licensed competitors;
	•	the rate of deployment of new technology by the network operators and the rate of adoption of new technology by the end consumers;
	•	the extent to which certain customers successfully develop and produce CDMA-based integrated circuits and system software to meet their own needs;
	•	general economic conditions;
	•	changes in governmental regulations in countries where we or our customers currently operate or plan to operate; and
	•	widespread illness.

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	Changes in financial accounting standards related to share-based payments are expected to have a significant effect on our reported results.

	We depend upon a limited number of third party manufacturers to provide component parts, subassemblies and finished goods for our products. Any disruptions in the operations of, or the loss of, any of these third parties could harm our ability to meet our delivery obligations to our customers and increase our cost of sales.

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	We are subject to the risks of our licensees and our conducting business outside the United States.

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	•	changes in legal or regulatory requirements, including regulations governing the materials used in our products;
	•	difficulty in protecting or enforcing our intellectual property rights and/or contracts in a particular foreign jurisdiction;
	•	our inability to succeed in significant foreign markets, such as China, India or Europe;
	•	cultural differences in the conduct of business;
	•	difficulty in attracting qualified personnel and managing foreign activities;
	•	recessions in economies outside the United States;
	•	longer payment cycles for and greater difficulties collecting accounts receivable;
	•	export controls, tariffs and other trade protection measures;
	•	fluctuations in currency exchange rates;
	•	inflation and deflation;
	•	nationalization, expropriation and limitations on repatriation of cash;
	•	social, economic and political instability;
	•	natural disasters, acts of terrorism, widespread illness and war;
	•	taxation; and
	•	changes in laws and policies affecting trade, foreign investments, licensing practices and loans.

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	Currency fluctuations could negatively affect future product sales or royalty revenue, harm our ability to collect receivables, or increase the U.S. dollar cost of the activities of our foreign subsidiaries and international strategic investments.

	•	assets or liabilities of our consolidated subsidiaries and our foreign investees that are not denominated in the functional currency of those entities are subject to the effects of currency fluctuations, which may affect our reported earnings. Our exposure to foreign currencies may increase as we expand into new markets.
	•	investments in our consolidated foreign subsidiaries and in other foreign entities that use the local currency as the functional currency may decline in value as a result of declines in local currency values.
	•	certain of our revenues, such as royalty revenues, are derived from licensee or customer sales that are denominated in foreign currencies. If these revenues are not subject to foreign exchange hedging transactions, weakening of currency values in selected regions could adversely affect our anticipated revenues and cash flows.
	•	foreign exchange hedging transactions could affect our cash flows and earnings because they may require the payment of structuring fees, and they may limit the U.S. dollar value of royalties from licensees’ sales that are denominated in foreign currencies.
	•	our trade receivables are generally U.S. dollar denominated. Any significant increase in the value of the dollar against our customers’ or licensees’ functional currencies could result in an increase in our customers’ or licensees’ cash flow requirements and could consequently affect our ability to collect receivables.
	•	strengthening of currency values in selected regions may adversely affect our operating results because the activities of our foreign subsidiaries may become more expensive in U.S. dollars.
	•	strengthening of currency values in selected regions may adversely affect our cash flows and investment results because strategic investment obligations denominated in foreign currencies may become more expensive, and the U.S. dollar cost of equity in losses of foreign investees may increase.

	We may engage in strategic transactions that could result in significant charges or management disruption and fail to enhance stockholder value.

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	Defects or errors in our products and services or in products made by our suppliers could harm our relations with our customers and expose us to liability. Similar problems related to the products of our customers or licensees could harm our business.

	Global economic conditions that impact the wireless communications industry could negatively affect our revenues and operating results.

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	Our industry is subject to competition that could result in decreased demand for our products and the products of our customers and licensees and/or declining average selling prices for our licensees’ products and our products, negatively affecting our revenues and operating results.

	•	comprehensiveness of products and technologies;
	•	value added features which drive replacement rates;
	•	manufacturing capability;
	•	scalability and the ability of the system technology to meet customers’ immediate and future network requirements;
	•	product performance and quality;
	•	design and engineering capabilities;
	•	compliance with industry standards;
	•	time to market;
	•	system cost; and
	•	customer support.

	•	longer operating histories and presence in key markets;
	•	greater name recognition;
	•	motivation by our customers in certain circumstances to find alternate suppliers;
	•	access to larger customer bases; and
	•	greater sales and marketing, manufacturing, distribution, technical and other resources than we have.

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	Our operating results are subject to substantial quarterly and annual fluctuations and to market downturns.

	Our stock price may be volatile.

	•	announcements concerning us or our competitors, including the selection of wireless communications technology by wireless operators and the timing of the roll-out of those systems;
	•	receipt of substantial orders or order cancellations for integrated circuits and system software products;
	•	quality deficiencies in services or products;
	•	announcements regarding financial developments or technological innovations;
	•	international developments, such as technology mandates, political developments or changes in economic policies;
	•	lack of capital to invest in 3G networks;
	•	new commercial products;
	•	changes in recommendations of securities analysts;

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	•	government regulations, including stock option accounting and tax regulations;
	•	energy blackouts;
	•	acts of terrorism and war;
	•	inflation and deflation;
	•	widespread illness;
	•	proprietary rights or product or patent litigation;
	•	strategic transactions, such as acquisitions and divestitures; or
	•	rumors or allegations regarding our financial disclosures or practices.

	Our industry is subject to rapid technological change, and we must keep pace to compete successfully.

	•	rapid technological advances and evolving industry standards;
	•	changes in customer requirements;
	•	frequent introductions of new products and enhancements; and
	•	evolving methods of building and operating telecommunications systems.

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	The enforcement and protection of our intellectual property rights may be expensive and could divert our valuable resources.

	Claims by other companies that we infringe their intellectual property or that patents on which we rely are invalid could adversely affect our business.

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	Potential tax liabilities could adversely affect our results.

	The high amount of capital required to obtain radio frequency licenses and deploy and expand wireless networks could slow the growth of the wireless communications industry and adversely affect our business.

	If we experience product liability claims or recalls, we may incur significant expenses and experience decreased demand for our products.

	If wireless phones pose safety risks, we may be subject to new regulations, and demand for our products and those of our licensees and customers may decrease.

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	Our business depends on the availability of satellite and other networks for our OmniTRACS, TruckMAIL, EutelTRACS, OmniExpress, LINQ, T2 Untethered TrailerTRACS, GlobalTRACS, QConnect and OmniOne systems and other communications products.

	Our business and operations would suffer in the event of system failures.

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	We cannot provide assurance that we will continue to declare dividends at all or in any particular amounts.

	Government regulation may adversely affect our business.

	Our business and operating results will be harmed if we are unable to manage growth in our business.

	We may not be able to attract and retain qualified employees.

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	Future changes in financial accounting standards or practices or existing taxation rules or practices may cause adverse unexpected revenue fluctuations and affect our reported results of operations.

	Compliance with changing regulation of corporate governance and public disclosure may result in additional expenses.

	Our stockholder rights plan and certain provisions of our certificate of incorporation could adversely affect the performance of our stock.

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	•	the judgment, advice and analysis of QUALCOMM’s management and its financial and legal advisors with respect to the potential strategic, financial and operational benefits of the transaction, including management’s favorable recommendation of the transaction, based in part on the business, technical, financial, accounting and legal due diligence investigations performed with respect to Flarion and its subsidiaries;
	•	management’s expectations regarding the anticipated timing for the commercial development of Flarion’s technology and the costs associated with additional development of Flarion’s intellectual property;
	•	the expected qualification of the transactions contemplated by the merger agreement as a reorganization within the meaning of Section 368(a) of the Internal Revenue Code;
	•	the opinion and presentation of QUALCOMM’s financial advisor;
	•	the results of operations and financial condition of QUALCOMM and Flarion; and
	•	the terms of the merger agreement and the agreements related to the merger, including the consideration to be paid by QUALCOMM and the structure of the merger which were considered by both the board of directors and management of QUALCOMM to provide a fair and equitable basis for the transaction.

	•	the risk that the transaction might not be completed in a timely manner or at all;
	•	the potential loss of key Flarion employees critical to the ongoing success of Flarion’s business and to the successful integration of QUALCOMM’s business and Flarion’s business;
	•	the general difficulties of integrating products, technologies and companies;
	•	the risk that the benefits sought to be achieved by the transaction, including those outlined above, will not be achieved;
	•	the effect of public announcement of the transaction on QUALCOMM’s common stock;
	•	the other risks and uncertainties discussed above in the section entitled “Risk Factors;” and
	•	the risk of diverting management resources from other strategic opportunities and operational matters for a period of time.

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	•	the risks and potential rewards associated with, as an alternative to the merger, continuing to execute Flarion’s strategic plan as an independent entity. These risks include, among others, Flarion’s uncertain future profitability, potential difficulties in obtaining necessary additional financing to remain a stand-alone entity, its reliance on a limited number of customers for a substantial portion of its revenues, and its uncertain ability to compete effectively against larger and better capitalized competitors, and the rewards include, among others, the ability of existing Flarion stockholders to participate in the potential future growth and profitability of QUALCOMM after the merger;
	•	the possibility, as alternatives to the merger, of seeking to be acquired by a company other than QUALCOMM, to engage in a combination with a company other than QUALCOMM or to effect an initial public offering of Flarion common stock, and the Flarion board of directors’ conclusion that neither a transaction with another party nor any other alternative would reasonably be likely to result in greater value to the stockholders than the proposed transaction with QUALCOMM. The Flarion board of directors concluded that the transaction with QUALCOMM could be acceptably completed from a timing and regulatory standpoint, and would yield greater benefits than the alternatives given QUALCOMM’s financial resources and its ability to fund a greater number of long-term growth projects and to compete effectively;
	•	the value of the consideration provided for in the merger agreement based on the then-current market price and historical trading price of QUALCOMM common stock over the past year;
	•	the presentation and opinion of Evercore;
	•	the ability to complete the merger as a reorganization for United States federal income tax purposes;
	•	the interests that certain executive officers and directors of Flarion may have with respect to the merger in addition to their general interests as stockholders of Flarion. See the section entitled “The Merger — Interests of Flarion’s Directors and Management in the Merger;”
	•	the merger will enable Flarion stockholders to participate in, and benefit from the future growth potential of, a large, publicly held company with a greater depth of technologies, marketing opportunities and financial and operating resources that should enhance Flarion’s ability to bring technology to market;
	•	the public market for QUALCOMM common stock will offer Flarion stockholders liquidity earlier than if Flarion proceeded with an initial public offering, while avoiding the risk and investment in time and expense of an initial public offering; and
	•	the availability of appraisal rights under Section 262 of the DGCL.

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	•	analyzed certain internal financial statements and other non-public financial and operating data concerning Flarion prepared by and furnished to Evercore by the management of Flarion;
	•	analyzed financial projections concerning Flarion prepared by and furnished to Evercore by the management of Flarion;
	•	discussed the past and current operations and financial condition and the prospects of Flarion with the management of Flarion;
	•	compared the financial performance of Flarion and QUALCOMM with publicly traded companies and their securities that Evercore deemed relevant;
	•	reviewed the financial terms, to the extent publicly available, of other business combinations and other transactions that Evercore deemed relevant;
	•	participated in discussions and negotiations among representatives of Flarion and QUALCOMM and their financial and legal advisors;
	•	reviewed and participated in discussions and negotiations regarding the merger agreement and the related exhibits and schedules in the forms provided to Evercore and assumed that the final forms of such merger agreement, exhibits and schedules would not vary in any respect material to Evercore’s analysis;
	•	analyzed publicly available projections and operating data for QUALCOMM prepared by Wall Street analysts;
	•	analyzed publicly available financial statements and other information relating to QUALCOMM;
	•	reviewed with Flarion management the scope and results of the transaction process to the date of its opinion; and
	•	performed such other analyses and examinations and considered such other factors as Evercore has in Evercore’s sole judgment deemed appropriate for purposes of its opinion.

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	Transaction Terms

	•	approximately $3.93 per as-converted share of value at the effective time of the merger (or upon exercise of such options or warrants), which reflects an aggregate value of $600 million and is based upon the number of shares of Flarion capital stock outstanding on a fully diluted basis as of the date of the opinion; and
	•	additional consideration of approximately $1.34 per as-converted share of value subject to the satisfaction of the patent milestone (and, with respect to holders of Flarion options, other than directed options, and warrants, the exercise of such options or warrants), which reflects an aggregate value of $205 million (less any holdback and offset due to indemnification claims) and is based upon the number of shares of Flarion capital stock outstanding on a fully diluted basis as of the date of the opinion.

	Flarion Peer Group Trading Analysis

Communications Semiconductor		Diversified Semiconductor		Wireless Infrastructure
Companies		Companies		Companies
Analog Devices Incorporated		Intel Corporation		Cisco Systems Inc.
Maxim Integrated Products, Inc.		Texas Instruments Inc.		Nokia Corporation
Broadcom Corporation		STMicroelectronics N.V.		Siemens Aktiengesellschaft
Freescale Semiconductor, Inc.				Motorola, Inc.
Silicon Laboratories Inc.				LM Ericsson Telephone Company
Skyworks Solutions, Inc.				Alcatel
RF Micro Devices, Inc.				Lucent Technologies Inc.
				Nortel Networks Corp.
				Alvarion Ltd.

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	Flarion Relevant Precedent Transaction Analysis

	•	Cisco Systems, Inc.’s acquisition of Airespace, Inc.;
	•	Cisco Systems, Inc.’s acquisition of Latitude Communications, Inc.;
	•	Cisco Systems, Inc.’s acquisition of Linksys;
	•	3Com Corp.’s acquisition of TippingPoint Technologies, Inc.;
	•	Alcatel’s acquisition of Spatial Wireless;
	•	Avaya Inc.’s acquisition of Spectel;
	•	Broadcom Corporation’s acquisition of Zyray Wireless, Inc.;
	•	Broadcom Corporation’s acquisition of Mobilink Telecom Inc.;
	•	Lucent Technologies Inc.’s acquisition of Telica, Inc.;
	•	Tellabs, Inc.’s acquisition of Advanced Fibre Communications, Inc.;
	•	Juniper Network, Inc.’s acquisition of NetScreen Technologies, Inc.;
	•	Polycom, Inc.’s acquisition of Voyant Technologies, Inc.;
	•	Motorola, Inc.’s acquisition of Winphoria Networks;
	•	UTStarcom, Inc.’s acquisition of CommWorks;
	•	Juniper Networks, Inc.’s acquisition of Unisphere Networks, Inc.; and
	•	QUALCOMM’s acquisition of SnapTrack, Inc.

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	Flarion Discounted Cash Flow Analysis

	QUALCOMM Historical Share Price Analysis

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	QUALCOMM Peer Group Trading Analysis

Communications Semiconductor Companies		Diversified Semiconductor Companies
Analog Devices Incorporated		Intel Corporation
Maxim Integrated Products, Inc.		Texas Instruments Inc.
Broadcom Corporation		STMicroelectronics N.V.
Freescale Semiconductor, Inc.
Silicon Laboratories Inc.
Skyworks Solutions, Inc.
RF Micro Devices, Inc.

	QUALCOMM Discounted Cash Flow Analysis

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	QUALCOMM Research Analyst Price Targets

	•	Bank of America Securities LLC;
	•	Merrill Lynch & Co., Inc.;
	•	Citigroup Global Markets, Inc.;
	•	Deutsche Bank Securities, Inc.;
	•	Credit Suisse First Boston, Inc.;
	•	CIBC World Markets Corp.;
	•	Morgan Stanley & Co.;
	•	Bear Stearns & Co. Inc.; and
	•	Lehman Brothers Inc.

	General

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	Director and Officer Indemnification

	Stock Ownership by Executive Officers and Directors

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	Stock Options and Change of Control

	•	Raymond Dolan, Rajiv Laroia, Michael Gallagher, Edward Jordan, Edward Knapp and Theresa McCarthy held options to purchase 1,500,000, 1,500,000, 1,200,000, 350,000, 581,250 and 150,000 shares of Flarion common stock, respectively;
	•	Daniel Stanzione, Matthew Desch, Andrew Viterbi, Robert LaBlanc and Joseph Tibbetts (each a non-employee member of the Flarion board of directors) held options to purchase 80,000, 85,000, 80,000, 60,000 and 80,000 shares of Flarion common stock, respectively; and
	•	all executive officers and directors of Flarion as a group held options to purchase 5,666,250 shares of Flarion common stock.

	•	Raymond Dolan, Rajiv Laroia, Michael Gallagher, Edward Jordan, Edward Knapp and Theresa McCarthy held options to purchase 1,500,000, 1,500,000, 600,000 (these options were terminated in connection with Mr. Gallagher’s termination of employment with Flarion), 350,000, 581,250 and 150,000 shares of Flarion common stock, respectively, which may accelerate and vest either upon or following the completion of the merger and/or upon an involuntary termination of employment of such executive officers following the completion of the merger; and
	•	Daniel Stanzione, Matthew Desch, Andrew Viterbi, Robert LaBlanc and Joseph Tibbetts are each entitled to 100% of vesting with respect to all of their options to purchase shares of Flarion common stock upon the completion of the merger.

	Directed Options

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	Employment Offer Letters

	Non-Competition and Non-Solicitation Agreements

	•	divert or interfere with any orders for the products or services of QUALCOMM’s or Flarion’s business of developing and/or marketing of technology, products and services for wireless communications networks and devices anywhere in the world, or any customers of the restricted business, or induce or attempt to persuade any person to terminate or significantly reduce his or her business association with QUALCOMM or the company surviving the mergers; or
	•	induce, or attempt to induce, any employee, representative or consultant of QUALCOMM, the company surviving the mergers or any affiliate thereof to terminate or significantly reduce his or her employment or other contractual relationship with QUALCOMM, the company surviving the mergers or any affiliate of either of them.

	Stock Restriction Agreements

	Waiver of Acceleration of Option Vesting and Amendment of Stock Option Agreement

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	General

	•	brokers or dealers in securities or foreign currencies;
	•	traders;
	•	stockholders who are subject to the alternative minimum tax provisions of the Code;
	•	tax-exempt organizations;
	•	stockholders who are foreign persons, including those who are not citizens or residents of the U.S.;
	•	expatriates;
	•	stockholders treated as partnerships for United States federal income tax purposes;
	•	stockholders that have a functional currency other than the United States dollar;
	•	stockholders who do not hold their Flarion stock as a capital asset within the meaning of Section 1221 of the Code;
	•	banks, mutual funds, financial institutions or insurance companies;
	•	stockholders who acquired Flarion capital stock in connection with stock option or stock purchase plans or in other compensatory transactions;
	•	stockholders who hold Flarion capital stock as part of an integrated investment, including a straddle, hedge, or other risk reduction strategy, or as part of a conversion transaction or constructive sale;

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	•	stockholders who acquired their shares through Flarion’s 401(k) plan, deferred compensation plan or other retirement plan; or
	•	stockholders whose Flarion capital stock is “qualified small-business stock” for purposes of Section 1202 of the Code.

	Flarion Common Stockholders Who Receive Solely QUALCOMM Common Stock

	Flarion Preferred Stockholders and Flarion Common Stockholders Who Receive a Combination of QUALCOMM Common Stock and Cash

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	Installment Method (Treatment of Contingent Cash Consideration)

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	Cash in Lieu of Fractional Shares

	Dissenting Stockholders

	Tax Consequences to QUALCOMM, its Merger Subsidiaries and Flarion

	Backup Withholding

	•	furnish a correct taxpayer identification number and certify that they are not subject to backup withholding on the substitute Form W-9 or successor form included in the letter of transmittal to be delivered to the former Flarion stockholder following the completion of the mergers (or the appropriate Form W-8, as applicable); or
	•	are otherwise exempt from backup withholding.

	Tax Return Reporting Requirements

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	•	$3.5 million for each calendar month (or portion thereof) following June 30, 2005 (pro-rated for partial months);
	•	any employee severance or integration fee, cost, expense, payment or expenditure that is paid, incurred or accrued at the direction of QUALCOMM;
	•	any expense paid, incurred or accrued relating to or arising out of the amended and restated investors’ rights agreement, as amended, entered into by Flarion and certain of its stockholders and any filing fees incurred in connection with efforts to obtain any clearances, approvals or consents or the expiration of waiting periods under the HSR Act, or foreign antitrust or competition laws;
	•	all expenses of Flarion relating to actions, suits, proceedings, claims, arbitrations or investigations commenced following the public announcement of the merger agreement and the transactions contemplated thereby that are attributable to such public announcement and transactions; and
	•	any expense paid, incurred or accrued to purchase certain inventory specified by QUALCOMM.

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	•	QUALCOMM common stock (less shares deposited in the expenses fund on behalf of such holder, as described below);
	•	the initial cash consideration (less the portion deposited in the expenses fund on behalf of such holder, as described below);
	•	cash in lieu of any fractional shares of QUALCOMM common stock; and
	•	dividends or other distributions, if any, on QUALCOMM common stock to which they are entitled under the terms of the merger agreement.

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	•	the respective businesses and assets of the parties and their ability to complete the merger;
	•	their due organization, valid existence and good standing;
	•	the absence of need for approval by any governmental entity to execute the merger agreement (except filings with the Delaware Secretary of State, SEC filings, state securities law filings, or any HSR filings);
	•	the accuracy of information provided in their financial statements;
	•	brokers’ and finders’ fees;
	•	the absence of material litigation; and

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	•	the accuracy and completeness of information they supply for inclusion in this registration statement.

	•	its subsidiaries;
	•	the existence of any required consent from any governmental entities required for the operation of its business;
	•	its capital structure;
	•	the absence of certain changes or events;
	•	the absence of any material obligations or liabilities, other than those expressly disclosed in the disclosure schedule;
	•	intellectual property rights and agreements;
	•	inbound license rights, outbound license rights and related agreements;
	•	compliance with filing and maintenance requirements of applicable governmental entities with respect to its patent rights, copyrights, domain names and trademark rights;
	•	the absence of any covenant not to compete or other agreement limiting its ability to transact business in any market, field or geographical area or with any person;
	•	the absence of infringement of the intellectual property rights of any person in the conduct of its business;
	•	the absence of any interested party transactions with any of its directors, officers, employees or agents;
	•	the accuracy and completeness information provided in the disclosure schedule and in its financial statements;
	•	the validity and enforceability of each material contract;
	•	the absence of termination or threat of termination of its relationship with any customer of supplier for goods with a value greater than $100,000 per annum;
	•	compliance with all environmental laws applicable to properties and facilities it uses or occupies;
	•	tax matters;
	•	its compliance with all laws (including ERISA) applicable to its employee benefits plans;
	•	its compliance with all applicable laws with respect to employment practices;
	•	the existence of insurance policies appropriate for its type of business;
	•	its compliance with all federal, state, local and foreign statutes with respect to the conduct of its business, including any international trade laws;
	•	the absence of any payments by Flarion or person acting on Flarion’s behalf in order to obtain favorable treatment in securing business; and
	•	the stockholder votes required to approve the merger and the merger agreement.

	•	the timely filing of all forms and reports required to be filed with the SEC since October 1, 2002, as well as the conformance of these filings to the requirements of the Securities Act or Exchange Act (whichever applies); and

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	•	the existence of all necessary authorization of corporate action to issue and deliver the QUALCOMM’s common stock pursuant to the merger agreement.

	•	continue the prosecution and registration process with respect to any intellectual property rights consistent with past practice;
	•	use all reasonable efforts to keep available the services of its present officers and key employees and preserve its relationships with customers, suppliers, distributors, licensors, licensees, potential customers and others having business dealings with it; and
	•	promptly notify QUALCOMM of any material event or occurrence not in the ordinary course of its business, or any change in its capitalization (other than with respect to the grant of stock options in accordance with the merger agreement or the exercise of stock options or warrants).

	•	accelerate, amend or change the period of exercisability or vesting of options or other rights granted under its stock plans or authorize cash payments in exchange for any option or other rights granted under any of such plans;
	•	issue, deliver or sell or authorize or propose the issuance, delivery or sale of, or purchase or propose the purchase of, securities of it or of any of its subsidiaries, provided that (i) Flarion may, in the ordinary course of business consistent with past practice, grant options for the purchase of its common stock under Flarion’s option plan not to exceed an aggregate of 200,000 shares; and (ii) Flarion shall, effective immediately prior to the consummation of the first merger, grant options to purchase Flarion common stock to Flarion’s employees, in the amounts and subject to the terms and conditions specified by QUALCOMM, under Flarion’s option plan, having an aggregate intrinsic value of up to $26 million (see the section entitled “Certain Terms of the Merger Agreement — Directed Options”);
	•	enter into or amend any agreements pursuant to which Flarion or any of its subsidiaries transfers to any person any ownership rights to intellectual property rights owned by Flarion or in which Flarion claims an ownership interest or any other person is granted any outbound license rights with respect to any of Flarion’s or the subsidiary’s proposed products (other than such licenses and rights implied by the sale of products to customers) or Flarion’s intellectual property rights;
	•	sell, lease, license or otherwise dispose of or encumber any of its properties or assets that are in excess of $25,000 in value and material, except for the sale of products or in the ordinary course of business consistent with past practice;
	•	enter into, terminate or amend (i) any agreement involving the obligation to pay or the right to receive $75,000 or more per annum or $200,000 or more in the aggregate, other than purchase orders issued by Flarion to its suppliers solely to fulfill written obligations, existing as of the date of the merger agreement, of Flarion to its customers, (ii) any agreement relating to the license, transfer or other disposition or acquisition of intellectual property rights (other than the license of commercially available software pursuant to a shrinkwrap end user license agreement with customary terms and conditions or a standardized license, in each case with a purchase price of less than $10,000) or rights to market or sell Flarion’s or its subsidiaries’ products or (iii) any other agreement material to the business or prospects of Flarion or its subsidiaries or that is or would be a material contract as defined in the merger agreement;

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	•	make any capital expenditures, capital additions or capital improvements, in excess of $75,000 individually or $500,000 in the aggregate;
	•	grant or pay any severance or termination pay or benefits to any director, officer or employee, except for payments made pursuant to written agreements outstanding on the date of the merger agreement;
	•	commence a lawsuit (with certain exceptions);
	•	acquire or agree to acquire by merging with, or by purchasing a substantial portion of the stock or assets of, or by any other manner, any business or any entity;
	•	present, deliver or otherwise communicate to any customers (or potential customers) any proposals in any way related to Flarion’s or its subsidiaries’ business or prospects, including, but not limited to, Flarion’s or its subsidiaries’ current or future intellectual property rights, technology, products or potential business or other strategic relationships; or
	•	solicit, initiate, or knowingly encourage or engage in negotiations or discussions regarding any proposal or offer for a merger, consolidation, share exchange, business combination, sale of all or a substantial portion of the assets, or similar transactions, other than as contemplated by the merger agreement.

	•	with respect to any payment of cash, stock or other property pursuant to any Flarion stock option or employee plan (or any other plan or agreement of Flarion) that could constitute a “parachute payment” under Section 280G of the Code, enter into any amendment to such plan providing for, upon the consummation of the transactions contemplated by the merger agreement: (i) the reduction of all or any portion of any such payment, or the waiver of all or any portion of any such payment by the recipient thereof, or (ii) the payment of any such payment, or the payment of the reduced, eliminated or waived portion thereof, subject to approval of the stockholders in the manner determined by Flarion;
	•	sell products, directly or indirectly under the existing terms of any contract in effect as of the date of the merger agreement between Flarion and an original equipment manufacturer;
	•	support deployments in certain countries (listed on a schedule to the merger agreement) to the extent provided in the merger agreement;
	•	license its technology to the relevant carrier and its customers in connection with each deployment described above to the extent necessary to permit such carrier and such customers to use such equipment and devices; and
	•	license its technology to such original equipment manufacturer in connection with such deployments to the extent necessary to permit the use of such products; provided, however, that unless QUALCOMM otherwise consents in writing, any agreement entered into in connection with such provision shall include provisions to (i) limit liability under or arising out of such agreement and (ii) disclaim and exclude all liability for any loss of profits or incidental, consequential, indirect, special, punitive, exemplary or other similar damages.

	•	Each party shall use all reasonable efforts to take, or cause to be taken, all actions necessary to effectuate the mergers and related transactions;
	•	QUALCOMM shall take any commercially reasonable action required to be taken under any applicable state securities laws in connection with the registration and qualification of its common stock to be issued pursuant to the merger;

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	•	In the event QUALCOMM is directed by the SEC that any portion of its common stock being issued in connection with the merger may not be registered pursuant to this registration statement, QUALCOMM shall use its commercially reasonable efforts to cause such shares to be registered under the Securities Act so as to permit the resale thereof, and in connection therewith shall cause to be prepared and filed a registration statement on Form S-3 with the SEC with respect to such shares as soon as reasonably practicable;
	•	Flarion shall, through the consummation of the merger, apprise QUALCOMM of material operational matters and the general status of Flarion’s ongoing operations;
	•	QUALCOMM and Flarion shall use all reasonable efforts to file, as promptly as practicable after the date of the merger agreement, all notices, reports and other documents required to be filed by such party with any governmental entity with respect to the mergers, including, but not limited to, filing notifications required under HSR and any other federal or state antitrust or fair trade law;
	•	QUALCOMM and Flarion shall, as promptly as practicable, (i) make any filings and give any notices required to be made and given by such party in connection with the mergers and the other transactions contemplated by the merger agreement; (ii) use all reasonable efforts to obtain any consent required to be obtained by such party in connection with the mergers, and (iii) use all reasonable efforts to lift any restraint, injunction or other legal bar to the mergers;
	•	QUALCOMM shall take all corporate action necessary to reserve for issuance a sufficient number of shares of QUALCOMM common stock issuable pursuant to outstanding options under Flarion’s option plan assumed by QUALCOMM. No later than ten (10) business days after the consummation of the mergers, QUALCOMM shall file a registration statement on Form S-8 with respect to the shares of QUALCOMM common stock subject to such options and shall use commercially reasonable efforts to maintain the effectiveness of such registration statement or registration statements for so long as such options remain outstanding;
	•	QUALCOMM shall take such steps (and Flarion shall assist) as may be necessary to comply with the securities and blue sky laws of all jurisdictions applicable to the issuance of the QUALCOMM common stock in connection with the mergers, the assumption by QUALCOMM of the outstanding Flarion options under Flarion’s option plan and the grant of the QUALCOMM warrants;
	•	Flarion will use commercially reasonable efforts in consultation with QUALCOMM to retain existing employees of Flarion through the consummation of the mergers. Flarion shall use its commercially reasonable efforts to cause the employees of Flarion designated in writing by QUALCOMM to execute an offer letter in the form provided by QUALCOMM and, to the extent an employee of Flarion has not previously executed a similar agreement with Flarion, a proprietary rights and non-disclosure agreement in the form provided by QUALCOMM;
	•	Flarion shall promptly notify QUALCOMM of anything that, individually or in the aggregate, could reasonably be expected to have a material adverse effect with respect to Flarion;
	•	QUALCOMM and Flarion agreed to not take any action or fail to take any action that could prevent the mergers from qualifying as a reorganization under the provisions of Section 368(a) of the Code;
	•	Flarion shall use commercially reasonable efforts to cause certain of its contracts as identified in the merger agreement to be terminated prior to the consummation of the mergers;
	•	QUALCOMM shall assume the written obligations of Flarion to defend, indemnify and hold harmless Flarion’s current and former executive officers and directors, which obligations arise pursuant to indemnity agreements between Flarion and such individuals provided to QUALCOMM, including the notification obligations thereunder, including, but not limited to, indemnity obligations with respect to matters arising out of the merger agreement;

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	•	To the extent requested by QUALCOMM, Flarion shall use its commercially reasonable efforts to obtain all contract consents specified in the merger agreement and to deliver such consents to QUALCOMM; and
	•	Flarion shall use its commercially reasonable efforts to seek and obtain the release of patent numbers 6,711,120 and 6,473,418 from the security interest held by Chase Manhattan Bank and to terminate all UCC financing statements which have been filed with respect to such security interest.

	Conditions to Obligations of Each Party

	•	no temporary restraining order, preliminary or permanent injunction or other order shall have been issued by any court of competent jurisdiction, or any other legal or regulatory restraint or prohibition preventing the consummation of the merger, which could reasonably be expected to have a material adverse effect;
	•	no action shall be taken, nor any statute, rule, regulation or order enacted, entered, enforced or deemed applicable to the merger which makes the consummation of the merger illegal;

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	•	the acquisition from all governmental entities of approvals, waivers and consents necessary for consummation of the merger as may be required under the Securities Act, state blue sky laws and HSR; and
	•	the adoption and approval of the merger agreement, the mergers and the necessary amendments to Flarion’s certificate of incorporation by Flarion’s stockholders.

	Conditions to Obligations of QUALCOMM and its Merger Subsidiaries

	•	the representations and warranties of Flarion in the merger agreement shall be true and correct, without regard to any qualification of materiality on and as of the date of the merger agreement and on and as of the closing date of the merger as though such representations and warranties were made on and as of such time (except for such representations and warranties that speak specifically of another date, which shall be true and correct in all material respects as of such date), except when the failure of such representations and warranties to be true and correct has not had a material adverse effect on Flarion;
	•	Flarion shall have performed and complied in all material respects with all covenants, obligations and conditions of the merger agreement required to be performed and complied with by it as of the closing of the merger;
	•	Flarion shall deliver to QUALCOMM a certificate executed on its behalf by Flarion’s chief executive officer and chief financial officer certifying that the previous two conditions have been satisfied;
	•	Flarion shall deliver to QUALCOMM, a certificate executed by Flarion’s secretary containing Flarion’s certificate of incorporation, bylaws, resolutions of its board of directors authorizing the merger and the executed written consents of Flarion’s stockholders adopting the merger agreement;
	•	Flarion shall deliver any and all written notification required pursuant to the Open Base Station Architecture Initiative Supporter Agreement dated September 3, 2004, in order to withdraw Flarion from participation therein;
	•	there shall not be any pending or threatened legal proceeding in which a governmental entity is or is threatened to become a party that (i) challenges the consummation of the mergers, (ii) relates to the mergers and seeks damages or other relief from any of the parties to the merger agreement, (iii) seeks to prohibit or limit QUALCOMM’s ability to vote or otherwise exercise ownership rights with respect to Flarion’s capital stock, or (iv) will materially and adversely affect QUALCOMM or Flarion’s right to own Flarion’s assets or operate Flarion’s business;
	•	QUALCOMM’s legal counsel shall deliver to QUALCOMM a written opinion to the effect that the mergers should or will be treated for tax purposes as a reorganization within the meaning of Section 368(a) of the Code (this opinion shall not be waivable without Flarion’s approval);
	•	there shall not be issued any order of any governmental agency which (i) prohibits or limits QUALCOMM’s ability to vote or otherwise exercise ownership rights with respect to Flarion’s capital stock or (ii) adversely affects the right of QUALCOMM or Flarion to own Flarion’s assets or operate Flarion’s business;
	•	specified individuals and at least 65% of Flarion’s engineers shall have agreed to maintain employment with the surviving corporation or accept employment with QUALCOMM on terms reasonably acceptable to QUALCOMM;
	•	Flarion shall not have entered into any agreements, arrangements or understandings, except as specified in the merger agreement;
	•	no material adverse effect shall have occurred with respect to Flarion;

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	•	Flarion’s legal counsel shall have delivered to QUALCOMM an opinion commensurate with the form attached to the merger agreement;
	•	agreements providing for the termination of certain Flarion contracts identified in the merger agreement shall have been executed and delivered to QUALCOMM;
	•	Flarion shall have terminated each of its 401(k) plans that is required to be terminated;
	•	Flarion shall execute and deliver to QUALCOMM a statement and notice in connection with “FIRPTA”;
	•	Flarion shall have delivered to QUALCOMM the closing payment schedule, the closing option schedule and the updated disclosure schedule specified in the merger agreement; and
	•	certain liens on certain patents held by Flarion shall have been released.

	Conditions to Obligations of Flarion

	•	the representations and warranties of QUALCOMM and its merger subsidiaries in the merger agreement shall be true and correct on and as of the date of the merger agreement and on as of the closing date of the merger as though such representations and warranties were made on and as of such time (except for such representations and warranties that speak specifically of another date, which shall be true and correct in all material respects as of such date);
	•	QUALCOMM and its merger subsidiaries shall have performed and complied in all material respects with all covenants, obligations and conditions of the merger agreement required to be performed by them as of the closing;
	•	QUALCOMM and its merger subsidiaries shall deliver to Flarion certificates executed by a duly authorized officer of each respective entity certifying that the two above conditions have been satisfied;
	•	Flarion’s legal counsel shall deliver to Flarion a written opinion to the effect that the mergers should or will be treated for tax purposes as a reorganization within the meaning of Section 368(a) of the Code (this opinion shall not be waivable without QUALCOMM’s approval);
	•	QUALCOMM’s common stock to be issued pursuant to the merger agreement shall have been authorized for listing on The Nasdaq National Market upon official notice of issuance; and
	•	this registration statement shall have become effective under the Securities Act and shall not be the subject of any stop order or proceedings seeking a stop order, and any material blue sky and other state securities laws applicable to the registration and qualification of the QUALCOMM common stock issuable or required to be reserved for issuance pursuant to the merger agreement shall have been complied with.

	•	any breach of any representation or warranty made by Flarion in the merger agreement or in any of the certificates delivered to QUALCOMM by Flarion pursuant to the agreement for a period from the closing date through 18 months (and thereafter until resolved if a claim is made prior to such date);

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	•	any nonfulfillment or breach of, or default in connection with, any covenant or agreement by Flarion under the merger agreement for a period from the closing date through 18 months (and thereafter until resolved if a claim is made prior to such date);
	•	the exercise by any dissenting stockholder of appraisal rights under the DGCL (provided that such dissenting stockholder’s pro rata portion of the initial merger consideration and the patent milestone amount shall be deducted from such damages);
	•	any post-closing adjustment to the aggregate amount of the merger consideration payable to Flarion as a result of an adjustment in connection with the working capital or expense threshold amount, as described above; or
	•	certain other matters specified in the disclosure schedule to the merger agreement.

	•	any breach of any representation or warranty made by QUALCOMM or its merger subsidiaries in the merger agreement or in any of the certificates delivered to QUALCOMM or its merger subsidiaries pursuant to the agreement;
	•	any nonfulfillment or breach of, or default in connection with, any covenant or agreement by QUALCOMM or its merger subsidiaries under the merger agreement;
	•	any breach by Flarion of, or any claim against Flarion under, the Flarion amended and restated investors’ rights agreement with respect to (i) any covenants therein other than any claim from, or relating to, NV Partners II LP or any of its affiliates, (ii) certain notice requirements arising out of or related to the execution and delivery of this Agreement, (iii) the execution and delivery of the Exclusivity Agreement between Flarion and QUALCOMM dated June 27, 2005, or (iv) the performance by Flarion or any Flarion stockholder of the transactions contemplated by the merger agreement; or
	•	actions taken by Flarion in connection with the grant or issuance of the directed options.

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	•	receive all notices or documents given or to be given to any of the stockholders by QUALCOMM pursuant to the merger agreement and to receive and accept service of legal process in connection with any suit or proceeding arising under the merger agreement;
	•	deliver to QUALCOMM at the effective time of the merger all certificates and documents to be delivered by any of the stockholders;
	•	engage counsel, and such accountants and other advisors for any of the stockholders and incur such other expenses on behalf of any of the stockholders in connection with the merger agreement; and
	•	take such action on behalf of any of the stockholders as the stockholders’ agent may in its sole discretion deem appropriate to carry out the intent of the merger agreement.

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	•	the closing of the merger has not taken place on or before January 21, 2006, provided, however, that the right to terminate shall not be available to any party whose failure to fulfill any obligation under the merger agreement was the cause of or resulted in the failure of the merger to occur by such date; or
	•	if a court of competent jurisdiction or other governmental entity shall have issued a nonappealable final order, decree or ruling or taken any other action, in each case having the effect of permanently restraining, enjoining or otherwise prohibiting the mergers, unless the party relying on such order, decree or ruling or other action has not complied in all material respects with its obligations under the merger agreement.

	•	by QUALCOMM upon a breach of any representation, warranty, covenant or agreement on the part of Flarion in the merger agreement or if any representation or warranty of Flarion has become untrue so that the condition to completion of the merger regarding Flarion’s representations and warranties or covenants would not be met. However, before QUALCOMM may terminate pursuant to any such breach, such breach must remain uncured for 20 days after Flarion’s receipt of notice of such breach; or
	•	by Flarion upon a breach of any representation, warranty, covenant or agreement on the part of QUALCOMM or its merger subsidiaries in the merger agreement or if any representation or warranty of QUALCOMM or its merger subsidiaries has become untrue so that the condition to completion of the merger regarding QUALCOMM and its merger subsidiaries representations and warranties or covenants would not be met. However, before Flarion may terminate pursuant to any such breach, such breach must remain uncured for 20 days after QUALCOMM’s receipt of notice of such breach.

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	Flarion Products:

	•	RadioRouter Base Station: Performs like an IP-based router in a Local Area Network (LAN), but with Wide Area Network (WAN) radio coverage. RadioRouter base stations leverage existing cell towers, antennas and backhaul infrastructure and support standardized IP interfaces for integration and Radio Access Network (RAN) provisioning;
	•	FlashView Element Management System: An integrated provisioning and element management tool for the Flarion RadioRouter base station, offering Fault, Configuration, Accounting, Performance and Security (FCAPS) management functions;
	•	PC Card: The Flarion wireless network PC Card (PCMCIA) can be plugged into IP-based end-user devices (laptop, PDA, digital camera, etc.) for connectivity to the Flarion network;
	•	Desktop Modem: Flarion’s wireless Desktop Modem provides always-on access to the Flarion mobile broadband wide area network. The modem is compatible with desktop PCs, notebook PCs, and other

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		IP end-user devices, as well as consumer electronic devices (gaming consoles, web tablets, etc) that have standard Ethernet or USB connections. The modems could be used in stationary or mobile environments; and
	•	Mobile Chipset Solution: Flarion’s mobile chipsets provide a complete FLASH-OFDM solution for consumer and enterprise end-user devices. They can be integrated with host devices, such as PC Cards, fixed and portable computers, PDAs, mobile phones, digital cameras, entertainment devices, and gaming consoles and are offered with a complete reference design package and technical support services from Flarion’s technical team.

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Name		Age				Position
Raymond P. Dolan			48			Chairman and Chief Executive Officer
Rajiv Laroia			42			Founder, Chief Technology Officer, and Director
Edward B. Jordan			44			Senior Vice President and Chief Financial Officer
Edward M. Knapp			44			Senior Vice President, Product Marketing and Market Development
Theresa L. McCarthy			41			Vice President and General Counsel
Matthew J. Desch			47			Director
Robert P. Goodman			45			Director
Martin D. Hale, Jr.			33			Director
Robert E. LaBlanc			71			Director
Bruce I. Sachs			45			Director
Daniel C. Stanzione			60			Director
Joseph S. Tibbetts, Jr.			52			Director
Andrew J. Viterbi			70			Director

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	•	each stockholder known by Flarion to beneficially own more than 5% of Flarion’s capital stock;
	•	each of Flarion’s directors and named executive officers; and
	•	all of Flarion’s directors and executive officers as a group.

						Rights to												Rights to
						Acquire												Acquire
						Shares of												Shares of
		Number of				Common				Percent of				Number of				Preferred				Percent of
		Shares of				Stock within				Total				Shares of				Stock within				Total
		Common				60 Days of				Common				Preferred				60 Days of				Preferred
Name and Address of Beneficial Owner(1)		Stock				August 5, 2005				Stock				Stock				August 5, 2005				Stock
5% Stockholders, Directors and Executive Officers:
Entities affiliated with Bessemer Venture Partners(2)			178,666				—				*				10,360,529				—				19.2	%
Entities affiliated with Charles River Partners(3)			112,000				—				*				10,360,529				—				19.2	%
Coastdock & Co.(4)			—				7,878,346				27.6	%			3,939,173				—				7.3	%
Nextel Data Investments 1, Inc.(5)			—				14,156,850				40.6	%			6,078,425				1,000,000				12.8	%
Entities affiliated with New Venture Partners(6)			—				—				—				10,360,529				—				19.2	%
Entities affiliated with Pequot Capital Management(7)			76,000				—				*				7,824,553				—				14.5	%
T-Mobile Venture Fund GmbH & Co. KG(8)			—				8,051,572				28.0	%			2,025,786				2,000,000				7.2	%
Matthew J. Desch(9)			100,000				85,000				*				—				—				—
Raymond P. Dolan(10)			4,444,444				—				21.5	%			—				—				—
Robert P. Goodman(11)			178,666				—				*				10,360,529				—				19.2	%
Martin D. Hale, Jr.(12)			76,000				—				*				7,824,553				—				14.5	%
Robert E. LaBlanc			—				11,250				*				—				—				—
Rajiv Laroia(13)			3,611,114				—				17.4	%			—				—				—
Michael K. Gallagher(14)			1,500,000				600,000				9.9	%			—				—				—
Edward B. Jordan(15)			650,000				350,000				4.7	%			—				—				—
Edward M. Knapp(16)			238,750				281,250				2.5	%			—				—				—
Theresa L. McCarthy			800,000				—				3.9	%			—				—				—
Bruce I. Sachs(17)			112,000				—				*				10,360,529				—				19.2	%
Daniel C. Stanzione(18)			100,000				640,170				3.5	%			280,085				—				*
Joseph S. Tibbetts, Jr.			—				31,250				*				—				—				—

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Rights to

Rights to

Acquire

Acquire

Shares of

Shares of

Number of

Common

Percent of

Number of

Preferred

Percent of

Shares of

Stock within

Total

Shares of

Stock within

Total

Common

60 Days of

Common

Preferred

60 Days of

Preferred

Name and Address of Beneficial Owner(1)

Stock

August 5, 2005

Stock

Stock

August 5, 2005

Stock

Andrew J. Viterbi(19)

100,000

1,114,056

5.6

%

517,028

—

*

All executive officers and directors as a group (14 persons)

11,910,974

3,112,976

61.5

%

29,342,724

—

54.3

%

	*	Represents beneficial ownership of less than 1.0% of the outstanding shares of common stock or preferred stock, as applicable.

	(1)	Unless otherwise indicated, the address for each person or entity named below is c/o Flarion Technologies, Inc., 135 Route 202/ 206 South, Bedminster, NJ 07921.
	(2)	Consists of (a) 6,720 shares of common stock, 345,800 shares of Series A preferred stock and 325,234 shares of Series B preferred stock held by Bessemer Venture Investors II L.P., (b) 35,268 shares of common stock, 2,529,280 shares of Series A preferred stock and 1,706,921 shares of Series B preferred stock held by Bessemer Venture Partners V L.P., (c) 39,772 shares of common stock, 1,916,720 shares of Series A preferred stock and 1,924,829 shares of Series B preferred stock held by Bessec Ventures V L.P., (d) 972 shares of common stock and 47,033 shares of Series B preferred stock held by BVE 2001 LLC, (e) 15,828 shares of common stock and 766,046 shares of Series B preferred stock held by BVE 2001 (Q) LLC, (f) 13,440 shares of common stock and 650,466 shares of Series B preferred stock held by BIP 2001 L.P., (g) 66,666 shares of common stock held by Bessemer Search Group and (h) 148,200 shares of Series A preferred stock held by BVE LLC. The address for each of these entities is 1865 Palmer Avenue, Suite 104, Larchmont, NY 10538. Each of these holders of preferred stock has agreed not to convert its shares of preferred stock into common stock until the earlier of the termination of the merger agreement and the effectiveness of the merger.
	(3)	Consists of (a) 101,364 shares of common stock, 4,471,129 shares of Series A preferred stock and 4,905,839 shares of Series B preferred stock held by Charles River Partnership X, a limited partnership, (b) 2,784 shares of common stock, 122,740 shares of Series A preferred stock and 134,708 shares of Series B preferred stock held by Charles River Partnership X-A, a limited partnership, (c) 6,692 shares of common stock, 294,961 shares of Series A preferred stock and 323,722 shares of Series B preferred stock held by Charles River Friends X-B, LLC and (d) 1,160 shares of common stock, 51,170 shares of Series A preferred stock and 56,260 shares of Series B preferred stock held by Charles River Friends X-C, LLC. The address for each of these entities is 1000 Winter Street, Suite 3300, Waltham, MA 02451. Each of these holders of preferred stock has agreed not to convert its shares of preferred stock into common stock until the earlier of the termination of the merger agreement and the effectiveness of the merger.
	(4)	Consists of shareholdings of Series B preferred stock of Cisco Systems, Inc. The address for this entity is 170 West Tasman Drive, Building Number 10, San Jose, CA 95134.
	(5)	Consists of (a) 6,078,425 shares of Series B preferred stock and (b) a fully vested warrant to purchase 1,000,000 shares of Series B preferred stock. The address for Nextel Data Investments 1, Inc. is 2001 Edmund Halley Drive, Reston, VA 20191.
	(6)	Consists of (a) 5,555,600 shares of Series A preferred stock and 2,779,143 shares of Series B preferred stock held by NV Partners II LP and (b) 2,025,786 shares of Series B preferred stock held by NVP II-B LP. The address for these entities is 98 Floral Avenue, Suite 201, Murray Hill, NJ 07974. Each of these holders of preferred stock has agreed not to convert its shares of preferred stock into common stock until the earlier of the termination of the merger agreement and the effectiveness of the merger.
	(7)	Consists of (a) 76,000 shares of common stock, 2,470,000 shares of Series A preferred stock and 4,935,174 shares of Series B preferred stock held by Pequot Private Equity Fund II, L.P., (b) 367,564 shares of Series B preferred stock held by Pequot Private Equity Fund III, L.P. and

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		(c) 51,815 shares of Series B preferred stock held by Pequot Offshore Private Equity Partners III, L.P. The address for these entities is 500 Nyala Farm Road, Westport, CT 06880. Each of these holders of preferred stock has agreed not to convert its shares of preferred stock into common stock until the earlier of the termination of the merger agreement and the effectiveness of the merger.
	(8)	Consists of (a) 2,025,786 shares of Series B preferred stock, (b) a fully vested warrant to purchase 1,000,000 shares of Series B preferred stock and (c) an unvested warrant to purchase 1,000,000 shares of Series B preferred stock, for which vesting is based on performance which could occur within 60 days after August 5, 2005. The address of T-Mobile Venture Fund GmbH & Co. KG is Gotenstrabe 156, Bonn, D53175, Germany.
	(9)	Consists of (a) 100,000 shares of common stock, (b) fully vested options to purchase 75,625 shares of common stock and (c) unvested options to purchase 9,375 shares of common stock with rights of early exercise.

(10)	Consists of (a) 3,444,444 shares of common stock held by Raymond P. Dolan and (b) 1,000,000 shares of common stock held by R & V Dolan, L.L.C. Mr. Dolan serves Flarion’s Chairman and Chief Executive Officer.
(11)	Consists of the shares of capital stock as described in footnote (2) above. Mr. Goodman is the member of the Flarion board of directors representing Bessemer Venture Partners.
(12)	Consists of the shares of capital stock as described in footnote (7) above. Mr. Hale is the member of the Flarion board of directors representing Pequot Capital Management.
(13)	Consists of (a) 2,759,114 shares of common stock held by Rajiv Laroia, (b) 22,000 shares of common stock held by Tarana Laroia, (c) 22,000 shares of common stock held by Ishaan Laroia, (d) 22,000 shares of common stock held by Krishan Kumar Laroia, (e) 22,000 shares of common stock held by Anuradha Laroia-Batta, (f) 22,000 shares of common stock held by Sanjeev Laroia, (g) 22,000 shares of common stock held by Sanjdeep Laroia and (h) 720,000 shares of common stock held by the Rajiv Laroia Grantor Retained Annuity Trust. Mr. Laroia is a founder of Flarion and serves as the Chief Technology Officer and as a director of Flarion.
(14)	As of August 5, 2005, Michael Gallagher served as President of Flarion. Mr. Gallagher terminated his employment with Flarion effective as of September 6, 2005.
(15)	Consists of (a) 416,666 shares of common stock, (b) 233,334 shares of common stock subject to repurchase rights of Flarion and (c) unvested options to purchase 350,000 shares of common stock with rights of early exercise.
(16)	Consists of (a) 238,750 share of common stock, (b) fully vested options to purchase 31,250 shares of common stock and (c) unvested options to purchase 250,000 shares of common stock with rights of early exercise.
(17)	Consists of the shares of capital stock as described in footnote (3) above. Mr. Sachs is the member of the Flarion board of directors representing Charles River Ventures.
(18)	Consists of (a) 100,000 shares of common stock, (b) 200,000 shares of Series A preferred stock, (c) 80,085 shares of Series B preferred stock, (d) fully vested options to purchase 70,625 shares of common stock and (e) unvested options to purchase 9,375 shares of common stock with rights of early exercise.
(19)	Consists of (a) 100,000 shares of common stock held by Mr. Viterbi, (b) 100,000 shares of Series A preferred stock and 158,514 shares of Series B preferred stock held by Andrew James Viterbi, Trustee of the Andrew James Viterbi Flarion Annuity Trust dated April 11, 2005, (c) 100,000 shares of Series A preferred stock and 158,514 shares of Series B preferred stock held by Andrew James Viterbi, Trustee of the Erna Finci Viterbi Flarion Annuity Trust dated April 11, 2005, (d) fully vested options to purchase 70,625 shares of common stock and (e) unvested options to purchase 9,375 shares of common stock with rights of early exercise.

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	•	ten days following a public announcement or disclosure that a person or group has acquired beneficial ownership of 15% or more of our outstanding common stock; or
	•	ten business days after someone commences, or announces they intend to commence, a tender offer or exchange offer for 15% or more of our outstanding common stock.

	•	the board of directors of the corporation approves either the business combination or the transaction that resulted in the stockholder becoming an interested stockholder, prior to the time the interested stockholder attained that status;
	•	upon consummation 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 commenced, excluding for purposes of determining the number of shares outstanding those shares owned by persons who are directors and also officers, and by employee stock plans in which employee participants do not have the right to determine confidentially whether shares held subject to the plan will be tendered in a tender or exchange offer; or
	•	at or subsequent to such time, the business combination is approved by the board of directors and authorized at an annual or special meeting of stockholders, and not by written consent, by the

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		affirmative vote of at least two-thirds of the outstanding voting stock that is not owned by the interested stockholder.

	•	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 loans, advances, guarantees, pledges or other financial benefits provided by or through the corporation.

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	QUALCOMM

	•	6,000,000,000 shares of common stock, par value $0.0001 per share; and
	•	8,000,000 shares of preferred stock, par value $0.0001 per share.

	Flarion

	•	173,000,000 shares of common stock, par value $0.001 per share;
	•	18,436,225 shares of Series A preferred stock, par value $0.001 per share; and
	•	41,466,416 shares of Series B preferred stock, par value $0.001 per share.

	QUALCOMM

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	Flarion

	General

	QUALCOMM

	Flarion

	QUALCOMM

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	Flarion

	General

	QUALCOMM

	Flarion

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	General

	QUALCOMM

	Flarion

	QUALCOMM

	Flarion

	QUALCOMM

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	Flarion

	General

	•	for actions taken in good faith and in a manner they reasonably believed to be in, or not opposed to, the best interests of the corporation; and
	•	with respect to any criminal proceeding, if they had no reasonable cause to believe that their conduct was unlawful.

	QUALCOMM

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	Flarion

	QUALCOMM

	Flarion

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	•	adopted the merger agreement;
	•	elected that the merger shall not constitute a liquidation, dissolution or winding up of Flarion for purposes of Flarion’s certificate of incorporation;
	•	agreed not to convert any shares of Flarion preferred stock held by them into shares of Flarion common stock, unless the merger agreement is terminated; and
	•	approved an amendment to Flarion’s certificate of incorporation to amend and restate paragraph 5(g) of Section A of Article FOURTH of the certificate of incorporation to read as follows:

“(g) Merger or Sale of Assets. If at any time or from time to time there shall be a merger or consolidation of the Corporation with or into another Corporation, or the sale of all or substantially all of the Corporation’s properties and assets to any other person (other than an event described in paragraph 4(c), unless the requisite number of holders of Preferred Stock have elected not to treat such event as a liquidation for purposes of such paragraph), then, as part of such merger, consolidation or sale, provision shall be made so that the holders of Preferred Stock shall be entitled to receive upon consummation of such transaction, the number of shares of stock or other securities or property of the Corporation, or of the successor corporation resulting from such merger, consolidation or sale, to which a holder of Common Stock issuable upon conversion would have been entitled upon consummation of such merger had such holder’s Preferred Stock been converted into Common Stock prior to such merger, consolidation or sale, provided that no such provision shall be deemed to constitute the consent of the holders of Preferred Stock to any such transaction if such consent is required by this Amended and Restated Certificate of Incorporation or under applicable law, and provided further that the provisions of this paragraph 5(g) shall not apply to the transactions contemplated by the Agreement and Plan of Reorganization, entered into by and among QUALCOMM Incorporated, a Delaware corporation (“Acquiror”), Fluorite Acquisition Corporation, a Delaware corporation and a wholly owned subsidiary of Acquiror, Quartz Acquisition Corporation, a Delaware corporation and a wholly owned subsidiary of Acquiror, QF REP, LLC (as Stockholders’ Agent), and the Corporation, as such Agreement and Plan of Reorganization may be amended from time to time.”

	•	waived and released claims against Flarion and its affiliates relating to ownership of Flarion securities or status as a Flarion stockholder;
	•	amended the Flarion amended and restated stockholders agreement and the Flarion amended and restated investors’ rights agreement to terminate automatically upon a change of control of Flarion; and
	•	appointed QF REP, LLC as the stockholders’ agent.

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	•	Annual Report on Form 10-K for the year ended September 26, 2004
	•	Quarterly Report on Form 10-Q for the period ended June 26, 2005
	•	Quarterly Report on Form 10-Q for the period ended March 27, 2005
	•	Quarterly Report on Form 10-Q for the period ended December 26, 2004
	•	Current Report on Form 8-K filed August 19, 2005
	•	Current Report on Form 8-K filed July 8, 2005
	•	Current Report on Form 8-K filed June 8, 2005
	•	Current Report on Form 8-K/ A filed May 6, 2005
	•	Current Report on Form 8-K filed March 11, 2005
	•	Current Report on Form 8-K filed February 25, 2005
	•	Current Report on Form 8-K filed January 19, 2005
	•	Current Report on Form 8-K filed December 13, 2004

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			Page
Consolidated Financial Statements as of December 31, 2004 and 2003 and for the Two Years Ended December 31, 2004 and for the period January 21, 2000 (date of inception) through December 31, 2004:
	Report of Independent Auditors			F-2
	Consolidated Balance Sheets at December 31, 2004 and 2003			F-3
	Consolidated Statements of Operations for the two years ended December 31, 2004 and 2003 and for the period January 21, 2000 (date of inception) through December 31, 2004			F-4
	Consolidated Statements of Redeemable Convertible Preferred Stock, Stockholder’s Equity (Deficit) and Comprehensive Income (Loss) for the period January 21, 2000 (date of inception) through December 31, 2004			F-5
	Consolidated Statements of Cash Flows for the two years ended December 31, 2004 and 2003 and for the period January 21, 2000 (date of inception) through December 31, 2004			F-7
	Notes to Consolidated Financial Statements			F-8
Condensed Consolidated Financial Statements as of June 30, 2005 and for the Six Months Ended June 30, 2005:
	Condensed Consolidated Balance Sheet at June 30, 2005(unaudited)			F-20
	Condensed Consolidated Statement of Operations for the six months ended June 30, 2005 (unaudited)			F-21
	Condensed Consolidated Statement of Cash Flows for the six months ended June 30, 2005 (unaudited)			F-22
	Notes to Condensed Consolidated Financial Statements (unaudited)			F-23

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	/s/ Ernst & Young LLP

F-2

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				December 31
				2004				2003
ASSETS
Current assets:
		Cash and cash equivalents		$	61,777,085			$	15,756,598
		Accounts receivable — trade			781,430				2,092,911
		Accounts receivable — related party			753,496				1,514,800
		Inventories			2,174,743				2,429,421
		Deferred cost of sales			10,909,444				3,744,305
		Prepaid expenses and other current assets			1,038,786				542,532
Total current assets					77,434,984				26,080,567
Restricted cash					100,000				100,000
Fixed assets, net					3,070,025				3,016,324
				$	80,605,009			$	29,196,891
LIABILITIES, REDEEMABLE CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ EQUITY (DEFICIT)
Current liabilities:
		Accounts payable		$	1,222,514			$	2,915,706
		Accrued liabilities			2,470,221				2,611,478
		Deferred revenue			25,019,784				7,330,700
		Current portion of long-term debt and capital lease obligations			170,211				868,385
Total current liabilities					28,882,730				13,726,269
Capital lease obligations, less current portion					—				198,524
Deferred rent obligation					—				110,756
Series A Redeemable Convertible Preferred Stock (liquidation value $18,370,600 at December 31, 2004), $.001 par value; shares authorized: 18,436,225 in 2004 and 2003, issued and outstanding: 18,370,600 in 2004 and 2003					18,323,908				18,311,733
Series B Redeemable Convertible Preferred Stock (liquidation value $176,302,818 at December 31, 2004), $.001 par value; shares authorized: 41,466,416 in 2004 and 21,466,416 in 2003, issued and outstanding: 35,715,178 in 2004 and 18,495,997 in 2003					176,206,015				91,174,740
Stockholders’ equity (deficit):
	Common stock, $.001 par value; shares authorized: 173,000,000 in 2004 and 116,000,000 in 2003, issued and outstanding: 18,181,584 in 2004 and 17,157,512 in 2003				18,182				17,158
	Additional paid-in capital				6,890,688				3,329,601
	Notes receivable from employee stockholder				(187,500	)			(187,500	)
	Deferred compensation				(10,276	)			(107,728	)
	Accumulated other comprehensive loss				(28,596	)			(13,710	)
	Deficit accumulated during development stage				(149,490,142	)			(97,362,952	)
Total stockholders’ equity (deficit)					(142,807,644	)			(94,325,131	)
				$	80,605,009			$	29,196,891

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										For the Period
										January 21, 2000
		Year Ended December 31								(Date of Inception)
										to December 31,
		2004				2003				2004
Revenue		$	2,569,725			$	383,400			$	3,013,125
Research and development expenses			26,759,045				19,760,450				80,128,622
Acquired in-process research and development			—				—				5,555,600
Selling, general and administrative expenses			28,448,986				18,615,355				69,261,019
Interest expense			111,790				229,830				757,227
Interest income			(622,906	)			(177,863	)			(3,609,832	)
Gain on sale of marketable securities			—				—				(199,405	)
Net loss		$	(52,127,190	)		$	(38,044,372	)		$	(148,880,106	)

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			Series A Redeemable								Series B Redeemable																					Notes								Accumulated				Deficit
			Convertible Preferred								Convertible Preferred																					Receivable								Other				Accumulated
			Stock								Stock									Common Stock								Additional				from								Comprehensive				During				Treasury Stock
																												Paid-in				Employee				Deferred				Income				Development
			Shares				Value				Shares				Value					Shares				Value				Capital				Stockholders				Compensation				(Loss)				Stage				Shares				Value				Total
Issuance of preferred stock in connection with subscription and contribution agreement				5,555,600			$	5,555,600				—			$	—					—			$	—			$	—			$	—			$	—			$	—			$	—				—			$	—			$	—
Sale of preferred stock				12,815,000				12,705,000																																																	—
Issuance of common stock in connection with:
	Exercise of stock options																				6,873,244				6,873				164,958				(111,111	)																							60,720
	Purchase of restricted stock																				5,331,114				5,331				39,475																												44,806
Issuance of warrant in exchange for services																													26,250																												26,250
Deferred non-cash compensation																													460,722								(460,722	)																			—
Amortization of non- cash compensation																																					52,249																				52,249
Accretion to redemption value of redeemable convertible preferred stock								1,301,441																					(691,405	)															(610,036	)											(1,301,441	)
Net loss																																													(11,765,971	)											(11,765,971	)
Balance, December 31, 2000				18,370,600				19,562,041				—				—					12,204,358				12,204				—				(111,111	)			(408,473	)			—				(12,376,007	)			—				—				(12,883,387	)
Sale of preferred stock												9,190,247				45,197,835																																									—
Issuance of common stock in connection with:
	Exercise of stock options																				3,239,912				3,240				524,424				(187,500	)																							340,164
Purchase of treasury stock																																																	795,000				(19,875	)			(19,875	)
Issuance of warrant in exchange for services																													146,556																												146,556
Deferred non-cash compensation																													469,823								(469,823	)																			—
Vested portion of non-employee stock awards																													55,423																												55,423
Amortization of non- cash compensation																																					237,926																				237,926
Non-cash compensation related to option modifications																													55,422																												55,422
Adjustment to deferred compensation for terminations																													(71,071	)							71,071																				—
Accretion on redeemable convertible preferred stock, net of reversal								(1,274,658	)							21,367													1,253,291																												1,253,291
Net loss																																													(20,289,913	)											(20,289,913	)
Other comprehensive income:
	Unrealized gain on securities																																								168,429																168,429
Total comprehensive loss																																																									(20,121,484	)
Balance, December 31, 2001				18,370,600				18,287,383				9,190,247				45,219,202					15,444,270				15,444				2,433,868				(298,611	)			(569,299	)			168,429				(32,665,920	)			795,000				(19,875	)			(30,935,964	)
Sale of preferred stock												607,736				3,000,001																																									—
Issuance of common stock in connection with:
	Exercise of stock options																				677,618				678				114,562				111,111																(795,000	)			19,875				246,226
Vested portion of non-employee stock awards																													57,315																												57,315
Amortization of non- cash compensation																																					239,286																				239,286
Non-cash compensation related to option modifications																													3,985																												3,985
Adjustment to deferred compensation for terminations																													(22,196	)							22,196																				—
Accretion to redemption value of redeemable convertible preferred stock								12,175								25,175													(37,350	)																											(37,350	)
Net loss																																													(26,652,660	)											(26,652,660	)
Other comprehensive income:
	Unrealized gain on securities prior to disposition																																								18,925																18,925
	Less reclassification adjustment for gains included in net loss																																								(187,354	)															(187,354	)
	Foreign currency translation adjustment																																								(3,781	)															(3,781	)
Total comprehensive loss																																																									(26,824,870	)
Balance, December 31, 2002				18,370,600				18,299,558				9,797,983				48,244,378					16,121,888				16,122				2,550,184				(187,500	)			(307,817	)			(3,781	)			(59,318,580	)			—				—				(57,251,372	)

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			Series A Redeemable								Series B Redeemable																					Notes								Accumulated				Deficit
			Convertible Preferred								Convertible Preferred																					Receivable								Other				Accumulated
			Stock								Stock									Common Stock								Additional				from								Comprehensive				During				Treasury Stock
																												Paid-in				Employee				Deferred				Income				Development
			Shares				Value				Shares				Value					Shares				Value				Capital				Stockholders				Compensation				(Loss)				Stage				Shares				Value				Total
Balance, December 31, 2002 (carried forward)				18,370,600			$	18,299,558				9,797,983			$	48,244,378					16,121,888			$	16,122			$	2,550,184			$	(187,500	)		$	(307,817	)		$	(3,781	)		$	(59,318,580	)			—			$	—			$	(57,251,372	)
Sale of preferred stock												8,698,014				42,898,926																																									—
Issuance of common stock in connection with:
	Exercise of stock options																				1,035,624				1,036				166,967																												168,003
Vested portion of non-employee stock awards																													174,400																												174,400
Vested portion of warrant issued in connection with trial agreement																													467,822																												467,822
Amortization of non- cash compensation																																					171,804																				171,804
Non-cash compensation related to option modifications																													42,124																												42,124
Adjustment to deferred compensation for terminations																													(28,285	)							28,285																				—
Accretion to redemption value of redeemable convertible preferred stock								12,175								31,436													(43,611	)																											(43,611	)
Net loss																																													(38,044,372	)											(38,044,372	)
Other comprehensive income:
	Foreign currency translation adjustment																																								(9,929	)															(9,929	)
Total comprehensive loss																																																									(38,054,301	)
Balance, December 31, 2003				18,370,600				18,311,733				18,495,997				91,174,740					17,157,512				17,158				3,329,601				(187,500	)			(107,728	)			(13,710	)			(97,362,952	)			—				—				(94,325,131	)
Sale of preferred stock												17,219,181				84,998,215																																									—
Issuance of common stock in connection with:
	Exercise of stock options																				1,024,072				1,024				325,208																				1,250				1,875				328,107
Purchase of treasury stock																																																	(1,250	)			(1,875	)			(1,875	)
Vested portion of non-employee stock awards																													134,258																												134,258
Vested portion of warrant issued in connection with trial agreement																													3,149,233																												3,149,233
Amortization of non- cash compensation																																					95,075																				95,075
Adjustment to deferred compensation for terminations																													(2,377	)							2,377																				—
Accretion to redemption value of redeemable convertible preferred stock								12,175								33,060													(45,235	)																											(45,235	)
Net loss																																													(52,127,190	)											(52,127,190	)
Other comprehensive income:
	Foreign currency translation adjustment																																								(14,886	)															(14,886	)
Total comprehensive loss																																																									(52,142,076	)
Balance, December 31, 2004				18,370,600			$	18,323,908				35,715,178			$	176,206,015					18,181,584			$	18,182			$	6,890,688			$	(187,500	)		$	(10,276	)		$	(28,596	)		$	(149,490,142	)			—			$	—			$	(142,807,644	)

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												For the Period
												January 21, 2000
				Year Ended December 31								(Date of Inception)
												to December 31,
				2004				2003				2004
Cash flows from operating activities
Net loss				$	(52,127,190	)		$	(38,044,372	)		$	(148,880,106	)
Adjustments to reconcile net loss to net cash used in operating activities:
	Depreciation and amortization				1,978,317				1,164,896				5,484,863
	Acquired in-process research and development				—				—				5,555,600
	Non-cash compensation and interest				1,918,744				540,771				3,296,551
	Deferred rent				(110,756	)			(159,616	)			—
	Gain on sale of fixed assets				—				11,824				11,824
	Gain on sale of marketable securities				—				—				(187,354	)
	Changes in operating assets and liabilities:
		Accounts receivable			2,072,785				(3,572,711	)			(1,534,926	)
		Inventories			254,678				(2,429,421	)			(2,174,743	)
		Deferred cost of sales			(7,165,139	)			(3,744,305	)			(10,909,444	)
		Prepaid expenses and other current assets			(541,138	)			(138,945	)			(965,270	)
		Restricted cash							100,000				(100,000	)
		Accounts payable and accrued liabilities			(1,773,862	)			3,674,916				3,506,145
		Deferred revenue			19,118,317				7,798,522				26,916,839
Net cash used in operating activities					(36,375,244	)			(34,798,441	)			(119,980,021	)
Cash flows from investing activities
Purchase of equipment					(2,032,018	)			(2,396,803	)			(8,095,787	)
Purchase of marketable securities					—				—				(28,142,183	)
Sale of marketable securities					—				—				28,329,537
Net cash used in investing activities					(2,032,018	)			(2,396,803	)			(7,908,433	)
Cash flows from financing activities
Proceeds from sale of preferred stock, net of expenses					84,998,215				42,898,926				188,799,977
Proceeds from sale of common stock					328,107				168,003				1,076,915
Proceeds from note receivable from employee stockholder					—				—				111,111
Purchase of treasury stock					(1,875	)			—				(21,750	)
Proceeds from sale leaseback					—				—				2,684,197
Principal payments on capital lease					(889,712	)			(974,507	)			(2,957,413	)
Payment of note payable					(6,986	)			(7,135	)			(27,498	)
Net cash provided by financing activities					84,427,749				42,085,287				189,665,539
Net increase in cash and cash equivalents					46,020,487				4,890,043				61,777,085
Cash and cash equivalents, beginning of period					15,756,598				10,866,555				—
Cash and cash equivalents, end of period				$	61,777,085			$	15,756,598			$	61,777,085
Supplemental disclosures of cash flow information
Cash paid during the period for interest				$	77,347			$	173,478			$	584,448
Acquisition of fixed assets under capital lease obligations				$	—			$	146,398			$	443,427

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1.	Organization and Business

2.	Basis of Presentation

3.	Summary of Significant Accounting Policies

	Principles of Consolidation

	Use of Estimates

	Cash and Equivalents

	Accounts Receivable

	Inventories

	Deferred Cost of Sales

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	Marketable Securities

	Fixed Assets

	Foreign Currency Translation

	Accretion

	Revenue Recognition

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	Research and Development

	Income Taxes

	Stock Split

	Stock-Based Compensation

										For the Period
										January 21, 2000
		Year Ended December 31								(Date of Inception)
										to December 31,
		2004				2003				2004
Net loss, as reported		$	(52,127,190	)		$	(38,044,372	)		$	(148,880,106	)
Deduct: stock-based employee compensation expense included in reported net loss			95,075				213,928				897,871
Add: total stock-based employee compensation expense determined under fair value based method for all awards			(696,040	)			(497,580	)			(2,065,299	)
Net loss, as adjusted		$	(52,728,155	)		$	(38,328,024	)		$	(150,047,534	)

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	Reclassifications

4.	Inventories

		December 31
		2004				2003
Raw materials		$	833,288			$	789,220
Finished goods			1,947,945				1,698,975
			2,781,233				2,488,195
Reserves for excess and obsolete inventory			(606,490	)			(58,774	)
		$	2,174,743			$	2,429,421

5.	Fixed Assets

		December 31
		2004				2003
Equipment		$	6,150,912			$	4,643,222
Software			1,621,403				1,325,523
Leasehold improvements			389,645				264,047
Furniture and fixtures			293,767				220,644
Automobiles			33,440				33,440
			8,489,167				6,486,876
Less accumulated depreciation and amortization			5,419,142				3,470,552
		$	3,070,025			$	3,016,324

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6.	Accrued Liabilities

		December 31
		2004				2003
Compensation and benefits		$	761,039			$	967,152
Consulting fees			494,092				767,598
Accounting and legal fees			374,087				306,202
Utilities			328,015				210,000
Taxes			134,406				23,628
Other			378,582				336,898
		$	2,470,221			$	2,611,478

7.	Debt

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8.	Income Taxes

			December 31
			2004				2003
Deferred tax assets:
	Net operating loss carryforward		$	54,472,000			$	35,690,000
	Deferred revenue			2,736,000				—
	Research tax credit			2,715,000				1,597,000
	Depreciation and amortization			—				101,000
	Amortization of deferred compensation			439,000				385,000
	Inventory reserves			243,000				24,000
	Other			39,000				59,000
Total deferred tax assets				60,644,000				37,856,000
	Valuation allowances			(58,930,000	)			(37,856,000	)
Net deferred tax assets				1,714,000				—
Deferred tax liabilities:
	Deferred cost of sales			(1,466,000	)			—
	Depreciation and amortization			(248,000	)			—
Total deferred tax liabilities				(1,714,000	)			—
Net deferred tax assets and liabilities			$	—			$	—

9.	Contribution and Subscription Agreement

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10.	Series A and B Redeemable Convertible Preferred Stock

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11.	Stock Option Plans and Other Stock-Based Compensation

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			Number of				Weighted-
			Options/				Average
			Awards				Exercise Price
	Granted			18,158,158			$	0.02
	Exercised			(12,204,358	)			0.02
	Canceled			(250,000	)			0.03
Outstanding at December 31, 2000				5,703,800				0.04
	Granted			9,246,666				0.33
	Exercised			(3,239,912	)			0.16
	Canceled			(1,054,250	)			0.08
Outstanding at December 31, 2001				10,656,304				0.25
	Granted			4,407,200				0.50
	Exercised			(1,472,618	)			0.09
	Canceled			(1,276,276	)			0.41
Outstanding at December 31, 2002				12,314,610				0.34
	Granted			3,613,000				1.40
	Exercised			(1,035,624	)			0.16
	Canceled			(765,002	)			0.25
Outstanding at December 31, 2003				14,126,984				0.63
	Granted			13,015,750				1.50
	Exercised			(1,025,322	)			0.32
	Canceled			(4,534,455	)			1.34
Outstanding at December 31, 2004				21,582,957				1.02
Exercisable at:
	December 31, 2004			9,837,818			$	0.61
	December 31, 2003			6,831,336				0.44
Available for grant at December 31, 2004				8,188,161

		Number of Options								Weighted-
										Average
		Currently				Currently				Contractual
Exercise Price		Outstanding				Exercisable				Life
$0.025			1,566,680				1,566,680				5.5 years
0.125			975,378				894,003				5.9 years
0.500			6,442,149				5,083,948				7.0 years
1.000			504,000				189,000				8.3 years
1.500			12,094,750				2,104,187				9.3 years

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			Number of				Fair				Exercise
			Options				Value				Price
Period January 21, 2000 to December 31, 2000
	Exercise price less than market price			9,645,114			$	0.06			$	0.02
	Exercise price equals market price			8,513,044				0.01				0.03
	Exercise price greater than market price			—				—				—
Year ended December 31, 2001
	Exercise price less than market price			4,092,000				0.15				0.13
	Exercise price equals market price			5,154,666				0.11				0.50
	Exercise price greater than market price			—				—				—
Year ended December 31, 2002
	Exercise price less than market price			—				—				—
	Exercise price equals market price			4,407,200				0.09				0.50
	Exercise price greater than market price			—				—				—
Year ended December 31, 2003
	Exercise price less than market price			—				—				—
	Exercise price equals market price			3,613,000				0.19				1.40
	Exercise price greater than market price			—				—				—
Year ended December 31, 2004
	Exercise price less than market price			—				—				—
	Exercise price equals market price			13,015,750				0.24				1.50
	Exercise price greater than market price			—				—				—

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Stock option plan:
	Outstanding			21,582,957
	Reserved for future grant			8,188,161
Conversion of Series A Preferred Stock				36,741,200
Conversion of Series B Preferred Stock				71,430,356
Conversion of Series A Preferred Stock warrants				131,250
Conversion of Series B Preferred Stock warrants				6,079,006
				144,152,930

12.	Related Party Transactions

13.	Commitments and Contingencies

F-18

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Table of Contents

14.	Employee Benefit Plan

F-19

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Table of Contents

				June 30, 2005
				(Unaudited)
ASSETS
Current assets:
		Cash and cash equivalents		$	46,329,993
		Accounts receivable — trade			806,054
		Accounts receivable — related party			840,000
		Inventories			3,223,341
		Deferred cost of sales			10,536,229
		Prepaid expenses			863,779
		Other current assets			223,136
Total current assets					62,822,532
Fixed assets, net					2,325,172
				$	65,147,704
LIABILITIES, REDEEMABLE CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ DEFICIT
Current liabilities:
		Accounts payable		$	863,856
		Accrued liabilities			4,287,350
		Deferred revenue			24,242,828
		Current portion of long-term debt and capital lease obligations			35,338
Total current liabilities					29,429,372
Series A Redeemable Convertible Preferred Stock (liquidation value $18,370,600), $.001 par value; shares authorized: 18,436,225, issued and outstanding: 18,370,600					18,330,549
Series B Redeemable Convertible Preferred Stock (liquidation value $176,302,818), $.001 par value; shares authorized: 41,466,416, issued and outstanding: 35,715,178					176,222,033
Stockholders’ deficit:
	Common stock, $.001 par value; shares authorized: 173,000,000, issued and outstanding: 18,364,835				18,365
	Additional paid-in capital				8,565,196
	Notes receivable from employee stockholder				(187,500	)
	Accumulated other comprehensive loss				(7,126	)
	Accumulated deficit				(167,223,185	)
Total stockholders’ deficit					(158,834,250	)
				$	65,147,704

F-20

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Table of Contents

		Six Months
		Ended June 30,
		2005
		(Unaudited)
Revenue		$	7,775,298
Cost of sales			4,190,845
Research and development expenses			11,785,253
Selling, general and administrative expenses			10,202,323
Interest expense			8,502
Interest income			(678,582	)
Net loss		$	(17,733,043	)

F-21

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Table of Contents

		Six Months
		Ended June 30,
		2005
		(Unaudited)
Cash flows from operating activities
Net cash used in operating activities		$	(15,324,238	)
Cash flows from investing activities
Purchase of equipment			(105,349	)
Net cash used in investing activities			(105,349	)
Cash flows from financing activities
Proceeds from sale of common stock			117,369
Principal payments on capital lease			(134,874	)
Net cash used in financing activities			(17,505	)
Net decrease in cash and cash equivalents			(15,447,092	)
Cash and cash equivalents, beginning of period			61,777,085
Cash and cash equivalents, end of period		$	46,329,993

F-22

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Table of Contents

1.	Basis of Presentation

	Stock-Based Payments

		Six Months
		Ended June 30,
		2005
Net loss, as reported		$	(17,733,043	)
Deduct: stock-based employee compensation expense included in reported net loss			1,590,257
Add: total stock-based employee compensation expense determined under fair value based method for all awards			(319,263	)
Net loss, as adjusted		$	(16,462,049	)

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Table of Contents

2.	Composition of Certain Financial Statement Items

Raw materials		$	1,795,052
Finished goods			1,890,805
			3,685,857
Reserves for excess and obsolete inventory			(462,516	)
		$	3,223,341

Compensation and benefits		$	2,775,226
Consulting fees			255,931
Accounting and legal fees			661,851
Taxes			164,604
Other			429,738
Total accrued liabilities		$	4,287,350

3.	Income Taxes

4.	Series A and B Redeemable Convertible Preferred Stock

F-24

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F-25

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Table of Contents

5.	Stockholders’ Equity

Common stock outstanding at December 31, 2004			18,181,584
Issuance of common stock in connection with the exercise of stock options			183,251
Common stock outstanding at June 30, 2005			18,364,835

6.	Comprehensive Loss

Net loss			$	(17,733,043	)
Other comprehensive income (loss):
	Foreign currency translation loss			21,470
Total comprehensive loss			$	(17,711,573	)

7.	Commitments and Contingencies

8.	Related Party Transactions

9.	Subsequent Events

F-26

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Table of Contents

A-1

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Table of Contents

								Page
1.		DEFINITIONS							A-6
2.		THE MERGERS							A-13
			2.1			The Mergers			A-13
			2.2			Closing; Effective Time			A-13
			2.3			Effect of the Mergers			A-14
			2.4			Certificate of Incorporation; Bylaws			A-14
			2.5			Directors and Officers			A-14
			2.6			Effect on Capital Stock in Merger I			A-14
			2.7			Surrender of Certificates			A-22
			2.8			Effect on Capital Stock in Merger II			A-24
			2.9			No Further Ownership Rights in Target Capital Stock			A-24
			2.10			Lost, Stolen or Destroyed Certificates			A-25
			2.11			Tax Consequences			A-25
			2.12			Taking of Necessary Action; Further Action			A-25
3.		REPRESENTATIONS AND WARRANTIES OF TARGET							A-25
			3.1			Organization, Standing and Power			A-25
			3.2			Authority			A-26
			3.3			Governmental Authorization			A-27
			3.4			Financial Statements			A-27
			3.5			Capitalization			A-27
			3.6			Absence of Certain Changes			A-29
			3.7			Absence of Undisclosed Liabilities			A-29
			3.8			Litigation			A-29
			3.9			Delivery of Notice			A-30
			3.10			Intellectual Property			A-30
			3.11			Prior License Grants			A-34
			3.12			Interested Party Transactions			A-34
			3.13			Minute Books			A-35
			3.14			Written Consent Action			A-35
			3.15			Material Contracts			A-35
			3.16			Accounts Receivable			A-36
			3.17			Customers and Suppliers			A-36
			3.18			Employees and Consultants			A-36
			3.19			Title to Property			A-36
			3.20			Real Estate			A-37
			3.21			Environmental Matters			A-37
			3.22			Taxes			A-38
			3.23			Employee Benefit Plans and Employment Matters			A-40
			3.24			Insurance			A-42
			3.25			Compliance With Laws			A-42
			3.26			Brokers’ and Finders’ Fee			A-42
			3.27			Bank Accounts			A-43
			3.28			Employee Agreements			A-43

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Table of Contents

								Page
			3.29			Reserved			A-43
			3.30			International Trade Matters			A-43
			3.31			Certain Payments			A-43
			3.32			Registration Statement; Information Statement/ Prospectus			A-43
			3.33			Vote Required			A-44
			3.34			Subsidiaries			A-44
4.		REPRESENTATIONS AND WARRANTIES OF ACQUIROR, MERGER SUB I AND MERGER SUB II							A-44
			4.1			Organization, Standing and Power			A-44
			4.2			Authority			A-44
			4.3			SEC Documents; Financial Statements			A-45
			4.4			Issuance of Shares			A-46
			4.5			Merger Sub I and Merger Sub II			A-46
			4.6			Investigation			A-46
			4.7			Brokers’ and Finders’ Fee			A-46
			4.8			Litigation			A-46
			4.9			Information Supplied			A-46
5.		CONDUCT PRIOR TO THE EFFECTIVE TIME OF MERGER I							A-47
			5.1			Conduct of Business of Target and Subsidiaries			A-47
			5.2			No Solicitation			A-50
			5.3			Deployments			A-50
6.		ADDITIONAL AGREEMENTS							A-50
			6.1			Information Statement/ Prospectus			A-50
			6.2			Access to Information			A-53
			6.3			Confidentiality			A-54
			6.4			Public Disclosure			A-54
			6.5			Regulatory Approval; Further Assurances			A-54
			6.6			Cancellation of Warrants			A-55
			6.7			Form S-8			A-55
			6.8			Blue Sky Laws			A-55
			6.9			Reserved			A-56
			6.10			Listing of Additional shares			A-56
			6.11			Employees			A-56
			6.12			Duty to Supplement			A-56
			6.13			Tax Treatment			A-56
			6.14			Termination of Agreements			A-56
			6.15			Tax Matters			A-56
			6.16			Resignation of Directors			A-56
			6.17			FIRPTA Matters			A-56
			6.18			Closing Working Capital			A-57
			6.19			Approval of Stockholders			A-57
			6.20			Indemnification			A-57
			6.21			Required Contract Consents			A-57
			6.22			Expenses			A-57

A-3

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Table of Contents

								Page
			6.23			Notification of Certain Parties			A-57
			6.24			Release and Termination of Security Interests			A-58
			6.25			Delivery of Written Notice			A-58
			6.26			Employee Benefits			A-58
			6.27			WARN; COBRA			A-59
			6.28			Stockholder Approval Regarding Section 280G Payments			A-59
			6.29			Amendment of Target Option Plan			A-59
7.		CONDITIONS TO THE MERGER							A-60
			7.1			Conditions to Obligations of Each Party to Effect the Mergers			A-60
			7.2			Additional Conditions to the Obligations of Acquiror, Merger Sub I and Merger Sub II			A-60
			7.3			Additional Conditions to Obligations of Target			A-62
8.		TERMINATION, EXTENSION AND WAIVER							A-63
			8.1			Termination			A-63
			8.2			Effect of Termination			A-63
			8.3			Extension; Waiver			A-63
9.		INDEMNIFICATION							A-64
			9.1			Reserved			A-64
			9.2			Indemnification			A-64
			9.3			Offset of Claims Period; Release of Holdback Indemnification Funds			A-66
			9.4			Offset of Claims; Sole Remedy			A-66
			9.5			Objections to Claims			A-66
			9.6			Resolution of Conflicts			A-66
			9.7			Stockholders’ Agent			A-66
			9.8			Third-Party Claims			A-71
10.		GENERAL PROVISIONS							A-71
			10.1			Notices			A-71
			10.2			Counterparts			A-72
			10.3			Entire Agreement; Nonassignability; Parties in Interest			A-72
			10.4			Severability			A-73
			10.5			Remedies Cumulative			A-73
			10.6			Governing Law			A-73
			10.7			Rules of Construction			A-73
			10.8			Specific Enforcement			A-73
			10.9			Guarantee			A-73
			10.10			Amendment; Waiver			A-74
			10.11			Incorporation of Exhibits and Schedules			A-74

A-4

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Table of Contents

Exhibits
EXHIBIT A		Certificate of Merger
EXHIBIT B		Second Certificate of Merger
EXHIBIT C		Form of Action by Written Consent of the Stockholders
EXHIBIT D		Certificate of Incorporation of Surviving Corporation I
EXHIBIT E-1		Waiver of Accelerated Option Vesting and Amendment of Stock Option Agreement
EXHIBIT E-2		Waiver of Accelerated Option Vesting and Amendment of Stock Option Agreement
EXHIBIT F-1		Non-Competition and Non-Solicitation Agreement
EXHIBIT F-2		Non-Competition and Non-Solicitation Agreement
EXHIBIT G-1		Stock Restriction Agreement
EXHIBIT G-2		Stock Restriction Agreement
EXHIBIT H		Legal Opinion
EXHIBIT I		Form of Certificate Amendment
EXHIBIT J		Certificate of Incorporation of Surviving Corporation

Schedules
TARGET DISCLOSURE SCHEDULE
SCHEDULE A		Persons with Knowledge with Respect to Target
SCHEDULE B		Persons Executing the Executed Written Consents
SCHEDULE 2.6(a)(i)		Sample Calculation
SCHEDULE 2.6(e)		Target Representatives
SCHEDULE 2.6(f)		Schedule of Target Options
SCHEDULE 2.6(g)		Assumed Target Warrants
SCHEDULE 3.11		Certain IP Rights
SCHEDULE 3.12		Specified Third Party Licensor
SCHEDULE 3.28		Identified Employees
SCHEDULE 5.1(D)		Directed Options to Named Individuals
SCHEDULE 5.1(X)		Schedule of Deployments
SCHEDULE 6.14		Target Contracts Requiring Termination
SCHEDULE 6.26		Target Employee Plans Remaining in Effect
SCHEDULE 7.2(I)		Target Employees
SCHEDULE 8.2		Fee Transaction Party

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	“Acquiror” has the meaning set forth in the introductory paragraph.
	“Acquiror Common Stock” has the meaning set forth in Section 2.6(a)(i).
	“Acquiror Financial Statements” has the meaning set forth in Section 4.3(b).
	“Acquiror Indemnified Person” and “Acquiror Indemnified Persons” have the meanings set forth in Section 9.2(b).
	“Acquiror Indemnitee” has the meaning set forth in Section 6.1(b)(v).
	“Acquiror Material Adverse Effect” has the meaning set forth in Section 4.2.
	“Acquiror SEC Documents” has the meaning set forth in Section 4.3(a).

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	“Acquiror Selected Applications” has the meaning set forth in Section 2.6(m)(i).
	“Acquiror Selection Date” has the meaning set forth in Section 2.6(m)(i).
	“Acquiror Warrant” has the meaning set forth in Section 2.6(g).
	“Acquisition Proposal” has the meaning set forth in Section 5.2(a).
	“Additional Expenses Fund Shares” has the meaning set forth in Section 9.7(j)(iii).
	“Additional Patent Consideration” has the meaning set forth in Section 2.6(m)(i).
	“Additional Payment Amount” has the meaning set forth in Section 2.6(m).
	“Additional Payment Per Share Price” has the meaning set forth in Section 2.6(m).
	“Adjustment Amount” has the meaning set forth in Section 2.6(b).
	“Aggregate Equity Consideration” means the aggregate number of shares of Acquiror Common Stock delivered as part of the Initial Purchase Price.
	“Aggregate Purchase Price” has the meaning set forth in Section 2.6(m).
	“Agreement” has the meaning set forth in the introductory paragraph.
	“Applications” has the meaning set forth in Section 2.6(m)(i).
	“Assessable Equity Consideration” has the meaning set forth in Section 2.6(c).
	“Assessable Merger Consideration” has the meaning set forth in Section 2.6(c).
	“Assumed Option” has the meaning set forth in Section 2.6(f)(i).
	“Assumed Target Warrant” has the meaning set forth in Section 2.6(g).
	“Average Closing Price” has the meaning set forth in Section 2.6(f)(i).
	“CERCLA” has the meaning set forth in Section 3.21(a)(i).
	“Certificate” has the meaning set forth in Section 2.7(c).
	“Certificate Amendment” has the meaning set forth in Section 5.1(w).
	“Certificate of Merger” has the meaning set forth in Section 2.2.
	“Closing” has the meaning set forth in Section 2.2.
	“Closing Balance Sheet” means a balance sheet of Target as of the Closing Date prepared by Acquiror in accordance with GAAP as applied by Target in preparing the Target Balance Sheet.
	“Closing Date” has the meaning set forth in Section 2.2.
	“Closing Date Price” has the meaning set forth in Section 2.6(c).
	“Closing Option Schedule” has the meaning set forth in Section 2.6(f)(iii).
	“Closing Payment Schedule” has the meaning set forth in Section 2.6(e).
	“Closing Target Common Stock Consideration” means the aggregate consideration which the Stockholders are entitled to receive at the Effective Time of Merger I in respect of Target Common Stock pursuant to Section 2.6(a)(ii).
	“Closing Working Capital” has the meaning set forth in Section 2.6(d).
	“Closing Working Capital Calculation” has the meaning set forth in Section 2.6(d).
	“COBRA” has the meaning set forth in Section 3.23(b).
	“Code” has the meaning set forth in Recital E.

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	“Common Exchange Ratio” has the meaning set forth in Section 2.6(a)(ii).
	“Confidentiality Agreement” has the meaning set forth in Section 6.3.
	“Contemplated Transactions” shall mean the transactions and other matters contemplated by this Agreement, including the Mergers.
	“Contractor Invention Agreement” has the meaning set forth in Section 3.10(p).
	“Copyrights” has the meaning set forth in Section 3.10(a)(ii).
	“Core IP Rights” has the meaning set forth in Section 3.10(e).
	“Damages” has the meaning set forth in Section 9.2(b).
	“Deductible Amount” has the meaning set forth in Section 9.2(e).
	“De Minimis Damages” has the meaning set forth in Section 9.2(e).
	“DGCL” has the meaning set forth in Section 2.1.
	“Directed Inventory” has the meaning set forth in Section 5.3.
	“Directed Options” has the meaning set forth in Section 5.1(d).
	“Dissenting Shares” has the meaning set forth in Section 2.6(l).
	“Dissenting Stockholder” and “Dissenting Stockholders” have the meanings set forth in Section 2.6(l).
	“DLA” has the meaning set forth in Section 6.15.
	“Domain Names” has the meaning set forth in Section 3.10(a)(iii).
	“Effective Time” has the meaning set forth in Section 2.2.
	“Effective Time of Merger I” has the meaning set forth in Section 2.2.
	“Effective Time of Merger II” has the meaning set forth in Section 2.2.
	“Employee Benefits” has the meaning set forth in Section 6.26.
	“Employee/ Officer Invention Agreement” has the meaning set forth in Section 3.10(p).
	“Encumbrances” has the meaning set forth in Section 3.19.
	“Environmental Laws” has the meaning set forth in Section 3.21(a)(i).
	“ERISA Affiliate” has the meaning set forth in Section 3.23(a).
	“Estimated Closing Working Capital” has the meaning set forth in Section 6.18.
	“Excess Dissenters Consideration” has the meaning set forth in Section 2.6(c).
	“Excess Expenses Certificate” has the meaning set forth in Section 9.7(n).
	“Exchange Act” has the meaning set forth in Section 3.4(b).
	“Exchange Agent” has the meaning set forth in Section 2.7(a).
	“Exchange Fund” has the meaning set forth in Section 2.7(b).
	“Executed Written Consents” has the meaning set forth in Recital C.
	“Existing Option” has the meaning set forth in Section 2.6(f)(i).
	“Expenses Fund” has the meaning set forth in Section 2.7(b).
	“Expenses Fund Cash” has the meaning set forth in Section 2.7(i).

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	“Expenses Fund Shares” has the meaning set forth in Section 2.7(i).
	“Fee Transaction” has the meaning set forth in Section 8.2.
	“Fully Diluted Share Number” means the sum (without duplication) of (i) the total number of shares of Target Common Stock issued and outstanding immediately prior to the Effective Time of Merger I, (ii) the total number of shares of Target Common Stock issuable, immediately prior to the Effective Time of Merger I, upon conversion of all issued and outstanding Target Preferred Stock and all Target Preferred Stock issuable upon the exercise or conversion of all issued and outstanding Target Options, Target Warrants and other outstanding Target instruments or other rights exercisable for or convertible into Target Preferred Stock (whether vested or unvested, contingent or otherwise) and (iii) the total number of shares of Target Common Stock issuable, immediately prior to the Effective Time of Merger I, upon the exercise or conversion of all issued and outstanding Target Options, Target Warrants and other outstanding Target instruments or other rights (in each case, excluding the Directed Options) exercisable for or convertible into Target Common Stock (in each case, whether vested or unvested, contingent or otherwise).
	“Governmental Entity” has the meaning set forth in Section 3.2.
	“GPL” has the meaning set forth in Section 3.10(a)(viii).
	“Hazardous Materials” has the meaning set forth in Section 3.21(a)(ii).
	“Holdback Indemnification Funds” has the meaning set forth in Section 9.2(e).
	“Holder” has the meaning set forth in Section 6.1(b)
	“Holder Indemnity” has the meaning set forth in Section 6.1(b)(iv)
	“HSR” has the meaning set forth in Section 3.2.
	“Inbound License Rights” has the meaning set forth in Section 3.10(a).
	“In-Bound Material License” has the meaning set forth in Section 3.15.
	“Indemnification Termination Date” has the meaning set forth in Section 9.3.
	“Indemnified Person” has the meaning set forth in Section 6.1(b)(vi)
	“Indemnified Persons” has the meaning set forth in Section 9.2(c).
	“Indemnifying Person” has the meaning set forth in Section 6.1(b)(vi)
	“Independent Accounting Firm” means an independent accounting firm of national reputation (other than an accounting firm regularly used by Acquiror unless otherwise agreed to by Stockholders’ Agent) mutually agreed upon by Acquiror and the Stockholders’ Agent.
	“Information Statement/ Prospectus” has the meaning set forth in Section 3.32.
	“Initial Cash Consideration” has the meaning set forth in Section 2.6(a)(i).
	“Initial Purchase Price” has the meaning set forth in Section 2.6(a).
	“International Trade Law” has the meaning set forth in Section 3.30.
	“Intrinsic Value” means the difference between the Per Share Purchase Price and the exercise price of each share of Target Common Stock underlying a Directed Option.
	“IP Encumbrance” has the meaning set forth in Section 3.10(l) .
	“IP Rights” has the meaning set forth in Section 3.10(a)(i).
	“Knowledge,” “Known” or “Know” means (i) with respect to an individual, that individual’s actual awareness of the fact or other matter, and (ii) with respect to a Person (other than an individual), the actual awareness of any individual who is currently serving as a director or executive officer of that Person

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	of the fact or other matter; provided, further, that Target shall be deemed to have “Knowledge”, “Known” or “Know” a fact or other matter if any director of Target, any executive officer of Target or any of the individuals listed on Schedule A attached hereto has “Knowledge”, “Known” or “Knows” of such fact or matter.
	“Lease” and “Leases” have the meanings set forth in Section 3.20(a).
	“LGPL” has the meaning set forth in Section 3.10(a)(viii).
	“LW” has the meaning set forth in Section 6.15.
	“Material Contract” has the meaning set forth in Section 3.15(c).
	“Merger I” has the meaning set forth in Recital A.
	“Merger II” has the meaning set forth in Recital A.
	“Mergers” has the meaning set forth in Recital A.
	“Merger Consideration” means the Initial Cash Consideration, the Aggregate Equity Consideration and the Additional Payment Amount.
	“Merger Sub I” has the meaning set forth in the introductory paragraph.
	“Merger Sub II” has the meaning set forth in the introductory paragraph.
	“Named Individuals” has the meaning set forth in Section 7.2(i).
	“NASD” has the meaning set forth in Section 4.2.
	“Notice Parties” has the meaning set forth in Section 6.23(b).
	“Notice Period” has the meaning set forth in Section 6.23(b).
	“NVP” means NV Partners II LP.
	“Offer” has the meaning set forth in Section 6.23(b).
	“Offer Notification” has the meaning set forth in Section 6.23(b).
	“Officer’s Certificate” has the meaning set forth in Section 9.2.
	“Option Earn-out Shares” has the meaning set forth in Section 2.6(f)(i).
	“Option Exchange Ratio” has the meaning set forth in Section 2.6(f)(i).
	“Outbound License Rights” has the meaning set forth in Section 3.10(a).
	“Patent Milestone Date” has the meaning set forth in Section 2.6(m)(i).
	“Patent Milestone Option Issuance Date” shall mean March 15 of the year following the calendar year in which the Patent Milestone Date occurs.
	“Patent Rights” has the meaning set forth in Section 3.10(a)(vi).
	“Pension Plan” has the meaning set forth in Section 3.23(d).
	“Per Share Additional Patent Consideration” has the meaning set forth in Section 2.6(m)(i).
	“Per Share Purchase Price” has the meaning set forth in Section 2.6(a).
	“Person” means any individual, corporation, partnership, limited liability company, joint venture, association, joint-stock company, trust, unincorporated organization or Governmental Entity.
	“Preferred Equity Amount” means the amount equal to (i) 40% of the amount of the Aggregate Purchase Price to which the Stockholders are entitled to receive (assuming the payment in full of the Additional Patent Consideration) based on the Per Share Purchase Price, the Per Share Additional

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	Patent Consideration (assuming no offsets pursuant to Section 9) and the shares of Target Capital Stock issued and outstanding immediately prior to the Effective Time of Merger I (excluding shares to be cancelled in accordance with Section 2.6(h) and Dissenting Shares), less (ii) the Closing Target Common Stock Consideration.
	“Preferred Equity Percentage” has the meaning set forth in Section 2.6(a)(i).
	“Preferred Exchange Ratio” has the meaning set forth in Section 2.6(a)(i).
	“Prosecution Standard” has the meaning set forth in Section 2.6(m)(i).
	“Prosecution Instructions” has the meaning set forth in Section 2.6(m)(i).
	“Public Software” has the meaning set forth in Section 3.10(a)(viii).
	“Purchase Price Objection Notice” has the meaning set forth in Section 2.6(d).
	“Purchase Price Resolution Period” has the meaning set forth in Section 2.6(d).
	“RCRA” has the meaning set forth in Section 3.21(a)(i).
	“Real Estate” has the meaning set forth in Section 3.20(b).
	“Record Date” shall mean the record date for the written consents of the stockholders of Target adopting this Agreement.
	“Registrable Securities” has the meaning set forth in Section 6.1(b).
	“Registration Statement” has the meaning set forth in Section 3.32.
	“Remaining Applications” has the meaning set forth in Section 2.6(m)(i)
	“Representatives” shall mean officers, directors, partners, trustees, executors, employees, agents, attorneys, accountants and advisors.
	“Required Approvals” has the meaning set forth in Section 9.2(c)(iv).
	“Required Contract Consents” has the meaning set forth in Section 3.15(b).
	“Required Certificate Amendment Vote” has the meaning set forth in Section 3.33(a).
	“Required Merger Stockholder Vote” has the meaning set forth in Section 3.33(a).
	“Resumption Notice” has the meaning set forth in Section 6.1(b)(ii).
	“Returns” has the meaning set forth in Section 3.22(b).
	“Rights Agreement” shall mean the Amended and Restated Investors’ Rights Agreement dated as of March 30, 2001, by and among Target and certain Stockholders, as amended.
	“S-3” has the meaning set forth in Section 6.1(b).
	“SEC” has the meaning set forth in Section 4.2.
	“Second Certificate of Merger” has the meaning set forth in Section 2.2.
	“Securities Act” has the meaning set forth in Section 3.12.
	“Signing Date Price” has the meaning set forth in Section 2.6(c).
	“Standardized Licenses” has the meaning set forth in Section 3.10(f).
	“Stockholder” has the meaning set forth in Section 2.6(e).
	“Stockholder Indemnified Person” and “Stockholder Indemnified Persons” have the meanings set forth in Section 9.2(c).
	“Stockholders’ Agent” has the meaning set forth in the introductory paragraph.

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	“Stockholders’ Agreement” shall mean the Amended and Restated Stockholders’ Agreement dated as of March 30, 2001, by and among Target and certain Stockholders, as amended.
	“Subsequent Patent Firm” has the meaning set forth in Section 2.6(m)(ii).
	“Subsidiary” has the meaning set forth in Section 3.1.
	“Superior Proposal” has the meaning set forth in Section 6.23(d).
	“Survival Period” has the meaning set forth in Section 9.2(a).
	“Surviving Corporation” has the meaning set forth in Section 2.1.
	“Suspension Notice” has the meaning set forth in Section 6.1(b)(ii).
	“Suspension Right” has the meaning set forth in Section 6.1(b)(ii).
	“Surviving Corporation I” has the meaning set forth in Section 2.1.
	“Target” has the meaning set forth in the introductory paragraph.
	“Target 401(k) Plan” has the meaning set forth in Section 7.2(n).
	“Target Balance Sheet” has the meaning set forth in Section 3.7.
	“Target Balance Sheet Date” has the meaning set forth in Section 3.6.
	“Target Capital Stock” has the meaning set forth in Recital B.
	“Target Common Stock” has the meaning set forth in Recital B.
	“Target Disclosure Schedule” has the meaning set forth in Section 3.
	“Target Employee Plans” has the meaning set forth in Section 3.23(a).
	“Target Financial Statements” has the meaning set forth in Section 3.4(a).
	“Target Material Adverse Effect” has the meaning set forth in Section 3.1.
	“Target Option” has the meaning set forth in Section 2.6(f)(i).
	“Target Option Plan” has the meaning set forth in Section 3.5(a).
	“Target Preferred Stock” has the meaning set forth in Recital B.
	“Target Selected Applications” has the meaning set forth in Section 2.6(m)(i).
	“Target Selection Date” has the meaning set forth in Section 2.6(m)(i).
	“Target Warrants” has the meaning set forth in Section 3.5(a).
	“Target’s Closing Working Capital” shall mean shall mean (i) the total current assets (excluding deferred expenses) of Target at Closing, including cash, cash equivalents, accounts receivable net of appropriate reserves, inventory and prepaid expenses, less (ii) the total current liabilities (excluding deferred revenue) of Target at Closing, all as defined under GAAP.
	“Target’s Current Facilities” has the meaning set forth in Section 3.21(b).
	“Target’s Facilities” has the meaning set forth in Section 3.21(b).
	“Target’s Patent Firm” has the meaning set forth in Section 2.6(m)(i).
	“Tax” and “Taxes” have the meanings set forth in Section 3.22(a).
	“Ten Day Notice” has the meaning set forth in Section 6.23(a).
	“Thirty Day Notice” has the meaning set forth in Section 6.23(a).
	“Topping Offer” has the meaning set forth in Section 6.23(b).

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	“Trademark Rights” has the meaning set forth in Section 3.10(a)(vii).
	“Trade Secret Information” has the meaning set forth in Section 3.10(i).
	“Transaction Expenses” shall mean any fee, cost, expense, payment or expenditure of Target incurred or accrued through the Effective Time of Merger I in connection with this Agreement or the transactions contemplated hereby; provided, however, that “Transaction Expenses” shall in no event include (i) any employee severance or integration fee, cost, expense, payment or expenditure incurred at the direction of Acquiror, (ii) the Directed Options (including any amounts required to be withheld as a result of the issuance of the Directed Options), (iii) any expense paid or payable relating to or arising out of the Rights Agreement or (iv) any filing fees incurred in connection with efforts to obtain any clearances, approvals or consents or the expiration of waiting periods under HSR or foreign antitrust or competition laws.
	“Transaction Expense Threshold” has the meaning set forth in Section 2.6(b).
	“Updated Schedule” has the meaning set forth in Section 6.12.
	“USPTO” shall mean the United States Patent and Trademark Office.
	“Warrant Earn-out Shares” has the meaning set forth in Section 2.6(g).
	“Warrant Exchange Ratio” has the meaning set forth in Section 2.6(g).
	“WARN” has the meaning set forth in Section 3.23(k).
	“Working Capital Threshold” has the meaning set forth in Section 2.6(b).

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	(a) The per share price shall equal the amount obtained by dividing (A) $600,000,000, as adjusted pursuant to Section 2.6(b) (the “Initial Purchase Price”) by (B) the Fully Diluted Share Number (the “Per Share Purchase Price”).

(i) Each share of Target Preferred Stock issued and outstanding immediately prior to the Effective Time of Merger I (excluding shares to be cancelled in accordance with Section 2.6(h) and Dissenting Shares) shall be converted and exchanged into the right to receive an amount equal to two (2) times the Per Share Purchase Price, a portion of which, equal to the Preferred Equity Percentage, shall be payable with a fraction (the “Preferred Exchange Ratio”) of a share of validly issued, fully paid and nonassessable common stock, $0.0001 par value, of Acquiror (“Acquiror Common Stock”) which equals the amount obtained by (A) dividing two (2) times the Per Share Purchase Price by the Average Closing Price and (B) multiplying the quotient of (A) by the Preferred Equity Percentage, and the remainder of which shall be payable in cash (the “Initial Cash Consideration”). The “Preferred Equity Percentage” shall mean the percentage resulting from (I) the Preferred Equity Amount divided by (II) the aggregate amount of the Initial Purchase Price that Stockholders are eligible to receive based on shares of Target Preferred Stock held by them and issued and outstanding immediately prior to the Effective Time of Merger I (excluding shares to be cancelled in accordance with Section 2.6(h) and Dissenting Shares), based on the Per Share Purchase Price. Schedule 2.6(a)(i) attached hereto reflects a sample calculation pursuant to this Section 2.6.

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(ii) Each share of Target Common Stock issued and outstanding immediately prior to the Effective Time of Merger I (excluding shares to be cancelled in accordance with Section 2.6(h) and Dissenting Shares) shall be converted and exchanged into the right to receive an amount equal to the Per Share Purchase Price, which shall be payable with a fraction (the “Common Exchange Ratio”) of a share of validly issued, fully paid and nonassessable Acquiror Common Stock which equals the amount obtained by dividing the Per Share Purchase Price by the Average Closing Price.

	(b) To the extent (i) Target’s Estimated Closing Working Capital at the Closing Date (but without deduction of any paid, incurred or accrued Transaction Expenses) is less than $46,500,000, reduced by (A) $3,500,000 for each calendar month (or portion thereof) following June 30, 2005 (pro-rated for partial months), (B) any employee severance or integration fee, cost, expense, payment or expenditure that is paid, incurred or accrued at the direction of Acquiror, (C) any expense paid, incurred or accrued relating to or arising out of the Rights Agreement and any filing fees incurred in connection with efforts to obtain any clearances, approvals or consents or the expiration of waiting periods under HSR or foreign antitrust or competition laws, (D) all expenses of Target relating to actions, suits, proceedings, claims, arbitrations or investigations commenced following the public announcement of this Agreement and the transactions contemplated hereby and attributable to such public announcement and transactions, and (E) any expense paid, incurred or accrued to purchase Directed Inventory, such applicable amount being the “Working Capital Threshold,” or (ii) Target’s Transactions Expenses exceed $10,000,000 in the aggregate (the “Transaction Expense Threshold”), the Initial Purchase Price shall be reduced by an amount equal to the sum of (I) the amount, if any, by which the Working Capital Threshold exceeds Target’s Estimated Closing Working Capital at the Closing Date pursuant to Section 6.18 (and as determined in accordance with this Section 2.6), and (II) the amount, if any, by which Target’s Transaction Expenses exceed the Transaction Expense Threshold (the sum of (I) and (II) being the “Adjustment Amount”); provided, however, that the amount, if any by which Target’s Estimated Closing Working Capital at the Closing Date exceeds the Working Capital Threshold shall be offset against the Adjustment Amount.
	(c) Using the lower of the closing price per share for the Acquiror Common Stock on the Nasdaq National Market on the trading day immediately prior to the date of this Agreement (the “Signing Date Price”) and the closing price for the Acquiror Common Stock on the Nasdaq National Market on the trading day immediately prior to the Closing Date (the “Closing Date Price”), if the value of the Aggregate Equity Consideration which the holders of shares of Target Common Stock and Target Preferred Stock issued prior to May 1, 2005 are entitled to receive (the “Assessable Equity Consideration) would be less than forty percent (40%) of the amount of the Assessable Merger Consideration (as defined below), then the number of shares of Acquiror Common Stock that the holders of shares Target Preferred Stock outstanding immediately prior to the Effective Time of Merger I are entitled to receive (other than Dissenting Shares and shares to be cancelled in accordance with Section 2.6(h)) shall automatically be increased and the Initial Cash Consideration payable to such holders shall automatically be decreased (with the aggregate value of the Initial Purchase Price payable to each such holder remaining the same, based on the Average Closing Price) such that, after such adjustment, the value (using the lower of the Signing Date Price and the Closing Date Price) of the Assessable Equity Consideration is equal to forty percent (40%) of the Assessable Merger Consideration. In the event it is determined with finality (either via non-appealable award(s) or judgment(s) or via binding settlement(s)) that there are any amounts paid or payable to Dissenting Stockholders in respect of Dissenting Shares in excess of the Dissenting Stockholders’ pro-rata share of the Assessable Merger Consideration (the “Excess Dissenters Consideration”), Acquiror shall, immediately after the full amount of Excess Dissenters Consideration is known with finality and immediately prior to payment thereof to Dissenting Stockholders, issue to the former holders of shares of Target Common Stock and Target Preferred Stock (other than Dissenting Shares and shares to be cancelled in accordance with Section 2.6(h)), or to their respective successors and assigns, additional freely tradable shares of Acquiror Common Stock such that, after such issuance, the value of all shares of Acquiror Common Stock (using the lower of the Signing Date Price and the Closing Date Price) issued by Acquiror pursuant to this Agreement to the former holders of Target Common Stock and Target Preferred Stock issued prior to May 1, 2005 is equal to forty

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	percent (40%) of the sum of the Assessable Merger Consideration and the Excess Dissenters Consideration. The value of any Acquiror Common Stock issued pursuant to the preceding sentence (determined by using the closing price for the Acquiror Common Stock on the Nasdaq National Market on the trading day immediately prior to such issuance) shall offset dollar-for-dollar the first amounts which may thereafter become payable by Acquiror to such holders pursuant to Section 2.6(m) hereof. Notwithstanding the foregoing, no fractional shares of Acquiror Common Stock shall be issued pursuant to this Section 2.6(c) and in lieu thereof, Acquiror shall pay cash equal to the product of such fraction multiplied by the closing price of one share of Acquiror Common Stock on the date thereof (the “Fractional Share Payments”). The intent of this Section 2.6(c) is to ensure that the “continuity of proprietary interest” requirement of Treasury Regulations Section 1.368-1(e) is met and shall be construed to effectuate such intent. In no event shall any change in the composition of the Merger Consideration pursuant to this Section 2.6(c) reduce the aggregate amount of consideration paid by Acquiror to the Stockholders hereunder. As used herein “Assessable Merger Consideration” shall mean the value of the Aggregate Equity Consideration (using the lower of the Signing Date Price and the Closing Date Price), the Initial Cash Consideration and the maximum permitted Additional Payment Amount which the holders of shares of Target Common Stock and Target Preferred Stock outstanding immediately prior to the Effective Time of Merger I (other than Dissenting Shares and shares to be cancelled in accordance with Section 2.6(h)) are entitled to receive (assuming the occurrence of the Patent Milestone Date).
	(d) As soon as practicable (and in any event within sixty (60) days following the Closing), Acquiror shall prepare and deliver to the Stockholders’ Agent the Closing Balance Sheet, a calculation of Target’s Closing Working Capital based on such Closing Balance Sheet (the “Closing Working Capital Calculation”) and all work papers and back-up materials relating thereto. The Closing Balance Sheet and the Closing Working Capital Calculation shall be conclusive and binding on the parties hereto unless the Stockholders’ Agent gives written notice of any objections thereto setting forth in reasonable detail the amounts in dispute and the basis for such dispute (a “Purchase Price Objection Notice”) to Acquiror within thirty (30) days after its receipt of the Closing Balance Sheet, Closing Working Capital Calculation and all work papers and back-up materials relating thereto. From and after the Closing and so long as any dispute set forth in a Purchase Price Objection Notice is outstanding and unresolved, Acquiror shall afford the Stockholders’ Agent and its Representatives with reasonable access during normal business hours to the applicable financial records of the Surviving Corporation so as to enable their review of the Closing Balance Sheet and Closing Working Capital Calculation. If the Stockholders’ Agent delivers a Purchase Price Objection Notice as provided above, Acquiror and the Stockholders’ Agent shall attempt in good faith to resolve such dispute, and any resolution by them as to any disputed amounts shall be final, binding and conclusive. If Acquiror and the Stockholders’ Agent are unable to resolve, despite good faith negotiations, all disputes reflected in the Purchase Price Objection Notice within thirty (30) days thereafter (the “Purchase Price Resolution Period”), then Acquiror and the Stockholders’ Agent will, within thirty (30) days after the expiration of the Purchase Price Resolution Period, submit any such unresolved dispute to the Independent Accounting Firm. Acquiror and the Stockholders’ Agent shall provide to the Independent Accounting Firm all work papers and back-up materials relating to the unresolved disputes requested by the Independent Accounting Firm to the extent available to Acquiror or its Representatives or the Stockholders’ Agent or its Representatives. Acquiror and the Stockholders’ Agent shall be afforded the opportunity to present to the Independent Accounting Firm any material related to the unresolved disputes and to discuss the issues with the Independent Accounting Firm; provided, however, that no such presentation or discussion shall occur without the presence of a representative of both Acquiror and the Stockholders’ Agent. The determination by the Independent Accounting Firm, as set forth in a notice to be delivered to Acquiror and the Stockholders’ Agent within thirty (30) days after the submission of the unresolved disputes to the Independent Accounting Firm, shall be final, binding and conclusive on Acquiror and the Stockholders’ Agent. The determination of the Independent Accounting Firm shall be limited to the disagreements submitted to the Independent Accounting Firm and shall be limited in scope as to whether: (i) the Closing Balance Sheet and Closing Working Capital Calculation were prepared in accordance with GAAP and, to the

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	extent consistent with GAAP, on the basis of the same accounting principles and practices used by Target in preparing the Target Balance Sheet and (ii) there were any mathematical errors in the calculation of the Closing Date Balance Sheet and the Closing Working Capital Calculation. The fees and expenses of the Independent Accounting Firm shall be split equally between Acquiror and the Stockholders’ Agent. Target’s Closing Working Capital reflected in the Closing Working Capital Calculation, as revised to reflect the resolution of any and all disputes by Acquiror and the Stockholders’ Agent and/or the Independent Accounting Firm, shall be deemed to be the “Closing Working Capital.”
	(e) Closing Payment Schedule. At the Closing, Target shall deliver to Acquiror a definitive closing payment schedule (the “Closing Payment Schedule”) accurately setting forth: (i) the name of each holder of Target Capital Stock immediately prior to the Effective Time of Merger I (after giving effect to any exercises of Target Options or Target Warrants prior to the Effective Time of Merger I) (each, a “Stockholder”); (ii) the number of shares of Target Capital Stock of each class and series held by each such Stockholder immediately prior to the Effective Time of Merger I; (iii) the cash amount of the Additional Patent Consideration to which each Stockholder may be entitled assuming the terms and conditions of Section 2.6(m)(i) are satisfied and that there has been no offset of any portion of the Additional Patent Consideration pursuant to Section 9 hereof; (iv) the cash amount to be withheld and contributed to the Expenses Fund on behalf of each such Stockholder pursuant to Section 2.7(i); (v) the shares of Acquiror Common Stock to be withheld and contributed to the Expenses Fund on behalf of each such Stockholder pursuant to Section 2.7(i); (vi) the Cash Consideration, if any, and the number of shares of Acquiror Common Stock that each such Stockholder is entitled to receive at the Closing pursuant to Section 2.6 (after deduction of the Expenses Fund Cash and Expenses Fund Shares to be withheld and contributed to the Expenses Fund on behalf of such Stockholder pursuant to Section 9.7); and (vii) the estimated aggregate amount of Target’s Transaction Expenses. The Closing Payment Schedule shall be accompanied by reasonable documentation which supports the information provided therein (including written confirmations from those Target Representatives, if any, identified by Acquiror on Schedule 2.6(e) as to all amounts paid, owed and to be owed by Target to such Target Representative in connection with the transactions contemplated by this Agreement).
	(f) Target Stock Options.

(i) At the Effective Time of Merger I, Acquiror will assume each option to purchase Target Common Stock that was granted under the Target Option Plan and is outstanding immediately prior to the Effective Time of Merger I (each a “Target Option”) and (A) each Target Option shall thereby be converted into an option (an “Assumed Option”) to purchase the number of shares of Acquiror Common Stock equal to the product of the number of shares of Target Common Stock that were issuable upon exercise of such Target Option (whether or not then exercisable or vested) immediately prior to the Effective Time of Merger I multiplied by the Option Exchange Ratio (as defined below), rounded down to the nearest whole number of shares of Acquiror Common Stock, and (B) the per share exercise price for the shares of Acquiror Common Stock issuable upon exercise of such Assumed Option shall be equal to the quotient obtained by dividing the per share exercise price of the Target Option immediately prior to the Closing Date by the Option Exchange Ratio, rounded up to the nearest whole cent. Each Assumed Option that is not a Directed Option (an “Existing Option”) shall also include the right to receive, upon or following the exercise of such Existing Option and subject to the occurrence of the Patent Milestone Date, shares of Acquiror Common Stock (“Option Earn-out Shares”), as set forth below. The number of Option Earn-out Shares allocated to an Existing Option shall be the number of shares of Acquiror Common Stock (rounded down to the nearest whole share) having a fair market value (based upon the closing price of the Acquiror Common Stock on the Patent Milestone Date, Indemnification Termination Date or Patent Milestone Option Issuance Date, as the case may be) equal to the product of (a) the Per Share Additional Patent Consideration multiplied by (b) the number of shares of Target Common Stock that were issuable upon exercise of such Existing Option (whether or not then exercisable or vested) immediately prior to the Effective Time of Merger I; provided, however, that with respect to any Option Earn-out Shares issuable as of the Patent Milestone Option Issuance Date as set forth

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	below, the Per Share Additional Patent Consideration shall be determined without regard to any pending or future claims for indemnification pursuant to Section 9. Option Earn-out Shares shall be allocated to each vesting tranche of an Existing Option proportionate to the number of shares of Acquiror Common Stock subject to such tranche upon assumption, and shall remain subject to any repurchase right applicable to the tranche. Option Earn-out Shares shall be issuable on the later of (a) the date of exercise of the relevant tranche, and (b)(i) if the Patent Milestone Date occurs on or after the Indemnification Termination Date, the Patent Milestone Date or (ii) if the Patent Milestone Date occurs prior to the Indemnification Termination Date, (A) with respect to a portion of the Per Share Additional Patent Consideration equal to the amount of Per Share Additional Patent Consideration to which the Stockholders are entitled to receive on the Patent Milestone Date, the Patent Milestone Date and (B) with respect to the remainder of the Per Share Additional Patent Consideration, the earlier of the Patent Milestone Option Issuance Date and the Indemnification Termination Date. In no event shall any Directed Options be entitled to receive any Option Earn-out Shares. No holder of an Existing Option shall be required to pay any additional exercise price with respect to Option Earn-out Shares. Except for the foregoing adjustments and as otherwise provided herein, all the terms and conditions in effect for each Assumed Option immediately prior to the Effective Time of Merger I shall continue in effect following the assumption of such option in accordance with this Agreement. For the purposes of this Section 2.6(f), the term “Option Exchange Ratio” shall mean an amount equal to the quotient obtained by dividing (x) the Per Share Purchase Price by (y) the average of the closing prices of a share of Acquiror Common Stock on the Nasdaq National Market for all of the trading days between the date of this Agreement and the date which is three (3) trading days prior to the trading date on which the Effective Time of Merger I occurs (the “Average Closing Price”).
	(ii) Prior to the Effective Time of Merger I, Target and Acquiror shall take all action that may be necessary (under the Target Option Plans or otherwise) to effectuate the provisions of this Section 2.6(f) and to ensure that, from and after the Effective Time of Merger I, holders of Target Options have no rights with respect to such Target Options other than those specifically provided in this Section 2.6.
	(iii) Target has represented and warranted in Section 3.5 to Acquiror that Schedule 2.6(f) accurately sets forth the following information as of July 19, 2005: (i) the name of the holder of each outstanding Target Option; (ii) the Target Option Plan pursuant to which such Target Option was granted; (iii) the number of shares of Target Common Stock subject to such Target Option, and the applicable exercise price per share of Target Common Stock; (iv) the vesting schedule applicable to such Target Option; (v) to the extent applicable, a description of any acceleration of vesting provisions to which such Target Option is subject; (vi) the expiration date of such Target Option; and (vii) the tax status of such Target Option. At the Closing, Target shall deliver to Acquiror a definitive closing option schedule (the “Closing Option Schedule”) accurately setting forth: (A) the information described in clauses “(i)” through “(vi)” of the preceding sentence immediately prior to the Effective Time of Merger I, (B) the Option Exchange Ratio and (C) the number of shares of Acquiror Common Stock that will be subject to each Target Option immediately after its assumption by Acquiror at the Effective Time of Merger I, and the applicable exercise price per share of Acquiror Common Stock.

(g) Target Warrants. At the Effective Time of Merger I, Acquiror will grant to each holder of a warrant to purchase Target Preferred Stock described on Schedule 2.6(g) (to the extent not exercised prior to the Effective Time of Merger I) (the “Assumed Target Warrants”) a warrant (each, an “Acquiror Warrant” and collectively, the “Acquiror Warrants”) to purchase the number of shares of Acquiror Common Stock, rounded down to the nearest whole number of shares of Acquiror Common Stock, equal to the product of the number of shares of Target Preferred Stock that were issuable upon exercise of such Assumed Target Warrant (whether or not then exercisable or vested) immediately prior to the Effective Time of Merger I multiplied by the Warrant Exchange Ratio (as defined below), rounded down to the nearest whole number of shares of Acquiror Common Stock, and the per share

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	exercise price for the shares of Acquiror Common Stock issuable upon exercise of each such Acquiror Warrant shall be equal to the quotient obtained by dividing the exercise price of such Assumed Target Warrant immediately prior to the Closing Date by the Warrant Exchange Ratio, rounded up to the nearest whole cent. Except for the foregoing adjustments and as otherwise provided herein, each Acquiror Warrant shall be granted on the terms and conditions in effect for such Assumed Target Warrant immediately prior to the Effective Time of Merger I. For the purposes of this Section 2.6(g), the term “Warrant Exchange Ratio” shall mean an amount equal to the quotient obtained by dividing (x) two (2) times the Per Share Purchase Price by (y) the Average Closing Price. In addition, each Acquiror Warrant shall include the right to receive, upon or following the exercise of such Acquiror Warrant and subject to the occurrence of the Patent Milestone Date, shares of Acquiror Common Stock (“Warrant Earn-out Shares”), in addition to the shares of Acquiror Stock determined by the Warrant Exchange Ratio, as set forth below. The number of Warrant Earn-out Shares allocated to an Acquiror Warrant shall be the number of shares of Acquiror Common Stock (rounded down to the nearest whole share) having a fair market value (based upon the closing price of the Acquiror Common Stock on the Patent Milestone Date or the Indemnification Termination Date, as the case may be) equal to the product of (i) two (2) times the Per Share Additional Patent Consideration multiplied by (ii) the number of shares of Target Common Stock that were issuable under the relevant Assumed Target Warrant immediately prior to the Effective Time of Merger I. Warrant Earn-out Shares shall be allocated to each vesting tranche of an Acquiror Warrant proportionate to the number of shares of Acquiror Common Stock subject to such tranche upon the grant of the Acquiror Warrant. Warrant Earn-out Shares shall be issuable on the later of (a) the date of exercise of the relevant tranche, and (b)(i) if the Patent Milestone Date occurs on or after the Indemnification Termination Date, the Patent Milestone Date or (ii) if the Patent Milestone Date occurs prior to the Indemnification Termination Date, (A) with respect to a portion of the Per Share Additional Patent Consideration equal to the amount of Per Share Additional Patent Consideration to which the Stockholders are entitled to receive on the Patent Milestone Date, the Patent Milestone Date and (B) with respect to the remainder of the Per Share Additional Patent Consideration, the Indemnification Termination Date.
	(h) Cancellation of Target Capital Stock Owned by Acquiror and Treasury Stock. At the Effective Time of Merger I, each share of Target Capital Stock owned by Acquiror or any direct or indirect wholly owned subsidiary of Acquiror immediately prior to the Effective Time of Merger I, and each share of Target Capital Stock that is held in the treasury of Target, shall automatically be canceled and extinguished without any conversion thereof and no Merger Consideration shall be deliverable in exchange therefor.
	(i) Capital Stock of Merger Sub I. At the Effective Time of Merger I, each share of common stock of Merger Sub I issued and outstanding immediately prior to the Effective Time of Merger I shall be converted into and exchanged for one validly issued, fully paid and nonassessable share of common stock of Surviving Corporation I. Each stock certificate of Merger Sub I evidencing ownership of any such shares shall continue to evidence ownership of such shares of capital stock of Surviving Corporation I.
	(j) Adjustments to Exchange Ratio. The Preferred Exchange Ratio, Common Exchange Ratio, the Option Exchange Ratio, the Warrant Exchange Ratio and Merger Consideration payable with respect to Target Capital Stock shall be adjusted to reflect fully the effect of any stock split, reverse split, stock dividend (including any dividend or distribution of securities convertible into Acquiror Common Stock, Target Preferred Stock or Target Common Stock), reorganization, recapitalization or other like change with respect to Acquiror Common Stock or Target Capital Stock occurring after the date hereof and prior to the Effective Time of Merger I.
	(k) Fractional Shares. No fraction of a share of Acquiror Common Stock will be issued, but in lieu thereof each Stockholder who would otherwise be entitled to a fraction of a share of Acquiror Common Stock (after aggregating all fractional shares of Acquiror Common Stock to be received by such holder) shall receive from Acquiror an amount of cash (rounded to the nearest whole cent) equal to the product of (i) such fraction, multiplied by (ii) the Average Closing Price. The fractional share

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	interests of each Stockholder shall be aggregated, so that no Stockholder shall receive cash in respect of fractional share interests in an amount greater than the value of one full share of Acquiror Common Stock.
	(l) Appraisal Rights. Notwithstanding anything in this Agreement to the contrary, shares of Target Capital Stock that are issued and outstanding immediately prior to the Effective Time of Merger I and which are held by Stockholders who did not vote in favor of the adoption of this Agreement (the “Dissenting Shares”), which Stockholders comply with all of the relevant provisions of the DGCL to exercise appraisal rights (each, a “Dissenting Stockholder” and collectively, the “Dissenting Stockholders”), shall not be converted into or be exchangeable for the right to receive Merger Consideration, unless and until such Stockholders shall have failed to perfect or shall have effectively withdrawn or lost their rights to appraisal under the DGCL, but will be entitled to appraisal by the Delaware Court of Chancery and to payment of the “fair value” of such shares in cash exclusive of any element of value arising from the accomplishment or expectation of the Merger together with a fair rate of interest, as determined by such court. If any Dissenting Stockholders shall have failed to perfect or shall have effectively withdrawn or lost such right, such holder’s shares of Target Capital Stock, shall thereupon be converted into and become exchangeable for the right to receive, as of the Effective Time of Merger I, the Merger Consideration to which it is entitled. Target shall give Acquiror (a) prompt notice of any demands for appraisal of any Target Capital Stock or attempted withdrawals of such demands and any other instruments served pursuant to the DGCL and received by Target relating to Stockholders’ rights of appraisal, and (b) the opportunity, subject to reasonable consultation with the Stockholders’ Agent, to direct all negotiations and proceedings with respect to demands for appraisal under the DGCL. Neither Target nor the Surviving Corporation shall, except with the prior written consent of Acquiror, voluntarily make any payment with respect to, or settle or offer to settle, any such demand for payment. If any Dissenting Stockholder shall fail to perfect or shall have effectively withdrawn or lost the right to dissent, the shares of Target Capital Stock held by such Dissenting Stockholder shall thereupon be treated as though such shares had been converted into the right to receive the Merger Consideration pursuant to this Agreement. Acquiror shall contribute or cause to be contributed to Surviving Corporation funds sufficient from time to time to make all payments with respect to Dissenting Stockholders who have perfected their rights to appraisal under the DGCL.
	(m) In addition to the Initial Purchase Price set forth in Section 2.6(a) above, Acquiror shall pay to the Stockholders in cash the additional amounts set forth in this Section 2.6(m) (the “Additional Payment Amount” and, together with the Initial Purchase Price, the “Aggregate Purchase Price”), in each case less amounts subject to offset pursuant to Section 9 hereof, subject to and in accordance with the following:

(i) Target represents and warrants to Acquiror that Target has an aggregate of at least one hundred twenty-five (125) U.S. patent applications pending as of July 21, 2005, with this number being subject to change from time to time as a result of the filing of continuations and/or divisional patent applications claiming priority to a pending application and/or the filing of utility applications claiming the benefit of a pending provisional application (Target’s pending U.S. patent applications, continuation and divisional applications of Target’s pending U.S. patent applications and utility applications which claim benefit to at least one of Target’s pending U.S. patent applications, collectively the “Applications”). Following Acquiror’s review and analysis of the published Applications, Acquiror will select, in its sole discretion, fifteen (15) of the Applications (the “Acquiror Selected Applications”) by written notice to Target no later than ten (10) days after the date of this Agreement (the “Acquiror Selection Date”). Following the Closing Date, the Acquiror Selected Applications will be prosecuted by Acquiror or Acquiror’s agent as selected by Acquiror (which may include Target’s Patent Firm as defined below), in either case, by utilizing reasonably diligent efforts (including to avoid undue delay) and in good faith to achieve issuance of U.S. patents from such applications (the “Prosecution Standard”). Between the Acquiror Selection Date and the Closing Date, Target shall not, nor shall any agent for Target, take any actions in continuing prosecution of the Acquiror Selected Applications. Following the selection by Acquiror of the Acquiror Selected

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Patents, Target shall select by written notice to Acquiror sixty (60) of the Applications other than the Acquiror Selected Applications (the “Target Selected Applications”). Target shall make such selection by no later thirty (30) days after the Acquiror Selection Date (the “Target Selection Date”). In the event that Target fails to make such selection by the Target Selection Date, Acquiror shall have the right to designate the Target Selected Applications. Promptly following the Closing Date, Target’s current patent counsel (“Target’s Patent Firm”), or a Subsequent Patent Firm (as defined below), shall be instructed by Acquiror to prosecute the Target Selected Applications in accordance with the Prosecution Standard. The Applications other than the Acquiror Selected Applications and the Target Selected Applications (the “Remaining Applications”) will be prosecuted in accordance with the Prosecution Standard by Acquiror or an agent selected by Acquiror (which agent may include Target’s Patent Firm). From and after the Closing Date, Acquiror, consistent with Target’s past practices in the ordinary course of business, shall pay in a timely manner all reasonable fees and expenses incurred in connection with the prosecution of the Target Selected Applications by Target’s Patent Firm or the Subsequent Patent Firm (as defined below). With respect to the Target Selected Applications, Target’s Patent Firm or any Subsequent Patent Firm shall be instructed by Acquiror (for itself and on behalf of the Stockholders’ Agent) that during the period prior to the Patent Milestone Date (as defined below) it shall diligently seek and obtain claims as similar as possible to the claims currently pending in such Applications except where in the exercise of such firm’s professional judgment (and taking Acquiror’s reasonable guidance into consideration) and in response to office actions received from the USPTO, modifications to the claims (including drafting narrower claims, canceling claims and/or pursuing claims in divisional or continuation Applications) are necessary to achieve the issuance of patents, in which case such firm shall be instructed to seek claims as nearly broad as the original claims as reasonably possible (the foregoing being the “Prosecution Instructions”). For the period be tween the date of this Agreement and the Closing Date, Target shall instruct Target’s Patent Firm to prosecute all Applications in accordance with the Prosecution Instructions; provided, however, that (i) such instructions shall not apply with respect to the Acquiror Selected Applications after the Acquiror Selection Date, and (ii) during such period Target’s Patent Firm shall not be required to (but may) seek Acquiror’s guidance. For the purposes of this Section 2.6(m), a patent shall be deemed to have issued from an Application in the event of (i) the actual issuance of any patent by the USPTO with respect to such Application as of the date of such issuance or (ii) the abandonment, by Acquiror or its agent, of the prosecution of any Acquiror Selected Applications or any of the Remaining Applications being prosecuted by Acquiror or its agent. Acquiror shall provide the Stockholders’ Agent with a quarterly written update informing the Stockholders’ Agent as to (x) the issuance by the USPTO of any patents, (y) the receipt by Acquiror, its agent or Target’s Patent Firm of any Notice of Allowance, and (z) the receipt of any office action from the USPTO, in each case with respect to any Applications following the Closing Date until the Patent Milestone Date. Target shall notify Acquiror in writing as soon as reasonably practicable following the issuance of a patent from any Application at any time subsequent to July 21, 2005 and prior to the Closing Date, and Acquiror, in addition to the quarterly reports described above, shall notify the Stockholders’ Agent in writing as soon as reasonably practicable following the issuance or deemed issuance of a patent from any Application at any time subsequent to the Closing Date through the Patent Milestone Date. “Patent Milestone Date” means the date of issuance with respect to the twentieth (20th) patent issuing from the Applications. Upon the Patent Milestone Date, the Stockholders shall be entitled to receive in cash (A) for each share of Target Preferred Stock issued and outstanding immediately prior to the Effective Time of Merger I (excluding shares to be cancelled in accordance with Section 2.6(h) and Dissenting Shares) an amount equal to two (2) times the Per Share Additional Patent Consideration and (B) for each share of Target Common Stock issued and outstanding immediately prior to the Effective Time of Merger I (excluding shares to be cancelled in accordance with Section 2.6(h) and Dissenting Shares) an amount equal to the Per Share Additional Patent Consideration. Within thirty (30) days after the Patent Milestone Date, Acquiror shall deliver via wire transfer to the Exchange Agent for distribution to the Stockholders the aggregate amount of Per Share Additional Patent Consideration to which the Stockholders are entitled to receive in accordance with the

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	preceding sentence (the “Additional Patent Consideration”). The “Per Share Additional Patent Consideration” shall be equal to $205,000,000 (or such lesser amounts following any offsets pursuant to Section 9, which offsets shall not exceed $75,000,000 in the aggregate), divided by the Fully Diluted Share Number. Notwithstanding the foregoing, in the event that the Patent Milestone Date occurs prior to the Indemnification Termination Date, then within thirty (30) days of the Patent Milestone Date Acquiror shall deliver via wire transfer to the Exchange Agent for distribution to the Stockholders (I) the amount of the Additional Patent Consideration, less (II) $75,000,000, and less (III) amounts delivered to the Stockholders’ Agent in respect of an Excess Expenses Certificate, and promptly following the Indemnification Termination Date Acquiror shall deliver via wire transfer to the Exchange Agent for distribution to the Stockholders the remaining amount of the Additional Patent Consideration (following any offsets pursuant to Section 9 or amounts delivered to the Stockholders’ Agent in respect of an Excess Expenses Certificate). Notwithstanding the foregoing, at all times following the Patent Milestone Date, Acquiror shall have sole discretion as to continued prosecution of any and all Applications and shall have no further obligations with respect thereto pursuant to this Agreement. If the Patent Milestone Date does not occur on or before the eighth (8th) anniversary of the Closing Date, then Acquiror shall no longer have any obligation to pay the Additional Patent Consideration to the Stockholders.
	(ii) Notwithstanding the foregoing, if (A) at any time the attorney(s) at Target’s Patent Firm who, as of the date of this Agreement, principally work with Target to prepare and file Target’s U.S. patent applications, leave Target’s Patent Firm to practice at another law firm or otherwise become unable or unwilling to prosecute the Target Selected Applications or (B) at any time following the first anniversary of the Closing Date, the Stockholders’ Agent reasonably determines that a different law firm should prosecute the Target Selected Applications (which different law firm shall be selected only with the consent of Acquiror, such consent not to be unreasonably withheld), then the Stockholders’ Agent may, upon written notice to Acquiror, designate such other law firm (provided that prior or current engagement of such law firm by any company adverse to Acquiror in current or threatened litigation shall constitute a reasonable ground for non-acceptance by Acquiror) (the “Subsequent Patent Firm”) to prosecute the Target Selected Applications as provided herein. Promptly after receipt of such designation from Stockholders’ Agent and so as to not compromise prosecution of the Target Selected Applications, Acquiror shall provide Target’s Patent Firm with written notice of termination with respect to the Target Selected Applications and the identity of a representative of the Subsequent Patent Firm to whom such applications should be transferred.

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	(i) “IP Rights” means any and all of the following in any country: (A) Copyrights, Patent Rights, Trademark Rights, Domain Names, moral rights, trade secrets, know how rights, technology, inventions, designs, proprietary information, manufacturing and operating specifications, formulae, technical data, computer programs, hardware, software and other intellectual property rights and intangible assets; and (B) the right (whether at law, in equity, by contract or otherwise) to use or otherwise exploit any of the foregoing.
	(ii) “Copyrights” means all copyrights and copyrightable works, mask works and mask work rights, including without limitation all rights of authorship, use, publication, reproduction, distribution, performance, transformation, moral rights and rights of ownership of copyrightable and mask works and all rights to register and obtain renewals and extensions of registrations, together with all other interests accruing by reason of international copyright treaties.
	(iii) “Domain Names” means all URL registrations for Internet websites.
	(iv) “Inbound License Rights” means, collectively, any license (express or implied) granted to Target, any covenant not to assert or other immunity from suit granted to Target by any Person, any action or omission by any Person other than Target that operates in such a way that would give rise to a laches or equitable estoppel claim by Target that would result in the avoidance of a claim of infringement by Target, or any other right granted to Target pursuant to which Target could use, make, offer for sale, sell, import, or distribute any product.
	(v) “Outbound License Rights” means, collectively, any license (express or implied) granted by Target to any Person, any covenant not to assert or other immunity from suit granted by Target to any Person, any action or omission by Target that operates in such a way that would give rise to a laches or equitable estoppel claim by any Person that would result in the avoidance of a claim of infringement by any such Person, or any other right granted by Target to any Person pursuant to which such Person could use, make, offer for sale, sell, import, or distribute any product.
	(vi) “Patent Rights” means all issued patents and pending patent applications (which for purposes of this Agreement shall include, without limitation, utility patents, utility models, design patents, certificates of invention and applications for certificates of invention and related priority rights) in any country, including without limitation, all provisional applications, substitutions, continuations, continuations-in-part, divisions, renewals, reissues, re-examinations and extensions thereof.
	(vii) “Trademark Rights” means all trademarks, registered trademarks, applications for registration of trademarks, service marks, registered service marks, applications for registration of service marks, trade names, registered trade names and applications for registrations of trade names.
	(viii) “Public Software” shall mean software subject to (i) any version of the GNU General Public License (the “GPL”), (ii) any version of the GNU Lesser Public License (formerly known as the GNU Library Public License) (the “LGPL”), (iii) any license that satisfies any version of the Open Source Definition of the Open Source Initiative, (iv) any other license of any computer program that requires source code of the computer program to be made generally available to the public or permits or requires any distribution of source code by licensees of the computer program or any derivative work of or work derived from the computer program, and (v) any other license of any computer program (or part thereof)

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(the “first computer program”) if that license requires, as a condition of that license or any right under it, that a modified version of the first computer program or another computer program that is based, in whole or in part, on the first computer program, be licensed to all third parties or the public either implied, royalty-free or on terms that otherwise limit the ability of Target to recover royalties for Target’s products.

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(i) All current and former officers, directors, managers and employees of Target whose duties include or included the development, conception, writing, creation or reduction to practice of IP Rights have executed and delivered to Target an agreement (containing no exceptions or exclusions from Target’s form agreement) regarding the protection of Trade Secret Information and the exclusive and irrevocable assignment to Target of any IP Rights arising from services performed for Target by such Persons, the form of which has been supplied to Acquiror (each an “Employee/ Officer Invention Agreement”).

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	(ii) All current and former consultants and independent contractors to Target whose duties include or included the development, conception, writing, creation or reduction to practice of IP Rights have executed and delivered to Target an agreement (containing no exceptions or exclusions) regarding the protection of Trade Secret Information and the exclusive and irrevocable assignment to Target of any IP Rights arising from services performed for Target by such Persons (each a “Contractor Invention Agreement”).
	(iii) To Target’s Knowledge, no current or former employee, officer, manager, director or independent contractor of Target is in violation of any term of any Employee/ Officer Invention Agreement or Contractor Invention Agreement.
	(iv) No current or former officer, manager, director, employee, stockholder, consultant, independent contractor, any prior owner or predecessor in interest of any IP Rights owned by (or claimed to be owned by) Target has or claims to have any ownership interest or Outbound License Rights in, to or under any IP Rights owned by Target or in which Target claims to have an ownership interest.

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(i) “Environmental Laws” shall mean any applicable foreign, federal, state or local governmental laws (including common laws), statutes, ordinances, codes, regulations, rules, policies, permits, licenses, certificates, approvals, judgments, decrees, orders, directives, or requirements that pertain to the protection of the environment, protection of public health and safety, or protection of worker health and safety, or that pertain to the handling, use, manufacturing, processing, storage, treatment, transportation, discharge, release, emission, disposal, re-use, recycling, or other contact or involvement with Hazardous Materials, including, without limitation, the federal Comprehensive Environmental Response, Compensation and Liability Act of 1980, 42 U.S.C. Section 9601, et seq., as amended (“CERCLA”), and the

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	federal Resource Conservation and Recovery Act, 42 U.S.C. Section 6901, et seq., as amended (“RCRA”).
	(ii) “Hazardous Materials” shall mean any material, chemical, compound, substance, mixture or by-product that is identified, defined, designated, listed, restricted or otherwise regulated under Environmental Laws as a “hazardous constituent,” “hazardous substance,” “hazardous material,” “acutely hazardous material,” “extremely hazardous material,” “hazardous waste,” “hazardous waste constituent,” “acutely hazardous waste,” “extremely hazardous waste,” “infectious waste,” “medical waste,” “biomedical waste,” “pollutant,” “toxic pollutant,” “contaminant” or any other formulation or terminology intended to classify or identify substances, constituents, materials or wastes by reason of properties that are deleterious to the environment, natural resources, worker health and safety, or public health and safety, including without limitation ignitability, corrosivity, reactivity, carcinogenicity, toxicity and reproductive toxicity. The term “Hazardous Materials” shall include without limitation any “hazardous substances” as defined, listed, designated or regulated under CERCLA, any “hazardous wastes” or “solid wastes” as defined, listed, designated or regulated under RCRA, any asbestos or asbestos-containing materials, any polychlorinated biphenyls, and any petroleum or hydrocarbonic substance, fraction, distillate or by-product.

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(a) Acquiror has filed on a timely basis all forms, reports and documents required to be filed with the SEC since October 1, 2002 (all forms, reports and documents filed by Acquiror and its predecessors with the SEC since October 1, 2002, in each case including all exhibits and schedules thereto and documents incorporated by reference therein, together with any documents filed during such period by Acquiror with the SEC on a voluntary basis on Current Reports on Form 8-K, are referred to herein as the “Acquiror SEC Documents”). The Acquiror SEC Documents: (i) complied as to form in all material respects with the requirements of the Securities Act or the Exchange Act, as the case may be, and the rules and regulations thereunder, each as in effect on the date so filed or amended, and (ii) did not at the time they were filed (or if amended or superseded by a filing, which filing must have occurred prior to the date of this Agreement for the Acquiror SEC Documents otherwise filed prior to the date of this Agreement, then on the date of such filing) contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading.

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(b) Each of the audited and unaudited consolidated financial statements (including, in each case, any related notes thereto) contained in the Acquiror SEC Documents (the “Acquiror Financial Statements”) complied as to form in all material respects with applicable accounting requirements and with the published rules and regulations of the SEC with respect thereto as of their respective dates and have been prepared in accordance with GAAP applied on a consistent basis throughout the periods involved (except as may be indicated in the notes thereto or in the Acquiror SEC Documents), and each fairly presents the consolidated financial position of Acquiror and the Acquiror’s Subsidiaries at the respective dates thereof and the consolidated results of their operations and cash flows for the periods indicated, except that the unaudited interim financial statements were or are subject to normal and recurring year-end adjustments and do not contain all of the footnote disclosures required by GAAP.

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	(a) Charter Documents. Cause or permit any amendments to its Certificate of Incorporation or Bylaws, or the applicable charter or other organizational documents, other than the filing of the Certificate of Amendment to the Certificate of Incorporation of Target in substantially the form attached hereto as Exhibit I (the “Certificate Amendment”);
	(b) Dividends; Changes in Target Capital Stock. Declare or pay any dividends on or make any other distributions (whether in cash, stock or property) in respect of any Target Capital Stock or the capital stock of the Subsidiaries, or split, combine or reclassify any of Target Capital Stock or the capital stock of the Subsidiaries or issue or authorize the issuance of any other securities in respect of, in lieu of or in substitution for shares of Target Capital Stock or the capital stock of the Subsidiaries, or repurchase or otherwise acquire, directly or indirectly, any shares of Target Capital Stock, except in the case of repurchases or acquisitions of shares from former employees, directors and consultants in accordance with agreements providing for the repurchase of shares in connection with any termination of service to it or in connection with the administration of Target Employee Plans, each in accordance with past practices;
	(c) Stock Option Plans, Etc. Accelerate, amend or change the period of exercisability or vesting of options or other rights granted under its stock plans or authorize cash payments in exchange for any options or other rights granted under any of such plans, except as may otherwise be required hereunder;
	(d) Issuance of Securities. Issue, deliver or sell or authorize or propose the issuance, delivery or sale of, or purchase or propose the purchase of, any shares of Target Capital Stock or shares of the capital stock of any Subsidiary or securities convertible into, or subscriptions, rights, warrants or options to acquire, or other agreements or commitments of any character obligating it to issue any such shares or other convertible securities other than the issuance of shares of Target Capital Stock pursuant to the exercise of Target Options, Target Warrants or other rights therefore outstanding as of the date of this Agreement; provided, however, that (i) Target may, in the ordinary course of business consistent with past practice, grant options for the purchase of Target Common Stock under the Target Option Plan not to exceed an aggregate of 200,000 shares; and (ii) Target shall, subject to the consummation of Merger I, prior to the Effective Time of Merger I and as specified in writing by Acquiror on or before the later to

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	occur of (A) the date that is 45 days following the date of this Agreement and (B) the date that is 21 days following the date upon which Acquiror has completed its interviews of Target’s employees (unless Acquiror fails to complete such interviews in a timely manner notwithstanding Target’s diligent efforts in making its employees available for such interviews), grant options to purchase Target Common Stock to the employees of Target under the Target Option Plan, having an aggregate Intrinsic Value of up to $26,000,000, unless otherwise agreed to by Acquiror and Target, in the amounts and pursuant to other terms so specified by Acquiror, including, but not limited to, with respect to vesting, exercise price and exercise periods (the “Directed Options”) (provided that (I) in no event shall Target be required to grant or issue any Directed Option in violation of any applicable securities or other laws (with such compliance to be mutually determined in good faith by Acquiror and Target following consultation with their respective legal counsel), (II) Target shall cooperate with Acquiror in determining such securities laws compliance, (III) the actions to be taken by Target shall include (x) seeking the approval of the Directed Options by the Stockholders in connection with Target’s obligations under Section 6.28, (y) to the extent necessary to grant the Directed Options, the amendment of the Target Option Plan to increase the number of shares of Target Common Stock reserved under the Target Option Plan, and (z) seeking the approval of the Stockholders of any such amendment, (IV) the grant of the Directed Options shall be effective immediately prior to, and shall be conditioned upon, the Closing, and (V) the Directed Options shall include grants to the Named Individuals in accordance with the parameters set forth on Schedule 5.1(d)).
	(e) Intellectual Property Rights. Enter into or amend any agreements pursuant to which Target or any Subsidiary transfers to any Person any ownership rights to IP Rights owned by Target or in which Target claims an ownership interest or any other Person is granted any Outbound License Rights with respect to any of Target’s or the Subsidiary’s proposed products (other than such licenses and rights implied by the sale of products to customers) or Target’s IP Rights;
	(f) Dispositions. Sell, lease, license (other than the license of IP Rights, which shall be subject to Section 5.1(e) above) or otherwise dispose of or encumber any of its properties or assets that are in excess of $25,000 in value and material, individually or in the aggregate, to its business, taken as a whole, except for the sale of products or in the ordinary course of business consistent with past practice;
	(g) Indebtedness. Incur any indebtedness for borrowed money, or guarantee any such indebtedness, or issue or sell any debt securities or guaranty any debt securities of others;
	(h) Agreements. Enter into, terminate or amend, (i) any agreement involving the obligation to pay or the right to receive $75,000 or more per annum or $200,000 or more in the aggregate, other than purchase orders issued by Target to its suppliers solely to fulfill written obligations, existing as of the date of this Agreement, of Target to its customers, (ii) any agreement relating to the license, transfer or other disposition or acquisition of IP Rights (other than the license of commercially available software (excluding Public Software) pursuant to a shrinkwrap end user license agreement with customary terms and conditions or a Standardized License, in each case with a purchase prices of less than $10,000) or rights to market or sell Target or Subsidiary products or (iii) any other agreement material to the business or prospects of Target or Subsidiary or that is or would be a Material Contract;
	(i) Payment of Obligations. Pay, discharge or satisfy any claims, liabilities or obligations (absolute, accrued, asserted or unasserted, contingent or otherwise) arising other than in the ordinary course of business, other than the payment, discharge or satisfaction of liabilities reflected or reserved against in the Target Financial Statements or in an amount not exceeding $100,000 in the aggregate;
	(j) Capital Expenditures. Make any capital expenditures, capital additions or capital improvements, in excess of $75,000 individually or $500,000 in the aggregate;
	(k) Insurance. Materially reduce the amount of any material insurance coverage provided by existing insurance policies;
	(l) Termination or Waiver. Take action to terminate or waive any right of substantial value of which Target has Knowledge, other than in the ordinary course of business;

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	(m) Employee Benefit Plans; New Hires; Pay Increases. Amend any Target Employee Plan or adopt any plan that would constitute a Target Employee Plan except as contemplated in or otherwise necessary to implement the transactions contemplated by this Agreement (including, without limitation, the assumption of the Target Options by Acquiror and as set forth in Section 6.29 and Section 5.1(d) and as contemplated under Section 6.28) or comply with applicable laws or regulations, hire any employee, or pay any special bonus, special remuneration or special noncash benefit (except payments and benefits made pursuant to written agreements outstanding on the date hereof and listed on Section 3.23 of the Target Disclosure Schedule), or increase the benefits, salaries or wage rates of its employees, except in the ordinary course of business in accordance with its standard past practice;
	(n) Severance Arrangements. Grant or pay any severance or termination pay or benefits to any director, officer or employee, except for payments made pursuant to written agreements outstanding on the date hereof and disclosed on the Target Disclosure Schedule;
	(o) Lawsuits. Commence a lawsuit other than (i) for the routine collection of bills, (ii) in such cases where Target in good faith determines that failure to commence suit would result in the material impairment of a valuable aspect of Target’s or the Subsidiaries’ businesses, provided that it consults with Acquiror prior to the filing of such a suit or (iii) for a breach of this Agreement;
	(p) Acquisitions. Acquire or agree to acquire by merging with, or by purchasing a substantial portion of the stock or assets of, or by any other manner, any business or any corporation, partnership, association or other business organization or division thereof or otherwise acquire or agree to acquire any assets that are material individually or in the aggregate, to its business, taken as a whole;
	(q) Taxes. Other than in the ordinary course of business, make or change any material election in respect of Taxes, adopt or change any accounting method in respect of Taxes, file any material Tax Return or any amendment to a material Tax Return, enter into any closing agreement, settle any material claim or assessment in respect of Taxes, or consent to any extension or waiver of the limitation period applicable to any material claim or assessment in respect of Taxes;
	(r) Revaluation. Materially revalue any of its assets, including without limitation writing down the value of inventory or writing off notes or accounts receivable in each case other than in the ordinary course of business or as required by GAAP;
	(s) Customer Proposals. Present, deliver or otherwise communicate to any customers (or potential customers) any proposals in any way related to Target’s or the Subsidiaries’ business or prospects, including, but not limited to, Target’s or the Subsidiaries’ current or future IP Rights, technology, products or potential business or other strategic relationships; or
	(t) Public Software. Target shall not use or incorporate, in any manner, any Public Software with or into any of Acquiror’s IP Rights or products.
	(u) Other. Take or agree in writing, or otherwise agree to take, any of the actions described in Sections 5.1(a) through (t) above, or any action that would cause a material breach of its representations or warranties contained in this Agreement or prevent it from materially performing or cause it not to materially perform its covenants hereunder.

(v) Parachute Payments. With respect to any payment of cash, stock or other property pursuant to any Target Option or any Target Employee Plan, or under any other plan, program, contract or agreement of Target or any of its Subsidiaries, that could constitute a “parachute payment” under Section 280G of the Code, Target or any of its Subsidiaries may adopt or enter into any amendment to such Target Option, Target Employee Plan or other plan, program, contract or agreement providing for, upon the consummation of the transactions contemplated by this Agreement: (i) the reduction or elimination of all or any portion of any such payment, or the waiver of all or any portion of any such payment by the recipient thereof, or (ii) the payment of any such payment, or the payment of the reduced, eliminated or waived portion thereof, subject to approval of the Stockholders in the manner determined by Target;

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	(w) Transaction Expenses. Target may incur and pay any Transaction Expenses at any time and from time to time; and
	(x) Deployment. Target shall be permitted to (i) sell products, directly or indirectly under the existing terms of any contract in effect as of the date of this Agreement between Target and an original equipment manufacturer, (ii) support deployments in the countries listed on Schedule 5.1(x) to the extent provided on Schedule 5.1(x), (iii) license its technology to the carrier and its customers in connection with each such deployment to the extent necessary to permit such carrier and such customers to use such equipment and devices, and (iv) license its technology to such original equipment manufacturer in connection with such deployments to the extent necessary to permit the use (but not the manufacture or sale) of such products; provided, however, that unless Acquiror otherwise consents in writing, any agreement entered into in connection with this Section 5.1(x) shall include provisions to (A) limit liability under or arising out of such agreement to (I) the amounts actually received by either party from the other party thereunder or (II) no greater than $3,000,000, and (B) disclaim and exclude all liability any loss of profits or incidental, consequential, indirect, special, punitive, exemplary or other similar damages.

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	(i) Acquiror shall: (A) prepare and file with the SEC the S-3 in accordance with this Section with respect to the shares of Registrable Securities and shall use all commercially reasonable efforts to cause the S-3 to remain effective for a period ending on the date which is one (1) year after the Effective Time of Merger I; (B) prepare and file with the SEC such amendments and supplements to the S-3 and the prospectus used in connection therewith as may be necessary, and comply with the provisions of the Securities Act with respect to the sale or other disposition of all securities proposed to be registered in the S-3 until the termination of effectiveness of the S-3; and (C) for so long as Acquiror is required to cause the S-3 to remain effective, furnish to each Holder such number of copies of any prospectus (including any preliminary prospectus and any amended or supplemented prospectus) as required by the Securities Act, and such other documents as each Holder may reasonably request in order to effect the offering and sale of the shares of Registrable Securities to be offered and sold.
	(ii) Notwithstanding any other provision of this Section 6.1(b), Acquiror shall have the right at any time to require that all Holders suspend open market offers and sales of Registrable Securities whenever, and for so long as, in the reasonable, good-faith judgment of Acquiror after consultation with counsel, there is in existence material undisclosed information or events with respect to Acquiror (the “Suspension Right”). In the event Acquiror exercises the Suspension Right, such suspension will continue for the period of time reasonably necessary for disclosure to occur at a time that is not materially detrimental to Acquiror or until such time as the information or event is no longer material, each as reasonably determined in good faith by Acquiror after consultation with counsel. Acquiror will promptly give the Stockholders’ Agent notice, in a writing signed by an executive officer of Acquiror, of any such suspension (the “Suspension Notice”). Acquiror agrees to notify the Stockholders’ Agent promptly upon termination of the suspension (the “Resumption Notice”). Upon receipt of either a Suspension Notice or

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	Resumption Notice, the Stockholders’ Agent shall immediately notify each Holder concerning the status of the S-3. The period during which Acquiror is required to cause the S-3 to remain effective shall be extended by a period equal in length to any and all periods during which open market offers and sales of Registrable Securities are suspended pursuant to exercise of the Suspension Right.
	(iii) Acquiror shall pay all of the out-of-pocket expenses, other than underwriting discounts and commissions, incurred in connection with any registration of Registrable Securities pursuant to this Section 6.1(b), including without limitation all registration and filing fees, printing expenses, transfer agents’ and registrars’ fees, the fees and disbursements of Acquiror’s outside counsel and independent accountants, and the reasonable fees and disbursements of a single counsel for the Holders.
	(iv) To the fullest extent permitted by law, Acquiror will indemnify, defend, protect and hold harmless each selling Holder, each underwriter of Registrable Securities being sold pursuant to this Section 6.1(b), each person, if any, who controls any such Holder or underwriter within the meaning of the Securities Act or the Exchange Act and their respective affiliates, officers, directors, partners, successors and assigns (each a “Holder Indemnitee”), against all actions, claims, losses, damages, liabilities and expenses to which they or any of them become subject under the Securities Act, the Exchange Act or under any other statute or at common law or otherwise and, except as hereinafter provided, will promptly reimburse each Holder Indemnitee for any legal or other expenses reasonably incurred in connection with investigating or defending any actions whether or not resulting in any liability, insofar as such actions, claims, losses, damages, liabilities and expenses arise out of or are based upon any untrue statement or alleged untrue statement of material fact in any registration statement and any prospectus filed pursuant to Section 6.1(b) or any post-effective amendment thereto or arise out of or are based upon any omission or alleged omission to state a material fact required to be stated therein or necessary to make the statements therein not misleading or any violation by Acquiror of any rule or regulation promulgated under the Securities Act, the Exchange Act or any statute, regulation or law applicable to Acquiror and relating to action or inaction required of Acquiror in connection with such registration; provided, however, that Acquiror shall not be liable to any such Holder Indemnitee in respect of any actions, claims, losses, damages, liabilities and expenses resulting from any untrue statement or alleged untrue statement, or omission or alleged omission made in reliance upon and in conformity with information furnished in writing to Acquiror by such Holder Indemnitee or any of such Holder Affiliate specifically for use in connection with such registration statement and prospectus or post-effective amendment.
	(v) To the fullest extent permitted by law, each selling Holder of Registrable Securities will indemnify Acquiror, each person, if any, who controls Acquiror within the meaning of the Securities Act or the Exchange Act, each underwriter of Registrable Securities and their respective affiliates, officers, directors, partners, successors and assigns (each an “Acquiror Indemnitee”) against any actions, claims, losses, damages, liabilities and expenses to which they or any of them may become subject under the Securities Act, the Exchange Act or under any other statute or at common law or otherwise, and, except as hereinafter provided, will promptly reimburse each Acquiror Indemnitee for any legal or other expenses reasonably incurred in connection with investigating or defending any actions, whether or not resulting in any liability, insofar as such actions, claims, losses, damages, liabilities and expenses arise out of or are based upon any untrue statement or alleged untrue statement of a material fact in any registration statement and any prospectus filed pursuant to Section 6.1(b) or any post-effective amendment thereto, or any omission or alleged omission to state a material fact required to be stated therein or necessary to make the statements therein not misleading, which untrue statement or alleged untrue statement or omission or alleged omission was made in reliance upon and in conformity with information furnished in writing to Acquiror by such Holder or underwriter specifically for use in connection with such registration statement, prospectus or post-effective amendment; provided, however, that the obligations of each such selling Holder hereunder shall be limited to an amount equal to the proceeds to such Holder from the sale of such Holder’s Registrable Securities under the S-3.
	(vi) Each person entitled to indemnification under this Section 6.1(b) (an “Indemnified Person”) shall give notice to the party required to provide indemnification (the “Indemnifying Person”) promptly

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	after such Indemnified Person has actual knowledge of any claim as to which indemnity may be sought and shall permit the Indemnifying Person to assume the defense of any such claim and any litigation resulting therefrom; provided, however, that counsel for the Indemnifying Person who conducts the defense of such claim or any litigation resulting therefrom shall be approved by the Indemnified Person (whose approval shall not unreasonably be withheld), and the Indemnified Person may participate in such defense at such party’s expense (unless the Indemnified Person has reasonably concluded that there may be a conflict of interest between the Indemnifying Person and the Indemnified Person in such action, in which case the fees and expenses of counsel for the Indemnified Person shall be at the expense of the Indemnifying Person); and provided, further, that the failure of any Indemnified Person to give notice as provided herein shall not relieve the Indemnifying Person of its obligations under this Section 6.1(b) except to the extent that the Indemnifying Person is materially prejudiced thereby. No Indemnifying Person, in the defense of any such claim or litigation, shall (except with the consent of each Indemnified Person) consent to entry of any judgment or enter into any settlement that does not include as an unconditional term thereof the giving by the claimant or plaintiff to such Indemnified Person of a release from all liability in respect to such claim or litigation. Each Indemnified Person shall furnish such information regarding itself or the claim in question as an Indemnifying Person may reasonably request in writing and as shall be reasonably required in connection with the defense of such claim and litigation resulting therefrom.
	(vii) In order to provide for just and equitable contribution to joint liability under the Securities Act in any case in which any Holder Indemnitee or Acquiror Indemnitee makes a claim for indemnification pursuant to this Section 6.1(b) but it is judicially determined (by the entry of a final judgment or decree by a court of competent jurisdiction and the expiration of time to appeal or the denial of the last right of appeal) that such indemnification may not be enforced in such case notwithstanding that this Section 6.1(b) provides for indemnification in such case, then Acquiror and such Holder shall contribute to the aggregate losses, claims, damages or liabilities to which they may be subject (after contribution from others) in such proportion as is appropriate to reflect the relative fault of Acquiror on the one hand and the Holder on the other in connection with the statements or omissions that resulted in such losses, claims, damages or liabilities, as well as any other relevant equitable considerations or, if the allocation provided herein is not permitted by applicable law, in such proportion as shall be permitted by applicable law and reflect as nearly as possible the allocation provided herein. The relative fault of Acquiror on the one hand and of the Holder on the other shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or omission or alleged omission to state a material fact relates to information supplied by Acquiror on the one hand or by the Holder on the other, and each party’s relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission; provided, however, that in any such case (i) no Holder will be required to contribute any amount in excess of the proceeds received by such Holder from the sale of Registrable Securities pursuant to the S-3; and (ii) no person or entity guilty of fraudulent misrepresentation within the meaning of Section 11(f) of the Securities Act will be entitled to contribution from any person or entity who was not guilty of such fraudulent misrepresentation.

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	(a) Within twenty-four (24) hours following the execution of this Agreement, Acquiror and Target shall jointly prepare and Target shall immediately provide (i) written notice setting forth the information required to be provided as set forth in Section 5.2(a) of the Rights Agreement (the “Ten Day Notice”), and (ii) written notice setting forth the information required to be provided as set forth in Section 5.3(a) of the Rights Agreement (the “Thirty Day Notice”).
	(b) If Target shall receive a bona fide written offer (an “Offer”) during the period of ten (10) business days following delivery of the Ten Day Notice (the “Notice Period”), from a party to whom Target was obligated to delivery such Ten Day Notice, other than NVP (the “Notice Parties”), Target shall immediately provide written notice to Acquiror of such Offer. Should Target’s Board of Directors determine by resolution that such Offer is, or could reasonably be expected to lead to, a Superior Proposal (as defined below), Target shall immediately provide written notification to Acquiror (an “Offer Notification”) of such determination (together with a certified copy of the resolution duly adopted by Target’s Board of Directors making such determination), but in any event within twenty-four

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	(24) hours thereafter. Such notification shall include the terms and conditions of such Offer presented to Target. Acquiror shall have the right to require Target to reject such Offer if, within the later of (i) five (5) business days following receipt of an Offer Notification and (ii) the date that is ten (10) business days following the date on which the Ten Day Notice was delivered, Acquiror provides Target with an Offer having an aggregate fair market value (in cash and/or Acquiror Common Stock) which, in the good faith judgment of Target’s Board of Directors, exceeds the fair market value of the cash and/or stock included in the Offer provided by a Notice Party by an amount equal to or greater than one percent (1%) of such Notice Party’s Offer (a “Topping Offer”); provided, however, that Acquiror shall not be entitled to revoke such Topping Offer and Acquiror and Target shall proceed to consummate Merger I pursuant to the other terms and conditions set forth in this Agreement. If the Notice Period has expired and Target has not received an Offer which Target’s Board of Directors has determined is a Superior Proposal from a Notice Party, or if Target has received a Topping Offer and the Notice Period has expired, Target shall immediately terminate all discussions or other communications with such Notice Parties and thereafter use its best efforts to consummate the Mergers pursuant to the terms set forth in the Topping Offer and the other terms and conditions set forth in this Agreement.
	(c) Notwithstanding the provisions of Section 5.2(a) of this Agreement, Target shall have the right to communicate with the Notice Parties to the extent required by the Rights Agreement during the Notice Period and during the period in which Acquiror has the right to make a Topping Offer pursuant to Section 6.23(b), as well as in order to take action to accept such Superior Proposal in the event that Acquiror does not make a Topping Offer within the time period allotted for making such a Topping Offer pursuant to Section 6.23(b).
	(d) For purposes of this Agreement, “Superior Proposal” means any unsolicited written proposal from any of the parties receiving the Ten Day Notice to acquire, directly or indirectly, for consideration consisting of cash and/or securities, substantially all of the equity securities of Target entitled to vote generally in the election of directors or substantially all of the assets of Target, on terms which Target’s Board of Directors determined in good faith (after consultation with its financial advisor) to be more favorable from a financial point of view to the Stockholders than the Mergers and the transactions contemplated by this Agreement.

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	(a) No Injunctions or Restraints; Illegality. No temporary restraining order, preliminary or permanent injunction or other order issued by any court of competent jurisdiction or other legal or regulatory restraint or prohibition preventing the consummation of the Mergers shall be and remain in effect, nor shall any proceeding brought by an administrative agency or commission or other governmental authority or instrumentality, domestic or foreign, seeking any of the foregoing be pending, which could reasonably be expected to have a Target Material Adverse Effect, nor shall there be any action taken, or any statute, rule, regulation or order enacted, entered, enforced or deemed applicable to Merger I, which makes the consummation of Merger I illegal.
	(b) Governmental Approval. Acquiror, Target, Merger Sub I and Merger Sub II shall have obtained from each Governmental Entity all approvals, waivers and consents, necessary for consummation of or in connection with Merger I as may be required under the Securities Act, under state blue sky laws and under HSR.
	(c) Stockholder Approval. This Agreement, the Mergers and the Certificate Amendment shall be adopted and approved by the Stockholders by the requisite vote under the DGCL and Target’s Certificate of Incorporation.

	(a) Representations, Warranties and Covenants. The representations and warranties of Target in this Agreement shall be true and correct, without regard to any qualification as to materiality contained in such representation or warranty, on and as of the date of this Agreement and on and as of the Closing as though such representations and warranties were made on and as of such time (except for such representations and warranties that speak specifically as of the date hereof or as of another date, which shall be true and correct in all material respects as of such date), except where the failure of such representations and warranties to be true and correct has not had a Target Material Adverse Effect.
	(b) Performance of Obligations. Target shall have performed and complied in all material respects with all covenants, obligations and conditions of this Agreement required to be performed and complied with by it as of the Closing.
	(c) Certificate of Officers. Acquiror, Merger Sub I and Merger Sub II shall have received a certificate executed on behalf of Target by the chief executive officer and chief financial officer of Target certifying that the conditions set forth in Sections 7.2(a) and 7.2(b) have been satisfied.
	(d) Secretary’s Certificate. Acquiror, Merger Sub I and Merger Sub II shall have received from Target’s Secretary, a certificate having attached thereto (i) Target’s Certificate of Incorporation as in effect immediately prior to the Effective Time of Merger I, (ii) Target’s Bylaws as in effect immediately prior to the Effective Time of Merger I, (iii) resolutions approved by Target’s Board of Directors authorizing the transactions contemplated hereby, and (iv) the Executed Written Consents.
	(e) Delivery of Written Notice. Target shall have delivered any written notification required pursuant to that certain Open Base Station Architecture Initiative Supporter Agreement between the Promoters (as defined in such agreement) and Target dated September 3, 2004, in order to withdraw from participation from all Specifications (as defined in such agreement).

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	(f) No Governmental Litigation. There shall not be pending or threatened any legal proceeding in which a Governmental Entity is or is threatened to become a party or is otherwise involved, and neither Acquiror nor Target shall have received any communication from any Governmental Entity in which such Governmental Entity indicates the probability of commencing any legal proceeding or taking any other action: (i) challenging or seeking to restrain or prohibit the consummation of the Mergers; (ii) relating to the Mergers and seeking to obtain from Acquiror or any of its Subsidiaries, or Target or any of its Subsidiaries, any material damages or other relief; (iii) seeking to prohibit or limit in any material respect Acquiror’s ability to vote, receive dividends with respect to or otherwise exercise ownership rights with respect to the Target Capital Stock; or (iv) that would materially and adversely affect the right of Surviving Corporation or Target to own the assets or operate the business of Target.
	(g) Tax Opinion. Acquiror shall have received a written opinion from Acquiror’s legal counsel to the effect that the Mergers should or will be treated for Federal income tax purposes as a reorganization within the meaning of Section 368(a) of the Code. It is understood that, in rendering such opinion, DLA may rely upon representations contained in the tax representation letters of Acquiror and Target, as provided in Section 6.15 of this Agreement. The opinion in this Section 7.2(g) shall not be waivable without the approval of Target.
	(h) No Other Order. There shall not be issued any order of any Governmental Agency which (i) prohibits or limits in any material respect Acquiror’s ability to vote, receive dividends with respect to or otherwise exercise ownership rights with respect to any of Target Capital Stock or (ii) which adversely affects the right of Acquiror or Target to own the assets or operate the business of Target.
	(i) Employees. As of the Closing, all of the individuals set forth in Part I of Schedule 7.2(i) (the “Named Individuals”) and at least sixty-five percent (65%) of Target’s engineers, the names of which are set forth in Part II of Schedule 7.2(i), shall have agreed to maintain employment with the Surviving Corporation or accepted employment with Acquiror, in each case on terms reasonably acceptable to Acquiror (which terms shall include an annual base salary that is not less than that paid to employee by Target as of the date of this Agreement) set forth in an offer letter in the form provided by Acquiror and, to the extent an employee has not previously entered into a similar agreement with Target, a Proprietary Rights and Non-Disclosure Agreement in the form provided by Acquiror.
	(j) Post-Signing Agreements. Other than as permitted by Section 5.1(x), Target shall not have entered into any agreements, arrangements or understandings in violation or breach of Section 5.1(h) that (i) violate or breach clause (ii) of Section 5.1(h) or (ii) result in commitments by Target or any Subsidiary of Target to sell or provide any products.
	(k) No Target Material Adverse Effect. No Target Material Adverse Effect shall have occurred.
	(l) Opinion. LW shall have delivered to Acquiror an opinion in substantially the form attached hereto as Exhibit H.
	(m) Termination Agreements. Agreements, satisfactory in form and substance to Acquiror, providing for the termination of the Target contracts identified on Schedule 6.14 shall have been executed and delivered to Acquiror.
	(n) Termination of 401(k) Plan. Effective as of the day immediately preceding the Closing Date, Target shall have terminated each Target Employee Plan that includes a cash or deferred arrangement that is intended to be qualified under Code Section 401(k) (each, a “Target 401(k) Plan”) (unless Acquiror shall have provided written notice to Target no later than five (5) business days prior to the Closing Date that such Target 401(k) Plan shall not be terminated). Unless Acquiror provides such written notice to Target, Target shall adopt and deliver to Acquiror a copy of resolutions of the Board of Directors of Target, in form and substance reasonably satisfactory to Acquiror, terminating such Target 401(k) Plan effective as of the day immediately preceding the Closing Date. In the event that termination of a Target 401(k) Plan would reasonably be anticipated to result in such Target 401(k) Plan incurring liquidation charges, surrender charges or other fees then Target shall take such actions as are necessary to reasonably estimate the amount of the charges and/or fees, to the extent possible, and

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	provide such estimate in writing to Acquiror no later than fifteen (15) calendar days prior to the Closing Date.
	(o) FIRPTA Documents. The statement and notice referred to in Section 6.17, executed by Target, shall have been delivered to Acquiror.
	(p) Closing Payment Schedule. Target shall have delivered to Acquiror the Closing Payment Schedule.
	(q) Closing Option Schedule. Target shall have delivered to Acquiror the Closing Option Schedule.
	(r) Updated Schedule. Target shall have delivered to Acquiror the Updated Schedule.
	(s) Release and Termination of Security Interests. Patent Nos. 6711120 and 6473418 held by Target shall have been released from the security interest held by Chase Manhattan Bank and all UCC financing statements which have been filed with respect to such security interest shall have been terminated.

	(a) Representations, Warranties and Covenants. The representations and warranties of Acquiror, Merger Sub I and Merger Sub II in this Agreement shall be true and correct in all material respects without regard to any qualification as to materiality contained in such representation or warranty on and as of the date of this Agreement and on and as of the Closing Date as though such representations and warranties were made on and as of such time (except for such representations and warranties that speak specifically as of the date hereof or as of another date, which shall be true and correct in all material respects as of such date).
	(b) Performance of Obligations. Acquiror, Merger Sub I and Merger Sub II shall have performed and complied in all material respects with all covenants, obligations and conditions of this Agreement required to be performed and complied with by them as of the Closing.
	(c) Certificate of Officers. Target shall have received a certificate executed on behalf of Acquiror, Merger Sub I and Merger Sub II by a duly authorized officer of each of Acquiror, Merger Sub I and Merger Sub II, respectively, certifying that the conditions set forth in Sections 7.3(a) and 7.3(b) have been satisfied.
	(d) Tax Opinion. Target shall have received a written opinion from Target’s legal counsel to the effect that the Mergers should or will be treated for Federal income tax purposes as a reorganization within the meaning of Section 368(a) of the Code. It is understood that, in rendering such opinion, LW may rely upon representations contained in the tax representation letters of Acquiror and Target, as provided in Section 6.15 of this Agreement. The opinion in this Section 7.3(d) shall not be waivable without the approval of Acquiror.
	(e) Nasdaq Listing. The Acquiror Common Stock to be issued pursuant to Merger I shall have been authorized for listing on the Nasdaq National Market upon official notice of issuance.
	(f) Registration Statement. The Registration Statement shall have become effective under the Securities Act and shall not be the subject of any stop order or proceedings seeking a stop order, and any material “blue sky” and other state securities laws applicable to the registration and qualification of the Acquiror Common Stock issuable or required to reserved for issuance pursuant to this Agreement shall have been complied with.

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	(a) by the mutual written consent of Acquiror and Target;
	(b) by either Acquiror or Target if Merger I shall not have been consummated by the date that is one hundred eighty (180) days from the date hereof; provided, however, that the right to terminate this Agreement under this Section 8.1(b) shall not be available to any party whose failure to fulfill any obligation under this Agreement has been the cause of or resulted in the failure of Merger I to occur on or before such date;
	(c) by either Acquiror or Target if a court of competent jurisdiction or other Governmental Entity shall have issued a nonappealable final order, decree or ruling or taken any other action, in each case having the effect of permanently restraining, enjoining or otherwise prohibiting the Mergers, unless the party relying on such order, decree or ruling or other action has not complied in all material respects with its obligations under this Agreement;
	(d) by Acquiror or Target, if there has been a breach of any representation, warranty, covenant or agreement on the part of the other party set forth in this Agreement, such that the condition set forth in Section 7.2(a), (b) or (j), or in Section 7.3(a) or (b), respectively, shall not be satisfied which breach shall not have been cured within twenty (20) business days following receipt by the breaching party of written notice of such breach from the other party; or
	(e) by Target, in the event that (i) Target receives a Superior Proposal, (ii) Acquiror does not make a Topping Offer within the time period allotted for making a Topping Offer pursuant to Section 6.23(b), (iii) Target has fully complied with the requirements set forth in Section 6.23 hereof, and (iv) Target accepts, conditional solely upon the prior termination of this Agreement, such Superior Proposal, in which case this Agreement shall be deemed to be of no force and effect ab initio; or
	(f) by Acquiror, if Target has failed to deliver the Executed Written Consents to Acquiror prior to 12:00 p.m. Pacific Time on July 26, 2005.

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	(i) any breach of any representation or warranty made by Target in this Agreement or in any of the certificates delivered to Acquiror by Target pursuant to this Agreement (without giving effect to any materiality qualification contained in such representation or warranty, and without giving effect to any update of or modification to the Target Disclosure Schedule made or purported to have been made on or after the date of this Agreement) other than with respect to disclosure of items on the Updated Schedule not previously reflected on the Target Disclosure Schedule (but which should have been so included thereon) and which result in De Minimis Damages (as defined below);
	(ii) any nonfulfillment or breach of, or default in connection with, any covenant or agreement by Target under this Agreement;
	(iii) the exercise by any Dissenting Stockholder of appraisal rights under the DGCL (provided that such Dissenting Stockholder’s pro rata portion of the Initial Purchase Price and the Additional Payment Amount shall be deducted from such Damages);
	(iv) any post-Closing adjustment to the aggregate amount of the Merger Consideration payable to Target as a result of (A) Target having Closing Working Capital less than the Working Capital Threshold, or (B) Target’s Transaction Expenses exceeding the Transactional Expense Threshold, but in each case excluding all liabilities included in the determination of Target’s Closing Working Capital; or
	(v) any matter set forth on the Target Disclosure Schedule in a paragraph that includes a statement that “the information in this paragraph is being disclosed for the purpose of providing representations and warranties in the Agreement that are true and correct and not in an attempt to transfer liability to Acquiror.”

	(i) any inaccuracy or breach of any representation or warranty made by Acquiror, Merger Sub I or Merger Sub II in this Agreement or in any of the certificates delivered to Target by Acquiror, Merger Sub I or Merger Sub II pursuant to this Agreement;
	(ii) any nonfulfillment or breach of, or default in connection with, any covenant or agreement by Acquiror, Merger Sub I or Merger Sub II under this Agreement;

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	(iii) any breach by Target of, or any claim against Target under, the Rights Agreement with respect (A) to Section 5.2(a) or Section 5.3(a) of the Rights Agreement (other than any claim from, or relating to, NVP or any of its affiliates), (B) the Ten Day Notice or the Thirty Day Notice arising out of or related to the execution and delivery of this Agreement, (C) the execution and delivery of the Exclusivity Agreement between Target and Acquiror dated June 27, 2005, or (D) the performance by Target or any Stockholder of the transactions contemplated hereby; or
	(iv) actions taken by Stockholder Indemnified Persons in connection with the grant or issuance of Directed Options (other than (A) with respect to a Stockholder Indemnified Person, the Taxes incurred by such Stockholder Indemnified Person in respect of or relating to the receipt by such Stockholder Indemnified Person of any Directed Option, and (B) insofar as Damages arise from or relate to the failure of Target to obtain all necessary corporate approvals with respect to the grant or issuance of such Directed Options under the DGCL or to obtain any necessary approval of the Stockholders (collectively, the “Required Approvals”)).

Notwithstanding anything to the contrary in this Agreement, Target provides no representation or warranty pursuant to this Agreement, any exhibit or any certificate delivered pursuant to this Agreement with respect to (A) the Directed Options (other than with respect to the Required Approvals) and (B) compliance with, or a lack of breach or default under the provisions in the Rights Agreement relating to the Ten Day Notice or the Thirty Day Notice as a result of the execution and delivery of this Agreement or the consummation of the transactions contemplated hereby (other than with respect to NVP), and no matter relating to or arising out of the Directed Options, or such provisions in the Rights Agreement relating to the transactions contemplated herein (other than with respect to NVP), shall form the basis, in whole or in part, for a Target Material Adverse Effect.

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	(i) receive all notices or documents given or to be given to any of the Stockholders by Acquiror pursuant hereto or in connection herewith and to receive and accept service of legal process in connection with any suit or proceeding arising under this Agreement;
	(ii) deliver to Acquiror at the Effective Time of Merger I all certificates and documents to be delivered to Acquiror by any of the Stockholders pursuant to this Agreement, together with any other certificates and documents executed by any of the Stockholders and deposited with the Stockholders’ Agent for such purpose;
	(iii) engage counsel, and such accountants and other advisors for any of the Stockholders and incur such other expenses on behalf of any of the Stockholders in connection with this Agreement and the transactions contemplated hereby as the Stockholders’ Agent may in its sole discretion deem appropriate;
	(iv) take such action on behalf of any of the Stockholders as the Stockholders’ Agent may in its sole discretion deem appropriate in respect of:

	(A) taking such other action as the Stockholders’ Agent or any of the Stockholders is authorized to take under this Agreement;
	(B) receiving all documents or certificates and making all determinations, on behalf of any of the Stockholders, required or permitted under this Agreement;
	(C) all such other matters as the Stockholders’ Agent may in its sole discretion deem necessary or appropriate to consummate this Agreement and the transactions contemplated hereby; and
	(D) all such action as may be necessary after the Effective Time of Merger I to carry out any of the transactions contemplated by this Agreement, including, without limitation, the defense and/or settlement of any claims for which indemnification is sought pursuant to Section 9 and any waiver of any obligation of Acquiror or the Surviving Corporation.

All actions, decisions and instructions of the Stockholders’ Agent shall be conclusive and binding upon all of the Stockholders and no Stockholder shall have any claim or cause of action against the Stockholders’ Agent, and the Stockholders’ Agent shall have no liability to any Stockholder, for any action taken, decision made or instruction given by the Stockholders’ Agent in connection with this Agreement, except in the case of its own willful misconduct.

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	(i) The Stockholders’ Agent is hereby appointed and constituted the true and lawful attorney-in-fact of each Stockholder, with full power in his, her or its name and on his, her or its behalf to act according to the terms of this Agreement in the absolute discretion of the Stockholders’ Agent; and in general to do all things and to perform all acts including, without limitation, executing and delivering any other agreements, certificates, receipts, instructions, notices or instruments contemplated by or deemed advisable in connection with this Agreement.
	(ii) This power of attorney and all authority hereby conferred is granted and shall be irrevocable and shall not be terminated by any act of any Stockholder, by operation of law, whether by such Stockholder’s death, disability protective supervision or any other event. Without limitation to the foregoing, this power of attorney is to ensure the performance of a special obligation and, accordingly, each Stockholder hereby renounces its, his or her right to renounce this power of attorney unilaterally any time before the latest to occur of (A) the termination or resolution of all pending indemnification claims pursuant to Section 9.2 or disputes relating to the Additional Patent Consideration or the Per Share Additional Patent

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	Consideration, (B) the eighth (8th) anniversary of the Closing Date, and (C) the complete distribution of the Expenses Fund.
	(iii) Each Stockholder hereby waives any and all defenses which may be available to contest, negate or disaffirm the action of the Stockholders’ Agent taken in good faith under this Agreement.
	(iv) Notwithstanding the power of attorney granted in this Section 9.7(f), no agreement, instrument, acknowledgement or other act or document shall be ineffective by reason only of the Stockholders having signed or given such directly instead of the Stockholders’ Agent.

	(i) The Stockholders’ Agent shall be entitled to withdraw amounts held in the Expenses Fund in reimbursement for out-of-pocket fees and expenses (including legal, accounting and other advisors’ fees and expenses, if applicable) incurred by the Stockholders’ Agent in connection with this Agreement and the transaction contemplated hereby.
	(ii) At the Closing, the Expenses Fund Shares shall be registered in the name of, and, together with the Expenses Fund Cash, shall be deposited with, the Stockholders’ Agent, such deposit(s) and any Additional Expenses Fund Shares (as defined in Section 9.7(j)(iii) below) to constitute the Expenses Fund and to be governed by the terms set forth herein. The Expenses Fund shall be drawn on a pro rata basis from the Merger Consideration payable to each Stockholder. In the event Acquiror issues any Additional Expenses Fund Shares, such shares will be issued in the name of the Stockholders’ Agent and

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	delivered to the Stockholders’ Agent in the same manner as the Expenses Fund Shares delivered at the Closing.
	(iii) Except for dividends paid in stock declared with respect to the Expenses Fund Shares (“Additional Expenses Fund Shares”), which shall be treated as Expenses Fund Shares in the Expenses Fund pursuant to Section 9.7(j)(ii) hereof, any cash dividends, dividends payable in securities (other than stock) or other distributions of any kind made in respect of the Expenses Fund Shares or the Expenses Fund Cash will be allocated and released to each Stockholder based on its pro-rata entitlement. On an annual basis, each Stockholder will be allocated its pro rata share of income earned on the Expenses Fund. Each Stockholder will have voting rights with respect to the Expenses Fund Shares and Additional Expenses Fund Shares deposited in the Expenses Fund with respect to such Stockholder so long as such Expenses Fund Shares and Additional Expenses Fund Shares are held as part of the Expenses Fund, and Acquiror will take all reasonable steps necessary to allow the exercise of such rights. While the Expenses Fund Shares and Additional Expenses Fund Shares remain in the Stockholder Agent’s possession, the Stockholders will retain and will be able to exercise all other incidents of ownership of said Expenses Fund Shares and Additional Expenses Fund Shares which are not inconsistent with the terms and conditions of this Agreement.
	(iv) The Stockholders’ Agent shall have the authority to sell all Expenses Fund Shares and Additional Expenses Fund Shares in its discretion.
	(v) Within five (5) business days after the later of (A) the termination or resolution of all pending indemnification claims pursuant to Section 9.2 or disputes relating to the Additional Patent Consideration and (B) the eighth (8th) anniversary of the Closing Date, the Stockholders’ Agent shall release from the Expenses Fund to the Stockholders their pro rata portion of the Expenses Fund Shares, Additional Expenses Fund Shares and Expenses Fund Cash therein. Expenses Fund Shares, Additional Expenses Fund Shares and Expenses Fund Cash shall be released to the respective Stockholders in proportion to their pro rata portion of the Merger Consideration. Acquiror will take such action as may be necessary to cause such certificates representing Expenses Fund Shares and Additional Expenses Fund Shares to be issued in the names of the appropriate persons. No fractional shares shall be released and delivered from the Expenses Fund to the Stockholders. In lieu of any fraction of an Expenses Fund Share or Additional Expenses Fund Share to which a Stockholder would otherwise be entitled, such Stockholder will receive from Acquiror an amount of cash (rounded to the nearest whole cent) equal to the product of such fraction multiplied by the Average Closing Price.
	(vi) No Expenses Fund Shares or Additional Expenses Fund Shares or any beneficial interest therein may be pledged, sold, assigned or transferred, including by operation of law, by any Stockholder or be taken or reached by any legal or equitable process in satisfaction of any debt or other liability of any such Stockholder, prior to the delivery to such Stockholder of such Stockholder’s pro rata portion of the Expenses Fund by the Stockholders’ Agent as provided herein.

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	QUALCOMM Incorporated
	5775 Morehouse Drive
	San Diego, CA 92121
	Attention: President
	Fax: (858) 658-2100
	Tel: (858) 587-1121

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	DLA Piper Rudnick Gray Cary US LLP
	4365 Executive Drive, Suite 1100
	San Diego, CA 92121
	Attention: Cameron Jay Rains
	Fax: (858) 677-1401
	Tel: (858) 677-1476

	Flarion Technologies, Inc.
	135 Route 202/206 South
	Bedminster, NJ 07921
	Attention: Chief Executive Officer
	Fax: (908) 947-7000
	Tel: (908) 947-7090

	Latham & Watkins LLP
	600 West Broadway, Suite 1800
	San Diego, California 92101
	Attention: Howard L. Armstrong
	Fax: (619) 236-1234
	Tel: (619) 696-7419

	QF REP, LLC
	c/o Charles River Ventures, Inc.
	1000 Winter Street, Suite 3300
	Waltham, MA 02451
	Attn: Sarah Reed, Esq.
	Fax: 781-768-6100
	Tel: 781-768-6064

	Proskauer Rose LLP
	1585 Broadway
	New York, NY 10036-8299
	Attention: Adam J. Kansler
	Fax: (212) 969-2900
	Tel: (212) 969-3689

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	FLARION TECHNOLOGIES, INC.

	By:	/s/ Raymond P. Dolan

	Name: Raymond P. Dolan

	Title: Chairman and CEO

	QUALCOMM INCORPORATED

	By:	/s/ William E. Keitel

	Name: William E. Keitel
	Title: Executive Vice President and CFO
	FLUORITE ACQUISITION CORPORATION

	By:	/s/ William E. Keitel

	Name: William E. Keitel

	Title: President and CFO

	QUARTZ ACQUISITION CORPORATION

	By:	/s/ William E. Keitel

	Name: William E. Keitel

	Title: President and CFO

	STOCKHOLDERS’ AGENT:
	QF REP, LLC

	By:	/s/ Bruce I. Sachs

	Name: Bruce I. Sachs

	Title: Managing Member

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I) (i) each outstanding share of common stock, par value $0.001 per share, of Flarion (“Flarion Common Stock”) will be converted into the right to receive an amount equal to the Per Share Purchase Price, which will be payable with a fraction of a share of common stock, par value $0.001 per share (“Acquiror Common Stock”), of Acquiror equal to the quotient of the Per Share Purchase Price divided by the Average Closing Price; (ii) each outstanding share of preferred stock, par value $0.001 per share (“Flarion Preferred Stock”) will be converted into the right to receive an amount equal to two times the Per Share Purchase Price, a portion of which will be payable with a fraction of a share of Acquiror Common Stock equal to the amount obtained by (A) dividing two times the Per Share Purchase Price by the Average Closing Price and (B) multiplying the result of (A) by the Preferred Equity Percentage and the remainder of which shall be payable in cash; (iii) QUALCOMM will assume each option to purchase Flarion Common Stock that was granted under the Flarion Option Plan and is outstanding immediately prior to the Effective Time of Merger I (each a “Flarion Option”) and (A) each Flarion Option shall thereby be converted into an option (an “Assumed Option”) to purchase the number of shares of Acquiror Common Stock, rounded down to the nearest whole number of shares of Acquiror Common Stock, equal to the product of the number of shares of Flarion Common Stock that were issuable upon exercise of such Flarion Option (whether or not then exercisable or vested) immediately prior to the Effective Time of Merger I multiplied by the Option Exchange Ratio, rounded down to the nearest whole number of shares of Acquiror Common Stock, and (B) the per share exercise price for the shares of Acquiror Common Stock issuable upon exercise of such Assumed Option shall be equal to the quotient obtained by dividing the exercise price of the Flarion Option immediately prior to the Closing Date by the Option Exchange Ratio, rounded up to the nearest whole cent; and (iv) QUALCOMM will grant to the holders of warrants to purchase Flarion Preferred Stock (the “Assumed Flarion Warrants”), warrants (“Acquiror Warrants”) to purchase the number of shares of Acquiror Common Stock, rounded down to the nearest whole number of shares of Acquiror Common Stock, equal to the product of the number of shares of Flarion Preferred Stock that were issuable upon exercise of such Acquiror Warrants (whether or not then exercisable or vested) immediately prior to the Effective Time of Merger I multiplied by the Warrant Exchange Ratio, rounded down to the nearest whole number of shares of Acquiror Common Stock, and (B) the per share exercise price for the shares of Acquiror Common Stock

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	issuable upon exercise of such Acquiror Warrants shall be equal to the quotient obtained by dividing the exercise price of the Assumed Flarion Warrants immediately prior to the Closing Date by the Warrant Exchange Ratio, rounded up to the nearest whole cent;
	II) Upon the Patent Milestone Date, QUALCOMM shall (i) pay to each former holder of Flarion Common Stock an amount in cash equal to the Per Share Additional Patent Consideration; (ii) pay to each former holder of Flarion Preferred Stock an amount in cash equal to two times the Per Share Additional Patent Consideration; (iii) exchange each Assumed Option that is not a Directed Option (an “Existing Option”) for the number of Option Earn-out Shares allocated to an Existing Option in respect of any payment of Additional Patent Consideration the number of shares of Acquiror Common Stock (rounded down to the nearest whole share) having a fair market value (based upon the closing price of the Acquiror Common Stock on the date of Patent Milestone Date) equal to the product of (a) the Per Share Additional Patent Consideration actually being delivered by Acquiror to the Stockholders, multiplied by (b) the number of shares of Flarion Common Stock subject to the corresponding Existing Option immediately prior to its assumption; and (iv) exchange each Acquiror Warrant for Earn-out Shares in addition to the shares of Acquiror Stock determined by the Warrant Exchange Ratio in the same manner as the Assumed Options pursuant to (iii) above.

	(i) Analyzed certain internal financial statements and other non-public financial and operating data concerning Flarion prepared by and furnished to us by the management of Flarion;
	(ii) Analyzed certain financial projections concerning Flarion prepared by and furnished to us by the management of Flarion;
	(iii) Discussed the past and current operations and financial condition and the prospects of Flarion with the management of Flarion;
	(iv) Compared the financial performance of Flarion and QUALCOMM with certain publicly-traded companies and their securities that we deemed relevant;
	(v) Reviewed the financial terms, to the extent publicly available, of certain business combinations and other transactions that we deemed relevant;
	(vi) Participated in discussions and negotiations among representatives of Flarion and QUALCOMM and their financial and legal advisors;
	(vii) Reviewed and participated in discussions and negotiations regarding the Definitive Agreement and the related exhibits and schedules in the forms provided to us and have assumed that the final forms of such Definitive Agreement, exhibits and schedules will not vary in any respect material to our analysis;
	(viii) Analyzed certain publicly available projections and operating data for QUALCOMM prepared by Wall Street analysts;
	(ix) Analyzed certain publicly available financial statements and other information relating to QUALCOMM;
	(x) Reviewed with Flarion management the scope and results of the transaction process to date; and
	(xi) Performed such other analyses and examinations and considered such other factors as we have in our sole judgment deemed appropriate for purposes of this opinion.

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	Very truly yours,
	EVERCORE GROUP INC.

	By:	/s/ Timothy G. LaLonde

	Timothy G. LaLonde
	Senior Managing Director

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	(1) Provided, however, that no appraisal rights under this section shall be available for the shares of any class or series of stock, which stock, or depository receipts in respect thereof, at the record date fixed to determine the stockholders entitled to receive notice of and to vote at the meeting of stockholders to act upon the agreement of merger or consolidation, were either (i) listed on a national securities exchange or designated as a national market system security on an interdealer quotation system by the National Association of Securities Dealers, Inc. or (ii) held of record by more than 2,000 holders; and further provided that no appraisal rights shall be available for any shares of stock of the constituent corporation surviving a merger if the merger did not require for its approval the vote of the stockholders of the surviving corporation as provided in subsection (f) of § 251 of this title.
	(2) Notwithstanding paragraph (1) of this subsection, appraisal rights under this section shall be available for the shares of any class or series of stock of a constituent corporation if the holders thereof are required by the terms of an agreement of merger or consolidation pursuant to §§ 251, 252, 254, 257, 258, 263 and 264 of this title to accept for such stock anything except:

	a. Shares of stock of the corporation surviving or resulting from such merger or consolidation, or depository receipts in respect thereof;
	b. Shares of stock of any other corporation, or depository receipts in respect thereof, which shares of stock (or depository receipts in respect thereof) or depository receipts at the effective date of the merger or consolidation will be either listed on a national securities exchange or designated as a national market system security on an interdealer quotation system by the National Association of Securities Dealers, Inc. or held of record by more than 2,000 holders;
	c. Cash in lieu of fractional shares or fractional depository receipts described in the foregoing subparagraphs a. and b. of this paragraph; or
	d. Any combination of the shares of stock, depository receipts and cash in lieu of fractional shares or fractional depository receipts described in the foregoing subparagraphs a., b. and c. of this paragraph.

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	(3) In the event all of the stock of a subsidiary Delaware corporation party to a merger effected under § 253 of this title is not owned by the parent corporation immediately prior to the merger, appraisal rights shall be available for the shares of the subsidiary Delaware corporation.

	(1) If a proposed merger or consolidation for which appraisal rights are provided under this section is to be submitted for approval at a meeting of stockholders, the corporation, not less than 20 days prior to the meeting, shall notify each of its stockholders who was such on the record date for such meeting with respect to shares for which appraisal rights are available pursuant to subsection (b) or (c) hereof that appraisal rights are available for any or all of the shares of the constituent corporations, and shall include in such notice a copy of this section. Each stockholder electing to demand the appraisal of such stockholder’s shares shall deliver to the corporation, before the taking of the vote on the merger or consolidation, a written demand for appraisal of such stockholder’s shares. Such demand will be sufficient if it reasonably informs the corporation of the identity of the stockholder and that the stockholder intends thereby to demand the appraisal of such stockholder’s shares. A proxy or vote against the merger or consolidation shall not constitute such a demand. A stockholder electing to take such action must do so by a separate written demand as herein provided. Within 10 days after the effective date of such merger or consolidation, the surviving or resulting corporation shall notify each stockholder of each constituent corporation who has complied with this subsection and has not voted in favor of or consented to the merger or consolidation of the date that the merger or consolidation has become effective; or
	(2) If the merger or consolidation was approved pursuant to § 228 or § 253 of this title, then either a constituent corporation before the effective date of the merger or consolidation or the surviving or resulting corporation within 10 days thereafter shall notify each of the holders of any class or series of stock of such constituent corporation who are entitled to appraisal rights of the approval of the merger or consolidation and that appraisal rights are available for any or all shares of such class or series of stock of such constituent corporation, and shall include in such notice a copy of this section. Such notice may, and, if given on or after the effective date of the merger or consolidation, shall, also notify such stockholders of the effective date of the merger or consolidation. Any stockholder entitled to appraisal rights may, within 20 days after the date of mailing of such notice, demand in writing from the surviving or resulting corporation the appraisal of such holder’s shares. Such demand will be sufficient if it reasonably informs the corporation of the identity of the stockholder and that the stockholder intends thereby to demand the appraisal of such holder’s shares. If such notice did not notify stockholders of the effective date of the merger or consolidation, either (i) each such constituent corporation shall send a second notice before the effective date of the merger or consolidation notifying each of the holders of any class or series of stock of such constituent corporation that are entitled to appraisal rights of the effective date of the merger or consolidation or (ii) the surviving or resulting corporation shall send such a second notice to all such holders on or within 10 days after such effective date; provided, however, that if such second notice is sent more than 20 days following the sending of the first notice, such second notice need only be sent to each stockholder who is entitled to appraisal rights and who has demanded appraisal of such holder’s shares in accordance with this subsection. An affidavit of the secretary or assistant secretary or of the transfer agent of the corporation that is required to give either notice that such notice has been given shall, in the absence of fraud, be prima facie evidence of the facts stated therein. For purposes of determining the stockholders entitled to receive either notice, each constituent corporation may fix, in advance, a record date that shall be not more than 10 days prior to the date the notice is given, provided, that if the notice is given on or after the effective date of the merger or consolidation, the record date shall

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	be such effective date. If no record date is fixed and the notice is given prior to the effective date, the record date shall be the close of business on the day next preceding the day on which the notice is given.

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“(g) Merger or Sale of Assets. If at any time or from time to time there shall be a merger or consolidation of the Corporation with or into another Corporation, or the sale of all or substantially all of the Corporation’s properties and assets to any other person (other than an event described in paragraph 4(c), unless the requisite number of holders of Preferred Stock have elected not to treat such event as a liquidation for purposes of such paragraph), then, as part of such merger, consolidation or sale, provision shall be made so that the holders of Preferred Stock shall be entitled to receive upon consummation of such transaction, the number of shares of stock or other securities or property of the Corporation, or of the successor corporation resulting from such merger, consolidation or sale, to which a holder of Common Stock issuable upon conversion would have been entitled upon consummation of such merger had such holder’s Preferred Stock been converted into Common Stock prior to such merger, consolidation or sale, provided that no such provision shall be deemed to constitute the consent of the holders of Preferred Stock to any such transaction if such consent is required by this Amended and Restated Certificate of Incorporation or under applicable law, and provided further that the provisions of this paragraph 5(g) shall not apply to the transactions contemplated by the Agreement and Plan of Reorganization, entered into by and among QUALCOMM Incorporated, a Delaware corporation (“Acquiror”), Fluorite Acquisition Corporation, a Delaware corporation and a wholly owned subsidiary

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	of Acquiror, Quartz Acquisition Corporation, a Delaware corporation and a wholly owned subsidiary of Acquiror, QF REP, LLC (as Stockholders’ Agent), and the Corporation, as such Agreement and Plan of Reorganization may be amended from time to time.”

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	STOCKHOLDER:

	By:

	Name:
	Title:

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	1. Defined Terms. Capitalized terms not defined herein shall have the meaning assigned to such terms in the Stockholders’ Agreement.
	2. Amendment to the Stockholders’ Agreement. A new Section 21 shall be added to the Stockholders’ Agreement as follows:
	“21. Termination Upon a Change of Control.

	(a) This Agreement shall automatically terminate immediately prior to the occurrence of a Change of Control and, upon such termination, this Agreement shall be of no further force and effect.
	(b) For the purposes of this Section 21, “Change of Control” shall mean a merger or consolidation or other business transaction or series of transactions, pursuant to which stockholders of the Company prior to the effective date of such transaction or series of transactions possess beneficial ownership of less than fifty percent (50%) of the total combined voting power of the surviving corporation following such transaction or series of transactions.”

	3. Modification. Except as and to the extent specifically modified or amended hereby, the Stockholders’ Agreement shall remain in full force and effect. This Amendment may not be altered, amended or modified in any way except in accordance with Section 12 of the Stockholders’ Agreement. Any such alteration, amendment or modification shall be binding on the Parties.
	4. Governing Law. This Amendment will be governed by and construed in accordance with the laws of the State of New York, without regard to principles of conflicts of laws.
	5. Counterparts. This Amendment may be executed in counterparts, each of which shall be declared an original, but all of which together shall constitute one and the same instrument.

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	Flarion Technologies, Inc.

	By:

	Name:
	Title:
	Investor

	By:

	Name:
	Title:
	Common Stockholder

	By:

	Name:
	Title:

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	1. Defined Terms. Capitalized terms not defined herein shall have the meaning assigned to such terms in the Rights Agreement.
	2. Amendment to Section 7 of the Rights Agreement. A new Section 7.10 shall be added to the Rights Agreement as follows:
	“7.10 Termination Upon a Change of Control.

	(a) This Agreement shall automatically terminate immediately prior to the occurrence of a Change of Control and, upon such termination, this Agreement shall be of no further force and effect.
	(b) For the purposes of this Section 7.10, “Change of Control” shall mean a merger or consolidation or other business transaction or series of transactions, pursuant to which stockholders of the Company prior to the effective date of such transaction or series of transactions possess beneficial ownership of less than fifty percent (50%) of the total combined voting power of the surviving corporation following such transaction or series of transactions.”

	3. Modification. Except as and to the extent specifically modified or amended hereby, the Rights Agreement shall remain in full force and effect. This Amendment may not be altered, amended or modified in any way except in accordance with Section 7.3 of the Rights Agreement. Any such alteration, amendment or modification shall be binding on the Company, all Investors and all Founders.
	4. Governing Law. This Amendment will be governed by and construed in accordance with the laws of the State of New York, without regard to principles of conflicts of laws.
	5. Counterparts. This Amendment may be executed in counterparts, each of which shall be declared an original, but all of which together shall constitute one and the same instrument.

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	Flarion Technologies, Inc.

	By:

	Name:
	Title:
	Investor

	By:

	Name:
	Title:

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ITEM 20.	INDEMNIFICATION OF DIRECTORS AND OFFICERS.

ITEM 21.	EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.

	(a)	Exhibits

Exhibit
Number				Description of Document
	2	.1		Agreement and Plan of Reorganization made and entered into as of July 25, 2005, by and among the Registrant, Fluorite Acquisition Corporation, Quartz Acquisition Corporation, Flarion Technologies, Inc. and QF REP, LLC (included as Annex A to the prospectus/ information statement included in this registration statement)*
	3	.1		Certificate of Incorporation of Registrant(1)
	3	.2		Bylaws of Registrant(2)
	5	.1		Opinion of DLA Piper Rudnick Gray Cary US LLP regarding legality of securities being registered(3)
	8	.1		Opinion of Latham & Watkins LLP regarding certain tax matters
	8	.2		Opinion of DLA Piper Rudnick Gray Cary US LLP regarding certain tax matters
	21	.1		Subsidiaries of the Registrant(4)
	23	.1		Consent of DLA Piper Rudnick Gray Cary US LLP (included in Exhibit 5.1)
	23	.2		Consent of PricewaterhouseCoopers LLP, independent registered public accounting firm for the Registrant
	23	.3		Consent of Latham & Watkins LLP (included in Exhibit 8.1)
	23	.4		Consent of Ernst & Young LLP, independent auditors for Flarion Technologies, Inc.
	24	.1		Power of Attorney(3)

	*	All exhibits and schedules will be provided supplementally to the Securities and Exchange Commission upon request of the Commission.

(1)	Incorporated by reference to Exhibit 99.5 to our Current Report on Form 8-K filed March 11, 2005.
(2)	Incorporated by reference to Exhibit 99.6 to our Current Report on Form 8-K filed March 11, 2005.
(3)	Previously filed.
(4)	Incorporated by reference to Exhibit 21 to our Annual Report on Form 10-K for the year ended September 26, 2004.

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	None.

ITEM 22.	UNDERTAKINGS.

	•	to file, during any period in which offers or sales are being made, a post-effective amendment or prospectus supplement to this registration statement:

	(1) to include any prospectus required by Section 10(a)(3) of the Securities Act;
	(2) to reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than a 20% change in the maximum aggregate offering price set forth in the “Calculation of Registration Fee” table in the effective registration statement; and
	(3) to include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement;

	•	that, for the purpose of determining any liability under the Securities Act, each such post-effective amendment 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;
	•	to remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering;
	•	that, for purposes of determining any liability under the Securities Act, each filing of the Registrant’s annual report pursuant to Section 13(a) or 15(d) of the Securities Exchange Act (and, where applicable, each filing of an employee benefit plan’s annual report pursuant to Section 15(d) of the Securities Exchange Act) that is incorporated by reference in this registration statement 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;
	•	to respond to requests for information that is incorporated by reference into the prospectus pursuant to Items 4, 10(b), 11, or 13 of this Form, within one business day of receipt of such request, and to send the incorporated documents by first class mail or other equally prompt means. This includes information contained in documents filed subsequent to the effective date of the registration statement through the date of responding to the request;
	•	to supply by means of a post-effective amendment all information concerning a transaction, and the company being acquired involved therein, that was not the subject of and included in the registration statement when it became effective;
	•	that prior to any public reoffering of the securities registered hereunder through use of a prospectus which is a part of this registration statement, by any person or party who is deemed to be an underwriter within the meaning of Rule 145(c), the issuer undertakes that such reoffering prospectus will contain the information called for by the applicable registration form with respect to reofferings by persons who may be deemed underwriters, in addition to the information called for by the other items of the applicable form; and

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	•	that every prospectus (i) that is filed pursuant to the immediately preceding paragraph, or (ii) that purports to meet the requirements of Section 10(a)(3) of the Securities Act and is used in connection with an offering of securities subject to Rule 415, will be filed as a part of an amendment to the registration statement and will not be used until such amendment is effective, and that, for purposes of determining any liability under the Securities Act, each such post-effective amendment 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.

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	QUALCOMM INCORPORATED

	By:	/s/ Paul E. Jacobs

	Paul E. Jacobs
	Chief Executive Officer
	(Principal Executive Officer) and Director

	By:	/s/ William E. Keitel

	William E. Keitel
	Executive Vice President and
	Chief Financial Officer (Principal Financial
	Officer and Principal Accounting Officer)

Signature				Title(s)		Date
/s/ Paul E. Jacobs   Paul E. Jacobs				Chief Executive Officer (Principal Executive Officer) and Director		September 19, 2005
/s/ William E. Keitel   William E. Keitel				Executive Vice President and Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer)		September 19, 2005
/s/ Irwin Mark Jacobs*   Irwin Mark Jacobs				Chairman of the Board		September 19, 2005
/s/ Richard C. Atkinson*   Richard C. Atkinson				Director		September 19, 2005
/s/ Adelia A. Coffman*   Adelia A. Coffman				Director		September 19, 2005
/s/ Donald G. Cruickshank*   Donald G. Cruickshank				Director		September 19, 2005
/s/ Raymond V. Dittamore*   Raymond V. Dittamore				Director		September 19, 2005

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Signature				Title(s)		Date
/s/ Diana Lady Dougan*   Diana Lady Dougan				Director		September 19, 2005
/s/ Robert E. Kahn*   Robert E. Kahn				Director		September 19, 2005
/s/ Duane A. Nelles*   Duane A. Nelles				Director		September 19, 2005
/s/ Peter M. Sacerdote*   Peter M. Sacerdote				Director		September 19, 2005
/s/ Brent Scowcroft*   Brent Scowcroft				Director		September 19, 2005
/s/ Marc I. Stern*   Marc I. Stern				Director		September 19, 2005
/s/ Richard Sulpizio*   Richard Sulpizio				Director		September 19, 2005
*By:		/s/ William E. Keitel   William E. Keitel Attorney-in-fact				September 19, 2005

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Exhibit
Number				Description of Document
	2	.1		Agreement and Plan of Reorganization made and entered into as of July 25, 2005, by and among the Registrant, Fluorite Acquisition Corporation, Quartz Acquisition Corporation, Flarion Technologies, Inc. and QF REP, LLC (included as Annex A to the prospectus/ information statement included in this registration statement)*
	3	.1		Certificate of Incorporation of Registrant(1)
	3	.2		Bylaws of Registrant(2)
	5	.1		Opinion of DLA Piper Rudnick Gray Cary US LLP regarding legality of securities being registered(3)
	8	.1		Opinion of Latham & Watkins LLP regarding certain tax matters
	8	.2		Opinion of DLA Piper Rudnick Gray Cary US LLP regarding certain tax matters
	21	.1		Subsidiaries of the Registrant(4)
	23	.1		Consent of DLA Piper Rudnick Gray Cary US LLP (included in Exhibit 5.1)
	23	.2		Consent of PricewaterhouseCoopers LLP, independent registered public accounting firm for the Registrant
	23	.3		Consent of Latham & Watkins LLP (included in Exhibit 8.1)
	23	.4		Consent of Ernst & Young LLP, independent auditors for Flarion Technologies, Inc.
	24	.1		Power of Attorney(3)

	*	All exhibits and schedules will be provided supplementally to the Securities and Exchange Commission upon request of the Commission.

(1)	Incorporated by reference to Exhibit 99.5 to our Current Report on Form 8-K filed March 11, 2005.
(2)	Incorporated by reference to Exhibit 99.6 to our Current Report on Form 8-K filed March 11, 2005.
(3)	Previously filed.
(4)	Incorporated by reference to Exhibit 21 to our Annual Report on Form 10-K for the year ended September 26, 2004.